MIAMI 8304780.1 84482/88966 

UNITED STATED BANKRUPTCY COURT 

SOUTHERN DISTRICT OF FLORIDA 

FT. LAUDERDALE DIVISION 

www.flsb.uscourts.gov

In re: 

SEVEN STARS ON THE HUDSON CORP. 

 

Debtor, 

_______________________________________/

Case No.: 20-19106-SMG 

Chapter 11 

MDG POWERLINE HOLDINGS, LLC'S (A) OBJECTION TO 3rd AMENDED PLAN 

OF REORGANIZATION FOR SMALL BUSINESS 

AND 

(B) SUPPLEMENTAL OBJECTION TO MOTION TO ASSUME UNEXPIRED LEASE 

OF NONRESIDENTIAL PROPERTY 

 

MDG Powerline Holdings, LLC ("MDG"), by and through undersigned counsel, objects 

to the Debtor's 3rd Amended Plan of Reorganization for Small Business [ECF No. 194](the 

"Plan") and submits its supplemental objection to the Debtor's Motion to Assume Unexpired 

Lease of Nonresidential Property [ECF No. 92] (the "Lease Motion"). 

PRELIMINARY STATEMENT 

Confirmation of the Plan should be denied because the Debtor cannot meet its burden 

under section 1191 of the Code. As explained below and will be demonstrated at the 

confirmation hearing, the Debtor cannot meet its burden to prove, with clear and convincing 

evidence, that confirmation of the Plan is not likely to be followed by the liquidation, or the need 

for further financial reorganization. 

 In addition, and for similar reasons, the Lease Motion should be denied because the 

Debtor cannot meet its burden to provide adequate assurance of future performance under the 

Lease pursuant to section 365(b)(1)(C). 

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BACKGROUND 

The Plan 

1. On April 20, 2021, the Debtor filed the Plan. By the Plan, the Debtor seeks to 

reorganize as a subchapter V debtor by (a) restructuring its obligations owed to Wells Fargo, (b) 

stretching payments owed to the Broward County tax collector and (c) borrowing $225,000 of 

new funds the cure amounts owed to MDG (the "Post-Petition Loans"). In addition, the Plan 

provides for the payment of administrative expense claims upon the effective date of the Plan, 

other than payments owed to the Debtor's bankruptcy counsel (who has agreed to be paid over 

time).1

 

2. The Debtor obtained the Post-Petition Loans because it did not have sufficient 

cash on hand to pay the cure amount due under the Lease. In addition, neither of the principals 

of the Debtor have sufficient assets to inject the necessary amounts to pay the cure amount due 

under the Lease. Moreover, neither principal has the wherewithal to repay the $188,000 insider 

loan it took from the Debtor pre-petition. See Plan, p. 5, fn. 2. 

3. The Debtor projects that it will earn approximately $24,000 of net income over 

the next three years after payments of the amounts due under the Plan. See ECF No. 210, Ex. 1. 

The Lease

4. MDG and the Debtor entered into the Lease on or about November 23, 2015. The 

initial term of the Lease is for ten years. See ECF No. 157, Ex. A., p.1 and Section 2.03. 

Subject to separate obligations for taxes, utilities and operating expenses, the initial annual rent 

under the Lease was $340,000 through the end of the fifth year, at which time the annual rent 

payment increased in accordance with the terms of the Lease. See Ex. A, pp. 1-2. The 

 

1

 Despite the Plan provision providing for the payment of all administrative expenses upon the effective date of the 

Plan, the Debtor's projections fail to include such payment. See ECF No. 209 (Second Amended Fee Application of 

Subchapter V Trustee). 

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obligations under the Lease are guaranteed by Jens Berding and Eddy Manzo-Berding pursuant 

to separate Lease Guaranty agreements entered into at the time of the Lease. 

ARGUMENT 

The Plan Cannot Be Confirmed Due to the Debtor's Failure to Demonstrate Feasibility 

5. In order to confirm a plan under section 1191 of the Bankruptcy Code, the plan 

must meet all of the requirements of section 1129(a), other than paragraph 15 of such section 

(which is inapplicable here). See 11 U.S.C. §1191(a). 

