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  • White Oak Commercial Finance, Llc v. Ny And Co Ecomm Llc, Fashion To Figure Ecomm Llc, Lord & Taylor Ecomm Llc, Letote Ecomm Llc, Aquatalia Ecomm Llc, Joseph Saadia, Jack Saadia, Ny And Co Ip Llc, Fashion To Figure Ip Llc, Saadia Group Llc, Rtw Retailwinds Acquisition Llc, Lord & Taylor Acquisitions Llc, Lord & Taylor Ip Llc, Letote Ip Llc, Aquatalia Ip Llc, 501 Jersey Avenue Llc, Brook Warehousing And Distribution Llc, 1735 Jersey Avenue Property, Llc, Saadia Distribution Llc, 1000 Stony Battery Property Owner Llc, 1000 Stoney Battery Road LlcCommercial - Contract - Commercial Division document preview
  • White Oak Commercial Finance, Llc v. Ny And Co Ecomm Llc, Fashion To Figure Ecomm Llc, Lord & Taylor Ecomm Llc, Letote Ecomm Llc, Aquatalia Ecomm Llc, Joseph Saadia, Jack Saadia, Ny And Co Ip Llc, Fashion To Figure Ip Llc, Saadia Group Llc, Rtw Retailwinds Acquisition Llc, Lord & Taylor Acquisitions Llc, Lord & Taylor Ip Llc, Letote Ip Llc, Aquatalia Ip Llc, 501 Jersey Avenue Llc, Brook Warehousing And Distribution Llc, 1735 Jersey Avenue Property, Llc, Saadia Distribution Llc, 1000 Stony Battery Property Owner Llc, 1000 Stoney Battery Road LlcCommercial - Contract - Commercial Division document preview
  • White Oak Commercial Finance, Llc v. Ny And Co Ecomm Llc, Fashion To Figure Ecomm Llc, Lord & Taylor Ecomm Llc, Letote Ecomm Llc, Aquatalia Ecomm Llc, Joseph Saadia, Jack Saadia, Ny And Co Ip Llc, Fashion To Figure Ip Llc, Saadia Group Llc, Rtw Retailwinds Acquisition Llc, Lord & Taylor Acquisitions Llc, Lord & Taylor Ip Llc, Letote Ip Llc, Aquatalia Ip Llc, 501 Jersey Avenue Llc, Brook Warehousing And Distribution Llc, 1735 Jersey Avenue Property, Llc, Saadia Distribution Llc, 1000 Stony Battery Property Owner Llc, 1000 Stoney Battery Road LlcCommercial - Contract - Commercial Division document preview
  • White Oak Commercial Finance, Llc v. Ny And Co Ecomm Llc, Fashion To Figure Ecomm Llc, Lord & Taylor Ecomm Llc, Letote Ecomm Llc, Aquatalia Ecomm Llc, Joseph Saadia, Jack Saadia, Ny And Co Ip Llc, Fashion To Figure Ip Llc, Saadia Group Llc, Rtw Retailwinds Acquisition Llc, Lord & Taylor Acquisitions Llc, Lord & Taylor Ip Llc, Letote Ip Llc, Aquatalia Ip Llc, 501 Jersey Avenue Llc, Brook Warehousing And Distribution Llc, 1735 Jersey Avenue Property, Llc, Saadia Distribution Llc, 1000 Stony Battery Property Owner Llc, 1000 Stoney Battery Road LlcCommercial - Contract - Commercial Division document preview
  • White Oak Commercial Finance, Llc v. Ny And Co Ecomm Llc, Fashion To Figure Ecomm Llc, Lord & Taylor Ecomm Llc, Letote Ecomm Llc, Aquatalia Ecomm Llc, Joseph Saadia, Jack Saadia, Ny And Co Ip Llc, Fashion To Figure Ip Llc, Saadia Group Llc, Rtw Retailwinds Acquisition Llc, Lord & Taylor Acquisitions Llc, Lord & Taylor Ip Llc, Letote Ip Llc, Aquatalia Ip Llc, 501 Jersey Avenue Llc, Brook Warehousing And Distribution Llc, 1735 Jersey Avenue Property, Llc, Saadia Distribution Llc, 1000 Stony Battery Property Owner Llc, 1000 Stoney Battery Road LlcCommercial - Contract - Commercial Division document preview
  • White Oak Commercial Finance, Llc v. Ny And Co Ecomm Llc, Fashion To Figure Ecomm Llc, Lord & Taylor Ecomm Llc, Letote Ecomm Llc, Aquatalia Ecomm Llc, Joseph Saadia, Jack Saadia, Ny And Co Ip Llc, Fashion To Figure Ip Llc, Saadia Group Llc, Rtw Retailwinds Acquisition Llc, Lord & Taylor Acquisitions Llc, Lord & Taylor Ip Llc, Letote Ip Llc, Aquatalia Ip Llc, 501 Jersey Avenue Llc, Brook Warehousing And Distribution Llc, 1735 Jersey Avenue Property, Llc, Saadia Distribution Llc, 1000 Stony Battery Property Owner Llc, 1000 Stoney Battery Road LlcCommercial - Contract - Commercial Division document preview
  • White Oak Commercial Finance, Llc v. Ny And Co Ecomm Llc, Fashion To Figure Ecomm Llc, Lord & Taylor Ecomm Llc, Letote Ecomm Llc, Aquatalia Ecomm Llc, Joseph Saadia, Jack Saadia, Ny And Co Ip Llc, Fashion To Figure Ip Llc, Saadia Group Llc, Rtw Retailwinds Acquisition Llc, Lord & Taylor Acquisitions Llc, Lord & Taylor Ip Llc, Letote Ip Llc, Aquatalia Ip Llc, 501 Jersey Avenue Llc, Brook Warehousing And Distribution Llc, 1735 Jersey Avenue Property, Llc, Saadia Distribution Llc, 1000 Stony Battery Property Owner Llc, 1000 Stoney Battery Road LlcCommercial - Contract - Commercial Division document preview
