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Full title: Amended Motion re: 78 Motion to assume/reject/assign filed by Debtor 1 Tea Olive I, LLC. An affidavit or verification, Proposed order. (Andre, Samuel) (Entered: 01/25/2021)

Document posted on Jan 24, 2021 in the bankruptcy, 29 pages and 0 tables.

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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MINNESOTA In re: Tea Olive I, LLC d/b/a Stock+Field, Case No.: 21-30037 Chapter 11 Case Debtor. AMENDED NOTICE OF HEARING AND MOTION FOR ORDER AUTHORIZING REJECTION OF UNEXPIRED LEASE TO: The parties specified in Local Rule 9013-3(a)(2) and the parties identified on the certificate of service list. 1. Tea Olive I, LLC, the debtor and debtor-in-possession (the “Debtor”), hereby moves this Court for the relief requested below and gives notice of hearing. 2. The Court will hold a hearing on this Motion at 1:00pm (CT) on February 11, 2021, in Courtroom 2B, 232 Warren E. Burger Federal Building and U.S. Courthouse, 316 North Robert Street, St. Paul, MN 55101. The hearing will be held telephonically: a. Dial 1-888-684-8852; b. When prompted, enter ACCESS CODE: 5988550; c. When prompted, enter SECURITY CODE: 0428. 3. Any response to the Motion must be filed and served no later than February 5, 2021, pursuant to the applicable Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and the Local Rules. UNLESS A RESPONSE OPPOSING THE MOTION IS TIMELY FILED, THE COURT MAY GRANT THE MOTION WITHOUT A HEARING. 4. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. §§ 157 and 1334, Rule 5005 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and

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Local Rule 1070-1. This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409. The petition commencing the Debtor’s chapter 11 case was filed on January 10, 2021 (the “Filing Date”). The case is currently pending in this Court. 5. This Motion arises under section 365 of title 11 of the United States Code (the “Bankruptcy Code”). This Motion is filed under Bankruptcy Rule 6006 and Local Rules 2002-1, 9013-1, and 9013-2. The Debtor requests an order: (i) authorizing the Debtor to reject that certain Real Estate Lease Agreement dated August 7, 2020 by and between the Debtor and Illiana Realty, LLC (“Illiana”), and (ii) granting such other relief as is just and proper. GENERAL BACKGROUND 6. On the Filing Date, the Debtor filed a voluntary petition for relief pursuant to chapter 11 of the Bankruptcy Code. The Debtor continues to operate in possession of its respective assets and the management of its business as debtor-in-possession pursuant to Section 1107(a) and 1108 of the Bankruptcy Code. 7. Further general information about the Debtor and this case is set forth in the Declaration of Matthew F. Whebbe in Support of Chapter 11 Petition and Initial Motions (Doc. 22). The additional facts relevant to this Motion set forth below are verified by Matthew Whebbe, as evidenced by the attached verification. BACKGROUND RELEVANT TO THE MOTION 8. Illiana owns real property located at 1201 N. Jefferson St., Watseka, IL 60970 (the “Property”). On August 7, 2020, the Debtor entered into a certain Real Estate Lease Agreement with Illiana dated August 7, 2020 (the “Lease Agreement”), in order to operate a commercial warehouse on the Property for the purpose of storing goods and other assets related

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to its business operations. A true and correct copy of the Lease Agreement is attached to this Motion as Exhibit A. 9. The Lease Agreement is an unexpired lease within the meaning of 11 U.S.C. § 365(a). The Lease Agreement has a term of one year that began on August 7, 2020 and is scheduled to end on August 7, 2021. The Lease Agreement provides for monthly rent in the amount of $2,000. 10. The Lease Agreement also required the Debtor to pay Illiana a $2,000 security deposit, and requires the Debtor to pay concurrently with its monthly rent payment of $2,000 an amount equal to 1/12 of the real estate taxes of the Property, pay for all maintenance and repair of the Property, and maintain insurance coverage including fire and extended coverage insurance and comprehensive public liability insurance, amongst other potential costs. 11. The Debtor is not currently using the Jefferson Warehouse for storage of its assets and has determined that it no longer requires the use of the Jefferson Warehouse for its business operations. To avoid the ongoing incurrence of the costs and expenses identified above, the Debtor and Illiana entered into negotiations on January 13, 2021, to cancel the Lease Agreement and turn over the Jefferson Warehouse to Illiana. The Debtor and Illiana ultimately reached a resolution and entered into a stipulation (the “Stipulation”). A true and correct copy of the Stipulation is attached to this Motion as Exhibit B. 12. By rejecting the Lease Agreement, with an effective date of the date of this Motion, the Debtor will realize significant savings by avoiding the costs and expenses identified above, including any claim by Illiana for rent or real estate taxes due for January 2021 and any claim for damages as a result of rejection of the Lease Agreement. Moreover, pursuant to the terms of the Stipulation, Illiana has agreed to waive and rejection damages claim.

