Bradley S. Shraiberg (admitted pro hac vice) SHRAIBERG, FERRARA & LANDAU, P.A.

2385 NW Executive Center Drive, Suite 300 Boca Raton, Florida 33431 Telephone: 561-443-0800 Facsimile: 561-998-0047 Attorneys for Sterling Palm Beach, LLC

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK __________________________________________ ) In re: ) ) Innkeepers USA Trust, et al., ) ) ) Debtors. ) ) __________________________________________) Chapter 11 Case No. 10-13800 Jointly Administered

MOTION OF STERLING PALM BEACH, LLC FOR ALLOWANCE OF ADMINISTRATIVE EXPENSE CLAIM PURSUANT TO 11 U.S.C. 503 Sterling Palm Beach, LLC (Sterling), by and through its undersigned counsel, hereby files its Motion for Allowance of Administrative Expense Claim Pursuant to 11 U.S.C. 503 (the Motion) and moves the Court pursuant to 11 U.S.C. 503 for allowance and payment of its administrative expense claim, and in support of the motion, respectfully states as follows: JURISDICTION AND VENUE 1. 2. This Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334. This matter is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue is proper

in this Court pursuant to 28 U.S.C. 1408 and 1409. 3. 503(b)(1). The statutory predicate for relief requested herein is 11 U.S.C. 507(a)(2) and

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BACKGROUND 4. Since on or about February 10, 2004, Innkeepers USA Trust and/or Innkeepers USA

Limited Partnership (together, the Debtor) has leased commercial property located at 340 Royal Poinciana Way, Palm Beach, Florida, a shopping center commonly known as Royal Poinciana Plaza. 5. The fee owners of Royal Poinciana Plaza, Sidney Spiegel, as successor trustee under

the provisions of a certain Trust Agreement dated October 25, 1984 and Island Properties of Palm Beach, Inc., through a ground lease entered into on or about March 31, 2008, assigned to Sterling their leasehold interests in Royal Poinciana Plaza. 6. The applicable lease commenced on April 1, 2004 and expired on March 31, 2010.

The Debtor initially leased approximately 19,442 square feet. After, the Debtor leased additional suites through two amending agreements to the lease, which increased the total leased space to approximately 24,027 square feet. 7. After the March 31, 2010 lease expiration, the Debtor has occupied, and continues to

occupy, approximately 9,102 square feet (the Property). 8. The Debtor filed for relief under Chapter 11 of the Bankruptcy Code on July 19,

2010 (the Petition Date). 9. From the Petition Date through the date of the Motion, the Debtor has continued to

occupy the Property. 10. Sterling has entered into the following agreements with respect to space comparable

to the Debtors space. On or about March 1, 2010, Sterling entered into a lease extension for first floor space under which the tenant pays a square footage rate of $52.50 triple net, which would amount to gross rent of $64.50. On or about February 18, 2011, Sterling entered into a new lease

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for first floor space under which the tenant pays a square footage rate of $56.00 triple net, which would amount to gross rent of $68.00. 11. Based on a gross rent of $60.00 per square foot, Sterling would be entitled to For the period covering July 19, 2010 through July 31, 2010, the For the period of August 2010 through

monthly rent of $45,510.00.

unpaid pro rata portion of the rent constitutes $19,084.84.1

June 2011, the unpaid pro rata portion of the rent constitutes $500,610.00. Thus Sterling was entitled to a total payment of $519,694.80. 12. From August 2010 through June 2011, however, the Debtor provided Sterling

monthly payments of $23,880.43, totaling $262,684.73. As a result, for the period of August 2010 through June 2011, the unpaid rent constitutes $257,010.10. 13. For the reasons stated above, for the post-petition period, from July 19, 2010 through

June 2011, Sterling is entitled to an administrative claim in the amount of $257,010.05 for unpaid rent. LEGAL ARGUMENT 14. Section 503(b)(1)(A) provides that [a]fter notice and a hearing, there shall be

allowed administrative expenses, other than claims allowed under section 502(f) of this title, including . . . the actual, necessary costs and expenses of preserving the estate . . . . 11 U.S.C. 503(b)(1)(A). 15. There is no question, of course, that the payment of rent for the use and occupancy

of real estate ordinarily counts as an actual, necessary cost to which a landlord, as a creditor, is entitled. Zagata Fabricators, Inc. v. Superior Air Products, 893 F.2d 624, 627 (3d Cir. 1990)

