Hearing Date and Time: September 30, 2010 at 10:00 a.m.

(Prevailing Eastern Time) Objection Deadline: September 24, 2010 at 4:00 p.m. (Prevailing Eastern Time)

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 Counsel for the Official Committee of Unsecured Creditors of Innkeepers USA Trust, et al. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re Innkeepers USA Trust, et al., Debtors. ) ) ) ) ) ) ) Chapter 11 10-13800 (SCC) Jointly Administered

OBJECTION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO THE MOTION OF THE AD HOC COMMITTEE OF PREFERRED SHAREHOLDERS FOR AN ORDER DIRECTING THE APPOINTMENT OF STATUTORY COMMITTEE OF PREERRED SHAREHOLDERS PURSUANT TO BANKRUPTCY CODE SECTION 1102(a)(2) The Official Committee of Unsecured Creditors (the Committee) of Innkeepers USA Trust (Innkeepers) and certain of its direct and indirect subsidiaries in the above-captioned chapter 11 cases, as debtors and debtors in possession (collectively, the Debtors), by its counsel, Morrison & Foerster LLP, hereby submits this objection to the Motion of the Ad Hoc Committee of Preferred Shareholders (the Equity Holders) for an Order Directing the Appointment of a Statutory Committee of Preferred Shareholders Pursuant to Bankruptcy Code Section 1102(a)(2) (the Equity Committee Motion) [Dock. No. 435]. In support thereof, the Committee respectfully represents and alleges as follows:

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PRELIMINARY STATEMENT The Equity Committee Motion should be denied because the Debtors solvency is highly questionable and there does not appear to be a substantial likelihood of recovery for the preferred shareholders. Moreover, the Equity Holders arguments are nothing more than conjecture based on speculative information and an incomplete valuation analysis submitted on the eve of the objection deadline. The Equity Holders simply opine, but fail to substantiate with conclusive evidence, that (i) the Debtors are not hopelessly insolvent and that value remains for the Equity Holders and (ii) even if the Debtors properties are fully encumbered, value remains in the ability to control the property. See Equity Committee Motion at 26-27, 32. Accordingly, the Equity Holders fail to meet the burden necessary to justify the appointment of an official equity committee under section 1102(a)(2) of the Bankruptcy Code, and the Debtors estates should not be forced to bear the cost of the Equity Holders desperate search for value. The Court should use its discretion to deny the appointment of an official equity committee under section 1102(a)(2) of the Bankruptcy Code because: (i) the Debtors appear to be hopelessly insolvent; and (ii) the Equity Holders are more than adequately represented in Debtors cases. Courts have recognized that the appointment of an additional committee is extraordinary relief that should be rarely applied. Here, the Equity Committee Motion is nothing more than an attempt to force the estates to pay the costs of the Equity Holders likely fruitless pursuits. Here, the Equity Holders cannot satisfy their burden for the following reasons: (i) The Equity Holders have not established that there is a substantial likelihood that they would obtain any, let alone a meaningful, distribution from the Debtors estates under a strict application of the absolute priority rule. The Equity Holders assertions are based on misconstrued case law, speculative information and a

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limited valuation analysis that only encompasses one (1) of the three (3) traditional methods of valuing assets in bankruptcy proceedings. (ii) Even if the Court finds that the Debtors do not appear to be hopelessly insolvent, an official equity committee is still not warranted because the Equity Holders interests are adequately represented. The Equity Holders have been actively involved in these cases and will in all likelihood continue to be active even without official status. Moreover, the Committees goal is to uncover claims and unencumbered assets for the benefit of the estates unsecured creditors. As an independent group in these cases, the Committee is making every effort to maximize the value of the Debtors estates, as evidenced by the Committees current endeavor to conduct a lien analysis of the Debtors properties as well as investigate the Debtors 2007 transaction with Apollo Investment Corporation (Apollo). Any benefits resulting from the Committees efforts will affect all parties-in-interest.1 Consequently, an equity committee is not needed in an official capacity. Moreover, the Equity Holders are sophisticated parties that are represented by counsel, and are thus adequately represented in the Debtors cases. Therefore, there is nothing that an official equity committee can add to this case that the Equity Holders themselves are not capable of contributing. Furthermore, there is no reason to believe that the Equity Holders will stop pursuing any possible value for a return on their investments, and consequently protect the interests of all equity holders.

