1 2 3 4 5 6 7 8 9 10 APPEARANCES: 11 IN RE:

UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE ) ) PERKINS & MARIE CALLENDERS INC.) et al., ) Debtors. ) ) ) ) ) ) Case No. 11-11795 (KG) Chapter 11 Courtroom No. 3 824 Market Street Wilmington, Delaware 19801 September 8, 2011 10:00 A.M.

TRANSCRIPT OF HEARING BEFORE HONORABLE KEVIN GROSS UNITED STATES BANKRUPTCY JUDGE

For the Debtors: 12 13 14 15 16 17 18 ECRO: 19 Transcription Service: 20 21 22 23 24 25

Young Conaway Stargatt & Taylor, LLP By: ROBERT S. BRADY, ESQUIRE ROBERT POPPITI, ESQUIRE 1000 West Street, 17th Floor Wilmington, Delaware 19801 (302) 571-6600 Troutman Sanders LLP By: HOLLACE COHEN, ESQ. The Chrysler Building 405 Lexington Avenue New York, NY 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 the Creditors Committee:

Ropes & Gray By: MARK SOMERSTEIN, ESQUIRE 1211 Avenue of the Americas New York, New York 10036 (212) 596-9000 Stevens & Lee By: JOHN DEMMY, ESQUIRE 1105 North Market Street, 7th Floor Wilmington, Delaware 19801 (302) 654-5181

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 NOTICE OF AGENDA MATTERS: For the Debtors, by Ms. Cohen For the Committee, by Mr. Somerstein For Omega Trust, by Mr. Demmy For the Debtors, by Mr. Poppiti INDEX Page 4 10 11 13

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 see you. THE CLERK: THE COURT: please be seated. Please rise. Good morning, everyone; thank you and

Its good to see you all and I really

apologize for the delay, but I thought we could fit both in but there was a little bit of speechifying going on as you might imagine, so were a little late and I thank you for your indulgence here. MR. BRADY: Certainly no problem, Your Honor; Robert And I

Brady on behalf of Perkins and Marie Callender's, Inc. dont think well have any speechifying here.

Were here for

the disclosure statement hearing, Your Honor, and solicitation procedures. And the good news is, I believe,

weve fully resolved all of the outstanding responses and objections. And Hollace Cohen is here from Troutman Sanders

and she will advise the Court where we are and the language changes were working on. THE COURT: Thank you, Mr. Brady. Ms. Cohen, good

morning; its good to see you again. MS. COHEN: Good morning, Your Honor, its good to

Im Hollace Cohen, Troutman Sanders, on behalf of

Perkins & Marie Callenders Inc. and their affiliated Debtors. As you know, were here to seek entry of an order

approving the Debtors second amended -- Im going to call it the second amended disclosure statement for the Debtors second amended joint plan of reorganization. I mention that

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 to you, Your Honor, because on Saturday in the very wee hours of the morning, we filed our first amended disclosure statement and first amended joint plan of reorganization and that has virtually 90 or more percent of the changes that we have made from the initial disclosure statement and plan that we previously filed with this Court on July 14th, 2011. I can walk you through some of the changes that appear in that version and then the minimal number of changes that have been made in the second amended, and I can tell you that based on conversations out in the hall which we used -we put the time outside to good use. We really resolved as

Mr. Brady noted all of the objections, but we have a few little tweaks that we need to do to put in some additional language. As you know, when we were here on August 22nd, 2011 we were before you to report that there were ongoing negotiations among the Debtors, the Official Committee of Unsecured Creditors and the restructuring support parties with respect to the treatment of the claims of holders of the Debtors senior unsecured notes and general unsecured claims. The Committee counsel reported to you that the two key issues were the cash available to pay those claims and also the treatment of the PMC Holdings LLC membership interest that would be issued to holders at senior note claims and certain holders of general unsecured claims. We made a great deal of

