shl Doc 567 Filed 11/05/18 Entered 11/05/18 14:09:43 Main Document Pg 1 of 5

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1 shl Doc 567 Filed 11/05/18 Entered 11/05/18 14:09:43 Main Document Pg 1 of 5 JENNER & BLOCK LLP Marc Hankin Carl Wedoff 919 Third Avenue New York, New York (212) Angela Allen (admitted pro hac vice) 353 North Clark Street Chicago, Illinois (312) Counsel for the Chapter 11 Trustee UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK X : In re : Chapter 11 : FIRESTAR DIAMOND INC., et al., 1 : Case No (SHL) : Debtors. : Jointly Administered : X CHAPTER 11 TRUSTEE S MOTION TO REJECT UNEXPIRED LEASES OF CERTAIN STORAGE UNITS Richard Levin, not individually but solely in his capacity as chapter 11 trustee (the Trustee ) for the above-captioned debtors (the Debtors ), respectfully submits this motion ( Motion ) for the entry of an Order under section 365 of title 11 of the United States Code (the Bankruptcy Code ), Rule 6006 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ), and Rule of the Local Bankruptcy Rules for the Southern District of New York ( Local Rules ), approving the Trustee s rejection of unexpired leases of storage units owned by U-Haul Moving & Storage of Flushing ( U-Haul ) and Long Island City Storage ( LIC ) as of 1 The Debtors and the last four digits of their respective taxpayer identification numbers are as follows: Firestar Diamond, Inc. (2729) ( Firestar ), Fantasy, Inc. (1673) ( Fantasy ), and Old AJ, Inc. f/k/a A. Jaffe, Inc. (4756) ( Jaffe ).

2 shl Doc 567 Filed 11/05/18 Entered 11/05/18 14:09:43 Main Document Pg 2 of 5 October 31, 2018 or, in the alternative, confirming that any such leases were automatically rejected by operation of section 365(d)(4)(A) of the Bankruptcy Code. In support of this Motion, the Trustee states: Jurisdiction and Venue 1. The Court has jurisdiction over this matter under 11 U.S.C This is a core proceeding under 28 U.S.C. 157(b)(2) in which the Court may constitutionally enter a final order, and the Trustee consents to the entry of a final order by the Court. Venue is proper under 28 U.S.C The Trustee makes this motion under Bankruptcy Code section 365, Bankruptcy Rule 6006, and Local Rule Background 3. On February 26, 2018 (the Petition Date ), each of the Debtors filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. Until the appointment of the Trustee, the Debtors operated their businesses and managed their affairs as debtors in possession ( Debtors in Possession ) under sections 1107 and 1108 of the Bankruptcy Code. 4. On March 9, 2018, the Court entered an Order directing that these cases be jointly administered. (Dkt. 24.) An Official Committee of Unsecured Creditors has not been appointed in these cases. 5. On June 7, 2018, the Court entered an Order directing the United States Trustee to appoint a chapter 11 trustee. (Dkt. 186.) 6. On June 14, 2018, the United States Trustee appointed the Trustee as chapter 11 trustee. (Dkt. 222.) The same day, the Court entered an Order approving the Trustee s appointment. (Dkt. 227.) 7. After being appointed, the Trustee learned that certain items of miscellaneous 2

