IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re: PERKINS & MARIE CALLENDER'S INC.,

et al., 1

Chapter 11 Case No. 11-11795 (KG) (Jointly Administered)

Hearing Date: To Be Determined Objection Deadline: To Be Determined

Debtors.

MOTION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR AUTHORITY TO COMMENCE CERTAIN ACTIONS ON BEHALF OF AND FOR THE BENEFIT OF THE DEBTORS' ESTATES

The Official Committee of Unsecured Creditors (the "Committee") of Perkins & Marie Callender's Inc. ("PMCI") and its affiliated debtors (collectively, and together with PMCI, the "Debtors"), by and through its undersigned counsel, submits this motion for an order authorizing the Committee to initiate, prosecute, and settle any claims or causes of action, on behalf of and for the benefit of the Debtors' estates, against certain parties who hold claims against the Debtors in these chapter 11 cases (the "Motion"), and respectfully represents as follows:
PRELIMINARY STATEMENT

1.

In its capacity as a fiduciary for unsecured creditors of the Debtors' estates, the

Committee has undertaken a preliminary investigation into: (i) proofs of claim filed by the Debtors' pre-petition equity sponsor, Castle Harlan, Inc. ("Castle Harlan"), and by P&MC's Real Estate Holding LLC ("RE Holding") and P&MC's Holding LLC ("Holding"), two non-debtor entities controlled directly or indirectly by Castle Harlan; (ii) proofs of claim filed by Omega

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

Trust and Tri-State House of Pancakes, Inc. ("Tri-State") based on profit-sharing agreements entered into thirty-five years ago by the Debtors' predecessors; and (iii) purported claims of Mark Apostolou, Martha Apostolou, and Barbara Apostolou Torres (collectively, the "Apostolou

Parties"), and George Callas ("Callas" and, together with Castle Harlan, RE Holding, Holding,
Omega Trust, Tri-State, the Apostlou Parties, and any of their respective successors, assigns, or transferees, the "Defendants") listed by the Debtors on their Schedule F of Creditors Holding Unsecured Nonpriority Claims (as amended, "Schedule F") based on a third profit-sharing agreement entered into by one of the Debtors' predecessors more than twenty-five years ago (collectively, the "Disputed Claims"). 2. Not only has the Committee's investigation revealed circumstances which provide

grounds for objection to the more than $72 million in Disputed Claims, but the Committee has also identified certain affirmative claims the Debtors have against the Defendants based on prepetition payments made, and obligations incurred, by the Debtors. Taken together, the successful objection to the Disputed Claims and the successful pursuit of the Debtors' affirmative claims against the Defendants will result in a significantly enhanced recovery for the Debtors' unsecured creditors. 3. While the Committee has demanded that the Debtors commence the actions

described herein and object to the Disputed Claims, the Debtors have refused. Given the Debtors' refusal, the Committee is the only party in interest qualified to pursue them.

RELIEF REQUESTED

4.

By this Motion, and pursuant to sections 105, 1103(c), and 1109(b) of title 11 of

the United States Code, 11 U.S.C. 101 et seq. (the "Bankruptcy Code"), the Committee requests that the Court enter an order authorizing, and granting standing to, the Committee to initiate, prosecute, and settle, with any settlement subject to approval of the Court, any claims or causes of action, on behalf of and for the benefit of the Debtors' estates, against each of the Defendants that arise from, or relate in any respect to, any of the Disputed Claims, including, without limitation, standing to initiate, prosecute, and settle any claims or causes of action arising under chapter 5 of the Bankruptcy Code or any similar law of any state (collectively, the

"Authorized Actions").
5. The Committee also requests that the Court enter an order authorizing the

Committee to immediately commence discovery, including the authority to issue subpoenas, in connection with the Committee's investigation of any of the Disputed Claims and/or any of the Authorized Actions, without further order of the Court. 6. Lastly, in light of the Debtors' refusal to object to the Disputed Claims, the

Committee seeks to establish procedures by which the Committee may object to any of the Disputed Claims solely for voting purposes on the Debtors' Second Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (the "Plan") by filing a determination motion (a "Committee Determination Motion") no later than October 3, 2011, which is the date previously set by the Court for the Debtors to object to any claims for voting purposes. 2

If a Committee Determination Motion is filed, the Committee requests that any ruling by the Court on the Committee Determination Motion be considered a ruling with respect to the allowance of the claim(s) at issue under Rule 3018 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") solely for the purpose of accepting or rejecting the Plan and such claim(s) shall be counted, for Plan voting purposes only, in the amount determined by the Court.

JURISDICTION AND VENUE 7. This Court has subject matter jurisdiction to consider this Motion pursuant to 28

U.S.C. 157 and 1334. This Motion is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper in this Court pursuant to 28 U.S.C. 1408 and 1409. 8. The statutory predicates for the relief requested in this Motion are Bankruptcy

Code sections 105(a), 1103(c), and 1109(b). PROCEDURAL BACKGROUND 9. On June 13, 2011 (the "Petition Date"), each of the Debtors filed a voluntary

petition for relief under chapter 11 of the Bankruptcy Code. Pursuant to Bankruptcy Code sections 1107 and 1108, the Debtors continue in the management and operation of their businesses and properties as debtors in possession. The Debtors' chapter 11 cases have been consolidated for procedural purposes only and are being jointly administered pursuant to Bankruptcy Rule 1015(b). No trustee or examiner has been appointed in these cases. 10. On June 24, 2011, the Office of the United States Trustee appointed the

Committee and designated the following seven members to serve on the Committee: (i) The Coca-Cola Company, (ii) Wilmington Trust Company, (iii) Standard General Master Fund LP, 3 (iv)NewsAmrcaMkting,(v)LuFmlyTrstiNohgaeSn,LPd(vi)Mr. Benjamin Monroy. 4

3 0n 4

September 16, 2011, Standard General Master Fund LP resigned from the Committee.

0n June 24, 2011, the Office of the United States Trustee filed the notice of the appointment of the Committee [D.I. 109], which was subsequently revised on June 28, 2011 [D.I. 127].

THE COMMITTEE'S INVESTIGATION OF THE DISPUTED CLAIMS AND AUTHORIZED ACTIONS

11.

The Committee has undertaken a preliminary investigation into the Disputed

Claims and has identified, and discovered sufficient facts to support, certain meritorious claims that the Debtors' estates hold against each of the Defendants. 12. The affirmative claims the Debtors have against the Defendants include, but are

not limited to: (i) claims for declaratory relief that each of the Disputed Claims are not "claims," as such term is defined in section 101(5) of the Bankruptcy Code ("Claims"), but are equity interests, or, in the alternative, for recharacterization of the claims as equity interests; 5 and (ii) for the avoidance of intentional and constructive fraudulent conveyances. 13. As these causes of action are based on facts gathered to date, this list may not be

exhaustive. Other claims and/or causes of action may be identified as the Committee's investigation continues. Additionally, the Committee has identified other circumstances for objecting to the Disputed Claims, including that certain of the Disputed Claims are time-barred by the applicable statute of limitations or that the amounts claimed are inflated.
SUMMARY OF THE DISPUTED CLAIMS AND THE AUTHORIZED ACTIONS
Castle Harlan

14.

Castle Harlan, together with its affiliates, indirectly hold substantially all of the

equity interest in debtor Perkins & Marie Callender's Holding Inc., which is the holding company that wholly owns PMCI, the Debtors' principal operating entity and the primary
5 The Committee has standing to object to the Disputed Claims pursuant to section 502(a) of the Bankruptcy Code. Although the Committee may have standing in connection with the Committee's claim objections to seek declaratory relief that the Disputed Claims are equity interests and, in the alternative, for recharacterization, the Committee, out of an abundance of caution, requests herein that it be authorized to pursue such claims for declaratory relief. In the interests of judicial economy and pursuant to Bankruptcy Rule 3007(b), the Committee may include its objections to the Disputed Claims in the adversary proceedings the Committee seeks to assert against the Defendants for, inter alia, avoidance of intentional and constructive fraudulent conveyances. Alternatively, the Committee may file separate objections to the Disputed Claims and reserves its right to request consolidation of the claim objections with any adversary proceedings pursuant to Bankruptcy Rule 7042.

obligor on the Debtors' pre-petition senior secured working capital facility and secured and unsecured bond debt. 15. Castle Harlan filed proofs of claim nos. 1487 and 1489 (together, the "1999

Management Fee Claims") asserting claims for $3,832,000.00 in management fees for the period of 2004 to 2006 purportedly due under a Management Agreement dated November 12, 1999 (the "1999 Management Agreement"). 16. Additionally, Castle Harlan filed proofs of claim nos. 1485 and 1493 (together,

the "2005 Management Fee Claims" and, together with the 1999 Management Fee Claims, the "Management Fee Claims") asserting claims for $12,444,106.86 in management fees for the period of 2008-2011 purportedly due under a Management Agreement dated September 21, 2005 (the "2005 Management Agreement" and, together with the 1999 Management Agreement, the "Management Agreements"). 17. As an initial matter, the fees purportedly due under the Management Agreements

are not properly classified as Claims, but rather constitute equity interests. The 2005 Management Agreement, under which Castle Harlan claims it is owed more than $12 million, provides that the management fee is based on an "annual fee in an amount equal to 3% of the aggregate equity contributions made by any member of the Castle Harlan Group to any of the Companies or their subsidiaries after the date hereof." Self-evidently, this annual "fee" is simply an annual return on an equity investment and, accordingly, is not a Claim, but rather an equity interest. Similarly, the fixed fees purportedly due under the 1999 Management Agreement appear to have no correlation to the services purportedly provided by Castle Harlan, but instead also appear to be a fixed return on investment.

