Case No. 02-802474, (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
SUSAN PIERSON SONDERBY, Chief United States 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 (the “Real Property Leases”), which are identified on Schedules A and B attached hereto; the Court finds 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 good and sufficient cause exists for the granting of the relief as set forth herein,
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 be effective for each Real Property Lease set forth on the annexed Schedule B as often days following the delivery by the Debtors to the landlord (and subtenant, as applicable) under that particular Real Property Lease of a notice of rejection of that particular Real Property Lease. The landlord 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. To the extent that any of the Real Property Leases could be construed as financing transactions or capital leases, abandonment of such Leases and the property subject thereto is authorized pursuant to Section 544(a) of the Bankruptcy Code.
3. 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 the date this Motion is filed and the effective date of the rejection of that particular Real Property Lease, notwithstanding the terms of such Real Property Lease.
4. 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 after the effective date of the rejection 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.
5. 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 landlord of the Real Property Lease which landlord shall be entitled to remove or dispose of such property in its sole discretion.
6. With regard to any Real Property Lease where a subtenant is in possession of the premises, the Debtors shall send a written notice to such subtenant directing such subtenant to make all future rent payments to the landlord of such Real Property Lease. Also, upon written request by any landlord, the Debtors shall provide to such landlord a copy of any sublease that affects the premises subject to the Real Property Lease.
7. 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.
8. The Court shall retain exclusive jurisdiction to resolve any dispute arising from or relating to the rejections authorized herein or this Order.
9. Notwithstanding Rule 6006(d) of the Federal Rules of Bankruptcy Procedure, this Order shall take effect immediately upon signature.
SCHEDULE A REAL PROPERTY LEASES IMMEDIATE REJECTION
[EDITORS’ NOTE: SCHEDULE A IS ELECTRONICALLY NON-TRANSFERRABLE.]
SCHEDULE B REAL PROPERTY LEASES REJECT UPON 10 DAYS NOTICE SCHEDULE B
LEASES
[EDITORS’ NOTE: SCHEDULE B IS ELECTRONICALLY NON-TRANSFERRABLE.]
SCHEDULE B REAL PROPERTY LEASES REJECT UPON 10 DAYS NOTICE SCHEDULE B
SUBLEASES
[EDITORS’ NOTE: SCHEDULE B IS ELECTRONICALLY NON-TRANSFERRABLE.]