1 2 3 4 5 IN RE:

UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE ) ) ) ) ) ) ) ) ) ) Case No. 11-11795 (KG) Chapter 11 Courtroom No. 3 824 Market Street Wilmington, Delaware 19801 October 25, 2011 1:00 P.M.

PERKINS & MARIE CALLENDERS INC., et al. Debtors.

6 7 8 9 10 APPEARANCES: 11 For the Debtors: 12 13 14 15 16 17 18 ECRO: 19 Transcription Service: 20 21 22 23 24 25

TRANSCRIPT OF HEARING BEFORE HONORABLE KEVIN GROSS UNITED STATES BANKRUPTCY JUDGE

Young Conaway Stargatt & Taylor, LLP By: ROBERT F. POPPITI, JR., ESQ. The Brandywine Building 1000 West Street, 17th Floor Wilmington, Delaware 19801 (302) 571-6600 Troutman Sanders, LLP BY: HOLLACE T. COHEN, ESQ. The Chrysler Building 405 Lexington Avenue New York, New York 10174 (212) 704-6000 GINGER MACE Reliable 1007 N. Orange Street Wilmington, Delaware 19801 Telephone: (302) 654-8080 E-Mail: gmatthews@reliable-co.com

Proceedings recorded by electronic sound recording: transcript produced by transcription service.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

For Restructuring: Support Parties:

Akin Gump Strauss & Feld, LLP By: SCOTT ALBERINO, LLP One Bryant Park New York, New York 10036 (212) 872-1000 Omega Trust By: JOHN D. DEMMY, ESQ. Stevens & Lee 1105 North Market Street 7th Floor Wilmington, DE 19801 (302) 654-5180

For Omega Trust:

3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 OPENING STATEMENT: For the Debtors, by Mr. Poppiti NOTICE OF AGENDA MATTERS: For the Debtors, by Ms. Cohen For the Debtors, by Mr. Poppiti For Restructuring Support Parties, Mr. Alberino For Omega Trust, by Mr. Demmy For the Debtors, by Mr. Poppiti INDEX Page 4 5 6 11 15 18

4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Poppiti. MR. POPPITI: In terms of todays hearing, Your THE COURT: please be seated. how are you? MR. POPPITI: THE COURT: Im fine, Your Honor. Thank you everyone, good afternoon, and Mr. Poppiti,

Its good to see you all.

Good. For the record, Robert Poppiti, from

MR. POPPITI:

Young, Conaway, Stargatt and Taylor, on behalf of the Debtors. THE COURT: Yes. Your Honor, well be working off the One significant

MR. POPPITI:

agenda that we filed for todays hearing.

change, the change that we did advise Chambers of is that Agenda Item 2 is no longer going forward on a contested basis. THE COURT: Thats what I understand, thank you, Mr.

Honor, hopefully its a brief one, and heres how we anticipate it playing out. First, my co-counsel, Ms. Cohen,

would like to get up, at the convenience of the Court give Your Honor an update, of where weve been since the disclosure statement hearing. Building up, of course towards

Mondays confirmation hearing THE COURT: Yes. -- just to give you a brief update of

MR. POPPITI:

5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you. what things have been filed, and what things are going to be filed etc. Your Honor, then Ill take the podium again, and

handle the Debtors Determination Motion, and after that I believe Mr. Alberino will take the podium to handle the 3018 Motion that the Committee filed, and brief the Court on the resolution thats been reached with respect there to. THE COURT: Okay. All right, Mr. Poppiti, thank

Ms. Cohen, good afternoon, good to see you again. MS. COHEN: Good to see you, Your Honor, Alice Im here to report

Cohen, Troutman Sanders, for the Debtors.

that things have been going along in accordance with the schedule. The voting was completed on the 14th of October,

the plan supplements has been filed on October 21st, you will be receiving a balloting report which is due on Thursday, October 27th, and we will also be filing the proposed confirmation order, and findings of fact and conclusions of law on October 27th. THE COURT: MS. COHEN: Wonderful. In addition, that day will include the

confirmation brief to the extent that we have any objections remaining outstanding. We are making significant progress There are

with respect to the objections to confirmation.

basically three categories of objections that the Debtors have received. The first category is that regarding taxing

authorities, we have been working with them on language to be

6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Poppiti. MR. POPPITI: Good afternoon, Your Honor, for the included in the confirmation order, and subject to their review thereof, we believe that will be a resolution of all these taxing authorities objections. THE COURT: MS. COHEN: Okay. There have also been, as a second

category landlord objections to confirmation, and we are in discussions with them, and in the process of agreeing to language respecting - that would resolve their objections. Lastly, we received objections both from Omega Trust and also from Tri-State. As to Omega Trust, you will hear from Mr.

