Case CSS Doc 524 Filed 03/16/18 Page 1 of 7 THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

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1 Case CSS Doc 524 Filed 03/16/18 Page 1 of 7 THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ) ) Chapter 11 CHARMING CHARLIE HOLDINGS, ) INC., et al., ) Case No (CSS) ) Jointly Administered Debtors. 1 ) ) ) Ref. D.I. 423 and 493 CBL & ASSOCIATES MANAGEMENT, INC. S CURE OBJECTION CBL & Associates Management, Inc. ( CBL ), by and through counsel, and as managing agent for the owners of the properties identified herein, hereby files this limited objection (the Objection ) regarding the Debtors Supplement to Second Amended Joint Chapter 11 Plan of Reorganization of Charming Charlie Holdings Inc. And Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 493] (the Cure Notice ), and respectfully represents as follows: 1. On December 11, 2017 the above-captioned debtors (the Debtors ) filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. Upon information and belief, the Debtors continue to operate their businesses and manage their properties as debtors-inpossession pursuant to 11 U.S.C. 1107(a) and CBL is the managing agent for twelve (12) locations (the CBL Locations ) at which the Debtors lease retail space (the Premises ) from the Landlords pursuant to unexpired 1 The Debtors in these chapter 11 cases are: Charming Charlie Canada LLC; Charming Charlie Holdings Inc.; Charming Charlie International LLC; Charming Charlie LLC; Charming Charlie Manhattan LLC; Charming Charlie USA, Inc.; and Poseidon Partners CMS, Inc. CHD

2 Case CSS Doc 524 Filed 03/16/18 Page 2 of 7 leases of nonresidential real property (individually, a Lease, and collectively, the CBL Leases ). 3. On February 12, 2018, Debtors filed their Second Amended Joint Chapter 11 Plan of Reorganization of Charming Charlie Holdings Inc. And Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (including all exhibits thereto and as amended, modified, or supplemented from time to the Plan ) [Docket No. 423] and their Disclosure Statement for Debtors' Second Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code [Docket No. 425]. 4. On March 5, 2018, Debtors filed their Cure Notice. 5. The CBL Leases are leases of real property in a shopping center as that term is used in Section 365(b)(3). See In re Joshua Slocum, Ltd., 922 F.2d 1081, (3d Cir. 1990). 6. CBL objects to the cure amount proposed for the CBL Lease in the Debtors Cure Notice CBL executed that certain Multi-Property Lease Modification Agreement (the Amendment ) with Debtors effective January 25, Under the Amendment, CBL agreed to certain rent concessions retroactive to January 1, 2018 (the Rent Concessions ). Pursuant to the Rent Concessions, Debtor is to report monthly sales per leased location to CBL and pay a certain percentage of such sales in lieu of base rent charges. 2 The Cure Notice states that the cure listed does not include (a) amounts that have been waived or deferred pursuant to the terms of a lease amendment that has been executed, which amounts will be paid in accordance with the terms of such lease amendment or (b) amounts on account of common area maintenance, insurance, taxes, and similar charges or credits (and amounts owed by or credits owed to Debtors after year-end adjustments and reconciliations or such charges) that have yet to be reconciled and billed as of the date of this filing, which amounts will be paid in ordinary course of business under the terms of the lease, as amended. However, CBL has not executed a lease agreement that waives the cure costs owed pursuant to the CBL Leases. 2

