Hearing Date: TBD Objection Deadline: January 28, 2011 at 4:00 pm EST

MORRISON & FOERSTER LLP 1290 Avenue of the Americas New York, New York 10104 Telephone: (212) 468-8000 Facsimile: (212) 468-7900 Brett H. Miller Lorenzo Marinuzzi Jordan A. Wishnew UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK In re INNKEEPERS USA TRUST, et al., ) ) ) ) ) ) ) ) ) Chapter 11 Case No. 10-13800 (SCC) Jointly Administered

Debtors.

NOTICE OF FIRST INTERIM APPLICATION OF MORRISON & FOERSTER LLP AS COUNSEL FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR COMPENSATION AND REIMBURSEMENT OF EXPENSES INCURRED FOR THE PERIOD JULY 28, 2010 THROUGH NOVEMBER 30, 2010

ny-951748

This is a(n):

___ monthly X interim

___ final application.

Name of Applicant: Authorized to provide professional services to:

Morrison & Foerster LLP (Applicant) Official Committee of Unsecured Creditors (the Committee)

Date of Retention: Period for which Compensation and Reimbursement are sought:

July 28, 2010 July 28, 2010 through November 30, 2010 (the Application Period)

Amount of Compensation Sought as Actual, Reasonable, and Necessary: Amount of Expense Reimbursement Sought as Actual, Reasonable, and Necessary:

$1,396,631.67

$35,510.51

PLEASE TAKE NOTICE THAT you can receive a copy of the Interim Application of Morrison & Foerster LLP for the Period July 28, 2010 to November 30, 2010 (the Interim Application) by: (i) accessing the website maintained by Omni Management Group, LLC (Omni), at www.omnimgt.com/innkeepers; (ii) contacting Omni directly at Innkeepers Hospitality c/o Omni Management Group, LLC, 16161 Ventura Boulevard, Suite C, PMB 606, Encino, California 91436; or (iii) accessing the PACER system on the Courts website at www.nysb.uscourts.gov for a nominal fee.

ny-951748

Summary of Monthly Applications for Interim Period: Date Filed 9/27/2010 11/18/2010 11/29/2010 12/29/2010 TOTAL Period Covered 7/28/2010 8/31/2010 9/1/2010 9/30/2010 10/1/2010 10/31/2010 11/1/2010 11/30/2010 Requested Fees Expenses $562,982.50 $6,369.85 $431,587.85 $189,604.32 $212,457.00 $18,454.55 $7,336.82 $3,349.29 Paid Fees Expenses $450,386.00 $6,369.85 $345,270.00 $101,714.26 $0.00 $897,370.26 $18,454.55 $7,336.82 $0.00 $32,161.22

$1,396,631.67 $35,510.51

Summary of Any Objections to Monthly Applications: Date of Fee Application 9/27/2010 Date of Objection 10/20/2010 Objecting Party Total Fees Subject to Objection1 $66,325.002 Total Expenses Subject to Objection $0

11/18/2010 11/29/2010 11/29/2010

12/20/2010 12/20/2010 12/20/2010

Midland Loan Services, Inc. (Midland) Midland Midland Wells Fargo Bank, N.A. and U.S. Bank National Association

$38,081.60 $129,487.15 $121,384.25

$0 $0 $0

PLEASE TAKE FURTHER NOTICE that, pursuant to the Courts Order Authorizing the Establishment of Procedures for Interim Compensation and Reimbursement of Expenses for Professionals and Official Committee Members, dated August 12, 2010 [Docket No.189] (the Interim Compensation Order), objections, if any, to the Interim Application must be filed with the Court and served on the Applicant at the address set forth below and the Notice Parties (as
In addition to the amounts listed above, each of the filed objections asserted that the objecting partys cash collateral should not be used for payment of any activities that are contrary to or fail to benefit the objecting partys interests. 2 Midland did not object to Applicant receiving payment of the $66,325.00, but rather argued that the amount represented fees that were improperly categorized within Applicants internal task codes.
1

ny-951748

such term is defined in the Interim Compensation Order) so as to be actually received by 4:00 p.m. prevailing Eastern Time on January 28, 2011. If no objections to the Interim Application are timely filed, the Court may enter an order granting the Interim Application without a hearing. Dated: January 14, 2011 /s/ Lorenzo Marinuzzi MORRISON & FOERSTER LLP Brett H. Miller Lorenzo Marinuzzi Jordan A. Wishnew 1290 Avenue of the Americas New York, New York 10104 Telephone: (212) 468-8000 Facsimile: (212) 468-7900 Counsel for the Official Committee of Unsecured Creditors

ny-951748

Hearing Date: TBD Objection Deadline: January 28, 2011 at 4:00 pm EST

UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK In re INNKEEPERS USA TRUST, et al., ) ) ) ) ) ) ) ) ) Chapter 11 Case No. 10-13800 (SCC) Jointly Administered

Debtors.

FIRST INTERIM APPLICATION OF MORRISON & FOERSTER LLP AS COUNSEL FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR COMPENSATION AND REIMBURSEMENT OF EXPENSES INCURRED FOR THE PERIOD JULY 28, 2010 THROUGH NOVEMBER 30, 2010 For its First Interim Application for Compensation and Reimbursement of Expenses (the Application) for the period July 28, 2010 through November 30, 2010 (the Application Period) Morrison & Foerster LLP (Applicant), Counsel to the Official Committee of Unsecured Creditors (the Committee) of Innkeepers USA Trust and certain of its direct and indirect subsidiaries in the above-captioned chapter 11 cases, as debtors and debtors in possession (collectively, the Debtors), respectfully represents as follows: PRELIMINARY STATEMENT 1. The Debtors cases encompass seventy-two (72) hotel properties and ninety-two

(92) debtor entities located throughout the country. The Debtors capital structure is equally complex and is comprised primarily of two pools of assets that include more than ninety percent (90%) of the Debtors assets and additional locations subject to secured and mezzanine loan arrangements. At any one time, the Debtors and the Committee are engaged with a number of lenders or special servicers, as well as an active group of preferred shareholders.

ny-951748

2.

These cases have been incredibly active during this first interim period. This

Court has entertained five (5) significant contested matters in the three and one half months following the Petition Date (defined below), including, but not limited to, (i) the Debtors motion to enter into a Plan Support Agreement, (ii) the Ad Hoc Committee of Preferred Shareholders (the Preferred Shareholders) request to appoint an examiner, (iii) the Preferred Shareholders request to appoint an official equity committee, (iv) the Debtors application for authority to use their lenders cash collateral, and (v) the motion of Marriott International Inc. (Marriott) to modify the automatic stay in order to complete de-identification of the Troy Central Hotel.1 During this period of time, the Committee has also been required to educate itself regarding the Debtors complex corporate structure, its capital structure, and its business operations. Like most cases of this size, the initial months of these cases have been extraordinarily active. 3. Certain secured parties posit that the Committee has (or should have) a

minimal role in this case because the aggregate trade claims purportedly pale in comparison to the amount of under-secured claims represented by the special servicers of the Debtors loan pools. While it may be true that the expected deficiency claims represented by these parties will exceed the level of trade claims, the Committee must still actively seek to maximize value for their constituents. At the direction of the Committee, Applicant performed the necessary services to enable the Committee to participate meaningfully in this case, including by undertaking an important investigation of the facts surrounding the 2007 leveraged buyout transaction through which Apollo Investment Corporation (Apollo) acquired these Debtors.

