Hawkeye Entertainment, LLC

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UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
SAN FERNANDO VALLEY DIVISION
In re:
HAWKEYE ENTERTAINMENT, LLC,
Debtor and Debtor in Possession.
HAWKEYE ENTERTAINMENT, LLC,
Plaintiff,
v.
SMART CAPITAL INVESTMENTS I, LLC;
SMART CAPITAL INVESTMENTS II, LLC;
SMART CAPITAL INVESTMENTS III, LLC;
SMART CAPITAL INVESTMENTS IV, LLC;
SMART CAPITAL INVESTMENTS V, LLC; and
MICHAEL S. CHANG,
Defendants.
SMART CAPITAL INVESTMENTS I, LLC,
et al.,
Counterclaimants,
v.
HAWKEYE ENTERTAINMENT, LLC, a
California limited liability company; W.E.R.M.
INVESTMENTS, LLC, a California Limited
Liability Company; and ROES 1-20
Counterclaim Defendants.
Case No. 1:23-bk-11501-MB
Chapter 11
Adv. No. 1:24-ap-01031-MB
CONSOLIDATED FINDINGS OF
FACT AND CONCLUSIONS OF LAW
FOLLOWING TRIAL
Trial Held:
Dates: June 8–11, 2026
Place: Courtroom 303
21041 Burbank Boulevard
Woodland Hills, CA 91367
FILED & ENTERED
SEP 18 2026
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY DEPUTY CLERK	Cetulio
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I. INTRODUCTION
On June 8–11, 2026, the Court held a consolidated evidentiary hearing on motions filed in Case
No. 1:23-bk-11501-MB (the "Bankruptcy Case") and a trial on the complaint and counterclaim filed in
Adv. No. 1:24-ap-01031-MB (the "Adversary Proceeding") (collectively, the "Proceedings"), the
Honorable Martin R. Barash, United States Bankruptcy Judge, presiding. Present on behalf of the
Debtor and Debtor in Possession/Plaintiff/Counter-Defendant Hawkeye Entertainment, LLC ("Debtor"
or "Hawkeye") and Counterclaim-Defendant W.E.R.M. Investments, LLC ("WERM") were Sandford
Frey, Esq. of Stinson LLP; Jordan Shaw, Esq.; Zachary Ludens, Esq., and Lauren Palen, Esq. of Shaw
Lewenz; and Adi McAbian ("Mr. McAbian"). No counsel appeared for Defendants/Counterclaimants
Smart Capital Investments I, LLC; Smart Capital Investments II, LLC; Smart Capital Investments III,
LLC; Smart Capital Investments IV, LLC; Smart Capital Investments V, LLC (collectively, "Smart
Capital"). Defendant Michael S. Chang ("Mr. Chang") appeared on his own behalf, pro se, made
argument, and presented evidence. A translator was present for the entirety of trial for Mr. Chang.1
The issues at trial were as follows:
A. The Bankruptcy Case
a. Motion of Hawkeye Entertainment, LLC, Debtor and Debtor-in-Possession for an
Order (1) Authorizing the Assumption of Non-Residential Real Property Lease and Sublease,
and (2) Determining the Debtor and Sublessor Not to Be in Breach or Default, Thereby Deeming
Them in Compliance with 11 U.S.C. § 365(b)(1)(A) and Excusing the Debtor from any
Additional Compliance with 11 U.S.C. § 365(b)(1)(B) and (C); or Alternatively, Extending the
Time Period Within Which the Debtor May Assume or Reject Unexpired Non-Residential Leases
and Executory Contracts (Case Dkt. 52) ("2023 Assumption Motion");2 and,
b. Motion of Hawkeye Entertainment, LLC, Debtor and Debtor-in-Possession for an
(1) Order Deeming Debtor in Compliance with 11 U.S.C. § 365(d)(3) and (2) Authorizing the
1 The Court notes that Debtor and WERM provided the translator for Mr. Chang. (See Trial Tr. June 8,
2026, at 8:15–16, 11:14–15).
2 References to "Case Dkt." refer to the docket in the Bankruptcy Case. References to "Adv. Dkt." refer
to the docket in the Adversary Proceeding.
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Debtor to Pay All Monetary Obligations Pursuant to the Lease into the Rental Trust Account
(Case Dkt. 57) (the "Compliance Motion," and together with the 2023 Assumption Motion, the
"Lease Motions").
B. The Adversary Proceeding
a. Debtor and Debtor in Possession's Complaint for Declaratory and Injunctive
Relief Regarding Violations of the Automatic Stay of 11 U.S.C. § 362(a)(3) filed on June 25,
2024 (Adv. Dkt. 1) ("Complaint") by the Debtor against Smart Capital and Mr. Chang; and,
b. Counter-Claimants Smart Capital Investments I, LLC, Smart Capital Investments
II, LLC, Smart Capital Investments III, LLC, Smart Capital Investments IV, LLC, Smart Capital
Investments V, LLC's Counterclaim for: 1. Breach of Contract; 2. Breach of the Implied
Covenant of Good Faith and Fair Dealing; 3. Declaratory and Injunctive Relief; 4. Violation of
11 U.S.C. § 365(d)(3); 5. Private Nuisance; 6. Waste; 7. Negligence; 8. Ejectment
("Counterclaims") (Adv. Dkt. 34) against the Debtor and WERM.
The Court, having considered the evidence, the testimony of the witnesses, the credibility of the
witnesses, the argument of counsel, the record, and being otherwise fully advised in the premises, based
on the substantial competent information, hereby makes the following FINDINGS OF FACT and
CONCLUSIONS OF LAW:3
II. PREFACE
As a threshold matter, the Court notes that all Parties who appeared at trial were afforded a full
and fair opportunity to present their respective positions. The Court heard three days of testimony and
one day of argument. Each Party had the opportunity to testify, present documentary evidence, examine
and cross-examine witnesses, make evidentiary objections, and present legal argument to the Court.
Moreover, while Smart Capital strategically elected not to formally appear, Mr. Chang—who
represented himself as being the primary, if not sole, authorized representative of Smart Capital—
3 Any Conclusion of Law that is properly or additionally deemed a Finding of Fact shall be, and is hereby,
so designated and incorporated as a Finding of Fact. Conversely, any Finding of Fact that is properly or
additionally deemed a Conclusion of Law shall be, and is hereby, so designated and incorporated as a
Conclusion of Law.
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appeared and through testimony, evidence, and argument, made the very same arguments for and against
Smart Capital's position as outlined in Smart Capital's Counterclaim and Opposition to the Debtor's lease
assumption. The Court carefully considered all admitted evidence, witness testimony, and arguments
presented by the Parties in reaching its findings and conclusions herein.
To the extent any Party failed to appear with or through counsel, present additional evidence, call
additional witnesses, or otherwise further develop the record, such failure was the result of that Party's
own litigation decisions and not any limitation imposed by the Court. As the Court noted on the record,
the Court found Smart Capital's failure to pay its former counsel to be a calculated decision on Smart
Capital's part to try to delay the trial—Mr. Chang testified that he had been receiving rent checks from
the Debtor and simply refused to negotiate the rent checks, despite the fact that the rent would have
allowed Smart Capital to bring its counsel's legal bills current. There was also evidence in the record
that Smart Capital employed licensed in-house counsel that routinely appeared during the bankruptcy
proceedings and related matters; and that Smart Capital had employed and recently employed several
law firms in separate nonbankruptcy actions proceeding simultaneously. The Court is satisfied that all
Parties received due process and were afforded a meaningful opportunity to be heard on all issues
presented for determination.
A memorandum regarding the exhibits admitted into evidence at trial, to which true copies of
such exhibits are appended, appears at Case Docket No. 608. References herein to exhibits admitted at
trial shall appear in the following format: "(Trial Exh. __)." References herein to testimony from the
trial transcripts appear in the following format: "(Trial Tr. [date], at __)." The Court has considered all
admitted exhibits, witness testimony, stipulations, argument, and matters of which it has taken judicial
notice in making the findings of fact and conclusions of law set forth herein.
III. JURISDICTION AND AUTHORITY
The Court has jurisdiction over the matters addressed herein pursuant to 28 U.S.C. § 1334(b).
The Lease Motions seeking relief under section 365 of the Bankruptcy Code arise under title 11 and
constitute core proceedings pursuant to 28 U.S.C. § 157(b). Accordingly, the Court has both statutory
and constitutional authority to enter final orders and judgments with respect to those matters.
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The Court further has jurisdiction over the claims and counterclaims asserted in the Adversary
Proceeding pursuant to 28 U.S.C. § 1334(b). The Complaint seeks declaratory and injunctive relief
concerning the Lease, Sublease, and related rights that are central to the Debtor's reorganization efforts
and that form the subject matter of the Lease Motions under section 365. (Adv. Dkt. 1.) The
Counterclaims likewise concern the same Lease, Sublease, and alleged defaults thereunder. (Adv. Dkt.
34.) Moreover, Smart Capital and Mr. Chang specifically and expressly consented to this Court's
determination of the Adversary Proceedings. (Adv. Dkt. 34 ¶ 13) ("The Bankruptcy Court has
constitutional jurisdiction to enter a final judgment in this adversary proceeding. To the extent the Court
does not have constitutional jurisdiction to enter final judgment, Smart Capital consents to the Court
entering a final judgment in this proceeding."); (Adv. Dkt. 35 ¶ 3) ("Defendants admit the allegations in
paragraph 3 of the complaint and that the Court may enter a final judgment on the Complaint. Pursuant
to FRBP 7012(b) Defendants also consent to the entry of a final judgment by the Court.").
To the extent that any claim or counterclaim does not constitute a core proceeding, the Court
finds that it is at minimum related to the Debtor's bankruptcy case because the outcome of such claims
could conceivably affect the administration of the estate, the Debtor's rights under the Lease and
Sublease, and the Debtor's reorganization efforts. Additionally, Smart Capital and Mr. Chang filed
proofs of claim in the case that assert claims in connection with the Lease and Sublease and alleged
defaults thereunder. The Court further finds that any objection to this Court's entry of final orders or
judgments with respect to such claims has been waived. Accordingly, the Court concludes that the
Court possesses the adjudicative authority to enter final orders and judgments as to all claims,
counterclaims, motions, and requests for relief addressed in these Findings of Fact and Conclusions of
Law.
These Findings of Fact and Conclusions of Law are entered pursuant to Federal Rule of
Bankruptcy Procedure 7052, which applies to this adversary proceeding and, through Federal Rule of
Bankruptcy Procedure 9014, to the contested matters adjudicated in connection with the Lease Motions
which seek relief under section 365 of the Bankruptcy Code.
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IV. FINDINGS OF FACT
A. Introduction
The trial before the Court was part of a more than fifteen-year saga. A saga that, as the Court
noted on the record, stems from Mr. Chang and his entities'—now Smart Capital, formerly New Vision
Horizon—persistent scheme to oust his tenant—the Debtor—and the Debtor's subtenant, WERM. The
case has been the subject of previously published decisions from this Court, the District Court, and the
Ninth Circuit Court of Appeals, and ultimately resulted in a nearly million-dollar attorneys' fee award
against Mr. Chang's entities.
But that did not dissuade Mr. Chang or Smart Capital.
As detailed below, Mr. Chang and Smart Capital have continued their efforts, however meritless,
to find, fabricate, cause, or create defaults under the Lease or impediments to the Debtor's and WERM's
operations. Mr. Chang and Smart Capital's counterclaims and arguments include allegations that the
Debtor performed unauthorized work, in the face of Smart Capital's instruction to complete that very
work; that the Debtor performed unpermitted work, despite zero credible evidence in support of such
contentions; that the Debtor completed structural work to the Premises, despite overwhelming evidence
to the contrary; that the Debtor's representative, Mr. McAbian, fraudulently signed a master covenant in
2013, despite this claim being adjudicated and/or released by prior orders, proceedings, and agreements;
that the Debtor failed to comply with an Order to Comply from the Los Angeles Department of Building
and Safety, despite a compliance opinion from that very department; that the Debtor trespassed on their
own premises despite having a valid lease; that the Debtor breached the lease by utilizing the common
areas it was expressly permitted to use or that the Debtor obstructed the common areas despite no
credible evidence in support; and finally, that the Debtor's bankruptcy filing was somehow the basis for
some sort of unfair competition.
All of the claims above were not only contradicted by credible evidence, but appeared to be
meritless, motivated by malice, and lacking a basis in law or fact from the outset.
