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UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEW JERSEY
Caption in Compliance with D.N.J. LBR 9004-2(c)
GENOVA BURNS LLC
110 Allen Road, Suite 304
Basking Ridge, NJ 07920
Phone: (973) 467-2700
Proposed Counsel for Robert Sickles
DANIEL M. STOLZ, ESQ.
JEFFREY R. RICH, ESQ.
DONALD W. CLARKE, ESQ.
JACLYNN N. McDONNELL, ESQ.
[email protected]
[email protected]
[email protected]
[email protected]

Chapter 11
In re:
Hon. Christine M. Gravelle
ROBERT H. SICKLES,
Case No.: 24-14781-CMG
Debtor-in-Possession.
Hearing Date:
In re:
Chapter 11
AHS REALTY LLC,
Hon. Christine M. Gravelle
Debtor-in-Possession.
Case No.: 24-14779-CMG

CERTIFICATION OF ROBERT H. SICKLES

IN SUPPORT OF CHAPTER 11 FILING

Robert H. Sickles (hereinafter, “Debtor”), being of full age and being duly sworn according

to law, hereby deposes and says:

1. I am the Debtor in this Chapter 11 proceeding, having filed a voluntary Chapter 11

Petition on May 9, 2024.

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2. I am married to Leslie S. Sickles and we reside at a home owned by us jointly

located at 4 Heathcliff Road, Rumson, New Jersey 07760 (the “Rumson Property”).

3. My most valuable asset is my ownership in AHS LLC (“AHS”), of which I am the

sole member.

4. AHS is the current owner of real property and improvements located at 1 Harrison

Avenue, Little Silver, New Jersey (the “Little Silver Property”). The Little Silver Property consists

of approximately 6 acres. While the property is zoned as residential, it has housed the Sickles

Market for 116 years. AHS filed a separate Chapter 11 petition at the same time I filed this Chapter

11 petition. The AHS case has been assigned docket number 24-14779.

5. The Little Silver Property was acquired by the Parker Family in 1663, as a result of

a land grant from the King of England to Peter Parker of Rhode Island. Parker later moved to the

Little Silver area and married into the Sickles Family.

6. The Sickles Market was opened by Harold Sickles and his wife Elsie in 1908. In

1945, my father, Robert W. Sickles, joined his parents in the operation of the Sickles Market and

in 1978, I, began working at the Market. Before it recently closed, I was responsible for the

operations of the Little Silver Market, and my daughters Tori and Sasha worked for the Market.

Ultimately, ownership of the Little Silver Market was conveyed to Sickles Market LLC. I am the

97% owner of the Little Silver Market.

7. Prior to October 10, 1997, the Little Silver Property had been passed down, through

inheritance, from one member of the Sickles Family to another. On October 10, 1997, my parents,

Robert W. Sickles and, Adelaide H. Sickles, conveyed the Little Silver Property to AHS. On or

about September 13, 2002, I purchased my parents’ ownership interest in AHS for the sum of

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$800,000.00. Simultaneously, I purchased my parents’ ownership interest in Sickles Market LLC

for the sum of $600,000.00.

8. In 2019, the Sickles Family determined to open a second market and a liquor store

in Red Bank, New Jersey. Funding for the Red Bank market and the liquor store was provided

through a $2.5 million commercial mortgage loan and a $1.1 million line of credit from Two Rivers

Bank. The Red Bank Market is owned by Sickles Provisions LLC (“Provisions”) and the liquor

store, operating under the name of “Bottles by Sickles” is owned by TST Beverages LLC

(“Bottles”). Bottles and the Red Bank Market officially opened on August 6, 2020.

9. Unfortunately, the opening of Red Bank and Bottles faced a number of issues,

including coinciding with the height of the COVID pandemic. Availability for parking of

customers of Bottles and Provisions proved to be substantially less than the landlord had suggested

it would be. As the COVID pandemic increased, foot traffic from commuters decreased.

