Case No. 02-B02474, (Jointly Administered)United States Bankruptcy Court, N.D. Illinois, Eastern Division
June 26, 2002
ORDER GRANTING MOTION FOR AN ORDER PURSUANT TO 11 U.S.C. § 365(a) AUTHORIZING REJECTION OF UNEXPIRED REAL PROPERTY SUBLEASES IN AID OF IMPLEMENTATION OF AGREED ORDER WITH WATERLOO ASSOCIATES
SUSAN PIERSON SONDERBY, Chief Judge
Upon the motion dated June 12, 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 Section 365(a) of the Bankruptcy Code, authorizing the Debtors to reject certain nonresidential real property subleases (the “Real Property Leases”), which are identified on Schedule I attached hereto; 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 be granted as set forth below.
1. The rejection of the Real Property Leases shall be effective as of May 31, 2002 (the “Rejection Date”).
2. To the extent that any of the Real Property Leases could be construed as financing transactions or capital leases, abandonment of such Real Property Leases and the property subject thereto is authorized pursuant to Section 544(a) of the Bankruptcy Code.
3. The rights of any subtenant of premises subject to any Real Property Lease under section 365(h) of the Bankruptcy Code are preserved with respect to the Debtors only; provided, however, with respect to any Real Property Lease subject to a sublease (i) the Debtors (subject to and after reconciling the subtenant’s account against any outstanding amounts owed to the Debtors under the applicable sublease and applying any such rentals received against such outstanding amounts) shall turn over to the applicable landlord any and all rentals collected by the Debtors from the subtenant of premises subject to such Real Property Lease for rental periods arising from and alter the Rejection Date and (ii) any dispute between the landlord and the subtenant 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 any premises which is the subject of a Real Property Lease after the Rejection Date shall be deemed abandoned to the landlord of the Real Property Lease which landlord shall be entitled to remove or dispose of such property in its sole discretion.
5. The Court shall retain exclusive jurisdiction to resolve any dispute arising from or relating to the rejections authorized herein or this Order.
6. Notwithstanding Rule 6006(d) of the Federal Rules of Bankruptcy Procedure, this Order shall take effect immediately upon signature.
Schedule 1
Store Number Location Sublease
3291 WATERLOO IA Hob-Lob, Limited Partnership
3291 WATERLOO IA Office Depot, Inc.