3 shl Doc 567 Filed 11/05/18 Entered 11/05/18 14:09:43 Main Document Pg 3 of 5 personal property belonging to Firestar (collectively, the Abandoned Assets ) were located in U-Haul unit number 0B186 (the U-Haul Unit ) and LIC unit numbers 1190 and 1157 (the LIC Units, together with the U-Haul Unit, the Units ). Thereafter, the Trustee s financial advisors visited the Units and determined that the Abandoned Assets consist of, among other things, packaging materials, office supplies, display stands, and various other objects of inconsequential value. 8. Contemporaneously with this Motion, the Trustee is filing and serving a notice of abandonment stating that the Trustee intends to abandon the Abandoned Assets to U-Haul and LIC, respectively. Upon the abandonment of the Units contents, the Units will be vacant and of no value to the Debtors estates. Relief Requested 9. By this Motion, the Trustee seeks approval of the rejection of any and all leases with U-Haul and LIC under Bankruptcy Code Section 365, Bankruptcy Rule 6006, and Local Rule , or alternatively, confirmation that such leases were automatically rejected by operation of section 365(d)(4)(A) of the Bankruptcy Code. Basis for Relief 10. The Trustee has determined that the Units are unnecessary and not conducive to realizing the highest value for the Debtors estates, has no economic value for the estates, but instead may burden the estates with unnecessary administrative expenses, and therefore that rejection would benefit the estates. 11. Pursuant to Bankruptcy Code section 365(a), the Trustee, subject to the court s approval, may... reject any executory contract or unexpired lease of the debtor. 11 U.S.C. 365(a). This provision allows a trustee to relieve the bankruptcy estate of burdensome agreements which have not been completely performed. Stewart Title Guar. Co. v. Old Republic 3

4 shl Doc 567 Filed 11/05/18 Entered 11/05/18 14:09:43 Main Document Pg 4 of 5 Nat l Title Co., 83 F.3d 735, 741 (5th Cir. 1996) (internal citation and quotation marks omitted). 12. The decision to assume or reject an executory contract or unexpired lease is a matter within the business judgment of the Trustee. Grp. of Inst. Inv rs v. Chi., Milwaukee, St. Paul, & Pac. R.R. Co., 318 U.S. 523, 550 (1943) ( [T]he question whether a lease should be rejected... is one of business judgment. ) (internal citations omitted); COR Route 5 Co., LLC v. Penn Traffic Co. (In re Penn Traffic Co.), 524 F.3d 373, 383 (2d Cir. 2008). The business judgment standard mandates that a bankruptcy court approve a Trustee s business decision unless the decision is the product of bad faith, or whim or caprice. In re Trans World Airlines, Inc., 261 B.R. 103, 121 (Bankr. D. Del. 2001) (internal citation and quotation marks omitted). Thus, if the Trustee has reasonably exercised his or her business judgment, a bankruptcy court should approve a proposed rejection of an unexpired lease. See Computer Sales Int l, Inc. v. Fed. Mogul Global, Inc. (In re Fed. Mogul Global, Inc.), 293 B.R. 124, (D. Del. 2003). 13. Under section 365(a) of the Bankruptcy Code, the Trustee seeks to reject any and all leases with U-Haul and LIC to avoid the possibility of incurring administrative expenses arising under or related to the Units. The Trustee, in his business judgment, believes that any such lease are burdensome, provide no economic value to the Debtors estates, and are therefore unnecessary to the realization of value for the Debtors estates. 14. Alternatively, 365(d)(4)(A) provides for the automatic rejection of unexpired leases of nonresidential real property unless such leases are assumed or rejected by the earlier of (i) 120 days after the date of the order for relief; or (ii) the date of the entry of an order confirming a plan. 11 U.S.C. 365(d)(4)(A). In this case, no plan has been confirmed and the 120-day period specified in 365(d)(4)(A) expired on June 26, Thus, to the extent leases of the Units constitute leases of nonresidential real property, such leases were rejected automatically by operation of 365(d)(4)(A). 4

5 shl Doc 567 Filed 11/05/18 Entered 11/05/18 14:09:43 Main Document Pg 5 of 5 Notice 15. Notice of this Motion has been provided to (a) the Office of the United States Trustee; (b) U-Haul; (c) LIC; (c) the Debtors; and (d) the 2002 Service List maintained by Omni Management Group in these chapter 11 Cases in accordance with the terms of the Order Establishing Notice and Case Management Procedures [Dkt. 530]. The Trustee submits that, in light of the nature of the relief requested, no other or further notice need be provided. WHEREFORE, the Trustee respectfully requests that the Court enter an Order substantially in the form of the proposed order attached hereto: approving the Trustee s rejection of any and all unexpired leases for the Units as of October 31, 2018, or alternatively, confirming that such leases were automatically rejected by operation of 365(d)(4)(A); and granting such other or further relief as the Court deems equitable and just. Dated: November 5, 2018 New York, New York Respectfully Submitted, JENNER & BLOCK LLP By: /s/ Marc Hankin Marc Hankin Carl Wedoff 919 Third Avenue New York, New York (212) mhankin@jenner.com cwedoff@jenner.com Angela Allen (admitted pro hac vice) 353 North Clark Street Chicago, Illinois (312) aallen@jenner.com Counsel for the Chapter 11 Trustee 5

