Case DOT Doc 10 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Main Document Page 1 of 7

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1 Case DOT Doc 10 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Main Document Page 1 of 7 IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION In re: ROOMSTORE, INC., Debtor. Chapter 11 Case No. 11- MOTION OF DEBTOR FOR ENTRY OF AN ORDER PURSUANT TO 11 U.S.C. 105(a), 363, AND 541(d) AND FEDERAL RULES OF BANKRUPTCY PROCEDURE 6003 AND 6004(h) AUTHORIZING THE DEBTOR TO CONTINUE PERFORMANCE OF AND HONOR OBLIGATIONS UNDER CERTAIN CONSIGNMENT ARRANGEMENTS The debtor and debtor-in-possession (the Debtor ) in the above-captioned chapter 11 case (the Bankruptcy Case ) hereby seeks the entry of interim order and final orders, substantially in the form attached hereto as Exhibit A (the Interim Order ) 1 and Exhibit B (the Final Order ), pursuant to sections 105(a), 363 and 541(d) of title 11 of chapter 11 of the United States Code, 11 U.S.C. 101, et seq., as amended (the Bankruptcy Code ), and Rules 6003 and 6004(h) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ), authorizing, but not directing, the Debtor to continue performance of, and honor obligations under, certain 1 An Interim Order and a Final Order are required in order for the Debtor to comply with Bankruptcy Rule 6003(b). LOWENSTEIN SANDLER PC Kenneth A. Rosen (NJ Bar No ) (Admission Pro Hac Vice Pending) Bruce D. Buechler (NJ Bar No ) (Admission Pro Hac Vice Pending) Mary E. Seymour (NJ Bar No ) (Admission Pro Hac Vice Pending) Cassandra M. Porter (NJ Bar No ) (Admission Pro Hac Vice Pending) Andrew David Behlman (NJ Bar No ) (Admission Pro Hac Vice Pending) 65 Livingston Avenue Roseland, New Jersey (973) and - KAPLAN & FRANK, PLC Troy Savenko (Va. Bar No ) Leslie A. Skiba (Va. Bar No ) 7 East 2nd Street ( ) Post Office Box 2470 Richmond, Virginia (804) Proposed Co-Counsel to the Debtor and Debtor-in-Possession

2 Case DOT Doc 10 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Main Document Page 2 of 7 prepetition consignment sales arrangements and, as appropriate, releasing funds owed to vendors pursuant to those prepetition consignment sales arrangements (the Motion ). In support of this Motion, the Debtor respectfully represents as follows: PRELIMINARY STATEMENT 1. The Debtor is a party to various pre-petition consignment sales arrangements (the Consignment Arrangements ) with certain vendors listed on the schedule attached hereto as Exhibit C (the Consignment Vendors ). Under the Consignment Arrangements, the Consignment Vendors provide the Debtor with certain products or merchandise that is offered for sale to the Debtor s customers in the ordinary course of business, and the Debtor does not pay the Consignment Vendors for the goods until the products are actually sold. Consequently, the Consignment Arrangements represent a way for the Debtor to obtain merchandise to offer for sale to its customers while avoiding the financial outlay that would otherwise be needed to purchase the goods from the Consignment Vendors and reducing the Debtor s exposure if the products are ultimately not sold. 2. Pursuant to the Consignment Arrangements, the Consignment Vendors retain title to the goods even as they are in the Debtor s possession. The Debtor generally remits the proceeds from the sale of a consigned good (the Consignment Proceeds ) to the Consignment Vendors on a regular basis. Through this Motion, the Debtor seeks permission, but not direction, to continue performance of and to honor its obligations under the Consignment Arrangements and, as appropriate in accordance with the Consignment Arrangements, releasing the Consignment Proceeds to the Consignment Vendors. BACKGROUND 3. On the date hereof (the Petition Date ), the Debtor commenced the Bankruptcy Case by filing a voluntary petition for relief under chapter 11 of the Bankruptcy Code. 4. No trustee or examiner has been appointed in the Bankruptcy Case. No official committee of unsecured creditors of the Debtor has yet been appointed. The Debtor continues to 1

