IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: MERVYN'S HOLDINGS, LLC, a Delaware limited

liability company, Debtor. Tax I.D. No. 20-1447931 In re: MERVYN'S LLC, a California limited liability company, Debtor. Tax J.D. No. 94-1274456 In re: MERVYN'S BRANDS, LLC, a Minnesota limited liability company, Debtor. Tax I.D. No. 41-1948850
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Chapter 11 Case No. 08( )

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Chapter 11 Case No. 08( )

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Chapter 11 Case No. 08( )

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MOTION OF THE DEBTORS AND DEBTORS IN POSSESSION FOR ENTRY OF AN ORDER DIRECTING JOINT ADMINISTRATION OF THEIR RELATED CHAPTER 11 CASES The above-captioned debtors and debtors in possession (collectively, the "Debtors") file this motion (the "Motion") for entry of an order, substantially in the form attached hereto as Exhibit B directing joint administration of their related Chapter 11 cases. In support of the Motion, the Debtors rely on the Affidavit of Charles R. Kurth, Executive Vice President, Chief
Financial Officer, and Chief Accounting Officer of the Debtors, in Support of the First Day Motions (the "First Day Affidavit") and respectfully state as follows:

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JURISDICTION

The Court has jurisdiction over this Motion under 28 U.S.C. 157 and 1334. This matter is a core proceeding within the meaning of 28 U.S.C. 157(b)(2). proceeding and this Motion is proper under 28 U.S. C. 1408 and 1409.
BACKGROUND A. Introduction 1.

Venue of this

On July 29, 2008 (the "Petition Date"), each of the Debtors filed a voluntary

petition for relief under Chapter 11 of the Bankruptcy Code. 2. The Debtors continue to operate their business and manage their properties as

debtors in possession pursuant to Banlauptcy Code 1107(a) and 1108. No trustee, examiner or official committee of unsecured creditors has been appointed in the Debtors' cases.
B. Overview of the Debtors' Corporate Structure aud Business

3.

Mervyn's LLC ("Mervyn's") traces its roots to a mid-range depmtment store

opened by Mervin Morris in San Lorenzo, California in 1949 and has grown over the last 60 years into a 177-store chain of family friendly, promotional department stores. Mervyn's was incorporated in 1954 and, in 1978, became a wholly-owned subsidiary of Dayton Hudson Corporation (now The Target Corporation). In late August 2004, Mervyn's converted into a California limited liability company in conjunction with its acquisition by Mervyn's Holdings, LLC ("Mervyn's Holdings"), a Delaware limited liability company formed by affiliates of Sun Capital Partners, Inc. ("Sun"), Cerberus Capital Management, L.P. ("Cerberus"), Lubert-Adler and Klaff Paitners, L.P. ("KLA") 1 Mervyn's Brands, LLC ("Mervyn's Brands") is a wholly-

The 2004 transaction divided the former Mervyn's Inc.'s retail business from substantially all of its real estate assets, consisting of262 properties previously owned or leased by Mervyn's. The remaining real estate assets, consisting of ce1tain leases that were not assignable (the "Restricted Leases") remained with Mervyn's. The real estate entities, including MDS Realty Holdings I, LLC, MDS Realty Holdings II, LLC, MDS Realty I, LLC, MDS Realty II, LLC,

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owned subsidiary of Mervyn's and a Minnesota limited liability company which owns all or substantially all of Mervyn's intellectual property. 4. As of the Petition Date, Mervyn's employed more than 18,000 people and

operated 177 retail stores in California and six states in the southwestern United States. Mervyn's retail stores average 80,000 retail square feet and are located primarily in community shopping centers, regional malls and freestanding locations. Through these retail stores,

Mervyn's sells its extensive selection of national brands and private-label apparel and housewares. 5. All of the retail stores are subject to leases with aggregate annual rent expense in

excess of $172 million. In addition to the retail stores, Mervyn's also leases two distribution centers and its headquarters facility located in Hayward, California. 6. For the fiscal year ended February 2, 2008, Mervyn's recorded net sales of

approximately $2.5 billion and incurred a net loss of approximately $64 million. C. The Debtors' Debt Structure 7. Mervyn's and Mervyn's Brands are party to that certain Loan and Security

