Case 16-10527-MFW Doc 1526 Filed 04/28/16 Page 1 of 5 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE -------------------------------------------------------x In re: : Chapter 11 : Sports Authority Holdings, Inc., et al., 1 : Case No. 16-10527 (MFW) : : Jointly Administered Debtors. : : Sale Hearing Date: May 24, 2016 at 9:30 a.m. ET : Cure Objection Deadline: April 29, 2016 at 4:00 p.m. ET : ------------------------------------------------------x Related to Docket No. 1210 RESERVATION OF RIGHTS OF MACY S WEST STORES, INC. TO THE NOTICE OF POSSIBLE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION WITH SALES Macy s West Stores, Inc., as the owner of, or the managing agent for the owner of, the property identified herein ( Macy s ), by its undersigned counsel, submits this reservation of rights (this Reservation of Rights ) to the Notice of Possible Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with Sales (Docket No. 1210) (the Notice ). In support of this Reservation of Rights, Macy s respectfully states: BACKGROUND 1. On March 2, 2016, the above-captioned debtors (the Debtors ) filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ) in the United States Bankruptcy Court for the District of Delaware (this Court ). 2. Upon information and belief, the Debtors are operating their businesses and managing their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the 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 80110.
Case 16-10527-MFW Doc 1526 Filed 04/28/16 Page 2 of 5 Bankruptcy Code. 3. Macy s is the owner of, or the managing agent for the owner of, the property known as Rogue Valley Home Store located in Medford, Oregon, in which the Debtors lease retail space (the Leased Premises ) 2 from Macy s pursuant to a written lease agreement (the Lease ). 3 4. The Leased Premises is located in a shopping center as that term is used in section 365(b)(3) of the Bankruptcy Code. See In re Joshua Slocum, Ltd., 922 F.2d 1081, 1086-87 (3d Cir. 1990). 5. On April 14, 2016, this court entered its Order (A) Approving Bid Procedures in Connection with (I) The Sale of Substantially All of the Debtors Assets and (II) The Transfer, Assumption and Assignment of Certain Unexpired Leases of Nonresidential Real Property, (B) Scheduling Separate Auctions for and Hearings to Approve the Sale of Assets and Unexpired Leases of Nonresidential Real Property Subject to the Debtors Store Closing Plan, (C) Approving Notice of Respective Date, Time, and Place for Auctions and for Hearings on Approval of Respective Sales, (D) Approving Procedures for the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sales, (E) Approving Form and Manner of Notice Thereof, and (F) Granting Related Relief (Docket No. 1186) (the Bid Procedures Order ). The Bid Procedures Order sets forth certain procedures in connection with the sale of substantially all of the Debtors assets (the Sale ), including the assumption and assignment of executory contracts and unexpired leases. 6. On April 15, 2016, the Debtors filed the Notice, which identifies the Lease among the Assigned Contracts (as defined in the Notice) that may be assumed and assigned to a 2 The counterparty is identified on the Notice as Federated Retail Holding Inc. 3 The Lease and related documentation is voluminous, and therefore, has not been attached to this Reservation of Rights. Macy s will provide copies of the Lease and related documentation upon request. 2
Case 16-10527-MFW Doc 1526 Filed 04/28/16 Page 3 of 5 successful bidder in connection with the Bid Procedures Order and the Sale. The Debtors have proposed $65,718.00 as the cure amount necessary to assume the Lease (the Proposed Cure Amount ). As set forth in the Notice, objections are due on or before April 29, 2016 at 4:00 p.m. (EST). RESERVATION OF RIGHTS 7. The Proposed Cure Amount represents the amounts currently due and owing to Macy s under the Lease. This amount may increase prior to any actual date of assumption of the Lease if the Debtors do not pay all amounts that accrue after the date of this Reservation of Rights, and any taxes, common area maintenance and other amounts that may come due, pursuant to the terms of the Lease and regardless of when those amounts accrued. 8. Accordingly, Macy s expressly reserves its right to amend or supplement the Proposed Cure Amount from time to time and at any time, and requests that the Debtors remain liable for, among other things: (a) post-petition rent and other charges under the Lease; (b) certain amounts due and owing under the Lease, but which may be unbilled as of the date hereof, including but not limited to year-end adjustments for common area maintenance, taxes and similar charges; (c) any regular or periodic adjustment of charges under the Lease which were not due or had not been determined as of the date of this Reservation of Rights; (d) any percentage rent that may be due under the Lease; (e) any non-monetary defaults; and/or (f) insurance and indemnification obligations under the Lease. 9. Macy s is also entitled to attorneys fees as part of the Proposed Cure Amount for the Lease, as the Lease provides. In re Westview 74 th Street Drug Corp., 59 B.R. 747, 757 (Bankr. S.D.N.Y. 1986) (payment of attorneys fees required as condition to lease assumption). Macy s asserts it is entitled to attorneys fees in the amount of at least $1,500, which amount 3
