BRYAN CAVE LLP Lawrence P.

Gottesman (LG-7061) Michelle McMahon (MM-8130) 1290 Avenue of the Americas New York, New York 10104 (212) 541-2000 And DUANE MORRIS LLP Phillip K. Wang, Esq. (admitted pro hac vice) One Market Plaza, Spear Tower, Suite 2200 San Francisco, CA 94105-1127 (415) 957-3185

Objection Deadline: Nov. 5, 2010 (extended by Consent from Nov. 3, 2010) Hearing Date: Nov. 10, 2010 at 10:00 a.m.

Attorneys for Wells Fargo Bank, N.A., as trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-C1 and U.S. Bank National Association, as successor to LaSalle Bank N.A., formerly known as LaSalle National Bank, as Trustee for the registered holders of ML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x In re: INNKEEPERS USA TRUST, et al., Debtors. : : (Jointly Administered) : Chapter 11 Case No.: 10-13800 (SCC)

x OBJECTION OF WELLS FARGO BANK, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-C1 AND U.S. BANK NATIONAL ASSOCIATION, AS SUCCESSOR TO LASALLE BANK N.A., FORMERLY KNOWN AS LASALLE NATIONAL BANK, AS TRUSTEE FOR THE REGISTERED HOLDERS OF ML-CFC COMMERCIAL MORTGAGE TRUST 2006-4, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-4 TO THE DEBTORS MOTION FOR THE ENTRY OF AN ORDER PURSUANT TO SECTION 363 OF THE BANKRUPTCY CODE (I) APPROVING THE DEBTORS UNDERTAKING TO COMPENSATE FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP AS COUNSEL TO THE INDEPENDENT COMMITTEE OF THE BOARD OF TRUSTEES OF INNKEEPERS USA TRUST AND AUTHORIZING THE PAYMENT OF SUCH COMPENSATION BY THE DEBTORS AND (II) AUTHORIZING THE DEBTORS TO COMPENSATE THE MEMBERS OF THE INDEPENDENT COMMITTEE

Wells Fargo Bank, N.A., as trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-C1 and U.S. Bank National Association, as successor to LaSalle Bank N.A., formerly known as LaSalle National Bank, as Trustee for the registered holders of ML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 (collectively, the Property Level Lenders), by their undersigned counsel, hereby object on the bases set forth below to the Debtors Motion For The Entry Of An Order Pursuant To Section 363 Of The Bankruptcy Code (I) Approving The Debtors Undertaking To Compensate Fried, Frank, Harris, Shriver & Jacobson LLP As Counsel To The Independent Committee Of The Board Of Trustees Of Innkeepers USA Trust And Authorizing The Payment Of Such Compensation By The Debtors And (II) Authorizing The Debtors To Compensate The Members Of The Independent Committee (the Motion), filed by the abovecaptioned debtors (the Debtors). In support of this Objection, the Property Level Lenders state as follows: BACKGROUND General Background 1. On July 19, 2010, the Debtors filed voluntary petitions for relief under chapter 11 of

the Bankruptcy Code commencing these bankruptcy cases. 2. The Debtors are debtors-in-possession and continue to operate their businesses

pursuant to 11 U.S.C. 1107 and 1108. 3. An official committee of unsecured creditors was appointed on July 28, 2010.

The Property Level Loans 4. The Property Level Lenders hold secured debt with an aggregate unpaid principal

balance of approximately $160 million (the Property Level Loans). A complete description of the
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Property Level Loans is set forth in the Declaration of Edward C. Brown in Support of the Objections of Certain Prepetition Lenders [Docket No. 258] 1-5 and incorporated herein. Property Level Lenders Efforts to Build Consensus Around a Marketing and Sale or Recapitalization Process 5. As set forth in detail in the Objection Of Wells Fargo Bank, N.A., As Trustee For The

Registered Holders Of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-C1 And U.S. Bank National Association, As Successor To Lasalle Bank N.A., Formerly Known As Lasalle National Bank, As Trustee For The Registered Holders Of Ml-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 To Debtors Motion For Entry Of An Order Extending The Exclusive Periods During Which Only The Debtors May File A Chapter 11 Plan And Solicit Acceptances Thereof And Omnibus Objection To Motions To Terminate Exclusivity (the Exclusivity Objection) and the supporting Declaration of Ronen Bojmel (the Bojmel Decl.), filed contemporaneously herewith and incorporated herein, the Property Level Lenders have been working with the Debtors major creditor and shareholder constituents toward a marketing and sales or recapitalization process that could be supported by all major stakeholders with the goal of reaching a consensual process with the Debtors.1 The Property Level Lenders have retained Miller Buckfire & Co., LLC to advise them on developing a marketing and sale or recapitalization process and plan of reorganization that will maximize value. Over the last two weeks, the Property Level Lenders advisors have met with the Debtors and most of the Debtors significant stakeholder groups. The Property Level Lenders advisors have also met with Five Mile Capital Partners (Five Mile) regarding its proposal to acquire the reorganized Debtors pursuant to a plan of reorganization. As a result of these meetings, the Property Level Lenders have developed a protocol for a marketing and sale or recapitalization
1

Defined terms not otherwise defined herein shall have the meanings set forth in the Exclusivity Objection.

