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

,1 et al., Debtors. DEBTORS MOTION PURSUANT TO 11 U.S.C. 105(a) AND 503(b) FOR AN ORDER CONFIRMING GRANT OF ADMINISTRATIVE EXPENSE STATUS TO OBLIGATIONS ARISING FROM POST-PETITION DELIVERY OF GOODS OR DELIVERY OF SERVICES 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, file this motion (the Motion) pursuant to sections 105(a) and 503(b) of title 11 of the United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code), for an order confirming the grant of administrative expense status to undisputed obligations arising (a) from post-petition delivery of goods received and accepted by the Debtors or (b) from post-petition provision of services to the Debtors. In support of this Motion, the Debtors 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: Chapter 11 Case No. 11-11795 (___) Joint Administration Pending

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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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 chapter 11 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(a) and

503(b) 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 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

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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 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.* 9. $507 million. The Debtors revenues for the year ended December 26, 2010 were approximately

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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B.

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 outstanding, and approximately $10,060,000 in principal amount is outstanding under the Credit Facility (comprised solely of outstanding letters of credit).

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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. By this Motion, the Debtors seek entry of an order confirming that their suppliers

and vendors (collectively, the Vendors) will have administrative expense priority claims under section 503(b) of the Bankruptcy Code for undisputed obligations arising from pre-petition purchase orders outstanding as of the Petition Date (collectively, the Outstanding Orders) for

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(a) products and goods received and accepted by the Debtors on or subsequent to the Petition Date and (b) services provided to the Debtors on or subsequent to the Petition Date. Basis For Relief Requested 15. Section 105 of the Bankruptcy Code provides that the Court may issue any

order. . . that is necessary or appropriate to carry out the provisions of this title. 11 U.S.C. 105(a). 16. Under section 503(b)(1)(A) of the Bankruptcy Code, all obligations that arise in

connection with the post-petition delivery of goods or services to the Debtors are, by definition, administrative expenses. 17. In the ordinary course of the Debtors businesses, numerous Vendors provide the

Debtors with merchandise, equipment, supplies, products and related items (collectively, the Goods) or provide services (collectively, the Services) to the Debtors. The Goods include, but are not limited to, food and beverage products, condiments, linen and paper products, cooking and cleaning supplies, uniforms and other products necessary to the day-to-day operation of the Debtors restaurants, as well as equipment, office supplies, furniture, computer supplies and equipment, packaging products and other items used in the Debtors business operations. As of the Petition Date, certain of such Goods may be in transit to the Debtors facilities. Services include, without limitation, courier services, moving and transport services, maintenance services, and other services to maintain the Debtors retail and business operations. 18. On average, the Debtors restaurants submit purchase orders to distributors

through the internet at least two (2) times per week in the ordinary course of the Debtors businesses. These restaurants then enter the invoices received from the distributors and submit them to the Debtors corporate offices for payment. All other supplies, equipment and services

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not otherwise provided to the Debtors from the distributors are ordered through other suppliers directly through the internet or by phone. The restaurants similarly enter invoices when the product is received and transmit them to the Debtors corporate office for payment. Likewise, the Foxtail manufacturing facilities issue purchase orders to various suppliers and vendors for product. Product delivery to the Foxtail facilities can occur anywhere from approximately three (3) to thirty (30) days following the date the purchase order is issued. As a result of the filing of these Chapter 11 Cases, Vendors may be concerned that delivery or shipment of Goods or provision of Services to the Debtors on or after the Petition Date pursuant to Outstanding Orders will render such Vendors pre-petition unsecured creditors of the Debtors estates. 19. Accordingly, Vendors may decline to ship, or may instruct their shippers not to

deliver, Goods destined for the Debtors or refuse to provide Services unless the Debtors issue substitute post-petition purchase orders. Alternatively, Vendors may require that the Debtors obtain an order of this Court confirming that all obligations of the Debtors arising from Outstanding Orders, delivery of which occurs post-petition, are to be granted administrative expense status under section 503(b)(1)(A) of the Bankruptcy Code. Reissuing thousands of purchase orders would require a significant investment of the Debtors time, energy and resources and would divert the attention of a significant number of critical employees from the Debtors reorganization efforts. Additionally, the potential delay in receiving Goods that would be caused by having to reissue purchase orders could significantly disrupt the Debtors business operations, which depend on the timely delivery of the Goods and Services, and hamper the Debtors reorganization efforts. 20. Although the Debtors believe that they have the authority to make payment for

