Case 2:17-bk-24626-VZ Doc 403 Filed 02/06/18 Entered 02/06/18 09:27:23 Desc Main Document Page 1 of 57 1 David S. Kupetz (CA Bar No. 125062) [email protected] 2 Asa S. Hami (CA Bar No. 210728) [email protected] 3 Steven F. Werth (CA Bar No. 205434) [email protected] 4 SulmeyerKupetz A Professional Corporation 5 333 South Hope Street, Thirty-Fifth Floor Los Angeles, California 90071-1406 6 Telephone: 213.626.2311 Facsimile: 213.629.4520 7 Attorneys for Shiekh Shoes, LLC 8 Debtor and Debtor in Possession 9 UNITED STATES BANKRUPTCY COURT 10 CENTRAL DISTRICT OF CALIFORNIA, LOS ANGELES DIVISION 11 In re Case No. 2:17-bk-24626-VZ 12 Chapter 11 SHIEKH SHOES, LLC, 13 a California limited liability company DEBTOR’S NOTICE OF MOTION AND MOTION FOR ORDER: 14 A Professional Corporation Debtor. (1) AUTHORIZING STORE CLOSING SALES 15 PURSUANT TO STORE CLOSING SALE GUIDELINES; Kupetz, 16 (2) AUTHORIZING SALE OF ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS, AND TEL. 213.626.2311 • FAX 213.629.4520 17 LOS ANGELES, CALIFORNIA 90071-1406 ENCUMBRANCES IN CONNECTION WITH Sulmeyer 333 SOUTH HOPE STREET, THIRTY-FIFTH FLOOR 18 STORE CLOSING SALES; 19 (3) AUTHORIZING REJECTION OF RELATED REAL PROPERTY LEASES 20 PURSUANT TO STREAMLINED LEASE REJECTION PROCEDURES PREVIOUSLY 21 APPROVED BY COURT; AND Tax ID: 47-1479918 22 (4) GRANTING ANCILLARY RELIEF; 23 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF 24 [Declarations of Shiekh S. Ellahi and Sandra De 25 La Riva filed separately] 26 Date: To Be Determined Time: To Be Determined 27 Place: Courtroom 1368 255 E. Temple Street 28 Los Angeles, CA 90012 ASH\ 2619110.4 Case 2:17-bk-24626-VZ Doc 403 Filed 02/06/18 Entered 02/06/18 09:27:23 Desc Main Document Page 2 of 57 1 TABLE OF CONTENTS Page 2 3 I. INTRODUCTION ..................................................................................................................6 4 II. FACTS ...................................................................................................................................8 5 A. Brief Background .......................................................................................................8 6 B. Critical Vendor Nike And Debtor’s Current Business Model ...................................8 7 C. Liquidity Issues And Postpetition Financing .............................................................9 8 1. The State Bank DIP Facility ...........................................................................9 9 2. The Replacement Financing .........................................................................10 10 3. The Nike Vendor Financing .........................................................................10 11 D. Restructuring Goals And Means of Maximizing The Value of The Estate .............11 12 1. General .........................................................................................................11 13 2. Progress Towards Reorganization Goals .....................................................11 14 3. Negotiations And Dialogue With Committee And Key A Professional Corporation Constituencies ..............................................................................................12 15 E. Initial Store Closing Sales And Retention of Gordon Brothers ...............................13 Kupetz, 16 F. Lease Rejection Procedures .....................................................................................13 TEL. 213.626.2311 • FAX 213.629.4520 17 LOS ANGELES, CALIFORNIA 90071-1406 Sulmeyer G. Current Proposed Store Closing Sales .....................................................................14 333 SOUTH HOPE STREET, THIRTY-FIFTH FLOOR 18 1. The Closing Stores .......................................................................................14 19 2. The Sale Guidelines .....................................................................................15 20 3. Projected Timing And Revenues ..................................................................15 21 4. The Debtor’s Internal Management of Closing Sales ..................................16 22 III. THE COURT SHOULD GRANT THE MOTION ..............................................................17 23 A. The Court Should Permit The Debtor to Conduct The Closing Sales 24 Pursuant to The Sale Guidelines ..............................................................................17 25 1. Standard ........................................................................................................17 26 2. The Closing Sales Are Predicated on a Valid Business Justification And Are in The Best Interests of the Estate .................................................17 27 3. The Asset Sales Should be Free And Clear of Liens And 28 Encumbrances ..............................................................................................19 ASH\ 2619110.4 i Case 2:17-bk-24626-VZ Doc 403 Filed 02/06/18 Entered 02/06/18 09:27:23 Desc Main Document Page 3 of 57 1 4. The Court Should Approve The Sale Guidelines And Exempt The Debtor From Complying With Various Restrictions And Laws ..................20 2 5. The Debtor Should be Authorized to Abandon Remaining Property ..........26 3 B. The Court Should Authorize Rejection of Leases Pursuant to The Rejection 4 Procedures ................................................................................................................27 5 C. The Waiver of Rule 6004 is Appropriate .................................................................28 6 IV. CONCLUSION ....................................................................................................................28 7 8 9 10 11 12 13 14 A Professional Corporation 15 16 Kupetz, 17 TEL. 213.626.2311 • FAX 213.629.4520 LOS ANGELES, CALIFORNIA 90071-1406 Sulmeyer 18 333 SOUTH HOPE STREET, THIRTY-FIFTH FLOOR 19 20 21 22 23 24 25 26 27 28 ii Case 2:17-bk-24626-VZ Doc 403 Filed 02/06/18 Entered 02/06/18 09:27:23 Desc Main Document Page 4 of 57 1 TABLE OF CONTENTS Page 2 3 CASES 4 Baker & Drake, Inc. v. Pub. Serv. Comm’n of Nevada (In re Baker & Drake, Inc.), 5 35 F.3d 1348 (9th Cir. 1994) ............................................................................................... 24 6 California State Bd. Of Equalization v. Goggin, 191 F.2d 726 (9th Cir. 1951), cert. denied, 342 U.S. 909 (1952) ....................................... 24 7 Hanover Ins. Co. v. Tyco Indus., Inc., 8 500 F.2d 654 (3d Cir. 1974) ................................................................................................ 26 9 Hargrave v. Township of Pemberton (In re Tabone, Inc.), 175 B.R. 855 (Bank. D.N.J. 1994) ...................................................................................... 19 10 In re 240 North Brand Partners, Ltd., 11 200 B.R. 653 (B.A.P. 9th Cir. 1996) ................................................................................... 17 12 In re Ames Dept. Stores, Inc., 136 B.R. 357 (Bankr. S.D.N.Y. 1992) .................................................................... 17, 20, 21 13 In re Blockbuster Inc., 14 Case No. 10-14997 (BRL) (Bankr. S.D.N.Y. Jan. 20, 2011) .............................................. 25 A Professional Corporation 15 In re Canyon Partnership, 55 B.R. 520 (Bankr. S.D. Cal. 1985) .................................................................................. 17 16 Kupetz, In re Contract Research Solutions, Inc., 17 Case No. 12-11004, 2013 WL 1910286 (Bankr. D. Del. May 1, 2013) ............................. 26 TEL. 213.626.2311 • FAX 213.629.4520 LOS ANGELES, CALIFORNIA 90071-1406 Sulmeyer 18 In re Enron Corp., 333 SOUTH HOPE STREET, THIRTY-FIFTH FLOOR 2003 WL 21755006 (Bankr. S.D.N.Y. July 28, 2003) ........................................................ 20 19 In re Ernst Home Ctr., Inc., 20 209 B.R. 974 (Bankr. W.D. Wash. 1997) ........................................................................... 17 21 In re Finlay Enters., Inc., Case No. 09-14873 (JMP) (Bankr. S.D.N.Y. Sept. 25, 2009) ............................................ 25 22 In re Fred’s Dollar Showrooms of Hernando, Inc., 23 44 B.R. 491 (Bankr. N.D. Miss. 1984) ................................................................................ 22 24 In re Joshua Slocum, Ltd., 99 B.R. 250 (Bankr. E.D. Pa. 1989), vacated on other grounds, 922 F.2d 1081 (3rd 25 Cir. 1990) ............................................................................................................................ 22 26 In re Linens Holding Co., Case No. 08-10832 (Bankr. D. Del. Oct. 28, 2008) ............................................................ 23 27 In re Lionel Corp., 28 722 F.2d 1063 (2d Cir. 1983) .............................................................................................. 17 iii Case 2:17-bk-24626-VZ Doc 403 Filed 02/06/18 Entered 02/06/18 09:27:23 Desc Main Document Page 5 of 57 1 In re Lisbon Shops, Inc., 24 B.R. 693 (Bankr. E.D. Pa. 1982) .............................................................................. 20, 22 2 In re R.H. Macy & Co., 3 170 B.R. 69 (Bankr. S.D.N.Y. 1994) .................................................................................. 21 4 In re Rawson Food Services, Inc., 61 B.R. 207 (Bankr. M.D. Fla. 1986) .................................................................................. 22 5 In re Shenango Group, Inc., 6 186 B.R. 623 (Bankr. W.D. Pa, 1995) ................................................................................ 24 7 In re Steve & Barry’s Manhattan LLC, Case No. 08-12579 (ALG) (Bankr. S.D.N.Y. Aug. 22, 2008)