3 Case DOT Doc 10 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Main Document Page 3 of 7 manage and operate its business as a debtor-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. 5. The Debtor was founded in 1992 in Dallas, Texas with four retail furniture stores. With over $300 million in net sales for its fiscal year ending 2010, the Debtor is one of the thirty largest furniture retailers in the United States. 6. Currently, the Debtor is headquartered in Richmond, Virginia and operates a chain of sixty-three retail furniture stores, including both large-format stores and clearance centers (collectively the Retail Stores ) in eight states: Pennsylvania, Maryland, Virginia, North Carolina, South Carolina, Florida, Alabama, and Texas. In addition, the Debtor has seven warehouses and distribution centers (the Warehouses ) located in Maryland, North Carolina, Texas, and Virginia that service the Retail Stores. 7. Prior to the Petition Date, the Debtor commenced store closing sales at five of its Retail Stores, located in Hoover, Alabama; Fayetteville, North Carolina; Houston, Texas, Norfolk, Virginia, and Baltimore, Maryland. 8. General information about the Debtor, its business, its capital structure, the events leading to the filing of its Bankruptcy Case, and the relief sought by the Debtor in its various First Day Pleadings is contained in the Declaration of Lewis M. Brubaker, Jr., Senior Vice President and Chief Financial Officer of RoomStore, Inc., in Support of Chapter 11 Petition and First Day Pleadings (the Brubaker Declaration ) filed contemporaneously herewith. JURISDICTION 9. This Court has jurisdiction over this Motion under 28 U.S.C. 157 and This is a core proceeding under 28 U.S.C. 157(b). 10. Venue is proper under 28 U.S.C and The statutory predicates for the relief sought herein are sections 105(a), 363 and 541(d) of the Bankruptcy Code and Bankruptcy Rules 6003 and 6004(h). 2

4 Case DOT Doc 10 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Main Document Page 4 of 7 RELIEF REQUESTED 12. By this Motion, the Debtor requests entry of an order authorizing, but not directing it to (i) continue performance of and honor obligations under its Consignment Arrangements and, (ii) as applicable, release the Consignment Proceeds to the Consignment Vendors pursuant to the terms of the Consignment Arrangements. BASIS FOR RELIEF 13. The Debtor believes that the Consignment Proceeds constitute trust fund obligations that must be held for the benefit of certain Consignment Vendors and, therefore, are not property of the Debtor s estate. See e.g., In re East Coast Herbals, Inc., 2006 WL , 10 (Bankr. D. Md. Sept. 26, 2006)(citing In re Rine & Rine Auctioneers, Inc., 74 F.3d 854, 857 (8th Cir.1996) ( Generally, where a debtor holds property as a consignee, the property will not become property of the estate. )); 11 U.S.C. 541(d). The Debtor, therefore, has no equitable interest in the Consignment Proceeds, and such funds are not available for the satisfaction of creditors claims. 14. To the extent that Consignment Proceeds are not trust funds, the Debtor believes that performance under the Consignment Arrangements is justified under section 105(a) of the Bankruptcy Code which codifies the inherent equitable powers of the bankruptcy court (commonly referred as the necessity of payment rule or the doctrine of necessity ), empowering the court to issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. 11 U.S.C. 105(a). A bankruptcy court s use of its equitable powers to authorize the payment of pre- petition debt when such payment is needed to facilitate the rehabilitation of the debtor is not a novel concept. In re Ionosphere Clubs, Inc., 98 B.R. 174, 175 (Bankr. S.D.N.Y. 1989). Pursuant to section 105(a) of the Bankruptcy Code, the Court can permit pre-plan payment of a pre-petition obligation when essential to the continued operation of the debtor. In re NVR L.P., 147 B.R. 126, 127 (Bankr. E.D. Va. 1992); see, e.g., In 3

5 Case DOT Doc 10 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Main Document Page 5 of 7 re Lehigh & New England Ry. Co., 657 F.2d 570, 581 (3d Cir. 1981); In re Just for Feet, Inc., 242 B.R. 821, 825 (D. Del. 1999). 15. As set forth above, performance under the Consignment Arrangements is necessary and critical to maintaining a consistent stream of certain goods to the Debtor s stores and comports with the expectations of the parties and the ordinary course of business between the parties. Accordingly, authorizing the Debtor to release the Consignment Proceeds to the Consignment Vendors and to continue perform and honor its obligations under the Consignment Arrangements is important to maintaining the Debtor s going concern value and emerging successfully from Chapter Finally, the Bankruptcy Code does not prohibit a debtor from paying trust fund and consignment obligations, and the proposed relief will not prejudice the rights of general unsecured creditors or other parties in interest. Relief similar to that requested herein has been granted in other Chapter 11 cases. See, e.g., In re The Great Atlantic and Pacific Tea Company, Inc., Case No (Bankr. S.D.N.Y. Jan. 13, 2011) and In re FiberMark, Inc., Case No (Bankr. D. Vt. April 27, 2004). The Debtor submits that the present circumstances warrant similar relief in its Bankruptcy Case. 17. For the foregoing reasons, the Debtor believes that granting the relief requested herein is appropriate and in the best interests of its estate. THE REQUIREMENTS OF BANKRUPTCY RULE 6003 ARE SATISFIED 18. The Debtor seeks immediate authorization for the relief contemplated by this Motion. Pursuant to Bankruptcy Rule 6003(b), the Court cannot grant relief regarding a motion to use, sell, lease or otherwise incur an obligation regarding property of the estate, including a motion to pay all or part of a claim that arose before the filing of the petition within twenty-one 4

