In re Skymark Props. Ii, LLC
| Decision Date | 21 February 2019 |
| Docket Number | Case No. 19-40211 Jointly Administered |
| Citation | 597 B.R. 363 |
| Parties | IN RE: SKYMARK PROPERTIES II, LLC, et al., Debtors. |
| Court | U.S. Bankruptcy Court — Eastern District of Michigan |
Anthony J. Kochis, Scott A. Wolfson, Rachel Walton, Wolfson Bolton PLLC, Troy, Michigan, Attorneys for the Debtors.
Robert A. Weisberg, Christopher A. Grosman, Carson Fischer, P.L.C., Bloomfield Hills, Michigan, Attorneys for Southfield Metro Center Holdings LLC.
John Polderman, Simon PLC, Bloomfield Hills, Michigan, Attorney for Receiver, NAI Farbman.
Marc M. Bakst, J. Adam Behrendt, Bodman PLC, Troy, Michigan, Attorneys for Tenneco Inc.
Kay Standridge Kress, Sean P. McNally, Pepper Hamilton LLP, Southfield, Michigan, Attorneys for Stefanini, Inc.
Douglas C. Bernstein, Plunkett Cooney, Bloomfield Hills, Michigan, Attorney for Morteza Katebian.
Jonathan B. Frank, Maddin, Hauser, Roth & Heller, P.C., Southfield, Michigan, Attorney for Laila Alizedah, Troy Wilson, and Arash Missaghi.
These jointly-administered cases came before the Court for a hearing on February 6, 2019, on three motions, namely:
(1) the joint motion by state court receiver NAI Farbman (the "Receiver") and secured creditor Southfield Metro Center Holdings, LLC (the "Lender") entitled "Joint Motion by Receiver NAI Farbman and Secured Creditor Southfield Metro Center Holdings LLC (I) to Dismiss or Suspend the Bankruptcy Case, or in the Alternative, (ii) for Relief under Section 543(c) and (d) of the Bankruptcy Code" (Docket # 32 in Case No. 19-40248, the "Joint Dismissal Motion");
(2) the motion by the Lender entitled "Motion by Secured Creditor Southfield Metro Center Holdings LLC to Dismiss or Suspend the Bankruptcy Case" (Docket # 24 in Case No. 19-40211, the "Dismissal Motion"); and
(3) the motion by the Debtor Skymark Properties SPE, LLC entitled "Debtors' Motion for Entry of an Interim and Final Order Permitting the Use of Cash Collateral" (Docket # 60 in Case No. 19-40248, the "Cash Collateral Motion").2
On February 7, 2019, confirming action taken by the Court at the conclusion of the February 6, 2019 hearing, the Court entered an order requiring certain parties to supplement the record in specific ways.3 The required supplements have been filed.4 The Court has reviewed the motions, the briefs in support of the motions, the responses to the motions, the replies in support of the motions, all exhibits attached to the pleadings, the supplements filed in response to the February 7 Order, and the entire record, and concludes that, for the following reasons, no further hearing is required, and that the Cash Collateral Motion must be denied, and the Joint Dismissal Motion and the Dismissal Motion should be granted. This opinion concerns only the Cash Collateral Motion. Today the Court is filing a separate opinion regarding the Joint Dismissal Motion and the Dismissal Motion.
This Court has subject matter jurisdiction over this bankruptcy case and this contested matter under 28 U.S.C. §§ 1334(b), 157(a) and 157(b)(1), and Local Rule 83.50(a) (E.D. Mich.). This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(M) and 157(b)(2)(O).
This proceeding also is "core" because it falls within the definition of a proceeding "arising under title 11" and of a proceeding "arising in" a case under title 11, within the meaning of 28 U.S.C. § 1334(b). Matters falling within either of these categories in § 1334(b) are deemed to be core proceedings. See Allard v. Coenen (In re Trans–Industries, Inc. ), 419 B.R. 21, 27 (Bankr. E.D. Mich. 2009). This is a proceeding "arising under title 11" because it is "created or determined by a statutory provision of title 11," see id. ,including Bankruptcy Code § 363. And this is a proceeding "arising in" a case under title 11, because it is a proceeding that "by [its] very nature, could arise only in bankruptcy cases." See id. at 27.
Debtor Skymark Properties SPE, LLC ("SPE") owns three towers (Towers 100, 200, and 300) of a commercial office building located at 27100, 27200, and 27300 West Eleven Mile Road, Southfield, Michigan, containing approximately 537,605 square feet of rentable floor space. The commercial space in Tower 300 is fully occupied. Tower 100 is 46.20% occupied, and Tower 200 is only 9.79% occupied. The consolidated occupancy of all three towers collective is 42.36%.5 Stefanini, Inc. ("Stefanini"); Federal-Mogul Corporation ("Federal-Mogul"), n/k/a Tenneco, Inc. ("Tenneco"); and Sterling Food Services are three of the tenants of SPE. Stefanini occupies approximately 49,071 of rentable square feet in Tower 100, consisting of "3 entire floors, and a portion of [the] first floor of Tower 100[.]"6 Tenneco occupies 3,550 square feet on the first floor of Tower 100 and the corridor between Towers 200 and 300.7
Debtor Skymark Properties II LLC ("Skymark II") owns the fourth tower (Tower 400) of the commercial office complex. Tower 400 is located at 27350 West Eleven Mile Road, Southfield, Michigan, has no tenants, is unoccupied, and is not currently fit for occupation.
