The U.S. Trustee assigned to the Toys “R” Us case filed with the U.S. Bankruptcy Court an objection to the Company’s 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 Trustee asserts, “The Debtors propose to waive any preference claims they may have against the landlords. The Debtors, however, have failed to meet their burden to prove that granting the Preference Waivers…is in the sound exercise of their business judgment. The Debtors also propose to pay each consenting landlord’s pro rata share of up to $300,000 in attorney fees. But the payment of a creditor’s legal fees without any other support or proof is not permitted by the Bankruptcy Code. The Debtors should not be allowed to pay pre-petition claims to landlords ahead of other unsecured claimants. The timing of the consent process proposed in the Landlord Motion is problematic.”
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