Case LSS Doc 379 Filed 04/12/17 Page 1 of 17 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE.

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1 Case LSS Doc 379 Filed 04/12/17 Page 1 of 17 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) Hearing Date: April 19, 2017 at 9:00 a.m. (ET) Re: Docket Nos. 76, 272, & 273 OBJECTION OF 145 GREAT ROAD, LLC, BRIXMOR PROPERTY GROUP INC., GGP INC., PLISKIN, EDDY PLAZA ASSOCIATES, LLC, PGIM REAL ESTATE, THE MACERICH COMPANY, AND VALLEY SQUARE OWNER, LLC TO (1) DEBTORS MOTION FOR ORDERS (A)(I) AUTHORIZING AND APPROVING BIDDING PROCEDURES, BREAK-FEE AND EXPENSE REIMBURSEMENT; (II) AUTHORIZING AND APPROVING THE DEBTORS ENTRY INTO THE STALKING HORSE APA; (III) APPROVING NOTICE PROCEDURES;(IV) SCHEDULING A SALE HEARING; AND (V) APPROVING PROCEDURES FOR ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES AND DETERMINING CURE AMOUNTS AND (B)(I) AUTHORIZING THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS ASSETS FREE AND CLEAR OF ALL CLAIMS, LIENS, RIGHTS, INTERESTS, AND ENCUMBRANCES; (II) APPROVING THE STALKING HORSE APA; AND (III) AUTHORIZING THE DEBTORS TO ASSUME AND ASSIGN CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES AND (2) NOTICE OF (I) POSSIBLE TREATMENT OF EXECUTORY CONTRACTS AND LEASES, (II) FIXING OF CURE AMOUNTS, AND (III) DEADLINE TO OBJECT THERETO 145 Great Road, LLC, Brixmor Property Group Inc., GGO Inc., Pliskin, Eddy Plaza Associates, LLC, PGIM Real Estate, The Macerich Company, and Valley Square Owner, LLC (collectively, the Objecting Landlords ), by and through their undersigned counsel, hereby file this objection (the Objection ) to (1) Debtors Motion for Orders (A)(I) Authorizing and Approving Bidding Procedures, Break-Fee and Expense Reimbursement; (II) Authorizing and 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). The Debtors executive headquarters are located at 160 Corporate Court, Meriden, CT DMEAST # v5

2 Case LSS Doc 379 Filed 04/12/17 Page 2 of 17 Approving the Debtors Entry Into the Stalking Horse APA; (III) Approving Notice Procedures;(IV) Scheduling a Sale Hearing; and (V) Approving Procedures for Assumption and Assignment of Executory Contracts and Unexpired Leases and Determining Cure Amounts and (B)(I) Authorizing the Sale of Substantially All of the Debtors Assets Free and Clear of All Claims, Liens, Rights, Interests, and Encumbrances; (II) Approving the Stalking Horse APA; and (III) Authorizing the Debtors to Assume and Assign Certain Executory Contracts and Unexpired Leases [D.I. 76] (the Motion ) 2 and (2) the Notice of (I) Possible Treatment of Executory Contracts and Leases, (II) Fixing of Cure Amounts and (III) Deadline to Object [D.I. 272] (as amended by the Notice of Filing of Revised Exhibit A to Notice of (I) Possible Treatment of Executory Contracts and Leases, (II) Fixing of Cure Amounts and (III) Deadline to Object [D.I. 273], the Cure Notice ). In support of the Objection, the Objecting Landlords respectfully represent as follows: Background 1. Eastern Outfitters, LLC and its debtor affiliates in the above-captioned chapter 11 cases (the Debtors ) filed their voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code on February 5, 2017 (the Petition Date ). The Debtors continue to operate their business and manage their properties as debtors-in-possession pursuant to 11 U.S.C. 1107(a) and The Debtors lease retail space (the Premises ) from Objecting Landlords pursuant to unexpired leases of nonresidential real property (individually, a Lease, and 2 Terms not otherwise defined herein shall have the meanings ascribed to them in the Motion and other accompanying documents. 3 Unless otherwise specified herein, all statutory references to Section are to 11 U.S.C. 101 et seq. (the Bankruptcy Code ). DMEAST # v5 2

