Case LSS Doc 547 Filed 05/16/17 Page 1 of 7 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

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1 Case LSS Doc 547 Filed 05/16/17 Page 1 of 7 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: EASTERN OUTFITTERS, LLC, et al., 1 Debtors. CHAPTER 11 Case No (LSS) (Jointly Administered) Re: Docket Nos. 261, 397, 515 OBJECTION OF CLF BOBS RANDOLPH, LLC TO SUPPLEMENTAL NOTICE OF ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND LEASES CLF Bobs Randolph, LLC ( Landlord ) objects to the Supplemental Notice of Assumption and Assignment of Executory Contracts and Leases [D.I. 515] (the Notice ). Specifically, Landlord objects to Sportsdirect.com Retail Ltd. s ( Buyer ) ability to demonstrate adequate assurance of future performance, as required by sections 365(b)(1)(c) and 365(f)(2)(B) of 11 U.S.C. 101 et seq. (the Bankruptcy Code ). All terms not defined herein shall have the same meaning as set forth in the Notice. In support of this Objection, Landlord states the following: Background 1. On or about February 5, 2017, Eastern Outfitters, LLC, Subortis Retail Financing, LLC, Eastern Mountain Sports, LLC, Subortis IP Holdings, LLC, Bob s Stores, LLC ( Bob s Stores ), and Bob s/ems Gift Card, LLC (collectively, the Debtors ) each filed their respective voluntary petitions for relief under chapter 11 of the Bankruptcy Code. Each of the Debtors has continued to operate their respective businesses and manage their respective properties as debtors-in-possession pursuant to 11 U.S.C. 1107(a) and The Debtors and the last four digits of their respective federal taxpayer identification numbers, where applicable, are as follows: Eastern Outfitters, LLC (9164); Subortis Retail Financing, LLC (9065); Eastern Mountain Sports, LLC (9553); Subortis IP Holdings, LLC; Bob s Stores, LLC (4389); and Bob s/ems Gift Card, LLC (9618). Objection to Supplemental Notice of Assumption & Assignment of ECs & ULs

2 Case LSS Doc 547 Filed 05/16/17 Page 2 of 7 2. Landlord owns that certain nonresidential real property including the buildings and improvements located thereon located at 100 Mazzeo Drive, Randolph, Massachusetts, (the Property ). Landlord leases the Property to Bob s Stores, pursuant to that certain Lease dated as of April 5, 1993 by and between the Trustees of Campanelli Investment Properties ( CIP ), as predecessor-in-interest to Landlord, as landlord, and Randolph Bob s, Inc., as predecessor-ininterest to Bob s Stores, as Tenant, and assigned to and assumed by Bob s Stores pursuant to that certain Fifth Notice of Assumption and Assignment of Unexpired Leases and Executory Contracts (the VRG Notice ) filed at Docket No in the jointly administered chapter 11 bankruptcy case of In re VRG Liquidating, LLC, et al., Case No (LSS)(the VRG Case ) 2 and that certain Seventh Order Approving the Assumption and Assignment of Unexpired Leases and Executory Contracts After the Closing Date entered by this Court on November 7, 2016 (the VRG Order ) at Docket No in the VRG Case (as assigned and collectively, as may have been renewed or otherwise amended, the Lease ). The Lease is currently effective, has not been effectively terminated, rejected, assigned (in this case) or otherwise rendered unenforceable or ineffective. Upon information and belief, Bob s Stores identifies the store located on the Property as Store No A portion of the Property is subleased by Bob s Stores pursuant to that certain Sublease dated as of April 18, 2008 by and between Bob s Stores Corp., as predecessor-ininterest to Bob s Stores, as Sublessor, and Ocean State Job Lot of MA2008, LLC ( Ocean State ), as Subtenant, and assigned to and assumed by Bob s Stores pursuant to the VRG Notice and VRG Order in the VRG Case (as assigned and collectively, as may have been renewed or otherwise amended, the Sublease ). The Sublease covers approximately 27,000 square feet of 2 The jointly administered debtors in the VRG Case included BS Liquidating, LLC (f/k/a Bob s Stores, LLC), the predecessor-in-interest by assignment of the Leases (as hereinafter defined) to Bob s Stores. Objection to Supplemental Notice of Assumption & Assignment of ECs & ULs 2

