Full title: Order Granting Motion to sell property free and clear of liens and approving the assumption and assignment of unexpired leases and executory contracts.(Related Doc # 175) (Whitney MNB) (Entered: 03/15/2021)
Document posted on Mar 14, 2021 in the bankruptcy, 13 pages and 0 tables.
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MINNESOTA
Case No.: 21-30037
Tea Olive I, LLC d/b/a Stock+Field,
Chapter 11 Case
ORDER (I) GRANTING EXPEDITED RELIEF, (II) APPROVING SALE FREE AND CLEAR, AND (III) APPROVING THE ASSUMPTION AND ASSIGNMENT OF UNEXPIRED LEASES AND EXECUTORY CONTRACTS
This case came before the court on the Debtor’s Motion for an Order (I) Granting Expedited Relief, (II) Approving Sale Free and Clear, and (III) Approving the Assumption and Assignment of Certain Contracts and Leases (“Sale Motion”).1 Based on the Sale Motion, the arguments of counsel, all the files, records and proceedings herein, the court being advised in the premises, and for those reasons stated orally and recorded in open court following the close of evidence:
IT IS FOUND AND DETERMINED THAT:2
A. This court has jurisdiction to hear and determine the Sale Motion pursuant to28 U.S.C. §§ 157 and 1334 and Local Rule 1070-1.
B. Venue of this case (the “Chapter 11 Case”) in this district is proper pursuant to28 U.S.C. §§ 1408 and 1409(a).
1 All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Sale Motion or the APA, as applicable.
2 Findings of fact shall be construed as conclusions of law and conclusions of law shall be construed as findings of fact when appropriate. See Bankruptcy Rule 7052.
C. Determination of the Sale Motion is a core proceeding under 28 U.S.C.
§ 157(b)(2)(A) and (N). The statutory predicates for the relief requested herein are sections 105,363, and 365 of the Bankruptcy Code and Bankruptcy Rules 2002, 6004, 6006, 9007, 9008 and 9014.
D. This order (the “Sale Approval Order”) constitutes a final order within themeaning of 28 U.S.C. § 158(a). Notwithstanding Bankruptcy Rules 6004(h) and 6006(d), and to any extent necessary under Bankruptcy Rule 9014 and Rule 54(b) of the Federal Rules of Civil Procedure, as made applicable by Bankruptcy Rule 7054, the court expressly finds that there is no just reason for delay in the implementation of this Sale Approval Order, and expressly directs entry of judgment as set forth herein.
E. Cause exists to grant expedited relief.
F. On February 26, 2021, the Debtor served the Sale Notice [Dkt No. 177] asdemonstrated by the certificate of service filed as Dkt. No. 203 thereby providing what appears to be due and proper notice of the Sale Motion. No other or further notice of the Sale appears to be required.
G. The Debtor served the Assumption and Assignment Notice [Dkt. No. 178], theFirst Supplemental Assumption and Assignment Notice [Dkt. No. 180], the Second Supplemental Assumption and Assignment Notice [Dkt. No. 190], and the Third Supplemental Assumption and Assignment Notice [Dkt. No. 191] as demonstrated by the certificates of service filed as Dkt. Nos. 204, 205, 213 and 216 thereby providing what appears to be due and proper notice of the intended assumption and assignment executory contracts or unexpired leases and any Cure Amounts. Adequate notice and opportunity to be heard appears to have been provided to parties to executory contracts and unexpired leases to be assumed and assigned pursuant to this
Sale Approval Order, including to the Cure Amount. No other or further notice of the assumption and assignment of the Assumed Contracts appears to be required.
H. Based upon the foregoing and the certificates of service filed with the court, due,proper, timely, adequate and sufficient notice of the Sale Motion, the Sale Approval Hearing, the sale (the “Sale”) of the Acquired Assets to R.P. Acquisition Corporation (the “Purchaser”) pursuant to that certain Asset Purchase Agreement dated March 2, 2021 (the “APA”), filed as Dkt. No. 181, and the proposed assumption and assignment of the Assumed Contracts appears to have been provided in accordance with sections 102(1), 363(b) and 365 of the Bankruptcy Code, Bankruptcy Rules 2002, 6004, 6006, 9007, 9008 and 9014 and Local Rules 2002-1, 2002-4, 6004-1, 9013-2 and 9013-3.