B. The Lease and Sublease
The Debtor is the tenant under a commercial lease for the first four floors and a portion of the
basement in the historic Pacific Stock Exchange Building, located at 618 S. Spring Street, Los Angeles,
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California 90014 (the "Property") pursuant to an unexpired Lease (the "2009 Lease") (Trial Exh. 1) as
amended by the First Amendment to the Lease Agreement dated August 19, 2014 (the "First
Amendment") (Trial Exh. 4), and any and all options and extensions thereunder and related thereto
(together with the 2009 Lease and First Amendment, the "Lease") between Smart Capital as the original
lessor's successor in interest4 and the Debtor as lessee.
WERM is the subtenant under the Standard Sublease, dated October 1, 2009 (Trial Exh. 2), as
modified by the Sublease Amendment dated October 1, 2019 (the "Sublease Amendment") (Trial
Exh. 7), and any and all extensions thereto (together with the Standard Sublease and the Sublease
Amendment, the "Sublease") between the Debtor and WERM for the first four floors and a portion of
the basement in the Property (the "Premises"). WERM as subtenant operates a nightclub and
entertainment venue under the name "Exchange LA."
C. The Option
The maturity date under the Lease was December 31, 2025, unless extended through the exercise
of a five-year option provided for in the Lease and Amendment. (Trial Exh. 1 §§ 1.23, 3.2; Trial Exh. 4
§ 10). On June 25, 2025, the Debtor served notice to Smart Capital of the Debtor's right and election to
exercise its option to extend the term of the Lease following expiration of the current Lease term for the
additional period of five years through and including December 31, 2030 (the "Lease Option Election").
In the same notice, Smart Capital was also timely notified that the Sublease was similarly extended to
coincide with the extended maturity date of the Lease (the "Sublease Option Election" and together with
the Lease Option Election, the "Option Election"). The Debtor also filed with the Court a Notice of the
Debtor's Exercise of Option to Extend Lease on June 26, 2025 (Case Dkt. 308) (the "Notice of Option
Election") (Trial Exh. 62).
The Court finds that Debtor timely, properly, and effectively exercised its option to extend the
Lease through December 31, 2030. The evidence presented at trial clearly established that Debtor
complied with the requirements necessary to exercise the option, provided the requisite notice, and
4 The original lessor was PAX America Development, LLC. (Trial Exh. 1).
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thereafter consistently acted in accordance with the extended Lease term. (Trial Tr. June 11, 2026, at
177:1–177:5). In addition, the Court notes that the Debtor remains in possession of the Premises.
The Court finds wholly unpersuasive and unsupported by the evidence any contention by Smart
Capital or Mr. Chang that the option was not properly exercised. (Trial Tr. June 11, 2026, at 177:4–
177:5). As discussed more fully below, the Court finds that such contention was instead part of
Mr. Chang's scheme to stop the Debtor and WERM from operating and to remove them from the
Premises by any means necessary. (Trial Tr. June 11, 2026, at 172:7–177:13). No such contention was
raised by Smart Capital or Mr. Chang in any prior paper or pleading, and the Court finds no merit in Mr.
Chang's assertion that he objected to the Option Election. No objection was admitted into evidence, and,
even if one had been, Mr. Chang identified no provision of the Lease or other legal basis permitting such
an objection. To the contrary, the evidence showed that rent was paid timely and that Smart Capital and
Mr. Chang refused to cash the rent checks—and, in some instances, voided them—instead of using those
funds to pay counsel. (Trial Tr. June 8, 2026, at 45:24–46:5; 79:18–80:7; 80:16–21; Trial Tr. June 10,
2026, at 164:4–10). In sum, the documentary evidence and credible witness testimony establish that the
Lease option was validly exercised, the Lease was extended in accordance with its terms, and the Lease
remains unexpired. (Trial Tr. June 11, 2026, at 177:15–177:20.)
Accordingly, the Court finds that the Lease and Sublease, together with all amendments thereto,
remain valid, enforceable, and in full force and effect through December 31, 2030, and that the Lease
and Sublease are capable of being assumed under Section 365(a) of the Bankruptcy Code. Any claims,
defenses, or arguments advanced by Smart Capital or Mr. Chang premised upon the expiration or
invalidity of the Lease and Sublease are rejected. (Trial Tr. June 11, 2026, at 168:13–168:17).
D. The Three-Day Notices
Prior to the initiation of the Bankruptcy Case, Smart Capital and Mr. Chang instituted an action
and/or proceeding against the Debtor relating to the provisions of the Lease and alleged defaults
thereunder by serving three Three-Day Notices alleging various non-monetary defaults.
Prior to serving the three Three-Day Notices, there was no evidence presented by Smart Capital
or Mr. Chang that Smart Capital or anyone on its behalf served a five-day written notice of default in
any payment of Minimum Rent or Additional Rent or any other charge as required under Section 16.1 of
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the Lease or a fifteen-day written notice of default in the prompt and full performance of any other
promises, covenants, or agreements which specified the particulars of the alleged default as required
under Section 16.1 of the Lease as modified by Section 15 of the First Amendment.
Pursuant to the Parties' agreement in the Joint Status Report (Case Dkt. 466), only one Three-
Day Notice was relevant to the Court's determination at trial, with the remaining two Three-Day Notices
being deemed moot and meritless by the Amended Order Granting Debtor's Motion for Partial
Summary Judgment (Case Dkt. 380) and Memorandum of Decision Re: Debtor's Motion for Partial
Summary Judgment, In re Hawkeye Entertainment, LLC, 675 B.R. 595 (Bankr. C.D. Cal. 2025) (Case
Dkt. 371). Though Mr. Chang presented evidence and argument directed at all three of the Three-Day
Notices, as well as a litany of other alleged non-monetary defaults, the only Three-Day Notice that was
relevant for trial was the Three-Day Notice executed by Mr. Chang on October 13, 2023, on behalf of
Smart Capital. This Three-Day Notice sought to terminate the Debtor's and its subtenant WERM's right
to possession with claims of nuisance and use of the Premises for a purported unlawful purpose based on
various alleged acts by staff and patrons (the "Three-Day Notice"). The Three-Day Notice was not
admitted into evidence, but after hearing testimony from Mr. McAbian on the issue (Trial Tr. June 8,
2026, at 121:16–127:5), and as further set forth herein, the Court finds there to be no credible evidence
of any use of the Premises for an unlawful purpose by the Debtor or WERM. (Trial Tr. June 11, 2026,
at 175:4–175:9). The Court finds the claims to, once again, be fabrications on the part of Mr. Chang and
Smart Capital as part of their attempt to stop the Debtor's and WERM's operations and remove them
from the Premises. (Trial Tr. June 11, 2026, at 162:12–162:17). As this Court noted on the record
following the trial, it is clear that Mr. Chang is motivated to do whatever he can to get rid of the Debtor
and WERM. (Trial Tr. June 11, 2026, at 160:10–160:14).
Following the receipt of the Three-Day Notice, the Debtor commenced the Bankruptcy Case by
filing a voluntary petition under Chapter 11 the Bankruptcy Code on October 18, 2023.
E. The Summary Judgment Order
On December 9, 2025, this Court entered its Amended Order Granting Debtor's Motion for
Partial Summary Judgment (Case Dkt. 380) (the "Order") and issued its Memorandum of Decision Re:
Debtor's Motion for Partial Summary Judgment, In re Hawkeye Entertainment, LLC, 675 B.R. 595
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(Bankr. C.D. Cal. 2025) (Case Dkt. 371) (the "Memorandum"). The Order provides, inter alia, that
"Smart Capital is precluded from asserting or seeking discovery on alleged defaults under the Lease and
Sublease existing prior to entry of the 2020 Assumption Order." (Case Dkt. 380 at 2.) The Court
reincorporates the Order and Memorandum herein and reiterated and affirmed those findings during
trial.
Specifically, the Court reaffirms and finds that any alleged default arising prior to October 27,
2020, the date of the 2020 Assumption Order (as identified in the Memorandum), was cured, resolved,
waived, released, adjudicated, or otherwise extinguished by operation of the 2020 Assumption Order
and may not serve as a basis for any claim, defense, counterclaim, setoff, recoupment, or other theory of
recovery asserted by Smart Capital or Mr. Chang. The Court finds that the release language in the
Settlement Agreement and Mutual Release of Claims (the "Settlement Agreement") is broad and is a full
and complete release of any and all known and unknown claims. (Trial Exh. 3 § 10.) The Court finds
that Mr. Chang initialed each page of the Settlement Agreement. (Trial Exh. 3; Trial Tr. June 8, 2026, at
176:25–178:3.) Importantly, although initially drafted between the Debtor and New Vision Horizon,
LLC ("New Vision"), Mr. Chang testified that Smart Capital purchased the Property from New Vision
(an entity also owned and controlled by Mr. Chang) (Trial Tr. June 8, 2026, at 64:20–22), and the
Settlement Agreement expressly states that it "shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns." (Trial Exh. 3 § 13.) It is also worth noting that the
Lease itself contains a similar successors and assigns provision. (Trial Exh. 1 § 22.11(e).) The
Settlement Agreement goes on to accept and approve the Lease and Sublease. (Trial Exh. 3 §§ 4, 6.)
For avoidance of doubt, the Court finds that Smart Capital purchased the Property subject to the Lease,
Sublease, Settlement Agreement, and any and all amendments thereto. (Trial Tr. June 11, 2026, at
160:1–160:2).
Accordingly, any evidence, testimony, argument, or other matter offered by Mr. Chang
concerning alleged defaults predating October 27, 2020, was irrelevant to the issues remaining for trial
except to the limited extent necessary to provide background or context. (Trial Tr. June 11, 2026, at
159:6–159:13.) Such evidence could not establish a default under the Lease or Sublease and could not
form the basis for any relief sought by Smart Capital or Mr. Chang.
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To the extent that Mr. Chang attempted at trial to rely upon conduct, events, notices, alleged
breaches, or purported defaults occurring before October 27, 2020, the Court finds that such matters
were barred by the Order and Memorandum and afforded them no weight in determining the merits of
the remaining claims and counterclaims. (Trial Tr. June 11, 2026, at 166:7–166:11.) The Court further
finds that the only defaults potentially at issue in this proceeding are those allegedly arising after
October 27, 2020, and not otherwise foreclosed by subsequent orders of this Court. (Trial Tr. June 11,
2026, at 159:14–159:18.)
F. Mr. Chang's Testimony
As a threshold matter, the Court finds that Mr. Chang's testimony was not credible. (Trial Tr.
June 11, 2026, at 161:2–161:9.) Based on the evidence presented at trial, the Court finds that
Mr. Chang, both individually and through his control of Smart Capital, was not motivated by good faith,
probable cause, or the actual seeking of redress. Instead, the evidence established that Mr. Chang and
Smart Capital had economic and malicious motivations. (Trial Tr. June 11, 2026, at 160:10–162:17; see
also id. at 161:24–162:4 (Mr. Chang "tended to exaggerate events, mischaracterize events and, in some
cases, fabricate them out of whole cloth.").) Mr. Chang's testimony made his goals clear: to either
pursue the Debtor and WERM to such an extent that they capitulated and paid additional rent or to
fabricate non-monetary defaults so that the Debtor and WERM would be evicted, allowing Smart
Capital to lease the Premises to another tenant on more favorable economic terms. (Trial Tr. June 11,
2026, at 160:24–161:1.) On numerous occasions, Mr. Chang's testimony at trial was contradicted by his
prior testimony from this action and from other prior bankruptcies and other actions between the Parties.
(See, e.g., Trial Tr. June 10, 2026, at 127:21–130:9.)
The Court further finds that, when confronted with questions that called for answers unfavorable
to his position, Mr. Chang frequently failed to answer the question asked. (Trial Tr. June 11, 2026, at
161:18–162:4.) Instead, Mr. Chang would change the subject, provide non-responsive answers, or
attempt to redirect the examination to unrelated matters. (Trial Tr. June 11, 2026, at 161:18–161:24.)
On multiple occasions, Mr. Chang attempted to answer questions with questions of his own directed to
the Court or counsel for the Debtor and WERM, rather than providing a responsive answer. (Trial Tr.
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June 11, 2026, at 161:18–161:24.) This pattern was evident throughout his testimony and further
undermined his credibility. (Trial Tr. June 11, 2026, at 161:24–162:4.)
Prior to the trial, Smart Capital's then-counsel moved to withdraw and sought a continuance of
the trial for that reason and that reason alone. (Tr. Apr. 28, 2026, at 11:13–11:19; Trial Tr. June 11,
2026, at 154:9–154:20.) The basis for the withdrawal was largely Mr. Chang and Smart Capital's
decision to stop paying its legal bills. (Tr. Apr. 28, 2026, at 24:6–24:10; Trial Tr. June 11, 2026, at
154:9–154:13.) The Court granted the Motion to Withdraw but denied the continuance finding that
based on the facts before the Court, the record, failure to pay legal bills, apparent financial ability to
employ other professionals in the various nonbankruptcy litigation, and the timing of the late withdrawal
of counsel, the requested continuance was a manufactured delay tactic by Smart Capital and Mr. Chang.
