Stephen K. Gallagher, VSB No. 38085 

VENABLE LLP 

8010 Towers Crescent Drive, Suite 300 

Tysons Corner, VA 22182 

Phone: (703) 760-1600 

Fax: (703) 821-8949 

skgallagher@venable.com 

Counsel to Worldgate Centre Owner, LLC 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

(Alexandria Division) 

In Re: 

ClubX, LLC, 

Debtor. 

BK No.: 20-12470-KHK 

Chapter 7 

WORLDGATE CENTRE OWNER, LLC’S ANSWER 

TO TRUSTEE’S CLAIM OBJECTION

Worldgate Centre Owner, LLC (“Worldgate”), by and through its undersigned counsel, 

hereby files its Answer in opposition to the Trustee’s Objection to Worldgate’s Proof of Claim 

and states as follows: 

1. Worldgate filed its Proof of Claim of Claim No. 1 on April 22, 2021. 

2. Claim No. 1 is in the amount of $27,968,342.65 and is for Debtor’s obligations 

under a Guaranty of Commercial Lease. 

3. The Trustee filed its Objection to Claim No. 1 on November 4, 2022. The claim 

objection should be overruled because Worldgate has suffered significant damages that are the 

subject of Claim No. 1, which is valid on its face and subject to amendment. 

4. The Trustee’s Objection first states that Worldgate has not provided sufficient 

information and documentation to support its claim for unpaid rent. However, in support of 

Claim No. 1 Worldgate has provided its Statement of Claim from an arbitration claim which sets 

forth Worldgate’s claim of $27,968,342.65, the 1994 Commercial Lease, and the Guaranty of 

Commercial Lease. Worldgate has also provided to the Trustee a calculation of the 

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$27,968,342.65 (which includes the calculation of unpaid rent), all amendments to the 1994 

Commercial Lease, and the letter terminating the lease, along with other documentation. This 

documentation is sufficient to support Worldgate’s claim for unpaid rent. The bare statement 

made by the Trustee that the claim amount does not match the amount of debt reflected in the 

Debtor’s books and records is not sufficient to disallow or reduce the claim, and no such books 

and records were filed with the objection. Worldgate has insufficient knowledge of the Debtor’s 

books and records to admit or deny statements about them, and so denies any allegation that the 

claim amount does not match the amount of debt reflected in the Debtor’s books and records. 

5. The Trustee states that Worldgate has provided insufficient documentation to 

verify calculation of the termination damages, which Worldgate denies. The Trustee suggests 

that Worldgate must show mitigation for post-petition income, application of present value of 

money deductions, applicable fair market value deductions, and applicable limitations under the 

Bankruptcy Code. But, the Trustee has failed to provide support that Worldgate’s claim for 

termination damages against the guarantor is subject to these limitations/deductions. For 

example, there is nothing in the Guaranty of Commercial Lease that suggests that Worldgate 

must mitigate its damages. See Southern Bank & Trust Co. v. Prosperity Beach, LLC, 2015 WL 

2169500, *4 (E.D. Va. 2015). In any event, the allegations that Worldgate must show mitigation 

for post-petition income, application of present value of money deductions, applicable fair 

market value deductions, and applicable limitations under the Bankruptcy Code are legal 

conclusions or arguments that do not require admission or denial, and therefore Worldgate denies 

any factual allegations contained therein. 

6. The Trustee also alleges that there may be certain defenses, counterclaims, and 

offsets raised by the tenant in the state court litigation involving the lease that may also be 

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available to the Debtor in determining the proper amount owed under Claim No. 1. While 

defenses, counterclaims, or offsets may have been raised by the tenant in prepetition litigation, 

they were mere assertions and remain unproven. Damages under the underlying lease remain 

subject to arbitration, which was stayed, and there has been no determination of the validity or 

amount of any alleged defenses, counterclaims, and offsets. The Trustee’s allegations that there 

may be certain defenses, counterclaims, and offsets raised by the tenant in the state court 

litigation involving the lease that may also be available to the Debtor in determining the proper 

amount owed under Claim No. 1, are legal conclusions or arguments that do not require 

admission or denial, and therefore Worldgate denies any factual allegations contained therein. 

7. Worldgate reserves the right to amend or supplement its Proof of Claim. 

8. Therefore, the Trustee’s Objection should be overruled, and Claim No. 1 should 

be allowed. 

 WHEREFORE, Worldgate requests that this Court enter an Order overruling the 

Objection, allowing Claim No. 1, and granting such other relief as is just and proper. 

Dated: December 21, 2022 By: /s/ Stephen K. Gallagher 

Stephen K. Gallagher 

(VSB No. 38085) 

VENABLE LLP 

8010 Towers Crescent Drive 

Suite 300 

Tysons Corner, VA 22182 

Phone: (703) 760-1600 

Fax: (703) 821-8949 

skgallagher@venable.com 

Counsel to Worldgate Centre Owner, 

LLC 

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CERTIFICATE OF SERVICE 

I hereby certify that on this 21st day of December 2022, a copy of the foregoing Answer 

was served via this court’s ECF system on those parties listed to receive such notice and via first 

class United States mail, postage prepaid, on the following parties: 

Robert H. Chappell, III 

Jennifer J. West 

Spotts Fain PC 

411 E. Franklin Street, Suite 600 

Richmond, VA 23219 

/s/ Stephen K. Gallagher 

 Stephen K. Gallagher 

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