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 progress in all of those respects and the plan, the first amended plan, that was filed on Saturday morning and the first amended disclosure statement set forth basically a new treatment order; an enhanced treatment for unsecured creditors and holders of senior notes. In particular in

addition to that treatment, I want to note that we substantially enhanced our disclosure statement taking into account some of the objections that were filed. And among other things, there is now an Exhibit C with the companys projections and Exhibit D which has a liquidation analysis. In addition to that, there is a

summary of significant assumptions behind the projections that is found in the section of the plan that deals with projections of the disclosure statement, rather, that deals with projections and valuation. In addition to that, we have

a new Exhibit B to the plan which is the PMC Holding LLC agreement which deals with issues of governance and, therefore, sets out in great detail what the rights of holders in membership interest will be. The disclosure statement happily contains the recommendation of the creditors committee that creditors in classes four, which are the senior note claims, and creditors in class five, general unsecured claims, should vote in favor of the plan. As detailed in the second amended disclosure

statement $7 million dollars will be available to pay holders

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 of allowed general unsecured claims of $5 million dollars or less and those holders that allowed senior note claims of $5 million dollars or less in principle amount that elect to receive cash. Such holders will receive cash equal to the

lesser of 14% of the holders allowed general unsecured claim or allowed senior notes claim or such pro rata share, such holders pro rata share of the cash cap amount which is the $7 million dollars. The plan further provides that certain specified general unsecured claims which is a new term that we have in the plan including claims arising under certain franchise development agreements and Omega and Tristate who both filed objections are counterparties to such agreements. Those

claims and those of Castle Harlan and perhaps others at the time of the plan supplement if they are allowed in the amount of $5 million dollars or less or elect to reduce their claims to $5 million dollars or less, then the cash cap amount will be increased by 14%, so that other creditors will not be affected by the allowance of those claims; other creditors receiving cash. As far as other creditors receiving membership interest, there will be whatever dilution occurs out of their -- the fact that membership interest would be issued on claims in excess of $5 million. THE COURT: MS. COHEN: Yes. Two significant features of the amended

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 resolved. plan is that the holders of general unsecured claims with less than $5 million may make the class five equity of elections. So now holders of general unsecured claims, if And creditors

they choose, can receive membership interest.

with allowed senior note claims of $5 million dollars or less may make the cash election, so theres kind of parity now between the two groups as to their choices. Holders of

allowed unsecured claims in excess of $5 million that do not make the cash election will receive as noted the PMC LLC membership interest. Finally, the key substantive change in the treatment that the second amended plan makes is that the amount of convenience claim has been reduced from $5,000.00 to $2500.00. And as a result of that change, while the first

amended plan provided for a cash cap amount of $6.75 million, as I noted the plan now provides for $7 million, so theres been an increase to compensate in the cash for the remaining creditors. As we noted, all of the objections have been Two landlords filed objections. And their

objection was based upon the issue of assignability. THE COURT: MS. COHEN: Right. And to resolve those, we removed the

assignability provision in the plan and, hence, from the disclosure statement. In terms of the comments that we got

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 from the two parties to the franchise development agreements, we enhanced the disclosure in Article IV, Section 6 of the disclosure statement entitled Territorial Exclusivity which was originally one paragraph and has been expanded to several paragraphs to reflect the fact that the Committee has advised the Debtors that they believe that the franchise development agreements constitute equity interest and, as such, are not entitled to any distribution as creditors under the plan. And that the Committee intends to object to such claims and seek re-characterization of those claims as equity interest. The Creditors Committee has also indicated that it may seek an order of the Bankruptcy Court committing it to pursue avoidance actions against the counterparties to the franchise development agreement. So, therefore, the request that the

franchise development agreement counterparties be advised of how they might be treated has largely been satisfied by these additions to the disclosures. But we have continued our discussions, as I said, in the hall and we will be making some further disclosures responsive to their requests. And one of those is that we

have agreed with each of the counsel to the franchise development agreement counterparties that at such time, since the Debtor is currently continuing to evaluate what should be the appropriate treatment of any claims arising from those agreements, that the Debtors will when they make that

