Leslie C. Heilman, Esquire* Dennis T. Lewandowski, Esquire (VSB #22232) 

Laurel D. Roglen, Esquire Lisa Hudson Kim, Esquire (VSB #45484) 

BALLARD SPAHR LLP Clark J. Belote, Esquire (VSB #87310) 

919 N. Market Street, 11th Floor KAUFMAN & CANOLES, P.C. 

Wilmington, Delaware 19801-3034 4101 Parks Avenue, Suite 700 

Telephone: (302) 252-4465 Virginia Beach, Virginia 23451 

Facsimile: (302) 252-4466 Telephone: (757) 491-4017 

E-mail: heilmanl@ballardspahr.com Facsimile: (888)360-9092 

roglenl@ballardspahr.com Email: lhkim@kaufcan.com; 

*Admitted Pro Hac Vice dtlewand@kaufcan.com; cjbelote@kaufcan.com

Hearing Date: June 25, 2020 at 11:00 a.m. (ET) 

and Objection Deadline: June 18, 2020 at 4:00 p.m. (ET) 

Related to Docket No. 247, 469, and 471

Dustin P. Branch, Esquire 

BALLARD SPAHR LLP 

2029 Century Park East, Suite 800 

Los Angeles, CA 90067-2909 

Telephone: (424) 204-4354 

Facsimile: (424) 204-4350 

E-mail: branchd@ballardspahr.com 

Counsel to 5616 Bay Street Investors LLC, Brixmor Operating Partnership LP, CenterCal Properties, 

LLC, DDR Deer Park Town Center LLC, ERY Retail Podium LLC, EDENS, Federal Realty Investment 

Trust, PGIM Real Estate, Related Companies, Retail Properties of America, Inc., Starwood Retail 

Partners LLC, The Forbes Company, The Macerich Company, Trademark Property Company, Gateway 

Knollwood, LLC, and Urban Edge Properties L.P.

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

RICHMOND DIVISION 

In re: 

CHINOS HOLDINGS, INC., et al.,

1

 Debtors. 

Chapter 11 

Case No. 20-32181 (KLP) 

(Jointly Administered) 

1

 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, as 

applicable, are Chinos Holdings, Inc. (3834); Chinos Intermediate Holdings A, Inc. (3301); Chinos Intermediate, Inc. 

(3871); Chinos Intermediate Holdings B, Inc. (3244); J. Crew Group, Inc. (4486); J. Crew Operating Corp. (0930); Grace 

Holmes, Inc. (1409); H.F.D. No. 55, Inc. (9438); J. Crew Inc. (6360); J. Crew International, Inc. (2712); J. Crew Virginia, 

Inc. (5626); Madewell Inc. (8609); J. Crew Brand Holdings, LLC (7625); J. Crew Brand Intermediate, LLC (3860); J. 

Crew Brand, LLC (1647); J. Crew Brand Corp. (1616); J. Crew Domestic Brand, LLC (8962); and J. Crew International 

Brand, LLC (7471). The Debtors’ corporate headquarters and service address is 225 Liberty St., New York, NY 10281. 

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LIMITED OBJECTION OF 5616 BAY STREET INVESTORS LLC, BRIXMOR OPERATING 

PARTNERSHIP LP, CENTERCAL PROPERTIES, LLC, DDR DEER PARK TOWN CENTER 

LLC, EDENS, ERY RETAIL PODIUM LLC, FEDERAL REALTY INVESTMENT TRUST, 

GATEWAY KNOLLWOOD, LLC, PGIM REAL ESTATE, RELATED COMPANIES, RETAIL 

PROPERTIES OF AMERICA, INC., STARWOOD RETAIL PARTNERS LLC, THE FORBES 

COMPANY, THE MACERICH COMPANY, TRADEMARK PROPERTY COMPANY, AND 

URBAN EDGE PROPERTIES L.P. TO THE PROPOSED DISCLOSURE STATEMENT FOR 

JOINT PREARRANGED CHAPTER 11 PLAN OF 

REORGANIZATION OF CHINOS HOLDINGS, INC. AND ITS 

AFFILIATED DEBTORS (WITH TECHNICAL CHANGES) 

5616 Bay Street Investors LLC, Brixmor Operating Partnership LP, CenterCal Properties, 

LLC, DDR Deer Park Town Center LLC, EDENS, ERY Retail Podium LLC, Federal Realty Investment 

Trust, Gateway Knollwood, LLC, PGIM Real Estate, Related Companies, Retail Properties of America, 

Inc., Starwood Retail Partners LLC, The Forbes Company, The Macerich Company, Trademark 

Property Company, and Urban Edge Properties L.P. (the “Landlords”) hereby file this limited objection 

(the “Objection”), by and through their undersigned counsel, to the Proposed Disclosure Statement for 

Joint Prearranged Chapter 11 Plan of Reorganization of Chinos Holdings, Inc. and Its Affiliated 

Debtors (with Technical Changes) [Docket No. 469] (the “Disclosure Statement”),2 and respectfully 

represent as follows: 

I. BACKGROUND FACTS

1. On May 4, 2020 (the “Petition Date”), the Debtors each filed a voluntary petition 

for relief under chapter 11 of title 11 of the United States Code with the United States Bankruptcy Court 

for the Eastern District of Virginia (the “Court”), which cases have been jointly consolidated for 

administrative purposes only (the “Chapter 11 Cases”). The Debtors continue to operate their 

businesses and manage their properties as debtors and debtors-in-possession pursuant to 11 U.S.C. 

