Case 08-11586-KG

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE _______________________________________ In re: ) Chapter 11 ) Case No. 08-11586 (KG) MERVYNS HOLDINGS, LLC, et al., ) (Jointly Administered) ) Debtors. ) Proposed Hearing Date: TBD ) Proposed Objection Deadline: TBD MOTION OF HANJIN SHIPPING CO., LTD. FOR RELIEF FROM THE AUTOMATIC STAY PURSUANT TO 11 U.S.C. 362(d) Hanjin Shipping Co., Ltd. (Hanjin), by and through its undersigned attorneys, hereby moves (the Motion) pursuant to section 362(d) of title 11 of the United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code), for an order, substantially in the form annexed to the Motion, granting relief from the automatic bankruptcy stay, in order to allow Hanjin, as carrier of certain cargo that may be part of the debtors bankruptcy estates, to allow the shipper, Runway Global Limited (Runway), to divert the cargo to a third party. In support of the Motion, Hanjin represents as follows: PRELIMINARY STATEMENT 1. On July 29, 2008 (the Petition Date), Mervyns Holdings, LLC and

its affiliated debtors (the Debtors) each filed their voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the Court). 2. Since the Petition Date, the Debtors have remained in possession of

their property and have managed their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code.

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JURISDICTION AND VENUE 3. This Court has jurisdiction over the subject matter of this Motion

pursuant to 28 U.S.C. 157 and 1334. This matter is a core proceeding pursuant to 28 U.S.C. 157(b)(1), (b)(2)(A) and (G). The statutory predicate for the relief sought herein is section 362(d) of the Bankruptcy Code. 4. Venue of the Motion in the Court is proper under 28 U.S.C. 1409(a). BACKGROUND 5. Hanjin is an ocean vessel cargo container carrier, with its principal

place of business at 80 East Route 4, Suite 490, Paramus, New Jersey 07652. 6. On or about October 4, 2008 through October 11, 2008, Hanjin, as

carrier, issued certain bills of lading to carry cargo on behalf of the Debtors (the Bills of Lading). A copy of the Bills of Lading is attached hereto as Exhibit A. 7. Under the Bills of Lading, Hanjin is the carrier, the Debtors are the

notify parties, Runway is the shipper, and Wachovia Bank, N.A. is the consignee. 8. Upon information and belief, the Debtors never paid the shipper,

Runway, the purchase price for the cargo. The cargo is in three Hanjin containers in Hanjins possession. 9. The cargo in the three containers is not part of the Debtors bankruptcy

estates. The Debtors have not arranged to take possession of the cargo or to pay the outstanding freight, detention charges and/or demurrage charges due to Hanjin. Demurrage charges, detention charges or other delay damages continue to accrue on a daily basis. 10. The current amount due to Hanjin for freight and accessorial charges on

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the three containers is $6,473.40. 11. Further, upon information and belief, the Debtors, as notify parties, and

Wachovia Bank, as consignee, have not paid the shipper, Runway, the purchase price for the cargo. Runway, as shipper, has resold the cargo to a third party, since the Debtors and the consignee, Wachovia, have not paid for the cargo or the freight charges attendant thereto. 12. Hanjin seeks stay relief in order to allow the shipper, Runway, to divert

the cargo to a third party who has purchased the cargo in the containers. RELIEF REQUESTED 13. By the Motion, Hanjin seeks an order for relief from the automatic stay,

in order to allow Hanjin to allow Runway to sell and deliver the cargo to a third party who has purchased the cargo, and in order to allow Hanjin to mitigate its damages. 14. Section 362(d) of the Bankruptcy Code provides, in relevant part, that: [o]n request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay (1) for cause, including the lack of adequate protection of an interest in property of such party in interest; (2) with respect to a stay of an act against property under subsection (a) of this section, if (A) the debtor does not have an equity in such property; and (B) such property is not necessary for an effective reorganization. 15. Cause exists for stay relief, because the Debtors do not have any equity

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in the cargo. Upon information and belief, the Debtors have not paid the shipper, Runway, the purchase price for the cargo. Further, the Debtors, as notify parties, have failed and refused to take delivery of the cargo. The Debtors have in effect abandoned the cargo. Demurrage, detention or extended freight charges continue to accrue on a daily basis. 16. In addition, Hanjin has a maritime lien on the cargo to pay its freight

charges and accessorial charges. As such, Hanjin is not adequately protected, because the freight charges and other charges may eventually exceed the value of the cargo. 17. The cargo is also not necessary for an effective reorganization. The

