Case Doc 366 Filed 11/13/17 Entered 11/13/17 19:13:30 Desc Main Document Page 1 of 12

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1 Document Page 1 of 12 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MINNESOTA In re: Distribution, LLC, WD Navarre Distribution, LLC, WD Encore Software, LLC, WD Navarre Holdings, LLC, WD Navarre Digital Services, LLC, Holdings, Inc., WD Navarre Canada, ULC, JOINTLY ADMINISTERED UNDER BKY BKY BKY BKY BKY BKY BKY BKY Debtors. NOTICE OF HEARING AND DEBTORS SECOND OMNIBUS MOTION FOR AN ORDER AUTHORIZING THE REJECTION OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES TO: Parties in interes as specified in Local Rule (a)(2): 1. The above-captioned debtors (the "Debtors" or "") file this motion requesting the relief described below and give notice of hearing. 2. PLEASE TAKE NOTICE that the Court will hold a hearing on this Motion at 9:00 a.m. on November 27, 2017 in Courtroom 8 West, United States Court House, 300 South Forth Street, Minneapolis, MN Any response to this motion must be filed and served not later than November 22, 2017, which is five days before the time set for the hearing (including Saturdays, Sundays and holidays). UNLESS A RESPONSE OPPOSING THE MOTION IS TIMELY FILED, THE COURT MAY GRANT THE MOTION WITHOUT A HEARING. 4. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157 and 1334, Rule 5005 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") and 1

2 Document Page 2 of 12 Local Rules and This is a core proceeding pursuant to 28 U.S.C. 157(b) and may be determined by this Court. Venue is proper before this Court pursuant to 28 U.S.C and On September 8, 2017 (the "Petition Date"), each of the above-captioned Debtors commenced with this Court a voluntary case under chapter 11 of title 11 of the United States Code, 11 U.S.C. 101, et seq. (the "Bankruptcy Code"). The Debtors' cases are being jointly administered pursuant to Bankruptcy Rule 1015(b). By orders of this Court entered on September 13, 2017, the Bankruptcy Cases are jointly administered under the caption set forth above which is designated as the lead case. Each Debtor remains in possession of its assets and continues to operate as a debtor-in-possession in accordance with 11 U.S.C and As of the date of this Motion, an Official Committee of Unsecured Creditors ("Committee") has been appointed. 5. This Motion arises under sections 105(a) and 365 of the Bankruptcy Code and Bankruptcy Rules 6006 and This Motion is filed under Local Rules , , and Notice of the hearing on this Motion is provided pursuant to Bankruptcy Rules 9013 and 9014, and Local Rules (b), (b), , and The Debtors seek to reject certain non-residential real property leases, executory contracts, and personal property leases as identified on Exhibit A. PARTIES RECEIVING THIS OMNIBUS MOTION SHOULD LOCATE THEIR NAME AND THEIR LEASE OR CONTRACT ON EXHIBIT A TO THIS MOTION. 2

3 Document Page 3 of 12 BACKGROUND 7. The Debtors' history, operations, debt structure and corporate structure are fully described in the declaration of Peter A. Richichi dated September 8, 2017 and in the declaration of relatedness also dated September 8, The Debtors primary purpose in their chapter 11 cases is to liquidate their remaining assets in an efficient manner that will maximize value of recovery for their creditors. As part of this process, the Debtors have conducted two asset sales relating to certain inventory and the WD Encore, LLC business. The Debtors have monitored the need for real property and equipment during the sale processes. As sales are approved and deals close, such need is eliminated. The Debtors have determined in their business judgment that maintaining the nonresidential real property leases, executory contracts, and personal property leases identified on Exhibit A (the "Rejected Agreements") provides no meaningful benefit and would only impose unnecessary costs and burdens on the Debtors estates. RELIEF REQUESTED 9. By this Motion, the Debtors request entry of an order authorizing the Debtors to reject the Rejected Agreements identified on Exhibit A to this Motion effective as of November 30, Additionally, the Debtors request that this Court order that the holder of any claim for damages arising from the rejection of any Rejected Agreement be required to file a proof of claim on account of such claim within 30 days after entry of the order on this Motion. 10. Pursuant to Local Rule , this motion is verified and is accompanied by a memorandum of law and proposed order. 11. Pursuant to Local Rule , the Debtors give notice that they may, if necessary, call Patrick Lawton, CFO of the Debtors, 2 W. Washington St., Suite 500, Greenville, 3

