Case CSS Doc 210 Filed 01/04/18 Page 1 of 6 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ) ) ) ) ) )

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1 Case CSS Doc 210 Filed 01/04/18 Page 1 of 6 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE IN RE: CHARMING CHARLIE HOLDINGS INC., et al., 1 Debtors. Chapter 11 Case No (CSS Jointly Administered BAYER RETAIL COMPANY VI, L.L.C., ASHLEY PARK PROPERTY OWNER LLC AND G&I VII RENO OPERATING LLC'S LIMITED OBJECTION TO DEBTORS' MOTION SEEKING ENTRY OF AN ORDER (I AUTHORIZING AND APPROVING PROCEDURES TO REJECT OR ASSUME EXECUTORY CONTRACTS AND UNEXPIRED LEASES AND (II GRANTING RELATED RELIEF Bayer Retail Company VI, L.L.C. ("Bayer", Ashley Park Property Owner LLC ("Ashley Park" and G&I VII Reno Operating LLC ("Reno" and together with Bayer and Ashley Park, the "Landlords" submit this limited objection (this "Objection" to Debtors Motion Seeking Entry of an Order (I Authorizing and Approving Procedures to Reject or Assume Executory Contracts and Unexpired Leases and (II Granting Related Relief (the "Rejection Procedures Motion" [Docket No. 20] filed by Charming Charlie Holdings Inc., et al. (the "Debtors". In support of this Objection, the Landlords state as follows: BACKGROUND FACTS 1. On December 11, 2017 (the "Petition Date", each of the Debtors filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code". The Debtors continue to operate their businesses and manage their properties as debtors-in-possession pursuant to Bankruptcy Code 1107(a and The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, include: Charming Charlie Canada LLC (0693; Charming Charlie Holdings Inc. (6139; Charming Charlie International LLC (5887; Charming Charlie LLC (0263; Charming Charlie Manhattan LLC (7408; Charming Charlie USA, Inc. (3973; and Poseidon Partners CMS, Inc. (3302. The location of the Debtors service address is: 5999 Savoy Drive, Houston, Texas v1

2 Case CSS Doc 210 Filed 01/04/18 Page 2 of 6 2. Lessee Charming Charlie, Inc. ("Charming Charlie" leases retail space (the "Premises" from the Landlords pursuant to unexpired leases of nonresidential real property (individually, a "Lease" and collectively, the "Leases" at certain shopping center locations (the "Centers", which Leases and Centers are more specifically described as follows: 3. That certain Lease dated August 3, 2009 (as it may have been amended, the Birmingham Lease by and between Bayer and Charming Charlie for those certain premises identified as Space 130 in the shopping center known as Retail Center IV of The Summit, in Birmingham, Alabama. 4. That certain Lease dated April 23, 2010 (as amended, the Reno Lease by and between Reno and Charming Charlie for those certain premises identified as Space 102 in the shopping center known as The Summit Sierra, in Reno, Nevada. 5. That certain Lease dated April 30, 2009 (as it may have been amended, the Newnan Lease by and between Ashley Park and Charming Charlie for those certain premises identified as Space #7372 in the shopping center known as Ashley Park, in Newnan, Georgia. 6. The Leases are leases "of a real property in a shopping center" as that term is used in Bankruptcy Code 365(b(3. See In re Joshua Slocum, Ltd., 922 F.2d 1081, (3 rd Cir On December 11, 2017, the Debtors filed the Rejection Procedures Motion, seeking this Court s approval of certain procedures for rejecting or assuming executory contracts and unexpired leases, and other requested relief. Landlords do not dispute the Debtors need for procedures to reject and assume executory contracts and unexpired leases without having to file separate motions to reject or assume for each individual contract or lease. Landlords do, v1 2

3 Case CSS Doc 210 Filed 01/04/18 Page 3 of 6 however, request that any order approving the Rejection Procedures Motion provide certain protections to the Landlords. OBJECTIONS AND RESERVATIONS OF RIGHTS 8. The Rejection Procedures Motion provides that [t]he Debtors are authorized, but not directed, at any time on or before the applicable Rejection Date, to remove or abandon any of the Debtors personal property that may be located on the Debtors leased premises that are subject to a rejected Contract. (See Rejection Procedures Motion, 9(g. The proposed Procedures further provide that the rejection of a lease will be effective as of the applicable rejection date set forth in the Rejection Notice, provided that the Debtors relinquish control of the premises to the Landlords. (See Rejection Procedures Motion, 9(d. All of the Leases require Debtors to remove all personal property and repair any damage caused by the removal of personal property, including signage, at the termination or expiration of that Lease. (See Birmingham Lease, 10.02, 10.03; Reno Lease, 10.02, 10.03; Newnan Lease, Debtors should be required to remove all personal property from the premises before rejection should be deemed to have occurred. Rejection should not be effective until all property is removed from the premises in accordance with the Leases and the premises are fully and properly restored to the Landlords. Accordingly, if Debtors fail to comply with the terms of the Leases failing to remove personal property, the Landlords rights should be reserved to (i contest the effective date of rejection, and (ii assert any associated claims. 9. The Landlords also request additional time to file any necessary objection(s. The Rejection Procedures Motion provides that a party has seven (7 days (the Objection Period after a Rejection Notice or Assumption Notice 2 is filed and served to file an objection to the 2 Capitalized terms not otherwise defined in this Objection are given the definitions provided in the Rejection Procedures Motion v1 3