Debtors have effectively abandoned the cargo. The Debtors are in the process of liquidating their assets. 18. Accordingly, Hanjin respectfully requests that this Court enter an

Order, substantially in the form annexed to the Motion, granting it stay relief in order to allow Hanjin to allow Runway to sell the cargo in the three containers to a third party. Alternatively, Hanjin seeks stay relief in order to exercise its maritime lien and to sell or otherwise dispose of the cargo to pay its outstanding freight and extended freight charges. HANJIN HAS A LIEN ON THE CARGO FOR UNPAID FREIGHT CHARGES 19. The Motion should also be granted because Hanjin has a lien on the cargo

in its possession to secure payment of the freight, detention and demurrage charges. 20. Pursuant to general maritime law and the applicable bills of lading, Hanjin

has a lien on all cargo in its possession for unpaid freight charges and extended freight charges, including detention charges or demurrage. See Matter of Commonwealth Oil

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Refining Company, Inc., 734 F.2d 1079, 1081 (5th Cir. 1984), citing The Lake Galera, 60 F.2d 876, 879 (2d Cir. 1932) (Demurrage, it is true, is sometimes referred to as being a form of extended freight). 21. Unquestionably, as a general rule, ship owners have a lien upon cargo for

freight charges. The Bird of Paradise, 72 U.S. 545, 554 (1866). Accord, Arochem Corp. v. Wilomi, Inc., 962 F.2d 496, 499 (5th Cir. 1992) (Under United States law, it has been settled for over a century that we presume a maritime lien exists in favor of a shipowner on cargo for charges incurred during the course of its carriage.). Also, see Atlantic Richfield Company v. Good Hope Refineries, Inc., 604 F.2d 865, 872 (5th Cir. 1979) (Without doubt Atlantic Richfield had a lien on each cargo carried by Good Hope for all demurrage charges incurred during the course of its carriage. Such a lien arises by force of law and is present unless expressly waived in the charter.). 22. Consequently, ship owners may retain the goods after the arrival of a ship

at the port of destination until payment of the freight charges is made. The Bird of Paradise, 72 U.S. at 554. 23. Such a lien is regarded in the jurisprudence of the United States as a

maritime lien, because it arises from the usages of commerce, independently of the parties, and not from any statutory regulations. Legal effect of such a lien is that the shipowner, as carrier by water, may retain the goods until the freight is paid. The Bird of Paradise, 72 U.S. at 555. 24. The parties to a maritime contract may also employ words in their contract

to affirm the existence of the maritime lien, or even to extend its reach. Id. Further, the intervening insolvency of either party to a maritime contract cannot change the terms of

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the parties agreement. 72 U.S. at 560 (Intention of the parties in the contract of affreightment, as in other commercial contracts, must be ascertained from the language employed, the subject-matter, and the surrounding circumstances, and it is clear that the question of construction cannot be affected in the smallest degree by the subsequent solvency or insolvency of one of the contracting parties.) (emphasis added). 25. In this case, the Bills of Lading extend Hanjins lien on cargo to cover

unpaid freight charges, including any detention charges. 26. In addition, then, to the lien created by general maritime law, Hanjin has a

lien on the cargo pursuant to the Bills of Lading. See WCI Steel, Inc. v. Seaway Marine Transport (In re WCI Steel, Inc.), 344 B.R. 838, 847 (Bankr. N.D. Ohio 2005) (In addition to the general maritime lien, Seaway had a lien pursuant to section 14 of the Bill of Lading, which was incorporated into and became a part of the Contract.). 27. Thus, Hanjin has a lien on the cargo in its possession. Hanjin seeks stay

relief to allow Runway to sell the cargo to a third party and/or to exercise its maritime lien on the cargo. NO PRIOR REQUEST 28. No prior request for the relief requested herein has been made to this or

any other Court. NOTICE 29. Notice of this Motion has been given to: (1) counsel for the Debtors;

(2) counsel for the Committee of Unsecured Creditors; (3) Counsel for Wachovia Bank; and, (4) the Office of the United States Trustee.