18.

Further, the 1999 Management Fee Claims include claims for management fees

that were purportedly incurred and unpaid for the years 2004 and 2005. The entirety of the claim for management fees that were incurred and unpaid for 2004, and part or all of the management fees that were incurred and unpaid for 2005, fall outside of the applicable six-year statute of limitations under New York law and, accordingly, such claims are time-barred. 19. Additionally, based on management's substandard performance throughout the

terms of the Management Agreements, particularly during the term of the 2005 Management Agreement, it is readily apparent that the Debtors did not receive fair consideration or reasonably equivalent value in exchange for the management fees paid to Castle Harlan or in exchange for the Debtors' remaining obligations, if any, under the Management Agreements. 20. Based on the Committee's investigation and analysis, all management fees paid to

Castle Harlan, and any obligations for unpaid management fees that were incurred by the Debtors, at any time the Debtors were insolvent, inadequately capitalized, and/or when the Debtors intended or believed that the Debtors would incur debts beyond their ability to pay (the "Avoidance Period"), are avoidable as constructive fraudulent conveyances.
Holding

21. 22.

Castle Harlan, together with its affiliates, owns 100% of Holding. Holding filed proof of claim no. 1486 (the "Director Fee Claim") against PMCI

for $264,423.02 in purportedly accrued and unpaid board of directors fees. 23. As an initial matter, the Director Fee Claim includes no documentation to support

any obligation of the Debtors to Holding. The Director Fee Claim simply attaches a schedule of amounts purportedly due to individual directors for 2010 and 2011, but provides no

documentation or other information as to whether any claims of the individual directors were assigned to Holding or any other basis for Holding to assert the claims. 24. To the extent that Holding may provide further documentation to support the

Director Fee Claim, the Director Fee Claim is nevertheless objectionable on the basis that the amounts purportedly owed are fixed returns on equity investments and are properly characterized as equity interests, not Claims. 25. Further, based on Castle Harlan's and the board of directors' substandard

performance, it is readily apparent that the Debtors did not receive fair consideration or reasonably equivalent value in exchange for any board of directors fees paid to Castle Harlan and/or Holding or in exchange for the Debtors' remaining obligations, if any, for accrued board of director fees. 26. Based on the Committee's investigation and analysis, all board of director fees

paid to Castle Harlan and/or Holding, and any obligations for unpaid board of director fees that were incurred by the Debtors, during the Avoidance Period, are avoidable as constructive fraudulent conveyances.
RE Holding

27.

Castle Harlan, together with its affiliates, owns 100% of Holding, which, in turn,

owns 100% of RE Holding. 28. RE Holding filed proof of claim no. 1491 (the "Westminster Lease Claim")

against debtor Marie Callender Pie Shops, Inc. ("Pie Shops") for $320,440.97 in unpaid rent and related costs under a lease dated September 1, 2010 (the "Westminster Lease"). 29. At the time the Westminster Lease was executed by Pie Shops and RE Holding in

late 2010, the financial performance of Pie Shops and the other Debtors had been substantially

declining Notwithstanding the Debtors' impaired financial condition, Castle Harlan directly or indirectly caused two entities under its control to enter into the Westminster Lease with $360,000.00 in annual rent, an amount that was well above market rent for the location and property. Further, the revenues of the restaurant located at the leased premises were wholly insufficient to cover even a fraction of the above-market rent obligations, as confirmed by the absence of any payments under the Westminster Lease since it was entered into in September, 2010. 30. Accordingly, based on the Committee's investigation and analysis, all of the

obligations of Pie Shops under the Westminster Lease are avoidable as intentional and constructive fraudulent conveyances.
Omega Trust

31.

Omega Trust filed proof of claim no. 1754 (the "Omega Trust Claim") against

PMCI in the amount of $55,053,953.27 based on an agreement dated February 1, 1977 (the "Omega Profit Sharing Agreement") whereby PMCI (as successor to Perkins 'Cake and Steak, Inc.) purportedly agreed to pay Omega Trust two percent (2%) of gross sales, in perpetuity, of all franchised restaurants in the states of Wisconsin and Iowa. 32. The Omega Trust Claim asserts a claim for $280,439.00 for unpaid pre-petition

amounts, a claim for $54,106,850.27 for the purported present value as of the Petition Date of future payments under the Omega Profit Sharing Agreement (the "Future Claim Amount"), and an administrative claim for $666,664.00 for payments purportedly due from the Petition Date to the anticipated confirmation date of October 31, 2011.

33.

As an initial matter, the Future Claim Amount is vastly overstated. The discount

rate used by Omega Trust to calculate the Future Claim Amount was artificially low, causing the Future Claim Amount to be artificially inflated. 34. Further, the Omega Profit Sharing Agreement is simply that, an agreement by

which Omega Trust was entitled to share in the profits of PMCI, and thus the entirety of the amounts claimed under the Omega Profit Sharing Agreement is not properly classified as a Claim, but rather constitutes an equity interest. 35. Additionally, Omega Trust has no obligations to PMCI under the Omega Profit

Sharing Agreement. Given the absence of obligations of Omega Trust or any other value provided to PMCI, it is apparent that PMCI has not received fair consideration or reasonably equivalent value in exchange for payments made, and any outstanding obligations under, the Omega Profit Sharing Agreement. 36. Accordingly, based on the Committee's investigation and analysis, all amounts

paid to Omega Trust, and any outstanding obligations to Omega Trust that were incurred, during the Avoidance Period, are avoidable as constructive fraudulent conveyances. Tri-State 37. Tri-State filed proof of claim no. 1259 (the "Tri-State Claim") against PMCI in

the amount of $152,929.70 based on an agreement between PMCI (as successor to OCASH, Inc.) and Tri-State dated May 4, 1976 (the "Tri-State Profit Sharing Agreement"), whereby PMCI purportedly agreed to pay Tri-State the greater of (i) 1% of gross sales, in perpetuity, of all franchised restaurants in the states of North Dakota, South Dakota, and Nebraska, and (ii) $50,000 (subject to escalation) per year.

10

38.

The current amount of the Tri-State Claim is based on amounts purportedly due

under the Tri-State Profit Sharing Agreement for the period of January, 2010 through March, 2011. It is the Committee's understanding that the Debtors paid Tri-State under the Tri-State Profit Sharing Agreement for the period of 2010 and, accordingly, the Tri-State Claim is facially overstated. 39. Further, as with the Omega Trust Profit Sharing Agreement, the Tri-State Profit

Sharing Agreement is nothing more than an agreement to share in the profits of PMCI, and thus any amounts claimed under the Tri-State Profit Sharing Agreement are not properly classified as Claims, but rather constitute equity interests. 40. Additionally, Tri-State has minimal obligations to PMCI under the Tri-State

Profit Sharing Agreement. The only obligation of Tri-State under the Tri-State Profit Sharing Agreement is to cause its employee, Al Kuper, to investigate potential restaurant locations and participate in the selection of, and negotiations with, future franchisees, all at the direction of PMCI. Given the minimal obligations of Tri-State or any other value provided to PMCI, it is apparent that PMCI has not received fair consideration or reasonably equivalent value in exchange for payments made, and any outstanding obligations, under the Tri-State Profit Sharing Agreement. Accordingly, based on the Committee's investigation and analysis, all amounts paid to Tri-State, and any outstanding obligations to Omega Trust that were incurred, during the Avoidance Period, are avoidable as constructive fraudulent conveyances.
Apostolou Parties and Callas

41.