Nonetheless, the fact remains that the likelihood of the Debtors estates containing enough value to filter down to the Equity Holders, remains highly questionable.

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(iii)

If it is eventually determined that there will be a recovery for preferred shareholders, and the Equity Holders played an active role in that determination, then the Equity Holders can apply and be reimbursed for their expenses under section 503(b)(3) of the Bankruptcy Code.

Therefore, the appointment of an official equity committee would serve no purpose, but rather would create unnecessary and significant costs for these estates and distract the Debtors, the creditor constituents and their respective professionals from focusing on taking the steps needed to successfully emerge from bankruptcy. Accordingly, the Committee strongly supports the prior determination of the United States Trustee to deny the Equity Holders request for the appointment of an equity committee. Although the Court has the ability to review the decision of the United States Trustee on this issue, the Committee respectfully urges the Court not to disturb the United States Trustees sound decision. BACKGROUND A. The Chapter 11 Cases 1. 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. 2. On the Petition Date, the Debtors filed a motion seeking authority to enter into a

plan support agreement (the PSA) with Lehman ALI Inc. 3. Pursuant to an order of this Court dated July 20, 2010, the Debtors chapter 11

cases are being jointly administered. 4. 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. 4
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5.

On July 28, 2010, the United States Trustee for the Southern District of New York

(the United States Trustee) appointed the five (5) member Committee2 pursuant to section 1102(a)(1) of the Bankruptcy Code. On that same date, the Committee selected Morrison & Foerster to serve as its counsel. 6. On July 30, 2010, the Committee met and selected Jefferies & Company, Inc.

(Jefferies) as financial advisor and investment banker to the Committee. 7. On August 17, 2010, the Committee filed a motion pursuant to Rule 2004 of the

Federal Rules of Bankruptcy Procedure to examine the 2007 transaction as well as the liens and claims of Debtors secured lenders. 8. On September 2, 2010, the Bankruptcy Court entered an order denying the

Debtors motion to assume the PSA. B. The Equity Holders Request for an Official Committee 9. On July 28, 2010, the Equity Holders sent the United States Trustee a letter

requesting the appointment of an official committee of equity security holders (the July 28 Request). 10. On August 10, 2010, the Debtors and the Committee each provided the United

States Trustee with their respective responses to the July 28 Request strongly urging the United States Trustees denial of the Equity Holders request because the appointment of an official equity committee is unjustified and would only serve to delay administration of the Debtors cases and increase costs.

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

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11.

Subsequently, on August 11, 2010, the Equity Holders filed the Motion of Ad Hoc

Committee of Preferred Shareholders for Order Directing Appointment of Examiner Pursuant to Section 1104(c)(1)-(2) of the Bankruptcy Code [Dock. No. 179] (the Examiner Motion)3 requesting the appointment of an examiner to conduct an investigation of the Debtors, Apollo and their respective directors and senior officers. 12. Notwithstanding the filing of the Examiner Motion, on August 11, 2010, the

Equity Holders sent a second letter to the United States Trustee, supplementing their earlier request for the appointment of an official committee of equity security holders (the August 11 Request). 13. On August 17, 2010, both the Debtors and the Committee sent the United States

Trustee their respective responses to the August 11 Request expressing the view that an official committee of preferred shareholders should not be appointed in the Debtors cases. 14. The Equity Holders wrote the United States Trustee yet again on August 19, 2010

in further support of their position (the August 19 Request, together with the July 28 Request and the August 11 Request, the Requests). The Debtors and the Committee each responded in writing on August 23, 2010. 15. On August 30, 2010, the United States Trustee denied the Requests. ARGUMENT 16. Section 1102(a)(2) of the Bankruptcy Code provides that: On request of a party in interest, the court may order the appointment of additional committees of creditors or of equity security holders if necessary to assure adequate representation of creditors or of equity security holders.

The Examiner Motion is also scheduled to be heard by the Court during the September 30th omnibus hearing.

