Case MFW Doc 2105 Filed 05/27/16 Page 1 of 7 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

Transcription

1 Case MFW Doc 2105 Filed 05/27/16 Page 1 of 7 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: SPORTS AUTHORITY HOLDINGS, INC., et al., 1 Debtors. Chapter 11 Case No (MFW) (Jointly Administered) DECLARATION OF JEREMY AGUILAR IN SUPPORT OF THE DEBTORS FOURTH OMNIBUS MOTION FOR ORDER, PURSUANT TO SECTIONS 105(A), 365(A), AND 554 OF THE BANKRUPTCY CODE, AND BANKRUPTCY RULE 6004, AUTHORIZING (A) REJECTION OF CERTAIN UNEXPIRED LEASES OF NON- RESIDENTIAL REAL PROPERTY NUNC PRO TUNC TO MAY 31, 2016, AND (B) ABANDONMENT OF ANY REMAINING PROPERTY LOCATED AT LOCATIONS COVERED BY SUCH LEASES I, Jeremy Aguilar, hereby declare under penalty of perjury, pursuant to section 1746 of title 28 of the United States Code, as follows: 1. I am the Chief Financial Officer of Sports Authority Holdings, Inc. ( Sports Authority Holdings ) and each of its principal subsidiaries, all of which are affiliated debtors and debtors in possession in the above-captioned chapter 11 cases (collectively, the Debtors ). I have served as CFO of the Debtors since In this capacity, I am familiar with the Debtors day-to-day operations, business, and financial affairs. 2. To maximize value for their estates and creditors, the Debtors have requested certain relief in Debtors Fourth Omnibus Motion for Order, Pursuant to Sections 105(a), 365(a), and 554 of the Bankruptcy Code, and Bankruptcy Rule 6004, Authorizing (A) Rejection of Certain Unexpired Leases of Non-Residential Real Property Nunc Pro Tunc to May 31, 2016, 1 The Debtors and the last four digits of their respective taxpayer identification numbers are as follows: Sports Authority Holdings, Inc. (9008); Slap Shot Holdings, Corp. (8209); The Sports Authority, Inc. (2802); TSA Stores, Inc. (1120); TSA Gift Card, Inc. (1918); TSA Ponce, Inc. (4817); and TSA Caribe, Inc. (5664). The headquarters for the above-captioned Debtors is located at 1050 West Hampden Avenue, Englewood, Colorado

2 Case MFW Doc 2105 Filed 05/27/16 Page 2 of 7 and (B) Abandonment of Any Remaining Property Located at Locations Covered by Such Leases (the Motion ). Pursuant to the Motion, the Debtors seek authorization to (a) reject, nunc pro tunc to May 31, 2016, certain unexpired leases of nonresidential real property, including any amendments or modifications thereto, in connection with certain store locations that the Debtors have determined, in their business judgment, are unprofitable and should therefore be rejected, and (b) abandon any remaining property located at any such locations. 3. I submit this declaration (this Declaration ) in support of the Motion. Except as otherwise indicated herein, all facts set forth in this Declaration and the Motion are based upon my personal knowledge of the Debtors operations and finances, information learned from my review of relevant documents, information supplied to me by other members of the Debtors management team and the Debtors advisors, or my opinion based upon my knowledge and experience or information I have reviewed concerning the Debtors operations and financial condition. I am over eighteen (18) years of age and I am authorized to submit the Declaration on behalf of the Debtors. If called upon to testify, I could and would competently testify to the facts set forth in this Declaration and the Motion based upon my own personal knowledge, except as otherwise stated herein. A. Leases at Rejected Stores 4. Prior to March 2, 2016 (the Petition Date ), the Debtors evaluated their lease portfolio to determine which stores were profitable and which were either underperforming or unprofitable. Based on this analysis, the Debtors identified certain store locations that were significantly underperforming and generating substantial losses, including the stores (collectively, the Rejected Stores ) subject to those certain unexpired long-term leases (collectively, the Rejected Leases ) set forth on Schedule 1 attached hereto. The Debtors determined that the inventory at the Rejected Stores should be liquidated through closing sales 2

3 Case MFW Doc 2105 Filed 05/27/16 Page 3 of 7 and that the Debtors would take steps to vacate the Rejected Stores. Concurrently, the Debtors marketed the Rejected Leases through a two-part auction process. No viable bids were received for any Rejected Lease. 5. The Debtors have concluded, in consultation with their advisors, that the Rejected Leases will not benefit from further marketing and the Debtors have liquidated the remaining inventory in the Rejected Stores. Therefore, the Debtors have determined in their business judgment that it is in their best interest to reject the Rejected Leases, effective as of the May 31, 2016, thereby avoiding the incurrence of additional administrative expenses for properties that are of no value to the Debtors. Accordingly, the Debtors have vacated the Rejected Stores and, concurrently therewith, sent written notice to each of the respective landlord counterparties to the Rejected Leases (collectively, the Landlords ) confirming the Debtors intent to unequivocally surrender their interest in and possession of the respective Rejected Stores and to reject the respective Rejected Leases, effective as of May 31, 2016, and returned keys in connection therewith. B. Remaining Property at Rejected Stores 6. The Debtors have determined, in their business judgment, that certain remaining personal property at the Rejected Stores, including, but not limited to, furniture, fixtures, and equipment (collectively, the Remaining Property ) will be difficult or expensive to remove and/or expensive to store, such that the economic benefits of removing and/or storing some or all of the Remaining Property will be exceeded by the attendant costs thereof. All inventory has been removed from the Rejected Stores following the end of the closing sales. 7. Accordingly, for the reasons set forth in this Declaration and in the Motion, on behalf of the Debtors, I respectfully submit that the relief requested in the Motion is in the best 3

