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 THIRD INTERIM FEE APPLICATIONS FILED BY (I) MOELIS & COMPANY LLC, (II) FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP, (III) MORRISON & FOERSTER LLP, (IV) JEFFERIES & COMPANY, INC., AND (V) KIRKLAND & ELLIS LLP FOR THE PERIOD FROM APRIL 1, 2011 THROUGH JULY 31, 2011 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 Third Interim Fee Applications Filed by (i) Moelis & Company LLC,2 (ii) Fried, Frank, Harris, Shriver & Jacobson LLP,3 (iii) Morrison & Foerster LLP,4 (iv) Jefferies & Company, Inc.,5 and (v) Kirkland & Ellis
1

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 3

Docket No. 2085. Docket Nos. 2087 and 2088.

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LLP6 for the Period from April 1, 2011 Through July 31, 2011 (the Third Interim Fee Applications filed by the Case Professionals) and in support hereof, respectfully states as follows: Preliminary Statement 1. Midland joins the United States Trustee7 in the objection to the full payment, at

this time, of the fees requested in the Third Interim Fee Applications. Because the plans affecting the majority of the debtors in these Cases have not yet become effective, it is still too early to determine whether the significant fees requested by the Case Professionals are reasonable, and as a result, the Court should continue the holdback of 20% for the Case Professionals fees until such a time as the Cases are closer to resolution. 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).8 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

4 5 6 7 8

Docket No. 2091. Docket No. 2092. Docket No. 2093. See Docket No. 2112. Docket No. 189.
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Procedures Order at p. 7, 10. Pursuant to the Fee Procedures Order, Notice Parties must file objections to the Third Interim Fee Applications on or before September 28, 2011.9 A. The Plan Process 3. The Debtors Plans of Reorganization Pursuant to Chapter 11 of the Bankruptcy

Code (the Joint Plans),10 which were confirmed on June 29, 2011,11 involve four separate plans for over ninety debtors. Currently, the Anaheim Plan is effective, as is a portion of the Remaining Debtor Plan. The Fixed/Floating Plan and part of the Remaining Debtor Plan, which affect the majority of the debtors in these Cases, have not become effective. 4. On August 29, 2011, the Debtors filed a complaint against Cerberus Series Four

Holdings, LLC, Chatham Lodging Trust, INK Acquisition LLC, and INK Acquisition II LLC the Plan Sponsorsfor breach of contract seeking specific performance of certain agreements essential to consummate the Fixed/Floating Plan and the remaining parts of the Remaining Debtor Plan. Trial in the adversary proceeding is not scheduled to begin until mid-October. B. The Third Interim Fee Applications 5. On September 14, 2011, the Case Professionals each filed their respective Third

Interim Fee Application requesting payment of fees and expenses in the amounts specified in the table below: Case Professional Moelis & Company LLC Fried, Frank, Harris, Shriver & Jacobson LLP Fees Requested $600,000.00 $202,489.00 Expenses Requested $17,431.92 $6,736.79

Midland is a Notice Party under the Fee Procedures Order. Docket No. 1799.

10 11

See Findings of Fact, Conclusions of Law, and Order Confirming Debtors Plans of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 1804].
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Case Professional Morrison & Foerster LLP Jefferies & Company, Inc. Kirkland & Ellis LLP

Fees Requested $374,983.25 $500,000.00 $5,291,425.50

Expenses Requested $7,119.57 $3,774.18 $273,652.98

Limited Objection 6. The fees requested in the Third Interim Fee Applications should continue to be

subject to a holdback. Until the current situation is resolved, the parties will not know whether (1) the Fixed/Floating Plan and the rest of the Remaining Debtor Plan will ultimately become effective, (2) the entire plan process will have to be repeated, (3) the Fixed/Floating Plan will be amended and that plan will become effective or (4) some other outcome might occur. It is, therefore, premature to evaluate the reasonableness and appropriateness of the fees requested in the Third Interim Fee Applications. 7. In light of the recent developments in these Cases, Midland objects to the Debtors

using Midlands Cash Collateral to pay more than 80% of the fees requested in the Third Interim Fee Applications. General Reservation of Rights 8. Midland reserves its right to submit additional objections to the compensation

requested by the Case Professionals when they submit final fee applications. 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

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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 continuing the holdback of 20% for fees requested in the Third Interim Fee Applications; and (ii) granting Midland such other and further relief as is equitable and just. Dated: September 28, 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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