10. It became difficult to find experienced food retail labor workers due to the COVID

pandemic. Labor costs at both Markets increased by 5% or more and other costs also increased

while revenue decreased.

11. At the height of the pandemic, sales at Little Silver averaged 20% below pre-

pandemic levels. In Red Bank, the pandemic essentially choked the opening and prospects for the

Red Bank operation. The pandemic also delayed the expansion of the Town of Red Bank into the

location of the Red Bank Market, further heightening losses at the Red Bank location. Due to the

consumer behavior changes after the COVID pandemic, the Red Bank store never accumulated

the foot traffic and commuter traffic that the space was planned for. With a lease already signed

and personally guaranteed with Metrovation, there was no choice but to move forward into a very

different retail world than was planned for with a very expensive $34 per square foot of rent.

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12. The operating losses of the Little Silver and Red Bank Markets were huge.

13. With the hope that the end of the COVID pandemic would restore Little Silver to

profitability and that the Red Bank operation would finally approach profitability, the Sickles

entities refinanced the Two Rivers loan through Northfield Bank. The Northfield loan proceeds,

totaled approximately $5 million.

14. The Northfield loan was secured by a first mortgage on the AHS Property, a

mortgage on my home, the equipment and fixtures at both Little Silver and Red Bank, and a blanket

lien on all their assets. Northfield insisted, as part of the loan, that a lease be executed between

AHS and Sickles Market. Annexed hereto marked Exhibit “A” is the Lease between AHS and

Sickles Market. The Lease is what is commonly referred to as a “triple net lease”, requiring Sickles

Market to pay utilities, taxes, insurance, etc. It is my belief that the $20,000.00 per month rental

under the Lease is at or significantly below market rental for the Little Silver Property.

15. Unfortunately, even with the Northfield funding, the Markets were unable to stem

the tide of losses. The Red Bank Market continued to lose money on an ongoing basis, and the

Little Silver Market never regained its prior profitability.

16. The Sickles Family utilized every resource available to them, including the

Debtor’s 401(k) account, to attempt to keep the “ships afloat”.

17. The losses continued and rent to the Red Bank landlord became significantly

delinquent. A decision was made that the Red Bank Market would have to close, as there was no

prospect that the losses at Red Bank would cease. The Red Bank Market closed on February 15,

2024.

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18. The liquor store at Red Bank, owned by Bottles, closed on April 17, 2024, after the

landlord obtained an Order for Possession. Bottles filed a Chapter 11 petition with this Court on

April 23, 2024.

19. In March 2023, the situation at the Little Silver Market also became unmanageable

financially. After 116 years of continuous operation, Sickles Market Little Silver closed on March

11, 2024 after not being able to fund payroll.

20. The Little Silvers Market is significantly delinquent in its rent payment to AHS

under the Lease. The base rental has not been paid since 2013 and Sickles Market has been without

funds to pay utilities and other obligations under the Lease.

21. It is my understanding that Sickles Market will be executing and delivering a Deed

of Assignment for the Benefit of Creditors to Brian Hofmeister, Esq. Attempts to obtain funding

for a retainer for counsel to file a Chapter 11 petition for Sickles Market were unsuccessful.

5 HARRISON

22. A residence historically owned by the Sickles Family, located at 5 Harrison Street,

Little Silver (hereinafter “5 Harrison”) sits in the parking lot of the Sickles Market. This property

is not subject to a Northfield mortgage and was not been transferred to AHS. The property was

passed down to my brother when our parents, who had owned the property, passed away. I

purchased 5 Harrison from my brother in 2020, for the amount of $300,000.00. To obtain funds

for the continued operations of the Markets, Sickles Market took out what are known as “merchant

loans” from various different parties. Merchant loans are secured primarily by credit card receipts

and the merchant lenders are entitled to sweep the credit card receipt accounts to pay monthly

interest, etc.

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23. In addition to a lien on credit card accounts, Bluestone Capital has a mortgage on

5 Harrison, to further secure repayment of the debt to that merchant lender. The indebtedness due

to Blue Stone Capital is currently approximately $500,000.00. The Debtor estimates that there is

between $100,000.00 and $200,000.00 of equity in 5 Harrison above the Bluestone mortgage.