4 Document Page 4 of 12 SC 29601; or Gregory A. Charleston, of Conway Mackenzie, Inc., 1075 Peachtree Street, Ste. 3675, Atlanta Georgia 30309, to testify at the hearing on the Motion regarding the facts set forth herein. NO PRIOR REQUEST 12. No prior request for the relief sought herein has been requested from this Court or any other court. WHEREFORE, the Debtors request entry of an order: a. Authorizing authorizing the Debtors to reject the Rejected Agreements identified on Exhibit A to this Motion effective as of November 30, 2017; b. Allowing the counterparties to the Rejected Agreements until December 20, 2017 to file claims for rejection damages; and c. Ganting such other relief as the Court deems just and equitable. Dated: November 13, 2017 e/ Phillip J. Ashfield Robert T. Kugler (# ) Edwin H. Caldie (# ) Phillip J. Ashfield (# ) Andrew J. Glasnovich (# ) STINSON LEONARD STREET LLP 50 South Sixth Street Minneapolis, MN Telephone: Facsimile: COUNSEL FOR THE DEBTORS 4

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6 Document Page 6 of 12 EXHIBIT A Counterparty ARMSTRONG-RACE REALTY COMPANY BENTON-MOBLY PARTNERS, LLC BIG BOX PROPERTY OWNER D LLC Successor in interest to EXETER 4550 QUALITY, LLC CHIEFTON INVESTMENTS LIMITED CISCO WEBEX LLC COMMERCE TECHNOLOGIES, INC. DE LAGE LANDEN SERVICES, INC. DE LAGE LANDEN SERVICES, INC. DE LAGE LANDEN SERVICES, INC. Debtor WD ENCORE SOFTWARE, LLC DISTRIBUTION, LCC NAVARRE CORPORATION/ WD Navarre Canada ULC Date of Lease 9-Mar-09 1-Mar-16 1-Jul-15 July Jan Apr Oct-15 8-Sep Dec-13 Description of Leased Premise, Personal Property, or Agreement Title THE GRANBY BUILDING, 230 SECOND STREET SE, CEDAR RAPIDS, IOWA 1772 S.E. MOBERLY, BENTONVILLE, ARKANSAS QUALITY DRIVE, MEMPHIS, TENNESSEE 450 EXPORT BOULEVARD, UNIT A, MISSISSAUGA, ONTARIO, CANADA WEBEX SERVICE - MEETING CENTER NAMED HOSTS SUPPLIER MASTER SERVICES (1) RICOH/LANIER S B&w MFP, (1) RICOH/LANIER 1-MP3054 B&W MFP, (1) RICOH/LANIER 2-MP 4054 B&w MFP, (1) RICOH/LANIER 3-MP 5054 B&W MFP, (1) RICOH/LANIER 1-MP 2554 B&W MFP, (1) RICOH/LANIER 1 MP C4503 COLOR & B&W MFP (1) LANIER MP C3004, (1) LANIER SR3210, (1) LANIER PB3150 (1) LANIER MPC3003 COLOR / B&W MFP; (1) LANIER SR 3130 INTERNAL FINISHER, (1) LANIER M3 FAX BOARD M3 1