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11 U.S.C. 1102(a)(2). 17. The appointment of an additional committee under section 1102(a)(2) of the

Bankruptcy Code is extraordinary relief that should rarely be approved. See Exide Techs. v. Wis. Inv. Bd., No. 02-1572-SLR, 2002 U.S. Dist. LEXIS 27210, at *3-4 (D. Del. Dec. 23, 2002) (Generally, however, the appointment of an official equity committee should be the rare exception . . . .); In re Spansion Inc., 421 B.R. 151, 156 (Bankr. D. Del. 2009) (The courts appointment of an additional committee is considered extraordinary relief and should be the rare exception.) (citing In re Dana Corp., 344 B.R. 35, 38 (Bankr. S.D.N.Y. 2006)); In re Oneida Ltd., No. 06-10489, 2006 Bankr. LEXIS 780, at *3 (Bankr. S.D.N.Y. May 4, 2006) (noting that [t]he statute requires the Court to find that the appointment of an equity committee is necessary, a high standard that is far more onerous than if the statute merely provided that a committee be useful); In re Northwestern Corp., No. 03-12872, 2004 Bankr. LEXIS 635, at *5 (Bankr. D. Del. May 13, 2004); In re Williams Commcns, 281 B.R. 216, 223 (Bankr. S.D.N.Y. 2002) (The appointment of official equity committees should be the rare exception.). 18. While the legislative history indicates that Congress recognized the vulnerability

of equity holders and implemented protections for their benefit, Congress chose not to provide for the mandatory appointment of an equity committee, and instead left the appointment to the discretion of bankruptcy courts on a case by case basis. See Victor v. Edison Bros. Stores (In re Edison Bros. Stores Inc.), No. 95-1354, 1996 U.S. Dist. LEXIS 13768, at *13 (D. Del. Sept. 17, 1996); Albero v. Johns-Manville Corp. (In re Johns-Manville Corp.), 68 B.R. 155, 160 (S.D.N.Y. 1986). 19. Bankruptcy courts have discretion to appoint additional committees based on

whether the relevant creditors or equity holders are adequately represented within the applicable

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case. See In re Johns-Manville, 68 B.R. at 159; see also In re Spansion, 421 B.R. at 156; In re Ampex Corp., No. 08-11094, 2008 Bankr. LEXIS 1536, at *2 (Bankr. S.D.N.Y. May 14, 2008); In re Northwestern, 2004 Bankr. LEXIS 635, at *5; In re Williams, 281 B.R. at 220; In re Edison Bros., 1996 U.S. Dist. LEXIS 13786, at *11; In re Beker Indus., 55 B.R. 945, 948 (Bankr. S.D.N.Y. 1985). 20. Since adequate representation is not defined under the Bankruptcy Code, courts

typically consider the following factors when determining whether to appoint an additional committee: (i) the number of shareholders; (ii) the size and complexity of the case; and (iii) whether the cost of an additional committee significantly outweighs the concern for adequate representation. See In re Johns-Manville, 68 B.R. at 159; In re Spansion, 421 B.R. at 156; In re Ampex, 2008 Bankr. LEXIS 1536, at *2-3; In re Williams, 281 B.R. at 220. 21. Moreover, the moving party must show that: (i) the debtors are not hopelessly

insolvent and there is a substantial likelihood that they will receive a meaningful distribution in the case under a strict application of the absolute priority rule; and (ii) they are unable to represent their interests in the bankruptcy case without an official committee. See Exide Techs., 2002 U.S. Dist. LEXIS 27210, at *4; In re Spansion, 421 B.R. at 156; In re Ampex, 2008 Bankr. LEXIS 1536, at *2-3; In re Northwestern, 2004 Bankr. LEXIS 635, at *5; In re Williams, 281 B.R. at 220. 22. No one factor is dispositive. However, several courts have considered solvency4

to be a threshold issue because, in the case of a hopelessly insolvent debtor, the debtor and

Case law does not require courts to make a determination that a debtor is hopelessly insolvent, instead courts must merely determine whether a debtor appears hopelessly insolvent. See In re Williams, 281 B.R. at 221 (Nowhere . . . does it mandate a finding by the court that the debtor is hopelessly insolvent. Instead, the language is whether the debtor appears to be hopelessly insolvent.) (citing In re Emons Indus., 50 B.R. 692, 694 (Bankr. S.D.N.Y. 1985)).

