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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: PERKINS & MARIE CALLENDER’S INC.,1 et al., Debtors.

Chapter 11 Case No. 11-11795 (___) Joint Administration Pending

DEBTORS’ MOTION PURSUANT TO 11 U.S.C. §§ 105(a), 363, 1107(a) AND 1108 FOR AN ORDER AUTHORIZING DEBTORS TO HONOR PRE-PETITION CUSTOMER PROGRAMS Perkins & Marie Callender’s Inc. (f/k/a The Restaurant Company) (“PMCI”) and its above-captioned affiliated debtor entities (collectively, with PMCI, the “Debtors”), by and through their undersigned proposed counsel, respectfully submit this motion (the “Motion”) for entry of an order pursuant to sections 105(a), 363, 1107(a) and 1108 of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”), (a) authorizing, but not directing, the Debtors to honor or pay certain pre-petition obligations to their customers and to otherwise continue certain of their pre-petition customer programs and practices in the ordinary course of the Debtors’ businesses, (b) authorizing, but not directing, the Debtors to pay all prepetition processing costs and fees associated with their customer programs and practices, including, without limitation, any fees associates with processing gift card transactions, and (c) authorizing banks and financial institutions to receive, process and honor all checks and electronic payment requests relating to the foregoing. In support of this Motion, the Debtors

The Debtors, together with the last four digits of each Debtor’s federal tax identification number, are: Perkins & Marie Callender’s Inc. (4388); Perkins & Marie Callender’s Holding Inc. (3999); Perkins & Marie Callender’s Realty LLC (N/A); Perkins Finance Corp. (0081); Wilshire Restaurant Group LLC (0938); PMCI Promotions LLC (7308); Marie Callender Pie Shops, Inc. (7414); Marie Callender Wholesalers, Inc. (1978); MACAL Investors, Inc. (4225); MCID, Inc. (2015); Wilshire Beverage, Inc. (5887); and FIV Corp. (3448). The mailing address for the Debtors is 6075 Poplar Avenue, Suite 800, Memphis, TN 38119.

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submit and incorporate by reference herein the “Declaration of Joseph F. Trungale in Support of Debtors’ Chapter 11 Petitions and First Day Motions”, filed contemporaneously with this Motion. In further support of this Motion, the Debtors respectfully state as follows: Jurisdiction and Venue 1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and

1334. This is a core proceeding within the meaning of 28 .U.S.C. § 157(b)(2). 2. Venue of the above-captioned and this Motion are proper in this District pursuant

to 28 U.S.C. §§ 1408 and 1409. 3. The statutory predicates for the relief requested herein are sections 105(a), 363,

1107(a) and 1108 of the Bankruptcy Code. Factual Background 4. On June 13, 2011 (the “Petition Date”), each of the Debtors filed a voluntary

petition (collectively, the “Petitions”) for relief under chapter 11 of the Bankruptcy Code, and each thereby commenced chapter 11 cases (collectively, the “Chapter 11 Cases”) in this Bankruptcy Court (the “Court”). No request has been made for the appointment of a trustee or examiner, and the Debtors continue to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. As of the date hereof, no Official Committee of Unsecured Creditors has been appointed in any of the Chapter 11 Cases. A. The Debtors’ Businesses 5. The Debtors are one of the leading operators of family-dining and casual-dining

restaurants, under their two (2) highly-recognized brands: (i) their full-service family dining restaurants located primarily in the Midwest, Florida and Pennsylvania under the name “Perkins

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Restaurant and Bakery” (“Perkins”), and (ii) their mid-priced, full-service casual-dining restaurants, specializing in the sale of pies and other bakery items, located primarily in the western United States under the name “Marie Callender’s Restaurant and Bakery” (“Marie Callender’s”). 6. Through the Debtors’ Foxtail Foods bakery goods manufacturing operations

(“Foxtail”), the Debtors offer pies, muffin batters, cookie doughs, pancake mixes, and other food products for sale to both company-owned and franchised Perkins and Marie Callender’s restaurants, and to unaffiliated customers, such as food service distributors and supermarkets, as well as on-line to the public. 7. As of April 17, 2011, the Debtors owned and operated one hundred sixty (160)

