1 MCNUTT LAW GROUP LLP SCOTT H. MCNUTT (CSBN 104696) 2 MICHAEL C. ABEL (CSBN 187743) SHANE J. MOSES (CSBN 250533) 3 219 9th Street San Francisco, California 94103 4 Telephone: (415) 995-8475 Facsimile: (415) 995-8487 5 Attorneys for MI PUEBLO, LLC 6 7 8 UNITED STATES BANKRUPTCY COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION 11 In re Case No. 13-53893-SLJ 12 MI PUEBLO, LLC fka MI PUEBLO Chapter 11 SAN JOSE, INC., 13 OPPOSITION TO MOTION FOR Reorganized Debtor. ALLOWANCE AND PAYMENT OF 14 ADMINISTRATIVE RENT CLAIM 15 Currently Scheduled Hearing Date Judge: Hon. Stephen L. Johnson 16 Date: November 16, 2016 Time: 2:00 p.m. 17 Place: 280 South First Street Courtroom 3099 18 San Jose, California 19 20 21 22 INTRODUCTION 23 Mi Pueblo, LLC, the reorganized debtor in the above-captioned case (“Mi Pueblo”), 24 hereby files its opposition to the Motion for Allowance and Payment of Administrative Rent 25 Claim (the “Motion”) [Docket No. 1291], filed by Stuart Limited Partnership (“Stuart”). 26 The Motion should be denied as untimely. It was filed more than two years after the 27 administrative claims bar date (i.e., June 30, 2014), and the Motion does not argue, let alone 28 demonstrate, “cause” that would justify a late-filed request for administrative claim under Section {00061476Case: } 13-53893 Doc# 1301 Filed: 11/09/16 Entered: 11/09/16 15:00:34 Page 1 of 7 1 503(a). Should the Court consider the Motion, it should still be denied because the amounts 2 sought are not properly administrative claims because any pre-confirmation amounts were waived 3 and the remaining (un-waived) amounts did not actually preserve or benefit the estate. 4 Denying the Motion will not prejudice Stuart because it can still pursue its rights, if any, in 5 a state court. On the other hand, Mi Pueblo will suffer significant prejudice if the Motion is not 6 denied; the bankruptcy case will remain open while the matter is resolved, and Mi Pueblo will 7 continue to incur United States Trustee fees of approximately $10,000 per month. 8 The Motion is too late, does not properly belong in this Court, and subjects Mi Pueblo to 9 undue prejudice. Accordingly, the Motion should be denied. 10 BACKGROUND 11 On July 22, 2013, Mi Pueblo San Jose, Inc. (the “Debtor”) filed a voluntary petition under 12 Chapter 11 of the Bankruptcy Code (11 U.S.C. §§ 101 et seq.). 13 On April 25, 2014, the Debtor filed the DEBTOR’S MOTION FOR AUTHORITY TO: 14 (1) ASSUME, OR (2) REJECT CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN 15 CONNECTION WITH CONFIRMATION OF THE DEBTOR’S PLAN OF REORGANIZATION [11 U.S.C. 1 16 §365(A)] (the “Assumption Motion”) [Docket No. 743]. A copy of the Assumption Motion is 17 attached as Exhibit A to the concurrently filed declaration of Michael C. Abel in support of this 18 opposition (“Abel Declaration”). After multiple continuances, the Court considered assumption of 19 Stuart’s lease with the Debtor (the “Lease”) on August 28, 2014 (after confirmation of the plan of 20 reorganization (the “Plan”)).2 21 22 1 The Motion suggests that the Court’s consideration of the assumption or rejection of Stuart’s Lease was ex parte (see Motion at p. 2). Mi Pueblo San Jose, Inc. filed an ex parte application 23 seeking permission to shorten the time for the hearing on the motion to assume or reject (see Docket No. 744), which request was granted. However, the notice of the scheduled hearing to 24 consider assumption or rejection was served on Stuart (see Docket No. 762). Further, the notices 25 of continuance for the hearings involving Stuart were also mailed to Stuart (see Docket Nos. 1029 and 1081). 26 2 In fact, the order confirming the Plan specifically excluded Stuart’s Lease and provided that it 27 would be the subject of a stipulation to extend the time to assume or reject the Lease. See Docket No. 921-1 at p. 26. 28 2 OPPOSITION TO MOTION FOR {00061476Case: } 13-53893 Doc# 1301 Filed: 11/09/16 Entered: 11/09/16 15:00:34ADMINISTRATIVE Page 2 of RENT 7 1 On May 23, 2014, the Court entered the FINDINGS OF FACT, CONCLUSIONS OF LAW, AND 2 ORDER (I) APPROVING THE DEBTOR’S DISCLOSURE STATEMENT AND (II) CONFIRMING THE 3 DEBTOR’S FIRST AMENDED PLAN OF REORGANIZATION PURSUANT TO CHAPTER 11 OF THE UNITED 4 STATES BANKRUPTCY CODE (the “Confirmation Order”) [Docket No. 921]. 