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Full title: Motion to compel Payment of PACA, 503(b)(9) and Post-Petition Claims. Filed by Creditor U.S. Foods, Inc. Objections due by 3/8/2021. (Attachments: # 1 Exhibit # 2 Proposed Order) (Hirsch, Kyle)

Document posted on Feb 14, 2021 in the bankruptcy, 9 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

(“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 ManagementOn October 23, 2020 (the “Petition Date”), Movie Grill Concepts Trademark Holdings, LLC (“MGCT”) and several affiliates (collectively with MGCT, 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.Several post-petition invoices due by the Debtors will be unpaid as of the deadline for asserting administrative claims in the aggregate amount of $34,205.00 (the “Post-Petition Claim” and, collectively with the PACA Claim and the 503(b)(9) Claim, the “US Foods Priority Claims”). US Foods’ PACA Claim US Foods respectfully requests that this Court

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Tricia W. Macaluso (SBN 24013773) BRYAN CAVE LEIGHTON PAISNER LLP 2200 Ross Ave., Suite 3300 Dallas, Texas 75201 Telephone: 214/721-8150 tricia.macaluso@bclplaw.com Aaron Davis BRYAN CAVE LEIGHTON PAISNER LLP 161 North Clark Street Suite 4300 Chicago, Illinois 60601-3315 Telephone: 312/602 5135 aaron.davis@bclplaw.com Attorneys for U.S. Foods, Inc. IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION IN RE: § Case No. 20-32633-11 § STUDIO MOVIE GRILL § Chapter 11 HOLDINGS, LLC, et al.,1 § § (Jointly Administered) Debtors. § MOTION TO COMPEL ALLOWANCE AND IMMEDIATE PAYMENT OF POST-PETITION CLAIM AND 503(b)(9) CLAIM 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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PLEASE TAKE NOTICE THAT THE OBJECTION DEADLINE FOR THIS MOTION IS March 8, 2021. US Foods, Inc. (“US Foods”), by and through its undersigned counsel and for its Motion to Compel Allowance and Immediate Payment of PACA Claim, Post-Petition Claim and 503(b)(9) Claim (the “Motion”) states as follows: JURISDICTION 1. This court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. Venue is appropriate in this Court pursuant to 28 U.S.C. §§ 1408 and 1409. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). BACKGROUND FACTS 2. On October 23, 2020 (the “Petition Date”), Movie Grill Concepts Trademark Holdings, LLC (“MGCT”) and several affiliates (collectively with MGCT, 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”). 3. Prior to the Petition Date, US Foods supplied food and food-related products to the Debtors. Certain invoices of US Foods issued to the Debtors totaling $960,013.66 remained unpaid on the Petition Date (the “Pre-Petition Claim”). 4. Pursuant to that certain Master Distribution Agreement effective as of July 1, 2013, MGCT is liable as a co-primary obligor for the full amount due by the Debtors to US Foods (the “Agreement”).2 MGCT’s affiliate Debtors are liable pursuant to the invoices they received for each of their respective food deliveries. 2 The Master Distribution Agreement contains confidential and proprietary information. It may be made available upon request and after entry of an appropriate protective order.

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5. Among the delivered goods, US Foods delivered perishable agricultural commodities (the “Commodities”) to the Debtors, within the meaning ascribed to such term under the Perishable Agricultural Commodities Act, 7 U.S.C. § 499a, et seq. (“PACA”). The aggregate principal value of the Commodities which remain unpaid as of the Petition Date for the Debtors is not less than $93,100.45. A summary, including dates of each transaction, the Commodities and invoice price are attached hereto as Exhibit A.3 A attached summary is broken down by Debtor. All Commodities delivered by US Foods were inspected, approved and accepted by the Debtors at the point of delivery. As of the date of this Motion, the invoices for these Commodities remain due and owing (the “PACA Claim”). 6. US Foods timely preserved its interest in the statutory trust arising under PACA by including the relevant PACA language in each of its invoices to the Debtors. 7. Additionally, several shipments of goods from US Foods were received by the Debtors within 20 days of the Petition Date in the aggregate amount of $57,688.53 (the “503(b)(9) Claim”)4. A summary of invoices showing the amount of 503(b)(9) Claim due by the Debtors is attached hereto as Exhibit B. 8. US Foods continued to supplies goods to the Debtors post-petition. Several post-petition invoices due by the Debtors will be unpaid as of the deadline for asserting administrative claims in the aggregate amount of $34,205.00 (the “Post-Petition Claim” and, collectively with the PACA Claim and the 503(b)(9) Claim, the “US Foods Priority Claims”). A summary of invoices showing the amounts due by each of the Debtors is attached hereto as Exhibit C. 3 Because the invoices are voluminous and cannot be conveniently attached to this Motion, Exhibit A contains a summary of the invoices. Upon request, all invoices will be made available for examination or copying. 4 Some of the PACA Claims overlaps with the 503(b)(9) Claims in the amount of $4,435.52.

