MENTER, RUDIN & TRIVELPIECE, P.C.

308 Maltbie Street, Suite 200 Syracuse, New York 13204-1498 Telephone: (315) 474-7541 Facsimile: (315) 474-4040 Kevin M. Newman Attorneys for Pyramid Management Group, LLC and Inland Southwest Management LLC

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ----------------------------------------------------------------------In re: Chapter 11 Case METROPARK USA, INC., Debtors. ---------------------------------------------------------------------LIMITED OBJECTION TO THE EMERGENCY MOTION OF THE DEBTOR FOR ENTRY OF AN ORDER PURSUANT TO SECTIONS 105, 363, 364, 365, AND 554 (I) APPROVING ASSUMPTION OF AGENCY AGREEMENT, (II) APPROVING STORE CLOSING SALES, (III) APPROVING BREAK-UP FEE, (IV) AUTHORIZING THE DEBTOR TO ABANDON PROPERTY, AND (V) GRANTING RELATED RELIEF Pyramid Management Group, LLC, managing agent for EklecCo NewCo, LLC and Pyramid Walden Company, L.P., and Inland Southwest Management LLC, managing agent for SLTS Grand Avenue II, L.P. (collectively the Landlords by and through their attorneys ), Menter, Rudin & Trivelpiece, P.C., respectfully submits this limited objection to the above captioned debtor (the s Debtor Emergency Motion of the Debtor for Entry of an Order ) Pursuant to Sections 105, 363, 364, 365, and 554 (I) Approving Assumption of Agency Agreement, (II) Approving Store Closing Sales, (III) Approving Break-up Fee, (IV) Authorizing the Debtor to Abandon Property, and (V) Granting Related Relief (the Motion ). Case No. 11-22866 (RDD)

Background 1. On May 2, 2011 (the ), Petition Date the above referenced debtor (the Debtor )

filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New ) York (the Court ). 2. Upon information and belief, the Debtor is operating its business and managing

its properties as a debtor-in-possession pursuant to 11 U.S.C. 1107(a) and 11081 of the Bankruptcy Code. 3. The Landlords lease nonresidential real property to the Debtor under unexpired

leases (the Leases for premises (the ) Premises located at the following locations: Palisades ) Center, West Nyack, NY; Walden Galleria, Buffalo, NY, and Southlake Town Square Phase II, Southlake, Texas (collectively the Shopping Centers ). 4. The Premises are located within shopping centers as that term is used in

Bankruptcy Code Section 365(b)(3). See In re Joshua Slocum, Ltd. 922 F.2d 1081, 1086 (3d 87 Cir. 1990). 5. On May 2, 2011, the Debtor filed the Motion seeking an Order authorizing,

among other things, (1) the Debtor assumption of the Agency Agreement2 (and each of the s transactions contemplated therein) as submitted or improved and accepted by the highest bidder at the Auction on terms substantially similar to those in the Agency Agreement; (2) store closing sales ( GOB Sales in accordance with the Agency Agreement and Sale Guidelines, with such ) sales to be free and clear of all liens, claims, and encumbrances; and (3) the Debtor to abandon unsold Merchandise or Owned FF&E at the closing stores following the conclusion of the GOB

1 2

1532, unless otherwise indicated. All statutory references hereinafter are to the Bankruptcy Code, 11 U.S.C. 101 Terms not otherwise defined herein shall have the meanings ascribed to them in the Motion.

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Sales. 6. The Debtor currently owes post-petition rent for May 2-31, 2011 to the Landlords. Limited Objection 7. The Landlords object to the Motion due to insufficient notice of the relief

requested in the Motion and the lack of due process. (see Proposed Order, E.). The Motion was filed at 8:40 p.m. on the Petition Date and approximately a day and a half before the hearing and without any Order of the Court reducing notice of the hearing. The relief sought by the Motion is sweeping and should not be considered at a first day hearing. 8. The Court should condition any relief on the Debtor payment of May 2011 posts

