Signs allowed per bankruptcy declaration by court?

[ThePinkPlanner]

This one was new to me.
National chain video store has several large, bold, ugly, signs on the property declaring store closing. This includes very large banners (entire length of storefront) and 40 sf a-frame signs placed on sidewalk and in parking lot.

We send a notice to the registered agent for the store: signs are not in compliance and do not have any permits.

We get a letter back from the agent's corporate attorney. They state that the chain has finalized its bankruptcy proceedings and part of the settlement included a provision that signs were specifically exempt from all local and state ordinances. They said that our state's attorney general was provided with a copy of the declaration and did not respond in the response period and therefore neither town nor state could object. I read through the declaration. It is alarming. Furthermore, there is no time limitation on how long the store closing sale can go on. I'm sure I could call our attorney, but with major budget cuts we're trying to keep our legal expenses to big items. I'm not really looking for advice, just curious if anyone else has every heard of or dealt with this.

[hilldweller]

We get a letter back from the agent's corporate attorney. They state that the chain has finalized its bankruptcy proceedings and part of the settlement included a provision that signs were specifically exempt from all local and state ordinances. .

This sounds b.s. to me. I don't think this is something a judge could legislate from the bench, so to speak.

[Cardinal]

I am not sure whether a judge would have the authority to exempt an individual from a law, without some compelling reason (unconstitionality, etc.). By the same token, couldn't a judge then decide to let a business sell alchohol when local statutes prohibit it, allow outdoor merchandise displays when local statutes prohibit it, reduse parking standards from those in the ordinance, waive stormwater requirements, etc.?

I also questions the attorney's statement that the declaration was sent to the attorney general. If the city is impacted by the declaration, shouldn't it have also received a copy for its review? If not, it seems the process was flawed and that issue can be reconsidered. Of course, that reconsideration will take time and cost you significant legal fees. Maybe the better option is to simply negotiate with the business an acceptable number and placement of signs, and length of time they may remain.

[Tobinn]

Let me get this straight. There's some sort of private bankruptcy deal that says they they don't have to follow local laws? Really? How friggin' handy is that? I am so not buying that.

[Suburb Repairman]

I don't buy that. If they are exempting them from local ordinances, those localities would have standing and should have been notified--not just the attorney general. To do so would violate due process provisions established by local ordinance for variances, zoning changes, exemptions, etc. Waiving those from the bench for a specific project unrelated to the cause is essentially a legislative action. A judge could only do that if there was a specific challenge to the sign code by the video store (and even then the case would have to exhaust other options).

I like Cardinal's comparison to relaxation of all zoning standards resulting from a bankruptcy--it just doesn't make sense.

[dissent]

Back in '09 ____ Camera was shutting down in my city, they had a massive Store Closing sign displayed on the exterior wall. We issued a citation, the owner faxed over a Federal Declaration from the Court of Appeals basically stating that local jurisdictions are not to interfere with the bankruptcy process. We ran it by the City Attorney, to challenge this meant flying to New Jersey to file an appeal. It was easier to just let the store die away.

[ThePinkPlanner]

I dug a little deeper, to an extent without getting our attorneys ($$) involved. They told us they sent a copy of the filing to the local jurisdiction. I asked for a copy of all notified parties. We were on page 209 of the notified parties. They have our tax department listed. I checked with the assessor's office who did indeed receive a copy of the filing, the same that was sent to me after the fact. Notified parties had 10 days to file a dispute. Our tax department only examined the filing for tax issues and did not notice the relief from local ordinances requested in chapter 15 of the filing- a real book. As the video store was only a tenant in a building they didn't own, there were no tax issues and they filed it away.

Here are a few paragraphs I've pulled from the court order:

the Debtors are authorized to take such actions as necessary and appropriate to conduct the Store Closing Sales and Bulk Inventory Sales without the necessity of a further order of this Court, including, but not limited to,advertising the Store Closing Sales.

Debtors shall be entitled to use sign walkers, hang signs and/or interior or exterior banners advertising the Store Closing Sales in accordance with the Store Closing Sales Procedures (or as otherwise agreed between the Debtors and the respective landlords), including, without limitation, advertising the Store Closing Sales as “store closing,” “sale on everything,” or similar themed sales and by means of media advertising, A-frames, banners, and similar signage, without further consent of any person and without compliance with the Liquidation Sale Laws. Provided that the use of banners and sign walkers is done in a safe manner, such sign walkers and banners, in and of themselves, shall not be deemed to be in violation of Safety Laws and/or General Laws.

12. Each and every federal, state, or local agency, departmental or Governmental Unit with regulatory authority over the Store Closing Sales and Bulk Inventory Sales and all newspapers and other advertising media in which the Store Closing Sales are advertised shall consider this Order as binding authority that no further approval, license, or permit of any Governmental Unit shall be required

There are other paragraphs also, but it is a long order. Maybe we could have filed a motion to object at the time the bankruptcy was filed, but I imagine that would have involved a substantial amount of legal time and money, not to mention that there was only a 10 day filing period. It seems a real stretch of due process to me.

