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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Perkins & Marie Callender’s Inc., et al.,1 Debtors.

Chapter 11 Case No. 11-11795 (KG) Jointly Administered
Objections Due: November 15, 2011 at 4:00 p.m. EST Hearing Date: November 22, 2011 at 4:00 p.m. EST

MOTION OF TRI-STATE HOUSE OF PANCAKES, INC. FOR RELIEF FROM THE AUTOMATIC STAY Tri-State House of Pancakes, Inc. (“Tri-State”), by and through its undersigned counsel, hereby moves (the “Motion”) for relief from the automatic stay under section 362(d) of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”) to permit Tri-State to issue a default notice and to provide an opportunity to cure under a licensing agreement in which Tri-State is the licensor and debtor Perkins & Marie Callender’s Inc. (the “Debtor”) is the licensee. In support of its Motion, Tri-State respectfully states the following: JURISDICTION AND VENUE 1. This is a core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(G), (K)

and (O). The bases for the relief sought herein are 11 U.S.C. §§ 361, 362(d), and

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The Debtors together with the last four digits of each Debtor’s federal tax identification number are: Perkins & Marie Callender’s Inc. (4388); Perkins & Marie Callender’s Holding Inc. (3999); Perkins & Marie Callender’s Realty LLC (N/A); Perkins Finance Corp. (0081); Wilshire Restaurant Group LLC (0938); PMCI Promotions LLC (7308); Marie Callender Pie Shops, Inc. (7414); Marie Callender Wholesalers, Inc. (1978); MACAL Investors, Inc. (4225); MCID, Inc. (2015); Wilshire Beverage, Inc. (5887); and FIV Corp. (3448). The mailing address for the Debtors is 6075 Poplar Avenue, Suite 800, Memphis, TN 38119.

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363, and Fed. R. Bankr. P. 4001. Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409. BACKGROUND 2. On June 13, 2011 (the “Petition Date”), the Debtor and its affiliated

debtors (collectively, the “Debtors”) in the above-captioned jointly administered bankruptcy cases each filed a voluntary petition under chapter 11 of the Bankruptcy Code. 3. The Debtors are operating their businesses and managing their

property as debtors in possession under Bankruptcy Code sections 1107(a) and 1108. 4. The Debtor and Tri-State are parties to an integrated license

agreement, which is an executory contract. The integrated license agreement includes an agreement of December 20, 1973, an agreement of March 31, 1976, and the assignment of sub-franchise licensing agreement dated May 4, 1976 (the “Agreements”). The Agreements permit the Debtor to operate Perkins restaurants in Tri-State’s exclusive territory, which comprises the states of North Dakota, South Dakota, and Nebraska (the “Territory”). Under the Agreements, the Debtor is required to perform services for Perkins franchisees and make royalty payments to Tri-State. In exchange for the Debtor’s performance under the Agreements, TriState is required to perform services for the Debtor. 5. On October 17, 2011, Debtors filed, among other things, the Notice of

(i) possible assumption of executor contracts and unexpired leases, (ii) fixing of cure amounts in connection therewith, and (iii) deadline to object thereto, under which

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Debtors plan to assume Perkins License Agreements in the states of North Dakota, South Dakota, and Nebraska [D.I. 1152]. 6. Debtors filed their Plan Supplement on October 21, 2011, expressing

their intent to reject the Agreements. See Plan Supplement Exhibit 10 [D.I. 1204]. 7. The portion of the integrated license agreement that is dated May 4,

1976 and is attached hereto as Exhibit A provides: This agreement shall be deemed to be in default in the event that [Debtor] fails to pay any monies owed to Tri-State pursuant to the terms of this agreement within ninety (90) days following the date that said sums become due and payable. . . . Further, it shall be considered an additional event of default if [Debtor] shall breach any of the terms and conditions of this agreement. May 4, 1976 Agreement, ¶ 7. 8. The Debtors have breached the Agreements by failing to timely pay

royalties to Tri-State when due and owing for more than ninety (90) days. In addition, Debtors have breached the Agreements by stating in their Plan Supplement for Debtors’ Second Amended Joint Plan of Reorganization [D.I. 1204] that the Debtors will reject the Agreements. 9. Under the Agreements, if the Debtor defaults, Tri-State must provide

a notice of default before the Debtor loses its rights in the licensed property under a conditional assignment.2 Specifically, the May 4, 1976 Agreement provides that “[a]s a condition precedent to, and in order to effect the conditional assignment

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The conditional assignment is typical of license agreements that provide upon a default, the licensee, the Debtor in this case, loses its right to use the licensed property, and all right to the licensed property reverts to the licensor, Tri-State in this case.