6. The Debtor has the burden of proving each element of 1129(a) is met based upon 

clear and convincing evidence. See In re Midland Plaza Assocs., 247 B.R. 877, 883 (Bankr. 

S.D. Fla. 2000); In re Miami Center Assocs. Ltd., 144 B.R. 937, 940 (Bankr. S.D. Fla. 1992); In 

re D&G Invs. of W. Fla., Inc., 342 B.R. 882, 885 (Bankr. M.D. Fla. 2006); SPCP Group, LLC v. 

Biggins, 465 B.R. 316, 324 (M.D. Fla. 2011). 

7. In determining whether the Plan is feasible, the Court must consider the "earning 

power of the business, its capital structure, the economic conditions of the business, the 

continuation of present management, and the efficiency of management in control of the business 

after confirmation." See D&G, 342 B.R. at 886. While the Debtor need not offer a guarantee of 

success, it does need to provide a reasonable assurance of success and be workable. See Gros 

v. Walton, 12-61905-CIV, 2013 WL 3927826, at *3 (S.D. Fla. July 29, 2013) (cleaned up) 

(citing In re Haas, 162 F. 3d 1087, 1090 ("[t]he plan itself must offer a reasonable prospect of 

success and be workable.") (11th Cir. 1998)). 

8. The Debtor's projections reflect that over the next 36 months the Debtor will 

generate a mere $24,000 of net income -- or, said another way, $667 per month. The Debtor 

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recently testified that (a) it had to borrow the money for the Post-Petition Loans,2 and (b) its 

principals had no ability to repay the $188,000 they owe to the Debtor arising from a pre-petition 

loan. Thus, it is not debatable that the Debtor is operating on a razor-thin margin with no room 

whatsoever for a misstep in its business operations and, whether the Debtor can do so is 

questionable. And, what evidence there is certainly does not rise to the level of clear and 

convincing. 

9. Per prior statements to the Court, both of the Debtor's principals have historically 

worked in the Debtor's business, including operations and management. However, within the 

last month (or two), Mr. Berding has stepped aside from direct involvement in the Debtor's 

operations. Indeed, his work with the Debtor is no more than half of what it was prior to him 

stepping aside. Thus, to the extent his prior services will be covered by other employees, those 

are not taken into account in the projections. Neither are any adjustments to the revenue side of 

the business, despite the fact that a key "operations" person will no longer be at the park on a 

daily basis. Moreover, there is no contingency built in for any disruptions in service that may be 

occasioned by the continued impacts of COVID-19, hurricanes or other external events. 

10. In addition, the projections omit any expense for outside lawyers or accountants, 

despite testimony from the Debtor that is utilizes an outside accountant to prepare its tax returns. 

The projections also omit line items associated with re-branding the pylon/marquis with the 

name "Spacebound," which the Debtor estimates will cost between $4-6k. 

11. Separate and apart from the numbers on the projections, based on the Debtor's 

acts in this case, it is questionable whether the projections can even be relied upon. For example, 

as the Court may recall, during the hearing on January 12, 2021 to continue the confirmation 

 

2

 Although not previously disclosed to the Court, the Debtor testified under oath that a significant portion of the 

Post-Petition Loans are being funded by an insider related to one of the Debtor's principals. 

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hearing, MDG brought to the Court's attention that Mr. Berding, as the corporate representative 

of the Debtor, testified under oath the day prior to the hearing that the Debtor entered into an 

undisclosed insider sale transaction with Ms. Berding, a 25% shareholder of Debtor. 

12. That transaction involved the sale of over 4,500 pairs of socks owned by Debtor 

to Ms. Berding in order for Debtor to have sufficient cash on hand to pay its obligations (the 

"Sock Transaction"). However, in the Debtor's December 2020 monthly operating report, which 

was filed more than a month after the deposition, Mr. Berding, under penalty of perjury, 

provided entirely conflicting answers to his prior sworn testimony under oath at his deposition. 

See ECF No. 131 (the "December MOR"). 

