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FRANKLIN C. ADAMS, Bar No. 85351 Frank.Adams@bbklaw.com RICHARD T. EGGER, Bar No. 162581 Richard.Egger@bbklaw.com DANIEL S. ROBERTS, Bar No. 205535 Daniel.Roberts@bbklaw.com Best Best & Krieger LLP 3500 Porsche Way, Suite 200 Ontario, California 91764 Telephone: (909) 989-8584 Fax: (909) 944-1441 WILLIAM J. BARRETT MATTHEW A. SWANSON (Pro hoc vice applications to be filed) BARACK FERRAZZANO KIRSCHBAUM & NAGELBERG LLP 200 West Madison, Suite 3900 Chicago, Ilinois 60606 Telephone: (312) 984-3100 Fax: (312) 984-3150 ATTORNEYS FOR FIRST INDUSTRIAL, L.P. UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA - RIVERSIDE In re: NATIONAL R.V. HOLDINGS, INC., a Delaware corporation, NATIONAL R.V. HOLDINGS, INC. a California corporation Debtors. Case No. 6:07-17941-PC Chapter 11 Jointly Administered with Case No.: 6:07-17937-PC PRELIMINARY OBJECTION OF FIRST INDUSTRIAL, L.P. TO (A) MOTION FOR (1) AN EXTENSION OF TIME WITHIN WHICH TO ASSUME AND ASSIGN, OR REJECT NON-RESIDENTIAL REAL PROPERTY LEASES; AND (2) AUTHORITY TO REJECT NONRESIDENTIAL REAL PROPERTY LEASES WITHOUT FURTHER NOTICE OR HEARING; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF BRUCE COX CONKLIN, JR. IN SUPPORT THEREOF AND (B) MOTION (1) TO AUTHORIZE THE DEBTORS TO ENTER INTO AUCTION AGREEMENT WITH BIDITUP AUCTIONS WORLDWIDE, INC., (2) TO APPROVE SALE OF CERTAIN TANGIBLE PERSONAL PROPERTY AND

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THE RIGHTS, TITLE AND INTERESTS OF THE DEBTORS IN CERTAIN INTELLECTUAL PROPERTY FREE AND CLEAR OF LIENS, CLAIMS, ENCUMBRANCES AND INTERESTS PURSUANT TO SUCH AUCTION AGREEMENT; AND (3) FOR OTHER RELATED RELIEF; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATIONS OF BRUCE COX CONKLIN, JR. AND STEVEN MATTES IN SUPPORT THEREOF Hearing Date: February 29, 2008 Time: 10:30 a.m. Place: Courtroom 303 U.S. Bankruptcy Court 3420 Twelfth Street Riverside, CA 92501-3819

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TO THE HONORABLE PETER H. CARROLL, UNITED STATES BANKRUPTCY JUDGE:

First Industrial, L.P., a Delaware limited partnership (First Industrial), by and through its undersigned attorneys, hereby submits this preliminary objection to the: (A) Motion For (1) An Extension Of Time Within Which To Assume And Assign, Or Reject Non-Residential Real Property Leases; And (2) Authority To Reject Non-Residential Real Property Leases Without Further Notice Or Hearing; Memorandum Of Points And Authorities; Declaration Of Bruce Cox Conklin, Jr. In Support Thereof [Docket No. 256] (the Extension Motion); and (B) Motion (1) To Authorize The Debtors To Enter Into Auction Agreement With BIDITUP Auctions Worldwide, Inc., (2) To Approve Sale Of Certain Tangible Personal Property And The Rights, Title And Interests Of The Debtors In Certain Intellectual Property Free And Clear Of Liens, Claims, Encumbrances And Interests Pursuant To Such Auction Agreement; And (3) For Other Related Relief; Memorandum Of Points And Authorities In Support Thereof; Declarations Of Bruce Cox Conklin, Jr. And Steven Mattes In Support Thereof [Docket No. 255] (the Retention and Sale Motion) filed by National R.V. Holdings, Inc. (NRVH) and National R.V., Inc. (NRV and together with NRVH, the Debtors) with respect thereto.

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INTRODUCTION

As of the petition date, NRV leased five non-residential buildings in Riverside, California comprising almost 600,000 square feet from First Industrial pursuant to the terms of the Leases.1 NRV has used, and continues to occupy, the foregoing leased premises. When NRV failed to timely remit post-petition rent to First Industrial, First Industrial filed a motion to compel payment under the Leases. First Industrials motion was subsequently resolved by the entry of the Landlord Stipulation which obligates the Debtors to pay rent as and when it comes due. In Capitalized terms not defined herein shall have the meaning ascribed to them in the Retention and Sale Motion.
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addition, the Landlord Stipulation authorizes the Debtors to conduct an auction of their personal property (but not any Utility Installations, Trade Fixtures or Alterations as defined in the Leases) provided that First Industrial is provided with satisfactory evidence of insurance from the Debtors auctioneer.

On the afternoon of February 22, 2008, the Debtors filed both the Extension Motion and the Retention and Auction Motion (together the Motions). Both of these Motions have been set for hearing on February 29, 2008, upon only one weeks notice. Under the Extension Motion, the Debtors seek the entry of an order pursuant to section 365(d)(4) of the Bankruptcy Code extending the time within which the Debtors can assume and assign, or reject the Leases by 90 days from March 29, 2008 through and including July 27, 2008. Under the Retention and Auction Motion, the Debtors seek the entry of an order authorizing their retention of BIDITUP to conduct an auction at the Premises of substantially all the Debtors property (after the sale of certain finished RVs).

