Case MFW Doc 1321 Filed 04/21/16 Page 1 of 5 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE.

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1 Case MFW Doc 1321 Filed 04/21/16 Page 1 of 5 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) RE: Docket Nos. 1092, 1277 Hearing Date: April 26, 2016 at 11:30 a.m. (ET) Response Deadline: April 21, 2016 at 4:00 p.m. (ET) JOINDER OF ALTUS BRANDS, LLC TO AGRON, INC. S OBJECTION TO TERM LOAN AGENT S EMERGENCY MOTION FOR ADEQUATE PROTECTION Altus Brands, LLC ( Altus ), one of the Debtors consignors, hereby supports, adopts and joins in Agron, Inc. s Objection To Term Loan Agent s Emergency Motion For Adequate Protection [Docket No. 1277] (the Agron Objection ), which opposes the relief sought in the Term Loan Agent s Emergency Motion for Adequate Protection [Docket No. 1092] (the Adequate Protection Motion ) filed by Wilmington Savings Fund Society, FSB (the Term Lender ). In support of this Joinder, Altus respectfully states as follows: 1. On March 2, 2016 (the Petition Date ), the Debtors commenced the abovecaptioned case under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ). The Debtors continue to operate their businesses and manage their properties as debtors-inpossession pursuant to 11 U.S.C. 1107(a) and Altus and certain of the Debtors are parties to a consignment agreement (the Consignment Agreement ), pursuant to which Altus provides the Debtors with certain of Altus goods (the Altus Goods ) for its stores. Pursuant to the terms of the Consignment Agreement, 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 Debtors is located at 1050 West Hampden Avenue, Englewood, Colorado

2 Case MFW Doc 1321 Filed 04/21/16 Page 2 of 5 title to the Altus Goods remains with Altus until a sale to a retail buyer is completed, at which point title transfers to the buyer. 3. As of the Petition Date, the Debtors allege that they have in their possession approximately $91,888 in Consignment Goods belonging to Altus, all of which are subject to the Consignment Agreement. 4. On March 15, 2016, the Debtors filed adversary proceeding number (the Adversary Proceeding ) against Altus seeking, inter alia, a declaration that the Debtors have an interest in the Altus Goods and, to the extent it has an interest, to avoid certain alleged transfers. See Adv. Pro. No , [Docket No. 1]. 5. Altus hereby joins in the Agron Objection and fully incorporates by reference the arguments set forth therein as its own with respect to the Altus Goods. The Adequate Protection Motion should be denied because the Term Lender has not established any right to adequate protection and has not carried its burden under section 363(p)(2) of the Bankruptcy Code. 6. As stated in the Agron Objection, the Term Lender was never granted a security interest in the Consigned Goods because the May 3, 2006 Security Agreement only granted the Term Lender a security interest in the Debtors Collateral, which is defined as personal property of each Grantor,... whether now owned... or hereafter acquired.... See Security Agreement, at 1.2 (emphasis added). 7. Accordingly, the Term Lender never had a security interest in the Altus Goods because under the Pay by Scan Program and the 2015 Agreement, the Debtors never owned or acquired the Altus Goods and title to those goods remains with Altus. See Kraken Invs. Ltd. v. Jacobs (In re Salander-O'Reilly Galleries, LLC), 2014 WL , at *3 (S.D.N.Y. Nov. 25, 2014) (stating that only property owned by a grantor can be collateral for a loan). 2

3 Case MFW Doc 1321 Filed 04/21/16 Page 3 of 5 8. Rather, under the Consignment Agreement, Altus retained title to the Altus Goods until the date such goods were sold, at which time title passed directly from Altus to the purchaser of such goods. Since the Altus Goods are not part of the Term Lender s collateral, the Term Lender is not entitled to any adequate protection. 9. The Term Lender attempts to circumvent this deficiency in its security documents by arguing that it has a perfected security interest in the Altus Goods by operation of Uniform Commercial Code (the UCC ) 9-319(a). However, UCC 9-319(a) is inapplicable if the consignee is generally known by its creditors to be substantially engaged in selling the goods of others, In re Valley Media, Inc., 279 B.R. 105, 123 (Bankr. D. Del. 2002), or where the creditor of the consignee claiming a security interest in consigned goods had actual knowledge of consignments. See e.g., Eurpac Serv. v. Republic Acceptance Corp., 37 P.3d 447, (Colo. Ct. App. 2000) (affirming lower court decision that that since creditor had actual knowledge of Eurpac s consignment business, creditor had no claim to Eurpac s consigned goods.... ). 10. Under the guise of the Adequate Protection Motion, the Term Lender is essentially asking the Court to perform an end-run around the Adversary Proceeding and determine that it has a valid security interest in the Altus Goods deserving of adequate protection. The determination of the validity of the Term Lender s security interest can only take place in the context of the Adversary Proceeding. See FED. R. BANKR. P. 7001(2) (providing that an adversary proceeding is, among other things, a proceeding to determine the validity, priority, or extent of a lien or other interest in property.... ). This Court should not determine the validity and extent of the Term Lender s security interest when it is more procedurally appropriate to address that issue in the Adversary Proceeding. For this reason, the Adequate Protection Motion should be denied. 3

