Professional Documents
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Sickles Bankruptcy
Sickles Bankruptcy
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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
Robert H. Sickles (hereinafter, “Debtor”), being of full age and being duly sworn according
located at 4 Heathcliff Road, Rumson, New Jersey 07760 (the “Rumson Property”).
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
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
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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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
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,
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
16. The Sickles Family utilized every resource available to them, including the
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
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
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
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.
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
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
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
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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
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
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
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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.
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
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
43. It is currently estimated that the principal amount of the sales tax due is in the
44. The State of New Jersey has asserted a claim for personal liability against me as
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
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
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
51. The TRO preliminarily enjoines Sickles Market, Sickles Provisions, their
subsidiary or related companies from alienating, dissipating, paying or assigning any assets. The
52. On or about March 25, 2024, Farmland and Four Seasons filed an amended
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
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
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
61. All of the leases were executed on or about October 18, 2017. My wife and I
62. The leases to the offices and liquor store have or will soon expire. The lease for the
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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 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
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
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
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
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
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
78. I hereby certify that the foregoing statements made by me are true. I am aware that
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