IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ) ) ) ) ) ) ) ) ) Chapter 11 Case No.

08-11586 (KG) Jointly Administered

Docket Ref. No. 331 Hearing Date: September 25, 2008 @ 2:00 p.m. Objection Deadline: September 18, 2008 @ 4:00 p.m.2

In re: MERVYNS HOLDINGS, LLC, et al.,1

Debtors.

LIMITED OBJECTION TO MOTION OF DEBTORS AND DEBTORS IN POSSESSION FOR AN ORDER, PURSUANT TO SECTIONS 105, 363 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULES 2002, 6004 AND 6006, APPROVING EXPEDITED PROCEDURES FOR THE REJECTION OR ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES MDS Realty I, LLC, MDS Realty II, LLC, MDS Realty III, LLC, MDS Realty IV, LLC, MDS Texas Realty I, LP, MDS Texas Realty II, LP, Balboa Realty LLC, KLA Westchester LLC, KLA SLO LLC, KLA Geary LLC, KLA Tustin Courtyard LLC, KLA Mountain LLC, KLA Mooney LLC, and KLA Main LLC (collectively, the Landlords), by and through their undersigned attorneys, submit this limited objection (the Limited Objection) to the Motion of Debtors and Debtors in Possession for an Order, Pursuant to Sections 105, 363 and 365 of the Bankruptcy Code and Bankruptcy Rules 2002, 6004 and 6006, Approving Expedited Procedures for the Rejection or Assumption and Assignment of Executory Contracts and Unexpired Leases (the Motion) [Docket No. 331] and respectfully represent as follows:
1

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

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BACKGROUND 1. On July 29, 2008 (the Petition Date), Mervyns Holdings, LLC,

Mervyns LLC and Mervyns Brands, LLC (collectively, the Debtors) each filed voluntary petitions (the Chapter 11 Cases) for relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code). The Chapter 11 Cases have been consolidated for administrative purposes only. The Debtors have continued to operate their businesses and manage their properties as debtors in possession under sections 1107(a) and 1108 of the Bankruptcy Code. No request has been made for the appointment of a chapter 11 trustee or an examiner. 2. The Landlords are the Debtors landlords for (a) 15 store locations

and two distribution centers under two unitary shopping center leases, each dated as of December 22, 2005, as amended (each, a Unitary Lease); and (b) eight individual site leases, each of various dates (collectively, the Leases). LIMITED OBJECTION 3. The Debtors seek an order (Proposed Order) approving

expedited procedures and approved forms of notices for the rejection or assumption and assignment of their contracts and unexpired leases. Motion at 7-8. Such procedures would purportedly apply to the Unitary Leases and Leases. 4. The Landlords do not object to creation of a streamlined process

by which the Debtors can effectively manage their executory contracts and unexpired leases in these Chapter 11 Cases. However, certain modifications must be made to the
2

Extended for the Landlords by the Debtors to the end of day Monday, September 22, 2008.

Proposed Order to adequately protect the Landlords interests. Specifically, among other things, the Landlords are concerned about the objection period for both the proposed rejection and proposed assumption and assignment of unexpired leases; the notice provided to third parties with potential interests in property that may be abandoned at the leased premises; and ambiguity in the procedures regarding the statutory requirements of adequate assurance of future performance. 5. The Landlords have been working cooperatively with Debtors

counsel in an effort to consensually resolve their concerns. Towards that end, the Landlords sent comments on the Proposed Order to Debtors counsel, and have been told that their suggested modifications to the proposed procedures appeared acceptable. 6. However, as of the filing of this limited objection, the Landlords

have not yet received a copy of a revised Proposed Order incorporating their changes. In light of the rapidly approaching hearing date and objection deadline, the Landlords are filing this limited objection to preserve all of their rights in connection with the relief requested in the Motion. RESERVATION OF RIGHTS AND JOINDER 7. The Landlords hereby reserve their rights to raise any and all

objections to the Motion and the proposed rejection or assumption and assignment of the Unitary Leases and Leases, including any objections as to cure amounts and the terms of any proposed rejection or assumption and assignment orders.

8.

In addition, to the extent not inconsistent with the relief sought

herein, the Landlords join in any opposition raised by other landlords to the Motion and the Proposed Order. CONCLUSION WHEREFORE, the Landlords respectfully request that the Court sustain the Limited Objection and grant the Landlords such other and further relief as this Court deems proper. Dated: Wilmington, Delaware September 22, 2008 KLEHR, HARRISON, HARVEY, BRANZBURG & ELLERS LLP By: /s/ Michael W. Yurkewicz Domenic E. Pacitti (DE No. 3989) Michael W. Yurkewicz (DE No. 4165) 919 Market Street, Suite 1000 Wilmington, DE 19801 Tel: 302-426-1189 Fax: 302-426-9193 - and PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP Douglas R. Davis Claudia R. Tobler 1285 Avenue of the Americas New York, New York 10019-6064 Telephone: (212) 373-3000 Facsimile: (212) 757-3990 Counsel for MDS Realty I, LLC, MDS Realty II, LLC, MDS Realty III, LLC, MDS Realty IV, LLC, MDS Texas Realty I, LP, MDS Texas Realty II, LP, Balboa Realty LLC, KLA Westchester LLC, KLA SLO LLC, KLA Geary LLC, KLA Tustin Courtyard LLC, KLA Mountain LLC, KLA Mooney LLC and KLA Main LLC

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ) ) ) ) ) ) ) ) )

In re: MERVYNS HOLDINGS, LLC, et al.,1

Chapter 11 Case No. 08-11586 (KG) Jointly Administered

Debtors.

CERTIFICATE OF SERVICE The undersigned hereby certifies that on this 22nd day of September, 2008, he caused a copy of the foregoing Limited Objection to Motion of Debtors and Debtors in Possession for an Order, Pursuant to Sections 105, 363, and 365 of the Bankruptcy Code and Bankruptcy Rules 2002, 6004, and 6006, Approving Expedited Procedures for the Rejection or Assumption and Assignment of Executory Contracts and Unexpired Leases to be served on the parties on the attached service list in the manner indicated thereon.

/s/ Michael W. Yurkewicz Michael W. Yurkewicz (DE No. 4165)

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

SERVICE LIST

Morgan, Lewis & Bockius, LLP 101 Park Avenue New York, NY 10178 Attn: Howard S. Beltzer Neil Herman Wendy Walker Via Facsimile 212.309.6001 Richards, Layton & Finger, P.A. One Rodney Square 920 North King Street Wilmington, DE 19801 Attn: Mark Collins Daniel J. DeFranceschi Christopher Samis L. Katherine Good Via Facsimile 302.651.7701 Office of the United States Trustee 844 King Street, Suite 2207 Lockbox 35 Wilmington, DE 19801 Attn: Jane Leamy Via Hand Delivery