  • White Oak Commercial Finance, Llc v. Ny And Co Ecomm Llc, Fashion To Figure Ecomm Llc, Lord & Taylor Ecomm Llc, Letote Ecomm Llc, Aquatalia Ecomm Llc, Joseph Saadia, Jack Saadia, Ny And Co Ip Llc, Fashion To Figure Ip Llc, Saadia Group Llc, Rtw Retailwinds Acquisition Llc, Lord & Taylor Acquisitions Llc, Lord & Taylor Ip Llc, Letote Ip Llc, Aquatalia Ip Llc, 501 Jersey Avenue Llc, Brook Warehousing And Distribution Llc, 1735 Jersey Avenue Property, Llc, Saadia Distribution Llc, 1000 Stony Battery Property Owner Llc, 1000 Stoney Battery Road LlcCommercial - Contract - Commercial Division document preview
						
                                

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FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY: COMMERCIAL DIVISION ----------------------------------------------------------------------------------x WHITE OAK COMMERCIAL FINANCE, LLC, Index No. 650682/2024 Plaintiff, Part 48 - against - (Commercial Division) NY AND CO ECOMM LLC, FASHION TO FIGURE SUPPLEMENTAL ECOMM LLC, LORD & TAYLOR ECOMM LLC, AFFIRMATION OF LETOTE ECOMM LLC, AQUATALIA ECOMM LLC, DAVID MONTIEL JOSEPH SAADIA, JACK SAADIA, NY AND CO IP RAMIREZ IN FURTHER LLC, FASHION TO FIGURE IP LLC, SAADIA SUPPORT OF MOTION GROUP LLC, RTW RETAILWINDS ACQUISITION FOR PRELIMINARY LLC, LORD & TAYLOR ACQUISITIONS LLC, INJUNCTION AND LORD & TAYLOR IP LLC, LETOTE IP LLC, ORDER OF SEIZURE AQUATALIA IP LLC, 501 JERSEY AVENUE LLC, BROOK WAREHOUSING AND DISTRIBUTION Motion Seq. No. 1 LLC, 1735 JERSEY AVENUE PROPERTY, LLC, SAADIA DISTRIBUTION LLC, 1000 STONY BATTERY ROAD PROPERTY OWNER LLC, and 1000 STONEY BATTERY ROAD LLC, Defendants. ----------------------------------------------------------------------------------x Preliminary Statement 1. As stated in my Initial Affidavit, I am a Managing Director of White Oak.1 Except as otherwise stated, I have personal knowledge of the matters set forth herein based upon my day-to-day management of White Oak’s lending relationship with the Saadia Group. Where facts stated are on information and belief, I believe them to be true. 2. I respectfully submit this Supplemental Affirmation in further support of White Oak’s motion for a preliminary injunction and order of seizure (the “Motion”), and further to the Court’s “Decision + Order On Motion Addendum To OSC Amended Feb. 20, 2024 1 Capitalized terms undefined herein have the same meaning as ascribed to them in the Verified Complaint (NYSCEF No. 2) and the initial Affidavit of the undersigned (the “Initial Affidavit” [NYSCEF No. 36]) and accompanying Memorandum (NYSCEF No. 39). 8073480.3 1 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 (the “Amended TRO” [NYSCEF No. 49]), pursuant to which the Court directed White Oak to “be prepared to explain their authority for decreasing funding availability” and to “be prepared to show defendants are not acting in a commercially reasonable manner at this time ie. under what circumstances it is commercially reasonable to sell inventory at a 75-80% discount.” 3. I have also reviewed the Affirmation of Mark Jarashow, Esq., dated February 21, 2024 (NYSCEF No. 50), and the unredacted exhibits thereto, and I submit this Affirmation in response. Numerous Forbearance Defaults Existed As Of November 17, 2023 Entitling White Oak To Reduce Funding To The Saadia Group In White Oak’s Absolute Discretion 4. As set forth in detail in the Complaint and my Initial Affidavit, the Saadia Group had been in default of the Amended Loan Agreement since at least April 2022. Compl., Ex. 16 (NYSCEF No. 18). These defaults resulted in, among other things, the First Forbearance Agreement of December 2022, id., Ex. 17 (NYSCEF No. 19), and numerous written acknowledgements by Saadia Group of these defaults and of the validity and enforceability of White Oak’s claims against them and security interests in the Collateral. Id., Exs. 18, 20–25 (NYSCEF Nos. 20, 22, 23, 24, 25, 26, 27). By the time the parties entered into the Second Forbearance Agreement on September 14, 2023, the Saadia Group had experienced losses of approximately $43,000,000 for 2022 and $28,000,000 for the first eight months of 2023. Jack Saadia told White Oak many times that he would not contribute any more of his own capital to support Saadia Group and could not obtain a recapitalization of Saadia Group. After many discussions and negotiations, Jack Saadia and White Oak agreed that the only reasonable path for White Oak to recover its loans to Saadia Group was for an 2 2 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 orderly wind-down of their businesses. The roadmap for this orderly wind-down was reflected in the Second Forbearance Agreement. Id., Ex. 27 (NYSCEF No. 29). 