petition rent to the Landlords. Although the Sale Guidelines provide that [p]ost-petition rents shall be paid and lease obligations shall be performed by the [Debtor] as required by the Bankruptcy Code . . . the Debtor has failed to pay stub rent for the period from May 2 to May , 31 in contravention of 365(d)(3). 9. The Landlords also object to the Debtor Motion because its proposed course of s

action fails to provide sufficient restrictions on the sales to protect the Landlordsinterests. 10. Despite the clarity of intent behind 365(d)(3), the Debtor seeks to override or

invalidate any provisions of the Leases that may impair the ability of the liquidation agent (the Liquidation Agent from conducting store closing sales (Motion, 62, 63, 65; Agency ) Agreement, 2.2; Proposed Order, 19). Such relief is sweeping and overbroad, as it rides roughshod over not only the plain meaning of 365(d)(3), but also over the equitable rights and interests of the Landlords. 11. Section 363(b)(1) provides that a debtor may use, sell, or lease, other than in the

ordinary course of business, property of the estate. 11 U.S.C. 363(b)(1); see In re Ames Dep t

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Stores, Inc., 136 B.R. 357, 359 (Bankr. S.D.N.Y. 1992). Nevertheless, Section 363(e) provides that the Court may prohibit or conditionthe sale, use, or lease of property upon the request of a party in interest in order to afford the protesting party adequate protection of its interest. 11 U.S.C. 363(e). 363(e) reserves for Bankruptcy Courts the discretion to condition the time, place and manner of store closing sales thereby providing adequate safeguards to protect shopping center landlords and their other tenants . . . .In re Ames Dep Stores, Inc., 136 B.R. t. at 359. The Court should thus seek to balance the Debtor interest in liquidating its assets and s the Landlordsinterests in maintaining a certain level of decorum and standard of appearance at the Shopping Centers. The Debtor proposes that the Agency Agreement and Sales Guidelines govern the store closing sales. The procedures provided therein are insufficient to adequately protect the Landlords. The Landlords therefore respectfully request that the Court place additional and different limitations on the Debtorsright to conduct store closing sales. 12. The Motion and Agency Agreement propose to advertise the store closing sales

Going Out of Business, Store Closing, using signage and advertising proclaiming: Bankruptcy Liquidation, Sale on Everything, Everything Must Go,or some other similarly themed sale without the consent of any person. (Motion, 12, 34; Agency Agreement, pg. 1, 2.2, 8.1, Sale Guidelines, 4.) The terms Bankruptcy, Lost our Lease, Chapter 11, Bare to the Walls, Going Out of Business,or other similar themes should not be used in any signage or advertising as they would have a negative impact on the image of the Shopping Centers. Simply stating Store Closing,Sale on Everything,or Everything Must Gois sufficient to promote the sales and avoids the imputation of ill-will or a sense that business is flagging at the Shopping Centers. Thus, the Court should order that the only slogans used in signage and advertising be Store Closing, Sale on Everything,or Everything Must Go,and

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that any other slogan must be approved in writing by the affected Landlord. 13. The Agency Agreement provides that the Liquidation Agent is permitted to

augment the merchandise to be sold with its own merchandise, which shall be similar in nature to the merchandise already sold at the locations. (Agency Agreement, 8.9; Sale Guidelines, 3.) Any property to be brought in must be of like kind and quality to that sold by the Debtor and in compliance with all Lease provisions, including all use provisions. 14. The Sale Guidelines provide that exterior banners may be used at non-enclosed

malls or at enclosed malls if the Premises has an independent entrance from the parking lot, provided that said banners shall be located or hung so as to make clear that the sale is being conducted only at the affected store and shall be no wider than the storefront of the Premises. (Sales Guidelines, 4; see also Agency Agreement, 8.1(a); Proposed Order, 16, 19.) No exterior banners should be permitted at the Shopping Centers. Palisades Center and Walden Galleria are enclosed malls. Southlake Town Square is a very high end lifestyle center and the use of exterior banners would severely and detrimentally impact the atmosphere and appearance cultivated by the Landlord. 15. Paragraph 6 of the Sale Guidelines provides that the Liquidation Agent will not

distribute written materials outside the Premises unless permitted by the Leases or if distribution is customary in the shopping center. (Sale Guidelines, 6.) There should be no written or verbal solicitation whatsoever outside the stores. 16. The Motion, Agency Agreement, Sale Guidelines, and Order permit the use of

signwalkers, A-frame signs, and other exterior signage. (Motion, 34; Agency Agreement, 8.1, (d); Sale Guidelines, 4; Proposed Order, 16, 19.) There should be no signwalkers, street signage, sandwich boards, A-frames, rooftop signage, balloons or inflatable devices, sidewalk

