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ME1 32917452v.1
IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re: : Chapter 11 : LUCKY’S MARKET PARENT : Case No. 20-10166 (JTD) COMPANY, LLC, et al.,1 : (Jointly Administered) :
Debtors. : Re: Docket Nos. 63 : Objection Due: March 23, 2020, at 4:00 p.m. : Hearing Date: March 30, 2020, at 3:00 p.m. __________________________ :
LIMITED OBJECTION OF SAMSON MERGER SUB, LLC TO THE DEBTORS’ PROPOSED SALE OF CLERMONT STORE AND PROPOSED ASSIGNMENT OF
LEASE FOR CLERMONT STORE TO PUBLIX SUPER MARKETS, I NC. Samson Merger Sub, LLC (“SMS”), by and through its undersigned counsel, files this
limited objection (“Objection”) to the Motion of Debtors for Entry of (I) an Order (A) Approving
Bid Procedures in Connection with the Potential Sale of Certain of the Debtors’ Assets, (B)
Scheduling an Auction and a Sale Hearing, (C) Approving the Form and Manner of Notice
Thereof, (D) Authorizing the Debtors to Enter into the Stalking Horse Agreement, (D) Approving
Bid Protections, (F) Approving Procedures for Assumption and Assignment of Contracts and
Leases, and (G) Granting Related Relief; and (II) an Order (A) Approving the Sale of Certain of
1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are Lucky’s Market Parent Company, LLC (2055), Lucky’s Farmers Market Holding Company, LLC (5480), Lucky’s Market Operating Company, LLC (7064), LFM Stores LLC (3114), Lucky’s Farmers Market, LP (0828), Lucky’s Farmers Market Resource Center, LLC (7711), Lucky’s Market Holding Company 2, LLC (0607), Lucky’s Market GP 2, LLC (9335), Lucky’s Market 2, LP (8384), Lucky’s Market of Longmont, LLC (9789), Lucky’s Farmers Market of Billings, LLC (8088), Lucky’s Farmers Markets of Columbus, LLC (3379), Lucky’s Farmers Market of Rock Hill, LLC (3386), LFM Jackson, LLC (8300), Lucky’s Farmers Market of Ann Arbor, LLC (4067), Lucky’s Market of Gainesville, LLC (7877), Lucky’s Market of Bloomington, LLC (3944), Lucky’s Market of Plantation, LLC (4356), Lucky’s Market of Savannah, GA, LLC (1097), Lucky’s Market of Traverse, City, LLC (2033), Lucky’s Market of Naples, FL, LLC (8700), and Sinoc, Inc. (0723). The Debtors chapter 11 cases are being jointly administered.
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the Debtors’ Assets (“Sale Motion”)2 regarding the Debtor’s proposed sale to Publix Super
Markets, Inc. (“Publix”) of the Lucky’s Store located at 1718 E. Highway 50, Clermont, Florida,
in the Clermont Town Center shopping center (the “Clermont Store”), and to the proposed
assignment of the Lease for the Clermont Store to Publix. In support thereof, SMS states as
follows.
PRELIMINARY STATEMENT
1. SMS leased the Clermont Store immediately prior to the Debtors. Approximately
1.5 miles away from the Clermont Store, SMS’s affiliates operate a Winn-Dixie supermarket.
SMS never operated a grocery store at the Clermont Store. Instead, to avoid diverting sales from
their affiliate, SMS leased the space but kept the store dark.
2. In 2016, after multiple requests from the landlord of the Clermont Store to reopen
one of the largest stores in its shopping center, SMS and the landlord of the Clermont Store
reached an agreement that SMS would terminate its lease with the landlord so long as no direct
competitors of SMS or its affiliates were allowed to lease the space for a period of 10 years.
Independent, specialty grocery stores, such as the Debtors, were carved out of this Lease
Restriction (defined infra.). Thus, as further described herein, to ensure that the stores in its
shopping center are not dark, the landlord sold its right to rent the Clermont Store to a traditional
grocery store for 10 years, approximately 7 of which remain outstanding.
3. Despite the fact that the Landlord sold its right to rent the Clermont Store to
Publix, the Debtors seek to sell the Clermont Store and assign their lease thereof to Publix. This
Court cannot grant the Debtors rights that the non-Debtor landlord sold more than three (3) years
ago and no longer possesses. Moreover, section 365(b) of the Bankruptcy Code (defined infra.)
