TC Global (Tully's Coffee) Motion to Reject Contracts by RandyReese1

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									1                                                                    HONORABLE KAREN A. OVERSTREET

2                                                       **HEARING DATE: FRIDAY, OCTOBER 12, 2012
                                                        **HEARING TIME: 9:30 A.M.
3                                                       LOCATION: SEATTLE, COURTROOM 7206
                                                        **RESPONSES DUE: AT TIME OF HEARING
4                                                       **SUBJECT TO ENTRY OF ORDER
                                                        SHORTENING TIME FOR HEARING
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8                                      UNITED STATES BANKRUPTCY COURT
                                       WESTERN DISTRICT OF WASHINGTON
9
         In re
10                                                                  No. 12-20253
         TC GLOBAL, INC.,
11                                                                  EMERGENCY MOTION TO REJECT
                                        Debtor.                     NON-RESIDENTIAL REAL PROPERTY
12                                                                  LEASES

13                TC Global, Inc. (“Debtor”) dba Tully’s, debtor-in-possession herein, moves the Court,

14       pursuant to Bankruptcy Code § 365 to reject the nineteen non-residential real property leases listed

15       below (each a “Lease”) with such rejection effective as of October 10, 2012 (“Petition Date”). This

16       motion is based on the files and records herein and on the accompanying Declaration of Scott Pearson.

17                The Debtor commenced this Chapter 11 case on the Petition Date. The Debtor is operating its

18       business and managing its affairs as a debtor-in-possession under 11 U.S.C. §§ 1107 and 1108.

19                The Debtor currently operates 48 retail coffee locations, including those associated with the

20       nine leases that the Debtor intends to vacate in the near-term. A comprehensive discussion of the

21       Debtor’s background history and events leading to the bankruptcy filing is set forth in the Declaration

22       of Scott Pearson in Support of First Day Motions filed contemporaneously herewith.

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24                                                                              B USH S TROUT & K ORNFELD               LLP
         EMERGENCY MOTION TO REJECT NON-RESIDENTIAL                                            LAW OFFICES

25       REAL PROPERTY LEASES – Page 1                                                     5000 Two Union Square
                                                                                                601 Union Street
                                                                                       Seattle, Washington 98101-2373
                                                                                          Telephone (206) 292-2110
26   1977 20121 xj092606wz                                                                Facsimile (206) 292-2104
       Case 12-20253-KAO           Doc 9    Filed 10/10/12     Ent. 10/10/12 14:27:09         Pg. 1 of 5
1                 The Leases that the Debtor proposes to reject are associated with locations that the Debtor

2        determined were unprofitable and thus ceased operations. As to ten of the Leases, the Debtor returned

3        possession of the associated premises to the landlords in a broom-clean state prior to the Petition Date

4        and seeks rejection as of the Petition Date. As to the remaining nine leases, the Debtor will return

5        possession of the premises to the landlords in a broom-clean state on or before October 19, 2012. As

6        to these Leases, the Debtor seeks rejection effective October 19, 2012.

7                 The Leases for rejection are as follows:1

8        Non-Debtor Party                  Store   Monthly Base     Leased Premises                  Exit Date
         to Lease                          No.     Rent
9        Strickland Trust                                           4036 E. Madison Avenue           By October 19, 2012
                                                   $4,475.00
         330 112 Ave NE                     1004                    Seattle, WA 98112
10                                                 plus CAMs
         Bellevue, WA 98009
         Columbia Center Properties,                                Columbia Center                  By October 19, 2012
11       LLC                                       $1,840.50        701 Fifth Ave
                                            1019
         999 3rd Avenue Ste 1550                                    Seattle, WA 98104
12       Seattle, WA 98104
         Harbor Properties, Inc.                                    1401 4th Avenue                  By October 19, 2012
13                                                 $14,417.95
         1411 4th Ave Sute 501              1024                    Seattle, WA 98101
                                                   plus CAMs
         Seattle, WA 98101
14       Seawest Associates                                         13100 NE 70th Place              By October 19, 2012
                                                   $3,990.00
         13120 NE 70th Place, Suite A       1032                    Kirkland, WA 98033
15       Kirkland, WA 98033
                                                   plus CAMs