§§ 1107(a) and 1108.3 No trustee or examiner has been appointed in the Chapter 11 Cases. 

2

 Terms not otherwise defined here shall have the meanings ascribed to them in the Disclosure Statement and Plan, and 

accompanying documents. 

3

 Unless otherwise specified, all statutory references to “Section” are to 11 U.S.C. §§ 101, et seq. (the “Bankruptcy Code”). 

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2. The Debtors lease retail space (the “Premises”) from the Landlords pursuant to 

unexpired leases of nonresidential real property (individually, a “Lease,” and collectively, the “Leases”) 

at the shopping center locations (the “Centers”) set forth in detail on Schedule A to this Limited 

Objection. 

3. The Leases are leases “of real property in a shopping center” as that term is used 

in Section 365(b)(3). In re Joshua Slocum, Ltd., 922 F.2d 1081, 1086-87 (3d Cir. 1990). 

4. On May 18, 2020, the Debtors filed the original Disclosure Statement [Docket 

No. 247] and the Joint Prearranged Chapter 11 Plan of Reorganization of Chinos Holdings, Inc. and its 

Affiliated Debtors [Docket No. 248] (the “Plan”). On June 11, 2020, the Disclosure Statement [Docket 

No. 469] and Plan [Docket No. 468] were amended. On the same date, the Debtors filed the Motion of 

Debtors for Entry of an Order (I) Approving the Proposed Disclosure Statement and the Form and 

Manner of the Notice of the Disclosure Statement Hearing, (II) Establishing Solicitation and Voting 

Procedures, (III) Scheduling Confirmation Hearing, (IV) Establishing Notice and Objection Procedures 

for Confirmation of the Debtors’ Plan, and (V) Granting Related Relief [Docket No 471] (the 

“Solicitation Procedures Motion”). The Landlords do not object to the Debtors’ efforts to confirm a 

plan of reorganization, but as drafted, the Disclosure Statement and Plan fail to provide adequate 

information for Landlords or other creditors to make an informed decision with respect to the Plan, and 

the Plan itself improperly seeks to modify the Landlords’ rights under their Leases and the Bankruptcy 

Code. 

II. ARGUMENT 

A. The Disclosure Statement fails to provide adequate information upon which creditors can 

rely to make an informed judgment regarding the Plan. 

5. Section 1125 requires that a disclosure statement contain “adequate information.” 

11 U.S.C. § 1125(a). Disclosure is the “pivotal” concept in a chapter 11 reorganization. Westland Oil 

Development Corp. v. MCorp Management, 157 B.R. 100, 102 (Bankr. S.D. Tex., 1993); citing

5 Collier on Bankruptcy, ¶ 1125.03 (15th ed. 1992); see also Oneida Motor Freight, Inc. v. United Jersey 

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4 

Bank, 848 F.2d 414, 417 (3d Cir. 1988) (“The importance of full disclosure is underlaid by the reliance 

upon the disclosure statement by creditors and the court. Given this reliance, we cannot overemphasize 

the debtor’s obligation to provide sufficient data to satisfy the Code standard of ‘adequate 

information.’”). The purpose behind the disclosure requirement is to prevent a debtor from seeking 

acceptance of its reorganization plan until it provides its creditors and other parties-in-interest with a 

disclosure statement that contains “adequate information” about the details of the debtor’s plan and its 

prospects of success. 11 U.S.C. § 1125(b). 

6. Section 1125(a)(1) defines adequate information as “[i]nformation of a kind, and 

in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and 

the condition of the debtor’s books and records, that would enable a hypothetical reasonable investor 

typical of holders of claims or interests of the relevant class to make an informed judgment about the 

plan . . . .” 11 U.S.C. § 1125(a)(1). Congress intended that the disclosure statement serve as the primary 

source of information upon which creditors and shareholders could rely in making an informed 

judgment about a plan of reorganization. See In re Scioto Valley Mortgage Co., 88 B.R. 168 (Bankr. 

S.D. Ohio 1988). 

7. The Disclosure Statement does not satisfy the disclosure standards set forth in 

Section 1125 of the Bankruptcy Code. The Disclosure Statement and Plan also rely, in part, on a Plan 

Supplement including schedules of assumed and rejected Leases that need not be filed until August 12, 

2020—a mere five (5) calendar days before the Plan Objection Deadline. The Plan Supplement should 

be provided no less than fourteen (14) days before any applicable objection deadline or the voting 

deadline to prevent disenfranchisement of claimants and give parties in interest sufficient time to review 

and formulate any necessary objections. 

8. Moreover, the Plan provides for the rejection of executory contracts and leases 

beyond the Effective Date of the Plan. This is contrary to the Bankruptcy Code and makes it impossible 

for creditors to make an informed decision on the Plan. “If, on the face of the plan, the plan could not be 

confirmed, then the Court [should] not subject the estate to the expense of soliciting votes and seeking 

confirmation. Not only would allowing an unconfirmable plan to accompany a disclosure statement, 

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and be summarized therein, constitute inadequate information, it would be misleading and it would be a 

needless expense to the estate.” In re Pecht, 57 B R. 137, 139 (Bankr. E.D. Va. 1986); In re Copy 

Crafters Quickprint, Inc., 92 B.R. 973, 980 (Bankr. N.D.N.Y. 1988) (“approval should be withheld 

if, . . . it is apparent that the plan will not comply with Code § 1129(a)”); In re Dakota Rail, Inc., 104 

B.R. 138, 143 (Bankr. D. Minn. 1989) (allowing a facially nonconfirmable plan to accompany a 

disclosure statement is both inadequate disclosure and a misrepresentation); see also In re Beyond.com 

Corp., 289 B.R. 138, 140 (Bankr. N.D. Cal. 2003) (“Because the underlying plan is patently 

unconfirmable, the disclosure statement may not be approved.”). As a result, the Court should require 

the Debtors to amend the Disclosure Statement and Plan to provide creditors with adequate information 

and conform provisions to be consistent with the Bankruptcy Code (which cannot be modified postconfirmation) before allowing the Debtors to proceed to plan confirmation. 

