1 2 3 4 5 6 7 8 9 10 11 12

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 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 STATEMENT RE MOTION OF AD HOC COMMITTEE OF EQUITY HOLDERS FOR APPOINTMENT OF OFFICIAL COMMITTEE OF EQUITY HOLDERS Date: Time: Place: Hearing February 19, 2008 10:30 a.m. Courtroom 303 U.S. Bankruptcy Court 3420 Twelfth Street Riverside, CA 92501

13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
102537.1

1 2 3 4 5 6 7 8 9 10 11 12
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. ("NRVH") and National R.V., Inc. ("NRV"), the debtors and debtors in possession in the above-captioned cases (collectively, the "Debtors"), file this statement concerning the Motion of Ad Hoc Committee of Equity Holders for Appointment of Official Committee of Equity Holders [Docket #197] (the "Motion") filed by Ali M.M. Mojdehi of Baker & McKenzie on behalf of Milfam 2 LLC, Miller Irrevocable A-4, and Millennium Partners, L.P. 1 and respectfully state as follows:

Simply put, the Debtors' position is that the Motion should be continued for 30 days.2 As the Debtors have made clear, in past filings with the Court, whether equity is "in the money" will likely turn on whether (and to what extent) they are successful in the ongoing litigation against Crane Composites, Inc. and its parent company, Crane Co. (the "Kemlite Litigation"). In the next week or two, the litigation will go to a jury. Once the jury has rendered its verdict we should have more visibility on whether equity is "in the money" and, hence, whether the appointment of an official equity committee makes sense in these cases. Nothing precludes any shareholder (or ad hoc committee of shareholders) from raising or being heard on any issue in these cases (with their professionals also being compensated from the estates) should they prove to have provided a substantial contribution to the estates.3 Moreover, if and when it becomes clearer that equity is "in the money", the Court can then take up whether there should be an official committee of equity holders, where the only meaningful difference is that its professionals would then be entitled to seek allowance of fees under the

13 14 15 16 17 18 19 20 21 22

23 24 25 26 27 28
3 2

Baker & McKenzie ("B&M") has represented the Debtors in the past. B&M approached the Debtors post-petition, requesting that the Debtors execute a conflict waiver in connection with B&M's representation of certain of these shareholders -- which the Debtors declined to do. The Debtors are still in the process of reviewing the facts and allegations set forth in the Motion. Consistent with their view that the Motion is not ripe for the Court's consideration at this time, the Debtors wish to make clear that any failure to address the facts and allegations at this time should not be construed in any way against the Debtors, including, without limitation, that by not responding to any particular fact or allegation therein, the Debtors have no objection to such facts or allegations. The Debtors shall, and do hereby, expressly reserve the right to address or otherwise respond to the facts and allegations later, if and to the extent necessary to do so. See 11 U.S.C. 503(b)(3)(D) & 1109(b).

102537.1

1 2 3 4 5 6 7 8 9 10 11 12
KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

more liberal standard of section 330 of the Bankruptcy Code.4 Simply put, until we know more, the appointment of an official equity committee may only result in an unnecessary run up in professional fees. In the meantime, however, the Court can rest assured that the NRVH board of directors has been able to adequately represent the interests of equity (under the circumstances). Consistent with their fiduciary duties, the Debtors' directors and officers have been ably and competently steering these cases over the past three months. More fundamentally, these Debtors (and not any committee) are in control of the litigation and have overseen it in a manner consistent with their fiduciary duties. The Debtors also still have the exclusive right to file a plan of reorganization. However, the Debtors' directors and officers are increasingly concerned that the recent conduct of the Official Committee of Unsecured Creditors (the "Creditors' Committee") -- if it continues -- will make it much more difficult (if not impossible) for them to do their jobs. As illustrated below, the Creditors' Committee seemingly takes issue with the very notion that these Debtors are entitled to be debtors-in-possession -- which could have irrevocably adverse implications for these cases.5 And here are just some recent examples: 1) Counsel for the Creditors' Committee has threatened to contact (and may have, in

13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

fact, contacted) the defendants in the Kemlite Litigation during the trial, in derogation of a series of warnings by Debtors' bankruptcy counsel and special litigation counsel (Daniel Petrocelli, of O'Melveny & Myers) that such communication could potentially have an adverse impact on any recovery to the estates;

It goes without saying, that to the extent an official equity committee is appointed, that will result in equity effectively becoming a third party at the table with respect to the major issues of these cases, and it should therefore be anticipated that this firm's and counsel for the Creditors' Committees fees will increase. If equity's participation is not bringing value to equity, then this cost is just hurting creditors. This point cannot be overstated. The need for individuals who will do what it takes to get the job done while balancing all competing interests is at the core of why our laws provide that the debtor is in possession. In stark contrast with the Creditors' Committee and any equity committee appointed in these cases, which only have duties to their constituents, these Debtors' directors and officers have duties to all constituencies in these cases. This attribute is critical to the success of these cases value will be maximized only if there are competent, motivated individuals who are willing to delicately balance the often diametrically opposed interests of the various constituencies in these cases and, yet, at the same time (where it is appropriate), also move expeditiously.

102537.1

1 2 3 4 5 6 7 8 9 10 11 12
KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067-6049 TELEPHONE: (310) 407-4000

2)

At the last cash collateral hearing, the Creditors' Committee indicated that they

would oppose the Debtors' efforts to obtain an extension of their directors and officers liability insurance coverage; 3) The Creditors' Committee has indicated that it has "problems" with the directors

being paid their board fees and that it will object to any payment of them; and 4) Just today, the Creditors' Committee withdrew its "non-objection" to the Debtors'

ability to pay their Interim CEO his regular salary. In view of the foregoing, there may very well be "cause" for the appointment of an official equity committee; but (at this time) the Debtors believe it would be prudent for this Court to hear the Motion once there is a verdict in the Kemlite Litigation and, by extension, once there is better visibility as to whether equity is in fact "in the money".

13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
102537.1

For the foregoing reasons, the Debtors shall, and do hereby, request the Motion continued for 30 days.

DATED: February 15, 2008

/s/ David M. Guess DAVID M. GUESS, an Attorney with KLEE, TUCHIN, BOGDANOFF & STERN LLP Bankruptcy Counsel for Debtors and Debtors in Possession