Opinion
Case No. O1-72167-DHA
August 13, 2002
James T. Lloyd, Jr., Esquire, Counsel for the Debtor.
Peter G. Zemanian, Esquire, Douglas Bacon, Esquire, Counsel for Congress.
Douglas M. Foley, Esquire, Joseph M. Coleman, Esquire, Counsel for the Committee.
ORDER (A) CONFIRMING DEBTOR'S AUTHORITY TO CONDUCT STORE CLOSING SALES AND (B) ESTABLISHING CONTRACT REJE(TION CLAIMS BAR DATE
This matter comes before the Court on August 13, 2002, at 2:00 p.m., on the Motion for an Order Pursuant to 11 U.S.C. § 105 (a) and 363 (b) and Rules 2002 and 3003 (c) of the Federal Rules of Bankruptcy Procedure (A) Confirming the Debtor's Authority to Conduct Store Closing Sales at Its Current Store Locations and (B) Establishing a Contract Rejection Claims Bar Date (the "Motion"), filed jointly on July 29, 2002 by debtor in possession Trak Auto Corporation (the "Debtor") and its primary secured lender Congress Financial Corporation (Central) ("Congress"). Objections to the Motion were filed by each of(i) The Pelican Group, Inc., (ii) MH Property, LLC, and (iii) Combined Properties Incorporated.
The Court having reviewed the Motion and having heard the representations and proffers of counsel for the Debtor and for Congress in support thereof and the corresponding support stated by counsel for the Official Committee of Unsecured Creditors (the "Committee"), and having reviewed the objections to the Motion and considered the points raised by counsel for certain of the Debtor's landlords, it appearing to the Court that: (a) this Court has jurisdiction over this matter pursuant to 28 U.S.C. § 157 and 1334; (b) this is a core proceeding pursuant to 28 U.S.C. § 157 (b)(2); (c) notice of the Motion and the hearing thereon was adequate under the circumstances; and (d) the store closings and Store Closing Sales described in the Motion are based upon the sound business judgment of the Debtor, and the means of carrying them out as set forth in the Motion are reasonable, necessary and in the best interests of the Debtor's estate.
The Court being fully advised of the premises, and having determined that the legal and factual bases set forth in the Motion establish just cause for the relief herein granted, and for good cause shown:
IT IS HEREBY ORDERED THAT:
Approval of the Store Closing Sales
1. Pursuant to sections 105 (a) and 3 63 (b) of the Bankruptcy Code, the Debtor is authorized and empowered to conduct the Store Closing Sales and take all actions reasonably related thereto or arising in connection therewith, including, without limitation, advertising the Store Closing Sales as "store closing" and/or "going out of business" sales and retaining a liquidation agent fbnded by Congress, notwithstanding any restrictions imposed by otherwise applicable federal, state or local laws, rules, statutes, ordinances, licensing requirements and procedures of any kind or nature.
2. The Debtor is authorized and empowered to conduct the Store Closing Sales and take all actions reasonably related thereto or arising in connection therewith, including, without limitation, advertising the Store Closing Sales as "store closing" and/or "going out of business" sales and retaining a liquidation agent funded by Congress, notwithstanding any restrictive provision of any lease or related documents purporting to limit such actions.
3. All parties and persons of every nature and description, including without limitation landlords, utility companies, governmental agencies, sheriffs, marshals or other public officers, newspapers and other advertising media, creditors and all those acting for or on their behalf, are jointly and severally restrained and enjoined from (a) in any way interfering with or otherwise impeding the Debtor from conducting the Store Closing Sales, or (b) instituting any action or proceeding in any court, other than this Court, or other administrative body having as its objective the obtaining of an order or judgment that might in any way directly or indirectly obstruct or otherwise interfere with, or adversely affect, the Store Closing Sales or the closing of the stores in accordance with the Purchase Agreement.
4. No bulk sales law or any similar law of any state or other jurisdiction shall apply in any way to the transactions authorized herein.
5. Pursuant to section 1146 (c) Bankruptcy Code, no transfer, stamp or similar tax shall apply to the transactions authorized herein.
6. Except as otherwise provided herein, the Debtor shall conduct the Store Closing Sales in compliance with all laws, rules and regulations of all governmental authorities and all leases and other occupancy agreements, including, but not limited to, (i) any federal, state or local law affecting public health or safety and (ii) applicable licensing fees due to the various localities in which the Debtor's stores are located.