B. The Disclosure Statement Fails Because the Plan’s Disparate Treatment of Unsecured 

Creditors Renders It Unconfirmable 

9. Where it is clear that a plan of reorganization cannot be confirmed, it is 

appropriate for a court to refuse to approve the disclosure statement. See In re Phoenix Petroleum Co., 

278 B.R. 385, 394 (Bankr. E.D. Pa. 2001) (where plan is so fatally flowed that confirmation is not 

possible, the court should refuse to consider the adequacy of disclosure); In re Market Square Inn, Inc., 

163 B.R. 64, 67-68 (Bankr. W.D. Pa. 1994) (“we conclude that [the creditor] cannot be compelled to 

voluntarily release his claim” and since it is clear that the plan is not capable of confirmation, it is 

appropriate to refuse approval of the disclosure statement”); In re Atlanta West VI, 91 B.R. 620, 622 

(Bankr. N.D. Ga. 1988) (“A court may refuse to approve a disclosure statement when it is apparent that 

the plan which accompanies the disclosure statement is not confirmable.”); In re Cardinal Congregate I, 

121 B.R. 760. 764 (Bankr. S.D. Ohio 1990); In re Filex, Inc., 116 B.R. 37, 41 (Bankr. S.D.N.Y. 1990) 

(“court will not approve disclosure statement for an admittedly unconfirmable plan”). 

10. In order for a plan to be confirmed, it must satisfy Section 1129(a)(1), which 

requires a plan to comply with all applicable provisions of the Bankruptcy Code. See 11 U.S.C. 

§ 1129(a)(1). 

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11. Section 1122 of the Bankruptcy Code, which provides: 

(a) Except as provided in subsection (b) of this section, a plan may place a claim or an 

interest in a particular class only if such claim or interest is substantially similar to the 

other claims or interests of such class. 

(b) A plan may designate a separate class of claims consisting only of every unsecured 

claim that is less than or reduced to an amount that the court approves as reasonable and 

necessary for administrative convenience. 

11 U.S.C. § 1122. 

12. As Colliers explains (7 L. King, Collier on Bankruptcy, ¶ 1129.03[1]) (15th ed. 

rev.): 

Section 1129(a)(1) states that a court can confirm a plan only if “[t]he plan 

complies with the applicable provisions of this title.” This requires that 

the plan conform to the “applicable” provisions of title 11. The legislative 

history suggests that the applicable provisions are those governing the 

plan’s internal structure and drafting: “Paragraph (1) requires that the plan 

comply with the applicable provisions of chapter 11, such as Section 1122 

and 1123, governing classification and contents of plan.” 

* * * 

Section 1129(a)(1) can also be used as the grounds for denial of 

confirmation when the plan is contrary to provisions of title 11 not found 

in chapter 11, such as impermissible releases of third parties which violate 

Section 524(e), or if the plan selectively rides roughshod over and 

attempts to nullify important provisions of the Bankruptcy Code. At some 

level, however, the courts have recognized that the complexity of plan 

confirmation permits notions of “harmless error,” so that technical 

noncompliance with a provision that does not significantly affect creditor 

rights will not block confirmation. 

13. Section 1129(a)(1) provides that “a plan may not be confirmed unless the plan 

complies with the applicable provisions of Title 11 . . . .” Mabey v. Southwestern Elec. Power Co. (In 

the Matter of Cajun Elec. Power Cooperative, Inc.), 150 F. 3d 503, 513, n.3 (5th Cir. 1998), citing 

Mickey’s Enters., Inc. v. Saturday Sales, Inc. (In re Mickey’s Enters., Inc.),165 B.R. 188, 193 (Bankr. 

W.D. Tex. 1994) (“In order to confirm a plan the court must find that the plan and its proponent have 

complied with the applicable provisions of Title 11.”). Moreover, a plan cannot be confirmed if it 

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violates the provisions of Title 11. See Resorts Int’l., Inc. v. Lowenschuss (In re Lowenschuss), 67 F.3d 

1394 (9th Cir. 1995) (holding chapter 11 plan could not be confirmed where it violated Section 524(e) 

by providing releases to non-debtors). 

14. In In re: Beyond.com Corporation, 289 B.R. 138; (Bankr. N.D. CA, 2003), the 

Bankruptcy Court denied confirmation for various reasons, including the failure of the Plan to comply 

with the requirements of Section 1129(a)(1), and in conclusion stated: 

Beyond.com filed this case because it needed the special provisions 

available only to bankruptcy debtors. Having sought bankruptcy’s 

protections, it cannot now rewrite the Bankruptcy Code to suit its purposes 

15. While Section 1122 requires any claims classified together to be substantially 

similar, it does not require that all substantially similar claims be placed in the same class. Debtors have 

“some flexibility in classification of unsecured claims,” but “there is a limit on the debtor’s power to 

classify claims.” In re Bryson Props., XVIII, 961 F.2d 496, 502 (4th Cir. 1991). “Although the 

proponent of a plan of reorganization has considerable discretion to classify claims and interests 

according to the facts and circumstances of the case, this discretion is not unlimited. There must be some 

limit on the debtor's power to classify creditors. . . . The potential for abuse would be significant 

otherwise. . . . If the plan unfairly creates too many or too few classes, if the classifications are designed 

to manipulate class voting, or if the classification scheme violates basic priority rights, the plan cannot 

be confirmed.” In re Holywell Corp., 913 F.2d 873, 880 (11th Cir. 1990) (citations omitted). 