The Debtors have included each of the Apostolou Parties and Callas on

Schedule F as having claims in the amount of $3,778.71 (the "Apostlou Claims") and $11,336.15 (the "Callas Claim"), respectively, based on a Development Agreement (the "New Jersey

11

Development Agreement") dated June 30, 1985, by and between PMCI (as successor to Perkins Restaurants, Inc.), on the one hand, and Louis T. Apostolou and Callas (together, the "Developer"), on the other. 42. Under the New Jersey Development Agreement, the Developer was granted the

exclusive right through the year 2075 to develop restaurants in a twenty-five mile radius of a certain point in Wall Township, New Jersey (the "New Jersey Territory"). The New Jersey Development Agreement provides that "[i]n consideration of Developer's prior development and its anticipated future development of restaurants . . . Perkins . . . shall refund to Developer .. . forty-nine percent (49%) of the royalties and initial franchise fees" collected by PMCI for restaurants within the New Jersey Territory. 43. As with the Omega Trust Claim and the Tri-State Claim, the Apostolou Claims

and Callas Claim (and any other claim that may be asserted based on the New Jersey Development Agreement) are not properly classified as Claims, but rather constitute equity interests. 44. Further, the Developer had no development obligations under the New Jersey

Development Agreement and, indeed, the fees payable under the agreement were expressly based on the Developer's activities prior to its execution. Given the absence of obligations of the Developer or any other value provided to PMCI, it is apparent that PMCI has not received fair consideration or reasonably equivalent value in exchange for payments made, and any outstanding obligations under, the New Jersey Development Agreement. 45. Accordingly, based on the Committee's investigation and analysis, all amounts

paid to the Developer, and any outstanding obligations to the Developer that were incurred, during the Avoidance Period, are avoidable as constructive fraudulent conveyances.

12

GROUNDS FOR RELIEF REQUESTED 46. The Bankruptcy Code authorizes the trustee or the debtor in possession to pursue

causes of action on behalf of the estate and obligates such estate representative to maximize the estate's value for the benefit of creditors. See, e.g., Commodity Futures Trading Comm 'n v.

Weintraub, 471 U.S. 343, 352 (1986) ("The trustee is accountable for all property received, and has the duty to maximize the value of the estate.") (internal citations and quotation omitted); see also, Commodore Int'l Ltd. v. Gould (In re Commodore Int'l Ltd.), 262 F.3d 96, 99 (2d Cir. 2001) ("The [debtor in possession] has an obligation to pursue all actions that are in the best interests of creditors and the estate.") (citation omitted). 47. Nevertheless, it has long been acknowledged that a debtor in possession "often

acts under the influence of conflicts of interest," which prevents it from pursuing potentially viable claims that would result in a benefit to unsecured creditors. Canadian Pac. Forest Prods. Ltd. v. JD. Irving, Ltd. (In re Gibson Grp., Inc.), 66 F.3d 1436, 1441 (6th Cir. 1995). To address the problem that arises where a debtor is unwilling or unable to fulfill its obligation to maximize the value of the estate, "[t]he practice of authorizing the prosecution of actions on behalf of an estate by committees ... , upon a showing that such is in the interests of the estate, is one of long standing, and nearly universally recognized." Adelphia Commc'ns Corp. v. Bank of Am. (In re Adelphia Commc'ns Corp.), 330 B.R. 364, 373 (Bankr. S.D.N.Y. 2005) (citations omitted). 48. It is well settled that bankruptcy courts may allow a creditors' committee to

pursue litigation on behalf of the estate under appropriate circumstances. See Official Comm. of Unsecured Creditors of Cybergenics Corp. v. Chinery, 330 F.3d 548, 575 (3d Cir. 2003); Official Comm. of Unsecured Creditors ex rel. the Estates of Polarid Corp. v. Barron (In re Polaroid Corp.), No. 03-56404, 2004 WL 1397582 (Bankr. D. Del. June 22, 2004); Official Comm. of

13

Unsecured Creditors ex rel. Valley Media, Inc. v. Cablevision Sys. Corp. (In re Valley Media, Inc.), No. 01-11353, 2003 WL 21956410 (Bankr. D. Del. Aug. 14, 2003).

49.

Indeed, creditors' committees have an "implied, but qualified, right . . . to initiate

adversary proceedings in the name of the debtor in possession under 11 U.S.C. 1103(c)(5) and 1109(b)." Unsecured Creditors Comm. of Debtor STN Enters., Inc. v. Noyes (In re STN Enters.,
Inc.) 779 F.2d 901, 904 (2nd Cir. 1985); see also Cybergenics, 330 F.3d 548 at 568.

50.

The Third Circuit has recognized that granting derivative standing to a creditors

committee "[p]rovides a critical safeguard to prevent against lax pursuit" of claims "that would amount to reputational self-immolation" for a debtor or its managers. Cybergenics, 330 F.3d 548 at 573. 51. Generally, "derivative standing requires: (1) a colorable claim, (2) that the trustee

[or the debtor] unjustifiably refused to pursue the claim, and (3) the permission of the bankruptcy court to initiate the action." Infinity Investors Ltd. ex rel. the Estate of Yes! Entm't Corp. v.
Kingsborough (In re Yes! Entm't Corp.), 316 B.R. 141, 145 (Bankr. D. Del. 2004). Here, all

three requirements for derivative standing have been met. 52. The first requirement for derivative standing is that the Committee must assert "a
STN

colorable claim or claims for relief that on appropriate proof would support a recovery."
Enterprises, 779 F.2d at 905. This is a relatively low standard to satisfy.

See, e.g., Adelphia,

330 B.R. at 369 (noting that there need only be "some factual support" for the claims); Official
Comm. of Unsecured Creditors of Corell Steel ex rel.Corell Steel v. Fishbein & Co., P.C., No.

91-4919, 1992 WL 196768, at *2 n.3 (E.D. Pa. Aug. 10, 1992) (noting that the claims need only be "potentially meritorious").

14

53.

In determining whether a claim is colorable, the court is not required to conduct a

"mini-trial of the claims." In re iPCS, Inc., 297 B.R. 283, 291 (Bankr. N.D. Ga. 2003) (citing
Official Comm. of Unsecured Creditors of Am. 's Hobby Ctr., Inc. v. Hudson United Bank (In re Ams. 's Hobby Ctr., Inc.), 223 B.R. 275, 282 (Bankr. S.D.N.Y. 1998)). Instead, the court may

"weigh the 'probability of success and financial recovery,' as well as the anticipated costs of litigation, as part of a cost/benefit analysis" to determine whether the prosecution of claims is likely to benefit the estate. Id. (citing America's Hobby Center, 223 B.R. at 282). Thus, the Committee need only establish the existence of a plausible claimwhich it has easily done, as set forth above. 54. Here, commencement of affirmative actions against the Defendants is likely to

substantially augment the Debtors' resources and could yield significant value to the unsecured creditors. The Committee anticipates that, at a minimum, the actions the Committee would commence and prosecute against the Defendants will eliminate more than $72 million in claims that have been asserted against the estates in addition to any recovery for the estates based on the avoidance of millions of dollars in transfers paid to certain of the Defendants in the years prior to the Petition Date. Further, the costs of the proposed litigation are dwarfed by the potential benefits to be achieved for the Debtors' estates and creditors. 55. The second requirement for derivative standing is that "the trustee [or the debtor]

unjustifiably refused to pursue the claim." Cybergenics, 330 F.3d at 561 (citing Fogel ex rel.
Estate of Madison Mgmt. Grp. v. Zell, 221 F.2d 955, 965-66 (7th Cir. 2000)). On September 19,

2011, Committee counsel delivered to the Debtors a letter, attached hereto as Exhibit A, demanding that the Debtors commence certain affirmative actions against the Defendants. On September 20, 2011, the Debtors notified the Committee that the Debtors would not commence

15

the requested affirmative actions against the Defendants. While the Debtors have not and will not commence certain actions against the Defendants, the Committee, in contrast, stands ready to protect the interests of the Debtors' estates and their creditors. 56. The third and final requirement for derivative standing is permission of the

bankruptcy court to initiate the action, and the Committee seeks to satisfy this requirement by the relief sought herein. 57. Accordingly, this Court has the authority, pursuant to Bankruptcy Code sections

105, 1103(c), and 1109(b), to grant to the Committee permission to commence the Authorized Actions against the Defendants and to settle such actions as appropriate, and the Court should grant such authority under the circumstances set forth herein.
RESERVATION OF RIGHTS

58.