3 Case LSS Doc 547 Filed 05/16/17 Page 3 of 7 the approximate 85,000 square feet of the building located on the Property (the Building ). Upon information and belief, (a) the portion of the Building that is not subleased pursuant to the Sublease is used and occupied by Bob s Stores and (b) the Sublease is currently effective, has not been effectively terminated, rejected, assigned (in this case) or otherwise rendered unenforceable or ineffective. 4. Landlord previously timely filed (a) that certain Objection of CLF Bobs Randolph, LLC to Notice of (I) Possible Treatment of Executory Contracts and Leases, (II) Fixing of Cure Amounts, and (III) Deadline to Object (the Cure Objection ) [D.I. 381], pursuant to which Landlord objected to the cure amount asserted by the Debtors with respect to the Lease, and (b) that certain Objection of CLF Bobs Randolph, LLC to Notice of Assumption and Assignment of Executory Contracts and Leases (the Prior A&A Objection ) [D.I. 421], pursuant to which Landlord objected to the assumption and assignment of the Lease for the reasons stated therein. Although the Prior A&A Objection was adjourned and remains outstanding, Landlord now files this objection out of an abundance of caution to preserve and reassert Landlord s rights and objections to the proposed assumption and assignment of the Lease, as set forth herein. 5. Pursuant to the Notice and that certain Order (I) Approving Notice Procedures for the Sale of Substantially All of the Debtors Assets, (II) Scheduling a Sale Hearing and (III) Approving Procedures for (A) Assumption and Assignment of Executory Contracts and Unexpired Leases and Determining Cure Amounts and (B) Rejection of Executory Contracts and Unexpired Leases (the Procedures Order ) [D.I. 261], the Debtors seek permission to, among other actions, assume and assign to Buyer or its designee certain executory contracts and unexpired leases, including the Lease, at the closing of the proposed sale of substantially all of Debtors assets to Buyer (the Closing ). Objection to Supplemental Notice of Assumption & Assignment of ECs & ULs 3

4 Case LSS Doc 547 Filed 05/16/17 Page 4 of 7 6. Pursuant to Procedures Order, the Debtors filed the Notice. The Notice states that the Debtors intend to assume and assign, inter alia, the Lease, to Buyer or its designee effective as of the Closing. Notice, pp. 1, 3; Exhibit A, p. 5, line 6. The Notice continues to incorrectly names AMB Property, LP ( AMB ) as the lessor under the Lease. AMB is the successor-ininterest to CIP, the original lessor under the Lease, and the predecessor-in-interest to Landlord. Further, the Notice does not list the Sublease as an executory contract or unexpired lease to be assumed and assigned by Bobs Stores to Buyer or its designee at Closing. 7. The total annual base rent due under the Lease is $863,355, while the total annual base rent due under the Sublease is, upon information and belief, $267,300, which represents nearly 1/3 of the annual rent obligation under the Lease. 8. Finally, the adequate assurance of future performance provided by Buyer indicates that the assignee of, inter alia, the Lease will be a newly formed entity that will be wholly owned by Dunlop Sports Group America, a Delaware entity that is an indirect wholly owned subsidiary of Sports Direct International PLC, a United Kingdom entity. Pursuant to the Procedures Order, the Debtors were required, on or before March 31, 2017 to serve evidence of the Buyer s adequate assurance of future performance under the Debtors leases of nonresidential real property, including, among other information, identifying (a) the formation information for any newly formed entity that will be the proposed assignee of such leases and (b) what credit enhancements will be available to guaranty the obligations under the affected leases. See Procedures Order, p. 8, 11.c). 9. As of the date hereof, neither the formation, including the name of, the newly formed entity that will be the proposed assignee of the Lease, nor the available credit Objection to Supplemental Notice of Assumption & Assignment of ECs & ULs 4

5 Case LSS Doc 547 Filed 05/16/17 Page 5 of 7 enhancement information with respect to the obligations under the Lease has been provided to Landlord. Objection 10. Accordingly, Landlord again objects to Buyer s ability to demonstrate adequate assurance of future performance, as required by sections 365(b)(1)(c) and 365(f)(2)(B) of the Bankruptcy Code, with respect to the Lease because (a) neither the Debtors nor the Buyer have indicated how the Sublease, which provides a source of funds to pay almost 1/3 of the annual rent obligations under the Lease, will be treated, and (b) despite the requirements in Paragraph 11.c) of the Procedures Order, neither the formation, including the name of, the newly formed entity that will be the proposed assignee of the Lease, nor the available credit enhancement information with respect to the obligations under the Lease, has been provided to Landlord. 11. The information regarding the Debtors and Buyer s intent with respect to the Sublease is an important part of the Buyer s ability to demonstrate adequate assurance of future performance because not only is the Sublease a significant source of revenue that can be used to satisfy the obligation under the Lease, but under section 365(h)(1) of the Bankruptcy Code, Ocean State, as subtenant under the Sublease, has certain rights with respect to the Sublease if Bob s Stores rejects the Sublease. Landlord is unable to comprehensively assess Buyer s adequate assurance of future performance without knowing the Debtors and Buyer s intentions with respect to the Sublease. 12. The information regarding the newly formed entity that will be the proposed assignee of the Lease is also an important part of the Buyer s ability to demonstrate adequate assurance of future performance because Landlord is entitled to know the identity of the proposed new tenant under its Lease and how such entity proposes to satisfy its obligations under Objection to Supplemental Notice of Assumption & Assignment of ECs & ULs 5