While the Debtor provided a payment of $22,356.23 for the month of July, the pro rata portion of the holdover rent for the Pre-Petition period for July 2010 constituted $24,615.57, which is addressed in Sterlings Response to Debtors Eighth Omnibus Objection to Claims (Claims to be Reclassified, Claims to be Adjusted, Compound Claims to be Reclassified, Wrong Debtor Claims, No Liability Claims and Amended and Replaced Claims) [ECF No. 1716]. Thus, the Debtors payment was applied to the pre-petition amount. {1158/000/00081899}

(citations omitted); In re Patient Educ. Media, Inc., 221 B.R. 97, 104 (Bankr. S.D.N.Y. 1998) (Under section 503(b)(1)(A) the nondebtor is entitled to recover the reasonable value of the use and occupation of his property.) When a debtor owns no suitable real estate of its own, its only choice is to become a tenant, and to assume the obligations of paying periodic rent to a landlord. Zagata Fabricators, Inc., 893 F.2d at 627. In such circumstances, therefore, rent is clearly an actual, necessary cost of preserving the estate, since the debtor's survival depends on its ability to pay the landlord for the right to possess the space necessary to conduct its business. Id. 16. [I]t is well-settled that under 503 the debtor is responsible for only the fair market

value of the property at the time of its use. In re Trans World Airlines, Inc., 145 F.3d 124, 136 (3d Cir. 1998). The contract rate is presumed to set the reasonable value, but either party may offer evidence to prove a different reasonable value. In re Patient Educ. Media, Inc., 221 B.R. 97, 104 (Bankr. S.D.N.Y. 1998) (citation omitted). The court may look to what the creditor charges for the rental of comparable space. Id. (citation omitted). The court may also consider the condition and marketability of the property. Id. 17. The Debtor has used and occupied the Property since the Petition Date through the

date of filing the Motion. The contract rate does not provide the reasonable value because the parties entered into the lease in 2004, and the lease has expired. Also, outside of bankruptcy, Sterling would be entitled to double rent pursuant to Florida Statute 83.06.2

Florida Statute 83.06 provides that: When any tenant refuses to give up possession of the premises at the end of the tenant's lease, the landlord, the landlord's agent, attorney, or legal representatives, may demand of such tenant double the monthly rent, and may recover the same at the expiration of every month, or in the same proportion for a longer or shorter time by distress, in the manner pointed out hereinafter.

Fla. Stat. Ann. 83.06 (West); See also Keeton Corr., Inc. v. RJ & RK, Inc., 858 So. 2d 349, 352 (Fla. Dist. Ct. App. 2003) (concluding that the double rent provision in section 83.06 applies when a lease has expired by the passage of time.) {1158/000/00081899}

18.

The reasonable value of the Debtors occupancy of the Property should be Based on

determined by reference to the rental of comparable space, which is discussed above.

what Sterling charged for the rental of comparable space, Sterling is entitled to unpaid market rate rent in the amount of $257,010.05. 19. Thus, Sterling is entitled to payment of $257,010.05 as an administrative expense

pursuant to 503(b)(1) for the Debtors post-petition occupancy period. Sterling is also entitled to a payment, as an administrative claim, for the Debtors occupancy of the Property for the period after June 2011 through the date the Debtor vacates the Property. WHEREFORE, Sterling Palm Beach, LLC respectfully requests that the Court enter an order: i) allowing Sterling Palm Beach, LLCs administrative expense claim in the amount of $257,010.05, ii) allowing Sterling Palm Beach, LLCs administrative expense claim in an appropriate amount for the Debtors occupancy of the Property after June 2011; and iii) granting Sterling Palm Beach, LLC such other and further relief as the Court deems appropriate. Dated: July 8, 2011 Respectfully submitted, SHRAIBERG, FERRARA & LANDAU, P.A. Attorney for the Sterling Palm Beach, LLC 2385 NW Executive Center Drive, #300 Boca Raton, Florida 33431 Telephone: 561-443-0800 Facsimile: 561-998-0047 By: /s/ Bradley S. Shraiberg_________________ Bradley S. Shraiberg (admitted pro hac vice) Florida Bar. No. 121622 bshraiberg@sfl-pa.com

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