The Troy Central Hotel refers to the Troy/Central Residence Inn, located at 2600 Livernois Road, Troy, Michigan 48083.

ny-951748

But for the actions of the Committee in this regard, there would likely be no review of this important transaction. 4. Throughout this Application Period, Applicant has sought to carefully control its

billings and in certain instances, taken voluntary write-downs of its fees. Given the nature and the scope of work that was performed indeed, the Committee is the sole party reviewing the Debtors 2007 transaction Applicant submits that the fees incurred were reasonable. 5. Only two parties have objected to Applicants monthly fee statements. They have

sought to cap Applicants fees by mischaracterizing the nature of much of Applicants work during this Application Period as being an investigation regarding the perfection and validity of their liens and claims. That is simply not correct. Even if their characterization was correct, it does not prevent payment of fees from encumbered assets. 6. For all of the reasons stated herein, Applicant asserts that the fees and expenses

requested are reasonable and appropriate in light of the circumstances of these Chapter 11 cases. Accordingly, Applicant respectfully requests that the Court overrule any outstanding objections to the Monthly Fee Applications (defined below), and allow Applicants reasonable fees and expenses, as filed, including any related holdbacks, on an interim basis.2 JURISDICTION, VENUE AND STATUTORY PREDICATES 7. This Court has jurisdiction over this Application pursuant to 28 U.S.C. 157 and

1334. This matter is a core proceeding within the meaning of 28 U.S.C. 157(b)(2). Venue of this proceeding and this Application in this District is proper pursuant to 28 U.S.C. 1408 and 1409.

Applicant will make an effort to resolve these pending objections in good faith, and hopes that the objecting parties will also make the same effort.

3
ny-951748

8.

The statutory bases for the relief requested herein are Sections 330, 331, and 1103

of title 11, United States Code, 11 U.S.C. 101-1532, as amended (the Bankruptcy Code), Rule 2016 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules), and Rule 2016-1 of the Local Rules for the United States Bankruptcy Court for the Southern District of New York (the Local Rules). This Application has been prepared in accordance with General Order M-151, Amended Guidelines for Fees and Disbursements for Professionals in Southern District of New York Bankruptcy Cases (the Local Guidelines), and the United States Trustee Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. 330 effective January 30, 1996 (the UST Guidelines and, together with the Local Guidelines, the Guidelines). Pursuant to the Local Guidelines, a certification regarding compliance with the Local Guidelines is attached hereto as Exhibit A. BACKGROUND A. The Chapter 11 Cases 9. On July 19, 2010 (the Petition Date), each of the Debtors filed with the Court a

voluntary petition for relief under Chapter 11 of the Bankruptcy Code, commencing the above captioned Chapter 11 cases. 10. Pursuant to an order of this Court dated July 20, 2010, the Debtors Chapter 11

cases are being jointly administered [Docket No. 51]. 11. The Debtors continue to operate their businesses and manage their properties as

debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On July 28, 2010, the United States Trustee for the Southern District of New York (the United States

4
ny-951748

Trustee) appointed the five (5) member Committee pursuant to section 1102(a)(1) of the Bankruptcy Code [Docket No. 82].3 12. On August 4, 2010, the Committee selected The Eric Ryan Corporation and JMC

Global as its Co-Chairpersons. 13. No trustee has been requested or appointed in the Debtors Chapter 11 cases. On

August 11, 2010, an Ad Hoc Committee of Preferred Shareholders filed a motion seeking appointment of an examiner (the Examiner Motion) [Docket No. 179], which was denied for the reasons set forth in the Courts order dated October 19, 2010 [Docket No. 583]. B. Applicants Retention and Interim Compensation 14. 15. On July 28, 2010, the Committee selected Applicant to serve as its counsel. Pursuant to an order entered on September 1, 2010 (the Retention Order), this

Court authorized the employment of Applicant as counsel to the Committee effective as of July 28, 2010 [Docket No. 376]. 16. On August 12, 2010, the Court entered an Order Authorizing the Establishment of

Procedures for Interim Compensation and Reimbursement of Expenses for Professionals and Official Committee Members (the Compensation Order) [Docket No. 189]. Pursuant to the terms of the Compensation Order, Applicant and the Committees other retained professionals are authorized to file and submit monthly fee applications to the Debtors and their counsel, counsel to Midland Loan Services, Inc. (Midland), counsel to Certain Prepetition Lenders (as defined therein), and the United States Trustee (collectively, the Notice Parties).

The Committee members are: (i) JMC Global; (ii) PDQ Consulting, Inc.; (iii) Triangle Renovations USA; (iv) American Hotel Register Company; and (v) The Eric Ryan Corporation.

5
ny-951748

17.

Pursuant to the Cash Collateral Order,4 there is a $150,000 aggregate cap on the

fees Applicant can be paid from Cash Collateral5 with respect to certain types of investigations (the Lien Review Cap). Specifically, the Cash Collateral Order provides that Cash Collateral may be used by the Committee to investigate the Loan Obligations and the Prepetition Collateral and/or a potential Challenge6; provided that no more than $150,000 in the aggregate may be spent from Cash Collateral on such investigations. See Cash Collateral Order 12. 18. On September 27, 2010, Applicant served its first monthly fee application

covering the period from July 28, 2010 through August 31, 2010 (the First Monthly Fee Application) on the Notice Parties. On November 18, 2010, Applicant served its second monthly fee application covering the period from September 1, 2010 through September 30, 2010 (the Second Monthly Fee Application) on the Notice Parties. On November 29, 2010, Applicant served its third monthly fee application covering the period from October 1, 2010 through October 31, 2010 (the Third Monthly Fee Application) on the Notice Parties. On December 29, 2010, Applicant served its fourth monthly fee application covering the period from November 1, 2010 through November 30, 20107 (the Fourth Monthly Fee Application,

The Cash Collateral Order refers to 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 Pursuant to 11 U.S.C. 361, 362, and 363 entered on September 2, 2010 [Docket No. 402]. 5 Cash Collateral generally includes the Fixed Rate Cash Collateral, the Floating Rate Cash Collateral, the Anaheim Cash Collateral, the Capmark Cash Collateral, the Merrill San Antonio Cash Collateral, the Merrill Tysons Corner Cash Collateral, and the Merrill Washington D.C. Cash Collateral. See Cash Collateral Order at 20. 6 The Loan Obligations generally include the Fixed Rate Obligations, the Floating Rate Obligations, the Anaheim Loan Obligations, the applicable Capmark Loan Obligations, and the applicable Merrill Loan Obligations. See Cash Collateral Order at 21. The Prepetition Collateral generally includes the Fixed Rate Collateral, the Floating Rate Collateral, the Anaheim Collateral, the Capmark Collateral, the Merrill San Antonio Collateral, the Merrill Tysons Corner Collateral, and Merrill Washington D.C. Collateral. See Cash Collateral Order at 20. A Challenge refers to the Committees right to challenge the validity, enforceability, priority and avoidability of any liens or security interests of Adequate Protection Parties (as defined below) against the Debtors assets, or to assert any other claims or causes of action against the Adequate Protection Parties. See Cash Collateral order 13. 7 The time for the Notice Parties to respond to the Fourth Monthly Fee Application has not yet expired. Applicant reserves the right to address any such objections in a supplemental filing.

6
ny-951748

and together with the First Monthly Fee Application, the Second Monthly Fee Application and the Third Monthly Fee Application, the Monthly Fee Applications) on the Notice Parties. 19. For the convenience of this Court and all parties in interest, attached hereto as

Exhibit B is a schedule of the total amount of fees incurred under each of Applicants internal task codes during the Application Period. 20. The total payments received by Applicant as of the date hereof are approximately

equal to: (i) 80% of requested compensation with respect to amounts incurred through October 31, 2010 for all internal task codes, except (a) the task code pertaining to the analysis of the Debtors leases and real estate (Task Code 17/R.E.), (b) the task code pertaining to the investigation into the 2007 transaction (Task Code 22/2007 Trans.) and (c) the task code pertaining to the review of prepetition liens on the Debtors assets (Task Code 23/Lien Review and together with Task Code 17/R.E. and Task Code 22/2007 Trans., the Task Codes); (ii) an aggregate of $150,000 with respect to amounts incurred during the Application Period under the Task Codes;8 and (iii) 100% of all other expenses incurred through October 31, 2010. 21. Applicant maintains computerized records of the time expended in the rendering

of the professional services required by the Committee. These records are maintained in the ordinary course of Applicants practice. For the convenience of this Court and all parties in interest, attached hereto as Exhibit C is a billing summary for the Application Period, setting forth the name of each attorney and paraprofessional who rendered services during the Application period, each attorneys year of bar admission and area of practice concentration, the

It should be noted that for the First Monthly Fee Application, the amount billed to Task Code 17/R.E., excluding the amount conditionally reallocated to Task Code 23/Lien Review in resolution of a fee objection (discussed below), was not included when Applicant and Midland calculated the aggregate amount that had been paid toward the Lien Review Cap.