(Case Dkt. 541; Tr. Apr. 28, 2026, at 27:20–31:21; Trial Tr. June 11, 2026, at 154:25–155:5.) After
hearing the evidence at the trial, the Court finds that those prior findings of a manufactured delay tactic
are even more strongly supported. (Trial Tr. June 11, 2026, at 155:5–155:7.) The evidence established
that Smart Capital and Mr. Chang retained and were actively employing and paying at least two, if not
more, other lawyers and law firms in numerous other disputes involving the same parties, including
Mr. Paul Pham who tangentially participated in this matter. (See Tr. Apr. 28, 2026, at 18:25–19:1; Trial
Tr. June 8, 2026, at 203:19–204:1.)
In addition, Mr. Chang intimated that Smart Capital would be appealing this Court's findings—
an action that would require the hiring of counsel. (Trial Tr. June 11, 2026, at 101:4–101:8.) And, as
noted above, Smart Capital refused to negotiate the Debtor's rent checks commencing January 2026 (and
did not seek to confirm a further agreement or order that acceptance of the rent was pursuant to Section
363(d)(3) and was not prejudicial to any of Smart Capital's rights); had Smart Capital done so, Smart
Capital would have had sufficient funds to pay its counsel. (Trial Tr. June 11, 2026, at 96:11–96:19.)
What is more, following trial, Smart Capital and Mr. Chang retained another attorney, Daniel B. Spitzer
of the Law Offices of Daniel B. Spitzer, who appeared at the hearings held on June 30, 2026, and
subsequently filed a 55-page objection to the Debtor's proposed findings of fact and conclusions of law
(Adv. Dkt. 145.) Under these circumstances, and based on the timing and surrounding facts, the Court
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finds that Smart Capital's inability or failure to appear through counsel at trial was a litigation tactic
intended to delay these proceedings. (Trial Tr. June 11, 2026, at 154:25–155:5.)
The Court also finds that Mr. Chang repeatedly mischaracterized documents, testimony, and
other evidence, at times fabricating facts out of whole cloth, in a manner designed to advance his own
position. (Trial Tr. June 11, 2026, at 162:15–162:17.) Mr. Chang refused to acknowledge the terms and
validity of the Lease, the Settlement Agreement, certain documents from the City of Los Angeles
("City"), and more. These misstatements were not isolated or immaterial. Rather, they reflected a
broader pattern of selective and self-serving testimony that undermined Mr. Chang's credibility as a
witness. For these reasons, the Court gives little weight to Mr. Chang's testimony except where it is
corroborated by other credible evidence in the record. (Trial Tr. June 11, 2026, at 161:24–162:4.)
Additionally, the Court finds that although Mr. Chang repeatedly urged the Court to deny the
2023 Assumption Motion based on a litany of purported defaults, he never once identified a specific
provision of the Lease or Sublease that the Debtor or WERM allegedly violated. (Trial Tr. June 11,
2026, at 163:4–163:7.) Instead, Mr. Chang offered broad accusations of misconduct, fraud,
unauthorized work, permitting issues, and operational concerns without tying those allegations to any
particular contractual obligation contained in the Lease or Sublease. The Court recognizes that
Mr. Chang is not an attorney. (Trial Tr. June 11, 2026, at 163:8–163:11.) However, Mr. Chang testified
under oath that he has been involved in the commercial real estate business for approximately thirty
years. (Trial Tr. June 11, 2026, at 164:7–164:9.) Even with that experience, Mr. Chang was unable to
direct the Court to a single Lease or Sublease provision that he contended had been breached. (Trial Tr.
June 11, 2026, at 164:7–167:15.) Indeed, despite several days of testimony and argument concerning
alleged defaults, the Court never received from Mr. Chang a straightforward explanation of which
contractual provision had been violated, how that provision had been violated, and what evidence
established the alleged breach. (Trial Tr. June 11, 2026, at 163:4–163:7.)
The Court finds this omission particularly significant because the existence of a default under the
Lease or Sublease necessarily requires proof that a specific contractual obligation was breached.
Without identifying the underlying contractual provision, the arguments and testimony amounted to
little more than generalized grievances regarding the Debtor's operations and Mr. Chang's longstanding
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disputes with the Debtor and WERM. Accordingly, the Court finds that Mr. Chang's inability to identify
any specific Lease or Sublease provision allegedly breached substantially undermines the credibility and
weight of Smart Capital's default allegations.
G. Mr. McAbian's Testimony
By contrast, the Court finds Mr. McAbian's testimony to be credible, knowledgeable, and
helpful. (Trial Tr. June 11, 2026, at 162:5–162:11.) Throughout the trial, Mr. McAbian demonstrated a
detailed familiarity with the Premises, the Lease, the Sublease, the operations of Exchange LA, and the
events giving rise to this litigation. (Trial Tr. June 11, 2026, at 162:6–162:11.) His testimony was
consistent with the documentary evidence and other credible testimony presented at trial. (Trial Tr. June
11, 2026, at 162:9–162:11.)
The Court further finds that Mr. McAbian testified in a straightforward manner and readily
acknowledged facts that were unfavorable to his position when appropriate. Unlike Mr. Chang,
Mr. McAbian did not appear to tailor his testimony to fit a particular litigation narrative. Rather, his
testimony reflected a genuine effort to answer the questions posed and provide the Court with an
accurate account of the relevant events. Accordingly, where the testimony of Mr. McAbian conflicts
with that of Mr. Chang, the Court credits the testimony of Mr. McAbian.
H. Smart Capital and Mr. Chang's Lack of Participation
On April 20, 2026, Greenspoon Marder LLP and Schorr Law, A Professional Corporation
(collectively, "Prior Counsel"), moved to withdraw as counsel for Mr. Chang and Smart Capital. (Case
Dkt. 520.) In connection with that Motion, Prior Counsel made a request to continue all hearings,
deadlines, and the trial. On May 5, 2026, the Court entered its Order allowing Prior Counsel to
withdraw but denying any request to continue any deadlines or trial. (Case Dkt. 541.)
Thereafter, the Parties' Pre-Trial Stipulation pursuant to Local Bankruptcy Rule 7016-1(b)(2)
was due by June 15, 2026. Despite efforts to confer with Smart Capital, its assistant general counsel,
Paul Pham, and Mr. Chang regarding the requirements of the Pre-Trial Stipulation, Smart Capital and
Mr. Chang's refusal to participate (Case Dkt. 550) resulted in the Debtor and WERM having to file a
Unilateral Pre-Trial Stipulation (Case Dkt. 548). Smart Capital and Mr. Chang refused to provide a list
of witnesses, a list of exhibits to be used at trial or exchange any exhibits. The Debtor and WERM also
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submitted a Trial Brief (Case Dkt. 571) in compliance with the Court's Scheduling Order (Case Dkt.
569), but neither Smart Capital nor Mr. Chang submitted any pre-trial briefing.
Smart Capital did not respond to the Motion to Strike Experts (Case Dkt. 553) (the "Motion to
Strike") filed by the Debtor by the Court's June 5, 2026, deadline (Case Dkt. 569). Therefore, at the start
of the trial, the Court heard argument on the Motion to Strike and granted the Motion to Strike (Case
Dkt. 585).
Nonetheless, to ensure that Mr. Chang was afforded every opportunity to present his case, the
Court proceeded with the trial on the merits. The Court further notes that, although Smart Capital did
not appear through counsel, Mr. Chang (who testified that he is the controlling member of Smart
Capital) appeared, testified extensively, cross-examined witnesses, and offered documentary evidence in
support of his and Smart Capital's positions. (Trial Tr. June 11, 2026, at 162:20–163:1.) Counsel for the
Debtor and WERM stated their objection to the timeliness of Mr. Chang's proffered exhibits—which the
Court noted—but otherwise agreed to the admissibility of all exhibits that Mr. Chang offered that were
capable of authentication and not replete with inadmissible hearsay. (Trial Tr. June 11, 2026, at 146:19–
147:10; Case Dkt. 608 (Memorandum of Exhibits Admitted at Trial)) Accordingly, the Court is
satisfied that it effectively has heard the evidence and arguments in support of Smart Capital's arguments
and claims, in addition to those of Mr. Chang.5
Having considered that evidence, however, the Court finds Smart Capital's positions to be
unpersuasive. (Trial Tr. June 11, 2026, at 176:23–177:5.) The Court's ruling is not the result of any
procedural deficiency arising from Smart Capital's lack of counsel. Rather, the Court finds that Smart
Capital failed to carry its burden of producing evidence sufficient to establish the existence of any
default under the Lease on the merits and only alternatively makes its findings on theory of default for
lack of counsel under Local Bankruptcy Rule 9011-2(a). (Trial Tr. June 11, 2026, at 165:11–165:13.)
5 Mr. Chang did not object to and therefore is not a party to the 2023 Assumption Motion or Compliance
Motion. (Dkt. 70 at 2, Dkt. 116 at 2, 150, He likewise is not a Counterclaimant against the Debtor. (Adv.
Dkt. 34 at 2-3). Nevertheless, virtually all of the evidence and argument he offered at trial sought to
demonstrate that the Debtor was in default under the Lease, i.e., the central claim of Smart Capital in those
proceedings.
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The Court further notes that, despite Smart Capital's and Mr. Chang's failure to participate in the
Pre-Trial Stipulation and the resulting limitations imposed by the Court's prior orders, the Court
nevertheless afforded Mr. Chang considerable latitude during trial. (Trial Tr. June 11, 2026, at 147:5–
147:10.) In particular, the Court permitted Mr. Chang to offer exhibits and argument, and the Court
evaluated the admissibility of proposed exhibits on their individual merits rather than excluding them
solely based on the Debtor and WERM's timeliness and procedural objections, as noted above. (Trial
Tr. June 11, 2026, at 146:19–147:10.)
The Court, therefore, concludes that Mr. Chang was given every reasonable opportunity to
present his evidence and that the Court's findings are based on a full consideration of the record
developed at trial.
I. The Alleged Defaults
In support of their objection to the 2023 Assumption Motion and Compliance Motion, Smart
Capital (through written opposition(s)) and Mr. Chang (through declarations and evidence submitted at
trial) attempted to assert various alleged defaults. Such defaults also formed the basis of the
Counterclaims. (Trial Tr. June 11, 2026, at 183:13–183:20). During trial, the Court informed the
Parties that, in addition to those alleged defaults set forth in the Three-Day Notice and additional alleged
defaults discussed throughout trial, the Court wanted to hear evidence regarding the alleged defaults
mentioned in Pages 12–14 of the Court's Memorandum. (Case Dkt. 371 at 12–14.) Each of such
defaults addressed at the trial will be referenced herein in turn.
For the reasons set forth further herein, after considering all evidence presented during the four-
day trial, the Court finds that Smart Capital and Mr. Chang failed to establish any existing default under
the Lease or Sublease. Indeed, the Court finds that no reasonable litigant in Smart Capital or Mr.
Chang's position would have believed there were legally valid or reasonable grounds to pursue
counterclaims against the Debtor or WERM or to object to assumption of the Lease. The evidence
established that Mr. Chang has strongly-held beliefs, but those beliefs—and, in turn, Smart Capital's
Counterclaims and the defaults that Smart Capital alleges—were motivated by ill will—not fact or
reason. (Trial Tr. June 11, 2026, at 161:9–161:16.) The Court expressly finds that the Debtor and
WERM are not in default under the Lease or the Sublease, including with respect to any alleged
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monetary default or non-monetary default, and that no cure payment or cure obligation is required as a
condition of assumption.
1. Alleged Pre-2020 Defaults
For the reasons already stated herein, to the extent that Mr. Chang relied upon alleged defaults
arising prior to entry of the 2020 Assumption Order, such arguments are without merit. The Court
previously determined that alleged defaults predating the 2020 Assumption Order were released by the
Settlement Agreement and are barred by claim preclusion and issue preclusion. (Trial Tr. June 11, 2026,
at 166:7–166:11.) Accordingly, the Court finds that any alleged default arising prior to the 2020
Assumption Order cannot constitute a present default under the Lease and cannot serve as a basis to
oppose assumption of the Lease.
