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

AMENDED LIMITED OBJECTION OF MIDLAND LOAN SERVICES TO THE MONTHLY APPLICATION OF KIRKLAND & ELLIS LLP FOR COMPENSATION FOR SERVICES AND REIMBURSEMENT OF EXPENSES AS ATTORNEYS FOR THE DEBTORS AND DEBTORS IN POSSESSION FOR THE PERIOD FROM JUNE 1, 2011 THROUGH JUNE 30, 2011 Midland Loan Services, a division of PNC Bank, N.A. (Midland) 1 hereby files this Amended Limited Objection of Midland Loan Services (the Objection) 2 to the Monthly Application of Kirkland & Ellis LLP (Kirkland) for Compensation for Services and

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. This Objection amends and supersedes the Limited Objection of Midland Loan Services to the Monthly Application of Kirkland & Ellis LLP for Compensation for Services and Reimbursement of Expenses as Attorneys for the Debtors and Debtors in Possession for the Period From June 1, 2011 Through June 30, 2011 [Docket No. 2030].
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Reimbursement of Expenses as Attorneys for the Debtors and Debtors in Possession for the Period From June 1, 2011 Through June 30, 2011 (the June Fee Application), 3 and in support hereof, respectfully states as follows: Preliminary Statement 1. Midland objects to the June Fee Application to the extent that it violates the Final

Cash Collateral Order by requesting fees for services related to the challenge of the guaranty claim asserted by Midland against Grand Prix Holdings LLC, (the Midland Guaranty Claim). As previously noted, the Midland Guaranty Claim has already been allowed by an order of this Court, and the time period during which any party could have challenged the claim has now expired. Background 2. On August 12, 2010, the Court entered its Order Authorizing the Establishment of

Procedures for Interim Compensation and Reimbursement of Expenses for Professionals and Official Committee Members (the Fee Procedures Order). 4 The Fee Procedures Order provides that nothing in this Order shall affect in any way any special servicers right to object to the use of its cash collateral to fund all or part of the fees and expenses of professionals compensated from the Debtors bankruptcy estates in monthly, interim, or final fee requests nor rule on the appropriateness of such cash collateral use or any entities rights with respect thereto. Fee Procedures Order at p. 7, 10. Pursuant to the Fee Procedures Order, Notice Parties must file objections to the June Fee Application on or before August 22, 2011, which is at least twenty (20) days after service of the monthly fee request. 5
3 4 5

Docket No. 1970. Docket No. 189. Midland is a Notice Party under the Fee Procedures Order.
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D-1989102_2.DOC

A.

Limitations on the Use of Cash Collateral 3. On September 2, 2010, the Court entered 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 Pursuant to the Final Cash Collateral Order, limitations were placed on the use of cash collateral to challenge the rights of the Adequate Protection Parties: 7 The Cash Collateral under an applicable Tranche of Debt and Professional Fees payable from such Cash Collateral may not be used (without prior written consent of the applicable Representative): (a) in connection with, or to finance in any way, any action, suit, arbitration, proceeding, application, motion, or other litigation of any type (or the preparation of any such action, suit, arbitration, proceeding, application, motion, or other litigation) (i) against the applicable Adequate Protection Parties seeking relief that would . . . (B) permit the applicable Debtors to prepare or prosecute an objection to, contest in any manner, or raise any defense to, the validity, extent, amount (other than entitlement to post-petition interest), perfection, priority, or enforceability of any of the rights and obligations of the applicable Adequate Protection Parties, or (C) permit the Debtors to pay for any services rendered by the professionals retained by the Debtors in connection with the assertion of or joinder in any claim, counterclaim, action, proceeding, application, motion, objection, defense, or other contested matter, the purpose of which is to seek, or the result of which would be to obtain, any order, judgment, determination, declaration, or similar relief that would otherwise be prohibited pursuant to this paragraph 12 . . . or (ii) invalidating, setting aside, avoiding, or subordinating, in whole or in part, the applicable Loan Documents or any payments made thereunder . . . . Final Cash Collateral Order at p. 41. Despite this limitation, the ability to challenge the claims of Midland within a certain time period was given to the Official Committee of Unsecured Creditors (the Committee): Notwithstanding the foregoing, the Cash Collateral and the Carve Out may be used by the Committee to investigate the Loan Obligations and the Prepetition Collateral and/or a potential Challenge (as defined below) . . . .

6 7

Docket No. 402. Midland is an Adequate Protection Party under the Final Cash Collateral Order.
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D-1989102_2.DOC

. . . provided, that any such Challenge not made by commencement of an adversary proceeding pursuant to Federal Rule of Bankruptcy Procedure 7001 (an Adversary Proceeding) and served no later than November 30, 2010 (the Challenge Period), shall be forever barred. Final Cash Collateral Order at p. 42. The Challenge Period during which the Committee could have raised an objection to the claims of Midland has now expired and no Challenge was asserted. 4. The Final Cash Collateral Order also provided for the final acknowledgment of

Midlands claims once the Challenge Period expired: If no such Adversary Proceeding is properly and timely filed and served by such date the liens and security interests of, and payments made on account thereof to, the Adequate Protection Parties shall not be subject to any other or further Challenge and shall not be determined to have been, as of the Petition Date, valid binding, perfected, enforceable, unavoidable, and having the priority asserted, and the Debtors, their estates and creditors, and any trustee in a Successor Case shall be bound by Debtors acknowledgements, stipulations, and agreements set forth in this Order. See Final Cash Collateral Order at p. 43 (emphasis supplied). The Challenge Period for any party (including the Committee) to challenge the Courts findings regarding the Holdings Guaranty has expired, and the Courts findings regarding the same are now final. B. The June Fee Application 5. On July 29, 2011, Kirkland filed its June Fee Application seeking approval of

$1,565,657.50 in fees and $106,239.04 in expenses, and corresponding payment of 80% of the fees and 100% of the expenses. Included in the June Fee Application are several time entries related to Kirklands attempts to challenge the Midland Guaranty Claim. The time entries relating to challenging Midlands claims in an untimely manner are specified in Exhibit A attached hereto. Kirkland requests $36,081.50 in fees related to the time entries identified in Exhibit A.