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attached hereto and executed in conjunction herewith, Tri-State shall be required to mail notice of default” to Debtor identifying certain information set forth with specificity in the May 4, 1976 Agreement. Id., ¶ 8. The notice of default must state that the Debtor “has a period of thirty (30) days from the date of receipt of said notice to cure the default therein listed . . .” Id., ¶ 8(C). 10. In the event the default is not cured, the conditional assignment

between the parties dated May 4, 1976 becomes effective without the necessity for the execution of any additional documents. Under the conditional assignment, in the event of an uncured default, the Debtor assigns to Tri-State all of the Debtor’s right title and interest in and to the Agreements and to all Perkins license agreements in North Dakota, South Dakota, and Nebraska. Id., ¶ 8 and Exhibit C thereto. 11. Tri-State will soon file an adversary complaint, seeking a declaration

that: (i) the Agreements between Tri-State and Debtor are an integrated license agreement enforceable according to its terms; (ii) the integrated licensing agreement between Tri-State and Debtor is an executory contract that, if rejected, and upon proper notice, requires the Debtor to return exclusive franchise rights and the underlying Perkins franchise agreements in the State of North Dakota, South Dakota and Nebraska to Tri-State; (iii) Tri-State’s rights under the integrated licensing agreements are not in the nature of equity; and (iv) any royalty payments paid under the integrated licensing agreements are not fraudulent conveyances under Bankruptcy Code section 548 and are not otherwise avoidable.

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RELIEF REQUESTED 12. By this Motion, Tri-State hereby seeks relief from automatic stay to

give notice of default under the Agreements to the Debtor and provide an opportunity to cure. BASIS FOR RELIEF REQUESTED 13. Bankruptcy Code section 362(a) provides that the filing of a petition

under Bankruptcy Code section 301 operates as a stay of: (1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title. 11 U.S.C. § 362(a). 14. The Bankruptcy Code further provides that:

(d) On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay . . . (1) for cause. 11 U.S.C. § 362(d). 15. The Bankruptcy Code does not define “cause.” Instead, whether

“cause” exists to lift the automatic stay should be determined on a case-by-case basis. See In re DBSI, Inc., 407 B.R. 159, 166 (Bankr. D. Del. 2009); see also Izzarelli v. Rexene Prod. Co. (In re Rexene Prod. Co.), 141 B.R. 574, 576 (Bankr. D. Del. 1992). Courts determine what constitutes “cause” based on the totality of the circumstances in each particular case. Baldino v. Wilson (In re Wilson), 116 F.3d

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87, 90 (3d Cir. 1997). A petitioning party bears the burden of establishing that cause exists to lift the automatic stay. In re RNI Wind Down Corp., 348 B.R. 286, 299 (Bankr. D. Del. 2006) (party seeking to lift the stay must first demonstrate “a factual and legal right to the relief that it seeks”) (citation omitted). 16. Courts in this Circuit employ a three-part balancing test to determine

whether cause exists to lift the stay in a particular case. Rexene, 141 B.R. at 576. Those factors are: (i) whether any great prejudice to either the bankrupt estate or the debtor will result from continuation of the civil suit; (ii) whether the hardship to the non-bankrupt party by maintenance of the stay considerably outweighs the hardship to the debtor; and (iii) the movant’s probability of prevailing on the merits. Id. 17. In this case, relief from the automatic stay should be granted to permit