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sales, or any exterior signage on shopping center property. Such advertising tactics detract from the appearance and atmosphere designed by the Landlords. Furthermore, signwalkers, street signage, sandwich boards, and A-frames would impede the normal flow of foot traffic, potentially pose a health and safety risk, and detract from the image of the shopping center. Thus, such signage should not be permitted on the Landlordsproperty or any of the adjacent sidewalks. 17. The sale of furniture, fixtures, and equipment (the FF&E is to be permitted and )

the purchasers must remove the FF&E through the back shipping areas or through other areas after store business hours. (Sale Guidelines, 8.) The Court should order that all FF&E must be removed through back shipping areas or other areas designated by the Landlords irrespective of when the FF&E is removed. 18. Additionally, auctions of the FF&E and merchandise are permitted. (Sale

Guidelines, 15.) The Court should prohibit auctions from taking place at the Premises, as such activities would reflect poorly on the Shopping Centers and are virtually never authorized in Chapter 11 retailersbankruptcy cases. 19. The Motion, Agency Agreement, Sale Guidelines, and Proposed Order do not

provide any limitations on the use of interior signage at the Premises, with the exception of prohibiting neon and day-glo signs. (see Sale Guidelines, 4.) All signage shall be comprised of no more than three colors. Window signage should be set back at least twelve inches from the windows and conceal no more than 50% of the surface area of the windows. There should be no more than six interior signs per 1,000 square feet of space in addition to the window signage. Finally, the Court should permit only one interior banner to be installed in the Premises and which must be located in the rear third of the retail space away from the windows. Any such

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banner should be no larger than three feet by six feet. 20. The Landlords should be permitted to dress and barricade the window areas of the

Premises once the sales have concluded. 21. The Sales Guidelines provide that Post-petition rents shall be paid and other

lease obligations shall be performed by the Merchant as required by the Bankruptcy Code, except as modified pursuant to the Approval Order, until the rejection or assumption and assignment of each lease. (Sale Guidelines, 12). The Debtor obligation to pay post-petition s rent cannot be modified by the Approval Order and all Lease obligations must be timely complied with. 22. The Sales Guidelines provide that the extent a conflict exists between the [t]o

terms and provisions of [the Sale Guidelines] and the Agency Agreement, then, the terms and provisions of the Agency Agreement shall govern and control. (Sales Guidelines, 16.) The Sales Guidelines must govern and control over the Agency Agreement as the guidelines provide for restrictions on the conduct of the sales which are not contained in the Agency Agreement. 23. The Proposed Order provides that all lease provisions and other contractual

restrictions that restrict or prohibit the Debtor from conducting store closing, liquidation or similar sales pursuant to the Sale Guidelines are unenforceable. This provision is incorrect as a matter of law and should be deleted from the Order. 24. The Proposed Order should be revised to state that the Landlords and the

Liquidation Agent may enter separate agreements regarding the conduct of the sales that may vary the terms of the sales and Sale Guidelines at the locations leased by such Landlords and that any such agreement shall govern and control the sales at the affected Premises. WHEREFORE, the Landlord respectfully requests that the Court deny the Debtor s

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Motion, or, in the alternative, enter an Order consistent with this Objection and grant any additional or further relief as the Court deems just and appropriate. Dated: May 3, 2011 Respectfully submitted, MENTER, RUDIN & TRIVELPIECE, P.C. By: /s/ Kevin M. Newman Kevin M. Newman Office and Post Office Address 308 Maltbie Street, Suite 200 Syracuse, New York 13204-1498 Telephone: (315) 474-7541 Facsimile: (315) 474-4040 Attorneys for Pyramid Management Group, LLC and Inland Southwest Management LLC

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