The Committee reserves its rights to seek authority to commence affirmative

actions, on behalf of and for the benefit of the Debtors' estates, against other parties.
NO PRIOR REQUEST

59. court.

No prior request for the relief sought herein has been made to this or any other

NOTICE

60.

Notice of this Motion has been delivered to (i) the United States Trustee; (ii)

counsel to the Debtors; (iii) counsel to Castle Harlan, Inc., P&MC's Real Estate Holding LLC, and P&MC's Holding LLC; (iv) counsel to Omega Trust; (v) counsel to Tri-State House of Pancakes, Inc.; (vi) Mark Apostolou, Martha Apostolou, and Barbara Apostolou Torres; (vii) George Callas; (viii) counsel to Wells Fargo Capital Finance, LLC, the administrative agent for the Debtors' pre-petition secured credit facility and post-petition debtor-in-possession financing facility; (ix) counsel to The Bank of New York Mellon Trust Company N.A., the successor

16

indenture trustee for the Debtors' senior secured notes; (x) counsel to Wilmington Trust Company, the successor indenture trustee for the Debtors' unsecured senior notes; (xi) counsel to Wayzata Investment Partners LLC and its affiliated funds, the counterparties to that certain Restructuring Support Agreement with the Debtors dated June 6, 2011; and (xii) all other parties that, as of the filing of this Motion, have requested notice in these chapter 11 cases pursuant to Bankruptcy Rule 2002. The Committee submits that such notice is sufficient and that no further notice of the relief requested in this Motion is required. WHEREFORE, this Court should (i) authorize, and grant standing to, the Committee to initiate, prosecute, and settle, with any settlement subject to approval of the Court, any claims or causes of action, on behalf of and for the benefit of the Debtors' estates, against each of the Defendants that arise from, or relate in any respect to, any of the Disputed Claims, including, without limitation, standing to initiate, prosecute, and settle any claims or causes of action arising under chapter 5 of the Bankruptcy Code or any similar law of any state, (ii) authorize the Committee to immediately commence discovery, including the authority to issue subpoenas, in connection with the Committee's investigation of the Disputed Claims and/or any of the Authorized Actions, without further order of the Court, (iii) establish procedures by which the Committee may object to any of the Disputed Claims solely for voting purposes on the Debtors' Second Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code by filing a determination motion with the Court, all as set forth more fully in the proposed order attached hereto as Exhibit B, and (iii) grant such other and further relief as the Court deems just and proper.

17

Dated: September 21, 2011 Wilmington, Delaware

LANDIS RATH & COBB LLP

William E Chipman, Jr. (No. 3818) Mark D. Olivere (No. 4291) 919 Market Street, Suite 1800 Wilmington, Delaware 19801 Telephone: (302) 467-4400 (302) 467-4450 Facsimile-

Benjamin L. Schneider Mark R. Somerstein ROPES & GRAY LLP 1211 Avenue of the Americas New York, New York 10036-8704 Telephone: (212) 596-9000 Facsimile (212) 596-9090 Counsel for the Official Committee of Unsecured Creditors

EXHIBIT A

ROPES & GRAY LLP 1211 AVENUE OF THE AMERICAS NEW YORK, NY 10036-8704 WVVW. ROP ESG RAY.COM

Mark R. Somerstein T +1 212 841 8814 F +1 646 728 1663

September 19, 2011

mark.somerstein@ropesgray.com

BY EMAIL AND HAND DELIVERY

Perkins & Marie Callender's Inc. and its affiliated debtor entities Hollace Topol Cohen Troutman Sanders LLP 405 Lexington Avenue New York, New York 10174-0700 Re:
In re Perkins & Marie Callender's Inc., et al., Case No. 11-11795 (Bankr. D. Del.)

Ms. Cohen: As you are aware, Ropes & Gray LLP represents the Official Committee of Unsecured Creditors (the "Committee") in the above referenced jointly administered chapter 11 cases of Perkins & Marie Callender's Inc. ("PMCI") and its affiliated debtors (collectively, and together with PMCI, the "Debtors") pending in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Committee has conducted a preliminary investigation and analysis of: (i) proofs of claim filed against certain of the Debtors by Castle Harlan, Inc. ("Castle Harlan"), P&MC's Real Estate Holding LLC ("RE Holding"), P&MC's Holding LLC ("Holding"), Omega Trust, and Tri-State House of Pancakes, Inc. ("Tri-State"); and (ii) the purported claims of Mark Apostolou, Martha Apostolou and Barbara Apostolou Torres (collectively, the "Apostolou Parties") and George Callas ("Callas") listed by the Debtors on their Schedule F of Creditors Holding Unsecured Nonpriority Claims (as amended, "Schedule F"). The Committee has also conducted a preliminary investigation and analysis of certain affirmative claims the Debtors possess against the foregoing entities.
Castle Harlan

Castle Harlan filed four claims against certain of the Debtors based on pre-petition management fees purportedly due and owing to Castle Harlan. Specifically, proofs of claim nos. 1487 and 1489 (together, the "1999 Management Fee Claims") assert claims for $3,832,000.00 in management fees

-2-

September 19, 2011

for the period of 2004-2006 purportedly due under a Management Agreement dated November 12, 1999 (the "1999 Management Agreement"). Additionally, Castle Harlan filed proofs of claim nos. 1485 and 1493 (together, the "2005 Management Fee Claims" and, collectively with the 1999 Management Fee Claims, the "Management Fee Claims") asserting claims for $12,444,106.86 in management fees for the period of 2008-2011 purportedly due under a Management Agreement dated September 21, 2005 (the "2005 Management Agreement" and, together with the 1999 Management Agreement, the "Management Agreements"). As an initial matter, the fees purportedly due under the Management Agreements are not properly classified as "claims," as such term is defined in section 101(5) of the Bankruptcy Code, but are instead equity interests. The 2005 Management Agreement, under which Castle Harlan claims it is owed more than $12 million, provides that the management fee is based on an "annual fee in an amount equal to 3% of the aggregate equity contributions made by any member of the Castle Harlan Group to any of the Companies or their subsidiaries after the date hereof." Self-evidently, this annual "fee" is simply an annual return on an equity investment and, accordingly is not a claim. Similarly, the fixed fees purportedly due under the 1999 Management Agreement appear to have no correlation to the services purportedly provided by Castle Harlan, but instead also appear to be a fixed return on investment. Further, the 1999 Management Fee Claims include claims for management fees that were purportedly incurred and unpaid for the years 2004 and 2005. The entirety of the claim for management fees that were incurred and unpaid for 2004, and part or all of the management fees that were incurred and unpaid for 2005, fall outside of the applicable six-year statute of limitations under New York law and such claims are time-barred. Additionally, based on management's substandard performance throughout the terms of the Management Agreements, particularly during the term of the 2005 Management Agreement, it is readily apparent that the Debtors did not receive fair consideration or reasonably equivalent value in return for the management fees paid to Castle Harlan or in return for the Debtors' remaining obligations, if any, under the Management Agreements. Based on the Committee's investigation and analysis, all management fees paid to Castle Harlan, and any obligations for unpaid management fees that were incurred by the Debtors, at any time the Debtors were insolvent, inadequately capitalized, and/or when the Debtors intended or believed that the Debtors would incur debts beyond their ability to pay (the "Avoidance Period"), are avoidable as constructive fraudulent conveyances. Based on the foregoing, the Committee hereby demands that the Debtors file an objection to the Management Fee Claims and commence action against Castle Harlan: (i) to disallow the entirety of the Management Fee Claims; (ii) for declaratory relief that the Management Fee Claims are not claims but equity interests, or in the alternative, for recharacterization of the claims as equity interests; (iii) for declaratory relief that the incurred and unpaid management fees for 2004, and part or all of the incurred and unpaid management fees for 2005, fall outside of the applicable six-year

-3-

September 19, 2011

statute of limitations and are time-barred; and (iv) for avoidance of all management fees paid to Castle Harlan, and any obligations for unpaid fees that were incurred by the Debtors, during the Avoidance Period as constructive fraudulent conveyances.
RE Holding