7
ny-951748

aggregate time expended by each attorney and each paraprofessional, the hourly billing rate for each attorney and each paraprofessional at Applicants current billing rates and the individual amounts requested for each professional. The compensation requested by Applicant is based on the customary compensation charged by comparably skilled practitioners in other similar cases under the Bankruptcy Code. 22. Applicant also maintains computerized records of all expenses incurred in

connection with the performance of professional services. A summary of the amounts and categories of expenses for which reimbursement is sought is attached hereto as Exhibit D. 23. Copies of Applicants computerized records of fees and expenses in the format

specified by the Guidelines have been filed with this Court and served on the Notice Parties with each of the Monthly Fee Applications. They will be made available to any party-in-interest requesting copies thereof. 24. There is no agreement or understanding between Applicant and any other person,

other than partners of the firm, for the sharing of compensation to be received for services rendered in these Chapter 11 cases. 25. The Monthly Fee Applications submitted by Applicant are subject to a 20%

holdback (as is customary in this district) imposed by the Court on the allowance of the fees requested by Applicant in the aggregate amount of $279,326.33. Applicant respectfully requests, in connection with the relief requested herein, that the Court allow the holdback amounts on an interim basis pursuant to sections 330 and 331 of the Bankruptcy Code and authorize the Debtors to satisfy such amounts.

8
ny-951748

C.

Objections to Applicants Monthly Fee Applications i. 26. The First Midland Objection

On October 20, 2010, Midland filed an objection (the First Midland Objection)

to the First Monthly Fee Application [Docket # 584], asserting that (i) the Midland Debtors9 should not fund the payment of approximately $32,365 in fees charged for the resolution of certain disputes between the Debtors and Marriott (the Marriott Dispute), and (ii) Applicant improperly allocated an unspecified portion of approximately $66,325 in fees charged to Task Code 17/R.E. that Midland believes should have been allocated to Task Code 23/Lien Review. 27. The First Midland Objection was resolved consensually by (i) Midlands

agreement to address the payment of fees related to the Marriott Dispute in accordance with the process outlined in the Cash Collateral Order for the allocation of estate expenses among the Adequate Protection Parties,10 and (ii) Applicants conditional reallocation of 25% of the fees from Task Code 17/R.E. to Task Code 23/Lien Review, subject to a reservation of rights by Applicant and Midland on this reallocation. This resolution was embodied in the Notice of Resolution to Midland Loan Services, Inc.s Limited Objection to the Monthly Application of Morrison & Foerster LLP for Compensation for Services and Reimbursement of Expenses as Attorneys for the Official Committee of Unsecured Creditors for the Period from July 28, 2010 Through August 31, 2010, filed on October 29, 2010 [Docket No. 631]. 28. At that time, Midland did not allege that all of the Task Codes were subject to the

Lien Review Cap. The First Midland Objection only asserted that Applicant improperly

The Midland Debtors are those debtors that are obligors under that certain secured loan in the amount of not less than $825,402,542 plus interest, costs and fees (the Fixed Rate Mortgage Loan), for which Midland is the special servicer pursuant to the Pooling and Servicing Agreement dated as of August 13, 2007. 10 Adequate Protection Party refers to a secured party who is party to certain loan documents within a tranche of debt and who has been granted a lien in cash constituting Cash Collateral. See Cash Collateral Order at 21.

9
ny-951748

categorized certain fees relating to Applicants review of the Fixed Rate Mortgage Loan by placing these services in Task Code 17/R.E. By reallocating twenty-five percent (25%) of the fees to Task Code 23/Lien Review, Applicant was aware that doing so would reduce the amounts available under the Lien Review Cap. ii. 29. The Second Midland Objection

On December 20, 2010, Midland filed a limited objection to Applicants Second

Monthly Fee Application (the Second Midland Objection) [Docket No. 771]. The Second Midland Objection objected to approximately $38,081.60 in fees, which is comprised of twenty percent (20%) of each of the following amounts: (i) $83,563 charged in connection with the equity committee/examiner motions; (ii) $63,420 charged in connection with the Committees contested request to employ Jefferies & Company, Inc. (Jefferies) as its financial advisor; and (iii) $43,425 charged for interoffice discussions and conversations. 30. In addition, Midland objected to the allowance and payment of fees and expenses

in excess of the Lien Review Cap, asserting in the Second Midland Objection that all services under any of the Task Codes are subject to the Lien Review Cap. iii. 31. The Third Midland Objection

On December 20, 2010, Midland filed another limited objection to Applicants

Third Monthly Fee Application (the Third Midland Objection and together with the Second Midland Objection, the December Midland Objections) [Docket No. 770]. The Third Midland Objection contested $129,487.15 of Applicants fees. Accordingly, the December Midland Objections collectively objected to payment of $167,568.75 in fees incurred by Applicant. 32. Specifically, the Third Midland Objection requested that Applicant be denied the

20% holdback on (i) $19,139.50 for charges incurred in connection with fee matters, and (ii) $21,375 charged for interoffice discussions and conversations. Moreover, Midland aggregated 10
ny-951748

the fees incurred by Applicant under the Task Codes and argued that $271,384.25 in fees incurred by Applicant during the case are subject to the Lien Review Cap under the First, Second and Third Monthly Fee Applications. As a result, Midland objected to the payment of $121,384.25 of fees from the Third Monthly Fee Application that are billed under the Task Codes, on the grounds that such fees impermissibly exceeded the $150,000 Lien Review Cap. 33. Applicant and Midland engaged in good faith discussions regarding the amount of

contested fees in the Third Midland Objection. As a result of these discussions, Applicant and Midland acknowledged certain numerical discrepancies in the chart included in paragraph 13 of the Third Midland Objection (the Amount Discrepancies), namely (i) the chart reflected that Applicant requested fees in the amount of $47,977.50 for Task Code 22/2007 Trans. in the month of September, when in fact, Applicants September invoice only requested fees in the amount of $41,977.50 for Task Code 22/2007 Trans. and (ii) as acknowledged within the Third Midland Objection, the chart does not account for Applicants voluntary 5% reduction in fees for the months of September and October. 34. Therefore, while the Third Midland Objection indicates that Midland objected to

$121,384.25 of fees from the Third Monthly Fee Application for services billed under the Task Codes, Midland and Applicant agreed that the actual amount to which Midland objected with respect to the Task Codes, once the Amount Discrepancies are taken into consideration, is $103,076.81. Consequently, the total amount of fees to which Midland objected in the Third Midland Objection is actually $111,179.71.

11
ny-951748

iv. 35.

