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Full title: Application for administrative expenses Filed by Creditor Rice Lake Square, LLC Objections due by 3/8/2021. (Attachments: # 1 Proposed Order) (Cooley, Michael)

Document posted on Feb 14, 2021 in the bankruptcy, 6 pages and 1 tables.

Bankrupt11 Summary (Automatically Generated)

Rice Lake Square, LLC (“Rice Lake”), pursuant to Sections 503(b) and 365(d)(3) of title 11 of the United States Code, respectfully files this Request (the “Request”) for an order granting the allowance and payment of Rice Lake’s administrative expense claim in the amount set forth herein and respectfully states as follows: I. JURISDICTION AND VENUE 1. Debtor Movie Grill Concepts XIII, LLC (the “Debtor Tenant”) and Rice Lake Square, LLC are parties to that certain lease with respect to premises consisting of approximately 38,099 square feet more fully described in the Lease and being located in the shopping center commonly known as Rice Lake Square in Wheaton, Illinois (the “Lease”).Rice Lake respectfully requests that the Court enter an order for allowance and payment of its administrative priority claims in the amount set forth herein, for payment obligations arising or accruing under the Lease between the Petition Date and January 31, 2021 pursuant to Bankruptcy Code Sections 365(d)(3), 503(a), 503(b)(1)(A), and 507(a)(2). Thus, the plain language of Section 365(d)(3) and the relevant case law clearly requires the Debtors’ immediate payment of all rents and related charges that arise post-petition as administrative expenses of these estates.Rice Lake’s administrative expense claim against the Debtor Tenant’s estate under Sections 365(d)(3) and 503(b) of the Bankruptcy Code in the amounts set forth herein; and (ii) providing such other relief the Court deems just and necessary.

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Michael P. Cooley (SBN 24034388) REED SMITH LLP 2850 N. Hardwood Street, Suite 1500 Dallas, Texas 75201 T: 469.680.4200 F: 469.680.4299 mpcooley@reedsmith.com Attorney for Rice Lake Square, LLC IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION In re: § Chapter 11 § STUDIO MOVIE GRILL § HOLDINGS, LLC, et al. § Case No. 20-32633-11 § Debtor. § Jointly Administered APPLICATION OF RICE LAKE SQUARE, LLC FOR ALLOWANCE AND PAYMENT OF ADMINISTRATIVE EXPENSE CLAIMS NO HEARING WILL BE CONDUCTED HEREON UNLESS A WRITTEN RESPONSE IS FILED WITH THE CLERK OF THE UNITED STATES BANKRUPTCY COURT AT EARLE CABELL FEDERAL BUILDING, 1100 COMMERCE ST., RM. 1254, DALLAS, TX 75242-1496, BEFORE CLOSE OF BUSINESS ON MARCH 5, 2021, WHICH IS AT LEAST 21 DAYS FROM THE DATE OF SERVICE HEREOF. ANY RESPONSE SHALL BE IN WRITING AND FILED WITH THE CLERK, AND A COPY SHALL BE SERVED UPON COUNSEL FOR THE MOVING PARTY PRIOR TO THE DATE AND TIME SET FORTH HEREIN. IF A RESPONSE IS FILED A HEARING MAY BE HELD WITH NOTICE ONLY TO THE OBJECTING PARTY. IF NO HEARING ON SUCH NOTICE OR MOTION IS TIMELY REQUESTED, THE RELIEF REQUESTED SHALL BE DEEMED TO BE UNOPPOSED, AND THE COURT MAY ENTER AN ORDER GRANTING THE RELIEF SOUGHT OR THE NOTICED ACTION MAY BE TAKEN.

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Rice Lake Square, LLC (“Rice Lake”), pursuant to Sections 503(b) and 365(d)(3) of title 11 of the United States Code, respectfully files this Request (the “Request”) for an order granting the allowance and payment of Rice Lake’s administrative expense claim in the amount set forth herein and respectfully states as follows: I. JURISDICTION AND VENUE 1. This matter is a core proceeding under 28 U.S.C. § 157(b)(2) and this Court has jurisdiction over the Request pursuant to 28 U.S.C. § 157 and 28 U.S.C. § 1334. 2. Venue is proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409. II. BACKGROUND FACTS 3. On October 23, 2020 (the “Petition Date”), Studio Movie Grill Holdings, LLC and certain of its affiliates (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. 4. Debtor Movie Grill Concepts XIII, LLC (the “Debtor Tenant”) and Rice Lake Square, LLC are parties to that certain lease with respect to premises consisting of approximately 38,099 square feet more fully described in the Lease and being located in the shopping center commonly known as Rice Lake Square in Wheaton, Illinois (the “Lease”). 5. On January 21, 2021, the United States Bankruptcy Court for the Northern District of Texas (the “Court”) entered its Order Establishing an Administrative Claim Bar Date and Approving the Form and Manner of Notice Thereof [Docket No. 532] (the “Bar Date Order”). The Bar Date Order established the deadline for filing requests for payment of administrative claims incurred or arising on or before January 31, 2021.