RE Holding, an entity directly or indirectly controlled by Castle Harlan, filed proof of claim no. 1491 (the "Westminster Lease Claim") against debtor Marie Callender Pie Shops, Inc. ("Pie Shops") for $320,440.97 in unpaid rent and related costs under a lease dated September 1, 2010 (the "Westminster Lease"). At the time the Westminster Lease was executed by Pie Shops and RE Holding in late 2010, the financial performance of Pie Shops and the other Debtors had been substantially declining Notwithstanding the Debtors' impaired financial condition, Castle Harlan caused two entities under its control to enter into the Westminster Lease with $360,000.00 in annual rent, an amount that was well above market rent for the location and property. Further, the revenues of the restaurant located at the leased premises were wholly insufficient to cover even a fraction of the above-market rent obligations, as confirmed by the absence of any payments under the Westminster Lease since it was entered into in September, 2010. Accordingly, based on the Committee's investigation and analysis, the entirety of the obligations of Pie Shops under the Westminster Lease are avoidable as intentional and constructive fraudulent conveyances. Based on the foregoing, the Committee hereby demands that the Debtors file an objection to the Westminster Lease Claim and commence action against RE Holding and/or Castle Harlan: (i) to disallow the entirety of the Westminster Lease Claim; and (ii) for avoidance of all obligations of Pie Shops under the Westminster Lease as intentional and constructive fraudulent conveyances.
Holding

Holding, another entity directly or indirectly controlled by Castle Harlan, filed proof of claim no. 1486 (the "Director Fee Claim") against PMCI for $264,423.02 in purportedly accrued and unpaid board of directors fees. As an initial matter, the Director Fee Claim includes no documentation to support any obligation of the Debtors to Holding. The Director Fee Claim simply attaches a schedule of amounts purportedly due to individual directors for 2010 and 2011, but provides no documentation or other information as to whether any claims of the individual directors were assigned to Holding or any other basis for Holding to assert the claims. To the extent that Holding may provide further documentation to support the Director Fee Claim, the Director Fee Claim is nevertheless objectionable on the basis that the amounts purportedly owed are fixed returns on equity investments and are properly characterized as equity interests, not claims. Further, based on Castle Harlan's and the board of directors' substandard performance, it is readily apparent that the Debtors did not receive fair consideration or reasonably equivalent value in return for any board of directors fees paid to Castle Harlan and/or Holding or in return for the Debtors' remaining obligations, if any, for accrued board of director fees. Based on the Committee's

-4

September 19, 2011

investigation and analysis, all board of director fees paid to Castle Harlan and/or Holding, and any obligations for unpaid board of director fees that were incurred by the Debtors, during the Avoidance Period, are avoidable as constructive fraudulent conveyances. Based on the foregoing, the Committee hereby demands that the Debtors file an objection to the Director Fee Claim and commence action against Holding, Castle Harlan, and/or the individual directors: (i) to disallow the entirety of the Director Fee Claim; (ii) for declaratory relief that the Director Fee Claim is not a claim, but an equity interest, or in the alternative, for recharacterization of the claim as an equity interest; and (iii) for avoidance of all director fees paid to Castle Harlan, Holding, and the individual directors, and any obligations for unpaid director fees that were incurred by the Debtors, during the Avoidance Period.
Omega Trust

Omega Trust filed proof of claim no. 1754 (the "Omega Trust Claim") against PMCI in the amount of $55,053,953.27 based on an agreement dated February 1, 1977 (the "Omega Profit Sharing Agreement") whereby PMCI (as successor to Perkins 'Cake and Steak, Inc.) purportedly agreed to pay Omega Trust two percent (2%) of gross sales, in perpetuity, of all franchised restaurants in the states of Wisconsin and Iowa. The Omega Trust Claim asserts a claim for $280,439.00 for unpaid pre-petition amounts, a claim for $54,106,850.27 for the purported present value as of the petition date of future payments under the Omega Profit Sharing Agreement (the "Future Claim Amount"), and an administrative claim for $666,664.00 for payments purportedly due from the petition date to the anticipated confirmation date of October 31, 2011. As an initial matter, the Future Claim Amount is vastly overstated. The discount rate used by Omega Trust to calculate the Future Claim Amount was artificially low, causing the Future Claim Amount to be artificially inflated. Accordingly, the Omega Trust Claim is facially overstated. Further, the entirety of the amounts claimed under the Omega Profit Sharing Agreement are not properly classified as "claims," as such term is defined in section 101(5) of the Bankruptcy Code, but are instead equity interests. The Omega Profit Sharing Agreement is simply that, an agreement by which Omega Trust was entitled to share in the profits of PMCI. Such an arrangement does not give rise to a claim, but simply an equity interest. Additionally, Omega Trust has no obligations to PMCI under the Omega Profit Sharing Agreement. Given the absence of obligations of Omega Trust or any other value provided to PMCI, it is apparent that PMCI has not received fair consideration or reasonably equivalent value in exchange for payments made, and any outstanding obligations under, the Omega Profit Sharing Agreement. Accordingly, based on the Committee's investigation and analysis, all amounts paid to Omega Trust, and any outstanding obligations to Omega Trust that were incurred, during the Avoidance Period are avoidable as constructive fraudulent conveyances.

-5-

September 19, 2011

Based on the foregoing, the Committee hereby demands that the Debtors file an objection to the Omega Trust Claim and commence action against Omega Trust: (i) to disallow the entirety of the Omega Trust Claim; (ii) for declaratory relief that the Omega Trust Claim is not a claim, but an equity interest, or in the alternative, for recharacterization of the claim as an equity interest; and (iii) for avoidance of all payments made to Omega Trust, and any outstanding obligations to Omega Trust that were incurred, during the Avoidance Period.
Tri-State

Tri-State filed proof of claim no. 1259 (the "Tri-State Claim") against PMCI in the amount of $152,929.70 based on an agreement between PMCI (as successor to OCASH, Inc.) and Tri-State dated May 4, 1976 (the "Tri-State Profit Sharing Agreement"), whereby PMCI purportedly agreed to pay Tri-State the greater of (i) 1% of gross sales, in perpetuity, of all franchised restaurants in the states of North Dakota, South Dakota, and Nebraska, and (ii) $50,000 (subject to escalation) per year. The current amount of the Tri-State Claim is based on amounts purportedly due under the Tri-State Profit Sharing Agreement for the period of January, 2010 through March, 2011. It is the Committee's understanding that the Debtors paid Tri-State under the Tri-State Profit Sharing Agreement for the period of 2010 and, accordingly, the Tri-State Claim is facially overstated. Further, the amount claimed under the Tri-State Profit Sharing Agreement is not properly classified as a "claim," as such term is defined in section 101(5) of the Bankruptcy Code, but is instead an equity interest. As with the Omega Trust Profit Sharing Agreement, the Tri-State Profit Sharing Agreement is nothing more than an agreement to share in the profits of PMCI. Such an arrangement does not give rise to a claim, but simply an equity interest. Additionally, Tri-State has minimal obligations to PMCI under the Tri-State Profit Sharing Agreement. The only obligation of Tri-State under the Tri-State Profit Sharing Agreement is to cause its employee, Al Kuper, to investigate potential restaurant locations and participate in the selection of, and negotiations with, future franchisees, all at the direction of PMCI. Given the minimal obligations of Tri-State or any other value provided to PMCI, it is apparent that PMCI has not received fair consideration or reasonably equivalent value in exchange for payments made, and any outstanding obligations, under the Tri-State Profit Sharing Agreement. Accordingly, based on the Committee's investigation and analysis, all amounts paid to Tri-State, and any outstanding obligations to Omega Trust that were incurred, during the Avoidance Period are avoidable as constructive fraudulent conveyances. Based on the foregoing, the Committee hereby demands that the Debtors file an objection to the TriState Claim and commence action against Tri-State: (i) to disallow the entirety of the Tri-State Claim; (ii) for declaratory relief that the Tri-State Claim is not a claim, but an equity interest, or in the alternative, for recharacterization of the claim as an equity interest; and (iii) for avoidance of all

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payments made to Tri-State, and any outstanding obligations to Tri-State that were incurred, during the Avoidance Period.
Apostolou Parties and Callas

