UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ____________________________________ In re: : : Mervyn's Holdings, LLC, et al., : : Debtors.

: ____________________________________:

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

OBJECTION BY WESTFIELD, LLC AND AFFILIATES TO THE MOTION OF DEBTORS AND DEBTORS IN POSSESSION FOR ORDERS AUTHORIZING AND APPROVING (A) AUCTION AND BID PROCEDURES, (B) BID PROTECTIONS TO STALKING HORSE BIDDER, IF APPLICABLE, (C) STORE CLOSING SALES FREE AND CLEAR OF LIENS, (D) AGENCY AGREEMENT, AND, (E) RELATED RELIEF, WITH RESPECT TO THE DEBTORS' REMAINING STORES Westfield, LLC, and its affiliates listed on the attached Schedule A (collectively, the "Westfield Landlords") hereby submit this Objection (the "Objection") to the Motion of the Debtor and Debtors in Possession for Orders Authorizing and Approving (A) Auction and Bid Procedures, (B) Bid Protections to Stalking Horse Bidder, If Applicable, (C) Store Closing Sales Free and Clear of Liens, (D) Agency Agreement, and (E) Related Relief, with Respect to the Debtors' Remaining Stores (the "GOB Sale Motion"), and in support thereof, represent as follows: BACKGROUND: 1. The Westfield Landlords are the owners and operators of shopping centers

in West Covina and El Cajon, California1 (each, a Westfield Center). Each of the Westfield Centers constitutes a shopping center as that term is used in 11 U.S.C. 365(b)(3) and the Westfield Center (Parkway Plaza) in El Cajon is an enclosed regional shopping mall.
In addition, a store is trading under the "Mervyn's" tradename at Westfield Solano in Fairfield, California and is included herein out of an abundance of caution.
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2.

One of the Debtors' retail stores is a part of each of the Westfield Centers

(the "Attached Stores") that, upon information and belief, is leased to the Debtors by nonDebtor third parties (the "Non-Debtor Lessors"). 3. Pursuant to the certain documents entitled "Grant of Reciprocal Easement

and Declaration of Covenant Running with the Land," for example (each, an "REA"), the Non-Debtor Lessors and the Debtors have certain contractual obligation regarding their conduct at the Attached Stores. 4. Pursuant to the GOB Sale Motion, the Debtors seek authority to conduct

store closing sales ("GOB Sales) at the Attached Stores and other locations, subject to certain Store Closing Sales Procedures (the Proposed GOB Sale Terms). THE OBJECTION: 5. Although the REAs prohibit the Debtors from conducting the GOB Sales

in the manner contemplated by the GOB Sale Motion, the Westfield Landlords understand that there is authority holding that contracts prohibiting GOB Sales are not strictly enforced because such clauses contravene the overall policy of the Bankruptcy Code requiring debtors to maximize the value available for distribution to creditors. See, e.g., In re Ames Dept. Stores, Inc., 136 B.R. 357, 359 (Bankr. S.D.N.Y. 1992). 6. The same authorities that generally permit GOB Sales, however, also

provide that, consistent with the Bankruptcy Code, reasonable time, place and manner restrictions may be imposed on GOB Sales. [Not enforcing an anti-GOB Sale clause in a lease] is not to say the Code abrogates all lease provisions and statutes conditioning GOB Sales. Section 363(e) reserves for bankruptcy courts the discretion to condition the time, place and manner of GOB sales, thereby providing adequate safeguards to protect shopping center landlords

and their other tenants, while allowing the Trustee to fulfill its fiduciary obligations. Ames, 136 B.R. at 359. Thus, the Court should balance the Debtors' obligation to maximize value to the estate and the Westfield Landlords' need to preserve the image of quality and prosperity at the Westfield Centers. 7. The Debtors have submitted Proposed GOB Sale Terms that are generally

acceptable. However, in view of 11 U.S.C. 363(e), at a minimum, the GOB Sales should be subject to slightly more restrictive court-ordered GOB Sale guidelines that would: a. No exterior banners shall be permitted at enclosed mall shopping centers. At non-enclosed mall shopping centers, one exterior

banner shall be permitted provided that it is located just over the main entrance to the Premises and is not wider than the entrance to the Store. No "Popsicle Stick" signs or anything similar shall be used anywhere on the property of any of the Westfield Centers. No signs shall be hung in common areas of the Westfield Centers or anywhere else on or about the Westfield Centers; b. Require the Debtor to abide by the Westfield Centers' hours (both opening and closing times); c. Prohibit advertising and/or signage from containing the terms "going out of business sale," bankruptcy sale," "Chapter 11 sale," lost lease," "court ordered sale" or "total liquidation sale"; d. Prohibit "sign walkers" (i.e. persons or devices that bear, hold, posses, contain or constitute a sign, banner, leaflet or other printed

