UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN...

UNITED STATES BANKRUPTCY COURTFOR THE SOUTHERN DISTRICT OF NEW YORK

In re:

BICOM NY, LLC, et al.,1

Debtors.

))))))

Chapter 11

Case No. 17-11906 (MEW)

Hearing Date: August 15, 2017, 10:00 a.m.

Response Deadline: August 8, 2017, 4:00 p.m.

NISSAN MOTOR ACCEPTANCE CORPORATION’S MOTION FOR RELIEF FROMTHE AUTOMATIC STAY PURSUANT TO 11 U.S.C. § 362 AND FEDERAL RULE OF

BANKRUPTCY PROCEDURE 4001 AND FOR RELATED RELIEF

Nissan Motor Acceptance Corporation (“NMAC”), by and through its undersigned

counsel, McElroy, Deutsch, Mulvaney & Carpenter, LLP, submits this Motion for an Order

Granting Relief from the Automatic Stay (the “Motion”), and states as follows:

JURISDICTION

1. The Court has jurisdiction to hear this matter pursuant to 28 U.S.C. §§ 157 and

1334. This matter is a “core” proceeding within the meaning of 28 U.S.C. § 157(b)(2)(G) and

(O).

2. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1408.

3. The statutory predicates for the relief requested are Sections 362(d)(1) and 553 of

11 U.S.C. §§ 101, et seq. (the “Bankruptcy Code”) and Fed. R. Bankr. P. 4001(a).

BACKGROUND

4. NMAC provides wholesale credit to authorized Nissan/Infiniti dealers to purchase

vehicle inventory, for working capital, and for the purchase of real estate for dealer premises.

1 The last four numbers of each Debtor’s taxpayer identification numbers are BICOM NY, LLC(9990); ISCOM NY, LLC (1589); and Bay Ridge Automotive Company, LLC (0694). TheDebtors’ addresses are 787 11th Avenue, New York NY 10019; 1 York Street, New York, NY10013; and 612 86th Street, Brooklyn, NY 11228, respectively.

17-11906-mew Doc 60 Filed 07/25/17 Entered 07/25/17 15:01:56 Main Document Pg 1 of 19

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Over the course of two years, NMAC extended $56 million in commercial financing to four

affiliated dealerships, ACIM NY, LLC d/b/a Nissan of Manhattan (“ACIM”), ALIM NY, LLC

d/b/a Infiniti of Manhattan (“ALIM”), White Plains Auto Company, LLC d/b/a White Plains

Nissan, and MTKN LLC d/b/a Nissan of Mt. Kisco (collectively, the “Dealerships”). The

Dealerships are owned, operated and/or controlled by three individuals, Gary B. Flom (“Flom”),

Veniamin Nilva (“Nilva”) and Alexander Boyko (“Boyko”). Additionally, other affiliated

entities, including BICOM NY, LLC (“BICOM” or the “Debtor”), guaranteed the Dealerships’

obligations to NMAC, by way of a Fourth Amended and Restated Cross-Guaranty, Cross-

Collateral and Cross-Default Agreement dated October 7, 2016 (the “Fourth Amended

Guaranty”)(copy attached to the Declaration of Virginia T. Shea dated July 24, 2017 [“Shea

Decl.”] at Exhibit “A”) (Dealerships, Flom, Nilva, Boyko and BICOM collectively, as “the

Flom Group” or the “Obligors”). The $56 million in secured debt was comprised of floor plan

financing (financing for each and every vehicle on the Dealerships’ floor), revolving loans,

working capital loans, and a mortgage loan. Each member of the Flom Group is an obligor

indebted to NMAC by virtue of written loan, guaranty and cross-collateralized/cross-

guaranty/cross-default agreements. None of the Obligors have disputed that monies are owed to

NMAC.

5. NMAC learned in October 2016 that Dealerships were selling vehicles out of trust

(“SOT”) -- that is, as vehicles were sold, the Dealerships failed to repay NMAC’s floor plan loan

from the proceeds of the sales of those vehicles, essentially, pocketing the sale proceeds. NMAC

thereupon suspended all floor plan and other financing until the SOTs were repaid. The SOTs

were not only never repaid, but the Dealerships continued to sell vehicles out of trust and, to

avoid NMAC’s oversight, fraudulently sold vehicles to customers without titles which were


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being held by NMAC to insure payment. Ramifications of that misconduct are still being

untangled by NMAC and the NY Department of Motor Vehicles. In addition to other sums

owed by the Obligors to NMAC, the Dealerships presently owe NMAC approximately $7.2

million in the proceeds of their sales out of trust. As will be described below, these issues and

others are being litigated by way of a complaint brought by ACIM, ALIM and BICOM against

Nissan North America, Inc. (“NNA”) and NMAC, as well as NMAC’s counterclaims and third

party claims, which litigation is pending in the United States District Court, Southern District of

New York under the Docket Number 17-cv-00729 (LTS)(the “District Court Litigation”).

