IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: PERKINS & MARIE CALLENDERS INC.

,1 et al., Debtors. Chapter 11 Case No. 11-11795 (___) Joint Administration Pending

DEBTORS MOTION FOR ORDER PURSUANT TO 11 U.S.C. 105(a), 363, 364, 1107(a) AND 1108 (I) AUTHORIZING THE DEBTORS TO (A) CONTINUE PREPETITION INSURANCE COVERAGE AND ENTER INTO NEW INSURANCE POLICIES AND (B) MAINTAIN PRE-PETITION PREMIUM FINANCING AGREEMENTS AND ENTER INTO NEW POST-PETITION PREMIUM FINANCING AGREEMENTS AND (II) AUTHORIZING AND DIRECTING THE DEBTORS' BANKS AND OTHER FINANCIAL INSTITUTIONS TO PROCESS, HONOR AND PAY CERTAIN CHECKS AND FUND TRANSFER REQUESTS Perkins & Marie Callenders 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 (Motion) for entry of an order pursuant to sections 105(a), 363, 364, 1107(a) and 1108 of title 11 of the United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code), (i) authorizing, but not directing, the Debtors to (a) continue pre-petition insurance coverage and enter into new insurance policies and (b) maintain pre-petition premium financing agreements and continue financing arrangements for insurance premiums, and (ii) authorizing and directing the Debtors banks and other financial institutions to process, honor and pay certain checks and fund transfer requests. In support of this Motion, the Debtors submit and incorporate by reference herein the

The Debtors, together with the last four digits of each Debtors federal tax identification number, are: Perkins & Marie Callenders Inc. (4388); Perkins & Marie Callenders Holding Inc. (3999); Perkins & Marie Callenders 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.

YCST01:11162232.1

070242.1001

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. The 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 cases 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, 363, 364,

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 Callenders Restaurant and Bakery (Marie Callenders). 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 Callenders 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 Callenders restaurants located in nine (9) states, and franchised thirty seven (37) Marie Callenders restaurants located in four (4) states and Mexico.2 Thus, the Debtors operate or franchise nearly 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) Callenders Grill restaurants in Los Angeles, California and a single East Side Marios 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 Callenders 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. Relief Requested 14. In the ordinary course of the Debtors businesses, the Debtors maintain, in current

effect, certain insurance policies (collectively, the Policies) which provide primary coverage and in certain instances excess and umbrella coverage for, among other things, liability of the

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Debtors directors and officers, property, crime and casualty risks on the Debtors real and personal property, workers compensation, liability that may result from the Debtors products, and liability that may arise out of the Debtors errors and omissions and employment practices. The Policies are essential to the preservation of the Debtors businesses, properties and assets, and in many cases the coverage is required by various regulations, laws and contracts that govern the Debtors business conduct. Attached hereto as Exhibit A is a spreadsheet identifying the Policies, including the period of coverage, the insurance carrier, policy numbers and premium amount. 15. By this Motion, the Debtors seek authority, but not direction, to pay any

premiums or other obligations, including posting collateral and letters of credit, under the Policies that may have been due pre-petition but were not in fact paid, or were paid pre-petition in an amount less than is actually owed under such Policies. The Debtors estimate that the obligations relating to pre-petition periods to be paid pursuant to the relief requested in this Motion are in an amount not to exceed $150,000 in the aggregate. 16. In addition, it is not economically advantageous for the Debtors to pay the

premiums on each of their Policies on an annualized basis. Accordingly, from time to time, in the ordinary course of their businesses, the Debtors set up installment payment programs with their insurance carriers, or alternatively finance the premiums on certain of these Policies (collectively, the Financed Policies).3 The Financed Policies are identified and labeled as such on Exhibit A .

The premium paid for the Worker Compensation and Employers Liability coverage, the excess General Liability coverage and Commercial Automobile coverage provided by ACE American Insurance Company is not financed pursuant to a premium financing agreement but is subject to an installment payment program for which the Debtors are required to post collateral and a letter of credit.

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17.