7. Pursuant to section 105 (a) of the Bankruptcy Code, and analogous to the rights available under section 363(f), all inventory, fixtures, furniture and equipment to be sold by the Debtor at the Store Closing Sales shall be sold free and clear of any and all liens with such liens attaching to the net proceeds of such Sales. All proceeds realized from the Store Closing Sales are subject to the liens and interests of Congress, consistent with the rights and priorities established under the Financing Orders.
8. The Debtor and its officers, employees, and agents are authorized to execute such documents and do such other acts as are necessary or desirable to carry out the Store Closing Sales and related actions authorized herein.
9. The Debtor and its officers, employees, and agents shall not be required to (a) obtain the approval of any federal, state, or local government agency, department or other authority, any landlord or any other third party, to conduct the Store Closing Sales and take the related actions authorized herein; (b) close the Converted and Non-Converted Stores in accordance with the terms of the Purchase Agreement; or (c) execute, obtain or file releases, termination statements, assignments, consents, or other instruments to effect, consummate and implement the provisions hereof
Establishment of Contract Rejection Claims Bar Date
10. Pursuant to Bankruptcy Rule 3003 (c), all holders of claims (as such term is defined in 11 U.S.C. § 101 (5)) against the Debtor arising from the Debtor's rejection of an executory contract or unexpired lease (each a "Rejection Claim") are required to file a separate, completed and executed Proof of Claim form (conforming substantially to the Official Bankruptcy Form No. 10) on account of such Rejection Claims so that such Proof of Claim form is received by the Debtor or its claims agent on or before thirty (30) days following the effective date of the rejection of such contract or lease in accordance with the terms of the Purchase Agreement and the Sale Order (the "Rejection Claims Bar Date").
11. Any holder of a Rejection Claim against the Debtor who is required, but fails to file a Proof of Claim form on account of such Claim in accordance with this Order on or before the Rejection Claims Bar Date, shall be forever barred, estopped and enjoined from asserting such Rejection Claim against the Debtor, and the Debtor's property shall be forever discharged from any and all indebtedness or liability with respect to such Rejection Claim, and such holder shall not be treated as a creditor of the Debtor for any purpose whatsoever.
12. Nothing in this Order shall be deemed to prejudice the Debtor's right to dispute any Rejection Claim as to the nature, amount, liability, classification or otherwise of any Rejection Claim, or to assert offsets or defenses to any Rejection Claim.
13. Subject to the terms of a separate stipulation in favor of Combined Properties, Incorporated, all objections to the Motion or to the relief requested therein or to the Store Closing Sales process that have not been withdrawn, waived or settled, and all reservations of rights included therein, are hereby overruled on the merits.
Additional Provisions
14. This Court shall retain exclusive jurisdiction to resolve any dispute arising from or relating to the Store Closing Sales, the Rejection Claims Bar Date, or this Order. Notwithstanding Bankruptcy Rule 6004 (g), this Order shall take effect immediately upon signature.
15. The Clerk shall forward a copy of this Order to counsel for the Debtor, James T. Lloyd, Jr., Esquire, TRAPANI, BERNARD LLOYD, City Centre, Suite 200, 223 E. City Hall Avenue, Norfolk, VA 23510; to lead counsel for the Committee, Joseph M. Coleman, Esquire, KANE RUSSELL COLEMAN LOGAN, 3700 Thanksgiving Tower, 1601 Elm Street, Dallas, TX 75201; to local counsel for the Committee, Douglas M. Foley, Esquire, McGUIREWOODs LLP, 101 West Main Street, Suite 9000, Norfolk, VA 23510; to lead counsel for Congress, J. Douglas Bacon, Esquire, LATHAM WATKINS, 233 South Wacker Drive, Suite 5800, Sears Tower, Chicago, IL 60606; to local counsel for Congress, Peter G. Zemanian, Esquire, WILLCOX SAVAGE, PC, 1800 Bank of America Center, Norfolk, VA 23510; to counsel for the Pelican Group, Inc., Douglas Scott, Esquire, DURRETTE BRADSHAw, P.C., 600 E. Main Street, 2OZ Floor, Richmond, VA 23219; to counsel for MH Property, LLC, Richard B. Rosenblatt, Esquire, 30 Courthouse Square, Suite 302, Rockville, MD 20850; to counsel for Combined Properties, Incorporated, Richard M. Goldberg, Esquire, SHAPIRO, SHER GUINOT, 36 South Charles Street, Suite 2000, Baltimore, MD 21201; and to the Office of the U.S. Trustee, Room 625, Federal Building, 200 Granby Street, Norfolk, VA 23510.