The Property Level Lenders Objection

On December 20, 2010, Wells Fargo11 and U.S. Bank12 (the Property Level

Lenders and together with Midland, the Objecting Parties) also filed a limited objection to the Third Monthly Fee Application (the Property Level Lenders Objection) [Docket No. 773]. Like Midland, the Property Level Lenders assert that approximately $271,384.25 of Applicants fees are subject to the Lien Review Cap under the First, Second and Third Monthly Fee Applications. The Property Level Lenders accordingly object to payment of $121,384.25 for fees from the Third Monthly Fee Application that is billed under the Task Codes, on the grounds that such fees impermissibly exceed the $150,000 Lien Review Cap. 36. After adjusting the Property Level Lenders calculations to adjust for the same

Amount Discrepancies, the actual amount objected to by the Property Level Lenders appears to be $103,076.81. 37. Accordingly, Applicant is subject to a total of $149,260.71 in fee payment

objections by the Objecting Parties, which number subsumes the Property Level Lenders fee objection inasmuch as the Property Level Lenders assert the same objection to Applicants fees as Midland (the Objection Amount). 38. In addition to the Objection Amount, each of the Objecting Parties objections

asserted that the Objecting Partys cash collateral should not be used for payment of any activities that are contrary to or fail to benefit the Objecting Partys interests.

Wells Fargo refers to 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. 12 U.S. Bank refers to 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.

11

12
ny-951748

RESPONSES TO OUTSTANDING OBJECTIONS 39. Since the First Midland Objection has been resolved, Applicant will respond only

to the December Midland Objections and the Property Level Lenders Objection. 40. The remaining objections to Applicants fees fall into two categories:

(i) objections to the reasonableness of fees incurred by Applicant for which Midland objects to payment to Applicant of the remaining 20% holdback for such fees; and (ii) objections to the amount charged under the Task Codes to the extent all such charges are limited to the $150,000 Lien Review Cap. Each of these categories is addressed below. (i) 41. Objections to 20% Holdback of Certain Fees

The December Midland Objections assert that Applicants 20% holdback should

be denied with respect to time charged in relation to (i) addressing equity committee and examiner issues, (ii) retaining Jefferies as the Committees financial advisor, (iii) interoffice discussions and (iv) billing related activities, Applicant submits that such services were reasonable and necessary. (a) 42. Equity Committee Matters

Midland argues that $16,712.60 of $83,563.00 (as calculated by Midland) should

not be paid respecting equity committee and examiner matters. As this Court may recall, Applicant vigorously and successfully objected to the motions by the Preferred Shareholders requesting the appointment of an official equity committee and an examiner. Such actions on the part of the Committee required the Applicant to review and analyze the Preferred Shareholders motions and arguments, thoroughly research the issues raised in the motions, confer with Jefferies regarding a valuation analysis, and prepare and prosecute objections to the motions. In fact, the examiner motion was denied in part because the Committee had already initiated its own

13
ny-951748

investigation into the propriety of the 2007 Transaction. See Transcript of September 30, 2010 hearing, pp. 168-169 attached hereto as Exhibit E. 43. If allowed, the appointment of an official equity committee and/or an examiner in

the Debtors chapter 11 cases would have resulted in additional significant administrative costs to the Debtors estates due to, at a minimum, the employment of additional professionals as well as the added motion practice and delay. Applicant contends that the fees charged in connection with defending against the Preferred Shareholders motions are both reasonable and justified because such efforts ultimately served to conserve the assets of the Debtors estates for the benefit of all creditors. (b) 44. Jefferies Retention

Second, the fees requested in connection with defending Jefferies retention as the

Committees financial advisors ($63,420, as calculated by Midland) are entirely justified. As previously mentioned, these cases involve ninety-two (92) Debtor entities and seventy-two (72) hotels with a complex capital structure. Accordingly and appropriately, the Committee sought to retain Jefferies as its financial advisor to assist Applicant with the critical tasks associated with guiding the Committee through the Debtors reorganization efforts including for evaluating a sale or plan transaction. 45. The application to retain Jefferies was met with a multi-front attack by Midland

(including the submission by Midland of declarations from its financial advisor), the Property Level Lenders, C-III Asset Management LLC and CWCapital Asset Management LLC. These parties objected to even the need for the Committee to retain a financial advisor. They also challenged the cost of Jefferies retention, the terms of its engagement letter as well as Jefferies disinterestedness. Consequently, Applicant engaged in reasonable and necessary actions to defend against the objections to Jefferies retention. Such actions included, without limitation: 14
ny-951748

(i) reviewing and analyzing the objections to Jefferies retention application; (ii) researching and analyzing the retention of financial advisors in similar bankruptcy cases; (iii) preparing a response to the objections to Jefferies retention application; (iv) preparing for and attending a deposition of Midlands witness to determine the process by which the witness made his conclusions; (v) preparing for and attending the hearing on the Jefferies retention; and (vi) coordinating with the objecting parties and Jefferies outside counsel to resolve the objections. Applicant asserts that the fees incurred as a result of its actions in support of Jefferies employment as the Committees financial advisor in these cases were both justified and necessary. 46. The Second Midland Objection unfairly characterizes the work performed to

retain Jefferies by stating that the fees incurred by Applicant were in connection with [t]he Committees request to employ Jefferies. Applicants reasonable fees and expenses were not incurred by merely requesting to employ Jefferies, but also by litigating and ultimately resolving the several objections filed against the Committees application to retain Jefferies. (c) 47. Interoffice Discussions

Third, with respect to the objections to time billed by Applicant to interoffice

discussions ($12,960 of $64,800 as calculated by Midland),13 Applicant notes that the size and complexity of the Debtors cases required Applicant quickly: to gain an understanding of numerous complicated real estate and financial transactions, including guarantees and securitized debt structures; to review, analyze and coordinate appropriate responses to contested matters; to verify that all secured creditors are properly perfected; and to investigate the transactions

13

These calculations include the aggregate amounts of interoffice discussion objections in both of the December Midland Objections.

15
ny-951748

preceding the Debtors bankruptcy filings. To that end, Applicant has staffed this matter with attorneys from different practice areas with distinct areas of legal expertise and experience. 48. It is necessary for these attorneys to confer with one another on different aspects

of the case. By insisting on regular updates from its specialized attorneys, the bankruptcy attorneys are able to better direct the provision of services. Applicant contends that such consultations maximize the effectiveness and efficiency of Applicants services because, among other things, it helps to ensure that the activities of attorneys in specialized practice groups are coordinated so as not to duplicate efforts or undertake tasks that are not necessary for advising the Committee. It is only logical that when a real estate attorney evaluates a real estate loan to determine the relative rights of parties, that the lawyer updates the bankruptcy attorneys with the results of that analysis. Consequently, Applicant asserts that its fees incurred as a result of interoffice communication are reasonable and justified. (d) 49. Fee Applications

Lastly, the amount objected to by Midland with respect to Applicants preparation

of monthly fee applications ($3,827.90 of $19,139.50 as calculated by Midland) should be paid. The time spent by Applicant in connection with billing issues included, without limitation, (i) preparing Applicants monthly fee application, (ii) assisting Jefferies with the preparation of its monthly fee application, (iii) reviewing and analyzing the monthly fee applications of other professionals in the Debtors cases, and (iv) reviewing, analyzing, defending against and attempting to resolve an objection to Applicants fees.14

14

Reviewing the time entries of which Midland complains reveals time spent answering Midlands questions and preparing for Midlands benefit an analysis of the time spent by Applicant in connection with the Marriott disputes. Midland utilized the requested fee calculation for its First Midland Objection to argue, not that Applicants work was unreasonable, but that another Adequate Protection Party should bear those costs. Yet, Midland now objects to payment of the fees incurred by Applicant in assisting Midland. That hardly seems appropriate.

16
ny-951748

50.