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WAIVER OF TEN DAY STAY PERIOD 30. Hanjin requests that the ten (10) day stay period imposed by Federal

Rule of Bankruptcy Procedure 4001(a)(3) with respect to the lifting of the automatic stay be waived, because Runway needs to sell and deliver the cargo to a third party in time for the holiday season. In addition, detention and other delay damages continue to accrue. Further, the value of the cargo will decrease, if the cargo cannot be sold or otherwise disposed of in time for the holiday season. WHEREFORE, Hanjin respectfully requests that this Court enter an Order substantially in the form annexed to the Motion granting stay relief to Hanjin. Dated: October 31, 2008 Wilmington, Delaware CIARDI CIARDI & ASTIN, P.C. /s/ Daniel K. Astin Daniel K. Astin (No. 4068) Anthony M. Saccullo (No. 4141) Shannon D. Leight (No. 4115) 919 Market Street, Suite 700 Wilmington, DE 19801 Telephone: (302) 658-1100 Facsimile: (302) 658-1300 Email: dastin@ciardilaw.com asaccullo@ciardilaw.com slieght@ciardilaw.com -andNOWELL AMOROSO KLEIN BIERMAN, P.A. Rick A. Steinberg, Esq. (RS-7396) 155 Polifly Road Hackensack, New Jersey 07601 Telephone: (201) 343-5001 Facsimile: (201) 343-5181 Email: rsteinberg@nakblaw.com Counsel for Hanjin Shipping Co., Ltd.

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE _______________________________________ In re: ) Chapter 11 ) Case No. 08-11586 (KG) MERVYNS HOLDINGS, LLC, et al., ) (Jointly Administered) ) Debtors. ) Proposed Hearing Date: TBD ) Proposed Objection Deadline: TBD NOTICE OF MOTION OF HANJIN SHIPPING CO., LTD. FOR RELIEF FROM THE AUTOMATIC STAY PURSUANT TO 11 U.S.C. 362(d) PLEASE TAKE NOTICE that on October 31, 2008, Hanjin Shipping Co., Ltd. (Hanjin), by and through its undersigned attorneys, filed the Motion of Hanjin Shipping Co., Ltd. for Relief from the Automatic Stay Pursuant to 11 U.S.C. 362(d) (the Motion). The Motion seeks an order pursuant to section 362(d) of title 11 of the United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code), substantially in the form annexed to the Motion, granting relief from the automatic bankruptcy stay in order to allow Hanjin to allow Runway Global Limited to divert cargo that may be part of the Debtors bankruptcy estates to a third party and/or to allow Hanjin to execute its maritime lien on cargo in its possession. PLEASE TAKE FURTHER NOTICE that Hanjin has requested a hearing (the Hearing) on the Motion on shortened notice. Hanjin will file a notice of the hearing when the date and time is determined. A hearing on the Motion may be heard before the Honorable Kevin Gross, United States Bankruptcy Judge, at the United States Bankruptcy Court for the District of Delaware, 824 North Market Street, 6th Floor, Courtroom #3, Wilmington, Delaware 19801 (the Court). PLEASE TAKE FURTHER NOTICE that responses or objections, if any, to

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the Motion (a) shall be in writing; (b) shall state with particularity the reasons for the objection or response; and (c) shall be filed with the Court and served upon counsel for the Movant, Daniel K. Astin, Esq., Ciardi Ciardi & Astin, P.C., 919 Market Street, Suite 700, Wilmington, Delaware 19801, and Rick A. Steinberg, Esq., Nowell Amoroso Klein Bierman, P.A., 155 Polifly Road, Hackensack, New Jersey 07601, by a deadline to be determined by the Court. Only those responses and objections which have been timely filed and served may be considered by the Court at the Hearing. PLEASE TAKE FURTHER NOTICE that if you fail to respond in accordance with this Notice, the court may grant the relief requested in the Motion without further notice or hearing. Dated: October 31, 2008 Wilmington, Delaware CIARDI CIARDI & ASTIN, P.C. /s/ Daniel K. Astin Daniel K. Astin (No. 4068) Anthony M. Saccullo (No. 4141) Shannon D. Leight (No. 4115) 919 Market Street, Suite 700 Wilmington, DE 19801 Telephone: (302) 658-1100 Facsimile: (302) 658-1300 Email: dastin@ciardilaw.com asaccullo@ciardilaw.com slieght@ciardilaw.com -andNOWELL AMOROSO KLEIN BIERMAN, P.A. Rick A. Steinberg, Esq. (RS-7396) 155 Polifly Road Hackensack, New Jersey 07601 Telephone: (201) 343-5001 Facsimile: (201) 343-5181 Email: rsteinberg@nakblaw.com Counsel for Hanjin Shipping Co., Ltd.