5. Pursuant to the Second Forbearance Agreement, among other things, at paragraph “3” thereof, White Oak agreed to forbear from enforcing its rights and remedies with respect to the then-existing events of default under the Amended Loan Agreement as set forth on Schedule I to the Second Forbearance Agreement, and to make advances to Saadia Group pursuant to the Loan Agreement as modified by the Second Forbearance Agreement, for a “Forbearance Period” agreed to expire on the earlier to occur of February 2, 2024, or the date of any Forbearance Default. The parties agreed that “[u]pon the expiration or termination of the Forbearance Period, the Lender shall have no obligation, contractual or otherwise, to make any Loans to the Borrowers, and any and all Loans made by the Lender to the Borrowers after the expiration or termination of the Forbearance Period shall be in the sole discretion of the Lender. Id., Ex. 27 § 3(d) (emphasis added). 6. On November 17, 2023, in response to Saadia Group’s then-current request for approximately $3,800,000 of advances from White Oak under the Amended Loan Agreement, I advised Jack Saadia (on behalf of Saadia Group) in writing by email (the “Funding Reduction Notification”), a copy of which is attached as Exhibit A to this Supplemental Affirmation and is incorporated by reference herein, as follows: We are also in receipt of the Borrowers’ $3.8 million Notice of Borrowing (the “Current Request”). As you are well aware, several material Forbearance Defaults have occurred under the Loan Agreement, including without limitation that (a) the Elion Sale has not been consummated on or before its Scheduled Closing Date, (b) the amount outstanding being approximately $53.8MM whereas the Maximum Amount permitted for the current week is $43MM, (c) the actual overadvance being approximately $10.8MM based upon $53.8MM outstanding whereas the Permitted Overadvance for the current week is $5MM, and (d) with respect to the Approved Budget, there having been 3 3 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 negative variances on a weekly basis in excess of the amounts permitted under the Forbearance Agreement. Based upon the occurrence of these Forbearance Defaults, White Oak is under no obligation to make advances, and any and all Advances made by White Oak are in its sole discretion, and it has the present and absolute right to declare all Obligations immediately due and payable, and exercise any and all rights and remedies provided for in the Loan Documents. Accordingly, White Oak rejects the Current Request to the extent of the $3.8MM Advance requested, but will fund an Advance in an amount equal to 75% of this week’s $3.2MM of collections, i.e. White Oak shall advance ~$2.4MM, and shall retain and apply the remaining ~$800M of collections in reduction of the Obligations. For each week going forward, it is White Oak’s present intent that it shall advance to Borrowers a percentage of that week’s cash collections as White Oak deems appropriate in its sole discretion (based upon the Borrowers’ aggregate collections and financial performance) and shall apply the remainder in reduction of the Obligations. In addition, White Oak shall commence charging interest at the default rate with respect to the Obligations. 