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Loehmann's CTG Retention App 11-14-10

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Loehmann's CTG Retention App 11-14-10 Powered By Docstoc
					TOGUT, SEGAL & SEGAL LLP
One Penn Plaza
Suite 3335
New York, New York 10119
(212) 594-5000
Albert Togut
Frank A. Oswald
Brian F. Moore

Proposed Counsel to the
 Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------X
                                                               :
In re:                                                         :   Chapter 11
                                                               :
LOEHMANN’S HOLDINGS, INC., et al.,                             :   Case No. 10-16077 (REG)
                                                               :
                                       Debtors.                :   (Jointly Administered)
                                                               :
                                                               :
---------------------------------------------------------------X

                APPLICATION OF THE DEBTORS PURSUANT
          TO BANKRUPTCY CODE SECTIONS 327(a), 328(a) AND 330,
          FED. R. BANKR. P. 2014(a) AND 2016, AND LOCAL BANKR.
         RULES 2014-1 AND 2016-1 AUTHORIZING RETENTION AND
      EMPLOYMENT OF CLEAR THINKING GROUP, LLC AS FINANCIAL
    ADVISOR TO THE DEBTORS, NUNC PRO TUNC TO THE PETITION DATE
        The debtors and debtors in possession in the above-captioned cases (collectively,

“Loehmann’s” or the “Debtors”)1 hereby move (the “Application”) for entry of an order

under sections 327(a), 328(a) and 330 of title 11 of the United States Code (the

“Bankruptcy Code”), Rules 2014 and 2016 of the Federal Rules of Bankruptcy Procedure

(the “Bankruptcy Rules”), and Rules 2014-1 and 2016-1 of the Local Bankruptcy Rules

for the United States Bankruptcy Court for the Southern District of New York (the

“Local Rules”), (i) authorizing the Debtors to retain and employ Clear Thinking Group,

LLC (“CTG”) as their financial advisor, effective as of the Petition Date (as defined

1
    The Debtors are the following entities: Loehmann’s Holdings, Inc., Loehmann’s, Inc., Loehmann’s
    Real Estate, Inc., Loehmann’s Operating Co., and Loehmann’s Capital Corp.
herein), (ii) approving the terms and conditions under which CTG will be retained and

compensated effective as of the Petition Date, and (iii) granting related relief. In

support of the Application, the Debtors rely upon the Declaration of Lee Diercks, a

partner of CTG (the “Diercks Declaration”). A copy of the Engagement Agreement is

annexed as Exhibit “A.” In further support of the Application, the Debtors, by and

through their undersigned counsel respectfully represent:

                                          JURISDICTION

                1.      This Court has subject matter jurisdiction to consider and

determine this matter pursuant to 28 U.S.C. § 1334. This is a core proceeding pursuant

to 28 U.S.C. § 157(b). Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408

and 1409.

                2.      The statutory predicates for the relief requested herein are

Bankruptcy Code sections 327(a), 328(a) and 330, Bankruptcy Rules 2014 and 2016 and

Local Rules 2014-a and 2016-1.

                                         BACKGROUND

                3.      On November 15, 2010 (the “Petition Date”) the Debtors filed

voluntary petitions in this Court for relief under Chapter 11 of the Bankruptcy Code.

The factual background regarding the Debtors, including their business operations,

their capital and debt structure, and the events leading to the filing of these bankruptcy

cases, is set forth in detail in the Declaration of Joseph Melvin, under Local Bankruptcy

Rule 1007-2 and in support of the Debtors’ Chapter 11 petitions (the “Melvin

Declaration”), filed with the Court on the Petition Date and fully incorporated herein by

reference.2

2
    Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the
    Melvin Declaration.

                                                   2
               4.      The Debtors continue to manage and operate their businesses as

debtors in possession under Bankruptcy Code sections 1107 and 1108.

                                      RELIEF REQUESTED
               5.      By this Application, the Debtors seek entry of an order

(i) authorizing the Debtors to retain and employ CTG as financial advisor and

consultant to the Debtors effective as of the Petition Date, (ii) approving, effective as of

the Petition Date, the terms and conditions contained in that certain amended and

restated letter agreement, dated October 29, 2010 (the “Engagement Agreement”),

under which CTG will be retained and compensated, and (iii) granting related relief. A

copy of the Engagement Agreement is annexed as Exhibit “B”.3

                                       BASIS FOR RELIEF

               6.      Under section 327(a) of the Bankruptcy Code a debtor in possession

may employ one or more professionals, that do not hold or represent an interest

adverse to the estate and that are disinterested persons, to assist the debtor-in-

possession in carrying out its duties under the Bankruptcy Code. 11 U.S.C. § 327(a).

Section 328 of the Bankruptcy Code provides, in pertinent part, that under section 327

of the Bankruptcy Code, a professional may be employed “on any reasonable terms and

conditions of employment, including on a retainer, on an hourly basis, on a fixed

percentage fee basis, or on a contingent fee basis.” 11 U.S.C. § 328(a).