Applicant asserts that all of its fees are reasonable and necessary. Accordingly,

Applicant respectfully requests that the Court deny Midlands objection to payment of Applicants 20% holdback with respect to time billed for (i) addressing equity committee and examiner issues, (ii) retaining Jefferies as the Committees financial advisor, (iii) interoffice discussions, and (iv) billing-related activities. (ii) The Task Code Objections 51. The Objecting Parties assertions that the Task Codes should all be subject to the

Lien Review Cap are misplaced. 52. The Cash Collateral Order provides, in pertinent part, that the Committee has a

right to investigate and challenge the validity, enforceability, priority and avoidability of any liens or security interests of Adequate Protection Parties against the Debtors assets, or to assert any other claims or causes of action against the Adequate Protection Parties. See Cash Collateral Order 12-13. 53. The Committees investigations pertaining to the Loan Obligations, Prepetition

Collateral, and Challenges are the only types of Committee work that are subject to the $150,000 Lien Review Cap. Importantly, the Cash Collateral Order does not place a limit on the Committees fees for investigations of the Loan Obligations, Prepetition Collateral, or Challenges, it merely limits the fees that may be satisfied from Cash Collateral to $150,000. 54. As explained more fully below, not all of the work performed under the Task

Codes represents investigations against the Loan Obligations, Prepetition Collateral, or Challenges. So it is clear, Applicant acknowledges that arguments can be made that some tasks allocated under one Task Code could also be fairly allocated to another. The simple truth is that Applicant tried as best as reasonably possible to allocate in a manner that respects the spirit of

17
ny-951748

the Lien Review Cap and properly reflects that certain necessary due diligence and information gathering efforts are not for the purpose of analyzing the validity of the Adequate Protection Parties claims. 55. The Committee has been charged with three separate and distinct undertakings

represented by the three Task Codes: (i) to understand the Debtors business and complex capital structure to enable the Committee to, among other things, analyze any proposed restructuring; (ii) to investigate the 2007 Transaction (defined below) and any causes of action resulting therefrom against any party; and (iii) to analyze the validity, extent, priority and avoidability of the prepetition liens on the Debtors assets. The Objecting Parties incorrectly and strategically seek to portray such undertakings as a single objective under the purview of the Lien Review Cap. This is simply not correct. 56. First and foremost, as this Court is aware, the Committee owes a fiduciary duty to

the Debtors general unsecured creditors. Although the level of claims in this case has been the subject of much speculation, based on actual proofs of claim filed, it would appear that there are in excess of $20 million of unsecured claims filed against the Debtors. While there is undoubtedly some duplication and subsumed section 503(b)(9) administrative claims in this amount, Applicant contends that the amount of filed proofs of claim demonstrates the existence of a meaningful pool of general unsecured claims for which the Committee must act as fiduciaries. 57. In order to discharge those duties, the Committee must understand the complex

capital structure and financial transactions of the Debtors, including their financing pools and all of the agreements within those pools even if the Committee had neither the authority, nor the responsibility to determine whether any challenges exist. That work is required merely to

18
ny-951748

understand where the assets are held, how they got there and which entities have rights against them. This is the purpose for which Applicant billed time to Task Code 17/R.E. 58. To that end, Applicants review of the Debtors organizational documents,

leasehold documents, intercreditor agreements and other underlying financial documents cannot all fall under the umbrella of the Lien Review Cap. Rather, the work that has been done under Task Code 17/R.E. would be needed even if there were no Challenge and Lien Review Cap. The nature of the work in Task Code 17/R.E. is needed simply to, among other things, understand the complicated corporate and capital structure of the Debtors and how best to structure a chapter 11 plan. Moreover, this work would be required whether the general unsecured claim amount against the Debtors is $2 million, $25 million or $250 million. 59. Likewise, work categorized under Task Code 22/2007 Trans. should not be

subject to the Lien Review Cap. Task Code 22/2007 Trans. is utilized for work performed in the investigation of the 2007 transaction (the 2007 Transaction) by which Apollo became the majority shareholder of Innkeepers USA Trust. 60. The work conducted under Task Code 22/2007 Trans. consists of Applicants

review of hundreds of thousands of pages of documents associated with the 2007 Transaction, in an effort to determine whether there are any causes of actions resulting from the 2007 Transaction that may serve to enhance the value of the Debtors estates for the benefit of all creditors and other parties in interest. Those actions could lie against Apollo, the Debtors prior management and board of directors, other parties that may have breached their obligations to the Debtors or committed malpractice, and certainly the holders of the secured claims that arose out of the 2007 Transaction.

19
ny-951748

61.

Therefore, Applicant contends that the activities conducted under Task Code

22/2007 Trans. do not fall under the umbrella of the Lien Review Cap, which applies to the investigation into the validity, enforceability and priority of the prepetition liens against the Debtors assets. To argue otherwise would mean that any claim arising out of the 2007 Transaction would necessarily challenge the Adequate Party Protection Parties liens and that no other claims could exist against any other party. 62. Applicant has tried to allocate as best as possible work that can be classified as

challenges to liens and claims into Task Code 23/Lien Review. Applicant readily acknowledges that in many instances there is some degree of overlap in the tasks, but Applicant believes it has been fair in its allocation of services. 63. The Objecting Parties seem to posit from their objections that anything even

remotely dealing with the Adequate Protection Parties is necessarily an effort to investigate and challenge the validity and enforceability of their claims and, therefore, subject to the Lien Review Cap. If all of the time entries suggested by the Objecting Parties were actually subject to the Lien Review Cap, the Committee would be unable to fulfill adequately its mandate to effectively represent unsecured creditors in a complex case such as this, nor would the Committee be able to complete its review of the 2007 Transaction. Moreover, if the Objecting Parties new understanding of the operation of the Lien Review Cap were correct, then merely reviewing a plan of reorganization proposed by any of the Adequate Protection Parties would be subject to the cap. For example, if the Committee were to analyze the methodology used to value the assets subject to Midlands secured claims under a proposed plan to ensure that the plan does not provide a windfall, the Objecting Parties overbroad application of the Lien Review Cap would cover those efforts as well.

20
ny-951748

64.

Instead, the Lien Review Cap only applies to Task Code 23/Lien Review. The

focus of the work performed under Task Code 23/Lien Review has been to investigate and verify whether all of the prepetition secured creditors claims are properly perfected. Such work required a substantial amount of effort and has included, without limitation, an analysis and review of the Debtors loan agreement, recorded security interests and assignments thereof.15 While there could certainly be some instances where work performed under one task code arguably could be included in another, Applicant has made a concerted effort to fairly allocate entries among the Task Codes. 65. The Committees work billed to Task Code 23/Lien Review during this period is

not only below the $150,000 Lien Review Cap, but such work has borne fruit in the form of identifying assets that are believed to be unencumbered because of deficiencies in the perfection of security interests. In particular, the Committee believes that two (2) of the Debtors prepetition secured parties failed to properly perfect their security interests against their operating lessees because UCC filings statements were not filed against those entities. 66. Finally, even if the Lien Review Cap applies equally to the Task Codes, which

Applicant asserts it does not, the Cash Collateral Order places no limit other then the Courts ruling on whether the fees are reasonable on Applicants ability to receive payment of its fees provided that such payment is not funded by Cash Collateral. 67. As mentioned above, the Committee believes that its efforts have identified

unencumbered assets and notes the admitted existence of an unencumbered bank account holding

15

Applicants review of loan documents provided by the Adequate Protection Parties has been allocated to Task Code 23/Lien Review.

21
ny-951748

approximately $7.4 million, which account is not pledged to any secured party.16 The language of the Cash Collateral Order does not prohibit the satisfaction of Applicants fees from the proceeds of any of these unencumbered assets. Accordingly, if the Court finds that the Lien Review Cap has been exceeded, Applicant respectfully requests that its reasonable fees be paid from non-Cash Collateral sources to the extent necessary. DESCRIPTION OF SERVICES AND EXPENSES AND RELIEF REQUESTED 68. In general, Applicant has represented the Committee in all aspects of the Debtors

bankruptcy proceedings, including, without limitation, the following: (a) (b) (c) (d) (e) assisting and advising the Committee in its consultation with the Debtors relative to the administration of these cases; attending meetings and negotiating with the representatives of the Debtors; assisting and advising the Committee in its examination and analysis of the conduct of the Debtors affairs; assisting the Committee in the review, analysis and negotiation of any potential plan(s) of reorganization that may be filed, including the Plan; taking all necessary action to protect and preserve the interests of the Committee, including (i) possible prosecution of actions on its behalf, (ii) if appropriate, negotiations concerning all litigation in which the Debtors are involved; and (iii) if appropriate, review and analysis of claims filed against the Debtors estates; generally preparing on behalf of the Committee all necessary motions, applications, answers, orders, reports and papers in support of positions taken by the Committee; appearing, as appropriate, before this Court and the United States Trustee, and protecting the interests of the Committee before this Court and before the United States Trustee; and performing all other necessary legal services in these cases.