The District Court Litigation

6. The facts underlying the District Court Litigation were aptly outlined by the

Honorable Laura Taylor Swain, U.S.D.J. (“Judge Swain”) in her Memorandum Opinion and

Order filed on February 28, 2017, denying Plaintiffs ACIM, ALIM (jointly, “Manhattan”) and

BICOM’s motion by Order to Show Cause for a Temporary Restraining Order and Preliminary

Injunction against defendants NNA and NMAC. (See Shea Decl. at Exhibit “B”, Memorandum

Opinion and Order).

7. Judge Swain explained that Manhattan was a Nissan/Infiniti dealership and that

BICOM was a Jaguar and Land Rover dealer and that BICOM served as the construction project

manager for a construction project located at 787 Eleventh Avenue, which property was leased

from the landlord Georgetown Eleventh Avenue Owners, LLC (“Georgetown”) by both BICOM

and NNA. NNA sells Nissan and Infiniti vehicles to franchised Nissan and Infiniti dealers, and

“NMAC operates as NNA’s captive finance arm, providing both consumer and commercial

financing to Nissan and Infiniti customers and dealers.” NMAC also provides financing to


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dealers by way of wholesale credit lines and “wholesale” or “floor plan” financing. (Id. at

Opinion at p. 2-3).

8. Judge Swain determined as a matter of fact that:

In or around November 2015, Manhattan entered into a business relationshipwith Defendants to build a renovated Nissan/Infiniti dealership on “Auto Row” inthe Midtown West area of Manhattan in New York City. Pending the completionof the construction, Manhattan opened and continues to operate a temporaryfacility nearby. Plaintiffs and Defendants have entered into a series ofinterlocking franchise, financing, and real estate-related agreements, includingManhattan’s sublease from NNA of the portion of the building at 787 EleventhAvenue (the “Building”) that is the site of the planned Nissan/Infiniti dealership(the “Premises”). Manhattan and NMAC also entered into various workingcapital and mortgage loans and revolving lines of credit, in part to fund theconstruction of the Premises. The Building is also the current and future site ofBICOM’s Jaguar Land Rover dealership, which is also undergoing renovation.BICOM has leased its portion of the Building directly from Georgetown. Thefinancing, dealership and real estate agreements among NNA, Manhattan, andNMAC include cross-default provisions under which defaults under financing anddealership standing covenants constitute defaults under the other agreements,including the sublease.

(Id. at p. 3)(citations omitted).

9. Judge Swain also determined that:

Manhattan breached its floor plan financing agreement with NMAC by failing torepay NMAC, for monies advanced in connection with the acquisition of cars forsale, proceeds of the retail sale of each financed vehicle. The failure to repayNMAC in connection with a given vehicle sale is referred to as a “sale out oftrust” (“SOT”).

(Id. at p. 3-4)(citiation omitted).

10. As to sales out of trust, Judge Swain found that:

By October 2016, Manhattan and other Nissan/Infiniti dealerships owned by GaryFlom ‘had sold hundreds of vehicles without paying off the liens to NMAC onthose vehicles, including the sale of numerous vehicles to other Nissan andInfiniti dealers[,]’ and, as of February 10, 2017, the total SOTs for the group ofdealerships was $7,639,891.57. Plaintiffs represent, and Defendants do notdispute, that Manhattan’s portion of the SOTs total $6.5 or $7 million.Defendants represent, and Plaintiffs do not dispute, that the financial transactionsand arrangements among the parties and the other Flom-affiliated dealerships


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entail not only cross-defaults but also cross-collateralization, and the SOTs aretherefore intertwined as a practical and legal matter with other outstandingindebtedness to NMAC.


11. Judge Swain explained that as a result of the SOT’s:

NMAC suspended Manhattan’s floor plan financing and construction loansextended. Following notification that the floor plan funding had been suspended,NNA sent ACIM and ALIM letters advising the dealerships that they were inbreach of their dealership agreements. On December 22, 2016, NNA notifiedPlaintiffs that the lack of floor plan financing constituted default under anadditional agreement between the parties and gave Manhattan thirty days, or untilJanuary 22, 2017 to cure the default. The default under the additional agreementsalso constituted a default under Manhattan’s sublease of the Premises. Plaintiffs,which have not cured the defaults, commenced this lawsuit on January 20, 2017.Plaintiffs are insolvent.


12. As to the extent of damages arising out of the sales out of trust, Judge Swain

concluded:

Thus, although the Manhattan-related SOTs total $7 million or less, the amount ofnew financing required to cure the defaults and prevent termination of thesublease is in the tens of millions of dollars. Plaintiffs’ counsel was unable torepresent that Plaintiffs have any prospect of recovering such an amount in thislitigation or of securing alternative financing of that magnitude.

(Id. at 5-6)(citation omitted).