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13. The Debtor’s obligations under the Lease Agreement are secured by a $2,000 security deposit. The Debtor will forfeit the $2,000 security deposit upon rejection of the Lease Agreement pursuant to the Stipulation. However, based upon the significant savings the Debtor will realize by avoiding the continued costs and expenses under the Lease Agreement, the Debtor has determined, in the exercise of its business judgment, that rejecting the Lease effective as of the date of this Motion, is in the best interest of the estate and creditors. RELIEF REQUESTED 14. The Debtor requests approval, pursuant to 11 U.S.C. § 365(a), of its decision to reject the Lease Agreement effective as of the date of this Motion. 15. Pursuant to Local Rule 9013-2(a), this Motion is verified and is accompanied by a memorandum of law, a proposed order, and proof of service. 16. Pursuant to Local Rule 9013-2(c), the Debtor gives notice that it may, if necessary, call one or more of the following to testify regarding the facts set forth in this Motion: (a) Matthew Whebbe, the Chief Executive Officer of the Debtor, whose business address is 2600 Eagan Woods Drive, Suite 120, Eagan, MN 55121. WHEREFORE, the Debtor respectfully requests that the Court enter an order: A. Approving the rejection of the Lease Agreement effective as of the date of this Motion; and; B. Such other and further relief as the Court deems just and equitable.

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Dated: January 25, 2021 /e/ Samuel M. Andre Clinton E. Cutler (#0158094) James C. Brand (#0387362) Steven R. Kinsella (#0392289) Samuel M. Andre (#0399669) FREDRIKSON & BYRON, P.A. 200 South Sixth Street, Suite 4000 Minneapolis, MN 55402-1425 (612) 492-7000 ccutler@fredlaw.com jbrand@fredlaw.com skinsella@fredlaw.com sandre@fredlaw.com PROPOSED ATTORNEYS FOR THE DEBTOR

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VERIFICATION I, Matthew Whebbe, the Chairman and Chief Executive Officer of Tea Olive I, LLC, declare under penalty of perjury that the foregoing is true and correct according to the best of my knowledge, information and belief. Dated: January _2_2_, 2021 Signed: _____________________ Matthew Whebbe

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EXHIBIT A

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EXHIBIT B

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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MINNESOTA In re: Tea Olive I, LLC d/b/a Stock+Field, Case No.: 21-30037 Chapter 11 Case Debtor. STPULATION The above captioned debtor (“Debtor”) and Illiana Realty, LLC (“Illiana”), with respect to that certain Real Estate Lease Agreement between them dated August 7, 2020 (the “Lease”), attached hereto as Exhibit A, regarding the property commonly known as 1201 N. Jefferson St., Watseka, IL 60970 (the “Property”), hereby stipulate and agree as follows: 1. Debtor shall reject the Lease, and the parties agree that the Lease and anytenancies which may have arisen from the Lease and/or Debtor’s possession of the Property shall terminate, upon the date of approval by order of the United States Bankruptcy Court for the District of Minnesota. 2. Debtor acknowledges and agrees that it is no longer in physical possessionof the Property and agrees that Illiana may enter into and upon the Property for any reasonable purpose. 3. Illiana releases Debtor from (i) any claim for rent and real estate taxes dueunder the Lease for January 2021, (ii) any claim for damages as a result of rejection of the Lease by Debtor, and (iii) any and all other claims held by Illiana against the Debtor as of the date of this stipulation.

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January 22 /e/ Samuel M. Andre

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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MINNESOTA In re: Tea Olive I, LLC d/b/a Stock+Field, Case No.: 21-30037 Chapter 11 Case Debtor. MEMORANDUM IN SUPPORT OF AMENDED MOTION FOR ORDER AUTHORIZING REJECTION OF UNEXPIRED LEASE Tea Olive I, LLC (the “Debtor”), as debtor and debtor in possession, submits this memorandum of law in support of its Amended Motion for Order Authorizing Rejection of Unexpired Lease (the “Motion”) in accordance with Local Rule 9013-2(a). The Debtor seeks the entry of an order substantially in the form filed herewith authorizing it to reject the Lease Agreement effective as of the date of the Motion. The Court should grant the relief requested because the proposed relief is an appropriate exercise of the Debtor’s business judgment and is in the best interests of the parties, including the Debtor’s estate and creditors. BACKGROUND The supporting facts are set forth in the verified Motion. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Motion. LEGAL ANALYSIS I. THE DEBTOR SHOULD BE AUTHORIZED TO REJECT THE LEASE. The Bankruptcy Code provides that a debtor in possession may either assume or reject unexpired leases, subject only to court approval. 11 U.S.C. § 365(a). Courts approve a debtor in possession’s decision to reject if the decision was a reasonable exercise of its business judgment. See, e.g., Four B. Corp. v. Food Barn Stores, Inc. (In re Food Barn Stores, Inc.), 107 F.3d 558,