Prospects for the Sale or Lease of the Property

24. There are several components of the value of the Property located at 5 Harrison

Street. The Debtor and AHS are exploring all alternatives for the maximization of the value of the

Property. First, I have received numerous expressions of interest from developers, seeking to build

a residential community at the Property. As set forth above, the Property is zoned for residential

use.

25. I intend to retain Suzanne Macnow and Robert L’Abbate of CBRE as broker with

regard to the sale of the Property.

26. The most recent appraisal on the Property lists its value at approximately $10

million.

27. I have received an expression of interest from a well-known developer for the

purchase of the Property in the range of $10 million.

28. I, with my real estate counsel and the interested developer, met with the Borough

of Little Silver. The Borough noted that new development should include low-income housing.

The Borough also noted new regulations which were about to take effect with regard to their

obligation to provide low-income housing. In summary, any developer who wishes to build

houses, condominiums, etc. on the Property would be required to devote a portion of the

development to low-income housing.

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29. While the Debtor and its professionals expect a very lengthy and contested closing

on the sale of the Property to a developer. My professionals’ estimate it could take between 3 and

5 years.

30. I, with my professionals, continue to speak with the broker and interested parties

with regard to the sale of the entirety of the Property as a residential development.

31. Second, I have been approached by a number of parties who wish to lease all or the

majority of the Sickles Market space and are prepared to pay Sickles Market and the Debtor a

substantial cash payment in exchange for use of the trademark Sickles name, the kitchen, other

facilities at the Market, and the commitment by me and my daughters to accept employment from

these prospective purchasers.

32. These purchasers would not require use of the majority of the six acres, only

requiring use of the Market facilities. Therefore, it is feasible to subdivide the Property, so that

the Market can continue to operate under new ownership, and the balance of the Property sold for

residential development.

33. The third alternative being explored, with some degree of overlap with the second

alternative, is the leasing of the Market, the garden center, and 5 Harrison, on a short-term basis,

during the time period required for any buyer of the Property to obtain the appropriate approvals

and overcome any resistance from residents of Little Silver.

34. There also is a fully operational and stocked garden center adjacent to the Little

Silver Market, with three greenhouses. The broker is actively seeking an operator who would be

interested in taking over operations of a “turnkey” garden center. The broker is also seeking a

short-term tenant for the house located at 5 Harrison. Such a lease would likely be feasible under

the first two scenarios set forth above.

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35. I look forward to discussing in detail, with this Court and my creditors, the various

alternatives available to maximize the return from the sale/lease of the Debtor’s Property.

THE NORTHFIELD LOANS

36. On or about November 9, 2022, I, on behalf of myself, AHS, and the other Sickles

entities, obtained two loans from Northfield Bank providing gross loan proceeds of $5 million.

37. The first loan was a line of credit in the maximum amount of $500,000.00,

evidenced by a Promissory Note dated November 9, 2022. To secure the Promissory Note, AHS

provided a mortgage encumbering the Little Silver Property in favor of Northfield Bank, and my

wife and I executed a mortgage encumbering the Rumson Property. My wife and I executed

guarantees (hers limited to her interest in the real property) on the first loan. In addition, Sickles

Management, Inc., Sickles Market LLC, Sickles Provisions LLC, and TST Beverages LLC

executed guarantees as well as security agreements encumbering all the assets of those entities.

38. Also on November 9, 2022, Northfield extended a term loan in the principal amount

of $4,500,000.00, evidenced by a Promissory Note dated November 9, 2022. The term loan was

secured by a commercial mortgage against the Little Silver Property, a mortgage against the

Rumson Property, as well as guarantees from Sickles Management, Inc., Sickles Market LLC,

Sickles Market Provisions LLC, TST Beverages LLC, and security interests in the assets of those

entities. My wife and I executed guarantees (hers limited to her interest in the real property) on the

term loan.