3 Case LSS Doc 379 Filed 04/12/17 Page 3 of 17 collectively, the Leases ) at the locations (the Centers ) set forth in detail on the attached Schedule A. 3. All of Objecting Landlords Premises are located in shopping centers, as that term is used in 11 U.S.C. 365(b)(3). See In re: Joshua Slocum, Ltd., 922 F.2d 1081 (3d Cir. 1990). 4. On October 7, 2016, the Debtors filed the Motion, seeking, inter alia, the sale (the Sale ) of certain assets to Sportsdirect.com Retail Ltd. ( Sportsdirect ), pursuant to that certain Asset Purchase Agreement dated as of February 8, 2017 [D.I. 63] (the Stalking Horse APA ), and establishing procedures for the assumption and assignment of executory contracts and leases in connection with the Sale. On March 31, 2017, the Court entered its order approving the bidding procedures for the Sale [D.I. 261] (the Bidding Procedures Order ), which set April 12, 2017 as the deadline to file objections to the Sale, including, without limitation, objections to the assumption and assignment of Contracts and Leases to Sportsdirect and objections to Sportsdirect s adequate assurance information. 5. On March 31, 2017, the Debtors filed the Cure Notice and provided certain adequate assurance information for Sportsdirect to Objecting Landlords. General Objections to Assumption and Assignment of Leases 6. While Objecting Landlords do not generally object to a Sale of the Debtors assets to maximize the value of their estates for the benefit of all creditors, including Objecting Landlords, Objecting Landlords do object to any proposed assumption and assignment of their Leases unless Debtors and/or Sportsdirect complies with the requirements of Sections 365 of the Bankruptcy Code. Absent the ability, or willingness, of the Debtors and Sportsdirect to satisfy said requirements, any proposed assumption and assignment to Sportsdirect must be denied. DMEAST # v5 3

4 Case LSS Doc 379 Filed 04/12/17 Page 4 of 17 Any assumption and assignment must comply with terms of the Leases. 7. With the enactment of 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, (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). 8. The changes embodied in the BAPCPA specifically preserve a landlord 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 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. (emphasis added). 151 Cong. Rec. S. 2459, (daily ed. March 10, 2005). 9. BAPCPA clarified Section 365 to reflect the Congressional intent that Debtors cannot use Section 365(f)(1) to void lease provisions, and it effectively overruled prior court decisions that did not strictly enforce lease terms. The revisions to Section 365 make it clear that the predicate to the limited ability to assign a lease over a landlord s objection under DMEAST # v5 4

5 Case LSS Doc 379 Filed 04/12/17 Page 5 of 17 Section 365(f) is that such assignment must be subject to the protections of Section 365(b)(1) and (3). 10. Section 365(f)(1) does not modify or override Section 365(b). Trak Auto Corp. v. West Town Ctr. LLC (In re Trak Auto Corp.), 367 F.3d 237, (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 must remain subject to all provisions of the Leases, including those provisions concerning use, radius, exclusivity, tenant mix and balance. Use 11. Sportsdirect has indicated that it intends to purchase the assets of the Debtors as a going concern and thereby continue to operate the Debtors stores. The adequate assurance information provided by Sportsdirect states that it offers footwear, clothing, accessories and other apparel and products for a variety of sports, which does not necessarily comply with the specific use provisions of certain of the Leases. Sportsdirect has not confirmed whether it intends to comply with the use provisions of the Leases. Objecting Landlords object to any proposed use of their Premises other than strictly in accordance with the current permitted use set forth in the each of the affected Leases. 12. Since the adequate assurance package does not identify which of Eastern Mountain Sports, Bob s Stores or Sportsdirect will be the tenant at each location, it is difficult to discern whether there will be a change of use. Sportsdirect must identify the particular name to be employed at each location. Tenant Mix and Balance 13. Objecting Landlords also object to any change of use of the Premises on the grounds that such change may adversely impact tenant mix and balance at the shopping DMEAST # v5 5

