10000003719

DEWEY & LEBOEUF LLP FILED UNDER SEAL
1301 Avenue of the Americas

New York, New York 10019
Telephone: 212.259.8000
Facsimile: 212.259.6333
Martin J. Bienenstock, Esq.
Irena M. Goldstein, Esq.
Timothy Q. Karcher, Esq.

Attorneys for Ad Hoc Committee of Preferred Shareholders
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
INNKEEPERS USA TRUST, et al.,
Debtors.
AD HOC COMMITTEE OF PREFERRED
SHAREHOLDERS,
Movant,
-against-

Respondent.

Chapter 11 Case No.

Case No. 10 13800
(SCC)
(Jointly Administered)

x
)
)
)
)
)
)
X
)
)
)
)
)
)
)
)
)
)
)
x

REPLY OF AD HOC COMMITTEE OF PREFERRED
SHAREHOLDERS TO OBJECTIONS TO MOTION FOR
ORDER DIRECTING APPOINTMENT OF EXAMINER PURSUANT
TO SECTION 1104(c)(1)-(2) OF THE BANKRUPTCY CODE

TO THE HONORABLE SHELLEY C. CHAPMAN
UNITED STATES BANKRUPTCY JUDGE:

The Ad Hoc Committee of Preferred Shareholders (the Ad Hoc Committee) in
the above-captioned chapter 11 cases of Innkeepers USA Trust (Innkeepers), its parent

2
corporation Grand Prix Holdings, LLC (Grand Prix) and their direct and indirect title
11 debtor subsidiaries (collectively, with Innkeepers and Grand Prix, the Debtors), files
this reply in further support of its Motion, dated August 11, 2010, for an Order Directing
Appointment of an Examiner Pursuant to Section 1104(c)(1)-(2) of the Bankruptcy Code
[Docket No. 179] (the Motion), and in reply to the limited and other objections and
responses thereto filed by Midland Loan Services, Inc. (Midland) [Docket No. 253]
(the Midland Response), Wells Fargo Bank, N.A. (Wells Fargo) [Docket No. 282]
(the Wells Fargo Joinder), the Official Committee of Unsecured Creditors (the UCC)
[Docket No. 263] (the UCC Objection), the United States Trustee (the US Trustee)
[Docket No. 268] (the US Trustees Response), Lehman ALI, Inc. (Lehman) [Docket
No. 270] (the Lehman Objection), Apollo Investment Corporation (Apollo, and
together with the UCC, Lehman, and the Debtors, the Objectors) [Docket No. 277] (the
Apollo Objection), and the Debtors [Docket No. 285] (the Debtors Objection,
together with the UCC Objection, the Lehman Objection and the Apollo Objection, the
Objections), and respectfully represents a follows:

Summary of Argument
1. By themselves, (a) the Debtors own financial advisors powerpoint
presentation showing fixed, liquidated mortgage debt exceeding the values of certain
properties by tens of millions of dollars, and (b) the numerous misrepresentations made
by the Debtors and Apollo in their Objections as proven by emails and draft agreements
uncovered in discovery, make the Ad Hoc Committees case that (i) an examiner is
mandatory due to the existence of more than $5 million of fixed, liquidated unsecured

3
debt, and (ii) an examiner is needed to bring sunshine, fairness, and the appearance of
fairness to these cases.
2. The evidence obtained by Midland and Five Mile Capital Partners (Five
Mile) in connection with their objections to the Debtors motion to assume the plan
support agreement between the Debtors and Lehman, dated July 17, 2010 (the PSA)
clearly proves that the Debtors and Apollo worked for months to manufacture an
emergency so that they could claim that the Debtors only purported salvation is approval
of the PSA which would guarantee the wiping out of the preferred shareholders and most
unsecured claims, and lead to the distribution of 100% of the stock of the reorganized
Debtors to Lehman, all without ever exposing the Debtors to competitive bidding.
Indeed, in lieu of a marketing process, Apollo entered into a side deal with Lehman under
which Lehman agrees to sell half of the stock it receives under the Plan to Apollo. In
defense, Apollo declares Lehman can terminate the sale agreement. But, since Lehmans
right to terminate expires the day before the hearing on the PSA, if Lehman dared to
terminate, Apollo could simply instruct the Debtors not to go forward with its motion for
approval of the PSA.
3. As further explained below, the evidence demonstrates that: (a) the
Debtors are run by a person chosen by Apollo and given a $1 million signing bonus,
1

among other things, which person emailed Lehman to make sure it would not terminate
its agreement to sell half the reorganized debtors to Apollo,
2
(b) Apollo always
contemplated that Apollo would acquire an interest in the reorganized Debtors, (c)
Apollo prevented the Debtors from marketing themselves and refused to examine

1
See Deposition Transcript of Marc A. Beilinson, attached hereto as Exhibit A, at 14:24-15:9.
2
See Email from Marc Beilinson to Michael Lascher, dated July 18, 2010, attached hereto as Exhibit B.

4
alternative plan proposals while recognizing that its agreement to purchase the equity of
the reorganized Debtors raised serious issues as to whether or not the proposed plan was
a sub rosa new value plan proposed in violation of the Supreme Courts decision in Bank
of America National Trust & Savings Assn v.203 North LaSalle Street Partnership, 526
U.S. 434, 440 (1999).
4. The Debtors and Apollos acts and conduct corroborate the need for an
examiner and make a prima facie case for the appointment of a trustee. Given the
difficulty of denying admissions in depositions, admissions in emails, and term sheets
negotiated by the Debtors and Apollo, the Objectors assert as their main grounds for
opposing the appointment of an examiner that (a) the Debtors and their relationship with
Apollo and Lehman are already being investigated; (b) the Ad Hoc Committees concerns
should be addressed in connection with plan confirmation; and (c) the appointment of an
examiner is not mandatory because there are not $5 million of uncontingent, liquidated,
unsecured claims against the Debtors estates.
5. The objection that creditors and/or the statutory creditors committee are
already investigating certain topics is wholly lacking in merit because none of their
discovery provides sunshine to those whose rights the Debtors would extinguish.
Examiners file public reports. Creditors and committees negotiate for what they want,
settle, and file no report.
6. Second, the objection that the Ad Hoc Committees issues are
confirmation issues is a universal truth not constituting a meritorious objection. The
purpose of every chapter 11 case is distributable value which is the focus of all parties in
interest. Bankruptcy Code sections 1129(a)(1)-(3) require that title 11 and other

5
applicable law be complied with for a plan to be confirmed. Thus, nearly every issue is a
confirmation issue. Therefore, the notion that an examiner is inappropriate to investigate
issues that arise at confirmation, is self rebutting because nearly all issues are
incorporated into confirmation and no issue would be appropriate for an examination.
7. Third, appointment of an examiner is appropriate given the fact that it is
the Debtors and Apollos very actions, initially not disclosed, which require the
investigation. Simply put, Apollo, which owns directly and indirectly 100% of the
common stock of the Debtors, has cut an exclusive deal with Lehman under which
Apollo will purchase 50% of the reorganized Debtors, while preferred shareholders have
no right to purchase anything.
3
Worse yet, the Debtors proposed chapter 11 plan
eliminates the preferred shareholders equity in up to 7 properties or joint ventures not
encumbered by blanket mortgages. The Debtors, controlled by Apollo, have made no
effort to market themselves and have deliberately refused to consider alternative
restructuring proposals. The Debtors have even refused to cooperate with Five Mile,
which had submitted a binding commitment to Midland for purchase of Innkeepers and
requested access for due diligence. See Five Miles Binding Commitment for the
Acquisition of Innkeepers USA Trust, attached hereto as Exhibit C; Exhibit A at 159:16-
160:5.

3
The Debtors and Apollo make much of the fact that the Apollo/Lehman deal is contained in a document
(the Apollo/Lehman Side Agreement), which is separate from the PSA in support of their contention that
it is an arms-length transaction. See Debtors Objection at 25 (Apollo ownership of the reorganized
Debtors would happen by virtue of a separate transaction between Lehman and [Apollo]); Apollo
Objection at 10-11 (Apollo is not a party to the PSA but entered into [an agreement] with Lehman
under which it has agreed to purchase half of the reorganized Debtors). The fact that it is in a separate
agreement is irrelevant when viewed along side the clear and convincing evidence that the PSA and the
Apollo/Lehman Side Agreement among the Debtors, Apollo, and Lehman were negotiated and treated by
the parties since April 2010 as one integrated transaction and that, until recently, Apollo was a proposed
signatory to the PSA. See Term Sheet Alternative A, attached to an email from Brian Greer dated June 17,
2010, attached hereto as Exhibit F, at APP-00658.

6
8. Fourth, the Objectors argue an examiner is not mandatory under
Bankruptcy Code section 1104(c)(2) because the Ad Hoc Committee has not
demonstrated there are more than $5 million of fixed, liquidated, unsecured claims, and
even if that threshold is met, there is no appropriate area of examination. These
arguments are equally without merit. First, it is too cute by half for the Objectors, on the
one hand, to argue that the Ad Hoc Committee has not met its burden of demonstrating
that there are at least $5 million of fixed, liquidated, unsecured claims while, on the other
hand, they have been negotiating for months a chapter 11 plan that, for instance, replaces
Midlands $825 million mortgage claim with a $500 million note, while giving Lehman
ownership of 72 properties when its collateral comprises only 20 properties. See Plan
Term Sheet, attached as Exhibit A to Debtors Motion for an Order (A) Authorizing the
Debtors to Assume the Plan Support Agreement and (B) Granting Related Relief [Docket
No. 15] at 2.
9. Because they cannot deny that there are more than $5 million of
deficiency claims, the parties argue that deficiency claims cannot be counted towards the
$5 million threshold because such claims are contingent and unliquidated today and
because the lenders may make a Bankruptcy Code section 1111(b)(2) election tomorrow.
See Debtors Objection at 4. But, today and when issued, the mortgage debt was fixed
and liquidated. And, the Debtors concede it is undersecured, which is equivalent to
conceding the existence of unsecured debt. Moreover, no one has made a section
1111(b)(2) election.
10. The Objectors further argue that there is no appropriate area of
examination because private parties are investigating the Debtors. The fact that the

7
Debtors and Apollos suspicious behavior has caused numerous parties to take discovery
does not obviate the need for a public examination.
4
Private parties investigate for their
own purposes. Examiners investigate to provide all parties with transparency and to
maintain the integrity of the bankruptcy system and the appearance of fairness.
11. Finally, the Debtors, Apollo, and Lehman ask this Court, the Ad Hoc
Committee, and all parties in interest to trust their word they have not done anything
wrong and that there is no appropriate examination to be conducted. Sorry, that is
simply not possible, particularly in light of the fact that the documents and information
filed by Midland and Five Mile with this Court provide conclusive evidence that many of
the representations made by Apollo and the Debtors in their papers are false. An
examiner must be appointed to investigate how the Debtors have harmed their estates and
favored Apollo.

4
The only materiality and relevance of creditors investigations is they corroborate the lack of full
disclosure and the existence of areas of appropriate examination.

8
ARGUMENT
A. An Examiner Should be Appointed
under Bankruptcy Code Section 1104(c)(1)

12. The Debtors, Apollo, and Lehman are supporting a chapter 11 plan, as
outlined in the PSA, which benefits only the Debtors management, Apollo, and Lehman,
and harms all other constituencies. Pursuant to the PSA, Lehman will receive 100% of
the stock of the reorganized Debtors in exchange for its liens against properties belonging
to 20, but not 72, of the Debtors. The PSA further provides that, if the confirmation
schedule deviates, and a plan is not confirmed by March 16, 2011, the automatic stay is
waived and Lehman, to the detriment of the Debtors creditors and shareholders, can take
possession of its collateral. By agreeing to such onerous terms, the Debtors have all but
guaranteed (if the PSA is approved) that their plan will be confirmed because the results
of not confirming a plan on time are disastrous for the Debtors, their creditors, and
shareholders. Simply put, the Debtors and Apollo constructed a chapter 11 strategy that
says: confirm our plan that favors Apollo or the estate is dismembered.
13. The one-sided nature of the PSA alone should raise eyebrows; but when
viewed in light of the facts that the Apollo/Lehman Side Agreement, under which Apollo
will regain a 50% interest in the Debtors, was always part of the overall agreement
among the parties (see Deposition Transcript of Michael Lascher, attached hereto as
Exhibit D, at 66:4-68:12), and that other interested parties have been precluded from
making a bid to sponsor a plan for the Debtors, including Five Mile (see Objection of
Five Mile Capital Partners LLC to Debtors Motion for an Order (A) Authorizing the
Debtors to Assume the Plan Support Agreement and (B) Granting Related Relief [Docket
No. 280] at 45), it is impossible to conclude anything other than the fact that the

9
Debtors and Apollo have been acting in an effort to avoid the requirements of LaSalle,
526 U.S. 434, 440 (1999), to market the Debtors. That is the definition of bad faith and
worse. Allowing such actions to remain unexamined undermines all the protections
otherwise afforded to creditors and shareholders under the Bankruptcy Code.
14. Notwithstanding, the Objectors argue that appointment of an examiner is
not in the best interests of the Debtors estates because (a) Midland, the UCC, and other
parties in the case are already investigating the Debtors and (b) the Ad Hoc Committee
has had, and will have, the opportunity to take discovery in connection with assumption
of the PSA and plan confirmation. See Apollo Objection at 8-10, Debtors Objection at
8-13, UCC Objection at 15, Lehman Objection at 3-5. This argument must fail because
the investigations and discovery taking place in these cases by Midland and the UCC are
being done confidentially, piecemeal, and by parties whose interests are not necessarily
aligned, and are under no obligation to report their findings to this Court. The only party
pursuing a broad investigation of the Debtors actions is Midland. Midland, however, has
no obligation to share its findings with the Court, creditors, or shareholders.
5
Indeed,
Midland is free to settle its dispute with the Debtors and never fully pursue the matter.
15. To be clear, the UCC, which is supposed to serve the interests of all
unsecured claimholders, has no obligation to share its findings with creditors or this
Court. Moreover, the UCCs investigation is focused solely on the 2007 transaction

5
Significantly, Midland, which has been responsible for a substantial amount of the investigation and
discovery cited in the Objections, does not object to the appointment of an examiner. See Midland
Response at 1. Wells Fargo has joined Midland in this position. See Wells Fargo Joinder at 2. Thus, the
creditors holding the largest claims in these cases have not opposed having an examiner.

10
under which Apollo gained control of the Debtors. The UCCs examination will not
overlap with the scope of the examination proposed by the Ad Hoc Committee.
6

16. Moreover, the fact that the Ad Hoc Committee has had and will have the
opportunity to take discovery in connection with the Debtors motion to assume the PSA
and plan confirmation does nothing to alleviate the need for an examiner. Indeed,
denying the appointment of examiner less than seven weeks into a case because the issues
to be investigated are more appropriately addressed in the context of plan confirmation
(Debtors Objection at p. 12) would completely frustrate the uncovering and disclosure of
facts when there is still time to do something about them. The Debtors and Apollo want
investigations to wait until confirmation, precisely because they know thats too late for
an investigation to have an impact in this case. Confirmation is too late to market the
debtors. Confirmation is too late to raise financing on better terms. The Debtors and
Apollo know all this and know that delaying sunshine until confirmation is tantamount to
denying disclosure in time to do anything about it. Indeed, the Debtors and Apollo
corroborate our argument by intentionally having made every effort to render
confirmation of their plan a fait accompli by ensuring fatal consequences in the event
confirmation is derailed.
17. Tellingly, the Debtors also argue this Courts decision on their motion to
assume the PSA will render any examiners investigations beyond such date as moot.
Debtors Objection at 23. This is not an objection. This is proof the Court should not
be locking in the Debtors plan by granting the plan support motion. Under the Debtors

6
Given the Debtors efforts to confirm their plan prior to March 16, 2011, it is disconcerting to say the
least that the UCC did not seek authority under Bankruptcy Rule 2004 to investigate all of the issues raised
by the Ad Hoc Committee in its Motion and merely filed a reservation of rights to the motion to assume the
PSA, as opposed to an objection. Who exactly is the UCC representing?

11
theory, there could never be an examination of any debtors prior acts because whats
done is done. Not only is this argument ridiculous, it reflects the Debtors next plan of
action, to render any arguments against confirmation of their plan all but moot because
the Debtors will have no choice but to proceed with the plan due to the penalties imposed
by the PSA (i.e., Lehman gets its collateral) if the plan is not confirmed.
18. The UCC argues that the Motion is nothing more than the [Ad Hoc
Committees] attempt to have its issues and interests formally addressed by the
Bankruptcy Court at the expense of the Debtors estates. See UCC Objection at 7. Lets
get this straight. Congress enacted the examiner statute to cause examiners to bring
sunshine to chapter 11 cases, and Congress provided that parties in interest (which it
defined in section 1109 to include shareholders) are entitled to request examiners, and the
estate must pay for the examiner. So, what the UCC is arguing is that the Ad Hoc
Committee is invoking the statute that Congress passed! All parties in interest, including
the UCC, should be interested in an investigation of the Debtors conduct leading up to
the formation of a plan that gives a creditor, Lehman, secured by only 20 properties,
100% of the stock of the reorganized Debtors owning 72 properties. In fact, it is both
surprising and distressing that the UCC does not recognize that the investigation could
expose a significant claim of the Debtors estates against Apollo.
19. The Objectors additional arguments pertaining to the delay to these cases
caused by an examiners investigation simply underscore the breakneck speed at which
Debtors seek to have a plan locked in for all practical purposes. It is telling that the
Motion, the grant of which would necessarily impact confirmation of the proposed plan,
could not be heard any earlier than September 1, the same date on which Debtors motion

12
for approval of the PSA and DIP financing will be heard. The schedule for approval of a
plan in these cases was established by the Debtors in their PSA and DIP financing
motionapproval of the PSA and DIP financing and filing of a disclosure statement by
September 2, approval of the disclosures and agreement on the sale terms between
Lehman and the Debtors by November 16, and confirmation of the plan by March 16.
See Debtors Motion for an Order (A) Authorizing the Debtors to Assume the Plan
Support Agreement and (B) Granting Related Relief [Docket No. 15] at 11. Failure to
meet any of these deadlines constitutes a termination event under the terms of the PSA
and allows Lehman to terminate the agreement. While in any bankruptcy case, speed has
the potential to save the debtors estates money that might inure to the debtors creditors,
in this case such a schedule, with the added pressure of the potential failure in the event
Lehman chooses to terminate when a milestone is missed, allows little time for
investigation of the motivations of the Debtors, Lehman, and Apollo, in particular before
the September 1 and November 16 deadlines. Such a timeline, coupled with the pressure
tactic incorporated into the PSA, evidences that the Debtors and Apollo designed the
process to make the enforcement of the rights of non-Lehman creditors and shareholders
under the Bankruptcy Code impracticable.
B. Appointment of an Examiner is Required
Under Bankruptcy Code Section 1104(c)(2)

20. The Objectors contend that the appointment of an examiner is not
mandatory under Bankruptcy Code section 1104(c)(2) because the Ad Hoc Committee
has not proved there are in excess of $5 million of unsecured, uncontingent liquidated
claims against the Debtors. See Debtors Objection at 2-4; Apollo Objection at 17;

13
UCC Objection at 31-34. Interestingly, none of the parties deny that the threshold is
met, but instead argue that any deficiency claims are unliquidated and not fixed and will
remain so until the Court has made a valuation finding with respect to the assets
collateralizing the Debtors various secured debt obligations. Debtors Objection at 4.
See also UCC Objection at 33.
21. The fact that the Court has not made a valuation finding on the value of
the Debtors does not mean that the Debtors have a good faith basis to dispute that that
there are at least $5 million of deficiency claims.
7
Indeed, as set forth above, the
Debtors own financial advisors have prepared reports showing that, at least with respect
the properties securing Lehmans loans, there are deficiency claims totaling more than
$60 million. (The Debtors assert that Lehman is owed $250 million and list Lehmans
collateral as having an illustrative value of $150 million to $190 million.) See
Lehman Discussion Materials, prepared in April 2010 by Debtors financial advisors,
and attached hereto as Exhibit E, at 12; Declaration of Dennis Craven, Chief Financial
Officer of Innkeepers USA Trust, in Support of First-Day Pleadings [Docket No. 2] at 8.
Similarly, Midlands blanket mortgage of $825 million is proposed to be addressed with a
$500 million mortgage.
22. The Debtors cannot hang their hat on the fact that the advisors have only
provided illustrative values and that any valuations are not final. It more than strains
credulity to believe that the Debtors have no idea whether or not, across 92 Debtors, there

7
Neither of the cases cited in the Objections to support the contention that a deficiency claim can not be
used to meet the $5 million threshold in section 1104(c)(2) was decided in the context of a motion for
appointment of an examiner. See In re Planes, Inc., 48 B.R. 698 (Bankr. N.D. Ga. 1985) (mentioning the
potential existence of a deficiency claim in connection with a ruling on plan confirmation); In re Sneijder,
407 B.R. 46 (Bankr. S.D.N.Y. 2009) (deciding not to expunge, on debtors motion, a secured claim where
it was likely a deficiency claim existed).

14
are $5 million of deficiency claims. They cannot claim both (a) ignorance of the value of
their properties and the amount of their secured debt and (b) that approval of the PSA,
which gives Lehman 100% of the stock of the reorganized Debtors in exchange for its
secured claims against 21of the 92 Debtors, is in the best interests of the estate.
Ignorance may be bliss, but it is also actionable. If the Debtors really have no idea what
their assets are worth, given that they have refused to market themselves to anyone other
than Lehman and Apollo, their entry into the PSA is tantamount to bad faith and Exhibit
A to any allegation that the officers and directors have breached their fiduciary
obligations.
23. In addition, it is disingenuous, to say the least, to both fail to deny that
there are $5 million of unsecured claims and rail against the Ad Hoc Committee for not
submitting proof that the threshold has been met. This information is within the Debtors
knowledge and control and is not freely available to the Ad Hoc Committee. Indeed, the
Debtors have requested that the Court grant them until October 1, 2010 to file their
schedules of liabilities. See Debtors Motion for an Order Further Extending the
Deadline to File Schedules of Assets and Liabilities, Schedules of Executory Contracts
and Unexpired Leases, and Statements of Financial Affairs [Docket No. 248]. The
Debtors should fess up, as Moelis did in its powerpoint, and admit that there are at least
$5 million of deficiency claims and stop the charade.
24. The Objectors contend that, even if this Court were to determine that the
$5 million threshold has been met, appointment of an examiner is not mandatory because
Bankruptcy Code section 1104(c) requires an examiner only if appropriate and

15
appointment in this case is neither necessary nor appropriate.
8
Debtors Objection at 4.
See also Lehman Objection at 6; UCC Objection at 41-44; Apollo Objection at
16-22. The Objectors request that this Court ignore the District Court decision in In re
Loral Space and Commcns, Ltd. 2004 WL 2979785 (S.D.N.Y. Dec. 23, 2004) in which
the District Court held that appointment was mandatory if the $5 million threshold is
satisfied and cite to decisions outside of this circuit in support of their construction of
section 1104(c).
9
See Debtors Objection at 7; Apollo Objection at 17; UCC
Objection at 36; Lehman Objection at 7.

8
The US Trustee takes a contrary view and asserts in the US Trustee Response that, if the $5 million
threshold has been satisfied, this Court has no alternative but to appoint an examiner.
9
Apparently in possession of a clairvoyant and presumptuous gene, the Debtors state that there are no
published decisions in this circuit affirming the reasoning of Loral Space because the reasoning produces
the undesirable result of requiring the appointment of an examiner in any chapter 11 case with $5 million of
qualifying debt as soon as any party requests one. Debtors Objection, 10-11. The Debtors then cite a
number of unpublished decisions from other jurisdictions refusing to appoint examiners despite the
threshold being met. Should we presume that there are no published decisions in those circuits denying
appointment of examiners because courts in such circuits disagree with the unpublished decisions?

16
25. Even if the Objectors interpretation of section 1104(c)(2) is correct,
10

which it is not, appointment of an examiner in this case is both necessary and appropriate.
The Objectors main reasons for contending that appointment of an examiner is not
appropriate are that (a) there are a number of ongoing investigations covering the same
subject areas as those outlined in the Motion, (b) the issues the Ad Hoc Committee seeks
to have investigated relate to plan confirmation and should be properly considered in that
context, and (c) the proposed topics of examination are inappropriate because they are the
product of unsubstantiated allegations.

10
The Objectors principally rely upon the decisions of the United States Bankruptcy Court for the District
of Delaware in In re Spansion and In re Visteon. In Spansion, the request for the examiner was made 9
months into the case, when a plan was already on file and the disclosure statement approved, and it
concerned whether or not the plan on file was proposed in good faith. In this case, we are only seven
weeks into the case, there is no plan on file, only a PSA which is harmful to everyone but the Debtors
management, Apollo and Lehman. In Visteon the Court denied the appointment of an examiner where
there were allegations that the Company had undervalued its equity and where public filings contrasted
with the Debtors disclosures. In stark contrast, here there are substantial allegations of bad faith in the
form of secret side-deals with creditors, which were hidden from the Court. Here there are no public
disclosures to use as a measuring stick. Everything has been hidden from view. In denying the
appointment of an examiner, the bankruptcy court in Visteon stated,

But at some point there has to be a level of smoke, if you will -- not a lot but more than
none, more than just a whiff of smoke -- but some sort of indication, some sort of
allegation or facts that make the Court think in a whole that, hmm, somebody needs to
look into this independently and tell the Court whats going on. Its easy in Lehman or
Revco to figure out that somebodys got to figure this out.

Here, theres more than just a whiff of smoke. There is evidence of outright deception and
ongoing manipulation of the process.

Additional cases cited by the Objectors to support propositions that an examination in these cases
would be inappropriate are distinguishable. See In re WorldCom, Inc., Case No. 02-13533, 2003
Bankr. LEXIS 2192 (Bankr. S.D.N.Y May 16, 2003) (and finding that appointment of a second
examiner was inappropriate where the powers of the first could be expanded); In re Sletteland, 260
B.R. 657 (Bankr. S.D.N.Y. 2001) (finding appointment of an examiner unnecessary where
creditors with investigation power had moved for the appointment); In re Bradlees Stores, Inc.,
209 B.R. 36 (S.D.N.Y. 1997) (denying a motion filed 8 months after receipt of information
prompting the motion, and 19 days before the expiration of the statute of limitation for claims
movants wanted examiner to prosecute); In re Schepps Food Stores, Inc., 148 B.R. 27 (S.D. Tex,
1992) (denying an emergency appeal on the eve of confirmation where the movant had waited two
months after first expressing concerns to file a motion).

17
26. First, as outlined above, the ongoing investigations and the fact that
certain of the issues relate to plan confirmation do not in any way obviate the need for an
examiner. The investigations currently underway are to serve each of the various
creditors private interests. The results of the investigations are unlikely to be publically
available and, what is clearly needed in these cases is transparency.
27. Second, as explained above, it is entirely inappropriate to contend, on the
one hand, that the inquiry into the reasonableness of the Debtors actions in entering into
the PSA should be conducted in connection with plan confirmation and simultaneously
contend, on the other hand, that after this Court approves the Debtors entry into the PSA,
an investigation of the events leading up to the PSA are moot. See Debtors Objection at
p. 12, 23.
28. Third, and most importantly, it is the Objectors who make baseless and
false statements to this Court. For example, Apollo states that The Debtors chief
restructuring officer has offered sworn testimony that (a) the Debtors did not engage in
negotiations with AIC regarding AICs contemplated post-reorganization purchase of
equity from Lehman; (b) the Sale Agreement between AIC and Lehman was relevant to
the Debtors only insofar as it would satisfy a condition precedent to Lehmans
obligations under the PSA; and (c) the PSA represents an exercise of the Debtors best
business judgment.
11
These statements are false.
29. The Debtors, Apollo and Lehman were in negotiations together
concerning the Debtors restructuring and Apollos purchase of the reorganized Debtors
equity as far back as April 2010. Indeed, until June, Apollo was a proposed signatory to

11
The deposition testimony of Schuyler Hewes is in itself illustrative. Mr. Hewes was the Rule 30(b)(6)
witness proferred by Apollo. During his deposition, Mr. Hewes answered I dont know, I dont recall
or a similar phrase in response to questions no fewer than 40 times.

18
the term sheet. See Term Sheet Alternative A, attached to an email from Brian Greer
dated June 17, 2010, attached hereto as Exhibit F, at APP-00658.
30. Moreover, not much credence should be granted to Mr. Beilinsons
statements. Mr. Beilinson, was appointed to the Debtors board of directors by Apollo
(see Exhibit A at 16:18-24), and then hired by the Debtors as their chief restructuring
officer and given a million-dollar bonus for signing on for another year, and [] had a
retention bonus of a million dollars for that year. Exhibit A at 14-15. Mr. Beilinsons
loyalty is not divided it is completely devoted to Apollo in light of the forgoing as
evidenced by his email to Lehman, dated July 18, 2010 in which he stated that he was
trusting that [Lehman] wont terminate [Apollo] in first 45 days when denying
Lehmans request to be able to terminate use of cash collateral if the Debtors breached its
obligations to Lehman under the PSA because that would give midland a real hook.
Exhibit B. Lehman may have good reason to trust Mr. Beilinson, but the Debtors
creditors and non-Apollo shareholders certainly do not.
31. Also, the side-deal between Apollo and Lehman was clearly relevant to
the Debtors since it was always understood that Apollo would be the entity acquiring the
new equity causing the Debtors chief restructuring officer Marc Beilinson to highlight
for Lehman the risk that the proposed transaction was subject to attack as a sub rosa
new value plan. See Meeting Notes, attached hereto as Exhibit G, at APP-00589. AIC
makes much ado of the fact that Lehman can terminate the Sale Agreement at will, but its
last opportunity to do so is the day before the hearing on the PSA.
32. In light of these revelations, one cannot take the Debtors and Apollos
word for it that the failure to initially disclose the existence of the side deal in the first

19
day declaration between Apollo and Lehman was inadvertent. See Transcript of July 20
hearing in In re Lehman Brothers Holdings Inc., et. al., Case No. 08-13555-JMP (Bankr.
S.D.N.Y.), attached hereto as Exhibit H, at 23-24. Indeed, the fact that the existence of
the side deal was referenced in prior drafts of the first day declaration is consistent with
the fact that Apollo was supposed to be a signatory to prior versions of the PSA. See
Exh. E at 6. It appears that once the parties agreed that Apollo would not sign the PSA,
all reference to the side deal was deleted. Moreover, if the Debtors and Apollo had truly
intended to disclose the side deal, it would have been in the motion to approve the PSA.
33. Creditors and shareholders are entitled to a public report of whether the
Debtors management and directors breached their duties of care and loyalty to the
Debtors estates in a scheme designed to benefit Apollo.
CONCLUSION
WHEREFORE the Ad Hoc Committee respectfully reiterates its request for the
appointment of an Examiner to investigate the issues set forth in its Motion and Reply,
and granting it such other and further relief as the Court deems just and proper.

Dated: New York, NY DEWEY & LEBOEUF LLP
August 27, 2010

/s/ Martin J. Bienenstock
Martin J. Bienenstock, Esq.
Irena M. Goldstein, Esq.
Timothy Q. Karcher, Esq.
New York, New York 10019
Telephone: 212.259.8000
Facsimile: 212.259.6333

