UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ____________________________________ ) In re ) Case No.

08-11586 (KG) ) Chapter 11 MERVYNS HOLDINGS, LLC, et al.,1 ) Jointly Administered ) Debtors. ) Hearing Date: March 25, 2009 at 10:00 A.M. ____________________________________) Objection Deadline: March 18, 2009 at 4:00 P.M. MOTION FOR ALLOWANCE AND IMMEDIATE PAYMENT OF VERIZON BUSINESS GLOBAL LLCS ADMINISTRATIVE EXPENSE CLAIM, INCLUDING, IF NECESSARY, PAYMENT FROM THE ADEQUATE ASSURANCE UTILITY DEPOSIT ACCOUNT Verizon Business Global LLC (Verizon Business), by and through counsel, moves the Court to direct payment of Verizon Business administrative claim from assets in Debtors estates, including, if necessary, the Adequate Assurance Utility Deposit Account. In support thereof, Verizon Business states as follows. GENERAL BACKGROUND 1. On July 29, 2008, Mervyns Holdings, LLC, Mervyns LLC and Mervyns

Brands, LLC (collectively Mervyns or Debtors) filed voluntary petitions for relief with this Court under Chapter 11 of the Bankruptcy Code. The Debtors Chapter 11 cases are jointly administered. 2. On July 29, 2008, Mervyns filed its Motion for Entry of an Order, Inter Alia,

Establishing Procedures for Determining Adequate Assurance of Payment for Future Utility Services (the Utility Deposit Motion), requesting to deposit $1.6 million dollars into an interest-bearing segregated account (the Utility Deposit Account) for the purpose of providing

1 The Debtors in these cases, along with the last four digits of their federal tax identification numbers, are Mervyns Holdings, LLC (3405), Mervyns LLC (4456) and Mervyns Brands, LLC (8850).
DB04/048629.0270/1140463.2 DD02

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0811586090218000000000020

all utility providers adequate assurance of payment for post-petition utility services to the Debtors (Docket # 6). This Motion was approved by the Court on July 30, 2008 (Docket # 48) (the Adequate Protection Order). 3. In the Utility Deposit Motion, Mervyns stated that it incurs utility expenses for

water, sewer service, electricity, natural gas, telephone service, internet service, waste management service and other services (Motion at E) (emphasis added). On information and belief, Verizon Business was Mervyns primary, if not exclusive, provider of telephone and internet services. SPECIFIC BACKGROUND 4. Verizon Business and Mervyns are parties to an MCI Service Agreement and

seventeen (17) amendments thereto (together, the Agreement). Verizon Business became party to the Agreement following its purchase of MCI Communications, Inc., in 2006. Pursuant to the Agreement, Verizon Business provided telecommunication and data services to Mervyns including, but not limited to, local and long distance switched usage phone services, voice mail services, teleconferencing services, internet access and broadband services, private IP services, managed WAN and managed LAN services, data storage, and internet and website servicing (collectively the Services). 5. The Services are utility services and thus were included in the list of utility

expenses for which Mervyns was required to provide adequate assurance of payment. The funds in the Utility Deposit Account ensure payment for all post-petition utility services, including the Services provided by Verizon Business. 6. Verizon Business sold the Services to the Debtors in the ordinary course of the

Debtors business as post-petition services necessary to preserve the value of the Debtors estate,

to allow the Debtors to operate post-petition, and to allow the Debtors to timely consummate a plan of reorganization or liquidation. 7. Pursuant to the Agreement, Verizon Business billed Mervyns for certain Services

in arrears based on actual usage. Consequently, Verizon Businesss invoices for those Services sought payment for services actually provided prior to termination. 8. Mervyns terminated the Agreement on November 30, 2009, and has failed to pay

invoices received from Verizon Business after said termination. The invoices are over 5000 pages long and detail all services rendered by Verizon Business, including an itemized list of all ingoing and outgoing telephone calls. A summary of the invoices is attached hereto and to Verizon Businesss Administrative Claim Request being filed concurrently herewith. It indicates the value of monthly invoices submitted for services rendered prior to termination of the Agreement. 9. Verizon Business has not been paid for utility services provided to Mervyns after

the Petition Date and through November 30, 2008. Concurrently with the filing of this Motion, Verizon Business is filing its administrative expense claim for such utility services in the amount of $413,611.04 (the Post-Petition Claim) against debtor Mervyns LLC (4456). BASIS FOR RELIEF 10. Section 503 of the Bankruptcy Code states that an entity shall be allowed an

administrative expense claim for the actual, necessary costs and expenses of preserving the estate. 11 U.S.C. 503(b)(1)(A). An administrative expense claim will be allowed where the expense arose post-petition and conferred a benefit on the debtors estate. Harnischfeger Indus., Inc., 293 B.R. 650, 659 (Bankr.D.Del. 2003). In re

11.

