Case JMC-7A Doc 3202 Filed 02/04/19 EOD 02/04/19 09:33:27 Pg 1 of 13

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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF INDIANA

Indianapolis Division )

In Re: ITT Technical Services, Inc., ) Case No. 16-07207-JMC-7A ) Chapter 7 Proceeding

Debtor. ) )

REQUEST AND APPLICATION OF CATHERINE STREET ASSOCIATES, LLC FOR ALLOWANCE AND PAYMENT OF AN ADMINISTRATIVE EXPENSE CLAIM

PURSUANT TO 11 U.S.C. §§ 365(d)(3) AND 503(b)(1)

Catherine Street Associates, LLC (“Landlord”), by and through its undersigned counsel, hereby files this request for allowance and application for payment of an administrative expense claim (this “Application”), pursuant to sections 365(d)(3) and 503(b)(1) of title 11 of the United States Code §§ 101, et seq. (the “Bankruptcy Code”), related to post-petition, pre-rejection rent owed to Landlord. In support of this Application, Landlord respectfully states as follows:

JURISDICTION

1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334. 2. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A).

3. Venue in this Court is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

4. The statutory predicates for the relief sought in this Motion are sections 105, 365, 503, and 507 of the Bankruptcy Code.

BACKGROUND A. The Lease

5. Landlord is the owner of that certain commercial real property located at 300 Gateway Centre Parkway, Richmond, Virginia, at which Debtor ITT Educational Services, Inc. Case 16-07207-JMC-7A Doc 3202 Filed 02/04/19 EOD 02/04/19 09:33:27 Pg 1 of 13

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(the “Debtor”) leased space (the “Leased Premises”) under the terms of that certain Commercial Lease most recently dated February 9, 2016 (as the same may have been amended from time to time, the “Lease”). A true and correct copy of Lease and all attachments thereto are attached hereto as Exhibit A and incorporated herein by reference in their entirety.

6. Pursuant to the terms of the Lease, the Debtor agreed to make monthly rent payments to the Landlord by the tenth day of each month (the “Rent”). At all times relevant hereto, the Rent was $29,875.00 per month. If the Rent is not received within five (5) business days after written notice is given, the Landlord may assess a five percent (5%) late charge (the “Late Charges”).

7. From the inception of the Lease, the Debtor enjoyed the uninterrupted use and occupancy of the Leased Premises.

B. The Bankruptcy Case

8. On September 16, 2016 (the “Petition Date”), the Debtor, along with certain of its affiliates and subsidiaries, filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Indiana.

9. Also on September 16, 2016, the Office of the United States Trustee appointed Deborah J. Caruso as the Chapter 7 Trustee (the “Trustee”) of the Debtor’s estate.

10. On November 7, 2016, the Court entered an Order [574], inter alia, (i) rejecting the Lease effective as of October 31, 2016 (the “Rejection Date”), and (ii) extending the Trustee’s time for performance under the Lease until November 15, 2016 (i.e., 60 days from the Petition Date).

11. As of November 15, 2016 (and through the date of this Application), the Trustee has not performed any of the Debtor’s obligations arising under the Lease from the Petition Date through and including the Rejection Date, as discussed below.

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C. The Administrative Expense Claim

12. Notwithstanding the Trustee’s exclusive use and occupancy of the Leased Premises from the Petition Date through and including the Rejection Date, Landlord has not received payment of any of the Rent owed to it for that time period.

13. As a result, Landlord has incurred damages totaling $47,052.25, comprised of the following amounts:

a. Rent in the amount of $14,937.50 for the period of September 16, 2016 (the Petition Date), to September 30, 2016;1

b. Late Charges for unpaid September 2016 Rent (for the stub rent period) totaling $746.00;2

c. Rent in the amount of $29,875.00 for the period of October 1, 2016, to October 31, 2016 (the Rejection Date);

d. Late Charges for unpaid October 2016 Rent totaling $1,493.75.

The foregoing amounts are collectively referred to as the “Post-Petition/Pre-Rejection Lease Obligations”.

RELIEF REQUESTED

14. By this Application, Landlord respectfully requests entry of an Order allowing and directing that the Trustee pay the Post-Petition/Pre-Rejection Lease Obligations due and owing under the Lease pursuant to section 365(d)(3) and 503(b)(1) of the Bankruptcy Code.