               7.      Bankruptcy Rule 2014 requires that an application for retention of a

professional person include:




3
    Any statements contained herein concerning the terms and conditions of the Engagement Agreement
    are qualified entirely by reference to the Engagement Agreement. In the event of a conflict between
    this Application and the Engagement Agreement, the Engagement Agreement shall control.

                                                   3
       [S]pecific facts showing the necessity for the employment, the name of the person
       to be employed, the reasons for the selection, the professional services to be
       rendered, any proposed arrangement for compensation, and to the best of the
       applicant’s knowledge, all of the person’s connections with the debtor, creditors,
       any other party in interest, their respective attorneys and accountants, the United
       States trustee, or any person employed in the office of the United States trustee.
Fed. R. Bank. P. 2014(a).
              8.      As described in more detail in the Melvin Declaration, earlier in

2010, the Debtors announced a plan to consolidate certain of their underperforming

specialty retail stores and reorganize around their better performing stores.

              9.      Loehmann’s initially engaged CTG in April 2010 to assist with an

operational diagnostic assessment, expense reductions, and labor standards and

productivity improvements. Loehmann’s subsequently engaged CTG as its financial

advisor on May 11, 2010 to: (i) perform a high level review of Loehmann’s performance

and financial projections; (ii) assist with the preparation and monitoring of a rolling

thirteen week cashflow and availability model; develop a sensitivity analysis related to

weekly cash availability; (iii) assess opportunities and make recommendations to

increase liquidity; and (iv) assist Loehmann’s with communications to its stakeholders.

              10.     In October 2010, Loehmann’s amended its engagement of CTG as

financial advisor to (i) help and prepare the Debtors for these Chapter 11 cases,

including but not limited to assisting the Debtors in negotiating financing for their

postpetition operations and (ii) assist the Debtors in preparing all of the necessary

schedules and budgets in preparation for filing these Chapter 11 cases. The Debtors

seek to continue CTG’s services to, inter alia, (i) prepare necessary schedules, budgets

and court related reporting, (ii) assist the Debtors with the sale of assets if required, (iii)

provide the Debtors with expert witness testimony as required during the case and

(iv) provide such other services as required by the Debtors. In sum, pursuant to the


                                               4
Engagement Agreement, the Debtors have engaged CTG to provide financial advisory

services in connection with the Debtors’ bankruptcy case and related financial matters

as to which the Debtors and CTG may agree in writing under the terms of the

Engagement Agreement.

              11.    Because of its pre-Petition Date work for the Debtors, CTG has

substantial knowledge of the Debtors’ financial and operational affairs, which further

enable CTG to advise and perform its services efficiently under the Engagement

Agreement. As a result, the Debtors believe the CTG is well qualified to perform these

services and represent the Debtors’ interests in these Chapter 11 cases.

              12.    CTG is aware that the Debtors are retaining other professionals to

assist with the Debtors’ efforts in these Chapter 11 Cases. However, each professional

will be retained to provide distinct services, and each of the Debtors’ professionals

should, and CTG will, use their best efforts to avoid duplicating work. It is

CTG’sunderstanding that the Debtors seek to retain Perella Weinberg Partners LP

(“PWP”) to provide investment banking and advisory services as are customarily

provided in connection with the analysis and negotiation of any of the transactions

contemplated by this Chapter 11 case as described in detail in the Melvin Declaration.

PWP’s services will not be duplicative of the services to be rendered by CTG.

A.     Qualifications

              13.     Established in 2001, CTG has advised companies and creditors in

numerous distressed situations, both in and out of bankruptcy proceedings. CTG

clients include companies, creditors, corporate parents, and financial sponsors, as well

as acquirers of troubled assets. CTG has participated in many restructurings and

liquidations for retail clients including The Walking Company, Inc., Crabtree & Evelyn,

Inc., One Price Clothing, Inc., Market Antiques & Home Furnishing, Inc., Prints Plus,
                                            5
Inc., Bag’n Baggage, Inc., Boot Town & Western Wearhouse LTD, Copeland Sports, Inc.,

The Parent Company, Inc., Lillian Vernon, Inc., Rag Shop, Inc., Barbeques Galore, Inc.,

and Bachrach Acquisition, LLC. CTG has a wealth of experience of providing services

in retail Chapter 11 cases and has an excellent reputation as a result of many years of

quality services it has rendered on behalf of debtors throughout the United States.

