Case 24-14779-CMG Doc 52 Filed 08/16/24 Entered 08/16/24 10:13:29 Desc Main

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UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEW JERSEY
Caption in Compliance with D.N.J. LBR 9004-2(c)
GENOVA BURNS LLC
110 Allen Road, Suite 304
Basking Ridge, NJ 07920
Phone: (973) 467-2700
Counsel for Robert H. Sickles
DANIEL M. STOLZ, ESQ.
JEFFREY R. RICH, ESQ.
DONALD W. CLARKE, ESQ.
JACLYNN N. McDONNELL, ESQ.
dstolz@genovaburns.com
jrich@genovaburns.com
dclarke@genovaburns.com
jmcdonnell@genovaburns.com

Case No.: 24-14781

In re:
Judge: Hon. Christine M. Gravelle
ROBERT H. SICKLES,
Chapter 11
Debtor-in-Possession.
In re: Case No.: 24-14779

AHS REALTY LLC, Judge: Hon. Christine M. Gravelle

Debtor-in-Possession. Chapter 11

DEBTORS’ MOTION FOR AUTHORITY TO EXECUTE AND PERFORM

UNDER MEMORANDUM OF UNDERSTANDING AND RELATED AGREEMENTS

Robert H. Sickles (“Robert”) and AHS Realty LLC (“AHS”) (collectively, the “Debtors”),

by and through their counsel, Genova Burns LLC, hereby move before this Court as follows:

1. The Debtors filed separate Chapter 11 Petitions on May 9, 2024 (the “Petition

Date”). The Debtors have remained in control and possession of their assets as Debtors-in-

Possession since the Petition Date.

2. The Debtors have moved to administratively consolidate their Chapter 11 cases.

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3. Robert is married to Leslie S. Sickles, a non-debtor with whom he owns the

property at 4 Heathcliff Road, Rumson, New Jersey (the “Rumson Property”) as tenants by the

entirety.

4. Robert is the sole owner of AHS. AHS is the owner of real property and

improvements located at 1 Harrison Avenue, Little Silver, New Jersey (the “Little Silver

Property”). The Little Silver Property consists of approximately 6 acres, which houses the Sickles

Market and vacant land. The Little Silver Property is zoned as residential. The Little Silver

Property was acquired by the Parker family in 1663, as a result of a land grant from the King of

England. Peter Parker later moved to the Little Silver area and married into the Sickles family.

The Sickles family has owned the property continuously since such time.

5. The Sickles Market in Little Silver had been operated by the Sickles family for 116

years.

6. Because of the Debtors’ financial difficulties, which are detailed in the Certification

of Robert H. Sickles in support of Chapter 11 filing [Docket #7], the Sickles Market was forced to

close earlier this year.

7. Robert owns a single family house, bordered on three sides by the Little Silver

Property, located at 5 Harrison Avenue, Little Silver, New Jersey (hereinafter, “5 Harrison”).

8. Once the Debtors’ financial difficulties became public, the Debtors began to receive

inquiries from parties interested in both purchasing the Sickles Market and developing the Little

Silver Property. The Debtors and their professionals have entertained discussions with numerous

prospective purchasers.

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9. Several of the prospective purchasers have communicated with the Town of Little

Silver with regard to potential development of the Little Silver Property and the reopening of the

Sickles Market.

10. Two of the potential purchasers have also communicated with the Debtors’ primary

secured creditor, Northfield Bank, and its counsel.

11. Each of the prospective purchasers/plan proponents with whom the Debtors have

conducted discussions have indicated that reopening of the Sickles Market will enhance the value

of the Little Silver Property. Each of the prospective purchasers have also indicated that the 5

Harrison house should be knocked down and that land used as part of the residential development.

12. All of the prospective purchasers/plan proponents have recognized that

development of the Little Silver Property will require certain approvals from the Town of Little

Silver, to maximize the value of the Property. Because of the Township’s need to comply with

affordable housing laws, there may be public resistance to these zoning approvals. Although this

process might take some time, the Debtors, their professionals and the prospective purchasers/plan

proponents are all confident that the approvals will be ultimately obtained.

Claims Against the Debtors

13. Northfield Bank (“Northfield”) holds a lien on substantially all of the Debtors’

assets to secure a claim of approximately $5.3 million. Specifically, Northfield holds a mortgage

on the Rumson Property, a mortgage on the Little Silver Property, and a lien on all of the assets of

the Sickles Market.

14. Bluestone Capital, a merchant lender to the Sickles Market, holds a mortgage on

the 5 Harrison Property to secure a claim of approximately $532,000.00.

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15. Robert is personally responsible for unpaid sales taxes of approximately

$800,000.00, certain claims related to merchant cash advances totaling approximately $1.3

million, wage claims of approximately $300,000.00, and claims of approximately $150,000.00

related to personally guaranteed debt. Robert and his wife are guarantors on certain leases relating

to the operation of a market and liquor store in Red Bank, New Jersey.