5 On May 30, 2014, Mi Pueblo San Jose, Inc. filed the NOTICE OF ENTRY OF ORDER 6 CONFIRMING DEBTOR’S FIRST AMENDED PLAN, OCCURRENCE OF EFFECTIVE DATE OF DEBTOR’S 7 FIRST AMENDED PLAN, AND BAR DATES (“Notice of Entry of Confirmation Order”) [Docket No. 8 935]. The certificate of service indicates that the Notice of Entry of Confirmation Order was 9 served on all creditors and parties in interest, including Stuart, on June 2, 2014 [Docket No. 950]. 10 The Notice of Entry of Confirmation Order specifically provides that the administrative claims bar 11 date was June 30, 2014. Copies of the Notice of Entry of Confirmation Order and related 12 certificate of service are attached to the Abel Declaration as Exhibits B and C. 13 On September 11, 2014, the Court entered the ORDER GRANTING DEBTOR’S MOTION FOR 14 AUTHORITY TO: (1) ASSUME, OR (2) REJECT CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED 15 LEASES IN CONNECTION WITH CONFIRMATION OF THE DEBTOR’S PLAN OF REORGANIZATION [11 16 U.S.C. §365(A)] (“Assumption Order”) [Docket No. 1081]. A copy of the Assumption Order is 17 attached as Exhibit D to the Abel Declaration. 18 The Assumption Order provides in part: 19 Assumption of the Assumed Lease and satisfaction of any Cure Amount listed on Exhibit A to the Motion, or as otherwise agreed in 20 writing between Mi Pueblo and the counterparty to the Assumed Lease, as the case may be, shall result in the full release and 21 satisfaction of any Cure Amount, claims, or defaults as of the date hereof, whether monetary or nonmonetary . .(italics added) 22 23 The Assumption Order includes an electronic signature for Mr. Sobek , General Partner of 24 Stuart, dated September 9, 2014. The proposed cure amount for Stuart was $5,198.08 (see chart 25 attached to Exhibit A of the Abel Declaration), and pursuant to the Assumption Order, Stuart is 26 deemed to have accepted this cure amount in full satisfaction of any claims or defaults under the 27 Lease as of that time. 28 3 OPPOSITION TO MOTION FOR {00061476Case: } 13-53893 Doc# 1301 Filed: 11/09/16 Entered: 11/09/16 15:00:34ADMINISTRATIVE Page 3 of RENT 7 1 On August 9, 2016, more than two years after the administrative claims bar date and 2 almost two years after this Court entered the Assumption Order, Stuart’s counsel sent a letter to 3 Mi Pueblo’s counsel demanding payment of $134,122.97 allegedly due under the Lease as an 4 administrative claim. A copy of the letter from Stuart’s counsel is attached as Exhibit E to the 5 Abel Declaration. 6 On August 22, 2016, Mi Pueblo’s counsel responded with a letter explaining that the 7 Assumption Order amounted to a waiver of a significant portion of the amounts claimed and 8 further that there was no basis for the remaining amounts claimed. A copy of that letter to Stuart’s 9 counsel is attached as Exhibit F to the Abel Declaration. 10 Mi Pueblo’s counsel received no response for more than two months after sending its 11 letter. 12 On November 1, 2016, Stuart filed its Motion seeking allowance and payment of an 13 administrative claim for rent in the amount of $97,983.93. 14 ARGUMENT 15 The bar date for administrative claims was June 30, 2014. The DEBTOR’S FIRST AMENDED 16 PLAN OF REORGANIZATION PURSUANT TO CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE 17 (the “Plan”) defines “Administrative Claims Bar Date” to be 30 days after the Effective Date (as 18 defined in the Plan) unless otherwise ordered by the Court (see Docket No. 739 at p. 3). Article II 19 of the Plan deals with administrative claims and generally provides that, as required by the Code, 20 and except as agreed to by the parties or ordered by the Court, administrative claims will be paid 21 cash in the amount of the Allowed Administrative Claim on the Effective Date, or as soon 22 thereafter as practical (see Docket No. 739 at p. 26). Any holder of an administrative claim that 23 fails to file such claim by the bar date “shall be forever barred, estopped, and enjoined from 24 asserting” such claim (see Docket No. 739 at p. 27). 25 The Confirmation Order was entered on May 23, 2014. The Notice of Entry of 26 Confirmation Order was served on June 2, 2014, and explains that the administrative claims bar 27 date is June 30, 2014. Stuart was served with the Notice of Entry of Confirmation Order and is 28 bound by the bar date. The Motion, filed more than two years after the administrative claims bar 4 OPPOSITION TO MOTION FOR {00061476Case: } 13-53893 Doc# 1301 Filed: 11/09/16 Entered: 11/09/16 15:00:34ADMINISTRATIVE Page 4 of RENT 7 1 date, is untimely and must be denied unless Stuart demonstrates “cause” to permit it to file a tardy 2 claim.