Case 2:17-bk VZ Doc 472 Filed 03/14/18 Entered 03/14/18 13:39:08 Desc Main Document Page 1 of 42 UNITED STATES BANKRUPTCY COURT

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1 Main Document Page 1 of TIMOTHY J. YOO (SBN EVE H. KARASIK (SBN JULIET Y. OH (SBN LEVENE, NEALE, BENDER, YOO & BRILL L.L.P Constellation Boulevard, Suite 1700 Los Angeles, California Telephone: ( ; Facsimile: ( tjy@lnbyb.com, ehk@lnbyb.com, jyo@lnbyb.com Attorneys for Reorganized Debtor In re CORNESTONE APPAREL, INC., UNITED STATES BANKRUPTCY COURT Debtor. CENTRAL DISTRICT OF CALIFORNIA LOS ANGELES DIVISION Case No. 2:17-bk VZ Chapter 11 NOTICE OF MOTION AND MOTION OBJECTING TO CLAIM OF LANDLORD LVP ST. AUGUSTINE OUTLETS, LLC; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF TAE Y. YI IN SUPPORT THEREOF Hearing: Date: April 17, 2018 Time: 11:00 a.m. Place: Courtroom E. Temple Street Los Angeles, California 28 1

2 Main Document Page 2 of TO THE HONORABLE VINCENT P. ZURZOLO, UNITED STATES BANKRUPTCY JUDGE, CLAIMANTS AND ALL INTERSTED PARTIES: PLEASE TAKE NOTICE that a hearing has been scheduled on April 17, 2018 at 11:00 a.m. before the Honorable Vincent P. Zurzolo, United States Bankruptcy Judge, in Courtroom 1368 of the United States Bankruptcy Court for the Central District of California, Los Angeles Division, located at 255 East Temple Street, Los Angeles, California, for the Court to consider the motion (the Motion filed by Cornerstone Apparel, Inc., the debtor and debtor in possession in the above captioned case (the Debtor, for an order disallowing the following claim (the Objectionable Claim filed by the Debtor s former landlord LVP St. Augustine Outlets, LLC (Claim #117-1 (the Claimant with prejudice, on the grounds that the claim has been satisfied as set forth below: Creditor LVP St. Augustine Outlets, LLC (Claim # Grounds For Objection Claim No has been satisfied for all administrative expense claims asserted therein as all postpetition amounts due have been paid for the period prior to the August 31, 2017 rejection date of the nonresidential real property lease. PLEASE READ THIS DOCUMENT CAREFULLY TO DETERMINE THE BASIS FOR THE DEBTOR S OBJECTION TO YOUR CLAIM. The specific grounds for the Motion are set forth in detail in the attached Memorandum of Points and Authorities. PLEASE TAKE FURTHER NOTICE that, pursuant to Local Bankruptcy Rules (b(3(A and (f, any response to the Motion must be in writing and filed with the Clerk of the Bankruptcy Court and served upon the United States Trustee and counsel for the Debtor at the address set forth in the upper left-hand corner of the first page hereof not later than fourteen (14 days prior to the scheduled hearing date set forth above. PLEASE TAKE FURTHER NOTICE that, pursuant to Local Bankruptcy Rules (b(3(B and (h, the Court may deem the failure of a party in interest to file a timely response to the Motion to constitute consent to the granting by the Court of the relief requested by the Debtor in the Motion without further notice or hearing. 28 2

3 Main Document Page 3 of WHEREFORE, the Debtor respectfully requests that the Court enter an order: 1. granting the Motion in its entirety; 2. sustaining the Debtor s objections to the Objectionable Claim; 3. disallowing the Objectionable Claim in its entirety; and 4. granting such other and further relief the Court deems just and proper under the circumstances Dated: March 14, 2018 LEVENE, NEALE, BENDER, YOO & BRILL L.L.P. By: /s/ Eve H. Karasik TIMOTHY J. WOO _ EVE H. KARASIK JULIET Y. OH JEFFREY S. KWONG Attorneys for Reorganized Debtor 3

4 Main Document Page 4 of A. Background. MEMORANDUM OF POINTS AND AUTHORITIES I. STATEMENT OF FACTS 1. On June 15, 2017 (the Petition Date, Cornerstone Apparel, Inc. d/b/a Papaya Clothing, a California corporation and the debtor and debtor- in-possession herein ( Cornerstone or the Debtor, filed a voluntary petition for relief (the Petition under Chapter 11 of 11 U.S.C. 101 et seq. (the Bankruptcy Code. The Debtor is continuing to operate its business, manage its financial affairs and operate its bankruptcy estate as a debtor in possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. 2. The Debtor operates a chain of apparel stores under the name Papaya Clothing ( Papaya that cater to teens, juniors and the young at heart, and focuses on the 16 to 25 year old age group. Cornerstone has over 80 stores located in malls and shopping centers throughout the United States. The Papaya concept is to provide shoppers with great price, great service, and an innovative, upscale and welcoming atmosphere. 3. The Debtor is based in Commerce, California with a 75,000 square feet headquarters complex, which includes its warehouse and distribution facilities. The merchandise sold in the Papaya stores is manufactured in the United States, and is housed in the Debtor s California warehouse where the Debtor s employees pack and ship the merchandise to the retail locations. Given the ever-changing fashion world, the Debtor has established a production line that can take a new design from start to finish within a two-week period in order to give the customer an impressive selection of the latest fashions. 4. The Debtor s ownership and management have over twenty-five years experience in operating retail clothing business focusing primarily in the junior and petite apparel markets. This ownership and management team is responsible for the prior successes of retailers Everblue Casuals and Career Image. The Debtor consistently leads in its retail category in sales per square foot of retail space. 5. The Debtor employs a workforce of approximately of 1,300 employees. In 2016, the Debtor generated annual gross revenues of more than $134 million. The Debtor has no secured 4

