/biz/ - Business & Finance

Hi guys, docket autist anon here. Haven't been any crazy documents recently, but I wanted to share some fun stuff from docket 2040, a fee statement from AP Services (Holly Etlin's company that is a big part of the reorg). Lot's of mentions of a 6th street baby stand alone scenario. The legal definition of a standalone scenario is, "... the scenario in which the Debtors determine in their sole discretion to distribute Common Stock to certain Holders of Claims and not to consummate a Merger." Even if this is a contingency scenario, it has been discussed by the management of BBBY and therefore I want to discuss it too. Let's say there is a plan in place to distribute common stock to holders of claims and not to satisfy them with cash. Shills will mention the debt waterfall, absolute priority rule, and how bond holders would have to be fully satisfied before equity interests. But what if they were wrong? I bring you... THE NEW VALUE EXCEPTION TO THE ABSOLUTE PRIORITY RULE. This exception holds that if equity interests bring new value (1) in the form of money or money's worth (ex. stocks) (2) reasonably equivalent to interest retained or received by equity holders (3) necessary (4) up front (5) substantial. I remember during a court hearing, one of the BBBY lawyers mentioned "new money", and this document confirms 6th street made a credit bid for a standalone scenario. This could explain why no bids were accepted except for those with IP sharing agreements. They can't match the new money bid, especially since it has to be up-front cash. Oh, and speaking of IP sharing agreements, the deals with DOM and OSTK are most likely a version of 'source code escrow' a practice where valuable IP, data, or software are "sold" to a third-party after executing an escrow agreement with provisions on when that IP is released back to the debtor. This is a version of a poison pill, because now no one else can get the IP since they have no such agreement.