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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

LEE R. BOGDANOFF (State Bar No. 119542) JONATHAN S. SHENSON (State Bar No. 184250) DAVID M. GUESS (State Bar No. 238241) KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 Avenue of the Stars, 39th Floor Los Angeles, CA 90067 Telephone: (310) 407-4000 Facsimile: (310) 407-9090 Proposed Bankruptcy Counsel for Debtors and Debtors In Possession Debtors' Mailing Address 3411 N. Perris Blvd. Perris, CA 92571 National R.V. Holdings, Inc.'s Tax I.D. #XX-XXX-1079 National R.V., Inc.'s Tax I.D. #XX-XXX-5022

UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA RIVERSIDE DIVISION In re NATIONAL R.V. HOLDINGS, INC., a Delaware corporation; NATIONAL R.V., INC., a California corporation, Debtors. Case No.: 6:07-17941-PC Chapter 11 Jointly Administered with Case No.: 6:07-17937-PC OPPOSITION TO FRITTS FORD'S MOTION FOR RELIEF FROM THE AUTOMATIC STAY UNDER 11 U.S.C. 362; DECLARATIONS OF DAVID M. GUESS AND THOMAS J. MARTINI IN SUPPORT THEREOF Date: Time: Place: Hearing January 10, 2008 9:30 a.m. Courtroom 303 U.S. Bankruptcy Court 3420 Twelfth Street Riverside, CA 92501

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101406.1

Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

National R.V. Holdings, Inc. and National R.V., Inc., the debtors and debtors in possession in the above-captioned cases (the "Debtors"), respectfully oppose the Motion for Relief from the Automatic Stay Under 11 U.S.C. 362 [Docket No. 59] (the "Motion") filed by Fritts Ford with respect to "19 Ford Motorhome Stripped (bare) Chassis." As Fritts Ford has provided insufficient evidence in support of the relief requested therein and as there is a question as to whether Fritts Ford can be legally entitled to any relief in general, the Debtors oppose the Motion. The Debtors, moreover, believe that such relief is premature at this time. This Opposition is supported by these papers, the accompanying Declaration of David M. Guess (the "Guess Declaration"), the accompanying Declaration of Thomas J. Martini (the "Martini Declaration"), the Evidentiary Objections to Declaration of Duane Pratt in Support of Fritts Ford's Motion for Relief from the Automatic Stay Under 11 U.S.C. 362 (the "Evidentiary Objections"), filed concurrently herewith, the previously filed Declaration of Thomas J. Martini In Support of First-Day Motions [Docket No. 18], the record in these cases, including the pleadings and documents filed on behalf of the parties, the arguments and representations of counsel, and any oral or documentary evidence presented at or prior to the time of the hearing. I. INTRODUCTION Fritts Ford alleges that it both owns the "19 Ford Motorhome Stripped (bare) Chassis" (the "Chassis") and holds a security interest in the Chassis, and that these interests in the Chassis are not adequately protected. However, the evidence does not support these contentions. Fritts Ford fails to establish that it, in fact, "owns" the Chassis. Not only has Fritts Ford failed to

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demonstrate that it holds a valid and enforceable, security interest in the Chassis, having failed to produce an authenticated security agreement as required by the California Commercial Code, but also Fritts Ford simply did not perfect any such alleged security interest in the Chassis, and any security interest it does have is therefore avoidable. Thus, Fritts Ford is an unsecured creditor. As Fritts Ford appears to be an unsecured creditor, until it becomes clearer what the likely liquidation values of these estates are, it would be premature to release the Chassis to Fritts Ford at this time. While ultimately it may make economic sense to return the Chassis in exchange for
101406.1

Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

a dollar-for-dollar reduction of Fritts Ford's claims (or, alternatively, to sell the Chassis back to Fritts Ford), that will not be known until it becomes clearer what an unsecured claim is worth. As shown below, even if Fritts Ford could establish that it holds a perfected interest in the Chassis, it has failed to establish cause for relief from stay. II. FACTUAL BACKGROUND The Debtors commenced these cases by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code on November 30, 2007 (the "Petition Date"). The objective of these cases is to maximize the value of the estates as quickly as possible. This likely will be accomplished through an orderly disposition of the Debtors' assets for the best price. The Debtors believe that value for the benefit of creditors and, with perseverance, shareholders, can be derived from primarily three sources: (a) the successful prosecution of the Kemlite Litigation; (b) the orderly sale of inventory, both finished and unfinished motor homes, parts and replacements, and other valuable items on hand; and (c) the collection of accounts receivable, general intangibles (including intellectual property) and other assets. Prepetition, the Debtors manufactured and sold recreational vehicles ("RV's"). Numerous purveyors supplied goods to the Debtors to enable the Debtors to manufacture and sell their RVs. The raw inventory ordered by and supplied to the Debtors, including chassis, was held for sale pending the use of those materials in the manufacturing process. Before the filing, and during the brief period since these cases were commenced, the Debtors' efforts have been directed toward maximizing their recovery from these assets. In aid of this objective, the Debtors conducted a substantial reduction in force prepetition, but retained a skeletal staff comprised of key employees, many of whom have important relationships with dealers and their flooring lenders, vendors, and customers. These relationships should prove to be invaluable to the Debtors as they proceed with an orderly disposition of their assets. Specific work teams already have been organized to coordinate the liquidation efforts, to work with dealers, and to address customer concerns.

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101406.1

Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

III. LEGAL ARGUMENT A. As Fritts Ford Is an Unsecured Creditor, the Motion Should be Denied.

Fritts Ford alleges that it holds both a "valid security and ownership interest" in the Chassis. As shown below, this contention is incorrect. 1. Fritts Ford Has Retained (At Most) a Security Interest.

Fritts Ford premises its assertions of ownership of the Chassis on its being named with the Debtors on the Certificates of Origin for a Vehicle, all of which are attached as Exhibit A to the Motion. As a preliminary matter, Fritts Ford cites no legal authority for the proposition that the documents it has supplied are title documents, and does not adequately explain anywhere in the Motion what these documents, in fact, are. Although the accompanying Declaration of Duane Pratt in Support of Fritts Ford's Motion for Relief from the Automatic Stay Under 11 U.S.C. 362 (the "Pratt Declaration") attempts to bridge this gap, this section of the Pratt Declaration is objectionable for the reasons stated in the Evidentiary Objections. The failure of Fritts Ford to bridge this legal gap is in and of itself a sufficient reason to deny the Motion. That said, even accepting that the Certificates of Origin for a Vehicle are, in fact, "title" documents, the Motion still should be denied. As a starting point, Fritts Ford acknowledges in its own Motion that its relationship with the Debtors is one of vendor and "[v]endee." See Personal Property Declaration, 5.d. As such, the subject sales transactions are governed by California's version of Article 2 of the Uniform Commercial Code. See Cal. Comm. Code 2101-2801. See Cal. Comm. Code 2102 ("Unless the context otherwise requires, this division applies to transactions in goods . . . .").1 California Commercial Code section 2401(1) provides that "[a]ny retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest. Subject to these provisions and to the provisions of the division on secured transactions (Division 9), title

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"Goods" are defined as all things which are movable under both California's version of Article 2 (movable at the time of identification to the contract for sale) and California's version of Article 9 (movable when the security interest attaches). See Cal. Comm. Code 2105(1) & 9101(a)(44).

101406.1

Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties." As such, even if the Certificates of Origin for a Vehicle are "title" documents, the effect of Fritts Ford's retention of these documents is merely the reservation of a security interest that is subject to Article 9. "A reservation of title by the seller is to be regarded as reservation of a security interest." In re Telemart, 524 F.2d 761, 765 (9th Cir. 1975).2 Numerous courts across the country, applying identically worded statutes, have held that a chassis vendor that retains a "title" document does not, in fact, retain title. See, e.g., Barber v. Riverside Int'l Trucks (In re Pearson Indus., Inc.), 142 B.R. 831 (Bankr. C.D. Ill. 1992), (holding that a supplier of bare truck chassis that the debtor modified to equip for fertilizer application or sludge removal did not retain title); Continental Fire Trucks, Inc. v. John Grappone, Inc. (In re Continental Fire Trucks, Inc.), 33 B.R. 713 (Bankr. D. Mass. 1983) (holding, in case where buyer modified chassis to become fire trucks, that "despite the explicit agreement between the parties that Grappone would retain the certificate of origin, this does not prevent title from passing from the seller Grappone to the buyer Continental"). Based upon the preceding, at best, the most Fritts Ford holds is a security interest in the Chassis. 2. Fritts Ford's Security Interest Appears To Be Unenforceable.