6 Case DOT Doc 10 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Main Document Page 6 of 7 days of the filing of the petition unless the relief is necessary to avoid immediate and irreparable harm. Fed. R. Bankr. P. 6003(b). 19. For the reasons set forth above, the Debtor submits that the requirements of Bankruptcy Rule 6003(b) are met by seeking entry of the Interim Order at this time and requesting the Court to schedule a further hearing for entry of the Final Order granting this Motion at a later date. Moreover, the relief requested in the Motion is necessary to avoid immediate and irreparable harm to the Debtor and its estate. REQUEST FOR WAIVER OF STAY 20. In addition, by this Motion, the Debtor seeks a waiver of any stay of the immediate effectiveness of an order approving this Motion. Pursuant to Bankruptcy Rule 6004(h), [a]n order authorizing the use, sale, or lease of property other than cash collateral is stayed until the expiration of fourteen days after entry of the order, unless the court orders otherwise. For the reasons set forth above, the Debtor submits that ample cause exists to justify a waiver of the fourteen day stay imposed by Bankruptcy Rule 6004(h). RESERVATION OF RIGHTS 21. Nothing contained herein is intended or should be construed as (i) an admission as to the validity of any claim against the Debtor; (ii) a waiver of the Debtor s right to dispute any claim; or (iii) an approval or assumption of any agreement or contract, including any Consignment Arrangement, pursuant to section 365 of the Bankruptcy Code. NOTICE 22. Notice of this Motion will be given to (i) the Office of the United States Trustee for the Eastern District of Virginia; (ii) counsel to the Debtor s prepetition lender; (iii) the Debtor s twenty-five largest unsecured creditors; and (iv) the Consignment Vendors identified on Exhibit C. WAIVER OF MEMORANDUM OF LAW 23. Pursuant to Rule (G) of the Local Rules of the Bankruptcy Court, because there are no novel issues of law presented in the Motion and all applicable authority is set forth 5

7 Case DOT Doc 10 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Main Document Page 7 of 7 in the Motion, the Debtor respectfully requests that the Court waive the requirement that this Motion be accompanied by a separate memorandum of law. NO PRIOR REQUEST 24. No previous request for the relief sought herein has been made to this or any other Court. WHEREFORE, the Debtor respectfully requests that the Court enter the Interim Order and, subsequently the Final Order, substantially in the forms annexed hereto as Exhibit A and Exhibit B, respectively, granting the relief requested herein and such other and further relief as the Court may deem just and proper. Dated: December 12, 2011 Richmond, Virginia Respectfully submitted, /s/ Troy Savenko LOWENSTEIN SANDLER PC Kenneth A. Rosen (NJ Bar No ) (Admission Pro Hac Vice Pending) Bruce D. Buechler (NJ Bar No ) (Admission Pro Hac Vice Pending) Mary E. Seymour (NJ Bar No ) (Admission Pro Hac Vice Pending) Cassandra M. Porter (NJ Bar No ) (Admission Pro Hac Vice Pending) Andrew David Behlman (NJ Bar No ) (Admission Pro Hac Vice Pending) 65 Livingston Avenue Roseland, New Jersey (973) and - KAPLAN & FRANK, PLC Troy Savenko (Va. Bar No ) Leslie A. Skiba (Va. Bar No ) 7 East Second Street ( ) Post Office Box 2470 Richmond, Virginia (804) Proposed Counsel to the Debtor and Debtor in Possession 6