Attorneys for Ad Hoc Committee of
Preferred Shareholders
NY4 4026470.8

EXHIBIT A
---------------------------------*
In re:
Debtors.
---------------------------------*
Chapter 11
CASE NO.
10-13800 (SCC)
Deposition of MARC A. BEILINSON, called as
a witness for examination, held at the offices of
Kirkland & Ellis LLP, 601 Lexington Avenue, New
York, New York, on Thursday the 12th day of August
2010, commencing at 9:05 a.m., before Josephine H.
Fassett, a Registered Professional Reporter,
Certified Livenote Reporter and Notary Public of the
State of New York.
JOB NO. 19763
1
APP-00312
EXHIBIT 6
2 4
1 oOo 1 oOo
2 APPEARANCES: 2 A P P E A RAN C E S ( cont'd) :
3 3
4 KIRKLAND & ELLIS, LLP 4 KILPATRICK STOCKTON, LLP
5 Attorneys for Debtors and Debtors in Possession 5 Attorneys for Trimont Real Estate Advisors
6 655 Fifteenth Street, N.W. 6 1100 Peachtree Street, NE, Suite 2800
7 Washington, DC 20005-5763 7 Atlanta, Georgia 30309
8 BY: DANIEL T. DONOVAN, ESQ. 8 BY: TODD C. MEYERS, ESQ.
9 daniel.donovan@kirkland.com 9 tmeyers@kilpatrickstockton.com
10 JEFFREY M. GOULD, ESQ. 0 -and-
11 jeffrey .gould@kirkland.com 1 KILPATRICK STOCKTON, LLP
12 2 Attorneys for Trimont Real Estate Advisors
13 -and- 3 31 West 52nd Street, 14th Floor
14 4 New York, New York 10019
15 KIRKLAND & ELLIS, LLP 5 BY: MICHAEL D. CRISP, ESQ.
16 Attorneys for Debtors and Debtors in Possession 6 mcrisp@kilparickstockton.com
17 300 North LaSalle Street 7
18 Chicago, Illinois 60654 8
19 BY: JEFFREYD.PAWLITZ,ESQ. 9 BRYAN CAVE, LLP
t2o jeffrey .pawlitz@kirkland.com
/Q
Attorneys for LNR Partners, LLC
t21 71
t22 72
New York, New York 10104-3300
t23 73
BY: LAWRENCE P. GOTTESMAN, ESQ.
t24 4 lawrence.gottesman@bryancave.com
t?5 5
3 5
1 oOo
1 oOo
2 A P P E A RAN C E S ( cont'd) :
3
3
4 HAYNES and BOONE, LLP
4 PAUL, WEISS, RIFKIND, WHARTON & GARRISON, LLP
5 Attorneys for Midland Loan Services, Inc.
5 Attorneys for Apollo Investment Corporation
6 1221 Avenue of the Americas, 26th Floor
6 1285 Avenue of the Americas
7 New York, New York 10020-1007
8 BY: LENARD M. PARKINS, ESQ.
8 BY: ANDREW J. EHRLICH, ESQ.
9 lenard. parkins@haynesboone.com
9 aehrlich@paulweiss.com
0 -and-
10 AMY P. DIETERICH, ESQ.
1 HAYNES and BOONE, LLP
11 adieterich@paulweiss.com
2 Attorneys for Midland Loan Services, Inc.
12
3 2323 Victory Avenue, Suite 700
13
4 Dallas, Texas 75219
14 DECHERT, LLP
5 BY: MARK ELMORE, ESQ.
15 Attorneys for Lehman ALI Inc.
6 mark.elmore@haynesboone.com
7 CHIP BROOKER, ESQ.
8 chip. brooker@haynesboone. com
18 BY: BRIAN E. GREER, ESQ.
9
19 brian.greer@dechert.com
PO
20 KEVIN J. O'BRIEN, ESQ.
P1
21 kevin.obrien@dechert.com
P2
22 NICOLE B. HERTHER-SPIRO, ESQ.
P3
23 nicole.hertherspiro@dechert.com
P4
24
P5
25
2 (Pages 2 to 5)
DAVID FELDMAN WORLDWIDE, INC.
450 Seventh Avenue- Ste 2803, New York, NY 10123 (212)705-8585
APP-00313
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
6
oOo
APPEARANCES (cont'd):
MORRISON & FOERSTER, LLP
Attorneys for Unsecured Creditors Committee
1290 A venue of the Americas
BY: PAUL GALANTE, ESQ.
pgalante@mofo.com
WILLKIE FARR & GALLAGHER, LLP
Attorneys for Appaloosa Investment L.P. I
787 Seventh A venue
BY: BRIAN R. FAERSTEIN, ESQ.
bfaerstein@willkie.com
KASOWITZ, BENSON, TORRES & FRIEDMAN, LLP
Attorneys for Five Mile Capital Partners
1633 Broadway
BY: DANIEL A. FLIMAN, ESQ.
dfliman@kasowitz.com
7
oOo
ALSO PRESENT:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
MARK A. MURPHY, Innkeepers USA 4
IRA VIS SHELHORSE, Trimont Real Estate Advisors 5
6
7
8
9
10
11
12
13
14
15
16
17
18
!19
120
121
122
123
124
125
WITNESS
oOo
INDEX
MARC A. BEILINSON
By Mr. Parkins
By Mr. Meyers
By Mr. Gottesman
By Mr. Donovan
PAGE
12
163
202
227
AFTERNOON SESSION- 142
EXHIBITS
EXHIBIT DESCRIPTION PAGE
Exhibit 1 Amended Notice of Deposition of
Corporate Representatives of the
Debtors 17
Exhibit 2 Chart 18
Exhibit 3 Debtors' Motion for an Order (A)
Authorizing the Debtors to Assume
the Plan Support Agreement and (B)
Granting Related Relief 25
Exhibit 4 Plan Support Agreement 25
Exhibit 5 E-mail Exchange dated July 16, 2010 32
oOo
EXHIBITS
Exhibit 6 Document titled Illustrative Terms
of Proposed Restructuring dated
May 25, 2010 40
June 2, 2010 47
June 2, 2010 54
June 2, 2010 81
June 4, 2010 82
Exhibit 11 Document titled Term Sheet
Alternative A, Illustrative
Terms of Proposed Restructuring
dated June 17,2010 85
8
9
3 (Pages 6 to 9)
APP-00314
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
10
oOo
EXHIBITS
Alternative A, Illustrative Terms
June 29, 2010 94
Alternative A, Illustrative Terms
June 22, 2010 101
Exhibit 14 E-mail Exchange dated July 7, 2010 103
Exhibit 15 Document titled Project Tavern-
Lehman Discussion Materials dated
April22, 2010 114
Exhibit 16 Document titled Project Tavern-
Midland Discussion Materials dated
April28, 2010 130
Exhibit 17 Amended Declaration of Dennis
Craven, Chief Financial Officer of
Innkeepers USA Trust, in Support of
First-Day Pleadings 142
11
oOo
(Whereupon, on the record.)
MR. DONOVAN: Dan Donovan, Kirkland &
Ellis, for the Debtors and the witness.
MR. MURPHY: Mark Murphy with
Innkeepers.
MR. GOULD: Jeff Gould, Kirkland &
Ellis, for the Debtors.
MR. EHRLICH: Andrew Ehrlich, Paul,
Weiss, Rifkind, Wharton & Garrison, on behalf
of Apollo Investment Corporation.
MR. GALANTE: Paul Galante, Morrison &
Foerster, for the Unsecured Creditors
Committee.
MR. F AERSTEIN: Brian Faerstein,
Willkie Farr, for Appaloosa Investment LP I.
MR. PAWLITZ: JeffPawlitz, Kirkland &
Ellis, for the Debtors.
MR. MEYERS: Todd Meyers, Kilpatrick
Stockton, for Trimont.
MR. CRISP: Mike Crisp, Kilpatrick
Stockton, for Trimont.
MR. FLIMAN: Dan Fliman, Kasowitz,
Benson, Torres & Friedman, Five Mile Capital
Partners.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
12
oOo
MR. GOTTESMAN: Lawrence Gottesman,
Bryan Cave, LNR Partners, LLC.
MR. BROOKER: Chip Brooker, Haynes and
Boone, Midland Loan Services, Inc.
MR. ELMORE: Mark Elmore, Haynes and
Boone, Midland Loan Services, Inc.
MR. PARKINS: Lenard Parkins, Haynes
and Boone, Midland Loan Services, Inc.
M A R C A. B E I L I N S 0 N, the witness,
having been duly sworn, was examined and
testified under oath as follows:
MR. PARKINS: Counsel, stipulations,
we're taking this pursuant to agreement and
the rules?
MR. DONOVAN: No stipulations. We can
just proceed.
MR. PARKINS: Fine.
EXAMINATION BY
MR. PARKINS:
Q Mr. Beilinson, would you state your
full name, please?
Marc A. Beilinson
A Marc A. Beilinson.
Q And, Mr. Beilinson, how are you
presently employed?
A I'm the chief restructuring officer of
Innkeepers USA.
Q Do you have any other job at the
present time?
A No.
Q You're an attorney by education,
correct?
A Yes, I am.
Q Okay. Have you been in a deposition
13
to understand how the deposition process works?
A I've been at a few.
Q I'll ask you questions, you need to
respond orally so that the court reporter can get
your answer.
If there's any questions, you have any
problems with any of my questions or any
clarifications, let me know if you don't understand.
And we'll try not to talk over each
other, one person talks the other person answers.
And there will be times, I'm sure,
that various counsel interpose objections which
4 (Pages 10 to 13)
APP-00315
14 16
1 Marc A. Beilinson
1 Marc A. Beilinson
2 we'll have to hear as part of the deposition.
2 independent member of the Board of Apollo Investment
3 Are you familiar with that process?
3 Corporation that you came to know the individuals
4 A Yes.
4 who ultimately offered you a job with respect to
5 Q Okay.
5 Innkeepers; is that correct?
6 MR. PARKINS: Is there more lawyers on
6 A No, that's not correct.
7 the phone?
7
Q Okay. How did you get to know these
8 MR. DONOVAN: It's probably just
8 individuals?
9 Kirkland.
9 A I was an independent member ofthe
10 MR. PARKINS: Okay.
10 Board oflnnkeepers USA.
11 MR. GOULD: We have one associate in
11
Q Okay.
12 Chicago.
12 A And while I was an independent member
13 MR. PARKINS: Okay. Great.
13 of the Board of Directors, management reached out to
14 BYMR. PARKINS:
14 me in advance of a board meeting and asked me to
15 Q How long have you held the position of
15 come in and take a look at the company because they
16 CRO of Innkeepers?
16 knew of my past experiences as a restructuring
17 A Sometime in November of 2008.
17 professional.
18 Q And how much are you compensated as
18
Q And how did you come to be an
19 CRO of the debtors?
19 independent member of the Board of Directors of
20 A My base compensation is $900,000.
20 Innkeepers USA?
21 Q Is there any bonus component of your
21 A I received a call from Rick Press who
22 compensation?
22 is at Apollo asking ifl had an interest in serving
23 A Yes, there is.
23 as an independent member of the Board of Directors
24 Q What is that?
24 of a company they were investing money in.
25 A I received a million-dollar bonus for
25
Q Prior to becoming CRO for Innkeepers,
15 17
1 Marc A Beilinson 1 Marc A. Beilin son
2 signing on for another year, and I had a retention 2 would you go through your employment history,
3 bonus of a million dollars for that year. 3 please?
4 Q So there was a one-time bonus for 4 A Sure.
5 signing on from 2008 after that one year till 2009, 5 In 1983 I was employed by Buchalter
6 there's not another $1 million bonus, it was just a 6 Nemer Fields & Younger which is a regional law firm,
7 one-time bonus? 7 mostly based in California, but also with offices
8 A No, that was a bonus for the 8 outside of California including New York. I was
9 renegotiation of my contract after the first year. 9 there as a partner.
10 Q Okay. Who hired you to be CRO for the 10 I left there, went to Pachulski Stang
11 debtors? 11 Ziehl & Jones where I was a partner for 15 years.
12 A The Board. 12 And I left the practice of law about three years
13 Q The Board? Who on the Board of 13 ago.
14 Directors did you talk with to be hired? 14 During that period of time I've also,
15 A I talked to each of the members of the 15 you know, owned some businesses and had my own
16 Board, including those members who are affiliated 16 investment vehicles which I was chief executive of.
17 with Apollo Investment Corp. and the independent 17 Q Is it fair to say your concentration
18 members of the Board who are top-notch 18 while practicing law was in bankruptcy and
19 professionals. 19 restructuring?
20 Q How did you come to learn about the 20 A Absolutely.
21 opportunity to be CRO for the debtors? 21 (Amended Notice of Deposition of
22 A I was an independent member of the 22 Corporate Representatives of the Debtors
23 Board since the time of the transaction in 2007 when 23 marked as Exhibit I, as of this date.)
24 Apollo Investment Corp. took the enterprise private. 24 BYMR. PARKINS:
25 Q And it's from that position as an 25 Q Mr. Beilinson, I've had marked
5 (Pages 14 to 17)
APP-00316
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
18
Marc A. Beilinson 1
Exhibit 1, which is before you, the Amended Notice 2
of Deposition of Corporate Representatives of the 3
Debtors attached to the Document Request, have you 4
seen this document before? 5
A Yes, I have.
Q Have you reviewed the document?
A Not recently, but I have.
Q I take it you are here as the
corporate representative of the debtors --
A That's correct.
Q --in response to this notice; is that
correct?
A That's correct.
MR. DONOVAN: And subject to our
objections which were provided.
(Chart marked as Exhibit 2, as ofthis
date.)
MR. PARKINS: I'm trying to wait for
everybody to get one before I ask questions.
MR. DONOVAN: Okay. No problem.
MR. PARKINS: There's a lot of people
here.
BYMR. PARKINS:
Q Mr. Beilinson, I've handed you what I
Marc A. Beilinson
had marked as Exhibit 2. It's a chart that was
19
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
prepared by the debtors and handed at the first day 3
hearings, do you recollect this document? 4
A I've seen this before. 5
Q Did you have any role in preparing 6
this document? 7
A ~ - 8
Q No. Do you recall it being offered 9
into evidence at the first day hearings -- 10
A Yes. 11
Q --in the Innkeepers case? 12
Looking at Exhibit 2, we see at 13
the top in the center here, I take it, the ownership 14
of the various debtors outlined in the context of 15
this chart as well as the various debt pools; is 16
that correct? 17
A That's correct. 18
Q At the top of the chart we have Apollo 19
Investment Corporation. I might call it Apollo 2 0
during the deposition just to shorthand, is that 21
okay? 22
A No. 23
Q Okay. Then I'll call it Apollo 2 4
Investment Corporation, is that okay, or AIC, is 2 5
Marc A. Beilinson
that okay?
A That would be fine.
Q Okay. And Apollo Investment
Corporation is the 100 percent owner of the
ultimate-- of all these companies ultimately,
correct?
A Yes.
20
Q Okay. Grand Prix Holdings next in the
chart is a Delaware LLC; is that correct?
A I don't know.
Q Does it have a Board of Managers or
Board of Directors?
A I don't know if it's a corporation or
an LLC, so I'm not sure what.
Q Does it have a board?
A Yes.
Q Okay. Who is on the board?
A I don't think I know as I sit here.
Q Are you on the board?
A Uhm?
Q Are you on the board?
A As I sit here I don't know.
Q Okay. Do you know who its officers
are?
Marc A. Beilinson
A Off the top of my head there are a
21
hundred entities and off the top of my head, without
refreshing my memory, I couldn't tell you who was on
the board or who the officers were of any of the
entities.
Q Did you go back and sort of refresh
your recollection with respect to the topics to be
covered today in the deposition?
MR. DONOVAN: Well, let me object
here. I don't think membership on each board
was a topic, nor is it really one that one
should cover in a deposition, so.
BY MR. PARKINS:
Q My question, though, is: Did you go
back and refresh your recollection regarding in
order with respect to the topics to be covered in
the deposition as a 30(b)(6) representative of the
company?
MR. DONOVAN: Objection. You can
answer it.
A I reviewed what I thought was
appropriate for purposes of the deposition involving
the PSA and cash collateral.
Q The next in the line is Innkeepers USA
6 (Pages 18 to 21)
APP-00317
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
Trust Maryland REIT, does it have a Board of
Trustees?
A Yes.
Q Do you know who's on the Board of
Trustees?
A Most of the members.
Q
A
Can you tell me who they are?
Sure. Fred Kleisner, who is the CEO
22
1
2
3
4
5
6
7
8
9
of Morgan Hotel Group, who was formerly the CEO of 1 0
Wyndham Hotels, which is one of the largest hotel 11
chains in the country. 12
Larry Ruisi, who is a CEO of Lowes 13
Cinemas and formerly a chief executive at Sony 14
Pictures and Trimark. 15
And Bernie Zuroffwho is a chief 16
executive and general counsel to a number of 17
companies both who have gone through restructurings 18
in in-court and out-of-court process. 19
There are a number of Apollo 2 0
Investment Corp. people who are also on the board. 21
I believe those include Jim Zeiter, Patrick Dalton, 2 2
Justin Karval, and Schuyler Hewes. 2 3
I believe there is an employee of ARI,
which is a public company, which is affiliated with
23
24
25
Marc A. Beilinson 1
some of the Apollo entities by the name of Ken 2
Picache who is an expert in CMBS financing. 3
Q You're not on the board, are you? 4
A I am on the board. 5
Q You're on the board, okay. 6
A I was an independent member starting 7
in 2007, and when I took the position as CRO, in my 8
view that made me no longer independent, but I did 9
remain as a member of the Board of Directors. 10
Q Going down the list here. Innkeepers 11
Financial Corporation, a Virginia Corporation, do 12
you know whose on the Board of Directors of that 13
corporation? 14
A I can't tell you off the top of my 15
head. 16
Q Same question for Innkeepers USA 17
Limited Partnership, do you know who the partners 18
are of that limited partnership?
A I think my testimony will be the same
with regard to every other entity on this chart.
Q Okay.
A I'm happy to go through each.
Q Your testimony --I'm sorry, go ahead
and finish and I'll ask you a question.
19
20
21
22
23
24
25
Marc A. Beilinson
A My testimony is that, you know, as I
sit here today, I don't recall who the officers and
directors of each of the entities is. There's over
90 entities.
Q Looking at this Exhibit 2, we see
various, I'll call them lenders identified and
collateral identified with respect to those lenders
identified in green color in this chart; is that
correct?
A Yes.
Q Okay. More correctly, you see a
number of secured lenders in green and apparently
some mezz debt not in green in the context of this
chart; is that correct?
A I think that's what it's attempting to
demonstrate.
Q Okay. Now, going from the left side
24
of the chart we see there under Grand Prix Mezz
Borrower Fixed, LLC, you see they entered into a $25
million fixed rate CMBS pool with Midland as a
special servicer, correct?
A I see that.
Q Forty-five hotels stand as collateral
for that indebtedness, correct?
25
Marc A. Beilinson
A That is correct.
Q And the next column you have there in
green the 20 hotel Lehman collateral pool reflecting
a $238 million Floating Rate Lien and Senior
Mortgage Loan, correct?
A I see that reflected.
Q Okay. And we can go across here with
respect to each of the borrowers. Do these columns
where the green is noted and the debt and collateral
accurately, as far as you know, reflect the debt and
collateral holder of that debt for each of those
entities identified in green?
A It appears to, but I couldn't tell you
with certainty that those are the actual names of
the LLCs that hold those debt.
Q Okay.
(Debtors' Motion for an Order (A)
Authorizing the Debtors to Assume the Plan
Support Agreement and (B) Granting Related
Relief marked as Exhibit 3, as of this date.)
(Plan Support Agreement marked as
Exhibit 4, as of this date.)
MR. DONOVAN: Let me just state during
this time that we're designating this
7 (Pages 22 to 25)
APP-00318
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Marc A. Beilinson
confidential until we have a chance to review
the transcript pursuant to the protective
order, which we will do after we receive it.
MR. PARKINS: And we will clearly
abide by the protective order. I don't think
it's been entered yet by the terms, but in
any event, if we need to use this document,
we'll reach agreement and report.
MR. DONOVAN: Sure.
MR. PARKINS: Absolutely.
BYMR. PARKINS:
Q
Mr. Beilinson, I've handed you two
exhibits.
Exhibit 3 is the Debtors' Motion
for an Order Authorizing the Assumption of the Plan
Support Agreement. Do you have that in front of
you?
A Yes.
Q
And I've handed you also Exhibit 4
which is the Plan Support Agreement itself.
A This isn't stamped by the court, I
mean, am I to assume that this is what was actually
filed with the court with regard to Exhibit 3?
Q
You can assume that that was what was
27
Marc A. Beilinson
filed. I don't have files-- I don't get filed
stamped copies from the court, I just get service
copies. Okay?
A I'm happy to make that assumption,
though.
Q
And Exhibit 4 is the Plan Support
Agreement which we'll call the PSA from time to
time, okay?
A And I'm supposed to assume that --
Q
All exhibits are attached.
A And they're accurate as to what was
filed?
Q
Yes.
A Okay.
Q
The--
A You know, in fairness, there were
hundreds of drafts of each of these documents and I
want to make sure when I'm answering the questions
that I'm dealing with the final version which was
actually--
Q
Mr. Beilinson, I want you to look at
it until you're satisfied or your counsel's
satisfied that it is a correct copy of what was
filed with the court.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
MR. DONOVAN: No, ifyou're
representing it's the execution copy, that's
all we were trying to get at.
THE WITNESS: Yeah.
MR. PARKINS: Okay.
BYMR. PARKINS:
Q Looking at Exhibit 3, please,
which is the Motion.
A Yeah.
Q Did you review this Motion before it
was filed?
A Yes.
Q Okay. This Motion was filed as part
of the first day filing, is that correct, when the
case was filed on the 19th; is that correct?
A I don't know.
Q Well, let's look at the date, at least
the date of when it was signed. Page 18.
A Uh-hum.
28
Q What date did the company file Chapter
11?
A I believe July 19th.
Q Okay. The document is at least dated
July 19; is that correct?
29
Marc A. Beilinson
A Yes. I just --
Q All right.
A -- don't know if it was filed on that
date.
Q And the debtors as of today are still
continuing to seek approval of the assumption of
this agreement, which hearing is set for September
1; is that correct?
A That's correct.
Q Turn with me, if you would, to
Paragraph No.6 on page 4 of the pleading, please.
A (Complies.)
Q Take a moment and read it because I
want to ask you about it, okay?
A (Complies.)
I've reviewed it.
Q Have you finished reading it?
A Yes.
Q Okay. Going to about the last 10
lines of Paragraph No. 6, the sentence that begins:
For the last several months, the Debtors have
engaged Lehman in numerous strategic discussions.
Do you see that sentence? Do you see that language
there?
8 (Pages 26 to 29)
APP-00319
30 32
1 Marc A. Beilinson 1 Marc A. Beilinson
2 A Yes, I see the sentence. 2 (E-mail Exchange dated July 16,2010
3
Q
Okay. It says: The Debtors have 3 marked as Exhibit 5, as of this date.)
4 engaged Lehman in numerous strategic discussions to 4 BYMR. PARKINS:
5 outline the potential restructuring of the Debtors' 5
Q
I ask you to look at what's been
6 enterprise that would maximize the value of their 6 marked as Exhibit 5.
7 estates for the benefit of all constituents. 7 A (Reviews.)
8 It is true also that during that same 8 Yes, I'm familiar with this.
9 period of time, the months prior to the filing of 9
Q
Okay. Looking at the bottom part of
10 the bankruptcy, that the debtors were engaged in 10 Exhibit 5, an e-mail from you to James Zeiter.
11 dialogue with Apollo regarding the restructure, too; 11 Who is James Zeiter, by the way?
12 is that correct? 12 A Jim Zeiter is a CEO of Apollo
13 A No. 13 Investment Corp. and a member oflnnkeepers USA
14
Q
Is it your testimony the debtors were 14 Board of Directors.
15 not engaged at all with respect to the Term Sheet 15
Q
Looking at point number 3.
16 for the restructuring of this company where Apollo 16 A Yes.
17 at some time was to be considered a signatory to the 17
Q
Would you read that, please?
18 agreement? 18 A My understanding is that all issues
19 A That's correct, no. 19 have been resolved between Lehman and Apollo except
20
Q
Is that your testimony with respect to 20 the following single issue.
21 Apollo Investment Corporation? 21
Q
Now, do you know if Mr. Zeiter was
22 A No. 22 involved in the negotiations between Lehman and
23
Q
That is not your testimony or -- 23 Apollo regarding Apollo's ownership of the
24 A That's correct. 24 reorganized company?
25
Q
Okay. Was Apollo Investment 25 A He was involved in discussions between
31 33
2 Corporation -- did you have dialogue with Apollo 2 Apollo Investment Corp., I was using this as a
3 Investment Corporation months before the filing with 3 shorthand, and Lehman with regard to purchasing an
4 respect to a restructuring? 4 interest that Lehman may receive through a plan of
5 A Yes. To the extent they had members 5 reorganization post-confirmation.
6 of the Board oflnnkeepers USA, I was always keeping 6
Q
Why were you contacting him if he was
7 the members of the Board oflnnkeepers USA, and the 7 personally involved with this, did you not think he
8 Board comprises of a number of independent members 8 knew what was going on in any event?
9 and members who were affiliated with Apollo 9 MR. DONOVAN: Objection.
10 Investment Corp. or other Apollo affiliated 10 BY MR. PARKINS:
11 entities. 11
Q
You can answer.
12
Q Other than dialogue with the board 12 MR. DONOVAN: Yeah, you can still
13 where Apollo had representatives on the board, the 13 answer.
14 debtor was engaged, was it not, in dialogue with 14 A Could you ask the question again?
15 respect to Apollo becoming an owner of the equity of 15
Q
Yes. Why were you contacting him
16 the company as part of the restructuring negotiated 16 three days before the filing with respect to the
17 with Lehman; isn't that correct? 17 status of Apollo Investment Corporation's
18 A No. 18 acquisition if he was involved in those negotiations
19
Q Isn't it true that within a few days 19 himself?
20 of the filing of the bankruptcy case you had direct 20 MR. DONOVAN: Objection. You can
21 communications with representatives of Apollo with 21 answer.
22 respect to their potential acquisition of 50 percent 22 A Because one of the elements of the PSA
23 of the equity of this company coming out of 23 between Innkeepers USA and Lehman is that they are
24 bankruptcy? 24 capable of selling 50 percent of their
25 A I don't believe so. 25 post-confirmation interest for an amount of $107
9 (Pages 30 to 33)
APP-00320
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
34
Marc A. Beilinson
million, so it was material to Innkeepers USA that a
secondary transaction was actually going to be
executed. It wasn't important to me whether that
was Lehman or Apollo, or Lehman and a third party,
and in that term I meant Apollo Investment
Corporation. So it was important to me that that be
executed because it was a condition to Lehman's
compliance with the PSA which was negotiated by
Innkeepers USA.
Q Did it have Apollo sign an agreement
to acquire 50 percent of the stock?
MR. DONOVAN: Objection.
A I don't know--
Q Apollo Investment Corporation, I'm
sorry.
A I believe the terms of the PSA
provides that Lehman had to be able to sell 50
percent to a third party. It was immaterial to me
as to who that third party was in accordance with
the PSA.
Q Do you know if Lehman was negotiating
with anyone else other than AIC for the acquisition
of that stock at the time you sent this e-mail?
A I don't know.
35
Marc A. Beilin son
Q Okay. Are you aware that an agreement
was signed on this date dated July 16 between Lehman
and Apollo Investment Corporation with respect to
this acquisition?
A I was informed by both parties that it
was executed in whatever form.
Q And you knew that when, sir?
A I believe I knew that on, you know,
somewhere around the filing date.
Q Before the filing date?
A I believe so.
Q Look with me at Exhibit 3, the
Motion again. Paragraph No. 20.
I'd ask you to read it, please, I'm
going to ask you about it.
A (Complies.)
I've reviewed it.
Q Now, Mr. Beilinson, if you knew that
Apollo had signed the agreement with Lehman, Apollo
Investment Corporation signed the agreement with
Lehman before the filing, why wasn't that disclosed
in this pleading here, Paragraph 20?
MR. DONOVAN: Objection. Foundation.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
BY MR. PARKINS:
Q You can answer.
A I know it was disclosed to the court
at the first day hearings, what pleading it was in
and what paragraph it is in isn't really material to
me at all.
Q But--
A So I'm not sure why anyone chose not
to put that in this particular paragraph or why you
would believe that this is the appropriate paragraph
to put it in.
36
Q Well, it is accurate that the debtor,
through you at least, knew that Apollo Investment
Corporation was the purchaser of the new equity as
of the date of filing, correct?
BY MR. PARKINS:
Q You can answer.
A I think I knew there was some
agreement that was executed between the two. I
hadn't seen the agreement and it's not material to
Innkeepers USA as to who the purchaser of the new
equity is, just that there is a purchaser of the new
equity.
Marc A. Beilinson
Q Okay. And you just don't know why it
isn't disclosed in this pleading here, right?
MR. DONOVAN: Objection. Misstates
the testimony.
BY MR. PARKINS:
Q Do you know why it's not disclosed?
A No. There's no reason why it wouldn't
be disclosed or that it would be disclosed in this
document.
Q Based on your experience, sir, is a
37
transaction resulting in the present equity owner of
a Chapter 11 debtor ending up with equity of that
Chapter 11 debtor something that ought to be
disclosed in a bankruptcy case?
MR. DONOVAN: Well, hold on, let's
keep this clear. You know it was disclosed,
so I think you need to be more precise, and I
think these are misleading. You know it was
disclosed. If you're asking about this
particular paragraph, you need to be more
prec1se.
MR. PARKINS: What I know was it said
that they think -- we'll get to that in a
minute, counsel.
10 (Pages 34 to 37)
APP-00321
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
38
Marc A. Beilinson 1
MR. DONOVAN: Okay. 2
MR. PARKINS: Where it says, we think 3
AIC might be the buyer, but the testimony is 4
now we knew they were the ones going to be 5
the buyer, and we're going to get into that 6
in a second. 7
MR. DONOVAN: Well, we still don't 8
know, but all I'm asking is to be precise if 9
you're asking about this paragraph. 1 o
MR. PARKINS: Could you read the last 11
question back? 12
(Whereupon, the requested portion was 13
read back by the Reporter: 14
"Question: Based on your experience, 15
sir, is a transaction resulting in the 16
present equity owner of a Chapter 11 debtor 17
ending up with equity of that Chapter 11 18
debtor something that ought to be disclosed 19
in a bankruptcy case?") 20
MR. DONOVAN: Objection. You can 21
answer. 22
BY MR. PARKINS: 23
Q You can answer. 2 4
A I don't even understand the question. 2 5
39
Marc A. Beilinson 1
Apollo Investment Corp. is getting no distribution 2
on account of its prior equity in connection with 3
Innkeepers USA. 4
Q Mr. Beilinson, is it true that since 5
May of 2010 Apollo Investment Corporation has been 6
involved in negotiations with the Term Sheet for the
restructure of this company?
answer.
A In connection with a term sheet with
whom?
Q With the debtors and Lehman,
three-party negotiation.
A I never viewed Innkeepers as
responding to any term sheet from Apollo Investment
Corp. I believe that Innkeepers was negotiating
with Lehman with regard to the terms of a PSA, and I
believe that we only responded to term sheets that
were sent to us by Lehman, not by Apollo. Now that
we received term sheets from Apollo Investment
Corp., I believe we did. They were not, in my view,
any part of my negotiation, nor were they responded
to by Innkeepers or I.
MR. PARKINS: Give me a minute. Let
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
me pull some exhibits.
MR. DONOVAN: Sure.
While we're here, if anyone has
arrived since we made initial appearances,
can you please make your appearance.
MS. DIETERICH: Amy Dieterich from
Paul Weiss.
MR. SHELHORSE: Travis Shelhorse from
Trimont.
(Document titled Illustrative Terms of
Proposed Restructuring dated May 25,2010
marked as Exhibit 6, as of this date.)
BY MR. PARKINS:
Q Mr. Beilinson, I've had marked a
document as Exhibit 6. It has Bates stamp
40
numbers on the right-hand corner. LEH-ALI starting
with number 1 through 4. Do you have that document?
Do you see that?
A Yes.
Q Okay. I'll represent that these
documents were produced either from Lehman, AIC or
the debtors in the document production received in
the last couple of days including through last
night.
Marc A. Beilinson
MR. DONOVAN: And just if you could
tell him--
MR. PARKINS: Yes.
MR. DONOVAN: --what LEH indicates.
BYMR. PARKINS:
Q LEH would represent from the Lehman
document response.
A Okay.
Q Have you ever seen this document
before, sir?
A I don't recall this particular
document.
Q With respect -- there were
41
negotiations, Mr. Beilinson, weren't there, with
respect to a term sheet development in the months of
May, June and July between the debtors Lehman and
Apollo, is that correct, Apollo Investment
Corporation; is that correct?
answer.
A Could you repeat the question, please?
(Whereupon, the requested portion was
read back by the Reporter:
"Question: There were negotiations,
11 (Pages 38 to 41)
APP-00322
42 44
1 Marc A Beilinson 1 Marc A. Beilinson
2 Mr. Beilinson, weren't there, with respect to 2 A I think that Schuyler Hewes was
3 a term sheet development in the months of
3 involved. Patrick Dalton was involved. I'm not
4 May, Jnne and July between the debtors Lehman
4 sure who else was involved from AIC, nor would I
5 and Apollo, is that correct, Apollo 5 have that information.
6 Investment Corporation; is that correct?") 6 Q And did AIC have counsel involved?
7 A There were discussions that Innkeepers
7 A Yes, they did.
8 and I had with Lehman that included Lehman's desire 8 Q And who was their counsel?
9 to be able to sell the post-confirmation equity, at 9 A Paul Weiss.
10 least 50 percent of it, for the sum of $107 million 10 Q The document Exhibit 6 that I gave
11 to a third party. To the extent that they were
11 you is dated, has a date at the top May 25, 2010, do
12 negotiating with both Apollo Investment Corp. to be
12 you see that?
13 the potential buyer, yes, I was involved to some 13 A I see the date.
14 limited extent in connection with their 14 Q Okay. Turn with me, if you would, to
15 conversations with Apollo Investment Corp.
15 page 2 of this exhibit.
16 Q In the context of the negotiations
16 A (Complies.)
17 that took place with respect to proposed
17 Q And I'd ask you to look at the line
18 restructuring for Innkeepers, who negotiated on
18 items marked Equity Offering and Backstop, and read
19 behalf of Innkeepers from the business side?
19 them if you would, please.
20 A I did.
20 A (Complies.)
21 Q Okay. Was there anyone else from
21 I've reviewed this.
22 Innkeepers?
22 Q Okay. The Equity Offering part of
23 A No.
23 this document, the two paragraphs referring to
24 Q Okay. With respect --
24 equity offering, speaks to the fact that the
25 A Not materially. 25 company, Innkeepers, will conduct an equity offering
43 45
1 Marc A Beilinson
1 Marc A. Beilinson
2 Q I'm sorry, I didn't mean to interrupt.
2 which the company will sell62 percent of the equity
3 MR. DO NOV AN: I think he said "not 3 to a new holder, 27 percent of the equity will be
4 materially." 4 sold through a primary issuance, and 34.91 through a
5 A I was primarily responsible.
5 secondary issuance of Lehman shares.
6 Q Who was your counsel at the time?
6 The Backstop provision shows that
7 A Kirkland & Ellis.
7 Apollo Investment Corp. will provide a backstop to
8 Q And with respect to the Lehman side of
8 purchase 62.18 percent of the equity in the equity
9 the negotiations, from a business side who was
9 offering at a price of $171 million, in brackets,
10 negotiating for Lehman?
10 which consists of95 million for the 34.91 of
11 A Nancy Shanik and Michael Lascher were
11 secondary shares and 75 million for the 27.27 of
12 the primary contacts.
12 primary shares. Did I read it correctly?
13 Q And did they have counsel involved?
13 MR. DONOVAN: I'd object. I think you
14 A Yes, they did.
14 were summarizing it.
15 Q And who were their counsel?
15 MR. PARKINS: Okay.
16 A Dechert.
16 MR. DONOVAN: For completeness.
17 Q And with respect to AIC, to the extent
17 You can answer.
18 you know, okay, who was negotiating for AIC?
18 A That's what the words on this page in
19 MR. DO NOV AN: Objection.
19 a document that I don't know who sent to who says.
20 A At different points in time I think
20 Q My question is, sir: Have you seen
21 there were different people.
21 this provision before today in the context of your
22 Q Was Mr. Zeiter involved?
22 negotiations for restructure with Lehman?
23 A He was involved.
23 A I recall seeing this and I recall that
24 Q Who else was involved, to your
24 I told Lehman that I had absolutely no interest in
25 knowledge?
25 moving forward in restructuring the company in this
12 (Pages 42 to 45)
APP-00323
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A Beilinson
manner. And, as I recall, I was pretty adamant that
I wasn't interested in moving forward with any type
of equity offering or backstop as part of any
transaction of an internal restructuring with -- in
my role as chief restructuring officer of Innkeepers
USA
Q So you do recall receiving this and
you do recall responding to this language here,
correct?
A I now recall the document and I recall
my response to it being fairly strenuous.
Q So at least-- I'm sorry, I didn't
46
1
2
3
4
5
6
7
8
9
10
11
12
13
mean to interrupt, sir. 14
MR. DONOVAN: You can finish. 15
BYMR. PARKINS: 16
Q Do you want to finish your answer? I 17
didn't mean to interrupt, I thought you were done. 18
A That's okay. 19
Q Okay. So at least as ofthis document 2 0
with a date of May 25, 2010, AIC is certainly 21
mentioned as an integral part of a transaction in 2 2
this document? 2 3
A It was mentioned in a document that
was sent to me by Lehman.
Marc A Beilinson
Q Okay.
Proposed Restructuring dated June 2, 2010
BYMR. PARKINS:
Q I've handed you what has been marked
as Exhibit 7. It is a document again produced
from Lehman in its production of documents. It
47
24
25
1
2
3
4
5
6
7
8
9
starts with Bates stamp number 14 and goes through 10
Bates stamp number 22. 11
Have you seen this document before?
A I don't know. We had hundreds of
drafts going back and forth and whether I've seen
this particular document or not, I just don't know.
Q In the give and take of documents
12
13
14
15
16
between Lehman and the debtors since you were the 17
only one negotiating for the debtors, would you have 18
seen a transmission from Lehman with respect to a
restructuring proposal?
A I think so.
Q Okay. Is it reasonable to believe
that this was, in fact, if it was transmitted to the
company, you would have seen it?
A That's reasonable.
19
20
21
22
23
24
25
48
Marc A Beilinson
Q Okay. I ask you to look with me,
please, at page 4 and 5, starting with the topics
New Equity, Equity Offering, Equity Offering
Backstop, and Conditions Precedent to Lehman's
Obligations under PSA. I'm going to ask you about
those sections, so if you want to read them more
closely, please do.
A (Complies.)
I've reviewed it.
Q Okay. So a week after Exhibit 6
is at least dated, which was May 25, this is about a
week later at June 2nd, okay, this document that's
dated June 2nd, 2010, provides again that Apollo
Investment Corp. is going to provide a backstop to
the equity offering that Lehman proposes for the
company as part of the restructuring; is that
correct?
A That is generally what's said in a
document I evidently received by Lehman that was not
acceptable to Innkeepers USA
Q So despite your testimony that you
rejected this concept a week earlier, Lehman sent it
to you again; is that correct?
A I can't stop them from trying, but I
Marc A. Beilinson
can say no twice.
Q Did you respond to this document?
A I know I've had -- I had conversations
in response to the document, I doubt I would have
responded directly to this document.
49
Q This document under the Conditions
Precedent to Lehman's Obligations Under the PSA, the
third bullet point, if you look with me at the
bottom of page 5, it says: Agreement reached with
AIC in form and substance satisfactory to Lehman; is
that correct?
A That's what it says.
Q It specifically mentions AIC, not just
some third-party purchaser or backstop party; is
that true?
A That's what this document says.
Q Did you respond to Lehman about having
AIC involved in the transaction at all from your
perspective?
MR. DONOVAN: Objection. Vague.
You can answer to the extent --
A Okay, I -- can you ask it again,
please?
(Whereupon, the requested portion was
13 (Pages 46 to 49)
APP-00324
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
50
Marc A Beilinson 1
read back by the Reporter: 2
"Question: Did you respond to Lehman 3
about having AIC involved in the transaction 4
at all from your perspective?") 5
A Yes, I did. 6
Q What did you say? 7
A I told them that my intent was to do a 8
comprehensive integrated internal restructuring of 9
the company and that I thought it was best that we 10
negotiate directly with Lehman and the creditors of 11
this bankruptcy estate to come up with a plan that 12
could be confirmed by the Bankruptcy Court in a 13
rational period of time, and if as a condition to 14
that they had to have executed a term sheet with 15
regard to selling what they received out of this 16
chapter proceeding, I did understand that. I knew 17
they were talking to Apollo about that, and I 18
ensured that when I executed the final PSA, that the 19
condition was that it be a sell to a third party, 2 0
whether it was Apollo or somebody else was 21
immaterial to Innkeepers USA 2 2
Q So-- 23
A There would be a sell to a third 2 4
party, but I did know that they were discussing a 2 5
Marc A. Beilinson
transaction of some type with Apollo Investment
Corp.
Q You did know?
A I did know.
Q Okay. So my question is: Did you
tell Lehman you didn't want Apollo involved?
A No. I told Lehman that I wanted to
negotiate a transaction for the equitization of
their security interest in exchange for equity. And
what they did post confirmation was important only
from the context of the PSA condition precedent
which necessitated that they sell to a third party
50 percent of the post-confirmation interest.
Q Going back to this provision here
regarding the Equity Offering Backstop in this
Exhibit 7, provides that if AIC is not the new
51
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
owner, then AI C will be paid a breakup fee equal to, 18
bracket, 2.5 percent of the backstop amount or 4.275 19
million defined as the breakup fee; do you see that
provision?
A I see that provision, but I didn't
agree to it.
Q Because the company was going to pay
the breakup fee under this proposal; is that
20
21
22
23
24
25
52
Marc A. Beilinson
correct? Is that how you understood it?
A This proposal was not accepted by the
company and, hence, there was going to be no payment
to Apollo Investment Corp.
Q Did you understand this proposal to
include that the company would pay a breakup fee
under this proposal?
A A third party who made a proposal to
Innkeepers that was rejected that would have, if
accepted, caused a breakup fee.
Q And that breakup fee would go to AIC
under this proposal?
A I think we need to make clear that
this is not an Innkeepers' proposal, this was a
third-party proposal sent to Innkeepers USA and was
not acceptable.
Q It was sent to Innkeepers USA by
Lehman the exclusive party, as I understand, you
were negotiating with for a global restructuring
prefiling; is that correct?
A No, that's not correct.
BY MR. PARKINS:
Q You were negotiating with other
Marc A. Beilinson
entities pre filing for global restructuring?
A I was negotiating with all parties to
determine their interest in being a participant
including Midland.
Q Are there any term sheets you can
53
recall where Innkeepers delivered proposed terms for
a global restructuring to other constituencies other
than Lehman?
A No. Because Midland showed no
interest in anything having to do with a
restructuring of this enterprise.
Q My question is: Did you send a term
sheet or deliver a term sheet proposal to other,
let's start with, creditors of the various
Innkeepers entities for global restructuring?
A No, but pieces within an integrated
global restructuring, yes, I did sign a term sheet
with Marriott, signed a term sheet with Lehman,
negotiated with every other creditor constituent
that I could.
Q So your answer is no?
A I only signed one Plan Support
Agreement with Lehman.
MR. DONOVAN: Do you want to take a
14 (Pages 50 to 53)
APP-00325
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilin son
short break?
MR. PARKINS: Sure.
(Whereupon, off the record.)
54
1
2
3
4
(Document titled Illustrative Terms of 5
Proposed Restructuring dated June 2, 2010 6
marked as Exhibit 8, as of this date.) 7
(Whereupon, resumed.) 8
BYMR. PARKINS: 9
Q Mr. Beilinson, I've handed you a 10
document which I've marked as Exhibit 8. It's a 11
document which has a June 2nd, 2010 date at the top 12
of it, a Lehman ALI series of Bates stamp numbers 23 13
through 31. Do you have that in front of you? 14
MR. GOULD: Do you have extra copies? 15
MR. BROOKER: Yes. 16
MR. GOULD: Thank you.
BYMR. PARKINS:
Q I'd ask you to look at pages 4 and 5
of this document, the topics identified, New Equity,
Equity Offering, Equity Offering Backstop and
Conditions Precedent. Take a look at this, please,
I want to ask you about these sections.
A (Reviews.)
I've reviewed those provisions.
Marc A. Beilinson
Q Would you consider those provisions
similar to the ones we looked at with respect to
Exhibit 7? It's right in front of you if you want
to look at it to compare.
A (Complies.)
It looks somewhat similar.
Q Going to the Conditions Precedent both
in Exhibit 7 and Exhibit 8, the introduction
to those paragraphs said: The Transaction will
55
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
become binding on Lehman when Lehman, AIC and the 11
Company execute a plan support agreement and
incorporates a transaction set forth herein,
correct?
A Which document are you referring to?
Q I'm in Exhibit 7 and Exhibit
8. I ask you to look at that, I think that language
is the same in both.
A That is what these two documents that
were sent to me by Lehman say.
Q Okay. Both documents require AIC to
be party to a plan, to a PSA agreement; is that
correct?
A That's what these documents said and
12
13
14
15
16
17
18
19
20
21
22
23
24
25
56
Marc A. Beilinson
these documents, as you know, were not acceptable to
the debtor.
Q Look with me at the first page of each
Exhibit 7 and 8, if you would, please.
A (Complies.)
Q Specifically with respect to Exhibit
No. 7, I'm looking at Footnote No.2.
Seven says: Values are based on
Moelis presentation and have been included for
illustrative purposes only. What Moelis
presentation does this footnote refer to?
A I don't know.
Q Did Innkeepers make a presentation to
Lehman?
A Yes, we made a presentation to Lehman.
Q Did Moelis -- was Moelis the
investment banker retained by the company at the
time that presentation was made?
A Yes.
Q Did Moelis author a presentation
document to Lehman?
A I recall that there was a presentation
made by Innkeepers that Moelis may have had some
Marc A. Beilinson
input into, but I don't recall whether there was an
independent Moelis presentation.
Q Was there a meeting-- was there a
presentation made by Moelis that you were present
at?
Bad English, but I hope you get the
question.
MR. DO NOV AN: I think you may want to
re-ask it, it's vague.
BY MR. PARKINS:
Q Were you present at a presentation or
meeting with Lehman where Moelis handed out
materials to Lehman?
A I don't recall if Moelis or the debtor
handed out materials to Lehman, I do recall there
was a meeting where materials were handed out.
Q Okay. And how many meetings were
57
there between the debtors and Lehman where materials
were handed out by the company or Moelis its
investment banker?
A I don't recall.
Q Okay. So it's your testimony that you
don't recall what this Footnote 2 is referring to?
15 (Pages 54 to 57)
APP-00326
58 60
1 Marc A. Beilinson 1 Marc A. Beilin son
2 A No, I don't know what first docrunent 2 regard to each of those debt pools.
3 they were referring to. 3
Q Can you tell me what other creditors
4 Q Look with me then on Exhibit 8. 4 of the debtor had access with respect to all the
5 While these documents have a June 2nd 5 various debt pools of the debtors other than Lehman?
6 date on them, the Footnote 2's are different. Look 6 A None.
7 at Footnote 2 on Exhibit 8, it has an additional 7
Q Thank you.
8 sentence. 8 Were you ever advised, sir, that
9 A Yes, it does. 9 Lehman had completed a quantitative analysis of the
10 Q All right. Lehman is completing its 10 value of the company?
11 own quantitative analysis of the value of the 11 A No.
12 company and will supplement this term sheet once 12
Q Did you ever inquire as to whether
13 that analysis has been completed. 13 Lehman had, in fact, completed a quantitative
14 Do you recall receiving a Lehman 14 analysis of the value of the company?
15 quantitative analysis as to the value of the 15 A No.
16 company? 16
Q Do you recall getting this document
17 A No. 17 marked as Exhibit 8 with this footnote in it?
18 Q Were you ever advised by Lehman that 18 A I don't recall reviewing the footnote.
19 they had done such work? 19
Q Okay. In the context of negotiating
20 A I know they were analyzing a lot of 20 an overall restructuring, were you inquisitive as to
21 things and had retained Lazard to do so. 21 what the other party to the negotiations thought the
22 Q Had you authorized access by Lazard to 22 value of the company would be?
23 all the company's books and records to perform due 23 A What was important to me as chief
24 diligence? 24 restructuring officer was that I had a view with
25 A No. 25 regard to what reasonable and fair value was in
59 61
2
Q
You didn't give Lazard access to due 2 determining a comprehensive restructuring which
3 diligence? 3 included a plan support agreement with Lehman which
4 A I did give access to due diligence. 4 put limits on the amount of debt that this could --
5
Q
Did you put a limit on access that 5 this company should have on it in a recapitalized
6 Lazard would have for due diligence? 6 structure.
7 A Yeah, it was not all. 7
Q
My question --
8
Q
Not all what, sir? 8 A So what was important to me was what
9 A It was not all documents of the 9 our view as to appropriate value ranges were, not
10 debtor, so there was a limitation. 10 what Lehman's view of appropriate value ranges were.
11
Q
Did it involve all the hotels of the 11
Q
So the party you were -- you were
12 debtor? 12 indifferent to what Lehman's perspective was as to
13 A Did what involve all the hotels ofthe 13 the value of the company then in the context of
14 debtor? 14 these negotiations?
15
Q
Lazard's access to due diligence, did 15 A I wasn't indifferent.
16 it involve due diligence as to all the hotels of the 16
Q
You just didn't care?
17 various debtors? 17 A It wasn't particularly meaningful to
18 A Some information with regard to all 18 me in making my business judgment determination as
19 the hotels, yes. 19 to what was a good restructuring on behalf of the
20
Q
Looking with me at Exhibit 2 just 20 debtor.
21 for reference, sir, did it involve access to the 21
Q
Did you tell Lehman that it wasn't
22 various debt pools and hotels and collateral 22 important to you what they concluded the value of
23 reference there under the green coloration we talked 23 the company was in the context of your negotiations?
24 about earlier? 24 A No.
25 A Yes, there was some due diligence with 25
Q
Never?
16 (Pages 58 to 61)
APP-00327
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
62
Marc A. Beilinson
A I don't recall saying to them that I
didn't care what their views were. Of course I care
what everybody's views with regard to value are, and
to the extent that they wanted to discuss value, I
had an open mind with regard to listening to their
justifications with regard to value determinations
just like I would have an open mind with regard to
Midland and their views if they had any with regard
to what they believe their collateral pool was
worth.
Q
What you just said, where you said the
term sheets that were being exchanged provided for
Lehman to get a hundred percent of the equity of the
reorganized company, that's correct, isn't it,
that's what they contemplated, right?
A That's correct.
Q
Then Lehman would be concerned with
respect to not only the value of its collateral but
the collateral across the board with respect to all
of Innkeepers' hotels; is that correct?
A I don't know what was, Lehman was
interested in.
Q
Well, in your negotiations with
Lehman, did you discuss the value of hotels across
63
Marc A. Beilinson
the board since Lehman was going to be the ultimate
equity owner of all these hotels?
A I primarily discussed the range of
values with regard to each pool of hotels. I mean,
my view was pretty simple. Maybe it was too simple.
It was that ifi was providing what the court
determines to be the secured amount of the claim in
a note to each of the secured parties other than
Lehman, that when Lehman equitizes, the only equity
value of the enterprise came as a result of them
equitizing their collateral since by definition
everyone else is getting a hundred percent of their
secured claim in accordance with the Bankruptcy
Code.
Q
When you were negotiating with Lehman,
were you representing the debtors that owned the
hotels that are in Chapter 11 in the Midland pool?
A Absolutely.
Q
Do you think those debtors-- did you
ever discuss with Midland in the context of the
Lehman negotiations whether they shared your view
that the amount of recovery should be capped at a
value you determined?
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A Beilinson
Speculative.
A No, I have always maintained that
Midland should receive a note for the amount that
the court determines to be the value of their
collateral. I actually in negotiating with Lehman,
it was extremely important to me to consider the
interest and the flexibility of other parties within
this capital structure, and that it was my belief
64
that by equitizing Lehman in full it created about
$20 million ofEBITDA that could go to service the
debt that the court determines is the fair value of
the collateral of every other secured creditor, and
that it would actually facilitate my ability to
reach an agreement with Midland and other secured
lenders in this bankruptcy estate. Of course, that
was based upon a number of assumptions, and with
regard to CMBS creditors, and it was based upon
knowledge I actually received from Midland
themselves with regard to their lack of ability to
take equity themselves and the fact that this was
the type of-- this transaction with Lehman allowed
me to give Midland the type of consideration that
they would prefer in restructuring.
Q So you think Midland would prefer
65
Marc A. Beilinson
having more than $200 million of its debt eliminated
in the context of a restructuring, is that what you
think?
A What I said was that they would prefer
a note as a form of consideration equal to the value
of their collateral rather than equity or some other
type of consideration that the court may deem
appropriate under the new equivalent provisions of
the Bankruptcy Code.
Q Did you have these kinds of
negotiations on a restructure with Midland --
A Oh, I--
Q
A
--discussing these points with them?
I absolutely attempted to and, you
know, their retort at the beginning very beginning
was, you know, phrases like "Give me back my
collateral, I will never accept an AB note." They
didn't show the type of flexibility that allowed to
result in a consensual restructuring. I think that
tone has changed substantially since this timeframe.
In fact, in a conversation I had with Midland just
last week, I believe that I'll be receiving some
type of proposal with regard to a note structure.
And, you know, they validated my initial view that
17 (Pages 62 to 65)
APP-00328
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
special services didn't want equity or other types
of consideration rather than a note.
So, you know, I actually thought about
Midland a lot, and come into this plan support
agreement, and still believe that I'll end up with a
consensual resolution of this bankruptcy estate.
66
1
2
3
4
5
6
7
Q Let me just be clear here because you 8
talk in the first day declaration by Mr. Craven, you 9
talk in this pleading about the consensus that 1 0
exists with respect to the PSA you're seeking to 11
approve. I see we have Lehman which has $238 12
million and 20 hotels. Identify for me what other 13
special services or other creditor constituencies 14
have joined with you in support of the PSA that you 15
know of today.
A Well, I'm in discussions with
everybody. I think that Chapter 11 is a
consensus-building paradigm, and I believe this PSA
created the framework to build consensus around it,
not just amongst lenders but amongst unsecured
creditors, amongst Marriott, amongst franchisors.
So, you know, is it my belief that this is the
beginning of a process that will resolve, you know,
a lot of consensus, yes, that's my belief.
67
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson 1
Q So my question is, today, what other 2
lenders support the PSA as far as you know? Today. 3
A I don't know who's supporting and not, 4
except for you. 5
Q How about the mezz lenders. Do you
think mezz lenders is supporting getting wiped out
under your proposed plan of reorganization?
A I don't suppose that any party who is
receiving zero in this restructuring will be
supportive. I think that that would be the position
of holders of the Series C Preferred who I'm wiping
out. That would be AIC who's a holder of the Series
A which I'm wiping out. And also Apollo Investment
Corp. who owns the common equity who's receiving
nothing in this reorganization. I don't think
anybody who is losing a substantial amount of money
will be supportive oflosing hundreds of millions of
dollars.
Q Have any other special services, any
special services or any other creditors joined in
the PSA by signing it?
A No.
Q Okay. So the consensus of the
creditor body is with a $238 million creditor, but
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
not the rest of the creditors as far as you know
today; is that correct?
A I believe this is a consensus-building
process.
Q I'm asking today, sir.
A I don't know ifthere's a lack of
consensus, that this is an appropriate manner of
moving forward.
Q You mentioned Marriott.
A I believe these people are
appreciative of the fact that I'm moving forward and
continuing to talk to each of the special servicers
in trying to reach resolution with them as much as I
can on a consensual basis.
Q But you can't talk about a different
68
transaction than the one you are proposing under the
PSA; is that correct?
A No.
Q You can't, correct? You cannot, I'm
correct?
A That's not correct.
Q You can talk about an alternative
transaction?
A That's correct.
69
Marc A. Beilinson
Q You believe you're free to talk about
a different plan of reorganization at this time than
the one proposed under the PSA?
A I believe I have a fiduciary duty to
this judge and to the court and to the process to be
open to people talking to me about any type of
transaction.
Q Have you allowed any third parties to
have access to due diligence information in order to
make such a proposal since the beginning of the
bankruptcy case?
MR. DONOVAN: I'm going to object to
the question.
A No.
Q Others have asked though, haven't
they?
A Yes, but they haven't presented
proposals which I thought had viability or import.
Q So you want a proposal before due
diligence is done in order to let them have due
diligence, is that what you're saying?
A I will look at anything that someone
puts in front of me and use my best business
judgment to determine how to respond once I have
18 (Pages 66 to 69)
APP-00329
70 72
1 Marc A Beilinson 1 Marc A Beilinson
2 something in front of me. 2 BYMR. PARKINS:
3 Q Do you believe that PSA is effective 3 Q Did you shop this transaction before
4 as to the debtors today? 4 the filing to see if you could get a better deal for
5 A Absolutely. 5 the various constituencies reflected in this Exhibit
6 Q Okay. Do you believe that PSA permits 6 2?
7 you to negotiate an alternative transaction today? 7 A Yes, I talked to Midland and they said
8 A Yes, I believe that -- 8 they had absolutely no interest --
9 Q We'll look at that in a little bit. 9 Q Did you show them --
10 MR. DONOVAN: Hold on, let him finish, 10 A -- in the transaction.
11 please. 11 Q Did you show them the Lehman
12 A I believe that if someone submits a 12 transaction?
13 proposal that I believe has desirability and 13 A I did not.
14 viability that I can discuss that. 14 Q You did not. Did you show it to
15 Q Have you gone out and submitted 15 anybody?
16 alternative transactions to anybody? 16 A Oh, I showed it to Midland. I talked
17 A No. 17 to Midland about it prior to the time that it was
18 Q Your PSA has yet to be approved 18 executed and prior to the time it was filed and I
19 though, correct? 19 got no reaction that they had an interest in
20 A That's correct. I actually and 20 topping.
21 fundamentally believe that this PSA is in the best 21 Q That was the day before the filing,
22 interest of the debtor in this bankruptcy estate. 22 correct, a day or two before the filing?
23 It does more for all creditor constituencies than 23 A A couple days before the filing and
24 any proposal that I personally could come up with. 24 they showed -- well, you were at the meeting.
25 It equitizes a hundred percent of $238 25 And--
71 73
1 Marc A Beilinson 1 Marc A Beilinson
2 million. 2 Q That's right.
3 It creates $20 million of EBITDA that 3 A -- as you know, you showed absolutely
4 can be used to support the enterprise. 4 no interest in getting involved or putting forth a
5 It allows us to do deals with Marriott 5 transaction, so no.
6 and other constituents because they believe that the 6 Q So in the months that this Lehman
7 capital stock is sustainable and they want to do 7 transaction was being negotiated, you didn't advise
8 business with us in the future. 8 Midland, at least, about its existence until a day
9 It allows me to support whatever the 9 or two before the filing; is that correct?
10 court determines is the fair value of the secured 10 A Oh, that's correct.
11 claim of each of the secured creditors. 11 Q Okay. You didn't advise any of the
12 I think this is an extremely important 12 creditor constituencies about its existence and its
13 PSA I believe that it is the benchmark of a 13 negotiation before the filing, did you?
14 successful internal restructuring of the company for 14 A I believe that Marriott was aware that
15 the benefit of all. 15 I was negotiating a transaction.
16 Q Have you shopped this transaction with 16 Q Who was?
17 other constituencies in this case, this exact 17 A Marriott was involved.
18 transaction to get a higher and better deal 18 Q Marriott.
19 pre-petition? 19 A And not involved but informed that I
20 A I don't believe there is another 20 was negotiating a transaction with Lehman Brothers
21 transaction which would provide a higher and better 21 to equitize.
22 deal. 22 Q But you didn't shop it anywhere,
23 Q So is your answer no? 23 correct?
24 MR. DO NOV AN: I think his answer is 24 MR. DONOVAN: Objection.
25 his answer. 25 A I'm not sure what the word, the
19 (Pages 70 to 73)
APP-00330
74 76
2 meaning of those words are. 2 MR. DO NOV AN: Let me give you-- let
3 Q You're not aware as a bankruptcy 3 me give you two instructions.
4 lawyer what the word "shop a transaction" means? 4 One is to the extent you were acting
5 A To whom? I really just-- if you're 5 on advice of counsel or you were discussing
6 asking me whether I talked to other people about 6 transactions that were discussed with counsel
7 similar potential transactions, not, not exactly 7 and not disclosed, you shouldn't answer that.
8 like the one with Lehman Brothers, because there 8 But to the extent you can explain the process
9 wasn't anyone in a similar situation who had the 9 you went through with the board without
10 ability and desire potentially to equitize a 10 disclosing attorney-client privilege--
11 substantial amount of the debtors' secured claims. 11 MR. PARKINS: That's not my question.
12 Q How about with respect to a different 12 My question -- let me rephrase my question.
13 structure, did you talk to other creditor 13 MR. DONOVAN: Okay, then please do.
14 constituencies about an alternative to the Lehman 14 BYMR. PARKINS:
15 transaction before the filing of the bankruptcy 15 Q My question is: What alternative
16 case? 16 transactions did you discuss with the Board of
17 A Yes, I talked to, you know, Midland to 17 Directors relative to the Lehman one before it was
18 see what structures they might find acceptable. 18 approved by the Board?
19 Q That was two days before the 19 MR. DO NOV AN: My instruction is the
20 bankruptcy? 20 same. To the extent you can answer that
21 A Oh, no, that started months before. 21 without disclosing attorney-client
22 Q When did you show them the Lehman 22 information process, you can answer.
23 deal? 23 A Well, listen, I talked to them about
24 A I didn't show them the Lehman deal, 24 the process of moving forward with an internal --
25 but I talked to them about what they would have an 25 with a Chapter 11 without a plan support agreement
75 77
2 interest in in connection with a plan of 2 and an agreement with numerous constituents of the
3 reorganization, and I was completely stonewalled. 3 debtor.
4 So no, I didn't show them the Lehman transaction, 4 I discussed with them what a free-fall
5 but Midland showed absolutely no interest in being 5 bankruptcy looks like in comparison to a transaction
6 involved in the internal restructuring, so. 6 where you have $238 million of debt taken off your
7
Q Did you shop the deal to any outside 7 balance sheet, the security interest go away having
8 investors to come in and do a third-party 8 free and clear assets that could be utilized with
9 restructuring of the company not within the confmes 9 regard to the entire company.
10 of the creditor constituency? 10 We talked about what a free-fall
11 A No, I did not. 11 bankruptcy would look like if we didn't have
12
Q Did you shop it since the filing of 12 Marriott's agreement with regard to fulfilling the
13 the bankruptcy case? 13 debtors' obligations with regard to the PIPs.
14 A No, I have not. 14 We talked about the value inherent in,
15
Q When the Board of Directors of, or the 15 you know, freeing up $20 million ofEBITDA.
16 Board of Trustees met prior to the filing of the 16 Q Tell me about the alternative deals
17 bankruptcy case to approve the PSA and the Plan Term 17 you described to the board so we could make a
18 Sheet, what options to that PSA did you discuss with 18 decision on this deal versus another deal.
19 the board had been explored by the company prior to 19 A It was our view that this internal
20 the filing of the bankruptcy case? 20 restructuring was in the best interest of the estate
21 MR. DONOVAN: Objection. Youjust 21 of the debtor and it was the best viable alternative
22 asked him the day before? 22 for the benefit of all constituencies and that in
23 MR. PARKINS: Before the filing-- 23 our best business judgment that executing this PSA
24 MR. DONOVAN: Okay. 24 with Lehman Brothers was a good result in comparison
25 MR. PARKINS: --of the PSA. 25 to other transactions.
20 (Pages 74 to 77)
APP-00331
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
Q So you didn't present any alternative
78
1
2
transactions other than the Lehman one to the Board 3
before the filing; is that correct? 4
MR. DONOVAN: Objection. Misstates 5
the testimony. 6
BYMR. PARKINS: 7
Q Let's talk about Moelis. Moelis is 8
your investment banker, right? 9
A Yes. 10
Q Was Moelis given the charge prefiling 11
to go out and find alternative transactions to the 12
Lehman transaction? 13
A They were given the charge to give me
their best advice so that I could utilize it in
fulfilling my fiduciary duty and exercising my
business judgment.
MR. PARKINS: Object. Not responsive.
BYMR. PARKINS:
Q My question, sir, was: Did Moelis go
out and seek alternative transactions to that
reflected by the Lehman transaction pre-petition?
A If you can explain what you're asking,
I'd be happy to respond.
Marc A. Beilinson
79
Q Did you instruct Moelis to go out and
find alternative transaction to the Lehman
transaction for the months of April, May and June
through the filing to the Lehman transaction?
A I asked them to discuss with me all
potential alternative type transactions and look for
the one that creates the greatest viability for the
benefit of our constituencies which are the
creditors oflnnkeepers USA.
Q Did Moelis go out --
A With no limitation on that.
Q On your instruction, did Moelis go out
and shop alternative transactions to the Lehman
transaction?
A To people external of our capital
structure?
Q Yes.
A No, they did not.
Q How about internal to your capital
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
structure, did Moelis go out and make presentations 21
with respect to alternative transactions to the 2 2
Lehman one to the various other creditor
constituencies?
A They--
23
24
25
80
Marc A. Beilinson
You can answer.
A They were with me in trying to explore
what constituents were interested in alternative
transactions including Midland.
Q Did Moelis make presentations with
respect to alternative transactions with respect to
other creditor constituencies pre-petition?
A I believe they did. I believe that
was a point of our meetings with Midland in Kansas
City and subsequent to Kansas City was exploring
what alternative transactions they may have an
interest in pursuing, and the response was there
were none.
Q Take, for example, in April ofthis
year, not too long ago, did Moelis make a
presentation to Midland that include restructuring
alternatives?
A I know they made a presentation but I
don't know what it included.
Q Do you know whether it included taking
a look at the proposed Lehman transaction?
A No.
Q You don't know?
Marc A. Beilinson
A No, it didn't. I don't think the
Lehman transaction occurred back in April.
Q Had you made a proposal to Lehman by
the time you met with Midland?
A I don't recall.
Q You don't. Well, we'll get into that
in a little bit.
A Good.
MR. DONOVAN: We're all looking
forward to it.
BYMR. PARKINS:
Q We'll get into that in a little bit.
A Well, why don't we just do that now?
Proposed Restructuring dated June 2, 2010
BYMR. PARKINS:
Q I've handed you what's been marked
Exhibit 9, it's again a Lehman ALI production
with Bates stamp number 32 through 40.
A Okay.
Q I ask you to look again with respect
81
to the Equity Offering Backstop/Conditions Precedent
21 (Pages 78 to 81)
APP-00332
82 84
1 Marc A. Beilinson 1 Marc A Beilinson
2 section of this document. 2
Q
So there was a negotiation, you just
3 A I've reviewed it. 3 rejected it; is that correct?
4
Q
Okay. As I look at the Equity 4 A No, I received a document and I
5 Offering Backstop here, I see Apollo Investment 5 rejected it.
6 Corporation bought a backstop to purchase 61.82 6
Q
I thought you said you didn't recall
7 percent of the equity. If you look with me at the 7 receiving a document?
8 prior exhibit, there was a different number of 8 A Well--
9 equity, amount of equity going to be purchased, 9 MR. DO NOV AN: This one.
10 slightly less. Can you tell me why? 10 BYMR. PARKINS:
11 A No, this was another proposal by a 11
Q
This document.
12 third party that was unacceptable to me and that I 12 A No, I said when I-- when it was-- if
13 let them know it was unacceptable. 13 it was transmitted to me, I would have received it
14
Q
Okay. 14 and I would have rejected it.
15 (Document titled Illustrative Terms of 15
Q
And what counteroffer did you give
16 Proposed Restructuring dated June 4, 2010 16 Lehman at this time, if any?
17 marked as Exhibit 10, as of this date.) 17 A I don't recall this time frame.
18 BYMR. PARKINS: 18
Q
Do you recall whether the proposal
19
Q
I've handed you what's been marked as 19 that the company wanted Lehman to accept was
20 Exhibit 10, another Lehman production, numbers 20 embodied in what's called the Moelis Presentation
21 41 through 50. 21 reflected in Footnote No. 2?
22 A Okay. 22 A I don't remember what was embodied in
23
Q
I ask you again to look at the 23 the Moelis Presentation that was described in
24 sections, I think beginning on page 5 of this 24 Footnote 2. I mean, if you have it, I'd like to
25 exhibit, New Equity, New Equity Capitalization 25 take a look at it so I can --
83 85
1 Marc A. Beilinson 1 Marc A Beilinson
2 Options and Conditions Precedent. 2
Q
We'll get there.
3 A (Reviews.) 3 A -- comment on it.
4 I'm sorry, what would you like me to 4
Q
We'll get there.
5 review? 5 A Okay, I'm happy to wait.
6
Q
The sections designated New Equity, 6 Are we going to get to documents which
7 New Equity Capitalization Options and Conditions 7 reflect anything that were acceptable to the debtor,
8 Precedent, pages 5 and 6. 8 because so far you've been showing me offers made by
9 A (Reviews.) 9 a third party that have been unacceptable.
10 I've reviewed it. 10
Q
Well, we started out with the PSA that
11
Q
Do you recall receiving this document? 11 you signed, Mr. Beilinson, so I take it that was
12 A No. 12 acceptable?
13
Q
If it was transmitted to the company, 13 A That was acceptable.
14 it would have gone to you as the negotiator for the 14
Q
So we started there.
15 company, though, correct? 15 (Document titled Term Sheet
16 A Yes. 16 Alternative A, Illustrative Terms of Proposed
17
Q
Do you recall Capitalization Options A 17 Restructuring dated June 17, 2010 marked as
18 and B becoming part of the negotiations between you, 18 Exhibit 11, as of this date.)
19 Lehman and Apollo Investment Corporation? 19 BY MR. PARKINS:
20 A No. They were not part of my 20
Q
Mr. Beilinson, I hand you a document
21 negotiations with either Apollo or with Lehman. I 21 marked Exhibit 11. Before I ask you to read
22 found it wholly unacceptable and consistent with, I 22 some portion of it, do you recall who represented
23 believe, Exhibits 7, 8 and 9, not acceptable to the 23 Apollo Investment Corporation, what law firm?
24 debtor, and I didn't engage in discussions with 24 A I didn't hear the question.
25 regard to this as a meaningful alternative. 25
Q
What law firm do you recall
22 (Pages 82 to 85)
APP-00333
86 88
2 represented Apollo Investment Corporation? 2 purchase of new equity, does it not?
3 A I believe Paul Weiss. 3 A What this document seems to do is
4
Q
This document again is a Lehman 4 allow Apollo Investment Corp. to purchase equity
5 production. 5 that Lehman receives from a restructuring.
6 MR. DONOVAN: Sir, are you 6
Q
Did you on behalf of the company ever
7 representing all these went to the company, 7 go out to try to find a different buyer for the
8 or you don't know? 8 stock that Lehman wanted to sell?
9 MR. PARKINS: Don't know. 9 A No.
10 MR. DONOVAN: Okay. 10
Q
I thought it was important to you that
11 MR. PARKINS: It's a production, I 11 there be a buyer.
12 don't know where they went. 12 A There was, and I was -- I was pleased
13 MR. DONOVAN: No, I know, I didn't 13 that Apollo Investment Corp. was there and in
14 know if you just took out, okay. 14 discussions with Lehman.
15 BYMR. PARKINS: 15
Q
By the way, you're on another board of
16
Q
This document is marked 230, Bates 16 directors of an Apollo-related entity, aren't you?
17 numbers 230 through 241. I will note that it has a 17 A Yes.
18 header: PW Comments dated 6/22/10. 18
Q
What entity is that that you serve on
19 A Okay. 19 the board of directors on?
20
Q
I ask you to look at this document 20 A Apollo Real Estate Commercial REIT,
21 beginning on page 5, and 6, and review the areas 21 it's called ARIon the New York Stock Exchange. I'm
22 designated New Equity, AIC Purchase of New Equity 22 an independent member of the board and I'm an
23 and Conditions Precedent. 23 independent member of the audit committee of that
24 A (Complies.) 24 entity which is a public entity subject to SEC rules
25 I've reviewed it. Well, you asked me 25 and regulations.
87 89
2 to review Conditions Precedent? 2
Q
Do you know if any disclosure has been
3
Q
I'm sorry? 3 made that you are on a board of directors of an
4 A Did you ask me to review Conditions 4 affiliate of the ultimate parent of this debtor?
5 Precedent, too? 5 MR. DONOVAN: Objection to form.
6
Q
New Equity, AIC Purchase of New Equity 6 A No, don't know.
7 Purchased and Conditions Precedent, yes. 7
Q
Do you intend to make disclosure?
8 A Let me review that provision now. 8 A Of course. It's in the public record,
9 (Reviews.) 9 I mean, I'm an independent director of a public
10 I've reviewed it. 10 company that went public about nine months ago, so.
11
Q
Okay. Do you remember seeing this 11
Q
But you haven't made disclosure as of
12 document before today? 12 now?
13 A A document like this. 13 A I don't--
14
Q
This document -- 14 MR. DONOVAN: You mean other than the
15 A Not-- 15 SEC report, I mean, what are saying?
16
Q
I'm sorry, sir. This document-- 16 BYMR. PARKINS:
17 finish up.
17
Q
Have you made disclosure that you're
18 A I don't know if it was this particular 18 on the board of a public company to the Bankruptcy
19 document. 19 Court affiliated with the parent company of this
20
Q
But again, if the company received a 20 debtor?
21 document with respect to the negotiations for 21 MR. DONOVAN: Objection to form.
22 restructuring, you would have gotten it? 22 A I don't know.
23 A If they had received one, yes, I would 23
Q
The Conditions Precedent set out in
24 have received it. 24 this document reflect again that AIC will execute a
25
Q
This document provides for AIC 25 PSA along with Lehman and the company, correct?
23 (Pages 86 to 89)
APP-00334
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
90
Marc A. Beilinson
A You mean a document that was
unacceptable to me given to, potentially given to
the debtor, that is a provision.
Q Was the transaction unacceptable to
you as proposed?
A illnn --
Q Reflected in this exhibit.
A I haven't read the entire exhibit, so.
Q So how do you know it was unacceptable
if you don't read it, sir? Read it, take your time.
A It wasn't important to me and I had no
interest in being part of a PSA with a third party.
My interest was to have a PSA with a substantial
creditor of Innkeepers, Hospitality and USA And to
the extent that they had a prerequisite of selling
part of their post-confirmation equity to a third
party, it was important to me that they were talking
to a third party that had knowledge, interest, and
capability for fulfilling the transaction because
that was a condition precedent to effectiveness of
the PSA which I believe in my business judgment is
in the best interest of an internal restructuring of
this case.
Q Did you advise Apollo or its lawyers
91
Marc A. Beilinson
to stop putting in Apollo Investment Corporation as
a signatory to a PSA?
A I didn't advise Apollo or their
lawyers of anything other than I had no interest in
negotiating a transaction with them.
Q With Apollo Investment Corporation?
A That's correct. I understood that
they were involved in negotiations with Lehman. It
was important to me that they had an interest since
they are a viable interested party in helping Lehman
fulfill its obligations under the PSA, and to that