I. The APA represents a fair and reasonable offer to purchase the Acquired Assetsunder the circumstances of this Chapter 11 Case. The Debtor has demonstrated compelling circumstances, good, sufficient and sound business purposes for the Sale of the Acquired Assets pursuant to section 363(b) of the Bankruptcy Code. The Sale of the Acquired Assets pursuant to the APA constitutes a reasonable and sound exercise of the Debtor’s business judgment.
J. On March 2, 2021, the Court ordered the appointment of a consumer privacyombudsman pursuant to section 332 of the Bankruptcy Code in connection with the Sale of consumer personally identifiable information, as such term is defined in section 101 of the Bankruptcy Code (“PII”) [Dkt. No. 179]. On March 4, 2021, the United States Trustee appointed Luis Salazar as the consumer privacy ombudsman (the “Ombudsman”) [Dkt. No.
183]. On March 12, 2021, the Ombudsman filed his Consumer Privacy Ombudsman’s Report (the “Ombudsman Report”), recommending that the Court approve the Sale of the PII [Dkt. No.
212]. After giving due considerations to the facts, circumstances, and conditions of the Sale,
including the Ombudsman Report, and finding that no showing was made that the Sale would violate applicable nonbankruptcy law, the Debtor is authorized to sell the PII pursuant to section 363(b)(1)(B) of the Bankruptcy Code.
K. Upon entry of this Sale Approval Order, the Debtor (i) has full corporate or otherpower to execute, deliver and perform its obligations under the APA and all other documents contemplated thereby or entered into in connection therewith, and (ii) has taken all action necessary to authorize and approve the APA and such other documents contemplated thereby and the consummation by them of the transactions contemplated thereby or entered into connection therewith.
L. The Debtor is authorized to sell and transfer the Acquired Assets free and clear ofall Liens, Claims, Encumbrances and Interests (as that term is defined in paragraph 8 hereof) pursuant to the APA because it has satisfied the requirements of section 363(f) of the Bankruptcy Code.
M. Those holders of Liens, Claims, Encumbrances and Interests against the Debtor,its estate or in respect of any of the Acquired Assets who did not object, or who withdrew their objections, to the Sale or the Sale Motion are deemed to have consented to the Sale pursuant to section 363(f)(2) of the Bankruptcy Code.
N. Except for the Assumed Liabilities, the transfer of the Acquired Assets to thePurchaser, and assumption and assignment to the Purchaser of the Assumed Contracts, will not subject the Purchaser to any Lien, Claim, Encumbrance and Interest whatsoever with respect to the operation of the Debtor’s business prior to the Closing Date to the maximum extent provided by section 363(f) of the Bankruptcy Code.
O. The APA was negotiated, proposed and entered into by the parties in good faith,from arms’ length bargaining positions and there is no evidence of collusion within the meaning of section 363(m) of the Bankruptcy Code. As a result of the foregoing, Debtor and Purchaser are entitled to the protections of section 363(m) of the Bankruptcy Code with respect to all aspects of the APA. Purchaser is not an “insider” of Debtor, as that term is defined in section 101(31) of the Bankruptcy Code. Moreover, there is no evidence that any of Purchaser, Debtor, or any other party has engaged in any conduct that would cause or permit the APA to be avoided under section 363(n) of the Bankruptcy Code.