         Landlord Management, Inc.                                  2100 North 45th Street           By October 19, 2012
16       5248 California Ave SW             1035   $3,563.94        Seattle, WA 98134
         Seattle, WA 98136
17       Bella Bottega Partners                                     8862 161st Ave NE                By October 19, 2012
                                                   $8,304.50
         9125 10th Ave S                    1039                    Redmond, WA 98052
18       Seattle, WA 98108
                                                   plus CAMs

         Hollywood Vineyards, LP                                    14481 Woodinville Redmond        By October 19, 2012
19                                                 $5,481.00
         13306 SE 30th Street               1044                    Rd.
                                                   plus CAMs
         Bellevue, WA 98005                                         Woodinville, WA 98072
20
         PPR Redmond Retail, LLC                                    16349 NE 74th Place              Before Petition Date
                                                   $4,500.00
         (Macerich)                         1049                    Redmond Town Square
21                                                 plus CAMs
         7525 166th Ave NE, Suite D-                                Redmond, WA 98052

22
                  1
                  Due to the large number of leases, the leases are not being filed with this Motion. Any party desiring
23       a copy of a lease may obtain the same by contacting counsel for the Debtor.

24                                                                                   B USH S TROUT & K ORNFELD                LLP
         EMERGENCY MOTION TO REJECT NON-RESIDENTIAL                                                  LAW OFFICES

25       REAL PROPERTY LEASES – Page 2                                                           5000 Two Union Square
                                                                                                      601 Union Street
                                                                                             Seattle, Washington 98101-2373
                                                                                                Telephone (206) 292-2110
26   1977 20121 xj092606wz                                                                      Facsimile (206) 292-2104
       Case 12-20253-KAO                Doc 9   Filed 10/10/12    Ent. 10/10/12 14:27:09            Pg. 2 of 5
1        Non-Debtor Party                  Store   Monthly Base    Leased Premises                  Exit Date
         to Lease                          No.     Rent
2        210
         Redmond, WA 98052
3        MJ Enterprises International,                             2312 North 30th Street           Before Petition Date
         LLC                                       $1,597.17       Tacoma, WA 98403
4                                           1050
         2312 N 30th St, Suite 201                 plus CAMs
         Tacoma, WA 98403
5        Horizon Holdings 1, LLC                                   1427 Pacific Avenue              By October 19, 2012
                                                   $1,431.00
         2125 Commerce St, Suite 200        1051                   Tacoma, WA 98402
6                                                  plus CAMs
         Tacoma, WA 98402
         Broadway State LLC                                        824 East Pike Street             Before Petition Date
7        c/o Redside Partners LLC                  $4,250.00       Seattle, WA 98122
                                            1066
         1320 E. Pike St                           plus CAMs
8        Seattle, WA 98122
         Friendly Fuels, Inc.                                      4800 Jackson Rd.                 By October 19, 2012
9                                                  $2,400.00
         1190 NE Sunset Blvd, Suite F       1076                   Port Orchard, WA 98366
                                                   plus CAMs
         Renton, WA 98056
10       The Wilsonian, LLC                                        4700 University Way NE           Before Petition Date
                                                   $4,316.00
         1873 S Bellaire St., Suite 1210    1084                   Seattle, WA 98105
11       Denver, CO 80222
                                                   plus CAMs

         Sun Valley Associates                                     601 Sun Valley Road              Before Petition Date
12       675 E Sun Valley Rd, Suite L       2001
                                                   $7,216.41
                                                                   Ketchum, ID 83340
                                                   plus CAMs
         Ketchum, ID 83340
13       Hoa Lieu                                                  919 Cole Street                  Before Petition Date
         4623 Anza St.                      3003   $7,923.85       San Francisco, CA 94117
14       San Francisco, CA 94121
         Post-Montgomery Associates                                50 Post Street                   Before Petition Date
15                                                 $3,857.37
         1 Montgomery St, Suite 3220        3009                   San Francisco, CA 94104
                                                   plus CAMs
         San Francisco, CA 94101
16
         Embarcadero Associates                                    2 Embarcadero Center             Before Petition Date
         (Boston Properties)                       $6,132.00       San Francisco, CA 94111
17                                          3011
         Four Embarcadero Center                   plus CAMs
         San Francisco, CA 94111
18
         425 Street Condo Project                                  425 Market Street                Before Petition Date
         425 Market St, Suite 955           3021   $3,817.00       San Francisco, CA 94105
19
         San Francisco, CA 94105
         First Shattuck, LLC                                       2150 Shattuck Ave.               Before Petition Date
20                                                 $6,899.67
         2150 Shattuck Ave, Suite B100      3034                   Berkeley, CA 94704
                                                   plus CAMs
         Berkeley, CA 94704
21