BASIS FOR THE RELIEF REQUESTED A. Section 365(d)(3)

15. Section 365(d)(3) of the Bankruptcy Code provides, in relevant part, t h a t : The trustee shall timely perform all the obligations of the debtor…arising from and after the order

1_{This amount was calculated by determining the} _{per diem} _{amount of the Rent for September 2016}

($29,875/30 days = $995.83). That per diem amount was multiplied by the number of post-petition days in September 2016 (15), which equals $14,937.50.

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for relief under any unexpired lease of nonresidential real property, until such lease is assumed or rejected[.] 11 U.S.C. § 365(d)(3) (emphasis added).

16. In the Seventh Circuit, “obligations under an unexpired lease that arise after an order for relief is entered permitting the bankruptcy case to proceed (commonly referred to as arising ‘post-petition’), and prior to rejection of the lease (‘prerejection’), are to be timely fulfilled under the terms of the lease.” HA-LO Indus. v. CenterPoint Props. Tr., 342 F.3d 794, 798 (7th Cir. 2003).

17. As the Seventh Circuit has held, the policy behind section 365(d)(3) of Bankruptcy is “to relieve landlords of the uncertainty of collecting rent fixed in the lease ‘in full, promptly, and without legal expense’ during the awkward post-petition prerejection period.” Id. at 799 (citation omitted).

18. Just as in HA-LO Industries, the Post-Petition/Pre-Rejection Lease Obligations for the period of October 1, 2016, through and including October 31, 2016, arose under the Lease between the Petition Date and the Rejection Date. However, in violation of section 365(d)(3) of the Bankruptcy Code, the Trustee did not pay those amounts as they came due (nor did she pay them on November 15, 2016—i.e., the extended deadline for performance).

19. Likewise, this Court has held that landlords may assert claims for “stub rent” under sections 365(d)(3) and 503(b)(1) of the Bankruptcy Code. See, e.g., In re Trinat Health Care, Inc., No. 02-06360-JKC-11, 2002 Bankr. LEXIS 1900, at *10 (U.S. Bankr. S.D. Ind. June 5, 2002) (entering order compelling immediate payment of prorated rent owed for post-petition period of month following petition date). As that Court noted, “the proper focus of the Court’s § 365(d)(3) inquiry is on when the services in question are rendered to and benefit the estate, not the date when the debtor is first billed for them.” Id.

2_{This is five percent (5%) of $20,714.86.}

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20. Except that Trinat Health Care involved a Chapter 11 debtor in possession, it is otherwise analogous to this case as both the debtor in Trinat Health Care and the Debtor here filed their bankruptcy petitions midway through the month. The Trinat Health Care Court awarded the landlord the immediate payment of rent for the period from the petition date to the end of the month. Although Landlord does not seek “immediate” payment, Landlord is entitled to allowance and payment of the unpaid September 2016 Rent and related charges (i.e., the “stub rent”) that arose under the Lease between the Petition Date and September 30, 2016.3

21. Accordingly, pursuant to section 365(d)(3) of the Bankruptcy Code, Landlord requests entry of an Order allowing and directing that the Trustee pay the Post-Petition/Pre-Rejection Lease Obligations due and owing under the Lease from the Petition Date through and including the Rejection Date.

B. Section 503(b)(1)

22. Alternatively, section 503(b)(1)(A) of the Bankruptcy Code provides, in relevant part, that:

After notice and a hearing, there shall be allowed administrative expenses, other than claims allowed under section 502(f) of this title, including . . . the actual, necessary costs and expenses of preserving the estate . . . .

11 U.S.C. § 503(b)(1)(A).

23. Landlord is entitled to an administrative expense claim because the Post- Petition/Pre-Rejection Lease Obligations have preserved the Debtor’s estate for the benefit of all creditors and parties in interest. Specifically, from the Petition Date through and including the Rejection Date, Landlord, among other things: (i) safeguarded sensitive business records of the

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While Landlord does not seek “immediate” payment of the Post-Petition/Pre-Rejection Lease Obligations, to the extent the Application is granted, Landlord seeks prompt payment upon the Trustee’s good faith determination that the Debtor’s estate has sufficient funds to pay administrative claims.