6 Case LSS Doc 547 Filed 05/16/17 Page 6 of 7 the Lease, including any necessary guaranty thereof or other credit enhancement to support such obligations. Conclusion 13. Because the Debtors and Buyer have not identified (a) the proposed treatment of the Sublease; or (b) the newly formed entity that will be the proposed assignee and available credit enhancement information with respect to the obligations under the Lease, the Debtors and Buyer have failed to demonstrate adequate assurance of future performance with respect to the Lease as required by sections 365(b)(1)(c) and 365(f)(2)(B) of the Bankruptcy Code. Therefore, Landlord again objects to any assumption and assignment of the Lease until such time as full compliance with Section 365 has been demonstrated. WHEREFORE, Landlord (a) objects to the Buyer s ability to demonstrate adequate assurance of future performance, as required by sections 365(b)(1)(c) and 365(f)(2)(B) of the Bankruptcy Code; (b) objects to any assumption of the Lease unless the information identified herein is provided to Landlord prior to the assumption and assignment of the Lease and such information otherwise adequately resolves the objections set forth above; and (c) requests such other and further relief as may be just and required under all of the circumstances. DATED: May 16, 2017 /s/ Christopher D. Loizides Christopher D. Loizides (No. 3968) LOIZIDES, P.A King Street, Suite 800 Wilmington, DE Telephone: (302) Facsimile: (302) loizides@loizides.com - and - Objection to Supplemental Notice of Assumption & Assignment of ECs & ULs 6

7 Case LSS Doc 547 Filed 05/16/17 Page 7 of 7 Lisa M. Peters (admitted pro hac vice) KUTAK ROCK LLP 1650 Farnam Street Omaha, NE Telephone: (402) Facsimile: (402) lisa.peters@kutakrock.com Counsel for CLF Bobs Randolph, LLC Objection to Supplemental Notice of Assumption & Assignment of ECs & ULs 7

8 Case LSS Doc Filed 05/16/17 Page 1 of 3 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: EASTERN OUTFITTERS, LLC, et al., 1 CHAPTER 11 Case No (LSS) (Jointly Administered) Debtors. CERTIFICATE OF SERVICE I, Christopher D. Loizides, hereby certify that on May 16, 2017, I did cause to be served true and correct copies of the foregoing OBJECTION OF CLF BOBS RANDOLPH, LLC TO NOTICE OF ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND LEASES to the parties listed on the attached service listed as indicated thereon. DATED: May 16, 2017 /s/ Christopher D. Loizides Christopher D. Loizides (No. 3968) LOIZIDES, P.A King Street, Suite 800 Wilmington, DE Telephone: (302) Facsimile: (302) loizides@loizides.com 1 The Debtors and the last four digits of their respective federal taxpayer identification numbers, where applicable, are as follows: Eastern Outfitters, LLC (9164); Subortis Retail Financing, LLC (9065); Eastern Mountain Sports, LLC (9553); Subortis IP Holdings, LLC; Bob s Stores, LLC (4389); and Bob s/ems Gift Card, LLC (9618). Objection to Supplemental Notice of Assumption & Assignment of ECs & ULs

9 Case LSS Doc Filed 05/16/17 Page 2 of 3 SERVICE LIST VIA ELECTRONIC MAIL AND FIRST-CLASS MAIL Daniel Bliss EASTERN OUTFITTERS, LLC 160 Corporate Court Meriden, CT dbliss@bobstores.com Debtors Jennifer Feldsher, Esquire BRACEWELL LLP 1251 Avenue of Americas New York, NY jennifer.feldsher@bracewelllaw.com Co-Counsel to Debtors Mark E. Dendinger, Esquire BRACEWELL LLP CityPlace I, 34 th Floor 185 Asylum Street Hartford, CT mark.dendinger@bracewelllaw.com Co-Counsel to Debtors Norman L. Pernick, Esquire Marion M. Quirk, Esquire Katharina Earle, Esquire COLE SCHOTZ PC 500 Delaware Avenue, Suite 1410 Wilmington, DE npernick@coleschotz.com mquirk@coleschotz.com kearle@coleschotz.com Co-Counsel to Debtors Alexander W. Stevenson LINCOLN PARTNERS ADVISORS LLC 633 West Fifth Street, Suite 6650 Los Angeles, CA astevenson@lincolninternational.com Investment Banker to Debtors Jane M. Leamy, Esquire OFFICE OF THE U.S. TRUSTEE 844 King Street, Room 2207 Lockbox 35 Wilmington, DE jane.m.leamy@usdoj.gov Objection to Supplemental Notice of Assumption & Assignment of ECs & ULs 2

10 Case LSS Doc Filed 05/16/17 Page 3 of 3 Matthew L. Hinker, Esquire GREENBERG TRAURIG LLP 200 Park Avenue New York, NY hinkerm@gtlaw.com Counsel to Stalking Horse Bidder Jay R. Indyke, Esquire Richelle Kalnit, Esquire COOLEY LLP 1114 Avenue of the Americas New York, NY jindyke@cooley.com rkalnit@cooley.com Co-Counsel to Official Committee of Unsecured Creditors Steven K. Kortanek, Esquire DRINKER BIDDLE & REATH LLP 222 Delaware Avenue, Suite 1410 Wilmington, DE steven.kortanek@dbr.com Co-Counsel to Official Committee of Unsecured Creditors Robert K. Malone, Esquire DRINKER BIDDLE & REATH LLP 600 Campus Drive Florham Park, NJ robert.malone@dbr.com Co-Counsel to Official Committee of Unsecured Creditors Objection to Supplemental Notice of Assumption & Assignment of ECs & ULs 3