media of any sort), stick signs, banners or leaflets of any sort from being used or employed in connection with the GOB Sale on or about any portion of the affected shopping centers, including without limitation, the enclosed mall area, the parking areas, ring roads, entrances, buffer zones, and other common areas, excepting only in-store signage and in-store solicitation of customers as expressly permitted; e. Require that the GOB Sales be conducted in strict compliance with the GOB Sale Guidelines regardless of whether individual restrictions in such Guidelines are contained in the REA and/or relevant leases (e.g., the fourth sentence of paragraph 3 of the Proposed GOB Sale Terms should be stricken from the ultimate Court-approved guidelines); and f. Require that the GOB Sales be conducted in strict compliance with the GOB Sale Guidelines without reference to claimed "exceptions" based on claims of "customary" practices at

particular shopping centers (e.g., the reference to customary practices in section 5 of the Proposed GOB Sale Terms should be stricken). 8. In past Chapter 11 bankruptcy cases, the court-approved liquidators have

arranged for numerous people donning "sandwich boards" and other signs advertising the GOB Sale ("Sign Walkers") to walk around in the parking lot and other common areas of the shopping center. The use of such Sign Walkers on the shopping center premises,

including the parking lot, resulted in numerous safety hazards. Any effort to use Sign Walkers at the Westfield Centers should be prohibited by the Court. 9. Furthermore, two of the three Attached Stores are part of an enclosed

mall. Given the substantive differences between the Proposed GOB Sale Terms in respect of an enclosed mall, versus a non-enclosed mall, the Debtors should be required to state whether they agree with the Westfield Landlords that each of the Attached Stores is within an enclosed mall. WHEREFORE, the Westfield Landlords request that the Court enter an order: a. Sustaining this Objection and granting the GOB Sale Motion subject to the terms and conditions outlined in this Objection; and Granting the Westfield Landlords such other and further relief as the Court deems appropriate. SEITZ, VAN OGTROP & GREEN, P.A. /s/ Patricia P. McGonigle ____________________________________ PATRICIA P. MCGONIGLE (ID No. 3126) pmcgonigle@svglaw.com 222 Delaware Avenue, Suite 1500 P. O. Box 68 Wilmington, DE 19899 (302) 888-0600 (302) 888-0606 (fax) -andNiclas A. Ferland, Esq. Ilan Markus, Esq.
LeClairRyan, A Professional Corporation

b.

By:

555 Long Wharf Drive, 8th Floor New Haven, CT 06511 Telephone: (203) 784-8200 Facsimile: (203) 777-1181 Email: niclas.ferland@leclairryan.com ilan.markus@leclairryan.com Counsel to: Westfield, LLC and its affiliates listed on Schedule A 5

Dated: October 27, 2008

SCHEDULE A
WESTFIELD, LLC

Case No

Tenant

Landlord Eastland Shopping Center LLC Parkway Plaza LP

Location

SF

RCD

EXP

08-11587 Mervyn's LLC 08-11587 Mervyn's LLC N/A

West Covina, CA El Cajon, CA Fairfield, CA

79,800 82,059 88,800

2/1/06 10/1/89 7/1/00

1/31/11 7/31/19 3/31/67

Non Debtor (MDS Realty 1) Solano Mall LP

CERTIFICATE OF SERVICE The undersigned hereby certifies that on October 27, 2008, a copy of the foregoing pleading was served upon the individuals set forth below in the manner so noted:

Mark D. Collins, Esquire Daniel J. DeFranceschi, Esquire Christopher Samis, Esquire L. Katherine Good, Esquire Richards Layton & Finger, PA One Rodney Square 920 N. King Street Wilmington, DE 19801 Via Facsimile 302.651.7701 Howard S. Beltzer, Esquire Neil Herman, Esquire Wendy Walker, Esquire Morgan Lewis & Bockius, LLP 101 Park Avenue New York, NY 10178 Via Facsimile 212.309.6001 Jane Leamy, Esquire United States Trustees Office 844 King Street, Suite 2313 Lockbox 35 Wilmington, DE 19801 Via Facsimile 302.573.6497

/s/ Patricia P. McGonigle ________________________________ PATRICIA P. MCGONIGLE (ID #3126)

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