Case No. 02-B02474, (Jointly Administered)United States Bankruptcy Court, N.D. Illinois
September 11, 2003
William J. Barrett, Barack Ferrazzano Kirschbaum Perlman
Nagelberg LLC, Chicago, IL, for Kmart Corporation.
Andrew N. Goldman, Jeffrey R. Gleit, Wilmer, Cutler Pickering, New York, NY, for Kmart Corporation.
Corey E. Light, Chicago, IL, for KIMCO REALTY CORPORATION.
Robert W. Lannan, Chicago, IL, for KIMCO REALTY CORPORATION.
James J, Caserio, Chicago, IL, for KIMCO REALTY CORPORATION.
Patrick M. Jones, Chicago, IL, for KIMCO REALTY CORPORATION.
Greenberg Traurig, P.C., Chicago, IL, for KIMCO REALTY CORPORATION.
STIPULATION AND AGREED ORDER RESOLVING CERTAIN CLAIMS OF KIMCO REALTY CORPORATION
SUSAN SONDERBY, Chief Judge, Bankruptcy
This stipulation and agreed order (the “Stipulation and AgreedOrder”), between and among Kmart Corporation and certain of its domestic subsidiaries and affiliates, former debtor and debtors-in-possession in the above captioned cases (collectively, “Kmart”), and Kimco Realty Corporation and certain of its subsidiaries and affiliates (collectively, “Kimco”), is entered into on this 10th day of September, 2003,
RECITALS
WHEREAS, on January 22, 2002, Kmart filed voluntary petitions for relief under chapter 11 of the United State Bankruptcy Code, 11 U.S.C. § 101, et seq. (the “Code”); and
WHEREAS, on April 23, 2003 the Bankruptcy Court entered an Order confirming Kmart’s First Amended Joint Plan of Reorganization (the”Plan”) and the Plan became effective on May 6, 2003; and
WHEREAS, pursuant to certain non-residential real property leases and subleases (the “Leases”) Kmart was the lessee of certain non residential real property at each of the sites identified by the Debtors’ store numbers on Exhibit A attached hereto (collectively, the “Properties”); and
WHEREAS, as debtor-in-possession Kmart rejected the Leases pursuant to § 365(a) of the Code; and
WHEREAS, Kimco filed timely proofs of claim asserting damages under § 502(b)(6) of the Code resulting from Kmart’s rejection of the Leases which claims are referenced on Exhibit A attached hereto (collectively, the “Lease Rejection Claims”); and
WHEREAS, the aggregate amount of the Lease Rejection Claims asserted by Kimco is approximately $180,000,000; and
WHEREAS, on or about March 7, 2003, Kmart filed its Third Omnibus Objection (the “Third Omnibus Objection”) pursuant to 11 U.S.C. § 102(1), 10S(a) and 502(d) and Federal Rule of Bankruptcy Procedure 3007, wherein Kmart sought to disallow and expunge certain of the Lease Rejection Claims and Kmart has also filed certain other objections to the Lease Rejection Claims; and
WHEREAS, Kmart and Kimco have negotiated a settlement that will resolve the Lease Rejection Claims and grant Kimco an allowed general unsecured claim in the amount of $142,500,000;
IT IS HEREBY STIPULATED AND AGREED, BY AND BETWEEN THE UNDERSIGNEDPARTIES:
1. This Stipulation and Order shall not be binding on the undersigned parties (the “Parties”) unless and until it is signed by all Parties and approved by the Bankruptcy Court.
2. The settlement proposal contained in this Stipulation and Order is approved.
3. The Parties executing this Stipulation and Order all hereby warrant that they have full authority to execute this Stipulation and Order.