B.     Services to be Provided

              14.    The parties have entered into the Engagement Agreement, which

governs the relationship between CTG and the Debtors. The terms and conditions of

the Engagement Agreement were negotiated, and reflect the parties’ mutual agreement

as to the substantial efforts that will be required in this engagement. To date, CTG has

provided, and/or will provide on an on going-forward basis upon the Court’s approval

of this Application, the following services:

                     (a)    Assist in the evaluation of the Debtors’ business prospects;


                     (b)    Assist in the development of the Debtors’ Chapter 11 plan;
                     (c)    Assist in the development of financial data and
                            presentations to the Debtors’ Board of Directors, secured
                            lender, landlords, various creditors, the Court and other
                            third parties;
                     (d)    Assist with the preparation of necessary schedules, budgets
                            and court related reporting;
                     (e)    Analyze various liquidation scenarios and potential impact
                            of these scenarios on the recoveries of those stakeholders
                            impacted by the Debtors’ partial or full liquidation;
                     (f)    Participate in negotiation among the Debtors and their
                            creditors, suppliers, lessors, landlords and other parties in
                            interest;
                     (g)    Assist in arranging debtor in possession financing for the
                            Debtor, as requested;
                     (h)    Provide expert witness testimony concerning and of the
                            subjects encompassed by CTG’s services;

                                               6
                     (i)    Assist the Debtors in preparing marketing material in
                            conjunction with the sale or liquidation of some or all of the
                            Debtors’ assets; and
                     (j)    Provide such other advisory services as customarily
                            provided in connected with these proceedings under
                            Chapter 11 of the Bankruptcy Code.
C.     Disclosure Concerning Conflicts of Interest
              15.    To the best of the Debtors’ knowledge, information and belief, and

based entirely and in reliance upon the Diercks Declaration: (a) CTG is a “disinterested

person” within the meaning of section 101(14) of the Bankruptcy Code as required by

section 327(a) of the bankruptcy Code and referenced by section 328 of the Bankruptcy

Code, and holds no interest materially adverse to the Debtors, its creditors, and

shareholders for the matters for which CTG is to be employed; and (b) CTG has no

connection to the Debtors, its creditors, shareholders or related parties herein except as

disclosed in the Diercks Declaration.

              16.    Moreover, based upon its work for the Debtors and its wealth of

experience in retail chapter 11 cases, the retention and employment of CTG is necessary

and in the best interests of the Debtors’ estates, creditors and equity interest holders.

              17.    Also to the best of the Debtors’ knowledge, information and belief,

and based upon Diercks Declaration: (i) to the best of Lee Diercks’ knowledge,

information and belief, none of CTG’s past or current engagements would or does

appear to create an interest materially adverse to the interests of the Debtors, creditors,

or equity security holders in this case and, as such the Debtor believes that CTG is

disinterested and holds no materially adverse interest as to the matters upon which

they are to be retained; and (ii) to the extent CTG discovers any facts bearing on the

matters described herein during the period of CTG’s retention, it will supplement the

information contained in the Diercks Declaration.

                                             7
D.    Compensation

             18.    As set forth in the Engagement Agreement, the Debtors and CTG

agreed to the following terms of compensation:

                    (a)    Retainer Fee: In addition to the other fees provided for
                           within the Engagement Agreement, upon the execution of
                           the Engagement Agreement, the Debtors paid CTG $95,000
                           retainer prior to the Petition Date for postpetition work. The
                           Debtors also agreed to pay CTG for all pre-petition services
                           provided at the Hourly Rate, as defined hereafter, and pay
                           for all pre-petition expenses incurred prior to the filing its
                           petition in the bankruptcy court. The retainer will be held
                           by CTG until the conclusion of the Debtors’ Chapter 11 cases
                           and will be applied to fees and expenses authorized
                           pursuant to CTG’s final fee application;
                    (b)    Hourly Fees: CTG’s fees are based on the hours charged at
                           its hourly rates (“Hourly Rates”), which currently are:
                                  Partner              $450.00
                                  Managing Director    $300.00
                                  Manager              $225.00
                                  Consultant           $200.00
                                  Analyst              $175.00

                    (c)    Expenses: In addition to the other fees provided for within
                           the Engagement Agreement, the Debtors shall pay directly
                           or reimburse CTG for all reasonable out-of-pocket expenses
                           incurred in connection with its assignments under the
                           Engagement Agreement, such as travel, lodging, postage,
                           telephone, courier services, copying, conference calls and
                           facsimile charges. The Debtors will also pay for all legal
                           requirements and actions regarding the bankruptcy case in
                           accordance with the indemnification provision described
                           below. All such billings will be in accordance with standard
                           Bankruptcy Court practices.

             19.    The fees described above are consistent with CTG’s normal and

customary billing practices for cases of this size and complexity, which requires the

level and scope of services outlined in the Engagement Agreement.

             20.    The Debtors believe that the fee arrangements set forth in

Engagement Agreement are fair and reasonable.


                                            8
              21.    Pursuant to sections 330 and 331 of the Bankruptcy Code, the

Bankruptcy Rules and the Local Rules, CTG will apply to the Court for interim and final

allowance of compensation and reimbursement of expenses as a professional person

pursuant to, and subject to the standard of review of, Section 330 of the Bankruptcy

Code, the Bankruptcy Rules and applicable local rules and orders and not subject to any

other standard of review under section 330 of the Bankruptcy Code.