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ARGUMENT US Foods’ Priority Claims should be allowed in full, and the Debtors should be directed to make immediate payment of each of the claims as set forth below. US Foods’ PACA Claim US Foods respectfully requests that this Court direct the Debtors to comply with its obligations under PACA by directing Debtors to make full and immediate payment of US Foods’ PACA Claim. As set forth in detail below, it is well established that funds that are PACA trust funds are not property of the estate, are not subject to the Bankruptcy Code’s priority scheme, and are to be paid to PACA claimants ahead of the Debtors’ other creditors. The Debtors have an obligation to ensure that PACA trust funds are used first to satisfy all PACA claims, and such payment should not be delayed until a plan of reorganization. A. The Debtors’ Assets are Subject to a PACA Trust and Trust Assets are not Property of the Estate Section 499e(c)(2) defines the corpus of the PACA trust to be all produce, including all inventories of food or other products derived from produce and receivables or proceeds from the sale of produce or its products. See 7 U.S.C. § 499e(c)(2); see Bocchi Ams. Assocs. Inc. v. Commerce Fresh Marketing Inc., 515 F.3d 383, 388 (5th Cir. 2008) (stating “PACA creates, immediately upon delivery of the produce, a nonsegregated ‘floating’ trust in favor of unpaid sellers, which attaches to the products themselves and any proceeds”). The trust also extends to all inventory of a debtor gained from a commingled account, and to any other assets acquired with PACA trust funds. See 7 C.F.R. § 46.46(b); Frio Ice, S.A. v. Sunfruit, Inc., 918 F.2d 154, 159 (11th Cir. 1990). A PACA trust begins when perishable agricultural commodities are “received by a commissioned merchant, dealer or broker in all transactions . . . and exists ‘until full payment of the sums owing in connection with such transactions has been received by [all] unpaid suppliers,

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sellers or agents.’” 7 U.S.C. § 499e(c)(2). Thus, cash that the Debtors are now receiving from their accounts receivable is clearly impressed with the PACA trust, just as all cash the Debtors received in the past was also impressed with the PACA trust, as well as all other of the Debtors’ assets derived from PACA products. C. US Foods is Entitled to Immediate Payment of its PACA Claim Failure to maintain the PACA trust and make full payment promptly to the PACA trust beneficiaries is unlawful. 7 U.S.C. § 499b(4). Produce dealers “are required to maintain trust assets in a manner that such assets are freely available to satisfy outstanding obligations to sellers of perishable agricultural commodities[,]” and any act or omission inconsistent with this responsibility, including dissipation of trust assets, is proscribed. 7 CFR § 46.46(d)(1). Dissipation of trust assets, defined as the diversion of trust assets or the impairment of a seller’s right to obtain payment (7 CFR § 46.46[a][2]), is forbidden. 7 CFR § 46.46(d)(1) (emphasis added). When a produce buyer files for bankruptcy protection, the PACA trust assets are not part of the debtor’s estate. 11 U.S.C. § 541(d); 49 Fed. Reg. 45735, 45738; see In re Delta Produce, L.P., 845 F.3d 609, 613 (5th Cir. 2016) (“[PACA] trust assets are . . . insulated from the buyer’s bankruptcy estate). Therefore, so long as PACA creditors like US Foods remain unpaid, the Debtors, as PACA trustees, have a fiduciary duty to ensure that sufficient assets are made available to pay all sums owing under the PACA trust, even before payment to secured lienholders. 7 U.S.C. § 499e(c)(1). “The dissipation of PACA trust assets constitutes irreparable harm if it makes ultimate recovery unlikely.” Tanimura & Antle, Inc. v. Packed Fresh Produce, Inc., 222 F.3d 132, 140-41 (3rd Cir. 2000).

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Where, as here, the Debtors are continuing operations and using cash collateral belonging to PACA creditors, and the Debtors have failed to timely comply with their obligations under PACA, US Foods is entitled to the relief requested herein. Accordingly, US Foods is entitled to have its PACA Claim allowed in the amount of $93,100.45 from MGCT, and/or in the amounts from each of the Debtors as set forth in Exhibit B, and US Foods is demanding prompt payment thereof. US Foods’ 503(b)(9) Claim Pursuant to Section 503(b)(9) of the Bankruptcy Code, “[a]fter notice and a hearing, there shall be allowed administrative expenses . . . including . . . the value of any goods received by the debtor within 20 days before the date of commencement of a case under this title in which the goods have been sold to the debtor in the ordinary course of such debtor’s business.” The goods shipped to the Debtors were sold in the ordinary course of the Debtors’ businesses, and each of Debtors’ facilities received such goods within 20 days of the Petition Date. Accordingly, US Foods is entitled to have its 503(b)(9) Claim allowed in the amount of $57,688.53 from MGCT, and/or in the amounts from each of the Debtors as set forth in Exhibit C, and US Foods is demanding prompt payment thereof. US Foods’ Post-Petition Claim Pursuant to 503(b)(1) US Foods’ Post-Petition Claim is entitled to priority under Section 503(b)(1) of the Bankruptcy Code. Pursuant to Section 503(b)(1), “[a]fter notice and a hearing, there shall be allowed administrative expenses . . . including “the actual, necessary costs and expenses of preserving the estate.” To qualify as an administrative expense, the expense must arise from a post-petition transaction with the Debtor, and such expense must have benefited the Debtor in the operation of

