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Full title: Motion to reject / Debtors' Third Motion for Entry of an Order Under Section 3654 and 554 of the Bankruptcy Code (I) Authorizing the Debtors to Reject Certain Unexpired Commercial Real Property Leases; and (II) Granting Related Relief Filed by Debtor Studio Movie Grill Holdings, LLC (Attachments: # 1 Exhibit a) (Wright, Frank)

Document posted on Feb 4, 2021 in the bankruptcy, 7 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

NO. 20-32633-11 § STUDIO MOVIE GRILL HOLDINGS, LLC, § Chapter 11 et al.,1 § § DEBTORS.The Debtors in these Chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, include: Studio Movie Grill Holdings, LLC (6546) (“SMG Holdings”); OHAM Holdings, LLC (0966); Movie Grill Concepts Trademark Holdings, LLC (3096); Movie Grill Concepts I, Ltd. (6645); Movie Grill Concepts III, Ltd. (2793); Movie Grill Concepts IV, Ltd. (1454); Movie Grill Concepts IX, LLC (3736); Movie Grill Concepts VI, Ltd. (6895); Movie Grill Concepts VII, LLC (2291); Movie Grill Concepts X, LLC (6906); Movie Grill Concepts XI, LLC (2837); Movie Grill Concepts XII, LLC (6040); Movie Grill Concepts XIII, LLC (5299); Movie Grill Concepts XIV, LLC (4709); Movie Grill Concepts XIX, LLC (9646); Movie Grill Concepts XL, LLC (4454); Movie Grill Concepts XLI, LLC (4624); Movie Grill Concepts XLII, LLC (2309); Movie Grill Concepts XLIII, LLC (9721); Movie Grill Concepts XLIV, LLC (8783); Movie Grill Concepts XLV, LLC (2570); Movie Grill Concepts XV, LLC (4939); Movie Grill Concepts XVI, LLC (1033); Movie Grill Concepts XVII, LLC (1733); Movie Grill Concepts XVIII, LLC (8322); Movie Grill Concepts XX, LLC (7300); Movie Grill Concepts XXI, LLC (1508); Movie Grill Concepts XXII, LLC (6748); Movie Grill Concepts XXIV, LLC (5114); Movie Grill Concepts XXIX, LLC (5857); Movie Grill Concepts XXV, LLC (4985); Movie Grill Concepts XXVI, LLC (5233); Movie Grill Concepts XXVII, LLC (4427); Movie Grill Concepts XXVIII, LLC (1554); Movie Grill Concepts XXX, LLC (1431); Movie Grill Concepts XXXI, LLC (3223); Movie Grill Concepts XXXII, LLC (0196); Movie Grill Concepts XXXIII, LLC (1505); Movie Grill Concepts XXXIV, LLC (9770); Movie Grill Concepts XXXIX, LLC (3605); Movie Grill Concepts XXXV, LLC (0571); Movie Grill Concepts XXXVI, LLC (6927); Movie Grill Concepts XXXVII, LLC (6401); Movie Grill Concepts XXXVIII, LLC (9657); Movie Grill Concepts XXIII, LLC (7893); Studio Club, LLC (3023); Studio Club IV, LLC (9440); Movie Grill Concepts XI, LLC (2837); Movie Grill Concepts XLI, LLC (4624); Movie Grill Concepts XLVI, LLC (2344); Movie Grill Concepts XLVII, LLC (5866); Movie Grill Concepts XLVIII, LLC (8601); Movie Grill Concepts XLIX, LLC (0537); Movie Grill Concepts L, LLC (5940); Movie Grill Concepts LI, LLC (7754); Movie Grill Concepts LII, LLC (8624); Movie Grill Concepts LIII, LLC (3066); Movie Grill Concepts LIV, LLC (2018); Movie Grill Concepts LV, LLC (4699); Movie Grill Partners 3, LLC (4200); Movie Grill Partners 4, LLC (1363); Movie Grill Partners 6, LLC (3334); and MGC ManagementAll theaters operate under the brand name “Studio Movie Grill.”The Northwest Highway Lease was executed to be effective August 28, 2013 between Debtor Movie Grill Concepts XXI, LLC and EPT Dallas, LLC, a Delaware limited liability company.In re Thinking Machs. Corp., 67 F.3d 1021, 1028–29 (1st Cir. 1995) (acknowledging that a bankruptcy court “has the equi