(f)

(g)

(h)
16

The unencumbered $7.4 million bank account was discussed in open court at the hearing on September 30, 2010.

22
ny-951748

69.

To provide an orderly and meaningful summary of the services rendered by

Applicant on behalf of the Committee during the Application Period, Applicant established, in accordance with the Guidelines and its internal billing procedures, separate task codes in connection with these chapter 11 cases. The following is a summary of the most significant professional services rendered by Applicant during the Application Period organized in accordance with Applicants internal system of task codes: (a) Asset Analysis and Recovery 001.

Fees: $10,714.00; Total Hours: 21.0 This category includes the review and analysis of the Debtors miscellaneous assets. (b) Asset Dispositions/Sales 002.

Fees: $13,425.00; Total Hours: 16.6 This category includes matters related to the disposition or sale of the Debtors assets, including reviewing the proposed sale process and marketing strategy for the Debtors assets. (c) Business Operations and Advice 003.

Fees: $22,605.00; Total Hours: 33.9 This category includes matters related to reviewing the Debtors current and projected business operations, and providing the Committee with advice, including reviewing and analyzing franchise agreements, hotel management agreements and the Debtors monthly operating reports. (d) Case Administration 004.

Fees: $60,335.50; Total Hours: 119.9 This category includes matters related to the general administration of the Debtors cases on behalf of the Committee, including advising the Committee as to how to fulfill its duties and

23
ny-951748

exercise its rights in the Debtors cases. This category also includes time spent responding to letters to the U.S. Trustee requesting the appointment of an official equity committee. (e) Claims Administration and Objections 005.

Fees: $13,325.00; Total Hours: 21.2 This category includes matters related to the claims administration process, including reviewing the bar date motion and comfort letters relating to franchise agreements as well as monitoring the status of filed claims. (f) Other Motions and Applications 006.

Fees: $347,289.00; Total Hours: 610.5 This category includes matters related to the review, analysis, research, preparation, prosecution and defense of all motions and applications, other than fee and employment applications, with respect to the Debtors cases, including, among others, the Committees motion to serve Rule 2004 discovery requests, the Preferred Shareholders motion for the appointment of an official equity committee, the Preferred Shareholders motion for the appointment of an examiner, the Debtors insurance premium financing motion, the Debtors motion to compensate Fried, Frank, Harris, Shriver & Jacobson LLP as counsel to the Independent Committee and monitoring the litigation between LNR and CRES. (g) Fee/Employment Applications 007.

Fees: $70,928.50; Total Hours: 188.2 This category includes all matters related to the preparation of monthly and interim fee applications for Applicant and the Committees other professionals and preparation of retention applications for Applicant and the Committees other professionals as well as supplemental filings thereto. This category also includes matters related to the review and analysis of fee

24
ny-951748

applications of other non-Committee professionals retained in connection with the Debtors cases. (h) Fee/Employment Objections 008.

Fees: $58,657.00; Total Hours: 101.0 This category includes time related to reviewing and preparing responses and attempting to resolve filed objections to Applicants fee applications and Jefferies employment application. This category also includes matters related to the review and analysis of objections to the fee applications of other retained professionals in the Debtors cases. (i) Financing 009.

Fees: $82,401.50; Total Hours: 150.7 This category includes matters related to the review, analysis and negotiation of the Debtors post-petition financing arrangements, including the Debtors use of cash collateral. In addition, this category also includes time spent (i) researching, preparing and prosecuting an objection to the Debtors cash collateral and debtor-in-possession financing motions, (ii) researching, preparing and prosecuting an objection to Midlands motion to reconsider the Cash Collateral Order, and (ii) negotiating and drafting a stipulation modifying the Cash Collateral Order. (j) Meetings of Creditors 010.

Fees: $59,800.00; Total Hours: 93.3 This category includes matters associated with committee meetings. Applicant prepared for and conducted numerous telephonic meetings of the Committee to discuss the many motions and applications filed with the Court as well as any other matters of significance and importance to general unsecured creditors. Applicant prepared for and conducted telephonic meetings of the

25
ny-951748

Committee held on the following dates: August 4, 2010, August 11, 2010, August 18, 2010, September 8, 2010, September 15, 2010, September 22, 2010, September 29, 2010, October 13, 2010, November 3, 2010 and November 17, 2010. Each of these meetings required preparation by Applicant, including periodically researching issues raised by individual Committee members, creditors and/or the Debtors, arranging scheduling and work distribution with other professionals and preparing agendas for all meetings. (k) Plan and Disclosure Statement 011.

Fees: $130,571.50; Total Hours: 199.9 This category includes matters related to the Debtors plan support agreement and related materials, responses and objections thereto as well as motions by various interested parties to terminate the Debtors plan exclusivity periods. More specifically, this category includes time spent: (i) researching and preparing an analysis of the Debtors plan support agreement and advising the Committee with respect to the same; (ii) researching and preparing a reservation of rights regarding the Debtors plan support agreement; (iii) researching and preparing an objection to the motions to terminate the Debtors exclusivity as well as a statement in support of the Debtors motion to extend their exclusive periods; and (iv) participating in meetings and discussions regarding the Debtors plan process for exiting chapter 11. (l) Relief from Stay Proceedings 012.

Fees: $5,619.00; Total Hours: 10.1 This category includes matters related to motions seeking relief from the automatic stay. (m) Hearings 013.

Fees: $95,554.50; Total Hours: 157.5

26
ny-951748

This category includes matters related to preparation for and attendance at hearings, including attendance at the hearings held on August 25, 2010, August 30, 2010, August 31, 2010, September 1, 2010, September 2, 2010, September 30, 2010 and November 10, 2010. (n) Communication with Creditors 016.

Fees: $23,425.50; Total Hours: 36.8 Applicants activities under this category consisted primarily of correspondence with Committee members, general unsecured creditors and other parties-in-interest regarding the status of the Debtors bankruptcy proceedings. (o) Lease / Real Estate Analysis 017.

Fees: $97,721.25; Total Hours: 187.6 This category includes matters related to the research, review and analysis of the Debtors real estate assets. Applicants diligence activities under this category consisted of, among other things, reviewing the Debtors commercial mortgage-backed securities structures, pooling and servicing agreements, and lease agreements. In addition, Applicant prepared summaries and reports regarding the outcome of its diligence. (p) Schedules and Statements 018.

Fees: $1,125.00; Total Hours: 1.8 This category includes matters related to review and analysis of the Debtors filed schedules and statements of financial affairs. (q) First Day Motions and Hearings 019.

Fees: $10,985.00; Total Hours: 20.5

27
ny-951748

This category includes matters related to the review and analysis of, and research regarding, the Debtors generic first day motions. Applicant also provided advice to and corresponded with the Committee on the foregoing matters. (r) 2007 Transaction Investigation 022.

