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1 2 3 4 5 6 7 8 9 In re 10 TC GLOBAL, INC., 11 Debtor.

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

HONORABLE KAREN A. OVERSTREET **HEARING DATE: FRIDAY, OCTOBER 12, 2012 **HEARING TIME: 9:30 A.M. LOCATION: SEATTLE, COURTROOM 7206 **RESPONSES DUE: AT TIME OF HEARING **SUBJECT TO ENTRY OF ORDER SHORTENING TIME FOR HEARING

UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF WASHINGTON

No. 12-20253 EMERGENCY MOTION TO REJECT NON-RESIDENTIAL REAL PROPERTY LEASES

TC Global, Inc. (“Debtor”) dba Tully’s, debtor-in-possession herein, moves the Court, pursuant to Bankruptcy Code § 365 to reject the nineteen non-residential real property leases listed below (each a “Lease”) with such rejection effective as of October 10, 2012 (“Petition Date”). This motion is based on the files and records herein and on the accompanying Declaration of Scott Pearson. The Debtor commenced this Chapter 11 case on the Petition Date. The Debtor is operating its business and managing its affairs as a debtor-in-possession under 11 U.S.C. §§ 1107 and 1108. The Debtor currently operates 48 retail coffee locations, including those associated with the nine leases that the Debtor intends to vacate in the near-term. A comprehensive discussion of the Debtor’s background history and events leading to the bankruptcy filing is set forth in the Declaration of Scott Pearson in Support of First Day Motions filed contemporaneously herewith.

EMERGENCY MOTION TO REJECT NON-RESIDENTIAL REAL PROPERTY LEASES – Page 1
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B USH S TROUT & K ORNFELD
LAW OFFICES

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5000 Two Union Square 601 Union Street Seattle, Washington 98101-2373 Telephone (206) 292-2110 Facsimile (206) 292-2104

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The Leases that the Debtor proposes to reject are associated with locations that the Debtor determined were unprofitable and thus ceased operations. As to ten of the Leases, the Debtor returned possession of the associated premises to the landlords in a broom-clean state prior to the Petition Date and seeks rejection as of the Petition Date. As to the remaining nine leases, the Debtor will return possession of the premises to the landlords in a broom-clean state on or before October 19, 2012. As to these Leases, the Debtor seeks rejection effective October 19, 2012. The Leases for rejection are as follows:1
Non-Debtor Party to Lease Strickland Trust 330 112 Ave NE Bellevue, WA 98009 Columbia Center Properties, LLC 999 3rd Avenue Ste 1550 Seattle, WA 98104 Harbor Properties, Inc. 1411 4th Ave Sute 501 Seattle, WA 98101 Seawest Associates 13120 NE 70th Place, Suite A Kirkland, WA 98033 Landlord Management, Inc. 5248 California Ave SW Seattle, WA 98136 Bella Bottega Partners 9125 10th Ave S Seattle, WA 98108 Hollywood Vineyards, LP 13306 SE 30th Street Bellevue, WA 98005 PPR Redmond Retail, LLC (Macerich) 7525 166th Ave NE, Suite DStore No. 1004 Monthly Base Rent $4,475.00
plus CAMs

Leased Premises 4036 E. Madison Avenue Seattle, WA 98112 Columbia Center 701 Fifth Ave Seattle, WA 98104 1401 4th Avenue Seattle, WA 98101 13100 NE 70th Place Kirkland, WA 98033 2100 North 45th Street Seattle, WA 98134 8862 161st Ave NE Redmond, WA 98052 14481 Woodinville Redmond Rd. Woodinville, WA 98072 16349 NE 74th Place Redmond Town Square Redmond, WA 98052

Exit Date By October 19, 2012

By October 19, 2012

1019

$1,840.50

1024

$14,417.95
plus CAMs

By October 19, 2012

1032

$3,990.00
plus CAMs

By October 19, 2012

By October 19, 2012

1035

$3,563.94

1039

$8,304.50
plus CAMs

By October 19, 2012

1044

$5,481.00
plus CAMs

By October 19, 2012

1049

$4,500.00
plus CAMs

Before Petition Date

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

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EMERGENCY MOTION TO REJECT NON-RESIDENTIAL REAL PROPERTY LEASES – Page 2
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B USH S TROUT & K ORNFELD
LAW OFFICES