6 Case LSS Doc 379 Filed 04/12/17 Page 6 of 17 centers. This is of particular concern with regard to the Brookside Shops premises. Eastern Mountain Sports has a particular emphasis on equipment, outerwear and gear for outdoor activities such as camping, skiing, kayaking, paddleboarding, rock climbing and mountaineering (including equipment rentals), rather than merely the sale of athletic and athleisure apparel sold elsewhere. Eastern Mountain Sports own marketing materials refer to its outdoor heritage. To the extent there is a shift by Sportsdirect from an outdoor sports and equipment store to an essentially apparel-centric store, thus increasing the percentage of primarily apparel retailers at the shopping center, such a change will upset the tenant mix, contrary to the showing required by Section 365(b)(3)(D). Adequate Assurance of Future Performance 14. Debtors may only assume and assign any of the Objecting Landlords Leases if adequate assurance of future performance by the assignee of such... lease is provided, U.S.C. 365(b)(1)(C); see also 11 U.S.C. 365(f)(2). The provision of adequate assurance of future performance is an affirmative duty of the Debtors, and the Debtors bear the ultimate burden of persuasion as to issues under Section 365 (see In re Rachels Industries, Inc., 109 B.R. 797, 802 (Bankr. W.D. Tenn. 1990); see also Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1309 (5th Cir. 1985)), as specifically as to issues of adequate assurance of future performance (See In re Lafayette Radio Electronics Corp. 12 B.R. 302, 312 (Bankr. E.D.N.Y. 1991)). The obligation to comply with Section 365(b) and Section 365(f) is unaffected by maneuvering the assumption and assignment process through a sale process. 15. The Leases are shopping center leases, requiring a heightened demonstration of adequate assurance of future performance than is rquired by the general provision of Section 365(b)(1)(C). In re Sun TV and Appliances, Inc., 234 B.R. 356, 359 (Bankr. D. Del. 1999). In order to assume and assign shopping center leases, the Debtors must satisfy DMEAST # v5 6

7 Case LSS Doc 379 Filed 04/12/17 Page 7 of 17 the heightened requirements set forth in 11 U.S.C. 365(b)(3)(A)-(D). See Joshua Slocum, 922 F.2d at 1086; see also L.R.S.C. Co. v. Rickel Home Centers, Inc. (In re Rickel Home Centers, Inc.), 209 F.3d 291, 299 (3d Cir. 2000). The heightened adequate assurance requirements include the following: The source of rent and assurance that the financial condition and operating performance of the proposed assignee and its guarantors, if any, must be similar to the financial condition and operating performance of the debtor and its guarantor(s), if any, as of the time the debtor became the lessee. See 11 U.S.C. 365(b)(3)(A); That any percentage rent due under the lease will not decline substantially. See 11 U.S.C. 365(b)(3)(B); That assumption and assignment of the lease is subject to all provisions thereof, including (but not limited to) provisions such as a radius, location, use, or exclusivity provision, and will not breach of any such provision in any other lease, financing agreement, or master agreement relating to such shopping center. See 11 U.S.C. 365(b)(3)(C); and That assumption and assignment of the lease will not disrupt the tenant mix or balance in the shopping center. See 11 U.S.C. 365(b)(3)(D). 16. While certain adequate assurance information has been provided to Objecting Landlords by Sportsdirect, limited information has been made available to Objecting Landlords concerning the actual assignee entity, as well as regarding the potential assignment of the Leases, including what Leases may be immediately assumed and assigned to the Newco, or may be later designated. Moreover, the information provided is wholly inadequate where, as here, the proposed assignee is a Newco. No information is provided regarding confirmed financing for the transaction or for ongoing operations. 17. Sportsdirect must prove that the Newco has the ability to establish adequate assurance of future performance under Objecting Landlords Leases as of the time of the assignment of any such Lease. Objecting Landlords demand strict proof at the hearing on the proposed assumption and assignment of their Lease(s) of the Newco s ability to provide DMEAST # v5 7