16. The Fourth Circuit has favorably cited In re Greystone III Joint Venture, 948 F.2d 

134 (5th Cir. 1992), in which the Fifth Circuit found that there is no basis to separately classify codecreated claims from other non-code-created claims of the same priority. See In re Bryson, 961 F.2d at 

502 (“A fair reading of both subsections [of Section 1122] suggests that ordinarily ‘substantially similar 

claims,’ those which share common priority and rights against the debtor's estate, should be placed in 

the same class.”). 

17. A chapter 11 plan also may not unfairly discriminate against an impaired, nonaccepting class of claims in order for such plan to be confirmable pursuant to Section 1129(b). “Courts 

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have struggled to give the unfair discrimination test an objective standard.” 7 Collier on Bankruptcy ¶ 

1129.03(3)(a) (Alan N. Resnick & Henry J. Sommer eds., 16th ed., 2011). The Fourth Circuit has 

joined other courts in affirming a test borrowed from the chapter 13 unfair discrimination rule provided 

in Section 1322(b)(1), which considers the following four factors: 

(1) whether there is a reasonable basis for the discrimination; (2) whether 

the plan can be confirmed and consummated without the discrimination; 

(3) whether the discrimination is proposed in good faith; and (4) the 

treatment of the classes discriminated against. 

Ownby v. Jim Beck, Inc. (In re Jim Beck, Inc.), 214 B.R. 305, 307 (W.D. Va. 1997), aff’d, 162 F.3d 

1155 (4th Cir. 1998); In re Sutton, Case No. 10-10539-8-RDD, 2012 Bankr. LEXIS 752, at *6-10 

(Bankr. E.D.N.C. Feb. 9, 2012). Other courts have found that there is a rebuttable presumption of unfair 

discrimination where there is (1) a dissenting class, (2) another class of the same priority, and (3) a 

difference in the plan’s treatment of the two classes resulting in either (a) a materially lower recovery to 

the dissenting class or (b) a recovery for the dissenting class that is at materially greater risk. See In re 

Dow Corning Corp., 244 B.R. 705, 710 (Bankr. E.D. Mich. 1999), aff'd in relevant part 255 B.R. 445 

(E.D. Mich. 2000), aff'd in part and remanded Class Five Nev. Claimants v. Dow Corning Corp. (In re 

Dow Corning Corp.), 280 F.3d 648 (6th Cir. 2002). 

18. Here, the Plan is patently unconfirmable because it fails to satisfy Sections 1122. 

The Plan divides general unsecured claims into “Ongoing Trade Claims” and “Other General Unsecured 

Claims.” Ongoing Trade Claims are defined as “any General Unsecured Claim held by a party that, 

within 30 days of the Petition Date, has executed a trade agreement” and agreed to provide trade terms 

for no less than 180 days. Plan, at § 1.100. Other General Unsecured Claims are defined as “any 

General Unsecured Claim other than an Ongoing Trade Claim, including, for the avoidance of 

doubt . . . all Claims arising from rejection of an Executory Contract or Unexpired Lease pursuant to 

Sections 365 or 1123 of the Bankruptcy Code.” Plan, at § 1.101. This classification improperly 

separates general unsecured claims for the purpose of disparate treatment, as discussed below. The 

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Debtors specifically classify rejection damages claims, which will no doubt be significant in these cases, 

from other prepetition claims of certain trade vendors. 

19. Moreover, the gerrymandering of the general unsecured claims results in unfair 

discrimination against Holders of Other General Unsecured Claims in the form of a substantially lower 

projected recovery. Ongoing Trade Claims in Class 6-A will share in a $71,000,000 recovery pool with 

an estimated percentage recovery of 50%. Meanwhile, Other General Unsecured Claims in Class 6-B 

will share in $3 million if they accept the Plan or $1 million if they reject the Plan, resulting in at best, a 

1.6% projected recovery on such Claims. This disparate treatment reveals the true purpose behind the 

separate classification—minimizing recoveries to counterparties on account of rejected contracts and 

leases and to those trade creditors who have chosen not to enter into a trade agreement with the Debtors. 

As the Fifth Circuit made clear, the genesis of a general unsecured claim is not a valid basis for separate 

classification. See Greystone, 948 F.2d 134, and Courts must look beyond pretextual justifications for 

disparate treatment of claims of the same priority. The Debtors attempt to conceal their efforts to singleout those parties who have decided not to partner with the Debtors for lesser treatment by including 

other types of general unsecured claims in the Other General Unsecured Claims category, such as the 

Term Loan Deficiency Claims. But Article 4.7 of the Plan states that the Term Loan Deficiency Claims 

have agreed to forego any distribution pursuant to the Plan anyway, so they are not forced to accept any 

such discriminatory treatment. 

20. For these reasons, the Plan as currently proposed is unconfirmable and approval 

of the Disclosure Statement should be denied. 

C. The Plan and Disclosure Statement seek to improperly extend the time to assume or reject 

leases. 