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The validity, enforceability and priority of Fritts Ford's security interest is governed by

Although title generally "passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place," see Cal. Comm. Code 2401(2), the parties can explicitly agree that title shall pass at a time other than the moment the seller completes the physical delivery (e.g., any moment the parties select in between identification of the goods and the completion of the physical delivery). This provision does not change the basic fact that all Fritts Ford retains is a security interest. This is because, as California Commercial Code sections 2401(1) and 2401(2) "are part of the same section, they must be read together. The text of subsection (1) limits a seller's ability to retain title after the goods have been delivered to the buyer . . . . In contrast, the text of subsection (2) makes clear that, in those cases where the seller agrees to deliver the goods to the buyer, the buyer does not obtain title until such time as the goods are delivered to the buyer . . . ." Italverde Trading, Inc. v. Four Bills of Lading, 485 F. Supp. 2d 187, 1998 (E.D.N.Y. 2007). Reading California Commercial Code sections 2401(1) and 2401(2) harmoniously, although the parties may agree that title passes before the completion of physical delivery, upon delivery, the retention of a "title" document amounts solely to the retention of a security interest.

101406.1

Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

California's version of Article 9 of the Uniform Commercial Code. See Cal. Comm. Code 9101-9709. "Except as otherwise provided in subdivisions (c) and (d), this division applies to each of the following: . . . A security interest arising under Section 2401 . . . ." Cal. Comm. Code 9109(a)(5); see also Cal. Comm. Code. 9101(a)(72) (defining "secured party" to include, inter alia, "[a] person that holds a security interest arising under Section 2401"). In order to hold an enforceable security interest, Fritts Ford must have complied with all applicable Article 9 provision governing the enforceability of security interests, namely California Commercial Code section 9203. This section provides, in pertinent part, that "a security interest is enforceable against the debtor and third parties with respect to the collateral only if each of the following conditions is satisfied: (1) Value has been given[;] (2) The debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party[;] (3) . . . The debtor has authenticated a security agreement that provides a description of the collateral . . . " While the Debtors do not presently dispute over whether the first two prongs of this provision have been met, there is a serious question as to whether the Debtors ever authenticated a security agreement with Fritts Ford. Fritts Ford certainly has not attached evidence of such an agreement to the Motion, even though prompted to do so in paragraph 7 of the Motion. The Debtors can only surmise that no such security agreement exists. If that is the case, then Fritts Ford does not have an enforceable security interest. See Pearson, 142 B.R. at 839 (noting that chassis vendor was not a secured creditor where the debtor was in possession of the chassis and there was no written security agreement). Thus, Fritts Ford is would not be entitled to adequate protection pursuant to Bankruptcy Code section 362(d)(1). In any event, there is insufficient evidence to grant the Motion until such a security agreement is put into evidence. As such, there can be no "cause" to grant Fritts Ford's motion for relief from the automatic stay at this time. The Motion therefore should be denied without prejudice. 3. Fritts Ford's Security Interest Appears To Be Unperfected.

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Even if it is assumed that there is an authenticated security agreement between Fritts Ford and the Debtors, in order to hold a perfected security interest under Article 9, absent some specific exception, Fritts Ford would have had to have filed a UCC.-1 financing statement with
101406.1

Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

the secretary of state. See Cal. Comm. Code 9310(a) ("Except as otherwise provided in subdivision (b) and in subdivision (b) of Section 9312, a financing statement must be filed to perfect all security interests and agricultural liens."). The Debtors have searched for UCC-1. financing statements that have been filed against them in both California and Delaware. The UCC-1 financing statements that the Debtors have discovered through these searches are attached to the Guess Declaration as Exhibits A and B. It is worth noting that although the Debtors have found UCC-1 financing statements that have been filed by certain chassis vendors, namely Freightliner Custom Chassis Corporation ("Freightliner") and Spartan Motors Chassis, Inc. ("Spartan"),3 the Debtors have been unable to find any UCC-1 financing statements filed by Fritts Ford. As no such UCC-1 financing statements were attached to the Motion, the Debtors can only surmise that no such UCC-1 financing statements exist. Absent some exception, therefore, Fritts Ford's security interest (if any) would be an unperfected security interest. As unperfected security interests are avoidable pursuant to Bankruptcy Coded section 544(b)(1), Fritts Ford would hold (and, in fact, likely does hold) merely a general unsecured claim. Fritts Ford may contend that it is not required to file a UCC-1 financing statement pursuant to California Commercial Code section 9310(b)(3), which provides, in pertinent part, that "[t]he filing of a financing statement is not necessary to perfect a security interest that . . . is a security interest in property subject to a statute, regulation, or treaty described in subdivision (a) of Section 9311." Specifically, California Commercial Code section 9311(a)(2), provides, in pertinent part, that "[e]xcept as otherwise provided in subdivision (d), the filing of a financing statement is not necessary or effective to perfect a security interest in property subject" to certain provisions of the California Vehicle Code and the California Health and Safety Code. Without acknowledging that these provisions apply to the instant facts or not, it is enough to say that Fritts Ford was nonetheless required to file a UCC-1 financing statement because the exception stated in subsection (d) to Section 9311 dictates that result. Under subjection (d), "[d]uring any

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28

The fact that Freightliner and Spartan knew that they were required under California to file UCC-1 financing statements only serves to make Fritts Ford's error more apparent and unfortunate.

101406.1

Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

period in which collateral subject to a statute specified in paragraph (2) of subdivision (a) is inventory held for sale or lease by a person or leased by that person as lessor and that person is in the business of selling goods of that kind, this section does not apply to a security interest in that collateral created by that person." Cal. Comm. Code 9311(d). In other words, subsection (d) provides that where the subject goods are inventory held for sale by a person that is in the business of selling goods of that kind, the ordinary filing requirements specified in the balance of Article 9 govern perfection of those interests. It is, in effect, an exception to the exception. "Inventory" is a defined under the California Commerical Code to include "goods, other than farm products, which are . . . [h]eld by a person for sale . . . [or] [c]onsist of raw materials, work in process, or materials used or consumed in a business." Cal. Comm. Code 9101(a)(48) (emphasis added). The Chassis clearly are the raw materials which the Debtors use to

manufacture and sell RVs. The Chassis can be considered "materials used or consumed in a business," or, to the extent they have been built upon, the Chassis would become "work in progress." In any event, the Chassis plainly constitute inventory "[h]eld by [the Debtors] for sale." As noted above, all of the inventory received by the Debtors is used to manufacture the RVs sold in the ordinary course of the Debtors' business; by definition, therefore, all such inventory is held for sale. As such, to obtain a perfected security interest in this inventory, Fritts Ford had to file a UCC-1 financing statement It didn't. To date, the only significant creditors who appear to have filed such financing statements are Wells Fargo, Freightliner and Spartan. Simon v. Chrysler Credit Corp. (In re Babaeian Transp. Co.), 206 B.R. 536 (Bankr. C.D. Cal. 1997) involved a dispute under the prior version of the Uniform Commercial Code over whether a creditor was required to file a UCC-1 financing statement to perfect its security interest in the Debtors' taxis, or whether being named on the "pink slips" was enough. Judge Bufford analyzed the relevant provisions of the California Commercial Code, and determined that because the taxis were "inventory," a UCC-1 financing statement was required to be filed in order to perfect a security interest in the taxis. As no such UCC-1 financing statement was filed, Judge Bufford held that the creditor in that case merely held an unperfected security interest. Fritts Ford's position can effectively be summed up by reference to California
101406.1

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Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

Commercial Code section 9310, which provides, in pertinent part, that "[a] security interest arising under Section 2401 . . . is subject to [Article 9]. However, until the debtor obtains possession of the goods, all of the following apply: (1) The security interest is enforceable, even if paragraph (3) of subdivision (b) of Section 9203 has not been satisfied . . . [and] (2) Filing is not required to perfect the security interest . . . ." Cal. Comm. Code 9310 (emphasis added). Here, it is undisputed that the Debtors have obtained possession of the goods that is the whole point of the Motion. As such, section 9310 can only mean that an authenticated security agreement is necessary to create an enforceable security interest, and that the filing of a UCC-1 financing statement is necessary to perfect that security interest. So far as the Debtors can tell, there is no authenticated security agreement and a UCC-1 financing statement has not been filed. 4. No Final Determination With Respect to Fritts Ford's Interests.