Agreement, dated September 2, 2004, by and among Mervyn's, as borrower, Mervyn's Brands as guarantor, Wachovia Capital Finance Corporation (Western) (as successor to Congress Financial Corporation (Western)), as administrative agent and collateral agent, the lenders party thereto from time to time (the "Prepetition First Lien Lenders") and other parties thereto, under which the Prepetition First Lien Lenders provided a loan facility of up to $600 million to Mervyn's (the

(continued ... ) MDS Realty Ill, LLC, MDS Realty IV, LLC, MDS I Texas Realty, LP and MDS II Texas Realty, LP (collectively, the "MDS Entities"), each of which is directly or indirectly owned by KLA, Sun and Cerberus, did not file Chapter I I petitions on the filing date. Such entities have lending arrangements separate from the prepetition lending arrangements of the Debtors.

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"?repetition Senior Loan Facility") consisting of a $550 million revolving loan A facility and a $50 million revolving loan B facility, each of which is subject to a borrowing base. 8. Amounts outstanding under the ?repetition Senior Loan Facility are secured by a

first priority security interest in all or substantially all of Mervyn's and Mervyn's Brands' accounts, general intangibles (including, without limitation, intellectual property), goods (including, without limitation, inventory and equipment), commercial tort claims, receivables, real property2 and fixtures, chattel paper, instruments, documents and credit card sales drafts, credit card sales slips, charge slips or receipts and other forms of store receipts, deposit accounts, letters of credit, bankers acceptances and similar instruments (including letter of credit rights, supporting obligations and present and future liens, security interests, rights, remedies, title and interest in, to and in respect of receivables and other collateral), investment property, monies, credit balances and other similar property, records, all products and proceeds of the foregoing, and Mervyn's membership interests in Mervyn's Brands (the "?repetition Collateral"). As of the Petition Date, an aggregate amount of approximately $329,381,571.02, plus interest, costs and expenses, was outstanding under the ?repetition Senior Loan Facility. 9. In addition to the ?repetition Senior Loan Facility, Mervyn's is party to that

certain Subordinated Promissory Note in the aggregate principal amount of $30 million, dated as of November 27, 2007 (the "SCSF Note"), by and among Mervyn's, as borrower, and SCSF Mervyn's (Offshore), Inc. and SCSF Mervyn's (US), LLC, 3 as lenders. The SCSF Note is

No mortgages were filed in respect of the Debtors' real estate interests, including leaseholds, by the Prepetition Agent, the Prepetition First Lien Lenders, or the Prepetition Second Lien Lenders. 3 SCSF Mervyn's (Offshore), Inc. and SCSF Mervyn's (US), LLC are affiliates of Sun, and also hold 39.59598% and 15.94846%, respectively, of the Retail Investor Percentage Interest membership interests in the Retail Series of Mervyn's Holdings (series relating to the operation of the retail business), 20.17961% and 8.64765%, respectively, of the common membership interests in the Restricted Leases Series of Mervyn's Holdings (series relating to the Restiicted Leases), and 20.40651% and 8. 74349%, respectively, of the prefen-ed membership interests in the Restricted Leases Series of Mervyn's Holdings.

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guaranteed by Mervyn's Brands, and the obligations of Mervyn's and Mervyn's Brands thereunder are secured by a second lien in the Prepetition Collateral.
D. Events Leading to the Bankrnptcy Filing

10.

During the first quarter of2008, Mervyn's instituted a long-term turnaround plan

designed to differentiate itself from its competitors, grow sales, and improve store productivity, and thereby improve profitability and cash flow. However, rollout of the plan coincided with a variety of external economic factors which have led to a precipitous decline in the Debtors' profitability and liquidity. 11. Chief among those external factors are the decline in the housing market and the

tightening of the credit markets which have led, respectively, to a decline in consumer discretionary spending, including in the apparel and home decor sectors, and to a tightening of credit terms by Mervyn's suppliers and their factors. These negative external factors have

worsened in recent months. As a result of the foregoing, the ability of Mervyn's to pay its suppliers, maintain an uninterrupted flow of merchandise into the stores and service its debt has been severely negatively impacted. As economic conditions continued to deteriorate and

liquidity continued to tighten, the commencement of these cases became necessary to rationalize Mervyn's finances and operations, with the objective of reorganizing the Debtors as profitable entities.
RELIEF REQUESTED

12.

