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Gristedes loses motion against Madison Capital over unpaid fees

A Southern District Court judge has denied a motion from John Catsimatidis’ Gristedes supermarket chain that aimed to compel real estate investment firm Madison Capital to follow a court order and pay a $170,257 security deposit.

The dispute stems from Gristedes’ sublease at 2101-2115 Broadway in the Upper West. In October of 2005, the company entered into a sub-lease at the location with Loehmann’s Holdings. Leohmann’s filed for chapter 11 bankruptcy in December 2013, after which the firm sold its store leases. Madison bought the right to designate which stores to assume in Leohmann’s behalf, which resulted in the Broadway location being folded into its LLC, referred to in court documents as “MC Long Term.”

Later on, the court approved an assumption order, which instructed MC Long Term to pay Gristedes a security deposit worth $170,257. The amount, which was equivalent to one month’s rent, was supposed to stand as additional “adequate assurance of future performance.” According to court documents, the security deposit remains unpaid.

Gristedes argued that Madison Capital violated the assumption order because it misrepresented MC Long Term as a long term tenant that was adequately capitalized. It urged the court to find Madison Capital in contempt unless it pays the security deposit and further capitalizes MC Long Term. Further complicating the lawsuit is a response from Asonia Commercial, the landlord for the Broadway property. The firm contends that both Gristede’s and Madison Capital owe $1.4 million in unpaid rent. It also told the court that it is entitled to the security deposit, not Gristedes.

In an opinion released on Thursday, bankruptcy court judge Martin Glenn denied the motion, ruling that the suit was “a post-confirmation dispute that arises between two non-debtor parties,” which echoed an argument raised by Madison Capital.

“The Court believes that abstention… is appropriate under the circumstances,” Glenn wrote.

The suit is the latest in a long line of legal skirmishes between the parties. Last May, Gristedes filed a separate suit that sought damages against Madison Capital for non-payment of rent. Ansonia also sued Gristedes earlier this month, arguing that the supermarket firm failed to honor its obligations under the sublease agreement.

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