2 Terms used but not otherwise defined herein shall have the same meanings ascribed to them as in the Motion and accompanying documents.
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prohibits this Court from approving an assignment that would violate use restrictions in a
shopping center. Accordingly, for the reasons further described herein, the Debtors’ proposed
sale and assignment of the Clermont Store lease to Publix must be denied.
BACKGROUND
I. HISTORY OF CLERMONT STORE’S LEASE RESTRICTION
4. SMS is a subsidiary of Southeastern Grocers, Inc. (“SEG”) which operates
grocery stores including Winn-Dixie super markets. SMS is the successor by merger to Kash ‘N
Karry Food, Stores, Inc. (“KNK”). KNK was the original tenant of the Clermont Store pursuant
to that certain Lease Agreement dated March 31, 1998 entered into between Lucas Clermont
Limited Partnership (“LCL”), as Landlord (the “Lease”), and KNK, as Tenant.
5. On or about April 19, 2016, SMS, as successor by merger to KNK, and LCL
entered into that certain Lease Termination and Release Agreement for Winn-Dixie Store #2541,
1700 E. State Road 50, Clermont, Florida (the “Lease Termination Agreement”), a true and
correct copy of which is attached hereto as Exhibit A. On or about May 3, 2017, SMS and LCL
entered into a Memorandum of Termination of Lease and Second Amendment to Memorandum
of Lease (the “Memorandum of Termination”), a true and correct copy of which is attached
hereto as Exhibit B. The Memorandum of Termination was recorded in the Public Records of
Lake County, Florida on or about May 10, 2017, in Official Records Book 4942 at Page 2031.
6. Pursuant to the Lease Termination Agreement and the Memorandum of
Termination, SMS and LCL terminated the Lease. This enabled LCL to lease the Clermont
Store to another tenant which LCL desired to do. Both instruments contain a restriction which
provides:
From the Lease Termination Date and continuing thereafter for ten (10) years (the “Memorandum Termination Date”), Landlord shall be
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prohibited from leasing to a traditional grocery store (which traditionally grocery stores include, but not limited to, Publix, Walmart Neighborhood Market or Kroger). Notwithstanding the foregoing, as of the Lease Termination Date and any time thereafter, Landlord shall be permitted to enter into a lease with a “niche” or “specialty” grocer or with a “non-traditional” retailer who offers groceries in addition to selling other items such as apparel or electronics or jewelry or cosmetics, such as by way of example and not by way of limitation, TJ Maxx or Ross Dress for Less or Best Buy or PetSmart or Michael’s Crafts or Cost Plus World Market or Home Goods. By way of example, such niche or specialty grocers include Fresh Markets or Trader Joe’s or Chamberlin’s or Earth Fare or Sprouts or Lucky’s or Fresh Thyme. For avoidance of doubt as to whether a proposed grocer is a “traditional” grocer to whom this restriction applies, Landlord may request Tenant’s approval (“Tenant’s Approval Request”) and if Tenant fails to respond to Tenant’s Approval Request within thirty (30) days of Tenant’s receipt of same, Tenant’s Approval Request shall be deemed approved, and Landlord’s proposed grocer tenant shall be deemed not in violation of this Agreement.
See, e.g., Ex. B, ¶ 2. 7. SMS bargained for the foregoing covenant (the “Leasing Restriction”) as
consideration for agreeing to terminate the Lease. In addition, SMS paid LCL cash consideration
for its agreement to the Leasing Restriction. Subsequent to agreeing to the Leasing Restriction,
LCL leased the Clermont Store to Lucky’s, a permitted tenant.
II. THE DEBTORS’ PROPOSED SALE AND ASSIGNMENT OF THE CLERMONT STORE LEASE 8. Lucky’s Market Parent Company, LLC and its debtor affiliates in the above-
captioned chapter 11 cases (collectively, “Debtors”) filed their voluntary petitions for relief
under chapter 11 of title 11 of the United States Code (“Bankruptcy Code”) on January 27, 2020
(“Petition Date”) in the United States Bankruptcy Court for the District of Delaware (“Court”).
The Debtors continue to operate their business and manage their properties as debtors-in-
possession pursuant to 11 U.S.C. §§ 1107(a) and 1108.
