COOLEY LLP 1114 Avenue of the Americas New York, New York 10036 Telephone: (212) 479-6000 Facsimile:

(212) 479-6275 Cathy Hershcopf Jeffrey L. Cohen Alex R. Velinsky Proposed Attorneys for Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------In re METROPARK USA, INC., Debtor. ---------------------------------------------------------------x : : : : : : : x

Chapter 11

Case No. 11-22866 (RDD)

DEBTORS APPLICATION FOR ENTRY OF AN ORDER UNDER BANKRUPTCY CODE SECTIONS 327(a) AND 328 AND BANKRUPTCY RULES 2014 AND 2016 AUTHORIZING RETENTION AND EMPLOYMENT OF GREAT AMERICAN GROUP REAL ESTATE LLC D/B/A GA KEEN REALTY ADVISORS AS SPECIAL REAL ESTATE ADVISOR TO THE DEBTOR, NUNC PRO TUNC TO MAY 12, 2011 TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE: The debtor and debtor in possession in the above-captioned case (the Debtor)1 hereby applies (the Application) for entry of an order under sections 327(a) and 328 of title 11 of the United States Code (the Bankruptcy Code), Rules 2014 and 2016 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules), and Rules 2014-1 and 2016-1 of the Local Bankruptcy Rules for the United States Bankruptcy Court for the Southern District of New York (the Local Rules), authorizing the employment and retention of Great American Group Real Estate LLC d/b/a GA Keen Realty Advisors (Keen Realty), nunc pro tunc to May 12, 2011, as the Debtors special real estate advisor and obtaining approval of the terms by which Keen Realty will be compensated under that certain Retention Agreement by and between Keen
1

The Debtors federal tax identification number is 81-0636659.

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Realty and the Debtor attached hereto as Exhibit A (the Retention Agreement).2 In support of the Application, the Debtor relies upon and incorporates by reference the affidavit of Matthew Bordwin (the Bordwin Affidavit), attached hereto as Exhibit B. Application, the Debtor respectfully represents: BACKGROUND The Debtors Businesses 1. Metropark was founded in 2004 to capitalize on the large Gen Y segment (the In further support of the

25-35 year old customer) who had moved on from teen retailers, but were still looking for fashion-forward apparel and accessories. Through a multi-channel sales strategy, including sales through brick-and-mortar stores and e-commerce, Metropark caters to trendsetting young adult customers by offering a unique and highly differentiated merchandise assortment introducing a Fashion, Music, Art philosophy into the marketplace. 2. Since its founding in 2004, Metropark has grown rapidly from its four original

store locations to approximately 70 stores in 21 states, in addition to its newly redesigned online retail presence at www.metroparkusa.com. Metropark offers its customers a unique mix of premium quality apparel and accessories geared toward the 25-35 year old trendsetter. The Metropark retail stores provide a truly unique experiential lifestyle shopping environment including, style consultants, in-store events (e.g. live art installations, fashion shows and DJ performances) and a carefully edited inventory assortment of highly sought after brands with a strong offering of up and coming, fashion forward designer talent to deliver an authentic and culturally relevant mix of diverse brands to the customer. 3. As a result of several internal and external factors, the Debtor faced

extraordinary liquidity constraints in the first quarter of 2011. Because of this reality, the Debtor

Any statements contained herein concerning the terms and conditions of the Retention Agreement are qualified entirely by reference to the Retention Agreement. In the event of a conflict between this Application and the Retention Agreement, the Retention Agreement shall control. 2
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spent the better part of the first quarter of 2011 trying to identify a financial partner to provide an equity infusion, debt investment or otherwise stabilize the financial wherewithal of the Company. Unfortunately, a transaction in the best interest of the Company, its creditors and its shareholders was not available outside of chapter 11 and the Company has reached the end of its liquidity runway. Accordingly, the Debtor has determined that the commencement of this case would provide the sole opportunity to, among other things, sell substantially all of the assets of the Debtor. The Debtors Bankruptcy Case 4. On May 2, 2011 (the Petition Date), the Debtor commenced with this Court a

voluntary case under the Bankruptcy Code. The Debtor is authorized to operate its businesses and manage its properties as debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 5. On May 4, 2011, the Court approved the Emergency Motion of the Debtor for

Entry of an Order Pursuant to Sections 105, 363, 364, 365 and 554 (I) Approving Assumption of Agency Agreement, (II) Approving Store Closing Sales, (III) Approving Break-up Fee (IV) Authorizing the Debtor to Abandon Property and (V) Granting Related Relief (the Sale Motion) (Doc. No. 19) and on May 6, 2011, the Court entered an order approving the Sale Motion (Doc. No. 59) pursuant to which the Debtor has commenced an orderly liquidation of its inventory through going out of business sales.