extent I was pleased that AIC wanted to be involved,
I was pleased that they were involved, and I was
pleased that they reached a contractual relationship
with Lehman.
Q Looking earlier in this document on
page 4 with respect to DIP financing.
A Yes.
Q Romanette i looks to me like AIC was
considering doing the DIP financing for the fixed
rate facility; is that correct?
A Yes. I asked Apollo Investment Corp.
if they would have an interest in funding the
necessary DIP financings that were necessary --
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A Beilinson
necessitated by the Marriott termination notices. I
also was pleased that Midland brought a DIP
financing source to the debtors' attention. As I
told Midland and I've told everyone in connection
with this bankruptcy case, my goal was to get the
best possible tips on the best possible terms and,
in fact, have done so. I might note that Apollo
92
isn't doing either of the DIPs, Apollo Investment
Corp. or Apollo aren't doing either of the DIPS, but
I was pleased that they were supportive in at least
providing a DIP proposal.
Q Tell me how you communicated to AIC
that Innkeepers wasn't interested in doing a PSA
with AIC.
A Verbal.
Q And who did you tell?
A People who were at AIC.
Q Who did you tell?
A Well, I don't really make things a
secret, I mean people generally know how I feel and
what I intend to do.
Q Rather than osmotic transference, did
you tell someone verbally that that was
unacceptable?
Marc A. Beilinson
A Sure.
Q Who?
A I don't recall.
Q Okay. Who were you negotiating with
from AIC at the time?
A At various points in time various
93
people who are on my board and also representatives
of AIC I would talk to.
Q Including the president of the
company?
A Excuse me?
Q The president of AIC? CEO of AIC?
A Who is the president?
Q The CEO of AIC.
A If that's Jim Zelter, yes.
Q Okay.
A I did talk to Jim Zelter on occasion.
Q And that was the person you had that
communication with a couple of days before the
filing we went through in an earlier exhibit,
correct?
A Jim Zelter is the person I wrote a
letter to a couple days before the filing.
Q You're referring to the e-mail, right?
24 (Pages 90 to 93)
APP-00335
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
A E-mail, yes.
Q Was there a letter?
A No.
Q Okay.
(Document titled Term Sheet
Alternative A, Illustrative Terms of Proposed
Restructuring dated June 29, 2010 marked as
94
THE WITNESS: Could we take a break?
MR. DONOVAN: Do you want to do it now
or after this?
MR. PARKINS: What?
MR. DONOVAN: Do you want to do it
now?
MR. PARKINS: We can do it now.
(Whereupon, resumed.)
BYMR. PARKINS:
Q Before you, sir, is an exhibit which
I've marked as Exhibit 12. It's a Term Sheet
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Alternative A. Again, a Lehman production starting 2 2
at Bates number 254 to 264. It says Dechert Draft 23
6/29/10 in the right-hand corner. 2 4
I ask you again to look at pages 5 and 2 5
Marc A. Beilinson
6. New Equity, Distribution of New Equity and
Conditions Precedent. Take a look at that.
A (Reviews.)
I've read those two provisions.
Q This document doesn't appear to have a
95
provision for AIC to sign a PSA, do you see that, in
the Conditions Precedent?
A I do see it in this document.
Q It does have a condition precedent
1
2
3
4
5
6
7
8
9
10
agreement reached with Apollo Investment Corp. in 11
form and substance satisfactory to Lehman. Do you 12
know what agreement that would be? 13
MR. DONOVAN: Maybe on the next page. 14
BYMR. PARKINS: 15
Q It's on page 6, I'm sorry, third 16
bullet point under Conditions Precedent. 17
MR. DONOVAN: Thank you. 18
A I assume it was the type of 19
transaction they ended up consummating where Lehman 2 0
was entering into some transaction with Apollo to
sell some of the interest that we'll receive in this
restructuring.
Q Did you respond to this term sheet? I
mean you received it on behalf of the company, do
21
22
23
24
25
Marc A. Beilinson
you recall --better question, strike that.
Do you recall receiving this document?
A I received, recall receiving a
document like this.
Q Okay. Did you respond to this
document?
A Yes, I believe I responded to the
document.
Q What was the response?
A I haven't reviewed this whole
document, so I can't tell you. I -- was your
question with regard to paragraphs --
Q Take a second to review it.
A -- Distribution of Equity or the whole
agreement?
Q Let's talk about the Equity provision.
96
Did you respond with respect to the equity portion
of this document?
A I believe I did have a response.
Q What was the response?
A That we were getting closer.
Q But not accepted, correct?
A That's correct.
Q Okay. We went through a lot of term
Marc A. Beilinson
97
sheets through the month, evidenced through the
month of June that were prepared by Lehman's counsel
that you said were summarily rejected, unacceptable.
A That sort of provisions were
unacceptable, yes.
Q Okay. Do you know why Lehman kept
making proposals repeatedly that you told them were
unacceptable?
A No.
Q Did you talk to them about the fact
that you continue to make proposals to me that are
facially unacceptable, stop doing it?
A Well, I try not to control things I
can't control like other parties, but, you know, I
would go through their proposals and I would orally
tell them what provisions were reasonable,
acceptable, or not acceptable. And if they keep
trying, I will keep having the same conversation, at
some point in time they stop trying.
Q Now, do you know whether or not Apollo
found the provisions in this proposal acceptable?
A I don't know.
Q Okay. Did you have any discussions
with respect to anyone from Apollo regarding this
25 (Pages 94 to 97)
APP-00336
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
98
Marc A. Beilinson 1
proposal perfected in this Tenn Sheet Alternative A? 2
A I had many conversations with people 3
who are on my board who also are employees of Apollo 4
Investment Corp. with regard to the restructuring, 5
and the debtor, and its operations --
Q I'll ask a better question.
A -- frequently.
Q Better question.
Did you have discussions with anyone
from AIC regarding their acquisition of equity of
the debtor as part of a global restructuring in
response to this Term Sheet?
MR. ERHLICH: Objection to form.
A No, I had no discussion with them with
regard to acquisition ofthe equity of this debtor.
Q AIC clearly had different positions,
they were the equity owner of the debtor?
A Yes.
Q And they had been evidenced in these
various tenn sheets as potential acquirers of the
equity or a portion of the equity of the
restructured company, they were in both positions,
is that correct, during this entire timeframe?
A During this entire timeframe I had
Marc A. Beilinson
made it clear to Midland, Lehman, Apollo, AIC, and
any Apollo affiliate that happened to be within
earshot, that they were going to receive no
distribution from this bankrupted debtor on account
of any preexisting equity interest that they had,
that they were going to be wiped out with regard to
the Preferred A, they were going to be wiped out
with regard to their common equity. I was going to
do a deal with, as it tums out, Lehman, who would
be a hundred percent owner who had a condition to
have an equity partner on a proposed confirmation
basis, and was a positive feature that Apollo, who
had lost essentially $250 million in this
enterprise, still has sufficient interest and faith
99
to talk to Lehman about purchasing 50 percent, yeah,
that was a positive feature.
Q Purchasing 50 percent of a company
that has--
A Fifty percent of the equity that they
receive in a restructuring.
Q Of the equity that they receive in a
restructure.
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Now, is it your recollection in the 2 4
context of these negotiations that Apollo Investment 2 5
100
Marc A. Beilinson
Corporation wanted protections under Section 1145
and 1146 of the Bankruptcy Code with respect to
transfer taxes and safe harbor with respect to
securities laws?
A I don't recall that. I believe that
Lehman wanted protections with regard to those, I
don't recall whether that discussion involved Apollo
Investment Corp. or not.
Q So you weren't, you didn't have any
discussions involving Apollo's --Apollo Investment
Corp's desire to have the benefit of those
protections in the context of a restructuring?
A I do not believe I had any
conversations involving 1145 or 1146 with regard to
with Apollo.
Q All right. Have you had a chance to
look at the pleadings filed in the Lehman case where
Lehman sought approval of its transaction with AIC?
A Which pleadings?
Q Pleadings where Lehman sought approval
of the transaction to enter into the PSA.
A Yeah, I took a look at it.
Q Okay. And to enter and to sell
50 percent of its equity to be received in this
101
Marc A. Beilinson
restructure to Apollo, do you recall that document?
A I recall seeing a pleading and
reviewing a pleading in which they filed it before
Judge Peck, yes.
Q All right.
A Can I clarify an answer, because I
realized that I was talking about 1146 in the
Bankruptcy Code and not talking to Apollo with
regard to that provision.
I don't really know what 1146 does, so
I might have overstated that. So could you let me
review 1146 so I'll what the substance is so --
Q If you don't recall it, you don't
recall it.
A Okay. I just want to amend my answer
to the extent that, you know, I don't really know
what the substance of 1146 is.
Q Sure.
(Document titled Tenn Sheet
Alternative A, lllustrative Terms of Proposed
Restructuring dated June 22, 2010 marked as
BY MR. PARKINS:
Q I've handed you what's been marked as
26 (Pages 98 to 101)
APP-00337
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
Exhibit 13. It's a document again produced by
Lehman, Bates stamp number 141 to 152.
A Uh-hum.
Q It's identified as a Dechert Draft
dated 6/23/10 approximately-- well, six days
earlier than Exhibit 12.
A Okay.
Q Looking again at the pages 5 and 6 on
102
the New Equity, AIC Purchase of New Equity, and
1
2
3
4
5
6
7
8
9
10
Conditions Precedent to Lehman's obligations under 11
PSA, take a look at those, please.
A (Complies.)
I've reviewed those.
Q Okay. This document with a date of
June 22, 2010, Dechert Draft 6/23/10, still has AIC
as a condition precedent executing a plan support
agreement as one of the parties, correct?
A Yes, in this document from Dechert to
somebody that is a condition precedent.
Q Okay. Do you recall receiving this
document?
A I received many documents that were
similar to this.
Q Was this document acceptable, the
Marc A. Beilinson
103
proposal embodied in this document acceptable with
respect to the equity ownership?
A No.
Q Okay. I take it then you communicated
the answer no to Lehman in response to this
document?
A Well, this was getting closer in
concept and I probably communicated that this was
getting closer in concept.
(E-mail Exchange dated July 7, 2010
marked as Exhibit 14, as ofthis date.)
A (Reviews.)
Q I've handed you what's been marked as
Exhibit 14.
A Okay.
Q The top of the first page appears to
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
be an e-mail from Mr. Joseph Glatt at Apollo Capital 18
sent Wednesday, July 7 to you.
A That's what it appears.
Q Do you recall receiving this e-mail
with the attachments?
A (Reviews.)
MR. DONOVAN: While you review that,
1 et me just state for the record these are
19
20
21
22
23
24
25
Marc A. Beilinson
not consecutively numbered Bates pages, so
they may be the attachments, but they at
least appear to be an aggregation of
different pages and documents.
A (Continues review.)
Q I'd like you to look at this document,
104
we'll start with page 1. Have you looked at page 1?
A Okay, I'm looking at it.
Q Page 1, it has apparently two e-mail
chains, one from Joseph Glatt to you dated July 7,
and one from Mr. Alan Kornberg at Paul Weiss to a
group of recipients, including recipients at Dechert
and recipients at Kirkland, and to Mr. Glatt at
Apollo Capital.
A Okay.
Q Is Apollo Capital, first of all, the
same as Apollo Investment Corporation?
A I have no idea.
Q Do you know Mr. Glatt?
A I do know Mr. Glatt.
Q Is he an employee of AIC or some other
Apollo entity?
A I have no clue.
Q Okay. Do you recall receiving this
Marc A. Beilinson
e-mail from Mr. Glatt?
A I recall receiving e-mails from
Mr. Glatt, sure, if this says I received it, I
received it.
Q With respect to the second e-mail
105
referenced here, the one from Mr. Kornberg, there's
a little message attached to it, it says: All, As
discussed last week, we are attaching two term
sheets: One relating to the proposed agreements
between Lehman and Innkeepers and the other relating
to those between Lehman and AI C. We think this
approach more accurately reflects the transactions
under discussion.
And it goes on: I hope that we can
continue the very constructive discussions the
parties have had to date.
Please note that the attached are
subject to further comments and revisions by AI C.
Best regards, Alan.
I want you to take a look at these
term sheets that are attached to this document and
tell me whether or not you agree with Mr. Kornberg's
statement that they reflect-- that they more
accurately reflect the transactions under discussion
27 (Pages 102 to 105)
APP-00338
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
at that time?
106
1
2
A Well, this refers to a discussion that 3
Alan Kornberg was having with Mr. Sage, Greer, Buck, 4
Basta, Sa thy, and Glatt, I wasn't necessarily part 5
of those discussions. 6
Q Well--
A So it maybe reflects something amongst
them which isn't necessarily the CRO of--
Q Mr. Glatt sent this transmission to
you so--
A No, he sent, he sent a transmission so
I would know what was transpiring between them.
Q My question is, sir: Do these term
sheets, as Mr. Kornberg suggests, more accurately
reflect the transactions under discussion at that
time on July 7th?
MR. DONOVAN: I'm going to object.
This document appears to be somewhat
irregular in that it seems to be an
aggregation of documents, they aren't in
consistent Bates order, so I don't think it's
entirely clear or fair to ask him ifthese
are the e-mail's attachments that were
attached since we go from 127 to II 0 and then
Marc A. Beilinson
a few pages tO 148.
107
MR. PARKINS: That's how we got them.
MR. DONOVAN: You got them in 127 and
they then went to 11 0?
MR. PARKINS: This is how we got them,
right.
MR. DONOVAN: Okay. Well, I still
object.
MR. PARKINS: All right.
BYMR. PARKINS:
Q Well, let's take the first one to deal
with the objection.
Paul Weiss, a document Draft 7/6/10,
Term Sheet, Lehman/AIC, take a look at that.
A I'm going to have to read it all
because--
Q Please do.
A (Reads.)
Q It's only four pages.
A I've read the four pages.
Q Going with me to page 2 of this
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
document, Conditions to Execution of Stock Purchase 2 3
Agreement.
A I see the provision.
24
25
108
Marc A. Beilinson
Q The first bullet point reads:
Approval of the Bankruptcy Court of a plan support
agreement executed by Lehman, AIC and the Company as
contemplated by the Lehman-Innkeepers' Term Sheet, I
read it correctly, didn't I?
A You read it correctly.
Q All right. Is that your understanding
of the current negotiations at this time on July
7th?
A I don't know what my thoughts were on
July 7th.
Q Okay. Do you have any dispute that
this reflects the current status of negotiations at
that time?
A I don't have a view with regard to the
current status on July 7th.
Q But it is clear, at least from this
document, which is a Paul Weiss document, okay, that
AIC was still intending to be a party to the PSA as
recited right here in this document?
A That's the way I would view this
document.
Q Okay. Then if I go on to the next
term sheet which is, starts on page number 148,
Marc A. Beilinson
Paul Weiss document dated 7/6/10 beginning at 148.
Going to pages 5 and 6, looking at the
109
topics New Equity, AIC Purchase of New Equity, and
Conditions Precedent, would you take a look at
those, please?
A (Complies.)
I've reviewed it.
Q Looking at the Conditions Precedent,
the section on page 6 of this document, it reads:
The transaction become binding on Lehman when
Lehman, Apollo Investment Corp. (" AIC") and the
Company execute a plan support agreement ("the PSA")
that incorporates the Transaction as set forth
herein, including, and it goes on to have various
bullet points, correct?
A Yes, that's what it says.
Q Now did you accept this proposal?
A No. The only proposal I accepted was
the final one that was a PSA filed with the
Bankruptcy Court.
Q What response did you make to the
proposals embodied in both of these term sheets?
A Well, I was focused in on a number of
things around this timeframe. I was focused in on
28 (Pages 106 to 109)
APP-00339
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
110
Marc A Beilinson
coming to an agreement for which was an overall
agreement with Innkeepers -- I mean with Lehman,
which embodied a ton of elements. It involved
conditions, events of termination, events of
default, remedies, conversion of debt to equity,
what rights would be there, what conditions
subsequent there were. At this same time period, I
was focused in on getting a DIP with regard to Five
Mile, negotiating with Marriott, negotiating with
other franchisors, preparing for a bankruptcy case,
and running an operation the size oflnnkeepers.
Q So what were your response to these
two term sheets?
A My response was I was giving people
overall comments with regard to each and every
element of these term sheets in an effort to move
the process along, but obviously there were elements
of each of these proposals which were not acceptable
as a cohesive unit which would result in a PSA that
I would finally execute in my business judgment.
So, you know, I wasn't looking at specific
provisions, I wasn't looking at how the overall
transaction would be structured, all the conditions
to it, whether they would be met and whether this
Marc A Beilinson
111
was a viable business transaction in the business
judgment of debtor to move forward with, at this
phase it wasn't.
Q As of this date did this accurately
reflect the transactions under discussion as
reflected by Mr. Kornberg or was it not accurate?
A With regard to these provisions?
Q With regard to the transactions
evidenced by the two term sheets sent to you by
AIC's lawyer.
A I don't know--
MR. DONOVAN: Objection. Objection to
form.
A --what was sent to me by AIC's lawyer
and I wasn't focused in on any term sheet that AIC
sent to me.
Let me just be absolutely clear that
it was, had I received a term sheet from AIC, okay,
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
I was not focused in on it, it wasn't a type of 2 0
thing I would have responded to meaningfully because 21
my transaction was with Innkeepers. Those are the 22
term sheets that I reviewed, analyzed and responded 2 3
to to get to a final resolution. What Apollo's 2 4
views with regard, or Apollo Investment Corp's views 2 5
Marc A Beilinson
with regard to some of these provisions were
inconsequential to me.
Q But it was important that Apollo or
someone else buy the stock from Lehman?
A Yes, because that was ultimately a
condition precedent to Lehman's requirement of
moving forward with the PSA
Q Now at this time, July 7, or so,
that's about 12 days before the filing of the
bankruptcy case, isn't it? Am I accurate?
A That's about right.
112
Q Okay. And these negotiations with AIC
were still ongoing with respect to the PSA as
evidenced by these communications; is that correct?
A Well, the negotiations really have to
have two parties, and what I'm telling you, Lenny,
is that I wasn't interested in responding to a term
sheet, assuming it was sent by AIC to the debtor.
My interest was negotiating the PSA and term sheet
between Innkeepers and Lehman. The fact that
Paul Weiss may have sent a term sheet indicating its
interest in the various provisions including events
of default and conditions precedent subsequent
really was not the focus of mine and was likely not
Marc A Beilin son
responded to by me.
Q Well, let's go to the second term
sheet.
A Sure.
Q Starting with Bates number 148, that's
113
a Term Sheet Alternative, it says Lehman/Innkeepers,
did you look at that term sheet and respond to that
one since that's the one you say you were focused
on?
A Would you like me to review it?
Q Absolutely.
A Okay. (Reviews.)
I scanned it.
Q My question is: Did you respond to
this term sheet with respect to the
Innkeepers/Lehman deal?
MR. DONOVAN: Objection to form.
A I don't believe I responded directly
to this term sheet.
Q How about indirectly?
A I think I had some oral conversations
with Lehman as to what would be moving forward.
Q And who did you talk with at this
date?
29 (Pages 110 to 113)
APP-00340
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
114 116
Marc A. Beilinson 1 Marc A. Beilinson
A I talked to a number of people. 2 A Well, if it's the meeting I'm thinking
Q This is getting close to a filing 3 of, it was at Lehman Brothers.
date, so do you recall who you talked to in the last 4 Q Do you recall seeing this document
12 days before the filing trying to reach agreement 5 before?
on aPSA? 6 A I do recall this document.
A I talked to Suzanne Frey and Michael 7 Q All right. Is this the document that
Lascher and a bunch oflawyers in the room from 8 was referred to earlier in various footnotes as the
Dechert. 9 Moelis Presentation?
Q Did your-- 10 MR. DONOVAN: Objection. Foundation.
A Talked to a lot of people. 11 BY MR. PARKINS:
Q Did your lawyers at Kirkland engage in 12 Q Do you know?
negotiations outside of your presence with respect 13 A I don't know.
to substantive terms of the PSA or was that for you 14 Q Okay. Did you ask Moelis to make up,
to do only? 15 to prepare this document as part of the presentation
A I was probably the primary person 16 you made to Lehman on this day?
negotiating the terms of the PSA, but I'm sure that 17 A I think that I was with Moelis and it
my counsel under my direction had, you know, 18 was a joint effort between the debtor and Moe! is in
substantive conversations with regard to various 19 preparing different aspects of this presentation.
0 0
20 Q And who from the debtor? prOVlSlOnS.
Q Okay. 21 A That would be me.
(Document titled Project Tavern - 22 Q You. Okay.
Lehman Discussion Materials dated April22, 23 A And other officers and directors, but
2010 marked as Exhibit 15, as of this date.) 24 primarily me.
25 Q As we go through this document, page
115 117
Marc A. Beilin son 1 Marc A. Beilinson
BYMR. PARKINS: 2 5, for example, that page is entitled Consolidated
Q I've handed you what's been marked as 3 Financial Overview. I take it that is for all of
Exhibit 15. It was produced last night by 4 the hotels for the years 2007, '8, '9, '10 and
Innkeepers, Kirkland & Ellis. We got it last night. 5 projected for '11?
I'd ask you to take a look at it 6 A Well, it would be projected for '10.
because I want to ask you some questions about it. 7 Q The remaining part of'10, and '11?
A Sure. 8 A I think that's accurate.
Q Okay. 9 Q Okay. And the next page 6 is Fixed
A (Complies.) 10 Pool Financial Overview for the same period of time.
Yes, I reviewed this. 11 And these projections for 2010 and 2011 were the
Q Do you recall whether there was a 12 company's projections or Moelis' projections?
meeting between Innkeepers and Lehman on or about 13 A The company's projections.
April 22nd this year? 14 Q Moelis made no changes or
A That wouldn't surprise me. 15 modifications of the projections of the companies
Q Other than being surprised, do you 16 with respect to 2010 and '11 for either page 5 or 6?
recall attending such a meeting? 17 A I think they tested. We had day-long
A I'm not good at timeframes but -- 18 meetings where we talked about projections and what
let's see. Four months ago sounds about right that 19 we thought. We had a discourse. We had views which
I had a meeting with Lehman -- 20 were mutually the same, and we had disagreements,
Q Do you recall where that meeting was? 21 but, you know, essentially they're management's
A -- where we discussed this type of 22 estimates.
transaction. 23 Q Page 7, Floating Rate -- Floating Pool
Q Didn't mean to interrupt you. 24 Financial Overview for the same periods of time.
Do you recall where that meeting was? 25 Just going with me through 8. Other Pools Financial
30 (Pages 114 to 117)
APP-00341
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
118
Marc A. Beilinson 1
Overview for the same periods of time. So we have 2
Fixed Pool which is Midland, Floating Pool which is 3
Lehman, correct, and then we have Other Pools which 4
are various special servicers; is that correct? 5
A That's correct. 6
Q Before this meeting on or about April
22, had you had any discussions with anyone from
Lehman about a global restructuring?
A Not that I recall.
Q Okay. Did you go to the Board of
Trustees for authority to prepare this presentation
and give it to Lehman?
A I don't think so.
Q Okay. Did you talk to anyone from AIC
regarding the preparation and presentation of this
document to Lehman?
A I talk to my board members all the
time.
Q Specifically with respect to this
document?
A I think I may have.
Q Did you seek board approval to make
this presentation?
A I don't believe I did.
Marc A. Beilinson
Q
Go with me to page 12 of this
119
document, Illustrative Valuation Ranges for Lehman
Hotels, Fixed Pool Hotels, and Other Hotels.
Illustrative Value. What does an illustrative value
mean to you?
A Well, it's a kind of a first
indication as to the range of potential values for
certain assets that are being discussed.
Q
And how did these values come about as
written here were reflected to the Lehman Hotels,
for example, let's start with that?
A That was kind of the value that was
placed there after, you know, my financial advisors
and Moelis and management and I, you know, looked
at, you know, all ofthe elements of each of the
hotels within each ofthe pools. You know, we, you
know, did an asset-by-asset analysis with regard to
the quality ofthe assets, the competitive features,
what was going on with our clients in those
environments, and what we thought would happen in
the future.
We looked at the type of asset as to
whether it was a Marriott Hotel or a different type
of hotel to determine whether the GEN 1 quality
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
versus GEN 5, GEN 6 or the Hyatt properties were
going to do better or worse in this environment.
We looked at capital intensive natures
120
of certain assets versus others and how much CAPEX
would be put in.
We really looked at, you know,
comparable companies and what their multiples looked
like and how they are similar to ours and different
to ours.
And we looked at discounted cash flow,
you know, analysis and projections to come to a
feeling as to what range of values we believed each
of the tranches, you know, had at this part in time.
And, of course, that was back in April, and that's
obviously a continuing process and I continue to ask
Moelis to consider all of the assumptions. I
consider all of the assumptions to decide whether
the range should be moving up or if the range should
be moving down with what's going on in the
macroeconomic environment, a world that we live in.
So we looked at everything in coming to a range of
values.
Q That sounds like there was a --
A Not everything, but a lot.
121
Marc A. Beilinson
Q Since there was a number of underlying
work product done that gave rise to these
illustrative value assumptions; is that correct?
A You know, I don't know, it was more
working sessions where we talked about all sorts of
elements and I'm sure, you know, we came up with
calculations.
MR. PARKINS: Counsel, ifthere are
underlying documents which support these, I
don't know if they've been produced, but
we'll look, but if they haven't been
produced, I'd like them.
MR. DO NOV AN: Send me a letter, I'm
not sure, they may very well be responsive.
MR. PARKINS: I don't know, I didn't
look through everything last night.
MR. DO NOV AN: Neither did I.
MR. PARKINS: All right.
BYMR. PARKINS:
Q Going with me to page 13, I see that
page is entitled Illustrative Pro Forma Structure.
And this page seems to describe a transaction very
similar to what is reflected in the PSA, correct?
A Yes, it does.
31 (Pages 118 to 121)
APP-00342
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilin son
Q And this was presented to Lehman
122
1
2
without any anticipation of making, pre-advising 3
Lehman that you're going to make a proposal for 4
Lehman to be the equity owner of the company is what 5
you're telling me? 6
A That's what I'm telling you. 7
MR. DONOVAN: Objection. Misstates 8
the testimony. 9
BYMR. PARKINS: 10
Q Now, what was Lehman's response at 11
this meeting to this Illustrative Pro Forma 12
Structure?
A They needed more information.
Q Looking at the Parent Equity box it
13
14
15
says Lehman/Investor. Who did you contemplate to be 16
the investor?
A Whoever Lehman chose.
17
18
Q Did you think Lehman would have to 1 9
choose someone? How would you know that as part of 2 0
a cold prof offer to them? 21
MR. DONOVAN: I'll object to the form. 22
Foundation.
Go ahead, you can answer.
A As I testified earlier, when I look at
123
23
24
25
Marc A. Beilinson 1
each of the constituents in the beginning of a 2
restructuring process, I try to gain an insight 3
through my past experience as to what type of 4
consideration people would like to have versus not 5
like to have. What will motivate them to accept 6
equity versus debt, you know, what type of 7
enterprise they have, and I made an assumption early 8
on way back in April after taking everything into 9
consideration in a very hostile economic 10
environment, that Lehman in converting all of its 11
debt to equity may very well want the right to take 12
some of that equity risk off the table post 13
confirmation and realize on that value of the 14
equity. So I made that assumption way back in 15
April, I think it was, and it's proven to be a 16
fairly accurate assumption, because, as you know, 17
when people take a hundred percent equity, you can 18
do quite well or you can do quite poorly as Apollo 19
did in losing $250 million. 2 0
Q When-- 21
A So I suggested to them that they could
take half their equity off the table after they--
after the transaction is consummated and that, you
know, I believe even in that meeting they said,
22
23
24
25
Marc A. Beilinson
asked if Apollo may have an interest, and my
response was I didn't know but they've been
supportive and may have an interest.
Q You say Apollo had been supportive,
124
didn't they have an obligation to fund some PIP work
that they failed to do?
MR. ERHLICH: Objection to form.
MR. DONOVAN: Objection. It calls for
a legal conclusion and speculation by this
witness.
A Apollo has always been supportive of
Innkeepers.
Q Have you ever asked Apollo to fund PIP
work--
A Yes.
Q -- in the last four or five months
before the filing of the bankruptcy case?
A Yeah, I answered your first question,
now is there a second question?
Q Is the answer yes to that question?
A I answered yes to have I ever asked
Apollo to fund PIP work.
Q Within four to five months prior to
Marc A. Beilinson
the filing of the bankruptcy case?
A The answer is no in that five-month
period.
Q Okay.
A Actually, that's unfair. I did have a
125
conversation with Apollo as to whether they might
contribute money into the bankruptcy estate for
purposes of fulfilling certain potential guarantee
obligations they had to a third party in exchange
for a release. That of course I couldn't grant but
the third party could grant, and did move forward.
As you probably know, back in 2008,
early 2009, I did seek to monetize a third-party
guarantee against Apollo for the benefit of the
bankruptcy estate and, in fact, they contributed
money into the bankruptcy estate for purposes of
funding PIP with regard to the Lehman pool in
exchange for a release by Lehman of that guarantee,
as I recall.
Q I believe in March of 2010 Marriott
sent notices of default and franchise termination
with respect to a number of hotels; is that correct?
A That's correct.
Q As of that time, after that time, did
32 (Pages 122 to 125)
APP-00343
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
126
Marc A. Beilinson
you approach Apollo for funding the PIP work which
was the subject of the Marriott notices?
A I talked to my board and I talked to
Apollo Investment Corp. with regard to how I was
going to consider Innkeepers' handling a problem
that the capital structure which existed was
unsustainable. There wasn't sufficient cash flow to
pay its lenders and fulfill the Marriott PIP
obligations that, quite frankly, I had paid lenders
for probably a year when those funds could have been
better utilized or potentially better utilized in
fulfilling the PIP obligations, and that I believe
the time that we needed to find a way to restructure
this company to make it sustainable with a capital
structure that was viable, fair and appropriate to
the parties and could be dealt with in a way that
Marriott wouldn't pull the flags which I thought was
a--
MR. PARKINS: Move to strike that as
nonresponsive.
BYMR. PARKINS:
Q
My question was --
A -- value disruptive event in regard
to--
127
Marc A. Beilinson
Q
My question was --
MR. DONOVAN: Could you let him
finish?
A -- with regard to your properties.
Q
My question was: Did you ask Apollo
Investment Corporation to fund the PIP work
necessary after Marriott gave the notice, yes or no?
MR. DONOVAN: Objection. Asked and
answered. And you can answer however you
feel you need to answer fully and fairly.
A I talked to members of my board with
regard to always to potentially handle this
situation.
Q
And did Apollo Investment Corporation
fund the PIP work after the Marriott notices of
default came in?
A Not that I'm aware of.
Q
You would be aware of it, though,
wouldn't you?
A I think SO.
Q
Okay. At the time you made this
presentation to Lehman, and I'm asking you to look
here on page 14.
A (Complies.)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
128
Marc A. Beilinson
Q Was it your position that you were
representing all the Innkeepers' entities including
those from the Midland pool?
A I was a fiduciary on behalf of the
integrated Innkeepers structure.
Q Did you go to Midland and suggest to
them that you were going to make a proposal to
somebody to eliminate $250 to $425 million of their
debt before you did that?
A No, because I didn't believe that it
had any negative impact on Midland. In fact, I
thought that making this proposal was substantially
in Midland's favor. It equitized another party of
the capital structure. It took 20 assets that were
securitized and it freed them up to give this
company flexibility to operate in a positive way
with its franchisors and other partners. It created
$20 million ofEBITDA that could be utilized to
support whatever was negotiated with Midland with
regard to the fair value of its collateral which I
as a bankruptcy professional believe they're
entitled to in a plan of restructuring context. And
I thought this was actually, in my view, in the best
Marc A. Beilinson
interest of the bankruptcy, the future bankruptcy
estate and in the best interest of other
participants.
MR. PARKINS: Nonresponsive.
BY MR. PARKINS:
129
Q My question is: Did you ask Midland
whether it was okay to make a proposal where it
wiped out 250 to 425 million of their debt before
you made it?
answered. You can answer.
BY MR. PARKINS:
Q Your answer was nonresponsive so I'm
asking you again.
Did you talk to Midland whether it was
okay to make this proposal with respect to its debt?
to--
answered. You can answer again.
A I did not talk to Midland with regard
Q This proposal?
A -- this proposal.
Q How about with respect to the other
pools, did you talk to anybody else in the other
33 (Pages 126 to 129)
APP-00344
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
130 132
Marc A. Beilinson 1 Marc A Beilinson
pools with respect to whether it was okay to make 2 like them to consider. So on April 27 -- 22nd I put
this proposal as their fiduciary? 3 out to Lehman a discussion piece so we could talk
A I don't believe I have an obligation 4 through issues and discuss whether there was any
as a fiduciary to talk to other pools with regard to 5 kind of mutuality to move forward in a relationship.
this proposal in advance of making the proposal. 6 Q Did you tell anybody from Midland at
MR. DONOVAN: Is it a good time to 7 the meeting on or about April 28 that six days
take a lunch break, it's 12:15. 8 earlier you had expressed some vision to Lehman
MR. PARKINS: I've got one more 9 about how their indebtedness would be treated?
document I think would be good to go through 10 A No, because I didn't think it was
and then we can take a break. I think 11 anything other than a discussion piece and really my
they'll tie together. 12 goal was, this was the first time that I could meet
MR. DONOVAN: Okay. 13 with Midland because, as you know, there was a
(Document titled Project Tavern- 14 general service rep until a few days before this, so
Midland Discussion Materials dated April 28, 15 Wachovia was there. All of a sudden in the middle
2010 marked as Exhibit 16, as of this date.) 16 of the debtors' crisis with value destructive events
BYMR. PARKINS: 17 occurring around me with regard to Marriott and
Q I'd ask you to look at Exhibit 16, 18 potential deflaggings and default notices, a
it's a document dated April28, 2010, on Moelis 19 liquidity crisis in an environment with Rev PAR
we'll call it letterhead, Project Tavern, Midland 20 defining at a substantial rate, okay, I then have to
Discussion Materials; do you see it? 21 switch over and start talking to someone who has
A Yes. 22 never been involved with Innkeepers before, a
Q Did you authorize Moelis to prepare 23 special servicer who has never heard of Innkeepers
this document? 24 before. So when I make that switchover in a
A Yes. And, in fact, I think I was 25 three-day period of time, it's important for me to
131 133
involved in the preparation of this document 2 educate the special servicer as to what the
together with management. 3 circumstances are with regard to their collateral,
Q Was there a meeting with Midland on or 4 what the circumstances are with regard to their
about April 28, 2010? 5 borrower, what the circumstances are with regard to
A I'm not good with dates, but I think 6 Innkeepers, and begin a dialogue as to how we're
that was probably the time period. 7 going to handle this crisis together.
Q And that was, it looks like, about six 8
Q
And you don't--
days after the meeting that likely occurred with 9 A Because that's the way I view it.
respect to Exhibit 15. 10
Q
And you don't think that at the time
A That's probably about right. 11 you met Midland that it was appropriate to advise it
Q Okay. Now, as I go through this 12 six days earlier you had put together a suggestion
document, I don't see any sheets in here which 13 of a restructure which eliminated the 250 and 425
reflect the proposal you made to Lehman of how 14 million dollars of their debt?
you're going to deal with Midland's debt, am I 15 A No, because what I did with Lehman--
missing something here? 16 well, first of all, I was subject to I believe a
A No. The purpose of this meeting was 17 confidentiality agreement. It was a meeting to
to try to assess what Midland's views were with 18 discuss resolution of our claims, and if you'd
regard to a restructuring of their debt. 19 notice, those values were all bracketed.
Q But there's no-- the treatment that 20
Q
You're a fiduciary for--
you had proposed to Lehman in an offer to Lehman six 21 A Those were all bracketed numbers.
days ago with respect to Midland's debt is not in 22
Q
At that time you were the fiduciary
here? 23 for the Lehman debtors and the Midland debtors at
A It wasn't an offer to Lehman, it was a 24 the same time?
discussion piece which laid out a structure that I'd 25 A I was a fiduciary for an integrated
34 (Pages 130 to 133)
APP-00345
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
134
Marc A. Beilinson
enterprise which had a number of lenders, one of
which being Midland, one of them, you know, being a
number of different lenders. So it's an integrated
enterprise that I'm the fiduciary for for the
benefit of everyone. And my goal has always been to
ensure that Midland gets a note for the value of
their collateral, which is exactly what the
Bankruptcy Code tells a fiduciary in a bankruptcy
estate is the lender's right. So I want to protect
the lender's right to do it, and one of the ways I
was doing it was by creating the equitization of the
Lehman portfolio. So yes, I believe I was acting in
my fiduciary best interest on behalf of all
constituents of this estate.
Q So as a fiduciary for Midland, which
is the largest creditor of these estates; is that
correct?
A I am not a fiduciary for Midland.
Q Are you a fiduciary for--
A I'm a fiduciary --
MR. DONOVAN: Let him finish.
A -- for an integrated enterprise which
is Innkeepers USA, one lender of is Midland.
Q Are you a fiduciary for the creditors
Marc A. Beilinson
of this estate?
A I'm a fiduciary for the entire corpus
including the creditors.
Q My question is: Are you including the
creditors?
A Yeah.
Q So Midland is the largest creditor?
A Yes, they are.
Q Okay. And as fiduciary for Midland,
135
the largest creditor, when you met with them six
days after your Lehman meeting in that capacity as
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
fiduciary, it was okay for you not to disclose you 13
were thinking of reducing their debt between 250 and 14
425 million dollars?
A Absolutely. At that meeting, we
actually discussed the reduction oftheir debt. In
that meeting they asked Bill Derrough ofMoelis &
Company what he believed the value oftheir claim
would be, and I believe his response was somewhere
in the high 4's, maybe you could get to a low 5
number. Middle 4's I believe his was, and maybe the
low 5's. And the business participants on Midland
actually said at that meeting that they knew they
were substantially under water, they looked at other
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilin son
transactions, and that everyone knew that a 2007
transaction in this marketplace was somewhere in the
range of 35 to 50 percent under water. So this
isn't a shocking revelation, this was a revelation
that was accepted by Midland and discussed --
Q And this is when --
MR. DONOVAN: Let him finish, please.
BYMR. PARKINS:
Q Are you done?
A It was discussed with Midland at our
first meeting.
Q Did you discuss when meeting the
136
honest fact that you met with Lehman six days
earlier and made this overture to Lehman, yes or no?
A I told them that I had met with Lehman
and we were discussing alternatives with them just
as I wanted to do with Midland.
Q Did you tell them you made this
restructuring proposal to Lehman, yes or no?
A No, I did not because this was a
thought process.
Q After you made this Lehman proposal,
or restructuring proposal to Lehman, did you go shop
this proposal with any other creditors of the debtor
Marc A. Beilinson
to do a better deal?
A Well, the only other creditor in a
position that had a substantial amount of assets
137
that could be converted was Midland. And, as I said
earlier, I didn't believe that Midland had an
interest in converting their debt to equity, which
actually has proven to be accurate in the fact that
Kevin Simone told me even last week that they never
had an interest, nor could they take equity. So
there was only one party I could shop it within the
internal structure to and that party had no
interest.
Q Did you approach any creditor
constituency asking them to look at this Lehman
suggested proposal you made and come up with a
structure to address the issues you had and to
compete with the Lehman proposal?
A I talked to creditors about all sorts
of things.
Q Did you take these pages of the Lehman
presentation and show them to creditors and say:
This is the end result I want, can we do better than
that, can you come up with something better than
that?
35 (Pages 134 to 137)
APP-00346
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
138 140
A No, not at that time. 2 that this is going to end up being a non-consensual
Q Have you shown this proposal to anyone 3 resolution with Midland. I think this is part of
else other than the fact that it was filed with the 4 the process, including my deposition being taken by
court prior to the filing of this stuff with the 5 you, and that we'll enter into negotiated
court? 6 resolutions at some point in time, whether it's
A No. 7 today or two months from now.
Q Did you since the bankruptcy filing, 8 Q So at the present time you reject the
okay, talk to third parties, not creditors, about 9 concept of shopping this company to get a different
doing a better transaction or an alternative 10 alternative transaction?
transaction of this Lehman proposal? 11 A I don't think that's a requirement
A Yes. 12 under the Bankruptcy Code or even during my
Q And have you offered them due 13 exclusive period of time and I don't think that's in
diligence access in order to make a proposal? 14 the best interest of this bankruptcy estate.
A No, because none of the proposals were 15 Q So the answer is yes, you reject that
in my business judgment better or viable or 16 proposition?
accretive as a fiduciary to this bankruptcy estate. 17 MR. DONOVAN: Asked and answered. His
Q You have experience as a bankruptcy 18 answer stands.
lawyer, how do I make proposal to acquire a company 19 BY MR. PARKINS:
unless I get due diligence first? 20 Q That's how you view your fiduciary
A You know, my obligation as a fiduciary 21 duty, to just go with this deal and no other
is to do an internal restructuring. The Bankruptcy 22 alternative deal at this time?
Code, as you know, was set up so that I have an 23 MR. DONOVAN: Object. Objection to
exclusive period of time to negotiate within the 24 form.
capital structure to propose a plan that could be 25 THE WITNESS: How about a lunch break?
139 141
accepted or rejected by creditors and they have to 2 MR. PARKINS: Yeah.
meet the confirmation requirements set forth in 3 THE WITNESS: Thank you.
1129(a) or (b) of the Bankruptcy Code. 4 MR. DONOVAN: We're going to take
I believe that we have an internal 5 lunch now. We're taking a lunch break.
restructuring that meets all the requirements of 6 Off the record.
1129, is confirmable and in the best interest of 7 (Whereupon, off the record.)
this bankruptcy estate in the exercise of my 8 (Whereupon, lunch recess 12:29 p.m.)
fiduciary duty. And I tend to move forward unless a 9
transaction presents itself that I believe as a 0
fiduciary is better. I haven't -- 1
Q Better for you or better for Lehman, 2
sir? 3
A Better for the bankruptcy estate. 4
Q Is that what your document says? 5
A Yes. 6
Q Again, have you created a due 7
diligence room for third-party non-creditor entities 8
to go do due diligence in order to make a proposal? 9
A No. I'm in my exclusive period where ?0
I intend to fulfill my obligations under the PSA to ?1
file an internal plan of reorganization for the ?2
enterprise and will allow Midland and others to ?3
object to confirmation and to vote to accept or ?4
reject the plan. I, unlike others, don't believe ?5
36 (Pages 138 to 141)
APP-00347
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
142
Marc A Beilinson
AFTERNOON SESSION
(Whereupon, resumed 1:17 p.m.)
(Amended Declaration of Dennis Craven,
Chief Financial OtTicer of Innkeepers USA
1
2
3
4
5
Trust, in Support of First-Day Pleadings 6
marked as Exhibit 17, as of this date.) 7
BYMR. PARKINS: 8
Q Mr. Beilinson, I've handed you a 9
document marked as Exhibit 17. It's entitled 1 0
the Amended Declaration of Dennis Craven, Chief 11
Financial Officer of Innkeepers USA Trust, in
Support of First-Day Pleadings. I will tell you it
doesn't have the 12 inches of exhibits attached to
it, it is just the Declaration itself. It had all
the -- a lot of exhibits to it, about 12 inches
worth, but I'm not interested in the exhibits.
Have you looked at this Declaration?
A Not recently, but before it was filed.
Q Okay. I'd like you to look with me at
Paragraph 14.
A (Complies.)
Q I asked you to look at Paragraph 14
because I want to ask you about it, please.
A (Complies.)
Marc A Beilinson
I've reviewed it.
Q Okay. The first sentence of Paragraph
143
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
14 says: The Debtors' proposed restructuring is 4
supported by its significant stakeholders, including 5
Marriott and Lehman, and constitutes an integrated, 6
global resolution among the Debtors and these 7
parties. 8
A Yes. 9
Q Now I have read in recent days an 10
issue that has arisen with respect to Marriott with 11
respect to a franchise hotel in Troy, Michigan; is 12
that correct? 13
A That's correct.
Q Okay. And, as I understand it, the
termination of a franchise by Marriott would be a
14
15
16
triggering of a termination event over these various 17
agreements before the court? 18
A That's not correct. 19
Q The termination of a franchise would 2 0
not be a triggering event, a termination event? 21
A With regard to all of these exhibits, 2 2
no, that's not correct. 2 3
Q I guess I'd ask you to look at 2 4
Exhibit 3. 2 5
144
Marc A. Beilinson
MR. DONOVAN: Do you want the motion
or the actual agreement?
MR. PARKINS: The actual agreement.
MR. DONOVAN: That's 4.
MR. PARKINS: Sorry.
BYMR. PARKINS:
Q And I'd ask you to look at the Term
Sheet.
A Which Term Sheet?
Q Well, the Term Sheet for the PSA, the
Plan Term Sheet.
A Okay.
Q Illustrative Terms of Proposed
Restructuring July 17,2010.
A Okay.
Q It's early on in the document. First
you have the PSA and then you have the Term Sheet
attached to it.
I'd ask you to look at page 8 of the
Term Sheet. It looks like this. You'll see the
Term Sheet. You're too deep in the document.
A Okay.
Q Under Termination Events Under PSA and
Use of Cash Collateral, in E there seems to say:
145
Marc A. Beilinson
The entry of a Bankruptcy Court order granting
relief from the automatic stay, Romanette double ii,
to permit termination of any franchise agreement
with Marriott or any other hotel brand.
MR. DONOVAN: I object. I don't think
you're reading the whole thing correctly.
A Okay. So provision Eon page 8 says:
The entry order of any order of the Bankruptcy Court
granting relief from automatic stay ( ii) to permit
termination of any franchise agreement, yeah, that
is an accurate reading.
Q Uhm?
A That's accurate.
Q Okay.
MR. DONOVAN: And you only focused
on-- I'm sorry.
BY MR. PARKINS:
Q Now, in response to the motion for
relief from stay I see that the company has filed a
motion to assume that agreement.
A I believe that's correct.
Q Okay. Has there been dialogue with
respect to this issue between you and Marriott,
because obviously this is a triggering event and a
37 (Pages 142 to 145)
APP-00348
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
146 148
Marc A. Beilinson
1 Marc A. Beilinson
termination event ofthis agreement to try to
2 Date in Paragraph 11, the proviso?
resolve or is it going to go to litigation?
3 A Uh-hum.
A I always try to resolve all issues.
4 Q That it says that this agreement shall
Q
Have you had a dialogue with anybody
5 not be binding on Lehman unless and until a number
from Marriott?
6 of events occur, one of them is that it be approved
A Of course.
7 by the Lehman Bankruptcy Court?
Q
And what's the status of that
8 A That is correct.
dialogue?
9 Q Is that your understanding that it's
A We've agreed to disagree with regard
10 not binding on Lehman today?
to Marriott at this point in time and continue
11 MR. DONOVAN: Objection to form.
trying to come up with a resolution which is
12 A That's probably accurate.
accretive to the bankruptcy estate and Marriott.
13 Q Okay. With respect to these
Q
All right.
14 companies, the debtors, you're seeking court
MR. DO NOV AN: Mr. Parkins, just so
15 approval of this transaction also, correct?
it's clear, were you suggesting that the
16 A That's correct.
Troy, Michigan hotel was in the floating rate
17 Q Okay. Do you believe it's binding on
pool?
18 you today until court approval is obtained?
MR. PARKINS: I'm sorry? This is a
19 A It's an interesting issue. In other
floating rate pool.
20 words, my view is it's an executory contract that I
MR. DO NOV AN: That's what I was 21 entered into and therefore until there's an
confused by. This was my confusion and I
22 assumption of rejection, it is binding upon me.
think the record might just be -- I think you
23 It's an interesting issue as to whether I view it
were asking about the floating rate pool and
24 the same way with regard to the binding nature upon
I don't think he says floating rate pool.
25 Lehman since this was made subject to their
147 149
MR. PARKINS: What I'm asking is: 2 Bankruptcy Court approval and their bankruptcy had
Does he know whether this is a termination 3 already been commenced, so it's an interesting
event. 4 lSSUe.
MR. DONOVAN: Ifyouknow. 5 Q So you believe it's binding on the
A It's a termination event that could 6 debtors now?
actually be waived if Lehman so chooses. 7 A Yes, I do.
Q It's also a termination event, as I 8 Q It is binding on the debtors if you
recall, under the Five Mile DIP that any franchise 9 choose to make it binding on the debtors, correct?
is terminated, isn't it? 10 A Well, I could seek to reject an
A I don't believe that's accurate that a 11 executory contract and thereby make it an unsecured
termination of a franchise in the floating rate pool 12 claim that would give them damages. But, as I know,
would not be a termination event with regards to the 13 I'm seeking to assume it in the bankruptcy case.
Five Mile pool or with a Five Mile -- in connection 14 Q Look with me at Section 4.
with a Five Mile DIP. 15 A Sure.
Q Okay. In Exhibit 4, which is the Plan 16 Q You need to keep your finger on
Support Agreement, I would like to look at, I think 17 Section 11 to go back to the definition of Effective
it is Paragraph No. 11, Section 11, please. 18 Date because Section 4 speaks to the effective date.
A (Complies.) Okay. 19 A Section 4?
Q Okay. Do you want to read it or are 20 Q Section 4, Support of the Transaction;
you familiar with it? 21 Additional Covenants.
A Sure. (Reads.) 22 A Okay.
I've reviewed it. 23 Q Take a look at it, please.
Q Okay. As I understand it, looking at 24 A (Complies.)
the language right after the definition of Effective 25 Do you want me to review 4( a) or 4(b)
38 (Pages 146 to 149)
APP-00349
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
150 152
and (c) also? 2 transaction that would work under the Bankruptcy
Q 4(a). 3 Code under 1129, you spoke about 1129 earlier.
A Okay, I've reviewed it. 4 A Yeah, I don't think that would fall
Q Okay. You already just testified that 5 within my business judgment as what's in the benefit
you believe this agreement is effective and that the 6 of this bankruptcy estate.
debtor is bound by this agreement at this time, 7 Q Okay. But it's workable?
correct? 8 A That was only part of the test, after
A I said it's an interesting issue. I 9 I believed that the alternative transaction was one
think it's an executory contract that until 10 that was in the best interest of the bankruptcy
assumption and rejection gives me an option to go 11 estate. I also then have to make a determination
either way, I think that's probably more accurate. 12 that the contingencies and viability of such a
Q Are you treating this as an effective 13 proposal create a potential likelihood that it could
agreement now where the debtor is performing under? 14 be successful, so it's a multi-test, multipart test.
A I'm treating it as an effective 15 Q Well, if 1.2 of the $1.4 billion of
agreement. 16 the creditors of these estates wanted that to happen
Q So you agree you're bound by the 17 in the context of an alternative plan of
provisions of Section 4(a) double i and triple i 18 reorganization, it can happen then, can it?
then? 19 A It can happen during the exclusive
MR. DONOVAN: Objection to form. 20 period ifi don't believe it's in the best interest
A I guess I'm bound by it so long as I 21 of this business enterprise.
don't exercise a fiduciary out. 22 Q And the best interest of the business
Q And a fiduciary out -- 23 enterprise ends up being in the best interest of the
A And, by the way, I want to make it 24 person who owns that enterprise; isn't that true?
clear, I'm not sure if it's legal, I mean, I've got 25 A No.
151 153
Marc A Beilinson 1 Marc A Beilinson
lawyers around me that will tell me whether it's a 2 MR. DONOVAN: Objection to form.
legal or a practical obligation, but I personally 3 BY MR. PARKINS:
feel bound whether that's an oral bound or a legal 4 Q Okay. It's not the best interest of
bound. 5 the business enterprise doesn't inure to the equity
Q Okay. The fiduciary out that's 6 owners of that enterprise then?
contained in Section 25. 7 A No.
A I'm there. 8 Q Okay.
Q Could you look at Section 25(a), (b) 9 A I have made it very, very clear on
and (c) because I want to ask you about them? 10 April 28th when I met with Midland the first time
A I'll take a look at them. 11 that Apollo was going to be receiving in any of its
Q Take a look at them, please. 12 forms no consideration on account of any of its
A (Complies.) 13 pre-petition rights in connection with Innkeepers.
I've reviewed it. 14 Q I'm talking about Lehman. Lehman will
Q What is in your mind a firm 15 inure to the upside as a result of this-- as a
alternative transaction? 16 result of the enterprise being restructured that you
A A transaction that in my business 17 suggest, isn't it the case?
judgment is a proposal that has a reasonably good 18 A What's the question, I'm confused?
degree of likelihood that it's workable in every 19 Q The benefit, the upside in the
respect. 20 business enterprise under the transaction you
Q In what? I'm sorry, I didn't hear 21 propose inures to Lehman if the companies are
you. 22 successful, correct?
A That's workable in every respect. 23 A The economic results of the ownership
Q So a proposal where all unsecured 24 of a hundred percent of the stock will inure to the
creditors get back their property is an alternative 25 benefit or the detriment of the holder of that
39 (Pages 150 to 153)
APP-00350
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
154
Marc A. Beilin son 1
equity. It is certainly not just an upside 2
potential as evidenced by Apollo losing 3
$250 million. 4
Q And is it true, is it not, that in the 5
presentations you have made, whether to Lehman or to 6
Midland, that the company projects that it will take 7
three or four years for these hotels to turn around 8
and start performing in a more normalized fashion;
is that correct?
A I don't know what you mean by a more
normalized fashion after three or four years, if you
could be more specific, I'm happy to give a direct
response.
Q Well, do you think these hotels
performance will turn around significantly in the
next three or four years?
A I believe that there is upside
potential and I do believe that there will be an
increase in Rev PAR, R-e-v-P-A-R, over time.
Q Look at Exhibit 16, if you would.
A Okay.
Q Look with me on page 12.
A Okay.
Marc A. Beilinson
Q Okay. The first paragraph: In this
155
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
presentation we are running a scenario where 3
projections have been developed on a hotel-by-hotel 4
basis for the portfolio. Management estimates 5
financial performance will not return to 2007 levels 6
for at least four to six years. Describe what the 7
2007 levels performance were. 8
A They were -- they were certainly 9
actually better than they are today and I think that 10
this statement probably reflects my view, right, 11
which is, in five or six years they'll get back to 12
historic highs which was essentially in 2007. 13
Q So do you believe that the performance 14
of the hotels will gradually increase over the next 15
yean? 16
A I hope so. 17
Q Okay. That's your estimate of 18
financial performance, do you think it will just be 19
a one-time shot or it will increase gradually? 2 0
A I think it will be extremely gradual. 2 1
Q Okay. 22
A There will be potentially some going
backwards before it goes forward again.
Q Are you aware that the Lehman-Apollo
23
24
25
156
Marc A. Beilinson
transaction contemplates an IPO three years after
the effective date of the plan?
A No.
Q You haven't read that transaction
documents?
A I have not read the Apollo-Lehman
transaction document in full.
Q All right. In your judgment, how much
higher and better does an alternative transaction
have to be for Lehman before you will exercise your
rights under Section 25( c)?
A You're just referring to 25(c)?
Q Yes.
A Just higher better in my business
judgment, no quantitative amount.
Q What if it's better for all the other
creditors and not as good for Lehman, what will you
do?
A If it's better for the bankruptcy
estate, I'll exercise my fiduciary out.
Q And you think this document let's you
do that?
A Yes, I do.
157
Marc A. Beilinson
Q Okay. Can you point me to the
provision that says you can do that, if it's worse
for Lehman, if it's worse for Lehman you think you
can exercise your fiduciary out?
A Yes.
MR. DONOVAN: Asked and answered.
BY MR. PARKINS:
Q Okay. If that's what you think this
document says, we'll proceed.
So if a transaction were better for
Midland than proposed under this transaction, and
worse for Lehman, you're going to look at this as an
enterprise or you're going to look at it by creditor
for whom you are fiduciary?
A I'm a fiduciary for the corporate
which is an integrated enterprise and will look at
what's in the best interest of the estate.
Q The estate, there are 70 estates.
A I understand that.
Q Okay? So for the estates of the
Midland debtors, are you going to look out for the
interest of the Midland debtors' estates or the
Apollo or the other Lehman debtors' estates, which
ones?
40 (Pages 154 to 157)
APP-00351
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
A All of them.
Q And if there's a conflict, how do you
resolve that?
A Use my best business judgment.
Q You resolve conflicts by business
judgment?
A Yeah. And if there's--
the form. I think --
MR. PARKINS: I'm sorry?
the form. I think it depends what you're
referring to as a conflict there.
BYMR. PARKINS:
Q Well, conflict, it's better for
158
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Midland and worse for Lehman, for those debtors, the 17
Midland debtors and the Lehman tranche or Lehman 18
pool, how does that get worked out in your mind?
A If I'm faced with those issues, I'll
deal with them at the time that a particular issue
is faced, and I'll deal with it accordingly.
19
20
21
22
Q If a motion to determine exclusivity 2 3
were filed by someone who had a better proposal for 2 4
every pool of debt but Lehman, would you agree to 2 5
Marc A. Beilinson
that--
MR. DONOVAN: Objection--
Q -- termination of exclusivity?
Form.
A I'm not going to prejudge what a
proposal looks like. Ifi happen to get one, I'll
look at it, and make a business judgment at the
time.
Q Does the proposal have to be the firm
alternative transaction you described earlier?
A No. I think I've made it clear that
Section 25 sub (a) is a fiduciary out that I can
exercise in my business judgment.
Q And, therefore, since you are not
159
saying you won't engage in the dialogue, will you
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
engage in a dialogue after people do due diligence? 18
A No. Right now I believe that this 19
integrated PSA that has Marriott on board, two DIP !2 0
lenders on board, to do an internal restructuring of 121
this enterprise is clearly in the best interest of 12 2
the bankruptcy estate. I intend to move forward and 12 3
file a plan in the next 30 days that all creditor 12 4
constituencies can then look at, consent to, object 12 5
Marc A. Beilinson
to, negotiate with me and have their rights under
1129. So at this point in time I see no reason to
move forward with anything other than an internal
restructuring of this enterprise.
160
Q You say two DIP lenders in support of
the transaction, you include Five Mile in that; is
that correct?
A Well, they support doing the DIP for
purposes of protecting the value of the fixed pool
portfolios and two others.
Q In fact, in the context of the
negotiations with Five Mile for the DIP, you didn't
tell them until right before the filing that there
was a Lehman transaction in place, did you?
A No, I told them before the
transaction, before --
Q Just before?
A Before they executed the transaction.
Q Just before?
A What's your point?
Q My question is you told them just
before, not during the four months or the month
before the DIP was being negotiated, you didn't tell
them there was a Lehman transaction in play.
161
Marc A. Beilinson
A That was a few days before the
transaction.
Q Okay. You're not saying that Five
Mile is in support of this transaction?
A No, I think Five Mile is in support of
the DIP which eliminates a value disruptive event
with regard to the fixed rate pool and, you know,
they understand that's helping preserve their value
as a controlling class of that entity. I think
that's what they're supportive of.
Q So, as I understand your testimony,
with respect to the Five Mile DIP, they're putting
it in to fund the PIPs for the fixed rate pool
primarily--
A Primarily.
Q --right?
that--
A
Q
Primarily. And to preserve value of
Yes.
--right?
Value which you say over time will
increase, correct?
You said the hotel performance will
increase over time, right?
41 (Pages 158 to 161)
APP-00352
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
162
Marc A. Beilinson
A I hope so.
Q And that increase in value is not
going to go to the creditors of the fixed rate pool
under your plan, it's going to Lehman, isn't it?
A No. I think we have to look at this
at the time of plan confirmation, and I have an
obligation to provide you with a value of your
secured claim, at that time. So you will be getting
a hundred percent of the value of your collateral,
which is what the Bankruptcy Code tells me how I'm
supposed to treat you, and I'm giving it to you in
the best form of consideration possible, which is a
fully secured note in a company that has free cash
to support that note. That's much better than most
fiduciary or CRO's would do, they'd be looking at
giving you lesser quality types of consideration.
Q Doesn't the Bankruptcy Code as you
understand it, since you're talking about it with
me, also provide that for the deficiency claim a
secured creditor gets other consideration like the
equity upside if it chooses to get that in the
ownership of those assets?
A No.
Q That equity upside should go to
163
Marc A. Beilinson
someone else in this transaction that you're
proposing here?
A I think when that party is averting to
it 200 million plus of debt to equity, they deserve,
with the additional risk that they're taking,
potentially an upside, but potentially a downside,
and it always surprises me in this uncertain economy
that people still only look at upside possibilities
versus downside risk.
MR. PARKINS: Give me a second.
Pass the witness.
MR. DONOVAN: Who's next?
MR. MEYERS: I'm going to ask
questions but let's take five minutes before
we start.
MR. DONOVAN: All right.
(Whereupon, resumed.)
EXAMINATION BY
MR. MEYERS:
Q Mr. Beilinson, my name is Todd Meyers
with Kilpatrick Stockton and I represent Trimont
Real Estate Advisors. Trimont is one of the secured
lenders in this case.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
164
Marc A. Beilinson
Let me remind you, you're still under
oath. The same rules that applied when you were
being questioned by Mr. Parkins would apply here,
okay?
A Sure.
Q Now, you are here today testifying on
behalf of all of the debtors; is that correct?
A Sure.
Q Okay. I believe your Exhibit 1, your
Notice of Deposition, said that you would be here as
the 30(b)(6) witness for the debtors, which would be
all of the debtors, do you understand that?
A I don't really understand what a
30(b )(6) deposition is but I think I'm here on
behalf of the integrated estate.
Q Okay. I know you testified to be the
CRO for the debtors; is that correct?
A That's correct.
Q Are you the CRO for each and every
debtor in this case?
A I think I testified I'm not sure who
the officers or directors are of each and every
entity but I consider myself the CRO of all entries.
Q And you consider yourself acting in
Marc A. Beilinson
the best interests of all of the entries?
A Yes.
Q Would you pull Exhibit 2, which is the
color chart?
A I have it.
Q I'm primarily interested in the two
branches on this chart which have a yellow box,
okay?
A I see that.
Q I am, because Trimont is involved in
those two branches, if you will. I'm going to try
165
not to repeat the questions Mr. Parkins asked you, I
couldn't hear all the answers but--
A That's okay.
Q --hopefully I'll avoid duplication
because I'm primarily focused here.
If you start with the third branch
over from the left, which has the yellow box Grand
Prix Mezz Borrower Term LLC, do you see that?
A Yes.
Q Let's talk about that for a minute.
Do you understand that KP A HS Anaheim,
LLC is one of the debtors in this case, correct?
It's below that in the green box.
42 (Pages 162 to 165)
APP-00353
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
A Yes.
Q Okay. And that entity owns a Hilton
166
1
2
3
hotel in Anaheim, correct? 4
A I believe that's accurate. 5
Q Okay. And the mortgage debt on that 6
property is approximately 13.7 million, correct? 7
A That's correct. 8
Q And it says here that CW Capital is 9
the special servicer for that property level loan, 1 0
is that your understanding? 11
A Yes. 12
Q Now, above KP A HS Anaheim, LLC is a 13
yellow box with an entity Grand Prix Mezz Borrower 14
Term LLC, do you see that? 15
A Yes. 16
Q And Grand Priz Mezz Borrower Term LLC 17
owns a hundred percent of the membership interest of 18
KPA HS Anaheim, LLC, correct?
A Yes.
Q Okay. And it is correct, isn't it,
that Grand Prix Mezz Borrower Term LLC is the
borrower under a $21.3 million loan which is
referred to on this chart as the Anaheim Lehman
Mezzanine Loan, correct?
Marc A. Beilinson
A I think that's the right entity.
Q Okay. Now, it lists here CW Capital
as the special servicer. Isn't it true that Trimont
is actually the special servicer for that loan, or
do you not know?
A I think that's the case, but I would
have to take your representation.
Q Okay. For today's purposes I'll
167
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
represent that Trimont is the special servicer for 10
that particular loan. 11
A Thank you. 12
Q Now, with respect to the --I'll refer 13
to the $21.3 million loan as the Anaheim Mezz Loan. 14
A Okay. 15
Q I think that's generally what it's 16
referred to in the debtors' papers, okay? 17
A Okay. 18
Q Now, do you understand that the-- 19
that Lehman was the --was originally and remains 2 0
nominally the lender on the Anaheim Mezz Loan? 21
A I don't know ifi have an 22
understanding as to whether they're a lender or a 2 3
nominal lender or owns the lender or is a borrower 2 4
or whatever. 2 5
168
Marc A. Beilinson
Q Okay. Are you aware that a hundred
percent of the beneficial interests in that loan
have been sold into a CDO?
A No.
Q As you sit here today, do you know
whether Lehman has the consent rights with respect
to the treatment of that loan?
A No.
Q All right. Look at the-- immediately
to the left of that, there's another branch. You'll
see at the bottom it says Fee Owners/Ground Lessees
(20 LLCs). Now that is to represent 20 debtors each
of which owns a particular hotel, correct?
A I think that's accurate.
Q And generally that's referred to,
those are referred to as the floating rate debtors?
A That's correct.
Q Okay. And each of those debtors is
jointly obligated on a loan to Lehman in the
approximate amount originally of $238 million,
correct?
A That's not correct.
Q Okay. Can you explain why that's not
correct?
169
Marc A. Beilinson
A I think that the obligation is now
$238 million, I think originally it was 250.
Q So the 238 represents your
understanding of the current unpaid principal
balance of that loan?
A Yes.
Q Now, and the collateral for that loan
are each of the hotels within that that are owned by
each of those 20 entities, correct?
A There are 20 hotels which
collateralize the $238 million obligation.
Q Okay. And that is the loan we've been
talking about at length today that Lehman is going
to convert to equity under the plan that's
contemplated in the Plan Support Agreement, correct?
A That's correct.
Q Now, above this, the green box we just
discussed is Grand Prix Mezz Borrower Floating 2,
LLC, do you see that?
A Yes.
Q And is your understanding that Grand
Prix Mezz Borrower Floating 2, LLC owns 100 percent
of the membership interests in each of the 20
property owning LLCs in the floating rate pool?
43 (Pages 166 to 169)
APP-00354
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
170 172
A I believe that's accurate. 2 A That's correct.
Q And do you understand that Grand Prix 3 Q But with respect to the Floating Rate
Mezz Borrower Floating 2, LLC is the borrower under 4 Mezzanine Loan you do have an understanding, based
a 121 million dollar loan that's referred to here as 5 at least on what Lehman has told you, which is that
the Floating Rate Lehman Mezzanine Loan? 6 they do not have consent rights?
A Yes, I believe that Innkeepers has 7 A That's also correct.
borrowed $121 million which it's collateralized by 8 Q Okay. When did Lehman tell you that
an equity and trust in those 20 hotels. 9 they don't have consent rights with respect to the
Q So you've taken me one step further 10 Floating Rate Mezzanine Loan?
which is the collateral for that loan. But just 11 A Sometime between April 22nd and July
before we get there. You said Innkeepers. 12 19.
Technically speaking, Grand Prix Mezz Borrower 13 Q You can't be any more specific than
Floating 2, LLC is the borrower under that $121 14 that?
million loan, correct? 15 A No.
A According to this chart, but, and I 16 Q We'll look at a couple documents in a
assume that's accurate. 17 minute and try to see if we can narrow it down.
Q And, as you just alluded to, the 18 A Okay.
collateral for that loan is a pledge by Grand Prix 19 Q You said between April 22nd and the
Mezz Borrower Floating 2, LLC of the membership 20 filing date?
interest in the 20 property owning debtors, correct? 21 A Yes.
A I believe that's accurate. 22 Q Actually, let's do it real quickly
Q Okay. Now it lists here 23 now. Look at Exhibit 15, if you will.
Administrative Agent - Trimont. Do you understand 24 A (Complies.) Okay.
that Trimont is the special servicer for that 25 Q All right. Now this is the Moelis
171 173
mezzanine loan, the $121 million loan? 2 presentation materials from April22nd that were
A That's my understanding. 3 discussed earlier today, do you recall that?
Q And since -- well, let me ask you 4 A Yes.
this: Are you aware of whether Lehman is the lender 5 Q Do you know whether there's any
under that $121 million loan either nominally or 6 mention in here of whether Lehman controls or has
actually? 7 the consent rights with respect to the Floating Rate
A No. 8 Mezzanine Loan?
Q Are you aware whether that loan has 9 A I don't believe there's anything in
been sold, the beneficial interest in that loan had 10 this docrunent that highlights whether they do or
been sold into a CDO? 11 don't have consent rights.
A I believe it was sold and now Lehman 12 Q Okay. You don't know whether
retains various interests or its affiliates retain 13 there's --I'm sorry, could you repeat your answer?
various interests but don't really know what the 14 MR. MEYERS: Or can you repeat his
actual reality is. 15 answer?
Q Okay. Do you know one way or another 16 A I'm happy to.
whether Lehman has consent rights with respect to 17 I don't think there's anything in the
the treatment of that $121 million Floating Rate 18 docrunent that reflects whether I knew or didn't know
Mezz Loan in this case? 19 if Lehman had consent rights, at this time I believe
A I don't believe, I think they told me 20 that I thought they did. At this time I believe
that they don't, but I don't have any independent 21 they did.
knowledge. 22 Q You believe that at this time they did
Q When I asked you that same question 23 have consent rights?
with respect to Anaheim, you didn't know one way or 24 A Yes.
another, correct? 25 Q Okay.
44 (Pages 170 to 173)
APP-00355
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
174
Marc A. Beilinson
MR. DONOVAN: I think you misstated
his answer, I think he said at this time he
thought they did.
MR. MEYERS: Right.
BY MR. MEYERS:
Q Is that accurate what counsel just
stated? At this time --
MR. DONOVAN: Why don't you re-ask the
question?
BY MR. MEYERS:
Q We don't want to trick you.
A At the time in April22nd I believe
that they had consent rights.
Q Okay. So when this model was prepared
for a meeting with Lehman to discuss this internal
restructuring, your understanding at that time was
that with respect to the floating rate mezz Lehman
controlled that, so it would sort of be part of the
global resolution with Lehman anyway?
A The answer is yes, but it wasn't
terribly material to me since I had a view with
regard to valuation that was well below the $238
million first, so I considered the mezz piece at all
times to be no different than the Apollo equity that
175
Marc A. Beilin son
AIC owned or the Series A or Series C Preferred
stock. I viewed people who were out of the money as
out of the money. And when I was talking to Lehman,
I always told them that the mezz was out of the
money. So it wasn't really material to me whether
they had consent rights or not.
Q When you said you always told Lehman
the mezz was out of the money, do you mean the
Floating Rate Mezz or the Anaheim Mezz or both?
A Well, the Floating Rate Mezz. I
actually think the Anaheim Mezz actually has some
value which is over and above the value of the first
lien with regard to that property.
Q Okay. How much?
A Don't know. I mean, I haven't done a
final analysis of it, but it's not immaterial.