8 Case LSS Doc 379 Filed 04/12/17 Page 8 of 17 adequate assurance of future performance as required in accordance with Section 365 of the Bankruptcy Code. As a part of the showing of adequate assurance as required by Section 365, Debtors and/or the Newco must show specifically, in addition to all other requirements of Section 365, that any proposed assignee s financial condition [is] similar to the financial condition of the debtor as of the time the debtor became the lessee under the lease. Additional Security 18. If the Newco cannot show that it possesses sufficient operating experience or capitalization to satisfy Objecting Landlords requirements, the Newco must be required to provide some type of credit enhancement as part of its adequate assurance of future performance demonstration, such as: (i) a guaranty of future performance from a financially capable parent entity; (ii) a letter or credit; or (iii) a cash security deposit. 19. Further, pursuant to Section 365(l) of the Bankruptcy Code, Objecting Landlords demand that the Newco post either a letter of credit or, in Objecting Landlords sole discretion, a security deposit, equal to six (6) months rent and additional rental charges under each Lease. Liabilities for Year-End Adjustments 20. The lessee under Objecting Landlords Leases is responsible for year-end adjustments to items such as common area maintenance, insurance, taxes, percentage rent and other items that are paid during the course of the year on an estimated basis. Generally the yearend adjustment, or true-up, of these categories does not take place until several months after the close of the landlord s fiscal year. Since Section 365(b) only requires debtors to cure defaults under their leases, and since there can be no default for failure to pay an amount that has not as yet been billed, unpaid year-end adjustments, and those adjustments that may currently be accruing, are not a part of the cure obligation of the Debtors. The obligation to pay the year-end DMEAST # v5 8

9 Case LSS Doc 379 Filed 04/12/17 Page 9 of 17 adjustments is, however, certainly a part of the obligation to provide adequate assurance of future performance. Any attempt to assign the Leases free and clear of these obligations must be denied. 21. Objecting Landlords, therefore, request that in the event that assumption and assignment of any of their Leases is approved by the Court, the Sale Order specifically provide that such approved assignee shall be responsible for all unpaid year-end 2016 and 2017 adjustments when such charges become due in accordance with the terms of the Leases, whether accruing prior to or after the effective date of assumption and assignment of the Leases. If the Debtors and/or Sportsdirect will not include such language, the Court should require that the Sale Order establish an escrow equal to the greater of $5, or 150% of the average year-end adjustments for the prior three (3) years for each lease to assure that any amounts due will be available to Objecting Landlords when the year-end adjustments are actually billed and due pursuant to the terms of the respective Leases. Assumption and Amendment Agreement 22. Objecting Landlords request that, as a condition to any order approving the assumption and assignment of any of Objecting Landlords Leases, the assignee shall be required to enter into a short form Assumption and Amendment Agreement whereby the assignee shall become directly obligated to Objecting Landlords and the provisions of Objecting Landlords Leases regarding notice addresses will be modified. The form of Assumption and Amendment Agreement will be made available to Sportsdirect. Designation Rights 23. Objecting Landlords do not object to the designation period requested by Sportsdirect, provided that the process ensures that all obligations under the Leases will be performed and Objecting Landlords have adequate recourse if they are not. DMEAST # v5 9

10 Case LSS Doc 379 Filed 04/12/17 Page 10 of As an initial matter, Sportsdirect or the actual operating entity must comply with all terms of the Leases during any designation period in all respects. In addition, Sportsdirect or the actual operating entity must be responsible for all obligations during the time that it controls the Leases. For instance, if tax obligations, year-end reconciliations, or any other lease charges are billed or otherwise become due under the Leases during the designation period, the actual operator must satisfy (or arrange to have the Debtors satisfy) these amounts in full as an administrative expense of the Debtors estates under Section 365(d)(3). 25. There is no direct relationship between Sportsdirect or any other operating entity and landlords of undesignated Leases. Therefore, it is unclear what remedy those landlords will have in the event of failure to perform by the operator. Any final order approving the Sale to Sportsdirect must protect landlords during any proposed designation period. The Court should require that sufficient funds remain with the Debtors to cover lease obligations for the undesignated leases during any such designation period in the event Sportsdirect (or its assignee) fails to perform under the Leases as well as provide that it has jurisdiction to hear any disputes during the designation period. There should also be a direct contractual relationship establishing the rights and obligations of the parties during any such designation period. 26. Moreover, there needs to be a written agreement between Sportsdirect, the actual operating entity and the Debtors that provides for the operating entity to have access to the Premises an authority to run the stores for the benefit of the Debtors during any such designation period. Cure Amounts 27. Objecting Landlords base cure claims (exclusive of April rent, unless otherwise noted, other charges, such as attorney s fees and year-end adjustments, etc.), as compared to the Debtors cure is summarized below, and those charges comprising the Objecting DMEAST # v5 10