4 Case MFW Doc 1321 Filed 04/21/16 Page 4 of To the extent the Court determines that the Term Lender is entitled to adequate protection on account of a security interest that will be contested in the Adversary Proceeding, Altus requests that such ruling not have any res judicata or collateral estoppel effect on any and all arguments that Altus may raise in the Adversary Proceeding. It would greatly prejudice Altus if the Court were to determine that the Term Lender s security interest in the Altus Goods is valid when Altus has not yet filed an answer in the Adversary Proceeding or conducted discovery under Part VII of Federal Rules of Bankruptcy Procedure. 12. For the reasons set forth in the Agron Objection and herein, Altus respectfully requests that the Court deny the Term Lender s Agent s Adequate Protection Motion. 13. To the extent not inconsistent with the relief sought herein, Altus joins in any other objection to the Term Lender s Adequate Protection Motion filed by a consignment vendor. 14. Altus reserves the right to amend or supplement this Joinder as warranted prior to the hearing on the Term Lender s Adequate Protection Motion, and Altus expressly reserves the right to assert any and all Affirmative Defenses available under the Bankruptcy Code and/or other applicable law, as may be discovered during the course of discovery and investigation in this adversary proceeding. 15. Nothing herein constitutes an admission as to the priority or validity of the claims, liens, encumbrances or interests of any party and Altus reserves the right to contest all such claims, liens or interests. 16. Nothing contained herein shall be deemed an admission of any fact or a waiver of any of Altus rights or remedies in connection with the Adequate Protection Motion or the Adversary Proceeding, whether at law or in equity, all of which rights and remedies are hereby 4

5 Case MFW Doc 1321 Filed 04/21/16 Page 5 of 5 expressly reserved, including but not limited to submitting further objections to the Adequate Protection Motion. WHEREFORE, Altus respectfully requests entry of an order denying the Term Lender s Adequate Protection Motion, and that the Court grant Altus such other and further relief as the Court deems just and proper. McELROY, DEUTSCH, MULVANEY & CARPENTER, LLP Dated: April 21, 2016 /s/ David P. Primack David P. Primack, Esq. (No. 4449) 300 Delaware Avenue, Suite 770 Wilmington, DE Telephone: Facsimile: dprimack@mdmc-law.com Counsel to Altus Brands, LLC 5

6 Case MFW Doc Filed 04/21/16 Page 1 of 2 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) CERTIFICATE OF SERVICE I, David P. Primack, Esquire certify that I caused true and correct copies of the foregoing document to be served upon the parties listed on the attached service list in the manner indicated. Dated: April 21, 2016 McELROY, DEUTSCH, MULVANEY & CARPENTER, LLP /s/ David P. Primack David P. Primack, Esq. (No. 4449) 300 Delaware Avenue, Suite 770 Wilmington, DE Telephone: Facsimile: dprimack@mdmc-law.com Counsel to Altus Brands, LLC 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 Debtors is located at 1050 West Hampden Avenue, Englewood, Colorado

7 Case MFW Doc Filed 04/21/16 Page 2 of 2 SERVICE LIST MORRIS NICHOLS ARSHT & TUNNELL LLP Robert J. Dehney Gregory W. Werkheiser Daniel B. Butz 1201 North Market Street, 16th Floor Wilmington, DE VIA HAND DELIVERY Robert J. Stark Bennett S. Silverberg BROWN RUDNICK LLP Seven Times Square New York, NY VIA FIRST CLASS MAIL William R. Baldiga One Financial Center Boston, MA VIA FIRST CLASS MAIL Michael S. Neiburg Young Conaway Stargatt & Taylor, LLP Rodney Square 1000 North King Street Wilmington, DE VIA HAND DELIVERY