M. Fine Lumber Co., Inc.

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
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In re
Case No. 07-43529-CEC
M. FINE LUMBER CO., INC.,
Chapter 11
Debtor.
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DECISION
Appearances:
Gary B. Sachs, Esq.
Hofheimer Gartlir & Gross, LLP
530 Fifth Avenue
New York, New York 10036
Attorneys for Debtor
Clifford A. Katz, Esq.
Platzer Swergold Karlin Levine
Goldberg & Jaslow, LLP
1065 Avenue of the Americas
New York, New York 10018
Attorneys for the Committee of
Unsecured Creditors
Scott H. Rosenblatt, Esq.
Jocelyn Lee Jacobson, Esq.
Reitler Brown & Rosenblatt, LLC
800 Third Avenue
New York, New York 10022
Attorneys for New York Timber
Neal M. Rosenbloom, Esq.
Finkel Goldstein Rosenbloom & Nash, LLP
26 Broadway
New York, New York 10004
Attorneys for Peabody Webster Holdings LLC
William E. Curtin, Esq.
271 Cadman Plaza East
Suite 4529
Brooklyn, New York 11201
Office of the United States Trustee
CARLA E. CRAIG
Chief United States Bankruptcy Judge

1
This matter comes before the Court on the motion of M. Fine Lumber Company, Inc. (the
"Debtor") to assume its commercial lease with Peabody Webster Holdings LLC (the "Landlord")
pursuant to § 365 of Title 11, U.S.C. (the "Bankruptcy Code"). The Landlord objected to the
Debtor's assumption of the lease. For the following reasons, the Debtor's motion is granted, on
the condition that, within 10 days after entry of the order granting this motion, the Debtor tenders
to the Landlord the full amount due to cure pre-petition defaults under the Lease (including
$7,000, on account of attorneys' fees to which the Landlord may be entitled under the lease),
together with $50,000 as an additional security deposit.
Jurisdiction
This Court has jurisdiction over this core proceeding under 28 U.S.C. §§ 1334(b) and 157
and the Eastern District of New York standing order of reference dated August 28, 1986. This
decision constitutes the Court’s findings of fact and conclusions of law to the extent required by
Federal Rule of Bankruptcy Procedure 7052.
Facts
On June 29, 2007, the Debtor filed a voluntary petition under Chapter 11 of the
Bankruptcy Code. 	On Schedule G, the Debtor listed a commercial lease with the Landlord for
the premises located at 1301 Metropolitan Avenue, Brooklyn, New York (the "Lease") as an
executory contract. The Debtor operates a lumberyard located at the premises subject to the
Lease.
On August 2, 2007, the Landlord filed a motion to compel the Debtor to pay post-petition
rent and real estate taxes due under the Lease, and to provide proof that it maintains required
insurance coverage.

2
1 "Tr." refers to the transcript of the hearing held on January 25, 2008.
On October 24, 2007, pursuant to § 365(d)(B)(i) of the Bankruptcy Code, the Court
extended the Debtor's time to assume or reject executory contracts and unexpired leases to
January 25, 2008, which is the 210th day after the date this case was commenced.
On January 9, 2008, the Debtor filed a motion to assume the Lease pursuant to 11 U.S.C.
§ 365(a) of the Bankruptcy Code. The Debtor asserted that it owed approximately $25,000 in
pre-petition rental arrears and $18,500 in post-petition real estate taxes, totaling $43,500. The
Landlord argued that the Debtor owes pre-petition rental arrears of $24,961.74, post-petition real
estate taxes of $17,929.66, and reimbursement of legal fees incurred by the Landlord of
approximately $9,200, totaling $63,891.40. The Landlord estimated that the amount of attorneys
fees would increase to $11,000. The Landlord also argued that the Debtor did not provide
"adequate assurance of future performance" as required by § 365.
When the Debtor commenced this case, an eviction proceeding was pending due to the
Debtor's failure to pay rent. (Tr. 1 at 42.) At the hearing on the Debtor's motion to assume the
Lease, the Debtor stipulated that it is not relying on its payment history with the Landlord to
show adequate assurance of future performance, and that Debtor's record of payment under the
Lease would not support a finding of adequate assurance. (Tr. at 72.) Although the Debtor's
principal testified that the company has "about broken even" in Chapter 11, he conceded that the
Debtor has accrued post-petition administrative expenses that it cannot currently pay, including
$35,000 post-petition payments owed to its workers' union. (Tr. at 41, 42, 44.) On January 17,
2008, the United States Trustee filed a motion to dismiss the case, or alternatively, to convert it
to Chapter 7.