E.     Indemnification and Contribution Provisions
              22.    As set forth more fully in the Engagement Agreement, subject to

the Court’s approval, the Debtors agreed to indemnify, hold harmless and defend CTG

against claims, liabilities, losses, damages and reasonable expenses, including

reasonable legal fees, relating to or arising out of the engagement of CTG by the Debtors

except for any such losses, claims, damages or liabilities due to gross negligence, willful

misconduct, breach of fiduciary duty, bad faith and, self-dealing of CTG.

                                         NOTICE
              23.    The Notice of this Application has been provided to: (i) the United

States Trustee for the Southern District of New York; (ii) the entities listed on the

Debtors’ Consolidated List of Creditors Holding the 30 Largest Unsecured Claims filed

pursuant to Bankruptcy Rule 1007(d); (iii) the entities listed on the Debtors’

Consolidated List of Prepetition Secured Creditors; (iv) counsel to the agent for the

Debtors’ prepetition credit facility; (v) the Office of the United States Attorney for the

Southern District of New York; (vi) the Office of the Attorney General of New York;

(vii) the Internal Revenue Service; and (viii) any parties required to be served under

any applicable Bankruptcy Rule or Local Rule. The Debtors submit that, under the

circumstances, no other or further notice is necessary.



                                             9
              24.     No previous request for the relief sought herein has been made by

the Debtors to this or any other court.

              WHEREFORE, the Debtors respectfully request that this Court enter an

order, substantially in the formed annexed as Exhibit “C”: (i) authorizing the Debtors

to retain and employ CTG as their financial advisor, nunc pro tunc to the Petition Date,

(ii) approving the terms and conditions contained in the Engagement Agreement and

(iii) granting such other related relief as is just and proper.


Dated: New York, New York
       November 16, 2010
                                            TOGUT, SEGAL & SEGAL LLP
                                            Proposed Counsel to the Debtor
                                             and Debtor in Possession
                                            By:

                                            /s/ Frank A. Oswald
                                            FRANK A. OSWALD
                                            Member of the Firm
                                            One Penn Plaza, Suite 3335
                                            New York, New York 10019
                                            (212) 594-5000




                                              10
TOGUT, SEGAL & SEGAL LLP
One Penn Plaza
Suite 3335
New York, New York 10119
(212) 594-5000
Albert Togut
Frank A. Oswald
Brian F. Moore

Proposed Counsel to the
 Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------X
                                                               :
In re:                                                         :   Chapter 11
                                                               :
LOEHMANN’S HOLDINGS, INC., et al.,                             :   Case No. 10-16077 (REG)
                                                               :
                                       Debtors.                :   (Jointly Administered)
                                                               :
                                                               :
---------------------------------------------------------------X

              DECLARATION OF LEE DIERCKS PURSUANT TO
           28 U.S.C. 1746 IN SUPPORT OF DEBTORS’ APPLICATION
          PURSUANT TO BANKRUPTCY CODE SECTION 327(a), 328(a)
           AND 330, FED. R. BANKR. P. 2014(a) AND 2016, AND LOCAL
        BANKR. RULES 2014-1 AND 2016-1 AUTHORIZING RETENTION
     AND EMPLOYMENT OF CLEAR THINKING GROUP, LLC AS FINANCIAL
     ADVISOR TO THE DEBTOR, NUNC PRO TUNC TO THE PETITION DATE


                 I, Lee Diercks, hereby declare under penalty of perjury as follows:

                 1.        I am a Partner of Clear Thinking Group LLC (“Clear Thinking”) a

consulting firm that specializes in corporate restructuring; operations improvements;

litigation analytics; liquidation and asset sales, case management services and maintains

offices at 401 Towne Centre Drive, Hillsborough, New Jersey 08844. I have read the

Application for an Order pursuant to Section 327(a), 328(a) and 330 of the Bankruptcy

Code authorizing the employment of Clear Thinking as financial advisors to the above

captioned Debtors (the “Debtors”), and submit this affidavit in support thereof.


                                                        1
                            Clear Thinking’s Qualifications

              2.     Clear Thinking is recognized for its expertise in providing

financial advisory services in financially distressed situations, including advising

debtors, creditors and other constituents in Chapter 11 proceedings in numerous

cases.

              3.     I have considerable expertise with Chapter 11 restructuring, asset

liquidation, sale of distressed assets, and other distressed company circumstances,

advising both debtors and creditors. Examples of Debtor Retail Advisory

assignments in which Clear Thinking and I have been actively involved include,

among others: Crabtree & Evelyn, Inc., The Walking Company, Inc., Bacharach, Inc.,

Swoozies, Inc., The Parent Company, Inc., Barbecues Galore, Inc., Boot Town

Western Warehouse, Inc., One Price Clothing, Inc., Market Antiques & Home

Furnishing, Inc., Prints Plus, Inc., Bag’n Baggage, Inc., Copeland Sports, Inc., Lillian

Vernon, Inc., and Rag Shops, Inc.

              4.     My duties as Partner with respect to Clear Thinking’s

engagement to represent the Debtor includes, among other things, strategic advice,

assistance with the negotiation of a DIP facility, participation in negotiations among

the Debtors and their creditors, suppliers, and other parties in interest, assistance to

the Debtors in reviewing the terms, conditions and impact of any proposed full or

partial liquidation of the Debtors’ assets, advice and assistance to the Debtors’ retail

operations and participation in presentations to the Debtors’ pre-petition and post

petition secured lender(s) and creditors.

