Joshua A. Sussberg, P.C. (admitted pro hac vice) Michael A. Condyles (VA 27807)

Emily E. Geier (admitted pro hac vice) Peter J. Barrett (VA 46179)

AnnElyse Scarlett Gains (admitted pro hac vice) Jeremy S. Williams (VA 77469)

KIRKLAND & ELLIS LLP Brian H. Richardson (VA 92477)

KIRKLAND & ELLIS INTERNATIONAL LLP KUTAK ROCK LLP

601 Lexington Avenue 901 East Byrd Street, Suite 1000

New York, New York 10022 Richmond, Virginia 23219-4071

Telephone: (212) 446-4800 Telephone: (804) 644-1700

Facsimile: (212) 446-4900 Facsimile: (804) 783-6192

-andJoshua M. Altman (admitted pro hac vice)

KIRKLAND & ELLIS LLP

KIRKLAND & ELLIS INTERNATIONAL LLP

300 North LaSalle Street

Chicago, Illinois 60654

Telephone: (312) 862-2000

Facsimile: (312) 862-2200

Co-Counsel to the Debtors and Debtors in Possession

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

RICHMOND DIVISION

)

In re: ) Chapter 11

)

PIER 1 IMPORTS, INC., et al.,

1

) Case No. 20-30805 (KRH)

)

Debtors. ) (Jointly Administered)

)

SUPPLEMENT TO DEBTORS’ OMNIBUS MOTION 

FOR ENTRY OF AN ORDER (I) AUTHORIZING THE DEBTORS 

TO WIND DOWN OPERATIONS, (II) AUTHORIZING THE DEBTORS 

TO CONDUCT STORE CLOSINGS, AND (III) GRANTING RELATED RELIEF

The above-captioned debtors and debtors in possession (collectively, the “Debtors”)2file 

this supplement (this “Motion Supplement”) in further support of the Debtors’ Omnibus Motion 

 

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

number, are set forth in the Order (I) Directing Joint Administration of Chapter 11 Cases and (II) Granting 

Related Relief [Docket No. 76]. The location of the Debtors’ service address is PO BOX 961020, Fort Worth, 

TX 76161-0020. Or, for delivery by Airborne, Federal Express & other Courier Services: 685 John B. Sias 

Memorial Parkway Suite 255, Fort Worth, TX 76134.

2 Capitalized terms used but not otherwise defined in this Motion Supplement shall have the meanings ascribed to 

them in the Wind-Down Motion or as later defined herein, as applicable.

Case 20-30805-KRH Doc 696 Filed 05/26/20 Entered 05/26/20 22:05:42 Desc Main

Document Page 1 of 10
2

for Entry of an Order (I) Authorizing the Debtors to Wind Down Operations, (II) Authorizing the 

Debtors to Conduct Store Closings, and (III) Granting Related Relief [Docket No. 671] 

(the “Wind-Down Motion”). In support of this Motion Supplement, the Debtors respectfully state 

as follows:

Preliminary Statement

1. On May 19, 2020, the Debtors filed the Wind-Down Motion, seeking approval to 

wind down operations and granting related relief. The Wind-Down Motion contemplated that the 

Debtors, the DIP Lenders, the Ad Hoc Group of Term Lenders, and the Creditors Committee would 

finalize and execute a Term Sheet and develop a Wind-Down Budget that would bring a 

consensual resolution to these chapter 11 cases. The Debtors filed the Term Sheet and current 

proposed Wind-Down Budget on May 25, 2020 [Docket No. 688]. 

2. The Term Sheet contemplates one additional component of the Wind-Down that 

was not included in the Wind-Down Motion. Specifically, the Debtors’ deadline to assume or 

reject3unexpired leases pursuant to section 365(d)(4) of the Bankruptcy Code 

(the “365(d)(4) Deadline”) is currently September 14, 2020. See Order Extending the Time Within 

Which the Debtors Must Assume or Reject Unexpired Leases of Nonresidential Real Property

[Docket No. 346] (the “Extension Order”). The Debtors currently estimate that, as a result of 

delays caused by COVID-19, they will not be out of the majority of their stores by the 365(d)(4) 

Deadline; the Debtors currently anticipate completing the Store Closings, and exiting the 

properties, at approximately 301 stores by no later than the end of September and the remaining 

 

3 At this time, the Debtors intend to reject all leases at the end of the Store Closings. If the Debtors determine to 

assume or assume and assign a lease, the Debtors will file a motion before the 365(d)(4) Deadline to preserve this 

option. The Debtors consider this a remote possibility.