By this Motion, the Debtors seek entry of an order directing joint administration

of these Chapter 11 cases for procedural purposes only. The Debtors request that the Court maintain one file and one docket for all of the jointly administered cases under the case number assigned to Mervyn's Holdings, LLC and that these Chapter 11 cases be administered under a consolidated caption in the form attached hereto as Exhibit A.
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13.

The Debtors also request that an entry be made on the docket of each of the

Debtors' Chapter 11 cases, other than Mervyn's Holdings, LLC, that is substantially similar to the following: An order has been entered in accordance with Rule 10 15(b) of the Federal Rules of Banlauptcy Procedure and Rule 1015-1 of the Local Rules of Banlauptcy Practice and Procedure of the United States Banlauptcy Court for the District of Delaware directing joint administration of the Chapter 11 cases of Mervyn's Holdings, LLC, Mervyn's LLC, and Mervyn's Brands, LLC. All further pleadings and other papers shall be filed in, and all further docket L_). entries shall be made in, Case No. 08BASIS FOR RELIEF

14.

Banlauptcy Rule 1015(b) provides that, if two or more petitions are pending in

the same court by or against a debtor and an affiliate, "the court may order a joint administration of the estates." Debtor Mervyn's Holdings, LLC owns 100% of Debtor Mervyn's LLC.

Mervyn's LLC in turn owns 100% of Debtor Mervyn's Brands, LLC. Therefore, the Debtors are "affiliates," as that term is defined in Section I 0 I (2) of the Banlauptcy Code. Accordingly, this Court is authorized to grant the relief requested. 15. In addition, Rule 1015-1 of the Local Rules ofBanlauptcy Practice and Procedure

of the United States Bankruptcy Court for the District of Delaware (the "Local Rules") provides as follows: An order of joint administration may be entered, without notice and an opportunity for hearing, upon the filing of a motion for joint administration pursuant to Fed. R. Bankr. P. 1015, supported by an affidavit, declaration or verification, which establishes that the joint administration of two or more cases pending in this Court under title 11 is warranted and will ease the administrative burden for the Court and the parties. An order of joint administration entered in accordance with this Local Rule may be reconsidered upon motion of any party in interest at any time. An order of joint administration under this Local Rule is for procedural purposes only and shall not cause a "substantive" consolidation of the respective debtors' estates.
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Del. Bankr. L.R. 1015-1. 16. Pursuant to Local Rule 1015-1, the Debtors have filed the First Day Affidavit

contemporaneously herewith. The First Day Affidavit establishes that the joint administration of the Debtors' respective estates is warranted, will ease the administrative burden for the Court and the parties and will protect creditors of the different estates against potential conflicts of interest. 17. The joint administration of the Debtors' Chapter 11 cases will permit the Clerk of

the Court to utilize a single general docket for these cases and combine notices to creditors of the Debtors' respective estates and other parties in interest. The Debtors anticipate that numerous notices, applications, motions, other pleadings and orders in these cases will affect all of the Debtors. Joint administration will permit counsel for all parties in interest to include the

Debtors' respective cases in a single caption on the numerous documents that will be filed and served in these cases. Joint administration also will enable parties in interest in all of the abovecaptioned Chapter 11 cases to be apprised of the various matters before the Court in all of these cases. 18. In addition, the Debtors respectfully request that parties in interest be excused

from including each of the Debtors' names, states of formation and incorporation, tax identification numbers and case numbers in the captions of pleadings filed in these cases. Instead, for all pleadings, the Debtors request that parties in interest be permitted and directed to use a consolidated caption, indicating that the pleading relates to the jointly administered bankruptcy cases of "Mervyn's Holdings, LLC, a Delaware limited liability company, et al," a form of which is attached hereto as Exhibit A. 19. Because these cases involve three (3) Debtors with thousands of potential

creditors, the entry of an order of joint administration will (a) significantly reduce the volume of