8.

On May 6, 2011, the United States Trustee for the Southern District of New York

appointed the Official Committee of Unsecured Creditors. No request has been made for the appointment of a trustee or examiner. 9. The Debtor and Keen Realty entered into the Engagement Agreement attached

hereto as Exhibit A, effective as of May 12, 2011.

3
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JURISDICTION 10. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. 157

and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. RELIEF REQUESTED 11. By this Application, the Debtor seeks to employ and retain Keen Realty nunc pro

tunc to May 12, 2011, as the Debtors special real estate advisor, and obtain approval of the terms by which Keen Realty will be compensated under the Retention Agreement. Accordingly, the Debtor respectfully requests entry of an order under sections 327(a) and 328 of the Bankruptcy Code, in substantially the form attached hereto as Exhibit C, authorizing the Debtor to employ and retain Keen Realty as its special real estate advisor to perform real estate advisory services, as summarized herein and more fully described in the Bordwin Affidavit. BASIS FOR RELIEF REQUESTED 12. Under section 327 of the Bankruptcy Code, a debtor in possession may employ

one or more professionals, that do not hold or represent an interest adverse to the estate and that are disinterested persons, to assist the debtor-in-possession in carrying out its duties under the Bankruptcy Code. 11 U.S.C. 327(a). Section 328 of the Bankruptcy Code provides, in pertinent part, that under section 327 of the Bankruptcy Code a professional may be employed on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, on a fixed percentage fee basis, or on a contingent fee basis. 11 U.S.C. 328(a). 13. Bankruptcy Rule 2014 requires that an application for retention of a professional

person include: [S]pecific facts showing the necessity for the employment, the name of the person to be employed, the reasons for the selection, the professional services to be rendered, any proposed arrangement for compensation, and to the best of the applicant's knowledge, all of the person's connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee.

4
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Fed. R. Bankr. P. 2014(a). 14. By this Application, the Debtor requests that the Court approve the employment

and compensation arrangements described in the Retention Agreement pursuant to sections 327 and 328 of the Bankruptcy Code. The employment arrangements contained in the

Retention Agreement are beneficial to the Debtors estate and the compensation arrangements provide certainty and proper inducement for Keen Realty to act expeditiously and prudently with respect to the matters for which it will be employed. SERVICES TO BE RENDERED 15. Pursuant to the Retention Agreement, Keen Realty has been retained to render

the real estate services listed below: (a) (b) (c) (d) (e) (f) On request, review pertinent documents and consult with the Debtors counsel, as appropriate; Coordinate with the Debtor the development of due diligence materials, the cost of which shall be Debtors sole responsibility; Develop, subject to the Debtor's review and approval, a marketing plan and implement each facet of the marketing plan; Communicate regularly with all prospects and maintain records of all communications; Communicate periodically with the Debtor and its professional advisors in connection with the status of its efforts; Work with the attorneys responsible for the implementation of the proposed transactions, reviewing documents, negotiating and assisting in resolving problems which may arise; and If required, appear in Court during the term of the Retention Agreement, to testify or to consult with the Debtor in connection with the scope of the Retention Agreement.

(g)

16.

It is necessary and essential that the Debtor, as debtor in possession, employ

Keen Realty under the terms of the Retention Agreement to render the foregoing professional services. Keen Realty has indicated a willingness to continue to act on behalf of, and render such services to, the Debtor.

5
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17.

The Debtor believes that the services will not duplicate the services that other

professionals will be providing the Debtor in this case. KEEN REALTYS QUALIFICATIONS 18. Keen Realty has extensive experience in and an excellent reputation for

providing high quality real property disposition services to large and complex companies in bankruptcy proceedings and other distressed situations. The Debtor understands that Keen Realty is an expert in developing and executing processes designed to maximize the value of real estate assets. Furthermore, Keen Realty and its professionals have successfully

negotiated the termination of leases in the American Retail Group, Arthur Anderson, and K-Mart bankruptcy cases, among others. DISINTERESTEDNESS OF KEEN REALTY 19. To the best of the Debtors knowledge, and except as otherwise set forth herein