11 Case LSS Doc 379 Filed 04/12/17 Page 11 of 17 Landlords cure are more fully detailed in Exhibits A through H, which are attached hereto and incorporated into this Objection by reference: SHOPPING CENTER LANDLORD STORE NO. Brookside Shops College Plaza Park City Shopping Center 145 Great Road, LLC Brixmor Property Group GGP, Inc. 90 Plaza 200 Pliskin 171 DEBTORS CURE LANDLORDS CURE 4 EXHIBIT $15, $38, A $18, $151, B $27, $47, C $29, $53, D Fort Eddy Plaza Annapolis Town Center at Parole Freehold Raceway Valley Square Eddy Plaza Associates, LLC PGIM Real Estate The Macerich Company $ -0- $57, E $59, $102, F $48, $79, G Valley Square Owner, LLC $24, $41, H 28. Objecting Landlords further aver that additional amounts, not as yet known, may also be due with regard to calendar years 2016 and 2017, such as year-end adjustments to various items including, but not limited to, real estate taxes, common area maintenance, percentage rent and insurance. Section 365(b) of the Code requires that a debtor 4 The Objecting Landlords Cure does not include charges arising after filing this Objection, or charges not directly billed to Objecting Landlords as of the filing of this Objection. Objecting Landlords Cure also does not include charges that are billed directly to Debtors, including in some cases, real estate taxes. To the extent Objecting Landlords are later billed for any amount due to Debtors failure to pay, or to the extent that there are other charges that come due under the Leases after the date of this Objection, Objecting Landlords retain and reserve the right to payment of these amounts when billed in the ordinary course under the Leases (and to amend this Objection to the extent necessary for any amounts that come due under the Leases through the date of any cure payment). 5 Attorney s fees are not included in this figure, and are listed separately herein at Paragraph 34. DMEAST # v5 11

12 Case LSS Doc 379 Filed 04/12/17 Page 12 of 17 cure all defaults in conjunction with a lease assumption. Since certain accrued, unbilled items may not have been invoiced to date, there can be no default for the failure to pay same. 29. The Leases contain provisions for recovery of attorneys fees, costs, and interest in the event Objecting Landlords are required to take legal action to protect their interests. Debtors are obligated to cure all defaults under the Leases, and compensate Objecting Landlords for their actual pecuniary losses as a result of defaults under the Leases. See 11 U.S.C. 365(b)(1)(A) and (B). The principle is well-recognized. In re LCO Enterprises, 12 F.3d 938, 941 (9th Cir. 1993); Elkton Associates v. Shelco Inc. (Matter of Shelco), 107 B.R. 483, 487 (Bankr. D. Del. 1989) (debtors allowed to assume lease provided it cured all pre-petition defaults). 30. The Debtors (or their assignee) take the Leases cum onere subject to existing burdens. The Debtors cannot assume the favorable portions, and reject the unfavorable provisions, of their Leases. In re Washington Capital Aviation & Leasing, 156 B.R. 167, 172 (Banks. E.D. Va. 1993). If forced to continue in the performance of the Leases, Objecting Landlords are entitled to the full benefit of the bargain under their Leases with the Debtors. See Matter of Superior Toy and Mfg. Co., Inc., 78 F.3d 1169 (7th Cir. 1996). The full benefit of the bargain principle has been held to require payment of interest. The cure of a default under an unexpired lease pursuant to 11 U.S.C. 365 is more akin to a condition precedent to the assumption of a contract obligation than it is to a claim in bankruptcy. One of the purposes of Section 365 is to permit the debtors to continue in a beneficial contract; provided, however, that the other party to the contract is made whole at the time of the debtor s assumption of the contract. In re Entertainment, Inc., 223 B.R. 141, 151 (Bankr. N.D. Ill. 1998) (citation omitted; bankruptcy court allowed interest at 18%). Interest on pre-petition lease charges continues to run DMEAST # v5 12