Case 16-10527-MFW Doc 1526 Filed 04/28/16 Page 4 of 5 and any attorneys fees accrued over and above that amount should be paid to Macy s in addition to the Proposed Cure Amount. 10. In addition, Macy s requests that any order approving the assumption of the Lease provides that any assignee will be responsible for all accrued, but unbilled charges under the Lease, including unpaid year-end adjustments and reconciliations, whether accruing prior to or after the effective date of assumption and/or assignment of the Lease, when such charges become due in accordance with the terms of the Lease. This result is mandated by the requirement that the Debtors cure all arrears and that the Debtors provide adequate assurance of future performance under the terms of the Lease. See 11 U.S.C. 365(b)(1). 11. Macy s reserves any and all rights to supplement or amend this Reservation of Rights and expressly reserves the right to object to any additional relief sought by the Debtors in connection with the Lease. Macy s also respectfully reserves the right to object to the adequate assurance of future performance in connection with the Lease by any successful bidder. JOINDER 12. Macy s joins in any objections to the Notice that are filed by other landlords, to the extent that they are not inconsistent with this Reservation of Rights. WHEREFORE, Macy s respectfully requests that this Court enter an order: (a) sustaining this Reservation of Rights; (b) requiring that any order authorizing the assumption of the Lease affirmatively requires the Debtors to pay all amounts owing to Macy s under the Lease through the effective date of any assumption of the Lease plus attorneys fees; and (c) granting Macy s such other and further relief as this Court deems just and appropriate under the circumstances. 4
Case 16-10527-MFW Doc 1526 Filed 04/28/16 Page 5 of 5 Dated: April 28, 2016 Wilmington, Delaware Respectfully submitted, /s/ Leslie C. Heilman Leslie C. Heilman, Esquire (No. 4716) BALLARD SPAHR LLP 919 N. Market Street, 11th Floor Wilmington, DE 19801 Telephone: (302) 252-4465 Facsimile: (302) 252-4466 E-mail: heilmanl@ballardspahr.com -and- Ronald E. Gold, Esq. Ohio Bar No. 0061351 FROST BROWN TODD LLC 3300 Great American Tower 301 East Fourth Street Cincinnati, Ohio 45202 Telephone: (513) 651-6800 Facsimile: (513) 651-6981 E-mail: rgold@fbtlaw.com COUNSEL FOR MACY S WEST STORES, INC. 5
Case 16-10527-MFW Doc 1526-1 Filed 04/28/16 Page 1 of 3 CERTIFICATE OF SERVICE Leslie C. Heilman, Esquire hereby certifies that on this 28th day of April, 2016, a true and correct copy of the foregoing Reservation of Rights of Macy s West Stores, Inc. to the Notice of Possible Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with Sales was served upon the addressees listed on the attached service list in the manner indicated. Dated: April 28, 2016 Wilmington, Delaware /s/ Leslie C. Heilman Leslie C. Heilman (DE No. 4716) BALLARD SPAHR LLP
Case 16-10527-MFW Doc 1526-1 Filed 04/28/16 Page 2 of 3 Via Hand Delivery: Michael R. Nestor, Esq. Andrew L. Magaziner, Esq. Young Conaway Stargatt & Taylor, LLP Rodney Square, l 000 North King Street Wilmington, Delaware 19801 Counsel for the Debtors Bradford J. Sandler, Esq. Pachulski Stang Ziehl & Jones LLP 919 N. Market Street, l 7th Floor Wilmington, DE 19801 Counsel to the Official Committee of Unsecured Creditors Office of the United States Trustee Attn: Hannah McCollum, Esq. 844 King Street, Suite 2207 Lockbox 35 Wilmington, Delaware 19801 Via First Class U.S. Mail: Robert A. Klyman, Esq. Matthew J. Williams, Esq. Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, California 90071 Counsel for the Debtors Robert J. Feinstein, Esq. Pachulski Stang Ziehl &Jones LLP 780 Third Avenue, 36t" Floor New York, NY 10017-2024 Counsel to the Official Committee of Unsecured Creditors Jeffery N. Pomerantz, Esq. Pachulski Stang Ziehl & Jones LLP 10100 Santa Monica Boulevard, 13 th Floor Los Angeles, CA 90067-4100 Counsel to the Official Committee of Unsecured Creditors SERVICE LIST
Case 16-10527-MFW Doc 1526-1 Filed 04/28/16 Page 3 of 3 Donald E. Rothman, Esq. Riemer & Braunstein LLP Three Center Plaza Boston, Massachusetts 02108 Counsel for Bank of America, N.A., in its capacity as (A) DIP Agent under the proposed Debtorin-Possession Credit Agreement, and (B) Administrative Agent and Collateral Agent under the Second Amended and Restated Credit Agreement, dated as of May 17, 2012 Robert J. Stark, Esq. Bennett S. Silverberg, Esq. Brown Rudnick LLP Seven Times Square New York, NY 10036 Counsel for (A) Wilmington Savings Fund Society, FSB as Administrative Agent and Collateral Agent under the Amended and Restated Credit Agreement, dated as of May 3, 2006 and amended and restated as of November 16, 2010 and (B) certain Term Lenders under the Amended and Restated Credit Agreement, dated as of May 3, 2006 and amended and restated as of November 16, 2010 Kevin J. Simard, Esq. Choate, Hall & Stewart LLP Two International Place Boston, Massachusetts 02110 Counsel for Wells Fargo Bank, National Association, in its capacity as FILO Agent under the Second Amendment to Second Amended and Restated Credit Agreement, dated as of November 3, 2015 John J. Rapisardi, Esq. O Melveny & Meyers LLP 7 Times Square, Broadway New York, NY 10036 As counsel for certain holders of 11.5% Senior Subordinated Notes Due February 19, 2018 under the Securities Purchase Agreement, dated as of May 3, 2006 2