Tri-State to exercise its remedies and preserve all rights available to it under the Agreements. There will be no prejudice to the Debtor if stay relief is granted. By failing to make payments for more than ninety (90) days and rejecting the Agreements, the Debtor has unequivocally and intentionally breached the Agreement. Relief from the automatic stay will in no way prejudice the debtor or the debtor’s estate. This factor favors stay relief. 18. On the other hand, if stay relief is not granted, the prejudice to Tri-

State would be severe. Tri-State has specific rights bargained for under the Agreements that are triggered by an event of default and the provision of notice by Tri-State to the Debtor. If stay relief is not granted to permit Tri-State to provide notice, it would be stripped of these bargained-for rights, and might well confer an

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undeserved benefit on the estates of the Debtors. This factor also favors stay relief. 19. The final Rexene factor, the movant’s probability of prevailing on the

merits, is not a factor here. Tri-State currently does not seek to commence or continue litigation against the Debtor outside of this Court. Instead, it seeks only to exercise the rights that the parties agreed that Tri-State would possess in the event of default. This factor therefore, is inapplicable. 20. herein. WHEREFORE, Tri-State respectfully requests that the Court enter an order in substantially the form attached hereto (i) granting Tri-State relief from the automatic stay to give notice of default under the Agreements to the Debtor and provide an opportunity to cure; (ii) waiving the stay of such order imposed by Fed. R. Bankr. P. 4001(a)(3); and (iii) granting such other and further relief as may be just and proper. Dated: October 27, 2011 WOMBLE CARLYLE SANDRIDGE & RICE, LLP /s/ Thomas M. Horan Kevin J. Mangan (DE Bar No. 3810) Thomas M. Horan (DE Bar No. 4641) 222 Delaware Avenue, Suite 1501 Wilmington, Delaware 19801 Telephone: (302) 252-4320 Facsimile: (302) 252-4330 E-mail: kmangan@wcsr.com E-mail: thoran@wcsr.com -andIn sum, the Rexene factors warrant granting the relief requested

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Roger W. Damgaard Woods, Fuller, Shultz & Smith P.C. P.O. Box 5027 Sioux Falls, SD 57117-5027 Telephone: (605) 336-3890 E-mail: Roger.Damgaard@woodsfuller.com Counsel to Tri-State House of Pancakes, Inc.

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Perkins & Marie Callender’s Inc., et al.,1 Debtors. Chapter 11 Case No. 11-11795 (KG) Jointly Administered Re: D.I. __________

ORDER GRANTING MOTION OF TRI-STATE HOUSE OF PANCAKES, INC. FOR RELIEF FROM THE AUTOMATIC STAY Upon the Tri-State House of Pancakes, Inc. (“Tri-State”) for Relief from the Automatic Stay (the “Motion”), and the Court finding that notice of the Motion and the hearing on the Motion was sufficient under the circumstances; and after due deliberation the Court having determined that the relief requested in the Motion is appropriate; and good and sufficient cause having been shown therefor, it is hereby ordered that: 1. 2. The Motion is GRANTED. Tri-State is hereby granted relief from the automatic stay under 11

U.S.C. § 362(d) to provide to debtor Perkins & Marie Callender’s Inc. notice of default in accordance with that certain Agreement dated May 4, 1976.
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The Debtors together with the last four digits of each Debtor’s federal tax identification number are: Perkins & Marie Callender’s Inc. (4388); Perkins & Marie Callender’s Holding Inc. (3999); Perkins & Marie Callender’s Realty LLC (N/A); Perkins Finance Corp. (0081); Wilshire Restaurant Group LLC (0938); PMCI Promotions LLC (7308); Marie Callender Pie Shops, Inc. (7414); Marie Callender Wholesalers, Inc. (1978); MACAL Investors, Inc. (4225); MCID, Inc. (2015); Wilshire Beverage, Inc. (5887); and FIV Corp. (3448). The mailing address for the Debtors is 6075 Poplar Avenue, Suite 800, Memphis, TN 38119.

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The stay of this order imposed by Fed. R. Bankr. P. 4001(a)(3) is

waived, and this order shall be effective immediately upon entry. 4. This Court shall retain jurisdiction to interpret, implement, and

enforce the provisions of this Order.