Case 20-30805-KRH Doc 696 Filed 05/26/20 Entered 05/26/20 22:05:42 Desc Main

Document Page 2 of 10
3

approximately 240 stores by the end of October.

4

 In exchange for the landlords allowing the 

Debtors to remain in the applicable properties beyond the 365(d)(4) Deadline and until the 

conclusion of the Store Closings, the Debtors will (a) continue to timely satisfy all rent obligations

in the ordinary course of business through the date that the Debtors vacate the premises (with such 

rent to be paid based on the actual weeks of occupancy), and (b) reimburse the landlord for April 

and May rent (such rent, the “Deferred Rent Claims”)5by no later than September 12, 2020. If 

the landlords do not consent to this later lease rejection date, the Debtors will work with the 

landlord to vacate the premises as soon as possible on or around the 365(d)(4) Deadline, and such 

landlord will be entitled to an administrative expense claim on account of the Deferred Rent 

Claims, which claim will be treated just as all other administrative expenses in these chapter 11 

cases. 

3. The Debtors believe that this process is fair and reasonable under the circumstances 

and will help to mutually resolve the landlords’ concerns regarding the payment of Deferred Rent 

Claims and the Debtors’ need to maintain their occupancy to finish the Store Closings in a 

value-maximizing manner. For the avoidance of doubt, (i) the Debtors will pay rent each week 

(based on the current lease rate) for each week of occupancy through and after the current 365(d)(4) 

Deadline and abide by other lease terms and (ii) the Debtors currently intend to reject all remaining

 

4 The Debtors recognize and concede that this puts the rejection date beyond the Debtors’ 365(d)(4) Deadline, but 

the Debtors will not change their determination regarding whether to reject or assume such lease after the 

365(d)(4) Deadline.

5 See the Order (I) Approving Relief Related to the Interim Budget, (II) Temporarily Adjourning Certain Motions 

and Applications for Payments, and (III) Granting Related Relief [Docket No. 493] 

(the “Limited Operation Order”); and the First Supplemental Order (I) Approving Relief Related to the Interim 

Budget, (II) Temporarily Adjourning Certain Motions and Applications for Payments, and (III) Granting Related 

Relief [Docket No. 629] (the “Supplemental Limited Operation Order”).

Case 20-30805-KRH Doc 696 Filed 05/26/20 Entered 05/26/20 22:05:42 Desc Main

Document Page 3 of 10
4

lease upon the conclusion of the Store Closings, and will not change that determination after the 

365(d)(4) Deadline.

Relief Requested

4. As contemplated in the Wind-Down Motion, and as modified to reflect the relief 

requested in this Motion Supplement, the Debtors seek entry of an order, substantially in the form 

attached hereto as Exhibit A (the “Order”): 

 granting all of the relief requested in the Wind-Down Motion;

 authorizing the Debtors to implement procedures and pay the Deferred Rent Payment 

in connection with remaining in stores through the end of the Store Closings; and

 granting related relief.

Background

5. The Debtors are party to a large number of leases with respect to their remaining

stores. Pursuant to section 365(d)(4)(A) of the Bankruptcy Code, the Debtors were required to 

assume or reject the Leases by June 16, 2020 if they did not receive an extension from the Court. 

On March 13, 2020, the Court entered the Extension Order, thereby extending the deadline to 

assume or reject the Leases to September 14, 2020. Because the Debtors anticipate the Store 

Closings will, in some cases, extend beyond September 14, 2020, the Debtors are seeking certain 

landlords’ permission to remain as tenants under certain of the remaining leases beyond the 

365(d)(4) Deadline.

6. As the Court is aware, the Debtors’ stores were closed in April and May and rent 

for that period was deferred in accordance with the Limited Operation Order and the Supplemental 

Limited Operation Order. The Debtors intend to pay all Deferred Rent Claims pursuant to the 

Limited Operation Order and the Supplemental Limited Operation Order on or prior to

September 12, 2020, subject to the procedures described herein. 