7. Each of the Forbearance Defaults relied on by White Oak on November 17, 2023, to reduce its funding of Saadia Group, as described in my Funding Reduction Notification email to Jack Saadia, had occurred, was legitimate, and was material. Each was more than sufficient to contractually entitle White Oak not merely to reduce its funding of Saadia Group as it did, but also to cease funding Saadia Group entirely and accelerate the loan, which White Oak nevertheless continued to forbear from doing. Indeed, while White Oak exercised its contractual right to reduce funding, it never ceased funding until it accelerated the loan and demanded repayment in full on January 30, 2024. Compl., Ex. 28 (NYSCEF No. 30). The following paragraphs set forth these Forbearance Defaults for the Court with specificity, as requested by the Court. 8. Forbearance Defaults under §§ 9(a) and 9(b) of the Second Forbearance Agreement. (a) Section 9(a) provides that “the occurrence and continuance of any Default or Event of Default under the Loan Agreement or the Loan Documents, as modified 4 4 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 by this Agreement, after the Amendment No. 11 Effective Date, other than the Specified Events of Default” is a Forbearance Default. Id., Ex. 27 § 9(a). Section 9(b) provides that it is a Forbearance Default if “any Loan Party shall fail to keep or perform any of the terms, obligations, covenants or agreements contained in this Agreement.” Id., Ex. 27 § 9(b). (b) Section 4 of the Forbearance Agreement amended the Amended Loan Agreement to limit and cap the “Maximum Amount of the Revolving Facility” at specified amounts for each week for until the Forbearance Period Outside Date. Id., Ex. 27 § 4. (c) Saadia Group’s loan balance with White Oak, plus the amount of letters of credit issued and outstanding under the Amended Loan Agreement, exceeded the amounts permitted by the Second Forbearance Agreement, as follows: Per Forbearance Agreeement Actual Amounts Maximum Amount of Month Week Date Loan Balance L/C's TOTAL Variance Credit Facility Sep-23 week5 $57,700,000 9/29/2023 $56,374,650 $613,196 $56,987,845 $712,155 Oct-23 week1 $57,700,000 10/6/2023 $58,853,656 $613,196 $59,466,852 ($1,766,852) Oct-23 week 2 $57,700,000 10/13/2023 $57,741,509 $613,196 $58,354,705 ($654,705) Oct-23 week 3 $57,700,000 10/20/2023 $56,404,708 $613,196 $57,017,903 $682,097 Oct-23 week 4 $43,000,000 10/27/2023 $56,261,804 $613,196 $56,874,999 ($13,874,999) Nov-23 week 1 $43,000,000 11/3/2023 $56,115,879 $613,196 $56,729,075 ($13,729,075) Nov-23 week 2 $43,000,000 11/10/2023 $55,496,341 $613,196 $56,109,537 ($13,109,537) Nov-23 week 3 $43,000,000 11/17/2023 $54,792,942 $613,196 $55,406,137 ($12,406,137) Nov-23 week 4 $40,000,000 11/24/2023 $53,459,020 $613,196 $54,072,216 ($14,072,216) This chart reflects and summarizes both the relevant provisions of the Second Forbearance Agreement, and White Oak’s “Facility Ledger Report” for the relevant period, a copy of which is attached as Exhibit B to this Supplemental Affirmation and is incorporated by reference herein. (d) Accordingly, Saadia Group was in Forbearance Default as of October 6, 2023, and remained in Forbearance Default as of November 17, 2023, the date of the Funding Reduction Notification, under §§ 9(a) and 9(b) of the Second Forbearance Agreement. 5 5 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 9. Forbearance Defaults under § 9(l) of the Second Forbearance Agreement. (a) This section provides that it is a Forbearance Default if “the weekly variance report required by Section 8(d) above for each week commencing with September 2023 week 3, shall reflect negative variances for two consecutive weeks against the Approved Budget greater than 10% against the Value of Inventory, greater than 20% against the Receipts from Sales, or greater than 20% against the Total Disbursements.” Compl., Ex. 27 § 9(l). (b) Saadia Group repeatedly experienced negative variances against the Approved Budget in breach of Section 8(d) of the Second Forbearance Agreement prior to the November 17, 2023 date of the Funds Reduction Notification, as follows: Receipts from Sales Sep-23 Sep-23 Oct-23 Oct-23 Oct-23 variance analysis week 4 week 5 week 1 week 2 week 3 Approved Budget 3,926 4,328 4,561 4,609 6,120 Actual 2,159 1,542 2,319 3,256 2,513 Variance (1,767) (2,786) (2,242) (1,353) (3,607) Variance % -45% -64% -49% -29% -59% This chart reflects and summarizes the variance reports submitted by Saadia Group to White Oak for the relevant weeks of September and October, 2023, copies of which are attached as Exhibit C to this Supplemental Affirmation and incorporated by reference herein, which together establish variances materially higher than the approved threshold of 20% for two consecutive weeks. (c) Accordingly, Saadia Group was in Forbearance Default since the fourth week of September 2023 and remained in Forbearance Default on November 17, 2023, the date of the Funding Reduction Notification, under § 9(l) of the Second Forbearance Agreement. 