Perkins restaurants located in thirteen (13) states, and franchised three hundred fourteen (314) Perkins restaurants located in thirty-one (31) states and five (5) Canadian provinces. Similarly, the Debtors owned and operated eighty-five (85) Marie Callender’s restaurants located in nine (9) states, and franchised thirty seven (37) Marie Callender’s restaurants located in four (4) states and Mexico.2 Thus, the Debtors operate or franchise approximately six hundred (600) restaurants throughout the United States, Canada and Mexico.* 8. As of April 17, 2011, the Debtors employed approximately twelve thousand three

hundred fifty (12,350) employees, consisting of approximately five thousand three hundred fifty (5,350) part-time employees and approximately seven thousand (7,000) full-time employees.*

Included therein, MCPSI operates two (2) “Callender’s Grill” restaurants in Los Angeles, California and a single “East Side Mario’s” restaurant in Lakewood, California. * Immediately prior to the Petition Date, the Debtors initiated a store reduction program to discontinue approximately sixty-five (65) corporate-operated restaurant locations, which will have the attendant effect of a reduction in workforce of approximately 2,500 people.

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9. $507 million. B.

The Debtors’ revenues for the year ended December 26, 2010 were approximately

Corporate Structure and Pre-Petition Capitalization 10. Perkins & Marie Callender’s Holding Inc. (f/k/a The Restaurant Holding

Corporation) is a holding company that wholly owns PMCI. PMCI is the Debtors’ principal operating entity and the primary obligor on the Debtors’ pre-Petition Date senior secured working capital facility and their secured and unsecured bond debt. PMCI directly or indirectly owns and operates the Debtors’ restaurant operations, oversees the Debtors’ franchised restaurant operations, and owns and operates its Foxtail business. 11. On September 24, 2008, PMCI issued $132 million in aggregate principal amount

of 14% Senior Secured Notes (the “Senior Secured Notes”), with a maturity date of May 31, 2013 and interest payable semi-annually on May 31 and November 30 of each year. Prior thereto, on September 21, 2005, PMCI issued $190 million of 10% Senior Notes (the “Senior Notes”), with a maturity date of October 1, 2013 and interest payable semi-annually on April 1 and October 1 of each year. Concurrently with the issuance of the Senior Secured Notes, PMCI and PMC Holding entered into a Credit Agreement dated as of September 24, 2008 (as amended, the “Credit Agreement”) with Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC) as the lender and administrative agent (the “Credit Facility Agent”), consisting of a revolving credit facility in favor of PMCI, as borrower, of up to $26,000,000, with a sub-limit of $15,000,000 for the issuance of letters of credit (collectively, the “Credit Facility”). As of the Petition Date, approximately $103,000,000 in aggregate principal amount of the Senior Secured Notes are outstanding, $190,000,000 in aggregate principal amount of the Senior Notes are

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outstanding, and approximately $10,060,000 in principal amount is outstanding under the Credit Facility (comprised solely of outstanding letters of credit). 12. Effective April 30, 2011, PMCI and various of the other Debtors entered into two

(2) forbearance agreements (collectively, the “Forbearance Agreements”), one (1) with the holders of in excess of eighty (80%) percent in aggregate principal amount of the Senior Notes (the “Senior Note Forbearance Agreement”), and one (1) with the lender and Credit Facility Agent under the Credit Agreement. 13. In the weeks preceding the Petition Date, the Debtors entered into a

“Restructuring Support Agreement” dated as of June 6, 2011 with the holders of the Senior Notes signatory to the Senior Note Forbearance Agreement and the holders of one hundred (100%) percent of the Senior Notes (collectively, the “Restructuring Support Parties”) designed to mutually and consensually develop and agree upon the parameters of a reorganization program for the Debtors that will, among other things, delever the Debtors’ capital structure, and thereby establish a pre-filing blueprint for an efficient and effective chapter 11 reorganization process. In connection with entering into the Restructuring Support Agreement, the Debtors and the Restructuring Support Parties also negotiated the principal terms of the Debtors’ plan of reorganization, and such plan of reorganization and the accompany disclosure statement will be filed with the Court on or before July 14, 2011 in accordance with the milestones contained in the Restructuring Support Agreement. Customer Programs 14. Prior to the Petition Date, and in the ordinary course of business, the Debtors

engaged in certain marketing, sales and promotional practices, certain of which are described in greater detail below, which are targeted to develop and sustain positive reputations in the