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OBJECTION

Since receiving the Debtors Motions, First Industrial has work diligently with the Debtors in an effort to resolve its objections to the Motions without Court intervention. While First Industrial and the Debtors have reached an agreement in principal addressing First Industrials concerns, in light of the interests that certain third-parties may assert in connection with the Motions and in light of the reality that the Debtors cannot guarantee that the form of order agreed to by the parties will be entered by the Court, First Industrial submits this Objection in order to preserve its rights in opposition.

1.

First Industrials Objection to the Extension Motion

Under the Extension Motion, the Debtors seek to extend the deadline for assuming and
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assigning, or rejecting the Leases for ninety days pursuant to Bankruptcy Code section 365(d)(4). Such an extension should not be granted because, as further set forth below, during such extension period the Debtors currently propose to use the Premises in a manner expressly prohibited by the terms of the Leases. See, e.g., In re 611 Sixth Ave. Corp., 191 B.R. 295, 298 (Bankr. D.N.Y. 1996) (whether debtor complies with lease obligations impacts finding of cause for extension).

In addition, under the Extension Motion, the Debtors seek approval of a mechanism whereby their rejection of the Leases will be deemed effective, without further notice and a hearing, by the filing and service of a Notice of Rejection upon First Industrial. Extension Motion at 9:6-14. At the same time however the Debtors have not agreed to turnover possession of the Premises contemporaneously with such filing. Extension Motion at 9:12-13 (the Debtors propose to promptly turnover possession to First Industrial). Rejection of the Leases requires the Debtors to immediately surrender the Premises to First Industrial and thus First Industrial objects to the Extension Motion to the extent the relief requested therein is inconsistent with this statutory requirement. 11 U.S.C. 365(d)(4); See In re Southwest Aircraft Services, Inc., 53 B.R. 805, 808 (Bankr. C.D. Cal. 1985) (The additional mandate found in 365(d)(4) requiring immediate surrender of the property to the lessor upon rejection, emphasizes the clear Congressional intent that 365(d)(4) be strictly construed.).

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2.

First Industrials Objection to the Retention and Auction Motion

Under the Retention and Auction Motion, the Debtors seek the entry of an order approving the Auction Agreement with BIDITUP and authorizing the sale of the Property upon the Premises. First Industrial objects to the Retention and Auction Motion for the following reasons: Under the Landlord Stipulation, First Industrial has only agreed to waive the auction prohibition under the Leases with respect to the Debtors personal property and not any
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Utility Installations, Trade Fixtures or Alterations (as defined in the Leases). To the extent the Court authorizes the Debtors to completely abrogate this provision of the Lease, First Industrial is entitled to additional adequate protection from the Debtors. See In re Friedman's, Inc., 336 B.R. 880, 884 (Bankr. D. Ga. 2005) (Landlords who are compelled by a Section 363 Order to permit a use prohibited in their leases are entitled to additional adequate protection beyond regular rental payments.). Under the Landlord Stipulation, BIDITUP (to the extent approved as the Debtors auctioneer) is required to carry a general liability policy of insurance protecting the Debtors and Landlord as additional insureds against bodily injury, personal injury and property damage arising out of any Action conducted on the Premises and all areas appurtenant thereto at levels reasonably satisfactory to Landlord. Landlord Stipulation at 3:11-15. Exhibit 5 to the Retention and Auction Motion reflects that the insurance coverage obtained by BIDITUP (1) does not name First Industrial as an additional insured, (2) does not cover personal injury damage, and (3) has insufficient coverage amounts for property damage. Such protection is unsatisfactory to First Industrial and inconsistent with the parties agreement in the Landlord Stipulation. The Debtors propose to conduct a Public Auction of all Property defined to include all tangible personal property including, but not limited to, all machinery, equipment, and overhead cranes. See Exhibit 1 to Retention and Auction Motion at 2. Under the Debtors Leases with First Industrial, however, the Debtors do not have the right to sell the cranes. Section 7.4(c) of the Leases grants First Industrial the right to retain the cranes at the expiration of the lease term if it so desires. See Exhibits 3 and 4 to Retention and Auction Motion at Section 7.4(c). This provision of each Lease was negotiated at its inception in light of the size of the cranes and the expected costs attendant to properly removing them from the Premises. Certain fixtures owned by First Industrial including but not limited to electrical panels, power distribution boxes, utility installations, electrical transfers (whether attached to the cranes or the walls or anywhere else) may improperly be included in the broad definition of Property set forth in the Auction Agreement. In order to resolve this objection, such items must be carved out, together with any other First Industrial owned property, from the Auction Agreement and, in an effort to limit any further litigation down the road, First Industrial requests that the Court order a representative of the Debtors and BIDITUP to accompany First Industrial in a walk through of the Premises to identify exactly which fixtures BIDITUP will seek to sell at the proposed Public Auction. BEST BEST & KRIEGER LLP

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Dated: February 28, 2008

By: /S/ RICHARD T. EGGER Attorneys for FIRST INDUSTRIAL, L.P.

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