KELLEY DRYE & WARREN LLP James S. Carr Robert L.

LeHane 101 Park Avenue New York, New York 10178 Tel: (212) 808-7800 Fax: (212) 808-7897 Counsel for Cotton On USA, Inc.

Proposed Hearing Date: June 30, 2011 at 10:00 a.m. Proposed Objection Deadline: June 30, 2011 at 10:00 a.m.

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK __________________________________________ ) In re: ) Chapter 11 ) METROPARK USA, INC. ) Case No. 11-22866 (RDD) ) Debtor. ) __________________________________________) MOTION FOR ENTRY OF AN ORDER PURSUANT TO 11 U.S.C. 107(b) AND RULE 9018 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE AUTHORIZING COTTON ON USA, INC. TO FILE FINANCIAL STATEMENTS UNDER SEAL Cotton On USA, Inc. (Cotton On), by and through its counsel, Kelley Drye & Warren LLP, hereby files this motion (the Motion) for entry of an order, substantially in the form attached hereto as Exhibit A, pursuant to 11 U.S.C. 107(b) and Rule 9018 of the Federal Rules of Bankruptcy Procedure authorizing Cotton On to file under seal certain financial statements of Cotton On (the Financial Statements). In support of this Motion, Cotton On respectfully states as follows: JURISDICTION 1. The Court has jurisdiction to consider the Motion pursuant to 28 U.S.C.

157 and 1334. This matter is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(A) and (O). 2. Venue is proper pursuant to 28 U.S.C. 1408 and 1409.

3.

The statutory predicates for the relief requested in the Motion are section

107(b) of the Bankruptcy Code and Bankruptcy Rule 9018. BACKGROUND 4. On May 2, 2011, the above-captioned debtor (the Debtor) filed a

voluntary petition for relief under chapter 11 of the Bankruptcy Code. The Debtor continues to operate its business and manage its properties as a debtor in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. 5. On May 6, 2011, the United States Trustee for the Southern District of

New York appointed the Official Committee of Unsecured Creditors.1 No request has been made for the appointment of a trustee or examiner. 6. On May 12, 2011, the Debtor filed the Motion of the Debtor for Order

(A) Setting (1) Date to Conduct Auction of Debtors Interests in Certain Real Property Leases and Intellectual Property, and (2) Sale Hearing Date; (B) Approving Bidding Procedures and Terms of Auction; (C) Establishing Cure Amounts; (D) Authorizing Debtor to Enter Into Lease Termination Agreements; (E) Approving and Authorizing Sale of Leases and Intellectual Property to Highest or Otherwise Best Bidder Free and Clear of All Liens, Interests, Claims and Encumbrances Pursuant to 363 of the Bankruptcy Code; (F) Waiving the Requirements of Rule 6004 of the Federal Rules of Bankruptcy Procedure and Local Bankruptcy Rule 6004-1; and (G) Granting Related Relief (the Sale Procedures Motion).2 7. Pursuant to the Sale Procedures Motion, the Debtor sought entry of an

order: (i) scheduling an auction for the sale of the Debtors interests in its unexpired nonresidential leasehold interests and intellectual property; (ii) establishing a deadline for landlords
1 2

Docket Entry No. 57. Docket Entry No. 88.

and other parties in interest to file and serve objections to the assignees ability to provide adequate assurance of future performance; and (iii) scheduling a hearing on the sale. 8. On May 24, 2011, the Court entered an Order approving the Sale

Procedures Motion (the Procedures Order).3 Pursuant to the Procedures Order, the Debtor was authorized to conduct an auction of the leases and intellectual property. The Debtor was further authorized to enter into a stalking horse agreement with Cotton On (the Designation Rights Agreement) that would grant Cotton On the sole and exclusive right, with respect to 41 of the Debtors leases, to designate which leases would be assigned or rejected. 9. The Auction was scheduled for May 26, 2011 and the Procedures Order

established May 31, 2011 as the deadline for parties to object to the assignment of any lease to Cotton On. At the auction, Cotton On was deemed to have submitted the highest and otherwise best bid for the designation rights for the Debtors 41 leases covered by the Designation Rights Agreement. 10. On June 6, 2001, the Court entered an Order Pursuant to Sections 105 and