Alberino that there has not only been a resolution as to the Committee Determination Motion with respect to the Omega Trust claims, but also as respects their objections confirmation. So the one remaining item that we are yet to

address will be the Tri-State objection to confirmation. I also want to note that we bobbed with Your Honor relative to the - I should say the Committee bobbed with Your Honor relative to the Committees Determination Motion, a resolution with Castle Harlan Inc., and its affiliated entities as to their Determination Motion. Mr. Poppiti is

going to speak first with respect to the Debtors Determination Motion, thank you very much. THE COURT: Thank you, Ms. Cohen, thank you. Mr.

7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 record again, Robert Poppiti, from Young, Conaway, Stargatt and Taylor. Your Honor, in accordance with the disclosure

statement order we filed our Determination Motion THE COURT: Yes. -- objecting to certain claims solely Those claims went into two

MR. POPPITI:

for plan voting purposes.

buckets, the first of which was which we believed were then overstated 502(b)(6) damages claims, as well as some overstated litigation claims. Your Honor, we did receive

several responses to the motion, since that time weve also had the opportunity to see the ballots come in on the plan. The voting deadline as Ms. Cohen spoke of was October 14th THE COURT: Yes. -- Your Honor will see an official --

MR. POPPITI:

declaration from Omni, I believe before 10:00 a.m. on Thursday THE COURT: Okay. -- well get that filed and over with

MR. POPPITI: the agenda papers.

So to add some context to what weve done

in response to the objections, Class 3 has been accepted, Your Honor, Class 4 has been accepted as has Class 5 under the plan. To give you some specific amounts again these are

pretty accurate, but un-official in the sense that the voting declaration has been yet been filed with the Court, Class 3 we had 103 million in acceptances, no rejections; Class 4,

8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 171 million and some change in acceptances, and about 1 million in rejections; and Class 5, Your Honor, we had around 50 million in acceptances, and around 4.8 million in rejections of the plan. THE COURT: MR. POPPITI: All right. So obviously that I hope gives the

Court some context of why we made some decisions with respect to our Determination Motion. THE COURT: Of course. If I may approach, Your Honor, Ill

MR. POPPITI:

walk you through a red line of a revised form of order which will give you the context in terms of how we resolved some of these responses. THE COURT: All right, thank you, Mr. Poppiti. May I approach? Thank

MR. POPPITI: THE COURT: you, great. MR. POPPITI:

You may, Mr. Poppiti, certainly.

Your Honor, if you look at the second

page of the order at the second ordered paragraph, youll see here what weve addressed as the objection that we received from Blumenthal, Nordrehaug & Bhowmik. And weve done there,

Your Honor, an issue they filed about 20 million dollars in proofs of claim, and obviously were looking to have a 20 million dollar vote. What we decided there was somewhat of a

Solomon like approach where we split the baby, but not quite

9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in that - at the end of the day their going to have about 14.8 million in votes in the plan. THE COURT: Okay. So they basically had a bucket of

MR. POPPITI:

claims that have been filed on behalf of individual claimants, and they had a second bucket which consisted of two I guess quasi class proof of claims if you would. One of

them our objection will stand as to I believe its the 6.3 million dollar one, the other one our objections withdrawn to, and that was the 6.2 million dollar claim. So at the end

of the day we resolved that one by withdrawing in part, and allowing the claims to stand on the other ones. THE COURT: Okay. In order of paragraph 3, Your Honor,