Q It could be more than 10 million?
A I don't believe so.
Q Did you have that belief about the
Anaheim Mezz being in the money when this deal with
Lehman was negotiated?
A Yes.
Q Okay. But yet you understand that the
Term Sheet and the plan contemplated by the Term
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
176
Marc A. Beilinson
Sheet says that the mezzanine debt will receive
nothing with respect to Anaheim?
A Well-- I don't think that's what I
contemplated. I'm not sure if that's what the Term
Sheet says.
Q So when you say that's not sure what
you contemplated, does that mean you're not sure
that's what you understand-- strike that.
A That isn't my understanding of the
Term Sheet without looking at it right now.
Q Without looking at it right now, your
understanding as the CRO of the debtors is that
there will be some value provided with respect to
the mezzanine loan on Anaheim?
A Why don't I go ahead and look at the
Term Sheet instead of guessing?
Q Okay.
A Can anyone tell me --
MR. DO NOV AN: Exhibit 4.
THE WITNESS: Four?
A (Reviews.) It's a lot of paper.
Okay, I've refreshed my memory.
Q Okay. Based on refreshing your
recollection, do you believe that under the Term
177
Marc A. Beilinson
Sheet and the plan contemplated thereby that the
Anaheim mezzanine lender will receive anything under
the plan?
A Yes.
Q Okay. Can you explain to me where you
see that?
A I believe the mezzanine debt that is
defined in the treatment of claims and equity and
trusts under the plan was intended to mean the
mezzanine lender debt, which is dealt with under
Footnote I of the Term Sheet, which involves the
Grand Prix Mezz Borrower Floating 2, which has a
security interest in the equity of the 20 hotels.
It was not intended to include the Anaheim Mezz debt
which would be included under other secured debt
since I view it as partially secured by virtue of
the fact that the property has a security interest,
the property's value is in excess of 13.3 million.
Q Okay. And when you made that
statement you talked about what was intended, does
that mean that there's a mistake in here or am I
misreading this?
MR. DONOVAN: Let me make an
alternative, too. I don't think you
45 (Pages 174 to 177)
APP-00356
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
178
Marc A. Beilinson
necessarily mistake or misread, so objection
to form.
A I'm telling you that I believe this
document by virtue of Footnote 1 says exactly what I
intended it to say.
Q Okay. Look at page 2, look at where
you've got-- do you see the different boxes and
you've got one that's Mezzanine Debt? And it says:
The mezzanine debt defined term will be deemed
cancelled and the mezzanine lender will not retain
any property or interest on account of such debt
under the plan, do you see that?
A Hold on, give me one second. (Reads.)
Yeah, you know what, I think there
probably needs to be some clarification here, in my
VleW.
Q And why do you now come to that
conclusion?
A Well, since you think there's an
ambiguity, and I think there's no ambiguity, there
seems to be a need for clarification. So if there's
a need for clarification, let me go and do my job
and clarify it.
Q And we're all for that, we're all for
179
Marc A. Beilinson
hearing how or what it was intended by this document
and correcting it. I'm just simply looking at
Footnote 1 which defines mezzanine lender to be the
lender in connection with the mezzanine loan with
respect to the collateral security in the floating
rate debt or the mezzanine loan with respect to the
Anaheim property, and that's collectively defined as
the mezzanine debt. Then you go to this page 2,
mezzanine debt gets nothing, that's how we read the
document. If that was not intended, we're all for
having that corrected.
A I appreciate the fact you pointed it
out to me, and as I will always do, if that's not
what I intended, I'll try to discuss it with my
partner to the PSA and have it revised to reflect
what I believe is a fair intention.
Q Okay. And that goes to my next
question: Do you know what Lehman understands to be
the treatment of the Anaheim Mezz debt under this
document?
A Lehman has to speak for themselves,
but I would be surprised if it wasn't some within
the realm of what I believe.
Q Well, were there any -- were there
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
180
Marc A. Beilinson
ever any discussions in connection with the
negotiations that the Anaheim Mezz was, in fact, in
the money and needed to be dealt with under this
restructuring?
A I've always thought it was one ofthe
seven assets that would be dealt with with regard to
other secured claims. I think that was the
understanding ofthe parties. I'm sitting here in a
deposition and my partner to the PSA isn't here, but
I think that would be my belief as to our collective
understanding.
Q Okay. But you don't, sitting here
today, have any specific recollection of discussions
with Lehman in connection with the negotiations of
the Plan Support Agreement and Term Sheet that the
Anaheim Mezz was in the money and we had to deal
with that as another secured debt or something like
that?
A I had discussions with regard to every
topic, I'm sure I had discussions with regard to
that, too.
Q Okay. But it's possible that Lehman
has a different view which is the view that was what
we read this to say?
181
Marc A. Beilinson
MR. DONOVAN: Objection. Objection to
form. You're speculating or asking him to
speculate.
BY MR. MEYERS:
Q You don't know what Lehman understands
to be the treatment of Anaheim Mezz as you sit here
today?
A I answered the question the best I
could 14 times.
Q Okay. Now -- all right. Back to the
floating rate mezz. You testified that you believe
that to be out of the money, correct?
A Absolutely.
Q And under this deal there's no
mistake, it's your understanding is that the
floating rate mezz will receive nothing under the
plan, correct?
A That's correct.
Q The specific terminology, by the way,
on page 2 is that the mezzanine debt will be deemed
cancelled. Now, you were a bankruptcy lawyer in a
past life, right?
A Yes.
Q You understand the concept of
46 (Pages 178 to 181)
APP-00357
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
182
Marc A. Beilinson 1
cancellation of debt as a treatment in a plan? 2
A I don't know. 3
Q Does it mean anything more than just 4
no consideration will be given on a respective debt? 5
A I don't think so. 6
Q All right. Now, back to the floating 7
rate mezzanine debt. 8
In the Moelis model, that April 22nd 9
document that we just referred to, Exhibit 5, I 10
believe, you said you didn't believe there was any 11
mention in there of whether-- there was no mention 12
in this document you believe of whether Lehman 13
controlled the floating rate mezzanine debt, 14
correct? 15
MR. DONOVAN: Objection to form. 16
A Which mezzanine debt? 17
Q We were talking about the floating 18
rate mezz debt and we were exploring a few minutes 19
ago when you might have come to an understanding 2 0
that Lehman did not control or have consent rights
with respect to the mezzanine debt, and I believe
21
22
you testified it was sometime between April22nd and 2 3
the filing date; is that accurate?
A That's accurate.
Marc A. Beilin son
Q And then we looked at the April 22nd
document, Exhibit 15, and you did not see any
183
24
25
1
2
3
mention in this document that Lehman did not control 4
the floating rate mezzanine debt? 5
A And as I testified, it wasn't material
to me.
Q Now, look at Exhibit 6, which was the
May 25th draft of the Term Sheet with Lehman.
A Okay.
6
7
8
9
10
Q Do you know whether any mention was 11
made in this document that Lehman did not control or 12
have consent rights with respect to the floating 13
rate mezzanine debt?
A I don't know.
MR. DONOVAN: Do you want him to
review this or --
MR. MEYERS: Sure.
A (Reviews.)
I don't see anywhere in here that it
says either way.
Q Okay. Now look at Exhibit 7, and in
particular Footnote 1.
A I've read the footnote.
Q Okay. Now, it seems that now there's
14
15
16
17
18
19
20
21
22
23
24
25
184
Marc A. Beilinson
a specific mention in this document that it's not,
while it's being provided on behalf of Lehman ALI,
not in their capacity as the floating rate mezz
lender, correct?
A That's what it says.
Q Okay. Does that refresh your
recollection as to when you may have first become
aware that Lehman did not have control or consent
rights with respect to the floating rate mezzanine
loan?
A No.
Q Okay. Do you have any understanding
of what footnote meant, what Footnote 1 meant?
A Yeah, I understood the footnote when I
read it, but, as I've stated, it's not material to
how I viewed my interaction with Lehman in
connection with the PSA since I thought the mezz was
always substantially out of the money.
Q The floating rate mezz?
A The floating rate mezz.
Q Okay. Take a look at Exhibit 17, if
you would, which is the Craven Affidavit.
A (Complies.)
Q Okay. I apologize if Mr. Parkins
185
Marc A. Beilinson
asked you this, but, did you read this affidavit
before it was filed with the court?
A Yes.
Q Did you, at the time it was filed, did
you agree with all of the statements made in this
affidavit?
A Anything that was material, yes.
Q Were you aware of any inaccuracies in
this affidavit at the time it was filed?
A I'm sure if there were inaccuracies, I
would have pointed them out.
Q Okay. Now, take a look at Paragraph
31 and read that, if you would.
A (Complies.)
Yeah, I've read that paragraph.
Q Okay. At the time this affidavit was
filed, did you understand Paragraph 31 to be an
accurate statement of the matters being addressed?
A I don't understand Paragraph 31 as I
sit here today.
Q
A
Q
You don't understand it?
No.
Okay. Did you understand it when you
read it before it was filed?
47 (Pages 182 to 185)
APP-00358
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
186
Marc A. Beilinson
A I probably did, but I'd have to read
everything to put this paragraph into context. Just
reading this alone doesn't jog my memory.
Q Okay. Are you aware as you sit here
today of whether Paragraph 31 is accurate?
A I have no context to put it into to
that context.
Q Well, what it says-- I'm
paraphrasing, but if you disagree, you tell me.
But what it says is that the Anaheim
Mezz Loan is subordinate to not only the Anaheim,
the obligations under the Anaheim Mortgage Loan
Agreement but also the obligations under the
Floating Rate Mortgage Loan Agreement. Do you
understand that to be accurate?
MR. DONOVAN: Objection. Form. Go
ahead, you can answer.
A I don't know. I mean, I'd like to
look at the documents. Could you -- I'm sure you
have the documents. If you give them to me, I'll
review them now and I'll give you what my belief is
today.
Q Okay. Well, just to be clear. What
this says, okay, is that the Anaheim Mezz Loan is
187
Marc A. Beilinson
subordinate not only to the $13.7 million loan but
also the 237 million -- $238 million loan, do you
have a belief one way or another as to whether
that's true?
MR. DONOVAN: I object. I think he
said he can't answer unless he sees the
documents. So if you can't provide the
documents, I don't want him speculate.
MR. MEYERS: But he should have a
belief as the lead negotiator for the debtor
as to whether or not on behalf of the debtor
that has a loan out on an Anaheim Mezz
whether that loan was subordinate to 13
million in debt or 250 million.
MR. DONOVAN: I don't disagree with
you, but I think it's fair that he's
overseeing a big operation her and he asked
to see the documents.
MR. MEYERS: Okay.
MR. DONOVAN: Ifyoudon'twanthim to
look at the documents and just guess, then I
think it's worthless testimony.
THE WITNESS: I think I should just
make a clarifying statement, is that okay?
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
188
Marc A. Beilinson
MR. DONOVAN: Yeah, sure.
A Reading this paragraph and hearing
your comments with regard to this paragraph, I think
ifthis is accurate in what your assumption is, then
my comments that, earlier, that Anaheim Mezz lender
were in the money would be different. So let me
just be clear. I'm happy to sit down with you,
review the documents, get a better understanding on
a current basis so that I can decide after reviewing
of the documents as to whether my comment earlier
that a mezz was in the money laying a high mezz may
very well be out of the money ifthis is accurate
and your assumption is accurate.
Q Okay. And I'm not trying to trick
you, sir.
MR. MEYERS: Counsel, let me just
state that your law firm has confirmed to us
that that's inaccurate, okay? And I'm not
trying to trick you, I'm just trying to
figure out what was understood when the deal
was being negotiated, is this a drafting
error or was this an impression that the
debtors were under that was mistaken. So, we
can probably skip over reading the loan
Marc A Beilin son
documents, Kirkland & Ellis has contlrmed
that the Anaheim Mezzanine Loan is only
subordinate to the Anaheim property loan?
MR. DONOVAN: Well, that's kind of
irrelevant here for this witness. He asked
to see the documents. If you want his
belief, I mean, you can make whatever
statements you want But you're here, he's
under oath, he's asked to see the documents,
I don't think it's fair when he said he wants
to look at it to ask him questions.
BY MR. MEYERS:
Q It's fair to say that you don't recall
189
what the Anaheim Mezz is subordinate to? You don't
know off the top of your head what it's subordinate
to?
A I have now heard a number of things
come out of your mouth as to whether my counsel
believes that Paragraph 31 is inaccurate or not It
says there's a subordination agreement which says
you are or your client isn't subordinate to the mezz
piece on the 20 hotel properties, and all I'm going
to say to you in this deposition is, I'd like to
review the documents. If my belief is that the
48 (Pages 186 to 189)
APP-00359
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
190
Marc A. Beilin son
Anaheim mezz piece is not subordinate to the
Floating Rate Loan, then I think you're in the
money, and I'll treat you as such. If it turns out
that you are subordinate to that loan, too, I will
treat you like you're out of the money. So I'm just
looking for confirmation as to what these documents
say and then I'll act appropriately and accordingly.
Q Okay. If we -- and I'll move on.
If we assume that 31 is a mistake and
the Anaheim Mezz Loan is only subordinate to the
Anaheim Property Loan such that in your view the
Anaheim Mezz Loan's in the money, then is it fair to
say that the plan for the Anaheim property level
debtor is going to treat the property level lender
as fully secured?
A Is that the $13.3 million loan that
you're referring to?
Q I think it's 13.7, yes.
A Okay. Yes, that would be fully
secured.
Q Okay. The amount of the Lehman loan
under the floating rate, the Floating Rate Lehman
Loan, you understand that at confirmation the amount
of that loan will be roughly $238 million?
191
Marc A. Beilinson
A No.
Q You believe it will be higher?
A No.
Q Lower?
A Substantially.
Q Okay. Let me back it up.
Before reduction under the Bankruptcy
Code, I'm just talking about the unpaid balance of
the Lehman loan, is it $238 million or is it
something substantially more or less?
A I think it's probably around there.
Q And you believe the collateral that
secures that loan is worth substantially less than
$238 million?
A Yes.
Q Okay. The two mezzanine debtors--
I'll try to do this collectively, okay?
The Grand Prix Mezz Borrower Floating
2, LLC and Grand Prix Mezz Borrower Term, LLC --and
I'm asking the same question with respect to each--
do they have any other creditors besides Trimont the
special servicer for the secured debt?
A I believe they do.
Q What are those other creditors?
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
A Sitting here I couldn't tell you.
Q Are they secured creditors?
A Sitting here I can't tell you.
Q Do you have any idea of the dollar
amount of the claims of those creditors?
A Not as I sit here.
Q Do you know a single creditor that
either one might have?
A I'm just not going to speculate,
there's 90 entities, I didn't come prepared today to
talk about each creditor of each entity, so I'm just
not capable of speculating on that.
192
Q Okay. The two mezzanine borrowers are
parties to the Plan Support Agreement, correct?
Q Okay. Take a look at the Plan Support
Agreement, it's Exhibit 4.
A (Complies.)
Q Look at the signature pages. They're
not numbered. But the last signature page is Grand
Prix Holdings LLC on behalf of all the debtor
entities listed on Exhibit A. I'm sorry. On Annex
A, and then Annex A follows. Do you see the
mezzanine debtors on Annex A?
193
Marc A. Beilinson
A I'm sorry, I thought your question was
that the mezzanine lenders were signatories.
Q If I said that, I apologize.
A That was my understanding. Could you
read this back?
Q Well--let me restate the question
because if I said that, that was incorrect.
Do you understand the two mezzanine
borrowers that are debtors in this bankruptcy to be
parties to the Plan Support Agreement?
A Yes.
Q So they support the Plan Support
Agreement, correct?
A Yes.
Q Now since we're a little bit in flux
on Anaheim as to exactly what the treatment provided
for the mezz is, let's focus on the floating rate,
debtor floating rate mezz borrower for a minute.
That entity is a party to the Plan
Support Agreement and it supports the Plan Support
Agreement. Yet its primary assets are the
membership interests in the 20 property owning
floating rate debtors, correct?
A I don't know.
49 (Pages 190 to 193)
APP-00360
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
194
Marc A. Beilinson
Q The principal assets of Grand Prix
Mezz Borrower Floating 2, LLC are its membership
interests in the 20 floating rate debtors, correct?
A I don't know.
Q Do you know that that is among the
assets of Grand Prix Mezz Borrower Floating 2, LLC?
A I believe it is.
Q But you don't know whether there are
any other assets of Grand Prix Mezz Borrower 2, LLC?
A That's correct.
Q Are you aware of any assets in
particular or you just have no idea?
A Not as I sit here today, I didn't know
it was a topic for this deposition.
MR. DONOVAN: It wasn't, so.
MR. MEYERS: But I think it's
reasonable to expect that the CRO of the
debtors would know the principal assets of
the debtor.
MR. DONOVAN: When you think of every
entity, I don't think that's a fair
interpretation.
MR. MEYERS: I'm just asking about
Grand Prix Mezz Borrower Floating 2, LLC?
195
Marc A. Beilinson
MR. DONOVAN: Ifyou want to send us a
letter, we can get you board members, we're
happy to give you information, but this isn't
a memory test. So if you guys have
questions, we'll answer it, but let's do it
in an efficient way.
BYMR. MEYERS:
Q Why is the Plan Support Agreement and
the plan that's contemplated thereby in the best
interests of Grand Prix Mezz Borrower Floating 2,
LLC?
A My obligation is to do an integrated
restructuring of the entire enterprise. If a party
doesn't have any value on account of its
pre-petition situation, and they're not getting any
value, it means that they're being treated as the
absolute priority rule would require them to be
treated under the Bankruptcy Code. So, so long as I
am treating people in accordance with the Bankruptcy
Code, and giving them rights to which they are
entitled, and no greater rights, then I think it is
fine for the debtors to be as a fiduciary
signatories to this PSA.
Q So we can agree, and we've already
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
196
Marc A. Beilinson
agreed, that the-- that membership interests in the
20 property level debtors in the floating rate pool
are being extinguished under the plan, correct?
A That's correct.
Q And those are among the assets of
Grand Prix Mezz Borrower 2, LLC, correct?
A That's correct.
Q So Grand Prix Mezz Borrower Floating
2, LLC is getting nothing under this plan, correct?
A That's correct.
Q Okay. But your view as CRO of that
entity is that that's acceptable treatment under the
Bankruptcy Code because there's no value to those
membership interests?
A That is correct, and that would be my
same analysis with regard to Innkeepers USA Limited
Partnership, Innkeepers Financial Corporation,
Innkeepers USA Trust and Grand Prix Holdings.
Q Do you have an understanding of the
corporate structure of the enterprise postemergence?
A Not specifically as we sit here today.
Q Okay. With respect to Grand Prix Mezz
Borrower Floating 2, LLC, do you know whether that
entity will continue to exist postemergence?
197
Marc A. Beilinson
A I doubt it.
Q Now, does the plan that is-- does the
plan that you're envisioning filing within the next
30 days contemplate substantive consolidation of any
of the debtors?
MR. DONOVAN: Objection. I'm going to
instruct--
A I'm considering all sorts of issues in
connection with the preparation of a plan and
disclosure statement including that issue.
Q Okay. I just got a few more
questions.
Take a look at Exhibit 15. And
specifically page 14.
A Exhibit 14, page 14?
Q Exhibit 15, page 14. The Project
Tavern?
A Whatpage?
Q Fourteen.
A Okay.
Q With respect to the floating pool, the
column Pro Forma Debt states zero to 50 million, do
you see that?
A Not on page 14.
50 (Pages 194 to 197)
APP-00361
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
198
Marc A Beilinson
Q Well, look on the-- it does on mine,
so. I'm looking on the top up here across 0-50.
A Okay.
Q All right. So when this document was
done by Moelis, the floating rate pool, they were
anticipating that the emergence debt would be
between zero and 50 million with respect to the
floating rate debtors, correct?
A I really didn't have any part of
preparing this page, but that appears to be
accurate.
Q You reviewed this document before it
was submitted to Lehman, correct?
A I testified that I reviewed it, not
that I understood every piece of it.
Q Okay. So you saw that Moelis at least
was illustrating a scenario in which the floating
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
rate pool could have as much as 50 million in debt 19
post deal, correct?
A I don't believe I had an understanding
as to this page at the time it was presented in
April 22nd. This wasn't something that was
meaningful to me.
Q If you had focused on this, would you
199
20
21
22
23
24
25
Marc A. Beilinson 1
have changed that to just say zero because of your 2
view at that time that the value of the properties 3
in the floating rate pool were less than the 4
property level debt? 5
A I don't know if that's accurate, 6
because this was begirming phases in negotiation 7
which could include all sorts of potential 8
variations. You know, you could talk about fully 9
equitizing, you can talk about partially equitizing, 10
you can talk about different types of debt, so I 11
would probably create the flexibility which is 12
embedded in these numbers, so I actually don't have 13
a problem with the way this was presented. 14
Q But would it have been your 15
understanding that the 50 million would have been 16
for Lehman as the property level debtor as opposed 17
to for the mezz lender?
A Well, I've already stated that I think
the mezz lender is substantially out of the money,
and that there would be absolutely no recovery on
account of any pre-petition claim that I viewed was
out of the money which is unfortunately one of your
clients as well as AIC and public shareholders.
Q Okay. And you're right, this could
18
19
20
21
22
23
24
25
200
Marc A. Beilinson
have been a number of things. I was trying to
figure out whether this was representing that. I
mean, because this does talk about Lehman getting a
hundred percent of the equity or 95 percent of the
equity, but it may have been leaving 50 million in
for them as opposed to for the mezz lender?
A Yeah. There was never any
consideration on my part that the mezz lender was in
the money and therefore it was always contemplated
by me that they'd be receiving no consideration in
an internal plan of reorganization, so this would
have been flexibility to deal with Lehman as in
their senior debt in connection with the company.
Q Hopefully last question.
Is the Anaheim hotel, is that
necessary to the enterprise?
A I believe every hotel is necessary to
the enterprise, and I'm going to be negotiating with
all lenders to maintain the existing entity as an
integrated whole.
Q Okay. If you received an offer to buy
Anaheim for a price that you thought was equal or in
excess of its value, could it be sold or does it
need to stay in to make the rest of the parts of the
Marc A. Beilinson
enterprise work?
A I'm happy to make --
MR. DONOVAN: Objection. Calls for
speculation.
A As facts get presented to me and
offers, I take them all under consideration and
determine what's in the best interest of the
enterprise as a whole.
Q But not of that debtor specifically?
A I have to take that into
consideration, too.
Q So you look at what's in the best
interest of each debtor specifically and the
enterprise as a whole?
A I believe that my fiduciary duty is
fairly broad and has to take into consideration the
interests of the entire enterprise and all the
creditors within that enterprise.
MR. MEYERS: I have no further
questions.
THE WITNESS: Thank you.
MR. MEYERS: Thank you very much.
201
MR. GOTTESMAN: Why don't we take five
minutes and then I'll push on.
51 (Pages 198 to 201)
APP-00362
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
202 204
MR. DONOVAN: Very good. 2 Washington, DC, LLC, same question.
(Whereupon, off the record.) 3 A Yes, I understand. I know the
(Whereupon, resumed.) 4 property and the loan.
EXAMINATION BY 5
Q
You're familiar with both?
MR. GOTTESMAN: 6 A Yes.
Q Good afternoon. 7
Q
Okay. Good.
A Hi. 8 And next to that is KPA Tysons Corner
Q My name is Lawrence Gottesman with 9 RI, LLC, do you see that?
Bryan Cave on behalf of LNR Partners LLC. LNR is 10 A I'm familiar with the property and the
the special servicer with respect to two 11 loan.
securitization trusts, one CSFB 2007-Cl and MLCFC 12
Q
Okay. Good.
2006-4. It might be easier, sir, if we just go back 13 And then KPA San Antonio, LLC, are you
for one minute to Exhibit 2 and we can point out 14 familiar with the loan and property with respect to
which entities are at issue just to put it in 15 that?
context, if we could. 16 A Yes, I am.
A Okay. 17
Q
Okay. Good.
Q In the middle of page are a bunch of 18 At any point during the process prior
green boxes or boxes with green at the top? 19 to the petition date that started in approximately
A Yes. 20 April and then ended with the petition date, were
Q Do you see that? And then the five, I 21 there internal discussions at Innkeepers with
guess to the right, starting with KPA RIGG, LLC and 22 respect to these hotels and their loans as to how
ending at KPA San Antonio, LLC, do you see that? 23 they should be treated?
A Yes. 24 A Yes.
Q Okay. Those are the hotels with 25
Q
Okay. Could you describe those for
203 205
Marc A. Beilinson
1 Marc A. Beilinson
respect to which loans LNR is a special servicer. 2 me, please?
Are you familiar generally with those loans? 3 A I don't think we talked about how to
A Let's go back over it just to make 4 deal with each of the entities and all the
sure I got it right.
5 properties in connection with an overall
Q
Sure. 6 restructuring. We reached out to the special
A Go ahead.
7 servicer with regard to each of these properties and
Q
Okay. Let's start at the beginning.
8 entered into a dialogue with them which included the
Do you see the box that has KPA RIGG,
9 provision to them of pretty much all due diligence
LLC in green at the top? 10 materials that they requested with regard to these
A The Residence Inn in Garden Grove? 11 five assets. And we began discussing with the
Q
Correct.
12 special servicer the DIP facility in connection with
A Okay.
13 Tysons in San Diego, and the cash collateral
Q
And are you familiar with that 14 agreement with regard to all five of them.
property? 15
Q
The special servicer that you're
A Yes, I am.
16 referring to is who?
Q
And are you familiar with the secured
17 A I can't remember the person
debt with respect to that property? 18 responsible at LNR.
A Yes, I am. 19
Q
But it was LNR as opposed to Midland
Q
Okay. Next is KPA RIMY, LLC, do you
20 or someone else?
see that?
21 A No, it was LNR.
A With regard to the Residence Inn, San 22
Q
Okay. And did you make a
Diego, yes, I'm familiar with the property and the 23 restructuring proposal with LNR with respect to any
loan.
24 of these loans?
Q
Okay. And then next to it is KPA
25 A No. I started off by providing them
52 (Pages 202 to 205)
APP-00363
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
206
Marc A. Beilinson
with substantial amounts of due diligence
information that they had requested.
I then started talking to them about
Marriott with regard to Tysons, which is one ofthe
potentially deflagged hotels and the San Diego
Residence Inn.
I sent them draft DIP proposals with
regard to Tranche Band C of the fixed rate
facility, and started talking to them about why it
makes sense both for the benefit of the estate and
for their own benefit to enter into a fair financing
on a priming basis with regard to those properties.
I informed them that we were going to
be filing a chapter proceeding with regard to the --
each of the entities in the enterprise and I sent
them a cash collateral stipulation a couple weeks
before we filed so we could start talking about it.
Q
Okay. And, to be clear, there was no
restructuring proposal communicated with respect to
any of these properties, you communicated with
respect to the potential DIP but not a proposal to
restructure any of the loans?
A Not at that time, no.
Q
At any time?
207
Marc A. Beilinson
A I've started talking to them about
what proposals we could talk about and it became
clear to me that LNR's view was that they needed to
get appraisals with regard to the property before
they could enter into meaningful discussion with me
and we of course have given them full and complete
access to the properties and general managers for
purposes of valuing their properties so that they
can enter into discussions with me, and I look
forward to doing that as soon as possible.
Q
Okay. And have you had any
discussions, as Innkeepers more broadly had any
discussions with Lehman with respect to these
particular hotels and their respective debt?
A Well, the only agreement that I'm
aware of is embodied in the PSA which says that the
balance of the debt after the fixed and floating
rate pool cannot exceed 150 million dollars or
Lehman has the right but not the obligation to
terminate the PSA.
Q
I understand, and perhaps my question
wasn't sufficiently clear. I guess the question I
had is: Were there any specific discussions with
Lehman or its representatives with regard to any of
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
208
Marc A. Beilinson
the hotels that we've now identified in Exhibit 2 as
to the--
A No, I think--
Q -- their performance and their status
and their proper treatment as opposed to the more
generic Plan Support Agreement provision that you
just described?
MR. DONOVAN: Objection to form. You
can answer.
A No, we did talk about each of the
assets and their condition, the attributes of each.
They had budget information with regard to all of
them, but with regard to the right amount of the
secured claim with regard to each, any one of them,
no there was no specific conversation.
Q So there was a specific discussion
generally regarding both that specific claim amount,
for example, with respect to the KPA RIGG loan
that's the second green box in from the right in the
center? From the left, excuse me.
A I think we talked about, you know,
condition of the property. Economic factors
affecting it. I don't think we talked about the
loan amount itself except to the extent that we all
Marc A. Beilinson
acknowledged it was nnder secured.
Q Specific to that property or generally
with respect to the hotels in the Innkeepers'
portfolio?
A I actually remember a conversation
209
with regard to a number of the properties which were
specially serviced by LNR.
Q With whom was that conversation?
A That conversation was with members of
Lehman or Alvarez or Lazard, I don't remember
specifically.
Q
A
Q
A
Q
Someone?
It was somebody in that group.
And at what point in time was that?
It was in the April to July timeframe.
Somewhere within that broad period of
time but you couldn't nail it down further?
A I could not nail it down.
Q Was anyone else in attendance from
your side?
A I don't remember when I had the
conversation or whether it was by phone or in
person. It could be that Mark Murphy was there, if
it was in person, I don't recall.
53 (Pages 206 to 209)
APP-00364
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
210 212
Q Was there any correspondence that 2 more of a business discussion with regard to
related to it that either set it up or followed up?
3 property conditions and characteristics.
Q Some sort of general business
Q So it was just an oral conversation
5 discussion?
that may have been over the phone or may have been 6 A Absolutely.
in person?
7
Q Okay. And going back to your
A More than likely on something like 8 conversation from LNR. During any of those
this over the phone but I don't recall specifically. 9 conversations, did you mention that you were in
Q And then with respect for the next 10 discussions with Lehman with respect to what
property, if I ask you the same question, the answer
11 ultimately culminated in the Plan Support Agreement
would be the same or do you have a specific
12 and the related Term Sheet?
recollection beyond that?
13 A I told them that I was talking to
A I actually have specific recollection 14 Lehman with regard to an overall restructuring, I
with regard to the Garden Grove property, San Diego 15 don't believe I got into the details. I talked to
and Tysons, and remember talking about with regards 16 them about Marriott, and the overall Marriott
to San Antonio improvements that were done over the 17 transaction and how it interrelated with the
course of the last year and a half. 18 properties involved, which is Tysons in San Diego
Q Can you describe those recollections?
19 which he specially serviced. I talked to them at
A Yeah. They were more geared to 20 length with regard to potential DIP financing
condition of the property and what needed to be done 21 proposals and why I thought they were beneficial and
to bring them up to speed. 22 fair value to them. I also--
With regard to San Antonio, I 23
Q But it's fair to say you never
specifically was talking about the driveway that I 24 communicated that the Lehman Plan Support Agreement
think needs some work done. That I think that 25 and the related term sheet contemplated substantial
211 213
improvements that we did in the last two years are 2 writedown in the secured debt service by LNR; is
sustainable for at least until the next cycle in six 3 that correct?
years. 4 A I'm not sure that that's accurate.
With regard to San Diego and Tysons, I 5 Q Substantial writedown from the current
talked to them about what I thought the costs were 6 outstanding principal balance. When you say it's
with regard to the PIPing obligations in connection 7 not accurate, what do you mean by that?
with Marriott and what I thought needed to be done 8 A Well, I think the Lehman PSA says that
and what could potentially be delayed. 9 with regard to the other properties in connection in
With regard to the Residence Inn in 10 the enterprise, which is essentially seven
Garden Grove, there were issues with regard to the 11 properties, can't have in excess of 150 million
pool area and some tiling there, there was some 12 dollars worth of debt. It doesn't suggest what the
granite broken off that I wanted to get replaced. 13 amount of the debt is with regard to each of those
So there was a lot of details with regard to the 14 individual properties.
property that I wanted to let them know what the 15 Q But the aggregate is obviously more
general condition was. 16 than 150; is that correct?
Q So you discussed over what period of 17 A Well, the aggregate, if you keep all
time the PIP needed to be performed? 18 seven properties, would be on a loan basis in excess
A We discussed, no, what the condition 19 of 150 million dollars, but on a value basis may be
of the properties were, you know, were they 20 substantially less than that.
sustainable till the next cycle of renovations. 21 Q Does the Lehman Term Sheet permit you
When the PIPs needed to be done, how much needed to 22 to return back any of the properties to their
be done. Whether there was deferred maintenance, 23 respective lenders?
what the deferred maintenance might be and whether 24 A I believe that it does.
it was material or not, so it was really kind of 25 Q And that would not be a termination
54 (Pages 210 to 213)
APP-00365
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
214 216
Marc A. Beilinson 1 Marc A. Beilin son
event? 2 worked together to get three other properties
A That's correct. 3 released from the general servicer to the special
Q
If the lender took back the property 4 servicer, so those conversations obviously took
pursuant to a lift stay, would that be a termination 5 place, you know, later because we really had to work
event? 6 together for a period of time to get him in charge
MR. DONOVAN: Objection to form. 7 of those properties.
You can answer to the extent you know. 8 Q Okay. So you would say that those
A I'd have to review the PSA. 9 commenced a couple months ago in your recollection
Q
It happens to be marked as an exhibit, 10 or am I missing --
so let's go back. 11 A They commenced at least a couple of
A Exhibit 4? 12 months ago with two other properties a little bit
Q
Yes. 13 less far ago with regard to.
A Can you point me to the provision, 14 Q A little bit later?
please? 15 A A little bit later with regard to.
Q
I will momentarily. 16 Q Okay, so we can just chronologically
Yes. Let me direct your attention to 17 be in the same field.
paragraph E at the bottom of page 8 of the Plan 18 A Okay, that's fine.
Support Agreement. I think you were looking at the 19 Q Okay. Did you have any discussions
Term Sheet and I'm looking at the Plan Support 20 with Apollo or I guess Apollo Investment Corporation
Agreement, sir. 21 with respect to any of these properties, the five
A Okay. So what page of the Plan 22 that we've been referring to?
Support Agreement? 23 A Only to the extent that I discussed
Q
It looks like page 8. 24 these properties and the fixed rate and the floating
A I have reviewed the provision. 25 rate pool with members of the board of Innkeepers
215 217
Q
And does that refresh your 2 which included people who were employees of Apollo.
recollection as to what the Plan Support Agreement 3
Q
But it was in your capacity as members
says would be the consequence of stay relief with 4 of the board or as opposed to their capacity of
respect to any of these property secured lenders? 5 Apollo the buyer of equity?
A The relief, the stay relief would give 6 A No, it was in their capacity as
Lehman the right but not the obligation to terminate 7 members of the board.
the PSA if relief from stay was granted. 8
Q
And no other capacity?
Q
But it's your understanding that if 9 A I believe that's correct.
the debtor voluntarily surrendered the property 10
Q
Okay. By the way, did you have any
pursuant to a plan or otherwise that would not 11 discussions with the master servicer for these
constitute a termination right that would give 12 securitizations with respect to these properties?
Lehman the right but not the obligation to 13 A Yes, I did.
terminate? 14
Q
Okay. Do you recall when those were?
A I believe that's accurate. 15 A Probably going back maybe four months
Q
Okay. By the way, the discussions 16 ago.
with LNR that you referred to a little while ago, do 17
Q
And what was the substance of those
you recall when those took place? 18 discussions?
A They've taken place over the course of 19 A The fact that I was going to be a
a few months. As you probably know-- is it Chris 20 restructurer. That I told them in advance of
Brown? 21 defaulting with regard to the financial obligations
Q
Yes, Chris Brown. 22 of the loan that I was going to do so. It was a
A Chris Brown is the individual at LNR. 23 conversation saying that I'd like to start entering
Well into the process at1er he was special servicer 24 into restructuring discussions and that this is
with regard to two of the properties, he and I 25 probably more appropriately moved from the general
55 (Pages 214 to 217)
APP-00366
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson
servicer to the special servicer. I was trying to
move the process along.
Q Do you recall whom you had those
218
1
2
3
4
discussions at the master servicer? 5
A Not offthe top of my head. 6
Q Were those memorialized in writing or 7
by e-mail or otherwise? 8
A I don't recall. 9
Q And do you recall if any of the 1 0
conversations with respect to LNR whether they were 11
memorialized in writing at all? And that would
include e-mails.
A Some ofthem might have been
memorialized. I mean, their request for information
or providing them due diligence information, they
needed access to property. There's communications
in e-mail form that have gone back and forth between
12
13
14
15
16
17
18
myself, Mark Murphy and Chris Brown and other people 19
atLNR. 20
Q Okay. And then just to close the loop
with regard to the master, it's safe to say you
never made a particular restructuring proposal; is
that correct?
A I tried to enter into discussions with
219
Marc A. Beilinson
them but unfortunately in the CMBS community the
general servicers have very little ability to enter
into those discussions.
Q By general servicer you're referring
to the master servicer?
A I was talking about the master
serv1cer.
Q Okay. I just want to make sure we got
21
22
23
24
25
1
2
3
4
5
6
7
8
9
our parties straight. 10
In connection with this whole process, 11
did you or the company conduct any independent 12
assessment of the burdens for these particular 13
debtors as opposed to the integrated whole? And I 14
did hear your earlier testimony with respect to your 15
views regarding integrated all, but did you also
look at it at all on a particularized basis?
A Well, you know, I look at it and I say
what's a fair value of some body's security interest
and I have to treat it appropriately in connection
with the plan of reorganization, so long as I'm
doing that I feel I'm fulfilling my obligations as a
fiduciary.
Q That is not exactly responsive because
that's not what I asked. I guess the question is:
16
17
18
19
20
21
22
23
24
25
220
Marc A. Beilinson
For example, taking the first one, did you look at
whether or not KPA RIGG, LLC would benefit in this
overall restructuring or suffer detriments, and did
you analyze it on a property basis with respect to
that or did you put this simply in the context of
what was good for the overall whole? Putting aside
your interpretation of your fiduciary duty for a
second.
A I think I look at each area and I say
am I treating them fairly. And ifl'm treating them
fairly and I'm doing what's in the best interest of
the integrated whole, I think I'm fulfilling my
fiduciary duty.
Q But once again, it's not the question
I asked. Ultimately the court can figure out what
your fiduciary duty was and whether or not you met
it, and that's for anyone in this room to decide.
The question is just specifically what you did or
didn't do.
So, did you determine that, for
example, KPA RIGG would benefit in terms of its cash
flow from the proposed plan as a result of the
transaction contemplated by the Plan Support
221
Marc A. Beilinson
Agreement and the annexed Term Sheet, or did you
not? And whether or not that was your fiduciary
duty and your interpretation is a different issue.
A I think I looked at a lot of these
entities in that way. For example, I knew I needed
to do an integrated relationship, integrated
agreement with Marriott by virtue of the fact there
were 23 hotels that were in default. Some of these
hotels were San Diego and Tysons which I believe
benefited from my ability to negotiate with them
with regard to properties that were in the floating
rate and fixed rate pool. I believe that other
entities have benefited in the past because of cash
flow that was generated from the enterprise that
went into properties to improve them to the benefit
of the whole. So yes, I did look at, you know, how
all the pieces fit together to benefit the entire
corporation, but also the pieces of the corporation,
and that's just one example of how I take it into
consideration.
Q Well, with respect to this particular
entity, did you perform that analysis, in other
words, did it benefit in terms of financing a PIP?
Is a PIP required with respect to that entity KP A
56 (Pages 218 to 221)
APP-00367
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
222 224
Marc A. Beilinson 1 Marc A Beilinson
RIGG,LLC? 2 properties. I believe with regard to San Antonio
A No. 3 the answer would be, no, they could not have done
Q
Okay. 4 their historic CAPEX with regard to that property
A I don't believe so at this time. 5 and fulfilled its obligations under the loan. I
Q
And do you know if it generates 6 believe I can say that with regard to San Diego with
sufficient cash to service its debt? 7 regard to the upcoming PIP. I believe I can say
A I've looked at all the issues with 8 that with regard to Tysons. I believe I can also
regard to that entity and others and I can't tell 9 say that with regard to the double thing.
you today because I didn't know that was the purpose 10
Q
Okay.
of, you know, this deposition, but. 11 A I think there were benefits that they
Q
Sitting here today, you don't know the 12 received by virtue of being part of the cohesive
answer to that question? 13 enterprise, that or historic which are current.
A Which question? 14
Q
Historic as in pre-petition?
Q
Whether it generates sufficient cash 15 A Yes.
to service its own debt. 16
Q
Okay. And have you tried to quantify
A With regard to that hotel, no, I can't 17 those historic pre-petition benefits?
answer the question. 18 A Not totally.
Q
Okay. 19
Q
Partially?
A I also can't answer the question as to 20 A I thought about it.
whether it's always been able to satisfy the debt or 21
Q
Okay. Did you write down any slots?
how much money went into the capital improvements 22 A No.
from other sources with regard which benefited that 23
Q
So they're just still somewhere in the
property. 24 ether?
Q
Well, did you perform that historical 25 A Yes.
223 225
analysis with respect to each of these entities? 2
Q
Good. Okay.
A No. 3 And when I say you, I probably should
Q
Okay. And if I were to ask you the 4 make it broader in terms of Moelis or, you know, any
same question about the ability to service debt with 5 of the folks that you've hired to help you with this
respect to the other hotels serviced by LNR, would 6 process.
your answer be the same that you don't know sitting 7 A Yes.
here today? 8
Q
The answer is still sort of
A I believe that if you're asking 9 collectively in that ether?
service the debt without making capital 10 A Yes.
improvements, which are required under PIPs, or are 11
Q
Okay. By the way, do any of these
you asking without doing deferred CAPEX and future 12 borrowers, do they have independent managers or
CAP EX. 13 directors?
Q
Let's just say on a current cash 14 A I don't recall.
basis. Let's take it one step at a time. 15
Q
Okay. Do you know who approved the
I'm just simply asking-- once again, 16 Chapter 11 files for each of these five entities
it's not memory test, if the answer is you don't 17 that we've been discussing?
know, you don't know. 18 A No.
A I looked at those kinds of issues and 19
Q
Do you know if resolutions were signed
with most properties they didn't have sufficient 20 authorizing the Chapter 11 filing?
cash flow to service debt and their capital needs. 21 A I've been told that they were.
Q
I understand, except I'm not really 22
Q
Do you know if you signed any
asking about most properties, I'm asking about this 23 resolutions?
group of properties. 24 A Yes.
A I'm talking about this group of 25
Q
Okay. Did you sign resolutions with
57 (Pages 222 to 225)
APP-00368
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Marc A. Beilinson
respect to any of these entities?
A No.
Q Okay. When you say you don't know if
226
there are any independent managers with respect to
this, I think it would probably follow, but I want
to confirm that you don't recall any discussions
with any independent managers about whether or not
to file these entities; is that correct?
A That's correct.
Q Okay. And it would also presumably
follow that you didn't discuss the Plan Support
Agreement and the related Term Sheet with any
independent managers relating to these entities?
A I believe I testified I didn't talk to
the independent managers with regard to this filing.
Q Okay. Or the Plan Support Agreement
which was signed prior to the filing?
A That's correct.
Q And during the negotiations with
respect to that?
A That's correct.
Q Okay.
MR. GOTTESMAN: I don't think I have
any further questions. Thank you very much.
227
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Marc A. Beilinson 1
THE WITNESS: Thank you. 2
MR. DONOVAN: Thank you. 3
Let me ask you some questions, Mr. 4
Beilinson. 5
EXAMINATION BY 6
MR. DONOVAN: 7
Q You were asked questions about the 8
drafts of the Plan Support Agreement today. I'd 9
like to ask you some questions about the Plan 10
Support Agreement you're actually trying to get 11
confirmed with the court. That's Exhibit 4 if you 12
need to look at it. 13
Does the Plan Support Agreement you're 14
seeking to have confirmed, is AIC a signatory to the 15
Plan Support Agreement? 16
A No, it is not. 17
Q Okay. Does the Plan Support Agreement 18
1 9 you are seeking approval from the Bankruptcy Court 19
20
21
22
have any type of backstop provision?
A No, it does not.
Q Does the Plan Support Agreement you
20
21
22
2 3 are seeking approval have any type of breakup fee in 2 3
2 4 it? 2 4
25 A No, it does not. 25
228
Marc A. Beilin son
Q If you could turn to Exhibit 17, the
Amended Declaration.
A (Complies.)
Q I direct your attention to page 33.
A Okay.
Q You were asked today whether there's
been any disclosure of your board membership with
respect to Apollo Commercial Real Estate Finance,
Inc., do you remember those questions?
A Yes, I do.
Q Okay. Has it been disclosed to the
Bankruptcy Court that you are a member of the board
of Apollo Commercial Real Estate Financial, Inc.?
A Yes, it has been.
Q Where?
A It's in Footnote 7 on page 33 of
Dennis Craven's Declaration in amended form.
Q If you'd turn to page 8 of Exhibit 17,
the Craven Declaration.
A (Complies.) Okay.
Q Directing you to Paragraph 13, in the
middle it reads: It is the Debtors' understanding
that subject to certain terms and conditions, AIC
may become the purchaser. Do you see that?
Marc A. Beilinson
A Yes.
Q So it's fair to say it was disclosed
229
to the Bankruptcy Court that AIC may become the
purchaser of the equity, at least a portion, that
Lehman may receive as a part of this plan; is that
correct?
A Absolutely.
you.
MR. DONOVAN: Nothing further. Thank
THE WITNESS: Thank you, guys.
MR. DONOVAN: Thank you.
Off the record.
(Whereupon, deposition adjourned 3:22
p.m.)
58 (Pages 226 to 229)
APP-00369
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
230
oOo
CERTIFICATE
I, JOSEPHINE H. FASSETT, a Registered
Professional Reporter and Notary Public within and
for the State ofNew York, do hereby certify that
the witness, whose deposition is hereinbefore set
forth, was first duly sworn by me on the date
indicated, and that the foregoing videotaped
deposition is a true and accurate record of the
testimony given by such witness.
1
2
3
4
5
6
7
8
9
10
11
12
I FURTHER CERTIFY that I am not employed 13
by nor related to any of the parties to this action 14
by blood or marriage, and that I am in no way
interested in the outcome of this matter.
JOSEPHINE H. FASSETT, RPR, CLR
New York Notary Public
oOo
UNITEDSTATESBANKRUPTCYCOURT
CASE NO. 10-13800 (SCC)
---------------------------------*
In re: ) Chapter 11
INNKEEPERS USA TRUST, et al., )
Debtors. )
---------------------------------*
231
I, MARC A BEILINSON, hereby certify that
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
I have read the transcript of my testimony taken 11
under oath in my deposition of August 12, 2010, and 12
that the transcript is a true, complete and accurate 13
record of my testimony, and that the answers on the 14
record as given by me are true and correct. 15
MARC A BEILINSON
Subscribed and sworn to before me this ___ day
of ,2010.
Notary Public
16
17
18
19
20
21
22
23
24
25
232
INSTRUCTIONS TO WITNESS
Please read your deposition over carefully
and make any necessary corrections. You should state
the reason in the appropriate space on the errata
sheet for any corrections that are made.
After doing so, please sign the errata sheet
and date it.
You are signing same subject to the changes
you have noted on the errata sheet, which will be
attached to your deposition.
It is imperative that you return the original
errata sheet to the deposing attorney within thirty
(30) days of receipt of the deposition transcript by
you. In you fail to do so, the deposition transcript
may be deemed to be accurate and may be used in court.
ERRATA
I wish to make the following changes,
for the following reasons:
PAGE LINE
233
__ CHANGE: _________ _
REASON: ____________ __
__ CHANGE: _________ _
REASON: ____________ __
__ CHANGE: __________ _
REASON: _____________ _
__ CHANGE: _________ _
REASON: _____________ _
__ CHANGE: _________ _
REASON: _____________ _
__ CHANGE: _________ _
REASON: _____________ _
WITNESS' SIGNATURE DATE
59 (Pages 230 to 233)
APP-00370
234
A
168:15 170:2 60:8 13 3 : 1 7 144:3 '4 all:7 231:7
AB65:18
170:17,22 advisors 4:5,12 145:4,11,21 Alan 104:12
abide 26:6
174:7 182:24 7:5 119:14 146:2 147:17 105:20 106:4
ability 64: 14,20
182:25 185:19 163:24 148:4 150:6,7 ALI 5:15 54:13
74:10 219:3
186:6,16 188:5 aehrlich@pau ... 150:14,16 81:21 184:3
221 : 11 223 : 5
188:13,14 5:9 169:16 180:16 allow 88:4
able34:18 42:9
198:12 199:6 affidavit 184:23 186:14,15 139:23
222:21
213:4,7 215:15 185:2,7,10,17 189:21 192:15 allowed 64:22
absolute 195:18
230:11231:14 affiliate 89:4 192: 18 193 : 11 65:19 69:9
absolutely 17:20
232:16 99:3 193:14,21,22 allows 71:5,9
26:11 45:24
accurately 25: 11 affiliated 15: 16 195:9 205:14 alluded 170:18
63:19 65:15
105:13,25 22:25 31:9,10 207:16 208:7 alternative 9:20
70:5 72:8 73:3
106:15 Ill :5 89:19 212:11,24 10:5,9 68:23
75:5111:18
acknowledged affiliates 171: 13 214:19,21,23 70:7,16 74:14
113:12 135:16
209:2 afternoon 8: 11 215:3 221:2,8 76:15 77:16,21
181:14 199:21
acquire 34:12 202:7 226:13,17 78:2,12,21
212:6 229:8
138:19 Agent 170:24 227:9,11,14,16 79:3,7,14,22
accept 65: 18
acquirers 98:21 aggregate 227:18,22 80:5,8,13
84: 19 1 09: 18
acquisition 213:15,17 agreements 83:2585:16
123:6 139:24
31:22 33:18 aggregation 105:10 143:18 94:7,22 98:2
acceptable 48:21
34:23 35:5 104:4 106:21 ahead23:24 101:21 113:7
52:17 56:2
98:11,16 ago 17:13 80:17 122:24 176:16 138:10 140:10
74:18 83:23
act 190:8 89:10 115:19 186:18 203:7 140:22 151:16
85:7,12,13
acting 76:4 131:22 182:20 AIC 19:25 34:23 151:25 152:9
97:18,18,22
134:13 164:25 215:17 216:9 38:4 40:22 152:17 156:10
102:25 103:2
action230:15 216:12,13 4 3 : 1 7' 18 44:4 159:12 177:25
110:19 196:13
actual25: 15 217:16 44:6 46:21 alternatives
accepted 52:3,11
144: 3 '4 1 71 : 15 agree 51:23 49:11,14,19 80:19 136:17
96:23 109:19
adamant 46:2 105:23 150:17 50:4 51:17,18 Alvarez 209:11
136:6 139:2
additional58:7 158:25 185:6 52:12 55:11,21 ambiguity
access 58:22
149:21 163:6 195:25 67:13 86:22 178:21,21
59:2,4,5, 15,21
address 137:17 agreed 146:10 87:6,25 89:24 amend 101:16
60:4 69:10
addressed 196:2 91:13,20 92:13 amended 8:16
138:14 207:8
185:19 agreement 8:22 92:15,18 93:6 10:19 17:21
218:17
adieterich@p ... 8:24 12:16 93:9,13,13,15 18:2 142:4,11
account 39:3
5:11 25:20,22 26:9 95:7 98:11,17 228:3,18
99:5 153:12
adjourned 26:17,21 27:8 99:2 100:19 Americas 3:6
178:12 195:15
229:15 29:8 30:18 102:10,16 4:21 5:6,16 6:6
199:22
Administrative 34:11 35:2,20 104:22 105:12 amount 33:25
accretive 13 8: 17
170:24 35:21 36:21,22 105:19 108:4 51:19 61:4
146:13
advance 16:14 49:10 53:24 108:20 109:4 63:8,23 64:4
accurate 27:12
130:6 217:20 55:12,22 61:3 109:12111:16 67:17 74:11
36:13 Ill :7
advice 76:5 64:15 66:6 111:19112:13 82:9 137:4
112:11 117:8
78:15 76:25 77:2,12 112:19 118:15 156:17 168:21
123:17 137:8
advise 73:7,11 95:11,13 96:16 175:2 199:24 190:22,24
145:12,14
90:25 91:4 102:18 107:24 227:15 228:24 192:6 208:14
147:11 148:12
133:11 108:4 109:13 229:4 208:18,25
150:12 166:5
advised 58: 18 110:2,3 114:5 AIC's 111:11,15 213:13
APP-00371
235
amounts 206:2 186:18 187:7 91:2,4,7,23 137:14 91:23 124:2,15
Amy 5:10 40:7 195:6 208:10 92:8,9,10 appropriate 124:23 127:9
Anaheim 165 :23 210:11 214:8 95:11,21 97:21 21:23 36:11 129:11,18
166:4,13,19,24 222:13,18,20 97:25 98:4 61:9,10 65:9 13 5: 18 140: 17
167:14,21 223:7,17 224:3 99:2,3,13,25 68:8 126:16 142:23 157:7
1 71 : 24 1 7 5 : 1 0 225:8 100:8,11,16 133:11 232:5 165:13 171:23
175:12,21 answered 101:2,9 103:18 appropriately 185:2 187:18
176:3,15 177:3 124:20,23 1 04: 15' 1 7' 18 190:8 217:25 189:6,10
177:15 179:8 127:10 129:12 104:23 109:12 219:20 219:25 220:17
179:20 180:3 129:19 140:17 Ill :25 112:4 approval29:7 227:8 228:7
180:17 181:7 157:7 181:9 123:19 124:2,5 100:19,21 asking 16:22
186:11,12,13 answering 27:19 124:13,15,24 108:3 118:23 37:20 38:9,10
186:25 187:13 answers 13 :23 125:7,15 126:2 148:15,18 68:6 74:6
188:6 189:3,4 165:14 231:15 126:5 127:6,15 149:2 227:19 78:24 127:23
189:15 190:2 anticipating 153:11 154:3 227:23 129:15 137:15
190:11,12,13 198:7 157:24 174:25 approve 66:12 146:24 147:2
190: 14 193 : 1 7 anticipation 216:20,20 75:17 181:3 191:21
200:16,23 122:3 217:2,5 228:9 approved 70:18 194:24 223:9
analysis 58:11 Antonio 202:23 228:14 76:18 148:6 223:12,16,23
58:13,15 60:9 204:13 210:17 Apollo's 32:23 225:15 223:23
60:14 119:18 210:23 224:2 100:11111:24 approximate aspects 116: 19
120:12 175:17 anybody 67:17 Apollo-Lehman 168:21 assess 131: 18
196:17 221:23 70:16 72:15 156:7 approximately assessment
223:2 129:25 132:6 Apollo-related 102:6 166:7 219:13
analyze 220:5 146:5 88:16 204:19 asset 119:23
analyzed Ill :23 anyway 174:20 apologize 184:25 Aprill0:15,18 assets 77:8 119:9
analyzing 58:20 Apollo 5:5 11:11 193:4 79:4 80:16 119:19 120:5
Andrew 5:8 11:9 15:17,24 16:2 Appaloosa 6:13 81:3 114:23 128:16 137:4
Annex 192:23,24 16:22 19:19,20 11:16 115:14 118:7 162:23 180:7
192:25 19:24 20:4 apparently 120:15 123:9 193:22 194:2,7
annexed 221 :2 22:20 23:2 24: 13 1 04: 1 0 123:16 130:15 194:10,12,19
answer 13:18 30:11,16,21,25 appear95:6 130:19 131:5 196:6 205:11
21:21 33:11,13 31:2,9,10,13 104:4 132:2,7 153:10 208:12
33:21 36:3,19 31:15,21 32:12 appearance 40:6 172:11,19 asset-by-asset
38:22,24 39:10 32:19,23 33:2 appearances 173:2 174:13 119:18
41:21 45:17 33:17 34:5,6 40:5 182:9,23 183:2 associate 14: 11
46:17 49:22 34:11,15 35:4 appears 25: 14 198:23 204:20 assume 8:21
53:22 71:23,24 35:20,20 36:14 103:17,20 209:16 25:19 26:23,25
71:25 76:7,20 39:2,6,16,20 106:19 198:11 area 211:12 27:10 95:19
76:22 80:3 39:21 41:18,18 applied 164:3 220:11 145:21 149:13
101:7,16 103:6 42:5,5,12,15 apply 164:4 areas 86:21 170:17 190:10
122:24 124:22 45:7 48:14 appraisals 207:5 ARI22:24 88:21 assuming 112:19
125:3 127:10 50:18,21 51:2 appreciate arisen 143:11 assumption
127:11 129:12 51:752:5 179:13 arrived 40:5 26:16 27:5
129:14,19 67:14 82:5 appreciative aside 220:7 29:7 123:8,15
140:15,18 83:19,21 85:23 68:12 asked 16:14 123:17 148:22
173:13,15 86:2 88:4,13 approach 69:16 75:22 150:11 188:5
174:3,21 88:20 90:25 105:13 126:2 79:6 86:25 188:14
APP-00372
236
assumptions 5:16 6:6,14 17:18 30:10 104:2 106:22 83:1 84:1 85:1
64:17 120:17 averting 163 :4 31:20,24 37:15 113:6 85:11,20 86:1
120:18 121:4 avoid 165:16 38:20 50:12,13 becoming 16:25 87:1 88:1 89:1
Atlanta 4:7 aware35:2 63:14 64:16 31:15 83:18 90:1 91:1 92:1
attached 18:4 73:14 74:3 65:10 66:7 began 205:11 93:1 94:1 95:1
27:11 105:8,18 127:18,19 69:12 70:22 beginning 65: 16 96:1 97:1 98:1
105:22 106:25 155:25 168:2 74:3,15,20 65:16 66:24 99:1 100:1
142:14 144:19 171:5,9 184:9 75:13,17,20 69:11 82:24 101:1 102:1
232:11 185:9 186:5 77:5,11 89:18 86:21 109:2 103:1 104:1
attaching 105:9 194:12 207:17 92:6 100:3 123:2 199:7 105:1 106:1
attachments a.m 1:15 101:9 108:3 203:8 107:1 108:1
103:22 104:3 109:21 110:11 begins 29:21 109:1 110:1
106:24
B
112: 11 124: 19 behalf 11 : 1 0 111:1112:1
attempted 65:15
b 5:22 8:14,22
125:2,8,16,17 42:19 61:19 113:1 114:1
attempting
9:2 10:2 12:11
128:23 129:2,2 88:6 95:25 115:1 116:1
24:16
25:2083:18
134:9,9 138:8 128:6 134:14 117:1 118:1
attendance
139:4 151:9
138:17,18,22 164:8,16 184:3 119:1 120:1
209:20
206:9
139:4,8,14 187:12 192:22 121:1 122:1
attending
back 21:7,16
140:12,14 202:10 123:1 124:1
115:17
38:12,14 41:24
145:2,9 146:13 Beilinson 1: 11 125:1 126:1
attention 92:4
47:14 50:2
148:7 149:2,2 8:4 12:24 13:1 127:1 128:1
214:17 228:5
51:15 65:17
149:13 152:2,6 13:2,3 14:1 129:1 130:1
attorney 13: 10
81:3 120:15
152:10 156:21 15:1 16:1 17:1 131:1 132:1
232:13
123:9,15
159:23 162:11 17:25 18:1,25 133:1 134:1
Attorneys 2:5,16
125:13 149:17
162:18 181:22 19:120:1 21:1 135:1 136:1
3:5,12 4:5,12
151:25 155:12
191 : 8 193 : 1 0 22: 1 23 : 1 24: 1 137:1 138:1
4:20 5:5,15 6:5
181:11 182:7
195:19,20 25:1 26:1,13 139:1 140:1
6:13,21
191:7 193:6
196:14 227:19 27:1,22 28:1 141:1 142:1,9
attorney-client
202:13 203:4
228:13 229:4 29:1 30:1 31:1 143:1 144:1
76:10,21
212:7 213:22
231:2 32:1 33:1 34:1 145:1 146:1
attributes
214:4,11
bankrupted 35:1,19 36:1 147:1 148:1
208:12
217:15 218:18
99:5 37:1 38:1 39:1 149:1 150:1
audit 88:23
backstop 44: 18
base 14:20 39:5 40:1,15 151:1 152:1
August 1:14
45:6,7 46:4
based 17:7 37:11 41:1,15 42:1,2 153:1 154:1
231:13
48:5,15 49:15
38:15 56:9 43:1 44:1 45:1 155:1 156:1
author 56:22
51:16,19 54:21
64: 1 7' 18 1 72:4 46:147:1 48:1 157:1 158:1
authority 118: 12
82:5,6 227:20
176:24 49:1 50:1 51:1 159:1 160:1
authorize
Backstop/Con ...
basis 68:15 52:1 53:1 54:1 161:1 162:1
130:23
81:25
99:13 155:5 54:10 55:1 163:1,22 164:1
authorized
backwards
188:10 206:13 56:1 57:1 58:1 165:1 166:1
58:22
155:24
213:18,19 59:1 60:1 61:1 167:1 168:1
authorizing 8:21
Bad 57:7
219:17 220:5 62:1 63:1 64:1 169:1 170:1
25:19 26:16
balance 77:7
223:15 65:1 66:1 67:1 171:1 172:1
225:20
169:6 191:9
Basta 106:5 68:1 69:1 70:1 173:1 174:1
automatic 145:3
207:18 213:6
Bates 40:16 71:1 72:1 73:1 175:1 176:1
145:10
banker 56:19
47:10,11 54:13 74:1 75:1 76:1 177:1 178:1
Avenue 1:13 3:6
57:21 78:9
81:22 86:16 77:1 78:1 79:1 179:1 180:1
3:13 4:21 5:6
bankruptcy 1:2
94:23 102:3 80:1 81:1 82:1 181:1 182:1
APP-00373
237
183:1 184:1 130:4 133:16 Benson 6:20 20:13,16,18,20 165:8,19,25
185:1 186:1 134:13 135:20 11:24 20:22 21:5,11 166:14 169:18
187:1 188:1 135:22 137:6 Bernie 22: 16 22:2,5,21 23:4 203:9 208:20
189:1 190:1 139:5,10,25 best50:10 69:24 23:5,6,10,13 boxes 178:8
191:1 192:1 145:22 147:11 70:21 77:20,21 31 :6,7,8, 12,13 202:19,19
193:1 194:1 148:17 149:5 77:23 78:15 32:14 62:20 bracket 51: 19
195:1 196:1 150:6 152:20 90:23 92:7,7 63:2 75:15,16 bracketed
197:1 198:1 154:19,20 105:20 128:25 75:19 76:9,16 133:19,21
199:1 200:1 155:14 159:19 129:3 134:14 76:18 77:17 brackets 45:9
201:1 202:1 164:10 166:5 139:7 140:14 78:3 88:15,19 branch 165:18
203:1 204:1 170:2,7,22 152:10,20,22 88:22 89:3,18 168:11
205:1 206:1 171:12,20 152:23 153:4 93:8 98:4 branches 165:8
207:1 208:1 173:9,19,20,22 157:18 158:5 118:11,18,23 165:12
209:1 210:1 174:13 175:19 159:22 162:13 126:4 127:12 brand 145:5
211:1 212:1 176:25 177:8 165:2 181:9 159:20,21 break 54:2 94:10
213:1 214:1 178:4 179:17 195:10 201:8 195:3 216:25 130:8,11
215:1 216:1 179:24 181:12 201:13 220:13 217:4,7 228:8 140:25 141:5
217:1 218:1 182:11,11,13 better 71: 18,21 228:13 breakup 51:18
219:1 220:1 182:22 191:3 72:4 96:2 98:7 body67:25 51:20,25 52:7
221:1 222:1 191:13,24 98:9 120:3 bonus 14:21,25 52:11,12
223:1 224:1 192: 16 194: 8 126:12,12 15:3,4,6,7,8 227:23
225:1 226:1 198:21 200:18 137:2,23,24 books 58:23 Brian 5: 18 6: 16
227:1,5 228:1 201:16 212:15 138:10,16 Boone 3:4,11 11:15
229:1 231:11 213:24 215:15 139:11,12,12 12:5,7,9 brian. greer@ ...
231:18 217:9 221:10 139:14 155:10 borrowed 170:8 5:19
belief64:9 66:23 221 : 13 222: 5 156:10,16,18 borrower 24:20 bring 210:22
66:25 175:20 223:9 224:2,6 156:21 157:11 133:5 165:20 broad 201:17
180:11 186:22 224:7,8 226:15 158:16,24 166:14,17,22 209:17
187:4,11 189:8 believed 120:13 162:15 188:9 166:23 167:24 broader 225:4
189:25 135:19 152:9 beyond210:13 169:19,23 broadly 207: 13
believe 22:22,24 believes 189:20 bfaerstein@wi ... 170:4,4,13,14 Broadway 6:22
28:23 31:25 benchmark 6:17 170:20 177:13 broken 211:13
34:17 35:9,12 71:13 big 187:18 191:19,20 Brooker 3: 17
36:11 39:17,19 beneficial168:3 Bill135: 18 193:19 194:3,7 12:4,4 54:16
39:22 47:22 171:10 212:21 billion 152:15 194:10,25 Brothers 73:20
62:10 65:23 benefit 30:7 binding 55:11 195:11 196:7,9 74:8 77:24
66:6,19 68:4 71:15 77:22 109:11 148:5 196:24 116:3
68:11 69:2,5 79:9 100:12 148:10,17,22 borrowers 25:9 brought 92:3
70:3,6,8, 12,13 125:15 134:6 148:24 149:5,8 192: 14 193 : 1 0 Brown 215:21
70:21 71:6,13 152:5 153:19 149:9 225:12 215:22,23
71:20 73:14 153:25 206:11 bit70:9 81:9,14 bottom 32:9 218:19
80:10,10 83:23 206:12 220:3 193:16 216:12 49:10 168:12 Bryan4:19 12:3
86:3 90:22 220:23 221:16 216:14,15 214:18 202:10
96:8,20 100:6 221:18,24 blood 230:16 bought 82:6 Buchalter 17:5
100:14 113:19 benefited 221: 11 board 15:12,13 bound 150:7,17 Buck 106:4
118:25 123:25 221:14 222:23 15:13,16,18,23 150:21 151:4,4 budget 208: 13
125:21 126:13 benefits 224: 11 16:2,10,13,14 151:5 build 66:20
128:12,23 224:17 16:19,23 20:12 box 122:15 bullet49:9 95:17
APP-00374
238
108:2 109:16 184:4 217:3,4 CE022:9,10,13 choose 122:20 closer 96:22
bunch 114:8 217:6,8 32:12 93:13,15 149:9 103:8,10
202:18 CAPEX 120:5 certain 119:9 chooses 147:7 CLR230:20
burdens 219: 13 223:12,13 120:5 125:9 162:22 clue 104:24
business 42:19 224:4 228:24 chose 36:9 CMBS23:3
43:9 61:18 capital6:21 certainly 46:21 122:18 24:21 64:18
69:24 71:8 11:24 64:9 154:2 155:9 Chris 215:20,22 219:2
77:23 78:17 71:7 79:16,20 certainty 25: 15 215:23 218:19 Code 63:15
90:22 110:21 103:18 104:15 Certified 1: 17 chronologically 65:10 100:3
111:2,2135:23 104:17 120:4 certify 230:7,14 216:16 101:9 134:9
138:16 151:17 126:7,15 231:11 Cinemas22:14 138:23 139:4
152:5,21,22 128:16 138:25 chains 22: 12 circumstances 140:12 152:3
153:5,20 166:9 167:3 104:11 133:3,4,5 162:11,18
156:16 158:5,6 222:22 223:10 chance26:2 City 80:12,12 191:9 195:19
159:9,15 212:2 223:21 100:17 claim 63:8,14 195:21 196:14
212:4 Capitalization CHANGE 233:9 71:11 135:19 cohesive 110:20
businesses 17: 15 82:25 83:7,17 233:11,13,15 149:12 162:9 224:12
buy 112:5 capped 63:23 233:17,19 162:20 199:22 cold 122:21
200:22 care 61:16 62:3 changed 65:21 208:15,18 collateral 21 :24
buyer 38:4,6 62:3 199:2 claims 74:11 24:8,24 25:4
42:13 88:7,11 carefully 232:3 changes 117: 14 133:18 177:9 25:10,12 59:22
217:5 case 1:7 19:12 232:9 233:5 180:8 192:6 62:10,19,20
28:16 31:20 chapter 1:6 clarification 63:12 64:6,13
c
37:15 38:20 28:21 37:13,14 178: 16,22,23 65:7,18 128:22
c2:2 3:2 4:2,8
69:12 71:17 38:17,18 50:17 clarifications 133:3 134:8
5:2 6:2 12:11
74:16 75:13,17 63:18 66:18 13:21 144:25 162:10
67:12 150:2
75:20 90:24 76:25 206:15 clarify 101:7 169:8 170:11
151:10 175:2
92:6 100:18 225:16,20 178:24 170:19 179:6
206:9 230:3,3
110:11 112:11 231:6 clarifying 191:13 205:13
calculations
124:19 125:2 characteristics 187:25 206:17
121:8
149:13 153:17 212:3 class 161:10 collateralize
California 17:7
163:25 164:21 charge 78:11,14 clear 37:17 169:12
17:8
165:24 167:7 216:6 52:14 66:8 collateralized
calll6:21 19:20
171 : 19 23 1 :4 chart 8: 19 18: 1 7 77:8 99:2 170:8
19:24 24:7
cash 21:24 19:2,16,19 106:23 108:18 collective 180:11
27:8 130:20
120:11 126:8 20:10 23:21 Ill: 18 146: 16 collectively
called 1:11 84:20
144:25 162:14 24:9,15,19 150:25 153:9 179:8 191:18
88:21
205:13 206:17 165:5,8 166:24 159:13 186:24 225:9
calls 124:10
220:23 221:14 170:16 188:8 206:19 color 24:9 165:5
201:4
222:7,15 Chicago 2: 18 207:4,23 coloration 59:23
cancellation
223:14,21 14:12 clearly 26:5 column 25:3
182:2
caused 52:11 chiefl0:20 13:5 98:17 159:22 197:23
cancelled 178: 11
Cave4:19 12:3 17: 16 22: 14,16 client 189:22 columns 25:9
181:22
202:10 46:6 60:23 clients 119:20 come 15:20
capability 90:20
CDO 168:4 142:5,11 199:24 16:15,18 50:12
capable 33:24
171:11 Chip 3:17 12:4 close 114:3 66:5 70:24
192:13
center 19:14 chip. brooker ... 218:21 75:8 119:10
capacity 13 5: 12
208:21 3:18 closely 48:8 120:12 137:16
APP-00375
239
137:24 146:12 71:14 75:9,19 172:24 184:24 139:24 162:7 153:12 162:13
178:18 182:20 77:9 83:13,15 185:15 192:19 190:7,24 162:17,21
189:19 192:11 84:19 86:7 228:4,21 confirmed 50:13 182:5 200:9,11
coming 31 :23 87:20 88:6 component 188:18 189:2 201:7,12,17
110:2 120:22 89:10,18,19,25 14:21 227:12,15 221:21
commenced 93:1195:25 comprehensive conflict 158:3,14 considered
149:3 216:9,11 98:23 99:18 50:9 61:2 158:16 30:17 174:24
commencing 108:4 109:13 comprises 31:8 conflicts 158:6 considering
1:15 122:5 126:15 concentration confused 146:22 91:21 197:9
comment 85:3 128:18 135:19 17:17 153:18 consistent 83 :22
188:11 138:19 140:9 concept 48:23 confusion 106:22
comments 86: 18 145:20 154:7 103:9,10 140:9 146:22 consists 45:10
105:19 110:16 162:14 200:14 181:25 connection 39:3 Consolidated
188:4,6 219:12 concerned 62:18 39:1142:14 117:2
Commercial company's concluded 61 :22 75:2 92:5 consolidation
88:20 228:9,14 58:23 117:12 conclusion 147:14 153:13 197:5
committee 6:5 117:13 124:11 178:19 179:5 180:2,15 constituencies
11:14 88:23 comparable condition 34:8 184: 18 197: 1 0 53:8 66:14
common 67:15 120:8 50:14,20 51:12 200:14 205:5 70:23 71:17
99:9 compare 55:5 90:21 95:10 205:12 211:7 72:573:12
communicated comparison 77:5 99:11102:17 213:9 219:11 74:14 77:22
92:13 103:5,9 77:24 102:20 112:7 219:20 79:9,24 80:9
206:20,21 compensated 208:12,23 consecutively 159:25
212:24 14:18 210:21 211:16 104:2 constituency
communication compensation 211:19 consensual 75:10 137:15
93:20 14:20,22 conditions 48:5 65:20 66:7 constituent
communicatio ... compete 137:18 49:7 54:22 68:15 53:20
31:21 112:15 competitive 55:8 83:2,7 consensus 66: 10 constituents
218:17 119:19 86:23 87:2,4,7 66:20,25 67:24 30:7 71:6 77:2
community complete 207:7 89:23 95:3,8 68:8 80:5 123:2
219:2 231:14 95:17 102:11 consensus-boil ... 134:15
companies 20:6 completed 58:13 107:23 109:5,9 66:19 68:4 constitute
22:18 117:15 60:9,13 110:5,7,24 consent 159:25 215:12
120:8 148:14 completely 75:3 112:24 212:3 168:7 171:17 constitutes
153:21 completeness 228:24 172:6,9 173:7 143:6
company 16:15 45:16 conduct 44:25 173:11,19,23 constructive
16:24 21:19 completing 219:12 174:14 175:7 105:16
22:25 28:21 58:10 confidential 182:21 183:13 consummated
30:16 31:16,23 compliance 34:9 26:2 184:9 123:24
32:24 39:8 Complies 29:13 confidentiality consequence consummating
44:25 45:2,25 29:16 35:17 133:17 215:4 95:20
47:24 48:17 44:16,20 48:9 confines 75:9 consider 55:2 contacting 33:6
50:10 51:24 55:6 56:6 confirm 226:7 64:7 120:17,18 33:15
52:4,7 55:12 86:24 102:13 confirmable 126:6 132:2 contacts 43:12
56:19 57:20 109:7 115:10 139:7 164:24,25 contained 151 :7
58:12,16 60:10 127:25 142:22 confirmation consideration contemplate
60:14,22 61:5 142:25 147:19 51:11 99:12 64:23 65:6,8 122:16 197:5
61:13,23 62:15 149:24 151:13 123:14 139:3 66:3 123:5,10 contemplated
APP-00376
240
62:16 108:5 217:23 33:17 192: 15 193 : 14 69:6 71:10
169:16 175:25 conversations corpus 135:3 193:24 194:4 89:19 108:3
176:5,8 177:2 42:15 49:4 Corp's 100:12 194:11 196:4,5 109:21 138:5,6
195:10 200:10 98:3 100:15 Ill :25 196:7,8,10,11 143:18 145:2,9
212:25 220:25 113:22 114:19 correct 13:11 196:16 198:9 148:7,14,18
contemplates 212:9 216:4 16:5,6 18:11 198:14,20 149:2 185:3
156:2 218:11 18:13,14 19:17 203:12 213:3 220:17 227:12
context 19:15 conversion 19:18 20:7,10 213:16 214:3 227:19 228:13
24:14 42:16 110:6 24:10,15,22,25 217:9 218:24 229:4 231:2
45:21 51:12 convert 169:15 25:2,6 27:24 226:9,10,19,22 232:16
60: 19 61 : 13,23 converted 13 7:5 28:15,16,25 229:7 231:16 Covenants
63:21 65:3 converting 29:9,10 30:12 corrected 149:21
99:25 100:13 123:11 137:7 30:19,24 31:17 179:12 cover 21:13
128:24 152:17 copies 27:3,4 36:16 41:18,19 correcting 179:3 covered 21:9,17
160:12 186:3,7 54:15 42:5,6 46:10 corrections Craven 10:20
186:8 202:16 copy 27:24 28:3 48:18,24 49:12 232:4,6 66:9 142:4,11
220:6 corner 40:17 52:2,21,22 correctly 24:12 184:23 228:20
contingencies 94:24 204:8 55:14,23 62:15 45:12 108:6,7 Craven's 228:18
152:12 Corp 15:17,24 62:17,21 68:3 145:7 create 152:13
continue 97:12 22:21 31:10 68:18,20,21,22 correspondence 199:12
105:16 120:16 32:13 33:2 68:25 70:19,20 210:2 created 64: 10
146:11 196:25 39:2,17,22 72:22 73:9,10 costs 211:6 66:20 128:19
Continues 104:6 42:12,15 45:7 73:23 78:4 counsell2:15 139:17
continuing 29:7 48:15 51:3 83:15 84:3 13:25 22:17 creates 71:3 79:8
68:13 120:16 52:5 67:15 89:25 91:8,22 37:25 43:6,13 creating 134:12
contract 15:9 88:4,13 91:23 93:22 96:23,24 43:15 44:6,8 creditor 53:20
148:20 149:11 92:10 95:11 98:24 102:18 76:5,6 97:3 64:13 66:14
150:10 98:5 100:9 109:16 112:15 114:18 121:9 67:25,25 70:23
contractual 109:12 126:5 118:4,5,6 174:7 188:17 73:12 74:13
91:15 corporate 8: 17 121:4,24 189:19 75:10 79:23
contribute 125:8 17:22 18:3,10 125:23,24 counsel's 27:23 80:9 90:15
contributed 157:16 196:21 134:18 143:13 counteroffer 134:17 135:8
125:16 corporation 5:5 143:14,19,23 84:15 135:11 137:3
control97:14,15 11:11 16:3 145:22 148:8 country 22:12 137:14 157:14
182:21 183:4 19:20,25 20:5 148:15,16 couple 40:24 159:24 162:21
183:12 184:9 20:14 23:12,12 149:9 150:8 72:23 93:20,24 192:8,12
controlled 23:14 30:21 153:22 154:10 172:16 206:17 creditors 6:5
174:19 182:14 31:2,3 34:7,15 160:8 161:23 216:9,11 11:13 50:11
controlling 35:4,21 36:15 164:8,18,19 course 62:3 53:1560:3
161:10 39:6 41:19 165:24 166:4,7 64:16 89:8 64:18 66:22
controls 173:6 42:6 82:6 166:8,19,21,25 120:15 125:11 67:21 68:2
cont'd 3:2 4:2 83:1985:23 168:14,18,22 146:7 207:7 71:1179:10
5:2 6:2 86:2 91:2,7 168:23,25 210:18 215:19 134:25 135:4,6
conversation 100:2 104:18 169:10,16,17 court 1 :2 13: 17 136:25 137:19
65:22 97:19 127:7,15 170:15,21 26:22,24 27:3 137:22 138:9
125:7 208:16 196:18 216:20 171:25 172:2,7 27:25 36:4 139:2 151:25
209:6,9,10,23 221:19,19 181:13,18,19 50:13 63:7 152:16 156:19
210:5 212:8 Corporation's 182:15 184:5 64:5,12 65:8 162:4 191:22
APP-00377
241
201:19 148:2 149:18 200:13 205:4 187:11,12 deem 65:8
crisis 132:16,19 149:18 156:3 dealing 27:20 190:15 192:22 deemed 178:10
133:7 172:20 182:24 deals 71:5 77:16 193:19 194:20 181:21 232:16
Crisp4:15 11:21 204:19,20 dealt 126:17 199:17 201:10 deep 144:22
11:21 230:9 232:8 177:11 180:4,7 201:14 215:10 default 110:6
CRO 14:16,19 233:23 debt 19:16 24:14 debtors 1:8 2:5,5 112:24 125:22
15:10,21 16:25 dated 8:25 9:5,8 25:10,11,12,16 2:16,16 8:18 127:17 132:18
23:8 106:9 9:11,14,17,22 59:22 60:2,5 8:20,21 11:4,8 221:9
164:18,20,24 10:6,10,12,14 61:4 64:12 11:18 14:19 defaulting
176:13 194:18 10:17 28:24 65:2 77:6 15:11,21 17:22 217:21
196:12 32:2 35:3 110:6 123:7,12 18:4,10 19:3 deferred 211 :23
CRO's 162:16 40:12 44:11 128:11 129:9 19:15 25:18,19 211:24 223:12
CSFB202:12 47:4 48:12,14 129:17 131:15 26:15 29:6,22 deficiency
culminated 54:6 81:17 131:19,22 30:3,5,1 0,14 162:20
212:11 82:16 85:17 133:14 135:14 39:13 40:23 defined 51 :20
current 108:9,14 86:18 94:8 135:17 137:7 41:17 42:4 177:9 178:10
108:17 169:5 101:22 102:6 158:25 163:5 47:17,18 57:19 179:8
188:10 213:5 103:11 104:11 166:6 176:2 59:17 60:5 defines 179:4
223:14 224:13 109:2 114:23 177:8,11,15,16 63:17,20 70:4 defining 132:20
cw 166:9 167:3 130:15,19 178:9,10,12 74:1177:13 definition 63:12
cycle 211:3,21 dates 131:6 179:7,9,10,20 92:4 132:16 147:25 149:17
day 1:14 19:3,10 180:18 181:21 133:23,23 deflagged 206:6
D
28:15 36:5 182:2,5,8,14 143:4,7 148:14 deflaggings
D2:19 4:15 8:2
66:9 72:21,22 182:17,19,22 149:6,8,9 132:18
Dallas 3:14
73:8 75:22 183:5,14 157:22,23,24 degree 151:19
Dalton 22:22
116:16 231:21 187:15 191:23 158:17,18 Delaware 20: 10
44:3
days 3 1 : 19 3 3 : 16 197:23 198:7 164:8,12,13,18 delayed 211:9
damages 149: 12
40:24 72:23 198:19 199:5 165:24 167:17 deliver 53:14
Dan 11:3,23
74:19 93:20,24 199:11 200:14 168:13,17,19 delivered 53:7
DANIEL2:8
102:6 112:10 203:18 207:15 170:21 176:13 demonstrate
6:24
114:5 131:9,22 207:18 213:2 188:24 191:17 24:17
daniel.donova ...
132:7,14 213:12,13 192:25 193:10 Dennis 10:19
2:9
133:12 135:12 222:7,16,21 193:24 194:4 142:4,11
date 17:23 18:18
136:14 143:10 223:5,10,21 194:19 195:23 228:18
25:21,23 28:18
159:24 161:2 debtor 31:14 196:3 197:6 depends 158:13
28:19,21 29:5
197:5 232:14 36:13 37:13,14 198:9 219:14 deposing 232:13
32:3 35:3,10
day-long 117:17 38:17,19 56:3 228:23 231:8 deposition 1: 11
35:11 36:16
DC 2:7 204:2 57:15 59:10,12 Dechert 5: 14 8:16 13:13,14
40:13 44:11,13
deal71:18,22 59:14 60:4 43:16 94:23 14:2 17:21
46:21 47:5
72:4 74:23,24 61:20 70:22 102:5,16,19 18:3 19:21
54:7,12 58:6
75:7 77:18,18 77:3,21 83:24 1 04: 13 114:9 21:9,13,18,23
81:18 82:17
99:10 107:12 85:7 89:4,20 decide 120:18 140:4 164:11
85:18 94:9
113:17 131:15 90:4 98:6,12 188:10 220:19 164:15 180:10
101:23 102:15
137:2 140:21 98:16,18 99:5 decision 77: 18 189:24 194:15
103:12 105:17
140:22 158:21 111:3 112:19 declaration 222:11 229:15
Ill :5 113:25
158:22 175:21 116:18,20 10:19 66:9 230:8,11
114:4,24
180:17 181:15 136:25 150:7 142:4,11,15,18 231:13 232:3
130:16 142:7
188:21 198:20 150:14 164:21 228:3,18,20 232:11,14,15
APP-00378
242
Derrough 31:2,12,14 16:13,19,23 106:16 Ill :6 86:4,16,20
135:18 133:6 145:23 20:13 23:10,13 114:23 130:15 87:12,13,14,16
describe 121:23 146:5,9 159:17 24:4 32:14 130:21 131:25 87:19,21,25
155:7 204:25 159:18 205:8 75:15 76:17 132:3,11 207:6 88:3 89:24
210:19 Diego 203:23 88:16,19 89:3 208:17 212:2,5 90:2 91:17
described 77: 17 205:13 206:6 116:23 164:23 discussions 94:6 95:6,9
84:23 159:12 210:15 211:5 225:13 29:23 30:4
96:3' 5 '7' 9' 12
208:8 212:18 221:10 disagree 146: 10 32:25 42:7 96:19 101:2,20
DESCRIPTION 224:6 186:10 187:16 66:17 83:24 102:2,15,19,22
8:15 9:3 10:3 Dieterich 5: 1 0 disagreements 88:14 97:24 102:25 103:2,7
