"Mervyns' began the day of the closing with more than $1 billion of real estate and, within the blink of an eye, it was gone; Mervyns received nothing in return," states the lawsuit. "The 2004 transaction is a transaction that ultimately led to Mervyns bankruptcy and is a fraudulent transfer that cannot withstand scrutiny."

Representatives of Cerberus and Sun Capital have said the lawsuit, which is ongoing, is without merit; Target sent the following statement to GlobeSt.com: "Target emphatically disagrees with the claims against Target in this lawsuit. Our 2004 sale of Mervyns was an arms-length transaction that was the result of a competitive bidding process."

Prior to the bankruptcy filing, Mervyn's operated 177 stores averaging 80,000 sf in California and six other states in the southwestern US. It employed 18,000 people. In its fiscal year ended Feb. 2, it recorded a net loss of $64 million on net sales of $2.5 billion.

After the company's real estate was separated out and the two pieces sold to private equity firms, some of Mervyns leaseholds were re-traded. In the most well-known of those deals, a joint venture between Developers Diversified Realty and Macquarie Trust in mid-2005 acquired 36 open and operating Mervyns stores for $396.2 million. The stores total 2.74 million sf and are located primarily in California and are generally leased to Mervyns for the next 15 years. DDR president/COO Dan Hurwitz spoke about the portfolio and speculation regarding Mervyns in a second quarter conference call held just days before Mervyns bankruptcy filing.

"We acquired 36 of our 38 Mervyns stores in 2005. Notably we bought the first portfolio they sold post LBO and were able to select what we believe are the most attractive locations," he said. "Approximately 70% of the assets are based in California including nearly one million sf in and around Los Angeles and over 500,000 sf in the Bay Area. If our Mervyns locations should become available to release, we believe there will be significant retailer interest in the sites we own, based on their desirable West Coast locations with high barriers to entry, infill locations and strong demographics."