P. The Debtor has demonstrated that it is an exercise of its sound business judgmentto assume and assign the Assumed Contracts, as described on Schedule 2.1(c) to the APA, filed as pages 4-6 of Dkt. No. 200 (“Schedule 2.1(c)”), including any amendments or modifications to such Schedule as agreed to by the Debtor and Purchaser pursuant to the APA, in connection with the consummation of the Sale of Acquired Assets, and the assumption and assignment of the Assumed Contracts is in the best interests of the Debtor, its estate, its creditors and its equity holders. Upon the Closing, Purchaser shall be deemed to have assumed only the Assumed Liabilities. Except with respect to the Assumed Liabilities, the Closing and the consummation of the transactions contemplated by the APA shall not, by reason of such Closing and transactions, subject Purchaser to any liability whatsoever for claims against Debtor with respect to the operation of the business of Debtor before the Closing Date. For the avoidance of doubt, and notwithstanding anything in the APA to the contrary, only those agreements identified on Schedule 2.1(c) shall constitute Assumed Contracts; the agreements identified on Schedule 1.1-AL do not constitute Assumed Contracts.
Q. All amounts which are required to be paid in connection with the assumption andassignment of the Assumed Contracts pursuant to the APA are as follows: the Cure Amounts, if any, set forth on Schedule 2.1(c) and due or owing under sections 365(b)(1)(A) and (B) and 365(f)(2)(A) of the Bankruptcy Code shall be paid by the Purchaser, subject to the terms and conditions of the APA. Counterparties to the Assumed Contracts have received adequate assurance of future performance under the Assumed Contracts within the meaning of sections 365(b)(1)(C) and (f)(2)(B) of the Bankruptcy Code. Accordingly, the Debtor has satisfied the requirements of sections 365(b)(1) and section 365(f)(2) of the Bankruptcy Code with respect to the Assumed Contracts identified in the APA.
R. In the absence of a stay pending appeal, Purchaser will be acting in good faithpursuant to Bankruptcy Code § 363(m) in closing the transactions contemplated by the APA at any time on or after the entry of this Order. The Court being satisfied that (i) no objections have been raised of a nature that should prevent the immediate entry of this Order, (ii) the APA contains deadlines with which the parties must comply, and (iii) the transfer of the Acquired Assets without delay beyond a time selected by the parties will help preserve the value of the Acquired Assets for Purchaser and Debtor’s estate, the Court finds cause to lift the stays provided in Bankruptcy Rules 6004(h) and 6006(d).
IT IS ORDERED:
1. The request for expedited relief is granted.
2. The Sale Motion is granted to the extent set forth herein.
3. All objections to the Sale Motion or the relief requested therein that have not beenwithdrawn, waived, or settled, including all reservations of rights included therein, which are not otherwise provided for by this Sale Approval Order, are overruled.
4. Notice of the Sale Approval Hearing appears to have been fair and equitableunder the circumstances and appears to have complied in all respects with sections 102(1), 105, 363 and 365 of the Bankruptcy Code, Bankruptcy Rules 2002, 6004, 6006, 9007, 9008 and 9014 and Local Rules 2002-1, 2002-4, 6004-1, 9013-2 and 9013-3.
Approval of the APA
5. The APA and all ancillary documents are approved.
6. The Sale of the Acquired Assets to Purchaser pursuant to the APA is authorizedunder sections 363 and 365 of the Bankruptcy Code and the entry of the Debtor into the APA is approved.
7. Pursuant to section 363(b) of the Bankruptcy Code, the Debtor is authorized toexecute and to fully perform under the APA, together with all additional instruments and documents that may be reasonably necessary, and to take all further actions as may be reasonably requested by the Purchaser for the purpose of transferring any or all of the Acquired Assets and perform the obligations of the Debtor under the APA, including effectuating amendments to the APA.