22                It makes no business sense for the Debtor to continue to incur administrative rent with respect
23       to the Leases that it is no longer needs. Thus, it is the Debtor’s business judgment that the Leases are
24                                                                                  B USH S TROUT & K ORNFELD                LLP
         EMERGENCY MOTION TO REJECT NON-RESIDENTIAL                                                 LAW OFFICES

25       REAL PROPERTY LEASES – Page 3                                                          5000 Two Union Square
                                                                                                     601 Union Street
                                                                                            Seattle, Washington 98101-2373
                                                                                               Telephone (206) 292-2110
26   1977 20121 xj092606wz                                                                     Facsimile (206) 292-2104
       Case 12-20253-KAO              Doc 9    Filed 10/10/12     Ent. 10/10/12 14:27:09           Pg. 3 of 5
1        a drain on the estate and, to the extent they are executory, rejection is in the best interests of the estate

2        and its creditors.

3                 Although the Bankruptcy Code does not set forth guidelines for courts to apply in determining

4        whether to approve the decision of a debtor-in-possession to assume or reject an executory contract or

5        unexpired lease, the overwhelming majority of courts has consistently applied the well-established

6        "business judgment" test. Group of Institutional Investors v. Chicago M. St. P. & Pac. R.R., 318 U.S.

7        523, 550, 63 S.Ct. 727 (1943) reh'g denied; In re G.I. Industries, Inc., 204 F.3d 1276, 1282 (9th Cir.

8        2000).

9                 The Ninth Circuit Court of Appeals has held that bankruptcy courts have the equitable power

10       to order that the rejection of leases apply retroactively. In re At Home Corp., 392 F.3d 1064 (9th Cir.

11       2004). In In re At Home Corp., the Court of Appeals affirmed the bankruptcy court’s retroactive

12       rejection where 1) the debtor had moved to reject the lease immediately upon filing the bankruptcy

13       and promptly set the hearing; 2) the debtor was not in possession of the premises; and 3) the

14       landlord’s only interest in opposing retroactive rejection was to obtain an administrative expense

15       claim. Id. at 1066. The facts here are in accord.

16                As set forth above, it is the Debtor’s business judgment that rejection of the Leases, to the

17       extent they are executory, is in the best interests of the estate and its creditors. Therefore, the Debtor

18       respectfully requests an order rejecting the ten Leases vacated prepetition with such rejection

19       retroactive as of the Petition Date. The Debtor further requests an order authorizing the rejection of

20       ///

21       ///

22       ///

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24                                                                                 B USH S TROUT & K ORNFELD              LLP
         EMERGENCY MOTION TO REJECT NON-RESIDENTIAL                                              LAW OFFICES

25       REAL PROPERTY LEASES – Page 4                                                       5000 Two Union Square
                                                                                                  601 Union Street
                                                                                         Seattle, Washington 98101-2373
                                                                                            Telephone (206) 292-2110
26   1977 20121 xj092606wz                                                                  Facsimile (206) 292-2104
       Case 12-20253-KAO           Doc 9     Filed 10/10/12      Ent. 10/10/12 14:27:09         Pg. 4 of 5
1        the nine Leases to be vacated as of October 19, 2012 with such rejection effective as of

2        October 19, 2012.

3                 DATED this 10th day of October, 2012.

4                                                             BUSH STROUT & KORNFELD

5
                                                              By     /s/ Christine M. Tobin-Presser
6                                                               Christine M. Tobin-Presser, WSBA #27628
                                                              Attorneys for TC Global, Inc., Debtor-in-
7                                                             Possession

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24                                                                            B USH S TROUT & K ORNFELD               LLP
         EMERGENCY MOTION TO REJECT NON-RESIDENTIAL                                          LAW OFFICES