8 Case DOT Doc 10-1 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Proposed Order A Page 1 of 4 EXHIBIT A - INTERIM ORDER IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION In re: Chapter 11 ROOMSTORE, INC., Case No. 11- Debtor. INTERIM ORDER PURSUANT TO 11 U.S.C. 105(a), 363, AND 541(d) AND FEDERAL RULES OF BANKRUPTCY PROCEDURE 6003 AND 6004(h) AUTHORIZING THE DEBTOR TO CONTINUE PERFORMANCE OF AND HONOR OBLIGATIONS UNDER CERTAIN CONSIGNMENT ARRANGEMENTS Upon the motion (the Motion ) 1 of the Debtor for entry of an order, pursuant to sections 105(a), 363, and 541(d) of the Bankruptcy Code and Bankruptcy Rules 6003 and 6004(h), and the Court having reviewed the Motion for entry of an order (this Order ) for authority, but not direction, to release certain Consignment Proceeds and to continue performance of and honor its obligations under Consignment Arrangements with Consignment Vendors as more fully set forth in the Motion; and the Court having determined that the relief sought by the Debtor in the Motion is in the best interest of the Debtor, its estate and creditors, and other parties-in-interest; 1 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion. LOWENSTEIN SANDLER PC Kenneth A. Rosen (NJ Bar No ) (Admission Pro Hac Vice Pending) Bruce D. Buechler (NJ Bar No ) (Admission Pro Hac Vice Pending) Mary E. Seymour (NJ Bar No ) (Admission Pro Hac Vice Pending) Cassandra M. Porter (NJ Bar No ) (Admission Pro Hac Vice Pending) Andrew David Behlman (NJ Bar No ) (Admission Pro Hac Vice Pending) 65 Livingston Avenue Roseland, New Jersey (973) and - KAPLAN & FRANK, PLC Troy Savenko (Va. Bar No ) Leslie A. Skiba (Va. Bar No ) 7 East 2nd Street ( ) Post Office Box 2470 Richmond, Virginia (804) Proposed Co-Counsel to the Debtor and Debtor-in-Possession

9 Case DOT Doc 10-1 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Proposed Order A Page 2 of 4 and it appearing that proper and adequate notice of the Motion has been given and that no other or further notice is necessary; and upon the record herein; and after due deliberation thereon; and good and sufficient cause appearing therefor, it is hereby ORDERED, ADJUDGED, AND DECREED THAT: 1. The Motion is granted on an interim basis until such time as the Court conducts a final hearing on this matter (the Final Hearing Date ). 2. The Final Hearing Date shall be, 201, at : a.m./p.m. Prevailing Eastern Time. 3. Any objection to the relief requested by the Motion on a final basis must be filed with the Court and be served upon (i) Office of the U.S. Trustee, 701 E. Broad Street, Suite 4304, Richmond, Virginia 23219, Attn: Robert B. Van Arsdale; and (ii) counsel to the Debtor, at the following addresses: KAPLAN & FRANK, PLC, Troy Savenko, Esq., 7 East 2nd Street (23224), P.O. Box 2470, Richmond, Virginia 23218, and LOWENSTEIN SANDLER PC, Kenneth A. Rosen, Esq., Bruce Buechler, Esq., Mary Seymour, Esq., Cassandra M. Porter, Esq., Andrew Behlmann, Esq., 65 Livingston Avenue, Roseland, New Jersey 07068; so as to be received by no later than, 201 at 5:00 p.m. (Eastern Time) (the Objection Deadline ). 4. The Debtor is authorized, but not directed, to pay Consignment Proceeds to the Consignment Vendors as is consistent with the Debtor s policies and practices and the Consignment Arrangements in effect as of the Petition Date. 5. The Debtor is authorized, but not directed, to continue performance and honor its obligations under the Consignment Arrangements with the Consignment Vendors. 6. In accordance with this Order, each of the financial institutions at which the Debtor maintains its accounts relating to the payment of the obligations described in the Motion are hereby authorized, but not directed, when requested by the Debtor to receive, process, honor 2

