Case No. 02-B02474, (Jointly Administered)United States Bankruptcy Court, N.D. Illinois, Eastern Division.
July 25, 2002
ORDER APPROVING PROCEDURES FOR (A) LIQUIDATING AND SETTLING MECHANICS’ LIEN CLAIMS AND (B) STAYING ENFORCEMENT OF MECHANICS’ LIEN CLAIMS PENDING RESOLUTION OF DISPUTED CLAIMS PURSUANT TO 11 U.S.C. § 105 AND 362 TO ALLOW ORDERLY LIQUIDATION OF MECHANICS’ LIEN CLAIMS
SUSAN PIERSON SONDERBY, United States Bankruptcy Judge.
IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1. The Debtors are hereby authorized to utilize the following procedures (the “Claims Resolution Procedure”) for liquidating and settling liens for the payment of contracting or similar services provided for the benefit of the Debtors (the “Mechanics’ Lien Claims”). Nothing in this order is to apply to Mechanics’ Lien Claims asserted on the Debtors’ fee owned property.
2. The Claims Resolution Procedure is approved in all respects, including, without limitation, the deadlines set forth in the Claims Resolution Procedure. Upon service of this order, the Claims Resolution Procedure shall be binding upon any person (a “Claimant”) asserting a Mechanics’ Lien Claims.
3. The Debtors remain authorized to pay valid Mechanics’ Lien Claims when they are resolved in a mariner suitable to the Debtors pursuant to the Debtors’ first day order (Docket number 115).
4. If the Debtors dispute a Mechanics’ Lien Claim (whether on the basis of amount or the validity of the lien itself), the Debtors, shall send a notice (the “Dispute Notice”) of the Claim Resolution Procedures to the holder of any Mechanics’ Lien Claim that is disputed within twenty days of written notice (the “Lien Notice”) that a lien is alleged and that an alleged claim is due and owing, except that the Debtors shall send a Dispute Notice to any Claimant of which they are currently aware within twenty days of the entry of this Order. Claimants and Landlords (or parties claiming through Landlords) shall be authorized to send Lien Notices to the Debtors and their counsel, if they have not previously done so. The service of the Dispute Notice by the Debtors on the Claimant and the applicable landlord of the Debtors (the “Landlord”) or other similarly situated party who has an identity of interest with the Debtors with respect to a Mechanics’ Lien Claim shall stay enforcement of the Mechanics’ Lien Claim or any default arising therefrom pending further order of this Court. The Debtors shall file a Dispute Notice in the appropriate jurisdiction, if any, out of which the Lien Notice arises, simultaneously with service of the Dispute Notice. The stay described in this paragraph shall proscribe the enforcement or prosecution of the Mechanics’ Lien Claims (or any defaults arising therefrom) against the Debtors, the applicable Landlords and their affected real property and any property of the Debtors’ estate. The Debtors shall include in the Dispute Notice a proposal as to the portion of the Mechanics’ Lien Claim that the Debtors are willing to pay to discharge the asserted lien. The Dispute Notice may contain a statement that the lien should be discharged for no cash consideration. During the pendency of the stay, the Landlords are precluded from exercising any default rights arising as a result of the Mechanics’ Lien Claim which, if resolved, will be deemed to have been cured. All applicable statutes of limitations shall be tolled during the pendency of the stay. A claimant may take the initial steps necessary to toll the running of an applicable statute of limitations but the stay shall otherwise preclude any other enforcement action. In the event that a Landlord’s mortgagee, other Lender with an interest in the affected real property or ground lessor (collectively, the “Lender”) refuses to honor the stay (the “Lender’s Refusal to Honor”) the Debtors shall upon notice of a Lender’s Refusal to Honor (“Notice of Lender’s Refusal to Honor”), contact the Lender. Landlords are authorized to send written Notices of Lender’s Refusal to Honor to the Debtors and their counsel. If the Debtors are unsuccessful in resolving the subject of the Notice of Lender’s Refusal to Honor with the Lender, the Debtors shall file within five business days from receipt of the Notice of the Lender’s Refusal to Honor a motion (the “Lender Motion”) to be presented at the next omnibus hearing in accordance with the Case Management Order to confirm or determine the applicability of the stay provided under the Claims Resolution Procedures as to any Lender that has refused to honor the stay, subject to the Lender’s rights to contest such relief. If a Lender Motion is not filed as set forth herein, or if the Lender Motion is not granted, the stay provided by this Order (not the automatic stay) will be lifted as to the affected Landlord no later than the first date set for such omnibus hearing. The affected Landlord shall have the right to be heard on any Lender Motion affecting the Landlord’s property. With respect to any Mechanics’ Lien Claim concerning a store where the lease is rejected, the stay provided by this Order (not the automatic stay) shall be deemed automatically lifted upon the effective date of the rejection of the lease.