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creditors should [not] have to bear the expense of negotiating over the terms of what is in essence a gift. In re Emons Indus., 50 B.R. 692, 694 (Bankr. S.D.N.Y. 1985); see also In re Spansion, 421 B.R. at 156-57; In re Ampex, 2008 Bankr. LEXIS 1536, at *3 (The threshold inquiry is solvency. Where a debtor is clearly or hopelessly insolvent and there is no expected recovery for equity then the appointment of an equity committee (and the imposition of the costs of such committee on the debtor) is unwarranted.); In re Oneida Ltd., Case No. 06-10489 (ALG), 2006 Bankr. LEXIS 780, at *5 (Bankr. S.D.N.Y. May 4, 2006) (indicating that one of the principle issues on any motion for the appointment of an equity committee is whether the debtor is solvent or it appears likely that there will be a return (or a substantial return) for equity); In re Williams, 281 B.R. at 220. 23. When viewed in the light most favorable to the Equity Holders, the Debtors

solvency is highly questionable. There does not appear to be a substantial likelihood of recovery for the preferred shareholders, and the Equity Holders are more than capable of adequately representing themselves. Therefore, the Court should use its discretion to deny the appointment of an official equity committee. A. The Equity Holders Have Failed to Meet Their Burden of Establishing a Substantial Likelihood of Recovery 24. The Equity Holders assert that equity exists in the Debtors estates because: (i)

there are properties within the estate that have equity in excess of the mortgage debt; and (ii) there is value in the right to control fully encumbered properties. See Equity Committee Motion at 3, 27. 25. Up until September 23, 2010, the Equity Holders did not proffer any evidence to

substantiate their statements that certain of the Debtors properties have value in excess of their individual mortgages that will flow up to the Equity Holders, but instead simply proffered

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speculative hypotheses of value. For example, the Equity Holders asserted that [i]f any of [the hotels owned by unencumbered debtors] have value in excess of their individual mortgages . . . then the corresponding Unencumbered Debtor has equity value. See Equity Committee Motion at 29 (emphasis added). Similarly, the Equity Holders contended that [t]he Debtors own and operate a total of seventy-two (72) hotels, nearly 10% of which are not subject to any secured financing, other than mortgages, and any one of which may have equity value. Id. (emphasis added). Accordingly, the Equity Holders reliance on speculative information and articles does not constitute strong evidence, see Equity Committee Motion at 29-31, and such general, unsubstantiated statements do not satisfy the Equity Holders burden of establishing that there is a substantial likelihood that their constituency will receive a monetary recovery from the estate. See In re Ampex, 2008 Bankr. LEXIS 1536, at *5 (finding that [t]he unrealized recoveries on licenses, as asserted by [the movant], however, are too speculative to consider for purposes of valuation.). 26. Less than twenty-four (24) hours before the objection deadline to the Equity

Committee Motion, the Equity Holders filed a quantitative analysis to support their assertion of value (the Equity Holders Analysis). See Declaration of Anders J. Maxwell in Support of Motion of Ad Hoc Committee of Preferred Shareholders for Order Directing Appointment of Statutory Committee of Preferred Shareholders Pursuant to Bankruptcy Code Section 1102(a)(2) [Dock. No. 485]. However, the Equity Holders Analysis is a simplistic and limited valuation analysis that fails to provide enough evidence to satisfy the Equity Holders burden of establishing that there is a substantial likelihood that they will receive a monetary recovery from the Debtors estates.

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27.