Skymark Properties Corporation ("SPC") is the sole member of each of the Debtors. Liberty and York Corporation ("L & Y") is the sole shareholder of SPC. L & Y has a single shareholder, but there is a dispute as to who is currently that shareholder. Laila Alizadeh ("Alizadeh") and Morteza Katebian a/k/a Ben Katebian ("Katebian") each allege to be the sole shareholder of L & Y.8
Pre-petition, the Debtors SPE and Skymark II (collectively, the "Debtors" or "Borrower") obtained a loan in the original principal amount of $ 17.35 million (the "Loan") from GreenLake Real Estate Fund LLC ("GreenLake").
In connection with the Loan, on December 30, 2016, the Debtors, by SPC, their sole member, and through SPC's authorized agent Katebian, signed a document entitled "Promissory Note Secured by Mortgage" (the "Promissory Note"),9 promising to repay the principal loan amount of $ 17.35 million at a fixed non-default interest rate of 11%, as well as other sums provided for in the Promissory Note, according to the terms of the Promissory Note.10 The Promissory Note provided for a balloon payment of the outstanding amounts due on the "Maturity Date" of December 31, 2019.11 The Promissory Note was "secured by a first priority Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing (the ‘Mortgage’) of [December 30, 2016] on the Property [as defined in the Promissory Note] and the other Loan Documents."12 "Property" was defined in paragraph 1.19 of the Promissory Note as follows:
The reference to "Tower 400 Funding" was a reference to a loan that Skymark II had obtained from Mercury Capital Funding LLC ("Mercury") "in the amount of $ 1,300,000" (the "Mercury Loan").14 SPE had guaranteed the Mercury Loan. On account of that loan, Tower 400 was encumbered, and "Mercury filed a UCC financing statement against the 100, 200, & 300 Towers."15 Out of the proceeds from the $ 17.35 million loan amount, "$ 1,300,000 [was] to be held back by Lender ... to be used to refinance the debt in favor of Mercury ...."16
Under the Promissory Note, the "Loan Documents" are:
The Promissory Note, in relevant part, required that Troy Wilson ("Wilson") "shall at all times be the employee of the [Debtors] or [their] affiliates who is principally responsible for the day to day management of [Towers 100-400]" and the Debtors' business operations.18 The Promissory Note also required that "SPC shall at all times own 100% of [the Debtors];" that "L & Y shall at all times own 100% of SPC;" and that "Morteza Katebian shall at all times own 100% of L & Y."19 SPC, L & Y and Katebian each personally guaranteed the amount due and other obligations of the Debtors under the terms of the Promissory Note, and they were all jointly and severally liable on such guaranty.20
The Promissory Note noted that one of the tenants of SPE—Federal-Mogul, had the right to reduce the percentage of the space it was leasing in Tower 100. It stated, in relevant part: "The lease with Federal-Mogul gives the tenant the option to relinquish up to 50% of the Premises in exchange for a termination fee of 24 months' rent for the space relinquished."21
"Upon an occurrence and during the continuance of an Event of Default" under the Promissory Note, GreenLake had the right, among other things, to "[d]eclare the total unpaid principal balance of the indebtedness evidenced [in the Promissory Note], together with all accrued but unpaid interest thereon and all other sums owing, immediately due and payable and all such amounts shall thereafter bear interest at the Default Rate."22
Paragraph 15 of the Promissory Note defined an "Event of Default." It stated:
To continue reading
Request your trial
-
Energy Conversion Devices Liquidation Trust v. Ovonyx, Inc. (In re Energy Conversion Devices, Inc.)
...an unpublished opinion, although the cases it cites, Henderson and Campbell , are published opinions. In re Skymark Properties II, LLC , 597 B.R. 363, 382 n.72 (Bankr. E.D. Mich. 2019), this Court explained that although unpublished Michigan appellate opinions are not binding precedent, the......
-
In re Wylie
...(In re Energy Conversion Devices, Inc. ), 621 B.R. 674, 714 n.138 (Bankr. E.D. Mich. 2020) (quoting In re Skymark Properties II, LLC , 597 B.R. 363, 382 n.72 (Bankr. E.D. Mich. 2019) ), Michigan courts may consider unpublished opinions as persuasive authority. See, e.g.,People v. Green , 26......
-
Soaring Pine Capital Real Estate & Debt Fund II, LLC v. Park St. Grp. Realty Servs., LLC
...federal bankruptcy court sitting in Detroit came to the same conclusion under similar circumstances in In re Skymark Properties II, LLC , 597 B.R. 363 (Bankr. E.D. Mich, 2019). There, an allegation was made that a promissory note contained an unlawful interest rate because, when combined, t......
-
Michigan Adopts Its Version Of The Uniform Assignment Of Rents Act
...an assignment of rents is only created if a mortgage or separate agreement grants one. Footnotes 1. In re Skymark Properties II, LLC, 597 B.R. 363 (Bankr. E.D. Mich. 2. Public Act No. 155 of 2022. The MUARA takes effect September 22, 2022. 3. The Uniform Law Commission proposes legislation ......