13 Case LSS Doc 379 Filed 04/12/17 Page 13 of 17 from the filing of the Debtors petition and must be paid as a condition of the assumption of the Leases. See In re Skylark Travel, Inc., 120 B.R. 352, 355 (Bankr. S.D.N.Y. 1990). Interest calculations are therefore not cut short by the automatic stay, and payment of such interest is required to fully compensate Objecting Landlords for the Debtors default under the Leases, and thus to properly assume the Leases. Finally, post-petition interest is allowable where such interest is provided for under the terms of the Leases. Cukierman v. Uecker (In re Cukierman), 265 F.3d 846, 853 (9th Cir. 2001). 31. Attorneys fees and costs incurred in enforcement of the covenants, obligations, and conditions of a lease are also proper components of a cure claim, and the Debtors (or successor) must satisfy these lease charges as part of the assumption or assumption and assignment of the Leases. Entertainment, Inc., 223 B.R. at 152 (citation omitted). There is no logical distinction for purposes of Section 365 between attorneys fees incurred in connection with pre-petition defaults and fees incurred with post-petition defaults. Id The fact that a landlord uses bankruptcy procedures to enforce a lease should not preclude recovery of attorneys fees and costs for such enforcement activity (particularly where the Bankruptcy Court is the exclusive forum where the landlord can obtain any relief, being foreclosed from state court relief by the automatic stay). Id., see also, In re Crown Books Corporation, 269 B.R. 12 (Bankr. D. Del. 2001) (Landlords fees and costs are recoverable as a component of cure under 11 U.S.C. 365(b)(1)); Urban Retail Properties v. Loews Cineplex Entertainment Corporation, et al., 2002 WL (S.D.N.Y. Apr. 9, 2002) (where lease provides for recovery of attorneys fees and interest, their receipt deserves the same priority under Section 365(d)(3) as any of the debtors other obligations that arise postpetition.... ); Three Sisters Partners, L.L.C. v. Harden (In re Shangra-La, Incorporated), 167 F.3d 843, 850 (4th Cir. 1999). The Supreme Court has upheld DMEAST # v5 13

14 Case LSS Doc 379 Filed 04/12/17 Page 14 of 17 the enforceability of such attorneys fees clauses, ruling that pre-petition attorneys fee clauses were enforceable with respect to issues peculiar to bankruptcy law. Travelers Casualty & Surety Co. of America v. Pacific Gas & Electric, 127 S. Ct. 1199, 1206 (2007). 32. Accordingly, Objecting Landlords further request that they be reimbursed for all of its actual pecuniary losses including, but not limited to, attorney s fees and costs expended with regard to Debtors bankruptcy proceedings. Objecting Landlords estimate their attorneys fees and costs through the hearing on assumption and assignment to be approximately $[5,000 - $7,500] per Lease. 33. The Cure Amounts above serve only as estimates. Objecting Landlords can only provide the information presently available regarding amounts owing by the Debtors, while reserving the right to amend the Objection as necessary to include any additional or unknown charges that arise, including but not limited to subsequent rent defaults, attorneys fees, costs, interest, and year-end adjustments and reconciliations. There is no basis to impose upon Objecting Landlords the equivalent of an administrative bar date, limiting their recourse to recover charges to which they are entitled under the Leases. 34. In addition to the monetary obligations that Debtors must satisfy under Section 365 of the Bankruptcy Code, Objecting Landlords Leases also provide that Debtors must indemnify and hold Objecting Landlords harmless with regard to existing claims as well as with regard to events which may have occurred pre-assignment but which are not made known to Objecting Landlords or the Debtors until some time post-assumption. Accordingly, the Debtors must be required to evidence, or obtain adequate insurance in order to guaranty (by way of purchase of a tail or otherwise) that their indemnity responsibilities will be met. Claims for indemnity may include, but are not limited to, claims for personal injuries which occur at the DMEAST # v5 14

