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Full title: Objection by Creditor Illiana Realty LLC to 175 Motion to sell property free and clear of liens, 178 Document. An affidavit or verification, Proof of service. (Lallier, Cameron) (Entered: 03/10/2021)

Document posted on Mar 9, 2021 in the bankruptcy, 21 pages and 0 tables.

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UNITED STATES BANKRUPTCY COURT DISTRICT OF MINNESOTA In Re: Case No.: 21-30037 Tea Olive I, LLC d/b/a Stock+Field, Chapter 11 Debtor. OBJECTION OF ILLIANA REALTY, LLC TO MOTION FOR AN ORDER (I) GRANTING EXPEDITED RELIEF, (II) APPROVING SALE FREE AND CLEAR OF LIENS AND INTERESTS, AND (III) APPROVING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN CONTRACTS AND LEASES Illiana Realty, LLC (“Landlord”), by and through undersigned counsel, submits this Objection (the “Objection”) to Debtor’s Motion For An Order (I) Granting Expedited Relief, (II) Approving Sale Free And Clear Of Liens And Interests, And (III) Approving The Assumption And Assignment Of Certain Contracts And Leases (the “Motion”). Landlord respectfully represents as follows: Background McHenry Store 1. Landlord and Debtor are parties to that certain Real Estate Lease Agreement dated as of July 31, 2020 (the “McHenry Store Lease”), pertaining to that certain retail facility located at 1860 N. Richmond Road, McHenry, IL 60051 (the “McHenry Store”), more particularly described in the McHenry Store Lease. A true and accurate copy of the McHenry Store Lease is attached hereto as Exhibit A. 2. The Term of the McHenry Store Lease is month-to-month. Matthew Whebbe (“Guarantor”) guaranteed Debtor’s performance under the McHenry Store Lease.

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3. Pursuant to the McHenry Store Lease, the amount due on the first of each month during the Term is $27,183.59, consisting of $20,000.00 in base rent, plus $7,183.59 in real estate taxes. 4. The McHenry Store Lease is listed as a lease to be assumed and assigned in the Motion. (See Ex. 1 to the Motion). Cure Amount 5. The Cure Amount listed for the McHenry Store Lease in the Motion is $2,000.00. (See Ex. 1 to the Motion). This figure is incorrect. 6. In fact, the following amounts are due and unpaid under the McHenry Store Lease: Pre-Petition Amounts Due: Rent due January 1, 2021= $20,000.00 Tax payment due January 1, 2021 = $ 7,183.59 Total Pre-Petition Amounts Due = $27,183.59 Post-Petition Amounts Due: Tax payment due February 1, 2021 = $ 7,183.59 Rent due March 1, 2021= $20,000.00 Tax payment due March 1, 2021 = $ 7,183.59 Total Post-Petition Amounts Due = $34,367.18 Total Amounts Due = $61,550.77 7. Based on the above, the total amount due from Tenant to Landlord to cure Tenant’s defaults under the McHenry Store Lease as of the date of this Objection is $61,550.77. In addition, Landlord is also entitled to seek payment of late fees (12%), attorneys’ fees, and costs in addition to this amount. 8. If the Cure Amount stated in the Motion is amended to $61,550.77, plus interest, fees and costs as provided in the McHenry Store Lease, Landlord will withdraw its objection to the Motion.

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North Jefferson Warehouse 9. Landlord and Debtor were previously parties to that certain Real Estate Lease Agreement dated as of August 7, 2020 (the “North Jefferson Warehouse Lease”), pertaining to that certain warehouse facility located at 1201 N. Jefferson St., Watseka, IL 60970 (the “North Jefferson Warehouse”), more particularly described in the North Jefferson Warehouse Lease. 10. The North Jefferson Warehouse Lease is listed as a lease to be assumed and assigned in the Motion. (See Ex. 1 to the Motion; listed as “Distribution Center -53 Store Lease”). 11. This Court entered an order pursuant to 11 U.S.C. § 365 on February 11, 2021, authorizing the Debtor to reject the North Jefferson Warehouse Lease and stating that the Debtor’s rejection of the North Jefferson Warehouse Lease was effective as of January 25, 2021. 12. The North Jefferson Warehouse Lease cannot be assumed or assigned pursuant to 11 U.S.C. § 365. 13. Jerry L. Gibbs, Manager of Landlord, is prepared to testify regarding the allegations set forth in this Objection. Argument In order to assume an executory contract, the Debtor must (a) cure or provide adequate assurance that the Debtor will promptly cure any defaults existing under the executory contract; (b) compensate (or provide adequate assurance that the Debtor will promptly compensate) the other party to the contract or lease for any actual pecuniary loss to such party resulting from the default; and (c) provide adequate assurance of future performance under the contract or lease. 11 U.S.C. § 365(b)(1).