2. Damage to the Historical Ceiling Tiles
During trial, the Parties introduced evidence and testimony that there was a ceiling tile that fell at
the Premises on January 20, 2024. Mr. Chang advanced the theory that the damage must have been
caused by the Debtor or WERM. (Trial Tr. June 11, 2026, at 164:25–165:3.) However, the Court finds
that this theory was based on speculation rather than evidence. (Trial Tr. June 11, 2026, at 165:14.)
The Court finds that Mr. Chang appeared convinced that the Debtor or WERM caused the
damage and clearly desired that conclusion to be true. (Trial Tr. June 11, 2026, at 164:25–165:3.) But,
no matter how strong Mr. Chang's belief, Mr. Chang offers no evidence outside of his professed
conviction that supports this conclusion. (Trial Tr. June 11, 2026, at 165:4–165:7.) After considering
all of the evidence presented during the trial, the Court finds that Smart Capital failed to present any
credible evidence establishing that the Debtor, WERM, or any of their employees or agents caused the
damage. (Trial Tr. June 11, 2026, at 165:5–165:7.) The evidence shows that Mr. Chang did not
personally observe the damage occur, did not present testimony from any witness who observed the
damage occur, and did not present any expert testimony or other competent evidence establishing the
cause of the damage. (Trial Tr. June 11, 2026, at 165:7–165:8.)
At most, Mr. Chang presented evidence that certain individuals may have had access to the area
at various points in time and invited the Court to infer from that fact that the Debtor or WERM must
have been responsible. (Trial Tr. June 11, 2026, at 165:14–165:21.) The Court declines to make such
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an inference. The evidence established that multiple individuals and entities had access to the Premises
over an extended period of time, including Smart Capital's employees (Trial Exh. 11), and the record
contains insufficient evidence for the Court to determine what caused the damage, when it occurred, or
who was responsible for it. (Trial Tr. June 11, 2026, at 165:14–165:21.) In other words, Smart Capital
has not carried its burden of producing evidence to establish either a default under the Lease on the
Motion to Assume Lease or a breach of the Lease under its Counterclaim.
The Court further finds that there are numerous possible explanations for the condition of the
tile, including causes unrelated to the Debtor or WERM. (Trial Tr. June 11, 2026, at 165:14–165:21.)
On the evidentiary record before the Court, any determination that the Debtor or WERM caused the
damage would be based solely on conjecture.
The Court therefore finds that there is no default under the Lease arising from the condition of
the ceiling tile at the Premises.
3. Holes in the Historic Ceiling
Next, Mr. Chang made various arguments related to twenty-five holes in the historic ceiling
through which there is access to certain rigging points for production equipment, which Mr. Chang
contended was another breach. (Trial Tr. June 11, 2026, at 165:22–166:1.) As a threshold matter,
Mr. Chang introduced no evidence as to when such holes were made, and Mr. McAbian testified that the
holes pre-dated the Debtor's tenancy, which the Court finds credible. (Trial Tr. June 10, 2026, at
177:24–178:5; 181:11–20; 182:11–19; 194:24–196:6.) Further, Mr. McAbian introduced evidence
showing that the production truss was in place prior to the Debtor's tenancy. (Trial Exh. 30, 31.)
Additionally, an exhibit entered into evidence by Mr. Chang confirms that the 25 holes in the historic
ceiling existed before the Debtor became a tenant under the Lease. (Trial Exh. I at 2) ("Charles Tan +
Associates is providing this letter to clarify we will qualify the hanging rod anchor points are actually
existing versus providing new anchors."). Additionally, Mr. Chang himself testified that he was not
present when the holes were made. (Trial Tr. June 10, 2026, at 34:6–8.) Mr. McAbian testified that the
Premises had been adapted and utilized as a nightclub for many years prior to the Debtor's tenancy.
(Trial Tr. June 10, 2026, at 180:2, 180:24–180:25.)
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Smart Capital has not carried its burden of producing evidence of either a default under the Lease
on the Motion to Assume Lease or a breach of the Lease under its Counterclaim.
The Court therefore finds that there is no default under the Lease arising from the holes or
anchor points in the ceiling of the Premises.
4. Netting Truss
Evidence was produced demonstrating that, following the fall of the historic ceiling tile, a netting
truss was installed to protect patrons from any further potential falling debris. (Trial Tr. June 8, 2026, at
100:1–111:11.) Mr. Chang argued that this was a breach of the Lease insofar as it constituted an
"Alteration" pursuant to Section 10.1 of the Lease which required the landlord's prior approval. After
reviewing the evidence, including photographs of the netting truss structure (Trial Exh. 31), the Court is
satisfied that the netting truss structure is freestanding and is not permanently attached to the building
and that the Debtor and WERM, with the assistance of engineers and other professionals, implemented a
netting system designed to protect patrons, employees, and the Premises from falling debris originating
from the historic structure. (Trial Tr. June 11, 2026, at 166:22–167:7.)
The Court finds that the netting system and supporting truss were not permanently affixed to the
building, did not alter the structure of the building, and did not constitute construction or an
unauthorized alteration of the Premises under the Lease. (Trial Tr. June 11, 2026, at 166:22–167:7.)
Further, Mr. McAbian credibly testified that the netting truss system cost less than the $100,000
threshold present in the Lease, such that the Debtor and WERM need not have obtained the prior written
consent of Smart Capital. (Trial Tr. June 8, 2026, at 117:9–117:11; see Trial Exh. 1 § 10.5(a).) The
Court further finds that Mr. Chang failed to present credible evidence establishing that the installation
was an "Alteration" under Section 10.1 of the Lease or that it violated any provision of the Lease or
otherwise constituted a default. (Trial Tr. June 11, 2026, at 166:15–167:21.)
To the contrary, the evidence demonstrated that the netting system provided a substantial benefit
not only to the Debtor and WERM, but also to Smart Capital as owner of the building. (Trial Tr. June
11, 2026, at 167:3–167:7.) The system was installed to protect against the risk of falling debris from the
historic structure and thereby enhanced the safety of patrons, employees, invitees, and the Premises
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itself. (Trial Tr. June 11, 2026, at 167:17–167:21.) The Court finds that the netting system addressed a
safety concern that otherwise would have exposed both the tenant and landlord to potential risk.
Again, Smart Capital has not produced evidence sufficient to establish the existence of a default
under the Lease on the Motion to Assume Lease or a breach of the Lease under its Counterclaim.
Accordingly, the Court finds that the installation and maintenance of the netting system and
supporting truss did not constitute a default under the Lease or Sublease. Rather, the evidence
established that the system was a reasonable and beneficial safety measure that protected persons and
property from potential hazards associated with the condition of the building.
5. PA-4/PA-5
At trial, Mr. Chang devoted substantial time to Mr. Chang's uncorroborated contention that he
discovered a purported fraud on Smart Capital and the City of Los Angeles arising from Mr. McAbian's
signature on a Master Covenant Agreement (the "MCA") executed more than a decade ago in
connection with ZA-1995-830-CUB-PA-4 issued February 25, 2013 ("PA-4"), a conditional use permit
that allows the Premises to be used as a nightclub. The Court has previously addressed these arguments
in its Memorandum and Order and reiterates those findings herein. For the avoidance of doubt, the
Court finds that any argument that the MCA was improperly executed or that PA-4 was procured by
fraud is barred by the doctrines of res judicata and collateral estoppel and are not subject to relitigation.
Nonetheless, as it did on the record at the close of trial, the Court will address some of
Mr. Chang's arguments. The Court finds that Mr. Chang's claim that he only recently discovered the
PA-4 MCA executed by Mr. McAbian, which forms the basis of his alleged fraud is not credible. The
evidence established that the documents upon which Mr. Chang now relies were matters of public record
for years. Based on the evidence and testimony, it is clear that Mr. Chang and Smart Capital thought up
the idea that Mr. Chang and Smart Capital could get rid of the Debtor and WERM by trying to block
ZA-1995-830-CUB-PA-5 ("PA-5") (Trial Exh. 21) from being issued by concocting a claim based on a
decade-old public record. The Court finds that Mr. Chang simply failed to pursue these arguments when
he and his affiliated entities had the opportunity to do so during the prior bankruptcy cases. As the
Court previously held, Mr. Chang cannot avoid the preclusive effect of prior orders by characterizing
long-extant public records as newly discovered evidence.
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Further, in response to Mr. Chang's contention that he and Smart Capital did not discover the
alleged fraud until after October 27, 2020, the Debtor introduced testimony and documentary evidence
demonstrating otherwise. In addition to the fact that the document has been a public record since 2013,
the Debtor introduced a version of PA-4 containing handwritten notes and annotations that was
produced by Smart Capital in discovery in the Second Bankruptcy (Trial Exh. 66), as well as referenced
testimony from Mr. Chang's prior deposition in which Mr. Chang acknowledged that those notes would
have been made and transcribed before October 27, 2020. (Trial Tr. June 10, 2026, at 138:3–142:10.)
The Court also heard—and saw, when Mr. Chang was being impeached—testimony that Mr. Chang
himself testified regarding PA-4 at the prior bankruptcy trial. (Trial Tr. June 10, 2026, at 198:19–
199:21.) The Court finds this significant because it establishes that Mr. Chang and Smart Capital were
aware, or at a minimum had sufficient information to become aware, of the very facts that now form the
basis of his fraud allegations prior to October 27, 2020. Accordingly, the Court rejects Mr. Chang's
assertion that the alleged fraud was first discovered after October 27, 2020, and finds that the evidence
presented at trial demonstrates that the underlying facts were known, or reasonably should have been
known, to Mr. Chang before that date.
Mr. Chang's testimony then evolved into claims that PA-4 and the affiliated MCA from 2013
signed by Mr. McAbian, created a cloud on the Property's title. However, it appears there is no cloud on
title to the Property whatsoever. First, the evidence made clear that PA-4 is expired and is superseded
by PA-5. (Trial Exh. 21.). Second, Mr. Chang, when pressed, conceded that while title to the Property
has been reviewed in connection with Mr. Chang's obtaining multiple loans on the Property, there is not
a single title report reflecting a cloud on title caused by the PA-4 MCA or any document or report
showing that the owner of the Property is any entity other than Smart Capital. Mr. Chang was
successfully able to obtain tens of millions of dollars of loans or lines of credit from various financial
institutions. (Trial Tr. June 10, 2026, at 117:1–120:24.)
Mr. Chang acknowledged that the PA-4 MCA did not affect title in terms of his ability to
subsequently encumber the Property with consensual liens, but it appears that Smart Capital and Mr.
Chang were instead utilizing it as a pretext to invalidate PA-5 as part of their ongoing efforts to shut
down or evict the Debtor and WERM.
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The evidence establishes that PA-5 confirms that PA-4 expired and is therefore seemingly no
longer of any force or effect. The evidence demonstrates that PA-5 requires that a new MCA be
recorded. The evidence further establishes that since its issuance, the Debtor has made several requests
that Smart Capital and Mr. Chang execute the MCA for PA-5, and that Smart Capital and Mr. Chang
have refused and failed to execute it.
Mr. Chang's theory continued to evolve throughout the trial. Initially, Mr. Chang contended that
PA-4 was void, fraudulent, or clouding title. When confronted with the legal and factual deficiencies of
that position, however, the argument shifted to the assertion that PA-5 must be void because PA-4 was
allegedly void and that somehow the Debtor used PA-4 to obtain PA-5. The Court finds both arguments
to be wholly without merit.
The evidence established that PA-4 is not void. To the contrary, the evidence demonstrated that
the City of Los Angeles was fully aware of Mr. Chang's allegations, including the public documents that
Mr. Chang characterized as a "smoking gun," and nevertheless determined that PA-4 remained valid and
effective. The City further rejected Mr. Chang's challenges and approved PA-5 notwithstanding his
objections. (Trial Exh. 21.) In fact, PA-5 itself contains the following language: "In considering the
relevance of this use, the Zoning Administrator has concluded that the discussion on the validity of the
CUB-PA4 entitlement is moot." (Trial Exh. 21-16.) The Court further acknowledges that Mr. Chang
continues to disagree with those governmental determinations—indicating that he would be pursuing a
state court appellate procedure to attempt to void PA-5. There is no evidence, however, that PA-5 has
been vacated, overturned, or enjoined by any court or governmental entity.
Mr. Chang's disagreement does not render PA-4 or PA-5 invalid and does not establish a default
under the Lease or Sublease. The evidence establishes that the City issued PA-3, PA-4 and recently PA-
5 and they were never revoked. At all times, the Debtor and WERM operated pursuant to, and
consistent with, the authority of, and the conditions and requirements imposed under, PA-3, PA-4, and
recently PA-5. Therefore, the evidence establishes that the Debtor and WERM were not in default of
Article 9 or any other provision of the Lease; that there is no credible evidence submitted that the Debtor
and WERM failed to operate in compliance with all governmental laws, ordinances, rules, regulations
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and orders applicable to the Premises as required under Section 9.5 of the Lease; and that the Debtor and
WERM used and occupied the Premises consistent with the Permitted Use under the Lease.