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9. As of the Petition Date, and continuing through the date on which this Objection
is filed, the Debtors lease the Clermont Store from LCL. The Lease is a lease “of real property
in a shopping center” as that term is used in Section 365(b)(3) of the Bankruptcy Code. See In re
Joshua Slocum, Ltd., 922 F.2d 1081, 1086-87 (3d Cir. 1990).
10. On January 30, 2020, the Debtors filed the Sale Motion, seeking authority, among
other things, to conduct an auction for the sale of the Debtor’s assets at the Clermont Store, as
further described therein, pursuant to the terms of an Asset Purchase Agreement (“Stalking
Horse Agreement”) with Publix and to assign the Clermont Store Lease in connection with the
Sale.
11. SMS has been advised the Publix intents to operate the Clermont Store as
traditional Publix grocery store, in violation of the Leasing Restriction. SMS has not received a
Tenant Approval Request from LCL, and SMS does not consent to the assignment of the Lease
to Publix.
12. An affiliate of SMS operates a Winn-Dixie super market at 684 East Hwy 50,
Clermont, Florida (“Winn-Dixie Store”), which is approximately 1.5 miles away from the
location of the Clermont Store. Based on an internal cash flow impact, the Winn-Dixie Store is
projected, conservatively, to lose approximately $4 million in EBITA over the 7 years remaining
in the Leasing Restriction if Publix operates a traditional grocery store at the Clermont Store.
13. The presence of a traditional Publix grocery store in the Clermont Town Center
will divert sales from the nearby Winn-Dixie Store and cause significant monetary damages to
SMS and its affiliates. SMS has provided notice to LCL that an assignment of the Lease to
Publix will violate the Leasing Restriction and that SMS will seek to enforce the Leasing
Restriction against LCL and hold LCL liable for all of SMS’s damages. Both LCL and Publix
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are well aware of the restriction because it was recorded on May 10, 2017 and thus is part of the
public record.
SMS’S OBJECTION TO THE SALE AND ASSIGNMENT OF THE CLERMONT STORE LEASE
14. Based on the Leasing Restriction, SMS objects: 1) to the Stalking Horse
Agreement; 2) to Publix as the Stalking Horse Bidder; 3) to the proposed sale of the Clermont
Store to Publix, or any other entity that intends to operate a traditional grocery store at the
Clermont Store; 4) to the proposed assignment of the Clermont Store Lease to Publix, or any
other entity that intends to operate a traditional grocery store at the Clermont Store; and 5) to the
proposed form of adequate protection to be provided in connection with the assignment of the
Clermont Store Lease. SMS’s objection is limited solely to the Clermont Store. SMS does not
generally object to a sale of the Debtors’ assets to maximize the value of their estates for the
benefit of all creditors, and SMS has no objection to the acquisition by Publix of the other sites
identified in the Stalking Horse Agreement.
15. The proposed assignment of the Clermont Store Lease to Publix, or any other
entity that intends to operate a traditional grocery store at the Clermont Store, will violate the
Leasing Restriction, cause LCL and Publix, or other such entity, to be subject to injunctive relief
and liable for damages and is not authorized by the applicable provisions of the Bankruptcy
Code. SMS’s grounds and authorities supporting its objection are set forth below. Absent the
ability of the Debtors, Publix and/or any other entity involved in acquisition of the Clermont
Store to comply with the Leasing Restriction and the Bankruptcy Code, the proposed sale,
assumption and assignment of the Clermont Store Lease must be denied.
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ARGUMENT
I. THE DEBTORS CANNOT COMPLY WITH SECTION 365(b)(3) (C) OF THE BANKRUPTCY CODE BY PROVIDING ADEQUATE ASSURANCE THA T THE ASSIGNMENT WILL NOT VIOLATE A USE PROVISION.
16. In connection with the assumption and assignment of leases, shopping center
landlords are afforded special statutory protections under the Bankruptcy Code in the form of
adequate assurance of future performance. Section 365(f)(2) of the Bankruptcy Code provides:
The trustee may assign an executory contract or unexpired lease of the debtor only if—
(A) the trustee assumes such contract or lease in accordance with the provisions of this section; and
(B) adequate assurance of future performance by the assignee of such contract or lease is provided, whether or not there has been a default in such contract or lease.