Case 20-30805-KRH Doc 696 Filed 05/26/20 Entered 05/26/20 22:05:42 Desc Main

Document Page 4 of 10
5

7. Proposed Procedures.

a. The Debtors will file a list of proposed rejection dates for all stores on or 

prior to July 10, 2020 (the “Rejection Notice”). This list will be subject to 

change; provided that the Debtors will need landlord consent to push any 

rejection date later than that which is set out in the Rejection Notice. 

b. Any landlord objecting to the proposed rejection date on the grounds that it 

is beyond the 365(d)(4) Deadline shall be required to file an objection prior 

to July 24, 2020.

1. Any landlord objecting to the proposed rejection date set forth on 

the Rejection Notice that does not subsequently agree to such 

proposed rejection date will have their Deferred Rent Claims treated 

as all other administrative claims in these chapter 11 cases. The 

Debtors will work with the landlord to vacate the premises as soon 

as possible on or around the 365(d)(4) Deadline.

c. Any landlord that does not file an objection prior to July 24, 2020 (each 

such landlord a “Consenting Landlord”) will be deemed to consent to the 

rejection date set forth on the Rejection Notice and will receive payment of 

the Deferred Rent amounts on or prior to September 12, 2020 (such 

payment, the “Deferred Rent Payment”).

8. The Debtors believe that the Deferred Rent Payment is reasonable consideration

for the benefit of completing the Store Closings in an orderly manner. As a result of the Debtors’ 

Wind-Down situation, the Debtors have no additional consideration to provide any non-consenting 

landlords. The Debtors believe that these procedures provide the opportunity for the greatest 

recovery for all stakeholders.

9. As further set forth below, the Debtors respectfully request that the Court grant the 

relief requested herein.

Basis for Relief

A. The Use of the Property of the Debtors’ Estates to Obtain Landlord Agreement for 

Retained Possession of the Stores is a Sound Exercise of the Debtors’ Business 

Judgment.

10. Section 363(b)(1) of the Bankruptcy Code authorizes a bankruptcy court, after 

notice and a hearing, to authorize a debtor to “use, sell, or lease, other than in the ordinary course 

Case 20-30805-KRH Doc 696 Filed 05/26/20 Entered 05/26/20 22:05:42 Desc Main

Document Page 5 of 10
6

of business, property of the estate.” 11 U.S.C. § 363(b)(1). To approve a use, sale or lease of 

property other than in the ordinary course of business, the court must find “some sound business 

purpose” that satisfies the business judgment test. See In re W.A. Mallory Co., 214 B.R. 834, 836 

(Bankr. E.D. Va. 1997); see also In re Glover, No. 09-74787 at *4 (SCS) 

(Bankr. E.D. Va. Mar. 31, 2010) (“The standard in this Circuit is whether the debtor in possession 

has exercised sound business judgment.”) (citing Lubrizol Enterprises, Inc. v. Richmond Metal 

Finishers, Inc., 756 F.2d 1043, 1046 (4th Cir. 1985)). Courts generally show great deference to a 

debtor’s decisions when applying the business judgment standard. See In re Alpha Nat. Res., Inc., 

546 B.R. 348, 356 (Bankr. E.D. Va. 2016) (“Courts apply the deferential business judgment test 

when analyzing transactions under § 363(b)(1).”). Deference to a debtor’s business judgment is 

inappropriate only if such business judgment is “so manifestly unreasonable that it could not be 

based on sound business judgment, but only on bad faith, or whim or caprice.” Lubrizol Enters., 

Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043, 1047 (4th Cir. 1985).

11. In addition, section 105(a) of the Bankruptcy Code provides, in relevant part that 

“[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out 

the provisions of this title.” 11 U.S.C. § 105(a).

12. As set forth herein, sound business reasons exist to justify the Debtors using assets 

of the Debtors’ estates as consideration for each landlord’s agreement for allowing the Debtors to 

retain possession of the stores through the Store Closings. Granting the relief requested herein 

will provide the Debtors with additional time to conclude their wind down and Store Closings. 

Premature rejections could grievously harm the value realized from the Store Closings and the 

liquidation of the Debtors’ remaining inventory. The Debtors believe, in their business judgment, 

that the value of taking the requisite time to conduct its operational wind-down far outweighs the 

Case 20-30805-KRH Doc 696 Filed 05/26/20 Entered 05/26/20 22:05:42 Desc Main

Document Page 6 of 10
7

value of any consideration they may give to landlords in conjunction with the relief requested 

herein.6 

13. For the foregoing reasons, the Debtors respectfully request that Court authorize, but 

not direct, the Debtors to follow the procedures set forth herein and provide the Deferred Rent 

Payment to landlords in exchange for permission to retain possession of the Debtors’ remaining 

stores in order to conduct the Store Closings and Wind-Down.