3
On January 25, 2008, the Court held an evidentiary hearing on the Debtor's motion to
assume the Lease, during which the Court heard testimony and oral argument. At the hearing,
the Debtor tendered checks to the Landlord for $43,000, representing the pre-petition and post
petition rental arrears. (Debtor's Exs. 1A, 1B, 1C.) The Landlord accepted the payment for post-
petition arrears, but declined to take payment for the pre-petition arrears, reserving the right to
receive the cure amounts in the event that the Debtor is permitted to assume the Lease.
Legal Standard
Section 365(a) of the Bankruptcy Code permits a debtor in possession to assume or reject
executory contracts and unexpired leases. 11 U.S.C. § 365(a). Section 365(b) of the Bankruptcy
Code provides that if there has been a default under the executory contract or unexpired lease, a
debtor in possession may not assume an executory contract or unexpired lease unless it:
(A) cures, or provides adequate assurance that the trustee will
promptly cure, such default . . . ;
(B) compensates, or provides adequate assurance that the trustee
will promptly compensate, a party other than the debtor to such
contract or lease, for any actual pecuniary loss to such party
resulting from such default; and
(C) provides adequate assurance of future performance under such
contract or lease.
11 U.S.C. § 365(b)(1).
The purpose of § 365 "is to assist in the debtor's reorganization effort." In re Westview
74th St. Drug Corp., 59 B.R. 747, 754 (Bankr. S.D.N.Y. 1986).

4
A. 	Cure of Defaults
1. 	Attorneys' Fees
The Debtor argues that the Landlord is not entitled to recover attorneys fees pursuant to
the Lease, and that such amounts should not be included in the amount required to cure the
default. The Landlord argues that it entitled to attorneys' fees pursuant to the Lease.
Section 365(b) of the Bankruptcy Code does not provide an independent basis for
recovery of attorneys' fees. 11 U.S.C. § 365(b); In re Best Products Co., 148 B.R. 413, 414
(Bankr. S.D.N.Y. 1992). A landlord is entitled to recover attorneys' fees in connection with
lease assumption pursuant to § 365(b) only to the extent provided for in the lease. In re Ames
Dep't Stores, Inc., 306 B.R. 43, 81 (Bankr. S.D.N.Y. 2004); Best Products, 148 B.R. at 414;
Westview, 59 B.R. at 756. It has been held that attorneys' fees are not recoverable "[w]here
litigated issues involve not basic contract enforcement questions, but issues peculiar to
bankruptcy law." Best Products, 148 B.R. at 414. Certainly this would be true in the absence of
an attorneys' fees clause in the Lease broad enough to include fees incurred in litigating
bankruptcy issues.
The Lease contains two provisions for the reimbursement of fees. Paragraph 20 of the
Lease provides, in pertinent part:
If the Tenant shall at any time be in default hereunder, and if the
Landlord shall institute an action or summary proceeding against
the Tenant based upon such default, then the Tenant will reimburse
the Landlord for the expense of attorneys' fees and disbursements
thereby incurred by the Landlord, so far as the same are reasonable
in amount.
(Lease at ¶ 20.)