MR. POPPITI:

youll see we got two responses on the 502(b)(6) claims, Ramirez and Firethorn, and we have determined that we are going to go ahead and withdraw as to both of those, the differences just didnt make sense in like the voting report to, you know, waste estate resources, and we already knew the plan had been accepted. The third person claim number 1529 that you see in the third paragraph was a personal injury claim; or actually take a step back it was the litigation claim, I dont recall if it was personal injury or not. Again, in light of where

the voting report was it just didnt make sense to press

10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 changes. forward on the objection. Your Honor, in the fourth

paragraph another litigation claim, Steven Martinez, et all, and very similar to what we did with the Blumenthal claim, we basically split the baby here, Your Honor, it was a 9.25 million dollar claim, theyll have a 4.5 million dollar vote that will count, and I believe that is the vote that actually rejected the plan; a significant vote out of the class creditors. Your Honor, the other changes were just conforming In light of the fact that we dealt with the 5

overstated litigation claims in the text of the order, Exhibit B has actually fallen out of the order now. THE COURT: Okay. And then finally in paragraph, what is

MR. POPPITI:

now paragraph D, we just clarified the reservation of rights language to make clear that not only are our rights reserved, but obviously the rights of the claimants are resolved as well, or reserved as well, and that language resolved an informal response that we received from Spinardi Properties. THE COURT: All right. So Your Honor, unless you have any

MR. POPPITI:

questions regarding the consensual basis now, wed request that you would enter the form of order. THE COURT: Does anyone else wish to be heard first?

All right, I am certainly satisfied with the resolution, and

11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it is certainly an appropriate exercise of your business judgment as to how to proceed with these matters, and very practical, and Im pleased to sign the order. MR. POPPITI: Thank you, Your Honor, with that Ill

turn the podium over to Mr. Alberino who will walk you through the resolution on Agenda Item 2. THE COURT: All right, thank you, Mr. Poppiti. Mr.

Alberino, good afternoon. MR. ALBERINO: Good Afternoon, Your Honor, its I

guess its somewhat strange Im up here on the Committees motion, but I think collectively Ive drawn the short straw -THE COURT: Okay. -- Ill present the settlement to

MR. ALBERINO: Your Honor. THE COURT:

Very well. As Ms. Cohen and Mr. Poppiti

MR. ALBERINO:

indicated earlier weve been working with; when I say we I referred to the Debtors, the Committee and the Restructuring Support Parties have been working collectively with Omega Trust Counsel in an effort to reach, you know, an accommodation on both the 3018 motion filed by the Committee as well as with respect to the confirmation objection which is currently pending. What Id like to do, Your Honor, is

just briefly walk you through some of the material settlement

12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Monday. terms, so we can put those on the record. THE COURT: Okay. I think we contemplate, and Mr. Demmy

MR. ALBERINO:

who is here in the courtroom today will correct if Im wrong, or perhaps elaborate, but we - its our current contemplation that the settlement terms will ultimately be memorialized in the form of confirmation order -THE COURT: Okay. -- that we intend to submit on

MR. ALBERINO:

And to the extent that our thinking changes we will

also advise the Court, you know, as of prior, you know, to the confirmation hearing. THE COURT: Very well, thank you. So just to quickly run you through Number one, obviously this

MR. ALBERINO:

the material points, Your Honor.

will result in the withdraw of the Committees pending 3018 motion as it relates to the Omega Trust, I think will keep the motion pending on the docket through the hearing, through confirmation just to ensure that the settlement is fully buttoned up, and documents are approved of. For voting purposes, Omegas agreed to reduce their claim to 1 dollar for voting purposes. So as reflected in

Mr. Poppitis presentation on the voting report, it contemplates a 1 dollar claim for Omega, but I think as Mr. Demmy would point out to the extent that for some reason our

13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 settlement goes sideways, he would like to reserve the right to come in at confirmation, and argue that his claim should be allowed in a greater amount, so we can try to establish his cram down objection. THE COURT: All right. If, and when necessary -

MR. ALBERINO: THE COURT:

Sure. -- I just thought we should make that

MR. ALBERINO:

point, you know not mislead the Court on the voting report. Number two, the Committee has agreed as part of the settlement to drop certain causes of action that they intended to pursue, you know, in the standing motion. These

include debris characterization action asserted against Omega, as well as any affirmative claims for relief against Omega, including avoidance actions. The next element here is that as part of the overall settlement on these issues with all the major stake holders, the Restructuring Support Parties have agreed along with the company to a modification of the plan to increase the general unsecured I guess recoveries for avoidance actions from 20 percent to 40 percent under the plan. One of the most material elements of the settlement, Your Honor, is weve essentially agreed to I think what we would call a floor and a ceiling for the ultimate Omega claim allowed in this case. You know the end result of this