5 Main Document Page 5 of 42 1 debt After opening its first retail store approximately 18 years ago in 1999, the Debtor substantially expanded its business operations to encompass a total of over 80 of retail stores throughout the United States by Approximately, 50 of these new retail stores were opened within the last six (6 years. The expansion effort took a heavy financial toll on the business operations of the Debtor as a whole as it incurred construction and other start up costs with the opening of each new store as well as a significant increase in operating expenses typically associated with a retail store chain operation. 7. The high cost of expansion combined with decreasing store sales as a result of a general industry-wide shift in consumer shopping preferences from in-store to online shopping, and the resulting increased competition, has left the Debtor with insufficient liquidity to meet all of its financial obligations. While the Debtor has already closed a number of its less profitable retail store locations, leaving open approximately 80 retail stores as of the Petition Date, the Debtor requires time to evaluate the viability of the remaining retail stores and identify other ways to decrease operational costs and increase profitability. In order to preserve the Debtor s rights under its lease agreements and to have an opportunity to restructure its business and financial affairs and ultimately reorganize, the Debtor filed this Chapter 11 bankruptcy case. 8. Through its bankruptcy case, the Debtor endeavored to identify the core Retail Stores around which the Debtor can successfully reorganize, to expeditiously close those Retail Stores which are not likely to be profitable and/or for which the Debtor is unable to obtain meaningful rent concessions from the landlords, to identify and implement reasonable cost cutting measures and to maximize the value of the Debtor s inventory by continuing its retail operations at the Retail Stores. Based on these efforts, the Debtor filed its Second Amended Disclosure Statement and Plan of A Reorganization of A Debtor Who Is Not An Individual [Doc. No. 296] on December 15, 2017 (the Disclosure Statement and Plan, which provides for the Debtor to restructure its existing debt in a cohesive and efficient manner while continuing to operate its longstanding business. 9. The Debtor obtained Court approval of its Plan at the confirmation hearing on 5

6 Main Document Page 6 of February 8, The Debtor is currently analyzing claims filed against the estate and preparing objections to claims, as applicable. B. The Debtor s Claims Analysis, And The Objectionable Claims. 10. The Court entered an order setting September 30, 2017 as the bar date (the Bar Date for creditors to file pre-petition claims against the Debtor. See (Doc. No The Court also entered an order on October 30, 2017 setting December 7, 2017 as the bar date to file administrative expense claims against the Debtor for the period of June 15, 2017 through October 31, See (Doc. No The Court s October 30, 2017 order set a second administrative expense bar date of 30 days after the Plan effective date for administrative expense claims incurred from November 1, 2017 through the Plan effective date. Id. 11. In connection with analyzing certain claims filed in the Debtor s case (the Claims, the Debtor and/or its professionals obtained copies of all such Claims filed in the Debtor s case. Upon obtaining copies of these Claims, the Debtor and/or its professionals analyzed all of the documentation filed by the respective putative creditors and interest holders in support of the Claims. Moreover, the Debtor reviewed its books and records (the Books and Records and reconciled the filed Claims against such Books and Records. 12. Based on the foregoing, the Debtor has determined that the following Claim (the Objectionable Claim is objectionable on the basis that it has either been paid/satisfied: Claimant Claim No. LVP St. Augustine Outlets, LLC II. ARGUMENT A. The Objectionable Claim Should Be Disallowed Because Such Claim Has Either Been Paid/ Satisfied in Full. Federal Rule of Bankruptcy Procedure 3001(a provides that a proof of claim is a written statement setting forth a creditor s claim. Federal Rule of Bankruptcy Procedure 3001(f provides that a proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim. Fed. R. Bankr. P. 3001(f; In re Southern 6

7 Main Document Page 7 of Cal. Plastics, Inc., 165 F.3d 1243, (9th Cir. 1999; In re Garner, 246 B.R. 617, (9th Cir. BAP However, Federal Rule of Bankruptcy Procedure 3001(f operates merely as an evidentiary presumption that is rebuttable. In re Garvida, 347 B.R. 697, 706 (9th Cir. BAP Once the debtor satisfies its burden of going forward by rebutting the presumption with counter-evidence, the burden of going forward shifts to the claimant. In re Lundell, 223 F.3d 1035, 1039 (9th Cir. 2000; Garvida, 347 B.R. at While the burden of going forward is primarily a procedural matter pertaining to the order of presenting evidence, the substantive burden of proof remains at all times upon the claimant. Garvida, 347 B.R. at 706; Lundell, 223 F.3d at 1039 (ultimate burden of persuasion remains at all times upon the claimant; So. Cal. Plastics, 165 F.3d at A claimant must establish by a preponderance of the evidence that its claim should be allowed. Lundell, 223 F.3d at The objecting party is not required to disprove the claim. In re Kahn, 114 B.R. 40 (Bankr. S.D.N.Y The Bankruptcy Court has the power to sift the circumstances surrounding any claim to see that injustice or unfairness is not done in the administration of the bankruptcy estate. Pepper vs. Litton, 308 U.S. 295, 304, 60 S.Ct. 238, 244 (1939. In In re Circle J. Dairy, Inc., 112 B.R. 297 (W.D. Ark. 1989, the Court held that: A claim, to be legally sufficient and, therefore, to be prima facie valid, under the Bankruptcy Rules, must: 1 be in writing; 2 make a demand on the debtor s estate; 3 express the intent to hold the debtor liable for the debt; 4 be properly filed; and 5 be based upon facts which would allow, as a matter of equity, to have the document accepted as a proof of claim. Id. at (citation omitted. Under the fifth requirement, the allegations of the proof of claim must set forth all the necessary facts to establish a claim and must not be self-contradictory. The prima facie validity of the claim does not attach unless the claim is in compliance with the Federal Rules of Bankruptcy Procedure ( Rules, including Rule 3001, and sets forth the facts necessary to support the claim. These requirements for legal sufficiency are consistent with the idea that the proof of 7