7 Document Page 7 of 12 Counterparty ELECTRONIC BUSINESS PRODUCTS, INC. FR NATIONAL LIFE, LLC GREENVILLE 1.1. LLC HIGHRADIUS CORPORATION INTERNATIONAL BUSINESS MACHINES CORPORATION INTERNATIONAL BUSINESS MACHINES CORPORATION SPEED COMMERCE, INC. SPS COMMERCE, INC. THE REDLIN GROUP DBA EDIADMIN.COM WELLS FARGO LEASING, INC. Debtor WD NAVARRE & HOLDINGS, INC. WD Navarre Canada ULC Successor in interest to NAVARRE Date of Lease 3-Jun Sep-13 8-Dec Dec Mar Mar-17 July Mar Jul-11 3-Jun-11 Description of Leased Premise, Personal Property, or Agreement Title MAINTENANCE FOR (4) LANIER LD130CSR, MAINTENANCE FOR (2) LANIER LD360P, MAINTENANCE FOR (1) LANIER LD150SP 9700 WEST 76TH STREET, EDEN PRAIRIE, MINNESOTA SUITE 500, 2 WEST WASHINGTON STREET, GREENVILLE, SOUTH CAROLINA MASTER TECHNOLOGY RELATIONSHIP MANAGED HOSTING CLOUD SERVICES IBM HOSTING & APPLICATIONS SERVICES - PRICING SCHEDULE ATTACHMENT 450 EXPORT BOULEVARD, UNIT A, MISSISSAUGA, ONTARIO, CANADA MASTER SERVICES MASTER SERVICES (4) LANIER LD130CSR, (2) LANIER LD360P, (1) LANIER LD150SP 2

8 Document Page 8 of 12 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MINNESOTA In re: Distribution, LLC, WD Navarre Distribution, LLC, WD Encore Software, LLC, WD Navarre Holdings, LLC, WD Navarre Digital Services, LLC, Holdings, Inc., WD Navarre Canada, ULC, JOINTLY ADMINISTERED UNDER BKY BKY BKY BKY BKY BKY BKY BKY Debtors. MEMORANDUM OF LAW IN SUPPORT OF THE DEBTORS SECOND OMNIBUS MOTION FOR AN ORDER AUTHORIZING THE REJECTION OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES The above-captioned debtors (collectively the "Debtors") submit this memorandum of law in support of their corresponding motion accordance with Local Rule (a). The facts supporting this memorandum are set forth in the motion, verified by Patrick Lawton, CFO of the Debtors. ANALYSIS Section 365(a) of the Bankruptcy Code provides that a debtor, subject to the court s approval, may assume or reject any executory contract or unexpired lease. 11 U.S.C. 365(a). A debtor may reject an unexpired lease so long as rejection benefits the estate and thereby satisfies the business judgment test. In re Audra-John Corp., 140 B.R. 752, 755 (Bankr. D. Minn. 1992). The business judgment test embodies considerable deference to the proponent of the rejection so long as it can articulate sound business reasons for repudiating the contract. 3

9 Document Page 9 of 12 Id. at 756; see also In re Crystalin, L.L.C., 293 B.R. 455, 463 (B.A.P. 8th Cir. 2003) (the business judgment test is not an onerous one ). The Debtors have satisfied the business judgment test with respect to the leases and contracts identified in Exhibit A to the Motion (the "Rejected Agreements"). Through rejection, the Debtors will eliminate unnecessary administrative expenses with no material impact on the Debtors ongoing efforts to sell estate assets in an efficient manner. The Debtors ongoing efforts to maximize the value of estate assets will not be impaired, and eliminating unnecessary administrative expenses will only further increase potential returns to unsecured creditors. See Audra- John, 140 B.R. at ( The primary focus of the inquiry should be on the value of the rejection to general unsecured creditors.... ). CONCLUSION For the foregoing reasons, the Debtors respectfully request that the Court enter an order authorizing the rejection of the Rejected Agreements. Dated: November 13, 2017 e/phillip J. Ashfield Robert T. Kugler (# ) Edwin H. Caldie (# ) Phillip J. Ashfield (# ) Andrew J. Glasnovich (# ) STINSON LEONARD STREET LLP 150 South Fifth Street Suite 2300, Minneapolis, MN Telephone: Facsimile: COUNSEL FOR THE DEBTORS 4

10 Document Page 10 of 12 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MINNESOTA In re: Distribution, LLC, WD Navarre Distribution, LLC, WD Encore Software, LLC, WD Navarre Holdings, LLC, WD Navarre Digital Services, LLC, Holdings, Inc., WD Navarre Canada, ULC, JOINTLY ADMINISTERED UNDER BKY BKY BKY BKY BKY BKY BKY BKY Debtors. ORDER AUTHORIZING REJECTION OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES At a hearing on November 27, 2017, this Court considered the Debtors Second Omnibus Motion for an Order Authorizing the Rejection of Certain Executory Contract and Unexpired Leases [Docket No. ] (the "Motion"). Based on the Motion and the files: IT IS ORDERED: 1. The Motion is GRANTED. 2. The Debtors are authorized to reject the leases and executory contracts identified below ("Rejected Agreements"), effective as of November 30, 2017: Counterparty ARMSTRONG-RACE REALTY COMPANY BENTON-MOBLY PARTNERS, LLC Debtor WD ENCORE SOFTWARE, LLC DISTRIBUTION, LCC Date of Lease 9-Mar-09 1-Mar-16 Description of Leased Premise, Personal Property, or Agreement Title THE GRANBY BUILDING, 230 SECOND STREET SE, CEDAR RAPIDS, IOWA 1772 S.E. MOBERLY, BENTONVILLE, ARKANSAS