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Frank J. Wright Texas Bar No. 22028800 Jeffery M. Veteto Texas Bar No. 24098548 Jay A. Ferguson Texas Bar No. 24094648 LAW OFFICES OF FRANK J. WRIGHT, PLLC 2323 Ross Avenue, Suite 730 Dallas, Texas 75201 Telephone: (214) 935-9100 COUNSEL TO DEBTORS AND DEBTORS-IN-POSSESSION, STUDIO MOVIE GRILL HOLDINGS, LLC, et al. IN THE UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION IN RE: § CASE NO. 20-32633-11 § STUDIO MOVIE GRILL HOLDINGS, LLC, § Chapter 11 et al.,1 § § DEBTORS. § Jointly Administered DEBTORS’ THIRD MOTION FOR ENTRY OF AN ORDER UNDER SECTION 365 AND 554 OF THE BANKRUPTCY CODE (I) AUTHORIZING THE DEBTORS TO REJECT CERTAIN UNEXPIRED COMMERCIAL REAL PROPERTY LEASE EFFECTIVE AS OF JANUARY 31, 2021; AND (II) GRANTING RELATED RELIEF 1 The Debtors in these Chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, include: Studio Movie Grill Holdings, LLC (6546) (“SMG Holdings”); OHAM Holdings, LLC (0966); Movie Grill Concepts Trademark Holdings, LLC (3096); Movie Grill Concepts I, Ltd. (6645); Movie Grill Concepts III, Ltd. (2793); Movie Grill Concepts IV, Ltd. (1454); Movie Grill Concepts IX, LLC (3736); Movie Grill Concepts VI, Ltd. (6895); Movie Grill Concepts VII, LLC (2291); Movie Grill Concepts X, LLC (6906); Movie Grill Concepts XI, LLC (2837); Movie Grill Concepts XII, LLC (6040); Movie Grill Concepts XIII, LLC (5299); Movie Grill Concepts XIV, LLC (4709); Movie Grill Concepts XIX, LLC (9646); Movie Grill Concepts XL, LLC (4454); Movie Grill Concepts XLI, LLC (4624); Movie Grill Concepts XLII, LLC (2309); Movie Grill Concepts XLIII, LLC (9721); Movie Grill Concepts XLIV, LLC (8783); Movie Grill Concepts XLV, LLC (2570); Movie Grill Concepts XV, LLC (4939); Movie Grill Concepts XVI, LLC (1033); Movie Grill Concepts XVII, LLC (1733); Movie Grill Concepts XVIII, LLC (8322); Movie Grill Concepts XX, LLC (7300); Movie Grill Concepts XXI, LLC (1508); Movie Grill Concepts XXII, LLC (6748); Movie Grill Concepts XXIV, LLC (5114); Movie Grill Concepts XXIX, LLC (5857); Movie Grill Concepts XXV, LLC (4985); Movie Grill Concepts XXVI, LLC (5233); Movie Grill Concepts XXVII, LLC (4427); Movie Grill Concepts XXVIII, LLC (1554); Movie Grill Concepts XXX, LLC (1431); Movie Grill Concepts XXXI, LLC (3223); Movie Grill Concepts XXXII, LLC (0196); Movie Grill Concepts XXXIII, LLC (1505); Movie Grill Concepts XXXIV, LLC (9770); Movie Grill Concepts XXXIX, LLC (3605); Movie Grill Concepts XXXV, LLC (0571); Movie Grill Concepts XXXVI, LLC (6927); Movie Grill Concepts XXXVII, LLC (6401); Movie Grill Concepts XXXVIII, LLC (9657); Movie Grill Concepts XXIII, LLC (7893); Studio Club, LLC (3023); Studio Club IV, LLC (9440); Movie Grill Concepts XI, LLC (2837); Movie Grill Concepts XLI, LLC (4624); Movie Grill Concepts XLVI, LLC (2344); Movie Grill Concepts XLVII, LLC (5866); Movie Grill Concepts XLVIII, LLC (8601); Movie Grill Concepts XLIX, LLC (0537); Movie Grill Concepts L, LLC (5940); Movie Grill Concepts LI, LLC (7754); Movie Grill Concepts LII, LLC (8624); Movie Grill Concepts LIII, LLC (3066); Movie Grill Concepts LIV, LLC (2018); Movie Grill Concepts LV, LLC (4699); Movie Grill Partners 3, LLC (4200); Movie Grill Partners 4, LLC (1363); Movie Grill Partners 6, LLC (3334); and MGC Management I, LLC (3224).