deserve 163:5 40:7,7 117:20 98:10 100:11 104:7 105:22
designated 83:6 different 43:20 disclose 13 5: 13 105:16 106:6 106:19 107:14
86:22 43:21 58:6 disclosed 35:22 118:8 180:2,14 107:23 108:19
designating 68:16 69:3 36:4 37:3,7,9,9 180:20,21 108:19,21,23
25:25 74:12 82:8 37:15,17,20 204:21 207:10 109:2,10
desirability 88:7 98:17 38:19 76:7 207:13,14,24 114:22 116:4,6
70:13 104: 5 116: 19 228:12 229:3 212:10 215:16 116:7,15,25
desire 42:8 119:24 120:9 disclosing 76:10 216:19 217:11 118:17,21
74:10 100:12 134:4 140:9 76:21 217:18,24 119:3 130:10
despite 48:22 174:25 178:8 disclosure 89:2,7 218:5,25 219:4 130:14,19,24
destructive 180:24 188:7 89:11,17 226:7 131:2,13
132:16 199: 11 221 :4 197:11 228:8 dispute 108: 13 139:15 142:10
details 211:14 diligence 58:24 discounted disruptive 144:17,22
212:15 59:3,4,6, 15,16 120:11 126:24 161:7 156:8,23
determination 59:25 69:10,21 discourse 117: 19 distribution 15 7: 10 173: 10
61:18 152:11 69:22 138:14 discuss 62:5,25 39:2 95:2 173:18 178:5
determinations 138:20 139:18 63:21 70:14 96:15 99:5 179:2,11,21
62:7 139:19 159:18 75:18 76:16 DISTRICT 1:3 182:10,13
determine 53:4 205:9 206:2 79:6 132:4 231:3 183:3,4,12
69:25 119:25 218:16 133:18 136:13 document 9:4,7 184:2 198:5,13
158:23 201:8 DIP 91:18,21,25 174:16 179:15 9:10,13,16,19 documents
220:22 92:3,12 110:9 226:12 10:4,8,13,16 27:18 40:22
determined 147:9,15 discussed 63 :4 18:4,5,7 19:4,7 47:9,16 55:19
63:24 159:20 160:6,9 76:6 77:4 26:8 28:24 55:21,25 56:2
determines 63:8 160:13,24 105:9 115:22 37:10 40:11,16 58:5 59:9 85:6
64: 5' 12 71 : 1 0 161:7,13 119:9 135:17 40:18,23 41:8 102:23 104:5
determining 205:12 206:8 136:6,11 41:10,13 44:10 106:21 121:10
61:2 206:22 212:20 169:19 173:3 44:23 45:19 156:6 172:16
detriment DIPs 92:9,10 211:17,19 46:11,20,23,24 186:20,21
153:25 direct 31 :20 216:23 47:3,8,12,15 187:8,9,19,22
detriments 154:13 214:17 discussing 50:25 48:13,20 49:3 188:9,11 189:2
220:4 228:5 65:14 76:5 49:5,6,7,17 189:7,10,25
developed 155:4 Directing 228:22 136:17 205:11 54:5,11,12,20 190:7
development direction 114:18 225:17 55:15 56:23 doing91:2192:9
41:16 42:3 directly 49:6 discussion 10: 14 58:2 60:16 92:10,14 97:13
dfliman@kaso ... 50:11 113:19 10:17 98:15 81:16 82:2,15 134:12 138:10
6:25 director 89:9 100:8 105:14 83:11 84:4,7 160:9 207:11
dialogue 30:11 directors 15: 14 105:25 106:3 84:11 85:15,20 219:22 220:13
APP-00379
243
223:12 232:7 156:13 157:7 8:14 9:2 10:2 eliminated 65:2 99:15 123:8
dollar 170:5 158:9,12 159:3 12:11 142:2,2 133:13 134:2,5,23
192:5 159:5 163:13 144:25 145:8 eliminates 161:7 139:23 152:21
dollars 15:3 163:17 174:2,9 214:18 230:3,3 Ellis 1:13 2:4,15 152:23,24
67:19 133:14 176:20 177:24 233:1 11:4,8,18 43:7 153:5,6,16,20
135:15 207:19 181:2 182:16 earlier 48:23 115:5 189:2 157:14,17
213:12,19 183:16 186:17 59:24 91:17 Elmore 3:15 159:22 160:5
Donovan 2:8 8:8 187:6,16,21 93:21 102:7 12:6,6 195:14 196:21
11:3,3 12:18 188:2 189:5 116:8 122:25 embedded 200:17,19
14:8 18:15,21 194:16,21 132:8 133:12 199:13 201:2,9,15,18
21:10,20 25:24 195:2 197:7 136:15 137:6 embodied 84:20 201:19 206:16
26:10 28:2 201:4 202:2 152:3 159:12 84:22 103:2 213: 1 0 221 : 15
33:9,12,20 208:9 214:7 173:3 188:6,11 109:23 110:4 224:13
34:13 35:24 220:10 227:3,7 219:15 207:17 entire 77:9 90:9
36:17 37:4,16 229:9,12 early 123:8 emergence 98:24,25 135:3
38:2,8,21 39:9 double 145:3 125:14 144:17 198:7 195:14 201:18
40:3 41:2,5,20 150:18 224:9 earshot 99:4 employed 13:4 221:18
43:3,19 45:13 doubt 49:5 197:2 easier 202:13 17:5 230:14 entirely 106:23
45:16 46:15 downside 163:7 EBITDA 64:11 employee 22:24 entities 21:3,6
49:21 52:23 163:10 71:3 77:15 104:22 23:2 24:4,5
53:25 55:24 draft 94:23 128:20 employees 98:4 25:13 31:11
56:13 57:9,25 102:5,16 economic 123: 10 217:2 53:2,16 128:3
63:25 69:13 107:14 183:9 153:23 208:23 employment 139:18 169:10
70:10 71:24 206:8 economy 163:8 17:2 192:11,23
73:24 75:21,24 drafting 188:22 educate 133:2 ended 95:20 202:15 205:4
76:2,13,19 drafts 27:18 education 13:10 204:20 206:16 221:6
78:5,23 80:2 47:14 227:9 effective 70:3 ends 152:23 221:14 223:2
81:6,11 84:9 driveway 210:24 147:25 149:17 engage 83:24 225:16 226:2,9
86:6,10,13 due 58:23 59:2,4 149:18 150:6 114:12 159:17 226:14
89:5,14,21 59:6,15,16,25 150:13,15 159:18 entitled 117:2
94:11,14 95:14 69:10,20,21 156:3 engaged 29:23 121:22 128:24
95:18 103:24 138:13,20 effectiveness 30:4,10,15 142:10 195:22
106:18 107:4,8 139:17,19 90:21 31:14 entity 23 :21
111:13 113:18 159:18 205:9 efficient 195:7 English 57:7 88:16,18,24,24
116:10 121:14 206:2 218:16 effort 110:17 ensure 134:7 104:23 161:10
121:18 122:8 duly 12:12 230:9 116:18 ensured 50:19 164:24 166:3
122:22 124:8 duplication Ehrlich 5:8 11:9 enter 100:22,24 166:14 167:2
124:10 127:3,9 165:16 11:9 140:5 206:12 192:12 193:20
128:5 129:11 duty 69:5 78:16 either 40:22 207:6,10 194:22 196:13
129:18 130:7 139:9 140:21 83:21 92:9,10 218:25 219:3 196:25 200:20
130:13 134:22 201:16 220:8 117:16 150:12 entered 24:20 221:23,25
136:8 140:17 220:15,18 171:6 183:21 26:7 148:21 222:9
140:23 141:4 221:4 192:9 210:3 205:8 entries 164:24
144:2,5 145:6 element 110:17 entering 95:21 165:2
145:16 146:15
E
elements 33:22 217:23 entry 145:2,9
146:21 147:5
E 2:2,2 3:2,2 4:2
110:4,18 enterprise 15 :24 environment
148:11 150:20
4:2 5:2,2,18
119:16 121:7 30:6 53:12 120:3,21
153:2 154:18
6:2,2 7:2,2 8:2
eliminate 128:10 63:11 71:4 123:11 132:19
APP-00380
244
environments 174:25 177:9 events 110:5,5 50:15,19 72:18 182:10 183:3,8
119:21 177:14 200:5,6 112:23 132:16 108:4 160:19 183:22 184:22
envisioning 217:5 229:5 144:24 148:6 executing 77:23 192:18,23
197:4 equivalent 65:9 everybody 18:20 102:17 197:14,16,17
equal51:18 65:6 ERHLICH 66:18 execution 28:3 202:14 208:2
200:23 98:14 124:9 everybody's 107:23 214:10,12
equitization errata 232:5,7 62:4 executive 17: 16 227:12 228:2
51:9 134:12 232:10,13 evidence 19:10 22:14,17 228:19
equitize 73:21 error 188:23 evidenced 97:2 executory exhibits 26: 14
74:10 ESQ2:8,10,19 98:20 Ill: 10 148:20 149:11 27:11 40:2
equitized 128:15 3:8,15,17 4:8 112:15 154:3 150:10 83:23 142:14
equitizes 63:10 4:15,23 5:8,10 evidently 48:20 exercise 13 9: 8 142:16,17
70:25 5:18,20,22 6:8 exact 71:17 150:22 156:11 143:22
equitizing 63:12 6:16,24 exactly 7 4:7 156:22 157:5 exist 196:25
64:10 199:10 essentially 99: 14 134:8 178:5 159:15 existed 126:7
199:10 117:21 155:13 193:17 219:24 exercising 78: 16 existence 73:8
equity 31:15,23 213:10 examination exhibit8:15,16 73:12
36:15,24,25 estate 4:5,12 7:5 1:12 12:22 8:19,20,24,25 existing 200:20
37:12,13 38:17 50:12 64:16 163:20 202:5 9:3,4, 7,1 0,13 exists 66: 11
38:18 39:3 66:7 70:22 227:6 9:16,19 10:3,4 expect 194:18
42:9 44:18,22 77:20 88:20 examined 12:12 10:8,12,13,16 experience
44:24,25 45:2 125:8,16,17 example 80:16 10:19 17:23 37:11 38:15
45:3,8,8 46:4 129:3 134:10 117:2 119:12 18:2,17 19:2 123:4 138:18
48:4,4,4,16 134:15 135:2 208:19 220:2 19:13 24:6 experiences
51:10,16 54:20 138:17 139:8 220:23 221:6 25:21,23 26:15 16:16
54:21,21 62:14 139:14 140:14 221:20 26:20,24 27:7 expert23:3
63:3,10 64:21 146:13 152:6 exceed 207: 19 28:8 32:3,6,10 explain 76:8
65:7 66:2 152:11 156:22 excess 177:19 35:13 40:13,16 78:24 168:24
67:15 81:25 157:18,19 200:24 213:11 44:10,15 47:5 177:6
82:4, 7,9,9,25 159:23 163:24 213:18 47:8 48:11 explore 80:4
82:25 83:6,7 164:16 206:11 exchange 8:25 51:17 54:7,11 explored 75:19
86:22,22 87:6 228:9,14 10:12 32:2 55 :4,9,9, 16,16 exploring 80:12
87:6 88:2,4 estates 30:7 51:10 88:21 56:5,7 58:4,7 182:19
90:17 95:2,2 134:17 152:16 103:11 125:10 59:20 60:17 expressed 132:8
96:15,17,18 157:19,21,23 125:19 72:5 81:18,21 extent 31:5
98:11,16,18,22 157:24 exchanged 62:13 82:8,17,20,25 42:11,1443:17
98:22 99:6,9 estimate 155:18 exclusive 52:19 85:18,21 90:8 49:22 62:5
99:12,20,22 estimates 117:22 138:24 139:20 90:9 93:21 76:4,8,20
100:25 102:10 155:5 140:13 152:19 94:9,20,21 90:16 91:13
102:10 103:3 et 1:7 231:7 exclusivity 101:23 102:2,7 101:17 208:25
109:4,4 110:6 ether 224:24 158:23 159:4 103:12,15 214:8 216:23
122:5,15 123:7 225:9 excuse 93 : 12 114:24 115:4 external 79: 16
123:12,13,15 event 26:8 33:8 208:21 130:16,18 extinguished
123:18,23 126:24 143:17 execute 55:12 131:10 142:7 196:4
137:7,10 153:5 143:21,21 89:24 109:13 142:10 143:25 extra 54:15
154:2 162:22 145:25 146:2 110:21 147:16 154:22 extremely 64:7
162:25 163:5 147:4,6,8,13 executed 34:4,8 164:10 165:4 71:12 155:21
169:15 170:9 161:7 214:2,6 35:7 36:21 172:23 176:20 e-mail8:25
APP-00381
245
10:12 32:2,10 faith 99:15 159:24 226:9 fine 12:20 20:3 65:19 128:18
34:24 93:25 falll52:4 filed 26:24 27:2 195:23 216:18 199:12 200:13
94:2 103:11,18 familiar 14:3 27:2,13,25 finger 149:16 Fliman 6:24
103:21 104:10 32:8 147:21 28:12,14,16 finish 23:25 11:23,23
105:2,6 218:8 203:3,14,17,23 29:4 72:18 46:15,17 70:10 floating 25:5
218:18 204:5,10,14 100:18 101:4 87:17 127:4 117:23,23
e-mails 105:3 far25:1167:3 109:20 138:4 134:22 136:8 118:3 146:17
218:13 68:2 85:8 142:19 145:20 finished 29:18 146:20,24,25
e-mail's 106:24 216:13 158:24 185:3,5 firm 17:6 85:23 147:12 168:17
F arr 6: 12 11 : 16 185:10,18,25 85:25 151:15 169:19,23,25
F
fashion 154:9,12 206:18 159:11 188:18 170:4,6,14,20
F 142:2 230:3
Fassett 1:16 files 27:2 225:16 first 15:9 19:3 171:18 172:3
faced 158:20,22
230:5,20 filing28:15 30:9 19:10 28:15 172:10 173:7
facially 97: 13
favor 128:15 31:3,20 33:16 36:5 56:4 58:2 174:18 175:10
facilitate 64: 14
feature 99:13,17 35:10,11,22 66:9 103:17 175:11 177:13
facility 91:22
features 119:19 36:16 72:4,21 104:17 107:12 179:6 181:12
205:12 206:10
fee 51: 18,20,25 72:22,23 73:9 108:2 119:7 181:17 182:7
fact 44:24 47:23
52:7,11,12 73:13 74:15 124:20 132:12 182:14,18
60:13 64:21
168:12 227:23 75:12,16,20,23 133:16 136:12 183:5,13 184:4
65:22 68:12
feel92:21 127:11 78:4 79:5 138:20 143:3 184:10,20,21
92:8 97:11
151:4 219:22 93:21,24 144: 17 153: 10 186:15 190:3
112:21 125:16
feeling 120:13 112:10 114:3,5 155:2 174:24 190:23,23
128:13 130:25
fiduciary 69:5 124:19 125:2 175:13 184:8 191: 19 193 : 18
136:14 137:8
78:16 128:6 138:5,8 160:14 220:2 230:9 193:19,24
138:4 160:12
130:3,5 133:20 172:20 182:24 First-Day 10:22 194:3,4,7,25
177:18 179:13
133:22,25 197:4 206:15 142:6,13 195:11 196:3,9
180:3 217:19
134:5,9,14,16 225:20 226:16 fit 221:18 196:24 197:22
221:8
134:19,20,21 226:18 five6:2111:24 198:6,9,18
factors 208:23
134:25 135:3 final27 :20 50: 19 11 0:9 124: 18 199:4 207:18
facts 201:6
135:10,13 109:20111:24 124:25 147:9 216:24 221:12
Faerstein 6: 16
138:17,21 175:17 147:14,14,15 Floor 3:6 4:13
11:15,15
139:9,11 finally 110:21 155:12 160:7 flow 120:11
fail232:15
140:20 150:22 Finance 228:9 160:13 161:4,6 126:8 220:24
failed 124:7
150:23 151:6 financiall0:20 161:13 163:15 221:15 223:21
fair 17:17 60:25
156:22 157:5 23:12 117:3,10 201:24 202:21 flux 193:16
64:12 71:10
157:15,16 117:24,25 205:11,14 focus 112:25
106:23 126:16
159:14 162:16 119:14 142:5 216:21 225:16 193:18
128:22 179:17
195:23 201:16 142:12 155:6 five-month focused 109:24
187:17 189:11
219:23 220:8 155:19 196:18 125:3 109:25 110:9
189:14 190:13
220:15,18 217:21 228:14 fixed 24:20,21 111:16,20
194:22 206:12
221:3 financing 23:3 91:21 117:9 113:9 145:16
212:22,23
field 216:17 91:18,21 92:4 118:3 119:4 165:17 198:25
219:19 229:3
Fields 17:6 206:12 212:20 160:10 161:8 Foerster 6:4
fairly 46:12
Fifteenth 2:6 221:24 161:14 162:4 11:13
123:17 127:11
Fifty 99:20 financings 91:25 206:9 207:18 folks 225:5
201:17 220:12
figure 188:21 find 74:18 78:12 216:24 221:13 follow 226:6,12
220:13
200:3 220:17 79:3 88:7 flags 126:18 followed 210:3
fairness 27:17
file 28:21 139:22 126:14 flexibility 64:8 following 32:20
APP-00382
246
233:5,6 97:22 fund 124:6,15,24 110:9 114:3 134:6
follows 12:13 Foundation 127:7,16 162:9 195:16 goes 47:10
192:24 35:24 56:13 161:14 196:10 200:4 105:15 109:15
footnote 56:8,12 57:25 78:23 fundamentally give 39:25 47:16 155:24 179:18
57:24 58:6,7 80:2 116:10 70:21 59:2,4 64:23 going 23:11
60:17,18 84:21 122:23 funding 91:24 65:17 76:2,3 24:18 29:20
84:24 177:12 four 107:20,21 125:18 126:2 78:14 84:15 33:8 34:3
178:5 179:4 115 : 19 124: 18 funds 126:11 118:13 128:17 35:16 38:5,6
183:23,24 124:25 154:8 further 105: 19 149:12 154:13 47:14 48:6,15
184: 14' 14' 15 154:12,17 170:10 201:20 163:11 178:14 51:15,24 52:4
228:17 155:7 160:23 209:18 226:25 186:21,22 55:8 63:2
footnotes 116:8 176:21 217:15 229:9 230:14 195:4 215:6,12 69:13 82:9
foregoing Fourteen 197:20 future 71:8 given 78:11,14 85:6 99:4,7,8,9
230:10 framework 119:22 129:2 90:3,3 182:5 106:18 107:16
form 35:7 49:11 66:20 223:12 207:7 230:12 107:22 109:3
65:6 89:5,21 franchise 125:22 231:16 117:25 119:20
95:12 98:14 143:12,16,20
G
gives 150:11 120:3,20
111:14113:18 145:4,11 147:9
gain 123:3
giving 110:15 121:21 122:4
122:22 124:9 147:12
Galante 6:8
162:12,17 126:6 128:9
128:5 140:24 franchisors
11:12,12
195:21 131:15 133:7
148:11 150:20 66:22 110:11
GALLAGHER
Glatt 103:18 140:2 141:4
153:2 154:18 128:19
6:12
104:11,14,20 146:3 153:11
156:13 158:10 frankly 126: 10
Garden 203: 11
104:21 105:2,4 155:23 157:13
158:13 159:6 Fred22:9
210:15 211:11
106:5,10 157:14,22
162:13 178:3 free 69:2 77:8
Garrison 5 :4
global52:20 158:9,12 159:7
181:3 182:16 162:14
11:10
53:2,8,16,18 162:4,5 163:14
186:17 208:9 freed 128:17
geared 210:20
98:12 118:9 165:12 169:14
214:7 218:18 freeing 77: 15
GEN 119:25
143:7 174:20 189:23 190:15
220:10 228:18 free-fall77:4, 10
120:2,2
go 17:2 21:7,15 192:10 197:7
Forma 121:22 frequently 98:8
general22: 17
23:23,24 25:8 200:19 206:14
122:12 197:23 Frey 114:7
132:14 207:8
52:12 64:11 212:7 217:15
formerly 22: 10 Friedman 6:20
211:16 212:4
77:7 78:12,20 217:19,22
22:14 11:24
216:3 217:25
79:2,11,13,21 good 61:19
forms 153:12 front26:17
219:3,5
88:7 97:16 77:24 81:10
forth 47:14 54:14 55:4
generally 48: 19
106:25 108:24 115:18 130:7
55:13 73:4 69:24 70:2
92:21 167:16
113:3 116:25 130:10 131:6
109:14 139:3 fulfill91: 12
168:16 203:3
118:11 119:2 151:18 156:19
218:18 230:9 126:9 139:21
208:18 209:3
122:24 128:8 202:2,7 204:7
Forty-five 24:24 fulfilled 224:5
generated
130:10 131:12 204:12,17
forward 45:25 fulfilling 77: 12
221:15
136:24 139:19 220:7 225:2
46:3 68:9,12 78:16 90:20
generates 222:6
140:21 146:3 gotten 87:22
76:24 81:12 125:9 126:13
222:15
149:17 150:11 Gottesman 4:23
Ill :3 112:8 219:22 220:14
generic 208:7
162:4,25 8:7 12:2,2
113:23 125:12 fulll2:25 64:10
Georgia4:7
176:16 178:23 201:24 202:6,9
132:5 139:9 156:8 207:7
getting 39:2
179:9 186:17 226:24
155:24 159:23 fully 127:11
60:16 63:13
202:13 203:4,7 Gould2:10 11:7
160:4 207:11 162:14 190:16
67:773:4
214:11 11:7 14:11
found 83:22 190:20 199:9
96:22 103:8,10
goal 92:6 132:12 54:15,17
APP-00383
247
gradual155:21 210:18 Hi202:8 154:15 155:15 impact 128:13
gradually hand 85:20 high 135:21 169:9,11 170:9 imperative
155:15,20 handed 18:25 188:12 177:14 202:25 232:12
Grand20:9 19:3 26:13,20 higher 71:18,21 204:22 206:6 import 69:19
24:19 165:19 47:7 54:10 156:10,16 207:15 208:2 important 34:4
166:14,17,22 57:13,16,17,20 191:3 209:4 221:9,10 34:7 51:11
169:19,22 81:20 82:19 highlights 223:6 60:23 61:8,22
170:3,13,19 101:25 103:14 173:10 hotel-by-hotel 64:7 71:12
177:13 191:19 115:3 142:9 highs 155:13 155:4 88:10 90:12,18
191:20 192:21 handle 127:13 Hilton 166:3 HS 165:23 91:10 112:4
194:2,7,10,25 133:7 hired 15:10,14 166:13,19 132:25
195:11 196:7,9 handling 126:6 225:5 hundred21:3 impression
196:19,23 happen 119:21 historic 155:13 62:14 63:13 188:23
granite 211 : 13 152:16,18,19 224:4,13,14,17 70:25 99:11 improve 221:16
grant 125:11,12 159:8 historical222:25 123:18 153:24 improvements
granted 215:8 happened 99:3 history 17:2 162:10 166:18 210:17 211:2
granting 8:23 happens 214:10 hold 25:16 37:16 168:2 200:5 222:22 223:11
25:20 145:2,10 happy23:23 70:10 178:14 hundreds 27:18 inaccuracies
Great 14:13 27:5 78:25 holder 25: 12 47:13 67:18 185:9,11
greater 195:22 85:5 154:13 45:3 67:13 Hyatt 120:2 inaccurate
greatest 79:8 173:16 188:8 153:25 188:19 189:20
green 24:9,13,14 195:4 201:3 holders 67:12
I
inches 142:14,16
25:4,10,13 harbor 100:4 Holdings 20:9
idea 104:19
include 22:22
59:23 165:25 Haynes 3:4,11 192:22 196:19
192: 5 194: 13
52:7 80:18
169:18 202:19 12:4,6,8 honest 136:14
identified 24:7,8
160:7 177:15
202:19 203:10 head 21:2,3 hope 57:7
24:9 25:13
199:8 218:13
208:20 23:16 189:16 105:15 155:17
54:20 102:5
included 42:8
Greer 5:18 218:6 162:2
208:2
56:10 61:3
106:4 header 86: 18 hopefully 165:16
Identify 66:13
80:21,22
group22:10 hear 14:2 85:24 200:15
ii 145:3,10
177:16 205:8
104:13 209:14 151:21 165:14 Hospitality
Illinois2:18
217:2
223:24,25 219:15 90:15
illustrating
including 15: 16
Grove 203: 11 heard 132:23 hostile 123: 10
198:18
17:8 40:24
210:15 211:11 189:18 hotel22: 10,11
illustrative 9:4,7
53:5 80:6
guarantee 125:9 hearing 29:8 25:4 119:24,25
9:10,13,16,20
93 : 1 0 1 04: 13
125:15,19 179:2 188:3 143:12 145:5
10:5,9 40:11
109:15 112:23
guess 143:24 hearings 19:4,10 146:17 161:24
47:3 54:5
128:3 135:4,5
150:21 187:22 36:5 166:4 168:14
56:11 81:16
140:4 143:5
202:22 207:23 held 1:12 14:15 189:23 200:16
82:15 85:16
197:11
216:20 219:25 help 225:5 200:18 222:17
94:7 101:21
inconsequential
guessing 176:17 helping 91:11 hotels 22:11
119:3,5,5
112:3
guys 195:5 161:9 24:24 59:11,13
121:4,22
incorporates
229:11 hereinbefore 59:16,19,22
122:12 144:14
55:13 109:14
230:8 62:21,25 63:3
immaterial
incorrect 193:8
H
HERTHER-S ... 63:5,18 66:13
34:19 50:22
increase 154:21
H 1:15 8:14 9:2
5:22 117:4119:4,4
175:17
155:15,20
10:2 230:5,20
Hewes22:23 119:4,11,17
immediately
161:23,25
half 123:23
44:2 125:23 154:8
168:10
162:3
APP-00384
248
indebtedness 48:21 50:22 intending 77:19 79:20 investors 75:8
24:25 132:9 52:10,15,16,18 108:20 90:23 137:12 involve 59:11,13
independent 53:7,16 56:15 intensive 120:4 138:22 139:5 59:16,21
15:17,22 16:2 56:25 62:21 intent 50:8 139:22 159:21 involved 32:22
16:9,12,19,23 79:10 90:15 intention 179:17 160:4 17 4: 16 32:25 33:7,18
23:7,9 31:8 92:14 105:11 interaction 200:12 204:21 39:7 42:13
57:3 88:22,23 110:3,12 184:17 interpose 13:25 43:13,22,23,24
89:9 171:21 111:22112:21 interest 16:22 interpretation 44:3,3,4,6
219:12 225:12 115:5,13 33:4,25 45:24 194:23 220:8 49:19 50:4
226:5,8,14,16 124:14 126:6 51:10,14 53:4 221:4 51:7 73:4,17
indicated 23 0: 10 128:3,7 132:22 53:11 64:8 interrelated 73:19 75:6
indicates 41:5 132:23 133:6 70:22 72:8,19 212:17 91:9,13,14
indicating 134:24 142:5 73:4 75:2,5 interrupt 43:2 100:8 110:4
112:22 142:12 153:13 77:7,20 80:14 46:14,18 131:2 132:22
indication 119:8 170:7,12 90:13,14,19,23 115:24 165:11 212:18
indifferent 196:17,18,19 91:5,10,24 introduction involves 177: 12
61:12,15 204:21 207:13 95:22 99:6,15 55:9 involving 21 :23
indirectly 209:4 216:25 112:20,23 inure 153:5,15 100:11,15
113:21 231:7 124:2,4 129:2 153:24 in-court 22: 19
individual Innkeepers/Le ... 129:3 134:14 inures 153:21 IPO 156:2
213:14 215:23 113:17 137:7,10,13 investing 16:24 irregular 106:20
individuals 16:3 input 57:2 139:7 140:14 investment 5:5 irrelevant 189:6
16:8 inquire 60:12 152:10,20,22 6:13 11:11,16 issuance 45:4,5
information inquisitive 60:20 152:23 153:4 15:17,24 16:2 issue 32:20
44:5 59:18 insight 123:3 157:18,23 17:16 19:20,25 143:11 145:24
69:10 76:22 instruct 79:2 159:22 166:18 20:4 22:21 148:19,23
122:14 195:4 197:8 170:21 171:10 30:21,25 31:3 149:4 150:9
206:3 208:13 instruction 177:14,18 31:10 32:13 158:21 197:11
218:15,16 76:19 79:13 178:12 201:8 33:2,17 34:6 202:15 221:4
informed 35:6 instructions 201:14 219:19 34:15 35:4,21 issues 32:18
73:19 206:14 76:3 232:1 220:13 36:14 39:2,6 132:4 137:17
inherent 77: 14 integral46:22 interested 46:3 39:16,21 41:18 146:4 158:20
initial 40:5 integrated 50:9 62:23 80:5 42:6,12,15 197:9 211:11
65:25 53:17 128:7 91:11 92:14 45:7 48:15 222:8 223:19
Inn 203:11,22 133:25 134:4 112:18 142:17 51:252:5 items 44:18
206:7 211:10 134:23 143:6 165:7230:17 56:19 57:21
Innkeepers 1 :7 157:17 159:20 interesting 67:14 78:9
J
7:4 10:21 11:6 164:16 195:13 148:19,23 82:583:19
J 5:8,20
13:6 14:16 200:21 219:14 149:3 150:9 85:23 86:2
James 32:10,11
16:5,10,20,25 219:16 220:14 interests 165:2 88:4,13 91:2,7
Jeff 11:7,17
19:12 21:25 221:7,7 168:3 169:24 91:23 92:9
JEFFREY2:10
23:11,17 31:6 intend 89:7 171:13,14 95:11 98:5
2:19
31:7 32:13 92:22 139:21 193:23 194:4 99:25 100:9,11
jeffrey.gould ...
33:23 34:2,10 159:23 195:11 196:2 104:18 109:12
2:11
36:23 39:4,15 intended 177: 10 196:15 201:18 Ill :25 126:5
jeffrey.pawlitz ...
39:17,24 42:7 177:15,21 internal 46: 5 127:7,15
2:20
42:18,19,22 178:6 179:2,11 50:9 71:14 216:20
Jim 22:22 32:12
44:25 46:6 179:15 75:6 76:24 investor 122:17
93:16,18,23
APP-00385
249
jobl:2113:7 97:19 149:16 67:3,4 68:2,7 knowledge Lazard's 59:15
16:4 178:23 213:17 73:3 74:17 43:25 64:19 lead 187:11
jog 186:4 keeping 31 :6 77:15 80:20,21 90:19 171:22 learn 15:20
joined 66:15 Ken23:2 80:22,25 82:13 Kornberg leaving 200:6
67:21 kept 97:7 86:8,9, 12,13 104:12 105:7 left 17:10,12
joint 116:18 Kevin 5:20 86:14 87:18 106:4,15 Ill :7 24:18 165:19
jointly 168:20 137:9 89:2,6,22 Kornberg's 168:11 208:21
Jones 17:11 kevin.obrien ... 90:10 92:21 105:23 legall24: 11
Joseph 103:18 5:21 95:13 97:7,15 Korval22:23 150:25 151:3,4
104:11 Kilpatrick 4:4 97:21,23 KPA 165:23 LEH41:5,7
Josephine 1: 15 4:11 11:19,21 101:11,17,17 166:13,19 Lehman 5:15
230:5,20 163:23 104:20,21 202:22,23 10:14 25:4
judge 69:6 101:5 kind 119:7,13 106:13 108:11 203:9,20,25 29:23 30:4
judgment 61:18 132:5 189:5 110:22111:12 204:8,13 31:17 32:19,22
69:25 77:23 211:25 114:18 116:12 208:19 220:3 33:3,4,23 34:5
78:17 90:22 kinds 65:11 116:13 117:21 220:23 221:25 34:5,18,22
110:21111:3 223:19 119:14,15,16 35:3,20,22
138:16 151:18 Kirkland 1: 13 119:17,18
L
39:13,18,20
152:5 156:9,17 2:4,15 11:3,7 120:7,12,14
L 7:2 12:11
40:22 41:7,17
158:5,7 159:9 11:17 14:9 121 :5,5,7, 11
lack 64:20 68:7
42:4,8 43:8,10
159:15 43:7 104:14 121:16 122:20
laid 131:25
45:5,22,24
July 8:25 10:12 114:12 115:5 123:7,17,25
language 29:24
46:25 47:9,17
28:23,25 32:2 189:2 124:3 125:13
46:9 55:17
47:19 48:16,20
35:3 41:17 Kleisner 22:9 132:13 134:3
147:25
48:23 49:11,18
42:4 103:11,19 knew 16:16 33:8 138:21,23
largest 22: 11
50:3,11 51:7,8
104:11 106:17 35:8,9,19 147:3,5 149:12
134:17 135:8
52:19 53:9,19
108:9,12,17 36:14,20 38:5 154:11 161:8
135:11
53:24 54:13
112:9 144: 15 50:17 135:24 164:17 167:6
Larry22:13
55:11,11,20
172:11 209:16 136:2 173:18 167:22 168:6
LaSalle 2:17
56:16,17,23
June 9:9,12,15 221:6 171:14,16,24
Lascher 43: 11
57:13,14,16,19
9:18,22 10:7 know 13:21 16:3 173:5' 12, 18
114:8
58:10,14,18
10:11 41:17 16:7 17:15 175:16 178:15
law 17:6,12,18
60:5,9,13 61:3
42:4 47:4 20:11,14,19,23 179:19 181:6
85:23,25
61:21 62:14,18
48:13,14 54:6 20:24 22:5 182:3 183:11
188:18
62:22,25 63:2
54:12 58:5 23:13,18 24:2 183:15 186:19
Lawrence 4:23
63:10,10,16,22
79:4 81:17 25:1127:17 189:16 192:8
12:2 202:9
64:6,10,22
82:16 85:17 28:17 29:4 193:25 194:5,6
lawrence.gotte ...
66:12 72:11
94:8 97:3 32:21 34:14,22 194:9,14,19
4:24
73:6,20 74:8
101:22 102:16 34:25 35:9 196:24 199:6,9
laws 100:5
74:14,22,24
justifications 36:4 37:2,7,17 204:3 208:22
lawyer 74:4
75:4 76:17
62:7 37:19,23 38:9 211:15,20
111:11,15
77:24 78:3,13
Justin 22:23 43:18 45:19 214:8 215:20
138:19 181:22
78:22 79:3,5
47:13,15 49:4 216:5 219:18
lawyers 14:6
79:14,23 80:23
K
50:25 51:4,5 221 : 1 7 222:6
90:25 91:5
81:3,4,21
Kansas 80:11,12
56:2,14 58:2 222:10,11,12
114:8,12 151:2
82:20 83:19,21
Kasowitz 6:20
58:20 62:22 223:7,18,18
laying 188:12
84:16,19 86:4
11:23
65:16,17,25 225:4,15,19,22
Lazard 58:21,22
88:5,8,14
keep 3 7: 1 7 97: 18
66:4,16,23,24 226:4
59:2,6 209:11
89:25 91:9,11
APP-00386
250
91:16 94:22 190:23 191:10 Lenny 112:17 219:3 187:2,3,13,14
95:12,20 97:7 198:14 199:17 Lessees 168:12 live 120:21 188:25 189:3,4
99:2,10,16 200:4,13 lesser 162:17 Livenote 1: 17 190:3,5,11,12
100:7,18,19,21 207:14,20,25 letter 93:24 94:3 LLC 4:20 12:3 190:17,22,24
102:3 103:6 209:11212:10 121:14 195:3 20:10,15 24:20 190:25 191:10
105:11,12 212:14,24 letterhead 165:20,24 191:14 203:24
108:4 109:11 213:8,21 215:7 130:20 166:13,15,17 204:4,11,14
109:12 110:3 215:13 229:6 let's 28:18 37:16 166:19,22 208:19,25
112:5,21 Lehman's 34:8 53:15 78:8 169:20,23 213:18 217:22
113:23 114:23 42:8 48:5 49:8 96:17 107:12 170:4,14,20 224:5
115:13,20 61:10,12 97:3 113:3 115:19 191:20,20 loans 203:2,3
116:3,16 118:4 102:11 112:7 119:12 156:23 192:22 194:3,7 204:22 205:24
118:9,13,17 122:11 163:15 165:22 194:10,25 206:23
119:3,11 122:2 Lehman-Apollo 172:22 193:18 195:12 196:7 Loan's 190:13
122:4,5,18,19 155:25 195:6 203:4,8 196:10,24 long 14:15 80:17
123:11 125:18 Lehman-Innk ... 214: 11 223 : 14 202:10,22,23 150:21 195:19
125:19 127:23 108:5 223:15 203:10,20 219:21
131:14,21,21 Lehman/AIC level166:10 204:2,9,13 longer 23:9
131:24 132:3,8 107:15 190:14,15 220:3 222:2 look 16:15 27:22
133:15,23 Lehman!Innk ... 196:3 199:5,17 LLCs 25:16 28:18 32:5
134:13 135:12 113:7 levels 155:6,8 168:13 169:25 35:13 44:17
136:14,15,16 Lehman/loves ... Lexington 1:13 LLP 1:13 2:4,15 48:2 49:9
136:20,23,24 122:16 lien 25:5 175:14 3:4,11 4:4,11 54:19,22 55:5
137:15,18,21 LEH-ALI40:17 life181:23 4:19 5:4,14 6:4 55:17 56:4
138:11139:12 Lenard 3:8 12:8 lift 214:5 6:12,20 58:4,6 69:23
143:6 147:7 lenard.parkin ... likelihood LNR4:20 12:3 70:9 77:11
148:5,7,10,25 3:9 151:19 152:13 202:10,10 79:7 80:23
153:14,14,21 lender 134:24 limit 59:5 203:2 205:18 81:24 82:4,7
154:6 156:11 167:21,23,24 limitation 59:10 205:19,21,23 82:23 84:25
156:19 157:4,4 167:24 171:5 79:12 209:8 212:8 86:20 94:25
157:13,24 177:3,11 limited 23: 18, 19 213:2 215:17 95:3 100:18,23
158:17,18,18 178:11 179:4,5 42:14196:17 215:23 218:11 102:12 104:7
158:25 160:15 184:5 188:6 limits 61:4 218:20 223:6 105:21 107:15
160:25 162:5 190:15 199:18 line 21:25 44:17 LNR's207:4 109:5 113:8
166:24 167:20 199:20 200:7,9 233:8 loan 3:5,12 12:5 115:6 121:12
168:7,20 214:4 lines 29:21 12:7,9 25:6 121:17 122:25
169:14 170:6 lenders 24:7,8 liquidity 13 2: 19 166:10,23,25 127:23 130:18
171:5,12,17 24:13 64:16 list 23:11 167:5,11,14,14 137:15 142:20
172:5,8 173:6 66:21 67:3,6,7 listed 192:23 167:21 168:3,8 142:23 143:24
1 73 : 19 1 7 4: 16 126:9,10 134:2 listen 76:23 168:20 169:6,8 144:8,20
174:18,20 134:4 159:21 listening 62:6 169:13 170:5,6 147:17 149:14
175:4,8,22 160:6 163:25 lists 167:3 170:11,15,19 149:23 151:9
179:19,22 193:3 200:20 170:23 171 :2,2,6,9, 10 151:11,12
180:15,23 213:23 215:5 litigation 146:3 171:19 172:4 154:22,24
181:6 182:13 lender's 134:10 little 70:9 81:9 172:10 173:8 157:13,14,17
182:21 183:4,9 134:11 81:14 105:8 176:15 179:5,7 157:22 159:9
183:12 184:3,9 length 169:14 193 : 16 215: 1 7 184:11 186:12 159:25 162:6
184:17 190:22 212:20 216: 12, 14' 15 186:13,15,25 163:9 168:10
APP-00387
251
172:16,23 lunch 130:8 72:1 73:1 74:1 177:1 178:1 136:3
176:16 178:7,7 140:25 141:5,5 75:1 76:1 77:1 179:1 180:1 mark.elmore ...
183:8,22 141:8 78:1 79:1 80:1 181:1 182:1 3:16
184:22 185:13 L.P6:13 81:1 82:1 83:1 183:1 184:1 marriage 23 0: 16
186:20 187:22 84:1 85:1 86:1 185:1 186:1 Marriott 53:19
189:12 192:17
M
87:1 88:1 89:1 187:1 188:1 66:22 68:10
192:20 197:14
M2:10 3:8 12:11
90:1 91:1 92:1 189:1 190:1 71:5 73: 14' 17
198:2 201:13
macroeconomic
93:1 94:1 95:1 191:1 192:1 73:18 92:2
207:10 219:17
120:21
96:1 97:1 98:1 193:1 194:1 110:10 119:24
219:18 220:2
maintain 200:20
99:1 100:1 195:1 196:1 125:21 126:3,9
220:11 221:17
maintained 64:3
101:1 102:1 197:1 198:1 126:18 127:8
227:13
maintenance
103:1 104:1 199:1200:1 127:16 132:17
looked 55:3
211:23,24
105:1 106:1 201:1 202:1 143:6,11,16
1 04: 8 119: 15
making 61:18
107:1 108:1 203:1 204:1 145:5,24 146:6
119:23 120:4,7
97:8 122:3
109:1 110:1 205:1206:1 146:11,13
120:8,11,22
128:14 130:6
111:1112:1 207:1 208:1 159:20 206:5
135:25 142:18
223:10
113:1 114:1 209:1210:1 211:8 212:16
183:2 221:5
management
115:1 116:1 211:1212:1 212:16 221:8
222:8 223:19
16:13 119:15
117:1 118:1 213:1 214:1 Marriott's 77:12
looking 19: 13
131:3 155:5
119:1 120:1 215:1 216:1 Maryland 22:2
24:6 28:8 32:9
management's
121:1 122:1 217:1218:1 master 217: 11
32:15 56:8
117:21
123:1 124:1 219:1220:1 218:5,22 219:6
59:20 81:11
managers 20:12
125:1 126:1 221:1 222:1 219:7
91:17 102:9
207:8 225:12
127:1 128:1 223:1 224:1 material34:2
104:9 109:3,9
226:5,8,14,16
129:1 130:1 225:1 226:1 36:6,22 174:22
110:22,23
manner46:2
131:1 132:1 227:1 228:1 175:6 183:6
122:15 147:24
68:8
133:1 134:1 229:1231:11 184:16 185:8
162:16 176:11
Marc 1:11 8:4
135:1 136:1 231:18 211:25
176:12 179:3
13:1,2 14:1
137:1 138:1 March 125:21 materially 42:25
190:7 198:3
15:1 16:1 17:1
139:1 140:1 Mark 3:15 7:4 43:4
214:19,20
18:1 19:1 20:1
141:1 142:1 11:5 12:6 materials 10: 14
looks 55:7 77:5
21 : 1 22: 1 23 : 1
143:1 144:1 209:24 218:19 10:17 57:14,16
91:20 131:8
24:1 25:1 26:1
145:1 146:1 marked 17:23 57:17,19
144:21 159:8
27:128:1 29:1
147:1 148:1 17:25 18:17 114:23 130:15
214:24
30:1 31:1 32:1
149:1 150:1 19:2 25:21,22 130:21 173:2
loop 218:21
33:1 34:1 35:1
151:1 152:1 32:3,6 40:13 205:10
losing 67:17,18
36:1 37:1 38:1
153:1 154:1 40:15 44:18 matter 230:17
123:20 154:3
39:140:1 41:1
155:1 156:1 47:5,7 54:7,11 matters 185:19
lost 99:14
42:1 43:1 44:1
157:1 158:1 60:17 81:18,20 maximize 30:6
lot 18:22 58:20
45:146:1 47:1
159:1 160:1 82:17,19 85:17 mcrisp@kilpa ...
66:5,25 96:25
48:149:1 50:1
161:1 162:1 85:21 86:16 4:16
114:11 120:25
51:1 52:1 53:1
163:1 164:1 94:8,21 101:22 mean 26:23 43:2
142:16 176:22
54:1 55:1 56:1
165:1 166:1 101:25 103:12 46:14,18 63:5
211 : 14 221 : 5
57:1 58:1 59:1
167:1 168:1 103:14 114:24 84:24 89:9,14
low 135:21,23
60:1 61:1 62:1
169:1 170:1 115:3 130:16 89:1590:2
Lower 191:5
63:1 64:1 65:1
171:1 172:1 142:7,10 92:21 95:25
Lowes 22:13
66:1 67:1 68:1
173:1 174:1 214:10 110:3 115:24
LP 11:16
69:1 70:1 71:1
175:1 176:1 marketplace 119:6 150:25
APP-00388
252
154:11 175:9 196:2,15 228:8 189:15,22 136:6,11,18 198:2
175:16 176:8 memorialized 190:2,11,13 137:5,6 139:23 minute 37:25
177:10,22 218:7,12,15 191:19,20 140:3 153:10 39:25 165:22
182:4 186:19 memory 21:4 193:18,19 154:7 157:12 172:17 193:19
189:8 200:4 176:23 186:4 194:3,7,10,25 157:22,23 202:14
213:7 218:15 195:5 223:17 195:11 196:7,9 158:17,18 minutes 163:15
meaning 7 4:2 mention 173:6 196:23 199:18 205:19 182:19 201:25
meaningful 182:12,12 199:20 200:7,9 Midland's misleading
61:17 83:25 183:4,11 184:2 mezzanine 128:15 131:15 37:19
198:24 207:6 212:9 166:25 170:6 131:18,22 misread 178:2
meaningfully mentioned 46:22 171:2 172:4,10 Mike 11:21 misreading
Ill :21 46:24 68:10 173:8 176:2,15 Mile 6:21 11:24 177:23
means 74:4 mentions 49:14 177:3,8,11 110:10 147:9 missing 131: 16
195:17 message 105:8 178:9,10,11 147:14,14,15 216:10
meant 34:6 met 7 5: 16 81 : 5 179:4,5,7,9,10 160:7,13 161:5 misstated 174:2
184:14,14 110:25 133:11 181:21 182:8 161:6,13 Misstates 37:4
meet 132:12 135:11 136:14 182:14,17,22 million 15:3,6 78:5 122:8
139:3 136:16 153:10 183:5,14 24:21 25:5 mistake 177:22
meeting 16:14 220:18 184:10 189:3 34:2 42:10 178:2 181:16
57:4,13,17 Meyers 4:8 8:6 191: 17 192: 14 45:9,10,11 190:10
72:24 115:13 11:19,19 192:25 193:3,9 51:20 64:11 mistaken 188:24
115:17,20,21 163:14,21,22 Michael 4: 15 65:2 66:13 MLCFC 202:12
115:25 116:2 173: 14 17 4:5' 6 43:11 114:7 67:25 71:2,3 modell74: 15
118:7 122:12 174:11 181:5 Michigan 77:6,15 99:14 182:9
123:25 131:4,9 183:18 187:10 143:12 146:17 123:20 128:10 modifications
131:17 132:7 187:20 188:17 middle 132:15 128:20 129:9 117:15
133:17 135:12 189:13 194:17 135:22 202:18 133:14 135:15 Moelis 56:10,11
135:16,18,24 194:24 195:8 228:23 154:4 163:5 56:18,18,22,25
136:12,13 201:20,23 Midland 3:5,12 166:7,23 57:3,5, 13,15
174:16 m ezz 24: 14, 19 10:17 12:5,7,9 167:14 168:21 57:20 78:8,8
meetings 57:18 67:6,7 165:20 24:21 53:5,10 169:3,12 170:5 78:11,20 79:2
80:11 117:18 166:14,17,22 62:9 63:18,21 170:8,15 171:2 79:11,13,21
meets 139:6 167:14,21 64:4,15,19,23 171:6,18 80:7,17 84:20
member 15:22 169:19,23 64:25 65:12,22 174:24 175:18 84:23 116:9,14
16:2,9,12,19 170:4,13,20 66:5 72:7,16 177:19 187:2,3 116:17,18
16:23 23:7,10 171:19 174:18 72:17 73:8 187:3,15,15 117:12,14
32:13 88:22,23 174:24 175:5,9 74:17 75:5 190:17,25 119:15 120:17
228:13 175:10,10,11 80:6,11,18 191:10,15 130:19,23
members 15:15 175:12,21 81:5 92:3,5 197:23 198:8 135:18 172:25
15:16,18 22:7 177:13,15 99:2 118:3 198:19 199:16 182:9 198:6,17
31:5,7,8,9 179:20 180:3 128:4,8,13,21 200:6 207:19 225:4
118:18 127:12 180:17 181:7 129:7,16,20 213:11,19 moment29:14
195:3 209:10 181:12,17 130:15,20 millions 67:18 momentarily
216:25 217:3,7 182:19 184:4 131:4 132:6,13 million-dollar 214:16
membership 184:18,20,21 133:11,23 14:25 monetize 125: 14
21:11 166:18 186:12,25 134:3,7,16,19 mind 62:6,8 money 16:24
169:24 170:20 187:13 188:6 134:24 135:8 151:15 158:19 67:17 125:8,17
193:23 194:3 188:12,12 135:10,23 mine 112:25 175:3,4,6,9,21
APP-00389
253
180:4,17 152:14 53:20 73:7 54:20 65:9 40:18 47:10,11
181 : 13 184: 19 Murphy7:4 128:21 140:5 82:25,25 83:6 64:17 81:22
188:7,12,13 11:5,5 209:24 160:24 175:22 83:7 86:22,22 82:8 94:23
190:4,6,13 218:19 188:22 87:6,6 88:2,21 102:3 108:25
199:20,23 mutuality 132:5 negotiating 95:2,2 102:10 109:24 113:6
200:10 222:22 mutually 117:20 34:22 39:17 102:10 109:4,4 114:2 121:2
month 97:2,3 42:12 43:10,18 230:7,20 231:3 125:23 134:2,4
160:23
N
47:18 52:20,25 NICOLE 5:22 135:22 148:5
months 29:22
N 2:2 3:2 4:2 5:2
53:3 60:19 nicole.herther ... 189:18 200:2
30:9 31:3
6:2 7:2 8:2
63:1664:6 5:23 209:7
41:16 42:3
12:11,11 142:2
73:15,20 91:6 night40:25 numbered 104:2
73:6 74:21
142:2,2
93:5 110:10,10 115:4,5 121:17 192:21
79:4 89:10
nail209: 18,19
112:20 114:17 nine89:10 numbers 40:17
115 : 19 124: 18
name 12:25 23:2
200:19 nominal167:24 54:13 82:20
124:25 140:7
163:22 202:9
negotiation nominally 86:17 133:21
160:23 215:20
names25:15
39:14,23 73:13 167:21 171:6 199:13
216:9,12
Nancy43:11
84:2 199:7 nonresponsive numerous 29:23
217:15
narrow 172:17
negotiations 126:21 129:5 30:4 77:2
Morgan 22:10
nature 148:24
32:22 33:18 129:14 N.W2:6
Morrison 6:4
natures 120:4
39:7 41:15,25 non-consensual
11:12
NE4:6
42:1643:9 140:2
0
mortgage 25:6
necessarily
45:22 60:21 non-creditor
07:212:11
166:6 186:13
106:5,9 178:2
61:14,23 62:24 139:18
142:2,2,2
186:15
necessary 91:25
63:22 65:12 normalized
oath 12:13 164:3
motion 8:20
91:25 127:8
83:18,21 87:21 154:9,12
189:10 231:13
25:18 26:15
200:17,18
91:9 99:25 North2:17
object 21:10
28:9,11,14
232:4
108:9,14 Notary 1:17
45:13 69:13
35:14 144:2
necessitated
112:13,16 230:6,20
78:18 106:18
145:19,21
51:13 92:2
114:13 160:13 231:24
107:9 122:22
158:23
need 13:16 26:8
180:3,15 note63:9 64:4
139:24 140:23
motivate 123:6
37:18,21 52:14
226:20 65:6,18,24
145:6 158:9,12
mouth 189:19
127:11 149:16
negotiator 83: 14 66:3 86:17
159:25 187:6
move 110:17
178:22,23
187:11 92:8 105:18
objection 21 :20
111:3 125:12
200:25 227:13
Neither 121:18 134:7 162:14
33:9,20 34:13
126:20 132:5
needed 122:14
Nemer 17:6 162:15
35:24 36:17
139:9 159:23
126:14 180:4
never 39:15 noted 25:10
37:4 38:21
160:4 190:9
207:4 210:21
61:25 65:18 232:10
39:9 41:20
218:3
211:8,18,22,22
132:22,23 notice 8:16
43:19 49:21
moved 217:25
218:17 221:6
137:9 200:8 17:21 18:2,12
52:23 55:24
moving 45:25
needs 178:16
212:23 218:23 127:8 133:19
56:13 57:25
46:3 68:9,12
210:25 223:21
new 1:3,13,14,18 164:11
63:25 73:24
76:24 112:8
negative 128:13
3:7,7 4:14,14 notices 92:2
75:21 78:5,23
113:23 120:19
negotiate 50:11
4:22,22 5:7,7 125:22 126:3
80:2 81:6 89:5
120:20
51:9 70:7
5:17,17 6:7,7 127:16 132:18
89:21 98:14
multipart
138:24 160:2
6:15,15,23,23 November 14:17
107:13 111:13
152:14
221:11
17:8 36:15,23 number 22:17
111:13 113:18
multiples 120:8
negotiated 31: 16
36:24 45:3 22:20 24:13
116:10 122:8
multi-test
34:9 42:18
48:4 51:17 31:8 32:15
124:8,9,10
APP-00390
254
127:9 128:5 82:5 116:22 117:9 202:17,25 167:20 168:21
129:11,18 offers 85:8 201:7 118:11,15 203:8,13,20,25 169:3
140:23 148:11 officer 10:20 125:5 127:22 204:7,12,17,25 osmotic 92:23
150:20 153:2 13:5 46:6 129:8,17 130:2 205:22 206:19 ought 37:14
154:18 156:13 60:24 142:5,12 130:13 131:12 207:12 212:7 38:19
159:3,5 178:2 officers 20:24 132:20 135:10 214:22 215:16 outcome 230:17
181:2,2 182:16 21:5 24:3 135:13 138:9 216:8,16,18,19 outline 30:5
186:17 197:7 116:23 164:23 142:20 143:3 217:10,14 outlined 19:15
201:4 208:9 offices 1:12 17:7 143:15 144:13 218:21 219:9 outside 17:8
214:7 220:10 Oh65:13 72:16 144:16,23 222:4,19 223:4 75:7 114:13
objections 13:25 73:10 74:21 145:8,15,23 224:10,16,21 outstanding
18:16 okay 13:13 14:5 147:16,19,20 225:2,11,15,25 213:6
obligated 168:20 14:10,13 15:10 147:24 148:13 226:4,11,17,23 out-of-court
obligation 124:6 16:7,11 18:21 148:17 149:22 227:18 228:6 22:19
130:4 138:21 19:22,24,25 150:4,5 151:6 228:12,21 overall60:20
151:3 162:8 20:2,4,9,18,24 152:7 153:4,8 once 58:12 69:25 110:2,16,23
169:2,12 23:6,22 24:12 154:23,25 220:16 223:16 205:5 212:14
195:13 207:20 24:18 25:8,17 155:2,18,22 ones 38:5 55:3 212:16 220:4,7
215:7,13 27:4,9,15 28:6 157:2,9,21 157:25 overseeing
obligations 48:6 28:14,24 29:15 161 :4 164: 5 ,1 0 one-time 15:4,7 187:18
49:8 77:13 29:20 30:3,25 164:17 165:9 155:20 overstated
91:12 102:11 32:9 35:2 37:2 165:15 166:3,6 ongoing 112: 14 101:12
125:10 126:10 38:2 40:21 166:21 167:3,9 open 62:6,8 69:7 overture 136:15
126:13 139:21 41:9 42:21,24 167:15,17,18 operate 128:18 Overview 117:3
186:13,14 43:18 44:14,22 168:2,19,24 operation 117:10,24
211:7 217:21 45:15 46:19,20 169:13 170:23 110:12 187:18 118:2
219:22 224:5 47:2,22 48:2 171:16 172:8 operations 98:6 owned 17:15
obtained 148:18 48:11,13 49:23 172:18,24 opportunity 63:17 169:9
obviously 51:655:21 173:12,25 15:21 175:2
110:18 120:16 57:18,23 60:19 174:15 175:15 opposed 199: 17 owner 20:5
145:25 213:15 67:24 70:6 1 7 5:24 1 7 6: 18 200:7 205:19 31:15 37:12
216:4 73:11 75:24 176:23,24 208:6 217:4 38:17 51:18
occasion 93: 18 76:13 81:23 177:6,20 178:7 219:14 63:3 98:18
occur 148:6 82:4,14,22 179:18 180:13 option 150:11 99:11 122:5
occurred 81 :3 85:5 86:10,14 180:23 181:11 options 75:18 owners 153:6
131:9 86:19 87:11 183:10,22,25 83:2,7,17 ownership 19:14
occurring 93:5,17 94:5 184:7,13,22,25 oral113:22 32:23 103:3
132:17 96:6,25 97:7 185:13,17,24 151:4 210:5 153:23 162:23
offer 122:21 97:24 100:24 186:5,24,25 orally 13: 17 Owners/Ground
131:21,24 101:16 102:8 187:20,25 97:16 168:12
200:22 102:15,21 188:15,19 order 8:20 21:17 owning 169:25
offered 16:4 103:5,16 104:9 190:9,20,22 25:18 26:4,6 170:21 193:23
19:9 138:13 104:16,25 191:7,17,18 26:16 69:10,21 owns67:15
offering 44:18 107:8 108:13 192:14,17 106:22 138:14 152:24 166:3
44:22,24,25 108:19,24 196:12,23 139:19 145:2,9 166:18 167:24
45:9 46:4 48:4 111:19112:13 197:12,21 145:9 168:14 169:23
48:4,16 51:16 113:13 114:21 198:4,17 original232: 12 O'BRIEN 5:20
54:21,21 81:25 115:9 116:14 199:25 200:22 originally oOo 2: 1 3 : 1 4: 1
APP-00391
255
5:1 6:1 7:1 8:1 35:23 36:6,10 140:19 141:2 180:10 218:19
9:110:111:1 36:11 37:21 142:8 144:4,6 partners 4:20 percent 20:5
12:1 230:1 38:10 142:21 144:7 145:18 6:21 11:25 31:22 33:24
231:1 142:23 143:3 146:15,19 12:323:18 34:12,19 42:10
147:18 148:2 147:2 153:3 128:19 202:10 45:2,3,8 51:14
p
155:2 185:13 157:8 158:11 partnership 51:19 62:14
P2:2,2 3:2,2 4:2
185:16,18,20 158:15 163:11 23:18,19 63:13 70:25
4:2,23 5:2,2,10
186:3,6 188:3 164:4 165:13 196:18 82:7 99:11,16
6:2,2 7:2
188:4 189:20 184:25 parts 200:25 99:18,20
Pachulski 17: 10
214:18 228:22 part 14:2 28:14 party 34:5,19,20 100:25 123:18
page 8:3,15 9:3
paragraphs 31:16 32:9 42:1149:15 136:4 153:24
10:3 28:19
44:23 55:10 39:23 44:22 50:20,25 51:13 162:10 166:18
29:12 44:15
96:13 46:4,22 48:17 52:9,19 55:22 168:3 169:23
45:18 48:3
paraphrasing 83:18,20 90:13 60:21 61:11 200:5,5
49:10 56:4
186:10 90:17 98:12 67:9 82:12 perfected 98:2
82:24 86:21
parent 89:4,19 106:5 116:15 85:9 90:13,18 perform 58:23
91:18 95:14,16
122:15 117:7 120:14 90:19 91:11 221:23 222:25
103:17 104:8,8
Parkins 3:8 8:5 122:20 140:3 108:20 125:10 performance
104:10 107:22
12:8,8,15,20 152:8 174:19 125:12 128:15 154:16 155:6,8
108:25 109:10
12:23 14:6,10 198:10 200:9 137:11,12 155:14,19
116:25 117:2,9
14:13,14 17:24 224:12 229:6 163:4 193:20 161:24 208:5
117:16,23
18:19,22,24 partially 177: 17 195:14 performed
119:2 121:21
21:14 26:5,11 199: 1 0 224: 19 Pass 163:12 211:18
121:22,23
26:12 28:6,7 participant 53:4 Patrick 22:22 performing
127:24 144:20
32:433:10 participants 44:3 150:14 154:9
145:8 154:24
36:2,18 37:6 129:4 135:23 Paul5:4 6:8 11:9 period 17:14
178:7 179:9
37:23 38:3,11 particular 36:10 11:12 40:8 30:9 50:14
181:21 192:21
38:23 39:25 37:21 41:12 44:9 86:3 110:8 117:10
197:15,16,17
40:14 41:4,6 47:15 87:18 104:12 107:14 125:4 131:7
197:19,25
45:15 46:16 158:21 167:11 108:19 109:2 132:25 138:24
198:11,22
47:6 52:24 168:14 183:23 112:22 139:20 140:13
202:18 214:18
54:3,9,18 194:13 207:15 Pawlitz 2: 19 152:20 209:17
214:22,24
57:11 72:2 218:23 219:13 11:17,17 211:17216:6
228:5,17,19
75:23,25 76:11 221:22 pay 51:24 52:7 periods 117:24
233:8
76:14 78:7,18 particularized 126:9 118:2
pages 54:19 83:8
78:19 81:13,19 219:17 payment 52:4 permit 145:4,10
94:25 102:9
82:18 84:10 particularly Peachtree 4:6 213:21
104:2,5 107:2
85:19 86:9,11 61:17 Peck 101:5 permits 70:6
107:20,21
86:15 89:16 parties 35:6 53:3 people 18:22 person 13:23,23
109:3 137:21
94:13,16,19 63:9 64:8 69:9 22:21 43:21 93:19,23
192:20
95:15 101:24 97: 15 1 02: 18 68:11 69:7 114:16 152:24
paid 51:18
107:3,6,10,11 105:17 112:17 74:6 79:16 205:17 209:24
126:10
115:2 116:11 126:17 138:9 92:18,21 93:8 209:25 210:7
paper 176:22
121:9,16,19,20 143:8 180:9 98:3 110:15 personally 33:7
papers 167:17
122:10 126:20 192: 15 193 : 11 114:2,11 123:5 70:24 151:3
paradigm 66: 19
126:22 129:5,6 219:10 230:15 123:18 159:18 perspective
paragraph
129:13 130:9 partner 17:9,11 163:9175:3 49:20 50:5
29:12,21 35:14
130:17 136:9 99:12 179:16 195:20 217:2 61:12
APP-00392
256
petition 204: 19 180:16 181:18 140:6 146:11 possibilities preparation
204:20 182:2 190:14 157:2 160:3,21 163:9 118:16 131:2
pgalante@mo ... 192:15,17 202:14 204:18 possible 92:7,7 197:10
6:9 193:11,13,20 209:15 214:14 162:13 180:23 prepare 116:15
phase Ill :4 193:21 195:9 pointed 179:13 207:11 118:12 130:23
phases 199:7 195:10 196:4 185:12 post 51:11 prepared 19:3
phone 14:7 196:10 197:3,4 points 43:20 123:13 198:20 97:3 174:15
209:23 210:6,9 197:10 200:12 65:1493:7 postemergence 192:11
phrases 65: 17 208:7 212:11 109:16 196:21,25 preparing 19:6
Picache 23 :3 212:24 214:18 pool24:21 25:4 post-confirma ... 110:11 116:19
Pictures 22: 15 214:20,22 62:10 63:5,18 33:5,25 42:9 198:11
piece 131 :25 215:3,11 117:10,23 51:14 90:17 prerequisite
132:3,11 219:21 220:24 118:3,3 119:4 potential30:5 90:16
174:24 189:23 220:25 226:12 125:18 128:4 31:22 42:13 presence 114:13
190:2 198:16 226:17 227:9 146:18,20,24 74:7 79:7 present 13:8
pieces 53:17 227:10,14,16 146:25 147:12 98:21 119:8 37:12 38:17
221:18,19 227:18,22 147:14 158:19 125:9 132:18 57:5,12 78:2
PIP 124:6,15,24 229:6 158:25 160:10 152:13 154:3 140:8
125:18 126:2,9 play 160:25 161:8,14 162:4 154:20 199:8 presentation
126:13 127:7 pleading 29:12 169:25 196:3 206:22 212:20 56:10,12,15,17
127:16 211:18 35:23 36:5 197:22 198:6 potentially 56:20,22,24
221:24,25 37:3 66:10 198:19 199:4 74:10 90:3 57:3,5,12
224:7 101:3,4 207:19 211:12 126:12 127:13 80:18,20 84:20
PIPing 211:7 pleadings 10:22 216:25 221:13 155:23 163:7,7 84:23 116:9,15
PIPs 77:13 100:18,20,21 pools 19:16 206:6 211:9 116:19 118:12
161:14 211:22 142:6,13 59:22 60:2,5 practical 151:3 118:16,24
223:11 please 12:25 117:25 118:4 practice 17:12 127:23 137:22
place42:17 17:3 28:8 119:17 129:25 practicing 17: 18 155:3 173:2
160:15 215:18 29:12 32:17 130:2,5 precedent 48:5 presentations
215:19 216:5 35:15 40:6 poorly 123:19 49:8 51:12 79:21 80:7
placed 119:14 41:22 44:19 portfolio 134:13 54:22 55:8 154:6
plan 8:22,24 48:3,8 49:24 155:5 209:5 81:25 83:2,8 presented 69: 18
25:19,22 26:16 54:22 56:5 portfolios 86:23 87:2,5,7 122:2 198:22
26:21 27:7 70:11 76:13 160:11 89:23 90:21 199:14 201:6
33:4 50:12 102:12 105:18 portion 3 8: 13 95:3,8,10,17 presently 13 :4
53:23 55:12,22 107:18 109:6 41:23 49:25 102:11,17,20 presents 139:10
61:3 66:5 67:8 136:8 142:24 85:22 96:18 109:5,9 112:7 preserve 161:9
69:3 75:2,17 147:18 149:23 98:22 229:5 112:24 161:18
76:25 102:17 151:12 205:2 position 14: 15 precise 3 7: 18,22 president 93: 10
108:3 109:13 214:15 232:3,7 15:25 23:8 38:9 93:13,14
128:24 138:25 pleased 88:12 67:11 128:2 preexisting 99:6 Press 16:21
139:22,25 91:13,14,15 137:4 prefer 64:24,25 presumably
144: 12 14 7: 16 92:3,11 positions 98: 17 65:5 226:11
152:17 156:3 pledge 170:19 98:23 Preferred 67:12 pretty 46:2 63:6
159:24 162:5,7 plus 163:5 positive 99:13,17 99:8 175:2 205:9
169:15,16 point 32:15 49:9 128:18 prefiling 52:21 pre-advising
175:25 177:2,4 80:11 95:17 Possession 2:5 53:2 78:11 122:3
177:10 178:13 97:20 108:2 2:16 prejudge 159:7 pre-petition
APP-00393
257
71:19 78:22 problem 18:21 211:20 212:18 159:11 205:23 provision 45:6
80:9 153:13 126:6 199:14 213:9,11,14,18 206:20,22 45:21 51:15,21
195:16 199:22 problems 13:20 213:22 215:25 218:23 51:22 87:8
224:14,17 proceed 12:19 216:2,7,12,21 proposals 69: 19 90:4 95:7
price 45:9 157:10 216:24 217:12 97:8,12,16 96: 17 101: 10
200:23 proceeding 221:12,16 109:23 110:19 107:25 145:8
primarily 43:5 50:17 206:15 223:20,23,24 138:15 206:8 157:3 205:9
63:4 116:24 process 13: 14 224:2 207:3 212:21 208:7 214:14
161:15,16,18 14:3 22:19 property 151 :25 propose 138:25 214:25 227:20
165:7,17 66:24 68:5 166:7,10 153:21 provisions 54:25
primary 43:12 69:6 76:8,22 169:25 170:21 proposed 9:5,8 55:2 65:9 95:5
45:4,12 114:16 76:24 110:18 175:14 177:18 9:11,14,17,21 97:5,17,22
193:22 120:16 123:3 178:12 179:8 10:6,10 40:12 110:23 111:8
priming 206: 13 136:22 140:4 189:4 190:12 42:17 47:4 112:2,23
principall69:5 204:18 215:24 190:14,15 53:7 54:6 67:8 114:20 150:18
194:2,19 213:6 218:3 219:11 193:23 196:3 69:4 80:23 proviso 148:2
prior 16:25 30:9 225:6 199:5,17 81:17 82:16 PSA21:24 27:8
39:3 72:17,18 produced 40:22 203:15,18,23 85:16 90:6 33:22 34:9,17
75:16,19 82:8 47:8 102:2 204:4,10,14 94:7 99:12 34:21 39:18
124:25 138:5 115:4 121:11 207:5 208:23 101:21 105:10 48:6 49:8
204:18 226:18 121:13 209:3 210:11 131:21 143:4 50:19 51:12
priority 195:18 product 121:3 210:15,21 144: 14 15 7: 12 55:22 66:11,15
private 15:24 production 211:15 212:3 220:24 66:19 67:3,22
privilege 76:10 40:23 47:9 214:4 215:5,10 proposes 48: 16 68:18 69:4
Prix 20:9 24:19 81:21 82:20 218:17 220:5 proposing 68: 17 70:3,6,18,21
165:20 166:14 86:5,11 94:22 222:24 224:4 163:3 71:13 75:17,18
166:22 169:19 prof 122:21 property's proposition 75:25 77:23
169:23 170:3 professional 177:19 140:16 85:10 89:25
170:13,19 1:16 16:17 proposal47:20 protect 134:10 90:13,14,22
177:13 191:19 128:23 230:6 51:25 52:3,6,8 protecting 91:3,12 92:14
191:20 192:22 professionals 52:9,13,15,16 160:10 95:7 100:22
194:2,7,10,25 15:19 53:1465:24 protections 102:12 108:20
195:11 196:7,9 Project 10:13,16 69:11,20 70:13 100:2,7,13 109:13,20
196:19,23 114:22 130:14 70:24 81:4 protective 26:3,6 110:20 112:8
Priz 166:17 130:20 197:17 82:11 84:18 proven 123:16 112:14,20
Pro 121:22 projected 117:5 92:12 97:22 137:8 114:6,14,17
122:12 197:23 117:6 98:2 103:2 provide 45:7 121:24 139:21
probably 14:8 projections 109:18,19 48:15 71:21 144:11,18,24
103:9 114:16 117:11,12,12 122:4 128:9,14 162:8,20 187:8 159:20 179:16
125:13 126:11 117:13,15,18 129:8,17,22,23 provided 18:16 180:10 184:18
131:7,11 120:12 155:4 130:3,6,6 62:13 176:14 195:24 207:17
148:12 150:12 projects 154:7 131:14 136:20 184:3 193 : 1 7 207:21 213:8
155:11 178:16 proper 208:6 136:23,24,25 provides 34:18 214:9 215:8
186:2 188:25 properties 120:2 137:16,18 48:14 51:17 public 1:17
191:12 199:12 127:5 189:23 138:3,11,14,19 87:25 22:25 88:24
215:20 217:15 199:3 205:5,7 139:19 151:18 providing 63:7 89:8,9,10,18
217:25 225:3 206:13,21 151:24 152:13 92:12 205:25 199:24 230:6
226:6 207:8,9 209:7 158:24 159:8 218:16 230:20 231:24
APP-00394
258
165:4 50:3 51:6 146:20,24,25 228:23 209:25 210:9
purchase 45:8 53:13 57:8 147:12 161:8 real4:5, 12 7:5 215:18 217:14
82:6 86:22 61:7 67:2 161:14 162:4 88:20 163:24 218:4,9,10
87:6 88:2,4 69:14 76:11,12 168:17 169:25 172:22 228:9 225:14 226:7
102:10 107:23 76:12,15 78:20 170:6 171:18 228:14 recapitalized
109:4 85:24 96:2,13 172:3,10 173:7 reality 1 71 : 15 61:5
purchased 82:9 98:7,9 106:14 174:18 175:10 realize 123: 14 receipt 23 2: 14
87:7 113:15 124:20 175:11 179:7 realized 101:8 receive 26:4 33:4
purchaser 3 6: 15 124:21,22 181:12,17 really21:12 36:6 64:4 95:22
36:23,24 49:15 126:23 127:2,6 182:8,14,19 74:5 92:20 99:4,21,22
228:25 229:5 129:7 135:5 183:5,14 184:4 101:11,17 176:2 177:3
purchasing 33:3 153:18 160:22 184:10,20,21 112:16,25 181:17 229:6
99:16,18 171:23 174:10 186:15 190:3 120:7 132:11 received 14:25
purpose 131: 17 179:19 181:9 190:23,23 164: 14 1 71 : 14 16:21 39:21
222:10 191:21 193:2,7 193:18,19,24 175:6 198:10 40:23 48:20
purposes 21:23 200:15 204:2 194:4 196:3 211:25 216:5 50:16 64:19
56:11 125:9,17 207:22,23 198:6,9,19 223:22 84:4,13 87:20
160:10 167:9 210:11 219:25 199:4 206:9 realm 179:24 87:23,24 95:25
207:9 220:16,20 207:19 216:24 reason 37:8 96:4 100:25
pursuant 12:16 222:13,14,18 216:25 221:13 160:3 232:5 102:23 105:4,5
26:3 214:5 222:20 223:5 221:13 233:10,12,14 111:19 200:22
215:11 questioned rational50:14 233:16,18,20 224:12
pursuing 80: 14 164:4 reach 26:9 64:15 reasonable receives 88:5
push 201:25 questions 13: 16 68:14 114:5 47:22,25 60:25 receiving 46:8
put36:10,12 13:19,20 18:20 reached 16:13 97: 1 7 194: 18 58:14 65:23
59:5 61:4 27:19 115:7 49:10 91:15 reasonably 67:10,15 83:11
120:6 132:2 163:15 165:13 95:11 205:6 151:18 84:7 96:3,4
133:12 186:3,7 189:12 195:6 reaction 72: 19 reasons 233:6 102:21 103:21
202:15 220:6 197:13 201:21 read29:14 32:17 recall19:9 24:3 104:25 105:3
puts 69:24 226:25 227:4,8 35:15 38:11,14 41:12 45:23,23 153:11 200:11
putting 73 :4 227:10 228:10 41:24 44:18 46:2,8,9, 11,11 recess 141:8
91:2 161:13 quickly 172:22 45:12 48:7 53:7 56:24 recipients
220:7 quite 123:19,19 50:2 85:21 57:2,15,16,22
1 04: 13' 13' 14
PW 86:18 126:10 90:9,11,11 57:24 58:14 recited 108:21
p.m 141:8 142:3 95:5 107:16,21 60:16,18 62:2 recollect 19:4
229:16
R
108:6,7 143:10 81:7 83:11,17 recollection 21:8
R2:2 3:2 4:2 5:2
147:20 156:5,7 84:6,17,18 21:16 99:24
0 6:2,16 7:2
179:10 180:25 85:22,25 93:4 176:25 180:14
quality 119:19 12:11 142:2
183:24 184:16 96:2,3,4 100:6 184:8 210:13
119:25 162:17 230:3 233:1,1
185:2,14,16,25 100:8 101:2,3 210:14 215:3
quantify 224:16 range63:4119:8
186:2 193:6 101:14,15 216:9
quantitative 120:13,19,19
231:12 232:3 102:21 103:21 recollections
58:11,15 60:9 120:22 136:4
reading 29:18 104:25 105:3 210:19
60:13 156:17 ranges 61:9,10
145:7,12 186:4 114:4 115:12 record 11:2 54:4
question 21:15 119:3
188:3,25 115:17,21,25 89:8 94:17
23:17,25 33:14 rate 24:21 25:5
reads 1 07: 19 116:4,6 118:10 103:25 141:6,7
38:12,15,25 91:22 117:23
108:2 109:10 125:20 147:9 146:23 163:18
41 :22,25 45:20 132:20 146:17
147:22 178:14 173:3 189:14 202:3 229:13
APP-00395
259
229:14 230:11 39:18 50:16 Registered 1 : 16 reorganized 206:7 211:10
231:15,16 59:18 60:2,25 230:5 32:24 62:15 resolution 66:7
records 58:23 62:4,6, 7,8,9 regulations rep 132:14 68:14111:24
recovery 63:23 63:5 64:18,20 88:25 repeat 41:22 133:18 140:3
199:21 65:24 77:9,12 REIT 22:2 88:20 165:13 173:13 143:7 146:12
reducing 135:14 77:13 83:25 reject 139:25 173:14 174:20
reduction 96:13 98:5,16 140:8,15 repeatedly 97:8 resolutions
135:17 191:8 99:7,9 100:7 149:10 rephrase 76:12 140:6 225:19
refer 56:12 100:15 101:10 rejected 48:23 replaced 211:13 225:23,25
167:13 108:16 110:9 52:10 84:3,5 report26:9 resolve 66:24
reference 59:21 110:16111:8,9 84:14 97:4 89:15 146:3,4 158:4
59:23 Ill :25 112:2 139:2 reporter 1: 16, 17 158:6
referenced 114:19 119:18 rejection 148:22 13:17 38:14 resolved 32:19
105:7 125:18 126:5 150:11 41:24 50:2 respect 16 :4
referred 116:8 126:24 127:5 related 8:23 230:6 21:8,17 24:8
166:24 167:17 127:13 128:22 25:20 210:3 represent 40:21 25:9 30:15,20
168:16,17 129:20 130:5 212:12,25 41:7 163:23 31:4,15,22
170:5 182:10 131:19 132:17 226:13230:15 167:10 168:13 33:16 35:4
215:17 133:3,4,5 relating 105:10 representation 41:14,16 42:2
referring 44:23 143:22 146:10 105:11 226:14 167:8 42:17,24 43:8
55:15 57:24 148:24 161:8 relationship representative 43:17 47:19
58:3 93:25 174:23 175:14 91:15 132:5 18:10 21:18 55:3 56:7 60:4
156:14 158:14 180:7,20,21 221:7 representatives 62:19,20 66:11
190:18 205:16 188:4 196:17 relative 76:17 8:17 17:22 74:12 79:22
216:22 219:5 203:22 205:7 release 125:11 18:3 31:13,21 80:8,8 81:24
refers 106:3 205:10,14 125:19 93:8 207:25 87:21 91:18
reflect 25:11 206:5,9,13,15 released 216:3 represented 96:18 97:25
85:7 89:24 207:5,25 relief8:23 25:21 85:22 86:2 100:3,4 103:3
105:24,25 208:13,14,15 145:3,10,20 representing 105:6 112:14
106:16 Ill :6 209:7 210:15 215:4,6,6,8 28:3 63:17 113:16 114:13
131:14 179:16 210:23 211:5,7 remain 23: 10 86:7 128:3 117:16 118:20
reflected 25:7 211:10,11,14 remaining 117:7 200:3 125:23 129:17
72:5 78:22 212:2,14,20 remains 167:20 represents 169:4 129:24 130:2
84:21 90:8 213:9,13 remedies 110:6 request 18:4 131:10,22
111:7119:11 215:25 216:13 remember 84:22 218:15 143:11,12
121:24 216:15 217:21 87:11 205:17 requested 3 8: 13 145:24 148:13
reflecting 25:4 218:22 221:12 209:6,11,22 41:23 49:25 151:20,23
reflects 105:13 222:9,17,23 210:16 228:10 205:10 206:3 161:13 167:13
106:8 108:14 224:2,4,6,7,8,9 remind 164:2 require 55:21 168:7 171:17
15 5: 11 173: 18 226:16 renegotiation 195:18 171:24 172:3,9
refresh 21:7,16 regarding 21 : 16 15:9 required 221 :25 173:7 17 4: 18
184:7 215:2 30:11 32:23 renovations 223:11 176:3,14 179:6
refreshed 51:16 97:25 211:21 requirement 179:7 182:22
176:23 98:11 118:16 reorganization 112:7 140:11 183:13 184:10
refreshing 21:4 208:18 219:16 33:5 67:8,16 requirements 191:21 196:23
176:24 regards 105:20 69:3 75:3 139:3,6 197:22 198:8
regard 23 :21 147:13 210:16 139:22 152:18 Residence 202: 11 203:2
26:24 33:3 regionall7:6 200:12 219:21 203:11,22 203:18 204:14
APP-00396
2 60
204:22 205:23 restructurer retain 171:13 Rifkind 5:4 room 114:8
206:20,22 217:20 178:11 11:10 139:18 220:19
207:14 208:19 restructuring retained 56:19 RIGG202:22 roughly 190:25
209:4 210:10 9:5,8,11,14,17 58:21 203:9 208:19 RPR230:20
212:10 215:5 9:21 10:6,10 retains 1 71 : 13 220:3,23 222:2 Ruisi22:13
216:21 217:12 13:5 16:16 retention 15:2 right 29:3 37:3 rule 195:18
218:11 219:15 17:19 30:5,16 retort 65:16 55:4 58:10 rules 12:17
220:5 221:22 31:4,16 40:12 return 155:6 62:1673:2 88:24 164:3
221 :25 223:2,6 42:18 45:25 213:22 232:12 78:9 93:25 running 110:12
226:2,5,21 46:5,6 47:4,20 revelation 136:5 100: 17 101:6 155:3
228:9 48:17 50:9 136:5 107:7,10 108:8 R-e-v-P-A-R
respective 182:5 52:20 53:2,8 review 26:2 108:21 112:12 154:21
207:15 213:23 53:12,16,18 28:11 83:5 115:19 116:7
respond 13: 17 54:6 60:20,24 86:21 87:2,4,8 121:19 123:12
s
49:3,18 50:3 61:2,19 64:24 96:14 101:13 131:11 134:10
S2:2 3:2 4:2 5:2
69:25 78:25 65:3,20 67:10 103:24 104:6 134:11 146:14
6:2 7:2,2 8:14
95:24 96:6,18 71:14 75:6,9 113:11 149:25 147:25 155:11
9:2 10:2 12:11
113:8,15 77:20 80:18 183:17 186:22 156:9 159:19
142:2,2,2
responded 39:19 81:17 82:16 188:9 189:25 160: 14 161: 17
safe 100:4
39:23 49:6 85:17 87:22 214:9 161:21,25
218:22
96:8 111:21,23 88:5 90:23 reviewed 18:7 163:17 167:2
Sage 106:4
113:2,19 94:8 95:23 21:22 29:17 168:10 172:25
San202:23
responding 98:5,12 99:21 35:18 44:21 174:5 176:11
203:22 204:13
39:16 46:9 100:13 101:22 48:10 54:25 176:12 181:11
205:13 206:6
112:18 118:9 123:3 82:3 83:10 181:23 182:7
210:15,17,23
response 18:12 128:24 131:19 86:25 87:10 198:5 199:25
211:5 212:18
41:8 46:12 136:20,24 96:11 102:14 202:22 203:5
221:10 224:2,6
49:5 80:14 138:22 139:6 109:8 111:23 207:20 208:14
Sathy 106:5
96:10,20,21 143:4 144:15 115:11 143:2 208:20 215:7
satisfactory
98:13 103:6 159:21 160:5 147:23 150:4 215:12,13
49:1195:12
109:22 110:13 174:17 180:5 151:14 198:13 rights 110:7
satisfied 27:23
110:15 122:11 195:14 205:6 198:15 214:25 153:13 156:12
27:24
124:3 135:20 205:23 206:20 reviewing 60: 18 160:2 168:7
satisfy 222:21
145:19 154:14 212:14 217:24 101:4 188:10 171:17 172:6,9
saw 198:17
responsible 43:5 218:23 220:4 Reviews 3 2:7 173:7,11,19,23
saying 62:2
205:18 restructurings 54:24 83:3,9 174:14 175:7
69:22 89:15
responsive 78: 18 22:18 87:9 95:4 182:21 183:13
159:17 161:4
121:15 219:24 result 63: 11 103:13,23 184:10 195:21
217:23
rest 68:2 200:25 65:20 77:24 113:13 176:22 195:22
says 30:3 38:3
restate 193:7 110:20 137:23 183:19 right-hand
45:19 49:10,13
restructure 153:15,16 revised 179:16 40:17 94:24
49:17 56:9
30:11 39:8 220:24 revisions 105:19 RIMV203:20
94:23 105:4,8
45:22 65:12 resulting 37:12 RevPAR 132:19 rise 121:3
109:17 113:7
99:23 101:2 38:16 154:21 risk 123:13
122:16 139:15
126:14 133:13 results 153:23 re-ask 57: 1 0 163:6,10
143:4 145:8
206:23 resumed 54:8 174:9 role 19:6 46:6
146:25 148:4
restructured 94:18 142:3 Rl204:9 Romanette
157:3,10 166:9
98:23 153:16 163:19 202:4 Rick 16:21 91:20 145:3
168:12 176:2,6
APP-00397
2 61
178:5,9 183:21 securitized send 53:13 138:23 139:3 74:4 75:7,12
184:6 186:9,11 128:17 121:14 195:2 210:3 230:8 79:14 136:24
186:25 189:21 security 51: 10 senior 25:5 seven 56:9 180:7 137:11
189:21 207:17 77:7 177:14,18 200:14 213:10,18 shopped 71:16
213:8 215:4 179:6 219:19 sense 206:11 Seventh6:14 shopping 140:9
scanned 113: 14 see 19:13 24:6 sent 34:24 39:20 Shanik 43:11 short 54:2
sec 1 : 8 23 1 :4 24:12,19,20,23 45:19 46:25 shared 63:22 shorthand 19:21
scenario 155:3 25:7 29:24,24 48:23 52:16,18 shareholders 33:3
198:18 30:2 40:19 55:20 103:19 199:24 shot 155:20
Schuyler 22:23 44:12,13 51:20 106:10,12,12 shares 45:5,11 show65:19 72:9
44:2 51:22 66:12 111:10,15,17 45:12 72:11,14 74:22
SEC 88:24 89:15 72:4 74:18 112:19,22 sheet9:19 10:4,8 74:24 75:4
second 38:7 82:5 95:7,9 125:22 206:8 30:15 39:7,11 137:22
96:14 105:6 107:25 115:19 206:16 39:16 41:16 showed 53: 10
113:3 124:21 121:21 130:21 sentence 29:21 42:3 50:15 72:16,24 73:3
163:11 178:14 131:13 144:21 29:24 30:2 53:14,14,18,19 75:5
208:20 220:9 145:20 160:3 58:8 143:3 58:12 75:18 showing 85:8
secondary 34:3 165:10,20 September 29:8 77:7 85:15 shown 138:3
45:5,11 166:15 168:12 series 54: 13 94:6,21 95:24 shows 45:6
secret 92:21 169:20 172:17 67:12,13 175:2 98:2,13 101:20 side24:18 42:19
section 82:2 177:7 178:8,13 175:2 107:15 108:5 43:8,9 209:21
100:2 109:10 183:3,20 serve88:18 108:25111:16 sign34:11 53:18
147:18 149:14 187:19 189:7 service 27:3 111:19112:19 95:7 225:25
149:17,18,19 189:10 192:24 64: 11 13 2: 14 112:20,22 232:7
149:20 150:18 197:24 202:21 213:2 222:7,16 113:4,7,8,16 signatories
151:7,9 156:12 202:23 203:9 223:5,10,21 113:20144:9 193:3 195:24
159:14 203:21 204:9 serviced 209:8 144:10,11,12 signatory 30:17
sections 48:7 228:25 212:19 223:6 144:18,21,22 91:3 227:15
54:23 82:24 seeing 45:23 servicer 24:22 175:25 176:2,6 signature 192:20
83:6 87:11 101:3 132:23 133:2 176:11,17 192:21 233:23
secured 24: 13 116:4 166:10 167:4,5 177:2,12 signed 28:19
63:8,9,14 seek 29:7 78:21 167:10 170:25 180:16 183:9 35:3,20,21
64: 13' 15 71 : 1 0 118:23 125:14 191:23 202:11 212:12,25 53:19,23 85:11
71:11 74:11 149:10 203:2 205:7,12 213:21 214:20 225:19,22
162:9,14,21 seeking 66:11 205:15 215:24 221:2 226:13 226:18
163:24 177:16 148:14 149:13 216:3,4 217:11 232:6,7,10,13 significant 14 3 : 5
177:17 180:8 227:15,19,23 218:2,2,5 sheets 39:19,21 significantly
180:18 190:16 seen 18:5 19:5 219:5,6,8 53:6 62:13 154:16
190:21 191:23 36:22 41:10 servicers 68: 13 97:2 98:21 signing 15:2,5
192:3 203:17 45:20 47:12,14 118:5 219:3 105:10,22 67:22 232:9
208:15 209:2 47:19,24 services 3:5,12 106:15 109:23 similar 55:3,7
213:2 215:5 sees 187:7 12:5,7,9 66:2 110:14,17 74:7,9 102:24
secures 191:14 sell34:18 42:9 66:14 67:20,21 111:10,23 120:9 121:24
securities 100:5 45:2 50:20,24 serving 16:22 131:13 Simone 137:9
securitization 51:13 88:8 SESSION 8:11 Shelhorse 7:5 simple 63:6,6
202:12 95:22 100:24 sessions 121:6 40:9,9 simply 179:3
securitizations selling 33:24 set29:8 55:13 shocking 136:5 220:6 223:16
217:12 50:16 90:16 89:23 109:14 shop 72:3 73:22 single 32:20
APP-00398
2 62
192:8 15 8: 11 173: 13 speculate 181 :4 status 33:17 submits 70:12
sir 3 5: 8 3 7: 11 192:23 193:2 187:9 192:10 108:14,17 submitted 70:15
38:16 41:11 sort21:7 97:5 speculating 146:8 208:5 198:14
45:20 46:14 174:19 212:4 181:3 192:13 stay 145:3,10,20 subordinate
59:8,21 60:8 225:8 speculation 200:25 214:5 186:12 187:2
68:6 78:20 sorts121:6 124:11 201:5 215:4,6,8 187:14 189:4
86:6 87:16 137:19 197:9 Speculative 64:2 step 170:10 189:15,16,22
90:11 94:20 199:8 speed 210:22 223:15 190:2,5,11
106:14 139:13 sought 100:19 spoke 152:3 stipulation subordination
188:16 202:13 100:21 stakeholders 206:17 189:21
214:21 sounds 115:19 143:5 stipulations Subscribed
sit20:19,23 24:3 120:24 stamp40:16 12:15,18 231:21
168:6 181:7 source 92:4 47:10,11 54:13 stock 34:12,24 subsequent
185:21 186:5 sources 222:23 81:22 102:3 71:7 88:8,21 80:12 110:8
188:8 192:7 SOUTHERN stamped 26:22 107:23 112:5 112:24
194:14 196:22 1:3 231:3 27:3 153:24 175:3 substance 49:11
sitting 180:9,13 space232:5 stand 24:24 Stockton 4:4,11 95:12 101:13
192:2,4 222:12 speak 179:22 stands 140:18 11:20,22 101:18 217:17
223:7 speaking 170:13 Stang 17:10 163:23 substantial
situation 74:9 speaks 44:24 start53:15104:8 stonewalled 75:3 67:17 74:11
127:14 195:16 149:18 119:12 132:21 stop 48:25 91:2 90:14 132:20
six 102:6 131:8 special24:22 154:9 163:16 97:13,20 137:4 206:2
131:21 132:7 66:2,14 67:20 165:18 203:8 straight 219:10 212:25 213:5
133:12 135:11 67:21 68:13 206:18 217:23 strategic 29:23 substantially
136:14 155:7 118:5 132:23 started 74:21 30:4 65:21 128:14
155:12 211:3 133:2 166:10 85:10,14 Street 2:6,17 4:6 135:25 184:19
size 110:12 167:4,5,10 204:19 205:25 4:13 191:6,11,14
skip 188:25 170:25 191:23 206:4,10 207:2 strenuous 46:12 199:20 213:20
slightly 82: 10 202:11 203:2 starting 23 :7 strike 96:2 substantive
slots 224:21 205:6,12,15 40:17 48:3 126:20 176:9 114:14,19
sold 45:4 168:4 215:24 216:3 94:22 113:6 structure 61:6 197:5
171:10,11,12 218:2 202:22 64:9 65:24 successful 71: 14
200:24 specially 209:8 starts 47:10 74:13 79:17,21 152:14 153:22
somebody 50:21 212:19 108:25 121:22 122:13 sudden 132:15
102:20 128:10 specific 110:22 state 1:18 12:24 126:7,16 128:7 suffer 220:4
209:14 154:13 172:13 25:24 103:25 128:16 131:25 sufficient 99: 15
somebody's 180:14 181:20 188:18 230:7 137:12,17 126:8 222:7,15
219:19 184:2 207:24 232:4 138:25 196:21 223:20
somewhat 55:7 208:16,17,18 stated 174:8 structured sufficiently
106:19 209:3 210:12 184: 16 199: 19 110:24 207:23
Sony 22:14 210:14 statement structures 7 4: 18 suggest 128:8
soon 207:11 specifically 105:24 155:11 stuff 138:5 153:17 213:12
sorry 23:24 49:14 56:7 177:21 185:19 sub 159:14 suggested
34:1643:2 118:20 196:22 187:25 197:11 subject 18:15 123:22 137:16
46:13 83:4 197:15 201:10 statements 88:24 105:19 suggesting
87:3,16 95:16 201:14 209:12 185:6 189:9 126:3 133:16 146:16
144:6 145:17 210:9,24 states 1:2 197:23 148:25 228:24 suggestion
146:19 151:21 220:20 231:2 232:9 133:12
APP-00399
2 63
suggests 106:15 93:2 101:19 141:4 149:23 Tavern 10:13,16 166:17,22
Suite 3:13 4:6 105:4113:5 151:11,12 114:22 130:14 175:25,25
sum42:10 114:17 115:8 154:7 163:15 130:20 197:18 176:5,11,17,25
summarily 97:4 121:7,15 167:8 184:22 taxes 100:4 177:12 178:10
summarizing 147:22 149:15 185:13 192:17 Technically 180:16 183:9
45:14 150:25 164:6,9 197:14 201:7 170:13 191:20 212:12
supplement 164:22 176:5,7 201:11,17,24 tell 21 :4 22: 8 212:25 213:21
58:12 176:8 180:21 221:20 223:15 23:15 25:14 214:20 221:2
support 8:22,24 183:18 185:11 taken 77:6 140:4 41:351:760:3 226:13
10:21 25:20,22 186:20 188:2 170:10 215:19 61:21 77:16 terminate
26:17,2127:7 203:5,6 213:4 231:12 82:10 92:13,17 207:21 215:7
53:23 55:12 219:9 talk 13:22 15:14 92:19,24 96:12 215:14
61:3 66:5,15 surprise 115:15 66:9,10 68:13 97:17 105:23 terminated
67:3 71:4,9 surprised 68:16,23 69:2 132:6 136:19 147:10
76:25 102:17 115:16 179:23 74:13 78:8 142:13 151:2 termination
108:3 109:13 surprises 163:8 93:9,18 96:17 160:14,24 92:2 110:5
121:10 128:21 surrendered 97:11 99:16 172:8 176:19 125:22 143:16
142:6,13 215:10 113:24 118:15 186:10 192:2,4 143:17,20,21
147:17 149:20 sustainable 71:7 118:18 129:16 222:9 144:24 145:4
160:6,9 161:5 126:15 211:3 129:20,25 telling 112:17 145:11 146:2
161:6 162:15 211:21 130:5 132:3 122:6,7 178:4 147:3,6,8,12
169:16 180:16 Suzanne 114:7 138:9 165:22 tells 134:9 147:13 159:4
192:15,17 switch 132:21 192:12 199:9 162:11 213:25 214:5
193:11,13,13 switch over 199:10,11 tend 139:9 215:12
193:21,21 132:24 200:4 207:3 term 9:19 10:4,8 terminology
195:9 208:7 sworn 12:12 208:11 226:15 30:15 34:6 181:20
212:11,24 230:9 231:21 talked 15: 15 39:7,11,16,19 terms 9:4, 7,10
214:19,20,23 59:23 72:7,16 39:21 41:16 9:13,16,21
215:3 220:25
T
74:6,17,25 42:3 50:15 10:5,9 26:7
226:12,17
T 2:8 7:2 8:14
76:23 77:10,14 53:6,13,14,18 34:17 39:18
227:9,11,14,16
9:2 10:2 142:2
114:2,4,7,11 53:19 58:12 40:11 47:3
227:18,22
230:3,3 233:1
117:18 121:6 62:13 75:17 53:7 54:5
supported 143:5
table 123:13,23
126:4,4 127:12 85:15 94:6,21 81:16 82:15
supporting 67:4
take 16:15 18:9
137:19 177:21 95:24 96:25 85:16 92:7
67:7
19:14 29:14
205:3 208:22 98:2,13,21 94:7 101:21
supportive
47:16 53:25
208:24 211:6 101:20 105:9 114:14,17
67:11,18 92:11
54:22 64:21
212:15,19 105:22 106:14 144:14 220:23
124:4,5,13
80:16 84:25
talking 50:18 107:15 108:5 221:24 225:4
161:11
85:11 90:11
69:7 90:18 108:25 109:23 228:24
supports 193:21
94:10 95:3
101:8,9 132:21 110:14,17 terribly 174:22
suppose 67:9
96:14 102:12
153:14 162:19 111:10,16,19 test 152:8,14
supposed 27:10
103:5 105:21
169: 14 17 5 :4 111:23112:18 195:5 223:17
162:12
107:12,15
182:18 191:9 112:20,22 tested 117:17
sure 13:24 17:4
109:5 115:6
206:4,10,18 113 :3,7,8, 16 testified 12: 13
20:15 22:9
117:3 123:12
207:2 210:16 113:20 144:8 122:25 150:5
26:10 27:19
123:18,23
210:24 212:13 144:10,11,12 164:17,22
36:9 40:3 44:4
130:8,11
219:7 223:25 144:18,21,22 181:12 182:23
54:3 73:25
137:10,21
talks 13:23 165:20 166:15 183:6 198:15
APP-00400
2 64
226:15 140:11,13 thirty 232:13 158:21 159:10 51:8 92:5,5
testifying 164:7 145:6 146:23 thought 21 :22 160:3 161:22 97:8 136:16
testimony 23:20 146:23,25 46:18 50:10 161:25 162:7,9 137:9 160:16
23:24 24:2 147:17 150:10 60:21 66:4 173:19,20,22 160:22 171:20
30:14,20,23 150:12 152:4 69:19 84:6 174:3,8,13,17 172:5 175:5,8
37:5 38:4 154:15 155:10 88:10 117:19 185:5,10,17 212:13 217:20
48:22 57:23 155:19,21 119:21 126:18 198:22 199:3 225:21
78:6 122:9 156:23 157:4,9 128:14,25 206:24,25 ton 110:4
161:12 187:23 158:10,13 136:22 173:20 209:15,18 tone 65:21
219:15 230:12 159:13 161:6 174:4 180:6 211:18 216:6 top 19:14,19
231:12,15 161:10 162:6 184:18 193:2 222: 5 223 : 15 21:2,3 23:15
Texas 3:14 163:4 164:15 200:23 211:6,8 timeframe 65:21 44:1154:12
Thank54:17 164:22 167:2,7 212:21 224:20 84:17 98:24,25 103:17 189:16
60:7 95:18 167:16 168:15 thoughts 108: 11 109:25 209:16 198:3 202:19
141:3 167:12 169:2,3 171:20 three 17:12 timeframes 203:10 218:6
201:22,23 173:17 174:2,3 33:16 154:8,12 115:18 topic 21:12
226:25 227:2,3 175:12 176:4 154:17 156:2 times 13:24 180:21 194:15
229:9,11,12 177:25 178:15 216:2 174:25 181:10 topics 21:8, 17
they'd 162:16 178:20,21 three-day tips 92:7 48:3 54:20
200:11 180:8,11 182:6 132:25 titled 9:4,7,1 0,13 109:4
thing Ill :21 187:6,17,23,24 three-party 9:16,19 10:4,8 topping 72:20
145:7 224:9 188:4 189:11 39:14 10:13,16 40:11 top-notch 15:18
things 58:21 190:3,19 Thursday 1: 14 47:3 54:5 Torres 6:20
92:20 97:14 191: 12 194: 17 tie 130:12 81:16 82:15 11:24
109:25 137:20 194:21,22 tiling211:12 85:15 94:6 totally 224: 18
189:18 200:2 195:22 199:19 tilll5:5 211:21 101:20 114:22 tranche 158:18
think20:19 205:3 208:4,22 time 13:8 15:23 130:14 206:9
21:11 23:20 208:24 210:4 17:14 25:25 tmeyers@kilp ... tranches 120:14
24:16 26:6 210:25,25 27:8,9 30:9,17 4:9 transaction
33:7 36:20 213:8 214:19 34:24 43:6,20 today 21:9 24:3 15:23 34:3
37:18,19,24 220:11,14 50:14 56:20 29:6 45:21 37:12 38:16
38:3 43:3,20 221 : 5 224: 11 69:3 72:17,18 66:16 67:2,3 46:5,22 49:19
44:2 45:13 226:6,24 81:5 84:16 68:3,6 70:4,7 50:4 51:2,9
47:21 52:14 thinking 116:2 90:11 93:6,7 87:12 140:7 55:10,13 64:22
55:17 57:9 135:14 97:20 106:2,17 148:10,18 68:17,24 69:8
63:20 64:25 third 34:5,19,20 108:9,15 110:8 15 5 : 1 0 164: 7 70:7 71:16,18
65:4,20 66:18 42:11 49:9 112:9 117:10 168:6 169:14 71:21 72:3,10
67:7,11,16 50:20,24 51:13 117:24 118:2 173:3 180:14 72:12 73:5,7
71:12,24 81:2 52:9 69:9 118:19 120:14 181:8 185:21 73:15,20 74:4
82:24 105:12 82:12 85:9 125:25,25 186:6,23 74:15 75:4
106:22 113:22 90:13,17,19 126:14 127:22 192: 11 194: 14 77:5 78:13,22
116:17 117:8 95:16 125:10 130:7 131:7 196:22 222:10 79:3,4,5,15
117:17 118:14 125:12 138:9 132:12,25 222:12 223:8 80:23 81:3
118:22 122:19 165:18 133:10,22,24 227:9 228:7 90:5,20 91:6
123:16 127:21 third-party 138:2,24 140:6 today's 167:9 95:20,21
130:10,11,25 49:15 52:16 140:8,13,22 Todd4:8 11:19 100:19,22
131:6 132:10 75:8 125:14 146:11 150:7 163:22 109:11,14
133:10 140:3 139:18 153:10 154:21 told 45:24 50:8 110:24 Ill :2
APP-00401
265
111:22115:23 treatment 188:20,20 212:11220:17 unpaid 169:5
121:23 123:24 131:20 168:8 200:2 218:2 unacceptable 191:9
136:3 138:10 171:18 177:9 227:11 82:12,13 83:22 unsecured 6:5
138:11 139:10 179:20 181:7 turn 29:11 44:14 85:9 90:3,5,10 11:13 66:21
140:10 148:15 182:2 193:17 154:8,16 228:2 92:25 97:4,6,9 149:11 151:24
149:20 151:16 196:13 208:6 228:19 97:13 unsustainable
151:17 152:2,9 trick 174:12 turns 99:10 uncertain 163:8 126:8
153:20 156:2,5 188:15,20 190:4 underlying upcoming 224:7
156:8,10 tried 218:25 twice 49:2 121:2,10 upside 153:15,19
157:11,12 224:16 two26:13 36:21 understand 154:2,19
159:12 160:7 triggering 44:23 55:19 13:14,21 38:25 162:22,25
160:15,17,19 143:17,21 72:22 73:9 50:17 52:6,19 163:7,9
160:25 161:3,5 145:25 74:19 76:3 143:15 147:24 USA 1:7 7:4
163:2 212:17 Trimark 22:15 95:5 104:10 157:20 161:9 10:21 13:6
220:25 Trimont 4:5,12 105:9 110:14 161:12 162:19 16:10,20 21:25
transactions 7:5 11:20,22 111:10112:17 164:13,14 23:17 31:6,7
70:16 74:7 40:10 163:23 140:7 159:20 165:23 167:19 32:13 33:23
76:6,16 77:25 163:24 165:11 160:6,11 165:7 170:3,24 34:2,10 36:23
78:3,12,21 167:4,10 165:12 191:17 175:24 176:9 39:4 46:7
79:7,14,22 170:24,25 192:14 193:9 181:25 185:18 48:21 50:22
80:6,8,13 191:22 202:11 211:2 185:20,22,24 52:16,18 79:10
105:13,25 triple 150:18 215:25 216:12 186:16 190:24 90:15 134:24
106:16111:6,9 Troy 143:12 type 46:3 51:2 193:9 204:3 142:5,12
136:2 146:17 64:22,23 65:8 207:22 223:22 196:17,19
transcript 26:3 true30:8 31:19 65:19,24 69:7 understanding 231:7
231:12,14 39:5 49:16 79:7 95:19 32:18 108:8 use 26:8 69:24
232:14,15 152:24 154:5 111:20115:22 148:9 166:11 144:25 158:5
transfer 100:4 167:4 187:5 119:23,24 167:23 169:5 utilize 78:15
transference 230:11231:14 123:4,7 227:20 169:22 171:3 utilized 77:8
92:23 231:16 227:23 172:4 174:17 126:12,12
transmission trust 1:7 10:21 types 66:2 176:10,13 128:20
47:19 106:10 22:2 142:6,12 162:17 199:11 180:9,12
106:12 170:9 196:19 Tysons 204:8 181:16 182:20
v
transmitted 231:7 205:13 206:5 184:13 188:9
vague49:21
47:23 83:13 Trustees 22:3,6 210:16 211:5 193:5 196:20
57:10 63:25
84:13 75:16 118:12 212:18 221:10 198:21 199:16
159:5
transpiring trusts 177: 10 224:8 215:9 228:23
validated 65 :25
106:13 202:12 tO 107:2 understands
valuation 119:3
Travis 7:5 40:9 try 13:22 88:7 179:19 181:6
174:23
treat 162:12 97:14 123:3
u
understood 52:2
value 30:6 58:11
190:4,6,15 131:18 146:2,4
Uhm 20:21 90:7
91:8 184:15
58:15 60:10,14
219:20 165:12 172:17
145:13
188:21 198:16
60:22,25 61:9
treated 132:9 179:15 191:18
Uh-hum 28:20
unfair 125:6
61:10,13,22
195:17,19 trying 18:19
102:4 148:3
unfortunately
62:4,5,7, 19,25
204:23 28:4 48:25
ultimate 20:6
199:23 219:2
63:11,24 64:5
treating 150:13 68:14 80:4
63:2 89:4
unit 110:20
64:12 65:6
150:15 195:20 97:19,20 114:5
ultimately 16:4
UNITED 1:2
71:10 77:14
220:12,12 146:12 188:15
20:6 112:6
231:2
119:5,5,13
APP-00402
266
121:4 123:14 108:22 128:25 88:8 91:13 1 07: 5 221 : 16 work58:19
126:24 128:22 133:9 140:20 100:2,7 136:18 222:22 121:3 124:6,16
132:16 134:7 148:20,23 152:16 211:13 weren't 41:15 124:24 126:2
135:19 160:10 155:11 174:22 211:15 42:2 100:10 127:7,16 152:2
161:7,9,18,22 177:17 178:17 wants 189:11 West4:13 201:2 210:25
162:3,8,10 180:24,24 Washington 2:7 we'll13:22 14:2 216:5
175:13,13 190:12 196:12 204:2 26:9 27:8 workable 151:19
176:14 177:19 199:3 207:4 wasn't 34:4 37:24 70:9 151:23 152:7
195:15,17 viewed 39:15 35:22 46:3 81:8,14 85:2,4 worked 158:19
196:14 199:3 17 5:3 184: 17 61: 15' 17,21 95:22 104:8 216:2
200:24 212:22 199:22 74:9 90:12 121:12 130:20 working 121:6
213:19 219:19 views 62:3,4,9 92:14 106:5 140:5 157:10 works 13:14
values 56:9 63:5 Ill :25,25 110:22,23 172:16 195:6 world 120:21
119:8,10 117:19 131:18 Ill :4,16,20 we're 12:16 worse 120:3
120:13,23 219:16 112:18 126:8 25:25 38:6 157:3,4,13
133:19 Virginia 23 : 12 131:24 174:21 40:4 81:11 158:17
valuing 207:9 virtue 177:17 175:6 179:23 133:6 141:4,5 worth 62:11
variations 199:9 178:5 221:8 183:6 194:16 178:25,25 142:17 191:14
various 13 :25 224:12 198:23 207:23 179:11 193:16 213:12
19: 15' 16 24:7 vision 132:8 water 135:25 195:3 worthless
53:15 59:17,22 voluntarily 136:4 we've 146:10 187:23
60:5 72:5 215:10 way32:11 88:15 169:13 195:25 wouldn't 37:8
79:23 93:7,7 vote 139:24 108:22 123:9 208:2 216:22 115:15 126:18
98:21 109:15 123:15 126:14 225:17 127:20
112:23 114:19
w
126:17 128:18 Wharton 5:4 write 224:21
116:8 118:5
Wachovia
133:9 148:24 11:10 writedown
143:17 171:13
132:15
150:12,24 wholly 83:22 213:2,5
171:14
wait 18:19 85:5
171:16,24 Willkie 6:12 writing 218:7,12
vehicles 17: 16
waived 147:7
181:20 183:21 11:16 written 119:11
Verbal92:16
want 27:19,22
187:4 195:7 wiped 67:7 99:7 wrote 93:23
verbally 92:24
29:15 46:17
199:14 215:16 99:8 129:9 Wyndham 22:11
version 27:20
48:751:7
217:10 221:6 wiping67:12,14
versus 77:18
53:25 54:23
225:11 230:16 wish233:5
X
120:2,5 123:5
55:4 57:9 66:2
ways 134:11 witness 1:12 8:3
X 8:2,14 9:2 10:2
123:7 163:10
69:20 71:7
Wednesday 11:4 12:11
viability 69: 19
94:11,14
103:19 28:5 94:10
y
70:14 79:8
101:16 105:21
week48: 11,13 124:12 140:25
yeah28:5,10
152:12
115:7 123:12
48:23 65:23 141:3 163:12
33:12 59:7
viable 77:21
134:10 137:23
105:9 137:9 164:12 176:21
99:16 100:23
91:11111:2
142:24 144:2
weeks 206:17 187:24 189:6
124:20 135:7
126:16 138:16
147:20 149:25
Weiss 5 :4 11 : 1 0 201:22 227:2
141:2 145:11
Victory 3: 13
150:24 151:10
40:8 44:9 86:3 229:11 230:8
152:4 158:8
videotaped
174:12 183:16
104:12 107:14 230:12 232:1
178:15 184:15
230:10
187:9,21 189:7
108:19 109:2 233:23
185:16 188:2
view 23:9 39:22
189:9 195:2
112:22 word 73:25 74:4
200:8 210:20
60:24 61:9,10
219:9 226:6
went 17:10 76:9 words45:18
year 15:2,3,5,9
63:6,22 65:25
wanted 51:8
86:7,12 89:10 74:2 148:20
80:17 115:14
77:19 108:16
62:5 84:19
93:21 96:25 221:24
126:11 210:18
APP-00403
2 67
years 17:11,12 $25 24:20 11004:6 152 102:3 200 163:5
117:4 154:8,12 $250 99:14 1129 139:7 152:3 16 8:25 10:16 20005-5763 2:7
154:17 155:7 123:20 128:10 152:3 160:3 32:2 35:3 2006-4 202:13
155:12,16 154:4 1129(a) 139:4 130:16,18 200715:23 23:8
156:2 211:2,4 $425 128:10 114 10:15 154:22 117:4 136:2
yellow 165:8,19 $900,000 14:20 1145100:2,15 163 8:6 155:6,8,13
166:14 1146 100:3,15 1633 6:22 2007-C1202: 12
York 1:3,14,14
0
101:8,11,13,18 17 8:18 9:22 2008 14: 1 7 15:5
1:18 3:7,7 4:14
0-50 198:3
12 8:5 10:4 94:9 10:19 85:17 125:13
4:14,22,22 5:7 94:21 102:7 142:7,10 200915:5 125:14
5:7,17,17 6:7,7
1
112:10 114:5 144:15 184:22 2010 1:15 8:25
6:15,15,23,23
18:16 17:23
119:2 142:14 228:2,19 9:6,9, 12, 15,18
17:8 88:21
18:2 29:9
142:16 154:24 18 8:19 28:19 9:22 10:7,11
230:7,20 231:3
40:18 104:8,8
231:13 19 28:25 172:12 10:12,15,18
Younger 17:6
104:10 119:25
12th 1:14 19th 28:16,23 32:2 39:6
164:10 177:12
12:15 130:8 197631:21 40:12 44:11
z 178:5 179:4
12:29 141:8 1983 17:5 46:21 47:4
Zeiter 22:22
183:23 184:14
121 170:5 48:14 54:6,12
32:10,11,12,21
1.2152:15
12213:6
2
81:17 82:16
43:22 93:16,18
1:17142:3
127 106:25 107:4
2 8:19 9:9,12,15
85:17 94:8
93:23
10 9:16 29:20
1285 5:6
18:17 19:2,13
101:22 102:16
zero67:10
82:17,20 117:4
1290 4:21 6:6
24:6 44:15
103:11 114:24
197:23 198:8
117:6,7 175:18
13 10:8 101:23
47:4 54:6 56:8
117:11,16
199:2
10-13800 1 : 8
102:2 121:21
57:24 58:7
125:21 130:16
Ziehl17: 11
231:4
187:14 228:22
59:20 72:6
130:19 131:5
Zuroff22:16
100 20:5 169:23
13.3177:19
81:17 84:21,24
144:15 231:13
10019 4:14
13.7 166:7
107:22 165:4
231:22
$
10019-6064 5:7
190:19
169:19,23
2011117:11
$115:6 10019-6099 6:15
130 10:18
170:4,14,20
202 8:7
$1.4 152:15 10019-6799 6:23
1410:12 47:10
177:13 178:7
2210:11,15
$107 33:25 42:10 10020-1007 3:7
103:12,15
179:9 181:21
47:11 101:22
$121170:8,14 10036-6797 5: 17
127:24 142:21
191:20 194:3,7
102:16 114:23
171:2,6,18 10110:11
142:23 143:4
194:10,25
118:8
$13.3190:17 10104-0050 6:7
181 : 1 0 197: 15
195:11 196:7
22nd 115:14
$13.7 187:2 10104-3300 4:22
197:16,16,17
196:10,24
132:2 172:11
$17145:9 103 10:12
197:25
202:14 208:2
172:19 173:2
$20 64:11 71:3 1095 5:16
14th 4:13
2nd 48:13,14
174:13 182:9
77:15 128:20 111:69:19
141102:3
54:12 58:5
182:23 183:2
$200 65:2 28:22 37:13,14
142 8:11 10:22
2's 58:6
198:23
$21.3 166:23 38:17,18 63:18
148 107:2 108:25
2.5 51:19
227 8:8
167:14 66:18 76:25
109:2 113:6
20 25:4 35:14,23
23 54:13 221:9
$23825:5 66:12 85:18,21 117:5
1510:13 17:11
66:13 128:16
23086:16,17
67:25 70:25 117:7,16
114:24 115:4
168:13,13
2323 3:13
77:6 168:21 147:18,18
131:10 172:23
169:10,11,24
237 187:3
169:3,12 148:2 149:17
183:3 197:14
170:9,21
238 169:4
174:23 187:3 225:16,20
197:17
177:14 189:23
24186:17
190:25 191:10 231:6
150 207:19
193:23 194:4
25 8:23,24 9:6
191:15 110 106:25 107:5
213:11,16,19
196:3
40:12 44:11
APP-00404
46:21 48:12
151:7 159:14
25th 183:9
25(a) 151:9
25(c) 156:12,14
250 129:9 133:13
135:14 169:3
187:15
254 94:23
26th 3:6
264 94:23
27 45:3 132:2
27.27 45:11
28 10:18 130:15
130:19 131:5
132:7
28th 153:10
28004:6
29 10:7 94:8
3
3 8:20 25:21
26:15,24 28:8
32:15 35:13
143:25
3:22229:15
30 159:24 197:5
232:14
30(b )( 6) 21 : 18
164:12,15
300 2:17
303094:7
314:13 54:14
185:14,18,20
186:6 189:20
190:10
32 8:25 81:22
33228:5,17
34.9145:4,10
35136:4
4
4 8:24 9:18
25:23 26:20
27:7 29:12
40:18 48:3
54:19 82:16
91:18 144:5
147:16 149:14
149:18,19,20
176:20 192:18
214:12 227:12
4's 135:21,22
4(a) 149:25
150:3,18
4(b) 149:25
4.275 51:19
409:681:22
4182:21
425 129:9 133:13
135:15
479:9
5
5 8:25 32:3,6,10
48:3 49:10
54:19 82:24
83:8 86:21
94:25 102:9
109:3 117:2,16
120:2 135:21
182:10
5's 135:23
5031:2233:24
34:12,18 42:10
51:14 82:21
99:16,18
100:25 136:4
197:23 198:8
198:19 199:16
200:6
52nd4:13
54 9:12
6
6 9:4 29:12,21
40:13,16 44:10
48:11 83:8
86:21 95:2,16
102:9 109:3,10
117:9,16 120:2
183:8
6/22/10 86:18
6/23/10 102:6,16
6/29/10 94:24
6011:13
60654 2:18
61.82 82:6
6245:2
62.18 45:8
6552:6
7
7 9:7 10:12 47:5
47:8 51:17
55:4,9,16 56:5
56:8 83:23
103:11,19
1 04: 11 112:9
117:23 183:22
228:17
7th 106:17
108:10,12,17
7/6/10107:14
109:2
70 157:19
7003:13
7545:11
752193:14
7876:14
8
89:10 54:7,11
55:9,17 56:5
58:4,7 60:17
83:23 117:4,25
144:20 145:8
214:18,24
228:19
819:15
82 9:18
85 9:22
9
99:13 81:18,21
83:23 117:4
9:05 1:15
90 24: 5 192: 11
94 10:7
9545:10 200:5
2 68
APP-00405