363 of the Bankruptcy Code and Bankruptcy Rules 2002 and 6004 Authorizing and Approving (I) Designation Rights Agreement With The Cotton On Group, (II) The Sale of Certain of the Debtors Leases, (III) Assumption and Assignment Procedures, (IV) Cure Amounts, and (V) Granting Related Relied (the Sale Order).4 Pursuant to the Sale Order, the Court approved, among other things, the Designation Rights Agreement by and between the Debtor and Cotton On.

3 4

Docket Entry No. 149. Docket Entry No. 190.

11.

As set forth in the Designation Rights Agreement and the Sale Order,

Cotton On was granted the right to designate for assignment any lease set forth in the Designation Rights Agreement. Cotton On was required to deliver to the Debtor, file and serve a notice (a Lease Assumption Notice) naming the designee, setting forth the cure amount, the proposed use of the premises, the proposed form of lease sale order, and providing evidence of adequate assurance of future performance. The landlord for any designated lease is entitled to file an objection within 7 business days of receipt of a Lease Assumption Notice. 12. On June 16, 2011, the Debtor filed and served a Lease Assumption Notice

with respect to 10 leases.5 Attached to the Lease Assumption Notice was the declaration of Michael Hardwick, Chief Financial Officer of Cotton On, in support of the assignment. 13. The following three objections were filed to the assignment of the

identified leases: (i) NorthPark Partners, LPs Objection to Assumption and Assignment of Unexpired Lease of Nonresidential Real Property (the NorthPark Objection);6 (ii) Supplemental Objection by Westfield, LLC and Westfield Garden State Plaza Limited Partnership to Notice of Assumption and Assignment of Unexpired Leases of Nonresidential Real Property (the Westfield Objection);7 and (iii) Objection of Aventura Mall Venture to Debtors Proposed Assumption and Assignment of Unexpired Lease of Nonresidential Real Property to Cotton On USA, Inc. (the Aventura Objection).8 A hearing on these objections has been scheduled for June 30, 2011 at 10:00 a.m.

5 6 7 8

Docket Entry No. 212. Docket Entry No. 222. Docket Entry No. 226. Docket Entry No. 227.

14.

Since the filing of the objections, Cotton On has attempted to work with

the respective landlords to resolve their objections. Cotton On believes it will be able to consensually resolve the NorthPark Objection. Cotton On is continuing to work to resolve the issues set forth in the Westfield Objection and the Aventura Objection prior to the hearing, each of which raises issues regarding Cotton Ons ability to provide adequate assurance of future performance. 15. In the event Cotton On is unable to resolve these objections consensually

prior to the hearing, Cotton On intends to submit the Financial Statements in support of its showing of adequate assurance of future performance. As a private company, Cotton Ons Financial Statements contain sensitive, non-public information, the disclosure of which could have a significant negative impact on Cotton On and its business.

RELIEF REQUESTED 16. By this Motion, Cotton On seeks entry of an order, in the form attached

hereto as Exhibit A, pursuant to section 107(b) of the Bankruptcy Code: (a) authorizing Cotton On to file the Financial Statements under seal; (b) maintaining the Financial Statements under seal and providing that such Financial Statements shall not be made available to anyone without the consent of Cotton On; (c) providing that the Clerk of the Court shall destroy the Financial Statements after the close of the Debtors bankruptcy case; and (d) establishing procedures for the submission of evidence, exhibits and testimony containing information from the Financial Statements.