              5.     As described in the Application, since May 11, 2010, Clear

Thinking has rendered financial advisory services to the Debtors in connection with

their restructuring efforts. Clear Thinking has also provided other services since
                                             2
April 28, 2010, including operational diagnostics, expense reduction, and

development of labor standards and productivity efforts. Clear Thinking has

become familiar with the Debtors’ operations and is well qualified to advise the

Debtors in connection with such financial matters in a cost-effective and efficient

manner.

                          Disinterestedness of Professionals

             6.     Based on the results of the conflict search conducted to date by

Clear Thinking’s compliance department, as described more fully below, and based

on my understanding of the Bankruptcy Code and Federal Rules of Bankruptcy

Procedure, and the practice being followed in other Chapter 11 cases, to the best of

my knowledge, neither I, Clear Thinking, nor any member or employee thereof,

insofar as I have been able to ascertain, has any connection with the Debtors, their

creditors, or other parties in interest (as reasonably known to us), their attorneys, the

U.S. Trustee, or any person employed in the Office of the U.S. Trustee, except as

disclosed or otherwise described herein.

             7.     To the best of my knowledge, Clear Thinking is a “disinterested

person” as that term is defined in section 101(14) of the Bankruptcy Code, as

modified by section 1107(b) of the Bankruptcy Code.

             8.     As part of its diverse practice, Clear Thinking appears in

numerous cases, proceedings, and transactions involving many different attorneys,

accountants, investment bankers, and financial consultants, some of which may

represent claimants and parties-in-interest in the chapter 11 case. Further, Clear

Thinking or companies in which it has investments has in the past, and may in the

future, be represented by several attorneys and law firms in the legal community,

some of whom may be involved in this proceedings. In addition, Clear Thinking has
                                            3
in the past and will likely in the future be working with or against other

professionals involved in this case in matters unrelated to the Debtors or this

Chapter 11 case. Based on our current knowledge of the professionals involved, and

to the best of my knowledge, none of these business relations constitute interests

materially adverse to the Debtors herein in matters upon which Clear Thinking is to

be employed.

             9.     Clear Thinking has represented, and will in the future represent,

many different clients with various business interests in numerous industries. These

clients are often referred to Clear Thinking by intermediaries such as lawyers,

investment bankers, lenders and accountants.

             10.    Clear Thinking has undertaken a thorough review of its

computerized database that contains the names of the clients and other parties of

interest with respect to certain matters. Clear Thinking has run the following parties

through its conflicts system: a) the Debtors; b) the Debtors’ current officers and

directors; c) the Debtors’ secured lenders; and d) the Debtors’ thirty (30) largest

unsecured creditors. Clear Thinking’s investigation has not revealed any actual or

potential conflict of interest with respect to Clear Thinking’s proposed

representation of the Debtors. However out of an abundance of caution Clear

Thinking makes the following disclosures:

      a.)    Clear Thinking has provided services in the past to some of the Debtors’
             current vendors and suppliers including, Mamiye Borthers, Inc., Andrew
             Marc, Inc. and Adrianna Papell, Inc. Clear Thinking is no longer
             employed by any of these vendors.

      b.)    Clear Thinking currently provides services to one of the Debtors’
             Vendors, Accessory Network Group, Inc. (ANG). To date, the work
             performed by CTG for ANG has been limited to providing financial
             advisory services including assisting with the development of financial
             projections and forecasts, and assistance with communication to ANG’s
             lender. None of the services rendered by CTG to ANG relate to the
                                           4
             Debtors or their assets or operations nor to claims against the Debtors.
             CTG's services for ANG have been fully disclosed to the Debtors (and
             CTG's retention by the Debtors has been fully disclosed to ANG), and
             each has expressly waived any potential conflict. As additional
             disclosure and for the Court's information, ANG is not a sole source
             provider of goods or services to the Debtors and the amount of ANG's
             claim against the Debtors is approximately $220,000.00, and thus is not a
             material percentage of the total claims against the Debtors. In order to
             ensure that there is not even the appearance of any conflict, CTG has
             agreed that (i) no CTG employee who works on matters for ANG will
             work on matters for the Debtors and vice versa, and (ii) CTG will not
             work on the analysis of any claims that the Debtors have against ANG or
             on objections or defenses that the Debtors may have to ANG's claims.
             CTG believes that it has imposed more than sufficient "ethical walls" in
             place here and made more than the required disclosures but is
             nevertheless willing to consider any additional suggestions that the
             United States Trustee or this Court may have.

      c.)    Clear Thinking, currently or in the past, has assisted borrowers of some
             of the Debtors’ “Factors” including Wells Fargo Capital Finance, CIT,
             and Rosenthal, all of which may become parties in interest herein.

      d.)    Clear Thinking, currently is employed by a Division of Wells Fargo
             Capital Finance, to assist it with one of their borrowers. This
             employment is completely unrelated to this case.

      e.)    Clear Thinking, in the past, has provided services to other borrowers of
             Crystal Financial LLC; and one Company where Crystal Financial
             LLChad an equity interest.