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paper that otherwise would be filed with the Clerk of this Court, (b) render the completion of various administrative tasks less costly and (c) minimize the number of unnecessary delays associated with the administration of separate Chapter 11 cases. Additionally, because this is not a motion for the substantive consolidation of the Debtors' estates, the rights of parties in interest will not be prejudiced or otherwise affected in any way by the entry of an order directing the joint administration of the Debtors' Chapter 11 cases. 20. The entry of a joint administration order in multiple related cases is common and

generally non-controversial in this district. See, e.g., In re Dan River Holdings LLC, Case No. 08-10726 (BLS) (Bania. D. Del. Apr. 22, 2008); In re Powermate Holding Corp., Case No. 0810498 (KG) (Ban1a. D. Del. Mar. 18, 2008); In re Leiner Health Products Inc., Case No. 0810446 (KJC) (Bania. D. Del. Mar. 12, 2008); In re Lillian Vernon Corporation, Case No. 0810323 (BLS) (Bankr. D. Del. Feb. 21, 2008); In re Wickes Holdings, LLC, No. 08-10212 (KJC) (Bania. D. Del. Feb. 5, 2008); In re Buffets Holdings, Inc., Case No. 08-10141 (MFW) (Bankr. D. Del. Jan. 23, 2008); In re Pope & Talbot, Inc., No. 07-11738 (CSS) (Bankr. D. Del. Nov. 21, 2007); In re American Home Mortgage Holdings, Inc., No. 07-11047 (CSS) (Bankr. D. Del. Aug. 7, 2007); In re Tweeter Home Entertainment Group, Inc., No. 07-10787 (PJW) (Bankr. D. Del. June 13, 2007). 21. For all of the foregoing reasons, the Debtors respectfully request the immediate

entry of an order providing for the joint administration of the Debtors' Chapter 11 cases pursuant to Banlauptcy Rule 1015(b) and Local Rule 1015-1.
NOTICE

22.

The Debtors shall provide notice of this Motion by facsimile and/or overnight

mail to: (i) the Office of the United States Trustee for the District of Delaware; (ii) the Debtors'

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thirty (30) largest unsecured creditors on a consolidated basis; (iii) counsel to the agent for the Debtors' proposed postpetition secured lenders; (iv) counsel to the agent for the Debtors' prepetition senior secured lenders; (v) counsel to the agent for the Debtors' prepetition junior secured lenders; (vi) the Internal Revenue Service; (vii) the Securities and Exchange Commission; (viii) the Office of the United States Attorney General for the District of Delaware; (ix) counsel to the Debtors' equity sponsors; (x) counsel to the MDS Entities; (xi) counsel to Cerberus; and (xii) the Common Carriers. As this Motion is seeking first-day relief, notice of this Motion and any order entered hereon will be served on all parties required by Del. Bankr. L.R. 9013-1 (m). Due to the urgency of the circumstances surrounding this Motion and the nature of the relief requested herein, the Debtors respectfully submit that no further notice of this Motion is required.
NO PRIOR REQUEST

23. other court.

No prior request for the relief sought in this Motion has been made to this or any

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WHEREFORE, the Debtors respectfully request that the Court enter an order, substantially in the fonn attached hereto as Exhibit B granting the relief requested in the Motion and such other and further relief as this Court deems just and proper. Dated: July 29, 2008 Wilmington, Delaware Respectfully submitted,

Mark D. Collins (No. 2981) Daniel J. DeFranceschi (No. 2732) Christopher M. Samis (No. 4909) L. Katherine Good (No. 5101) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 North King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Facsimile: (302) 651-7701 Email: collins@rlf.com defranceschi@rlf.com samis@rlf.com good@rlf.com and Howard S. Beltzer Wendy S. Walker MORGAN LEWIS & BOCKIUS LLP 101 Park Avenue New York, New York 10178-0060 Telephone: (212) 309-6000 Facsimile: (212) 309-6001 Email: hebeltzer@morganlewis.com wwalker@morganlewis.com
Proposed Attorneys for the Debtors and Debtors in Possession

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EXHIBIT A

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[PROPOSED FORM OF CAPTION]

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: MERVYN'S HOLDINGS, LLC, et al./ Debtors. ) ) )
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Chapter 11 Case No. 08Jointly Administered

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[TITLE OF PLEADING OR OTHER DOCUMENT]

The Debtors in these cases, along with the last four digits of their federal tax identification numbers, are Mervyn's Holdings, LLC (7931 ), Mervyn's LLC (4456) and Mervyn's Brands, LLC (8850).