Transfer of the Acquired Assets
8. Except to the extent set forth in the APA, pursuant to sections 105, 363 and 365 ofthe Bankruptcy Code, the Acquired Assets shall be transferred to the Purchaser in accordance with the APA and such transfer shall constitute a legal, valid, binding, and effective transfer of such Acquired Assets and shall vest Purchaser with title to the Acquired Assets, free and clear of
all Liens (as defined in the section 101(37) of the Bankruptcy Code), Claims (as defined in section 101(5) of the Bankruptcy Code), encumbrances, and other interests to the maximum extent of section 363(f) of the Bankruptcy Code (the foregoing collectively referred to as “Liens, Claims, Encumbrances and Interests” herein, provided, however, that throughout this Sale Approval Order the term “Liens, Claims, Encumbrances and Interests” shall not include Assumed Liabilities, except as otherwise set forth in the APA). All Liens, Claims, Encumbrances and Interests that are released, terminated and discharged as to the Acquired Assets shall attach to the sale proceeds to the extent applicable with the same validity, force and effect which they now have as against the Debtor, its estate or the Acquired Assets. The sole and exclusive right and remedy available to purported creditors, equity holders, including, without limitation, equity holders of the Debtor, holders of any other Liens, Claims, Encumbrances and Interests, and parties in interest shall be a right to assert Liens, Claims, Encumbrances and Interests against the Debtor’s estate.
9. All persons and entities are permanently barred from commencing or continuingany action or other proceeding of any kind against the Acquired Assets or the Purchaser and its successors or assigns with respect to any Liens, Claims, Encumbrances and Interests arising prior to the Closing Date. The sole and exclusive right and remedy available to any Person who asserts any Liens, Claims, Encumbrances and Interests in any way related to the Acquired Assets arising prior to the date of Closing shall be a right to assert such Liens, Claims, Encumbrances and Interests against the Debtor’s estate. If the proposed Sale fails to close for any reason, then Liens, Claims, Encumbrances and Interests shall continue against the Acquired Assets unaffected by this Sale Approval Order. As of the Closing, the Purchaser shall have any and all rights, claims, defenses and offsets held by Debtor and the estate with respect to Assumed Liabilities.
10. Except for the Assumed Liabilities as set forth in the APA, the transfer of theAcquired Assets pursuant to this Sale Approval Order shall not subject the Purchaser to any liability with respect to any obligations incurred in connection with, or in any way related to the Acquired Assets, prior to the date of Closing or by reason of such transfer under the laws of the United States, any state, territory, or possession thereof, or the District of Columbia, based, in whole or in part, directly or indirectly, on any theory of law or equity, including, without limitation, any theory of equitable subordination or successor or transferee liability.
Assumption and Assignment to Purchaser of Assumed Contracts 11. Pursuant to sections 105(a) and 365 of the Bankruptcy Code, and subject to andconditioned upon the Closing of the Sale, the Debtor’s assumption and assignment to the Purchaser of the Assumed Contracts is approved.
12. The Debtor is authorized to execute and deliver to the Purchaser such documentsor other instruments as may be necessary to assign and transfer the Assumed Contracts to the Purchaser.
13. In the event that an Assumed Contract is added to the APA after the date of thisSale Approval Order, non-debtor parties shall be given fourteen (14) days’ notice of the proposed assumption and assignment and any Cure Amounts and a right to object thereto.
Approval of Transition Services Agreement
14. The Debtor’s entry into and performance under the Transition ServicesAgreement is approved pursuant to 11 U.S.C. § 363 as a sound exercise of the Debtor’s business judgment.
15. The transaction contemplated by the APA is undertaken by the Purchaser in goodfaith, as that term is used in section 363(m) of the Bankruptcy Code, and accordingly, the Purchaser is a purchaser in good faith of the Acquired Assets and is entitled to all of the protections afforded by section 363(m) of the Bankruptcy Code.
16. The consideration provided by the Purchaser for the Acquired Assets under theAPA (i) shall be deemed to constitute reasonably equivalent value and fair consideration to the fullest extent provided by applicable law, including the Bankruptcy Code, Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act, and Uniform Voidable Transactions Act, and (ii) is fair and reasonable and may not be avoided under section 363(n) or any other provision of the Bankruptcy Code, or otherwise. All entities presently or on the Closing Date that may be in possession of some or all of the Acquired Assets are directed to surrender possession of the Acquired Assets to Purchaser on or before the Closing Date.