5
Paragraph 60 of the rider to the Lease provides that the maximum the Landlord may
recover for "any such summary proceedings" is $5000. Rider to Lease at ¶ 60. The Lease,
therefore, is unambiguous that the Landlord is entitled to recover attorneys' fees and
disbursements for any summary proceeding commenced based on the Debtor's default under the
Lease.
The Landlord asserts that the fees incurred in compelling the Debtor to perform its
obligations under the Lease, as well as the fees incurred in objecting to the Debtor's motion to
assume the Lease, are recoverable pursuant to paragraph 20 of the Lease. It is clear that none of
these services were rendered in the context of a summary proceeding. The question, therefore, is
whether the fees are compensable under the language of paragraph 20, which provides for
recovery of attorneys' fees "if the Landlord shall institute an action . . . based upon . . .
[Tenant's] default [under the lease]."
Black's Law Dictionary's definition of "action" includes "[a] civil or criminal judicial
proceeding." Black's Law Dictionary 31 (8th ed. 2004). The Landlord's motion to compel the
Debtor to perform its obligations under the Lease was a judicial proceeding instituted by the
Landlord based upon the Debtor's defaults under the Lease. The Landlord is therefore entitled to
recover attorneys' fees and costs incurred in connection with the motion.
The Landlord may not recover the attorneys' fees and costs incurred in objecting to the
Debtor's motion to assume the Lease. The language of the Lease provides for reimbursement "if
the Landlord shall institute" an action. The motion to assume the Lease was instituted by the
Debtor, and the Landlord objected to the relief sought. Furthermore, fees and costs were
incurred in objecting to the assumption of the Lease largely related to the Landlord's contention

6
that the Debtor has failed to provide "adequate assurance of future performance," which is not an
issue of contract enforcement, but arises solely under bankruptcy law. As such, they are not
recoverable under the language of the attorneys' fees clause of the Lease. In re Child World,
Inc., 161 B.R. 349, 354 (Bankr. S.D.N.Y. 1993); Best Products, 148 B.R. at 414.
The amount of fees recoverable by the Landlord will be determined at a later hearing.
However, for purposes of determining whether the Debtor has provided adequate assurance that
the cure amount will be promptly paid, the Court will estimate the fees at $7,000, approximately
75% of the total attorneys' fees claimed by the Landlord prior to the commencement of the
hearing on this motion.
2. 	Removal of Graffiti
The Landlord argues that the Debtor has defaulted under the Lease because it has not
removed graffiti which has been on the premises since December 2007. (Tr. at 74.) The Debtor
asserts that it requested graffiti removal pursuant to a New York City program that provides this
service free of charge, and anticipates that removal will be completed by early April or late May.
(Tr. at 75, 77.) The Landlord argued that graffiti removal is not free under the program and that
the Debtor must pay for it.
The Court heard testimony from Constance Cincotta, a member of the Landlord. (Tr. at
67.) She testified that she has had three "tags" of graffiti removed from other premises, and the
cost of such removal by a private contractor was $7,500. (Tr. at 80.)
Section 365(b)(1)(A) provides that the debtor must cure, or provide adequate assurance
that it will promptly cure any defaults. "Whether a cure is 'prompt' for purposes of

7
§ 365(b)(1)(A) depends on the facts and circumstances of each case." In re Embers 86th St.,
Inc., 184 B.R. 892, 900 (Bankr. S.D.N.Y. 1995.)
Here, the Debtor has undertaken that the graffiti will be removed by May, 2007. The
Debtor stated that if the graffiti removal is not free of charge, it will pay for the removal from
funds which are being made available to the Debtor to pay Lease obligations post-assignment.
(Tr. at 76.) Together with the additional security deposit which the Debtor will be required to
pay as a condition to assumption of the Lease, this constitutes adequate assurance of prompt cure
of this default.
B. 	Adequate Assurance of Future Performance Under the Lease
The Debtor argues that it provided adequate assurance of future performance by entering
into two separate agreements with third parties. The first of these agreements is with Greystone
Business Credit II LLC ("Greystone"), the debtor's post-petition lender (the "Greystone
Agreement"). 	The Greystone agreement provides for an additional $100,000 borrowing facility
to be available to the Debtor, to be used for working capital and to provide adequate assurance of
future performance under the Lease. (Debtor's Ex. 3.) The Greystone Agreement provides that
$53,000 of the advance would be available only to make contractual rent and other payments to
the Landlord, and would be disbursed directly to the Landlord upon receipt of notice that rent
had not been timely paid. Id. This restricted amount is equal to approximately four monthly rent
payments under the Lease (exclusive of taxes).
The monies to be advanced under the Greystone Agreement would be available for a
period not greater than six months from the first advance. The availability of the facility is
conditioned upon Greystone's receipt of a mortgage on the residence of the Debtor's principal,