25       REAL PROPERTY LEASES – Page 5                                                   5000 Two Union Square
                                                                                              601 Union Street
                                                                                     Seattle, Washington 98101-2373
                                                                                        Telephone (206) 292-2110
26   1977 20121 xj092606wz                                                              Facsimile (206) 292-2104
       Case 12-20253-KAO          Doc 9    Filed 10/10/12     Ent. 10/10/12 14:27:09        Pg. 5 of 5
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9                                      UNITED STATES BANKRUPTCY COURT
                                       WESTERN DISTRICT OF WASHINGTON
10
         In re
11                                                                   No. 12-20253
         TC GLOBAL, INC.,
12                                                                   [PROPOSED] ORDER AUTHORIZING
                                        Debtor.                      REJECTION OF NON-RESIDENTIAL
13                                                                   REAL PROPERTY LEASES AS OF THE
                                                                     PETITION DATE
14

15                 THIS MATTER came before the Court upon the Emergency Motion to Reject Non-

16       Residential Real Property Leases (“Lease Rejection Motion”) filed by TC Global, Inc. (“Debtor”) dba

17       Tully’s Coffee, debtor-in-possession herein. The Court has reviewed the files and records herein and

18       finds that cause exists for the requested relief. Now, therefore, it is hereby

19                 ORDERED that the Debtor is authorized to reject the following leases pursuant to Bankruptcy

20       Code § 365 and that such rejection(s) shall be deemed effective as of the date indicated:

21
                   Non-Debtor Party            Store     Leased Premises            Effective Rejection
22                 to Lease                    No.                                  Date
                   Strickland Trust                      4036 E. Madison Avenue     October 19, 2012
                                                  1004
23                 330 112 Ave NE                        Seattle, WA 98112

24                                                                                B USH S TROUT & K ORNFELD                LLP
         [PROPOSED] ORDER AUTHORIZING REJECTION OF                                                LAW OFFICES

25       NON-RESIDENTIAL REAL PROPERTY LEASES AS OF                                           5000 Two Union Square
                                                                                                   601 Union Street
         THE PETITION DATE – Page 1                                                       Seattle, Washington 98101-2373
                                                                                             Telephone (206) 292-2110
26   1977 20121 xi12fj06rj                                                                   Facsimile (206) 292-2104
      Case 12-20253-KAO           Doc 9-1    Filed 10/10/12      Ent. 10/10/12 14:27:09           Pg. 1 of 3
1                  Non-Debtor Party                   Store   Leased Premises             Effective Rejection
                   to Lease                           No.                                 Date
2                  Bellevue, WA 98009
                   Columbia Center Properties,                Columbia Center             October 19, 2012
3                  LLC                                        701 Fifth Ave
                                                       1019
                   999 3rd Avenue Ste 1550                    Seattle, WA 98104
4                  Seattle, WA 98104
                   Harbor Properties, Inc.                    1401 4th Avenue             October 19, 2012
5                  1411 4th Ave Sute 501               1024   Seattle, WA 98101
                   Seattle, WA 98101
6                  Seawest Associates                         13100 NE 70th Place         October 19, 2012
                   13120 NE 70th Place, Suite A        1032   Kirkland, WA 98033
7                  Kirkland, WA 98033
                   Landlord Management, Inc.                  2100 North 45th Street      October 19, 2012
8                  5248 California Ave SW              1035   Seattle, WA 98134
                   Seattle, WA 98136
9                  Bella Bottega Partners                     8862 161st Ave NE           October 19, 2012
                   9125 10th Ave S                     1039   Redmond, WA 98052
10                 Seattle, WA 98108
                   Hollywood Vineyards, LP                    14481 Woodinville Redmond   October 19, 2012
11                 13306 SE 30th Street                1044   Rd.
                   Bellevue, WA 98005                         Woodinville, WA 98072
12                 PPR Redmond Retail, LLC                    16349 NE 74th Place         October 10, 2012
                   (Macerich)                                 Redmond Town Square         (Petition Date)
13                 7525 166th Ave NE, Suite D-         1049   Redmond, WA 98052
                   210
14                 Redmond, WA 98052
                   MJ Enterprises International,              2312 North 30th Street      October 10, 2012
15                 LLC                                        Tacoma, WA 98403            (Petition Date)
                                                       1050
                   2312 N 30th St, Suite 201
16                 Tacoma, WA 98403
                   Horizon Holdings 1, LLC                    1427 Pacific Avenue         October 19, 2012
17
                   2125 Commerce St, Suite 200         1051   Tacoma, WA 98402
                   Tacoma, WA 98402
18
                   Broadway State LLC                         824 East Pike Street        October 10, 2012
                   c/o Redside Partners LLC                   Seattle, WA 98122           (Petition Date)
19                                                     1066
                   1320 E. Pike St
                   Seattle, WA 98122
20
                   Friendly Fuels, Inc.                       4800 Jackson Rd.            October 19, 2012
                   1190 NE Sunset Blvd, Suite F        1076   Port Orchard, WA 98366
21
                   Renton, WA 98056
                   The Wilsonian, LLC                         4700 University Way NE      October 10, 2012
22
                   1873 S Bellaire St., Suite 1210     1084   Seattle, WA 98105           (Petition Date)
                   Denver, CO 80222
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24                                                                                     B USH S TROUT & K ORNFELD              LLP
         [PROPOSED] ORDER AUTHORIZING REJECTION OF                                                   LAW OFFICES