Date: November ______, 2011

______________________________________ The Honorable Kevin Gross Chief United States Bankruptcy Judge

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WCSR 7009773v1

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Perkins & Marie Callender’s Inc., et al.,1 Debtors. Chapter 11 Case No. 11-11795 (KG) Jointly Administered
Objections Due: November 15, 2011 at 4:00 p.m. EST Hearing Date: November 22, 2011 at 4:00 p.m. EST

NOTICE OF MOTION OF TRI-STATE HOUSE OF PANCAKES, INC. FOR RELIEF FROM THE AUTOMATIC STAY Tri-State House of Pancakes, Inc. (“Tri-State”),2 by and through undersigned counsel, has filed the attached Motion for Relief from the Automatic Stay (the “Motion”). The Motion seeks relief from the automatic stay to permit Tri-State to issue a default notice and to provide an opportunity to cure under a licensing agreement in which Tri-State is the licensor and debtor Perkins & Marie Callender’s Inc. (the “Debtor”) is the licensee. You are required to file a response (and the supporting documentation required by Local Rule 4001-1(d)) to the Motion on or before November 15, 2011 at 4:00 p.m. (EST). At the same time, you must also serve a copy of the response upon the undersigned counsel. A hearing on the Motion will be held on November 22, 2011 at 4:00 p.m. (EST) in front of the Honorable Kevin Gross, Chief United States Bankruptcy Judge for the District of Delaware, at the Bankruptcy Court, at 824 North Market Street, Wilmington, Delaware. The hearing date specified above may be a preliminary hearing or may be consolidated with the final hearing, as determined by the Court. THE ATTORNEYS FOR THE PARTIES SHALL CONFER WITH RESPECT TO THE ISSUES RAISED BY THE MOTION IN ADVANCE FOR THE PURPOSE OF DETERMINING WHETHER A CONSENT JUDGMENT MAY BE ENTERED AND/OR FOR THE PURPOSE OF STIPULATING TO RELEVANT FACTS SUCH AS VALUE OF THE PROPERTY, AND THE EXTENT AND VALIDITY OF ANY SECURITY INSTRUMENT.

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The Debtors together with the last four digits of each Debtor’s federal tax identification number are: Perkins & Marie Callender’s Inc. (4388); Perkins & Marie Callender’s Holding Inc. (3999); Perkins & Marie Callender’s Realty LLC (N/A); Perkins Finance Corp. (0081); Wilshire Restaurant Group LLC (0938); PMCI Promotions LLC (7308); Marie Callender Pie Shops, Inc. (7414); Marie Callender Wholesalers, Inc. (1978); MACAL Investors, Inc. (4225); MCID, Inc. (2015); Wilshire Beverage, Inc. (5887); and FIV Corp. (3448). The mailing address for the Debtors is 6075 Poplar Avenue, Suite 800, Memphis, TN 38119. Capitalized terms not defined herein shall have the meanings ascribed to them in the Motion.

WCSR 7010760v1 10/27/2011

PLEASE TAKE FURTHER NOTICE, THAT IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF REQUESTED BY THE OBJECTION WITHOUT FURTHER NOTICE OR HEARING .

Dated: October 27, 2011

WOMBLE CARLYLE SANDRIDGE & RICE, LLP /s/ Thomas M. Horan Kevin J. Mangan (DE Bar No. 3810) Thomas M. Horan (DE Bar No. 4641) 222 Delaware Avenue, Suite 1501 Wilmington, Delaware 19801 Telephone: (302) 252-4320 Facsimile: (302) 252-4330 E-mail: kmangan@wcsr.com E-mail: thoran@wcsr.com -andRoger W. Damgaard Woods, Fuller, Shultz & Smith P.C. P.O. Box 5027 Sioux Falls, SD 57117-5027 Telephone: (605) 336-3890 E-mail: Roger.Damgaard@woodsfuller.com Counsel to Tri-State House of Pancakes, Inc.

WCSR 7010760v1 10/27/2011