8 Main Document Page 8 of claim itself is to be scrutinized with an eye to credibility. Id. (citations omitted. After reconciling the Objectionable Claim against the Books and Records, the Debtor submits that the Objectionable Claim objected to herein has been completely paid/satisfied. Because a claimant should not be entitled to recover for a claim that had been previously satisfied, the Court should disallow the Objectionable Claim in its entirety. 1. Claim No Filed By LVP St. Augustine Outlets, LLC. On September 27, 2017, LVP St. Augustine Outlets, LLC ( LVP filed a proof of claim in the Debtor s case, which claim has been denominated as proof of claim no ( Claim No Claim No asserts a general unsecured claim for a prepetition arrearage of $1,171.50, and an administrative expense claim of $3, The basis for Claim No is for amounts due postpetition under a nonresidential real property lease between the Debtor and the LVP for the Debtor s store located in the St. Augustine Outlets Shopping Center in St. Augustine, Florida (the LVP Lease. A true and correct copy of Claim No filed by LVP is attached hereto as Exhibit to the Declaration of Tae Y. Yi (the Yi Declaration. Pursuant to the second lease amendment for the LVP Lease, the Debtor was obligated to pay LVP rent in the amount of 5% of gross sales for the store. A true and correct copy of the second lease amendment is attached as Exhibit 117-1A to the Yi Declaration. The Debtor also leased a storage area in the Shopping Center pursuant to a separate agreement. For the period of January 1, 2017 through May 31, 2017 the Debtor leased the storage area free of rent. After the agreement terminated in May 31, 2017, the Debtor was permitted to use the storage area without a new agreement free of charge. A true and correct copy of the storage area lease is attached hereto as Exhibit 117-1B to the Yi Declaration. (LVP did not provide the Debtor with a signed copy of the storage area of the lease. The Debtor rejected the LVP Lease on August 31, 2017 pursuant to the order providing for rejection of the LVP Lease entered by the Court on August 30, [Docket No. 133]. The Debtor ceased operation of it store on August 27, 2017, and turned over possession of the leased property to LVP on August 31, The Debtor paid all administrative expense rent obligations 8

9 Main Document Page 9 of due under the LVP Lease. A true and correct copy of the Debtor s rent payment journal showing that all rental obligations have been paid is attached as Exhibit 117-1C to the Yi Declaration. Based on the Debtor s Books and Records, and analysis, the Debtor believes and that there are no outstanding administrative expense claim amounts owed. Accordingly, the administrative expense claim amounts of $3, asserted in Claim No should be disallowed in its entirety with prejudice. The Debtor is not objecting to the general unsecured claim asserted by LVP. 8 III. RESERVATION OF RIGHTS The Debtor expressly reserves the right to amend, modify or supplement the Motion and to assert additional objections to the Objectionable Claim or any other proofs of claim (filed or not that may be asserted against the Debtor by the aforementioned Claimant. Should the grounds for disallowance of the Objectionable Claim stated in the Motion be deemed insufficient, the Debtor reserves its rights to object on any other grounds that the Debtor discovers during the time that this case is pending. 15 IV. CONCLUSION 16 For the reasons set forth above, the Debtor respectfully requests that the Court enter an 17 order: granting the Motion in its entirety; 2. sustaining the Debtor s objections to the Objectionable Claim; 3. disallowing the Objectionable Claim in its entirety ; and 4. granting such other and further relief the Court deems just and proper under the circumstances Dated: March 14, 2018 LEVENE, NEALE, BENDER, YOO & BRILL L.L.P. By: /s/ Eve H. Karasik _ TIMOTHY J. WOO EVE H. KARASIK JULIET Y. OH Attorneys for Reorganized Debtor 9

10 Main Document Page 10 of DECLARATION OF TAE Y. YI I, Tae Y. Yi, hereby declare as follows: 1. I am over 18 years of age. I am the President, Chief Financial Officer, Secretary, and one of the three shareholders of Cornerstone Apparel, Inc., d/b/a Papaya Clothing, the debtor and debtor in possession in the above-captioned Chapter 11 bankruptcy case ( Cornerstone and the Debtor, and am therefore familiar with the business operations and financial books and records of the Debtor. I have personal knowledge of the facts set forth below and, if called to testify as a witness, I could and would competently testify thereto. 2. I have access to the Debtor s books and records. As the President, Chief Financial Officer, and Secretary of the Debtor, I am familiar with the history, organization, operations and financial condition of the Debtor. The records and documents referred to in this Declaration constitute writings taken, made, or maintained in the regular or ordinary course of the Debtor s business at or near the time of act, condition or event to which they relate by persons employed by the Debtor who had a business duty to the Debtor to accurately and completely take, make, and maintain such records and documents. The statements set forth in this declaration are based upon my own personal knowledge and my review of the Debtor s books and records. 3. I make this declaration in support of the Omnibus Motion Objecting To Completely Or Partially Paid/ Satisfied Claims (the Motion. All capitalized and undefined terms herein shall have the same meanings ascribed to them in the Motion. 4. The Debtor filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on June 15, 2017 (the Petition Date. The Debtor is continuing to operate its business, manage its financial affairs and operate its bankruptcy estate as a debtor in possession. 5. Cornerstone operates a chain of apparel stores under the name Papaya Clothing ( Papaya that cater to teens, juniors and the young at heart, and focuses on the 16 to 25 year old age group. Cornerstone has over 80 stores located in malls and shopping centers throughout the United States. The Papaya concept is to provide shoppers with great price, great service, and an innovative, upscale and welcoming atmosphere. 6. Cornerstone is based in Commerce, California with a 75,000 square feet 10