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EXHIBITB

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

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In re: MERVYN'S HOLDINGS, LLC, a Delaware limited liability company, Debtor. Tax I.D. No. 20-1447931 In re: MERVYN'S LLC, a California limited liability company, Debtor. Tax I.D. No. 94-1274456 In re: MERVYN'S BRANDS, LLC, a Minnesota limited liability company, Debtor. Tax I.D. No. 41-1948850

Chapter 11 Case No. 08( )

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Chapter 11 Case No. 08(

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Chapter 11 Case No. 08( )

ORDER DIRECTING JOINT ADMINISTRATION OF THE DEBTORS' RELATED CHAPTER 11 CASES Upon the motion (the "Motion") of the above-captioned debtors and debtors in possession (collectively, the "Debtors") for entry of an order (this "Order") directing the joint administration of the Debtors' related Chapter 11 cases; and upon the Affidavit of Charles R.

Kurth, Executive Vice President, Chief Financial Officer, and Chief Accounting Officer of the Debtors, in Support of the First Day Motions; the Court finding that (i) the Court has jurisdiction
over this matter pursuant to 28 U.S.C. 157 and 1334, (ii) this is a core proceeding pursuant to

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28 U.S.C. 157(b)(2)(A), (iii) notice of the Motion was sufficient under the circumstances and that no other or further notice need be provided, and (iv) capitalized terms not otherwise defined herein have the meaning given to them in the Motion; and the Court having determined that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and the Court having determined that the relief sought in the Motion is in the best interests of the Debtors and their estates; and after due deliberation and sufficient cause appearing therefore NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
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The Motion is GRANTED. The above-captioned Chapter 11 cases are consolidated for procedural ).

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purposes only and shall be jointly administered under Case No. 08-___ ( 3.

Pleadings, motions, notices, orders, and other documents filed in these

cases which require a caption, are authorized and required to bear a consolidated caption in the form set forth on Annex 1 attached hereto and incorporated herein by reference, which caption is approved in all respects. 4. The Clerk of the Court shall maintain one file and one docket for all of

these jointly administered cases, which file and docket for each,respective Chapter II case shall be the file and docket for Mervyn's Holdings, LLC, Case No. 08-___ ( 5. ).

A docket entry shall be made on the docket of each of the Debtors' cases,

other than that of Mervyn's Holdings, LLC, that is substantially similar to the following: An order has been entered in accordance with Rule I 0 15(b) of the Federal Rules of Bankruptcy Procedure and Rule 1015-1 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware directing joint administration of the Chapter 11 cases of Mervyn's Holdings, LLC, Mervyn's LLC, and Mervyn's Brands, LLC. All further pleadings and other papers shall be filed in, and all further docket entries shall be made in, Case No. 08L__).

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6.

Nothing contained in the Motion or this Order shall be deemed or

construed as directing or otherwise effecting a substantive consolidation of the above-captioned Chapter 11 cases. 7. This Court shall retain jurisdiction to hear and determine any matters

arising from or related to the implementation or interpretation of this Order. Dated: , 2008 Wilmington, Delaware UNITED STATES BANKRUPTCY JUDGE

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ANNEXl

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[FORM OF CAPTION] IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: MERVYN'S HOLDINGS, LLC, et al., 1 Debtors.
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Chapter 11 Case No. 08Jointly Administered

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[TITLE OF PLEADING OR OTHER DOCUMENT]

The Debtors in these cases, along with the last four digits of their federal tax identification number for each of the Debtors, are Mervyn's Holdings, LLC (7931), Mervyn's LLC (4456) and Mervyn's Brands, LLC (8850).

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