The Debtors have included each of the Apostolou Parties and Callas on Schedule F as having claims in the amount of $3,778.71(the "Apostlou Claims") and $11,336.15 (the "Callas Claim"), respectively, based on a Development Agreement (the "New Jersey Development Agreement") dated June 30, 1985, by and between PMCI (as successor to Perkins Restaurants, Inc.), on the one hand, and Louis T. Apostolou and Callas (together, the "Developer"), on the other. Under the New Jersey Development Agreement, the Developer was granted the exclusive right through the year 2075 to develop restaurants in a twenty-five mile radius of a certain point in Wall Township, New Jersey (the "New Jersey Territory"). The New Jersey Development Agreement provides that "[i]n consideration of Developer's prior development and its anticipated future development of shall refund to Developer . . . forty-nine percent (49%) of the royalties restaurants . . . Perkins and initial franchise fees" collected by PMCI for restaurants within the New Jersey Territory. As with the Omega Trust Claim and the Tri-State Claim, the Apostolou Claims and the Callas Claim (and any other claim that may be asserted based on the New Jersey Development Agreement) are not properly classified as "claims," as such term is defined in section 101(5) of the Bankruptcy Code, but are instead equity interests. Further, the Developer had no development obligations under the New Jersey Development Agreement and, indeed, the fees payable under the agreement were expressly based on the Developer's activities prior to its execution. Given the absence of obligations of the Developer or any other value provided to PMCI, it is apparent that PMCI has not received fair consideration or reasonably equivalent value in exchange for payments made, and any outstanding obligations under, the New Jersey Development Agreement. Accordingly, based on the Committee's investigation and analysis, all amounts paid to Developer, and any outstanding obligations to Developer that were incurred, during the Avoidance Period are avoidable as constructive fraudulent conveyances. Based on the foregoing, the Committee hereby demands that the Debtors file an objection to the Apostolou Claims and the Callas Claim and/or amend Schedule F by removing the Apostolou Claims and the Callas Claim therefrom, and further commence action against Developer: (i) to disallow the entirety of the Apostlou Claims, the Callas Claim, and any other claim that may be asserted based on the New Jersey Development Agreement; (ii) for declaratory relief that the Apostolou Claims, the Callas Claim, and any other claim that may be asserted based on the New Jersey Development Agreement are not claims, but equity interests, or in the alternative, for recharacterization of the claims as equity interests; and (iii) for avoidance of all payments made to Developer, and any outstanding obligations to Developer that were incurred, during the Avoidance Period.

temb 19,2011 rivmund or Notice of Debtors' Intentions By this letter, the Committee demands that the Debtors immediately file the claim objections and commence the affirmative actions, all as set forth above. The Committee expects that the Debtors will be properly advised of their fiduciary duties to their creditors and of their obligations to maximize the value of their estates by objecting to the invalid claims and by asserting the affirmative claims, as outlined above. To the extent that the Debtors understand that they have a fiduciary duty to proceed as outlined above, but the Debtors' management identifies any conflicts of interest in pursuing such litigation, the Committee hereby requests that the Debtors execute the enclosed stipulation authorizing the Committee to prosecute such actions for the benefit of the D e btors ' estates so as to alleviate such conflicts of interests The Committee requests that the Debtors apprise the Committee, through its undersigned counsel, that the Debtors will proceed as outlined above, or return the enclosed stipulation executed by the Debtors, by no later than :3:00 Eat.IED411p '. on Se tember 21, 2011. If the Debtors fail to respond or refuse to proceed as outlined above, the Committee will promptly file a motion for authority with the Bankruptcy Court to authorize the Committee to pursue the affirmative actions outlined above on behalf of the Debtors' estates.

Very Lily yours,

Mark K. Somerstein

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

x
: Chapter 11 In re: : Case No. 11-11795 (KG) PERKINS & MARIE CALLENDER'S INC., et al., 1 : : (Jointly Administered) Debtors. x STIPULATION GRANTING THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS AUTHORITY TO COMMENCE CERTAIN AFFIRMATIVE ACTIONS ON BEHALF OF AND FOR THE BENEFIT OF THE DEBTORS' ESTATES This stipulation is entered into by and among Perkins & Marie Callender's Inc. ("PMCI") and its affiliated debtors and debtors in possession in the above-captioned chapter 11 cases (collectively, and together with PMCI, the "Debtors") and the Official Committee of Unsecured Creditors (the "Committee" and, together with the Debtors, the "Parties"). WHEREAS, on June 13, 2011, each of the Debtors filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"), and pursuant to Bankruptcy Code sections 1107 and 1108, the Debtors continue in the management and operation of their businesses and properties as debtors in possession; WHEREAS, on June 24, 2011, the Office of the United States Trustee appointed the Committee; 2
1 The Debtors, together with the last four digits of each Debtor's federal tax identification number are: Perkins & Marie Callender's Inc. (4388); Perkins & Marie Callender's Holding Inc. (3999); Perkins & Marie Callender's Realty LLC (N/A); Perkins Finance Corp. (0081); Wilshire Restaurant Group LLC (0938); PMCI Promotions LLC (7308); Marie Callender Pie Shops, Inc. (7414); Marie Callender Wholesalers, Inc. (1978); MACAL Investors, Inc. (4225); MCID, Inc. (2015); Wilshire Beverage, Inc. (5887); and FIV Corp. (3448). The mailing address for the Debtors is 6075 Poplar Avenue, Suite 800, Memphis, TN 38119.

WHEREAS, the general bar date for filing proofs of claim in these chapter 11 cases was August 16, 2011; WHEREAS, the Committee has conducted a preliminary investigation and analysis of: (i) proofs of claim filed against certain of the Debtors by Castle Harlan, Inc. ("Castle Harlan"), P&MC's Real Estate Holding LLC ("RE Holding"), P&MC's Holding LLC ("Holding"), Omega Trust, and Tri-State House of Pancakes, Inc. ("Tri-State"); and (ii) the purported claims of Mark Apostolou, Martha Apostolou and Barbara Apostolou Torres (collectively, the "Apostolou
Parties") and George Callas ("Callas" and, together with Castle Harlan, RE Holding, Holding,

Omega Trust, Tri-State, and the Apostolou Parties, the "Claimants") listed by the Debtors on their Schedule F of Creditors Holding Unsecured Nonpriority Claims (as amended, "Schedule F"), and the Committee has also conducted a preliminary investigation and analysis of certain affirmative claims the Debtors possess against each of the foregoing entities; WHEREAS, Castle Harlan filed proofs of claim nos. 1487 and 1489 (together, the "1999
Management Fee Claims"), in which Castle Harlan asserts claims for $3,832,000.00 in

management fees for the period of 2004-2006 purportedly due under a Management Agreement dated November 12, 1999 (the "1999 Management Agreement"); WHEREAS, Castle Harlan also filed proofs of claim nos. 1485 and 1493 (together, the
"2005 Management Fee Claims" and, collectively with the 1999 Management Fee Claims, the "Management Fee Claims"), in which Castle Harlan asserts claims for $12,444,106.86 in

management fees for the period of 2008-2011 purportedly due under a Management Agreement

On June 24, 2011, the UST filed the notice of the appointment of the Committee [Docket No. 109], which was subsequently revised on June 28, 2011 [Docket No. 127].

dated September 21, 2005 (the "2005 Management Agreement" and, together with the 1999 Management Agreement, the "Management Agreements"); WHEREAS, the Committee asserts that the fees purportedly due under the Management Agreements are not properly classified a "claims," as such term is defined in Bankruptcy Code section 101(5), but rather constitute equity interests; WHEREAS, the Committee asserts that the entirety of the claim for management fees that were incurred and unpaid for 2004, and part or all of the management fees that were incurred and unpaid for 2005, fall outside of the applicable six-year statute of limitations under New York law and, accordingly, such claims are time-barred; WHEREAS, the Committee asserts that the Debtors did not receive fair consideration or reasonably equivalent value in exchange for the management fees paid to Castle Harlan or in return for the Debtors' remaining obligations, if any, under the Management Agreements; WHEREAS, the Committee asserts that all management fees paid to Castle Harlan, and any obligations for unpaid management fees that were incurred by the Debtors, at any time the Debtors were insolvent, inadequately capitalized, and/or when the Debtors intended or believed that the Debtors would incur debts beyond their ability to pay (the "Avoidance Period"), are avoidable as constructive fraudulent conveyances; WHEREAS, RE Holding, an entity directly or indirectly controlled by Castle Harlan, filed proof of claim no. 1491 (the "Westminster Lease Claim") against debtor Marie Callender Pie Shops, Inc. ("Pie Shops") for $320,440.97 in unpaid rent and related costs under a lease dated September 1, 2010 (the "Westminster Lease");