3 Case CSS Doc 524 Filed 03/16/18 Page 3 of 7 8. Debtor has not yet reported all required sales per leased location as contemplated under the Amendment and the Rent Concessions. As such, CBL cannot ascertain the appropriate cure amounts per leased location. Until Debtor reports sales as required under the Amendment, the amount of rent and charges due under the CBL Leases cannot be determined. 9. Further, under the Amendment, CBL agreed to defer rent/charges due and owing under the CBL Leases for December 2017 to a date set forth therein (such date is estimated to accrue post-assumption). For the avoidance of doubt, the below table ( Table B ) summarized the rent and charges under the CBL Leases for December 2017: TABLE B Property Name Property Location CBL Lease Cure Amounts for December 2017 Only Arbor Place Mall Douglasville, GA $17, Hamilton Place Mall Chattanooga, TN $16, Hanes Mall Winston-Salem, NC $18, Parkway Place Beaumont, TX $17, Pearland Town Center Pearland, TX $18, Shoppes at St. Clair Square Fairview, IL $15, Sunrise Mall Brownsville, TX $13, Triangle Town Mall Raleigh, NC $10, West County Mall Des Peres, MO $19, West Towne Mall Madison, WI $20, On March 13, 2018, Debtor filed its Third Amended Joint Chapter 11 Plan of Reorganization of Charming Charlie Holdings Inc. and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 517]. In the Plan, Debtors state that landlords deferred rent and percentage rent under post-petition lease amendments (the Amendment Rent and Charges ) are not included in the Cure Costs listed in Debtor s Cure Notice. Further, the Plan 3

4 Case CSS Doc 524 Filed 03/16/18 Page 4 of 7 states that landlords rights to Amendment Rent and Charges are fully reserved and not expunged and/or affected by Plan confirmation. 11. Debtors confirmed with undersigned counsel that CBL s rights to any unpaid Rent Concessions/Amendment Rent & Charges owed to CBL under the Amendment are reserved and the Cure Notice or subsequent Plan confirmation does not expunge and/or affect such amounts as due and owing Further, notwithstanding the Rent Concessions/Amendment Rent & Charges that are reserved, Debtor has understated the cure due under the CBL Leases at the following locations: TABLE A Property Name Property Location Proposed Cure Amounts CBL Lease Cure Amounts 4 Attorneys Fees Total Cure Amount Hanes Mall Winston-Salem, NC $0.00 $8.04 $ $ Shoppes at St. Clair Square Fairview, IL $0.00 $1, $ $1, CURE CLAIM OBJECTION 13. CBL objects to the assumption of the CBL Lease absent payment of all cure amounts owed thereunder through the effective date of assumption, including any amounts that will become due or be invoiced on or after March 12, 2018 (including but not limited to additional amounts, not yet known, with regard to calendar year 2017, such as year-end 3 To the extent CBL s reading of the Plan as to the CBL Leases cure amounts is in accurate, CBL objects to the Cure Notice herein. 4 The cure amounts specified in Table A do not reflect any amounts that will become due or be invoiced on or after March 12, 2018 or attorneys fees and costs, and CBL reserves all of its rights with respect thereto. CBL further avers that additional amounts, not yet known, may be due with regard to calendar year 2017, such as year-end adjustments to various items including, but not limited to, real estate taxes, common area maintenance, percentage 4

5 Case CSS Doc 524 Filed 03/16/18 Page 5 of 7 adjustments to various items including, but not limited to, real estate taxes, common area maintenance, percentage rent and insurance), as well as attorneys fees and costs. Further, CBL objects to the assumption of the CBL Lease absent specific agreement in a cure order to pay the amounts deferred but remaining due under the CBL Leases, as detailed in Table B, in accordance with the Amendment. 14. Section 365(b) provides in pertinent part as follows: (b)(1) If there has been a default in an executory contract or unexpired lease of the debtor, the trustee may not assume such contract or lease unless, at the time of assumption of such contract or lease, the trustee (A) cures, or provides adequate assurance that the trustee will promptly cure, such default ; (B) compensates, or provides adequate assurance that the trustee will promptly compensate, a party other than the debtor to such contract or lease, for any actual pecuniary loss to such party resulting from such default; and 11 U.S.C. 365(b)(1). (C) provides adequate assurance of future performance under such contract or lease. 15. Section 365(b)(1) includes compensation to landlords for sums incurred for attorneys fees and expenses. The CBL Lease provide for recovery of attorneys fees and expenses. 16. True and correct Lease Summaries supporting the actual and correct CBL Lease cure amounts for the leased locations contained in the Table A above are attached hereto and incorporated herein collectively as Exhibit A. rent and insurance. CBL further reserves all rights with respect thereto. Further, the cure amounts specified in Table A do not include the Rent Concessions due under the Amendment that are reserved pursuant to the Plan. 5