The Debtors wish to make absolutely clear that by this Opposition they are not seeking a final determination that Fritts Ford is, in fact, an unsecured creditor. That sort of relief can only be granted by way of an adversary proceeding pursuant to Rule 7001(2) of the Federal Rules of Bankruptcy Procedure. Rather, the Debtors merely wish to preview for the Court why they believe granting the Motion is inappropriate. The Debtors' approach, in this respect, is entirely appropriate. "The statutory requirement of a prompt adjudication of all lift stay motions is premised upon the congressional understanding that the rights of creditors may be materially diminished if the automatic stay remains in place for an extended period of time . . . . Given the need for summary treatment of lift stay motions, when a party opposes a motion of a creditor to terminate the stay and raises affirmative defenses to the validity of the claim itself, it may often be proper to require that the objector come forward during the left stay hearing simply with sufficient evidence to demonstrate that there is a reasonable probability that the objector would prevail in the later litigation which can completely determine those challenges to the claim." In re Nuclear Imaging Sys., Inc., 260 B.R. 724 (Bankr. E.D. Pa. 2000) (citing cases). "While the terms of 11 U.S.C. Section 362 suggest that the only issues to be litigated are adequate protection, equity, and necessity to an effective reorganization, some proof of the existence and amount of a debt must necessarily be an element of the equity analysis. I seriously question
101406.1

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Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

whether this court can make a final determination that the lien or the underlying debt is invalid outside the context of an adversary proceeding (with the procedural due-process built into those proceedings) or without the benefit of a final judgment rendered in another forum. Nevertheless, when presented with evidence in defense of a motion for relief that strongly supports an inference that the lien might be held invalid in such a proceeding, the court would be compelled to deny the motion and leave the stay in effect for a sufficient time to allow the debtor to pursue other litigation." Bargas v. Rice (In re Rice), 82 B.R. 623, 626 (Bankr. S.D. Ga. 1987). The Debtors anticipate that, to the extent necessary, they will file an adversary proceeding against Fritts Ford for a determination that Fritts Ford is an unsecured creditor. That said, the Debtors believe that it would be a waste of judicial resources if they were required to file and prosecute an adversary proceeding at this juncture merely to defend against a motion for relief from the automatic stay. Rather, the Debtors request that they first be given time to determine whether there is a sensible economic resolution to these disputes. B. Fritts Ford Has Failed to Show That It Is Not Adequately Protected.

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Fritts Ford makes essentially three arguments as to why its interests are not adequately protected and, as such, why relief from the automatic stay should be granted pursuant to Bankruptcy Code section 362(d)(1): (a) that its interest in the Chassis is not protected by an adequate equity cushion; (b) that the fair market value of the Chassis is declining and payments are not being made to Fritts Ford that are sufficient to protect its interest against that decline; and (c) that no proof of insurance with respect to the Chassis has been provided to Fritts Ford, despite the Debtors obligation to insure the collateral under the terms of Fritts Ford's contract with the Debtors. All three arguments are without merit. Accordingly, even if Fritts Ford were a secured creditor, it would not be entitled to relief from stay. 1. Equity Cushion.

Pursuant to Bankruptcy Code section 362(g), Fritts Ford has the "burden of proof on the issue of the debtor's equity in property. Fritts Ford has failed to meet its burden. Firstly, Fritts Ford has not presented any admissible evidence with respect to the value of the Chassis. The statements relating to the fair market value of the Chassis in the Pratt Delcaration are
101406.1

Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

objectionable for the reasons stated in the Evidentiary Objections. The only evidence Fritts Ford has presented in this regard are certain invoices, which it has attached as Exhibit B to the Motion. It is worth noting that these invoices are not, in fact, invoices from Fritts Ford to the Debtors. Instead, they appear to be invoices from Ford Motor Company to Fritts Ford. As such, it is unclear what, if anything, these invoices should stand for. The invoices are arguably irrelevant. Even accepting that the invoices represent a starting point, however, it is unclear whether there were any prepayments, whether the invoices reflect any bulk discounts, or whether the value of Chassis has increased since they were purchased by Fritts Ford. As such, there is simply no evidence with respect to the value of the Chassis. Without evidence that Fritts Ford lacks a sufficient equity cushion, even if Fritts Ford were a secured creditor, it would not be entitled to relief from the automatic stay under Bankruptcy Code section 362(d)(1). 2. Decline in Fair Market Value.

