Tops Holding II – Indenture Trustee Objects to Plan, Cites Failure to Recognize Indemnification and Fee Obligations

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October 26, 2018 –  U.S. Bank National Association, the indenture trustee (the “Trustee”) in respect of the Debtors’ 8.750%/9.500% Senior Notes due 2018 (the “HoldCo Notes”) and the 9.000% Senior Amortizing Notes Due 2020 (the “OpCo Notes”) filed an objection [Docket No. 722] to Tops Holding II’s Second Amended Joint Chapter 11 Plan of Reorganization [Docket No. 658]. The objection asserts, “The Plan fails to provide the Trustee with customary indemnity, release and compensation protections and other provisions that are supported by the terms of the Indentures…both Indentures specifically provide that Debtor Tops Holding is required to indemnify the Trustee and that such indemnification obligations survive the satisfaction and discharge of the Indentures. Both Indentures also expressly require Tops Holding to pay for the Trustee’s compensation and to reimburse the Trustee for all reasonable disbursements, advances and expenses the Trustee incurs in connection with the Trustee’s services under the Indentures, which compensation includes reasonable fees and expenses of the Trustee’s agents and counsel. And like its indemnification obligations, Tops Holding’s obligations to pay and satisfy the Trustee’s outstanding fees and expenses under the Indentures survive the satisfaction and discharge of the Indentures. As such, notwithstanding the Plan’s contemplated cancellation of the HoldCo Notes and the OpCo Notes under the Plan, Tops Holding’s indemnification and compensation obligations to the Trustee remain ongoing until they are satisfied. Moreover, upon an event of default — here, the bankruptcy filing of Tops Holding — the Indentures provide that the Trustee’s outstanding fees and expenses constitute administrative expense claims pursuant to the Bankruptcy Code.”

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