Finally, it is undisputed that Mr. McAbian executed the PA-4 MCA in 2013. The Settlement
Agreement executed in 2014 (Trial Exh. 3) contains a release by Smart Capital (as successor in interest
to New Vision Horizon, LLC) of the Debtor and, among others, its officers, directors, agents,
employees, and representatives. The release is a full and complete general release of all known and
unknown claims. Thus, even if Smart Capital and Mr. Chang did not know of the PA-4 MCA—a notion
that this Court rejects—the claim would be released as to the Debtor and its representatives, including
Mr. McAbian, whose signature Mr. Chang contends forms the basis of this non-existent fraud.
Accordingly, the Court finds that PA-4 remains valid and that PA-5 was properly issued. There
is no credible evidence presented by Smart Capital or Mr. Chang that Mr. McAbian engaged in fraud in
connection with his execution of the PA-4 MCA in 2013. There is, however, credible evidence that Mr.
McAbian executed the PA-4 MCA with the good-faith belief that he had the right and authority to do so.
Furthermore, there is no evidence of a revocation of PA-4 by the City, and the City has issued and not
revoked PA-5. Neither PA-4 nor PA-5 nor any MCA executed in connection therewith gives rise to any
default under the Lease or Sublease.
The Court further finds that Mr. Chang and/or Smart Capital failed to establish any default
relating to the process, the Master Covenant Agreement, or the allegations of fraud asserted by
Mr. Chang. Indeed, Mr. Chang's arguments in this regard are wholly without merit and, once again,
motivated by spite or a persistent scheme to stop the Debtor's and WERM's operations and remove them
from the Premises.
The evidence established that the only impediment to fully memorializing PA-5 in the public
records is Smart Capital's and Mr. Chang's refusal to execute the covenant documentation required by
the City despite repeated requests of the Debtor for them to do so. (Trial Exh. 63.) The Court therefore
finds that any issue concerning the recording of PA-5 is attributable to the conduct of Smart Capital, not
the Debtor or WERM.
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Smart Capital and Mr. Chang have not come forward with any evidence demonstrating the
existence of either a default under the Lease on the Motion to Assume Lease or a breach of the Lease
under its Counterclaim.
6. Construction Work
At trial, Mr. Chang repeatedly asserted that the Debtor and WERM performed unpermitted and
unauthorized work at the Premises without obtaining the landlord's prior consent. However, the Court
finds that Mr. Chang's testimony concerning the nature of the alleged construction was vague,
inconsistent, and lacking in specificity. Throughout the trial, Mr. Chang repeatedly stated that he did not
provide consent for certain work, but Mr. Chang never clearly identified the particular Lease provision
allegedly violated, nor did he clearly articulate what specific construction activity constituted the alleged
default, especially in light of the fact that Smart Capital also performed construction activities at the
Premises.
The Court further notes that Mr. Chang's testimony was inconsistent regarding whether the
relevant consent needed was his personal consent or the consent of Smart Capital as landlord. The Court
finds that Mr. Chang frequently conflated his own personal views with the actions and authority of
Smart Capital and treated the two as interchangeable, despite the fact that Smart Capital had other
employees that have coordinated with the Debtor and WERM.
Based on the evidence presented, however, the Court understands Mr. Chang's allegations to
concern, among other things, the ceiling tile, replacement of certain winches, components of the truss
and rigging system used to support production equipment, construction of the netting truss—addressed
previously—and certain bolts embedded in concrete that support portions of the production system. The
Court finds, however, that Smart Capital failed to present credible evidence establishing that the Debtor
or WERM installed most of the items about which Mr. Chang complained. On the contrary, the Court
received evidence that certain of the truss systems pre-dated the Debtor's tenancy. (Trial Exhs. 30, 31;
Trial Tr. June 9, 2026, at 133:5–133:11.)
To the extent that the evidence established that the Debtor or WERM replaced existing winches,
the Court finds that such work did not constitute a structural alteration, modification of the Premises, or
construction requiring landlord consent under the Lease. (Trial Tr. June 10, 2026, at 190:8–190:10,
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193:23–190:25 (winches are not permanently affixed to Premises and their replacement cost less than
$100,000); see Trial Exh. 1 § 10.5(a).) Rather, the replacement of existing winches constituted
replacement of operational equipment necessary for the safe functioning of the venue. (Trial Tr. June
10, 2026, at 190:18–190:20 (Mr. McAbian's testimony that the winches "hold a lot of weight above
people's heads," "were 20 years old," and need to be "inspected and certified every year.").) The
evidence demonstrated that the winches support substantial production equipment and serve important
safety functions. (Id. at 193:22 (Mr. McAbian's testimony that the winch motors are "a piece of
production equipment.").) The Court further finds that replacement of worn or outdated equipment with
functioning equipment is consistent with the ordinary operation and maintenance of a venue such as
Exchange LA.
The Court therefore finds that Smart Capital failed to establish that any of the complained-of
work constituted unauthorized construction, an impermissible alteration, or a default under the Lease or
Sublease. To the contrary, the evidence demonstrated that much of the work identified by Mr. Chang
involved safety-related equipment, maintenance, replacement of existing components, or conditions for
which Smart Capital failed to establish any connection to the Debtor or WERM.
Smart Capital has not come forward with credible evidence establishing the existence of either a
default under the Lease on the Motion to Assume Lease or a breach of the Lease under its Counterclaim.
Accordingly, the Court finds that no default exists or ever existed arising from the alleged
unauthorized construction, alterations, improvements, rigging, production equipment, winches, ceiling
openings, or related conditions at the Premises.
7. The Order to Comply
On February 20, 2026, Smart Capital received an Order to Comply and Notice of Fee (Trial Exh.
C) (the "Order to Comply") from the City of Los Angeles Department of Building and Safety
("LADBS"). The Order to Comply listed four "Violations," including orders to "Obtain all required
building permits for all the work that has been performed," "Submit all required plans and obtain all
required approvals," and "Obtain the required electrical permit, expose concealed work and call for
required inspections." (Trial Exh. C.)
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First, the evidence established that it was Mr. Chang himself that complained to LADBS in an
attempt to either have the Debtor or WERM cited, or have the building shut down in an attempt to once
again disrupt the Debtor's or WERM's operations. (Trial Tr. June 10, 2026, at 144:10–23.) Additionally,
the Court notes that there was no evidence that the Debtor or WERM actually caused the violations in
the Order to Comply—on the contrary, Mr. McAbian testified credibly that any such work would have
been done prior to the Debtor/WERM's tenancy at the Premises—Mr. Chang offered no credible
testimony or evidence to the contrary and in fact conceded he did not know when the violations
occurred. (Trial Tr. June 8, 2026, at 85:21–87:19.) Nonetheless, Mr. Chang and Mr. McAbian testified
that Mr. Chang, through his representatives, sent the Order to Comply to Debtor and demanded that the
"Violations" be cured. (Trial Tr. June 10, 2026, at 217:3–218:13; 219:15–220:12; 144:10–23.)
Thereafter, the Debtor/WERM presented evidence that they complied with the Order to Comply and that
LADBS has since closed the Order to Comply (Trial Exh. 15). The Court finds LADBS' decision
persuasive as whether the Debtor and WERM defaulted under the Lease or Sublease by purportedly
failing to maintain the Premises in accordance with City regulations.
Nonetheless, Mr. Chang argued that the Debtor and WERM's efforts to comply with the Order to
Comply constituted a violation of the Lease because, according to Mr. Chang, the Lease required Smart
Capital's prior approval before any work could be performed at the Premises. In other words, Mr.
Chang demanded that the Debtor complete specific work, but once the Debtor complied and completed
the work, Mr. Chang and Smart Capital claimed that the Debtor did not have permission to complete the
work that Mr. Chang and Smart Capital told the Debtor to complete. (Trial Tr. June 8, 2026, at 190–
191 (Mr. Chang's testimony that "in order to resolve the order to comply, the[ Debtor] need[ed] the
owner's consent, but they didn't obtain the owner's consent.").) The Court finds this argument to be
utterly devoid of merit.
The evidence established that Smart Capital, through its representatives, transmitted the Order to
Comply to Debtor and WERM and expressly directed the Debtor and WERM to address and correct the
violations identified therein. (Trial Tr. June 9, 2026, at 79:13–18; Trial Tr. June 11, 2026, at 173:6–
173:11.) Having instructed the Debtor and WERM to undertake the corrective work, Smart Capital and
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Mr. Chang cannot now credibly contend that the Debtor and WERM lacked authority to perform the
very work Smart Capital demanded they perform.
In addition, Mr. Chang contends that the Debtor failed to comply with the Order to Comply
when the Debtor brought the Premises into compliance with the Order to Comply. However, the
LADBS—the very governmental body who is charged with evaluating compliance—found that the
Debtor did precisely what it was required to do and all of the violations and items in the Order to
Comply were now closed and in compliance. (Trial Exh. 15) (noting that the Order to Comply was
"Closed"). Still, Mr. Chang disagrees; Mr. Chang believes that the Debtor is wrong, believes that the
LADBS is wrong, and—based on his comment during closing argument that this Court is not an
expert—Mr. Chang apparently believes that this Court is wrong. But Mr. Chang's arguments reflect a
different construction of reality that is unwilling to accept that the City of Los Angeles, although it
issued the Order to Comply, is now satisfied. The compliance was approved by the Department of
Building & Safety; the governmental body authorized by law to issue notices of non-compliance, to
decide when there is compliance and when there isn't compliance. And once again, the Court finds,
based on credible testimony, that the issuance of the Order to Comply was the result of Mr. Chang's
insistence, his attempt to get the City to cite the tenant and sub-tenant as part of a persistent scheme to
find excuses to declare the Lease in default and remove the tenant and sub-tenant. Mr. Chang is upset
not because Smart Capital is being harmed by the work done by the Debtor to bring the Premises into
compliance with the Order to Comply, but because Mr. Chang's scheme/plan to remove the Debtor and
WERM did not work.
Smart Capital has not come forward with credible evidence to establish the existence of a default
under the Lease on the Motion to Assume Lease or a breach of the Lease under its Counterclaim.
Accordingly, the Court finds that there is no credible evidence to support a default under the
Lease or Sublease by the Debtor or WERM related to the Order to Comply.
8. Obstruction of Access
Mr. Chang also advanced various allegations suggesting that the Debtor and WERM had
obstructed access to portions of the building or improperly entered areas outside of the leased Premises.
The Court finds that Mr. Chang failed to present any credible evidence supporting those allegations.
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Specifically, the Court finds that there is no credible evidence that the Debtor or WERM
obstructed Smart Capital's or Mr. Chang's access to any portion of the building to which Smart Capital
was entitled access under the Lease, Sublease, or applicable law. To the contrary, the evidence
demonstrated a pattern of Smart Capital seeking access to the Premises and other areas of the building
and obtaining such access when the proper notice and information was provided as required by the
Lease. (Trial Tr. June 8, 2026, at 92:24–93:2; Trial Tr. June 10, 2026, at 175:2–176:16); (Trial Exh. 1 §
10.2). Mr. Chang failed to identify any instance in which Smart Capital was denied access to an area to
which it was legally entitled.
Again, Smart Capital has not come forward with credible evidence to establish the existence of
either a default under the Lease on the Motion to Assume Lease or a breach of the Lease under its
Counterclaim.
9. Trespass
The Court likewise finds that Mr. Chang failed to establish any actionable trespass by the
Debtor, WERM, or their employees, agents, or representatives. Even assuming that individuals
associated with Debtor or WERM occasionally entered portions of the building outside of the leased
Premises, Mr. Chang failed to identify any provision of the Lease or Sublease prohibiting such conduct
or establishing that such conduct would constitute a default under the governing agreements.
More importantly, Mr. Chang failed to come forward with any credible evidence that any such
conduct occurred, that it was unauthorized, or that it resulted in any damage or interference with Smart
Capital or Mr. Chang's rights. The Court finds that the arguments were vague, unsupported by
documentary evidence, and based largely on speculation rather than firsthand knowledge or competent
testimony.
