Sears Holdings Bankruptcy Update

To address the timing mismatch of the Debtors’ assets and administrative claims, the Debtors intend to proceed with confirmation now and prosecute litigation with the oversight of the Litigation Designees who will be appointed effectively immediately upon entry of the Confirmation Order (and, on the Effective Date, will become the initial members of the Liquidating Trust Board), but intend to go effective once the Debtors either reconcile or settle with certain Administrative Expense Claimants. But the Debtors believe and will prove at the Confirmation Hearing that they have been and remain administratively solvent. The Debtors have met with certain Administrative Expense Claim creditors and proposed a settlement to such creditors in exchange for accepting a reduced but accelerated recovery on their Administrative Expense Claims. A construct for Administrative Claim settlements is attached hereto as Exhibit B (the “Administrative Expense Claims Settlement Proposal”). Negotiations among the Debtors and a group of ad hoc administrative creditors holding certain asserted Administrative Expense Claims are ongoing. In the Debtors’ view, and as the evidence demonstrates, such a settlement is “nice to have”—not a “must have.”