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Limited Objection 6. Midland objects to the June Fee Application to the extent that it seeks payment for

services related to the challenge of the Midland Guaranty Claim. The Midland Guaranty Claim was acknowledged by the Debtors in the Final Cash Collateral Order, and the period during which the Committee could have challenged the Midland Guaranty Claim has now passed. As a result, the Debtors should not receive compensation for preparing for or prosecuting an untimely challenge to the Midland Guaranty Claim. 7. If the June Fee Application is granted and fees approved for the time spent

contesting Midlands Guaranty Claim, the fees for that task may not be paid from Midlands Cash Collateral. As such, the $36,081.50 in fees related to the time entries identified in Exhibit A may not be funded from Midlands Cash Collateral. General Reservation of Rights 8. Midland reserves its right to submit additional objections to the compensation

requested by Kirkland when Kirkland submits a final fee application. The failure to raise additional objections at this time is not a waiver of any additional objections thereto. Local Rule 9013-1(a) 9. 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 pleading. Accordingly, Midland submits that this pleading satisfies Local Bankruptcy Rule 9013-1(a). WHEREFORE, Midland respectfully requests that the Court enter an order (i) sustaining this Objection and declining to authorize payment of any portion of the sum referenced above from Midlands Cash Collateral; (ii) reducing the compensation payable under the June Fee

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Application accordingly; and (iii) granting Midland such other and further relief as is equitable and just. Dated: August 24, 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.

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EXHIBIT A

Date

Timekeeper

Description Claims Administration & Objections Correspond and telephone conferences with J. Marines and P. Bryan re claim issues (.8); review and analyze Midland and C-III motions re allowed claims (.4). Review issues re claims stipulation (2.2); review correspondence re pending claims objections (.4); review outline re claim research (.6); review and revise objection to Midland motion to allow (1.4). Conference with working group re claims objections (2.3); analyze documents re same (.7); review and revise outline to claims objections (1.2); draft objection re same (3.4); review M. Beilinson declaration re same (.8). Draft and revise objections to claims (10.3); office conferences with working group re same (2.1). Office conferences with P. Bryan. J. Marines, and D. Brown re claims objection (1.3); legal research re same (1.0); draft objection to same (2.2). Office conferences with working group re claims objections (1.5); draft objection re same (5.9); correspond with M. Murphy re same (.3); review cash collateral order re claims issues (.3).

Rate ($)

Hours

Fee

6-1-11

Jeffrey M Gould

585

0.40

$234.00

6-3-11

Brian S Lennon

715

1.40

$1,001.00

6-21-11

Jennifer Marines

675

4.60

$3,105.00

6-21-11

Daniel R Brown

475

10.30

$4,892.50

6-21-11

Jeffrey M Gould

585

4.50

$2,632.50

6-22-11

Jennifer Marines

675

6.50

$4,387.50

Date

Timekeeper

6-22-11

Daniel R Brown

Description Review and revise claims objections (7.8); correspond and office conference with working group re same (3.4); legal research re same (2.1); research legal issues re claims objections (4.1). Review and revise claim objection (2.0); multiple office conferences with working group re same (2.5). Office conferences with working group re claims issues (1.5); draft and revise objection re same (1.4); review and revise declaration in support of same (.4). Draft and revise claims objections. Review and revise claim objections (4.2); correspond with J. Marines re same (.2).

Rate ($)

Hours

Fee

475

17.40

$8,265.00

6-22-11

Patrick M Bryan

665

4.50

$2,992.50

6-22-11

Jeffrey M Gould

585

3.30

$1,930.50

6-23-11 6-23-11

Jennifer Marines Daniel R Brown

675 475

1.90 4.40

$1,282.50 $2,090.00

Disclosure Statement & Plan of Reorganization Draft, review, and revise voting stipulation (2.0); correspond with B. Lennon and S. Hessler re same (1.7); telephone conferences with J. Gould re scheduling matters (.5); telephone conference with working group and the Company re confirmation issues (1.1); office conference with A. Sathy, S. Hessler, and B. Lennon re same (.4); correspond with Omni re voting (.1); formulate briefing and discovery schedule re potential guaranty claim litigation (1.0).

6-1-11

Jennifer Marines

675

1.00

$675.00

Date

Timekeeper

6-23-11

Patrick M Bryan

Description Prepare for confirmation hearing (2.7); revise guaranty objection (2.3); conference with J. Gould re same (1.6); office conference with working group re confirmation hearing (2.1); review confirmation objections and declarations in support of confirmation (2.4).

Rate ($)

Hours

Fee

665

3.90

$2,593.50

Total

64.1

36,081.50