Accordingly, the Court finds no default based on any alleged trespass. On the contrary, the
Court finds that the evidence demonstrated that it was actually Mr. Chang trespassing in the Premises
and violating the Debtor's and WERM's right to quiet enjoyment under Section 19 of the Lease. (Trial
Exh. 1 § 19.) For example, the Court heard testimony from Mr. McAbian that people under Mr. Chang
and Smart Capital's direction unilaterally entered into the Premises through a hole that they made by
removing a fire hose cabinet (Trial Tr. June 8, 2026, at 144:12–145:11; Trial Tr. June 9, 2026, at 10:19–
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11:11), and photographic evidence was introduced by the Debtor at trial establishing the intrusion into
the Debtor's premises and a trespass by an agent of Smart Capital or Mr. Chang. Video footage was also
introduced into evidence and reviewed by the Court which demonstrates Mr. Chang entering the
Debtor's premises in the evening. (Trial Exh. 64, 65) Testimony was introduced that no prior written
notice of such entry was provided by Smart Capital or Mr. Chang or anyone acting on their behalf as
required under the Lease. Mr. Chang's testimony that he was present to repair the elevator was not
credible and his testimony that he allegedly entered for emergency reasons because he allegedly heard
something in the Debtor's premises was convoluted, inconsistent and not credible. The evidence
presented does, however, establish that while Mr. Chang was trespassing onto the Debtor's leased
premises, he physically assaulted a staff member employed by the Debtor or WERM at the Premises.
(Trial Exhs. 64, 65.) Specifically, Mr. Chang shoved the employee to the ground in a callous and
uncivil manner. (Trial Tr. June 11, 2026, at 178:19–178:22, 181:20–181:25.)
Smart Capital has not come forward with credible evidence to establish the existence of either a
default under the Lease on the Motion to Assume Lease or a breach of the Lease under its Counterclaim.
10. Building Conditions, Safety Issues, and Operations
The Court finds that Smart Capital and Mr. Chang failed to establish any default relating to
building conditions, safety concerns, operational issues, alleged unauthorized events, alleged misuse of
the premises, or similar allegations. The Court finds that many of Mr. Chang's allegations were
unsupported, exaggerated, speculative, inconsistent with governmental determinations, or based on Mr.
Chang's subjective personal beliefs rather than admissible evidence. The Court finds Mr. McAbian's
testimony on these issues credible and persuasive. (Trial Tr. June 10, 2026, at 171:8–175:1.)
Accordingly, Smart Capital and Mr. Chang failed to present credible evidence to establish the existence
of any default arising from such allegations.
Mr. Chang testified that he is driven almost entirely by a concern for "public safety." However,
other aspects of his testimony and evidence presented contradict his contention in that regard. For
example, Mr. McAbian credibly testified that Mr. Chang, through his employees, caused the leased
Premises to be subject to trespassers and vandals by leaving unlocked and ajar certain doors and access
points. (See, e.g., Trial Tr. June 10, 2026, at 211:11–211:16.) Further, Mr. Chang complained about
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and sought to preclude the Debtor from remedying building safety issues, including its replacement of
the two-decade-old winches that suspend heavy overhead equipment, its installation and use of the truss
and netting systems to prevent business invitees from overhead hazards, and its correction of the issues
identified in the Order to Comply.
Smart Capital has not presented credible evidence to establish the existence of either a default
under the Lease on the Motion to Assume Lease or a breach of the Lease under its Counterclaim.
11. Monetary Default
Mr. Chang raised a contention of certain monetary default for the first time at trial. Specifically,
Mr. Chang asserted that if the Debtor's exercise of its option to renew the Lease was valid, the Debtor
was paying Smart Capital an amount that did not properly account for the annual increases agreed to in
the Lease. (Trial Tr. June 8, 2026, at 192:16–193:2; Trial Tr. June 9, 2026, at 7:8–7:14; Trial Tr. June
10, 2026, at 79:19–80:3, 85:19–85:24; see Trial Exh. 1 § 1.14.) No evidence was submitted by Smart
Capital or Mr. Chang as to the amount being paid by the Debtor or the amount on deposit in the Debtor
in Possession account as a result of Smart Capital's refusal to negotiate the rent checks. The evidence
demonstrated that no notice of default, written or otherwise, was ever sent on this issue despite the
language of the Lease that requires written notice (Trial Exh. 1 § 16.1). (Trial Tr. June 10, 2026, at
197:10–23; 133:5–8.) In addition, the Court heard credible evidence that the Debtor has always timely
paid rent. (Trial Tr. June 8, 2026, at 79:18–79:19.) In fact, Mr. McAbian testified that a member of his
team physically delivers a rent check to Smart Capital monthly. (Trial Tr. June 8, 2026, at 79:22–80:7.)
Once again, Smart Capital has not come forth with credible evidence to establish the existence of
either a monetary default under the Lease on the Motion to Assume Lease or a breach of the Lease under
its Counterclaim.
Accordingly, the Court finds that there is no credible evidence to support a monetary default
under the Lease or Sublease by the Debtor or WERM.
12. Guaranty
At trial, Mr. Chang claimed a default based on the failure of the Debtor to provide a new
guaranty following the death of Mr. William McAbian, Adi McAbian's father and one of two guarantors
under the Lease, on March 15, 2025. (Trial Tr. June 8, 2026, at 77:3–77:22; See Trial Tr. June 11, 2026,
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at 55:6–55:9.) There was no evidence or legal argument presented at trial that establishes that Mr.
William McAbian's guaranty legally terminated upon his death or resulted in a default under the Lease.
Neither Smart Capital nor Mr. Chang pointed to any provision of the Lease requiring a replacement
guarantor in the event of his death. Neither Smart Capital nor Mr. Chang introduced the guaranty into
evidence. Moreover, Smart Capital and Mr. Chang's argument that the Lease contains a self-executing
forfeiture upon a guarantor's death—without notice, without an opportunity to cure, and without any
declaration of default—contradicts both the plain language of the Lease and California's strong public
policy against forfeitures of leasehold estates. See Lease §§ 7, 12.5, 22.8; Cal. Civ. Code § 1442 ("A
condition involving a forfeiture must be strictly interpreted against the party for whose benefit it is
created."). Therefore, the Court does not need to address the effect of his death on the issue of adequate
assurance of future performance.
Even assuming the Court was required to reach the issues of adequate assurance of future
performance, there was no evidence presented by Smart Capital or Mr. Chang —no financial analysis,
no expert testimony, no comparison of guarantor net worth—that Mr. William McAbian's or his estate's
financial ability was impaired by his death upon which the Court can base a decision regarding the effect
of his death on adequate assurance of future performance. Further, the evidence before the Court
establishes that WERM remains a guarantor under the Lease. To the contrary, the Court finds that the
Debtor has been current on rent, which WERM is paying. (Trial Tr. June 11, 2026, at 148:20–149:2.)
13. Notice
It is also worth noting that various portions of the Lease require notice from Smart Capital of any
breach. (Trial Exh. 1 § 16.1; Trial Exh. 4 § 15.) The Court is not satisfied that it has heard any evidence
that notice of any breach was given to the Debtor and WERM. Therefore, in addition to the reasons
already set forth herein, the Court finds no default.
V. CONCLUSIONS OF LAW
The Court's Findings of Fact are hereby expressly incorporated herein and used in support of the
Court's following Conclusions of Law:
A. The Lease Motions
Under 11 U.S.C. § 365(a), the Court has the authority to approve of the debtor in possession's
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assumption of "any executory contract or unexpired lease of the debtor." See 11 U.S.C. § 1107(a).
Here, the Court's decision rests on whether to assume the Lease and Sublease. If there is a default of
either the Lease or Sublease, the law requires as a condition of assumption that the debtor in possession
"cures, or provides adequate assurance that [it] will promptly cure, such default[.]" 11 U.S.C. §
365(b)(1)(A). Importantly, the Court does not need to reach section 365(b)(1) if there are no defaults.
See Smart Cap. Invs. I, LLC v. Hawkeye Ent., LLC (In re Hawkeye Ent., LLC), 49 F.4th 1232, 1236 (9th
Cir. 2022) ("If there has been no default, section 365(b)(1)'s requirements—cure, compensation, and
adequate assurances of future performance—are not triggered.").
1. Burden of Proof
The burden of proof with respect to assumption of an executory contract is a shifting one. As the
moving party, the trustee or debtor in possession "has the ultimate burden of persuasion that the
[agreement] is one subject to assumption and that all requirements for assumption have been met." In re
Rachels Indus., Inc., 109 B.R. 797, 802 (Bankr. W.D. Tenn. 1990). The moving party's initial burden
includes establishing that assumption satisfies the business judgment rule. See Agarwal v. Pomona
Valley Med. Grp., Inc. (In re Pomona Valley Med. Grp. Inc.), 476 F.3d 665, 670 (9th Cir. 2007); see
also In re Minesen Co., 635 B.R. 533, 542 (Bankr. D. Haw. 2021); In re Hertz, 536 B.R. 434, 442
(Bankr. C.D. Cal. 2015).
However, "the nondebtor party to the contract has the burden of coming forward with all alleged
defaults and demonstrating that any required notice of default has been properly given." Minesen Co.,
635 B.R. at 542 (citing Kings Terrace Nursing Home & Health Related Facility v. N.Y. State Dep't of
Soc. Servs. (In re Kings Terrace Nursing Home & Health Related Facility), Case No. 91–11478, Adv.
No. 94–8912, 1995 WL 65531, at *26 (Bankr. S.D.N.Y. 1995)); see also, e.g., In re Arriva Pharms.,
Inc., 456 B.R. 419, 424 (Bankr. N.D. Cal. 2011) (citing In re Diamond Mfg. Co., Inc., 164 B.R. 189, 199
(Bankr. S.D. Ga. 1994)); In re Hathaway, 401 B.R. 477, 484 (Bankr. W.D. Wash. 2009) (citing In re
ALI Props., Inc., 334 B.R. 455, 460–61 (Bankr. D. Kan. 2005)); Rachels Indus., 109 B.R. at 802.
2. No Default Exists Under the Lease or Sublease
In this case, the burden of coming forward with evidence of the existence of a default under the
Lease or Sublease rests with Smart Capital. For the reasons set forth at length herein, Smart Capital and
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Mr. Chang did not come forward with any evidence establishing the existence of any default under the
Lease at trial, and Smart Capital likewise did not come forward with any evidence establishing the
existence of any default by virtue of their opposition papers or any of the documents submitted by them
in the record. The Court therefore expressly finds and concludes that no default whatsoever—monetary
or non-monetary—exists under the Lease or Sublease, and that no such default existed as of the petition
date or as of the date of assumption.
The Court further finds and concludes that Smart Capital and Mr. Chang failed to produce any
credible evidence in support of any of the defaults claimed in the three Three-Day Notices served prior
to the Petition Date and at issue in this case. Smart Capital and Mr. Chang also failed to establish the
existence of a nuisance created or caused by the Debtor or WERM. Therefore, no cure, no
compensation for pecuniary loss, and no further adequate assurance under 11 U.S.C. § 365(b)(1) is
required as a condition of assumption; and no curative measures under 11 U.S.C. § 365(b)(1)(A), (B)
and/or (C) is required by the Debtor. See Hawkeye Ent., LLC, 49 F.4th 1232 at 1236.
3. The Debtor's Assumption Satisfies the Business Judgment Rule
The Ninth Circuit Court of Appeals has instructed that application of the business judgment test
is deferential; the bankruptcy court is to "presume that the debtor-in-possession acted prudently, on an
informed basis, in good faith, and in the honest belief that the action taken was in the best interests of the
bankruptcy estate." Agarwal, 476 F.3d at 670.
The Court finds that the Debtor has exercised sound, reasonable, and appropriate business
judgment in seeking to assume the Lease and Sublease. The evidence presented at trial establishes that
the Lease is the Debtor's primary asset and forms the foundation of its reorganization efforts. (Trial Tr.
June 10, 2026, at 216:10–18.) The Court further finds that the Bankruptcy Case was commenced in
good faith and for a legitimate reorganization purpose and not as a litigation tactic or for any improper
purpose.
The evidence also demonstrated that the Sublease with WERM and the continued operation of
Exchange LA are the Debtor's primary source of revenue and the primary source of funding for the
Debtor's plan of reorganization and payment of creditors, and that it depends upon the preservation of
the Lease and the Sublease. Without the Lease and Sublease, the Debtor and WERM would be unable
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to continue operating the business, generate revenue, or pursue a successful reorganization for the
benefit of creditors and other stakeholders. (Trial Tr. June 10, 2026, at 216:10–18.) By contrast,
assumption of the Lease and Sublease preserves a valuable estate asset, allows the Debtor to continue
operating as a going concern, and maximizes the likelihood of a successful reorganization.