6 6 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 10. Forbearance Defaults Under § 9(g)(ii) of the Second Forbearance Agreement. (a) This section provides that it is a Forbearance Default if the “Elion Sale”—defined in the Second Forbearance Agreement to mean the then-pending sale of the 501 Jersey Avenue Premises pursuant to the terms and conditions of that certain Purchase and Sale Agreement between 501 Jersey Avenue LLC, Seller and Elion Acq, LLC, Purchaser, dated as of September 7, 2023 (the “501 Jersey Avenue P&SA)”—was not “consummated on or before the Scheduled Closing Date (as such term is defined in the 501 Jersey Avenue P&SA).” Compl., Ex. 27 § 9(g)(ii). A copy of the 501 Jersey Avenue P&SA is attached as Exhibit D to this Supplemental Affirmation and is incorporated by reference herein. (b) Section 6.01 of the 501 Jersey Avenue P&SA defined the “Scheduled Closing Date” as no later than October 24, 2023, unless extended by the prospective purchaser in accordance with the terms and conditions thereof to no later than November 24, 2023, by having fulfilled certain stated conditions and thereby extending its “Due Diligence Period” thereunder to conduct a “Phase II” environmental report regarding the subject real estate. See Ex. D. (c) I had conversations with Jack Saadia prior to November 1, 2023, in which Jack Saadia told me that the prospective purchaser of 501 Jersey Avenue Premises had not elected to extend the Due Diligence Period and therefore obtain an extension of the Scheduled Closing Date, and that the prospective purchaser had terminated the 501 Jersey Avenue P&SA. (d) Jack Saadia confirmed to me in writing by email on November 16, 2023, that the Elion Sale “did not proceed as anticipated as I strongly believe, had it done so we 7 7 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 would not be in the situation we presently face.” A copy of this email is attached as Exhibit E to this Supplemental Affirmation and is incorporated by reference herein. (e) The Elion Sale did not close by its Scheduled Closing Date, i.e., October 24, 2023; indeed, before the end of October 2023 the proposed transaction had failed and was never consummated. This sale was supposed to pay down the loan by $15 million. (f) Accordingly, Saadia Group was in Forbearance Default on October 24, 2023, and remained in Forbearance Default on November 17, 2023, the date of the Funding Reduction Notification, under § 9(g)(ii) of the Second Forbearance Agreement. 11. Forbearance Defaults Under § 9(j) of the Second Forbearance Agreement. (a) This section provides that it is a Forbearance Default “[i]f on or before October 20, 2023, Loan Parties shall fail to implement an enhanced aged inventory liquidation process which will include one or more third-party liquidator operated brick-and- mortar retail stores which will be opened as soon as reasonably practical.” Compl., Ex. 27 § 9(j). (b) The Loan Parties failed to so implement an “enhanced aged inventory liquidation process” by the required date. (c) Accordingly, Saadia Group was in Forbearance Default as of October 20, 2023, and remained in Forbearance Default on November 17, 2023, the date of the Funding Reduction Notification, under Section 9(j) of the Second Forbearance Agreement. 