13. As to BICOM, Judge Swain found:

BICOM, another Flom-affiliated business, currently occupies and operates itsJaguar land Rover dealership in the Building and has been managing therenovation of space for its own and Manhattan’s dealership spaces. BICOM has‘secured alternative hard money financing at the exorbitant interest rate of 20%’to continue funding the construction project. The parties’ contract with theBuilding’s owner provides for TI reimbursement payments to BICOM and toManhattan in connection with construction expenses. On or about July 20, 2016,Manhattan, NMAC, and NNA executed a Direct Payment Agreement (the‘DPA’), providing for the payment of all TI reimbursements due and payable toManhattan to NMAC toward outstanding balances on the construction loanpreviously provided by NMAC. There is still an outstanding balance on that loan.


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14. Judge Swain summarized Plaintiffs claim for irreparable harm as:

Plaintiffs assert that, unless they are granted their requested relief, ‘the multi-million dollar construction project will be forced to stop, causing additionalexpenses, endangering BICOM’s occupancy and operations, and increasing thelikelihood Manhattan’s dealership will be shut down,’ which would “irreparablyharm[]’ BICOM, ‘since it has valuable property rights with respect to its currentoperations in NNA’s portion of the [B]uilding.”.


15. In ruling that Plaintiffs failed to demonstrate that they were entitled to an

injunction enabling them to remain in possession of the Premises to complete the construction,

Judge Swain noted:

the prospects of recovery from a litigation are impossible to successfully predictor identify, and Plaintiffs could not, at oral argument, even proffer a scenario inwhich recovery on the claims they have asserted would be sufficient to enablethem to cure the cross-defaults and continue to operate in the Premises inaccordance with the relevant agreements. Floor plan financing and cash flow forongoing operations are necessary to cure the defaults under the related agreementsand, in light of the lack of certainty as to the success and time span of anylitigation, the potential for recovery here does not provide a basis for belief that itwill provide an adequate mechanism for cure of the current defaults …. BecausePlaintiffs have failed to demonstrate they are prepared and maintain the ability tocure the default by any means short of vacating the premises, Plaintiffs’ requestfor a Yellowstone injunction is denied.

(Id. at p. 8-9)(citations omitted).

16. By way of an Order and Judgment of Possession and Warrant of Eviction and

Order for Other Relief filed on April 27, 2017, Judge Swain ordered the eviction of BICOM,

among other related entities, from 787 Eleventh Avenue, New York, NY, that BICOM was to

produce all contractor and architect documents and drawings, and that Plaintiffs provide an

accounting of the construction of the premises. (Shea Decl. at Ex. “C”, Order and Judgment).


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17. By way of Order filed on May 23, 2017, Judge Swain ordered that ALIM, White

Plains and Flom were in contempt of her earlier April 21, 2017 order for failure to return 15

vehicles. (Id. at Exhibit “D”, May 23, 2017 Order).

18. On July 6, 2017, attorneys from the firm of Arent Fox LLP presented Magistrate

Judge Henry Pitman with proposed orders to show cause seeking to be relieved of counsel as to

ACIM, ALIM, BICOM and affiliated third-party defendants. Magistrate Judge Pitman granted

the application by way of order filed July 7, 2017, and ordered that all entities that had been

represented by Arent Fox LLP would have until July 20, 2017 to retain new counsel. (Id. at

Exhibit “E”, July 7, 2017 Order).

19. On July 19, 2017, the law firm of Fox Rothschild, LLP entered an appearance for

ACIM, ALIM, and the third-party defendants. (Id. at Exhibit “F”, Notice of Appearance).

20. No appearance has been made to date on behalf of BICOM.

21. By way of Initial Disclosures, ACIM, ALIM and BICOM assert damages

“including the rescission of the franchise agreements as well as profits and losses associated with

NNA’s and NMAC’s conduct, in an amount to be determined at trial but no less than

$10,000,000.” (See Id. at Exhibit “G”, Plaintiffs’ Counterclaim-Defendants’/Third-Party

Defendants’ Rule 26(a)(1) Initial Disclosures).


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RELIEF REQUESTED

22. By this Motion, NMAC seeks entry of an order providing that NMAC is entitled

to maintain its defenses against BICOM’s affirmative claim and continue with its own

affirmative claims against BICOM by way of NMAC’s counterclaim in the District Court

Litigation, in order to liquidate its claims against BICOM and to effectuate any setoff rights it

has with respect to its claims, by way of a grant of relief from the automatic stay for “cause”

pursuant to 11 U.S.C. § 362(d)(1).

NMAC is Entitled to Defend its Interests in the Pending District Court Lawsuit.

23. The automatic stay of Section 362 of the Bankruptcy Code provides a debtor with

a breathing spell from creditors and allows the bankruptcy court to centralize all disputes

concerning the debtor’s estate so that the reorganization can proceed efficiently. In re

Ionosphere Clubs, Inc., 922 F.2d 984, 989 (2d Cir. 1990), cert. denied, 502 U.S. 808 (1991).