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Both pre- and post-petition defaults must be cured. In re Pacific Express, Inc., 780 F.2d 1482 (9th Cir. 1986). Both monetary and non-monetary defaults must be cured. In re Windmill Farm, Inc., 841 F.2d 1467 (9th Cir. 1988). What constitutes prompt cure of existing defaults is dependent on the facts of each case. Most courts compare the time period for cure with the remaining term of the lease or contract; the closer the cure period to the remaining term of the lease or contract; the less likely the cure is prompt. In re Berkshire Chemical Haulers, Inc., 20 B.R. 454 (Bankr. D. Mass. 1982). What constitutes adequate assurance of prompt cure or future performance will depend on the fact of each particular case. Adequate assurance is not defined by the code nor in the legislative history of §365. Congress while discussing the assumption issue under § 365(b) provided the following explanation for adequate assurance: “if a trustee is to assume a contract or lease, the courts will have to ensure that the trustee’s performance under the contract or lease gives the other contracting party the full benefit of the bargain.” H.R. Rep. No. 595, 95th Cong., 2d Sess. at 348 (1978). Congress entrusted the courts with the development of the definition of adequate assurance of future performance under contracts and other leases. The phrase “adequate assurance of future performance” used in the bankruptcy code are not “words of art”, but are to be given practical, pragmatic construction. Matter of U.L. Radio Corp., 19 B.R. 537, 542 (Bankr. S.D.N.Y. 1982). The primary factor courts consider is whether the debtor has the ability to satisfy the financial obligations under the contract. The courts do not look to a guarantee of payment or profitability of the debtor but whether it appears that the debtor can meet the contract obligations going forward. In re Westview 74th Street Drug Corp., 59 B.R. 747 (Bankr. S.D.N.Y. 1986). Courts will normally look to the debtor’s cash flow projections, availability of other

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sources of revenue and the debtor’s past history in analyzing the adequate assurance standards. Bachakiam v. Musikahn Corp., 69 B.R. 55 (E.D.N.Y. 1986); Matter of WesMac Computer Systems, Inc., 59 B.R. 86 (Bankr. D. N.J. 1986). Here the Debtor has failed to provide Landlord with sufficient evidence of its ability to cure the Lease. Conclusion Landlord objects to the provisions of the Motion as outlined above and requests that the Court approve the Motion only with the revisions as requested herein and awards Landlord such other relief as is just and equitable. Respectfully submitted, ILLIANA REALTY, LLC By: /s/ Cameron A. Lallier One of its attorneys Thomas J. Lallier (#163041) Cameron A. Lallier (#393213) FOLEY & MANSFIELD, P.L.L.P. 250 Marquette Avenue, Suite 1200 Minneapolis, MN 55401 (612) 338-8788 (Telephone) (612) 338-8690 (Facsimile) AND Janaki Nair, IL Bar No. 6278112 (admitted pro hac vice) Elias, Meginnes & Seghetti, P.C. 416 Main Street, Suite 1400 Peoria, Illinois 61602 Telephone: (309) 637-6000 Facsimile: (309) 637-8514 jnair@emrslaw.com 921-0158

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Unsworn Affidavit of Service STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) I, Jacquelyn J. LaVaque, declare under penalty of perjury that on March 10, 2021, I caused notice of the filing of the following document: OBJECTION OF ILLIANA REALTY, LLC TO MOTION FOR AN ORDER (I) GRANTING EXPEDITED RELIEF, (II) APPROVING SALE FREE AND CLEAR OF LIENS AND INTERESTS, AND (III) APPROVING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN CONTRACTS AND LEASES to be served on interested parties requesting notice through the Court’s CM/ECF system. Executed on: March 10, 2021 Signed: /e/ Jacquelyn J. LaVaque Jacquelyn J. LaVaque Foley & Mansfield, P.L.L.P. 250 Marquette Avenue, Suite 1200 Minneapolis, MN 55401