12. Forbearance Defaults Under § 9(d)(2) of the Second Forbearance Agreement. (a) This section provides that it is a Forbearance Default if the Loan Parties “fail to furnish to Lender . . . agings of the Borrower’s accounts payable (i) on the Friday of the first and third fiscal weeks for the months of October and November and (ii) on the Friday 8 8 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 of the first and fourth fiscal weeks for the months of September, December and January.” Compl., Ex. 27 § 9(d)(2). (b) The Loan Parties never furnished White Oak with the accounts payable agings due on each of September 22, October 6, October 20, and November 3, 2023; their failures with respect to the September 22 and October 6, 2023 deliverables is set forth in writing in the email attached as Exhibit F to this Supplemental Affirmation and incorporated by reference herein. (c) Accordingly, Saadia Group was in Forbearance Default as of September 22, 2023, and remained in Forbearance Default on November 17, 2023, the date of the Funding Reduction Notification, under § 9(d)(2) of the Second Forbearance Agreement. 13. Based upon the occurrence of the Forbearance Defaults described above, each of which occurred before November 17, 2023, White Oak was contractually entitled under the Second Forbearance Agreement to restrict funding to Saadia Group on and after November 17, 2023, pursuant to paragraph “3” of the Second Forbearance Agreement. Saadia Group’s Retention and Fire-Sale Of White Oak’s Inventory Collateral Is Not Commercially Reasonable And Inverts The Ordinary Course In Which A Secured Party Is Entitled By Contract And The UCC To Direct and Implement The Liquidation Of Its Collateral Following the Debtor’s Default 14. As my counsel advised the Court at the hearing on February 20, 2024, White Oak’s contractual right under the Amended Loan Agreement and its accompanying documents to have been given immediate possession of the Collateral after it accelerated the loan on January 30, 2024, is further recognized by § 9-609 of the Uniform Commercial Code as enacted in New York, which my counsel informs me is explained in Official Comment No. 2 thereto as follows: “This section . . . provides that the secured party is entitled to take possession of collateral after default.” (emphasis added). 9 9 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 15. The Saadia Group is admittedly conducting a fire sale of White Oak’s inventory Collateral, with “all sales final,” no returns allowed, and at discounts of as much at 75–85%, which is not in the ordinary course of business, and even though the Court’s original temporary restraining order (NYSCEF Doc. No. 43) and Amended TRO (NYSCEF No. 49]) prohibited such conduct. This type of sales is a liquidation. The customers are savvy and are taking advantage of these deep discounts to purchase the most valuable inventory at unusually low prices that are not in the ordinary course. This will leave a batch of inventory for White Oak that is “broken,” completely useless, and will simply not be marketable, decreasing the value of the Collateral pool, and preventing White Oak from extracting the maximum value from its Collateral that it specifically bargained for in the event this type of situation arose. Such continued fire sales of White Oak’s Inventory Collateral will dramatically reduce the value of whatever inventory will remain when these fire sales cease to dispose of goods; for example when nothing is left but the dregs of the inventory—odd sizes, colors, styles, damaged goods, and the like (i.e., “broken inventory”)—which will make it unfeasible and unlikely that a professional liquidator will be interested in a bulk purchase, which if obtained before Saadia Group’s fire sales had started, would have maximized the value of all of White Oak’s Inventory and IP Collateral. This is not commercially reasonable by any standard. 16. In reviewing an inventory file provided by the Saadia Group, there was a drastic change in inventory amounts compared to the last report provided to White Oak. As the Court will see below: • The Lord & Taylor inventory decreased 39% at cost, 43% at retail, and 30% in units. • The FTF inventory decreased 22% at cost, 12% at retail, and 25% in units. • The NYCO inventory decreased 9% at cost, 11% at retail, and 10% in units. 