As of the Petition Date, the Debtors were financing approximately seven (7) of

their Policies pursuant to three (3) Commercial Insurance Premium Finance and Security Agreements (collectively, the Agreements, copies of which are attached hereto as Exhibit B) with AON Premium Finance, LLC (AON Finance). a. As of the Petition Date, the Debtors were financing their Umbrella/Excess

Liability policy issued by ACE Property and Casualty Insurance Company, their Umbrella/Excess Liability policy issued by Great American Insurance Company of New York, and their Punitive Damage Wrap policy issued by ACE Bermuda Insurance Ltd through AON Finance in an aggregate premium amount of $209,613.00, of which $159,049.62 was financed (inclusive of any finance charges). The Debtors next payment under this Agreement is due on June 30, 2011 in the amount of $26,508.27 and the Debtors will continue to make such monthly payments through September 30, 2011. b. As of the Petition Date, the Debtors were financing their All Risk Property

policy issued by Lexington Insurance Company, their Excess California Earthquake policy issued by Arch Special Insurance Company and Endurance American Specialty Insurance Company, and their Commercial Crime policy issued by Federal Insurance Company through AON Finance in an aggregate premium amount of $1,187,335.58, of which $961,748.10 was financed (inclusive of any finance charges). The Debtors next payment under this Agreement is due on June 30, 2011 in the amount of $106,860.90 and the Debtors will continue to make such monthly payments through September 30, 2011. c. As of the Petition Date, the Debtors were financing their Directors &

Officers liability policy issued by U.S. Specialty through AON Finance for the premium amount of $97,162.00, of which $90,271.80 was financed (inclusive of any finance charges). The

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Debtors next payment under this Agreement is due on June 21, 2011 in the amount of $9,027.18, and the Debtors will continue to make such monthly payments through August 21, 2011. 18. If the Debtors are unable to continue making payments under the Agreements,

AON Finance may be permitted to terminate the Financed Policies. The Debtors would then be required to obtain replacement insurance on an expedited basis and at significant cost to the estates. If the Debtors are required to obtain replacement insurance and to pay a lump sum premium for such insurance in advance, this payment may be the same or greater than what the Debtors currently pay to AON Finance under the Agreements. Even if AON Finance is not permitted to terminate the Financed Policies, any interruption of payments would severely and adversely affect the Debtors ability to finance premiums for future policies. 19. By this Motion, the Debtors seek authority, but not direction, to continue

performing under the Agreements, including by payment of any outstanding pre-petition amounts due under the Agreements. In view of the importance of maintaining the insurance coverage with respect to their business activities and the preservation of the Debtors cash flow by financing their insurance premiums, the Debtors believe it is in the best interest of creditors in these Chapter 11 Cases for the Court to authorize the Debtors to honor their obligations under the Agreements. Absent this authority, the Debtors will be burdened with seeking replacement insurance on an expedited basis or suffering the risk of a lapse in coverage, either of which would be severely detrimental to the Debtors Chapter 11 efforts. 20. The Debtors expect to renew many of their Policies and Agreements prior to their

expiration and/or enter into new premium finance agreements in the ordinary course of their business. To the extent that the Debtors will renew any Policies and/or Agreements and/or enter

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into new premium finance agreements during the pendency of these Chapter 11 Cases, the Debtors have agreed to provide five (5) business days notice to the Restructuring Support Parties of their renewal of such Policies or Agreements and/or entry into new premium finance agreements. Basis For Relief Requested A. The Court Should Authorize the Debtors to Make All Necessary Payments Under the Agreements to Maintain Existing Insurance Coverage. 21. There are several grounds upon which the Court may authorize the Debtors

maintenance of insurance coverage through their continued performance under the Agreements. First, the Debtors should be authorized to make all necessary payments under the Agreements pursuant to sections 105 and 363(b) of the Bankruptcy Code and the doctrine of necessity. Section 105 of the Bankruptcy Code authorizes this Court to issue any order . . . necessary or appropriate to carry out the provisions of the Bankruptcy Code. 11 U.S.C. 105(a). Additionally, section 363(b)(1) of the Bankruptcy Code authorizes a bankruptcy court, after notice and a hearing, to authorize a debtor to use, sell, or lease, other than in the ordinary course of business, property of the estate. See 11 U.S.C. 363(b)(1). 22. Section 105(a) of the Bankruptcy Code permits a court to authorize the payment