Clear Thinking agrees to update the disclosure information from time to time, if and

when additional parties with an interest in or a relationship with the Debtors are

identified by the Debtors, in writing, to Clear Thinking.


             11.    Clear Thinking is confident that: a) it does not represent, and

will not represent any parties-in-interest in connection with these Chapter 11 cases;

and b) any relationship it may have with any party-in-interest will not interfere with

or impair Clear Thinking’s representation of the Debtors in this Chapter 11 case. If

this Court approves the proposed employment of Clear Thinking by the Debtors,




                                           5
Clear Thinking will not accept any engagement or perform any services for any

entity or person other than the Debtors in this situation.

             Professional Services to be Rendered and Compensation.

             12.    The parties have entered into an agreement that would govern

the relationship between Clear Thinking and the Debtors, a copy of which is

attached as “Exhibit B” to the Application (the “Engagement Agreement”). Clear

Thinking has provided, and/or will provide upon the financial advisory services

(the “Financial Advisory Services”) as Clear Thinking and the Debtors shall deem

appropriate and feasible in order to advise the Debtors in the course of the Chapter

11 case, including, but not limited to the following:

      a.     Assist in the evaluation of the Debtors’ business and prospects;

      b.     Assist in the development of the Debtors’ Chapter 11 reorganization plan;

      c.     Assist in the development of financial data and presentations to the
             Debtors’ Boards of Directors, secured lender(s), bondholders, landlords,
             various creditors, the Court and other third parties;

      d.     Assist with the preparation of necessary schedules, budgets and court
             related reporting;

      e.     Analyzing various liquidation scenarios and potential impact of these
             scenarios on the recoveries of those stockholders impacted by the Debtors’
             partial or full liquidation;

      f.     Participate in negotiation among the Debtors and its creditors, suppliers,
             lessors, landlords and other parties in interest;

      g.     Assist in arranging Debtor in Possession financing for the Debtors, as
             requested;

      h.     Providing expert witness testimony concerning and of the subjects
             encompassed by Clear Thinking’s services;

      i.     Assist the Debtors in preparing marketing materials in conjunction with
             the sale or liquidation of some or all of the Debtors’ assets; and



                                           6
       j.     Provide such other advisory services as customarily provided in
              connection with these proceedings under Chapter 11 of the Bankruptcy
              Code.

              13.    The Financial Advisory Services that Clear Thinking will provide

to the Debtors are necessary to enable the Debtors to maximize the value of its estate

in connection with its financial restructuring and/or partial or full liquidation and sale

of assets.

              14.    Per the Engagement Agreement for the services will be based

upon the time devoted on the Debtors’ behalf and the experience of those providing

the services. Clear Thinking will bill at standard hourly rates as follows:

                            Partner                     $450
                            Managing Director           $300
                            Manager                     $225
                            Consultant                  $200
                            Analyst                     $150
                            Administrative              $75


              15.    In addition to the above fees, the Debtors shall reimburse Clear

Thinking, pursuant to the Engagement Agreement for all of its reasonable out of

pocket expenses incurred in connection with this engagement, such as travel,

lodging, postage, telephone courier services, copying, conference calls and facsimile

charges, all legal expenses associated with Clear Thinking’s retention and approval

by the Court, and all other legal requirements and actions regarding the Debtors’

Bankruptcy Case in accordance with the indemnification provision set forth in the

Engagement Agreement. All such billings will be in accordance with standard

Bankruptcy Court practices and local rules.

              16.    The fees described above are consistent with Clear Thinking’s

normal and customary billing practices for cases of this size and complexity, which

require the level and scope of services outlined in the Engagement Agreement.
                                             7
               17.       Clear Thinking has provided certain financial advisory services

to the Debtors since May 11th, 2010 and has been paid for those services in

accordance with the Engagement Agreement. Prior to the Petition Date, Clear

Thinking was paid a total of $962,756 for services provided prior to the Petition Date.

Per the Engagement Agreement, the Debtors agreed to pay Clear Thinking for all

pre-petition services provided, and pay for all pre-petition expenses incurred prior

to the filing its bankruptcy petition in the Bankruptcy Court. Clear Thinking also

received a $95,000 post petition retainer per the retention agreement that was paid

prior to the petition being filed. The retainer will be held by CTG until the conclusion

of the Debtors’ Chapter 11 cases and will be applied to fees and expenses authorized

pursuant to CTG’s final fee application.

               18.       I am generally familiar with the Bankruptcy Code and the

Bankruptcy Rules, and Clear Thinking will comply with them, subject to Orders of

this Court.

              I hereby declare under penalty of perjury that the foregoing is true and
              correct.