and in the accompanying Bordwin Affidavit, the professionals of Keen Realty (a) do not have any connection with the Debtor, its creditors or any other party in interest, or their respective attorneys and accountants, the U.S. Trustee or any person employed in the office of the same, or any judge in the Bankruptcy Court or the United States District Court for the Southern District of New York or any person employed in the offices of the same; (b) are disinterested persons, as that term is defined in Bankruptcy Code section 101(14); and (c) do not hold or represent any interest adverse to the estate. 20. Affidavit: (a) (b) (c) Neither Keen Realty nor any of its professionals holds or represents an interest adverse to the Debtors estate. Neither Keen Realty nor any of its professionals is or was a creditor or an insider of the Debtor. Neither Keen Realty nor any of its professionals is or was, within two years before the Petition Date, a director, officer, or employee of the Debtor. 6
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To the best of the Debtors knowledge and except as set forth in the Bordwin

(d)

Keen Realty does not have an interest materially adverse to the interest of the estate or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in the Debtor, or for any other reason. No professional employed by Keen Realty is related to any United States District Judge or United States Bankruptcy Judge for the Southern District of New York or to the U.S. Trustee for such district or to any known employee in the office thereof.

(e)

21.

In view of the foregoing, the Debtor believes that Keen Realty is a disinterested

person within the meaning of Bankruptcy Code section 101(14), as modified by Bankruptcy Code section 1107(b). 22. Keen Realty has informed the Debtor that throughout this case, Keen Realty will

continue to conduct periodic conflicts analyses to determine whether it is performing or has performed services for any significant parties in interest in this case and that it will promptly update this Application and disclose any material developments regarding the Debtor or any other pertinent relationships that come to Keen Realtys attention by way of a supplemental Affidavit. PROFESSIONAL COMPENSATION 23. Pursuant to the terms of the Retention Agreement, Keen Realty is to be

compensated as follows:3 (a) As and when the Debtor closes a Transaction, Keen Realty shall earn a fee in an amount equal to the greater of (i) five percent (5%) of the Gross Proceeds4 of such disposition or (ii) four thousand dollars ($4,000).

Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Retention Agreement. Pursuant to the Retention Agreement, the calculation of Gross Proceedsmeans the total amount of consideration paid or payable to the Debtors estates (excluding a reduction, release or waiver of a landlords cure claim) by the purchaser, assignee, designation rights purchaser, landlord or other transferee and shall be calculated to include, but not be limited to: (1) The total amount of cash (including but not limited to escrowed funds, securities, the repurchase or buyout of any options or warrants, any agreements or other property and any other consideration, including, without limitation, any contingent consideration, paid or payable, directly or indirectly, in connection with a Transaction), debt and/or equity raised to fund a Transaction; and/or (2) The purchase price paid by a third party to acquire one or more Properties. 7

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(b)

All transaction fees shall be paid, in full, off the top, from the Transaction proceeds or otherwise, simultaneously with the closing or other consummation of each Transaction. In addition to the fees that are or may be payable to Keen Realty under the

24.

Retention Agreement, Keen Realty is to be reimbursed for its reasonable out-of-pocket expenses incurred in connection with its activities under the Retention Agreement, up to the amount set forth in the Budget. 25. The Debtor submits that Keen Realtys compensation structure is consistent with

and typical of Keen Realtys normal and customary billing practices for comparable services in like-sized and similarly complex cases. 26. Given the transactional nature of Keen Realtys engagement, Keen Realty will

not be billing the Debtor by the hour, except in connection with certain litigation support and/or time spent as a witness in connection with any contested matter, if necessary, and will not be keeping records of time spent for professional services rendered in this Chapter 11 matter. Keen Realty will, however, be keeping reasonably detailed descriptions of the services that were rendered pursuant to its engagement. Accordingly, Keen Realty has advised the Debtor that it seeks relief from complying with fee application requirements and shall be compensated in accordance with the procedures set forth in the Application and Retention Agreement and such procedures as may be fixed by order of this Court. 27. The Debtor submits that the engagement and retention of Keen Realty on the

terms and conditions set forth herein is necessary and in the best interests of the Debtor, its estate, and its creditors and should be approved. NOTICE 28. Notice of this Motion has been provided to: (i) the Office of the United States

Trustee; (ii) counsel to the Committee; (iii) counsel to the Debtors prepetition secured lenders; and (iv) all parties entitled to notice pursuant to Bankruptcy Rule 2002. In light of the nature of the relief requested herein, the Debtor submits that no other or further notice need be provided. 8
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29.