LLP

5000 Two Union Square 601 Union Street Seattle, Washington 98101-2373 Telephone (206) 292-2110 Facsimile (206) 292-2104

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Non-Debtor Party to Lease 210 Redmond, WA 98052 MJ Enterprises International, LLC 2312 N 30th St, Suite 201 Tacoma, WA 98403 Horizon Holdings 1, LLC 2125 Commerce St, Suite 200 Tacoma, WA 98402 Broadway State LLC c/o Redside Partners LLC 1320 E. Pike St Seattle, WA 98122 Friendly Fuels, Inc. 1190 NE Sunset Blvd, Suite F Renton, WA 98056 The Wilsonian, LLC 1873 S Bellaire St., Suite 1210 Denver, CO 80222 Sun Valley Associates 675 E Sun Valley Rd, Suite L Ketchum, ID 83340 Hoa Lieu 4623 Anza St. San Francisco, CA 94121 Post-Montgomery Associates 1 Montgomery St, Suite 3220 San Francisco, CA 94101 Embarcadero Associates (Boston Properties) Four Embarcadero Center San Francisco, CA 94111 425 Street Condo Project 425 Market St, Suite 955 San Francisco, CA 94105 First Shattuck, LLC 2150 Shattuck Ave, Suite B100 Berkeley, CA 94704

Store No.

Monthly Base Rent

Leased Premises

Exit Date

1050

$1,597.17
plus CAMs

2312 North 30th Street Tacoma, WA 98403

Before Petition Date

1051

$1,431.00
plus CAMs

1427 Pacific Avenue Tacoma, WA 98402 824 East Pike Street Seattle, WA 98122

By October 19, 2012

Before Petition Date

1066

$4,250.00
plus CAMs

1076

$2,400.00
plus CAMs

4800 Jackson Rd. Port Orchard, WA 98366 4700 University Way NE Seattle, WA 98105 601 Sun Valley Road Ketchum, ID 83340 919 Cole Street San Francisco, CA 94117 50 Post Street San Francisco, CA 94104 2 Embarcadero Center San Francisco, CA 94111

By October 19, 2012

1084

$4,316.00
plus CAMs

Before Petition Date

2001

$7,216.41
plus CAMs

Before Petition Date

Before Petition Date

3003

$7,923.85

3009

$3,857.37
plus CAMs

Before Petition Date

Before Petition Date

3011

$6,132.00
plus CAMs

3021

$3,817.00

425 Market Street San Francisco, CA 94105 2150 Shattuck Ave. Berkeley, CA 94704

Before Petition Date

3034

$6,899.67
plus CAMs

Before Petition Date

It makes no business sense for the Debtor to continue to incur administrative rent with respect to the Leases that it is no longer needs. Thus, it is the Debtor’s business judgment that the Leases are EMERGENCY MOTION TO REJECT NON-RESIDENTIAL REAL PROPERTY LEASES – Page 3
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B USH S TROUT & K ORNFELD
LAW OFFICES