WHEREAS, the Committee asserts that Castle Harlan caused Pie Shops and RE Holding, two entities under its control, to enter into the Westminster Lease with $360,000.00 in annual rent, an amount that was above market rent for the location and property; WHEREAS, the Committee asserts that the entirety of the obligations of Pie Shops under the Westminster Lease are avoidable as intentional and constructive fraudulent conveyances; WHEREAS, Holding, an entity directly or indirectly controlled by Castle Harlan, filed proof of claim no. 1486 (the "Director Fee Claim") against PMCI for $264,423.02 in purportedly accrued and unpaid board of directors fees; WHEREAS, the Committee asserts that the Director Fee Claim includes no documentation to support any obligation of the Debtors to Holding; WHEREAS, the Committee asserts that the Director Fee Claim is also objectionable on the basis that the amounts purportedly owed are fixed returns on equity investments and are properly characterized as equity interests, not claims; WHEREAS, the Committee asserts that the Debtors did not receive fair consideration or reasonably equivalent value in return for any board of directors fees paid to Castle Harlan and/or Holding or in return for the Debtors' remaining obligations, if any, for accrued board of director fees; WHEREAS, the Committee asserts that all board of director fees paid to Castle Harlan and/or Holding, and any obligations for unpaid board of director fees that were incurred by the Debtors, during the Avoidance Period are avoidable as constructive fraudulent conveyances; WHEREAS, Omega Trust filed proof of claim no. 1754 (the "Omega Trust Claim") against PMCI in the amount of $55,053,953.27 based on an agreement dated February 1, 1977 (the "Omega Profit Sharing Agreement") whereby PMCI (as successor to Perkins 'Cake and 4

Steak, Inc.) purportedly agreed to pay Omega Trust two percent (2%) of gross sales, in perpetuity, of all franchised restaurants in the states of Wisconsin and Iowa; WHEREAS, the Omega Trust Claim asserts a claim for $280,439.00 for unpaid prepetition amounts, a claim for $54,106,850.27 for the purported present value as of the petition date of future payments under the Omega Profit Sharing Agreement (the "Future Claim Amount"), and an administrative claim for $666,664.00 for payments purportedly due from the petition date to the anticipated confirmation date of October 31, 2011; WHEREAS, the Committee asserts that Omega Trust used an artificially low discount rate in calculating the Future Claim Amount and, as a result, asserts that the Future Claim Amount is vastly overstated; WHEREAS, the Committee asserts that the amounts claimed under the Omega Profit Sharing Agreement are not properly classified as "claims," as such term is defined in Bankruptcy Code section 101(5), but rather constitute equity interests; WHEREAS, the Committee asserts that PMCI has not received fair consideration or reasonably equivalent value in exchange for payments made, and any outstanding obligations under, the Omega Profit Sharing Agreement; WHEREAS, the Committee asserts that all amounts paid to Omega Trust, and any outstanding obligations to Omega Trust that were incurred, during the Avoidance Period are avoidable as constructive fraudulent conveyances; WHEREAS, Tri-State filed proof of claim no. 1259 (the "Tri-State Claim") against PMCI in the amount of $152,929.70 based on an agreement between PMCI (as successor to OCASH, Inc.) and Tri-State dated May 4, 1976 (the "Tri-State Profit Sharing Agreement"), whereby PMCI purportedly agreed to pay Tri-State the greater of (i) 1% of gross sales, in perpetuity, of all 5

franchised restaurants in the states of North Dakota, South Dakota, and Nebraska, and (ii) $50,000 (subject to escalation) per year; WHEREAS, the Tri-State Claim includes a claim for amounts purportedly owed under the Tri-State Profit Sharing Agreement for 2010; WHEREAS, the Committee asserts that the Debtors paid Tri-State under the Tri-State Profit Sharing Agreement for the period of 2010 and, accordingly, the Tri-State Claim is overstated; WHEREAS, the Committee asserts that the amount claimed under the Tri-State Profit Sharing Agreement is not properly classified as a "claim," as such term is defined in Bankruptcy Code section 101(5), but rather constitutes an equity interest; WHEREAS, the Committee asserts that PMCI has not received fair consideration or reasonably equivalent value in exchange for payments made, and any outstanding obligations, under the Tri-State Profit Sharing Agreement; WHEREAS, the Committee asserts that all amounts paid to Tri-State, and any outstanding obligations to Tri-State that were incurred, during the Avoidance Period are avoidable as constructive fraudulent conveyances; WHEREAS, the Debtors have included each of the Apostolou Parties and Callas on Schedule F as having claims in the amount of $,3778.71 (the "Apostolou Claims") and $11,336.15 (the "Callas Claim"), respectively, based on a Development Agreement (the "New
Jersey Development Agreement") dated June 30, 1985, by and between PMCI (as successor to

Perkins Restaurants, Inc.), on the one hand, and Louis T. Apostolou and Callas, on the other (together, the "Developer");

WHEREAS, the New Jersey Development Agreement provides that "[i]n consideration of Developer's prior development and its anticipated future development of restaurants . . . Perkins shall refund to Developer . . . forty-nine percent (49%) of the royalties and initial

franchise fees" collected by PMCI for restaurants within the New Jersey Territory; WHEREAS, the Committee asserts that the Apostolou Claims and Callas Claim (and any other claim that may be asserted based on the New Jersey Development Agreement) are not properly classified as "claims," as such term is defined in Bankruptcy Code section 101(5), but rather constitute equity interests; WHEREAS, the Committee asserts that PMCI has not received fair consideration or reasonably equivalent value in exchange for payments made, and any outstanding obligations under, the New Jersey Development Agreement; WHEREAS, the Committee asserts that all amounts paid to Developer, and any outstanding obligations to Developer that were incurred, during the Avoidance Period are avoidable as constructive fraudulent conveyances; WHEREAS, the Debtors have also conducted a preliminary investigation of the affirmative claims set forth above against the Claimants and believes that it is in the best interests of the Debtors' estates and creditors that the claims be further investigated and pursued, if appropriate; WHEREAS, the Debtors' management has identified certain circumstances that could create conflicts of interest, or cause the appearance of conflicts of interests, that could impair, or cause the appearance of impairment of, the Debtors' ability to fulfill their fiduciary duties in pursuing the affirmative claims described above and therefore have agreed that the Committee

should be authorized to pursue the litigation on behalf of and for the benefit of the Debtors' estates; WHEREAS, despite the Committee having conducted a preliminary investigation with respect to the foregoing claims and the respective Claimants, the Committee's investigation is ongoing, and additional information may surface, which may give rise to other affirmative actions against the Claimants. NOW THEREFORE, IT IS HEREBY STIPULATED AND AGREED, SUBJECT TO COURT APPROVAL, AS FOLLOWS: 1. The Committee is hereby authorized, and shall have standing, to initiate,

prosecute, and settle (in each case, subject to the consent of the noteholder counterparties to that certain Restructuring Support Agreement, dated as of June 6, 2011, as amended from time to time), with any settlement subject to approval of the Court, any claims and causes of action against each of the Claimants that arise from, or relate in any respect to, any of the Claimants' claims against the estate of any of the Debtors, including, without limitation, standing to initiate, prosecute and settle any claims or causes of action arising under chapter 5 of the Bankruptcy Code or any similar law of any state. 2. The Committee shall have authority to immediately commence discovery,

including the authority to issue subpoenas, in connection with the Committee's investigation of the Claimant's respective claims against the Debtors' estates and any claims and causes of action the Debtors may have against any of the Claimants, without further order of the Court. [Signature Page Follows]

ROPES & GRAY LLP By Mark R. Somerstein 1211 Avenue of the Americas New York, NY 10036 Telephone: (212) 841-5735 Facsimile . (646) 728-6201
Counsel for the Official Committee of the Debtors

TROUTMAN SANDERS LLP By Hollace Topol Cohen The Chrysler Building 405 Lexington Avenue New York, NY 10174 Telephone: (212) 704-6000 Facsimile - (212) 704-6288
Counsel for the Debtors

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE x

Chapter 11 In re: : Case No. 11-11795 (KG) PERKINS & MARIE CALLENDER'S INC., et al., 1 : : (Jointly Administered) Debtors.
x ORDER GRANTING THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS AUTHORITY TO COMMENCE CERTAIN AFFIRMATIVE ACTIONS ON BEHALF OF AND FOR THE BENEFIT OF THE DEBTORS' ESTATES