10 10 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 17. Saadia Group has not offered any explanation for this drastic reduction in inventory in just two weeks. It also has offered no economic analysis in support of its arguments that it is acting commercially reasonably and its actions maintain the status quo. Saadia Group merely says it will be damaged if it is required by the Court to turn over the Collateral to White Oak in compliance with its contractual obligations that are recognized by statute. Saadia Group wants to liquidate the Collateral in the manner it deems best, after years of significant losses, and the inability or unwillingness to self-liquidate in a consensual manner according to a consensual business plan supported by White Oak. However, Saadia Group lost the right to dictate the terms of its liquidation, and to control and retain possession of the Collateral, when White Oak accelerated the loan and demanded the turnover of its Collateral on January 30, 2024, which was White Oak’s contractual and legal right at all times after November 17, 2023, if not earlier. 18. If the status quo as of this moment is that Saadia Group retains possession of the Collateral and the ability to dictate its liquidation, it is only because Saadia Group is doing so in breach and wrongful derogation of its contractual obligations to White Oak, contrary to 11 11 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 the Uniform Commercial Code. A thief is not entitled to retain stolen property by saying that its doing so respects the status quo and that being compelled to give back its ill-gotten gains will violate the status quo. This absurd argument and result must not be countenanced by the Court. Defendant Joseph Saadia Owns The Warehouses 19. Attached hereto as Exhibit G is a copy of a Personal Financial Statement, dated March 31, 2023, signed by Joseph Saadia and delivered to White Oak on or about May 24, 2023, redacted to protect certain sensitive information. 20. As the Court will see, in Schedule 5b, Joseph Saadia lists his “Investment[s] Real Owned” to include (a) 1735 Jersey Avenue, North Brunswick, NJ; (b) 501 Jersey Avenue, New Brunswick, NJ; and (c) 1000 Stoney Battery Rd. Lancaster, PA. These are the Warehouses where White Oak’s Collateral is located. 21. Jack Saadia has admitted to me during many conversations that he and his brother Joseph own and control the Warehouses. They also use the Warehouses to service other businesses they own and control. Monies from the sale of White Oak’s Collateral, including money deposited in the TD Bank Accounts, should not be used to pay the employees or other costs of the Warehouses who are providing services to other customers. During recent visits we learned that Aquatalia inventory that is part of White Oak’s Collateral was staged to ship to fulfill Nordstrom Orders. The bills of lading showed S3 as the shipper. S3 is not a Loan Party and should not be shipping any Aquatalia branded product. Attached as Exhibit H are pictures of Collateral inventory being shipped by S3. This Court Has Personal Jurisdiction Over The Warehouses 22. I have reviewed White Oak’s records and have confirmed that there were no less than eight (8) in person meetings with Jack Saadia and White Oak that occurred in New 12 12 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 York at White Oak’s offices at 1155 6th Avenue, NY, NY and/or the PKF O’Connor Davies offices at 245 Park Avenue, New York between April 12, 2022 and September 27, 2023. The purpose of these meeting was to discuss the Amended Loan Agreement, including but not limited to all of White Oak’s Collateral located at the Warehouses that Joseph and Jack Saadia own and control. [remainder of page intentionally left blank] 13 13 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 14 of 15 FILED: NEW YORK COUNTY CLERK 02/22/2024 09:38 AM INDEX NO. 650682/2024 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 02/22/2024 CERTIFICATION OF COUNSEL Pursuant to Rule 17 of the Rules of Practice for the Commercial Division, the total number of words in this Affirmation, excluding the caption and signature block, is 3,502 words. Dated: New York, New York February 22, 2024 THOMPSON COBURN LLP By: /s/ John P. Amato________ John P. Amato Joseph V. De Santis Vidya Dindiyal 488 Madison Avenue New York, New York 10022 (212) 478-7200 jamato@thompsoncoburn.com jdesantis@thompsoncoburn.com vdindiyal@thompsoncoburn.com Attorneys for Plaintiff White Oak Commercial Finance, LLC 8073480.3 15 of 15