24. This stay only applies to the commencement of or continuation of claims against

the debtor. Kookik v. Mrkowitz, 40 F.3d 567, 568 (2d Cir. 1994)(“This Court has recognized that

the automatic stay is applicable only to proceedings ‘against’ 11 U.S.C. § 362(a)(1), the debtor”).

25. However, the automatic stay does not preclude litigants from defending

themselves and protecting their legal rights from claims brought by the debtor. See In re

Financial News Network Inc., 158 B.R. 570, 573 (S.D.N.Y. 1993)(“a stay … does not prevent

entities against whom the debtor proceeds in an offensive posture – for example, by initiating a

judicial … proceeding – from ‘protecting their legal rights.’”).

26. Indeed, “[i]t has often been stated that the automatic stay is a shield, not a sword.”

In re Briarpatch Film Corp., 281 B.R. 820, 834 (Bankr. S.D.N.Y. 2002); Bohack Corp. v.

Borden, Inc. (In re Bohack Corp.), 599 F.2d 1160, 1168 (2d Cir. 1979) (noting that courts “must


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be cautions to avoid a decision which could convert Rule 11 44 [pre-Code stay] from a shield

into a weapon”).

27. BICOM has asserted affirmative claims against NMAC in the District Court

Litigation and has quantified its claim as “no less than $10,000,000.” (See Shea Decl. at Exhibit

“G”, Initial Disclosure). BICOM has thus made it clear that it will pursue its claims against

NMAC in the District Court Litigation. NMAC should not be barred by the automatic stay from

defending itself against the counterclaims, including establishment of the amounts owed to

NMAC by the Obligors (including BICOM) and asserting any right to setoff and/or recoupment.

NMAC is Entitled to Relief from the Automatic Stay For “Cause” Under Section 362(d)(1) toContinue the Pending District Court Lawsuit and/or Effectuate Its Right of Setoff

28. Bankruptcy Code § 362(d)(1) provides that “[o]n request of a party in interest,

and after notice and a hearing, the court shall grant relief from the stay provided under

subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such

stay (1) for cause . . . .” 11 U.S.C. § 362(d)(1). “’Cause’ is an intentionally broad and flexible

concept which must be determined on a case-by-case basis.” In re Project Orange Associates,

LLC, 432 B.R. 89, 103 (Bankr. S.D.N.Y. 2010)(internal citation omitted).

29. A party seeking to lift the stay has the initial burden of producing evidence of

“cause”, and once a prima facie case of cause has been proffered, the burden shifts to the debor

to disprove “cause”. Id. at 103. The legislative history of Seciton 362 “reveals that Congress

intended ‘that one of the factors to consider when determining whether to modify the stay is

whether doing so would permit pending litigation involving the debtor to continue in a

nonbankruptcy forum, ‘ as ‘[i]t will often be more appropriate to permit proceedings to continue

in their place of origin, where no great prejudice to the bankruptcy estate would result, in order


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to leave the parties to their chosen forum and to relieve the bankruptcy court from duties that

may be handled elsewhere.” Id.

30. Bankruptcy Courts in the Second Circuit either 1) analyze twelve factors set forth

by the Second Circuit in In re Sonnax Industries, Inc., 907 F.2d 1280 (2d. Cir. 1990), or 2)

“engage in fact-intensive inquiries which appear to be loosely based on prepetition status quo

ante between the parties.”2 Id. Additionally, “cause” can exist if the debtors actions in the case

are in bad faith. Id.

31. The twelve Sonnax factors are:

(1) whether relief would result in a partial or complete resolution of the issues;(2) lack of any connection with or interference with the bankruptcy case;(3) whether the other proceeding involves the debtor as a fiduciary;(4) whether a specialized tribunal with the necessary expertise has been

established to hear the cause of action;(5) whether the debtor’s insurer has assumed full responsibility for defending

it;(6) whether the action primarily involves third parties;(7) whether litigation in another forum would prejudice the interest of other

creditors;(8) whether the judgment claim arising from the other action is subject to

equitable subordination;(9) whether movant’s success in the other proceeding would result in a judicial

lien avoidable by the debtor;(10) the interests of judicial economy and the expeditious and economical

resolution of litigation;(11) whether the parties are ready for trial in the other proceeding; and(12) impact of the stay on the parties and the balance of harms.

In re Sonnax, 907 F.2d at 1286.

2 As cases that have focused on whether lifting the stay will return parties to the prepetitionstatus quo as opposed to applying the Sonnax factors have done so primarily where a prepetitionwarrant of eviction has been issued but not yet executed, such status quo analysis will not bedelved into as such facts are not applicable here. See In re Project Orange Associates, LLC, 432B.R. at 110-11.


