IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: MERVYNS HOLDINGS, LLC, et al. Debtors.

) ) ) ) ) ) Chapter 11 Bk. No. 08-11586 KG

SUNVALLEY SHOPPING CENTER, LLCS MOTION TO COMPEL TIMELY PAYMENT OF ADMINISTRATIVE RENT AND DISCHARGE OF MECHANICS LIENS Sunvalley Shopping Center, LLC (Sunvalley or Landlord), by their attorneys, Cooch and Taylor, P.A. and Andrew S. Conway, for their motion to compel timely payment of administrative rent, pursuant to Bankruptcy Code Section 365(d)(3), state as follows: 1. 2. 3. 4. This is a contested matter, pursuant to Bankruptcy Rules 4001(a), 6006(b) and 9014. Jurisdiction is based upon 28 U.S.C. 1334. This is a core proceeding within the meaning of 28 U.S.C. 157(b). On July 29, 2008 (the Filing Date), the debtor filed its petition for relief under

Chapter 11 of the United States Bankruptcy Code (Bankruptcy Code). 5. Since the filing date, the debtor has continued to operate its business and maintain

possession of its assets. 6. The Debtor is a tenant pursuant to an unrejected written lease (the Lease) for non-

residential real property in Pleasant Hill, California, (Store No. M-0031) which is the subject of this motion. 7. The debtor has failed to pay administrative rent to Sunvalley on a timely basis and as

of the filing of this motion has failed to pay administrative rent for the month of January 2009, and other charges due under the Lease including Common Area Maintenance CAM and Real Estate 1

0q/v)!:

0811586090126000000000038

Taxes. 8. Section 365(d)(3) of the Bankruptcy Code, provides, in relevant part, as follows: (3) The trustee shall timely perform all the obligations of the debtor, . . . arising from and after the order for relief under any unexpired lease of nonresidential real property, until such lease is assumed or rejected, notwithstanding section 503(b)(1) of this title. . . . Acceptance of any such performance does not constitute waiver or relinquishment of the lessors rights under such lease or under this title. (Emphasis added.) 9. The Debtors continued operation of its business at the leased premises, failure to

timely pay administrative rent, and failure to pay rent and other charges pursuant to the Lease results in a substantial injury to the Landlord. Injuries of this type were one of the primary reasons for the 1984 amendments to the Bankruptcy Code, which significantly altered the remedies available to the landlord upon the debtors failure to comply with the lease terms. Section

365(d)(3), as noted above, clearly requires the timely payment of all rent and other charges on an administrative basis through the date of rejection. 10. One of the purposes behind this provision, which was added to the Code in 1984 as

part of the Leasehold Management Bankruptcy Amendments Act of 1983 (P.L. 98-353, Title III, Subtitle C, 361), is clearly indicated by the floor statements of Senator Robert Dole prior to the sections enactment: A second and related problem is that . . . the trustee has stopped making payments due under the lease. These payments include rent due the landlord and common area charges which are paid by all the tenants according to the amount of space they lease. In this situation, the landlord is forced to provide current services the use of its property, utilities, security, and other services - without current payment. No other creditor is put in this position. In addition, the other tenants often must increase their common area charge payments to compensate for the trustees failure to make the required payments for the debtor. The bill would lessen these problems by requiring the trustee 2

to perform all obligations of the debtor under a lease of nonresidential real property at the time required in the lease. This timely performance requirement will insure that debtor-tenants pay their rent, common area, and other charges on time pending the trustees assumption or rejection of the lease. See In re: Industrial Distribution Services, Inc., 86 B.R. 718, 720 (M.D. Fla. 1988); In re: Washington Bancorporation, 125 (D.D.C. 1991); In re: Rare Coin Galleries of America, Inc., 72 B.R. 415 (D. Mass. 1987). See also, In re: Cardinal Industries, Inc., 109 B.R. 738, 740-41 (S.D. Ohio 1989). 11. The post-petition administrative amounts currently outstanding through the end of

January 2009, are as follows: CAM Adjustment Prior Year CAM Periphereral Property Tax on Periphereral Property Minimun Rent (Other Property)(January) Total $3,180.90 $11,891.65 $14,178.47 $17,083.33 $46,334.35