EXHIBIT B
From:
Sent:
To:
Subject:
mbeilinson@beilinsonpartners. com
Sunday, July 18, 2010 12:44 PM (GMT)
Lascher, Michael <michael.lascher@lamcollc.com>
Re: One More Decision
Not inclined. I understand its only a word but it gives midland a real hook and I'm filing the motion to assume on day one and already
reviewing the plan. I won't be amending our deal without your consent. I'm trusting that you won't terminate AIC in first 45
days .... please do the same with me on this issue for this short period of time
Dinner was really fun last night
------Original Message------
From: Lascher, Michael
To: Marc
Subject: Fw: One More Decision
Sent: Jull8, 2010 7:55AM
Good morning. Did you think about this?
----- Original Message -----
From: Lascher, Michael
To: 'mbeilinson@beilinsonpartners.com' <mbeilinson@beilinsonpartners.com>
Sent: Sat Jul17 17:50:25 2010
Subject: One More Decision
Can you live with giving me the ability to terminate cash collateral if you "breach your obligations to Lehman in connection with the
Restructuring" 7
Just say yes and I promise I won't ask you for anything else. Until tomorrow ...
Confidentiality Notice: The contents of this email, all related responses and any files and/or attachments transmitted with it are
CONFIDENTIAL and are intended solely for the use of the individual or entity to whom they are addressed. This email may contain
legally privileged or confidential information and may not be disclosed or forwarded to anyone else without authorization from the
originator of this email. If you have received this email in error, please notify the sender immediately and delete all copies from your
system.
Sent via BlackBerry by AT&T
CONFIDENTIAL LEH-ALI 005676
APP-00639
EXHIBIT 16