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its business and it must have been actual and necessary. See, e.g., In re Jack/Wade Drilling, Inc., 258 F.3d 385, 387 (5th Cir. 2001); see also Nabors Offshore Corp. v. Whistler Energy II, L.L.C. (In re Whistler Energy II, L.L.C.), 931 F.3d 432, 442 (5th Cir. 2019) (“Administrative priority serves ‘to encourage third parties to provide necessary goods and services to the debtor-in-possession so that it can continue to conduct its business, thus generating funds from which prepetition creditors can be paid.’”) (citations omitted). A. The Post-Petition Claim Arose from Post-Petition Transactions with the Debtors. MGCT and its affiliate Debtors are in the dine-in movie theater business. US Foods was a primary vendor of food to these facilities prepetition. Subsequent to the Petition Date, invoices were generated and issued to certain of the Debtors, and each of those Debtors accepted the goods on their respective invoices. MGCT is liable for all amounts due to US Foods as discussed herein. Accordingly, the Post-Petition Claim arose from transactions with the Debtors. B. The Post-Petition Transactions Were Actual and Necessary and Benefited the Debtors in the Operations of their Businesses. The draw of the Debtors’ business model is to provide a dine-in entertainment. The dine-in movie experience is what distinguishes the Debtors from other movie theaters. US Foods provides the goods required for the Debtors to optimize the dine-in experience. In other words, US Foods provides goods for the ongoing, post-petition operation of the Debtors. Administrative expense claim priority is given to those that provide such post-petition services to a debtor-in-possession to, among other things, encourage continued transactions with a bankrupt debtor. Because the goods supplied by US Foods to the Debtors were necessary to the Debtors’ business operations and were used by the Debtors, US Foods has directly and substantially benefitted the estate, and should be compensated for such benefits. At the very least, US Foods provided goods that preserved the estate’s assets for later disposition of such assets. Accordingly,

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US Foods is entitled to an allowed administrative claim under section 503(b)(1) of the Bankruptcy Code against MGCT in the amount not less than $34,205.00, and/or in the amounts from each of the Debtors as set forth in Exhibit D, and US Foods is demanding prompt payment thereof. US Foods reserves the right to assert any and all other claims of whatever kind or nature that it has, or it may have, against the Debtors arising pre or post-petition. The filing of this Motion is not (i) a waiver or release of any claims or rights of US Foods against any other person or entity relating to these shipments; (ii) an election of remedies; or (iii) a waiver of any past, present or future defaults. WHEREFORE, based on the foregoing, US Foods respectfully requests that the Court enter an order (1) declaring its PACA Claim in the amount of $93,100.45 against MGCT and its affiliate Debtors be allowed in full; (2) declaring its 503(b)(9) Claim in the amount of $57,688.53 against MGCT and its affiliate Debtors be allowed in full; (3) declaring its Post-Petition Claim in the amount of $34,205.00 against MGCT and its affiliate Debtors be allowed in full; (4) directing MGCT and its affiliate Debtors to make immediate full payment of the US Foods Priority Claims; and (5) awarding US Foods such other and further relief as the Court deems just and proper.

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Dated: February 15, 2021 Respectfully submitted, BRYAN CAVE LEIGHTON PAISNER LLP By: /s/ Tricia W. Macaluso Tricia W. Macaluso (SBN 24013773) 2200 Ross Ave., Suite 3300 Dallas, Texas 75201 Telephone 214-721-8150 Facsimile 214-721-8000 tricia.macaluso@bclplaw.com BRYAN CAVE LEIGHTON PAISNER LLP Aaron Davis 161 North Clark Street,Suite 4300 Chicago, Illinois 60601-3315 Telephone 312-602-5135 Facsimile 312-698-7535 aaron.davis@bclplaw.com ATTORNEYS FOR U.S. FOODS, INC. CERTIFICATE OF SERVICE I do hereby certify that a true and correct copy of the foregoing has been served upon the parties listed below via the Court’s ECF System on this the 15th day of February 2021 Frank Wright US Trustee 2323 Ross Ave #730 1100 Commerce Street, Room 976 Dallas, TX 75201 Dallas, TX 75202 /s/ Tricia W. Macaluso Tricia W. Macaluso