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marketplace for their restaurants and bakery goods production business (collectively, the “Customer Programs”). The Customer Programs are designed to allow the Debtors to successfully compete in a highly competitive marketplace by ensuring customer satisfaction and generating loyalty and goodwill for the Debtors, thereby allowing the Debtors to retain current customers, attract new ones, and ultimately enhance their revenues and profitability. 15. The Debtors need to continue during the postpetition period those Customer

Programs that are beneficial and cost-effective to their business. Such relief is necessary to preserve the Debtors’ critical business relationships and customer goodwill for the benefit of their estates. The revenue generated by the Customer Programs exceeds the operational and administrative cost to implement and maintain them, and for this and the other reasons set forth herein, it is essential and in the best interests of the Debtors, their estates and their creditors that the Debtors be permitted to honor their prepetition obligations in connection with the Customer Programs and to continue the Customer Programs in the ordinary course of their business. 16. The Debtors’ Customer Programs for the Perkins brand include the following: (a) Gift Cards: All one hundred sixty one (161) Perkins restaurants and three hundred nineteen (319) franchised locations utilize a gift card program processed by Banc of America Merchant Services, LLC (“BAMS”), under which customers may purchase a gift card in store or online at perkins.com which can be loaded in $10 and $25 denominated amounts and non-denominated amounts ranging from $5 to $100 per card (the “Perkins Gift Cards”). As of June 6, 2011, approximately $3.66 million in value remained outstanding on customers’ Perkins Gift Cards.3

Since the gift card program is also utilized at franchised locations, from time-to-time, though infrequently, a gift card will be purchased at a franchised location but redeemed at one of the Debtors’ locations, or vice versa. In such circumstances, a customer will purchase a gift card at a franchised location even though no goods are provided by that restaurant. If the gift card is then used at a non-franchised location, that non-franchised restaurant has provided services for which no payment has been made to the Debtors. This process also occurs in the reverse. Thereafter, BAMS settles these transactions for the Debtors by sweeping net redemptions to and from the appropriate franchise accounts and the Debtors’ promotional accounts (kept separate from other corporate funds and accounts) once a week. By this Motion, the Debtors seek authority to continue this policy.

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(b)

Great Lakes Scrip Program: The Great Lakes Scrip program is a certificate program in which gift cards are sold to Great Lakes Scrip Center LLC, a broker of scrip gift cards, at a fifteen percent (15%) discount and Great Lakes Scrip Center LLC then sells the cards to various charitable organizations as fundraisers. Direct Mail and Coupon Offers: In the ordinary course, the Debtors, as Perkins, conduct mass distributions of coupons and offers. Perkins does not participate in a formal system-wide direct mail program. Restaurant specific direct mail requests are facilitated by American Clearing House upon request. Perkins also utilizes free standing inserts and co-op inserts, facilitated through Valassis, to support promotional activity. In addition, Perkins distributes monthly emails to its email database, Perkins eClub. Perkins eClub members receive introductory offers upon sign up and subsequent monthly eBlasts with incentive offers.

(c)

17. following:

The Debtors’ Customer Programs for the Marie Callender’s brand include the

(a)

Gift Cards: Approximately eighty-five (85) Marie Callender’s restaurants and thirty-six (36) Marie Callender’s franchises utilize a gift card program processed by BAMS under which customers may purchase a gift card in store or online at mariecallenders.com which can be loaded in dollar amounts from $5-$100 per card (the “Marie Callender’s Gift Cards”, and together with the Perkins Gift Cards, the “Gift Cards”). As of June 6, 2011, approximately $3.57 million in value remained outstanding on customers’ Marie Callender’s Gift cards. Charity Certificate Program: Marie Callender’s offers a certificate program that provides non-profit organizations with valid tax identification numbers a fifteen percent (15%) discount on gift cards. Gift cards are then sold by the non-profit for face value and the organization makes fifteen percent (15%) for every gift card sold. Direct Mail and Coupon Offers: In the ordinary course, the Debtors, as Marie Callender’s, conduct mass distributions of coupons and monthly value offers through direct mail and to Sunday subscribers of certain newspapers. Often these coupons and offers are valid for a fixed period of time, typically four (4) to six (6) weeks.

(b)

(c)

18.