11 U.S.C. § 365(f)(2).
17. Section 365(b)(1) of the Bankruptcy Code provides: If there has been a default in an executory contract or unexpired lease of the debtor, the trustee may not assume such contract or lease unless, at the time of assumption of such contract or lease, the trustee—
(C) cures, or provides adequate assurance that the trustee will promptly cure, such default…;
(D) compensates, or provides adequate assurance that the trustee will promptly compensate, a party other than the debtor to such contract or lease for any actual pecuniary loss to such party resulting from such default; and
(E) provides adequate assurance of future performance under such
contract or lease.
11 U.S.C. § 365(b)(1).
18. Most importantly, in connection with a shopping center lease, adequate assurance
of future performance includes adequate assurance:
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(A) of the source of rent… due under such lease, and in the case of an assignment, that the financial condition and operating performance of the proposed assignee… shall be similar to the financial condition and operating performance of the debtor…as of the time the debtor became the lessee under the lease; (B) that any percentage rent due under such lease will not decline substantially; (C) that assumption or assignment of such lease is subject to all the provisions thereof, including (but not limited to) provisions such as a radius, location, use, or exclusivity provision …, and (D) that assumption or assignment of such lease will not disrupt any tenant mix or balance in such shopping center.
11 U.S.C. § 365(b)(3) (emphasis added). The lease at issue here is a shopping center lease. The
use restriction at issue here was made part of the Lease through the Second Amendment to
Memorandum of Lease, a recorded document.3
19. The Debtors bear the burden of proving adequate assurance of future performance
in connection with the potential assumption and assignment of the Lease to Publix. In re F.W.
Restaurant Assoc., Inc., 190 B.R. 143 (Bankr. D. Conn. 1995); In re Rachels Indus. Inc., 109
B.R. 797, 802 (Bankr. W.D. Tenn. 1990); In re Lafayette Radio Elec. Corp., 12 B.R. 302, 312
(Bankr. E.D.N.Y. 1981). The Debtors cannot meet that burden. The Debtors have not, and
cannot, provide adequate assurance of future performance. The simple reason is that the
assignment of the Lease to Public will violate the Leasing Restriction, and the Leasing
Restriction is a provision “such as a radius, location, use or exclusivity provision.” 11 U.S.C. §
365(b)(3)(C). The Leasing Restriction limits the use of the premises to certain specialty grocery
3 If Publix were to operate a traditional grocery on the premises, as it apparently plans to do, it would be subject to injunctive relief and a claim for damages for violating the use restriction because it has knowledge of the use restriction. Penn Mart Supermarkets, Inc. v. New Castle Shopping LLC, No. CIV.A. 20405-NC, 2005 WL 3502054, at *8 (Del. Ch. Dec. 15, 2005) (citing Reeve v. Hawke,136 A.2d 196 (Del. Ch.1957)). LCL would be liable for breach of contract and subject to substantial damages.
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stores or non-grocery stores that may sell grocery items. It does not allow the operation of a
traditional grocery store, and it specifically bars the operation of a standard Publix grocery store.
20. The Debtors’ proposed assignment of the Lease for the Clermont Store to Publix
is governed by 11 U.S.C. § 365(b)(3) and must therefore satisfy the rigorous requirements for
“adequate assurance of future performance of a lease of real property in a shopping center ....” 11
U.S.C. § 365(b)(3). The four subsections of section 365(b)(3) impose heightened requirements
for adequate assurance in the shopping center context. Assignment is impermissible if any one
of the four elements is unmet. The proposed assignment at issue here clearly violates subsection
(C). Courts have refused to approve assignment under similar circumstances. See In re Three
A’s Holdings, LLC, 364 B.R. 550 (Bankr. D. Del. 2007); In re Heilig-Meyers Co., 294 B.R. 660,
662–63 (Bankr. E.D. Va. 2001); In re Sun TV & Appliances, Inc., 234 B.R. 356 (Bankr. D. Del.
1999); Rockland Ctr. Assocs. v. TSW Stores of Nanuet, Inc. (In re TSW Stores of Nanuet, Inc.),
34 B.R. 299 (Bankr. S.D.N.Y. 1983).
21. Because the assignment does not comply with 11 U.S.C. § 365(b)(3), and the
Lease is a shopping center lease, the assignment to Publix, or any other entity that intends to
operate the Clermont Store as a traditional grocery store, may not be approved.
II. THE LEASING RESTRICTION IS NOT AN ANTI-ASSIGNME NT CLAUSE, AND, IN ANY EVENT, IT IS ENFORCEABLE AS A RESULT OF THE ADEQUATE ASSURANCE REQUIREMENT SET FORTH IN 11 U.S.C. § 365(b)(3).