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32. A court need only apply those factors that are relevant to a particular case. In re

Project Orange Associates, LLC, 432 B.R. at 104.

33. It has been held that with respect to the second and seventh factors, interference

with the bankruptcy case and prejudice to other creditors, that lifting the stay may “greatly

assist” the bankruptcy court. Id. at 107. “By permitting the parties to resolve issues … in the

state court where the court is very familiar with the facts and history of the case (and has already

ruled on some of the issues), this Court will be better equipped to determine any remaining

bankruptcy law issues … more quickly.” Id. at 108.

34. It has also been held that with respect to the fourth factor (whether a specialized

tribunal with necessary expertise has been established) and the tenth factor (the interests of

judicial economy and the expeditious and economical resolution of litigation), that where parties

have already been before a particular judge for a period of time, where that judge has already

become familiar with complex agreements and relationships, then these facts weigh in favor of

lifting the stay. Id. at 108-09.

35. Here, permitting the District Court rather than the Bankruptcy Court to determine

the viability of and quantify NMAC’s claims against BICOM, would likely “greatly assist” this

Court. Judge Swain has been intimately involved with both the complex agreements and

relationships as well as the law underlying the disputes among the affiliated dealerships, and she

has rendered multiple rulings. Accordingly, the varied interests of judicial economy would

significantly weigh in favor of lifting the automatic stay to permit NMAC to obtain a ruling as to

the viability of its claims against BICOM.

36. The sixth factor is whether the action primarily involves third parties. In the

District Court action, there are multiple third parties, albeit persons and entities (all non-debtors)


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affiliated with BICOM. The various agreements and contracts often reference each other and

are, effectively, intertwined. It would be unwieldy at best, to permit discovery, testimony and

trial to proceed with the sole exclusion discovery, testimony and trial as to NMAC (and NNA’s)

claims against BICOM. In the District Court action, there are multiple parties, only one of which

is in bankruptcy. It would be unfair to stymie resolution of the various parties in the District

Court Litigation, simply because on party has filed a petition in the bankruptcy court. Moreover,

particularly since the District Court Litigation involves intertwined agreements among the

various parties, to the extent companion issues are resolved but not NMAC’s claims against

BICOM, there is a risk of conflicting findings as between the two forums. In a “stay” analysis,

it has been said that “[m]ultiplicity of suits involving unnecessary time and expense … should be

avoided.” In re Anton, 145 B.R. 767, 770 (Bankr. E.D.N.Y. 1992)

37. As to the final factor, impact of the stay on the parties and the balance of harm,

the equities weigh in favor of lifting the stay. BICOM, and its owners and affiliates, are

expected to continue prosecuting their affirmative claims in the District Court Litigation.

BICOM would thus bear minimal extra expense, time or effort in defending NMAC’s claims. In

the absence of stay relief, NMAC (and NNA), would be the only parties in the District Court

Litigation that would not be able to prosecute the entirety of their claims, and, as such would be

significantly burdened if forced to litigate complex and intertwined issues in two separate

forums. The District Court Litigation is proceeding swiftly and NMAC would be prejudiced if it

had to, effectively, start all over with the education of this Court, presumably in the context of

proof of claim litigation, as to the facts and history of disputes among the parties.

38. In the matter In re Anton, 145 B.R. at 770, the Court noted that a bankruptcy

court has “the wide discretion to grant the relief and lift the automatic stay”. There, analyzing


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the Sommax factors, the Court determined that justice would be best served by lifting the stay

and permitting one Anton to be included in pending litigation:

Anton is not a stranger to the pending litigation; he is one of the principals inAQN which has been a defendant in the pending action since it was first filed.As one of the principals he has no doubt been kept advised of the course of thelitigation and of the discovery that has taken place. He himself has been deposed.Whether or not he is formally joined in the proceeding, his attention will bediverted to it because of his position as a major stockholder of AQN. Also due tothat position, the expense of litigation will be solely his to bear.

If he is not made a party, this Court, in order to evaluate the claim of Bliss in thisproceeding, will have to plow the same ground, lacking the advantages andheadstart now enjoyed by the District Court in which the action against AQN hasbeen pending since 1989 and in which discovery has been taken of most of themajor parties and in which a complete resolution of the issues should shortly beforthcoming.

In re Anton, 145 B.R. at 770.

39. Similarly, BICOM is no stranger to the District Court Litigation and has been

continuously involved as one of the plaintiffs in that action. Judge Swain has taken considerable

time and effort to resolve issues in the District Court Litigation and it would make little sense for

this Court to “plow the same ground.”

40. Additionally, as favorably noted by the Sonnax Court, Collier on Bankruptcy

mentions a few specific circumstances amounting to “cause” including “the liquidation of a

claim” which “may be more conveniently and speedily determined in another forum.” In re

Sonnax, 907 F.2d at 1286.