6 shl Doc Filed 11/05/18 Entered 11/05/18 14:09:43 Notice of Chapter 11 Trustees motion to reject and and all unexpired leas Pg 1 of 3 JENNER & BLOCK LLP Marc Hankin Carl Wedoff 919 Third Avenue New York, New York (212) Angela Allen (admitted pro hac vice) 353 North Clark Street Chicago, Illinois (312) Counsel for the Chapter 11 Trustee UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: FIRESTAR DIAMOND, INC., et al. Debtors. 1 Chapter 11 No (SHL) (Jointly Administered) NOTICE OF CHAPTER 11 TRUSTEE S MOTION TO REJECT ANY AND ALL UNEXPIRED LEASES OF CERTAIN STORAGE UNITS On November 5, 2018, Chapter 11 Trustee Richard Levin (the Trustee ) filed the annexed Chapter 11 Trustee s Motion to Reject Any and All Unexpired Leases of Certain Storage Units (the Motion ). A hearing will be held before the Honorable Sean H. Lane of the United States Bankruptcy Court for the Southern District of New York on November 29, 2018 at 10:00 a.m. (Eastern Daylight Time), or as soon thereafter as counsel may be heard (the Hearing ), in Courtroom 1 The Debtors and the last four digits of their respective taxpayer identification numbers are as follows: Firestar Diamond, Inc. (2729), Fantasy, Inc. (1673), and Old AJ, Inc. f/k/a A. Jaffe, Inc. (4756).

7 shl Doc Filed 11/05/18 Entered 11/05/18 14:09:43 Notice of Chapter 11 Trustees motion to reject and and all unexpired leas Pg 2 of of the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court ), One Bowling Green, New York, New York 10004, to consider the Motion. Objections, if any, to approval of the Motion and entry of the proposed order must: (i) be made in writing; (ii) state with particularity the grounds therefor; (iii) be filed with the Bankruptcy Court (with a copy to the Judge s chambers); and (iv) be served upon (a) counsel to the United States Trustee for Region 2, 201 Varick Street, Suite 1006, New York, NY (Attn: Richard Morrissey, Esq.); (b) counsel to the Trustee, Jenner & Block LLP, 919 Third Avenue, New York, New York (Attn: Richard Levin, Esq.); (c) counsel to the Debtors, Klestadt Winters Jureller Southard & Stevens, LLP, 200 West 41st St., 17th Floor, New York, NY (Attn: Ian Winters, Esq.); (d) counsel to Israel Discount Bank of New York, Troutman Sanders LLP, 875 Third Avenue, New York, New York (Attn: Brett D. Goodman, Esq.) and Troutman Sanders LLP, 600 Peachtree Street, NE., Suite 3000, Atlanta, Georgia (Attn: Harris B. Winsberg, Esq. and Matthew R. Brooks, Esq.); (e) counsel to HSBC Bank USA, National Association, Allen & Overy LLP 1221 Avenue of the Americas, New York, New York (Attn: Ken Coleman, Esq.); and (f) counsel to Punjab National Bank, Cleary, Gottlieb, Steen & Hamilton LLP, One Liberty Plaza, New York, NY (Attn: Sean O Neal) so as to be received by each of them no later than 5:00 p.m. (Eastern Daylight Time) on November 22, 2018 (the Objection Deadline ). If no responses or objections are served by the Objection Deadline, the relief may be granted as requested in the Motion without further notice or a hearing. You need not appear at the Hearing if you do not object to the relief requested in the Motion. The Hearing may be continued or adjourned from time to time without further notice other than an announcement of the adjourned date or dates at the Hearing or at a later hearing. 2