10 Case DOT Doc 10-1 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Proposed Order A Page 3 of 4 and pay any and all checks presented for payment and fund all transfer requests made by the Debtor related thereto, solely to the extent that sufficient funds are on deposit in such accounts, and such financial institutions may rely on the representations of the Debtor as to which checks are issued and authorized and which transfers are authorized to be paid in accordance with this Order without any duty of further inquiry and without liability for following the Debtor s instructions. 7. Nothing in this Order, or any action taken by the Debtor in furtherance of the implementation of this Order, shall be deemed an assumption or rejection of any Consignment Arrangements, executory contract, or unexpired lease. 8. Notwithstanding the relief granted herein or any actions taken hereunder, nothing contained in this Order shall create any rights in favor of, or enhance the status of any claim held the Consignment Vendors. 9. Entry of this Order is without prejudice to the right of the Debtor to contest the amount of any Consignment Proceeds, whether or not paid pursuant to this Order, or to seek a refund of any monies paid to a Consignment Vendors. 10. Notwithstanding Bankruptcy Rules 6003 and 6004(h), this Order shall be effective immediately upon its entry. 11. Within three days of the entry of this Order, the Debtor shall serve a copy of this Order by regular mail on (a) the Office of the United States Trustee, (b) counsel to the agent for the prepetition lender, (c) the Debtor s twenty-five largest unsecured creditors, (d) the Consignment Vendors identified on Exhibit C of the Motion, and (e) any counsel or party that has filed a notice of appearance or request for notice within such time. 12. The Court shall retain jurisdiction to hear and determine all matters arising from the implementation of this Order. 3

11 Case DOT Doc 10-1 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Proposed Order A Page 4 of The requirement under Local Bankruptcy Rule (G) to file a memorandum of law in connection with the Motion is hereby waived. ENTERED: WE ASK FOR THIS: UNITED STATES BANKRUPTCY JUDGE LOWENSTEIN SANDLER PC Kenneth A. Rosen (NJ Bar No ) (Admission Pro Hac Vice Pending) Bruce D. Buechler (NJ Bar No ) (Admission Pro Hac Vice Pending) Mary E. Seymour (NJ Bar No ) (Admission Pro Hac Vice Pending) Cassandra M. Porter (NJ Bar No ) (Admission Pro Hac Vice Pending) Andrew David Behlman (NJ Bar No ) (Admission Pro Hac Vice Pending) 65 Livingston Avenue Roseland, New Jersey (973) and - KAPLAN & FRANK, PLC Troy Savenko (Va. Bar No ) Leslie A. Skiba (Va. Bar No ) 7 East Second Street ( ) Post Office Box 2470 Richmond, Virginia (804) Proposed Counsel to the Debtor and Debtor in Possession CERTIFICATION UNDER LOCAL RULE (C) I hereby certify that notice of the Debtor s intent to seek entry of the foregoing proposed order was provided to the parties identified in the Motion and copy of this proposed order was provided to the Office of the United States Trustee for the Eastern District of Virginia prior to submission to this Court. 4

12 Case DOT Doc 10-2 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Proposed Order B Page 1 of 4 EXHIBIT B - FINAL ORDER THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION In re: Chapter 11 ROOMSTORE, INC., Case No. 11- Debtor. FINAL ORDER PURSUANT TO 11 U.S.C. 105(a), 363, AND 541(d) AND FEDERAL RULES OF BANKRUPTCY PROCEDURE 6003 AND 6004(h) AUTHORIZING THE DEBTOR TO CONTINUE PERFORMANCE OF AND HONOR OBLIGATIONS UNDER CERTAIN CONSIGNMENT ARRANGEMENTS Upon the motion (the Motion ) 1 of the Debtor for entry of an order, pursuant to sections 105(a), 363, and 541(d) of the Bankruptcy Code and Bankruptcy Rules 6003 and 6004(h), and the Court having reviewed the Motion for entry of an final order (this Order ) for authority, but not direction, to release certain Consignment Proceeds and to continue performance of and honor its obligations under Consignment Arrangements with the Consignment Vendors as more fully set forth in the Motion; and the Court having determined that the relief sought by the Debtor in the Motion is in the best interest of the Debtor, its estate and creditors, and other parties-in- 1 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion. LOWENSTEIN SANDLER PC Kenneth A. Rosen (NJ Bar No ) (Admission Pro Hac Vice Pending) Bruce D. Buechler (NJ Bar No ) (Admission Pro Hac Vice Pending) Mary E. Seymour (NJ Bar No ) (Admission Pro Hac Vice Pending) Cassandra M. Porter (NJ Bar No ) (Admission Pro Hac Vice Pending) Andrew David Behlman (NJ Bar No ) (Admission Pro Hac Vice Pending) 65 Livingston Avenue Roseland, New Jersey (973) and - KAPLAN & FRANK, PLC Troy Savenko (Va. Bar No ) Leslie A. Skiba (Va. Bar No ) 7 East 2nd Street ( ) Post Office Box 2470 Richmond, Virginia (804) Proposed Co-Counsel to the Debtor and Debtor-in-Possession