39. Northfield declared a default under both loans and has indicated its intention to

enforce its mortgages and liens against the real and personal property.

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40. Notwithstanding the defaults under the loan agreements, my professionals and I

have been engaged in ongoing discussions with Northfield Bank with regard to the alternatives to

liquidate assets and satisfy the outstanding amounts due to Northfield Bank.

41. Without waiving any rights, Northfield Bank and its counsel have been reasonable

and cooperative to date.

SALES TAX DUE

42. Because of the unanticipated financial difficulties experienced by the Markets and

Bottles, the businesses were unable to pay to the State of New Jersey Division of Taxation sales

taxes due and owing.

43. It is currently estimated that the principal amount of the sales tax due is in the

approximate sum of $750,000.00.

44. The State of New Jersey has asserted a claim for personal liability against me as

the “responsible party” with regard to the businesses.

45. As the businesses have all ceased operating, no further sales tax should accumulate.

DEPARTMENT OF LABOR

46. On April 29, 2024, I notification of potential personal liability to the State of New

Jersey Department of Labor and Workforce Development, as a result of unpaid back wages. The

Department of Labor has assessed claims against the Debtor in the amount of $277,799.63, plus

an administrative fee of $27,779.96 and a penalty in the amount of $1,150.00.

PACA CLAIMS

47. The Perishable Agricultural Commodities Act (“PACA”) protects vendors selling

fresh and frozen fruits and vegetables in interstate and farm commerce.

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48. Pursuant to PACA, trust can be imposed on the proceeds of the sale of perishable

agricultural commodities. A buyer or trustee violates PACA if it fails to maintain the PACA trust

or fails to make full payment promptly to the seller or trust beneficiary.

49. To preserve the trust, an unpaid supplier must give the trustee notice of intent to

preserve the trust within 30 calendar days after payment was due.

50. On March 20, 2024, Farmland Produce LLC and Four Seasons Produce, Inc.

obtained a Temporary Restraining Order (“TRO”), without notice, issued by Robert Kirsch, United

States District Judge.

51. The TRO preliminarily enjoines Sickles Market, Sickles Provisions, their

subsidiary or related companies from alienating, dissipating, paying or assigning any assets. The

claims of Farmland and Four Seasons total approximately $300,000.00.

52. On or about March 25, 2024, Farmland and Four Seasons filed an amended

complaint, including, as Defendants, me and AHS.

53. Pursuant to the TRO, PACA Plaintiffs served Northfield and Sickle’s-related

interests at other banks with the TRO and Order and a letter directing the freezing of all bank

accounts.

54. My counsel and I have engaged in numerous communications with counsel for the

PACA Plaintiffs. Counsel for the PACA Plaintiffs, in fact suggested that I, and my businesses, file

liquidating Chapter 11 petitions.

55. By letter Order dated April 12, 2024, Judge Kirsch extended the TRO.

56. On or about April 24, 2024, counsel for the PACA Plaintiffs filed a second amended

complaint adding C. Rooney Produce Co., Inc. as an additional Plaintiff (collectively Farmland,

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Four Seasons and Rooney shall be referred to as the “PACA Plaintiffs”). With the inclusion of the

Rooney claim, the Plaintiffs represented by counsel assert PACA claims totaling $375,960.47.

57. I have questioned whether proper and timely notice was provided by the PACA

Plaintiffs.

58. The PACA Plaintiffs have asserted trust claims beyond the inventory, accounts

receivable, and cash proceeds thereof. Under the interpretation of applicable law asserted by the

PACA Plaintiffs, the PACA Plaintiffs allege that they can assert trust claims against the equipment

owned by the Markets, the liquor inventory of TST, the liquor license owned by TST, and the real

estate owned by me and AHS. AHS and I have disputed this assertion of the attachment of trust

claims to the foregoing assets.

METROVATION

59. Metrovation Anderson LLC (“Metrovation”) is the owner of property owned as the

Anderson Building located at 200 Monmouth Street, Red Bank, New Jersey (the “Red Bank

Property”).