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Debtor; (ii) allowed the Debtor’s professional to access the Leased Premises to value the personal property and remove the Debtor’s sensitive business records; and (iii) preserved the Debtor’s interest in certain personal property. All of the foregoing benefitted the Debtor’s estate to the detriment of Landlord by the Trustee’s failure to pay the Post-Petition/Pre-Rejection Lease Obligations.

24. Accordingly, pursuant to section 503(b)(1) of the Bankruptcy Code, Landlord requests entry of an Order allowing and directing that the Trustee pay the Post-Petition/Pre- Rejection Lease Obligations due and owing under the Lease from the Petition Date through and including the Rejection Date.

25. The deadline for filing Applications for allowance and payment of administrative expense claims was originally set for January 30, 2017 (the “Admin Claim Deadline”). Pursuant to this Court’s ruling on January 30, 2019, Landlord has been granted an extension of the Admin Claim Deadline to February 6, 2019. Accordingly, this Application is timely filed. In further support of this Application, Landlord submits herewith the affidavit of Gary W. McDowell attached hereto as Exhibit B.

NOTICE IS GIVEN, that pursuant to the Case Management Procedures, any objection to this motion must be in writing and filed with the Bankruptcy Clerk by no later than 4:00 p.m. (prevailing Eastern Time) on March 13, 2019. Those not required or not permitted to file

electronically must deliver any objection by U.S. mail, courier, overnight/express mail or in person at:

116 U.S. Courthouse 46 East Ohio Street Indianapolis, IN 46204

The objecting party must also serve a copy of the written objection upon the Trustee’s counsel, at Counsel for Trustee Deborah J. Caruso, Rubin & Levin, P.C., 135 N. Pennsylvania Street, Suite 1400, Indianapolis, IN 46204. If an objection is NOT timely filed, the requested relief may be granted without a hearing.

NOTICE IS FURTHER GIVEN that in the event an objection to this motion is timely Case 16-07207-JMC-7A Doc 3202 Filed 02/04/19 EOD 02/04/19 09:33:27 Pg 6 of 13

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filed, a hearing on this motion and such objection will be conducted on March 20, 2019 at 1:30 p.m. (prevailing Eastern time), in Room 325 of the United States Courthouse, 46 East Ohio Street, Indianapolis, IN 46204.

WHEREFORE, Landlord respectfully requests the entry of an Order: (a) allowing an administrative expense claim in favor of Landlord in the amount of $47,052.25; (b) directing prompt payment of such claim upon the Trustee’s good faith determination that the Debtor’s estate has sufficient funds to pay administrative claims; and (c) granting such other and further relief as the Court deems just and proper.

Dated: February 4, 2019 Respectfully submitted,

CATHERINE STREET ASSOCIATES, LLC

By:/s/ George W. Hopper George W. Hopper, Esq. Michael W. McBride Cohen & Malad, LLP

One Indiana Square, Suite 1400 Indianapolis, IN 46204

Counsel for Catherine Street Associates, LLC Case 16-07207-JMC-7A Doc 3202 Filed 02/04/19 EOD 02/04/19 09:33:27 Pg 7 of 13

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CERTIFICATE OF SERVICE

I hereby certify that on February 4, 2019 a copy of the foregoing was filed electronically. Pursuant to Section IV.C.3(a) of the Case Management Procedures, notice of this filing will be sent to the following parties through the Court’s Electronic Case Filing system. Parties may access this filing through the Court’s system.

John Joseph Allman: [email protected], [email protected] Robert N Amkraut: [email protected]

Scott S. Anders: [email protected], [email protected] Manuel German Arreaza: [email protected]

Todd Allan Atkinson: [email protected] Darren Azman: [email protected]

Joseph E Bain: [email protected]

Kay Dee Baird: [email protected], [email protected];[email protected] Michael I. Baird: [email protected], [email protected]

Christopher E. Baker: [email protected], [email protected]

James David Ballinger: [email protected], [email protected] Joseph E. Bant: [email protected]

William J. Barrett: [email protected], [email protected]

Ashley Flynn Bartram: [email protected], [email protected] Alex M Beeman: [email protected], [email protected] Thomas M Beeman: [email protected]