22. The Debtors may argue that the Leasing Restriction is an anti-assignment clause.
11 U.S.C. § 365(f)(1) provides
Except as provided in subsections (b) and (c) of this section, notwithstanding a provision in an executory contract or unexpired lease of the debtor, or in applicable law, that prohibits, restricts, or conditions the assignment of such contract or lease, the trustee may assign such contract or lease under paragraph (2) of this subsection.
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The introductory clause – “Except as provided in subsections (b) and (c) of this section” – is
critical. As discussed above, subsection (b) of Section 365 requires, as a matter of adequate
assurance, that the assumption of a shopping center lease will not violate a use provision.
Therefore, by its plain terms, Section 365(f)(1) does not authorize an assignment of the Lease for
the Clermont Store free and clear of the Leasing Restriction. See In re Sun TV and Appliances,
Inc., 234 B.R. 356, 370 (Bankr. D. Del. 1999) (holding that, pursuant to statutory provision
specifically governing assumption and assignment of shopping center leases, restrictive use
provision in covenant had to be adhered to, as part of debtor's obligation to provide adequate
assurance of future performance).
23. Moreover, through the BAPCPA amendments, “Section 365(f)(1) is amended to
make sure that all of the provisions of Section 365(b) are adhered to and that 365(f) of the code
does not override Section 365(b).” Floor Statement of Senator Orrin Hatch, 151 Cong. Rec. S.
2459, 2461-62 (daily ed. March 10, 2005). In explaining the change to section 365(f)(1), Senator
Hatch stated:
The bill helps clarify that an owner should be able to retain control over the mix of retail uses in a shopping center. When an owner enters into a use clause with a retail tenant forbidding assignments of the lease for a use different than that specified in the lease, that clause should be honored. Congress has so intended already, but bankruptcy judges have sometimes ignored the law.
151 Cong. Rec. S. 2459, 2461 (daily ed. March 10, 2005).
24. The changes embodied in BAPCPA specifically preserves an interested party’s
right to enforce use and other lease provisions. Again, Senator Hatch’s remarks in the
Congressional Record clarify the intent behind Section 365(b) and 365(f):
A shopping center operator . . . must be given broad leeway to determine the mix of retail tenants it leases to. Congress decided that use or similar restrictions in a retail lease, which the retailer cannot evade under nonbankruptcy law, should not
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be evaded in bankruptcy. It is my understanding that some bankruptcy judges have not followed this mandate. Under another provisions of the Code, Section 365(f), a number of bankruptcy judges have misconstrued the Code and allowed the assignment of a lease even though terms of the lease are not being followed.
151 Cong. Rec. S. 2459, 2461-62 (daily ed. Mar. 10, 2005).
25. BAPCPA clarified Section 365 to reflect the Congressional intent that Debtors
cannot use Section 365(f)(1) to void lease provisions, and to overrule those prior court decisions
that did not strictly enforce lease terms. The predicate to the limited ability to assign a lease over
an objection under Section 365(f) is that such assignment must be subject to the protections of
Section 365(b)(1) and (3).
26. Section 365(f)(1) does not modify or override Section 365(b). See, e.g., Haggen
Holdings, LLC v. Antone, 739 Fed. Appx. 153, 156 (3d Cir. 2018) (“Denney Block is a
‘shopping center’ and thus, § 365(f) does not apply.” (citing In re Joshua Slocum Ltd, 922 F.2d
1081 (3d Cir. 1990)); see also Trak Auto Corp. v. West Town Ctr. LLC (In re Trak Auto Corp.),
367 F.3d 237, 243-44 (4th Cir. 2004) (bankruptcy courts could not use the general anti-
assignment provision of Section 365(f)(1) to trump the specific protections granted to landlords
in Section 365(b)(3)(C)). Any assignment of the Clermont Store Lease must remain subject to all
provisions of the Leases, including those provisions concerning use, radius, exclusivity, tenant
mix and balance.
27. Here, despite any arguments asserted to the contrary, it is clear that the Leasing
Restriction is not tantamount to an anti-assignment clause. It allows the landlord to enter into
new leases with a wide array of tenants including non-traditional grocers, specialty grocers and
other kinds of retailers that sell groceries. Indeed, the reason that the current tenant is a Lucky’s
Store is that Lucky’s fell within the scope of the broadly worded permissive provision. The
Leasing Restriction is a narrowly tailored provision that does not unduly restrict the landlord in
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leasing the premises. Notably, here, the Debtors have made no showing that they are unable to
lease the premises to a tenant that falls within the scope of the broad exception.
