United States Bankruptcy Court Western District of North Carolina Charlotte Division
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Case 17-31455 Doc 258 Filed 11/30/17 Entered 11/30/17 09:30:12 Desc Main Document Page 1 of 5 UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION IN RE: ) CASE NO. 17-31455 (JCW) ) PORTRAIT INNOVATIONS, INC., et al, ) CHAPTER 11 ) Debtors. ) _________________________________________ ) CBL & ASSOCIATES MANAGEMENT, INC.’S CURE CLAIM 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 cure claim objection (the “Objection”) regarding the Debtors’ cure proposed in its Notice of Filing of Assumption Schedule and Adequate Assurance Information [Docket No. 236] (the “Cure Notice”), filed on November 10, 2017, and respectfully represents as follows: 1. On September 1, 2017 (“Petition Date”), Portrait Innovations, Inc., and one affiliate, (the “Debtors”) filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (“Bankruptcy Code”). 2. The Debtors have continued to operate their business and manage their properties as debtors-in-possession pursuant to 11 U.S.C. §§ 1107(a) and 1108.1 3. On October 16, 2017, this Court entered its Order Under 11 U.S.C. §§ 105(a) and 363, Federal Rules of Bankruptcy Procedure 2002 and 6004 (A) Establishing the Form of Bidding Procedures for the Solicitation of Competing Offers to Purchase the Equity Interests in the Reorganized Company Pursuant to the Debtors' Chapter 11 Plan; (B) Authorizing the Debtors to Conduct an Auction; and (C) Granting Related Relief [Docket No. 196] (the “Bidding Procedures 1 Unless otherwise specified, all statutory references to “Section” are to 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”). CHD-715799-1 Case 17-31455 Doc 258 Filed 11/30/17 Entered 11/30/17 09:30:12 Desc Main Document Page 2 of 5 Order”), among other things, approving the proposed bidding procedures by which the Debtors solicited and selected the highest or otherwise best offer for the sale, liquidation, or other disposition of all or substantially all of Debtors’ assets, including Debtors’ leased locations. 4. On November 10, 2017, Debtors filed their Cure Notice [Docket No. 154]. 5. CBL is the managing agent for the owner of seven (7) properties2 (the “CBL Premises”) listed the Debtors’ Cure Notice (the “CBL Leases”), as follows: CBL Premises Property Location Brookfield Square Brookfield, WI District at Monroeville Monroeville, PA Shoppes at St. Clair Square Fairview Heights, IL Shops at Friendly Center Greensboro, NC Southaven Towne Center Southaven, MS Valley View Mall Roanoke, VA York Town Center York, PA 6. The CBL Leases are a leases “of real property in a shopping center” for purposes of 11 U.S.C. §365(b)(3). 7. While CBL does not object to the cure amounts proposed for the CBL Leases in the Debtors’ Cure Notice as of November 30, 2017, however, CBL files this objection to reserve its rights to any amounts that will become due or be invoiced after November 30, 2017. CURE CLAIM OBJECTION 8. CBL objects to the assumption of the CBL Leases 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 November 30, 2017 (including but not limited to additional amounts, not yet known, with regard to calendar year 2016, such as year-end 2 Case 17-31455 Doc 258 Filed 11/30/17 Entered 11/30/17 09:30:12 Desc Main Document Page 3 of 5 adjustments to various items including, but not limited to, real estate taxes, common area maintenance, percentage rent and insurance), as well as attorney fees and costs. 9. 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 (C) provides adequate assurance of future performance under such contract or lease. 11 U.S.C. § 365(b)(1). 10. Section 365(b)(1) includes compensation to landlords for sums incurred for attorneys’ fees and expenses. The CBL Leases provide for recovery of attorneys’ fees and expenses. 11. 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 12. CBL hereby reserves its rights to make such other and further objections as may be appropriate, 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 3 Case 17-31455 Doc 258 Filed 11/30/17 Entered 11/30/17 09:30:12 Desc Main Document Page 4 of 5 of any assumption, including attorneys’ fees and expenses; and (c) grant CBL such further relief as it deems proper. Dated: November 30, 2017 Charlotte, North Carolina Respectfully submitted, HAMILTON STEPHENS STEELE + MARTIN, PLLC /s/ Glenn C. Thompson Glenn C. Thompson (NC Bar No. 37221) 525 North Tryon Street, Suite 1400 Charlotte, North Carolina 28202 Telephone: (704) 344-1117 Facsimile: (704) 344-1483 Email: [email protected] - and- Caleb T. Holzaepfel Husch Blackwell LLP 736 Georgia Avenue, Suite 300 Chattanooga, TN 37402-2059 Telephone: 423.755.2654 Facsimile: 423.266.5499 [email protected] Attorneys for CBL & Associates Management, Inc. 4 Case 17-31455 Doc 258 Filed 11/30/17 Entered 11/30/17 09:30:12 Desc Main Document Page 5 of 5 UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION IN RE: ) CASE NO. 17-31455 (JCW) ) PORTRAIT INNOVATIONS, INC., et al, ) CHAPTER 11 ) Debtors. ) _________________________________________ ) CERTIFICATE OF SERVICE I hereby certify that copies of CBL & ASSOCIATES MANAGEMENT, INC.’S CURE CLAIM OBJECTION were served, on the date hereof, by either electronic notification on those parties registered with the United States Bankruptcy Court, Western District of North Carolina ECF system to receive notices for this case or by U.S. First Class mail as follows: Portrait Innovations, Inc. 2016 Ayrsley Town Blvd., Suite 200 Charlotte, NC 28273 U.S. Bankruptcy Administrator 402 West Trade Street, Suite 200 Charlotte, NC 28202 Dated: November 30, 2017 Charlotte, North Carolina HAMILTON STEPHENS STEELE + MARTIN, PLLC /s/ Glenn C. Thompson Glenn C. Thompson (NC Bar No. 37221) 525 North Tryon Street, Suite 1400 Charlotte, North Carolina 28202 Telephone: (704) 344-1117 Facsimile: (704) 344-1483 Email: [email protected] 5 .