of pre-petition obligations when so doing is essential to the continued operation of the debtor. This is generally referred to as the necessity of payment rule or the doctrine of necessity. See In re Just for Feet, 242 B.R. 821, 824 (D. Del 1999); In re Equalnet Commcns. Corp., 258 B.R. 368, 369 (Bankr. S.D. Tex. 2000); In re NVR, L.P., 147 B.R. 126, 128 (Bankr. E.D. Va. 1992); In re Financial News Network, Inc., 134 B.R. 732, 736 (Bankr. S.D.N.Y. 1991) (pre-petition claims may be paid when so doing is critical to the debtor's reorganization); In re Ionosphere Clubs, Inc., 98 B.R. 174, 177 (Bankr. S.D.N.Y. 1989).

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23.

The doctrine of necessity is a well-settled doctrine which has been adopted by the

Third Circuit. In re Sharon Steel Corp.,159 B.R. 730, 737 (Bankr. W.D.Pa. 1993) (citing In re Lehigh and New England Ry. Co., 657 F.2d 570, 581 (3d Cir. 1981)). The doctrine permits a bankruptcy court to authorize payment of certain prepetition claims prior to the completion of the reorganization process where the payment of such claims is necessary to the reorganization. See In re Just for Feet, Inc., 242 B.R. 821, 826 (D. Del. 1999) (stating that where the debtor cannot survive absent payment of certain prepetition claims, the doctrine of necessity should be invoked to permit payment); see also In re NVR L.P., 147 B.R. 126, 127 (Bankr. E.D. Va. 1992) ([T]he court can permit pre-plan payment of a pre-petition obligation when essential to the continued operation of the debtor.); In re Eagle-Picher Indus., Inc., 124 B.R. 1021, 1023 (Bankr. S.D. Ohio 1991) ([T]o justify payment of a pre-petition unsecured creditor, a debtor must show that the payment is necessary to avert a serious threat to the Chapter 11 process.). 24. Payment under the Agreements is necessary to avoid the risks associated with

proceeding into these Chapter 11 Cases without essential insurance coverage in place. Additionally, in the event that any of the Policies are cancelled due to nonpayment under the Agreements, the Debtors would be required to procure replacement insurance on an expedited basis, likely at a much higher cost. Granting the relief requested in this Motion would enable the Debtors to avoid this unnecessary cost and distraction. Therefore, granting the relief requested in this Motion would not disparately impact creditors, but rather serve the best interests of the estate and its creditors. 25. Additionally, sections 1107(a), 1108 and 1112 of the Bankruptcy Code support

the relief requested by Debtors in this Motion. The Debtors, operating their businesses as debtors-in-possession under sections 1107(a) and 1108 of the Bankruptcy Code, are fiduciaries

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holding the bankruptcy estate and operating the business for the benefit of its creditors and (if the value justifies) equity owners. In re CoServ, L.L.C., 273 B.R. 487, 497 (Bankr. N.D. Tex. 2002). Implicit in the duties of a chapter 11 debtor in possession is the duty to protect and preserve the estate, including an operating businesss going-concern value. Id. (emphasis added); In re Payless Cashways, Inc., 268 B.R. 543, 547 (Bankr. W.D. Mo. 2001)(the granting of preferential treatment to some creditors is a better result than closing the business.); In re Eagle-Picher Indus., Inc., 124 B.R. 1021, 1023 (Bankr. S.D. Ohio 1991) (payment of a prepetition unsecured creditor is justified when necessary to avert a serious threat to the Chapter 11 process). Section 1112 of the Bankruptcy Code highlights the importance of continued maintenance of insurance coverage by the estate by providing that failure to maintain appropriate insurance that poses a risk to the estate or to the public, is cause for mandatory conversion or dismissal of a chapter 11 case. See, e.g., In re Van Eck, 425 B.R. 54, 61 (Bankr. D. Conn. March 16, 2010); In re Campbell-Erskine Apothecary, Inc., 302 B.R. 169, 171-72 (Bankr. W.D. Penn. 2003). 26. Courts have noted that there are instances in which a debtor in possession can