8
Louis Fine, which he owns with his wife. Id. Mrs. Fine did not sign the Greystone Agreement,
but Mr. Fine offered testimony, obviously hearsay, that she had agreed to provide the mortgage
to Greystone and that she had authorized him to sign the Greystone Agreement on her behalf.
(Tr. at 26.) The Greystone Agreement is a modification of the Debtor's existing lending facility
with Greystone, which provides that the right to borrow terminates upon, among other things, the
conversion or dismissal of the case. (Debtor's Financing Mot. (Docket # 34), Ex. A at 20-21, ¶
7.1.) The Greystone Agreement would also be subject to Bankruptcy Court approval (see 11
U.S.C. § 364).
The second agreement proffered by the Debtor as adequate assurance of future
performance under the lease is with New York Timber ("NY Timber"), whose principal is
Merritt Fine, the son of the Debtor's principal (the " NY Timber Agreement"). Pursuant to the
NY Timber Agreement, NY Timber agrees to guarantee the rental payments under the Lease
until the Debtor confirms a Chapter 11 plan of reorganization, the Lease is assigned, or the
Debtor's case is converted or dismissed. (Debtor's Ex. 4.) The NY Timber Agreement also
provides that NY Timber will deposit in escrow an amount equal to two months of rent under the
Lease, "as added assurance of this guarantee." The NY Timber Agreement does not specify
exactly how and when the Landlord would be able to draw on these funds; however, the NY
Timber Agreement is clear that the escrowed funds would be returned to NY Timber upon
conversion or dismissal of the case. Id.
In addition, separate from any amounts that may become available for rent payments
under the Greystone Agreement and the NY Timber Agreement, the Landlord holds a security

9
deposit of $20,000, which equals approximately one and one-half months of rent, not including
taxes.
The Debtor also offered expert testimony concerning value of the Lease in support of its
contention that it has fulfilled the requirement of § 365(b)(1)(C) to provide adequate assurance
of future performance under the Lease. Neil Dolgin is an executive vice president of Kalman
Dolgin Inc., a real estate brokerage firm specializing in industrial commercial real estate in the
five boroughs of New York City, and holds an M.B.A. concentrating in "real estate and urban
development throughout New York City." (Tr. at 13.) He has appraised over 200 properties
since 1975 in the past five years. (Tr. at 13-14.) In light of his experience and expertise, and in
the absence of objection to his qualifications, Mr. Dolgin was qualified as an expert witness in
the field of appraisal of real property. (Tr. at 18.)
Mr. Dolgin testified that the Lease premises is approximately 60,000 square feet, and that
the rent under the Lease is approximately $3.18 per square foot, including taxes. (Tr. at 14-15.)
He testified that, on a conservative basis, the market rent for the premises is approximately $5
per square foot, including taxes. (Tr. at 18-19.) Mr. Dolgin estimated that the Lease is $1.8 per
square foot or $108,000, per year under market. (Tr. at 20-21, 22.) Based on Mr. Dolgin's
testimony, therefore, it appears that the Lease is approximately 36% under market. Taken
together with the substantial term remaining under the Lease (six years with a ten-year renewal
option), the Lease's under-market rent makes it an asset with substantial potential value. (Tr. at
69.)
Mr. Dolgin further testified that the leased premises consists primarily of vacant land,
and is located on the border of Queens and Brooklyn, zoned for heavy industrial use. (Tr. at 19-