EXHIBIT C
NOT A SOLICITATION OF VOTES ON A PLAN
August 20, 2010
Midland Loan Services, Inc.
10851 Mastin, 6th Floor, Overland Park, KS 66210
Attention: Kevin S. Semon
FIVE
MILE
Vice President, Special Servicing Manager
rt VF MILE CAPITAL PART NERS
THRE E STAMFORD PLAZA. gTH FLOOR
STAMFORD. CON!><ECTICUT o6g01
TELEJ'HONf 2039050950
FACSl :'vllLE 20) 90S09i4
Binding Commitment for the
Acquisition of Innkeepers USA Trust
Five Mile Capital II Pooling REIT LLC, through its investment advisor Five Mile Capital Partners
LLC (collectively, "Five Mile"), is pleased to submit this letter (this "Commitment Letter") to
Midland Loan Services, Inc. ("Midland"), which sets forth, among other things, our binding
commitment (the "Commitment") to provide equity capital for the restructuring of the debt and
equity of Innkeepers USA Trust ("Innkeepers") and its subsidiaries (collectively with Innkeepers, the
"Company'), resulting in Five Mile directly or indirectly owning 100% of the equity interests in the
reorganized Company (the "Transaction"). The funding from our Commitment will be used to
finance and otherwise implement a confirmed plan of reorganization to be filed by Midland (the
"Plan") acceptable to us in our reasonable discretion, which will provide for the treatment of claims
and other terms outlined below and will otherwise contain terms and treatment of claims consistent
with the applicable provisions of the Bankruptcy Code.
Five Mile is uniquely qualified to consummate the Transaction, given our substantial investment and
the rights we have in certain indebtedness in Innkeepers. As you know, we have made available,
subject to Court approval, debtor-in-possession financing to the Company in excess of $50 million.
As a result, we are familiar with the Company's assets and operating performance, gleaned from our
review of public filings and our own unassisted due diligence. We also have general expertise in the
hospitality market and the extended stay lodging sector.
I. Value & Proposed Capital Structure
Innkeepers is a leading owner of upscale and extended stay hotel properties throughout the United
States with interests in 73 hotels and approximately 10,000 rooms across 19 states. As with many
other lodging assets, the Company expe1ienced adverse asset performance as a result of the
economic downturn and became unable to perform under its existing debt obligations leading to the
Company's bankruptcy flling on July 19, 2010.
APP-00640
FIVE CAPITAL llC
Given the economic environment's adverse impact on operating performance, reduced valuations
within the lodging sector, required capital investments, and pending or existing franchise expirations,
we believe the Company must resize its existing capital structure.
Our Commitment is based on a valuation of the Company of $1.04 billion and results in a final
capital structure of $803.4 million in aggregate indebtedness and $236.6 million in new equity capital
to be invested by us. The details of the reorganized capital structure for the Company are provided
in Section IV below.
II. Capital Commitments
Subject to the conditions set forth above, we hereby submit this binding and irrevocable offer to
provide $236.6 million of cash to fund the Transaction to be effectuated in accordance with the
terms of this Commitment Letter on the effective date of the Plan. Five Mile's investment will be
used to recapitalize the Company, and more specifically, will be used to pay down existing debt and
provide funds for future property improvement work ("PIP"), furniture, fixtures, and equipment
investments ("FF&E"), cash reserves and potential growth opportunities. We will provide the cash
investment required to consummate the Transactions from our existing investment vehicles. In
connection therewith, we hereby confirm that we have available, and will have available at all times
prior to consummation of the Transaction or the termination of the Commitment, investor
commitments that exceed, in the aggregate, $240 million.
III. Plan Subject to Higher and Better Offers; Five Mile Free to Pursue
Other Transactions
Subject to Court approval of the bid protections for Five Mile described in Section VI herein, Five
Mile acknowledges that the Plan will be subject to higher and better offers for creditor treatment as
may be reflected in competing reorganization plans filed with the Court. For avoidance of doubt,
our providing this Commitment does not preclude us in any way from discussing alternate
transactions, including competing plans of reorganization, or engaging in any discussions regarding
providing financing or participating in any such alternate transactions (each, an "Alternate
Transaction"); provided however, that we will not enter into a binding commitment with respect to,
or otherwise consummate, any Alternate Transaction prior to the occurrence of a Termination
Event (as defined in Section IX hereof).
IV. Restructuring of Debt and Equity ofthe Company- New Equity, Debt Forgiveness,
& Cash Pay Downs
Based on our analysis of the Company's filings we believe that as of July 2010, the Company has
approximately $1.47 billion in outstanding debt obligations of which approximately $1.055 billion is
pre-petition obligations not related to Lehman ALI, Inc. ("Lehman") (i.e., exclusive of Lehman's
Floating Rate Mortgage Loan & Floating Rate Mezzanine Loan). Our Commitment contemplates a
restructuring whereby the current debt is reduced through debt forgiveness and cash pay downs to
approximately $803.42 million allowing non-Lehman pre-petition creditors to realize value for
72.4% of their outstanding obligations ($764.24 million of value realization on $1.055 billion of
current indebtedness), calculated after giving consideration to the present value of B-Notes to be
2
APP-00641
FIVE MILE CAPITAL PART!\E RS LLC
purchased by us as proposed in this Commitment Letter.
1
This recovery is materially better than the
66.3% maximum of value recovery for those same creditors described in the Plan Support
Agreement advanced by Lehman (the "Lehman Plan"), with the potential for less (there is a ceiling
but no floor on the creditor recovery and the Lehman Plan sponsor(s) benefits dollar-for-dollar to
the extent recovery by the secured creditors is reduced). We believe that the amount realized on the
Lehman's Floating Rate Mortgage Loan under our Commitment better reflects the value of the
collateral supporting that obligation versus the premium value contemplated in the Lehman Plan
which provides for a 90% recovery on Lehman's secured claim and appropriates the entirety of any
residual value of the enterprise to Lehman. The higher value going to Lehman under its plan is
realizable by Lehman only because there is a transfer of value from the non-Lehman prepetition
creditors to Lehman (and Apollo Investment Corporation ("Apollo")) under the Lehman Plan.
An illustration and an explanation of the debt restructuring portion of our Commitment are detailed
below:
($in millions)
r- .l
--;,;,j- l
IklzL