Waiver of Memorandum of Points and Authorities

14. The Debtors respectfully request that this Court treat this Motion Supplement as a 

written memorandum of points and authorities or waive any requirement that this Motion

Supplement be accompanied by a written memorandum of points and authorities as described in 

Local Bankruptcy Rule 9013-1(G).

Notice

15. The Debtors will provide notice of this Motion Supplement via first class mail, 

facsimile or email (where available) to: (a) the United States Trustee for the Eastern District of 

Virginia, Attn: Kenneth N. Whitehurst III and Shannon F. Pecoraro; (b) counsel to the official 

committee of unsecured creditors; (c) the agents under the Debtors’ prepetition secured facilities 

and counsel thereto; (d) the DIP Agents and their respective counsel thereto; (e) the indenture 

trustee to the Debtors’ industrial revenue bonds; (f) counsel to the ad hoc group of term loan 

lenders; (g) the lenders under certain Company-owned life insurance policies; (h) the Debtors’ 

Canadian counsel; (i) the United States Attorney’s Office for the Eastern District of Virginia; 

(j) the Internal Revenue Service; (k) the office of the attorneys general for the states in which the 

 

6 The Debtors recognize that in the alternative, the Debtors could request relief in the form of an extension of the 

365(d)(4) Deadline. The Debtors determined to seek this more limited relief given the certainty of rejection of 

the leases.

Case 20-30805-KRH Doc 696 Filed 05/26/20 Entered 05/26/20 22:05:42 Desc Main

Document Page 7 of 10
8

Debtors operate; (l) the Securities and Exchange Commission; (m) the landlords for the Additional 

Closing Stores; (n) Gordon Brothers Retail Partners LLC, and; (o) other parties that have requested 

notice pursuant to Bankruptcy Rule 2002 (collectively, the “Notice Parties”). The Debtors submit 

that, in light of the nature of the relief requested, no other or further notice need be given.

No Prior Request

16. No prior request for the relief sought in this Motion Supplement has been made to 

this or any other court except as set forth in the Wind-Down Motion.

[Remainder of page intentionally left blank]

Case 20-30805-KRH Doc 696 Filed 05/26/20 Entered 05/26/20 22:05:42 Desc Main

Document Page 8 of 10
WHEREFORE, for the reasons set forth herein and in the Wind-Down Motion, the Debtors 

respectfully request that the Court enter an order granting the relief requested herein and in the 

Wind-Down Motion and such other and further relief as the Court deems appropriate.

Richmond, Virginia

Dated: May 26, 2020

/s/ Jeremy S. Williams

KUTAK ROCK LLP KIRKLAND & ELLIS LLP

Michael A. Condyles (VA 27807) KIRKLAND & ELLIS INTERNATIONAL LLP

Peter J. Barrett (VA 46179) Joshua A. Sussberg, P.C. (admitted pro hac vice)

Jeremy S. Williams (VA 77469) Emily E. Geier (admitted pro hac vice)

Brian H. Richardson (VA 92477) AnnElyse Scarlett Gains (admitted pro hac vice)

901 East Byrd Street, Suite 1000 601 Lexington Avenue

Richmond, Virginia 23219-4071 New York, New York 10022

Telephone: (804) 644-1700 Telephone: (212) 446-4800

Facsimile: (804) 783-6192 Facsimile: (212) 446-4900

Email: Michael.Condyles@KutakRock.com Email: joshua.sussberg@kirkland.com

Peter.Barrett@KutakRock.com emily.geier@kirkland.com

Jeremy.Williams@KutakRock.com annelyse.gains@kirkland.com

Brian.Richardson@KutakRock.com

-andCo-Counsel to the Debtors

and Debtors in Possession Joshua M. Altman (admitted pro hac vice)

300 North LaSalle Street

Chicago, Illinois 60654

Telephone: (312) 862-2000

Facsimile: (312) 862-2200

Email: josh.altman@kirkland.com

Co-Counsel to the Debtors and Debtors in Possession

Case 20-30805-KRH Doc 696 Filed 05/26/20 Entered 05/26/20 22:05:42 Desc Main

Document Page 9 of 10
Exhibit A

Revised Order

[To come]

Case 20-30805-KRH Doc 696 Filed 05/26/20 Entered 05/26/20 22:05:42 Desc Main

Document Page 10 of 10