Richard James Bernard: [email protected]

John J Berry: [email protected], [email protected] Brandon Craig Bickle: [email protected]

Robert A. Breidenbach: [email protected]

Wendy D. Brewer: [email protected], [email protected] Kayla D. Britton: [email protected], [email protected] Jason R Burke: [email protected], [email protected]

Erin Busch: [email protected]

Kevin M. Capuzzi: [email protected], [email protected];[email protected] James E. Carlberg: [email protected],

[email protected];[email protected] Steven Dean Carpenter: [email protected]

Deborah Caruso: [email protected], [email protected];jkrichbaum@rubin- levin.net; [email protected]

Deborah J. Caruso: [email protected], [email protected] Joshua W. Casselman: [email protected], angie@rubin-

levin.net;[email protected]

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6 Ben T. Caughey: [email protected] Sonia A. Chae: [email protected]

John Andrew Chanin: [email protected], [email protected] Eboney Delane Cobb: [email protected]

Michael Edward Collins: [email protected]

Michael Anthony Collyard: [email protected], [email protected] Eileen Connor: [email protected]

Lawrence D. Coppel: [email protected]

Heather M. Crockett: [email protected],

[email protected];[email protected];[email protected] J Russell Cunningham: [email protected], [email protected]

David H DeCelles: [email protected]

Dustin R. DeNeal: [email protected], [email protected] Laura A DuVall: [email protected], [email protected] Henry A. Efroymson: [email protected]

Abby Engen: [email protected], [email protected] Annette [email protected]

Charles Anthony Ercole: [email protected], [email protected] Carolyn Meredith Fast: [email protected]

Elaine Victoria Fenna [email protected] Andrew W Ferich: [email protected]

Patrick F.X. Fitzpatrick: [email protected],

[email protected];[email protected];[email protected];mdabio@benes chlaw.com

John David Folds: [email protected], [email protected] Jennifer N Fountain: [email protected], [email protected]

Sarah Lynn Fowler: [email protected], [email protected] Lydia Eve French: [email protected]

Jonathan William Garlough: [email protected], [email protected];[email protected] Robert P Goe: [email protected]

Douglas Gooding: [email protected]

John Andrew Goodridge: [email protected], [email protected];[email protected] Michael Wayne Grant: [email protected]

Alan Mark Grochal: [email protected]

Gregory Forrest Hahn: [email protected], [email protected]

Julian Ari Hammond: [email protected], [email protected] Wallace M Handler: [email protected], [email protected]

Adam Craig Harris: [email protected] Brian Hauck: [email protected]

Jeffrey M. Hawkinson: [email protected], [email protected] Claude Michael Higgins: [email protected]

Michael W. Hile: [email protected], [email protected] Sean M Hirschten: [email protected]

Robert M. Hirsh: [email protected]

John C. Hoard: [email protected], jkrichbaum@rubin- levin.net;[email protected]

Andrew E. Houha: [email protected]

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James C Jacobsen: [email protected], [email protected]

Christine K. Jacobson: [email protected], [email protected] Jay Jaffe: [email protected], [email protected]

Benjamin F Johns: [email protected], [email protected] Russell Ray Johnson: [email protected]

Kenneth C. Jones: [email protected]

Anthony R. Jost: [email protected], [email protected] Timothy Q. Karcher t: [email protected]

John M. Ketcham: [email protected], [email protected] Taejin Kim: [email protected]

Edward M King: [email protected], [email protected];[email protected] Roy F. Kiplinger: [email protected], [email protected] James A. Knauer: [email protected], [email protected]

Kevin Dale Koons: [email protected], [email protected] Harris J. Koroglu: [email protected], [email protected] Lawrence Joel Kotler : [email protected]

Robert R Kracht: [email protected]

Andrew L. Kraemer: [email protected], [email protected] David R. Krebs: [email protected], [email protected]

Jerrold Scott Kulback: [email protected] Jay R LaBarge: [email protected]

Vilda Samuel Laurin: [email protected] Jordan A Lavinsky: [email protected]

David S Lefere: [email protected], [email protected] Martha R. Lehman: [email protected], [email protected]; [email protected];[email protected]