10
20.) He testified that it would not be difficult to market the Lease because "there's a very big
need for vacant land for these various different companies that have been pushed off their
property for the recent redevelopment of other properties in and around the metropolitan area."
(Tr. at 20.) Mr. Dolgin estimated that it would take "in the range of three months" to find
another tenant to take over the space and assume the Lease. (Tr. at 19.)
The Debtor argues that, although its own payment record, both pre and post-petition, is
admittedly less than stellar, the combination of Greystone and NY Timber Agreements, together
with the Lease's significant market value, provides adequate assurance of future performance.
According to the Debtor, within the next six months, either the Debtor, with the assistance of NY
Timber, will propose a plan of reorganization to recapitalize the Debtor and place it on a sound
financial footing; or, the Lease will be sold to a third party. (Tr. at 10, 41, 62-64, 72.) The
Debtor contends that the Greystone Agreement and NY Timber Agreement, taken together,
provide assurance to the Landlord that the rent will be paid during that six month period, and the
inherent value of the Lease, which is 36% below market for vacant industrial use property that is
significantly in demand in the New York City metropolitan area, provides adequate assurance
that if a plan cannot be confirmed, the Lease will be sold.
The Landlord argues that the Debtor has not provided "adequate assurance of future
performance," pointing to the Debtor's undisputed history of failing to timely pay rent under the
Lease, both pre-petition and post-petition. The Landlord contends that the Greystone Agreement
and the NY Timber Agreement are insufficient to provide adequate assurance because those
agreements expire in six months, and are subject to earlier termination if (among other things)
this case is converted or dismissed, while the Lease's term runs for another six years, with a ten

11
year renewal option. The Landlord also points out that the Greystone Agreement is subject to
conditions which were not met at the time of the hearing (such as receiving a mortgage on the
principals' residence), and that the NY Timber Agreement's guarantee was unsupported by
evidence of NY Timber's ability to perform that guarantee. The Landlord contends that the
evidence presented by the Debtor of the Lease's intrinsic value should not be considered in
determining whether the debtor has provided adequate assurance of future performance. The
Landlord points out that the Debtor has no assignee and is not moving to assign the Lease, and
argues that to permit the Debtor to assume the Lease based on evidence of future saleability is
tantamount to extending the Debtor's deadline to assume or reject the Lease beyond the 210 day
time limit set by § 365(d)(4)(B).
The term "adequate assurance of future performance" is not statutorily defined. Courts
have looked to the legislative history to determine its meaning. In re Rachels Indus., Inc., 109
B.R. 797, 803 (Bankr. W.D. Tenn. 1990); Westview, 59 B.R. at 754; In re Natco Indus., Inc., 54
B.R. 436, 440 (Bankr. S.D.N.Y. 1985); In re Sapolin Paints, Inc., 5 B.R. 412, 420 (Bankr.
E.D.N.Y. 1980). The legislative history indicates that Congress intended to give the term "a
practical, pragmatic construction." Sapolin Paints, 5 B.R. at 420. Whether "adequate assurance
of future performance" has been provided is determined by the facts and circumstances of each
case. In re Texas Health Ents., Inc., 72 Fed. Appx. 122, 126 (5th Cir. 2003); In re Gen. Oil
Distribs., Inc., 18 B.R. 654, 658 (Bankr. E.D.N.Y. 1982); Chera v. 991 Blvd. Realty Corp. (In re
Nat'l Shoes, Inc.), 20 B.R. 55, 59 (Bankr. S.D.N.Y. 1982); In re Lafayette Radio Elecs. Corp., 9
B.R. 993, 998 (Bankr. E.D.N.Y. 1981). A debtor need not prove that it will "thrive and make a
profit," Natco, 54 B.R. at 440, or provide "an absolute guarantee of performance," In re Silent