Upon consideration of the Stipulation Granting the Official Committee of Unsecured Creditors Authority to Commence Certain Affirmative Actions on Behalf of and for the Benefit of the Debtors' Estates (the "Stipulation"), entered into by and among Perkins & Marie Callender's Inc., and its affiliated debtors and debtors in possession in the above-captioned chapter 11 cases (collectively, the "Debtors") and the Official Committee of Unsecured Creditors (the "Committee", and together with the Debtors, the "Parties"), and the Court having determined that granting the relief agreed to by the Parties in the Stipulation is in the best interests of the Debtors, their estates and creditors, it is hereby: ORDERED, that the Stipulation is approved in its entirety; and it is further

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

ORDERED, that the Committee is hereby authorized, and shall have standing, to initiate, prosecute, and settle (in each case, subject to the consent of the noteholder counterparties to that certain Restructuring Support Agreement, dated as of June 6, 2011, as amended from time to time), with any settlement subject to approval of the Court, any claims or causes of action, on behalf of and for the benefit of the Debtors' estates, against each of (i) Castle Harlan, Inc., (ii) P&MC's Real Estate Holding LLC, (iii) P&MC's Holding LLC, (iv) Omega Trust, (v) Tri-State House of Pancakes, Inc., and (vi) Mark Apostolou, Martha Apostolou, Barbara Apostolou Torres and George Callas (collectively, the "Claimants") that arise from, or relate in any respect to, any of the Claimants' claims against the estate of any of the Debtors, including, without limitation, standing to initiate, prosecute and settle any claims or causes of action arising under chapter 5 of the Bankruptcy Code or any similar law of any state; and it is further ORDERED, that the Committee shall have authority to immediately commence discovery, including the authority to issue subpoenas, in connection with the Committee's investigation of the Claimant's respective claims against the Debtors' estates and any claims and causes of action the Debtors may have against any of the Claimants, without further order of the Court. Dated:

The Honorable Kevin Gross Chief United States Bankruptcy Judge

EXHIBIT B

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re: PERKINS & MARIE CALLENDER'S INC., et al.,1 Debtors.

Chapter 11 Case No. 11-11795 (KG) (Jointly Administered)

Ref. No.

ORDER GRANTING THE MOTION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR AUTHORITY TO COMMENCE CERTAIN ACTIONS ON BEHALF OF AND FOR THE BENEFIT OF THE DEBTORS' ESTATES

Upon consideration of the Motion of the Official Committee of Unsecured Creditors for an Order Granting the Committee Authority to Commence Certain Actions on Behalf of and for the Benefit of the Debtors' Estates (the "Motion"), and the Court having determined that granting the relief requested in the Motion is in the best interests of the Debtors, their estates, creditors, and other parties in interest, and after due deliberation, and good and sufficient cause appearing therefor, it is hereby ORDERED: 1. 2. The Motion is approved in its entirety; The Committee is hereby authorized, and shall have standing to, initiate,

prosecute, and settle, with any settlement subject to approval of the Court, any claims or causes of action, on behalf of and for the benefit of the Debtors' estates, against each of (i) Castle Harlan, Inc., (ii) P&MC's Real Estate Holding LLC, (iii) P&MC's Holding LLC, (iv) Omega Trust, (v) Tri-State House of Pancakes, Inc., (vi) Mark Apostolou, Martha Apostolou, and Barbara Apostolou Tones, and (vii) George Callas, and any of their respective successors,
1 The Debtors, together with the last four digits of each Debtor's federal tax identification number are: Perkins & Marie Callender's Inc. (4388); Perkins & Marie Callender's Holding Inc. (3999); Perkins & Marie Callender's Realty LLC (N/A); Perkins Finance Corp. (0081); Wilshire Restaurant Group LLC (0938); PMCI Promotions LLC (7308); Marie Callender Pie Shops, Inc. (7414); Marie Callender Wholesalers, Inc. (1978); MACAL Investors, Inc. (4225); MCID, Inc. (2015); Wilshire Beverage, Inc. (5887); and FIV Corp. (3448). The mailing address for the Debtors is 6075 Poplar Avenue, Suite 800, Memphis, TN 38119

assigns, or transferees (collectively, the "Defendants") that arise from, or relate in any respect to, any of the Defendants' claims against the estate of any of the Debtors (collectively, the

"Disputed Claims"), including, without limitation, standing to initiate, prosecute, and settle any
claims or causes of action arising under chapter 5 of the Bankruptcy Code or any similar law of any state (collectively, the "Authorized Actions"). 3. The Committee shall have authority to immediately commence discovery,

including the authority to issue subpoenas, in connection with the Committee's investigation of the Disputed Claims and/or any Authorized Actions. 4. The Committee may object to any of the Disputed Claims solely for voting

purposes on the Debtors' Second Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (the "Plan") by filing a determination motion (a "Committee Determination

Motion") with the Court no later than October 3, 2011. Responses, if any, to a Committee
Determination Motion shall be filed with the Court, and at the same time served upon the Notice Parties (as defined below), no later than five (5) business days prior to the hearing on the Committee Determination Motion. Unless otherwise agreed by the parties, the Court shall conduct a hearing on any Committee Determination Motion at the hearing on October 31, 2011 at 10:00 a.m. (prevailing Eastern Time) to consider confirmation of the Plan, or such earlier time as may be scheduled by the Court. If a Committee Determination Motion is filed, the ruling by the Court on the Committee Determination Motion shall be considered a ruling with respect to the allowance of the claim(s) at issue under Rule 3018 of the Federal Rules of Bankruptcy Procedure solely for the purpose of accepting or rejecting the Plan and such claim(s) shall be counted, for Plan voting purposes only, in the amount determined by the Court. The filing of a Committee Determination Motion or a ruling by the Court thereon shall not affect any right or

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ability of the Committee, the Debtors, the reorganized Debtors, or any other party in interest with authority to object to claims in these chapter 11 cases to later object to any such claim for any other purposes, including without limitation, distributions under the Plan. 5. As used herein, the term "Notice Parties" means: (a) the United States Trustee,

844 King Street, Suite 2207, Wilmington, Delaware 19801, attention: Richard Schepacarter, Esquire, Facsimile: (302) 573-6497; (b) the Debtors, Perkins & Marie Callender's Inc., 6075 Poplar Avenue, Suite 800, Memphis, Tennessee 38119, attention: Joseph F. Trungale, Facsimile: (901) 537-7122; (c) counsel to the Debtors, Troutman Sanders LLP, The Chrysler Building, 405 Lexington Avenue, New York, New York 10174, attention: Mitchel H. Perkiel, Esquire and Brett D. Goodman, Esquire, Facsimile . (212) 704-6288, and Young Conaway Stargatt & Taylor, LLP, The Brandywine Building, 1000 West Street, 17 th Floor, Wilmington, Delaware 19801, attention: Robert S. Brady, Esquire and Robert F. Poppiti, Jr., Esquire, Facsimile: (302) 5711253; (d) counsel to the Committee, Ropes & Gray LLP, 1211 Avenue of the Americas, New York, New York 10036-8704, attention: Mark R. Somerstein, Esquire and Benjamin L. Schneider, Esquire, Facsimile: (212) 596-9090, and Landis Rath & Cobb LLP, 919 Market Street, Suite 1800, Wilmington, Delaware 19801, attention: William E. Chipman, Jr., Esquire and Mark D. Olivere, Esquire, Facsimile: (302) 467-4450; (e) counsel to the agent for the Debtors' pre-petition secured credit facility and post-petition debtor-in-possession financing facility, Paul Hastings LLP, 600 Peachtree Street, N.E., Twenty-Fourth Floor, Atlanta, Georgia 30308, attention: Jesse H. Austin, III, Esquire, Facsimile . (404) 685-5208; (f) counsel to the indenture trustee for the Senior Secured Notes, Emmet, Marvin & Martin, LLP, 120 Broadway,

32nd Floor, New York, New York 10271, attention: Edward P. Zujkowski, Esquire, Facsimile:
(212) 238-3100; (g) counsel to the indenture trustee for the Senior Notes, Foley & Lardner LLP,

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90 Park Avenue, New York, New York 10016-1314, attention: Douglas Spelfogel, Esquire, Facsimile: (212) 687-2329; and (h) counsel to the Restructuring Support Parties, Akin Gump Strauss Hauer & Feld LLP, One Bryant Park, New York, New York 10036, attention: Ira Dizengoff, Esquire, Facsimile: (212) 872-1002, and Scott L. Al berino, Esquire, 1333 New Hampshire Avenue, N.W., Washington, D.C. 6. This Court shall retain jurisdiction over any and all matters arising from or related

to the implementation or interpretation of this Order Dated: Wilmington, Delaware , 2011

The Honorable Kevin Gross Chief Judge, United States Bankruptcy Court

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