Executed on November 12, 2010
                                            By:    /s/ Lee Diercks______________
                                                   Lee Diercks
                                                   Partner




                                               8
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------X
                                                               :
In re:                                                         :   Chapter 11
                                                               :
LOEHMANN’S HOLDINGS, INC., et al.,                             :   Case No. 10-16077 (REG)
                                                               :
                                       Debtors.                :   (Joint Administered)
                                                               :
---------------------------------------------------------------X


             ORDER PURSUANT TO BANKRUPTCY CODE SECTION
         327(a), 328(a) AND 330, FED. R. BANKR. P. 2014(a) AND 2016, AND
      LOCAL BANKR. RULES 2014-1 AND 2016-1 AUTHORIZING RETENTION
     AND EMPLOYMENT OF CLEAR THINKING GROUP, LLC AS FINANCIAL
     ADVISOR TO THE DEBTORS, NUNC PRO TUNC TO THE PETITION DATE

                 Upon the application (the “Application”) of the debtors and debtors in

possession in the above-captioned cases (collectively, “Loehmann’s” or the “Debtors”)1

for entry of an order pursuant to section 327(a), 328(a) and 330 of the Bankruptcy Code,

Fed. R. Bankr. P. 2014(a) and 2016, and Rules 2014-1 and 2016-1 of the Local Bankruptcy

Rules for the United States Bankruptcy Court for the Southern District of New York (the

“Local Rules”), authorizing the employment and retention of Clear Thinking Group,

LLC (“CTG ”) as financial advisors to the Debtors effective as of the date these

Chapter 11 cases were commenced (the “Petition Date”); and upon the Affidavit of Lee

Diercks, in support of the Application; and it appearing that the CTG neither holds nor

represents an interest adverse to the Debtors’ estates with respect to the matters upon

which it is to be engaged; and it appearing that CTG is a “disinterested person,” as the

term is defined in section 101(14) of the Bankruptcy Code; and it appearing that the

relief requested is in the best interest of the Debtors’ estates, their creditors, and other



1   The Debtors are the following entities: Loehmann’s Holdings, Inc., Loehmann’s, Inc., Loehmann’s
    Real Estate Holdings, Inc., Loehmann’s Operating Co., and Loehmann’s Capital Corp.
parties in interest; and it appearing that the Court has jurisdiction over this matter

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)(2); and it appearing that venue of this

proceeding and this Application in this District is proper pursuant to 28 U.S.C. §§ 1408

and 1409; and notice of this Application and the opportunity for a hearing on this

Application was appropriate under the particular circumstances and that no other or

further notice need be given; and no objections to the Application having been filed;

and after due deliberation and sufficient cause appearing therefore, it is hereby

ORDERED

              1.     The Application is granted as provided herein.

              2.     The Debtors are authorized pursuant to, inter alia, sections 327(a),

328(a) and 330 of the Bankruptcy Code to employ and retain CTG as financial advisors,

nunc pro tunc, to the Petition Date, and in accordance with the terms and conditions set

forth in the Engagement Letter attached to the Application as Exhibit “B” and

incorporated herein by reference.

              3.     The indemnification provisions included in the Engagement Letter

and incorporated herein by reference are approved.

              4.     CTG will file fee applications for interim and final allowance of

compensation and reimbursement of expenses pursuant to the procedures set forth in

sections 330 and 331 of the Bankruptcy Code and such Bankruptcy Rules as may then be

applicable, from time to time, and such procedures as may be fixed by order of this

Court.

              5.     CTG shall be compensated in accordance with the standards and

procedures set forth in sections 330 and 331 of the Bankruptcy Code and all applicable

Bankruptcy Rules, Local Rules, guidelines promulgated by the Office of the United
                                             2
States Trustee, and further orders of this Court. Additionally, CTG will advise the

Court, the Debtors, the Creditors Committee, if any, and the United States Trustee of

any adjustments in its hourly billing rates.

              6.     The Debtors are authorized to take all actions necessary to

effectuate the relief granted pursuant to this Order.

              7.     The Court retains jurisdiction with respect to all matters arising

from or related to the implementation of this Order.

DATED: New York, New York
       ______        , 2010

                                          HONORABLE ROBERT E. GERBER
                                          UNITED STATES BANKRUPTCY JUDGE




                                               3
TOGUT, SEGAL & SEGAL LLP                                   PRESENTMENT DATE: December 6, 2010
One Penn Plaza                                                            AT: 12:00 p.m.
Suite 3335
New York, New York 10119                                   OBJECTIONS DUE BY: December 3, 2010
(212) 594-5000                                                            AT: 4:00 p.m.
Albert Togut
Frank A. Oswald
Brian Moore

Proposed Counsel to the
 Debtors and Debtors in Possession


UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
                                                               :
In re:                                                         :   Chapter 11
                                                               :
LOEHMANN’S HOLDINGS, INC., et al.,                             :   Case No. 10-16077 (REG)
                                                               :
                                       Debtors.                :   (Jointly Administered)
                                                               :
---------------------------------------------------------------x