11 Document Page 11 of 12 Counterparty BIG BOX PROPERTY OWNER D LLC Successor in interest to EXETER 4550 QUALITY, LLC CHIEFTON INVESTMENTS LIMITED CISCO WEBEX LLC COMMERCE TECHNOLOGIES, INC. DE LAGE LANDEN SERVICES, INC. DE LAGE LANDEN SERVICES, INC. DE LAGE LANDEN SERVICES, INC. ELECTRONIC BUSINESS PRODUCTS, INC. FR NATIONAL LIFE, LLC GREENVILLE 1.1. LLC Debtor NAVARRE CORPORATION/ WD Navarre Canada ULC WD NAVARRE Date of Lease 1-Jul-15 July Jan Apr Oct-15 8-Sep Dec-13 3-Jun Sep-13 8-Dec-18 Description of Leased Premise, Personal Property, or Agreement Title 4550 QUALITY DRIVE, MEMPHIS, TENNESSEE 450 EXPORT BOULEVARD, UNIT A, MISSISSAUGA, ONTARIO, CANADA WEBEX SERVICE - MEETING CENTER NAMED HOSTS SUPPLIER MASTER SERVICES (1) RICOH/LANIER S B&w MFP, (1) RICOH/LANIER 1-MP3054 B&W MFP, (1) RICOH/LANIER 2-MP 4054 B&w MFP, (1) RICOH/LANIER 3-MP 5054 B&W MFP, (1) RICOH/LANIER 1-MP 2554 B&W MFP, (1) RICOH/LANIER 1 MP C4503 COLOR & B&W MFP (1) LANIER MP C3004, (1) LANIER SR3210, (1) LANIER PB3150 (1) LANIER MPC3003 COLOR / B&W MFP; (1) LANIER SR 3130 INTERNAL FINISHER, (1) LANIER M3 FAX BOARD M3 MAINTENANCE FOR (4) LANIER LD130CSR, MAINTENANCE FOR (2) LANIER LD360P, MAINTENANCE FOR (1) LANIER LD150SP 9700 WEST 76TH STREET, EDEN PRAIRIE, MINNESOTA SUITE 500, 2 WEST WASHINGTON STREET, GREENVILLE, SOUTH CAROLINA 2

12 Document Page 12 of 12 Counterparty HIGHRADIUS CORPORATION INTERNATIONAL BUSINESS MACHINES CORPORATION INTERNATIONAL BUSINESS MACHINES CORPORATION SPEED COMMERCE, INC. SPS COMMERCE, INC. THE REDLIN GROUP DBA EDIADMIN.COM WELLS FARGO LEASING, INC. Debtor & HOLDINGS, INC. WD Navarre Canada ULC Successor in interest to NAVARRE Date of Lease 30-Dec Mar Mar-17 July Mar Jul-11 3-Jun-11 Description of Leased Premise, Personal Property, or Agreement Title MASTER TECHNOLOGY RELATIONSHIP MANAGED HOSTING CLOUD SERVICES IBM HOSTING & APPLICATIONS SERVICES - PRICING SCHEDULE ATTACHMENT 450 EXPORT BOULEVARD, UNIT A, MISSISSAUGA, ONTARIO, CANADA MASTER SERVICES MASTER SERVICES (4) LANIER LD130CSR, (2) LANIER LD360P, (1) LANIER LD150SP 3. The deadline for counterparties to the Rejected Agreements to file proofs of claim for rejection damages is December 20, Dated: November, 2017 Kathleen H. Sanberg Chief United States Bankruptcy Judge 3