There are three traditional methods for valuing a company in bankruptcy

proceedings: (i) a discounted cash flow (DCF) analysis; (ii) a comparable company analysis, which incorporates an analysis of earnings before interest, tax, depreciation and amortization (EBITDA); and (iii) and a comparable mergers and acquisitions transaction analysis. See In re Spansion, No. 09-10690, Opinion on Confirmation (Bankr. Del. Apr. 1, 2010) [Dock. No. 3224]. Often the outcomes of these three methods are weighted to arrive at a fair and reasonable valuation of the company. See id. 28. The Equity Holders Analysis fails to recognize the three different perspectives

for valuation, and instead relies solely on the application of an EBITDA multiple. Thus, the only evidence the Equity Holders offer in support of their assertions regarding the Debtors value is a simplistic and limited valuation analysis that fails to encompass all three of the traditional valuation methods, and therefore fails to offer a complete picture with respect to the Debtors true value. 29. Without knowing the outcome of all three methods of valuation, the value results

reached by the Equity Holders are far from conclusive with respect to establishing whether (i) the Debtors are hopelessly insolvent or (ii) there is a substantial likelihood that the Equity Holders will receive a meaningful recovery from any of the Debtors estates. 30. Second, the Equity Holders misconstrue the United States Supreme Court

decision in Bank of America National Trust & Savings Assn v. 203 North LaSalle Street Partnership (hereafter, LaSalle) in a misguided attempt to demonstrate that value exists under the present circumstances in these cases. Specifically, the Equity Holders assert that LaSalle stands for the proposition that there is value in being able to control a fully encumbered asset. See Equity Committee Motion at 34. However, what the U.S. Supreme Court actually held

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was that prepetition equity holders could not be given the exclusive opportunity to receive an ownership interest in the reorganized debtor entity through a contribution of new capital because the exclusive investment opportunity constituted property of some value. See LaSalle, 526 U.S. 434, 454-55 (1999). 31. The LaSalle ruling is not applicable to the Debtors cases at this juncture in the

proceedings because the facts and circumstances surrounding the LaSalle decision, which consisted of a debtor attempting to obtain confirmation of a plan during the debtors exclusivity period, are very different from the current posture of the Debtors cases in which a plan is not currently on file and two creditor groups are currently trying to break the Debtors right to maintain exclusivity. See LaSalle, 526 U.S. at 440-41.5 32. The Equity Holders misconstrue the LaSalle holding to define value in a way that

was not intended by the LaSalle Court, namely the Equity Holders would have this Court believe that the fact that there may be value in the ability to control encumbered property is evidence that the Debtors are not hopelessly insolvent. By this reasoning an equity committee would need to be appointed in every chapter 11 reorganization case because, according to the Equity Holders logic, any debtor that has encumbered property still has value in the form of control over that property and thus cannot be hopelessly insolvent. 33. Moreover, even if there is value in having control over encumbered property, the

Equity Holders still fail to satisfy their burden in establishing the need for an official equity

See also Midland Loan Services, Inc.s Motion to Terminate Exclusivity [Dock. No. 348]; Motion 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 Terminate Exclusivity and Joinder to Midland Loan Services, Inc.s Motion to Terminate Exclusivity [Dock. No. 437].

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committee because they neither quantify this purported value nor demonstrate to the Court that they are likely to obtain a recovery from the estate. 34. Third, if the Court finds that it is unable to assess the Debtors solvency due to the

conflicting information provided by the Equity Holders and the objecting parties, then the Court should view that as a failure by the Equity Holders to satisfy their responsibility to establish a substantial likelihood of receiving a distribution from the Debtors estates. To the extent that the Court has doubts about the possibility of recovery, the Equity Holders have failed to meet their burden. See In re Spansion, 421 B.R. at 163 (The only thing certain from the record . . . is the uncertainty of the proffered valuations. The Ad Hoc Equity Committee has the burden of proving a substantial likelihood that equity security holders will receive a distribution from the Debtors, but this record does not support such a conclusion.). B. The Equity Holders Are Adequately Represented 35. As the Equity Holders point out in the Equity Committee Motion, courts

typically weigh insolvency as merely one of a variety of factors in their determination of whether to appoint a statutory equity committee it is by no means dispositive. See Equity Committee Motion at 26, fn. 17. 36. Whether the Equity Holders are adequately represented is a critical factor

because, in most cases, even those equity holders who do expect a distribution in the case can adequately represent their interest without an official committee and can seek compensation if they make a substantial contribution to the case. In re Williams, 281 B.R. at 223. Even if the Court finds that the Debtors are not hopelessly insolvent or that there is a significant dispute as to the solvency of the Debtors, the court should still deny the Equity Holders request for an official committee because (i) the Equity Holders have and will adequately represent themselves, and (ii) the Equity Holders interests are also represented by other parties in the cases. 13
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37.