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6. Under the terms of the Lease, the Debtor Tenant is required to make certain payments to Rice Lake arising out of its use and occupancy of the Premises. These payments include such items as rent and related charges, common area maintenance obligations, real property taxes, and all other charges imposed by the Lease, including year-end adjustments and reconciliations for charges that the Debtor Tenant pays on an estimated basis. The Debtor Tenant has not paid all obligations that have arisen or accrued during the post-petition period, and certain amounts remain due and owing for the period from and after the Petition Date through and including January 31, 2021. 7. Rice Lake is entitled to an administrative expense claim for such obligations in the amount of $126,400.37 as set forth in greater detail on Schedule 1 attached hereto, in addition to any indemnity obligations, amounts subject to setoff and/or recoupment, and/or attorneys’ fees.1 III. RELIEF REQUESTED 8. Rice Lake respectfully requests that the Court enter an order for allowance and payment of its administrative priority claims in the amount set forth herein, for payment obligations arising or accruing under the Lease between the Petition Date and January 31, 2021 pursuant to Bankruptcy Code Sections 365(d)(3), 503(a), 503(b)(1)(A), and 507(a)(2). IV. BASIS FOR THE RELIEF REQUESTED 9. Section 365(d)(3) provides that a debtor is required to “timely perform all the obligations of the debtor . . . arising from and after the order for relief under any unexpired lease of nonresidential real property, until such lease is assumed or rejected . . . .” 11 U.S.C. § 365(d)(3). See, e.g., Imperial Beverage Group, LLC, 457 B.R. 490, 497-500 (Bankr. N.D. Tex. 2011); In re Appletree Markets, Inc., 139 B.R. 417, 419-20 (Bankr. S.D. Tex. 1992). See also In re Simbaki, Ltd., Case No. 13-36878, 2015 BL 97167, *6 (Bankr. S.D. Tex. Apr. 6, 2015). 1 The amounts set forth herein cover amounts that accrued or were billed from the Petition Date through January 31, 2021 or date of this Request, as applicable. Rice Lake further reserves the right to assert claims for post-petition charges after January 31, 2021 and/or for any charges arising under the Lease in the appropriate forum to the extent not paid.

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10. The majority of courts that have considered the operation of Section 365(d)(3) have arrived at the same conclusion: costs and expenses incurred for post-petition, pre-assumption or rejection performance under an unexpired nonresidential real estate lease must be allowed as an administrative expense regardless of Section 503(b)(1)(A) limitations. Id. See also In re Liberty Outdoors, Inc., 205 B.R. 414, 417 (Bankr. E.D. Mo. 1997) (lessor entitled to recover unpaid expenses pursuant to section 365(d)(3) of the Bankruptcy Code regardless of whether such “expenses benefited or preserved the estate”); In re Worths Stores Corp., 135 B.R. 112, 115 (Bankr. E.D. Mo. 1991) (same); In re S. Lincoln Med. Grp., P.C., Case No. BK07-41636-TLS, 2008 WL 506086, at *2 (Bankr. D. Neb. Feb. 21, 2008) (citing In re Brewer, 233 B.R. 825, 829 (Bankr. E.D. Ark. 1999). Thus, the plain language of Section 365(d)(3) and the relevant case law clearly requires the Debtors’ immediate payment of all rents and related charges that arise post-petition as administrative expenses of these estates. 11. In addition, Section 503(b)(1) provides for an administrative expense claim for “the actual, necessary costs and expenses of preserving the estate. See 11 U.S.C. § 503(b)(1). A landlord’s administrative claim under Section 503(b)(1) is equal to the lease contract rate. In re ZB Co., Inc., 302 B.R. 316, 319 (Bankr. D. Del. 2003) (contract rate is presumed to be the fair rental value.). Section 507(a) of the Bankruptcy Code provides that administrative expense claims that are allowed under Section 503(b) of the Bankruptcy Code have first priority. See 11 U.S.C. § 507(a)(2). The Debtor Tenant benefited from the post-petition use and occupancy of the Premises, which the Debtor Tenant has continued to operate post-petition. 12. On the basis of the foregoing, Rice Lake respectfully requests that the Court enter an order allowing its administrative expense claim in the amount set forth in the attached Schedule 1 and accompanying supporting exhibits. Rice Lake makes this application to comply with the Court’s order and reserves its right to amend this application if further expenses are discovered. Rice Lake has made a good faith investigation to identify any and all such claims but given the circumstances of the case and the lack of access to the property, Rice Lake may in fact have additional claims that may become discovered later.

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WHEREFORE, Rice Lake respectfully request that the Court enter an Order: (i) awarding the allowance and payment of Rice Lake’s administrative expense claim against the Debtor Tenant’s estate under Sections 365(d)(3) and 503(b) of the Bankruptcy Code in the amounts set forth herein; and (ii) providing such other relief the Court deems just and necessary. Dated: February 15, 2021 Respectfully submitted, REED SMITH LLP By: /s/ Michael P. Cooley Michael P. Cooley (SBN 24034388) 2850 N. Harwood St., Ste. 1500 Dallas, Texas 75201 T: 469.680.4200 F: 469.680.4299 mpcooley@reedsmith.com Attorney for Rice Lake Square, LLC CERTIFICATE OF SERVICE The undersigned certifies that, on February 15, 2021, a true and correct copy of the foregoing document was served via the Court’s Electronic Case Filing (ECF) system upon all parties registered to receive electronic notices in this case, including the Debtors, the Office of the United States Trustee, and counsel for the Official Committee of Unsecured Creditors. /s/ Michael P. Cooley Michael P. Cooley

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SCHEDULE 1 Administrative Claim Amount
Table 1 on page 6. Back to List of Tables
Rent Amount
October (8 days) $ 17,980.05
November $ 69,672.68
December $ 69,672.68
January $ 69,672.68
Credits $ (100,597.72)
TOTAL: $126,400.37