11 Main Document Page 11 of headquarters complex, which includes its warehouse and distribution facilities. The merchandise sold in the Papaya stores is manufactured in the United States, and is housed in Cornerstone s California warehouse where Cornerstone s employees pack and ship the merchandise to the retail locations. Given the ever-changing fashion world, Cornerstone has established a production line that can take a new design from start to finish within a two-week period in order to give the customer an impressive selection of the latest fashions. 7. Cornerstone s ownership and management have over twenty-five years experience in operating retail clothing business focusing primarily in the junior and petite apparel markets. This ownership and management team is responsible for the prior successes of retailers Everblue Casuals and Career Image. Papaya consistently leads in its retail category in sales per square foot of retail space. 8. The Debtor employs a workforce of approximately of 1,300 employees. In 2016, the Debtor generated annual gross revenues of more than $134 million. The Debtor has no secured debt. 9. After opening its first retail store approximately 18 years ago in 1999, the Debtor substantially expanded its business operations to encompass a total of over 80 of retail stores throughout the United States by Approximately, 50 of these new retail stores were opened within the last six (6 years. The expansion effort took a heavy financial toll on the business operations of the Debtor as a whole as it incurred construction and other start up costs with the opening of each new store as well as a significant increase in operating expenses typically associated with a retail store chain operation. 10. The high cost of expansion combined with decreasing store sales as a result of a general industry-wide shift in consumer shopping preferences from in-store to online shopping, and the resulting increased competition, has left Cornerstone with insufficient liquidity to meet all of its financial obligations. While the Debtor has already closed a number of its less profitable retail store locations, leaving open approximately 80 retail stores as of the Petition Date, the Debtor requires time to evaluate the viability of the remaining retail stores and identify other ways to decrease operational costs and increase profitability. In order to preserve the Debtor s rights under its lease 11

12 Main Document Page 12 of agreements and to have an opportunity to restructure its business and financial affairs and ultimately reorganize, the Debtor filed this Chapter 11 bankruptcy case. 11. Through its bankruptcy case, the Debtor has endeavored to identify the core Retail Stores around which the Debtor can successfully reorganize, to expeditiously close those Retail Stores which are not likely to be profitable and/or for which the Debtor is unable to obtain meaningful rent concessions from the landlords, to identify and implement reasonable cost cutting measures and to maximize the value of the Debtor s inventory by continuing its retail operations at 8 the Retail Stores. Based on these efforts, the Debtor filed its Second Amended Disclosure Statement and Plan of A Reorganization of A Debtor Who Is Not An Individual [Doc. No. 296] on December 15, 2017 (the Disclosure Statement and Plan, which provides for the Debtor to restructure its existing debt in a cohesive and efficient manner while continuing to operate its longstanding business. 12. The Debtor obtained Court approval of its Plan at the confirmation hearing on February 8, The Debtor is currently analyzing claims filed against the estate, and preparing objections to claims, as applicable. 13. In connection with analyzing certain alleged claims filed in the Debtor s case (the Claims, my professionals and I obtained copies of all such Claims filed in the Debtor s case. Upon obtaining copies of these Claims, my professionals and I analyzed the documentation filed by the respective putative creditors and interest holders in support of the Claim. Moreover, my professionals and I reviewed the Debtor s books and records (the Books and Records and reconciled the Claims against such Books and Records. 14. Based on the foregoing, I determined that the following Administrative Claim (the Objectionable Claim is objectionable on the basis that it has been completely paid/ satisfied: Claimant Claim No. LVP St. Augustine Outlets, LLC On September 27, 2017, LVP St. Augustine Outlets, LLC ( LVP filed a proof of claim in the Debtor s case, which claim has been denominated as proof of claim no ( Claim No

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14 Main Document Page 14 of EXHIBIT LVP St. Augustine Outlets, LLC Proof of Claim No

