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Sears liquidation plan gets court approval

The U.S. Bankruptcy Court for the Southern District of New York has approved Sears Holdings Corp.'s Chapter 11 liquidation plan, according to an Oct. 7 court filing.

The plan received support from official committees representing Sears creditors and retirees, as well as the Pension Benefit Guaranty Corp., the filing said. Debtors that purchased Sears claims at discounted prices have also agreed to support the plan, which allows them to quickly receive 75% of what they are owed as long as they waive the rest.

Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., approved the liquidation plan after finding it "fair and equitable" and ruling that it does not discriminate unfairly among the different classes of unsecured creditors. He also said that the plan was solicited and proposed "in good faith" and complies with bankruptcy laws.

The plan received court approval despite Sears' admission that it does not have enough cash to cover essential bills, according to The Wall Street Journal. Unsecured creditors are expected to receive 2.5 cents on the dollar and Judge Drain projected Sears to be short by $36.5 million to $104.5 million in payment obligations that it needs to meet before exiting bankruptcy, the newspaper said.

The liquidation plan will take effect once the money from preference claims begin to flow into the bankruptcy estate, the Journal added.