Fees: $186,454.00; Total Hours: 312.9 This category includes matters related to the review and analysis of, and research regarding, the 2007 Transaction by which Apollo became the majority shareholder of Innkeepers USA Trust. Applicants diligence activities under this category included, among other things: (i) examining publicly filed documents; (ii) preparing and issuing subpoena and discovery requests to seven (7) parties; (iii) analysis of several hundred thousand pages of documents; (iv) drafting a motion to compel and supporting papers to obtain Apollos compliance with a document subpoena; (v) researching potential causes of action and related remedies stemming from the 2007 Transaction; (vi) conferring with the Committees financial advisors to assess potential causes of actions, and to analyze the documents in support thereof; and (vii) litigation planning. (s) Prepetition Lien Review 023.

Fees: $138,389.75; Total Hours: 266.3 This category includes all matters related to the review and analysis of the validity, extent and priority of the prepetition liens against the Debtors assets. Applicants activities under this category include (i) addressing issues relating to subpoena and discovery requests to the prepetition secured lenders, (ii) reviewing and analyzing the Debtors loan documents and all recordable documents related thereto, such as security instruments and UCC financing statements for purposes of determining perfection, and (iii) examining the Debtors recorded security interests and assignments thereof. In addition, Applicant conducted research regarding

28
ny-951748

various perfection issues within multiple jurisdictions. Applicant also prepared summaries of its diligence review and provided correspondence with the Committee regarding the status of the perfection analysis. 70. The foregoing general description of services rendered in specific areas is not

intended to be exhaustive of the scope of Applicants activities on behalf of the Committee in this case. The time records submitted with the Monthly Fee Applications present more completely the work performed by Applicant in each billing category during the period covered by this Application. 71. Applicant believes that the services rendered during the period from July 28, 2010

through November 30, 2010 on behalf of the Committee are reasonably worth the sum of $1,396,631.67, and Applicant requests the allowance of such sum. The blended hourly rate for all services rendered by Applicant during this period is $547.87. 72. Applicant further requests reimbursement of costs expended on behalf of the

Committee for the period July 28, 2010 through November 30, 2010 in connection with this chapter 11 proceeding in the sum of $35,510.51, as set forth in Exhibit D.17 73. Applicant therefore requests an order (i) approving interim compensation in the

sum of $1,396,631.67 and interim reimbursement of expenses in the sum of $35,510.51, (ii) directing prompt payment of all compensation and expenses not previously paid, and (iii) granting such other and further relief as may be just and proper.

17

The rates charged for such expenses are equivalent to what Applicant normally bills to its non-bankruptcy clients, and are calculated to compensate Applicant for only the actual cost of the expense.

29
ny-951748

Dated: January 14, 2011 Respectfully submitted, /s/ Lorenzo Marinuzzi MORRISON & FOERSTER LLP Brett H. Miller Lorenzo Marinuzzi Jordan A. Wishnew Counsel for the Official Committee of Unsecured Creditors

30
ny-951748

EXHIBIT A

A-1 ny-951748

MORRISON & FOERSTER LLP 1290 Avenue of the Americas New York, New York 10104 Telephone: (212) 468-8000 Facsimile: (212) 468-7900 Brett H. Miller Lorenzo Marinuzzi Jordan A. Wishnew UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK In re INNKEEPERS USA TRUST, et al., ) ) ) ) ) ) ) ) ) Chapter 11 Case No. 10-13800 (SCC) Jointly Administered

Debtors.

CERTIFICATION UNDER GUIDELINES FOR FEES AND DISBURSEMENTS FOR PROFESSIONALS IN RESPECT OF FIRST FEE APPLICATION OF MORRISON & FOERSTER LLP FOR INTERIM COMPENSATION AND REIMBURSEMENT OF EXPENSES I, Lorenzo Marinuzzi, hereby certify that: 1. I am a partner with the applicant firm, Morrison & Foerster LLP (Morrison &

Foerster), which serves as counsel to the Official Committee of Unsecured Creditors (the Committee) appointed in the Chapter 11 cases of Innkeepers USA Trust, and its affiliated debtors (collectively, the Debtors). 2. This certification is made in respect of Morrison & Foersters compliance with the

Amended Guidelines for Fees and Disbursements for Professionals in Southern District of New York Bankruptcy Cases, adopted by the Court on April 19, 1995 (the Local Guidelines), the United States Trustee Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. 330, adopted on January 30, 1996 (the A-2
ny-951748

UST Guidelines) and the Order Granting Motion to Establish Procedures for Interim Compensation and Reimbursement of Expenses of Professionals, dated January 26, 2010 (the Administrative Order), and collectively with the Local Guidelines and UST Guidelines, the Guidelines), in connection with Morrison & Foersters application, dated January 14, 2011 (the Application), for interim compensation and reimbursement of expenses for the period commencing July 28, 2010 through and including November 30, 2010, in accordance with the Guidelines. 3. (a) (b) In respect of Section B.1 of the Local Guidelines, I certify that: I have read the Application; to the best of my knowledge, information, and belief formed after reasonable inquiry, the fees and expenses sought fall within the Local Guidelines; the fees and disbursements sought are billed at rates in accordance with those customarily charged by Morrison & Foerster and generally accepted by Morrison & Foersters clients; and in providing the reimbursable services reflected in the Application, Morrison & Foerster did not make a profit on those services, whether performed by Morrison & Foerster in-house or through a third party. In respect of Section B.2 of the Local Guidelines and as required by the

(c)

(d)

4.

Administrative Order, I certify that Morrison & Foerster has complied with these provisions requiring it to provide the United States Trustee for the Southern District of New York and attorneys for the Debtors with a statement of Morrison & Foersters fees and expenses accrued during the previous month, although, due to administrative limitations, such statements were not always provided within the timetables set forth in the Local Guidelines and the Administrative Order.

A-3
ny-951748

5.

In respect of Section B.3 of the Local Guidelines, I certify that the Debtors and

the United States Trustee for the Southern District of New York are each being provided with a copy of the Application.

Dated: January 14, 2011 New York, New York

Respectfully submitted,

/s/ Lorenzo Marinuzzi MORRISON & FOERSTER LLP Lorenzo Marinuzzi Counsel for the Official Committee of Unsecured Creditors

A-4
ny-951748

EXHIBIT B SUMMARY OF PROFESSIONAL SERVICES RENDERED BY PROJECT CATEGORY BY MORRISON & FOERSTER ON BEHALF OF THE COMMITTEE FOR THE PERIOD JULY 28, 2010 THROUGH NOVEMBER 30, 2010 PROJECT CATEGORY 001 002 003 004 005 006 007 008 009 010 011 012 013 016 017 018 019 022 023 DESCRIPTION Asset Analysis and Recovery Asset Dispositions/Sales Business Operations and Advice Case Administration Claims Administration and Objections Other Motions and Applications Fee/Employment Applications Fee/Employment Objections Financing Meetings of Creditors Plan and Disclosure Statement Relief from Stay Proceedings Hearings Communication with Creditors Lease / Real Estate Analysis Schedules and Statements First Day Motions and Hearings 2007 Transaction Investigation Prepetition Lien Review HOURS 21.0 16.6 33.9 119.9 21.2 610.5 188.2 101.0 150.7 93.3 199.9 10.1 157.5 36.8 187.6 1.8 20.5 312.9 266.3 AMOUNT $10,714.00 $13,425.00 $22,605.00 $60,335.50 $13,325.00 $347,289.00 $70,928.50 $58,657.00 $82,401.50 $59,800.00 $130,571.50 $5,619.00 $95,554.50 $23,425.50 $97,721.25 $1,125.00 $10,985.00 $186,454.00 $138,389.75

B-1 ny-951748

Total Less Client Accommodation Total fees Requested

2,549.7

$1,429,326.00 $(32,694.33)1 $1,396,631.67

In addition to this client accommodation, Applicant also took a voluntary fee write off of $10,666.00 in September 2010; however, that sum was not charged to the Debtors estates under Applicants billing system and was not reflected within Applicants September invoice.