As set forth above, prior to the Petition Date, the Debtors sold, in the ordinary

course of their businesses, Gift Cards for customers to purchase from the Debtors. Customers had the option of purchasing the Gift Cards in denominated and, in certain instances, non-

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denominated amounts, as described more fully above. As of the Petition Date, some customers had not yet redeemed their Gift Cards or a portion thereof. When the customers in question purchased their Gift Cards, they had every expectation that they would be fully redeemable. The Debtors estimate that the approximate amount of outstanding pre-petition obligations with respect to the Gift Cards is $7,227,000 in the aggregate as of June 6, 2011. 19. Moreover, in connection with the administration of the Customer Programs, the

Debtors are a party to that certain Gift Card Processing Agreement dated as of February 4, 2010 between BAMS and Perkins Promotions, LLC (n/k/a Debtor PMCI Promotions LLC) (the “Gift Card Agreement”), which provides for, among other things, the establishment and implementation of a stored value card program, card production, maintenance of a database of Gift Card date, the authorization and processing of Gift Card transactions, a call center, and webbased support tools. Failure to continue to issue and process customer Gift Cards would severely disrupt the Debtors’ businesses, adversely affect sales and negatively impact loyal customers. Without this continued and uninterrupted ability, the Debtors would lose a major avenue for conducting sales transactions in the ordinary course of their businesses. 20. Under the terms of the Gift Card Agreement with BAMS, the Debtors are

required to pay BAMS fees for their Gift Card services, certain amounts of which may have accrued, but remained unpaid as of the Petition Date (collectively, the “Gift Card Processing Fees”). Accordingly, pursuant to this Motion, the Debtors seek authority to continue to pay these Gift Card Processing Fees, including any pre-petition obligations, in the ordinary course of their businesses to avoid any interruption of their ability to issue, process and service Gift Card transactions. The Debtors’ ability to allow its customers to purchase Gift Cards is critical to their business and therefore their chapter 11 reorganization efforts. The Debtors estimate that, as of

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the Petition Date, approximately $30,000 in Gift Card Processing Fees remain unpaid to BAMS. The Debtors submit that such amounts are minimal when compared to the substantial harm to the Debtors operations and burden of having to seek a replacement gift card processor on an expedited basis. Thus, the Debtors submit that it is necessary, prudent and in the best interest of their estates and creditors to allow, but not require, the Debtors to satisfy any such pre-petition amounts. Relief Requested 21. By this Motion, the Debtors seek entry of an order, pursuant to sections 105(a),

363, 1107(a) and 1108 of the Bankruptcy Code, authorizing, but not directing, the Debtors, in their discretion, to (i) perform and honor their prepetition obligations related to the Customer Programs as the Debtors determine to be advisable and (ii) continue, renew, replace, implement new, and/or terminate any such Customer Programs, as the Debtors deem appropriate, in the ordinary course of the Debtors’ business operations and without further application to this Court. In addition, in light of the fact that some of the Customer Programs may include unperformed prepetition obligations, the Debtors seek authorization to perform and honor all of their prepetition obligations with respect to the Customer Programs.4 22. The Debtors also request this Court to authorize, but not direct, the Debtors to pay

all prepetition processing costs and fees associated with their Customer Programs, including, without limitation, any Gift Card Processing Fees and any other fees associated with Gift Card

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Nothing contained herein shall constitute, nor shall it be construed as, a request to assume or adopt any executory contract with respect to any customer or Customer Program. The Debtors expressly reserve all rights with respect to the continuation or cessation of any contract with any customer or Customer Program and the assumption, adoption, modification or rejection of any executory contract with respect to any customer or Customer Program. Furthermore, the Debtors reserve the right to contest the amounts claimed to be due, if any, by any customer or with respect to any Customer Program in the ordinary course of business.

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transactions, and to authorize banks and financial institutions to receive, process and honor all checks and electronic payment requests relating to the foregoing Basis for Relief Requested 23. As set forth below, the Debtors believe that most of the Customer

Programs constitute “ordinary course of business” practices, and therefore do not require bankruptcy court approval. However, out of an abundance of caution, the Debtors seek authority from this Court to honor their pre-petition obligations arising from the Customer Programs in the ordinary course of business. 24. Sections 1107(a) and 1108 of the Bankruptcy Code authorize a debtor-in-

possession to continue to operate its business. Further, section 363(c) of the Bankruptcy Code authorizes a debtor-in-possession operating its business pursuant to section 1108 of the Bankruptcy Code to use property of the estate in the ordinary course of business without notice or a hearing. The Debtors submit that continuing, renewing, replacing, implementing new, and/or terminating their Customer Programs in the ordinary course of business is permitted by sections 363(c), 1107(a) and 1108 of the Bankruptcy Code without further application to the Court. 25. The Debtors, operating their businesses as debtors in possession under section