6 Case CSS Doc 524 Filed 03/16/18 Page 6 of 7 JOINDER 17. In addition to the foregoing, CBL further joins in the objections filed by Debtors other landlords to the extent that such objections are not inconsistent with the relief requested in this Objection. RESERVATION OF RIGHTS 18. CBL hereby reserves its rights to make such other and further objections as may be appropriate to all CBL Leases, including, but not limited to, objections regarding adequate assurance of future performance under Section 365. CONCLUSION For the reasons set forth above, CBL respectfully requests that this Court (i) sustain this Objection; (ii) require that any order authorizing the assumption of the CBL Leases affirmatively require the Debtors to pay all amounts owing thereunder through the effective date of any assumption, including attorneys fees and expenses; and (iii) grant CBL such further relief as it deems proper. Dated: March 19, 2018 Wilmington, DE 6 Respectfully submitted, HOGAN McDANIEL /s/garvan F. McDaniel Garvan F. McDaniel (DE No. 4167) 1311 Delaware Avenue Wilmington, Delaware Telephone: Facsimile: gfmcdaniel@dkhogan.com Attorneys for CBL & Associates Management, Inc.

7 Case CSS Doc 524 Filed 03/16/18 Page 7 of 7 CERTIFICATE OF SERVICE I hereby certify that on March 19, 2018, a true and correct copy of the foregoing Objection is being served via this Court s ECF notification system to all parties registered to receive such notice, including counsel for Debtor, counsel for US Trustee, and all parties requesting to receive notice. /s/ Garvan F. McDaniel Garvan McDaniel 7

8 Case CSS Doc Filed 03/16/18 Page 1 of 2 Lease Unpaid Charges Hanes Mall Tenant: Charming Charlie(l ) Date Description Charge Payment Net Due Balance 10/1/2017 Central Water Reimbursement (10/2017) /1/2017 Central Water Reimbursement (11/2017) /1/2017 Base Rent (12/2017) 15, , , /1/2017 Central Energy/Environ Reimb (12/2017) 1, , , /1/2017 Central Water Reimbursement (12/2017) , /1/2017 Tenant HVAC (12/2017) 1, , , /1/2017 Central Water Reimbursement (12/2017) , /11/2017 Late Fee , /1/2018 Base Rent (01/2018) 15, , , , /1/2018 Central Water Reimbursement (01/2018) , /1/2018 Base Rent (02/2018) 15, , , , /1/2018 Base Rent (03/2018) 15, , , /16/2018 2:57 PM Page 1 of 2

9 Case CSS Doc Filed 03/16/18 Page 2 of 2 Lease Unpaid Charges Shoppes at St. Clair Tenant: Charming Charlie(l ) Date Description Charge Payment Net Due Balance 7/19/ Year-End RET Adjustment 1, , , /1/2017 Base Rent (12/2017) 10, , , /1/2017 CAM Fixed Rate INL (12/2017) 1, , , /1/2017 Pro Rata Real Estate Taxes (12/2017) 2, , , /1/2018 Base Rent (01/2018) 10, , , , /1/2018 Base Rent (02/2018) 10, , , , /1/2018 CAM Fixed Rate INL (02/2018) 1, , , /1/2018 Pro Rata Real Estate Taxes (02/2018) 2, , , /1/2018 Base Rent (03/2018) 10, , , /1/2018 CAM Fixed Rate INL (03/2018) 1, , , /1/2018 Pro Rata Real Estate Taxes (03/2018) 2, , , /16/2018 2:57 PM Page 1 of 2

10 Case CSS Doc Filed 03/16/18 Page 1 of 1 CERTIFICATE OF SERVICE I hereby certify that on March 19, 2018, a true and correct copy of the foregoing Objection is being served via this Court s ECF notification system to all parties registered to receive such notice, including counsel for Debtor, counsel for US Trustee, and all parties requesting to receive notice. /s/ Garvan F. McDaniel Garvan McDaniel 7