41. Here, NMAC seeks to liquidate its claim against BICOM; that is, it seeks a

finding of liability and it seeks a finding quantifying its damages. NMAC would not seek to

enforce a liquidated judgment through execution against BICOM’s assets absent a further Order

of this Court. Accordingly, this is another factor that tips strongly in favor of lifting the stay.


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To The Extent NMAC’s Claims Are Claims Of Setoff, NMAC Should Be Entitled to Relieffrom the Automatic Stay For “Cause”

42. BICOM asserts claims for damages against NMAC in the District Court

Litigation and BICOM is unquestionably liable to NMAC on account of BICOM’s guaranty.

Therefore, to the extent that NMAC is found to be liable to BICOM in any amount (which

NMAC specifically denies), NMAC should be permitted to exercise its setoff rights3. The right

of setoff exists under non-bankruptcy law, but bankruptcy law (11 U.S.C. § 553(a)) limits setoff

to “pre-petition claims of creditors which are not disallowed and are mutual with their pre-

petition debts owing to the creditor.” In re Drexel Burnham Lambert Group, Inc., 113 B.R. 830,

839 (Bankr. S.D.N.Y. 1990). 11 U.S.C. §553 permits creditors to set off a prepetition debt it

owes to a debtor against a prepetition debt owed by the debtor, if the debts are mutual. In re

Westchester Structures, Inc., 181 B.R. 730, 739 (Bankr. S.D.N.Y. 1995). Mutuality occurs

“when the debts and credits are in the same right and are between the same parties, standing in

the same capacity.” Id. Here, both parties’ claims were incurred pre-petition and are between

the same parties standing in the same capacity. Therefore, the requisite mutuality exists for

setoff. Based upon the existence of NMAC’s valid setoff claims, NMAC has established its

prima facie case for “cause” under Section 362(d)(1).

43. “Courts have generally concluded that the existence of mutual obligations subject

to setoff constitutes sufficient cause to meet the creditor’s initial evidentiary burden in seeking

relief from the automatic stay.” In re Nuclear Imaging Systems, Inc., 260 B.R. 724, 730 (Bankr.

E.D. Pa. 2000); In re Flanagan Bros., Inc., 47 B.R. 299, 303 (Bankr. D.N.J. 1985); see also In re

Whitaker, 173 B.R. 359, 361 (Bankr. S.D. Ohio 1994) (“By establishing its right to setoff under

3 To the extent NMAC’s claims against BICOM would constitute a recoupment, no relief fromthe stay is required. See, In re McMahon, 129 F.3d 93, 98 (2d Cir. 1997).


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11 U.S.C. § 553(a) a creditor makes a prima facie showing of ‘cause’ for relief from stay under

11 U.S.C. § 362(d)(1)”).

44. Accordingly, to the extent BICOM has any valid claims against NMAC, they are

subject to setoff, and NMAC should be given relief from the automatic stay to assert it setoff

rights.

Potential Plan or Discharge Injunction Exception

45. To the extent that this Court grants this Motion prior to the effective date of any

plan of liquidation and to the extent that injunctions are approved in such plan which upon the its

effective date would subsequently enjoin NMAC from continuing to assert its defenses or the

liquidation of its claims in the District Court Lawsuit, NMAC seeks authority by this Motion to

except NMAC from any such injunctions. See, e.g. In re McCulloch, 2013 WL 5592880 (Bankr.

S.D. Tex. 2013), aff’d as modified, 2014 WL 1276146 (2014)(“If a discharge is granted, the

injunction 11 U.S.C. §524 replaces the automatic stay upon discharge. Even if the Stay is lifted

during the case, the discharge injunction begins at discharge and is unaffected by an order lifting

the stay”).

REQUEST FOR WAIVER OF 14-DAY STAY

46. Pursuant to Fed. R. Bankr. P. 4001(a)(3), “[a]n order granting relief from an

automatic stay made in accordance with Rule 4001(a)(1) is stayed until after the expiration of 14

days after the entry of the order, unless the court orders otherwise.” Fed. R. Bankr. P. 4001(a)(3).

NMAC requests that this Court provide in any Order granting this Motion that the 14 day stay in

Fed. R. Bankr. P. 4001(a)(3) shall not apply to the Order.


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NOTICE

47. Pursuant to Fed. R. Bankr. P. 4001(a)(1), counsel for NMAC has served a copy of

this Motion upon (i) counsel for the Debtors, (ii) the entities listed on the List of Creditors

Holding the 20 Largest unsecured Claims filed pursuant to Bankruptcy Rule 1007(d), (iii)

counsel for JP Morgan Chase Bank, NA, (iv) the United States Trustee, (v) the United States

Attorney for the Southern District of New York, (vi) the Internal Revenue Service (vii) the

United States Securities and Exchange Commission and (v) all parties requesting notice pursuant

to Fed. R. Bankr. P. 2002. In light of the nature of the relief requested, NMAC respectfully

submits that no further notice is necessary.

