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Case No. 11-11795 (KG) Jointly Administered

Objection Deadline: January 6, 2012 at 4:00 p.m. Hearing Date: January 19, 2012 at 9:30 a.m. (ET) _____________________________________________

RESPONSE AND OBJECTION OF POMPANO BY THE SEA LLC TO THE REORGANIZED DEBTORS' EIGHTH (8TH) OMNIBUS (SUBSTANTIVE) OBJECTION TO CLAIMS PURSUANT TO SECTION 502(b) OF THE BANKRUPTCY CODE. Pompano By The Sea LLC (“Pompano”) by and through its undersigned attorney, hereby submits this response and objection to debtors objection to claim [Docket No. 1426 ] (the "Objection") made, pursuant to section 502(b) of title 11 of the United States Code, 11 U.S.C. §§ 101 et sec. (the "Bankruptcy Code"). Rules 3003 and 3007 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), and Rule 3007-1 of the Local Rules of Bankruptcy Practice and Procedure for the United States Bankruptcy Court for the District of Delaware (the "Local Rules") and states:, Jurisdiction and Venue 1. This Court has jurisdiction to consider this Response to Objection under 28 U.S.C. §§

157 and 1334. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2). 2. Venue of the above-captioned chapter 11 cases and this Objection are proper in this

District pursuant to 28 U.S.C. §§ 1408 and 1409. 3. The statutory predicates for the relief requested herein are section 502(b) of the

Bankruptcy Code, Bankruptcy Rules 3003 and 3007, and Local Rule 3007-1.


General Background 4. On June 13, 2011 (the "Petition Date"), each of the Debtors filed a voluntary petition

for relief under chapter 11 of the Bankruptcy Code, and each thereby commenced chapter 11 cases (collectively, the "Chapter 11 Cases") in this Bankruptcy Court (the "Court"). 5. On August 8, 2011, Pompano By the Sea LLC filed its amended Administrative

Claim [1040] for $17,584.07 and a Rejection Claim [1043] for $415,487.39 6. On September 9, 2011, the Debtors filed the Debtors' Second Amended Disclosure

Statement for Debtors' Second Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code [Docket No. 923]. (the “Disclosure Statement”) 7. On December 20, 2011, after the acceptance of the plan in which Pompano could

not vote its Administrative Claim (because it was deemed “unimpaired”), the Debtor filed its 8th Omnibus Objection to claims [Docket No. 1426] seeking to reclassify Pompano’s Administrative Claim for unpaid rent to an Unsecured Claim and reduce its Rejection Claim from $415,487.39 to $363,032.31 without any calculations of how the adjustment is justified.


June 17, 2011. The Debtor’s insurance on the premises did not terminate until June 24, 2011. The debtor had full use of the premises and the landlord, Pompano, is entitled to Administrative Rent until the premises were vacated on June 17, 2011. To have otherwise, would allow a debtor to classify certain claims as unimpaired, and, after confirmation, seek to reclassify them as unsecured. It is disingenuous and unfair to allow this practice. This is the price a debtor must pay if it seeks to push through a reorganization without full disclosure of how it intends to treat

unimpaired claims after confirmation. It is respectfully suggested that the confirmation should be vacated, the court rule on the myriad objections to claim and then have a vote that would be more representative of the creditors who would be allowed to vote. The Disclosure Statement provides that Administrative Claim includes “payments for goods and services and leased premises” in cash would be paid equal to amount of such Allowed Administrative Claim (Disclosure Statement at 42). The Disclosure Statement then provides that Class 1 (Other Priority Claims), are not entitled to vote because the class is presumed to have voted for the plan because they are “Unimpaired under the Plan”. (Disclosure Statement at 115). Under “Acceptance”, [Plan, page 115] the Debtor does not disclose that it was going to object to claims that it had already agreed and represented to the court were unimpaired and not allowed to vote. DEBTOR HAS NOT SHOWN ANY JUSTIFICATON FOR REDUCING POMPANO’S REJECTION CLAIM 9. Sec. 502(b)(6) caps the landlord’s claim to rent reserved from the greater of (1)

one lease year or (2) fifteen percent, not to exceed three years of the remaining lease term following the earlier of the filing of the petition (June 13, 2011) and the date the Debtor surrendered the premises (June 17, 2011). The landlord also retains a claim for any unpaid rent due under such lease prior to the earlier of those dates. 10. Pompano submitted a copy of the Lease and its worksheet setting forth its

calculation of the Administrative and Rejection Claims (Ex1). In re Financial News Network, Inc. 149 B.R. 348 (Bankr. SDNY 1993) (landlord has both an administrative claim for the post petition, prerejection use of the premises and a general unsecured claim for rejection damages). The Debtor has not demonstrated how it arrived at its calculation for reducing the Rejection Claim and the objection should be denied. 11. Debtor’s reliance on In Re PPI Enterprises (U.S.) Inc. 324 F.3d 197 (3d Cir 2003)

is misplaced. In PPI, the landlord had terminated the lease long before the reorganization was filed. Since the lease had been terminated, the landlord was capped at the amount due at the time of the termination by the landlord and the landlord could not rely on the unexpired portion of the lease to calculate the rejection claim. Id at 208. 12. PPI talks about perverse creditors filing inflated claims to obtain an unwarranted

advantage in the voting process. Should this not be applied to a “Perverse” debtor who accepts claims for voting purposes, only to reject them when it comes time to pay? For this reason alone, the Debtor should be estopped from having this objection being granted. 13. It is not clear for what purpose the Debtor cites In re Foamex International, Inc.

368 B.R. 383 (Bankr. D. Del. 2007). In Foamex, which involved a lease rejection claim, the court found that the covenant for repairs and maintenance, although not part of reserved rent, was subject to the cap of Section 502(b)(6). Foamex does not deal with an Administrative Claim for earned rent until rejection. Is the Debtor arguing that both the Administrative Claim is included in the Rejection Claim and is subject to the cap? The claim of Pompano is limited to Rent, Taxes and Insurance, 1 all of which are included as rent in the lease which has been filed as an exhibit with the claim and subject is to the cap. Therefore, there should be no reduction of the Rejection Claim. CONCLUSION The Debtor has not produced any justification for reducing Pompano’s Rejection Claim. The Debtor accepted the Administrative Claim for purposes of voting and now seeks to reject or reclassify it. The Debtor should not have it both ways and should be estopped for objecting to the Administrative Claim.


See Lease dated September 29, 2005, Section 4(b) for Insurance and Section 7 for Taxes and Assessments 4

Wherefore, Pompano by The Sea LLC respectfully request that this court overrule and deny Debtors Objections to its Administrative Claim and Rejection Claim.

Dated: December 30, 2011 Coral Gables FL.

s/ Bennett G. Feldman BENNETT G. FELDMAN Attorney for Pompano By the Sea LLC Fla. Bar No. 024106 2655 Lejeune Road Suite 514 Coral Gables, Fla. 33134 Tel. 305 445-9909 Fax 305 461-5088 email:

CERTIFICATE OF SERVICE I HEREBY CERTIFY that on December 30, 2011, I electronically filed the foregoing document with the Clerk of the Court using CM/ECF. I further certify that this document is being served this day on all counsel of record identified on the below service list in the manner specified via transmission of Electronic Filing generated by CM/ECF or by some other authorized manner for those counsel who are not authorized to receive electronically, Notices of Electronic Filing.

s/ Bennett G. Feldman BENNETT G. FELDMAN Attorney for Pompano By The Sea LLC