14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 settlement is to narrow the issues to the ultimate claim allowance amount that would be at issue here. We now have a

floor, we now have a ceiling, you know, and as part of that the Omega Trust Parties have agreed along with the company, the Committee and the Restructuring Support Parties to create you know an exception under the plan to allow them to extend their claims ultimately allowed above 5 million dollars to participate in the cash recovery. In a deed the Omega parties have agreed that whatever the ultimate claim is allowed in this case, they will elect to take - they will take the cash recovery and will not elect, you know, to take and participate in the equity recovery on account of that classified, general unsecured claim. THE COURT: Okay. A few more points, the Omega Trust

MR. ALBERINO:

Entities have agreed to permanently give up any claims with respect to territorial exclusivity against Perkins, as well as their franchisees that relate to the royalty agreements. We have also - weve agreed that with respect to the ultimate claim allowance issue that we would request, you know, that the Court schedule a hearing on or before November 30th, to conduct that hearing. And a lot of discovery in

current connection with the 3018. THE COURT: Okay.

15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ALBERINO: And all parties have retained So I think

experts, some depositions have already occurred.

the parties would be in position to hopefully kind of fast track the discovery process, and if we cant resolve the claim you know hopefully have a hearing in front of Your Honor, on the limited issue of claim allowance. Now and

finally Perkins has agreed to make a series of modifications to the royalty rate structure that the Omega parties are currently paying with respect to stores that are actually owned by the Omega Trust. So, all these provisions will be kind of more fully reflected on the term sheet to be attached to the confirmation order, or the order itself, but reliance upon that, and the collective agreement among the parties, we believe we reached a resolution on the 3018, as well as a resolution that hopefully paves the way to a consensual confirmation with Omega. THE COURT: All right. Thank -

MR. ALBERINO:

Thats all, Your Honor, unless you

have any other questions. THE COURT: you, Mr. Alberino. MR. ALBERINO: THE COURT: MR. DEMMY: Thank you. No, it was very straight forward. Thank

Mr. Demmy, good afternoon. Good afternoon, Your Honor, John Demmy

16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of Stevens & Lee for the Omega Trust Entities. Just two

points in clarification very briefly, one not even clarification just acknowledgement of a general reservation of parties, we think we have a deal we have to write it down THE COURT: MR. DEMMY: Absolutely. -- and finalize it, but I dont expect

any major problems just if there are, you know, the parties are rolling things forward, and reserving their rights generally, and I think thats agreeable to all. And second,

I think you know if I misheard this I apologize, but I think Mr. Alberino talked about the Committee agreeing not to pursue certain claims THE COURT: MR. DEMMY: Yes. -- and re-characterization arguments.

It is really broader than that its the Restructuring Support Parties, the Committee and the Debtors, on behalf of the estate generally, so that those issues are to put bed forever and ever -THE COURT: MR. DEMMY: Okay. -- in return for the other commitments Thats a very

that the Omega Trust Parties are making here.

important term to us, I just wanted to clarify that on the record. THE COURT: Sure, it wouldnt make sense for one of

17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the entities not to proceed, and the others then to do so. MR. DEMMY: THE COURT: Exactly, right. I understand, thank you, Mr. Demmy. All

right, and that will then be encompassed in some sort of form of document, or in the confirmation order itself your settlement terms? MR. ALBERINO: Yes, Your Honor, were working on a

- we have a full - a very advance term sheet, and it remains to be seen whether we can attach the term sheet to the order, or whether we just memorialize the terms within the order paragraphs. THE COURT: Very well. Are you looking for a

hearing date now to consider any MR: DEMMY: Your Honor, this is a - really been

made at the Trusts request because we dont want the claim process now to go on, and on, and on. THE COURT: MR: DEMMY: Right. So we asked for a speedy resolution of

the claim amounts, since as Mr. Alberino mentioned, we have done some discovery there might be some more to do, but we anticipate that we could get there. We didnt want to

interfere with confirmation so, and then there was of course Thanksgiving, so we just picked November 30th as kind of the target date. THE COURT: Sure.