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Studio Movie Grill Holdings, LLC and its debtor affiliates (the “Debtors” or “SMG”) file this Third Motion for Entry of an Order Under Section 3654 and 554 of the Bankruptcy Code (I) Authorizing the Debtors to Reject Certain Unexpired Commercial Real Property Leases; and (II) Granting Related Relief (the “Motion”), seeking the entry of an order approving the rejection, as of the date of this Motion, of the lease described below. In support of this Motion, the Debtors would respectfully show the Court as follows: I. JURISDICTION AND VENUE 1. This Court has jurisdiction over this case pursuant to 28 U.S.C. §§ 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A). Venue is proper in this District pursuant to 28 U.S.C. § 1408. The statutory predicates for the relief requested herein are Sections 365(a) and 554(a) of Title 11 of the United States Code (the “Bankruptcy Code”) and Rule 6006 of the FEDERAL RULES OF BANKRUPTCY PROCEDURE (the “Bankruptcy Rules”). II. BACKGROUND 2. On October 23, 2020 (the “Petition Date”), the Debtors each filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (the “Bankruptcy Code”), thereby initiating the above-captioned bankruptcy cases (the “Chapter 11 Cases”). The Debtors continue to manage and operate their businesses as debtors-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. 3. An official committee of unsecured creditors has been appointed in these Chapter 11 Cases. No trustee or examiner has been requested or appointed in these Chapter 11 Cases. 4. SMG is engaged in the dine-in movie theater business. In addition to its movie offerings, SMG’s theaters include a bar and lounge area, with direct to seat service for guests before and during their movies. As of the Petition Date, SMG operated 33 movies theaters in 10 states,

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including Arizona, California, Florida, Georgia, Illinois, North Carolina, Pennsylvania, Texas, Indiana, and Virginia. All theaters operate under the brand name “Studio Movie Grill.” 5. A detailed description of the Debtors and their businesses, and the facts and circumstances supporting the Motion and the Debtors’ Chapter 11 Cases are set forth in greater detail in the Declaration of William Snyder, CRO of the Debtors, in Support of the Debtors’ Chapter 11 Petitions and First Day Motion (the “Snyder Declaration”),which was filed on the Petition Date and is incorporated by reference in this Motion. III. THE COMMERCIAL LEASE 6. The Debtors continue their efforts to preserve the maximum extent of their movie theater business through their Chapter 11 Cases. The Debtors have used this “breathing spell” afforded to them in Chapter 11 to navigate the ongoing national pandemic and negotiate with landlords. As part of this strategy, the Debtors have identified an additional lease that they now seek to rejection as of the filing of this Motion, as described below. A. The Northwest Highway Lease 7. The “Northwest Highway Lease” concerns a lease of real property consisting of a 56,430 square foot, 14 auditorium movie theater located at 10110 E. Technology Boulevard, Dallas, Texas 75220. 8. The Northwest Highway Lease was executed to be effective August 28, 2013 between Debtor Movie Grill Concepts XXI, LLC and EPT Dallas, LLC, a Delaware limited liability company. Studio Movie Grill Holdings, LLC is the Guarantor of the Spring Valley Lease. 9. As of the Petition Date, the movie theater location operating under the Northwest Highway Lease was open at limited capacity.

