Case No. 02 B 02474 (Jointly Administered)United States Bankruptcy Court, N.D. Illinois, Eastern Division
June 26, 2002
AGREED ORDER PURSUANT TO 11 U.S.C. § 365 AND FED. R BANKR. P. 6006 AUTHORIZING DEBTORS TO ASSUME AND ASSIGN A CERTAIN UNEXPIRED REAL PROPERTY LEASE TO RUBLOFF DEVELOPMENT GROUP, INC. (ROCKFORD, ILLINOIS, STORE NO. 1003)
SUSAN PIERSON SONDERBY, Chief United States Bankruptcy Judge
Upon the motion dated February 1, 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 11 U.S.C. § 365 and Rule 6006 of the Federal Rules of Bankruptcy Procedure, authorizing the Debtors to assume the unexpired nonresidential real property lease set forth on Schedule A attached hereto and other related documents and to assign their interests under the lease and related documents to Rubloff Development Group, Inc. (“Assignee”) 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 order or further notice is necessary; and (v) upon the record herein after due deliberation thereon, that the relief should be granted as set forth below:
1. The Debtors are authorized to assume that certain unexpired lease of non-residential real property as, set forth on Schedule A along with any and all casements, licenses, nondisturbance agreements and other similar agreements entered into by the Debtors which relate to their use and occupancy of the leased property (the “Property”), and all amendments, licenses, consents and other similar agreements between the Debtors and the landlord under the Lease (the “Landlord”) relating to the Property (collectively, the “Real Property Lease”). The Debtors’ decision to assume the Real Property Lease, however, remains subject to satisfaction of any and all conditions as set forth in the Assignment Agreement.
2. The Debtors are authorized to assign the Real Property Lease pursuant to the terms of that certain Lease Assignment and Assumption Agreement, a copy of which is attached to the Motion as Exhibit A (the “Assignment Agreement”). Upon the assignment of the Real Property Lease in accordance with the Assignment Agreement, neither the Debtor nor its estate shall retain any right or interest whatsoever in such Real Property Lease.
3. The conditions of Section 365(b)(1) of the Bankruptcy Code with respect to the assumption of an unexpired lease or executory contract have been satisfied in connection with the assumption of the Real Property Lease. In particular, the Debtors have provided the Landlord with adequate assurance of future performance pursuant to Section 365(b)(1)(C).
4. While the Court does not expressly decide the issue of whether the Property is part of a “shopping center” within the meaning of Section 365, all of the so-called “shopping center provisions” of the Bankruptcy Code with respect to the assumption of a shopping center lease have been satisfied in connection with the assumption of the Real Property Lease.
5. The assumption and assignment of the Real Property Lease are effective as of the Assignment Date (as defined in the Assignment Agreement). The Debtors retain no interest in the Real Property Lease after the assignment.
6. The cure claim, if any, shall be paid by Assignee, and the Debtors shall be released and forever discharged of any and all obligations with respect to the cure claim under the Real Property Lease, without any further action by the Landlord or order of the Court.
7. The Landlord and Assignee have entered into a Lease Agreement, First Amendment to Covenants, Conditions and Restrictions Agreement, and a Termination Option for Purchase of Real Estate and Memorandum of Option for Purchase of Real Estate, all of which shall become effective immediately upon entry of this Order.
8. The transactions contemplated herein are entitled to the full protections of Section 363(m) of the Bankruptcy Code.
9. As of the Assignment Date, the Debtors shall be released and forever discharged of any and all obligations and claims under the Real Property Lease, without any further action by the Landlord or order of the Court.
10. The Debtors are authorized to deliver possession of the premises subject to the Real Property Lease to Assignee as set forth in the Assignment Agreement.
11. The Debtors are authorized to sell and assign the Real Property Lease to Assignee free and clear of all liens, claims and encumbrances (except as set forth in the Assignment Agreement) pursuant to Section 363(f) of the Bankruptcy Code, with all such valid and enforceable liens, claims and encumbrances to attach to the proceeds of the assignment of the Real Property Lease, in the same relative priority as existed with respect to the Real Property Lease.
12. The Debtors and their respective officers, employees and agents, are authorized to perform all of their obligations, take whatever actions necessary, and issue, execute and deliver whatever documents may be necessary or appropriate to implement and effectuate the assumption and assignment of the Real Property Lease.
13. In accordance with section 1146(c) or the Bankruptcy Code, the sale, conveyance and assignment of the Real Property Lease to Assignee is hereby exempt from the imposition and payment of any law imposing a stamp tax, transfer tax or similar tax.
14. Each and every federal state and local government agency or department is hereby directed to accept any and all documents and instruments necessary or appropriate to consummate the assignment of the Real Property Lease in the appropriate public records.
15. To the extent that this Order is inconsistent with any prior order, the terms of this Order shall govern.
16. Nothing in this Order shall be deemed to extend the time to assume or reject any Real Property Lease under section 365(d)(4) of the Bankruptcy Code.
17. The Court shall retain exclusive jurisdiction to resolve any dispute rising from or relating to the assumption and assignment authorized herein or this Order.
18. Notwithstanding Rule 6006(d) of the Federal Rules of Bankruptcy Procedure, this Order shall take effect immediately upon signature.
SCHEDULE A
Store Location Date of Landlord No. Lease 1003 Rockford, Illinois 7/29/1993 LaSalle Bank National Association as Successor Trustee to LaSalle National Trust, N.A., as Trustee under Trust No, 117853
EXHIBIT A LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Assignment”) is made as of this 1st day of February, 2002 between Kmart Corporation, having its office at 3100 W. Big Beaver Road, Troy, Michigan 48084-3163 (“Assignor”) and Rubloff Development Group, Inc., an Illinois corporation, having its office at 6277 East Riverside Boulevard, Rockford, Illinois (“Assignee”).