15 Case LSS Doc 379 Filed 04/12/17 Page 15 of 17 leaseholds, where the Objecting Landlord is joined as a party defendant, damage and destruction to the property by the Debtors or their agents, claims for environmental damage or environmental clean up, etc. 6 Immediate Payment of Undisputed Cure Amounts 35. Section 365(b)(1)(A) requires that the Debtors promptly cure outstanding balances due under the Leases upon assumption. To the extent there is a dispute over the total cure obligation for any Lease, all undisputed cure amounts should be paid immediately. Debtors should escrow disputed amounts, and the Court should set a status conference within thirty (30) days of the assumption or assumption and assignment of the Leases to deal with any disputes that remain unresolved after such period. Joinder in Other Objections 36. The Objecting Landlords hereby join in the objections filed by the Debtors other landlords and creditors to the extent that such objections are not inconsistent with the provisions hereof. 6 If Debtors are covered under an occurrence basis insurance policy, rather than a claims made policy, this objection may be satisfied by proof of such insurance by the Debtors for the Objecting Landlords locations. DMEAST # v5 15

16 Case LSS Doc 379 Filed 04/12/17 Page 16 of 17 WHEREFORE, the Objecting Landlords respectfully request that the Court enter an order consistent with the foregoing objections; and for such other and further relief as may be just and proper under all of the circumstances. Dated: April 12, 2017 Wilmington, Delaware Respectfully submitted, /s/ Chantelle D. McClamb Matthew G. Summers, Esquire (No. 5533) Leslie C. Heilman, Esquire (No. 4716) Chantelle D. McClamb, Esquire (No. 5978) BALLARD SPAHR LLP 919 N. Market Street, 11th Floor Wilmington, DE Telephone: (302) Facsimile: (302) and David L. Pollack, Esquire BALLARD SPAHR LLP 51st Fl - Mellon Bank Center 1735 Market Street Philadelphia, Pennsylvania Telephone: (215) Facsimile: (215) pollack@ballardspahr.com and Dustin P. Branch (Cal. Bar No ) BALLARD SPAHR LLP 2029 Century Park East, Suite 800 Los Angeles, CA Telephone: (424) Facsimile: (424) branchd@ballardspahr.com Attorneys for 145 Great Road, LLC, Brixmor Property Group Inc., GGP Inc., Pliskin, Eddy Plaza Associates, LLC, PGIM Real Estate, The Macerich Company, and Valley Square Owner, LLC DMEAST # v5 16

17 Case LSS Doc 379 Filed 04/12/17 Page 17 of 17 SCHEDULE A 145 Great Road, LLC Store No. Unknown Brookside Shops Acton, MA Brixmor Property Group, Inc. Store No. 15 College Plaza Selden, NY GGP Limited Partnership Store No. 90 Park City Shopping Center Lancaster, PA Eddy Plaza Associates, LLC Store No. 501 Fort Eddy Plaza Concord, NH PGIM Real Estate Store No. 160 Annapolis Town Ctr. at Parole, LLC Annapolis, MD The Macerich Company Store No. 18 Freehold Raceway Freehold, NJ Valley Square Owner, LLC Store No. Unknown Valley Square Warrington, PA

18 Case LSS Doc Filed 04/12/17 Page 1 of 2 EXHIBIT A (Brookside Shops)

19 Case LSS Doc Filed 04/12/17 Page 2 of 2

20 Case LSS Doc Filed 04/12/17 Page 1 of 2 EXHIBIT B (College Plaza)

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22 Case LSS Doc Filed 04/12/17 Page 1 of 2 EXHIBIT C (Park City Shopping Center)