12
Partner, Inc., 119 B.R. 95, 98 (E.D. La. 1990). It must simply "appear[] that the rent will be paid
and other lease obligations met." Westview, 59 B.R. at 755. As one court stated:
The emphasis is on protection. Section 365 gives no indication
that a landlord . . . is to improve its position upon the bankruptcy
of a tenant. The statute affords no relief to a landlord simply
because it might have the opportunity to rent the premises to others
at a higher base or percentage rent and would otherwise seek to
escape the bargain it made.
Natco, 54 B.R. at 441 (citing In re Webster Clothes, Inc., 36 B.R. 260, 264 (Bankr. D. Md.
1984). In determining whether "adequate assurance of future performance" has been shown,
courts have considered some of the following factors:
(1) 	the debtor's payment history;
(2) 	presence of a guarantee;
(3) 	presence of a security deposit;
(4) 	evidence of profitability;
(5) 	a plan which would earmark money exclusively for the
landlord;
(6) 	the general outlook in the debtor's industry; and
(7) 	whether the unexpired lease is at, or below, the prevailing
rate.
See In re Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1310 (5th Cir. 1985);
Embers, 184 B.R. at 902; Westview, 59 B.R. at 755; Natco, 54 B.R. at 440; Sapolin Paints, 5
B.R. at 421.

13
Courts have found adequate assurance of future performance in a number of different
factual situations. See Westview, 59 B.R. at 755 (increase of sales, reduction of operating
expenses, and two months' security); Lafayette Radio, 9 B.R. at 1000 (court previously held that
debtor's sublease program, together with a proposed merger, provided adequate assurance; court
further found that proposed sublessee had a likelihood of success, value of sublease to debtor,
$10,000 security deposit, and $10,000 promissory note was sufficient); Sapolin Paints, 5 B.R. at
421 (below-market lease furnished adequate assurance). See also In re Ames Dep't Stores, 348
B.R. 91, 98 (Bankr. S.D.N.Y. 2006) (stating that, with respect to assumption and assignment of
leases in bankruptcy, "Congress has determined that the economic value in below market leases
is to go to creditor bodies generally, and not to a windfall for a single creditor"). The debtor
bears the burden of showing that the requirements for assumption under § 365 have been met.
Embers, 184 B.R. at 902; Rachels Indus., 109 B.R. at 802.
The Landlord contends that the market value and saleability of the Lease cannot be taken
into consideration in determining whether adequate assurance of future performance has been
shown. This Court disagrees. Nothing in § 365(b), or in the case law interpreting it, so restricts
the evidence which may be considered in this regard. To the contrary, courts have expressly
found the market value of a lease to be a factor providing adequate assurance of future
performance. See In re Serv. Merch. Co., 297 B.R. 675, 683 (Bankr. M.D. Tenn. 2002)
(considering value of below market lease in the context of adequate assurance under 11 U.S.C. §
365(b)(3)); In re Rickel Home Ctrs., Inc., 240 B.R. 826, 835 (D. Del. 1998) (considering the
value of below market lease in the context of adequate assurance under 11 U.S.C. § 365(b)(3));
Sapolin Paints, 5 B.R. at 421. In Sapolin Paints, for example, the court held noted that the rent

14
under the lease in question was significantly below market, and found that this "economic
condition . . . [provides] protection against the possibility that [the] property will be vacated and
abandoned sometime in the indefinite future . . . ." Sapolin Paints, 5 B.R. at 421. Accord,
Lafayette Radio, 9 B.R. at 1000.
Based upon Mr. Dolgin's testimony that the rent under the Lease is approximately 36%
below market, and that there is a high demand for vacant land such as the leased premises in
New York City for industrial use, it appears likely that the Debtor, or a trustee, if the case is
converted to Chapter 7, would be successful in finding a buyer for the Lease. It should be noted
that the Lease contains no restrictive use clause which, if enforceable in this bankruptcy case,
would limit the type of commercial or industrial tenant to which the Lease could be marketed.
The Landlord's contention that to find adequate assurance of future performance based
upon evidence of the Lease's market value amounts to a sub rosa extension of the Debtor's time
to assume the Lease, in violation of § 365(d)(4)(B)(ii), must be rejected. Section 365(d)(4) sets a
deadline for the assumption of a lease in order to limit the period during which a lessor may be
kept in "limbo," with a lease that has not been assumed or rejected. During that time, the
landlord does not know whether the lease will be assumed, and pre-petition defaults cured, or
whether it will be rejected, leaving the landlord with an unsecured claim for pre-petition arrears
and with vacant space to be re-let. During this "limbo" period, which, prior to the 2005
amendments to the Bankruptcy Code, often extended for years, the landlord may be forced to
forego opportunities to rent the space to desirable substitute tenants, and the rental market may
turn against the lessor.

