Toys “R” Us filed with the U.S. Bankruptcy Court a motion for entry of an order authorizing the Debtors to provide consideration to landlords in exchange for extending the 365(d)(4) deadline and approving the extension letter.
The motion explains, “As a part of the Debtors’ examination of their real estate lease portfolio, the Debtors have determined that they would benefit from additional time to evaluate whether to assume or reject a number of their non-residential real property leases beyond the current April 16, 2018 deadline. As consideration for receiving an extension of the time to determine whether to assume or reject these Leases through confirmation of the Debtors’ plan of reorganization, the Debtors have negotiated a package of consideration with the Creditors’ Committee that the Debtors and the Creditors’ Committee believe fairly compensates landlords for the extension.”
In addition, “The package includes a waiver of preference claims, limited fee reimbursement for landlords’ attorneys, a pool of funds available to extending landlords whose contracts are ultimately rejected, and a blackout period during which the Debtors may not reject the extended Lease(s) outside a confirmed plan of reorganization. Because the Debtors are still making determinations with respect to their Lease(s), the Debtors have sent the letter requesting the extension (the ‘Extension Letter’) to a likely larger number of landlords than those from whom the Debtors will ultimately require the extension. As such, the Extension Letter, and the consideration contained therein, is effective only once (a) the Debtors have countersigned and returned the Extension Letter to the applicable extending landlord by January 27, 2018 (or such later date as the landlord may be notified by the Debtors prior to January 27, 2018), and (b) the Court has entered the Order.”
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