NO PRIOR REQUEST

48. No prior request for relief sought in this Motion has been made to this or any

other Court.

WHEREFORE, for all of the foregoing reasons, NMAC respectfully requests that this

Court enter an Order (i) granting NMAC relief from the automatic stay for “cause” pursuant to

11 U.S.C. § 362(d)(1) in order to continue the District Court Litigation and effectuate setoff of

its claims; (ii) granting relief from the automatic stay to permit NMAC to liquidate its claim to

the extent in excess of its claims setoff; (iii) providing that the 14 day stay in Fed.R.Bankr.P.

4001(a)(3) shall not apply to the Order, and (iv) granting such further relief to NMAC as is

appropriate.

Dated: July 25, 2017 /s/ Eric R. Perkins_________Eric R. Perkins, Esq.Virginia T. Shea, Esq.McELROY, DEUTSCH, MULVANEY& CARPENTER, LLP225 Liberty Street, 36th FloorNew York, New York 10281(212) 483-9490Attorneys for PlaintiffNissan Motor Acceptance Corporation





UNITED STATES BANKRUPTCY COURTFOR THE SOUTHERN DISTRICT OF NEW YORK

In re:

BICOM NY, LLC, et al.,1

Debtors.

))))))

Chapter 11

Case No. 17-11906 (MEW)

DECLARATION OF VIRGINIA T. SHEA IN SUPPORT OF NISSAN MOTORACCEPTANCE CORPORATION’S MOTION FOR RELIEF FROM THE AUTOMATIC

STAY PURSUANT TO 11 U.S.C. § 362 AND FEDERAL RULE OF BANKRUPTCYPROCEDURE 4001 AND FOR RELATED RELIEF

I, VIRGINIA T. SHEA, of full age, hereby declare as follows:

1. I am an attorney at law and associated with the firm of McElroy, Deutsch,

Mulvaney & Carpenter, LLP, attorneys for Nissan Motor Acceptance Corporation (“NMAC”),

in the above matter.

2. I am familiar with the facts of this matter and submit this Declaration in support

of NMAC’s Motion for an Order Granting Relief from the Automatic Stay.

3. Attached hereto as Exhibit “A” is a true and accurate copy of a Fourth Amended

and Restated Cross-Guaranty, Cross-Collateral and Cross-Default Agreement dated October 7,

2016.

4. Attached hereto as Exhibit “B” is a true and accurate copy of a Memorandum

Opinion Order entered by the Honorable Laura Taylor Swain, U.S.D.J., and filed on February

28, 2017.

5. Attached hereto as Exhibit “C” is a true and accurate copy an Order and Judgment

1 The last four numbers of each Debtor’s taxpayer identification numbers are BICOM NY, LLC(9990); ISCOM NY, LLC (1589); and Bay Ridge Automotive Company, LLC (0694). TheDebtors’ addresses are 787 11th Avenue, New York NY 10019; 1 York Street, New York, NY10013; and 612 86th Street, Brooklyn, NY 11228, respectively.

17-11906-mew Doc 60-1 Filed 07/25/17 Entered 07/25/17 15:01:56 Declaration of Virginia T. Shea Esq. Pg 1 of 2

2

of Possession and Warrant of Eviction and Order for Other Relief, entered by Honorable Laura

Taylor Swain, U.S.D.J., and filed on April 27, 2017.

6. Attached hereto as Exhibit “D” is a true and accurate copy of an Order entered by

Honorable Laura Taylor Swain, U.S.D.J., and filed on May 23, 2017.

7. Attached hereto as Exhibit “E” is a true and accurate copy of an Order entered by

Honorable Henry Pitman, U.S.M.J., and filed on July 7, 2017.

8. Attached hereto as Exhibit “F” collectively, are true and accurate copies of

Notices of Entry of Appearance of Ely Goldin, Esq. and Craig R. Tractenberg, Esq., of the firm

of Fox Rothschild, LLP, counsel for Plaintiffs/Counter-Defendants ACIM, NY, L.L.C. d/b/a

“Nissan of Manhattan”; ALIM NY L.L.C., d/b/a “Infiniti of Manhattan”; Third-Party Defendants

BNF NY Realty, LLC; BNF Partners NY, LLC; MTKN, LLC d/b/a Nissan of Mt. Kisco; and

White Plains Auto Company, LLC d/b/a White Plains Nissan; Gary B. Flom and Veniamin

Nilva, filed on July 19, 2017.

9. Attached hereto as Exhibit “G” is a true and accurate copy of Initial Disclosers of

Plaintiffs/Counterclaim-Defendants ACIM, NY, L.L.C. d/b/a “Nissan of Manhattan”; ALIM NY

L.L.C., d/b/a “Infiniti of Manhattan”; Third-Party Defendants BNF NY Realty, LLC; BNF

Partners NY, LLC; MTKN, LLC d/b/a Nissan of Mt. Kisco; and White Plains Auto Company,

LLC d/b/a White Plains Nissan; Gary B. Flom and Veniamin Nilva, filed on June 29, 2017.