15
To alleviate the effect of this uncertainty, the 2005 amendments to the Bankruptcy Code
imposed a firm deadline for lease assumption, which the Debtor has met. Allowing the Debtor
to assume the Lease based upon the showing made here is not equivalent to extending that
deadline. The Landlord will receive all the benefits of lease assumption: defaults will be cured,
and if the lease is subsequently rejected, the landlord will be entitled to an administrative
expense claim to the extent provided by § 503(b)(7). The Landlord may disagree with this
Court's factual finding that adequate evidence has been presented that future obligations under
the Lease will be performed, but that does not place the Landlord in the same position as if the
Lease had not been assumed or rejected.
The question remaining is whether the Debtor has shown that there is adequate assurance
of future performance of the Lease obligations in the immediate future, until a plan is confirmed
or a buyer is found for the Lease. The Landlord argues that the assurance of payment provided
by the Greystone Agreement and the NY Timber Agreement is illusory. The Greystone
Agreement is subject to conditions, such as Greystone obtaining a mortgage on the Fines'
residence, which have not been met; Mrs. Fine, whose consent would be necessary, neither
signed the Greystone Agreement nor testified, and no updated title search has been performed to
determine whether, for example, there are other liens on the residence that might lead Greystone
to conclude that there is insufficient equity in the Fines' residence to support an additional
$300,000 advance.
With respect to the NY Timber Agreement, the Landlord points out that no evidence has
been presented of the ability of NY Timber to perform under the guarantee, and that under the

16
2 Because the Lease is a valuable asset, if it is assumed, it is unlikely that the case would be dismissed.
guarantee, including the escrowed two months of rent securing the guarantee, terminates if this
case is converted or dismissed.
These are valid objections to the Debtor's proffer of the Greystone Agreement and NY
Timber Agreement as adequate assurance of future performance. The U.S. Trustee has moved to
convert or dismiss this case, based upon, among other things, the Debtor's failure to remain
current with post-petition obligations. Given the Debtor's track record in this case, there is no
guarantee that this case will not be converted in the near future.2
Therefore, in order to provide adequate assurance of future performance, the Debtor must
provide the Landlord with a sufficient security deposit to insure that, if the case is converted, the
Landlord will receive rent payments while the trustee finds a buyer for the Lease. In light of Mr.
Dolgin's testimony that a buyer for the Lease could be found "in the range of" three months, a
security deposit equal to four months' rent, plus the taxes which will become due in July (which
is within the four month period) is adequate. Monthly rent payments are approximately $13,000,
and the real estate tax bill due in January was approximately $18,000. Given that the Landlord
holds a security deposit of $20,000, the amount that would be required as an additional security
deposit to provide adequate assurance of future performance is $50,000.

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Conclusion
For all of the foregoing reasons, the Debtor's motion to assume the Lease is granted,
conditioned upon the Debtor paying the following amounts to the Landlord, within ten days after
the entry of this Court's order authorizing assumption of the Lease:
(1) 	$24,961.74, representing pre-petition rental arrears;
(2) 	$50,000, as an additional security deposit; and
(3) 	$7,000, on account of attorneys' fees due under the Lease.
The latter amount is to be held by the Landlord's counsel pending determination of the
amount of attorneys' fees owed, which will be set down for a hearing.
A separate order will be issued herewith.
Dated: Brooklyn, New York
March 12, 2008
s/Carla E. Craig
CARLA E. CRAIG
Chief United States Bankruptcy Judge