4 Case MFW Doc 2105 Filed 05/27/16 Page 4 of 7 interest of the Debtors estates, their creditors, and all other parties in interest, and will allow the Debtors to avoid the incurrence of unnecessary administrative expenses. [Remainder of page intentionally left blank] 4

5 Case MFW Doc 2105 Filed 05/27/16 Page 5 of 7 and correct. Pursuant to 28 U.S.C. 1746, I declare under penalty of perjury that the foregoing is true Dated: May 27, 2016 /s/ Jeremy Aguilar Jeremy Aguilar [Declaration in Support of Fourth Omnibus Lease Rejection Motion]

6 Case MFW Doc 2105 Filed 05/27/16 Page 6 of 7 SCHEDULE 1 REJECTED LEASES Store No. Landlord Property Location Address for Notice Tamalpais Drive Inc. 435 Corte Madera Ave Corte Madera, CA Klamath-Jefferson, LLC 2870 S 6th Street Klamath Falls, OR Tamalpais Drive Inc. c/o Colliers International 100 Corte Madera Town Center Corte Madera, CA Klamath-Jefferson, LLC P. O. Box 1583 Corvallis, OR Village Square Retail Center, LLC 727 West Route 22 Lake Zurich, IL Village Square Retail Center, LLC 745 Ela Road Lake Zurich, IL Brookside (E&A), LLC 4543 Main Street Bridgeport, CT OWRF Baybrook, LLC Bay Area Blvd Friendswood, TX Brookside (E&A), LLC c/o EDENS Attn: Legal Department 1221 Main Street, Suite 1000 Columbia, SC OWRF Baybrook, LLC c/o O'Connor Capital Partners 535 Madison Avenue 23rd Floor New York, NY Inland American League City Victory Lakes Limited Partnership 237 Fairway Phase III Associates, L.P. 238 Inland American South Frisco Village LLC 2620 Gulf Freeway South League City, TX Fairway Plaza Pasadena, TX Preston Road Ste. 200-B Frisco, TX Inland American League City Victory Lakes Limited Partnership c/o Inland American Retail Management, L.L.C. / Bldg Attn: Leticia Henry Jones Road Suite 290 Houston, TX Fairway Phase III Associates, L.P Bissonnet, Suite 300 Bellaire, TX Inland American South Frisco Village LLC 2901 Butterfield Road Oakbrook, IL OPCLK, LLC W. 95 Street Lenexa, KS OPCLK, LLC Attn: Lease Administration 570 Delaware Avenue Buffalo, NY Schedule 1 1

7 Case MFW Doc 2105 Filed 05/27/16 Page 7 of 7 Store No. Landlord Property Location Address for Notice 275 ARC TSKCYMO001, LLC 283 Carriage Crossing Market Place, LLC 8980 NW Skyview Ave. Kansas City, MO E. Shelby Drive Collierville, TN ARC TSKCYMO001, LLC American Realty Capital Retail Operating Partnership, LP 106 York Road Jenkintown, PA Carriage Crossing Market Place, LLC c/o Jim Wilson & Associates, LLC Attn: Alice Skinner 2660 East Chase Lane, Suite 100 Montgomery, AL Realty Income Corp 7500 W. Colonial Dr. Orlando, FL Realty Income Corp 600 La Terraza Blvd. Escondido, CA Equity One (Northeast Portfolio), Inc. 171 West 230th Street Bronx, NY Equity One (Northeast Portfolio), Inc. c/o Equity One Attn: General Counsel 1600 NE Miami Gardens Drive North Miami Beach, FL The Macerich Company 1004 N Promenade Pkwy Casa Grande, AZ Madonna Plaza SRT LP 243 Madonna Rd San Luis Obispo, CA DDR Tucson Spectrum II LLC Attn: Executive Vice President - Leasing c/o DDR Corp Enterprise Parkway Beachwood, OH S. Calle Cruz Road Tucson, AZ The Macerich Company WP Casa Grande Retail LLC c/o WDP Partners Todd Chester North Tatum Blvd. Phoenix, AZ Madonna Plaza SRT LP c/o Schottenstein Property Group Attn: Sr. V.P. Real Estate 4300 East Fifth Avenue Columbus, OH DDR Tucson Spectrum II LLC Attn: Executive Vice President - Leasing c/o DDR Corp Enterprise Parkway Beachwood, OH Schedule 1 2