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process that has been shared with all major creditor and shareholder constituents and the Debtors. (Bojmel Decl. 22). While this protocol is still actively being discussed with such stakeholders and the Property Level Lenders cannot know with certainty either the final form that such protocol will take or which, if any, stakeholders will ultimately agree to such protocol, the Property Level Lenders believe that such protocol has the best prospects for achieving consensus and maximizing values. Id. 6. The underlying tenets of the protocol are implementing an open, transparent

marketing process and enhancing oversight and input by the Debtors stakeholders to re-establish credibility with the Debtors stakeholders and potential bidders/investors. A key component of the protocol is the appointment of a new trustee to the Debtors board of trustees (the Board) and the committee of independent trustees of the Board (the Independent Committee). Bojmel Decl. 34. Appointment of a new trustee will demonstrate to the Debtors stakeholders and potential bidders/investors that the Debtors are committed to an open, transparent process distinct from the process that resulted in the failed Plan Support Agreement. Simply renaming a subset of the existing board of trustees an Independent Committee will not convey independence when these same trustees supported the prior flawed process. Appointment of a new and truly independent trustee is critical. 7. In order to provide additional time to reach such a consensus, the Property Level

Lenders have decided to briefly adjourn the Property Level Lenders Exclusivity Motion, which was also scheduled for hearing on November 10, 2001, for approximately three weeks, subject to the Courts calendar (the Continued Hearing Date). The Property Level Lenders and the supporting constituents also requested the Debtors continue the hearing on the Motion and the Debtors Exclusivity Motion to the Continued Hearing Date based on a short extension of the Debtors Exclusive Periods through this date. The Debtors refused.
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OBJECTION 8. The Property Level Lenders do not object to granting the Debtors interim authority to

compensate separate counsel for the Independent Committee over the next few weeks until the Continued Hearing Date (the Interim Period), subject to an aggregate limit of $100,000 during this Interim Period. The Property Level Lenders do object to granting the Debtors final authority at this time. A final hearing on the Motion should be set in conjunction with the Property Level Lenders Exclusivity Motion on the Continued Hearing Date, but in any event not later than December 9, 2010. Final authority should be conditioned upon the appointment of a new independent trustee, pursuant to a budget and subject to a reasonable cap. Further, both interim and final authority should be subject to the notice and dispute process provided for other professionals compensation in the Final Order Authorizing the Debtors to (i) Use the Adequate Protection Parties' Cash Collateral and (ii) Provide Adequate Protection to the Adequate Protection Parties [Docket No. 402] (the Final Cash Collateral Order). 9. The relief requested by the Debtors is unusual and runs the risk of putting yet

additional and unwarranted fees and expenses on these estates. Accordingly, the necessity and appropriateness of compensating separate counsel for the Independent Committee is linked to the ongoing discussions regarding the protocol and a consensual marketing and sale or recapitalization process, as discussed in detail in the Property Level Lenders Exclusivity Objection and the Bojmel Decl. Accordingly, it is appropriate to defer a final hearing on the Motion to the Continued Hearing Date to provide the parties additional time to pursue a consensual process. 10. Although the Property Level Lenders believe that the formation of the Independent

Committee is a step in the right direction and a positive development in the pursuit of the an open and transparent marketing process, such committee must be truly independent and convey such
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independence to the Debtors stakeholders and potential bidders/investors. Bojmel Decl. 18. The current members of the Independent Committee supported the Debtors prior flawed process that resulted in the Plan Support Agreement. Id. That process shut out the Property Level Lenders and the vast majority of the Debtors stakeholders. Prior to and during the first forty days of this case, the Debtors, upon the approval of the Board, including the Independent Committee, singularly pursued negotiation and execution of and Court authority for a Plan Support Agreement with only a minority secured creditor and with an out-of-the-money equity holder of the Debtors. The Debtors made information and documents available only to these parties. The Debtors did not engage in any meaningful shopping of the proposed transaction or negotiations with the vast majority of their secured creditors or make any effort to ensure that one or more bankruptcy estates and their creditors were not preferred over the bankruptcy estates and creditors of other of the Debtors. 11. The Debtors closed process and failure to negotiate with the overwhelming majority

of their creditors and other stakeholders resulted in overwhelming objection to the Plan Support Agreement. In response to this opposition, the Debtors chose a litigation route and continued to seek approval of the Plan Support Agreement, without any negotiations or attempt to compromise with the objecting creditors who hold the majority of the secured debt of the Debtors. Nor did the Debtors give serious consideration to a competing proposal presented to them by Five Mile Capital Partners LLC (Five Mile). The Debtors efforts, which were approved by the Board, including the Independent Committee members, to forcefully impose this wholly unacceptable deal on its secured creditor body, despite the staggering costs of doing so, has damaged the credibility of the Debtors and their Board, including the Independent Committee, to both their creditors and stakeholders as well as the market. Bojmel Decl. 18. Given this history, the Debtors must take decisive steps to re-

