Hancock Fabrics looks to stop lease termination, recover $3.5 million in damages

By Caroline Salls

Pittsburgh, July 24 - Hancock Fabrics, Inc. is seeking $3.5 million in damages in connection with its attempts to stop an allegedly illegal potential termination of its Virginia Beach, Va., retail store lease, according to a complaint filed Monday with the U.S. Bankruptcy Court for the District of Delaware.

According to the filing, landlord S.C. Diamond Associates, LP and partner Robert O. Copeland are allegedly scheming to illegally extinguish the lease for Hancock's high-performing Virginia Beach retail store in order to develop the property in a rapidly growing area known as Town Center.

Hancock said S.C. Diamond and Copeland have tried to manufacture a foreclosure that was designed to extinguish Hancock's lease instead of negotiating an early termination of the lease.

The company said it has about seven years remaining on the lease, and unless a permanent injunction is granted against the defendants to prevent the unlawful attempts to extinguish it, Hancock will lose the value of its leasehold interest in the property and its business will be severely damaged.

Hancock Fabrics, a Baldwyn, Miss., specialty retailer of fabric and related home sewing and decorating accessories, filed for bankruptcy on March 21. Its Chapter 11 case number is 07-10353.

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