8 shl Doc Filed 11/05/18 Entered 11/05/18 14:09:43 Notice of Chapter 11 Trustees motion to reject and and all unexpired leas Pg 3 of 3 Dated: November 5, 2018 New York, New York Respectfully submitted, JENNER & BLOCK LLP By: /s/ Marc Hankin Marc Hankin Carl Wedoff 919 Third Avenue New York, New York (212) mhankin@jenner.com cwedoff@jenner.com Angela Allen (admitted pro hac vice) 353 North Clark Street Chicago, Illinois (312) aallen@jenner.com Counsel for the Chapter 11 Trustee 3

9 shl Doc Filed 11/05/18 Entered 11/05/18 14:09:43 Exhibit A - proposed order Pg 1 of 3 Exhibit A Proposed Order Approving Rejection of Any and All Unexpired Leases of Certain Storage Units

10 shl Doc Filed 11/05/18 Entered 11/05/18 14:09:43 Exhibit A - proposed order Pg 2 of 3 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: FIRESTAR DIAMOND, INC., et al. Debtors. 3 Chapter 11 No (SHL) (Jointly Administered) [PROPOSED] ORDER APPROVING CHAPTER 11 TRUSTEE S REJECTION OF ANY AND ALL UNEXPIRED LEASES OF CERTAIN STORAGE UNITS Upon the motion of Richard Levin, not individually but solely in his capacity as chapter 11 trustee (the Trustee ) for the above-captioned debtors (the Debtors ) for entry of an Order, under Section 365 of title 11 of the United States Code, Rule 6006 of the Federal Rules of Bankruptcy Procedure, and Rule of the Local Rules of Bankruptcy Procedure, approving rejection as of October 31, 2018 of any and all unexpired lease of nonresidential real property for: (1) storage unit number 0B186 (the U-Haul Unit ) located at 3630 College Point Blvd, Flushing, New York with U-Haul Moving and Storage of Flushing ( U-Haul ); and (2) storage unit numbers 1190 and 1157 (the LIC Units, together with the U-Haul Unit, the Units ) located at th Avenue, Long Island City, New York with Long Island City Storage ( LIC ); and this Court having jurisdiction to consider the Motion and the relief requested therein; and consideration of the Motion and the relief required being a core proceeding; and venue being proper before this Court; and it appearing that no other or further notice need be provided; and this Court having determined that relief requested in the Motion being in the best interest of the estates, creditors, and all parties in interest; and this Court having determined that the legal and 3 The Debtors in these jointly administered chapter 11 cases, along with each Debtor s respective chapter 11 case number and the last four digits of each Debtor s federal tax identification number are: (i) Firestar Diamond, Inc. (Case No ) (2729); (ii) Old AJ, Inc. f/k/a A. Jaffe, Inc. (Case No ) (4756); and (iii) Fantasy, Inc. (Case No ) (1673).

11 shl Doc Filed 11/05/18 Entered 11/05/18 14:09:43 Exhibit A - proposed order Pg 3 of 3 factual bases set forth in the Motion establish just cause for the relief granted herein; and upon all of the proceedings had before this Court and after due deliberation and sufficient cause appearing therefor, IT IS ORDERED : 1. The Motion is granted. 2. The Trustee s rejection of any and all leases relating to the Units is approved, and any such leases are deemed rejected as of October 31, To the extent any leases relating to the Units constitute unexpired leases of nonresidential real property, such leases were automatically rejected on June 26, 2018 by operation of 365(d)(4)(A) of the Bankruptcy Code. 4. This Court shall retain jurisdiction to hear and determine all matters arising from or related to the implementation, interpretation, and/or enforcement of this Order. Dated: New York, New York, 2018 HONORABLE SEAN H. LANE UNITED STATES BANKRUPTCY JUDGE 3