4. The Lease Rejection Claims shall be allowed as a general unsecured claim in the amount of $142,500,000 (the “Allowed Claim”) and shall be subject to a reserve of the last twenty percent (20%) of the distribution of such claim in the event of possible mitigation of the Allowed Claim due to the reletting of the Properties (the “Reserved Distribution”). On a
quarterly basis, starting on November 30, 2003 and ending on the earlier of (i) the date Kmart accepts the certification as set forth below, (ii) August 31, 2004 or (iii) the final distribution date as provided for in the Plan, Kimco shall provide Kmart with a chart providing information pertaining to the reletting of the Properties and the mitigation of the Allowed Claim. Kmart may, within ten (10) days after receipt of such chart, request that Kimco provide to Kmart any reasonable documentation relating to new transactions that have occurred during the prior quarterly period. In order to obtain release of the Reserved Distribution, Kimco must certify to Kmart, within one (1) year of the date of this Stipulation and Order to the effect that, despite reasonable commercial efforts, Kimco was unable to mitigate its damages with respect to the Properties so that in the aggregate the amount of Kimco’s actual damages were not less than $142,500,000, In the event that Kimco has provided Kmart with evidence supporting the position that its actual damages will meet or exceed the Allowed Claim, Kimco may request in writing that Kmart disburse the Reserved Distribution to Kimco. Kimco shall include in its request a certification and such supporting documentation reasonably necessary to justify that Kimco is entitled to that portion of the Reserved Distribution described in the certification. Kmart and Kimco will work together in good faith on the amount of any distribution of the Reserved Distribution.
5. This Stipulation and Order and the settlement provided for herein shall be contingent upon, and subject to, Kmart making a distribution to Kimco based upon the amount of the Allowed Claim in accordance with the Plan at the time of the regularly scheduled October 1, 2003 distribution with respect to allowed claims pursuant to the Plan,
6. By entering into this Agreed Order, the parties acknowledge that they are settling and compromising any objections or disputes that Kmart may have to the Lease Rejection
Claims, including but not limited to, the objections contained in the Third Omnibus Objection and contained in any other objections which have been filed by Kmart, and none of the parties admits any liability regarding the merits of the Lease Rejection Claims or any defenses thereto.
7. This Stipulation and Order and the settlement provided for herein shall not affect, apply to, or be deemed to include any administrative or cure claims that Kimco might have against Kmart or Kmart’s estates including, without limitation, any such administrative or cure claims relating to the Properties, and Kimco expressly reserves its rights to pursue any such claims.
8. This Stipulation and Order and the settlement provided for herein shall not affect, apply to, or be deemed to include any defense or right of setoff that Kmart might have to any administrative or cure claims filed by Kimco including, without limitation, any such administrative or cure claims relating to the Properties, and Kmart expressly reserves its rights to pursue or assert any such defenses or rights of setoffs to such claims.
9. Kimco does hereby release, waive, and forever discharge Kmart and each of its successors and assigns, of and from all manner of actions, causes, causes of action, suits, debts, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims, liabilities, and demands whatsoever, in law or in equity, and whether under state or federal law, in connection with the Lease Rejection Claims that Kimco now has against Kmart, Kmart’s bankruptcy estates or its respective successors or assigns, or hereafter can, shall, or may have, for upon, or by reason of any matter, cause, or thing whatsoever, existing on or at any time prior to the date of this Stipulation and Order.
10. Kmart does hereby release, waive, and forever discharge Kimco and each of its successors and assigns, of and from all manner of actions, causes, causes of action, suits, debts, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims, liabilities, and demands whatsoever, in law or in equity, and whether under state or federal law, in connection with any objections or counterclaims related to the Lease Rejection Claims that Kmart now has against Kimco or its respective successors or assigns, or hereafter can, shall, or may have, for upon, or by reason of any matter, cause, or thing whatsoever, existing on or at any time prior to the date of this Stipulation and Order.
11. This Stipulation and Order contains the entire understanding between and among the Parties and supersedes any prior understandings and agreements among them respecting the subject matter of this Stipulation and Order,
12. Any amendment to this Stipulation and Order must be in writing, signed by all Parties and approved by the Bankruptcy Court.
13. In the event an arbitration, suit or action is brought by any party under this Stipulation and Order to enforce any of its terms, or in any appeal there from, it is agreed that the prevailing party shall be entitled to reasonable attorneys’ lees to be fixed by the arbitrator, trial court and/or appellate court.
14. This Stipulation and Order may be signed in counterparts, by telefax, each of which counterpart shall constitute an original, but all of which together shall constitute one and the same agreement.
15. The Bankruptcy Court shall retain jurisdiction to enforce the terms of this Stipulation and Order,
SO ORDERED.
EXHIBIT A