Gary H Leibowitz: [email protected],

[email protected];[email protected] Donald D Levenhagen: [email protected] Elizabeth Marie Little: [email protected]

Melinda Hoover MacAnally : [email protected], [email protected];[email protected] Christopher John Madaio: [email protected]

John A. Majors: [email protected], [email protected] Steven A. Malcoun: [email protected]

Jonathan Marshall: [email protected]

Thomas Marvin Martin: [email protected] Jeff J. Marwil: [email protected],

[email protected]; [email protected]; [email protected] Richard J Mason: [email protected]

Patrick Francis Mastrian: [email protected], [email protected]

Ann Wilkinson Matthews: [email protected] Rachel Jaffe Mauceri: [email protected]

Michael K. McCrory: [email protected], [email protected] Maureen Elin McOwen: [email protected]

Harley K Means: [email protected], [email protected];[email protected];[email protected] Toby Case 16-07207-JMC-7A Doc 3202 Filed 02/04/19 EOD 02/04/19 09:33:27 Pg 10 of 13

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Merrill: [email protected], [email protected], [email protected] Robert W. Miller: [email protected]

Thomas E Mixdorf : [email protected], [email protected] Evgeny Grigori Mogilevsky: [email protected], [email protected]

James P Moloy: [email protected], [email protected]; [email protected]

Ronald J. Moore:[email protected] Hal F Morris: [email protected]

Michael David Morris: [email protected]

Kevin Alonzo Morrissey: [email protected], soliver@lewis- kappes.com;[email protected];[email protected]

Whitney L Mosby: [email protected], [email protected];[email protected] C Daniel Motsinger: [email protected], [email protected];

[email protected]; [email protected] Lee Duck Moylan: [email protected], [email protected] Abraham Murphy: [email protected]

Justin Scott Murray: [email protected]

Alissa M. Nann: [email protected], [email protected] Henry Seiji Newman: [email protected]

Kevin M. Newman: [email protected], [email protected]

Cassandra A. Nielsen: [email protected], [email protected], lking@rubin- levin.net

Ryan Charles Nixon: [email protected] Kathryn Elizabeth Olivier: [email protected], [email protected]; [email protected]

Gregory Ostendorf: [email protected], [email protected] Pamela A. Paige: [email protected], [email protected] Danielle Ann Pham: [email protected]

Zachary David Price: [email protected] Jack A Raisner: [email protected]

Jonathan Hjalmer Reischl: [email protected] James Leigh Richmond [email protected] Melissa M. Root [email protected]

David A. Rosenthal [email protected]

James E Rossow [email protected], [email protected];robin@rubin- levin.net;[email protected]

Rene Sara Roupinian [email protected],

[email protected];[email protected];[email protected];rfisher@ou ttengolden.com;[email protected]

Victoria Fay Roytenberg [email protected], [email protected] Steven Eric Runyan [email protected]

Craig Damon Rust [email protected], [email protected] Karl T Ryan [email protected], [email protected]

Joseph Michael Sanders [email protected]

Thomas C Scherer [email protected], [email protected]

James R. Schrier [email protected], [email protected];[email protected] Ronald James Schutz [email protected]

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7 H. Jeffrey Schwartz [email protected] Courtney Michelle Scott [email protected]

Joseph E Shickich [email protected], [email protected] William E Smith [email protected], [email protected]

Lauren C. Sorrell [email protected], [email protected];[email protected] Catherine L. Steege [email protected], [email protected];[email protected] Jesse Ellsworth Summers [email protected], [email protected]

Jonathan David Sundheimer [email protected]

Nancy K. Swift [email protected], [email protected] Eric Jay Taube [email protected],

[email protected];[email protected]

Meredith R. Theisen [email protected], [email protected];mcruser@rubin- levin.net

Meredith R. Theisen [email protected], [email protected];[email protected] Jessica L Titler [email protected]

Todd Christian Toral [email protected], [email protected] Ronald M. Tucker [email protected], [email protected],[email protected] U.S. Trustee [email protected]

Michael Ungar [email protected]

Sally E Veghte [email protected], [email protected] Rachel Claire Verbeke [email protected]