Accordingly, the Court finds that assumption of the Lease and Sublease represents a valid
exercise of the Debtor's business judgment and is in the best interests of the estate, creditors, and all
parties in interest. The Court further finds that Smart Capital and Mr. Chang failed to present any
credible evidence demonstrating that assumption of the Lease and Sublease would be detrimental to the
estate or otherwise constitute an improper exercise of the Debtor's business judgment.
Therefore, the Court concludes that, among other things, the Debtor has met its burden of proof
and demonstrated to the satisfaction of the Court, that: (a) assumption of the Lease and Sublease for the
Premises is in the best interest of the chapter 11 estate; (b) sound business judgment exists for the
Debtor's decision to assume the Lease and Sublease; (c) the Debtor has acted prudently, on an informed
basis, and in good faith and in an honest belief that assumption benefits the bankruptcy estate; (d) each
and every requirement for assumption under Bankruptcy Code § 365(a) has been met by the Debtor; (e)
no default or event of default exists as of the date of assumption; (f) no curative measures have been
trigged under Bankruptcy Code § 365(b)(1) (A), (B) and/or (C); (g) no cure need be made to any
counterparty to the Lease or Sublease as a condition of assumption of the Lease and Sublease; (h) no
pecuniary loss has been established by Smart Capital as a result of any default and, in any event, no
compensation for any pecuniary loss is required; and (i) adequate assurance of future performance is not
required but nevertheless it has been adequately demonstrated by the Debtor, the evidence presented and
the record in this case.
For the same reasons, the Court concludes that the Debtor is (and, at all times, has been) in
compliance with § 365(d)(3) of the Bankruptcy Code with respect to the Lease.
B. The Complaint
On June 25, 2024, the Debtor initiated the Adversary Proceeding by filing the Complaint against
Smart Capital and Mr. Chang individually (Adv. Dkt. 1). Therein, the Debtor asserted a claim for
declaratory relief and injunctive relief.
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The Court notes that Smart Capital did not appear through counsel to defend the claims asserted
in the Complaint. While the Court could treat Smart Capital's failure to appear through counsel as an
independent basis for relief, the Court need not do so. The Court conducted a full trial, heard testimony,
admitted exhibits, considered the Parties' arguments, and made findings on the merits. Based on the
evidence presented, the Court finds that the Debtor and WERM are the prevailing parties and have
established their entitlement to relief against Smart Capital and Mr. Chang and that Smart Capital and
Mr. Chang failed to establish any basis to deny such relief.
1. Declaratory Relief
In order for the Court to enter declaratory relief, the Court must be satisfied that the Debtor
showed that "there is a substantial controversy between parties having adverse legal interests, and the
controversy is of sufficient immediacy and reality to warrant declaratory relief." Newport-Mesa Unified
Sch. Dist. v. Cal. Dep't of Ed., 371 F.Supp.2d 1170, 1174 (C.D. Cal. 2005) (citing Hal Roach Studios,
Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 (9th Cir. 1989)). The Court finds that declaratory
relief is appropriate under the circumstances here. The evidence presented at trial established the
existence of an actual, present, and continuing controversy between the Parties concerning their
respective rights and obligations under the Lease, Sublease, and related agreements. Specifically, the
Parties dispute, among other things, whether the Lease was properly extended, whether any defaults
exist under the Lease or Sublease, the validity and effect of PA-4 and PA-5, and the Parties' respective
rights concerning operation of the Premises. The Court further finds that resolution of those disputes
will serve a useful purpose in clarifying and settling the legal relations at issue and will terminate and
afford relief from the uncertainty, insecurity, and controversy giving rise to this litigation. Accordingly,
declaratory relief is warranted.
The Court incorporates herein all findings of fact and conclusions of law previously made in
connection with the 2023 Assumption Motion and finds that those findings apply equally to the claims
for declaratory relief. Consistent with those findings, the Court declares that the automatic stay applies
to the rights of the Debtor and WERM to operate under the CUB, the Lease and Sublease. In finding as
such, the Court expressly concludes that (a) the Lease was properly extended through December 31,
2030; (b) the Lease, Sublease, and all amendments thereto remain valid, enforceable, and in full force
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and effect; (c) the Debtor and WERM were not and are not in default under the Lease or Sublease;
(d) PA-5 was properly issued and is valid and enforceable; and (e) Smart Capital and Mr. Chang's
various theories of default relating to PA-4, PA-5, permitting issues, alleged unauthorized construction,
alleged property damage, alleged interference with access, alleged trespass, and other matters addressed
herein are without merit.
Accordingly, judgment shall be entered in favor of the Debtor on the claim for declaratory relief
consistent with the findings and conclusions set forth herein.
2. Injunctive Relief
The Court further finds that the evidence supports the entry of limited injunctive relief in
addition to the declaratory relief awarded herein.
[A] plaintiff seeking a permanent injunction must satisfy a four-factor test before a court
may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable
injury; (2) that remedies available at law, such as monetary damages, are inadequate to
compensate for that injury; (3) that, considering the balance of hardships between the
plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest
would not be disserved by a permanent injunction.
eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006); Monsanto Co. v. Geertson Seed Farms,
561 U.S. 139, 156 (2010) (confirming application of the four-factor test outside the patent law context);
see also Edmo v. Corizon, Inc., 935 F.3d 757, 785 (9th Cir. 2019) (explaining that an injunction is
"mandatory," as opposed to prohibitory, where it requires the defendant to act). Based on the transcripts
from the trial and the Post-Trial Brief filed by the Debtor (Adv. Dkt. 142, 142-1), the Court concludes
that the Debtor satisfied the four-factor test.
The Court has authority to enter permanent injunctive relief in this adversary under 11 U.S.C.
§§ 1108, 1107, 541, 365, 363 and 105(a), Federal Rule of Bankruptcy Procedure 7065, and the
traditional equitable standards governing permanent injunctions. Specifically, the Court concludes that
it possesses broad equitable authority under 11 U.S.C. § 105(a) to "issue any order, process, or judgment
that is necessary or appropriate to carry out the provisions" of the Bankruptcy Code. The Court further
concludes that the injunctive relief awarded herein is necessary and appropriate to carry out and enforce
the provisions of the Bankruptcy Code, including, without limitation, the Debtor's rights under 11
U.S.C. §§ 365, 1108, 1107, 541, 363 and the relief granted in connection with the assumption of the
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Lease and Sublease.
The Court finds that the Lease constitutes the Debtor's principal asset and that the continued
operation of the Debtor's business depends upon the Debtor's ability to exercise its rights thereunder free
from improper interference. As set forth herein, the Court has determined that the Lease and Sublease
are valid and enforceable, that no defaults exist that would prevent assumption, and that Smart Capital
and Mr. Chang have repeatedly interfered with the Debtor's rights under the Lease and Sublease. Absent
injunctive relief, there exists a substantial risk that such interference will continue notwithstanding this
Court's rulings.
The Court further concludes that monetary damages would be inadequate to protect the Debtor's
possessory rights, operational rights, and rights arising from assumption of the Lease and Sublease. The
injunctive relief awarded herein is narrowly tailored to protect those rights, prevent continuing
interference, preserve the value of estate assets, and ensure the effectiveness of the relief granted by this
Court.
Accordingly, the Court concludes that the injunctive relief awarded herein is authorized by 11
U.S.C. § 105(a), is supported by the Court's equitable powers, and is necessary and appropriate to
implement and enforce this Court's rulings regarding the Lease, the Sublease, the Debtor's assumption
thereof, and the administration of the bankruptcy estate. The Court further notes the provision of the
Lease that expressly states that the Debtor "shall be entitled to all rights and remedies available at law or
in equity (including specific performance or other injunctive relief)[.]" (Trial Exh. 1 § 17.1.)
(a) Quiet Enjoyment/Trespass
For the avoidance of doubt, the Court finds that the evidence presented at trial established a
pattern of conduct by Mr. Chang involving unauthorized entry into areas subject to the Debtor's and
WERM's possessory rights. To the extent the evidence established any actionable trespass, the Court
finds that the more persuasive evidence demonstrated trespass by Smart Capital and Mr. Chang rather
than by the Debtor or WERM. The Court specifically credits the video evidence admitted at trial, which
depicts Mr. Chang entering the leasehold area and physically shoving a Debtor or WERM employee or
representative to the ground. (Trial Exhs. 64, 65.) And, when asked if he apologized to the individual
he shoved to the ground, Mr. Chang responded "No, why do I have to apologize?" (Trial Tr. June 9,
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2026, at 55:4–5.) In addition, there was video evidence of Mr. Chang or Smart Capital's representatives
knocking over camera equipment installed by the Debtor and otherwise entering the premises at a whim.
Under California law, every lease contains an implied covenant of quiet enjoyment, and a tenant
may sue for breach of that covenant for damages as well as injunctive relief. Andrews v. Mobile Aire
Estates, 22 Cal. Rptr. 3d 832, 840 (Cal. Ct. App. 2005). In other words, a tenant is entitled to exclude
even the landlord from the leased premises except to the extent access is authorized by the lease or
applicable law. Id. In Andrews, a tenant couple sued their mobile home park's owner for breach of
contract after the owner failed to take any action against a neighboring tenant whose harassment and
misconduct substantially interfered with their quiet enjoyment of their leasehold, despite repeated
complaints. Id. at 835–37. The California Court of Appeal reversed summary judgment for the
landlord, holding that the implied covenant of quiet enjoyment requires a landlord to make a reasonable
response to such interference, including investigation, warning the offending party, seeking an
injunction against the offending tenant, or pursuing eviction, rather than simply directing residents to
resolve the matter themselves. Id. at 597.
Applied to this case, the holding in Andrews supports the proposition that Smart Capital and Mr.
Chang have an obligation to cooperate with reasonable access requests, not merely refraining from
physically blocking access. See id.; see also In re Colbert, No. 19-41729, 2022 WL 2181359, at *6
(Bankr. N.D. Cal. June 16, 2022) (applying Andrews's quiet-enjoyment standard to a tenant's claim that
a landlord's eviction notices interfered with his tenancy).
The Court also expressly notes and considers the provisions of the Lease regarding quiet
enjoyment (Trial Exh. 1 § 19) and preventing the landlord from "unreasonably interfere[ing] with the
operation of the Tenant's business on the Premises" (Trial Exh. 1 § 2.2). The Court finds that the video
evidence and corresponding testimony concerning that incident were credible and persuasive.
The Court further finds that Mr. Chang's conduct demonstrates a substantial likelihood of
continued interference with the Debtor's and WERM's possessory rights absent injunctive relief.
Monetary damages alone would be inadequate to remedy such continuing interference. Accordingly, the
Court concludes that narrowly tailored injunctive relief is appropriate to protect the Debtor's and
WERM's rights under the Lease and Sublease. The Court further finds that the injunctive relief granted
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herein is in the public interest as it allows the Debtor and WERM to continue operating safely and
effectively.
Moreover, based on the evidence presented at trial, including portions of the Lease relating to
quiet enjoyment (Exh. 1 § 19) and the video evidence depicting Mr. Chang physically shoving a WERM
employee or representative to the ground (Trial Exhs. 64, 65), the Court finds that injunctive relief is
necessary to prevent further interference with the Debtor's and WERM's possessory rights and operation
of the Premises. The Court further finds that monetary damages would be inadequate to protect against
such future conduct. Accordingly, the Court concludes that it has authority pursuant to 11 U.S.C. §
105(a), and its inherent equitable powers to enter narrowly tailored injunctive relief prohibiting Mr.
Chang, Smart Capital, and those acting in concert with them from engaging in conduct that interferes
with the Debtor's and WERM's lawful possession, use, and enjoyment of the Premises, including
physical interference with the Debtor's and WERM's employees, agents, contractors, and
representatives.
(b) Mr. Chang's Execution of the PA-5 Master Covenant Agreement
The Court further finds that despite being integral to the operation of the Debtor and WERM,
Smart Capital and Mr. Chang have improperly refused to execute the covenant documentation necessary
to memorialize and record PA-5. (Trial Tr. June 9, 2026, at 39:11–40:14); (Trial Exh. 63). When asked
whether he was "going to do everything [he] can to try to block PA-5 from being able to go into effect,"
Mr. Chang unequivocally responded, "Yes." (Trial Tr. June 9, 2026, at 40:11–14.) Indeed, the Lease
requires the Debtor to obtain a CUB and Mr. Chang and Smart Capital seemingly concede that fact
while simultaneously taking steps to prevent or revoke the CUB that the Debtor and/or WERM obtained.