Since the Petition Date, Verizon Business has provided telecommunication and

data services to Mervyns. Such services have allowed the Debtors to continue to operate postpetition and have fostered the orderly liquidation of Debtors property. Accordingly, pursuant to 11 U.S.C. 503(b)(1)(A), Verizon Business is entitled to allowance of its Post-Petition Claim in the amount of $413,611.04. 12. Further, Verizon Business is entitled to immediate payment of its Post-Petition

Claim out of estate assets, and in particular the Utility Deposit Account, because to do so will not prejudice either the estate or creditors. administrative expense will be paid. Courts have discretion to determine when an In re Garden Ridge Corp., 323 B.R. 136, 143

(Bankr.D.Del. 2005) (Citing HQ Global Holdings, Inc., 282 B.R. 169, 173 (Bankr.D.Del. 2002)). In determining the time of payment, courts consider prejudice to the debtor, hardship to the claimant, and potential detriment to other creditors. Id. at 243. 13. Utilities are given special protection under 366(b) so that they are not forced to

provide post-petition services to a debtor without adequate assurance that the services will be timely paid for. In its Adequate Protection Order, this Court ordered the creation of the Utility Deposit Account, which Verizon Business believes, to date, still contains the initial $1.6 million. Sufficient adequate assurance was specially necessary for Verizon Business to continue providing the Services to Mervyns. Because Verizon Business, due to the nature of the services provided, billed Mervyns a month in arrears, a default in payment would lead to at least two months of unpaid services provided. For example, the invoice for services provided in June would typically arrive in the middle or end of July and not be due until sometime in August. By the time Mervyns was in default under the June bill, Verizon Business would have already provided services in July and likely part of August.

14.

The Debtors, their estate, and other creditors will suffer no prejudice if Debtors

are ordered to immediately pay the Post-Petition Claim out of the Utility Deposit Account. The Debtors liquidation has been substantially consummated, and Verizon Business is informed and believes that that there are already adequate available funds in the estate to pay all claims of equal or higher priority without prejudice. The funds in the Utility Deposit Account were earmarked as assurance that utility services be paid for. In the event the Debtors defaulted on utility service payment, the Utility Deposit Account was intended to cover the amounts owed. Accordingly, the Debtors will not be prejudiced by immediately paying the Post-Petition Claim out of the Utility Deposit Account the Utility Deposit Account was created for precisely such a payment. 15. Immediate payment of the Post-Petition Claim would also not prejudice other

creditors. On information and belief, there are not any other utility service providers seeking payment from the Utility Deposit Account. Verizon Business provided post-petition utility services under the belief that adequate assurance for payment of such services existed, and that in the event Mervyns defaulted under its obligations, the Utility Deposit Account would be available to pay for past services provided. Immediate payment of the Verizon Business administrative claim merely puts Verizon Business in the position contemplated by the creation of the Utility Deposit Account that is, the timely payment of all post-petition utility services provided to the Debtors. 16. Finally, Verizon Business itself will be prejudiced if the post-petition claim is not

immediately allowed and paid. Without immediate payment, including, as necessary, payment from the Utility Deposit Account, Verizon Business will lose the benefit of the express protections provided to utility providers under the Bankruptcy Code.

WHEREFORE, VERIZON BUSINESS respectfully requests that this Court enter an order finally allowing Verizon Businesss administrative expense claim in the amount of $413,611.04, directing immediate payment thereof from Debtors estate and/or from the Utility Deposit Account, and granting such other and further relief as this Court deems just and equitable. Respectfully Submitted this February 18, 2009 STINSON MORRISON HECKER LLP Darrell W. Clark 1150 18th Street, N.W., Suite 800 Washington, D.C. 20036-3816 Phone: 202-785-9100 Fax: 202-785-9163 Contact Attorney For This Motion: Josh L. Kahn Stinson Morrison Hecker LLP 1850 N. Central Avenue, Suite 2100 Phoenix, Arizona 85004-4584 Phone: 602-279-1600 Fax: 602-586-5236 Attorneys For Claimant Verizon Business