fulfill its fiduciary duty only . . . by the preplan satisfaction of a prepetition claim. In re CoServ, L.L.C., 273 B.R. at 497. The CoServ court specifically noted that preplan satisfaction of prepetition claims would be a valid exercise of a debtors fiduciary duty when the payment is the only means to effect a substantial enhancement of the estate. Id. at 498. The court provided a three-pronged test for determining whether a preplan payment on account of a prepetition claim was a valid exercise of a debtors 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 . . . which is disproportionate to the amount of the claimant's prepetition claim. Third, there is

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no practical or legal alternative by which the debtor can deal with the claimant other than by payment of the claim. Id. at 498; In re United Am. Inc., 327 B.R. 776, 782 (Bankr. E.D. Va. 2005) (summarizing the three-part test established in Coserv); In re CEI Roofing, Inc., 315 B.R. 50, 56- 57 (Bankr. N.D. Tex. 2004). 27. Payment of the prepetition amounts due under the Agreements meets each

element of the CoServ courts standard. Failure to maintain current insurance coverage would undoubtedly subject the Debtors to the probability of harm stemming from potential claims that otherwise may have been covered. To avoid that unnecessary and dangerous risk of doing business without coverage, the Debtors must make the necessary payments under the Agreements to keep their insurance policies in place. There is no practical or legal alternative by which the Debtors can deal with these claims other than by payment. Therefore, the Debtors can only meet their fiduciary duties as a debtor-in-possession under sections 1107(a) and 1108 of the Bankruptcy Code through payment of the prepetition amounts due under the Agreements and continued maintenance of the Policies. 28. Moreover, the relief requested in this Motion, under the circumstances present in

these Chapter 11 Cases, is not unusual and has been approved by courts in this district on numerous occasions. See, e.g., In re Harry & David Holdings Inc., Case No. 11-10884 (MFW) (Bankr. D. Del. March 29, 2011); In re Appleseeds Intermediate Holdings LLC, Case No. 1110160 (KG) (Bankr. D. Del. Feb. 18, 2011); In re Constar International Inc., Case No. 11-10109 (CSS) (Bankr. D. Del. Jan. 13, 2011) (same); In re Tribune Co., Case No. 08-13141 (KJC) (Bankr. D. Del. Dec. 8, 2008); In re Moll Industries, Inc., Case No. 10-11371 (BLS) (Bankr. D. Del. April 29, 2010).

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29.

In view of the importance of maintaining the insurance coverage with respect to

their business activities and the preservation of the Debtors cash flow and estates by financing the insurance premiums, the Debtors believe it is in the best interest of creditors in these Chapter 11 Cases to authorize the Debtors to honor these obligations. Any other alternative would likely require considerable cash expenditures and would be detrimental to the Debtors Chapter 11 efforts. Finally, if the Debtors fail to make the payments due under the Agreements and the Financed Policies are cancelled as a result, the Debtors may be exposed to immediate and significant risk. B. The Court Should Authorize the Debtors to Enter Into New Premium Finance Agreements Post-petition in the Ordinary Course of Business. 30. The Court should also authorize the Debtors to enter into new premium finance

agreements post-petition in the ordinary course of business. Section 363(c)(1) of the Bankruptcy Code provides that the trustee [or a debtor in possession] may enter into transactions, including the sale or lease of property of the estate, in the ordinary course of business, without notice or a hearing, and may use property of the estate in the ordinary course of business without notice or a hearing. 11 U.S.C. 363(c)(1). Section 363(b)(1) of the Bankruptcy Code provides that, [t]he trustee [or debtor in possession], 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). 31. The Debtors believe that the renewal of the Policies and/or the Agreements and/or

the execution of new premium finance agreements constitute transactions in the ordinary course of business, within the meaning of section 363(c)(1) of the Bankruptcy Code, that do not require prior bankruptcy court approval. 32. Neither the Bankruptcy Code nor its legislative history provide a framework for

analyzing whether a transaction is in the ordinary course of business. The Third Circuit,