23 Case LSS Doc Filed 04/12/17 Page 2 of 2

24 Case LSS Doc Filed 04/12/17 Page 1 of 2 EXHIBIT D (Plaza 200)

25 Case LSS Doc Filed 04/12/17 Page 2 of 2

26 Case LSS Doc Filed 04/12/17 Page 1 of 4 EXHIBIT E (Fort Eddy Plaza)

27 Case LSS Doc Filed 04/12/17 Page 2 of 4

28 Case LSS Doc Filed 04/12/17 Page 3 of 4

29 Case LSS Doc Filed 04/12/17 Page 4 of 4

30 Case LSS Doc Filed 04/12/17 Page 1 of 2 EXHIBIT F (Annapolis Town Center at Parole)

31 Case LSS Doc Filed 04/12/17 Page 2 of 2 Exhibit F. Cure Amounts for Eastern Outfitters, LLC Lease for Space in Annapolis Towne Centre Held by Annapolis Towne Centre at Parole, LLC Location Annapolis Towne Centre Landlord's Landlord's Total Cure Cure Calculation 1 Interest 2 Amount Rent and Charges: 1/1/2017 $7, CAM Recovery Short-pay $ $7, /1/2017 $4, Taxes $ $4, /1/2017 $ Merchant Association Dues $10.33 $ /1/2017 $35, Base Rent $1, $36, /1/2017 $12, CAM Recovery $ $12, /1/2017 $4, Taxes $ $4, /1/2017 $ Merchant Association Dues $7.39 $ /1/2017 $35, Base Rent $ $35, /1/2017 $ CAM Recovery Short-pay $4.98 $ /1/2017 $10.38 Merchant Association Dues Short-pay $0.14 $ /1/2017 $ CAM Recovery Short-pay $1.94 $ $100, $2, $102, Total Due: $102, Does not include charges for unbilled reconciliations and adjustments accrued under the specified lease. 2 Interest calculated at 10% from the due date through (Hearing).

32 Case LSS Doc Filed 04/12/17 Page 1 of 2 EXHIBIT G (Freehold Raceway)

33 Case LSS Doc Filed 04/12/17 Page 2 of 2 Exhibit G. Cure Amounts for Eastern Outfitters, LLC Lease for Space in Freehold Raceway Held by Freemall Associates, LLC Location Freehold Raceway Landlord's Landlord's Total Cure Cure Calculation 1 Interest 2 Amount Rent and Charges: 9/1/2016 ($1,500.00) Abated Rent credit $0.00 ($1,500.00) 1/1/2017 $8, Property Taxes $ $8, /1/2017 $7, Fixed CAM $ $7, /1/2017 $23, Base Rent $ $24, /1/2017 $7, Fixed CAM $ $7, /1/2017 $8, Property Taxes $ $8, /1/2017 $24, Base Rent $ $25, /1/2017 ($1,490.39) Overpayment $0.00 ($1,490.39) 4/3/2017 ($1,490.39) Overpayment $0.00 ($1,490.39) $74, $2, $76, Total Due: $76, Does not include charges for unbilled reconciliations and adjustments accrued under the specified lease. 2 Interest calculated at 10% from the due date through (Hearing).

34 Case LSS Doc Filed 04/12/17 Page 1 of 2 EXHIBIT H (Valley Square)

35 Case LSS Doc Filed 04/12/17 Page 2 of 2 Exhibit H. Cure Amounts for Eastern Outfitters, LLC Lease for Space in Valley Square Held by Valley Square Owner, LLC Location Valley Square Landlord's Landlord's Total Cure Cure Calculation 1 Interest 2 Amount Rent and Charges: 10/17/2016 ($21.66) Water/Sewer Payment $0.00 ($21.66) 11/17/2016 ($1,497.73) Reduced/Amended Rent Payment $0.00 ($1,497.73) 1/1/2017 $20, Reduced/Amended Rent $ $21, /1/2017 $20, Reduced/Amended Rent $ $21, /10/2017 $18.22 Water/Sewer (1/1/17-2/15/17) $0.34 $ /10/2017 $18.22 Water/Sewer (2/15/17-3/16/17) $0.21 $18.43 $40, $1, $41, Total Due: $41, Does not include charges for unbilled reconciliations and adjustments accrued under the specified lease. 2 Interest calculated at 10% from the due date through (Hearing).