Goods and Services received post-petition (irrespective of the time the purchase orders were first

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placed), confirmation of that authority is, in the Debtors view, highly desirable. The Debtors relationships with their Vendors are important and it is therefore critical to reassure Vendors that their valid claims will be given administrative expense priority status, and that they will be paid by the Debtors in the ordinary course of business for Goods delivered and Services provided to the Debtors post-petition. 21. The Debtors believe that the relief requested herein will ensure the continuous

supply of Goods and provision of Services to the Debtors that are vital to the Debtors continuous operations and integral to maximizing value in these cases. 22. Courts in this jurisdiction have previously issued orders confirming the grant of

administrative priority status to goods delivered and serviced provided to debtors post-petition in larger chapter 11 cases. See, e.g., In re Harry & David Holdings Inc., Case No. 11-10884 (MFW) (Bankr. D. Del. March 29, 2011) (authorizing, among other things, administrative expense priority status for postpetition deliveries of suppliers and vendors and the payment of undisputed obligations arising therefrom in the ordinary course of business); In re Appleseeds Intermediate Holdings LLC, Case No. 11-10160 (KG) (Bankr. D. Del. Jan. 20, 2011) (same); In re The Fairchild Corp., Case No. 09-10899 (CSS) (Bankr. D. Del. March 20, 2009) (same). Request For Immediate Relief and Waiver of Stay to Avoid Immediate and Irreparable Harm 23. 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. 8
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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. 24. 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 25. 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 26. 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.

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No Prior Request 27. other court. WHEREFORE, the Debtors respectfully request that the Court enter an order, in the form attached hereto as Exhibit A, 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 (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 Callenders Inc., et al. Debtors and Debtors-in-Possession No prior application for the relief requested herein has been made to this or any

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EXHIBIT A

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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) AND 503(b) CONFIRMING GRANT OF ADMINISTRATIVE EXPENSE STATUS TO OBLIGATIONS ARISING FROM POST-PETITION DELIVERY OF GOODS OR DELIVERY OF SERVICES Upon consideration of the Debtors Motion Pursuant to 11 U.S.C. 105(a) and 503(b) for an Order Confirming Grant of Administrative Expense Status to Obligations Arising from Post-Petition Delivery of Goods or Delivery of Services,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 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, good and sufficient cause exists for the relief requested. Accordingly, it is hereby, ORDERED, ADJUDGED AND DECREED that: 1. The Motion is granted. Chapter 11 Case No. 11-11795 (___) Jointly Administered

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.
2

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

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2.

The Court hereby confirms that the Vendors shall have administrative expense

claims under section 503(b) of the Bankruptcy Code (afforded priority pursuant to section 507(a)(2) of the Bankruptcy Code) for those undisputed obligations arising from Outstanding Orders relating to shipments of merchandise, equipment, supplies, products and related items, including, without limitation, food and beverage products, condiments, linen and paper products, cooking and cleaning supplies, and other products necessary to the day-to-day operation of the Debtors businesses and restaurants, as well as equipment, office supplies, furniture, computer supplies and equipment, packaging products and other items used in the Debtors business operations (collectively, the Goods) or provision of courier services, moving and transport services, maintenance services, and other services to maintain the Debtors retail and business operations (collectively, the Services) received and accepted by the Debtors on or after the Petition Date. 3. The Debtors are authorized, but not directed, in their sole discretion, to pay their

undisputed obligations arising from the post-petition shipment or delivery of Goods (including, without limitation, any Goods in transit on or after the Petition Date) or post-petition provision of Services to the Debtors by the Vendors and acceptance thereof by the Debtors, pursuant to their customary practices in the ordinary course of the Debtors business prior to the commencement of these Chapter 11 Cases. 4. Nothing in the Motion or this Order, nor the Debtors payment of any amounts

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.

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5.

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. 6. The Debtors are authorized to take or refrain from taking such acts as are

necessary and appropriate to implement and effectuate the relief granted herein. 7. Notwithstanding any applicability of Bankruptcy Rule 6004(h), the terms and

conditions of this Order shall be immediately effective and enforceable upon its entry. 8. 9. The requirements set forth in Bankruptcy Rule 6003(b) are satisfied. This Court shall retain jurisdiction with respect to all matters arising from or

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

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