28. Further, even if the adequate assurance provision did not override Section 365(f)
– and, by its clear terms, it does – Section 365(f) has never been used indiscriminately. Instead,
the law is clear that, “[w]hile the bankruptcy court has discretion to excise or waive a bargained-
for element of a contract, ‘Congress has suggested that the modification of a contracting
party's rights is not to be taken lightly. Rather, a bankruptcy court ... must be sensitive to
the rights of the non-debtor contracting party ... and the policy requiring that the non-debtor
receive the full benefit of his or her bargain.’” In re Fleming Cos., Inc., 499 F.3d 300, 304 (3d
Cir. 2007) (citing In re Joshua Slocum Ltd., 922 F.2d 1081, 1091 (3d Cir.1990)). The law is also
clear that, in bankruptcy, “’[a]n assignment is intended to change only who performs an
obligation, not the obligation to be performed.’” Id. (citing Medtronic AVE., Inc. v. Advanced
Cardiovascular Sys., Inc., 247 F.3d 44, 60 (3d Cir.2001)).
29. While section 365(f) gives a bankruptcy court the power to invalidate provisions
in leases assigned by debtors even when those provisions indirectly restrict the debtors’ ability to
assign the leases, a bankruptcy court retains discretion in determining whether a lease provision
hinders the possibility of assignment to a sufficient degree to render it unenforceable.
Sometimes such a provision will, and sometimes it will not. A court must examine the particular
facts and circumstances of the transaction to determine whether a lease clause restricts or
conditions assignment including the extent to which the provision hampers a debtor’s ability to
assign, whether the provision would prevent the bankruptcy estate from realizing the full value
of its assets, and the economic detriment to the non-debtor party. In re Ames Dept. Stores, Inc.,
316 B.R. 772, 794-95 (Bankr. S.D.N.Y. 2004).
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30. In making such a determination, a court must consider the details of the proposed
lease assumption and assignment to ensure that a proper balance is reached between the interests
of the debtor-tenant and the economic detriment to the non-debtor. Invalidation of a bargained-
for element of a contract under section 365(f) plainly is permissible, but the modification of a
contracting party’s rights cannot be taken lightly. Id.
31. The Leasing Restriction here does not preclude assignment, or result in a
forfeiture of the leasehold. It merely limits the use of the premises to a broad array of potential
tenants. When a use provision is as limited as the one here, where its purpose and effect is to
protect a neighboring business from a single prohibited and competing use, the bankruptcy court
has discretion to enforce the restriction. Id. The court should engage in a balancing approach—
balancing the negative impact of the restriction against the economic harm to the party or parties
it was designed to protect. Here, the restriction is not overly burdensome, and the harm to SMS
and its affiliates, which operate Winn-Dixie stores—a direct competitor of Publix—one of which
is located less than 1.5 miles away in the small town of Clermont—will be very substantial.
32. However, as noted earlier, because this matter involves a shopping center lease,
the Court need not engage in a balancing of benefit to the estate versus harm to SMS. The plain
language of the adequate assurance provision, as applicable to shopping center leases, precludes
the proposed assignment.
WHEREFORE, SMS respectfully requests that the Court enter an order (i) sustaining its
objection, (ii) precluding the assignment of the Lease to Publix or modifying the proposed
assignment to provide that it is subject to the Lease Restriction which remains fully enforceable,
and (ii) granting such other and further relief as the Court deems just and proper.