WITNESSETH
WHEREAS, Assignor entered into certain leases more particularly described in Schedule 1 attached hereto and made a part hereof (as the same may have been amended, supplemented or extended from time to time, and together with any and all other leases or agreements affecting the Premises (hereinafter defined), (individually, a “Lease” and collectively, the “Leases”), whereby Assignor leased from the landlord set forth in Schedule 1 certain real property more particularly described in Schedule 1 and in the Leases (collectively, the “Premises”); and
WHEREAS, on January 22, 2002, Assignor and certain of its affiliates filed voluntary petitions for reorganization under Chapter 11 of title 11 of the United States Code, 11 U.S.C. § 101 et seq., as amended (the “Bankruptcy Code”), in the United States Bankruptcy Court for the Northern District of Illinois (the “Bankruptcy Court”); and
WHEREAS, subject to the terms and conditions of this Assignment, Assignor desires to assign and transfer all of its right, title and interest in the Leases and the estates created thereby to Assignee and Assignee desires to purchase and accept such assignment and assume all rights, duties and obligations of the Assignor under the Leases arising on and after the Assignment Date (as hereinafter defined).
NOW THEREFORE, the parties hereto for and in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is conclusively acknowledged by the parties hereto, agree as follows:
1. Assumption of Lease by Assignor. As of the Assignment Date, Assignor hereby assumes the Leases pursuant to 11 U.S.C. § 365.
2. Assignment of Lease. As of the Assigmnent Date, Assignor hereby assigns, transfers, and sets over unto Assignee, its successors and assigns, all of Assignor’s right, title and interest in, to and under the Leases.
3. Assumption of Leasehold Obligations. Assignee hereby accepts the foregoing assignment and covenants with Assignor, that, on and after the Assignment Date, Assignee and its successors and assigns hereby assume and agree to keep, perform, fulfill or cause to be performed all of the terms, covenants, conditions and obligations contained in the Leases, which, by the respective terms therein, are imposed upon Assignor, as tenant, including, without limitations, the payment of any and all rents due thereunder; provided, however, notwithstanding the foregoing, (i) Assignee shall reimburse Assignor for any and all base rents and costs and expenses incurred by Assignor under the Leases from and after January 22, 2002 to the Assignment Date and (ii) Assignee shall have no obligation to make any payments to Assignor under the Subleases (as hereinafter defined) for any and all base rents and costs and expenses incurred or due under the Subleases from and after January 22, 2002 to the Assignment Date.
4. Ratification of Lease. Assignor and Assignee hereby ratify, reaffirm and adopt and agree that the Leases shall be in full force and effect as to Assignee.
5. Indemnification. Assignee hereby agrees to indemnify, protect, defend and hold Assignor harmless from and against all claims, damages, losses, costs and expenses (including attorneys’ fees) arising in connection with the Leases and relating to the period subsequent to the Assignment Date.
6. Governing Law. This Assignment shall be governed by and construed in accordance with the laws of the state where each of the Premises is located, as applicable.
7. Assignment Date. The “Assignment Date” shall mean the day and year first written above.
8. Counterparts. This Assignment may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument, and it shall constitute sufficient proof of the Assignment to present any copy, copies or facsimiles signed by the parties to be charged.
9. Conditions to Assignment. This Assignment is subject to (i) approval of the Bankruptcy Court, following notice to creditors and parties in interest, under the Bankruptcy Code and the rules promulgated thereunder, all as set forth more fully in the motion filed with the Bankruptcy Court to approve this Assignment (the “Motion”) and (ii) Assignee paying to Assignor (a) any and all amounts designated as “cure claims” due and payable to the Master Landlords in connection with Assignor’s assumption of the Leases pursuant to 11 U.S.C. § 365 to the extent any such claim is supported by evidence reasonably acceptable to Assignor and allowed by the Bankruptcy Court and (b) any and all amounts due and payable by Assignee, as subtenant, to Assignor, as sublandlord, under the subleases more particularly described on Schedule 2 attached hereto (collectively, the “Subleases”).
10. Failure of Condition. Notwithstanding anything to the contrary contained in Section 9 above or otherwise herein, in the event Assignor, after using good faith efforts (which shall not include the expenditure of any amounts by Assignor), is unable to obtain the approval of the Bankruptcy Court of the assumption and assignment of any Lease within sixty (60) days of the filing of the Motion, Assignee shall reimburse Assignor for any and all base rents and costs and expenses incurred by Assignor under such Lease from and after January 22, 2002 through the effective date of the rejection of such Lease except to the extent Assignor is otherwise reimbursed or compensated and made whole for such amounts.
11. Condition to Assignment of Oak Lawn, IL Lease (Store 3280) (the “Oak Lawn Lease”). Notwithstanding anything to the contrary contained herein, this Assignment with respect to the Oak Lawn Lease only is subject to the landlord of the Oak Lawn Lease and Assignee delivering to Assignor an agreement that the premises subject to the Oak Lawn Lease shall not be used or operated as a Walmart, Target, Caldor’s or any other direct competitor of Kmart for a period of two (2) years from and after the Assignment Date.
IN WITNESS WHEREOF, the parties hereto have duly executed this Assignment as of the day and year first written above,
ASSIGNOR ASSIGNEE
KMART CORPORATION RUBLOFF DEVELOPMENT GROUP, INC. By: By: Name: Name: Gerald H. Weber, Jr. Its: Its: Vice President
SCHEDULE 1 Leases
SCHEDULE 2 Subleases