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 Cohen. determination, should that occur before the time of filing of the plan supplement, will contact those counsel to advise them of their clients treatment and the decision of the Debtors in that regard. The disclosure statement also

indicates in that section the size of the claims at least of Omega which are substantial it is approximately $50.6 million, but notes that the Debtors believe that that size of claim is greatly overstated. In any event, we have dealt with all of those objections. Well continue to make some technical revisions

to both Exhibit C which includes the projections and also potentially Exhibit D, but in very minor tweaks as to amounts of claim. And we would hope, Your Honor, to be able to

submit to you either later today or early tomorrow both the second amended disclosure statement and the second amended plan. THE COURT: Excellent; all right, thank you, Ms. Let me hear from Mr.

I dont have any questions for you.

anyone else who would like to state a position. Somerstein, good afternoon; good morning, sir. MR. SOMERSTEIN: Somerstein -THE COURT:

Good morning, Your Honor; Mark

Its been a long day already. Yes, Your Honor; no speechifying

MR. SOMERSTEIN:

for this hearing; Mark, for the record, Mark Somerstein,

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 Ropes & Gray for the Committee. Judge, Im only going to

stand up to stay Ms. Cohen did a great job explaining what the changes were. We are very pleased. The Committee is

very pleased and Im on behalf of the Committee pleased to tell you that through the very great efforts of the company and its counsel, Wayzata and its counsel, we were able to negotiate long and hard with everybody. We think the

Committee has materially improved the recoveries for creditors. Were very pleased by that and appreciate the

cooperation with which all the parties have worked and we look forward to hopefully a confirmation of the plan as contemplated. Thank you. Thank you, Mr. Somerstein. Mr. Denny

THE COURT: for Omega Trust. MR. DEMMY:

Thats correct, Your Honor; John Demmy

of Stevens & Lee for the Omega Trust, and Ill take three minutes to make a very brief speech perhaps. THE COURT: And I said Mr. Denny; Im sorry. I had

Mr. Denny just before you got, before that last hearing ended, Mr. Demmy. MR. DEMMY: passed by me. I didnt hear the distinction so it

Thank you, Your Honor. Thank you. I really dont disagree with what Ms.

THE COURT: MR. DEMMY:

Cohen said just to advise Your Honor of the process here.

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 The amended disclosure statement that was filed on Saturday did, in fact, address some of the objections and other concerns that we raised in our objection had been filed obviously prior to the first amended disclosure statement. THE COURT: MR. DEMMY: Right. We did have a conversation yesterday as

Ms. Cohen indicated to try to further flesh out and resolve some of those issues and we did propose additional language and we did talk about that language outside in the hallway before the hearing. My understanding is well go back and

they will send to me some additional changes to the disclosure statement. And I have no understanding or belief

at this point that we wont be able to resolve those in short order. One of the essential concerns that Omega Trust had is the and as Ms. Cohen noted was the undefined nature of what our contracts are or are not or what are claims are or are not from the point of view of the Debtors. We understand

what the Committee has said about the franchise development agreement and perhaps the royalty agreement that relates to the franchise development issues, but we wanted to know what the Debtors view was because we wanted to know where we stand in the case prior to the voting deadline. And the

Debtor in earnest said were still evaluating and we dont know and we accept that; I think thats what Ms. Cohen said.

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 Poppiti. MR. POPPITI: THE COURT: MR. POPPITI: Good morning, Your Honor. Good morning. For the record Robert Poppiti from Your Honor, I think we just And if they come to any conclusions in that regard we will be advised, but we will vote a class five claim assuming the worst under the circumstances and go from there. So I just wanted to advise the Court of where we are on those things. Debtors position. It was important for us to understand the The Debtors said they dont have a

position on whether our contracts are executory, whether theyre not executory, whether to be rejected or assumed, whether they agree or disagree with the Committees, recharacterization issue. So we take them at their word on

that and well move the process forward and cooperate in getting the disclosure statement in a fashion that can be approved by the Court. THE COURT: MR. DEMMY: THE COURT: All right, Mr. Demmy, thank you. Thank you. Thank you very much. Anyone else? Mr.