21. The Disclosure Statement provides that the Debtors may reject leases after 

confirmation by providing for the possibility of motions to assume leases remaining pending after the 

Effective Date (see Plan, Article 8.1(b)), as well as by the Plan providing that the Debtors can reject 

leases post-confirmation if an allowed cure claim is determined to be greater than the amount asserted 

by Debtors (see Plan, Article 8.2(c)). This violates Section 365(d)(4), and as a result, the Plan is not 

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confirmable under Section 1129(a)(1). 

22. The Debtors cannot pick and choose which Code provisions to follow and which 

to ignore. Section 365(d)(4) requires the assumption or rejection of leases no later than the entry of the 

order confirmation a plan of reorganization, and the Debtors must abide by this provision to confirm 

their Plan. Section 365(d)(4) provides that “an unexpired lease of nonresidential real property under 

which the debtor is the lessee shall be deemed rejected . . . if the trustee does not assume or reject the 

unexpired lease by the earlier of (i) the date that is 120 days after the date of the order for relief [or 

within such additional time as set by the Court and authorized by Section 365(d)(4)]; or (ii) the date of 

the entry of an order confirming a plan.” 

23. As noted above, the Disclosure Statement and Plan propose to give the Debtors 

the ability to reject leases after entry of the confirmation order on various grounds, including if they are 

dissatisfied with a cure resolution. This potentially disenfranchises Landlords by permitting the Debtors 

to reject leases after the voting deadline, depriving Landlords with potentially significant rejection 

claims from having the ability to vote those claims to accept or reject the Plan. In addition, this may be 

used as an attempt to force Landlords to reduce their legitimate cure claims, even though there may be 

no legal basis to do so. This is unsupported by either statutory authority or case law, and the Bankruptcy 

Code requires that all leases of non-residential real estate will be assumed or rejected no later than the 

date of entry of the confirmation order. The Debtors must either finalize its list of assumed and rejected 

leases such that landlords with rejected leases have time to vote on the Plan, or they must provide some 

mechanism to make sure that these landlords are not improperly disenfranchised by the plan process. 

24. Prior to the 1984 amendments to the Bankruptcy Code, the final date when a 

Chapter 11 debtor could assume or reject an unexpired lease was the date of confirmation of its plan of 

reorganization. Specifically, Section 365(d)(2) provided that in Chapter 11, the trustee could assume or 

reject an executory contract or unexpired lease of the debtor at any time before the confirmation of a 

plan, but the court, on request of any party to the agreement, could shorten the time to assume or reject. 

See 11 U.S.C. § 365(d)(2) (1978). Soon after the enactment of the 1978 Bankruptcy Code, Congress 

realized that major deficiencies existed in Section 365. The delay built into Section 365(d)(2), without a 

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mechanism for earlier assumption or rejection, worked a hardship on lessors, particularly shopping 

center lessors. This ultimately culminated in the 1984 enactment of Section 365(d)(4), which made the 

60-day time limit imposed by Section 365(d)(1) in liquidation proceedings applicable to nonresidential 

leases of real property in reorganization cases. 

25. Section 365(d)(4) was created as part of the statutory provisions known as the 

Shopping Center Amendments of 1984. Initially, it provided that a nonresidential real property lease is 

deemed rejected if the trustee does not assume or reject it within 60 days after the order for relief, or 

within such additional time as the court fixes, for cause, within such 60-day period. The legislation’s 

purpose was to compel debtors to make prompt and effective assumptions and rejections of 

nonresidential real property leases, and it was not to extend this time. That notwithstanding, debtors 

made various attempts to extend the time to assume or reject leases multiple times during bankruptcy 

cases, including requests to extend the time to assume or reject leases after confirmation. While these 

requests were generally denied as contrary to legislative intent, further changes were necessary to clarify 

the law in this area. 

26. In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer 

Protection Act, which included explicit language regarding the outside date for assumption or rejection 

of nonresidential real property leases. This is the current version of Section 365(d)(4), and it provides 

that the deadline to assume or reject leases is the earlier of the time set by the statute (as may have been 

extended by the Court) or the date of entry of the confirmation order. As a result, Congress has 

specifically stated that debtors cannot extend the time to assume or reject there nonresidential real 

property leases beyond the date of confirmation. The Disclosure Statement and Plan must be modified 

to provide that all determinations as to which Leases are to be assumed or rejected under the Plan by the 

Debtors shall be made no later than the entry of the confirmation order. 

D. The Debtors should pay all undisputed cure amounts not later than the Effective Date. 

27. Consistent with the above, the Debtors should pay all undisputed cure amounts 

for assumed Leases on the Effective Date of the Plan along with other administrative claims. Section 

365(b)(1)(A) requires that the Debtors promptly cure outstanding balances due under the Leases upon 

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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. 

E. The Debtors Must Provide Landlords With Adequate Assurance Information and Cure 

Amounts with Sufficient Time to Object. 

28. The Debtors may not assume or assume and assign leases unless they demonstrate 

adequate assurance of future performance. 11 U.S.C. § 365(b)(1)(C); see also 11 U.S.C. § 365(f)(2). 

Providing 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 Indus., 

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). The obligation to comply with Section 365(b) and Section 

365(f) is unaffected by maneuvering the assumption and assignment process through a Plan. Courts 

require a specific factual showing through competent evidence to determine whether a debtor 

demonstrates adequate assurance of future performance. See, e.g., Matter of Haute Cuisine, Inc., 58 B.R. 

390 (Bankr. M.D. Fla. 1986) (even though experts presented cash flow projections, the court found that 

insufficient documentary evidence had been presented). To determine whether a party provides 

adequate assurance of future performance under Section 365(b), courts have looked to sufficient 

economic backing, economic conditions, certificates, credit reports, escrow deposits or other similar 

forms of security or guarantee. In re Lafayette Radio Elecs. Corp., 9 B.R. 993 (Bankr. E.D.N.Y. 1981); 

In re Belize Airways, 5 B.R. 152 (Bankr. S.D. Fla. 1980). 