4 Case CSS Doc 210 Filed 01/04/18 Page 4 of 6 Debtors proposed lease rejection or assumption and have that objection actually received by the Objection Service Parties. (See Rejection Procedures Motion, 9(c, 10(c. Seven days is not enough time for the Landlords to evaluate a proposed lease rejection or assumption and draft any objections that may be necessary, especially if there are intervening weekends and holidays. The Landlords submitting this Objection request that they have fourteen (14 business days from the date the Rejection or Assumption Notice is served to file an objection. 10. The Landlords also request that a Rejection or Assumption Notice (as well as evidence of adequate assurance also be served on the Landlords undersigned attorneys of record via to ensure prompt receipt of the notice(s. 11. The Rejection Procedures Motion provides for an adequate assurance package to be provided by overnight delivery service to the lease counterparty to the extent the Debtors seek to assume and assign a lease. (See Rejection Procedures Motion, 10(b. Landlords hereby request service by upon their undersigned counsel, reserve the right to request additional information to assess the ability of any proposed assigned to demonstrate adequate assurance of future performance, and reserve the right to object to any proposed assumption and assignment of a Lease as necessary. 12. The Debtors also request that the assignment of any Contract pursuant to the Assumption Procedures be made free and clear of any liens. (See Rejection Procedures Motion, 11. Some of Landlords' lenders have mortgages on the real property under the Leases and have been assigned the right to recover rents paid pursuant to the Leases. Therefore, any assignment should not be made free and clear of those lenders' mortgages and assignment rights. Landlords object to this provision of the Rejection Procedures Motion and reserve the right to v1 4

5 Case CSS Doc 210 Filed 01/04/18 Page 5 of 6 object to a specific assignment of a Lease free and clear of liens if the given assignment does not satisfy section 363(f of the Bankruptcy Code. 13. Further, Landlords specifically join in any objections filed in opposition to the Rejection Procedures Motion to the extent such objections are not inconsistent with the positions set forth herein. CONCLUSION For all of the foregoing reasons, Landlords request that this Court enter an order sustaining this Objection and granting such other, further, and different relief as this Court deems just and proper. Dated this the 4 th day of January Respectfully submitted, mailto:hlee@burr.com /s/ J. Cory Falgowski J. Cory Falgowski (No N. Market Street, Suite 1407 Telephone: ( Facsimile: ( jfalgowski@burr.com and Joe A. Joseph Regan C. Loper Burr & Forman LLP 420 North 20th Street, Suite 3400 Birmingham, Alabama Telephone: ( Facsimile: ( jjoseph@burr.com rloper@burr.com Counsel for Bayer Retail Company VI, L.L.C., Ashley Park Property Owner LLC, and G&I VII Reno Operating LLC v1 5

6 Case CSS Doc 210 Filed 01/04/18 Page 6 of 6 CERTIFICATE OF SERVICE I, J. Cory Falgowski hereby certify that on this 4 th day of January 2018, I served or caused to be served a true and correct copy of the foregoing document via U.S. First Class Mail as indicated below: Domenic E. Pacitti Michael W. Yurkwicz Klehr Harrison Harvey Branzburg, LLP 919 North Market Street, Suite 100 (Debtors Counsel Morton Branzburg Klehr Harrison Harvey Branzburg LL 1835 Market Street, Suite 1400 Philadelphia, PA (Debtors Counsel Joshua A. Sussberg, P.C. Christopher T. Greco Aparna Yenamandra Kirkland & Ellis LLP 601 Lexington Avenue New York, NY (Debtors Counsel James H.M. Sprayregen, P.C. Kirkland & Ellis LLP 300 North LaSalle Chicago, IL (Debtors Counsel Richard L. Schepacarter Office of the United States Trustee 844 King Street Suite 2207 (U.S. Trustee Pauline K. Morgan M. Blake Cleary Shane M. Reil Young Conaway Stargatt & Taylor, LLP Rodney Square 1000 North King Street (Ad Hoc Group of Term Loan Lenders Jeffrey D. Saferstein Adam M. Denhoff Sharad Thaper Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY (Ad Hoc Group of Term Loan Lenders /s/ J. Cory Falgowski OF COUNSEL v1 6