First, the Equity Holders assert that they cannot rely on the Committee to

represent their interests because the Committees actions, such as not opposing the PSA, make it clear that the Committee is only interested in protecting the rights of the unsecured claimholders. See Equity Committee Motion at 20-21. 38. As a point of clarification, the Committee did not support the PSA. The

Committee reserved its rights to oppose the Debtors Plan and Disclosure Statement at the appropriate time. See Reservation of Rights of the Official Committee of Unsecured Creditors in Response to Debtors Motion for an Order (A) Authorizing the Debtors to Assume the Plan Support Agreement and (B) Granting Related Relief [Dock. No. 349]. 39. In addition, the Committees goal is to maximize value for the Debtors estates,

the benefits of which would reach all parties-in-interest, including trade creditors, litigation plaintiffs, franchisors, under-secured prepetition lenders and, if applicable, preferred equity holders. As evidence of the Committees efforts to maximize the value of the Debtors estates, the Committee is currently engaged in a lien analysis of the Debtors properties, the lack of which the Equity Holders cite to in support of the Equity Committee Motion. See Equity Committee Motion at 41-42. In addition, the Committees investigation of the 2007 transaction with Apollo, which created the Fixed Rate and Floating Rate debt, is ongoing. Thus, the Committee is doing exactly what the Equity Holders believe is important to ensure that their interests are adequately represented. 40. Moreover, the Equity Holders are sophisticated parties that are well represented

by counsel. The Equity Holders have actively been involved in the Debtors cases and are more than capable of representing themselves in the Debtors chapter 11 cases without being given official committee status. See In re Johns-Manville, 68 B.R. at 163 (noting that unofficial

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groups have participated effectively in the reorganization thus far, and will continue to do so); In re Spansion, 421 B.R. at 163 (Even if . . . neither the Debtors, its management, nor the Creditors Committee are adequately representing the interest of the equity security holders, the Ad Hoc Equity Committee is well organized, well represented by counsel, and adequate to the task of representing its interests without official status.); In re Ampex, 2008 Bankr. LEXIS 1536, at *6. 41. Moreover, the failure to appoint an official equity committee will not preclude the

Equity Holders from remaining involved in the cases. See In re Williams, 281 B.R. at 223. C. The Equity Holders Can Seek Reimbursement Under Section 503 of the Bankruptcy Code 42. To the extent equity does end up being in the money, as the Equity Holders

assert, and the Equity Holders were actively involved in producing such good fortune, then they would be free to seek to have their costs allowed as a substantial contribution to the Debtors cases under section 503(b)(3)(D) of the Bankruptcy Code. See 11 U.S.C. 503(b)(3)(D); see also In re Johns-Manville, 68 B.R. at 163; In re Spansion, 421 B.R. at 164 (Even though there is still work to do in connection with the valuation, the Ad Hoc Equity Committee is well able to proceed and, if it makes a substantial contribution, relief can be sought under Bankruptcy Code 503(b)(3)(D).); In re Ampex, 2008 Bankr. LEXIS 1536, at *6-7 ([I]n the event [the movant] makes a substantial contribution to the case it can seek to be compensated under section 503 of the Bankruptcy Code.). However, at this time, the Debtors estates should not be forced to bear the Equity Holders costs when the Equity Holders are simply speculating about value. CONCLUSION 43. The circumstances of the Debtors cases are clear. The Equity Holders made

unsuccessful investments, the specifics of which have never been disclosed, and are now

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desperately searching for value in the Debtors estates. The unfortunate reality is that the Debtors appear to be hopelessly insolvent, and it is unlikely that the Equity Holders will receive any distribution from the estates. Accordingly, the Court should not disturb the U.S. Trustees sound decision not to appoint an equity committee. WHEREFORE, the Committee respectfully requests that the Court (i) deny the Equity Committee Motion; and (ii) grant such other and further relief as is just and proper. Dated: September 24, 2010 New York, New York Respectfully submitted, /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 of Innkeepers USA Trust, et al.

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