29. The Disclosure Statement and Plan do not provide any information on what 

Adequate Assurance information the Debtors intend to provide to the Landlords. Moreover, the 

documents specify no deadline whatsoever by which Adequate Assurance information will be provided. 

Absent sufficient Adequate Assurance information and a reasonable period of time to review such 

information, Landlords that have leases that are being assumed by the Plan cannot properly assess the 

tenant that will take over the those leases post-confirmation. 

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30. The Debtors should be required to provide Landlords with Adequate Assurance 

information and the Cure Notice no less than fourteen (14) days before any objection is due to be filed. 

There is more than enough time for the Debtors to provide the Landlords with this meaningful 

opportunity to review this crucial information and prepare objections. 

F. The Plan improperly seeks to modify rights under the Leases. 

31. The Plan provides that the assumption of leases shall serve as a full release of any 

monetary and non-monetary defaults. See Plan, Article 8.2(d). A debtor assumes its leases cum onere, 

or subject to existing burdens. In re Washington Capital Aviation & Leasing, 156 B.R. 167,172 (Bankr. 

E.D. Va. 1993). While the Debtors must pay all outstanding balances due under the Lease as cure at the 

time of assumption, the Debtors assume, and must honor, other obligations under the Leases, regardless 

of when they arise. The Debtors cannot avoid these obligations through releases or waivers in their 

Plan. 

32. In addition to rent and related monthly charges, the Debtors bear responsibility for 

other charges under the Leases that may not yet be known or which may not yet have been reconciled 

and/or adjusted from the pre-assumption periods. For instance, the Debtors occupy retail space at the 

Centers pursuant to triple-net leases, where they typically pay rent and related lease charges in advance 

for each month. In addition to a base minimum rent, the Debtors pay a pro-rata share of other charges 

and expenses, such as real property taxes, insurance, common area maintenance (“CAM”) fees, and 

percentage rent. Certain charges, such as CAM and property taxes are estimated prospectively, billed to 

and paid by the tenant during the year based upon such estimate, and then reconciled after year-end. 

Year-end reconciliations and adjustments for previous years may not yet be complete (i.e. – year-end 

reconciliations and adjustments that accrued through 2019 have not been billed for many locations, and 

such charges for 2020 will not be billed until 2021). Moreover, certain charges may be paid in arrears, 

and cannot be calculated (in some cases) until a year or more after year-end. These accrued but unbilled 

charges are not yet due under the Leases, and they do not create a current default or payment obligation 

that is part of the cure payment required to assume the Leases. Nevertheless, Debtors remain 

responsible for all accrued or accruing charges under the Leases, and must pay such charges when they 

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come due under the Leases. The Debtors cannot assume the Leases pursuant to the Plan, and then try to 

use the Plan or confirmation order to release their obligation to pay these accrued or accruing, but 

unbilled, charges that come due under the Leases in the ordinary course. 

33. The Leases also contain provisions that require the Debtors to indemnify 

Landlords with respect to various claims, which claims may not become known until after the 

assumption of the Leases (i.e., personal injury claims at the Premises and damage to property by the 

Debtors or their agents). Any assumption of the Leases must be subject to the terms of the Leases, 

including the continuation of all indemnification obligations, regardless of when they arose.4 Nothing in 

the Plan or confirmation order should act as a waiver or release of any indemnity or other rights that 

exist under the Leases. 

G. The Plan improperly seeks to deprive creditors of their setoff and recoupment rights. 

34. Through the injunction provisions, the Debtors improperly seek to deprive 

Landlords of their rights to setoff and recoupment. See Disclosure Statement, at Article VI.E.5. To the 

extent any claim objections or preference actions are prosecuted against the Landlords following Plan 

confirmation, the Landlords should not be deprived of their defensive right to assert setoffs or exercise 

recoupment, or limited in their ability to enforce these rights pursuant to applicable law and against any 

security deposits they may hold under the Leases. The Debtors fail to provide any authority for seeking 

to void Landlords’ ability to exercise their setoff and recoupment rights, and Debtors should not be 

permitted to deprive Landlords of these rights. See Carolco Television Inc. v. Nat’l Broadcasting Co. 

(In re De Laurentiis Entm’t Grp. Inc.), 963 F.2d 1269 (9th Cir. 1992), cert denied 506 U.S. 918 (1992) 

(setoff rights survive plan confirmation); see also In re Luongo, 259 F.3d 323, 333 (5th Cir. 2001); 

Folger Adam Security, Inc. v. DeMatteis/MacGregor, JV, 209 F.3d 252, 257-61 (3d Cir. 2000) 

(recoupment defense survives free and clear sale of debtor’s assets). This is especially true where, as 

here, the Plan seems to preserve all of the Debtors' rights to such setoff and recoupment. 

4

 Any ability to assume the Leases is subject to the protections provided by Section 365(b) and (f). Therefore, any 

assumption must be in accordance with all provisions of the Leases. 

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15 

H. The injunction provisions of the Plan as described in the Disclosure Statement are 

overbroad and ambiguous.

35. The releases and injunction provisions referenced in the Disclosure Statement and 

Plan are overbroad and require revision. See Disclosure Statement, at Article VI.E.5 & 6. The language 

does not adequately address the fact that various claims and rights under the Leases must survive 

confirmation of the Plan for the continuing obligations that exist under the Leases. The Debtors (or 

successor) assume the Leases subject to their terms, and must assume all obligations owing under the 

Leases, including obligations that have accrued but may not yet have been billed under each Lease and 

indemnity obligations under the Leases. 