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Date: March 23, 2020 M CCARTER & ENGLISH LLP Wilmington, DE
/s/ William F. Taylor, Jr. William F. Taylor, Jr. (No. 2936) Shannon D. Humiston (No. 5740) 405 North King Street, 8th Floor Wilmington, DE 19801 Telephone: (302) 984-6300 Facsimile: (302) 984-6399 Email: [email protected] [email protected] Counsel to Southeastern Grocers, Inc. and Samson Merger Sub, LLC
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EXHIBIT A
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EXHIBIT B
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INSTRUMENT#: 2017051066 OR BK 4942 PG 2031 PAGES: 4 5/10/2017 10:12:28 AM NEIL KELLY, LAKE COUNTY CLERK OF THE CIRCUIT COURT REC FEES: $35.50
Prepared by and please return to:
Mary Patricia Baxter Casto Southeast Realty Services 5391 Lakewood Ranch Boulevard, Suite 100 Sarasota, Florida 34240
MEMORANDUM OF TERMINATION OF LEASE AND SECOND AMENDMENT TO MEMORANDUM OF LEASE
THIS MEMORANDUM OF TERMINATION OF LEASE AND SECOND AMENDMENT TO MEMORANDUM OF LEASE (this "Amendment") is made and entered into as of the 4711'Dday of 4prit, Mkt 201 7(THE "Effective Date"), by and between SAMSON MERGER SUB, LLC, a Texas limited liability company (successor by merger to Kash N' Karry Food Stores, Inc.) (hereinafter referred to as "Tenant"), and LUCAS CLERMONT LIMITED PARTNERSHIP, an Ohio limited partnership (hereinafter referred to as "Landlord").
RECITALS:
A. Landlord and Tenant entered into a certain Lease Agreement dated March 31, 1998, as amended by Letter Agreement dated August 18, 1998, Letter Agreement dated February 4, 1999, Amendment to Lease Agreement dated February 24, 1999, and Second Amendment to Lease Agreement dated April 29, 2002 (collectively the "Lease").
B. A Memorandum of Lease was recorded June 9, 1998, in Official Records Book 1616, Page 1221, of the Public Records of Lake County, Florida, and subsequently amended by that certain Amendment to Memorandum of Lease dated March 31, 1998, and recorded in Official Records Book 1763, Page 2318, of the Public Records of Lake County, Florida (the aforesaid instruments, collectively, hereinafter referred to as the "Memorandum").
C. The parties hereto have terminated the Lease pursuant to the terms of a Lease Termination Agreement effective as of the Effective Date of this Amendment (the "Lease Termination Date") and Landlord and Tenant now desire to reflect that the Lease has been terminated and to further amend the Memorandum in accordance with the terms of the Lease Termination Agreement.
NOW THEREFORE, for and in consideration of the sum of Ten ($10.00) Dollars in hand paid by Landlord and Tenant, each to the other, and other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Recitals. The foregoing recitals are true and correct and fully incorporated herein.
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INSTRUMENT# 2017051066 OR BOOK 4942/PAGE 2032 PAGE 2 of 4
2. Termination of Lease and Amendment of Memorandum. Effective as of the Lease Termination Date, the Lease has been terminated. Effective as of the Lease Termination Date, the Memorandum is hereby amended to provide that all provisions, terms and conditions set forth therein, including all exhibits to the Memorandum, are hereby deleted and replaced with the following: "From the Lease Termination Date and continuing thereafter for ten (10) years (the "Memorandum Termination Date"), Landlord shall be prohibited from leasing to a traditional grocery store (which traditional grocery stores include, but are not limited to, Publix, Walmart Neighborhood Market or Kroger). Notwithstanding the foregoing, as of the Lease Termination Date and any time thereafter, Landlord shall be permitted to enter into a lease with a "niche" or "specialty" grocer or with a "non-traditional" retailer who offers groceries in addition to selling other items such as apparel or electronics or jewelry or cosmetics, such as by way of example and not by way of limitation, TJ Maxx or Ross Dress for Less or Best Buy or PetSmart or Michael's Crafts or Cost Plus World Market or Home Goods. By way of example, such niche or specialty grocers include Fresh Market or Trader Joe's or Chamberlin's or Earth Fare or Sprouts or Lucky's or Fresh Thyme. For avoidance of doubt as to whether a proposed grocer is a "traditional" grocer to whom this restriction applies, Landlord may request Tenant's approval ("Tenant's Approval Request") and if Tenant fails to respond to Tenant's Approval Request within thirty (30) days of Tenant's receipt of same, Tenant's Approval Request shall be deemed approved and Landlord's proposed grocer tenant shall be deemed not in violation of this Agreement. The Memorandum as amended herein shall be deemed terminated as of the Memorandum Termination Date without either party having to record a Termination of Memorandum. Either party may, however, at any time after the Memorandum Termination Date, at its sole cost and expense, file a Termination of Memorandum Agreement."
3. Governing Law. The terms and provisions of this Amendment shall be construed under and governed by the laws of the State of Florida.
4. Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all shall constitute one and the same Amendment; provided, however, this Amendment shall not be effective until fully executed by both parties.
(REST OF PAGE LEFT INTENTIONALLY BLANK; SIGNATURES AND ACKNOWLEDGEMENTS ON FOLLOWING PAGES)
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INSTRUMENT# 2017051066 OR BOOK 4942/PAGE 2033 PAGE 3 of 4
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the day and year first above written.
Witnesses: LANDLORD:
1 -4aU. Z-7 LUCAS CLERMONT LIMITED PARTNERSHIP, an Ohio limited partnership
Name: BY: Casto Clermont Corporation, an Ohio corporation, its General Partner
Name: tok-obtr1/4) tgi--
STATE OF OHIO
COUNTY OF FRANKLIN
By: Name: Don M. Casto, III Title: President
LANDLORD'S ACKNOWLEDGMENT
The foregoing instrument was acknowledged before me on this /2 416-.day of ipryi , 20 J,.-by (Name:) , as (Title:) On M. Casto, III
Pretident of Casto Clermont Corporation, an Ohio corporation, general partner of Lucas Clermont Limited Partnership, an Ohio limited partnership, on behalf of the partnership.
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INS TRUMENT# 2017051066 OR BOOK 4942/PAGE 2034 PAGE 4 of 4
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the day and year first above written.
Witnesses: TENANT:
• SAMSON MERGER SUB, LLC, a Texas limited liability coma y
Name: k) N ‘OV s 1(.,
Na tyice# C-1-4.641(
STATE OF COUNTY OF
By: Name: Title:
Brian Executive
TENANT'S ACKNOWLEDGMENT
Carney
The foregoing instrument was acknowlege befote me on this C4144 day of
Executive Vice 20110beid(entName:) an v. gamey
of SAMSON MERGER SUB, LLC, a Texas limited
ent LEGA A DA :
liability , mpany, on behalf of the company.
Personally Known OR Provided Identification Type of I tification Provided
Notary ublie Printe• ame: My Commission E res: 11.1 1 0/
OlaryAnn 1111pnocias Nankin •rs NOTARY PUBLIC 7 STATE OF FLORIDA
Ccevnii FF920152 Expires 9/21/2019
Title:)
Case 20-10166-JTD Doc 481-2 Filed 03/23/20 Page 5 of 5
ME1 32917452v.1
CERTIFICATE OF SERVICE
I, William F. Taylor, Jr., certify that on March 23, 2020, I caused a true and correct copy
of the foregoing Limited Objection of Samson Merger Sub, LLC to the Debtors’ Proposed Sale of
Clermont Store and Proposed Assignment of Lease for Clermont Store to Publix Super Markets,
Inc. to be served upon the below listed parties via email or in the manner so indicated.
/s/ William F. Taylor, Jr. William F. Taylor, Jr. (No. 2936)
Christopher A. Ward POLSINELLI PC 222 Delaware Avenue, Suite 1101 Wilmington, Delaware 19801 [email protected] Debtors’ Counsel
Liz Boydston POLSINELLI PC 2950 N. Harwood, Suite 2100 Dallas, Texas 75201 [email protected] Debtors’ Counsel
Timothy J. Fox, Jr. U.S. Trustee’s Office 844 King Street, Room 2207 Lockbox #35 Wilmington, Delaware 19899-0035 United States Trustee
Garrett Fail WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 [email protected] Counsel to Prepetition Secured Lender
Zachary Shapiro RICHARDS, LAYTON, & FINGER 920 N King St. Suite 200, Wilmington, Delaware 19801 [email protected] Counsel to the Prepetition Secured Lender
Emma Fleming Mark S. Indelicato Mark T. Power Jeffrey Zawadzki HAHN & HESSEN LLP 488 Madison Avenue New York, New York 10022 [email protected] [email protected] [email protected] [email protected] Creditor Committee Counsel
Case 20-10166-JTD Doc 481-3 Filed 03/23/20 Page 1 of 2
2 ME1 32917452v.1
Morgan L. Patterson Matthew P. Ward WOMBLE BOND DICKINSON (US) LLP 1313 North Market Street, Suite 1200 Wilmington, Delaware 19801 [email protected] [email protected] Creditor Committee Counsel
VIA CM/ECF Clerk of the Bankruptcy Court United States Bankruptcy Court for the District of Delaware 824 North Market Street, 3rd Floor Wilmington, DE 19801
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