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Fritts Ford next alleges that the value of the Chassis is declining because "Chassis stored outside and components subject to elements." The Debtors do not believe that Fritts Ford has presented any admissible evidence of this fact either, and have objected to this statement in the Platt Declaration in their Evidentiary Objections as well. Even if it were the case that the Chassis were stored outside, however, there is insufficient evidence that this is causing any decline in their fair market value. There is no reason to believe, and no evidence to the effect, that the value of whatever interest Fritts Ford has in the Chassis has declined. Without any evidence to the contrary, even if Fritts Ford were a secured creditor, it would not be entitled to relief from the automatic stay under Bankruptcy Code section 362(d)(1). 3. No Proof of Insurance.

Finally, Fritts Ford alleges that the Debtors have not provided it with evidence of insurance covering the Chassis despite the Debtors' alleged "obligation to insure the collateral under the terms of [Fritts Ford's] contract with Debtor(s)." The Debtors are unaware of any such contractual provision, and none was attached to the Motion. In any event, the Chassis are fully insured. The relevant insurance policy is attached as Exhibit A to the Martini Declaration. Given that the Chassis are insured, even if Fritts Ford were a secured creditor, it would not be
101406.1

Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

entitled to relief from the automatic stay under Bankruptcy Code section 362(d)(1). It is worth noting that Fritts Ford has not contacted the Debtors at any point since the Petition Date requesting evidence that the Chassis are insured or even to discuss whether insurance is in place. IV. CONCLUSION For all of the foregoing reasons, the Court should deny the Motion. If the Court

determines to continue the hearing on the Motion, the Debtors request that the Court continue this matter for thirty (30) days in order to provide the Debtors with sufficient time to better determine the liquidation values of these cases so that the Debtors have the ability to reach an economic resolution with Fritts Ford with a more complete set of facts at their disposal. DATED: December 27, 2007 /s/ David M. Guess DAVID M. GUESS, an Attorney with KLEE, TUCHIN, BOGDANOFF & STERN LLP Proposed Bankruptcy Counsel for Debtors and Debtors in Possession

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Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

DECLARATION OF DAVID M. GUESS 1. 2. I, David M. Guess, declare as follows: I am an attorney with the law firm of Klee, Tuchin, Bogdanoff & Stern LLP

("KTBS"), the proposed bankruptcy counsel for National R.V. Holdings, Inc. and National R.V., Inc., the debtors and debtors in possession in the above-captioned cases (the "Debtors"). 3. I am making this Declaration in support of the Opposition to Fritts Ford's Motion

for Relief from the Automatic Stay Under 11 U.S.C. 362. Except as otherwise stated herein, if called as a witness, I could and would competently testify to the matters set forth herein from my own personal knowledge. 4. On or about November 13, 2007, I submitted a request to Corp 2000, a service

provider that specializes in corporate and U.C.C. searches, to search for UCC-1 financing statements filed against the Debtors in the states of California and Delaware, their respective states of incorporation. The results of these searches are attached hereto as Exhibits A and B. 5. On or about the same date, I personally ran similar searches for UCC-1 financing

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statements through my law firm's Lexis account. I obtained substantially the same results through these searches as I had obtained through the searches that were done with Corp 2000. 6. Based on these searches, I determined that Wells Fargo Bank, N.A. ("Wells

Fargo"), Freightliner Custom Chassis Corp., Spartan Motor Chassis, Inc., and a handful of others, have filed UCC-1 financing statements against National R.V., Inc. I determined that Wells Fargo has also filed a UCC-1 financing statement against National R.V. Holdings, Inc. 7. I have not seen anything in the above-referenced search results or otherwise to

indicate that Fritts Ford has ever filed a UCC-1 financing statement against either of the Debtors. I declare under penalty of perjury that the foregoing is true and correct. Executed this 27th day of December at Los Angeles, California. /s/ David M. Guess DAVID M. GUESS