13 Case DOT Doc 10-2 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Proposed Order B Page 2 of 4 interest; and it appearing that proper and adequate notice of the Motion has been given, and that no other or further notice is necessary; and upon the record herein and the Interim Order; and after due deliberation thereon; and good and sufficient cause appearing therefor, it is hereby ORDERED, ADJUDGED, AND DECREED THAT: 1. The Motion is granted in its entirety. 2. The Debtor is authorized, but not directed, to pay Consignment Proceeds to the Consignment Vendors as is consistent with the Debtor s policies and practices and the Consignment Arrangements in effect as of the Petition Date. 3. The Debtor is authorized, but not directed, to continue performance and honor its obligations under the Consignment Arrangements with the Consignment Vendors. 4. In accordance with this Order, each of the financial institutions at which the Debtor maintains its accounts relating to the payment of the obligations described in the Motion are hereby authorized, but not directed, when requested by the Debtor to receive, process, honor and pay any and all checks presented for payment and fund all transfer requests made by the Debtor related thereto, solely to the extent that sufficient funds are on deposit in such accounts, and such financial institutions may rely on the representations of the Debtor as to which checks are issued and authorized and which transfers are authorized to be paid in accordance with this Order without any duty of further inquiry and without liability for following the Debtor s instructions. 5. Nothing in this Order, or any action taken by the Debtor in furtherance of the implementation of this Order, shall be deemed an assumption or rejection of a particular Consignment Arrangement, executory contract, or unexpired lease. 6. Entry of this Order is without prejudice to the right of the Debtor to contest the amount of any Consignment Proceeds, whether or not paid pursuant to this Order, or to seek a refund of any monies paid to a Consignment Vendors. 2

14 Case DOT Doc 10-2 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Proposed Order B Page 3 of 4 7. Notwithstanding the relief granted herein or any actions taken hereunder, nothing contained in this Order shall create any rights in favor of, or enhance the status of any claim held the Consignment Vendors. 8. Notwithstanding Bankruptcy Rule 6004(h), this Order shall be effective immediately upon its entry. 9. The Court shall retain jurisdiction to hear and determine all matters arising from the implementation of this Order. ENTERED: WE ASK FOR THIS: UNITED STATES BANKRUPTCY JUDGE LOWENSTEIN SANDLER PC Kenneth A. Rosen (NJ Bar No ) (Admission Pro Hac Vice Pending) Bruce D. Buechler (NJ Bar No ) (Admission Pro Hac Vice Pending) Mary E. Seymour (NJ Bar No ) (Admission Pro Hac Vice Pending) Cassandra M. Porter (NJ Bar No ) (Admission Pro Hac Vice Pending) Andrew David Behlman (NJ Bar No ) (Admission Pro Hac Vice Pending) 65 Livingston Avenue Roseland, New Jersey (973) and - KAPLAN & FRANK, PLC Troy Savenko (Va. Bar No ) Leslie A. Skiba (Va. Bar No ) 7 East Second Street ( ) Post Office Box 2470 Richmond, Virginia (804) Proposed Counsel to the Debtor and Debtor in Possession 3

15 Case DOT Doc 10-2 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Proposed Order B Page 4 of 4 CERTIFICATION UNDER LOCAL RULE (C) I hereby certify that notice of the Debtor s intent to seek entry of the foregoing proposed order was provided to the parties identified in the Motion and copy of this proposed order was provided to the Office of the United States Trustee for the Eastern District of Virginia prior to submission to this Court. 4

16 Case DOT Doc 10-3 Filed 12/12/11 Entered 12/12/11 15:03:04 Desc Exhibit(s) C - List of Consignment Vendors Page 1 of 1 EXHIBIT C LIST OF CONSIGNMENT VENDORS (1) L. Powell Acquisition Corp. 22 Jericho Turnpike, Suite 200 Mineola, NY and- Larry Woods Executive Vice President and CFO L. Powell Acquisition Corp Hayden Place Culver City, CA (2) Linon Home Décor Products, Inc. 22 Jericho Turnpike, Suite 200 Mineola, NY and- Alex Vasilakis Vice President Finance Linon Home Décor Products, Inc 22 Jericho Turnpike, Suite 200 Mineola, NY (3) Miresco Investment Services, Inc. d/b/a Miresco Decorative Rugs 8648 Glemont Drive, Suite 130 Houston, TX 77036