1107(a) and 1108 of the Bankruptcy Code, are fiduciaries “holding the bankruptcy estate and operating the business for the benefit of [their] creditors.” In re CoServ, L.L.C., 273 B.R. 487, 497 (Bankr. N.D. Tex. 2002). The CoServ court specifically noted that pre-plan satisfaction of pre-petition claims would be a valid exercise of a debtor’s fiduciary duty when the payment “is the only means to effect a substantial enhancement of the estate.” Id. at 498. The court provided

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a three-pronged test for determining whether a pre-plan payment on account of a pre-petition claim was a valid exercise of a debtor’s fiduciary duty: First, it must be critical that the debtor deal with the claimant. Second, unless it deals with the claimant, the debtor risks the probability of harm, or, alternatively, loss of economic advantage to the estate or the debtor’s going concern value, which is disproportionate to the amount of the claimant’s pre-petition claim. Third, there is no practical or legal alternative by which the debtor can deal with the claimant other than by payment of the claim. Id. at 498. 26. Honoring and maintaining the Customer Programs and satisfying the Gift Card

Processing Fees, including any pre-petition obligations on account thereof, meets each element of the CoServ court’s standard. As described herein, the success and ultimate viability of the Debtors’ businesses is dependent upon, among other things, customer loyalty. The Debtors therefore believe that they can only meet their fiduciary duties as debtors in possession under sections 1107(a) and 1108 of the Bankruptcy Code by having the authority, but not the direction, of this Court to satisfy any outstanding pre-petition obligations under the Customer Programs and on account of the Gift Card Processing Fees. 27. The Court may also authorize continuation of the Customer Programs pursuant to

section 363(b) of the Bankruptcy Code. Section 363(b) provides that “[t]he trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate.” 11 U.S.C. § 363(b)(1). Under this section, a court may authorize a debtor to pay certain pre-petition claims. See In re Ionosphere Clubs, Inc., 98 B.R. 174, 175 (Bankr. S.D.N.Y. 1989) (authorizing payment of pre-petition claims where the debtors “articulate some business justification, other than the mere appeasement of major creditors”); see also In re James A. Phillips, Inc., 29 B.R. 391, 395-97 (S.D.N.Y. 1983) (authorizing, pursuant to section 363, a contractor to pay pre-petition claims of some suppliers who were potential lien claimants, 11
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because the payments were necessary for the general contractors to release funds owed to the debtors). 28. Additionally, section 105(a) of the Bankruptcy Code authorizes the Court to issue

“any order, process, or judgment that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code].” 11 U.S.C. § 105(a). A bankruptcy court’s use of its equitable powers to “authorize the payment of pre-petition debt when such payment is needed to facilitate the rehabilitation of the debtor is not a novel concept.” In re Ionosphere Clubs, Inc., 98 B.R. at 175. Under section 105(a) of the Bankruptcy Code and the “necessity of payment” doctrine, the Court “can permit pre-plan payment of a pre-petition obligation when essential to the continued operation of the debtor.” In re NVR L.P., 147 B.R. 126, 127 (Bankr. E.D. Va. 1992); see also In re Lehigh & New England Ry. Co., 657 F.2d 570, 581 (3d Cir. 1981) (stating the necessity of payment doctrine “teaches no more than, if payment of a claim which arose prior to reorganization is essential to the continued operation of the [business] during reorganization, payment may be authorized even if it is made out of corpus.”); In re Just for Feet, Inc., 242 B.R. 821, 825 (D. Del. 1999) (“to invoke the necessity of payment doctrine, a debtor must show that payment of the pre-petition claims is ‘critical to the debtor’s reorganization’”) (citation omitted). 29. The Debtors submit that entry of an order approving the Debtors’ ability to

continue to honor their Customer Programs and satisfy the Gift Card Processing Fees is necessary to avoid immediate and irreparable harm to the Debtors and their estates. Well over ten thousand (10,000) customers frequent the Debtors’ restaurants and franchises each week. The success and viability of the Debtors’ businesses are dependent upon the loyalty and confidence of their customers. The continued support of this constituency is absolutely essential to the survival of the Debtors’ businesses and the Debtors’ ability to reorganize. The Debtors believe