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567 n.16 (8th Cir. 1997) (noting that courts use the business judgment test when deciding whether the approve the assumption, rejection, or assignment of an unexpired lease or executory contract); see also Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1309 (5th Cir. 1985) (finding it “well established” that the standard for determining if a lease should be rejected is the business judgment standard). As the Ninth Circuit Court of Appeals further explains, [I]n evaluating the rejection decision, the bankruptcy court should presume that the debtor-in-possession acted prudently, on an informed basis, in good faith, and in the honest belief that the action taken was in the best interests of the bankruptcy estate. It should approve the rejection of an executory contract under § 365(a) unless it finds that the debtor-in-possession’s conclusion . . . is so manifestly unreasonable that it could not be based on sound business judgment, but only on bad faith, or whim or caprice. In re Pomona Valley Med. Grp., 476 F.3d 665, 670 (9th Cir. 2007) (internal citations omitted). The Debtor is seeking to reduce costs and overhead expenses and has determined, in an exercise of its business judgment, that the Jefferson Warehouse is not necessary for its ongoing operations. The Debtor has not used the Jefferson Warehouse since the Filing Date and has agreed to surrender possession of the Jefferson Warehouse to Illiana as of the date of the Motion. The rejection of the Lease Agreement directly benefits the bankruptcy estate, permitting the Debtor to avoid incurring ongoing lease payments, insurance costs, maintenance costs, and other costs and expenses associated with the Property and Jefferson Warehouse. Additionally, Illiana has agreed to waive any rejection damages claim. Consequently, it is in the best interest of the estate for the Debtor to reject the Lease Agreement. The Court has the authority to make such rejection effective as of the date the Debtor provided notice of its intent to reject. In re At Home Corp., 392 F.3d 1064, 1072 (9th Cir. 2004); In re Sky Ventures, LLC, No. 14-42107, 2014 Bankr. LEXIS 5158 (Bankr. D. Minn. Dec. 23, 2014); see also In re Joseph C. Spiess Co., 145 BR 597, 601-02 (Bankr. N.D. Ill. 1992) (holding

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that rejection was effective as of the date of notice, subject to the Court’s later approval). In this situation, the Debtor has not delayed in seeking relief. The Debtor has filed this Motion within two weeks of the commencement of this chapter 11 case and has promptly worked with Illiana regarding the surrender of the Jefferson Warehouse for the benefit of the estate. The Debtor has not made, nor will it make, any use of the benefits of the Lease Agreement during the pendency of this case. Therefore, the Lease Agreement should be deemed rejected as of the date of the Motion. CONCLUSION For the foregoing reasons, the Debtor respectfully request that the Court authorize the Debtor to reject the Lease Agreement with an effective date of the date of the Motion. Dated: January 25, 2021 /e/ Samuel M. Andre Clinton E. Cutler (#0158094) James C. Brand (#0387362) Steven R. Kinsella (#0392289) Samuel M. Andre (#0399669) FREDRIKSON & BYRON, P.A. 200 South Sixth Street, Suite 4000 Minneapolis, MN 55402-1425 (612) 492-7000 ccutler@fredlaw.com jbrand@fredlaw.com skinsella@fredlaw.com sandre@fredlaw.com PROPOSED ATTORNEYS FOR THE DEBTOR 71959195

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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MINNESOTA In re: Tea Olive I, LLC d/b/a Stock+Field, Case No.: 21-30037 Chapter 11 Case Debtor. ORDER AUTHORIZING REJECTION OF UNEXPIRED LEASE This matter came before the court on the Amended Motion for Order Authorizing Rejection of Unexpired Lease. Based on the Motion and the record, IT IS ORDERED: 1. The debtor is authorized to reject the Real Estate Lease Agreement dated August 7, 2020, by and between the debtor and Illiana Realty, LLC. 2. The stipulation between the debtor and Illiana Realty, LLC is approved. 3. The debtor’s rejection of the Real Estate Lease Agreement shall be effective as of January 25, 2021. Dated: William J. Fisher United States Bankruptcy Judge