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however, has developed a two-part inquiry, including a horizontal dimension test and a vertical dimension test, for determining whether a transaction is in the ordinary course of business under section 363(c)(1). See In re Roth American, Inc., 975 F.2d 949, 952 (3d Cir. 1992); see, e.g., In re Nellson Nutraceutical, Inc., 369 B.R. 787, 791 (Bankr. D. Del. May 24, 2007); Braunstein v. McCabe, 571 F. 3d 108, 124-25 (1st Cir. 2009). The horizontal dimension test focuses on whether, from an industry wide perspective, the transaction is of the sort commonly undertaken by companies in that industry. In re Roth American, Inc., 975 F.2d 202 at 953. The vertical dimension test (or creditors expectation test) focuses on the vantage point of a hypothetical creditor and inquires whether the transaction subjects the creditor to economic risk of a nature different from those the creditor accepted when it decided to extend credit to the debtor. Id. 33. The Debtors believe that the renewal of the Policies and/or the Agreements and/or

the execution of new premium finance agreements satisfies the horizontal dimension test because maintaining insurance coverage is a common industry practice. Drabkin v. A.I. Credit Corp., 800 F.2d 1153, 1154 (Fed. Cir. 1986) (Such a premium financing agreement is a common commercial arrangement.). The vertical dimension test is also satisfied because the Debtors maintenance of insurance under premium finance agreements does not subject the Debtors creditors to any economic risk, but rather, serves to protect the Debtors creditors from economic risk. Accordingly, the renewal of the Policies and/or the Agreements and/or the execution of new premium finance agreements constitute ordinary course uses of estate property under Section 363(c)(1) of the Bankruptcy Code. See In re Roth American, 975 F.2d at 952 n.4 (citing U.S. v. Estate of Deutscher, 115 B.R. 592, 598-99 (M.D. Tenn. 1990), for the

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proposition that trustees use of fund to . . . reinstate insurance was in ordinary course of business). 34. Indeed, the Debtors submit that it may be outside the ordinary course of business

for them to fail to renew the Policies or the Agreements or enter into new premium finance agreements to obtain insurance coverage. See In re Lavigne, 114 F.3d 379, 383-84 (2d Cir. 1994) (cancellation of insurance policy was not in the ordinary course of business). Nevertheless, out of an abundance of caution, the Debtors have filed this Motion seeking entry of an order, to the extent necessary, approving, under section 363 of the Bankruptcy Code, the Debtors post-petition renewal of the Policies and/or the Agreements and/or the execution of new premium finance agreements. 35. This Court may also authorize the Debtors to enter into new premium finance

agreements pursuant to section 364(c)(2) of the Bankruptcy Code. Section 364(c)(2) authorizes, after notice and a hearing, a debtor in possession to obtain debt secured by a lien on property of the estate. See 11 U.S.C. 364(c)(2). Under any new premium finance agreement, the counterparty would likely require that the Debtors grant a security interest in the unearned premiums under the financed policies. See generally In re Schwinn Bicycle Co., 200 B.R. 980, 982 (Bankr. N.D. III. 1996) (describing insurance premium financing agreements). 36. Section 364(c) authorizes a debtor, in the exercise of its business judgment, to

incur secured debt if the debtor has been unable to obtain unsecured credit and the borrowing is in the best interests of the estates. See, e.g., In re General Growth Properties, Inc., 412 B.R. 122, 125-26 (Bankr. S.D.N.Y., May 14, 2009) (granting motion for post-petition financing upon finding that a) no comparable credit [was] available on more favorable terms; b) that the debtors needed post-petition financing to to preserve [their] assets and continue their operations;