5. Within thirty days of service of the Dispute Notice including a copy of this Order, the Claimant shall serve the Debtors’ counsel with a written response indicating its acceptance, rejection or disagreement with the Debtors’ proposal, if any. If the Claimant disagrees with the Debtors’ proposal, the Claimant shall attach invoices and supporting documentation containing adequate detail to substantiate its Mechanics’ Lien Claim to its response. If the Claimant fails to respond to the Dispute Notice within thirty days of service, the Debtor shall be authorized to pay the amount or otherwise discharge the lien as against the Debtors, the real estate and any party having an interest in the real estate as set forth in the proposal as full satisfaction and/or final payment to the title company that is administrating the lien releases as full satisfaction and final payment of any and all claims or Mechanics’ Lien Claims asserted by the Claimant and submit an order to this Court which order, if approved, the Debtor shall record in the appropriate recording office to discharge the lien as against the Debtors, the real estate and any party having an interest in the real estate. Such order may include any language required by the title company or local law as necessary to be in recordable form and to discharge the lien as against the Debtors, the real estate and any party having an interest in the real estate.
6. If the Claimant timely responds to the Dispute Notice stating, in writing, with reasonable specificity the basis therefore, then the Debtors shall have sixty days from service of the Claimant’s response to further negotiate a settlement with the Claimant. The Debtors will consult with the statutory committees regarding any settlements as reasonably requested by the such committees. If the Debtors and the Claimant do not resolve the Mechanics’ Lien Claims within the sixty day time period then, the Debtors shall, within five business days from the sixtieth day following the service of the Claimants’ response on the Debtors, file an objection in this Court to one or more of the unresolved Mechanics’ Lien Claims in an omnibus objection or otherwise or the stay described in this Order (not the automatic stay) shall be deemed automatically lifted. Claimants shall have thirty days from the service of the Debtors’ objection to respond to the objection. For any remaining contested Mechanics Lien Claims not resolved pursuant to the procedures set forth in this Order, hearings on the disputed claims will be set for status at the next omnibus hearing following the filing of a response to an objection to the claim in accordance with the Case Management Order.
7. Nothing in this order is intended to acknowledge the validity of any Mechanics’ Lien Claim. Nothing in this order is intended to, nor will this order be deemed to, obviate the need for any Claimant to file a proof of claim. Nothing in this order shall be deemed to limit any Claimant’s rights to pursue any Mechanic’s Lien Claim against the Debtors’ fee owned property so long as Claimant pursues such claim in accordance with the Bankruptcy Code.
8. Notwithstanding anything to the contrary provided herein, the right of any Landlord to seek allowance and payment of an administrative claim arising from the filing against the Landlord of a Mechanics’ Lien on any basis permitted under the Bankruptcy Code is preserved, provided that such right shall not be exercised while the stay is in effect pursuant to this order. Nothing in this Order alters or affects the requirements wider section 365 of the Bankruptcy Code for the assumption and!or assignment of a lease, including any requirement to cure a default. Upon a showing of hardship and good cause, Landlords may obtain relief from this order with respect to a Mechanics’ Lien Claim arising from postpetition services provided to the Debtors.