I declare under penalty of perjury that the foregoing is true and correct to the best of my

knowledge, information and belief.

Dated: July 24, 2017 McELROY, DEUTSCH, MULVANEY& CARPENTER, LLP

/s/Virginia T. SheaVirginia T. Shea

17-11906-mew Doc 60-1 Filed 07/25/17 Entered 07/25/17 15:01:56 Declaration of Virginia T. Shea Esq. Pg 2 of 2

17-11906-mew Doc 60-2 Filed 07/25/17 Entered 07/25/17 15:01:56 Exhibit Exhibits A-G to Declaration of Virginia T. Shea Esq. Pg 1 of 68


























































50115648

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

ACIM NY, L.L.C. d/b/a “Nissan of Manhattan,” :

ALIM NY, L.L.C. d/b/a “Infiniti of Manhattan” :

and BICOM NY, LLC d/b/a “Jaguar Rover :

Manhattan,” :

: No. 17-cv-00729-LTS-HBP

Plaintiffs/Counter-Defendants :

:

v. : NOTICE OF

: ENTRY OF APPEARANCE

Nissan North America, Inc. and Nissan Motor :

Acceptance Corp., :

:

Defendants/Counter Claimants :

:

v. :

:

BNF NY Realty, LLC; BNF Partners NY, LLC; :

MTKN, LLC d/b/a Nissan of Mt. Kisco; :

White Plains Auto Company, LLC d/b/a White :

Plains Nissa; Gary B. Flom; Alexander A. Boyko; :

and Veniamin Nilva, :

:

Third-Party Defendants :

TO THE CLERK OF THIS COURT AND ALL PARTIES OF RECORD:

PLEASE TAKE NOTICE that Ely Goldin, undersigned counsel with Fox Rothschild,

LLP, hereby enters his appearance as attorney of record in this civil action on behalf of

Plaintiffs/Counter-Defendants ACIM, NY, L.L.C. d/b/a “Nissan of Manhattan”; ALIM NY L.L.C.

d/b/a “Infiniti of Manhattan”; Third-Party Defendants BNF NY Realty, LLC; BNF Partners NY,

LLC; MTKN, LLC d/b/a Nissan of Mt. Kisco; White Plains Auto Company, LLC d/b/a White

Plains Nissan; and Gary B. Flom and Veniamin Nilva.

Case 1:17-cv-00729-LTS-HBP Document 308 Filed 07/19/17 Page 1 of 317-11906-mew Doc 60-2 Filed 07/25/17 Entered 07/25/17 15:01:56 Exhibit Exhibits A-G to Declaration of Virginia T. Shea Esq. Pg 59 of 68

50115648

Any and all further correspondence directed to these entities regarding this civil action, and

any pleadings or other filings in this action, may be served on undersigned counsel at the address

below.

Dated: July 19, 2017 Respectfully submitted,

New York City, New York

FOX ROTHSCHILD LLP

By: /s Ely Goldin

Ely Goldin, Esq.

101 Park Avenue, 17th Floor

New York, New York 10178

Tel: (212) 878-7900

Fax: (212) 982-0940

Attorneys for Plaintiffs ACIM, NY, L.L.C.

d/b/a “Nissan of Manhattan”; ALIM NY

L.L.C. d/b/a “Infiniti of Manhattan”; Third-

Party Defendants BNF NY Realty, LLC; BNF

Partners NY, LLC; MTKN, LLC d/b/a Nissan

of Mt. Kisco; and White Plains Auto

Company, LLC d/b/a White Plains Nissan;

Gary B. Flom and Veniamin Nilva


50115648

CERTIFICATION

I hereby certify that on this date, a copy of foregoing was filed electronically and served

by mail on anyone unable to accept electronic filing. Notice of this filing will be sent by e-mail to

all parties by operation of the Court’s electronic filing (ECF) system or by mail to anyone unable

to accept electronic filing. Parties may access this filing through the Court’s system.

Date: July 19, 2017

FOX ROTHSCHILD LLP

By: /s Ely Goldin

Ely Goldin, Esq.

101 Park Avenue, 17th Floor

New York, New York 10178

Tel: (212) 878-7900

Fax: (212) 982-0940

Attorneys for Plaintiffs ACIM, NY, L.L.C.

d/b/a “Nissan of Manhattan”; ALIM NY

L.L.C. d/b/a “Infiniti of Manhattan”; Third-

Party Defendants BNF NY Realty, LLC; BNF

Partners NY, LLC; MTKN, LLC d/b/a Nissan

of Mt. Kisco; and White Plains Auto

Company, LLC d/b/a White Plains Nissan;

Gary B. Flom and Veniamin Nilva









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