LLP

5000 Two Union Square 601 Union Street Seattle, Washington 98101-2373 Telephone (206) 292-2110 Facsimile (206) 292-2104

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a drain on the estate and, to the extent they are executory, rejection is in the best interests of the estate and its creditors. Although the Bankruptcy Code does not set forth guidelines for courts to apply in determining whether to approve the decision of a debtor-in-possession to assume or reject an executory contract or unexpired lease, the overwhelming majority of courts has consistently applied the well-established "business judgment" test. Group of Institutional Investors v. Chicago M. St. P. & Pac. R.R., 318 U.S. 523, 550, 63 S.Ct. 727 (1943) reh'g denied; In re G.I. Industries, Inc., 204 F.3d 1276, 1282 (9th Cir. 2000). The Ninth Circuit Court of Appeals has held that bankruptcy courts have the equitable power to order that the rejection of leases apply retroactively. In re At Home Corp., 392 F.3d 1064 (9th Cir. 2004). In In re At Home Corp., the Court of Appeals affirmed the bankruptcy court’s retroactive rejection where 1) the debtor had moved to reject the lease immediately upon filing the bankruptcy and promptly set the hearing; 2) the debtor was not in possession of the premises; and 3) the landlord’s only interest in opposing retroactive rejection was to obtain an administrative expense claim. Id. at 1066. The facts here are in accord. As set forth above, it is the Debtor’s business judgment that rejection of the Leases, to the extent they are executory, is in the best interests of the estate and its creditors. Therefore, the Debtor respectfully requests an order rejecting the ten Leases vacated prepetition with such rejection retroactive as of the Petition Date. The Debtor further requests an order authorizing the rejection of /// /// ///

EMERGENCY MOTION TO REJECT NON-RESIDENTIAL REAL PROPERTY LEASES – Page 4
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B USH S TROUT & K ORNFELD
LAW OFFICES

LLP

5000 Two Union Square 601 Union Street Seattle, Washington 98101-2373 Telephone (206) 292-2110 Facsimile (206) 292-2104

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the nine Leases to be vacated as of October 19, 2012 with such rejection effective as of October 19, 2012. DATED this 10th day of October, 2012. BUSH STROUT & KORNFELD

By /s/ Christine M. Tobin-Presser Christine M. Tobin-Presser, WSBA #27628 Attorneys for TC Global, Inc., Debtor-inPossession

EMERGENCY MOTION TO REJECT NON-RESIDENTIAL REAL PROPERTY LEASES – Page 5
1977 20121 xj092606wz

B USH S TROUT & K ORNFELD
LAW OFFICES

LLP

5000 Two Union Square 601 Union Street Seattle, Washington 98101-2373 Telephone (206) 292-2110 Facsimile (206) 292-2104

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1 2 3 4 5 6 7 8 9 10 In re 11 TC GLOBAL, INC., 12 Debtor. 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Non-Debtor Party to Lease Strickland Trust 330 112 Ave NE Store No. 1004 Leased Premises 4036 E. Madison Avenue Seattle, WA 98112 Effective Rejection Date October 19, 2012

UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF WASHINGTON

No. 12-20253 [PROPOSED] ORDER AUTHORIZING REJECTION OF NON-RESIDENTIAL REAL PROPERTY LEASES AS OF THE PETITION DATE

THIS MATTER came before the Court upon the Emergency Motion to Reject NonResidential Real Property Leases (“Lease Rejection Motion”) filed by TC Global, Inc. (“Debtor”) dba Tully’s Coffee, debtor-in-possession herein. The Court has reviewed the files and records herein and finds that cause exists for the requested relief. Now, therefore, it is hereby ORDERED that the Debtor is authorized to reject the following leases pursuant to Bankruptcy Code § 365 and that such rejection(s) shall be deemed effective as of the date indicated:

[PROPOSED] ORDER AUTHORIZING REJECTION OF NON-RESIDENTIAL REAL PROPERTY LEASES AS OF THE PETITION DATE – Page 1
1977 20121 xi12fj06rj