McCARTER & ENGLISH LLP By: /s/ William F. Taylor, Jr. William F. Taylor, Jr. (Delaware Bar No. 2936) 405 N. King Street, 8th Floor Wilmington, DE 19801 Phone: 302-984-6300 Fax: 302-984-6399 wtaylor@mccarter.com Local Counsel For Claimant Verizon Business

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ____________________________________ ) In re ) Case No. 08-11586 (KG) ) Chapter 11 MERVYNS HOLDINGS, LLC, et al.,1 ) Jointly Administered ) Debtors. ) Hearing Date: March 25, 2009 at 10:00 A.M. ____________________________________) Objection Deadline: March 18, 2009 at 4:00 P.M. NOTICE OF MOTION FOR ALLOWANCE AND IMMEDIATE PAYMENT OF VERIZON BUSINESS GLOBAL LLCS ADMINISTRATIVE EXPENSE CLAIM, INCLUDING, IF NECESSARY, PAYMENT FROM THE ADEQUATE ASSURANCE UTILITY DEPOSIT ACCOUNT PLEASE TAKE NOTICE that Verizon Business Global LLC has filed a MOTION FOR ALLOWANCE AND IMMEDIATE PAYMENT OF AN ADMINISTRATIVE EXPENSE CLAIM, INCLUDING, IF NECESSARY, PAYMENT FROM THE ADEQUATE

ASSURANCE UTILITY DEPOSIT ACCOUNT (the Motion), a copy of which is attached hereto and herewith served upon you. PLEASE TAKE FURTHER NOTICE that the Court will conduct a hearing on the Motion on March 25, 2009 at 10:00 A.M. prevailing Eastern time before the Honorable Kevin Gross, United States Bankruptcy Court, 6th Floor, 824 North Market Street, Wilmington, Delaware, at which time you may appear as you see fit. PLEASE TAKE FURTHER NOTICE that responses or objections to the Motion, if any, must be filed with the Clerk of the Court, 824 Market Street, Wilmington, Delaware, 19801

The Debtors in these cases, along with the last four digits of their federal tax identification numbers, are Mervyns Holdings, LLC (3405), Mervyns LLC (4456) and Mervyns Brands, LLC (8850).

ME1 8142926v.1

by March 18, 2009 at 4:00 P.M. prevailing Eastern time (the Objection Deadline) and served upon the following parties so that they are actually received by the Objection Deadline: Darrell W. Clark Stinson Morrison Hecker LLP 1150 18th Street, N.W., Suite 800 Washington, D.C. 20036-3816 Phone: 202-785-9100 Fax: 202-785-9163 -andJosh L. Kahn Stinson Morrison Hecker LLP 1850 N. Central Avenue, Suite 2100 Phoenix, Arizona 85004-4584 Phone: 602-279-1600 Fax: 602-586-5236 IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF DEMANDED BY THE MOTION WITHOUT FURTHER NOTICE OR HEARING. Dated: February 18, 2009 Wilmington, Delaware MCCARTER & ENGLISH, LLP By: /s/ William F. Taylor, Jr. William F. Taylor, Jr. (Delaware Bar No. 2936) Katharine L. Mayer (Delaware Bar No. 3758) MCCARTER & ENGLISH, LLP P.O Box 111 405 N. King Street 8th Floor Wilmington, DE 19899 (302) 984-6300 (phone) (302) 984-6399 (facsimile) wtaylor@mccarter.com kmayer@mccarter.com William F. Taylor, Jr. Katharine L. Mayer MCCARTER & ENGLISH, LLP P.O Box 111 405 N. King Street 8th Floor Wilmington, Delaware 19899 Fax: (302) 984-6399

2
ME1 8142926v.1

EXHIBIT A

ADMINISTRATIVE CLAIM OF VERIZON BUSINESS GLOBAL LLC AGAINST DEBTOR MERVYN'S LLC IN RE: MERVYN'S HOLDINGS, LLC ET AL. (CASE NO. 08-11584(KG)) (Summary of Invoices) Mervyn's Holdings, LLC Filed Chapter 11 Bankruptcy on 7/29/08 District of Delaware Case # 08-11586 (jointly administered)