60. The Sickles entities leased three different portions of the Red Bank Property. First,

Sickles Provisions leased a food market located at the Red Bank Property. Second, Sickles Market

rented certain office space at the Red Bank Property. Finally, TST Beverages LLC rented a liquor

store at the Red Bank Property.

61. All of the leases were executed on or about October 18, 2017. My wife and I

guaranteed each of the leases.

62. The leases to the offices and liquor store have or will soon expire. The lease for the

Red Bank Market has a substantial additional term.

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63. Metrovation has filed eviction actions against TST, the Red Bank Market, and

against Sickles Market for the office space. Orders for possession have been obtained.

64. Metrovation is actively seeking new tenants for the spaces previously occupied by

the Sickles entities at the Red Bank Property.

THE ASSETS

65. As set forth above, TST has filed its own Chapter 11 petition and it is anticipated

that an auction sale of the assets of TST will occur in early June of this year.

66. Based upon information provided to the Debtor, it is believed that the assets of TST

should yield in excess of $500,000.00. From those funds, a fine to the ABC and certain small

liquor bills would need to be satisfied. The remaining funds, which we believe will exceed

$400,000.00, will either be paid to Northfield Bank entirely, or some portion will be determined

to be paid to the PACA creditors. Whichever occurs, my personal debts will be reduced by more

than $400,000.00 through the sale of the TST assets.

67. The only remaining assets of Provisions are the equipment, which was utilized at

the Market. That equipment, which is now at the Red Bank Market, has been valued at

approximately $175,000.00. Again, the only parties who would have an entitlement to those

proceeds would be Northfield Bank, who holds a perfected lien on those assets, and the PACA

creditors who assert a disputed trust claim against those assets.

68. The assets of the Little Silver Market are more substantial. There is the machinery

and equipment utilized in the Market itself, as well as machinery and equipment used in the

kitchen/commissary, used at the Sickles Market to prepare food. There is also a fully equipped

and inventoried garden center, including three greenhouses, owed by the Little Silver Market. TI

believe that these assets, even at liquidation value, would yield substantial funds. However, if an

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operator could be located who wished to take over a “turnkey operation”, the Little Silver Market

could be worth a more substantial amount. In addition to the physical assets, the Little Silver

Market owns the trademark name “Sickles Market”, which appears to have significant value to

parties wishing to operate the Little Silvers Market.

69. I personally own the house located at 5 Harrison, which I hope to lease or sell in

the near future. I believe that the sale of 5 Harrison could yield several hundred thousand dollars

above the mortgage held on that property by Bluestone Capital.

70. My non-Debtor wife and I own the house in Rumson. The only mortgage on the

house in Rumson is the Northfield loan, which is also secured by all business assets.

71. Finally, and most importantly, I believe that the Little Silver Property can be sold

for an amount sufficient to pay all of the creditors who hold valid and enforceable claims against

me personally.

CONCLUSION

72. I wish the Court to understand how devastated my family and I are with regard to

the financial difficulties which we now face. For years, my family has been a pillar of the Little

Silver community, establishing personal relationships with most of our customers. We have always

acted responsibly and honorably in all of our endeavors.

73. Only a once in a millennium combination of an ill-timed expansion and a

worldwide pandemic could have resulted in the downfall of our 116-year-old company.

74. I do not take my inability to pay my financial obligations lightly. I am 67 years old

and have Type 2 diabetes. This situation has taken a tremendous toll on me physically and

emotionally.

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75. I fought hard to save the business and pay my creditors, perhaps too long and too

hard.

76. I am committed to working with my professionals and our creditors to assure that

all of my creditors are paid in full.

77. I thank the Court for its consideration of this Certification.

78. I hereby certify that the foregoing statements made by me are true. I am aware that

if any of the foregoing statements made by me are false, I am subject to punishment.

/s/ Robert H. Sickles

ROBERT H. SICKLES
Dated: May 14, 2024

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