36. Landlords may have claims for year-end reconciliation payments that have 

accrued (or are accruing) prior to confirmation, which have not yet been billed under the Leases. These 

legitimate lease obligations must survive plan confirmation. The Debtors occupy space at shopping 

centers pursuant to triple-net leases, where they pay rent and related lease charges in advance for each 

month. The Debtors may pay fixed minimum rent, along with a pro-rata share of expenses such as real 

property taxes, insurance, common area maintenance (“CAM”) fees, and the like. Certain charges, such 

as CAM and property taxes, are estimated prospectively, billed to and paid by the tenant during the year, 

and then reconciled after year-end. The reconciliation compares the amounts estimated and paid against 

actual charges incurred by the property. To the extent the estimated payments exceed actual charges, the 

result is a credit to the tenant. To the extent the estimated payments do not cover actual charges incurred 

by the Center, the result is an additional amount (or debit) for which the tenant is liable. Year-end 

reconciliations and adjustments for the Debtors for 2019 may not be completed prior to Plan 

confirmation for many locations. In other instances, certain charges (such as property taxes) may be 

paid in arrears or only billed annually. 

37. In addition, the Leases require the Debtors to indemnify and hold the Landlords 

harmless with respect to claims at the Premises. Such claims may not become known until after the 

effective date of the Plan, examples of which may include such claims as personal injuries at the 

Premises and damage to the Premises or Centers by the Debtors or their agents. The Plan cannot cut off 

these indemnification obligations, regardless of when they arose. Nothing in any Plan or confirmation 

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16 

order should preclude the Landlords from pursuing the Debtors or Reorganized Debtors for any 

indemnification obligation that Landlords have under the Leases, and the Plan and any order should 

specifically preserve all rights of the parties with respect to assumed Leases. 

H. The Plan Cannot Constitute an Objection to Claims.

38. Article 4.7 of the Plan states that “[t]he Plan shall be deemed a filed objection for 

purposes of Section 502 of the Bankruptcy Code to any Claim arising out of or relating to the rejection 

of an Executory Contract or Unexpired Lease whose holder is seeking the allowance of such Claim in 

excess of the amounts allowable under Section 502(b) of the Bankruptcy Code.” 

39. Rule 3007(a) of the Federal Rules of Bankruptcy Procedure requires that “[a] 

objection to the allowance of a claim and a notice of objection that substantially conforms to the 

appropriate Official Form shall be filed and served at least 30 days before any scheduled hearing on the 

objection or any deadline for the claimant to request a hearing.” Fed. R. Bankr. P. 3007(a)(1). Rule 

3007(e) enumerates additional requirements that must be met for filing an omnibus objection to more 

than one claim, including that such an objection state in a conspicuous place that claimants receiving the 

objection should locate their names and claims in the objection, list claimants alphabetically and provide 

a cross-reference to claim numbers, state the grounds of the objection to each claim, state in the title the 

identity of the objector and the grounds for the objections, and contain objections to no more than 100 

claims. 

40. The Plan fails to satisfy any of these requirements to constitute a valid claim 

objection and provide affected claimants with sufficient notice and an opportunity to respond. As an 

initial matter, many Landlords do not yet know whether their Leases will be assumed or rejected, so they 

do not know if this language will even apply to their claims. The Plan does not comport with the 

Official Form for a claim objection, nor does it meet the requirements to constitute an omnibus objection 

to claims. 

41. For these reasons, this provision is inappropriate and should be removed from the 

Plan. 

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III. RESERVATION OF RIGHTS 

42. Landlords reserve their rights to raise further objections to the Disclosure 

Statement and Plan and in response to any amended Disclosure Statement or Plan filed by the Debtors. 

IV. JOINDER IN OBJECTIONS 

43. Landlords also join in any objection of the Official Committee of Unsecured 

Creditors, as well as the objections of other landlords, to the extent not inconsistent with this Objection. 

V. CONCLUSION 

Based on the foregoing, Landlords request that the Court not approve the Disclosure 

Statement unless and until the Debtors provide adequate information as required by Section 1125, 

amend the Disclosure Statement and Plan so that the Disclosure Statement describes a Plan that is 

confirmable under Section 1129, including the modifications requested herein, and grant such further 

relief as the Court deems proper. 

Respectfully submitted 

By: /s/ Lisa Hudson Kim 

Dennis T. Lewandowski, Esquire (VSB #22232) 

Lisa Hudson Kim, Esquire (VSB #45484) 

Clark J. Belote, Esquire (VSB #87310) 

KAUFMAN & CANOLES, P.C. 

4101 Parks Avenue, Suite 700 

Virginia Beach, Virginia 23451 

Telephone: (757) 491-4017 

Facsimile: (888)360-9092 

Email: lhkim@kaufcan.com 

dtlewand@kaufcan.com 

cjbelote@kaufcan.com 

 and 

Dustin P. Branch admitted pro hac vice

BALLARD SPAHR LLP 

2029 Century Park East, Suite 800 

Los Angeles, CA 90067-3012 

Telephone: (424) 204-4354 

Facsimile: (424) 204-4350 

E-mail: branchd@ballardspahr.com 

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and 

Leslie C. Heilman admitted pro hac vice

Leslie Heilman, Esquire (No. 4716) 

BALLARD SPAHR LLP 

919 N. Market Street, 11th Floor 

Wilmington, DE 19801 

Telephone: (302) 252-4465 

Facsimile: (302) 252-4466 

Email: heilmanl@ballardspahr.com 

Counsel to 5616 Bay Street Investors LLC, Brixmor 

Operating Partnership LP, CenterCal Properties, 

LLC, DDR Deer Park Town Center LLC, ERY 

Retail Podium LLC, EDENS, Federal Realty 

Investment Trust, Gateway Knollwood, LLC, PGIM 

Real Estate, Related Companies, Retail Properties 

of America, Inc., Starwood Retail Partners LLC, 

The Forbes Company, The Macerich Company, 

Trademark Property Company, and Urban Edge 

Properties L.P. 