Account Aging
For Services provided July 29, 2008 through November 30, 2008 Account # Name Nasp ID Total Balance Usage Period $ $ $ $ $ $ $ $ 187,833.01 91,933.97 70,331.45 57,905.57 5,527.19 91.88 (12.03) 413,611.04 $ $ $ $ $ $ $ $ 0 - 30 January 73,989.00 59,591.58 5,527.19 91.88 139,199.65 31 - 60 December $ 78,006.46 $ 56,322.61 $ $ $ $ $ $134,329.07 61 - 90 November $114,648.25 $ 35,611.36 $ $ $ $ $ 0.28 $ 150,259.89 91 - 120 October $ $ $ $ $ $ $ $ Over 120 September $ $ $ $ $ $ $ $ 875.98 31.15 907.13 UCC / NP 7/29/08-11/30/08

Y2200936 X230000000661 Y2195659 Y2203310 Y2358930 00067845787 Y1834005 Grand Total:

MERVYNS- FEAT NODE-93161775 MERVYNS MERVYNS- FEAT NODE-93158763 MERVYNS MERVYN'S MERVYNS MERVYN'S CENTRAL PURCHASING

OOET OOET OOET OOET OOET OOET OOET

$ (4,821.70) $ $ $ $ (4,533.53) $ $ (1,686.01) $ $ $ $ $ $ (43.46) $ $(11,084.70) $

109,826.55 35,611.36 (3,657.55) (1,686.01) (12.03) 140,082.32

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: MERVYNS HOLDINGS, LLC, et al.,1 Debtors. ) ) ) ) ) ) ) Chapter 11 Case No. 08-11586 (KG) Jointly Administered Regarding D.I. _________

ORDER ALLOWING AND DIRECTING PAYMENT OF ADMINISTRATIVE EXPENSE CLAIM Upon consideration of the Motion For Allowance and Immediate Payment of Verizon Business Global LLCs Administrative Expense Claim, Including, If Necessary, Payment From The Adequate Assurance Utility Deposit Account (the Motion) filed by Verizon Business Global LLC (Verizon Business) in the above-captioned proceeding; and it appearing that this Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. 157 and 1334; and it appearing that this proceeding is a core proceeding pursuant to 28 U.S.C. 157(b); and it appearing that the venue of this Motion is proper pursuant to 28 U.S.C. 1408 and 1409; IT IS HEREBY ORDERED that: 1. 2. The Motion is GRANTED. Verizon Business shall be allowed an administrative expense claim pursuant to 11 U.S.C. 503(b)(1) of the Bankruptcy Code in the amount of $413,611.04 against debtor Mervyns LLC.

The Debtors in these cases, along with the last four digits of their federal tax identification numbers, are Mervyns Holdings, LLC (3405), Mervyns LLC (4456) and Mervyns Brands, LLC (8850).

DB04/048629.0270/1039422.1 DD02

3.

The Debtors shall immediately pay the administrative claim of Verizon Business in the amount of $413,611.04.

IT IS ORDERED, this __ day of __________, 2009.

Honorable Kevin Gross United States Bankruptcy Judge

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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ____________________________________ ) In re ) Case No. 08-11586 (KG) ) Chapter 11 MERVYNS HOLDINGS, LLC, et al.,2 ) Jointly Administered ) Debtors. ) ____________________________________) CERTIFICATE OF SERVICE I hereby certify that on February 18, 2009, the foregoing was served by first-class mail, postage prepaid upon the following: Wendy S. Walker, Esq. Neil Herman, Esq. Howard Beltzer, Esq. Kizzy Rosenblatt, Esq. Morgan, Lewis & Bockius LLP 101 Park Avenue New York, NY 10178-0060 Mark Collins, Esq. Daniel DeFranceschi, Esq. Christopher Samis, Esq. Katherine Good, Esq. Richards, Layton & Finger, P.A. One Rodney Square 920 North King Street Wilmington, DE 19801 Robert Sussman, Esq. Cathy Hershcopf, Esq. Jay R. Indyke, Esq. Cooley Godward Kronish LLP The Grace Building 1114 Avenue of the Americas New York, NY 10036-7998

2 The Debtors in these cases, along with the last four digits of their federal tax identification numbers, are Mervyns Holdings, LLC (3405), Mervyns LLC (4456) and Mervyns Brands, LLC (8850).

William P. Bowden, Esq. Amanda M. Winfree, Esq. Karen B. Skomoruena, Esq. Ashby & Geddes PA 500 Delaware Avenue, 8th Floor PO Box 1150 Wilmington, DE 19899 Office of the United States Trustee 844 King St Room 2207 Lockbox 35 Wilmington, DE 19899-0035

/s/ William F. Taylor, Jr. William F. Taylor, Jr.