25       NON-RESIDENTIAL REAL PROPERTY LEASES AS OF                                              5000 Two Union Square
                                                                                                      601 Union Street
         THE PETITION DATE – Page 2                                                          Seattle, Washington 98101-2373
                                                                                                Telephone (206) 292-2110
26   1977 20121 xi12fj06rj                                                                      Facsimile (206) 292-2104
      Case 12-20253-KAO               Doc 9-1        Filed 10/10/12     Ent. 10/10/12 14:27:09       Pg. 2 of 3
1                  Non-Debtor Party                 Store   Leased Premises             Effective Rejection
                   to Lease                         No.                                 Date
2                  Sun Valley Associates                    601 Sun Valley Road         October 10, 2012
                   675 E Sun Valley Rd, Suite L      2001   Ketchum, ID 83340           (Petition Date)
3                  Ketchum, ID 83340
                   Hoa Lieu                                 919 Cole Street             October 10, 2012
4                  4623 Anza St.                     3003   San Francisco, CA 94117     (Petition Date)
                   San Francisco, CA 94121
5                  Post-Montgomery Associates               50 Post Street              October 10, 2012
                   1 Montgomery St, Suite 3220       3009   San Francisco, CA 94104     (Petition Date)
6                  San Francisco, CA 94101
                   Embarcadero Associates                   2 Embarcadero Center        October 10, 2012
7                  (Boston Properties)                      San Francisco, CA 94111     (Petition Date)
                                                     3011
                   Four Embarcadero Center
8                  San Francisco, CA 94111
                   425 Street Condo Project                 425 Market Street           October 10, 2012
9                  425 Market St, Suite 955          3021   San Francisco, CA 94105     (Petition Date)
                   San Francisco, CA 94105
10                 First Shattuck, LLC                      2150 Shattuck Ave.          October 10, 2012
                   2150 Shattuck Ave, Suite B100     3034   Berkeley, CA 94704          (Petition Date)
11                 Berkeley, CA 94704

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                                                        / / /End of Order/ / /
13
         Presented by:
14
         BUSH STROUT & KORNFELD LLP
15

16
         By_________________________________
17         Christine M. Tobin-Presser, WSBA #27628
         Attorneys for TC Global, Inc.
18

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24                                                                                    B USH S TROUT & K ORNFELD             LLP
         [PROPOSED] ORDER AUTHORIZING REJECTION OF                                                 LAW OFFICES

25       NON-RESIDENTIAL REAL PROPERTY LEASES AS OF                                            5000 Two Union Square
                                                                                                    601 Union Street
         THE PETITION DATE – Page 3                                                        Seattle, Washington 98101-2373
                                                                                              Telephone (206) 292-2110
26   1977 20121 xi12fj06rj                                                                    Facsimile (206) 292-2104
      Case 12-20253-KAO             Doc 9-1        Filed 10/10/12    Ent. 10/10/12 14:27:09        Pg. 3 of 3

								
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