Young Conaway Stargatt & Taylor.

wanted to take a moment as Ms. Cohen said well present the - well lets take a step back. As Ms. Cohen said, well have

the second amended disclosure statement and the second amended plan either later day or tomorrow morning. And of

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 course, we have the matter of the solicitation procedures order which, of course, will approve our voting and balloting process and, obviously, the second amended disclosure statement. So our hope is once that second amended plan and

second amended disclosure statement is finished, well send the solicitation procedures order over under certification of counsel if thats acceptable to the Court. THE COURT: It certainly is, Mr. Poppiti. And if

there are issues remaining I think you can always get me on the telephone and we can do it that way. can move the process forward. MR. POPPITI: We appreciate that, Your Honor. And All right, so we

Im sure as you saw from the agenda and amended agenda we filed for todays hearing, we did file a revised solicitation procedures order -THE COURT: MR. POPPITI: Yes --- on Saturday morning. We did attach

a redline to what we had initially filed back in August when we filed the motion. Im happy to walk Your Honor through

the redline, although I think the changes were primarily conforming changes, as a result of the fact that we filed a first amended plan and disclosure statement. clean up -THE COURT: MR. POPPITI: Thats how it looked to me. And then I, you know, the one thing we Its a lot of

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 would point out though is we did receive an informal response from Wilmington Trust Company -THE COURT: MR. POPPITI: Yes. -- on the solicitation procedures. We One,

have resolved that informal response which was twofold. they wanted a 30 day balloting process.

In other words, 30

days from the date the packages go out to the voting deadline, so we bumped the 25 days up to the 30 at their request. THE COURT: MR. POPPITI: nominee process here. Right. And, secondly, we clarified the voting The way the initial order could have

been read was that Wilmington Trust on behalf of the senior notes and I believe Bank of New York on behalf of the senior secured notes would had to have served as the voting nominee. That obviously was not our intention so we clarified that in the form of order that we filed on Saturday. So unless you have any questions, Your Honor, what I would just propose is if you like me to I can step you through the proposed timeline we have -THE COURT: Yes. So Id be happy to do that. And, you know, Im a So after

MR. POPPITI: THE COURT:

Lets do that.

Judge who kind of messes up the dates on occasion.

we talk about it, it might be helpful if when you send over

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 the amended disclosure statement and order, if you fill in those dates for me as well. MR. POPPITI: THE COURT: MR. POPPITI: THE COURT: MR. POPPITI: Okay. But yes -No problem, Your Honor. Lets go, Im ready. Okay so were proposing September 14th

for the solicitation deadline which would be next Wednesday and thats obviously the deadline for us to get out our solicitation packages. THE COURT: be sufficient time? MR. POPPITI: Were fairly comfortable that we will. And you have time -- you think that will

I guess the only situation that could arise for some reason we went into the weekend without an order from the Court on the solicitation procedures. That may present some issues

but assuming we get that order -THE COURT: MR. POPPITI: THE COURT: attended to promptly. MR. POPPITI: Right and obviously a lot of that is That wont happen yeah -I think well be fine, Your Honor. If you send something over, it will be

on us to get the second amended plan and DS over to you. Then September 14th would also be the deadline, Your Honor, for the confirmation hearing notices to go out to the

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 contract parties, as well as for the notices of non-voting status to go out to the non-voting parties, 25, no later than 25 days prior to the confirmation hearing, and well get to that date in a moment, will be the deadline for us to go out and publish in USA Today a notice of the confirmation hearing. As I said before, were going to allow for 30 days from the solicitation deadline to the voting deadline, so that will put us at an October 14th, 2011 voting deadline. With respect to claims objections and determination estimation motions, Your Honor, its as follows: October 3rd will be the deadline for the Debtors to file a claims objection and/or determination motion in order for those to have an impact on plan voting. And, similarly, October 11th

will be the deadline for a creditor to file a 3018 motion if they believe that they should vote in an amount different or that they should actually vote. The form of order, Your