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establish credibility and confidence that they will run an open and transparent marketing and sale or recapitalization process. Id. 12. It is also critical to such a process that the Debtors convey independence to the

marketplace. Id. The Debtors prior process was unfairly stacked in favor of Lehman ALI Inc. and Apollo Investment Corporation, to the exclusion of all other competing offers. Id. In order to have a robust marketing process, the Debtors must be able to convince potential bidders/investors that these mistakes will not be repeated. Id. This cannot be achieved with an Independent Committee consisting entirely of the existing trustees. Id. Accordingly, compensating separate counsel for the Independent Committee in its current composition will not achieve any benefit for the Debtors estates and does not justify adding another layer of professional fees and expenses to this already overburdened case. 13. To the extent that a new trustee is not appointed, and the Independent Committee

retains its current configuration of a subset of the trustees that supported the flawed process that resulted in the Plan Support Agreement, the Property Level Lenders object to any use of their cash collateral to fund separate counsel beyond the Interim Period. As set forth in detail above, an Independent Committee is only beneficial to the extent that it is actually independent and can convey such independence to the Debtors stakeholders and the market. Under controlling Second Circuit precedent, the Property Level Lenders collateral may only be surcharged if and to the extent that such expenditures have been (i) incurred primarily for, and directly benefit, the secured creditors collateral, or (ii) consented to by the secured creditor. In re Flagstaff Foodservice Corp., 739 F.2d 73 (2d Cir. 1984). The Property Level Lenders do not consent, so [t]he benefit to the secured party which must be shown to prevail under Bankruptcy Code 506(c) imposes a heavy burden on the party seeking to invade the secured partys collateral. In re Emons Indus., Inc., 50 B.R. 692, 695
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(Bankr. S.D.N.Y. 1985) (denying retention of counsel by a statutorily appointed equity security holders committee and the payment of such professionals fees from the secured creditors cash collateral where the secured creditor in that case would not benefit from the committees services). See also In re Compton Impressions, Ltd., 217 F.3d 1256, 1260 (9th Cir. 2000) (Under 506(c), therefore, Compton must demonstrate that the expenses it seeks to surcharge against the Banks were reasonable, necessary, and beneficial to the Banks recovery, or that the Banks caused or consented to those expenses) (citation omitted); In re Willowood E. Apts. of Indianapolis II, Ltd., 114 B.R. 138, 145 (Bankr. S.D. Ohio 1990) (the partnerships legal expenses in filing and prosecuting its Chapter 11 case are not ordinary operating expenses, and funds for payment of such expenses must come from another source other than the [r]ents unless adequate protection is given to the [creditor]). It is well-settled that [t]o justify the imposition of costs against a secured creditor, it must be shown that [the debtors] funds were expended primarily for the benefit of the creditor and that the creditor directly benefited from the expenditure. In re Beker Indus. Corp., 89 B.R. 336, 342 (S.D.N.Y. 1988) (quoting In re Flagstaff Foodservice Corp., 762 F.2d 10, 12 (2d Cir. 1985)). Further, the Debtors do not meet this burden of proof by suggesting possible or hypothetical benefits. . . [p]roof of direct benefits sought and received by [the creditor] must be shown. Flagstaff, 762 F.2d at 12. The Debtors have not demonstrated any benefit to the Property Level Lenders collateral, particularly in light of the costs to be allocated to the Property Level Debtors estates by imposition of additional professionals fees. 14. Further, to the extent the Debtors are authorized to compensate separate counsel for

the Independent Committee, such compensation should be subject to appropriate limitations. Such authority should be (i) on an interim basis subject to aggregate limit of $100,000 during the Interim Period; (ii) on a final basis pursuant to a budget and subject to a reasonable cap; and (iii) and both on
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interim and final basis subject to the notice and dispute process provided for other professionals compensation in the Final Cash Collateral Order. This is consistent with the belief of the Property Level Lenders and this Court that the professional fees and expenses in these cases are a concern and should be limited. 15. The Property Level Lenders reserve their right to amend and supplement this

Objection, and incorporate to the extent applicable objections to the Motion filed by other parties in interest. Dated: November 5, 2010 New York, New York /s/ Lawrence P. Gottesman BRYAN CAVE LLP Lawrence P. Gottesman (LG-7061) Michelle McMahon (MM-8130) 1290 Avenue of the Americas New York, New York 10104 Tel: 212-541-2000; Fax: 212-541-4630 lawrence.gottesman@bryancave.com michelle.mcmahon@bryancave.com and DUANE MORRIS LLP Phillip K. Wang, Esq. (admitted pro hac vice) San Francisco, CA 94105-1127 Tel: (415) 957.3185; Fax: (415) 358.4725 pwang@duanemorris.com Attorneys for Wells Fargo Bank, N.A., as Trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage PassThrough Certificates, Series 2007-C1 and U.S. Bank National Association, as successor to LaSalle Bank N.A., formerly known as LaSalle National Bank, as Trustee for the registered holders of ML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4

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