A copy of the Account Statement is attached hereto as Exhibit A. 12. Under the facts and circumstances here, the Debtor should be compelled to promptly

pay all outstanding administrative sums so as to not prejudice the Landlord, and should be compelled to make future payments of rent on a timely basis. Section 3 of the Lease requires the payment of rent on or before the first day of the month, in advance. A copy of the relevant portion of the Lease is attached as Exhibit B 13. In addition to the amounts referenced in paragraph 11, the Debtor has failed to

pay for work performed and/or materials supplied for the Property. As a result, three mechanics liens totaling $33,134.85 have been recorded on the Property post-petition. As a result of the 3

existence of these mechanics liens, the Debtor is in default of its obligations under the Lease for the Property. A copy of the account statement showing the amount of the mechanics liens and date of each filing is annexed hereto as Exhibit C. 14. Section 8 of the Lease requires that:

Lessee shall keep the premises free from any liens arising out of any work performed, materials furnished or obligations incurred by Lessee, but Lessee may contest any lien or claim of lien provided that Lessee, within five (5) days after any final judgment which may be recovered against Lessee or the premises in any action or litigation ensuing by reason of Lessees contest of such lien or claim of lien, shall pay the same and fully discharge the premises from said lien and judgment, except that Lesssee may appeal any judgment rendered aginst it or the premises provided Lessee shall forthwith upon the rendering of such judgment furnish an appeal bond or otherwise cause a stay of execution of such judgment pending final determination of such appeal.

Relevant portions of the Lease are annexed hereto as Exhibit D and incorporated herein by reference. Upon information and belief, the Tenant has failed to contest any of the liens or claims of liens upon the Landlords Property. 15. The mechanic liens must be immediately discharged of record or bonded as

required by 365(b)(1)(A) and the Lease. 16. Movant requests an opportunity to present oral argument to the Court.

WHEREFORE, Sunvalley Shopping Center, LLC requests that the Court enter an order requiring the Debtor to immediately pay all administrative rent and other charges due and owing pursuant to the Lease, requiring the Debtor to make payments of administrative rent for future months on or before the first day of the month, in advance, requiring the Debtor to immediate cure of existing defaults under the Lease, including but not limited to the discharge or bonding of the mechanics liens, and awarding the Landlord their costs and fees incurred in bringing this 4

motion due to the Debtors failure to comply with the terms of the Lease, and Bankruptcy Code Section 365.

Cooch and Taylor, P.A. /s/ Susan E. Kaufman Susan E. Kaufman, (DSB#3381) 1000 West Street, 10th Floor The Brandywine Building Wilmington, DE 19899 (302) 984-3893 / (302) 984-3939 Fax skaufman@coochtaylor.com and Andrew S. Conway, Esq. /s/ Andrew S. Conway Andrew S. Conway 200 East Long Lake Road, Suite 300 Bloomfield Hills, Michigan 48304 (248) 258-7427 Attorneys for the Sunvalley Shopping Center, LLC Date: January 26, 2009

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ) ) Chapter 11 MERVYNS HOLDINGS, LLC, ) Bk. No. 08-11586 KG et al. ) Debtor. ) Hearing Date: February 25, 2009 @ 10:00 a.m.
)Objection Deadline: February 18, 2009 @ 4:00 p.m.

NOTICE OF MOTION OF THE MOTION OF SUNVALLEY SHOPPING CENTER, LLCS TO COMPEL TIMELY PAYMENT OF ADMINISTRATIVE RENT AND DISCHARGE OF MECHANICS LIENS

PLEASE TAKE NOTICE that on January 26, 2009, Sunvalley Shopping Center, LLC, filed with the United States Bankruptcy Court for the District of Delaware, (the Bankruptcy Court) the attached Motion of Sunvalley Shopping Center LLC to Compel Timely Payment of Administrative Rent and Discharge of Mechanics Liens (the "Motion"). PLEASE TAKE FURTHER NOTICE that any objections or responses to the Motion must be made in writing, filed with the Bankruptcy Court and served upon the undersigned counsel, so as to be actually received by the Bankruptcy Court and the undersigned counsel on or before FEBRUARY 18, 2009 at 4:00 p.m. (Eastern Time). PLEASE TAKE FURTHER NOTICE THAT A HEARING ON THE MOTION WILL BE HELD ON FEBRUARY 25, 2009 AT 10:00 A.M. (EASTERN TIME) BEFORE THE HONORABLE KEVIN GROSS, UNITED STATES BANKRUPTCY COURT JUDGE, AT THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE, 824 MARKET STREET, 6TH FLOOR, COURTROOM # 3, WILMINGTON, DELAWARE 19801.

IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE BANKRUPTCY COURT MAY GRANT THE RELIEF REQUESTED BY THE APPLICATION WITHOUT FURTHER NOTICE OR HEARING. HEIMAN, GOUGE & KAUFMAN, LLP /s/ Susan E. Kaufman Susan E. Kaufman (DSB # 3381) 800 King Street, Suite 303 Wilmington, DE 19801 (302) 658-1800 / (302) 225-3635 (fax) skaufman@hgkde.com AND /s/ Andrew S. Conway Andrew S. Conway, Esquire 200 East Long Lake Road, Suite 300 Bloomfield Hills, Michigan 48304 (248) 258-7427 Counsel for Sunvalley Shopping Center, LLC Dated: January 26, 2009

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: MERVYNS HOLDINGS, LLC, et al. Debtors. ) ) ) ) ) )

Chapter 11 Bk. No. 08-11586 KG

Related Docket No. _____

ORDER GRANTING THE MOTION OF SUNVALLEY SHOPPING CENTER, LLC TO COMPEL TIMELY PAYMENT OF ADMINISTRATIVE RENT Upon consideration of the Motion of Sunvalley Shopping Center, LLC dated January 26, 2009 to Compel Timely Payment of Administrative Rent (the Motion); and the Court having jurisdiction to consider the Motion pursuant to 28 U.S.C. 157 and 1334, and the Court having determined that granting the relief requested in the Motion is appropriate; and it appearing that due and adequate notice of the Motion has been given, and after due deliberation and sufficient cause appearing therefore, it is hereby; ORDERED that the Motion is granted; and it is further ORDERED that the Debtor shall immediately pay all administrative rent and other charges due and owing pursuant to the Lease including CAM Adjustment Prior Year CAM Periphereral Property Tax on Periphereral Property Minimun Rent (Other Property)(January) Total $3,180.90 $11,891.65 $14,178.47 $17,083.33 $46,334.35; and it is further

ORDERED that the Debtor shall be compelled to discharge or bond the mechanics liens; and it is further ORDERED that the Debtor shall be required to make payments of administrative rent for future months on or before the first day of the month, in advance; and it is further

ORDERED that the Debtor shall pay Sunvalley Shopping Center, LLC the fees and costs incurred in the bringing of the Motion in an amount to be determined.

Dated: February ____, 2009 The Honorable Kevin Gross United States Bankruptcy Judge

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: MERVYNS HOLDINGS, LLC, et al. Debtors. ) ) ) ) ) )

Chapter 11 Bk. No. 08-11586 KG

CERTIFICATE OF SERVICE

I, Susan E. Kaufman, Esquire certify that I caused one true and correct copy of the within Sunvalley Shopping Center, LLCs Motion to Compel Timely Payment of Administrative Rent and Discharge of Mechanics Lien to be sent on January 26, 2009 in the manner indicated to the following:

Via Hand Delivery Mark D. Collins, Esquire Daniel J. DeFranceschi, Esquire Richards Layton & Finger One Rodney Square Wilmington, DE 19801 Via U.S. Mail, Postage Prepaid Neil E. Herman, Esquire Morgan, Lewis & Bockius LLP 101 Park Avenue New York, NY 10178-0060 Cathy Hershcopf, Esq. Cooley Godward Kronish LLP 1114 Avenue of the Americas New York, NY 10036 Daniel Fiorillo, Esquire Otterbourg, Steindler, Houston & Rosen, P.C. 230 Park Avenue New York, NY 10169

Joshua Sussberg, Esquire Kirkland & Ellis, LLP 153 East 53rd Street New York, NY 10022

Cooch and Taylor, P.A. /s/ Susan E. Kaufman Susan E. Kaufman, (DSB#3381) 1000 West Street, 10th Floor The Brandywine Building Wilmington, DE 19899 (302) 984-3893 / (302) 984-3939 Fax Skaufman@coochtaylor.com

Dated: January 26, 2009