CERTIFICATE OF SERVICE 

The undersigned hereby certifies that on June 18, 2020, she caused the foregoing to be 

electronically filed and served via the Court’s CM/ECF system upon all parties registered to receive 

such notice and upon the Service List as indicated therein. 

/s/ Lisa Hudson Kim

Lisa Hudson Kim 

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SCHEDULE A 

5616 BAY STREET INVESTORS LLC

Store No. Unknown Bay Street Emeryville, CA

BRIXMOR OPERATING PARTNERSHIP LP

Store No. Unknown The Center at Preston Ridge Frisco, TX

CENTERCAL PROPERTIES, LLC

Store No. Unknown 2nd & PCH Long Beach, CA

Store No. Unknown Bridgeport Village Tualatin, OR

Store No. Unknown The Village at Meridian Meridian, ID

DDR DEER PARK TOWN CENTER LLC

Store No. Unknown Deer Park Town Center Deer Park, IL

EDENS

Store No. Unknown Atherton Mill Charlotte, NC 

Store No. Unknown Mosaic Fairfax, VA 

Store No. Unknown Park Road Shopping Center Charlotte, NC 

Store No. Unknown Trenholm Plaza Columbus, SC 

ERY RETAIL PODIUM LLC

Store No. Unknown Hudson Yards New York, NY 

FEDERAL REALTY INVESTMENT TRUST

Store No. Unknown Assembly Row Somerville, MA 

Store No. Unknown Plaza El Segundo El Segundo, CA 

Store No. Unknown Third Street Promenade Santa Monica, CA 

Store No. Unknown The Grove Shrewsbury, NJ 

Store No. Unknown Mercantile 

Westgate Center San Jose, CA 

Store No. Unknown Santana Row San Jose, CA 

Store No. Unknown Barracks Road Charlottesville, VA 

Store No. Unknown The Point El Segundo, CA 

Store No. Unknown The Grove Shrewsbury, NJ 

Store No. Unknown Third Street Promenade Santa Monica, CA 

GATEWAY KNOLLWOOD, LLC

Store No. Unknown Shoppes at Knollwood St. Louis Park, MN

PGIM REAL ESTATE

Store No. Unknown The Mercato Naples, FL 

RELATED COMPANIES

Store No. Unknown The Shops at Columbus Circle New York, NY 

RETAIL PROPERTIES OF AMERICA

Store No. Unknown Southlake Town Square – Grande 

Avenue (J. Crew)

Southlake, TX 

Store No. Unknown Southlake Town Square – Grande 

Avenue (Madewell)

Southlake, TX 

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2 

18536915v1 

STARWOOD RETAIL PARTNERS LLC

Store No. Unknown Franklin Park Toledo, OH

THE FORBES COMPANY

Store No. Unknown Somerset Collection North Troy, MI 

Store No. Unknown Somerset Collection South Troy, MI 

Store No. Unknown The Gardens Palm Beach Gardens, FL 

Store No. Unknown The Mall at Millenia Orlando, FL 

THE MACERICH COMPANY

Store No. Unknown Arden Fair Mall (J. Crew) Sacramento, CA 

Store No. Unknown Arden Fair Mall (Madewell) Sacramento, CA 

Store No. Unknown Biltmore Fashion Park Phoenix, AZ 

Store No. Unknown Broadway Plaza (J. Crew) Walnut Creek, CA 

Store No. Unknown Broadway Plaza (Madewell) Walnut Creek, CA 

Store No. Unknown The Village at Corte Madeira (J. 

Crew) Corte Madera, CA 

Store No. Unknown The Village at Corte Madeira 

(Madewell) Corte Madera, CA 

Store No. Unknown Fashion Outlets of Chicago Rosemont, IL 

Store No. Unknown Fashion Outlets of Niagara Falls 

USA Niagara Falls, NY 

Store No. Unknown FlatIron Crossing Broomfield, CO 

Store No. Unknown Kierland Commons Scottsdale, AZ 

Store No. Unknown Scottsdale Fashion Square Scottsdale, AZ 

Store No. Unknown The Oaks Thousand Oaks, CA 

Store No. Unknown Twenty Ninth Street (J. Crew 

Factory) Boulder, CO 

Store No. Unknown Twenty Ninth Street (Madewell) Boulder, CO 

Store No. Unknown Tysons Corner Center McLean, VA 

Store No. Unknown Washington Square Portland, OR 

TRADEMARK PROPERTY COMPANY

Store No. Unknown Bridgewater Commons (J. Crew) Bridgewater Township, NJ 

Store No. Unknown Bridgewater Commons (Madewell) Bridgewater Township, NJ 

URBAN EDGE PROPERLIES L.P.

Store No. Unknown J. Crew at Bergen Town Center Paramus, NJ 

Store No. Unknown The Men’s Shop at Bergen Town 

Center Paramus, NJ 

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