16. In addition to the foregoing, real estate taxes are accruing and unpaid on the

Properties.

The Memorandum of Understanding

17. On or about June 5, 2024, counsel for the Debtors were contacted by a

representative of a private investment group, 1663 Partners LLC (“1663”) to discuss a potential

transaction with the Debtors that could include a plan of reorganization sponsorship.

18. Since early June, the Debtors and their professionals have met with 1663, both in

person and electronically, on numerous occasions.

19. After the principals of 1663 (Jennifer Griffin Karp, Dennis S. Devine, and Timothy

J. McCooey) executed NDAs, the Debtors provided substantial due diligence material to 1663.

20. 1663 has indicated, from the outset, its desire to not only develop the Little Silver

Property, but also to reopen the Sickles Market. 1663 has also recognized the value of Robert, his

daughters, and certain employees in not only the development of the Little Silver Property, but the

future operations of the Little Silver Market.

21. After extensive discussion and negotiation, the Debtors and 1663 have agreed upon

a Memorandum of Understanding (the “MOU”), a copy of which is annexed hereto as Exhibit

“A”.

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22. The MOU has been signed by both 1663 and certain non-debtor members of the

Sickles family. By way of the within motion, the Debtors seek authority from this Court to execute

and perform under the MOU and certain related agreements.

23. Paragraph 2 of the MOU provides that 1663 will act as a chapter 11 plan sponsor

in the Debtors’ cases and will contribute the cash necessary to confirm chapter 11 plans in these

cases.

24. Under the plans, the Debtors’ assets will be transferred to certain new companies

which will own the Sickles Market, the Little Silver Property, 5 Harrison, and the Rumson

residence.

25. The MOU requires that Robert, his two daughters, and a former employee of the

Sickles Market (collectively, the “Critical Employees”) execute employment contracts with the

new companies.

26. In recognition of the value the Critical Employees can bring to the new companies,

the MOU contemplates (a) the opportunity for them to earn salary, benefits, and in certain cases,

limited (less than 5%) minority interest in the new companies; and (b) that one such benefit will

be that Robert and his wife, Leslie, may reside in the Rumson Property, without having to pay cash

rent, for a period of time and provides them with an option to repurchase the Rumson Property.

27. Should this Court authorize the Debtors to execute and perform under the MOU,

the Debtors will work with 1663 and the Critical Employees to execute a more detailed plan term

sheet (the “PSA”) and then to file and seek to confirm one or more Chapter 11 plans of

reorganization (collective, the “Plan”) in these cases.

28. The Debtors are confident that the Plan will provide for treatment that will be

accepted by the vast majority of their creditors.

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29. The MOU provides that the Debtors will work exclusively, subject to certain

conditions with 1663 on the Plan.

30. Both the Debtors and 1663 have spent an extraordinary amount of time and expense

working towards execution of the MOU and the plans of reorganization to be filed in these cases.

31. The Debtors respectfully submit that the entry of an Order authorizing the Debtors

to execute and perform under the MOU and Related Agreements is in the best interest of creditors

and these Bankruptcy Estates and will lead to confirmation of a Plan in these cases.

32. The Debtors respectfully submit that entering into the MOU is an exercise of the

Debtors’ prudent business judgment. The Debtors believe that entering into the MOU will

potentially facilitate the swift confirmation of a Plan of Reorganization in this case.

33. It has long been the law in this circuit, that the courts should defer to the Debtors’

business judgment. Univ. Med. Ctr. v. Sullivan (In re Univ. Med. Ctr.) 973 F.2d 1065, 1075 (3rd

Cir. 1992).

34. The Courts have uniformly given great deference to the Debtors’ business

decisions. See e.g. In re Immune Pharma, Inc., 635 B.R. 118 (Bankr. D.N.J. 2021); In re Armstrong

World Indus., Inc., 348 B.R. 136, 162 (Bankr. D. Del. 2006); In re Wheeling-Pittsburgh Steel

Corp., 72 B.R. 845, 840 (Bankr. W.D. Pa. 1987); Lubrizol Enters., Inc. v. Richmond Metal

Finishers, Inc., 756 F.2d 1043, 1047 (4th Cir. 1985).

35. It should be noted that should this Court authorize the Debtors to enter into the

MOU and perform thereunder, the Debtors will still need to bring before this Court for approval

any disclosure statement, and any plan of reorganization. Authorizing the Debtors to enter into the

MOU is merely the first step in a process which hopefully will lead to confirmation of a Plan of

Reorganization in these cases.

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WHEREFORE, the Debtors respectfully request the entry of the Order submitted

herewith, authorizing the Debtors to execute the MOU with 1663, to perform thereunder, and to

execute and perform under the Related Agreements, together with such other and further relief as

is just and equitable.

Respectfully submitted,

GENOVA BURNS LLC

Counsel for Debtors-in-Possession

By: /s/ Daniel M. Stolz

DANIEL M. STOLZ
Dated: August 16, 2024