15 Case 2:17-bk VZ Claim Doc Filed Filed 03/14/18 09/27/17 Entered Desc Main 03/14/18 Document 13:39:08 Page Desc 1 of Main Document 3 Page 15 of 42 Fill in this information to identify the case: FILED Debtor 1 Cornerstone Apparel, Inc. U.S. Bankruptcy Court Central District of California Debtor 2 (Spouse, if filing 9/27/2017 United States Bankruptcy Court Central District of California Kathleen J. Campbell, Clerk Case number: Official Form 410 Proof of Claim 04/16 Read the instructions before filling out this form. This form is for making a claim for payment in a bankruptcy case. Do not use this form to make a request for payment of an administrative expense. Make such a request according to 11 U.S.C Filers must leave out or redact information that is entitled to privacy on this form or on any attached documents. Attach redacted copies of any documents that support the claim, such as promissory notes, purchase orders, invoices, itemized statements of running accounts, contracts, judgments, mortgages, and security agreements. Do not send original documents; they may be destroyed after scanning. If the documents are not available, explain in an attachment. A person who files a fraudulent claim could be fined up to $500,000, imprisoned for up to 5 years, or both. 18 U.S.C. 152, 157, and Fill in all the information about the claim as of the date the case was filed. That date is on the notice of bankruptcy (Form 309 that you received. Part 1: Identify the Claim 1.Who is the current creditor? LVP St. Augustine Outlets, LLC Name of the current creditor (the person or entity to be paid for this claim Other names the creditor used with the debtor 2.Has this claim been acquired from someone else? 3.Where should notices and payments to the creditor be sent? Federal Rule of Bankruptcy Procedure (FRBP 2002(g No Yes. From whom? Where should notices to the creditor be sent? LVP St. Augustine Outlets, LLC Name c/o John T. Farnum, Esq. Linowes and Blocher LLP 7200 Wisconsin Ave, Suite 800 Bethesda, MD Where should payments to the creditor be sent? (if different Name Contact phone ( Contact phone Contact jfarnum@linowes law.com Contact Uniform claim identifier for electronic payments in chapter 13 (if you use one: 4.Does this claim amend one already filed? No Yes. Claim number on court claims registry (if known Filed on 5.Do you know if anyone else has filed a proof of claim for this claim? No Yes. Who made the earlier filing? MM / DD / YYYY Official Form 410 Proof of Claim page 1

16 Case 2:17-bk VZ Claim Doc Filed Filed 03/14/18 09/27/17 Entered Desc Main 03/14/18 Document 13:39:08 Page Desc 2 of Main Document 3 Page 16 of 42 Part 2: Give Information About the Claim as of the Date the Case Was Filed 6.Do you have any number you use to identify the debtor? No Yes. Last 4 digits of the debtor's account or any number you use to identify the debtor: 7.How much is the claim? 8.What is the basis of the claim? $ Does this amount include interest or other charges? No Yes. Attach statement itemizing interest, fees, expenses, or other charges required by Bankruptcy Rule 3001(c(2(A. Examples: Goods sold, money loaned, lease, services performed, personal injury or wrongful death, or credit card. Attach redacted copies of any documents supporting the claim required by Bankruptcy Rule 3001(c. Limit disclosing information that is entitled to privacy, such as healthcare information. Lease 9. Is all or part of the claim secured? No Yes. The claim is secured by a lien on property. Nature of property: Real estate. Motor vehicle Other. Describe: If the claim is secured by the debtor's principal residence, file a Mortgage Proof of Claim Attachment (Official Form 410 A with this Proof of Claim. Basis for perfection: Attach redacted copies of documents, if any, that show evidence of perfection of a security interest (for example, a mortgage, lien, certificate of title, financing statement, or other document that shows the lien has been filed or recorded. Value of property: $ Amount of the claim that is secured: Amount of the claim that is unsecured: $ $ (The sum of the secured and unsecured amounts should match the amount in line 7. Amount necessary to cure any default as of the date of the petition: $ Annual Interest Rate (when case was filed % 10.Is this claim based on a lease? Fixed Variable No Yes. Amount necessary to cure any default as of the date of the petition. $ Is this claim subject to a right of setoff? No Yes. Identify the property: Official Form 410 Proof of Claim page 2

17 Case 2:17-bk VZ Claim Doc Filed Filed 03/14/18 09/27/17 Entered Desc Main 03/14/18 Document 13:39:08 Page Desc 3 of Main Document 3 Page 17 of Is all or part of the claim entitled to priority under 11 U.S.C. 507(a? A claim may be partly priority and partly nonpriority. For example, in some categories, the law limits the amount entitled to priority. No Yes. Check all that apply: Domestic support obligations (including alimony and child support under 11 U.S.C. 507(a(1(A or (a(1(b. Up to $2,850* of deposits toward purchase, lease, or rental of property or services for personal, family, or household use. 11 U.S.C. 507(a(7. Wages, salaries, or commissions (up to $12,850* earned within 180 days before the bankruptcy petition is filed or the debtor's business ends, whichever is earlier. 11 U.S.C. 507(a(4. Taxes or penalties owed to governmental units. 11 U.S.C. 507(a(8. Contributions to an employee benefit plan. 11 U.S.C. 507(a(5. $ Amount entitled to priority $ $ $ $ Other. Specify subsection of 11 U.S.C. 507(a(2 that applies $ Part 3: Sign Below * Amounts are subject to adjustment on 4/01/19 and every 3 years after that for cases begun on or after the date of adjustment. The person completing this proof of claim must sign and date it. FRBP 9011(b. If you file this claim electronically, FRBP 5005(a(2 authorizes courts to establish local rules specifying what a signature is. A person who files a fraudulent claim could be fined up to $500,000, imprisoned for up to 5 years, or both. 18 U.S.C. 152, 157 and Check the appropriate box: I am the creditor. I am the creditor's attorney or authorized agent. I am the trustee, or the debtor, or their authorized agent. Bankruptcy Rule I am a guarantor, surety, endorser, or other codebtor. Bankruptcy Rule I understand that an authorized signature on this Proof of Claim serves as an acknowledgment that when calculating the amount of the claim, the creditor gave the debtor credit for any payments received toward the debt. I have examined the information in this Proof of Claim and have a reasonable belief that the information is true and correct. I declare under penalty of perjury that the foregoing is true and correct. Executed on date 9/27/2017 MM / DD / YYYY /s/ John T. Farnum Signature Print the name of the person who is completing and signing this claim: Name John T. Farnum First name Middle name Last name Title Partner Company Linowes and Blocher LLP Identify the corporate servicer as the company if the authorized agent is a servicer Address 7200 Wisconsin Ave, Suite 800 Number Street Bethesda, MD City State ZIP Code Contact phone ( jfarnum@linowes law.com Official Form 410 Proof of Claim page 3