BASIS FOR RELIEF 17. Section 107(b) of the Bankruptcy Code provides the Court with the

authority to enter orders, as appropriate, to protect entities from the harm which may result from the disclosure of confidential information. Section 107(b) provides in relevant part: On request of a party in interest, the bankruptcy court shall . . . (1) protect any entity with respect to trade secrets or confidential research, development, or commercial information; or (2) protect a person with respect to scandalous or defamatory matter contained in a paper filed in a case under this title.9 18. Bankruptcy Rule 9018 sets forth the procedures for application of section

107 of the Bankruptcy Code and provides that [o]n motion or on its own initiative, with or without notice, the court may make any order which justice requires (1) to protect the estate or any entity in respect of a trade secret or other confidential research, development, or commercial information . . .10 19. In the context of section 107(b), courts have defined commercial

information as information which would cause an unfair advantage to competitors by providing them information as to the commercial operations of an entity.11 Section 107(b) is designed to protect business entities from disclosure of information that could reasonably be expected to cause the entity commercial injury.12 Once a court determines that a party in interest is seeking protection of information that falls within one of the categories enumerated in

9 10 11

11 U.S.C. 107(b). Fed. R. Bankr. P. 9018. Video Software Dealers Assoc. v. Orion Pictures Corp. (In re Orion Pictures Corp.), 21 F.3d 24, 27 (2d Cir. 1994); Ad Hoc Protective Comm. For 10 % Debenture Holders v. Itel Corp., 17 B.R. 942, 944 (9th Cir. B.A.P. 1982). In re Global Crossing, Ltd., 295 B.R. 720, 725 (Bankr. S.D.N.Y. 2003); In re Northstar Energy, Inc., 315 B.R. 425, 429 (Bankr. E.D. Tex. 2004).

12

section 107(b) of the Bankruptcy Code, the court is required to protect a requesting interested party and has no discretion to deny the application.13 20. Cotton On submits that cause exists to authorize Cotton On to file the

Financial Statements under seal. The Financial Statements fit within the categories of section 107(b) of the Bankruptcy Code. The Financial Statements contain non-public financial information regarding Cotton On and its business, the disclosure of which (i) would constitute a default under certain confidentiality agreements; and (ii) could have a significant impact upon Cotton Ons business and ability to operate competitively in the industry. The disclosure of the Financial Statements could give competitors of Cotton On an unfair advantage in their dealings with Cotton On, which could have significant economic consequences to Cotton On. 21. Therefore, Cotton On requests the Court enter an order requiring the

Financial Statements to be filed with the Court and sealed. Cotton On further respectfully requests that the Court or the Clerk of the Court destroy the Financial Statements after the close of the Debtors bankruptcy case. 22. Finally, Cotton On submits that it is appropriate to establish the following

procedures for the submission of evidence, exhibits and testimony containing information from the Financial Statements in connection with any relief sought by any party in connection with this chapter 11 case. To the extent that the Financial Statements or any pleading, motion, deposition or memorandum disclosing any portion of the Financial Statement is proposed to be filed or is filed with the Court, such shall be submitted under seal by the filing party. Furthermore, to the extent that any portion of the Financial Statements or information contained in the Financial Statements may be disclosed during a hearing, Cotton On requests that any

13

Video Software Dealers Assn., 21 F.3d at 27 (emphasis in original).

portion of such hearing that discloses such information be heard in camera and conducted in a manner so as to prevent disclosure of such information to any person that has not received Cotton Ons express prior written authorization to receive the information contained in the Financial Statements; provided, however, that all such information will be provided to the United States Trustee and, on a professionals eyes only basis, the Debtors and the Committee. 23. Cotton On respectfully submits that these procedures are reasonable and

necessary and, therefore, should be approved by the Court. The procedures are narrowly tailored to prevent the disclosure of the information contained in the Financial Statements. MEMORANDUM OF LAW 24. This Motion does not raise any novel issues of law and the relevant legal

authorities are set forth herein. Accordingly, Cotton On requests that the Court waive the separate memorandum of law requirement contained in Local Bankruptcy Rule 9013-1(a). NOTICE 25. Notice of this Motion has been provided to: (a) counsel for the Debtor;

(b) the U.S. Trustee; (c) counsel to the Committee; (d) counsel to NorthPark Partners, LP; (e) counsel to Westfield, LLC and Westfield Garden State Plaza Limited Partnership; (f) counsel to Aventura Mall Venture; and (g) all other parties required to receive notice pursuant to Bankruptcy Rules 2002, 4001 or 9014 or requesting to receive notice prior to the date hereof. Cotton On submits that no other or further notice of the Motion need be provided. NO PRIOR REQUEST 26. No prior application for the relief requested herein has been presented to

this Court or any other court.