Honor, contemplates a confirmation hearing on October 31st, 2011 at 10:00 a.m. and we did coordinate with Your Honors scheduling clerk on that date. THE COURT: MR. POPPITI: Good. Confirmation objections are due on or

before October 14th at 4:00 p.m. and responses must be filed on or before 10:00 a.m. on October 27th. So obviously as Your

Honor sees the confirmation objection deadline its pretty

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 far in advance of the confirmation hearing and thats because were allowing for a pretty full process here. THE COURT: Absolutely and it will be helpful also

in trying to resolve any objections. MR. POPPITI: Thats exactly right, Your Honor. And

then October 27th at 10:00 a.m. will also be the deadline for us to file our proposed findings of facts and conclusions of law, any affidavits or declarations, as well as for us to get the voting report on file from. And then, finally, with

respect to the assumption of executory contracts and unexpired leases, the cure payment schedule will be filed by the Debtors no later than October 17th and parties will have five business days thereafter to respond if they believe they have any issues with respect to the proposed cure amounts. So, Your Honor, other than that, you know, the Debtors believe that the solicitation procedures that we proposed are fairly standard for this district. Unless you

have any questions, Your Honor, we would request then we send the form of order over that you entered. THE COURT: Thank you, Mr. Poppiti. Anyone on the

solicitation procedures?

Well I am certainly satisfied that

the disclosure statement meets the requirements of Section 1125 and certainly discloses the information that a reasonable investor would need to know to make a determination as to whether or not to vote on the plan, in

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 that. MR. PERKIEL: electronically. MR. SOMERSTEIN: Judge, I assume I can be excused He was on site and I think I was there favorably on the plan. And the solicitation procedures as

Mr. Poppiti indicated are in keeping with the procedures here in this district and are acceptable to the Court as well. MR. POPPITI: Thank you, Your Honor. I think thats

all we have on the Debtors side.

I dont know if anyone has

anything else, but we thank Your Honor for his time. THE COURT: And poor Mr. Perkiel was up all night

getting that disclosure statement filed. MR. PERKIEL: that, Your Honor. THE COURT: I know you did, but hopefully you Probably Mr. Well I did have a helping hand in

werent there at whatever crazy hour that was. Poppiti was there though. MR. POPPITI:

Your Honor, I will take no credit for

from remainder of new page? THE COURT: Yes, certainly. Thank you. It will be

MR. SOMERSTEIN: THE COURT:

Oh yes you certainly may be.

a relief to you, Im sure. MR. SOMERSTEIN: I would have been on the phone but

for I was going to be here anyway.

20 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 September 8, 2011 Date CERTIFICATE I certify that the foregoing is a correct transcript from the electronic sound recording of the proceedings in the aboveentitled matter. Honor. THE COURT: That way they dont get, you know, just THE COURT: Sure. Thanks, Judge. Anything else, counsel? If you dont mind, Mr.

MR. SOMERSTEIN: THE COURT:

You betcha.

All right I will await delivery.

Poppiti, just call us or send an e-mail or something to let us know the papers are on their way. MR. POPPITI: Of course and we appreciate that, Your

left sitting somewhere. MR. POPPITI: THE COURT: Great. And Im getting right on them that way.

All right, counsel, thank you all and a good day to you.

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 9/8/2011 was filed on 9/9/2011 . 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 9/30/2011 . If a request for redaction is filed, the redacted transcript is due 10/11/2011 . If no such notice is filed, the transcript may be made available for remote electronic access upon expiration of the restriction period, which is 12/8/2011 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: 9/9/11

(ntc)

Notice Recipients
District/Off: 03111 Case: 1111795KG User: Brandon Form ID: ntcBK Date Created: 9/9/2011 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