18 Case 2:17-bk VZ Doc Claim Filed Part 03/14/18 2 Filed Entered 09/27/1703/14/18 Desc Attachment 13:39:08 Desc 1 Main Document Page 1 of Page 2 18 of 42 EXHIBIT A

19 Case 2:17-bk VZ Doc Claim Filed Part 03/14/18 2 Filed Entered 09/27/1703/14/18 Desc Attachment 13:39:08 Desc 1 Main Document Page 2 of Page 2 19 of 42 In re Cornerstone Apparel, Inc., et al., Chapter 11 Case No (Jointly Administered United States Bankruptcy Court for the Central District of California EXHIBIT A TO PROOF OF CLAIM OF LVP ST. AUGUSTINE OUTLETS, LLC I. General Information Date of Original Lease: October 27, 2014 Date of First Amendment to Lease: May 1, 2015 Date of Second Amendment to Lease: April 6, 2017 Chapter 11 Petition Date: June 15, 2017 Rejection Date / Vacate Date: September 6, 2017 *A copy of the Lease will be made available upon request. II. Prepetition Arrearages Prepetition Arrearage: $1, III. Unpaid Post-Petition Rent (Administrative Expenses Storage Unit: $ Store Lease: $2, (plus September rent

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27 Main Document Page 27 of EXHIBIT 117-1B Storage Area Lease

28 Main Document Page 28 of 42 STORAGE AREA LEASE AGREEMENT ST. AUGUSTINE OUTLETS THIS STORAGE AREA LEASE AGREEMENT (This Storage Lease, made as of the latest date appearing under the signature of either Licensor or Licensee at the end of this Agreement, by and between LVP St. Augustine Outlets, LLC, ("Licensor" and Cornerstone Apparel, Inc. ("Licensee". W I T N E S S E T H: WHEREAS, Licensor and Licensee have heretofore entered into a Lease Agreement ("Lease Agreement", for premises in St. Augustine Outlets ("Shopping Center" (hereinafter referred to as "Present Premises", which Lease Agreement is by this reference incorporated herein and made a part hereof; and WHEREAS, Licensee desires to lease certain other premises in said Shopping Center (hereinafter referred to as "Storage Area"; and WHEREAS, Licensor is willing to lease said Storage Area upon certain terms and conditions as hereinafter set forth: NOW, THEREFORE, THIS AGREEMENT WITNESSETH, that in consideration of the Premises and the mutual covenants hereinafter set forth, the parties hereto agree to amend said Lease Agreement in the following manner: 1. In addition to the Present Premises, Licensor hereby leases to Licensee and Licensee hereby rents from Licensor the Storage Area containing approximately one thousand five hundred (1,500 square feet (Space #1135, in the location identified on Schedule "A-2" attached hereto. 2. Licensee has inspected and will accept the Storage Area in "as-is" condition. Licensee acknowledges that Licensor is under no obligation and has made no warranties or representations, either for the present time or for the future, to provide additional facilities, improvements or utility services in and to the Storage Area. Any additional work to the Storage Area, including electrical outlets, lighting, or heating, ventilation and airconditioning will be provided by Licensee at Licensee's sole cost and expense, based on plans and specifications submitted to Licensor for approval. 3. The Term of this Storage Lease for the Storage Area shall commence on January 1, 2017 and shall there after continue until May 31, 2017, subject, however, to Licensor's right to terminate this Storage Lease upon seven (7 days advance written notice to Licensee. 4. INTENTIONALLY DELETED 5. The Storage Area shall be used by Licensee solely for storage purposes related to the authorized use of the Present Premises and for no other purpose whatsoever. 6. Licensee agrees to pay to Licensor, as rental for said Storage Area, an amount equal to $0.00 (no charge per month (+ 6% state of Florida Sales Tax. Base Rent for the Term from January 1, 2017 to May 31, 2017 is due upon execution of this Agreement; Base Rent for all additional months added to the Term is due in advance on the first day of each calendar month of the Term. It is further understood and agreed that the aforementioned rental for said Storage Area shall not be included in Annual Basic Rental due and payable by Licensee for the Present Premises in calculating Licensee's liability for Annual Percentage Rental pursuant to the Lease Agreement.

