Lenard M. Parkins (NY Bar No. 4579124) John D. Penn (NY Bar No.

4847208) Mark Elmore (admitted pro hac vice) HAYNES AND BOONE, LLP 30 Rockefeller Plaza, 26th Floor New York, New York 10112 Telephone: (212) 659-7300 Facsimile: (212) 918-8989 Attorneys for Midland Loan Services, a Division of PNC Bank, N.A. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: INNKEEPERS USA TRUST, et al., Debtors. ) ) ) ) ) ) Chapter 11 Case No. 10-13800 (SCC) Jointly Administered

LIMITED OBJECTION OF MIDLAND LOAN SERVICES TO THE MOTION OF STERLING PALM BEACH, LLC FOR ALLOWANCE OF ADMINISTRATIVE EXPENSE CLAIM PURSUANT TO 11 U.S.C. 503 Midland Loan Services, a division of PNC Bank, N.A. (Midland) 1 hereby files this Limited Objection of Midland Loan Services (the Objection) to the Motion of Sterling Palm Beach, LLC for Allowance of Administrative Expense Claim Pursuant to 11 U.S.C. 503 (the Motion), 2 and in support hereof, respectfully states as follows:

Midland is the special servicer pursuant to the Pooling and Servicing Agreement dated as of August 13, 2007 (the Special Servicing Agreement) for that certain secured loan in the amount of not less than $825,402,542 plus interest, costs and fees (the Fixed Rate Mortgage Loan) owed by certain of the above captioned Debtors. The Fixed Rate Mortgage Loan is secured by cross-collateralized and crossdefaulted first priority mortgages, liens and security interests on forty-five (45) hotel properties and their contents and assets related thereto (collectively, the Midland Properties) and the other collateral, including all cash collateral as such term has meaning under section 363 of the Bankruptcy Code, generated by the Midland Debtors hotel and business operations with respect to the Midland Properties (the Midland Cash Collateral), as set forth in the Fixed Rate Mortgage Loan Agreement.
2

Docket No. 1856.

1

D-1976057

Background 1. On July 8, 2011, Sterling Palm Beach, LLC (Sterling) filed the Motion. In the

Motion, Sterling requests an administrative expense claim in the amount of $257,010.05 (the Sterling Claim) based on the continued postpetition use of certain commercial property (the Property) by Innkeepers USA Trust and/or Innkeepers USA Limited Partnership. The

Property appears to be used as the corporate headquarters for Innkeepers USA Trust, and in the proof of claim filed by Sterling, 3 the original lease agreement indicates that Innkeepers Hospitality, Inc. was the original tenant for the Property. 2. While Midland has not yet seen the proposed order regarding this Motion, at the

conclusion of the Motion, Sterling requests that the Court enter an order allowing the Sterling Claim but makes no mention of which debtor or debtors would be liable for any administrative claim that might be allowed. 3. The above-captioned cases (the Cases) of the above-captioned debtors (the

Debtors) have not been substantively consolidated. Section IV.A of the Debtors Plans of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code 4 expressly states that [t]he Plan does not contemplate substantive consolidation of any of the Debtors. In addition, in paragraph 7 of the Findings of Fact, Conclusions of Law, and Order Confirming Debtors Plans of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code, 5 the Court notes that [b]y prior order of the Court, these Chapter 11 Cases have been consolidated for procedural purposes only . . . .

3 4 5

Claim No. 1227. Docket No. 1799. Docket No. 1804.

2

D-1976057

4.

Pursuant 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 (the Final Cash Collateral Order), 6 corporate overhead charges and expenses of the Innkeepers USA Trust are to be paid out of the Master Account (as defined in the Final Cash Collateral Order). Objection 5. Midland objects to the Motion to the extent that it seeks administrative priority for

the Sterling Claim without properly identifying the specific debtor or debtor(s) against which it seeks a claim. The debtors that own or operate the Midland Properties are not obligated to Sterling and there is no basis to impose an administrative expense claim solely against those debtors and their bankruptcy estates. 6. The Sterling Claim relates to a specific, individual lease of commercial property

apparently having nothing to do with the Midland Properties, and if Sterling contends otherwise, it must either specify that it qualifies as a general corporate overhead charge of the Innkeepers USA Trust or provide evidence of a specific benefit conferred upon the debtors that own or operate the Midland Properties. 7. Any order allowing a claim in favor of Sterling must identify the specific

debtor(s) liable therefore, and because the relief requested in the Motion fails to do that, it must be denied in its current form. Local Rule 9013-1(a) 8. This pleading includes citations to the applicable rules and statutory authorities

upon which relief requested herein is predicated and a discussion of their application to this

Docket No. 402.

3

D-1976057

pleading. Accordingly, Midland submits that this pleading satisfies Local Bankruptcy Rule 9013-1(a). WHEREFORE, Midland respectfully requests that the Court enter an order denying the Motion. Dated: July 25, 2011 New York, New York

HAYNES AND BOONE, LLP

/s/ John D. Penn ______ Lenard M. Parkins (NY Bar #4579124) Mark Elmore (admitted pro hac vice) 30 Rockefeller Plaza, 26th Floor New York, New York 10112 Telephone No.: (212) 659-7300 Facsimile No.: (212) 884-8211 - and John D. Penn (NY Bar # 4847208) Haynes and Boone, LLP 201 Main Street, Suite 2200 Fort Worth, Texas 76102 Telephone No.: (817) 347-6610 Facsimile No.: (817) 348-2300 ATTORNEYS FOR MIDLAND LOAN SERVICES, A DIVISION OF PNC BANK, N.A.

D-1976057