GGP had a liquidity problem, not a solvency problem. They had good assets that were making money. Plus, the economy was rebounding from the biggest recession in memory.
Sears doesn't have a profitable base business. They have some nice assets, mostly real estate, but the longer this takes the worse off they are. The inventory gets stale and the fees add up. GGP was making money during BK, so they were actually getting stronger over time. That's important, because basically all the advisors in the process have an incentive for it to take as long as possible.
I have a position in the '18 debt, which trades at less than $0.30. If you think there is potential here that seems like a way better option. For the equity to get anything the debt would need to be dealt with fully, which makes the debt a 3 bagger. But there are a lot of lesser scenarios where the debt works out way better than the equity.
I think if you're considering the equity you should have a reason why the market is pricing the debt so much lower than what you perceive it's fair value to be. Because if the equity is in the money at all there is a multi-billion market inefficiency in the debt.
+1
Warren Buffett has said previously that there were times he took on the debt that he wishes he would've taken on the equity - but that is only clear in hindsight.
The debtholders control the bankruptcy process AND get paid before equity. If you've done the leg-work and believe that there's value in the equity, it would be foolish to not play the debt, which is far safer, for the 333% return. Until the market starts doing that and pricing the debt correctly, you can bet that the outcome for equity isn't going to be pretty.
And, if the debt re-prices, there's likely still a very good opportunity to roll into the equity to get the residual as well.