29 Main Document Page 29 of A default under this Agreement shall exist if Licensee fails to pay any Rent or other sum of money within five (5 days after the date due. A default by Licensee shall entitle Licensor to terminate this Agreement and the license created hereby by giving notice of such election to Licensee, and Licensor may reenter and take possession of the Premises and all goods, inventory, equipment, fixtures and all other personal property of Licensee which is located in the Premises, and Licensor may sell all or any part thereof at public or private sale, with the proceeds applied to sums owed to Licensor by Licensee. In addition, Licensor may recover from Licensee on a monthly basis during the remainder of the Term any Rent or other damages owing by Licensee as of the date of termination of this Agreement, plus Rent which would have become due through the end of the Term based upon the average Rent payable by Licensee with respect to the portion of the Term preceding the termination of the Agreement. The foregoing remedies shall be in addition to any other remedies Licensor may have under the laws of the state where the Shopping Center is located. Licensor may recover any and all costs and expenses incurred by Licensor, including, without limitation, court costs and reasonable attorneys' fees, in enforcing any of its rights or remedies under this Agreement once a default has occurred and the applicable cure period has expired. In the event this Agreement is not terminated, such costs and expenses, including, without limitation, reasonable attorneys' fees and court costs, shall be deemed to be Additional Rental payable, with interest at the Default Rate, upon Licensor's demand. In addition, Licensor may perform, on behalf and at the expense of Licensee, any obligation of Licensee under this Agreement which Licensee has failed to perform and of which Licensor shall have given Licensee notice, the cost of which performance by Licensor, together with interest thereon at the Default Rate from the date of such expenditure, shall be deemed Additional Rental and shall be payable by Licensee to Licensor upon demand; and Licensor may exercise the remedy described in this sentence without any notice to Licensee if Licensor, in its good faith judgment, believes it would be materially injured by failure to take rapid action or if the unperformed obligation of Licensee constitutes an emergency. If Licensee shall fail to pay any Rent within five (5 days after the same is due, Licensee shall be obligated to pay, as Additional Rental, a late payment equal to the greater of One Hundred Dollars ($ or ten percent (10% of any Rent payment not paid when due. In addition, any Rent which is not paid within three (3 days after the same is due shall bear interest from the first day due until paid at an annual rate of interest equal to the lesser of (i the maximum rate of interest for which Licensee may lawfully contract in the state where the Shopping Center is located or (ii eighteen percent (18% (the Default Rate. 8. This Storage Lease shall not be assignable by Licensee, except in connection with a Licensor-approved assignment of the Lease Agreement for the Present Premises. 9. It is expressly understood and agreed that all terms, covenants and conditions set forth in the Lease Agreement with respect to the Present Premises, are hereby made a part of this Agreement and shall apply with full force and effect to the Storage Area, except such provisions as are inconsistent with any terms and conditions of this Storage Lease. A default by Licensee under the Lease Agreement shall constitute a default by Licensee under this Storage Area Lease Agreement and a default by Licensee under this Storage Lease shall constitute a default by Licensee under the Lease Agreement. 10. Unless otherwise provided herein, all capitalized terms used herein shall have the same meaning as set forth in the Lease Agreement

30 Main Document Page 30 of Licensor shall have the right to relocate the Premises within the Shopping Center upon fortyeight (48 hours notice (the Relocation Notice to Licensee. The relocation of Licensee s personal property from the Premises to the new premises shall be performed by Licensee at Licensee s sole cost and expense. 12. The Term of this Agreement shall commence and end as set forth in Section 3, provided, however, that Licensor shall have the right to terminate this Agreement in its sole and absolute discretion upon forty-eight (48 hours notice to Licensee, whereupon Licensee shall vacate the Premises in broom clean condition and in as good condition as when received. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. WITNESS: LICENSEE: Cornerstone Apparel, Inc. d/b/a Papaya By: Name: Daryl Kim Title: District Manager kdallas@bellsouth.net Phone: ( work, ( mobile Date: WITNESS: LICENSOR: LVP St. Augustine Outlets, LLC By: Name: KJ Hatfield Title: Date: General Manager SL AGREEMENTS - STORAGE REVISED 02/10-3 -

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36 Main Document Page 36 of 42 FOURTH AMENDMENT TO LICENSE ST. AUGUSTINE OUTLETS THIS FOURTH AMENDMENT TO LICENSE (the Amendment, made and entered into this day of, 2016, by and between LVP ST. AUGUSTINE OUTLETS, LLC, (the "Licensor" whose principal address is 1985 Cedar Bridge Avenue, Suite 1, Lakewood, New Jersey (the "Licensor" and Cornerstone Apparel, Inc., ("Licensee" whose principal address is 5807 Smithway St., Commerce, CA W I T N E S S E T H: WHEREAS, Licensor and Licensee have heretofore entered into a Lease Agreement ("Lease Agreement", for premises in St. Augustine Outlets ("Shopping Center" (hereinafter referred to as "Present Premises", known as suite 75, Lease Agreement is by this reference incorporated herein and made a part hereof; and WHEREAS, Licensor and Licensee heretofore entered into a License Agreement dated August 17, 2015 (the License for 1,503 square feet of space (the "Storage Area", known as Space #1135, located in the St. Augustine Outlets, St. Augustine, Florida (the "Shopping Center", providing for a term which is currently set to expire August 31, 2016 (the Term ; and WHEREAS, Term shall be adjusted to expire on December 31, 2016; and WHEREAS, Licensor and Licensee have agreed to modify the terms of the License as hereinafter set forth. NOW, THEREFORE, THIS AGREEMENT WITNESSETH, that in consideration of the Storage Area and the mutual covenants hereinafter set forth, the parties hereto agree to Lease Agreement in the following manner: 1. All capitalized terms used herein shall have the meaning as defined and used in the License unless otherwise defined herein. The modifications to the License provided for in this Amendment shall be effective as of the date first written above, unless specifically set forth herein. 2. Term. Licensor and Licensee hereby agree to amend Term of the License to expire on December 31, 2016, subject, however, to Licensor's right to terminate this Storage Lease upon seven (7 days advance written notice to Licensee. 3. Miscellaneous Provisions Licensee shall remain liable for any and all Base Rent, Percentage Rent, additional rent or any other charges payable under the terms of the License which have not yet been paid but which are due and payable for Licensee's occupancy of the Existing Premises whether the same are billed or unbilled Except as modified by this Amendment, the License and all the terms, covenants, conditions, provisions and agreements thereof are hereby in all respects ratified, confirmed and approved. SIGNATURE PAGE TO FOLLOW