B-2 ny-951748

EXHIBIT C SUMMARY OF PROFESSIONAL SERVICES RENDERED BY PROFESSIONAL BY MORRISON & FOERSTER ON BEHALF OF THE COMMITTEE FOR THE PERIOD JULY 28, 2010 THROUGH NOVEMBER 30, 2010 Name of Professional Individual Partners Peter Dopsch Department and Licensure Hourly Billing Rate $730 Total Hours Billed .3 Total Compensation

Department: Litigation Licensure: NY (1987) MA (1983) Mark Edelstein Department: Real Estate Licensure: NY (1983) Stephan Engelhardt Department: Litigation Licensure: NY (1990) Lorenzo Marinuzzi Department: Bankruptcy Licensure: NY (1997) NJ (1996) Brett H. Miller Department: Bankruptcy Licensure: NY (1992) Larren Nashelsky Department: Bankruptcy Licensure: NY (1992) CT (1991) Jeffrey Temple Department: Real Estate Licensure: NY (1985) Associates and Of Counsel Naja Armstrong Department: Real Estate Licensure: NY (2009) David Capucilli Department: Bankruptcy Licensure: NY (2004) Ramos C. Fletcher Department: Litigation Licensure: NY (2009) CA (2005) Renee Freimuth Department: Bankruptcy Licensure: NY (2005) CT (2004) Paul Galante Department: Litigation Licensure: NY (2002) Stephen P. Koshgerian Department: Bankruptcy Licensure: NY (2010) Dina Kushner Department: Financial Transactions Licensure: CA (2009)

$219.00

$850 $745 $750

.2 118.1 337.7

$170.00 $87,984.50 $253,275.00

$875 $900

68.4 35.0

$59,850.00 $31,500.00

$795

81.6

$64,872.00

$430 $610 $590

154.9 42.4 82.4

$66,607.00 $25,864.00 $48,616.00

$590

43.3

$25,547.00

$650 $370 $325

283.3 111.3 5.2

$184,145.00 $41,181.00 $1,690.00

C-1 ny-951748

Name of Professional Individual Thomas McGovern Stacy Molison Eileen Pizzurro Diana Quarry Erica J. Richards Jordan A. Wishnew

Department and Licensure

Department: Licensure: Department: Licensure: Department: Licensure: Department: Licensure: Department: Licensure: Department: Licensure:

Real Estate NY (2005) Bankruptcy NY (2009) Litigation NY (2006) Real Estate NY (2009) Bankruptcy NY (2007) Bankruptcy NY (2003) NJ (2002) Litigation Support N/A Bankruptcy N/A Bankruptcy N/A Real Estate N/A Litigation N/A

Hourly Billing Rate $610 $430 $560 $430 $490 $625

Total Total Hours Compensation Billed 30.3 $18,483.00 386.7 19.1 63.1 182.9 278.8 $166,281.00 $10,696.00 $27,133.00 $89,621.00 $174,250.00

Paraprofessionals David Chan Laura Guido Douglas Keeton Robin Riley Kyle Weatherholtz

Department: Licensure: Department: Licensure: Department: Licensure: Department: Licensure: Department: Licensure:

$245 $230 $195 $225 $185

32.7 153.5 11.5 22.0 4.5

$8,011.50 $35,305.00 $2,242.50 $4,950.00 $832.50

Summary of Professionals Hours and Compensation Requested: PROFESSIONALS BLENDED RATE TOTAL HOURS BILLED 641.3 1,683.7 224.2 2,549.2 TOTAL COMPENSATION

TOTALS: Partners Associates and Of Counsel Paraprofessionals Total Incurred (Attorneys and Paraprofessionals) Less Client Accommodation Total Fees Requested

$769.14 $522.72 $228.99 $560.69

$497,870.50 $880,114.00 $51,341.50 $1,429,326.00 $ (32,694.33) $1,396,631.67

$547.80

2,549.2

C-2 ny-951748

EXHIBIT D SUMMARY OF EXPENSES INCURRED BY MORRISON & FOERSTER ON BEHALF OF THE COMMITTEE FOR THE PERIOD JULY 28, 2010 THROUGH NOVEMBER 30, 2010 Expense Category Air Freight Color Copies Document Preparation Fax Filing Fees Long Distance Telephone Meals Messenger Service Online Research LEXIS, WESTLAW, PACER, other Photocopies Postage Reporting Fees Secretarial Overtime Travel/Transportation Total Amount $319.07 $141.40 $2,317.50 $2.00 $25.00 $141.90 $308.59 $170.00 $15,810.58 $751.57 $53.95 $14,198.50 $187.50 $1,082.95 $35,510.51

D-1 ny-951748

EXHIBIT E

E-1 ny-951748

2 3
4
5
6
7

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK Case No. 10-13800-scc
- - - - - - - - - -x

In the Matter of:

8
9
-

INNKEEPERS USA TRUST, et al.,

..............................................................................

. .....

10
11

Debtors.

12 13
14

- - - - - - - - - - - - - - - - - - - - -X

U.S. Bankruptcy Court One Bowling Green New York, New York

15
16 17

18
19

September 30, 2010 10:05 AM

20 21 22 23 24 25 B E F 0 R E: HON. SHELLEY C. CHAPMAN U.S. BANKRUPTCY JUDGE

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

INNKEEPERS USA TRUST, eta!.

- 168 1
2

properly, I believe, pushed back and declined to appoint an

examiner to join an otherwise crowded fray, in which the many

3 4 5 6 7 8 9 10 11
12

combatants are well armed and highly motivated. Based on the record before me, I find that there is no basis to appoint an examiner under either 1104(c) (1) or 1104 (c) (2). And thus, I need not reach the question of whether

and to what extent Section 1104(c) is mandatory in nature. First, with respect to 1104 (c) (1), Section 1104 (c) (1) of the Code provides that a bankruptcy court shall order the appointment of an examiner, to conduct such an investigation of the debtor, as is appropriate, including an investigation of
any allegations of fraud, dishonesty,
incompetence, misconduct,

13 14 15 16 17 18 19 20 21
22

mismanagement, or irregularity in the management of the affairs of the debtor of or by current or former management of the debtor if such appointment is in the interest of creditors, any equity security holders, and other interest of the estate. As a result of Section 1104 (c) ( 1) 's use of the word and, an examiner should ?nly be appointed under that subsection, if doing so would serve the interest of all the debtor's stakeholders. Because all of the requested examination topics
either, one, have been addressed in the litigation surrounding

23 24
25

the motion to approve the PSA, or two, will be addressed by multiple layers of interested parties, including without
limitation/ as part of the committee's investigation, or in the

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

INNKEEPERS USA TRUST, et al.

- 169 1 2 3 4 5 6 7
8

plan process, it is not in the best interests of all of the debtor's stakeholders to appoint, and have the estate pay for a third party to duplicate the efforts of others. Even a cursory examination of the topics listed in the ad hoc committee's motion, which list was not substantially revised, post PSA, reveals that one or more parties has each and every one of these topics on its dance card. And the ad

hoc preferreds will have access to discovery in these cases, as

9 10 11
12

they proceed, and thus will have the ability to uncover and martial additional facts on the issues of concern to the preferreds.
These same issues are
1

of course

of tremendous

13 14 15 16 17 18 19 20
21

concern to the stakeholders throughout the capital structure of the debtors and to the Court. It is certainly my expectation

that at some point, the fruits of the committee's investigation will be shared with the parties and the Court. Second, with respect to Section 1104(c} (2}, under the plain language of the statute, the party moving for the appointment of an examiner must at a minimum, aggregate the fixed and liquidated unsecured debts, other than for goods,
services, taxes, or owing to an insider
1_

and demonstrate that

22 23 24 25

the sum thereof is greater than five million dollars. As the United States Trustee noted in her objection, although the ad hoc committee declares that it is quote, reasonable to assume, end quote, that the five million dollar

212-267-6868

VERlTEXT REPORTING COMPANY www.veritext.com

516-608-2400