The Court notes again, that Mr. Chang and Smart Capital's arguments directed at Mr. McAbian's
signature of the PA-4 CUB are meritless, caused no cloud on title, and bear no relevance to Mr. Chang's
intentional interference with PA-5. The Lease expressly notes that the premises are to be used for a
"nightclub." (Trial Exh. 1 § 1.17.) The evidence showed that a nightclub cannot operate without certain
use permits, in this case, the PA-5. (Trial Tr. June 10, 2026, at 216:13–18) ("if he continues to do what
he does, he will jeopardize our ability to operate. If he doesn't sign the MCA for PA5 and eliminates
PA5, we will not be able to operate, we will not be able to generate revenue, we will not be able to fund
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the plan, which is why it's all relevant for this courtroom."). Moreover, the Lease makes the Debtor
"solely responsible for . . . the procurement of a Conditional Use Permit ('CUP') from the appropriate
governmental agencies for the use of the Premises as a nightclub and/or restaurant, and the procurement
of the required ABS license ('ABC License') from the appropriate governmental agencies." (Trial Exh.
1 § 5.3.) Therefore, Smart Capital's refusal to sign PA-5 is in direct violation of the Lease which states,
in pertinent part, "Landlord shall not unreasonably interfere with the operation of Tenant's business on
the Premises[.]" (Trial Exh. 1 § 2.2.)
In addition to the requirements of the Lease, the Settlement Agreement contains a further
assurances clause, which requires Smart Capital (as successor to New Vision) to "execute such other
instruments consistent with, and necessary or convenient to carry out the provisions and purposes of this
Agreement." (Trial Exh. 3 ¶ 16.) The Court finds PA-5 to fit within the requirements of the further
assurances clause. As discussed herein, the Court has determined that PA-5 was validly issued and that
Smart Capital's objections thereto are without merit. The Court therefore concludes that the Debtor and
WERM are entitled to injunctive relief directing Smart Capital, Mr. Chang, or a person acting on their
behalf to take all steps to comply with the terms of the Lease, including by executing all documents
reasonably necessary to effectuate, record, and implement PA-5 within five days. See Edmo v. Corizon,
Inc., 935 F.3d 757, 781 (9th Cir. 2019).
(c) HVAC and Fire/Life-Safety Access and Cooperation
The Court further finds that the Debtor established the need for injunctive relief concerning
access to the HVAC system and the building's fire-life-safety systems. The Lease expressly provides
that the Debtor is responsible for "maintaining, replacing or upgrading the HVAC system for the
Premises" (Trial Exh. 1 § 5.7; see also § 10.3) and the "fire protection and suppression system
components within the Premises" (Trial Exh. 1 § 10.3), yet the evidence showed that Smart Capital has
been actively and intentionally preventing the Debtor's access and, thereby, preventing the Debtor's
compliance with the terms of the Lease. (Trial Tr. June 9, 2026, at 115:12–116:7; Trial Tr. June 10,
2026, at 1832:24–184:1.) Shockingly, while simultaneously preventing the Debtor from servicing the
HVAC systems, Mr. Chang and Smart Capital claimed that the Debtor was in default of the lease for
failing to service the HVAC system, again, lending to Mr. Chang and Smart Capital's persistent scheme
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to harm the Debtor and WERM through any means necessary as this Court previously noted on the
record following the trial. (Trial Tr. June 11, 2026, at 180:19–25.) The evidence demonstrated that
access to those systems is necessary for operation of the Premises, maintenance of required safety
measures, and compliance with applicable governmental requirements. (Trial Tr. June 11, 2026, at
182:1–13.) The Court finds that Smart Capital and Mr. Chang have, at various times, interfered with or
failed to provide such access. (Trial Tr. June 11, 2026, at 182:6–12.) Accordingly, the Court concludes
that the Debtor and WERM are entitled to reasonable and ongoing access to the HVAC system, fire-life-
safety systems, and any related equipment necessary for testing, inspection, maintenance, repair, and
regulatory compliance, regardless of whether such systems are located entirely within the leased
Premises. (Trial Tr. June 11, 2026, at 182:15–20.)
The Court further finds that compliance with fire-life-safety requirements and Regulation 4
requirements is essential to the lawful operation of the Premises and the safety of patrons and
employees. The Debtor responsible under the Lease for certain aspects of those requirements and the
landlord is responsible for others as discussed herein (Trial Exh. 1 § 2.2, 5.7, 9.5, 10.3). The evidence
established that Mr. Chang and Smart Capital's intentional delays and fabricated obstacles have impeded
Hawkey's ability to service those elements and that Smart Capital has outright failed to comply with its
obligations. (Trial Tr. June 11, 2026, at 154:24–155:7.) Accordingly, the Court concludes that Smart
Capital, Mr. Chang, and all persons acting on their behalf shall provide the Debtor with access to the
Premises fire-life-safety elements of the Premises including, without limitation, including all equipment,
controls, monitoring systems, and components necessary for testing, inspection, certification,
maintenance, repair, replacement, and regulatory compliance; and affirmatively provide Hawkeye and
WERM, and their contractors, engineers, consultants, agents, and representatives, reasonable access to
all fire-life-safety systems serving the Premises, including all equipment, controls, monitoring systems,
and components necessary for testing, inspection, certification, maintenance, repair, replacement, and
regulatory compliance.
Accordingly, judgment shall be entered in favor of the Debtor on the claims for injunctive relief
consistent with the findings and conclusions set forth herein.
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C. The Counterclaims
On July 22, 2024, Smart Capital asserted the Counterclaims against the Debtor and WERM
(Adv. Dkt. 34). Therein, Smart Capital alleged the following claims: Count I for Breach of Contract;
Count II for Breach of the Implied Covenant of Good Faith and Fair Dealing; Count III for Declaratory
and Injunctive Relief; Count IV for Violation of 11 U.S.C. § 365(d)(3); Count V for Private Nuisance;
Count VI for Waste; Count VII for Negligence; Count VIII for Ejectment.
The elements of a cause of action for breach of contract are (1) the existence of a contract, (2) the
plaintiff's performance or excuse for non-performance, (3) the defendant's breach, and (4) resulting
damage. E.g., Bella Canvas LLC v. TSC Apparel, LLC, 2020 WL 7048306, at *2 (C.D. Cal. Sept. 17,
2020). The elements for a cause of action for breach of the implied covenant of good faith and fair
dealing are (1) a contract, (2) plaintiff fulfilled his or her obligations under the contract, (3) defendant
unfairly interfered with plaintiff's right to receive benefits owed under the contract, and (4) plaintiff's
harm. E.g., Pemberton v. Nationstar Mortgage LLC, 331 F. Supp. 3d 1018, 1041 (S.D. Cal. June 26,
2018). The Court has already addressed the elements for both declaratory and injunctive relief. See
Newport-Mesa Unified Sch. Dist. v. Cal. Dep't of Ed., 371 F. Supp. 2d at 1174; eBay Inc. v.
MercExchange, L.L.C., 547 U.S. at 391.
The elements for a cause of action for private nuisance are (1) interference with the use and
enjoyment of a property, (2) invasion of plaintiff's interest in the use and enjoyment that is substantial
and unreasonable. Martinez v. Welk Group Inc., 907 F. Supp. 2d 1123, 1135 (S.D. Cal. 2012). To state
a cause of action for waste, Smart Capital needed to prove an injury to its future ownership interest. See
Cal. Dep't of Toxic Substances Control v. Payless Cleaners, 368 F. Supp. 2d 1069, 1082 (E.D. Cal.
2005). To state a cause of action for negligence, Smart Capital needed to prove (1) a legal duty to use
due care, (2) a breach of that legal duty that (3) was the proximate cause of injury. Lewis v. Russel,
2018 WL 746463, at *3 (E.D. Cal. 2018). And, to state a cause of action for ejectment, Smart Capital
needed to prove a right of ownership and a withholding of such right. C&C Props. v. Shell Pipeline Co.,
2018 WL 3014075, at *4 (E.D. Cal. 2018).
The Court concludes that Smart Capital failed to meet its burden of proof on any of the elements
of its claims as set out above in the findings of fact. (Trial Tr. June 11, 2026, at 183:13–20.) Though
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Smart Capital did not formally appear through counsel, Mr. Chang—Smart Capital's principal—did so
appear and presented evidence and argument in support of each and every one of Smart Capital's claims
and defenses. (Trial Tr. June 11, 2026, at 183:13–25.) Mr. Chang, a Defendant to the Complaint in his
own right, raised issued and introduced evidence far outside the bounds of the claims against him, and
focused almost exclusively on claims and evidence to support Smart Capital's claims and objections.
(Trial Tr. June 11, 2026, at 162:21–163:7.) Once again, the evidence showed not only an absence of a
default under the Lease or Sublease or misconduct on the part of the Debtor and WERM, but the
presence of a scheme to harm the Debtor and WERM through claims and conduct motivated by malice
and an absence of supporting law or fact. (See Trial Tr. June 11, 2026, at 172:7–13.) Smart Capital's
theories of liability are predicated upon allegations that the Debtor and/or WERM defaulted under the
Lease or otherwise engaged in misconduct. As noted above, Smart Capital failed to establish any
actionable default under the Lease or Sublease. To the contrary, the evidence demonstrated that many of
the alleged defaults were either barred by prior orders of this Court, unsupported by the evidence,
expressly authorized by Smart Capital itself, or otherwise did not constitute defaults under the governing
agreements. Accordingly, the factual predicate underlying Smart Capital's Counterclaims fails.
As an independent and alternative basis for the Court's ruling with respect to the Counterclaims,
the Court notes that Smart Capital, as limited liability companies, could not appear and prosecute claims
in this Court without licensed counsel. (Trial Tr. June 11, 2026, at 178:2–6.); see Local Bankr. R.
9011-2(a). No attorney appeared at trial on behalf of Smart Capital to prosecute the Counterclaim.
While the Court permitted Mr. Chang to testify and present evidence, the Court does not find that such
participation cured Smart Capital's failure to appear through counsel or otherwise relieved Smart Capital
of its obligation to prosecute its claims through licensed counsel.
Accordingly, the Court finds in favor of the Debtor and WERM and against Smart Capital on
each and every count of the Counterclaim. Judgment shall therefore be entered in favor of the Debtor
and WERM on all Counterclaims.
D. Binding Effect of These Findings and Conclusions
Smart Capital and Mr. Chang were afforded a full and fair opportunity to litigate every issue
determined herein over the course of a four-day trial in which Mr. Chang participated. (Trial Tr. June
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11, 2026, at 124:10–16.) Having done so, Smart Capital and Mr. Chang are bound by the
determinations set forth herein and may not relitigate them.
The Court concludes that the determinations set forth herein—including that the Lease, Sublease,
and all amendments thereto were validly extended through December 31, 2030, and remain valid and
enforceable (Trial Tr. June 11, 2026, at 177:15–177:20); that no default, monetary or non-monetary,
exists under the Lease or Sublease (Trial Tr. June 11, 2026, at 163); that PA-4 and PA-5 are valid and
that no fraud occurred in connection with the Master Covenant Agreement (Trial Tr. June 11, 2026, at
168:13–20); that the Debtor properly assumed the Lease and Sublease under 11 U.S.C. § 365 (Trial Tr.
June 11, 2026, at 198:2–4); and that Smart Capital takes nothing on the Counterclaims (Trial Tr. June
11, 2026, at 183:13–15)—constitute final determinations on the merits that are binding on Smart Capital
(all of the Smart Capital entities) and Mr. Chang. The Court concludes that each of the factual and legal
issues determined herein was actually litigated, was necessarily decided, and was essential to the Court's
judgment.
Because Mr. Chang appeared, testified, presented evidence, and made argument, and because he
testified that he is the controlling member of Smart Capital, the Court concludes that Mr. Chang and
Smart Capital are in privity with one another for purposes of both claim and issue preclusion. The
preclusive effect of these Findings and Conclusions therefore extends fully to Mr. Chang individually, to
each of the Smart Capital entities, and to any person or entity acting in concert with, or claiming by,
through, or under them. The Court further concludes that, given Smart Capital's and Mr. Chang's
demonstrated pattern of attempting to recast previously adjudicated matters as newly discovered grounds
for relief, noting this for future courts considering the conclusive effect of this Court's Findings and
Conclusions is necessary to bring finality to the Parties' disputes and to prevent further vexatious or
duplicative litigation.
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VI. CONCLUSION
Based on the foregoing, the Court will enter separate orders and a judgment (i) granting the 2023
Assumption Motion, (ii) granting the Compliance Motion, (iii) granting declaratory and injunctive relief
under the Complaint in favor of the Debtor and WERM, and (iv) entering judgment in favor of the
Debtor and WERM on the Counterclaim.
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Date: September 18, 2026
Case 1:23-bk-11501-MB Doc 634 Filed 09/18/26 Entered 09/18/26 15:15:20 Desc
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