18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. DEMMY: Before which the Court might have a day Maybe we wont have the

for us to have this hearing.

hearing, were still going to talk about the claim as well. MR. ALBERINO: Your Honor, just to interject, given

the fact that there are a number of attorneys that are actually involved doing the involvement litigation, and involved in the discovery process, it probably makes sense for us to maybe check with your chambers for a hearing date. I think coordinating among all the counsel, and hopefully by Monday well have a date selected. MR. DEMMY: Thats a fair point, Your Honor, I agree

with that for the convenience of all the counsel involved, so we had asked that this request be made at the hearing; I consider it made, and well firm up the date, between now and Monday. THE COURT: Well find something. MR. DEMMY: I only ever expect that you would do It may tough, but well see, all right?

your best, Your Honor. THE COURT: All right, well that well always do.

It may not be good enough thats what always concerns me, but well try. Anyone else? Your Honor, I think were all set.

MR. POPPITI: THE COURT:

All right. We look forward to getting our

MR. POPPITI:

19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 /s/Mary Zajaczkowski Mary Zajaczkowski, CET**D-531 October 28, 2011 Date I certify that the foregoing is a correct transcript from the electronic sound recording of the proceedings in the aboveentitled matter. documents on file, on Thursday get you an agenda, and hopefully be here largely on an un-contested basis on Monday. THE COURT: That would be wonderful, I hope so for

all of your sake I guess, as well as mine. MR. POPPITI: We hope - we know what you have

coming down the pike next week, Your Honor. THE COURT: say the least. MR. POPPITI: THE COURT: Yes, well good luck. Thank you, and if theres Im pleased Yes, next week will be interesting to

Thank you.

nothing further then it was good to see you all.

with your resolution, and we will stand in recess until Monday. MR. POPPITI: THE COURT: Thank you.

Thank you, good day to you. CERTIFICATE

UNITED STATES BANKRUPTCY COURT District of Delaware

In Re: Perkins & Marie Callender's Inc., et al. 6075 Poplar Avenue Suite 800 Memphis, TN 38119 EIN: 621254388 The Restaurant Company

Chapter: 11

Case No.: 1111795KG

NOTICE OF FILING OF TRANSCRIPT AND OF DEADLINES RELATED TO RESTRICTION AND REDACTION A transcript of the proceeding held on 10/25/2011 was filed on 10/28/2011 . The following deadlines apply: The parties have 7 days to file with the court a Notice of Intent to Request Redaction of this transcript. The deadline for filing a request for redaction is 11/18/2011 . If a request for redaction is filed, the redacted transcript is due 11/28/2011 . If no such notice is filed, the transcript may be made available for remote electronic access upon expiration of the restriction period, which is 1/26/2012 unless extended by court order. To review the transcript for redaction purposes, you may purchase a copy from the transcriber (see docket for Transcriber's information) or you may view the document at the clerk's office public terminal.

Clerk of Court Date: 10/28/11

(ntc)

Notice Recipients
District/Off: 03111 Case: 1111795KG User: Brandon Form ID: ntcBK Date Created: 10/28/2011 Total: 7

Recipients of Notice of Electronic Filing: ust United States Trustee USTPREGION03.WL.ECF@USDOJ.GOV TOTAL: 1 Recipients submitted to the BNC (Bankruptcy Noticing Center): db Perkins &Marie Callender's Inc., et al. 6075 Poplar Avenue Suite 800 Memphis, TN 38119 aty Brett D. Goodman Troutman Sanders LLP The Chrysler Building, 405 Lexington Ave New York, NY 10174 aty Hollace Topel Cohen Troutman Sanders LLP The Chrysler Building, 405 Lexington Ave New York, NY 10174 aty Mitchel H. Perkiel Troutman Sanders LLP The Chrysler Building, 405 Lexington Ave New York, NY 10174 aty Robert F. Poppiti, Jr. Young, Conaway, Stargatt &Taylor, LLP The Brandywine Building 1000 West Street 17th Floor Wilmington, DE 19801 aty Robert S. Brady Young, Conaway, Stargatt &Taylor The Brandywine Bldg. 1000 West Street, 17th Floor PO Box 391 Wilmington, DE 19801 TOTAL: 6