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE _______________________________________ In re: ) Chapter 11 ) Case No. 08-11586 (KG) MERVYNS HOLDINGS, LLC, et al., ) (Jointly Administered) ) Debtors. ) Re: Docket No. ____ ) ORDER GRANTING RELIEF FROM THE AUTOMATIC STAY TO HANJIN SHIPPING CO., LTD. PURSUANT TO 11 U.S.C. 362(d) Upon the motion (the Motion) of Hanjin Shipping Co., Ltd. (Hanjin), pursuant to section 362(d) of title 11 of the United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code), for an order granting relief from the automatic stay; and upon the record of any hearing held on the Motion; and this Court having determined that Hanjin is entitled to the relief requested in the Motion; and it appearing that proper and adequate notice of the Motion has been given and that no other or further notice is necessary; and after due deliberation thereon; and good and sufficient cause appearing therefor; it is ORDERED that the Motion is granted; and it is further ORDERED that the automatic stay provided under Section 362(a) of the Bankruptcy Code is hereby lifted in order to allow Hanjin to allow the shipper, Runway Global Limited (Runway), to sell the cargo that is the subject of the Motion to a third party; or, if Runway does not take possession of the cargo and does not pay Hanjin all freight and other charges, to allow Hanjin to otherwise exercise its maritime lien pursuant to United States maritime law and to immediately apply the proceeds of such sale or other disposition of the cargo to pay its freight, detention and/or demurrage charges (the Freight Claim); and it is further

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ORDERED that the sale or other disposition of the cargo shall be free and clear of any liens or interests that the Debtors or the consignee, Wachovia Bank, N.A., may have with respect to the cargo; and it is further ORDERED that if the proceeds of sale or other disposition of the cargo are less than the total accrued amount of the Freight Claim, Hanjin is authorized to file a claim or claims against the Debtors estates for the deficiency; and it is further ORDERED that the amount of the demurrage and/or detention component of the Freight Claim will continue to accrue through and including the date of the sale or other disposition of the cargo; and it is further ORDERED that, if Runway does not pay the freight and other charges due Hanjin, and if there is no buyer for the cargo, then Hanjin is authorized to dispose of the cargo in any lawful manner, and to add the costs of disposal to the Freight Claim; and it is further ORDERED that this Order is effective immediately and the 10 day stay period imposed by Federal Rule of Bankruptcy Procedure 4001(a)(3) with respect to the lifting of the automatic stay is waived. Dated: Wilmington, Delaware November ____, 2008 __________________________________ The Honorable Kevin Gross United States Bankruptcy Court Judge

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CERTIFICATE OF SERVICE I, Daniel K. Astin, Esquire, hereby certify that on October 31, 2008, I caused a copy of the Motion of Hanjin Shipping Co., Ltd. for Relief from the Automatic Stay Pursuant to 11 U.S.C. 362(d) to be served on the below parties in the manner indicated: VIA ELECTRONIC MAIL Daniel J. DeFranceschi, Esquire Richards, Layton & Finger One Rodney Square P.O. Box 551 Wilmington, DE 19899 Email: defranceschi@rlf.com Karen B. Skomorucha, Esquire Ashby & Geddes, P.A. 500 Delaware Avenue 8th Floor P.O. Box 1150 Wilmington, DE 19899 Email: kskomorucha@ashby-geddes.com VIA ELECTRONIC MAIL AND HAND DELIVERY Jane Leamy, Esquire Office of United States Trustee 844 King Street, Room 2207 Lockbox #35 Wilmington, DE 19899-0035 Email: jane.leamy@usdoj.gov VIA ELECTRONIC AND OVERNIGHT MAIL Howard S. Beltzer, Esquire Wendy S. Walker, Esquire Morgan, Lewis & Bockius LLP 101 Park Avenue New York, NY 10178-0060 Email: hbeltzer@morganlewis.com wwalker@morganlewis.com Jonathon N. Helfat, Esquire Daniel F. Fiorillo, Esquire Otterbourg, Steindler, Houston & Rosen, P.C. 230 Park Avenue New York, NY 10169-0075 Email: jhelfat@oshr.com dfiorillo@oshr.com Paul M. Basta, Esquire Joshua A. Sussberg, Esquire Kirkland & Ellis LLP 153 E. 53rd St. NY, NY 10022 Email: pbasta@kirkland.com jsussberg@kirkland.com

/s/ Daniel K. Astin Daniel K. Astin (No. 4068)