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that any delay in honoring various Customer Programs, satisfying the Gift Card Processing Fees or the discontinuation of Customer Programs as a result of the commencement of these Chapter 11 Cases will severely and irreparably impair the Debtors’ customer relations at a time when the loyalty and support of customers is extremely critical. 30. Moreover, honoring these pre-petition obligations will require minimal

expenditure of estate funds and will assist the Debtors in preserving customer relationships for the benefit of all stakeholders. The Debtors believe that any cost of continuation of the Customer Programs is justified by the greater likelihood of the customers’ continued patronage of the Debtors’ restaurants.5 Accordingly, to preserve the value of their estates, the Debtors must be permitted, in the Debtors’ sole discretion, to continue honoring the Customer Programs without interruption or modification. In addition, to provide necessary assurances to the Debtors’ customers on a going-forward basis, the Debtors request authority to continue honoring or paying all obligations to customers that arise from and after the Petition Date in the ordinary course of the Debtors’ businesses. 31. The Debtors believe that certain obligations on account of the Gift Cards may be

entitled to priority treatment pursuant to section 507(a)(7) of the Bankruptcy Code, which grants priority to: allowed unsecured claims of individuals, to the extent of $2,600 for each such individual, arising from the deposit, before the commencement of the case, of money in connections with the purchase, lease, or rental of property, or the purchase of services, for the personal, family, or household use of such individuals, that were not delivered or provided.

With respect to the continuation of the Debtors’ gift card and charitable programs, the Debtors submit that any amounts paid by customers and unused as of the Petition Date would arguably be entitled to priority treatment pursuant to section 507(a)(7) of the Bankruptcy Code as a customer deposit. The Debtors would therefore be required to pay these claims in full in order to confirm a plan of reorganization. Accordingly, granting the relief requested herein would only affect the timing, and not the amount, of the payment of these obligations to the extent that they constitute priority claims.

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11 U.S.C. § 507(a)(7). The Debtors submit that funds collected pre-petition by the Debtors on account of Gift Cards likely falls within this priority category. For example, a customer’s purchase of a Gift Card represents a “deposit … of money in connection with the purchase … of property, or the purchase of services, for the personal, family, or household use of such individual.” Furthermore, unless this Motion is granted, such “deposits” will represent payment for goods or services “that were not delivered or provided.” Thus, customers who purchased Gift Cards will likely be entitled to receive payment in full before the payment of any claims of general unsecured creditors in these Chapter 11 Cases. Therefore, the Debtors submit that continuing to honor Gift Cards purchased by customers prior to the Petition Date is likely to only affect the time of the payments to which customers are likely to be entitled, and not the amounts that would ultimately be received by such parties, and will not prejudice the rights of general unsecured creditors of these estates or other parties in interest. 32. In similar circumstances where retaining the loyalty and patronage of customers is

critical to a successful reorganization, courts in this District have granted relief similar to that requested herein. See, e.g., In re Harry & David Holdings Inc., Case No. 11-10884 (MFW) (Bankr. D. Del. March 29, 2011); In re Summit Business Media Holding Co., Case No. 11-10231 (PJW) (Bankr. D. Del. Jan. 28, 2011); In re Atrium Corp., Case No. 10-10150 (BLS) (Bankr. D. Del. Jan. 21, 2010); In re The Fairchild Corp., Case No. 09-10899 (CSS) (Bankr. D. Del. March 20, 2009); In re Norte, Case No. 09-10138 (KJC) (Bankr. D. Del. Jan. 15, 2009). 33. The Debtors’ creditors also will benefit from the relief sought herein. If the

Debtors are prohibited from maintaining policies consistent with past business practice, then customers’ lost confidence in the Debtors will damage the Debtors’ businesses to an extent that far exceeds any cost associated with continuing such practices. Accordingly, the Debtors’

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creditors will benefit from an order authorizing the relief sought herein because such an order will protect the Debtors’ reputation during this critical time and enhance the Debtors’ ability to generate revenue. 34. In light of the foregoing, the Debtors respectfully request that they be authorized,

but not directed, in the Debtors’ sole discretion, to continue honoring their Customer Programs and to satisfy any Gift Card Processing Fees in the ordinary course of the Debtors’ businesses in the same manner and on the same terms and conditions as such programs were administered prior to the Petition Date. Request For Immediate Relief and Waiver of Stay to Avoid Immediate and Irreparable Harm 35. The Debtors seek immediate authorization for the relief contemplated by this