WHEREFORE, Cotton On respectfully requests that this Court enter an order approving Cotton Ons request to file the Financial Statements under seal, implementing the procedures discussed in this Motion and granting such other and further relief as the Court deems just and proper. Dated:New York, New York June 23, 2011 KELLEY DRYE & WARREN LLP By: /s/ Robert L. LeHane James S. Carr Robert L. LeHane 101 Park Avenue New York, New York 10178 Tel: (212) 808-7800 Fax: (212) 808-7897 Counsel for Cotton On USA, Inc.

EXHIBIT A

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK __________________________________________ ) ) Chapter 11 ) METROPARK USA, INC. ) Case No. 11-22866 (RDD) ) Debtor. ) __________________________________________) In re: ORDER GRANTING MOTION OF COTTON ON USA, INC. FOR ENTRY OF AN ORDER PURSUANT TO 11 U.S.C. 107(b) AND RULE 9018 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE AUTHORIZING COTTON ON TO FILE FINANCIAL STATEMENTS UNDER SEAL Upon consideration of the Motion,1 dated June 23, 2011, of Cotton On USA, Inc. (Cotton On) for entry of an order, pursuant to section 107(b) of the Bankruptcy Code and Rule 9018 of the Federal Rules of Bankruptcy Procedure, to file under seal certain financial statements of Cotton On (the Financial Statements); and the Court having reviewed and considered (a) the Motion, (b) the objections to the Motion, if any, and (c) the arguments of counsel made and the evidence proffered or adduced at the hearing on the Motion; and the Court having determined that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; it is hereby: FOUND AND DETERMINED THAT: A. The Court has jurisdiction over the Motion pursuant to 28 U.S.C. 157

and 1334, and this matter is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(A) and (O). Venue of this case and the Motion in this district is proper pursuant under 28 U.S.C. 1408 and 1409.

Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Motion.

B.

As evidenced by the affidavit of service filed with the Court, proper,

timely, adequate and sufficient notice of the Motion and the hearing has been provided and such notice was good, sufficient and appropriate under the particular circumstances. C. The Financial Statements includes sensitive and confidential business

information that must be kept in safe custody and not disclosed to any third party. D. The procedures requested in the Motion are reasonable and necessary to

maintain the confidentiality of the Financial Statements and the information contained therein. NOW, THEREFORE, IT IS HEREBY: ORDERED that the Motion is granted to the extent set forth herein; and it is further ORDERED that all objections to the Motion or the relief requested therein that have not been withdrawn, waived, or settled, and all reservations of rights included therein, hereby are overruled on the merits; and it is further ORDERED that Cotton On may file the Financial Statements under seal; and it is further ORDERED that the Financial Statements will remain sealed until the close of this chapter 11 case, after which time the Court or the Clerk of the Court shall destroy the Financial Statements; and it is further ORDERED that to the extent that the Financial Statements, or any pleading, motion, deposition or memorandum disclosing any portion of, or information contained in, the Financial Statements, which discloses non-public information, is proposed to be filed or is filed with the Court, such shall be submitted under seal by the filing party; and it is further

ORDERED that to the extent that any part of, or information contained in, the Financial Statements may be disclosed during a hearing, any portion of such hearing that discloses such information shall be heard in camera and conducted in a manner so as to prevent disclosure of the information contained in the Financial Statements to any person that has not received Cotton Ons express prior written authorization to receive the information contained in the Financial Statements; provided, however, that all such information will be provided to the United States Trustee and, on a professionals eyes only basis, the Debtor and the Committee; and it is further ORDERED that this Court shall, and hereby does, retain jurisdiction with respect to all matters arising from or in relation to the implementation of this Order.

Dated: White Plains, New York June __, 2011 UNITED STATES BANKRUPTCY JUDGE