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IV. RELIEF REQUESTED & BASIS FOR RELIEF 10. On this Motion, the Debtors request the entry of an order substantially in the form attached hereto as Exhibit “A” that authorizes the Debtors to reject the commercial real property lease identified in Section III hereinabove (the “Lease”). 11. Within their business judgment, the Debtors have determined that the requested relief is the best course of action because the Lease is unnecessary to the administration of the Chapter 11 Cases and their continuation would be burdensome to their estates. 12. Bankruptcy Code Section 365(a) provides, in pertinent part that “the trustee, subject to the court’s approval, may assume or reject any executory contract or unexpired lease of the debtor.” 11 U.S.C. § 365(a). The general concept of rejection under Section 365 is that debtors may relieve themselves – and their bankruptcy estates – from burdensome, unprofitable contracts and leases for the purpose of preserving and maximizing the remaining value of the bankruptcy estate. See Stewart Title Gaur. Co. v. Old Rep. Nat’l Ins. Co., 83 F.3d 735, 741 (5th Cir. 1996) (noting that Bankruptcy Code § 365 “allows a trustee to relieve the bankruptcy estate of burdensome agreements which have not been completely performed.”) (quoting In re Murexco Petrol., Inc., 15 F.3d 60, 62 (5th Cir. 1994)). Bankruptcy Courts apply the business judgment standard to determine whether to approve a lease or contract rejection. See Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1309 (5th Cir. 1985) (quoting Grp. of Inst. Inv. v. Chi., Milwaukee, St. Paul & Pac. R.R. Co., 318 U.S. 523, 550 (1943) (“It is well established that ‘the question whether a lease should be rejected . . . is one of business judgment.’”). 13. The Debtors have determined, through an exercise of their sound business judgment, that rejecting the Lease is in the best interest of the Debtors’ estates and their creditors. This act of lease rejection is a key component of the Debtors’ efforts to maximize value and reorganize their

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businesses. Rejection of the Lease will prevent an economic drain on the Debtors’ limited financial resources. 14. Moreover, in the opinion of the Debtors the Lease has no capturable value through assumption and assignment to a third-party. The leased premise is a large footprint commercial space that is improved for use as a movie theater. Such leased premises cannot be readily converted to other commercially viable uses. Likewise, there is little current market for any assignment due to the continuing struggles in the movie theater industry. Therefore, the Lease does not warrant its continued carrying costs. 15. The Debtors request that the effective date of the rejection of the Lease be applied retroactively to the date Debtors vacated the premises. Substantial authority exists in support of rejection to the date the leased location is vacated. See In re Amber’s Stores, Inc., 193 B.R. 819, 827 (Bankr. N.D. Tex. 1996) (“nothing precludes a bankruptcy court, based on the equities of the case, from approving the trustee’s rejection of a non-residential real property lease retroactively to an earlier date.”); see also In re At Home Corp., 392 F.3d 1064, 1071 (9th Cir. 2004), cert. denied, 546 U.S. 814 (2005) (holding that a bankruptcy court, in exercising its equitable powers, may approve the retroactive rejection of a nonresidential real property lease; lease was rejected retroactively to date motion was filed where debtor never had possession of leased premises); In re Thinking Machs. Corp., 67 F.3d 1021, 1028–29 (1st Cir. 1995) (acknowledging that a bankruptcy court “has the equitable power, in suitable cases, to order a rejection to operate retroactively”); In re CCI Wireless, LLC, 279 B.R. 590, 595 (Bankr. D. Colo. 2002), aff’d, 297 B.R. 133 (D. Colo. 2003) (holding that retroactive rejection may be allowed when principles of equity so dictate and establishing the rejection effective as of the filing of the motion to reject).

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V. NOTICE 16. Notice of this Motion will be provided to the Debtors’ current complex service list (collectively, the “Notice Parties”). Based on the circumstances surrounding this Motion and the nature of the relief requested herein, the Debtors respectfully submit that no further notice is required. WHEREFORE, the Debtors respectfully request that this Court enter an Order (a) granting the Motion; and (b) awarding the Debtors such other and further relief as this Court may deem just and proper. DATED: February 5, 2021 Respectfully submitted, LAW OFFICES OF FRANK J. WRIGHT, PLLC By: /s / Frank J. Wright Frank J. Wright Texas Bar No. 22028800 Jeffery M. Veteto Texas Bar No. 24098548 Jay A. Ferguson Texas Bar No. 24094648 2323 Ross Avenue, Suite 730 Dallas, Texas 75201 Telephone: (214) 935-9100 Emails: frank@fjwright.law jeff@fjwright.law jay@fjwright.law COUNSEL TO DEBTORS AND DEBTORS-IN-POSSESSION, STUDIO MOVIE GRILL HOLDINGS, LLC, et al. CERTIFICATE OF SERVICE I certify that a true and correct copy of the forgoing document was served on the 5th day of February, 2021 by electronic transmission through the Court’s automated Case Management and Electronic Docketing System for the U. S. Bankruptcy Court for the Northern District of Texas. /s/ Jeffery M. Veteto Jeffery M. Veteto

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