13. Question 12 of the December MOR asks whether Debtor has "sold or transferred 

any asset or provided services to anyone related to the DIP in any way?" Mr. Berding checked 

"No", which is clearly contradictory to his sworn testimony regarding the Sock Transaction. Id., 

p.1 

14. Question 15 of the December MOR asks whether Debtor has "borrowed money 

from anyone or has anyone made payments on your behalf." Mr. Berding checked "Yes" and 

included a statement on Exhibit G that a payment was made by Eddy Manzo Berding on behalf 

of Debtor. Id., p.1 and p.5. Of course, as stated above, Mr. Berding testified under oath that the 

Sock Transaction was a sale to Ms. Berding and not a payment made on behalf of Debtor.3 

The Lease Cannot be Assumed Due to the Debtor's Failure 

to Demonstrate Adequate Assurance of Future Performance 

15. Pursuant to section 365(a) of the Bankruptcy Code, subject to subsections (b), (c), 

and (d) of such section, a debtor may assume an unexpired, non-residential real estate lease. 

 

3

 It is also worth noting as well that none of Debtor's monthly operating reports reflect the proceeds from 

"GoFundMe" page set up by Debtor. During his January deposition, Mr. Berding testified that all of the proceeds 

raised on that social funding site were paid directly to him. Although he testified that the proceeds were used to pay 

insurance expenses, to this date, no evidence or support has been provided to substantiate that testimony. 

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16. However, the right to assume an unexpired, non-residential real estate lease is not 

unlimited and a debtor must provide certain protections in favor of a landlord. A debtor may not 

assume an unexpired, non-residential real estate lease unless it (a) cures, or provides adequate 

assurance that it will promptly cure, any defaults under the Lease; (b) compensates, or provides 

adequate assurance of prompt compensation, to MDG for any actual pecuniary loss to MDG 

resulting from any defaults; and (c) provides adequate assurance of future performance under the 

Lease. See 11 U.S.C. § 365(b)(1). 

17. Through the Post-Petition Loans, the Debtor has purportedly raised sufficient 

funds to cure the economic cure amounts due to MDG to cure the amounts owed under the 

Lease. 

18. However, the Debtor has failed to provide adequate assurance of future 

performance under the Lease. See 11. U.S.C. §365(b)(1)(C). 

19. Under the terms of the Lease, Debtor is obligated to spend no less than $25,000 

per year on marketing expenses. In year 1 of the projections, the Debtor is $4,000 short of that 

amount. Moreover, in addition to the $25,000 per year direct marketing expense under the 

Lease, Debtor is obligated to reimburse Xtreme Action Park fifty percent (50%) of Xtreme's 

costs for joint marketing, in an amount not to exceed $25,000 per year. There is no budgeted 

amount for such reimbursements included in Debtor's projections. 

20. It is Debtor's burden to demonstrate that there is adequate assurance of future 

performance under the Lease. See 11 U.S.C. § 365(b)(1)(C). Clearly, Debtor has not done so. 

Accordingly, the Lease Motion must be denied. 

WHEREFORE, MDG respectfully requests that this Court (a) deny confirmation of the 

Plan, (b) deny the Lease Motion and deem that the Lease is rejected, and (c) grant such other 

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relief as the Court deems just and appropriate. 

Dated: May 3, 2021 

 Respectfully submitted, 

 BILZIN SUMBERG BAENA 

PRICE & AXELROD LLP 

 Counsel for MDG Powerline Holdings, LLC 

1450 Brickell Avenue, 23rd Floor 

 Miami, Florida 33131 

 (305) 374-7580 

 

 By: /s/ Jay M. Sakalo 

 Jay M. Sakalo 

 Fla. Bar No. 156310 

 

 

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CERTIFICATE OF SERVICE 

I HEREBY CERTIFY that a true and correct copy of the foregoing was served via 

CM/ECF Notice of Electronic Filing to all Parties appearing in this case who are registered to 

receive electronic noticing in this case via CM/ECF on this 3rd day of May, 2021. 

 By: /s/ Jay M. Sakalo 

 Jay M. Sakalo 

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