37 Main Document Page 37 of 42 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. WITNESS: LICENSEE: Cornerstone Apparel, Inc. By: Name: Title: Date: WITNESS: LICENSOR: LVP St. Augustine Outlets, LLC By: Name: Title: Date: Authorized Agent SL AGREEMENTS - STORAGE REVISED 02/10-2 -

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40 Main Document Page 40 of PROOF OF SERVICE OF DOCUMENT I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is: Constellation Boulevard, Suite 1700, Los Angeles, CA A true and correct copy of the foregoing document entitled NOTICE OF MOTION AND MOTION OBJECTING TO CLAIM OF LANDLORD LVP ST. AUGUSTINE OUTLETS, LLC; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF TAE Y. YI IN SUPPORT THEREOF will be served or was served (a on the judge in chambers in the form and manner required by LBR (d; and (b in the manner stated below: 1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF: Pursuant to controlling General Orders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the document. On March 14, 2018, I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and determined that the following persons are on the Electronic Mail Notice List to receive NEF transmission at the addresses stated below: Service information continued on attached page 2. SERVED BY UNITED STATES MAIL: On March 14, 2018, I served the following persons and/or entities at the last known addresses in this bankruptcy case or adversary proceeding by placing a true and correct copy thereof in a sealed envelope in the United States mail, first class, postage prepaid, and addressed as follows. Listing the judge here constitutes a declaration that mailing to the judge will be completed no later than 24 hours after the document is filed. LVP St. Augustine Outlets LLC Attn: Officer, Managing or General Agent, or Other Agent for Service of Process 1985 Cedar Bridge Avenue, Suite 1 Lakewood, NJ LVP St. Augustine Outlets LLC c/o John T. Farnum, Esq. Linowes and Blocher LLP 7200 Wisconsin Ave, Suite 800 Bethesda, MD LVP St. Augustine Outlets LLC Attn: Agent for Service of Process c/o Corporation Service Company 251 Little Falls Drive Wilmington, DE Hon. Vincent P. Zurzolo United States Bankruptcy Court Edward R. Roybal Federal Building 255 E. Temple Street, Suite 1360 / Ctrm 1368 Los Angeles, CA Service information continued on attached page 3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR (state method for each person or entity served: Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on March 14, 2018, I served the following persons and/or entities by personal delivery, overnight mail service, or (for those who consented in writing to such service method, by facsimile transmission and/or as follows. Listing the judge here constitutes a declaration that personal delivery on, or overnight mail to, the judge will be completed no later than 24 hours after the document is filed. None. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. March 14, 2018 Stephanie Reichert /s/ Stephanie Reichert Date Type Name Signature This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California. June 2012 F PROOF.SERVICE

41 Main Document Page 41 of TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF: Dustin P Branch on behalf of Creditor PGIM Real Estate, Starwood Retail Partners, LLC, The Macerich Company, Westfield, LLC branchd@ballardspahr.com, carolod@ballardspahr.com;hubenb@ballardspahr.com John H Choi on behalf of Interested Party Courtesy NEF johnchoi@kpcylaw.com, christinewong@kpcylaw.com Richard T Davis on behalf of Creditor Spotsylvania Mall Company rdavis@cafarocompany.com, lspahlinger@cafarocompany.com John P Dillman on behalf of Creditor Cypress-Fairbanks ISD, Galveston County, Harris County, Tyler County: houston_bankruptcy@publicans.com Scott Ewing on behalf of Interested Party Courtesy NEF contact@omnimgt.com, sewing@omnimgt.com;ecf@omnimgt.com;docketalarm-ecf-cacb @inbound.docketalarm.com Matthew A Gold on behalf of Creditor Argo Partners courts@argopartners.net Ronald E Gold on behalf of Creditor Washington Prime Group Inc. rgold@fbtlaw.com, joguinn@fbtlaw.com Steven T Gubner on behalf of Creditor 2253 Apparel, Inc. dba Celebrity Pink sgubner@bg.law, ecf@bg.law William W Huckins on behalf of Creditor Washington Prime Group Inc. whuckins@allenmatkins.com, clynch@allenmatkins.com Courtney J Hull on behalf of Creditor Texas Comptroller of Public Accounts bk-chull@oag.texas.gov, sherri.simpson@oag.texas.gov Clifford P Jung on behalf of Interested Party Courtesy NEF clifford@jyllp.com, victoria@jyllp.com;karill@jyllp.com Eve H Karasik on behalf of Debtor Cornerstone Apparel, Inc. ehk@lnbyb.com John W Kim on behalf of Attorney John W Kim johnkim@jwklawgroup.com Jeffrey Kurtzman on behalf of Creditor PREIT Services, as agent for PR Springfield Town Center, LLC kurtzman@kurtzmansteady.com Jeffrey S Kwong on behalf of Debtor Cornerstone Apparel, Inc. jsk@lnbyb.com, jsk@ecf.inforuptcy.com Dare Law on behalf of U.S. Trustee United States Trustee (LA: dare.law@usdoj.gov Scott Lee on behalf of Creditor Committee Official Committee of Unsecured Creditors slee@lbbslaw.com Noreen A Madoyan on behalf of Interested Party Courtesy NEF This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California. June 2012 F PROOF.SERVICE