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and c) that the terms and conditions of the DIP Documents had been negotiated in good faith); In re Budget Group, Inc., Case No. 02-12152, 2002 Bankr. LEXIS 1050 (Bankr. D. Del. Aug, 1, 2002) (authorizing funding of acquisition of property on a secured basis where acquired property was necessary to maintain operations and debtor could not obtain such funding on an unsecured basis); In re Ames Dept. Stores, 115 B.R. 34, 38 (Bankr. S.D.N.Y. 1990) (with respect to postpetition credit, courts permit debtors-in-possession to exercise their basic business judgment consistent with their fiduciary duties). Because a borrowing to maintain essential insurance coverage is in the best interests of the Debtors estates, the Court should authorize the Debtors to renew the Policies and/or the Agreements and/or the execute new premium finance agreements post-petition. C. The Court Should Authorize The Debtors Banks And Financial Institutions To Process And Honor Related Payments 37. The Debtors also request that the Court authorize the Debtors banks and financial

institutions, 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 all pre-petition obligations under the Agreements and Policies. The Debtors further request that all such banks and financial institutions be authorized to rely on the Debtors designation of any particular check or electronic payment request as approved pursuant to this Motion. Request For Immediate Relief and Waiver of Stay to Avoid Immediate and Irreparable Harm 38. 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 16
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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. 39. 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. 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 40. 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 41. 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

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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 42. other court. Remainder of page intentionally left blank No prior application for the relief requested herein has been made to this or any

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WHEREFORE, the Debtors respectfully request that the Court enter an order, in the form attached hereto as Exhibit C, granting the relief requested herein and such other and further relief 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 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 Callenders Inc., et al. Debtors and Debtors-in-Possession

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EXHIBIT A

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EXHIBIT B

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EXHIBIT C

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: PERKINS & MARIE CALLENDERS INC.,1 et al., Debtors. Ref. Docket No. _____ ORDER PURSUANT TO 11 U.S.C. 105(a), 363, 364, 1107(a) AND 1108 (I) AUTHORIZING THE DEBTORS TO (A) CONTINUE PRE-PETITION INSURANCE COVERAGE AND ENTER INTO NEW INSURANCE POLICIES AND (B) MAINTAIN PRE-PETITION PREMIUM FINANCING AGREEMENTS AND ENTER INTO NEW POST-PETITION PREMIUM FINANCING AGREEMENTS AND (II) AUTHORIZING AND DIRECTING THE DEBTORS' BANKS AND OTHER FINANCIAL INSTITUTIONS TO PROCESS, HONOR AND PAY CERTAIN CHECKS AND FUND TRANSFER REQUESTS Upon the Debtors Motion for Order Pursuant to 11 U.S.C. 105(a), 363, 364, 1107(a) and 1108 (I) Authorizing the Debtors to (A) Continue Pre-Petition Insurance Coverage and Enter Into New Insurance Policies and (B) Maintain Pre-Petition Premium Financing Agreements and Enter Into New Post-Petition Premium Financing Agreements and (II) Authorizing and Directing the Debtors Banks and Other Financing Institutions to Process, Honor and Pay Certain Checks and Fund Transfer Requests (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
The Debtors, together with the last four digits of each Debtors federal tax identification number, are: Perkins & Marie Callenders Inc. (4388); Perkins & Marie Callenders Holding Inc. (3999); Perkins & Marie Callenders 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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Chapter 11 Case No. 11-11795 (___) Jointly Administered

Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Motion.

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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 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: 1. 2. The Motion is granted. The Debtors are authorized, but not directed, in their sole discretion and in the

exercise of their business judgment, to honor the terms of their Agreements with AON Finance, including, without limitation, the payment of any pre-petition amounts outstanding under such agreements up to an aggregate amount of $145,000. 3. The Debtors are authorized, but not directed, in their sole discretion and in the

exercise of their business judgment, to pay, in the ordinary course of business, all pre-petition obligations as are necessary to maintain the Policies up to an aggregate amount of $150,000. 4. The Debtors are authorized, but not directed, in their sole discretion and in the

exercise of their business judgment (after the Debtors have provided five (5) business days notice to the Restructuring Support Parties), to renew the Policies and/or the Agreements and/or enter into new premium finance agreements in the ordinary course of business post-petition. 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 Agreements and the Policies, whether those

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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. 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. Notwithstanding any applicability of Bankruptcy Rule 6004(h), the terms and

conditions of this Order shall be immediately effective and enforceable upon its entry. 10. 11. The requirements set forth in Bankruptcy Rule 6003(b) are satisfied. 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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