17. Except as otherwise specifically provided for in this Sale Approval Order and inthe APA, the Purchaser and its employees, officers, directors, advisors, affiliates, owners, successors and assigns shall have no liability or responsibility for any liability or other obligation of the Debtor or the estate arising under or related to the Acquired Assets or other assets, operations, activities, or businesses of Debtor to the fullest extent of applicable law, including but not limited to under any theory of successor or vicarious liability, de facto merger or substantial continuity.
regulations governing the transfer, storage, maintenance, and access to the PII; (b) notify any consumer whose PII is being sold and transferred to the Purchaser by posting on Purchaser’s website or notifying customers in any initial contact email or communication; (c) provide consumers with an opportunity to opt-out from having their information used by the Purchaser as part of the notification process, to the extent required by law; and (d) file a certification within 30 days of the entry of this Sale Approval Order confirming the Purchaser’s compliance with these conditions.
19. This Court retains exclusive jurisdiction to (i) interpret, enforce and implementthe terms and provisions of the APA, all amendments thereto, any waivers and consents thereunder, and each of the agreements executed in connection therewith, (ii) compel delivery of the Acquired Assets to the Purchaser, (iii) resolve any disputes arising under or related to the APA and related agreements, except as otherwise provided therein, (iv) enjoin and adjudicate the assertion of any Liens, Claims, Encumbrances and Interests against the Purchaser or in respect of the Acquired Assets, and (v) interpret, implement and enforce the provisions of this Sale Approval Order.
20. As of the Closing, all agreements and all orders of this court entered prior to thedate hereof shall be deemed amended or modified solely to the extent required to permit the consummation of the transactions contemplated by this Sale Approval Order and the APA.
21. The APA and any related agreements, documents or other instruments may bemodified, amended or supplemented by the parties thereto in accordance with the terms thereof without further order of the court, provided that any such modification, amendment or supplement is not materially less favorable to the Debtor. In the event a modification is materially less favorable to the Debtor, the Debtor shall file and serve a notice of such
modification. If no party-in-interest filed a written objection with the court within five (5) business days, such modification shall be deemed approved without further order of the court, but the court may enter any such further order as may be necessary.
22. The Official Committee of Unsecured Creditors reserves all Challenge rights, asand to the extent provided in the Final Order (I) Authorizing Use of Cash Collateral; (II) Affording Adequate Protection; and (III) Modifying Automatic Stay [ECF No. 144] (the “Final Cash Collateral Order”), with respect to the validity, extent, priority, or perfection of the security interests, and liens of the Prepetition Secured Parties, as defined in the Final Cash Collateral Order, in the titled vehicles that constitute Acquired Assets and the proceeds thereof.
23. The Purchaser shall provide the Debtor and any successor trustee access to theserver(s), or copies thereof, that are included in the Acquired Assets.
24. Notwithstanding Section 6.11(a) of the APA, the Purchaser shall have no recourseagainst the Debtor or its estate for any breach of Section 4.3 of the APA, but is entitled to rely on this Sale Approval Order for the Debtor’s authority to enter into the Transactions.
25. Any rejection of the Debtor’s unexpired leases with STORE Master Funding XV,LLC or STORE Master Funding XVI, LLC (collectively, “STORE”) shall not be effective prior to March 31, 2021 absent further order. Nothing herein modifies STORE’s right to file a proof of claim or the Debtor’s or any other party in interest’s right to object thereto.
26. Notwithstanding Fed. R. Bankr. P. 6004(h) and 6006(d), this Sale Approval Ordershall take effect immediately upon entry, and in the absence of any entity obtaining a stay pending appeal, Debtor and Purchaser are free to close under the APA at any time.
27. To the extent that this Sale Approval Order is inconsistent with any prior order orpleading with respect to the Sale Motion in the Chapter 11 Case, the terms of this Sale Approval Order shall govern.
/e/ William J. Fisher
Dated: March 15, 2021
William J. Fisher
United States Bankruptcy Judge