Trinity Place Argues Bankrupt Clothing Store Syms Not Responsible To Pay Rent

by Tara Arick on April 17, 2013 · 0 comments

in Bankruptcy

- From LexisNexis® Mealey’s™ Daily Legal News.

Trinity Place Holdings Inc., an entity formed out of bankrupt Syms Corp., on April 11 filed a brief in the U.S. Bankruptcy Court for the District of Delaware, arguing that Syms should not be required to pay rent on various buildings based on the wording of the leases (In Re: Filene’s Basement LLC, No. 11-13511, Chapter 11, D. Del. Bkcy.).

Filene’s Basement LLC filed for Chapter 11 bankruptcy in 2011. As an affiliate of Filene’s, Syms entered bankruptcy at the same time.

Reconsideration Sought

On March 5, Trinity Place Holdings Inc., f/k/a Syms, moved for reconsideration of a Bankruptcy Court’s ruling that Syms was responsible for rent on a property in connection with a loan tied to a mortgage-refinancing deal.

Trinity maintains that the type of mortgage involved does not obligate Syms to pay rent.

On Feb. 9, the Bankruptcy Court ruled that Syms was obligated to pay a percentage of rent on a property in Rockville, Md., in connection with a mortgage-refinancing deal that Syms argues is more appropriately characterized as a bridge loan.

The $ 10 million loan and mortgage were part of a corporate finance or asset-based loan transaction, which, Syms maintains, is “precisely how Bank of America viewed it.”

Syms contends that the Bankruptcy Court erred in its ruling because it did not consider whether the mortgage was a refinancing as required by the plain language of the lease. In fact, Syms argues that the mortgage was not a refinancing.

Refinancing

Trinity argues in its current brief that the term “refinancing” as described by Syms and as commonly understood, is consisting with the letter and spirit of the ground lease.

Furthermore, Trinity argues that Syms’ interpretation of “permanent mortgage refinancing” is the only one that both accounts for all of the actual words used by the drafters of the ground lease and is consistent with the trade usage of those words in the commercial real estate and commercial real estate finance industries.

Trinity argues that Syms is entitled to reconsideration because the Bankruptcy Court’s decision was erroneous.

Filene’s is represented by Mark S. Chehi, Jay Goffman, Nancy Lieberman, Morris Kramer and Mark McDermott of Skadden Arps Slate Meagher & Flom in Wilmington. Syms is represented by Michael R. Lastowski of Duane Morris in New York. Trinity is represented by Sean M. Beach, John T. Dorsey, Curtis J. Crowther, Patrick A. Jackson and Ashley E. Markow of Young Conaway Stargatt & Taylor in Wilmington.

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