Motion. Pursuant to Rule 6003(b) of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), the Court cannot grant relief regarding “a motion to use, sell, lease or otherwise incur an obligation regarding property of the estate, including a motion to pay all or part of a claim that arose before the filing of the petition” within twenty-one (21) days of the filing of the petition unless the relief is “necessary to avoid immediate and irreparable harm.” Fed.R.Bankr.P. 6003(b). For the reasons set forth above, the Debtors submit that the requirements of Bankruptcy Rule 6003(b) are met and that the relief requested in the Motion is necessary to avoid immediate and irreparable harm to the Debtors and their estates. 36. In addition, by this Motion, the Debtors seek a waiver of any stay of the

effectiveness of the order approving this Motion. Pursuant to Bankruptcy Rule 6004(h), “[a]n order authorizing the use, sale, or lease of property other than cash collateral is stayed until the expiration of 14 days after entry of the order, unless the court orders otherwise.” Fed.R.Bankr.P.

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6004(h). For the reasons set forth above, the Debtors submit that ample cause exists to justify a waiver of the fourteen (14) day stay imposed by Bankruptcy Rule 6004(h). Reservation of Rights 37. Nothing contained herein is intended or should be construed as: (a) an admission

as to the validity of any claim against the Debtors; (b) a waiver of the Debtors’ rights to dispute any claim; or (c) an approval or assumption of any agreement, contract or lease, pursuant to section 365 of the Bankruptcy Code. Notice 38. The Debtors will serve notice of this Motion upon: (i) the Office of the United

States Trustee; (ii) the Debtors’ consolidated list of creditors holding the forty (40) largest unsecured claims; (iii) counsel to the agent for the Debtors’ pre-petition Credit Facility and postpetition debtor-in-possession financing facility; (iv) counsel to the indenture trustee for the Senior Secured Notes; (v) counsel to the indenture trustee for the Senior Notes; and (vi) counsel to the Restructuring Support Parties. Notice of this Motion and any order entered hereon will be served in accordance with Local Rule 9013-1(m). In light of the nature of the relief requested, the Debtors submit that no other or further notice is necessary No Prior Request 39. No prior application for the relief requested herein has been made to this Court or

any other court. WHEREFORE, the Debtors respectfully request that the Court enter an order, in the form attached hereto as Exhibit A: (i) authorizing, but not directing, the Debtors, in their sole discretion, to treat all Customer Programs in the ordinary course of the Debtors’ businesses in the same manner and on the same terms and conditions as such obligations were treated prior to the

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Petition Date, including by honoring all Customer Programs; (ii) authorizing, but not directing, the Debtors to continue honoring all obligations to customers that arise from and after the Petition Date in the ordinary course of the Debtors’ businesses; (iii) authorizing, but not directing, the Debtors to pay all prepetition processing costs and fees associated with their Customer Programs, including, without limitation, any Gift Card Processing Fees, regardless of whether such fees accrued prior to the Petition Date; and (iv) granting such other and further relief as the Court may deem necessary and proper. Dated: June 13, 2011 Wilmington, Delaware Respectfully submitted, YOUNG CONAWAY STARGATT & TAYLOR, LLP By: /s/ Robert S. Brady Robert S. Brady (No. 2847) Robert F. Poppiti, Jr. (No. 5052) The Brandywine Building 1000 West Street, 17th Floor P.O. Box 391 Wilmington, DE 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253 And TROUTMAN SANDERS LLP Mitchel H. Perkiel Brett D. Goodman The Chrysler Building 405 Lexington Avenue New York, NY 10174 Telephone: (212) 704-6000 Facsimile: (212) 704-6288 Proposed Counsel for Perkins & Marie Callender’s Inc., et al. Debtors and Debtors-in-Possession