Amy L VonDielingen [email protected] Carolyn Graff Wade [email protected] Louis Hanner Watson [email protected] Jeffrey R. Waxman [email protected], [email protected];[email protected] Christine M.H. Wellons [email protected]

Philip A. Whistler [email protected], [email protected] Bradley Winston [email protected], [email protected] Brandon Michael Wise [email protected]

Cathleen Dianne Wyatt [email protected], [email protected] Joseph Yar [email protected], [email protected]

James T Young [email protected], lking@rubin- levin.net;[email protected];[email protected] James E. Zoccola [email protected]

I further certify that February 4, 2019, pursuant to Section IV.C.3(c) of the Case management procedures, a copy of the foregoing was emailed to the following:

Arlington ISD/Richardson ISD: Eboney Cobb at [email protected] CEC Red Run, LLC: Alan M. Grochal at [email protected] SWRE Deal V Building, LLC: Paul Weiser at [email protected]

Tarrant County/Dallas County: Elizabeth Weller at [email protected] Northwest Natural Gas Company: Ashlee Minty at [email protected]

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Solar Drive Business, LLC: Chris W. Halling at [email protected] Market-Turk Company: Jordan A. Lavinsky at

[email protected]

Taxing Authority for Harris County, Texas: John P. Dillman at [email protected] Texas Comptroller of Public Accounts: Rachel Obaldo at [email protected]

Clear Creek Independent School District: Carl O. Sandin at [email protected]

Synchrony Bank: Recovery Management Systems Corporation at [email protected] Bexar County: Don Stecker at [email protected]

SWRE Deal V Building, LLC: Nancy K. Swift at [email protected] TN Dept. of Revenue: Michael Willey at [email protected]

Florida Department of Education: Benman D. Szeto at [email protected] Last Second Media, Inc.: T. Todd Egland at [email protected]

Hung Duong: Kevin Schwin at [email protected]

Travis County: Kay D. Brock at [email protected] Able Building Maintenance: Scott D. Fink at

[email protected] Marathon Ventures, LLC: Daniel M. Karger at [email protected]

Oklahoma County Treasurer: Tammy Jones at [email protected] JM Partners LLC: John Marshall at [email protected]

/s/ George W. Hopper

COHEN & MALAD, LLP One Indiana Square, Suite 1400 Indianapolis, Indiana 46204 Ph: 317-636-6481

Fx: 317-636-2593

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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF INDIANA

Indianapolis Division )

In Re: ITT Technical Services, Inc., ) Case No. 16-07207-JMC-7A ) Chapter 7 Proceeding

Debtor. ) )

AFFIDAVIT OF GARY W. MCDOWELL IN SUPPORT OF

REQUEST AND APPLICATION OF CATHERINE STREET ASSOCIATES, LLC FOR ALLOWANCE AND PAYMENT OF AN ADMINISTRATIVE EXPENSE CLAIM

PURSUANT TO 11 U.S.C. §§ 365(d)(3) AND 503(b)(1) COMMONWEALTH OF VIRGINIA

CITY OF RICHMOND, to wit:

This day appeared personally before me, a Notary Public in and for the City of Richmond in the Commonwealth of Virginia, Gary W. McDowell, who, after being duly sworn stated as follows:

1. That he, Gary W. McDowell, is the manager of Catherine Street Associates, LLC, authorized to act on behalf of the company.

2. That he, Gary W. McDowell, is knowledgeable of and has reviewed the allegations and facts contained in the accompanying Request and Application of Catherine Street Associates, LLC for Allowance and Payment of Administrative Expense Claim Pursuant to 11 U.S.C. §§365(d)(3) and 503(b)(1) (the “Application”).

3. That the Lease, with all amendments, attached to the Application as Exhibit A is a true, accurate and complete copy of the Lease upon which the Application is based.

4. That the amounts set forth in the Application for unpaid Rent due to Catherine Street Associates, LLC are accurate and remain unpaid.

5. That he, Gary W. McDowell, believes that the allegations and facts contained in the Application are true and accurate, and that he is an authorized representative of Catherine Street Associates, LLC.

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By:

SUBSCRIBED AND SWORN before me

this

day

of

MeDo'well, as manager of Catherine Street .Associates]fC. My commission expires:

Commission Number:

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Gary

February

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Gary W.

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