No previous request for the relief sought herein has been made by the Debtor to

this or any other court. WHEREFORE, the Debtor respectfully requests that the Court enter an order (i) authorizing the Debtor to employ and retain Keen Realty, nunc pro tunc to May 12, 2011, as the Debtors special real estate advisor, (ii) approving the terms and conditions contained in the Retention Agreement, and (iii) granting such other and further relief as is just and proper.

Dated: May 16, 2011 New York, New York Respectfully submitted, METROPARK USA, INC., By: /s/ Richard A. Hicks____________ Name: Richard A. Hicks Title: Chief Financial Officer

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EXHIBIT A RETENTION AGREEMENT

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EXHIBIT B BORDWIN AFFIDAVIT

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EXHIBIT C PROPOSED ORDER

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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------In re METROPARK USA, INC., Debtor. ---------------------------------------------------------------x : : : : : : : x

Chapter 11 Case No. 11-22866 (RDD)

ORDER APPROVING THE APPLICATION FOR ORDER UNDER BANKRUPTCY CODE SECTIONS 327(a) AND 328 AND BANKRUPTCY RULES 2014 AND 2016 AUTHORIZING EMPLOYMENT AND RETENTION OF GREAT AMERICAN GROUP REAL ESTATE LLC D/B/A GA KEEN REALTY ADVISORS AS SPECIAL REAL ESTATE ADVISOR TO THE DEBTOR, NUNC PRO TUNC TO MAY 12, 2011 Upon the application (the Application)1 of the above-captioned debtor and debtor in possession (the Debtor),2 for entry of an order under sections 327(a) and 328 of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Local Rules 2014-1 and 2016-1, authorizing the Debtor to employ and retain Great American Group Real Estate, LLC d/b/a AG Keen Realty Advisors (Keen Realty) as special real estate advisor; and the Court having reviewed the Application, the Retention Agreement, dated as of May 12, 2011 by and between Keen Realty and the Debtor (the Retention Agreement) and the Affidavit of Matthew Bordwin (the Bordwin Affidavit), the Managing Director of Great American Group, LLC, the Managing Member of Keen Realty; and the Court being satisfied with the representations made in the Application and the Bordwin Affidavit that Keen Realty represents no interest adverse to the Debtors estate, that it is a disinterested person as that term is defined under section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code, that its employment is necessary and in the best interests of the Debtors estate, creditors, and other
1

Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Application.
2

The Debtors federal tax identification number is 81-0636659.

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parties in interest; and it appearing that proper and adequate notice has been given and that no other or further notice is necessary; and upon the record herein; and after due deliberation thereon; and good and sufficient cause appearing therefor, it is hereby, ORDERED that the Application is granted to the extent provided herein; and it is further ORDERED that pursuant to sections 327(a) and 328 of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Local Rules 2014-1 and 2016-1, the Debtor, as debtor and debtor in possession, is authorized to employ and retain Keen Realty as its special real estate advisor nunc pro tunc to May 12, 2011 to perform the services set forth in the Application and the Retention Agreement; and it is further ORDERED that pursuant to 11 U.S.C. 328(a), the Debtor is authorized to pay Keen Realty in accordance with the terms of the Retention Agreement; and it is further ORDERED that (i) none of the fees payable to Keen Realty under the Retention Agreement shall constitute a bonus, (ii) Keen Realty shall not be required to keep time records for its transactional work under the Retention Agreement, (iii) Keen Realtys fees and expenses shall be treated as administrative expense claims, and (v) the terms and conditions of the Retention Agreement are fair and reasonable; and it is further ORDERED that this Court shall retain jurisdiction to hear and determine all matters arising from or related to the implementation, interpretation and/or enforcement of the Retention Agreement and this Order and neither the Debtor nor Keen Realty shall be required to seek authorization from any other jurisdiction with respect to the relief granted by this Order; and it is further ORDERED that Keen Realty shall not be required to submit fee applications and shall be compensated in accordance with the procedures set forth in the Application and Retention Agreement and such procedures as may be fixed by order of this Court.

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ORDERED that notice of the Application as provided herein shall be deemed good and sufficient notice of such Application.

Dated:

, 2011 New York, New York

UNITED STATES BANKRUPTCY JUDGE

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