[HomerJ]

Debtors shall be entitled to use sign walkers, hang signs and/or interior or exterior banners advertising the Store Closing Sales in accordance with the Store Closing Sales Procedures (or as otherwise agreed between the Debtors and the respective landlords), including, without limitation, advertising the Store Closing Sales as “store closing,” “sale on everything,” or similar themed sales and by means of media advertising, A-frames, banners, and similar signage, without further consent of any person and without compliance with the Liquidation Sale Laws. Provided that the use of banners and sign walkers is done in a safe manner, such sign walkers and banners, in and of themselves, shall not be deemed to be in violation of Safety Laws and/or General Laws.

12. Each and every federal, state, or local agency, departmental or Governmental Unit with regulatory authority over the Store Closing Sales and Bulk Inventory Sales and all newspapers and other advertising media in which the Store Closing Sales are advertised shall consider this Order as binding authority that no further approval, license, or permit of any Governmental Unit shall be required

Well in true legal fashion this seems awfully vague and could be interpreted one way or another. I would be confident to say that this is only allowing leverage on the types of signs allowed, but these signs should still have to meet a standard in relation to the building (certain percantage of the building elevation allowed etc.). Otherwise, what would stop them from building, well, whatever they want!

[ThePinkPlanner]

Well in true legal fashion this seems awfully vague and could be interpreted one way or another. I would be confident to say that this is only allowing leverage on the types of signs allowed, but these signs should still have to meet a standard in relation to the building (certain percantage of the building elevation allowed etc.). Otherwise, what would stop them from building, well, whatever they want!

Further on in the decision it says this:
In addition, the Debtors shall be permitted to utilize exterior banners at non-enclosed mall store locations or at mall locations if the Store has a
separate entrance from a parking lot; provided, however, that such banners shall be located or hung so as to make clear that the Sale is being conducted only at the affected Store and shall not
be wider than the storefront of the Closing Store and shall not be larger than 30 by 4 feet. No exterior balloons, inflatable devices, or rooftop advertising shall be used to advertise the Store Closing Sale. In addition, the Debtors shall be permitted to utilize A-frame, interior and exterior banners and similar signage.

So not only are they legislating signage from the bench, but they're also setting the terms. 30x4 is much larger than the maximums we allow (a total of 32 sq ft).

Sigh. Its all just so bizarre, but really too expensive to fix, even if we had a case. I should note that this is a national chain video store- and the notified parties list was national and VERY extensive. Take note if you have this chain in your town.

[Hink]

We were told when *large book retailer* went out of business a couple months ago, that we couldn't regulate their signage for the given month from our attorney. Something about federal bankruptcy law trumping our local code....

[HomerJ]

That's just ridiculous. I'm no legal expert, but it sure seems like some sort of applied challenge would be warranted.

Sigh, at least you know you have the power to do nothing about it at the moment. That's better than not knowing what to do.

[WSU MUP Student]

The Blockbuster that is nearest to my house started their bankruptcy sale last week and it reminded me of this thread.

The store is located as one of the end tenants in a relatively small strip center (the entire complex is just over 60,000 square feet) at the intersection of two arterial streets that are pretty quiet most of the day except for the morning and evening rush hours (besides this small complex and a similar one across the street, this is a mainly residential neighborhood). The complex is not in an incorporated city but is very close to two of the wealthiest cities in the state as well as three relatively desirable villages.

Right away, the store plastered one end of their building with the bright neon closing/going out of business signs and put up a bunch of their signs on stands in the grassy areas of the right-of-way bordering the sidewalks and the grassy areas that are the shopping center's property. The very next day after all the signs appeared, I was on my way home from work and noticed that all the signs not attached to the building had been removed and the day after that all the signs on the building itself that were not attached to the inside of the windows were also removed.

It just makes me wonder if somebody complained about the signs at this Blockbuster and the township was able to get them taken down without the resistance that they seem to be met with in PinkPlanner's area or if the stores in different states have different bankruptcy agreements?

[Dan]

I think it's okay to name the businesses here. We don't have a rule against it.

[Maister]

We ran into the very same thing when a national video store chain plunked their huge 'going out of business' signs down. We issued a citation and their attorney provided a copy of the bankrupcy judgement with the vague language referred to above. The decision was ultimately made to allow 'em to die and have their big signs up for a couple more weeks, rather than fight it out. You got to know when to hold 'em, know when to fold 'em....

[ThePinkPlanner]

Thank you Dan, I wasn't sure if it would be appropriate to name them.
This is indeed a Blockbuster. Its now going on 4 weeks and the banners appear to be up still, but we made a point to have them move the a-frames. It is an urban site and they had them on the sidewalk, obstructing a heavily trafficked public right of way. I wasn't standing for that regardless of the court order.

[transguy]

We had the same issue in my fair town. Big, ugly, and way out of context signs placed all over their site. We issued a citation and they came screaming that we can't make them do anything. So we had several people from the City contact various people with the company that owns the property. We stressed how we generally respected the developments this company puts up and that we were really surprised they were letting this happen; our view on their companies reputation was at risk. Next day, only one banner was up that just happened to also meet our requirements.