B USH S TROUT & K ORNFELD
LAW OFFICES

LLP

5000 Two Union Square 601 Union Street Seattle, Washington 98101-2373 Telephone (206) 292-2110 Facsimile (206) 292-2104

Case 12-20253-KAO

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Non-Debtor Party to Lease Bellevue, WA 98009 Columbia Center Properties, LLC 999 3rd Avenue Ste 1550 Seattle, WA 98104 Harbor Properties, Inc. 1411 4th Ave Sute 501 Seattle, WA 98101 Seawest Associates 13120 NE 70th Place, Suite A Kirkland, WA 98033 Landlord Management, Inc. 5248 California Ave SW Seattle, WA 98136 Bella Bottega Partners 9125 10th Ave S Seattle, WA 98108 Hollywood Vineyards, LP 13306 SE 30th Street Bellevue, WA 98005 PPR Redmond Retail, LLC (Macerich) 7525 166th Ave NE, Suite D210 Redmond, WA 98052 MJ Enterprises International, LLC 2312 N 30th St, Suite 201 Tacoma, WA 98403 Horizon Holdings 1, LLC 2125 Commerce St, Suite 200 Tacoma, WA 98402 Broadway State LLC c/o Redside Partners LLC 1320 E. Pike St Seattle, WA 98122 Friendly Fuels, Inc. 1190 NE Sunset Blvd, Suite F Renton, WA 98056 The Wilsonian, LLC 1873 S Bellaire St., Suite 1210 Denver, CO 80222

Store No.

Leased Premises

Effective Rejection Date October 19, 2012

1019

Columbia Center 701 Fifth Ave Seattle, WA 98104 1401 4th Avenue Seattle, WA 98101 13100 NE 70th Place Kirkland, WA 98033 2100 North 45th Street Seattle, WA 98134 8862 161st Ave NE Redmond, WA 98052 14481 Woodinville Redmond Rd. Woodinville, WA 98072 16349 NE 74th Place Redmond Town Square Redmond, WA 98052

October 19, 2012

1024

October 19, 2012

1032

October 19, 2012

1035

October 19, 2012

1039

October 19, 2012

1044

October 10, 2012 (Petition Date)

1049

1050

2312 North 30th Street Tacoma, WA 98403

October 10, 2012 (Petition Date)

1051

1427 Pacific Avenue Tacoma, WA 98402 824 East Pike Street Seattle, WA 98122

October 19, 2012

1066

October 10, 2012 (Petition Date)

1076

4800 Jackson Rd. Port Orchard, WA 98366 4700 University Way NE Seattle, WA 98105

October 19, 2012

1084

October 10, 2012 (Petition Date)

[PROPOSED] ORDER AUTHORIZING REJECTION OF NON-RESIDENTIAL REAL PROPERTY LEASES AS OF THE PETITION DATE – Page 2
1977 20121 xi12fj06rj

B USH S TROUT & K ORNFELD
LAW OFFICES

LLP

5000 Two Union Square 601 Union Street Seattle, Washington 98101-2373 Telephone (206) 292-2110 Facsimile (206) 292-2104

Case 12-20253-KAO

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Non-Debtor Party to Lease Sun Valley Associates 675 E Sun Valley Rd, Suite L Ketchum, ID 83340 Hoa Lieu 4623 Anza St. San Francisco, CA 94121 Post-Montgomery Associates 1 Montgomery St, Suite 3220 San Francisco, CA 94101 Embarcadero Associates (Boston Properties) Four Embarcadero Center San Francisco, CA 94111 425 Street Condo Project 425 Market St, Suite 955 San Francisco, CA 94105 First Shattuck, LLC 2150 Shattuck Ave, Suite B100 Berkeley, CA 94704

Store No. 2001

Leased Premises 601 Sun Valley Road Ketchum, ID 83340 919 Cole Street San Francisco, CA 94117 50 Post Street San Francisco, CA 94104 2 Embarcadero Center San Francisco, CA 94111

Effective Rejection Date October 10, 2012 (Petition Date) October 10, 2012 (Petition Date) October 10, 2012 (Petition Date) October 10, 2012 (Petition Date)

3003

3009

3011

3021

425 Market Street San Francisco, CA 94105 2150 Shattuck Ave. Berkeley, CA 94704

October 10, 2012 (Petition Date) October 10, 2012 (Petition Date)

3034

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

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

[PROPOSED] ORDER AUTHORIZING REJECTION OF NON-RESIDENTIAL REAL PROPERTY LEASES AS OF THE PETITION DATE – Page 3
1977 20121 xi12fj06rj

B USH S TROUT & K ORNFELD
LAW OFFICES

LLP

5000 Two Union Square 601 Union Street Seattle, Washington 98101-2373 Telephone (206) 292-2110 Facsimile (206) 292-2104

Case 12-20253-KAO

Doc 9-1

Filed 10/10/12

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