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Exhibit A

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

DECLARATION OF THOMAS J. MARTINI 1. 2. I, Thomas J. Martini, declare as follows: I am the Chief Financial Officer and Treasurer of National R.V. Holdings, Inc.

and National R.V., Inc., the debtors and debtors in possession in the above-captioned cases (the "Debtors"). 3. In these capacities, and in conjunction with the efforts of other members of the

Debtors' senior management, I am involved on a day-to-day basis with all aspects of the Debtors' affairs, including business operations, strategic planning, financial reporting, human resources, legal affairs and other management activities, including the Debtors' efforts to address their current financial difficulties. 4. As a consequence, I review and work extensively with the books and records of

the Debtors, including their business plans, financial statements and projections, business analyses and reports, contracts and other legal documents, notes and correspondence and the like. On a regular basis, I witness and/or participate in negotiations with lenders, vendors and other creditors of the Debtors, and have worked closely with personnel from all aspects of the Debtors' business operations. 5. I hold a B.S. in accounting from Pennsylvania State University. I am a certified

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public accountant and a member of the AICPA. I began working in the recreation vehicle industry nearly 30 years ago. From 1978 to 1984, I served as a controller for Coachmen Industries, Inc ("Coachmen"), which manufactures recreational vehicles ("RVs"), travel trailers, camping trailers, single family homes and multi-family residential structures, distributes to over 500 dealerships throughout the United States, and sells products directly from its companyowned dealership under such brand names as Coachmen, Georgie Boy, Sportscoach, Adrenaline, and Viking. From 1986 to 2001, I worked for Starcraft Industries, Inc. and Miller Building Systems, Inc. where I served as Chief Financial Officer for both companies. In 2001, I returned to Coachmen, where I assumed the role of Vice President and Treasurer. In 2004, I joined the Debtors as Treasurer and in 2005 I assumed the additional position of Chief Financial Officer.
101406.1

Opposition to Motion for Relief from Stay

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

6.

Based upon the foregoing, I have developed an intimate familiarity with: (a) the

Debtors' books and records, which are maintained in the ordinary course of business under my supervision and control as custodian (and under the control of other members of senior management), (b) the Debtors' business and financial history, and their current business and financial situation, and (c) the financial and operational details of the Debtors' business operations, and (d) the recreation vehicle industry generally. 7. I am making this Declaration in support of the Opposition to Fritts Ford's Motion

for Relief from the Automatic Stay Under 11 U.S.C. 362. Except as otherwise stated herein, if called as a witness, I could and would competently testify to the matters set forth herein from my own personal knowledge. 8. Prepetition, the Debtors manufactured and sold recreational vehicles ("RV's").

Numerous purveyors supplied goods to the Debtors to enable the Debtors to manufacture and distribute their RV's. The raw inventory ordered by and supplied to the Debtors, including chassis, was held for sale pending the use of those materials in the manufacturing process. 9. I am familiar with the "19 Ford Motorhome Stripped (bare) Chassis" (the

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"Chassis") that Fritts Ford refers to in its Motion for Relief from the Automatic Stay Under 11 U.S.C. 362 [Docket No. 59] (the "Motion"). In my opinion, they are in pristine condition and have not lost any of their value since we received them from Fritts Ford. 10. The Chassis are fully insured. Attached hereto as Exhibit A is the Debtors'

commercial property policy with Lumbermen's Underwriting Alliance, Policy No. 318997. This policy is effective through September 1, 2008. This policy fully covers the Chassis. I do not understand the contention that the Chassis are uninsured, and have only heard of this allegation in connection with the filing of the Motion. I am unaware of any contract with Fritts Ford that requires the Debtors to provide proof of insurance covering the Chassis, and Fritts Ford has not contacted me or, to the best of my knowledge anyone else working for the Debtors, requesting evidence of insurance or to discuss whether insurance is in place. 11. The invoices attached as Exhibit B to the Motion for Relief from the Automatic

Stay Under 11 U.S.C. 362 [Docket No. 59] do not appear to be invoices that were sent from
101406.1

Opposition to Motion for Relief from Stay

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