Case No 02 B02474, (Jointly Administered)United States Bankruptcy Court, N.D. Illinois, Eastern Division
March 21, 2002
ORDER UNDER 11 U.S.C. § 105(a) AND 365(a) AUTHORIZING (A) REJECTION OF CERTAIN UNEXPIRED LEASES AND (B) APPROVING PROCEDURES FOR REJECTING OTHER UNEXPIRED LEASES PURSUANT TO DEBTORS’ THIRD MOTION TO REJECT CERTAIN UNEXPIRED LEASES (BANK OF NEW YORK)
SUSAN PIERSON SONDERBY, Chief Bankruptcy Judge.
Upon the motion dated March 8, 2002 (the “Motion”), wherein Kmart Corporation (“Kmart”) and certain of its domestic subsidiaries and affiliates, debtors and debtors-in-possession in the above-captioned cases (collectively, the “Debtors”), moved this Court for entry of an order, pursuant to sections 105(a) and 365(a) of the Bankruptcy Code, authorizing the Debtors to reject certain nonresidential real property leases and subleases (individually, a “Real Property Lease” and collectively, the “Real Property Leases”), which are defined on Schedules A and B attached hereto; and upon the Affidavit of Charles C. Conaway, Support of Chapter 11 Petitions and First Day Orders and upon any objection; it appearing to the Court that (i) it has jurisdiction over the matters raised in the Motion pursuant to 28 U.S.C. § 157 and 1334; (ii) this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); (iii) the relief requested in the Motion is in the best interests of the Debtors, their estates and their creditors; (iv) proper and adequate notice of the Motion and the hearing thereon has been given and that no other or further notice is necessary; and (v) upon the record herein after due deliberation thereon, that the relief should he granted as set forth below,
1. The rejection of the Real Property Leases shall be effective for each Real Property Lease set forth on the annexed Schedule A as of the date the Motion was filed. The rejection of the Real Property Leases shall he effective for each Real Property Lease set forth on the annexed Schedule B as often days following the delivery by the Debtors to the statutory committee and (or 20 largest creditors, if no committee has yet been formed) and the lessor, the lessor’s counsel to the extent such counsel has appeared of record in the case and the sublessee under that particular Real Property Lease of a notice of rejection of that particular Real Property Lease, unless the applicable lessor or sublessee objects on any ground recognized under the Bankruptcy Code within twenty days of service of such notice of rejection on such lessor or sublessee, as applicable, in the absence of a timely objection or if an objection is overruled, the effective date of the rejection of a Real Property Lease set forth on Schedule B shall be as provided in the previous sentence. The rejection of any Real Property Lease shall have the effect of a termination. This Order shall apply only to the rejection of the Real Property Leases and shall not affect the obligations of the Debtors under any guaranty. The lessor for each Real Property Lease shall be entitled to immediate possession of the premises as of the effective date of such rejection, subject to applicable state law.
2. Under this lease rejection procedure, the Debtors will pay the rent (including base rent, common area maintenance and real estate taxes) due under a particular Real Property Lease on a pro-rated basis for each day between January 22, 2002 and the effective date of the rejection of that Real Property Lease, notwithstanding the terms of such Real Property Lease. Except for the foregoing, nothing in this Order shall be deemed a waiver of any claim by a lessor or sublessee for a rejection damage claim or an administrative claim.
3. The fights of any sublessee of premises subject to any Real Property Lease under section 365(h) of the Bankruptcy Code are preserved with respect to the Debtors only and not with respect to any of the Debtors’ lessors; provided, however, with respect to any Real Property Lease subject to a sublease (i) the Debtors shall turn over to the applicable lessor or to such other party as directed by the applicable lessor, any and all rentals collected by the Debtors from the sublessee of premises subject to such Real Property Lease for rental periods arising from and after the effective date of the rejection and (ii) any dispute between the lessor and the sublessee of premises subject to a Real Property Lease shall be determined pursuant to applicable state law in the appropriate state law forum.
4. Any personal property of the Debtors including, without limitation, furniture, fixtures and equipment, remaining in the Premises after the effective date of the rejection shall be deemed abandoned to the lessor of the Real Property Lease which lessor shall be entitled to remove or dispose of such property in its sole discretion.
5. With regard to any Real Property Lease where a sublessee is in possession of the premises, the Debtors shall send a written notice to such sublessee directing such sublessee to make all future rent payments to the lessor of such Real Property Lease, or to such other party as directed by the applicable lessor. Also, upon written request by any lessor, the Debtors shall provide to such lessor copies of all applicable subleases and other related documents in the possession of the Debtors.
6. Nothing in this Order shall be deemed to extend the time to assume or reject any Real Properly Lease under section 365(d)(4) of the Bankruptcy Code.
7. The Court shall retain exclusive jurisdiction to resolve any dispute arising from or relating to the rejections authorized herein or this Order.
8. Notwithstanding Rule 6006(d) of the Federal Rules of Bankruptcy Procedure, this Order shall take effect immediately upon signature.
9. To the extent that this Order is inconsistent with any prior order or pleading with respect to this matter, the terms of this Order shall govern.
SCHEDULE A REAL PROPERTY LEASES IMMEDIATE REJECTION None SCHEDULE B LEASES