              NOTICE OF PRESENTMENT OF PROPOSED ORDER
      PURSUANT TO BANKRUPTCY CODE SECTION 327(A), 328(A) AND
        330, FED. R. BANKR. P. 2014(A) AND 2016, AND LOCAL BANKR.
         RULES 2014-1 AND 2016-1 AUTHORIZING RETENTION AND
      EMPLOYMENT OF CLEAR THINKING GROUP, LLC AS FINANCIAL
    ADVISOR TO THE DEBTORS, NUNC PRO TUNC TO THE PETITION DATE


                 PLEASE TAKE NOTICE that upon the annexed application (the

“Application”) of Loehmann’s Holdings Inc., as debtors and debtors in possession, by

their proposed attorneys, Togut, Segal & Segal LLP, the undersigned will present for

signature the attached proposed Order Authorizing Retention and Employment of

Clear Thinking Group, LLC as Financial Advisors to the Debtors, nunc pro tunc to the

Petition Date to Bankruptcy Judge Robert E. Gerber on December 6, 2010 at 12:00 Noon

(“Presentment Date”).

                 PLEASE TAKE FURTHER NOTICE that objections, if any, to the

proposed Order must be made in writing and received in Judge Gerber‘s Chambers,
Room 627 of the United States Bankruptcy Court, One Bowling Green, New York, New

York 10004-1408, and by December 3, 2008 at 4:00 p.m. (“Objection Deadline”). Unless

objections are received by that time, the Order may be signed on the Presentment Date.

                PLEASE TAKE FURTHER NOTICE, that pursuant to General Order

M-1821, any objection filed by parties with legal representation shall be filed on or

before the Objection Deadline (i) through the Bankruptcy Court’s Electronic Case Filing

System (“ECF”)2 which may be accessed at the Bankruptcy Court’s Internet web site at

www.nysb.uscourts.gov, using Netscape Navigator software version 3.0 or higher, and

(ii) in portable document format (“PDF”) using Adobe Exchange software for

conversion.

                PLEASE TAKE FURTHER NOTICE, that any party that is either without

legal representation or that is unable to file documents electronically shall file its

objection on or before the Objection Deadline in .PDF format on a 3-1/2" floppy diskette

in an envelope clearly marked with the case name, case number, type and title of

document, document number of the document to which the objection refers and the file

name of the document.

                PLEASE TAKE FURTHER NOTICE, that any party that is either without

legal representation or that is unable to file documents electronically or create

documents in .PDF format, shall file its objection on or before the Objection Deadline in

either Word, WordPerfect or DOS text (ASCII) format on a 3-1/2" floppy diskette in an

envelope clearly marked with the case name, case number, type and title of document,
1
    Copies of General Order M-182 and the User’s Manual for the Bankruptcy Court’s Electronic Case
    Filing System are available at the official web site of the United States Bankruptcy Court for the
    Southern District of New York at www.nysb.uscourts.gov.
2
    Filing documents on the ECF requires a password, which an attorney may obtain by contacting the
    Bankruptcy Court’s technical assistance department at (212) 668-2870, ext. 3522, Monday through
    Friday, 8:30 a.m. to 5:00 p.m.



                                                    2
document number of the document to which the objection refers and the file name of

the document.

              PLEASE TAKE FURTHER NOTICE, that objections, if any, must be

served in accordance with the provisions of General Order M-182 so that they are

received on or before the Objection Deadline by (i) Togut, Segal & Segal, One Penn

Plaza, Suite 3335, New York, New York, Attn.: Frank A. Oswald, Esq. and Brian Moore,

Esq., (ii) the United States Trustee for the Southern District of New York; (iii) the

entities listed on the Debtors’ Consolidated List of Creditors Holding the 30 Largest

Unsecured Claims filed pursuant to Bankruptcy Rule 1007(d); (iv) the entities listed on

the Debtors’ Consolidated List of Prepetition Secured Creditors; (v) counsel to the

agent for the Debtors’ prepetition credit facility; (vi) the Office of the United States

Attorney for the Southern District of New York; (vii) the Office of the Attorney General

of the State of New York; (viii) the Internal Revenue Service; (ix) any parties required

to be served under any applicable Bankruptcy Rule or Local Rule; and (x) any party in

interest having filed a notice of appearance.

              PLEASE TAKE FURTHER NOTICE, that in the event an objection(s) is

properly served and filed, a hearing will be held to consider the Application and the

objection(s) on December 6, 2010 at 9:45 a.m.




                                              3
             PLEASE TAKE FURTHER NOTICE that objections not served and filed

on or before the Objection Deadline may not be considered by the Court.

DATED: New York, New York
       November 16, 2010
                                       TOGUT, SEGAL & SEGAL LLP
                                       Proposed Attorneys for the Debtors and
                                       Debtors in Possession
                                       By:


                                       /s/ Frank A. Oswald
                                       FRANK A. OSWALD
                                       A Member of the Firm
                                       One Penn Plaza, Suite 3335
                                       New York, New York 10019
                                       (212) 594-5000




                                          4

				
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