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EXHIBIT A

YCST01:11162224.1

070242.1001

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: PERKINS & MARIE CALLENDER’S INC.,1 et al., Debtors. Ref. Docket No. _____ ORDER PURSUANT TO 11 U.S.C. §§ 105(a), 363, 1107(a) AND 1108 AUTHORIZING DEBTORS TO HONOR PRE-PETITION CUSTOMER PROGRAMS Upon the Debtors’ Motion Pursuant to 11 U.S.C. §§ 105(a), 363, 1107(a) and 1108 for an Order Authorizing Debtors to Honor Pre-petition Customer Programs (the “Motion”),2 the Court finds that (i) it has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334; (ii) this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); (iii) venue of these cases and the Motion are proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409; and (iv) notice of the Motion and the hearing thereon was sufficient under the circumstances; and upon consideration of the Declaration of Joseph F. Trungale in Support of Debtors’ Chapter 11 Petitions and First Day Motions and the record herein, and after due deliberation, the Court hereby finds that good and sufficient cause exists for the relief requested in the Motion and that the requirements of Bankruptcy Rule 6003 have been satisfied because the relief requested in the Motion is necessary to avoid immediate and irreparable harm. Accordingly, it is hereby, ORDERED, ADJUDGED AND DECREED that: Chapter 11 Case No. 11-11795 (___) Jointly Administered

The Debtors, together with the last four digits of each Debtor’s federal tax identification number, are: Perkins & Marie Callender’s Inc. (4388); Perkins & Marie Callender’s Holding Inc. (3999); Perkins & Marie Callender’s Realty LLC (N/A); Perkins Finance Corp. (0081); Wilshire Restaurant Group LLC (0938); PMCI Promotions LLC (7308); Marie Callender Pie Shops, Inc. (7414); Marie Callender Wholesalers, Inc. (1978); MACAL Investors, Inc. (4225); MCID, Inc. (2015); Wilshire Beverage, Inc. (5887); and FIV Corp. (3448). The mailing address for the Debtors is 6075 Poplar Avenue, Suite 800, Memphis, TN 38119.
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Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motion.

YCST01:11162224.1

070242.1001

1. 2.

The Motion is granted. The Debtors are authorized, but not directed, in the Debtors’ sole discretion, to

pay, honor, perform or otherwise satisfy all obligations in respect of their Customer Programs, without regard to whether their obligations under the Customer Programs arose prior to or after the Petition Date, in the ordinary course of the Debtors’ businesses in the same manner and on the same terms and conditions as such programs were administered prior to the Petition Date. 3. The Debtors are authorized, but not directed, to continue, renew, replace, modify

and/or terminate such of the Customer Programs without further application to, or order of, the Court. 4. The Debtors are authorized, but not directed, in the Debtors’ sole discretion, to

pay all pre-petition Gift Card Processing Fees, up to an aggregate amount of $30,000, in accordance with the Debtors’ prepetition policies, practices and programs. 5. The Debtors’ banks shall be, and hereby are, authorized, when requested by the

Debtors in their sole discretion, to process, honor, and pay any and all checks or electronic fund transfers drawn on the Debtors’ bank accounts to pay any payments approved by this Order, including, without limitation, those related to the Customer Programs and the Gift Card Processing Fees, whether those checks were presented prior to or after the Petition Date, provided that sufficient funds are available in the applicable accounts to make the payments. 6. The Debtors’ banks may rely on the representations of the Debtors with respect to

whether any check or other transfer drawn or issued by the Debtors prior to the Petition Date should be honored pursuant to this Order, and any such bank shall not have any liability to any party for relying on such representations by the Debtors as provided for in this Order.

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YCST01:11162224.1 070242.1001

7.

Nothing in the Motion or this Order, nor the Debtors’ payment of any claims

pursuant to this Order, shall be deemed or construed as: (a) an admission as to the validity of any claim against the Debtors; (b) a waiver of the Debtors’ rights to dispute any claim; or (c) an approval or assumption of any agreement, contract or lease, pursuant to section 365 of the Bankruptcy Code. 8. Notwithstanding anything to the contrary in this Order, any payment made or to

be made under this Order, and any authorization contained in this Order, shall be subject to the requirements imposed on the Debtors under any Order(s) of this Court approving the Debtors’ debtor-in-possession financing facility and use of cash collateral and any budget in connection therewith. 9. 10. The requirements set forth in Bankruptcy Rule 6003(b) are satisfied. Notwithstanding any applicability of Bankruptcy Rule 6004(h), the terms and

conditions of this Order shall be immediately effective and enforceable upon its entry. 11. This Court shall retain jurisdiction to hear and determine all matters arising from

or related to the interpretation and implementation of this Order. Date: June _____, 2011 UNITED STATES BANKRUPTCY JUDGE

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