FQr{li I!.:J.J!./l.Q!J!ll
Five Mile DIP $50.8 $0.0 $50.8 -$508 so.o
Lehman DI P 517.0 $0.0 $17.0 -$17.0 $0.0
Fixed Rate CMHS Mortgage l .oan $825.4 -$225.4 $600.0 -$66.4 $533.6
Floating Rate Mortgage I .oan $238. 5 -$86.8 $151.7 -$16.8 $134.9
Floating Rate Mc:t.:t.aninc I .oan $121.0 -$121.0 $0.0 -$26 $0.0
Anaheim Mortgage l.oan $13.7 -$3.7 $10.0 -$1 .1 $8.9
Anaheim Mc-aaninc l.oan $21.3 -$21.3 $0.0 -$0.4 $0.0
Capmark Mission Valley CMBS Mortgage Loan $47.4 -$12.9 $34.5 -$3.8 $30.6
CapmaJ'k Garden Gmvc CMBS Mortgage I .oru> $37.6 -$10.3 $27.3 -S3.0 $24.3
Capmark Ontario CMBS Mortgage l.oan $35.0 -$9.6 $25.4 -$2.8 $226
Merrill Lynd1 Washington D.C. CMBS Mortgage Loan $25.6 -$7 0 $186 -521 $16.5
Merrill Lyn<h Tysons C"..t>mcr CMBS Mortgage I .oan $25.2 -$6.9 $18.3 -$2.0 $ 16.3
Merrill J.yn<h San Anwnio CMHS Mortgage lA>an $24. 2 -$6.6 $17.6 -$1 .9 $15.6
Present Value of B-Notcs<J $0.0 so.o $16.4 -$16.4 so.o
Total Debt $1,482.6 -$511.4 $987.5 -$187.1 $803.4
I)J I' Rctircmmt S67.8 S67.8
Pre-Petition Creditor Pay downs S103.0 $103.0
Fixt-c.l Rat< CMBS Mortgagt Special S<:rvirer Fcc $3.3 $3.3
Funding of FF&E Reserve $13.8 $13.8
Pre-funding of I :urure PIP Work $15.0 $15.0
Additional Cash on Halancc Sheet (2) $17.3 $17.3
Punhasc ofB-Notcs at Present Value $16.4 $16.4
New Cash $0.0 $0.0 $46.1 $190.5 $236.6
Total Caeital Structure $11482.6 -$511.4 $3.3 $!!040.0
( I) B-Notes rcprcst'llt an inwwst in the equity waterfall of the new capital struaurc that is subordinate to a 2.0x multiple on the Investors'
Investment. The note faa:: value is set at 20% of the deficiency daim. PrcSt'flt Value cstablishcc.l based upon 5 to 7 year period and no interest
aCXl'llal.
(2) lndudcs amount allocated to pay unserurcd crcc.litors (other than holders of dcficiL'Il'Y daims) their pro rata share of$500,000.
1
Any recovered [net) proceeds from Midland's lawsuit against Apollo, whjch alleges among other things that Apollo is
required to pay for certain property improvement projects that Apollo guaranteed and Innkeepers failed to timely
complete, will go to the B-Note holders of the Fixed Rate C't\.ffiS Mortgage Loan as additional consideration.
3
APP-00642
FIVE MilE CAPITAl PA'RTKERS tlC
Cash Proceeds & Uses
Our Commitment contemplates that the cash investment of $236.6 million will be used as follows:
o Repayment of the Five Mile and Lehman DIP in the amount of$67.75 million
o Pay down of Pre-Petition Mortgage lenders, after debt forgiveness, by $100 million
o Funding of $28.8 million of FF&E and PIP reserves to cover 2011 FF&E and future
PIP work
o Funding of $17.3 million of additional cash on the post-confirmation balance sheet.
o $16.4 million for us to purchase the B-Notes issued to holders of deficiency claims
based upon the present value of $7 3.8 million in B-Notes (20% of the deficiency
claim amount) subordinate to a 2.0x multiple on our investment
o Payment on non-deficiency unsecured claims in the amounts of: $2,550,949 to
Floating Rate Mezzanine Loan lenders; $449,051 to Anaheim Mezzanine Loan
lenders; and $500,000 to trade unsecured creditors
o Payment of fees to the Special Servicer of the Fixed Rate CMBS Mortgage equal to
0.625% of the Final Balance of the Fixed Rate CMBS Mortgage as complete
consideration for effecting the restructuring transactions
Debt Forgiveness & Pay Downs
Fixed Rate CMBS Mortgage Loan: Reduction to $600.0 million and a cash pay down of
$66.4 million to reduce the outstanding balance to $533.6 million. Company's issuance of B-
Notes to lender, which notes we agree to purchase immediately for $10.0 million in cash.
Floating Rate Mortgage Loan: Reduction to $151.7 million and a cash pay down of$16.8
million to reduce d1e outstanding balance to $134.9 million. Company's issuance ofB-Notes
to lender, which notes we agree to purchase immediately for $6,350,949 in cash, of which
$2,550,949 shall be subordinated and paid over to the Floating Rate Mezzanine Loan. Please
note our estimates for this mortgage pool are based on de minimis information as compared
with some of the other properties and therefore will require extra diligence
Floating Rate Mezzanine Loan: Payment of $2,550,949 as described above. Debt cancelled.
Anaheim Mortgage Loan: Reduction to $10.0 million and a cash pay down of$1.1 million to
reduce the outstanding balance to $8.9 million. Company's issuance ofB-Notes to lender,
which notes we agree to purchase immediately for $619,050 in cash, of which $500,000 shall
be subordinated and paid over to the Anaheim Mezzanine Loan.
Anaheim Mezzanine Loan: Payment of $449,051 as described above. Debt cancelled.
Capmark Mission Valley CMBS Mortgage Loan: Reduction to $34.5 million and a cash pay
down of $3.8 million to reduce the outstanding balance to $30.6 million. Company's issuance
of B-Notes to lender, which notes we agree to purchase immediately for $0.6 million in cash.
Capmark Garden Grove CMBS Mortgage Loan: Reduction to $27.3 million and a cash pay
down of $3.0 million to reduce the outstanding balance to $24.3 million. Company's issuance
of B-Notes to lender, which notes we agree to purchase immediately for $0.5 million in cash.
Capmark Ontario CMBS Mortgage Loan: Reduction to $25.4 million and a cash pay down
of $2.8 million to reduce the outstanding balance to $22.6 million. Company's issuance of B-
Notes to lender, which notes we agree to purchase immediately for $0.4 million in cash.
4
APP-00643
FIVE MilE CAPITAl PART?\ERS U.C
Merrill Lynch Washington D.C. CMBS Mortgage Loan: Reduction to $18.6 million and a
cash pay down of $2.1 million to reduce the outstanding balance to $16.5 million.
Company's issuance of B-Notes to lender, which notes we agree to purchase immediately for
$0.3 million in cash.
Merrill Lynch Tysons Corner CMBS Mortgage Loan: Reduction to $18.3 million and a cash
pay down of $2.0 million to reduce the outstanding balance to $16.3 million. Company's
issuance of B-Notes to lender, which notes we agree to purchase immediately for $0.3
million in cash.
Merrill Lynch San Antonio CMBS Mortgage Loan: Reduction to $17.6 million and a cash
pay down of $1.9 million to reduce the outstanding balance to $15.6 million. Company's
issuance of B-Notes to lender, which notes we agree to purchase immediately for $0.3
million in cash.
Unsecured trade creditors (not including holders of deficiency claims) that arc not otherwise
paid pursuant to a "first day" order, will receive a share of a cash allocation of $500,000.
All equity interests in the Company, including common and preferred stock, will be
cancelled, and no distributions will be made on account of such interests. The Plan will
provide for an equity incentive program for management of the reorganized Company.
V. Proposed Debt Rates, Maturities, Extensions, Amortization, & Release Prices
The Commitment includes the following terms for the restructured debt:
Fixed Rate CMBS Mortgage Loan: A proposed interest rate of 6. 71% and no change to the
existing maturity date of.July 9, 2017. Amortization will begin 48 months after the
confmnation of the Plan and will be based on a 30 year amortization schedule. Release
prices will be established and properties can be released at 115% of the allocated loan
amount. The loan is subject to prepayment at par without penalty. Allocated FF&E of
$7,840,067.
Floating Rate CMBS Mortgage Loan: A proposed interest rate of Libor + 2.05%, with an
initial maturity date of July 9, 2015, two one-year extension options, at the borrower's
option, and not subject to any fmancial covenants. Release prices will be established and
properties can be released at 115% of the allocated loan amount. The loan is subject to
prepayment at par without penalty. Allocated FF&E of $3,510,782.
Anaheim Mortgage Loan: A proposed interest rate of 5.41% and a maturity date of July 9,
2017. Amortization will begin 48 months after the confirmation of the Plan and will be
based on a 30 year amortization schedule. The loan is subject to prepayment at par without
penalty. Allocated FF&E of $407,400.
Capmark Mission Valley CMBS Mortgage Loan: A proposed interest rate of 5.98% and a
maturity date of July 9, 2017 as compared to the original maturity date of November 11,
2016. The loan is subject to prepayment at par without penalty. Allocated FF&E of
$446,681.
Capmark Garden Grove CMBS Mortgage Loan: A proposed interest rate of 5.98% and a
maturity date of July 9, 2017 as compared to the original maturity date of November 11,
$357,674.
5
APP-00644
FIVE MilE CAPITAl PART?\fRS U C
Capmark Ontario CMBS Mortgage Loan: A proposed interest rate of 5.98% and a maturity
date of July 9, 2017 as compared to the original maturity date of November 11, 2016. The
loan is subject to prepayment at par without penalty. Allocated FF&E of $456,855.
Merrill Lynch Washington D.C. CMBS Mortgage Loan: A proposed interest rate of 6.03%
and a maturity date of July 9, 2017 as compared to the original maturity date of October 1,
$266,428.
Merrill Lynch Tysons Corner CMBS Mortgage Loan: A proposed interest rate of 5.98% and
a maturity date of July 9, 2017 as compared to the original maturity date of October 1, 2016.
The loan is subject to prepayment at par without penalty. Allocated FF&E of $235,718.
Merrill Lynch San Antonio CMBS Mortgage Loan: A proposed interest rate of 6.03% and a
maturity date of july 9, 2017 as compared to the original maturity date of October 1, 2016.
The loan is subject to prepayment at par without penalty. Allocated FF&E of $278,395.
VI. Offer Structure and Protections
As stated, the Transaction will be implemented by a recapitalization of the Company through the
Plan. Since the Company has rejected our request to perform due diligence and has expressed no
real interest in engaging us in meaningful discussions regarding a potential transaction in lieu of
continuing on with the Lehman Plan, it will be necessary for Midland or another party in interest to
seek and obtain a bankruptcy court order terminating the Company's plan exclusivity period in order
for Midland to file the Plan. Assuming exclusivity is so terminated, we require that stalking horse
protection be immediately sought by Midland from the Court, including the following: (i) a break-
up fee of $10 million in favor of Five Mile (the "Break-Up Fee") if an alternative Chapter 11 plan
financed by a different party is confirmed by the Court and consummated; (ii) a fust over-bid in the
competing plan in the form of additional capital into the Company in the minimum amount of $25
million cash (mclusive of amount allocable to pay the Break-Up Fee, which shall only be payable
from the cash realized from the fust overbid), with subsequent over-bids in the form of additional
capital into the Company in minimum $10 million increments of additional cash (or additional debt
on identical terms as described in our Commitment), and (iii) a reimbursement of all of our legal fees
and expenses incurred in connection with this offer and its confirmation and consummation
(including due diligence fees and expenses) in an amount not to exceed $2,000,000. Midland
confums its agreement with such terms.
Midland confrrms that, other than the sale of equity interests in the reorganized Company, the Plan
will not contemplate or provide for a sale of the Company or any of its assets pursuant to section
1129(b)(2)(a)(ii) or (iii) or section 363 of the Bankruptcy Code. As such, no holder of a lien on any
asset of the Company shall be permitted to credit bid its claim as part of the Plan. The confrrmation
of the best plan of reorganization providing for the highest and best return to creditors is
contemplated, subject to the protections being granted to Five Mile as set forth above in this Section
VI. In lieu of participating in the recapitalization provided in the Plan, the Plan should provide that
each secured creditor shaH have the option to take ownership of its collateral in full satisfaction,
settlement, release and exchange for its claim(s) against the Company, in which case there shall be an
attendant adjustment to the consideration hereunder.
VII. Strength of the Plan
6
APP-00645
FIVE MilE CAPITAL PARTl\"fRS LLC
We believe the Plan (consistent with the terms of this Commitment Letter) is (i) superior to the
Lehman Plan, (ii) beneficial to all creditors, not just Lehman, and (iii) in the best interests of the
Company and its bankruptcy estates. The Plan values the Company at $1.04 billion, which is higher
than the valuation of $915 million in the Lehman Plan. The Plan provides for approximately $67.24
million in additional recovery value for the Non-Lehman Pre-Petition creditors (or 9% more) and
$187.1 million in cash pay downs of indebtedness, including retirement of $67.75 million of DIP
financing and the purchase of the B-Notes for $16.4 million. Further, there is substantially higher
certainty and less execution risk with the Plan, fmanced by our Commitment, as it will provide for
the exit financing component critical to the success and emergence of Innkeepers from bankruptcy.
The Lehman Plan does not include a commitment for $75 million of exit financing, which is
required for Innkeepers to successfully emerge from bankruptcy.
We believe the Plan also provides additional stability for the Company as compared to the Lehman
Plan by providing approximately $28.8 million in cash reserves to fund future FF&E and PIP
investments and an additional $17.3 million in general cash liquidity (includes amount allocated to
pay the unsecured creditors - other than holders of deficiency claims) to manage seasonality within
the business, cover operating or interest shortfalls should they occur, and provide funds to pay
administrative and priority expenses upon emergence. Our Commitment's suggested amortization of
the Fixed Rate and Anaheim Mortgage Loans, after a 48 month period will allow the Company to
reach a more normalized level of operating performance. We are ready to move forward and have
all the resources, including available funds, to conclude the transactions outlined in this
Commitment Letter.
VIII. Midland Covenants
In consideration for our Commitment, Midland hereby covenants and agrees to
(a) perform its undertakings set forth in the second paragraph of Section VI above, (b) use its best
efforts to seek a bankruptcy court order to terminate the Company's plan exclusivity period, and (c)
upon termination of the Company's plan exclusivity period, to (i) immediately thereafter flle a
motion seeking approval of the bid protections identified above and fl.le the Plan consistent with the
terms of this Commitment Letter, (ii) take all necessary steps to obtain an order approving a
disclosure sta(ement in respect of the Plan, (iii) thereafter solicit votes for the Plan, and (iv)
thereafter take all necessary steps to seek conftrmation and effectiveness of the Plan. All orders and
filings by Midland relating to the Plan shall be subject to our prior review and approval, which
approval shall not be unreasonably withheld or delayed.
IX. Termination of Commitment
This Commitment Letter outlines only some of the essential terms regarding the proposed
Transaction, is not all-inclusive and does not purport to summarize or contain all of the conditions,
covenants, representations, warranties and other provisions which would be contained in defmitive
documentation for the Transaction.
In addition, this Commitment Letter shall terminate and be of no further force or effect, and we
and you shall no longer be obligated with respect to our Commitment (and, in such event, we shall
not be entitled to any of the bid protections in favor of us, including, without limitation, those set
forth in Section VI herein) and other agreements set forth herein (including, without limitation, our
7
APP-00646
FIVE MILE CAPlTAl PART!X'ERS llC
agreement with respect to Alternate Transactions set forth in Section III hereof), upon the earliest to
occur of the following (each, a "Termination Event"):
the occurrence of any material adverse condition, change in or material disruption of
conditions in the financial, banking, capital or hospitality markets and extended stay lodging
sector that, in our reasonable judgment, would impair the viability or success of the
Transaction;
the occwrence of any condition, change or development that could reasonably be expected
to have a material adverse effect on the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of the Company;
the Company fails to provides us with unfettered and reasonable access to its properties,
books and records, subject to a non-disclosure agreement for a period of thirty (30) days
("Due Diligence Access Period"), such period to commence by September 15, 2010;
our determination, on or prior to the last day of the Due Diligence Access Period, that the
results of our due diligence investigation with respect to mortgage pools (and underlying
properties) are not satisfactory to us in our sole discretion;
our inability to negotiate and execute all related documents (including customary
representations, warranties, covenants, conditions, and indemnities) necessary to effectuate
the Transaction, in each case in form and substance satisfactory to us in ow reasonable
discretion;
any breach by you of, or non-compliance with, the covenants set forth in Section VIII
herein;
your failure, by October 15, 2010 (or such later date to which we shall agree in writing), to
(a) obtain a bankruptcy court order terminating the Company's plan exclusivity period, (b)
ft.le a motion to approve bid protections in favor of us (including, without limitation, those
set forth in Section VI herein) with respect to the Plan, or (c) ftle the Disclosure Statement
and Plan;
the Cowt's failure to (a) approve your motion to approve protections in favor of us
(including, without limitation, those set forth in Section VI herein) before October 27, 2010
(or such later date to which we shall agree in writing), (b) approve the Disclosure Statement
for the Plan on or before November 15, 2010 (or such later date to which we shall agree in
writing), or (c) enter a final order approving the Plan (acceptable to us in our reasonable
discretion) by December 31, 2010 (or such later date to which we shall agree in writing);
the Court's confirmation of the Lehman Plan; or
mutual agreement of Midland and Five Mile.
Time is of the essence with respect to the Termination Events.
X. Miscellaneous
All notices, requests, claims, demands and other communications hereunder shall be given (and shall
be deemed to have been duly received if given) by hand delivery in writing or by facsimile
transmission with confumation of receipt, as follows:
if to Five Mile:
8
APP-00647
Three Stamford Plaza
301 Tresser Boulevard, Ninth Floor
Stamford, CT 06901
Attention: James G. Glasgow, Jr.
Email: jglasgow@fivemilecapital.com
Facsimile: (203) 905-0954
if to Midland:
1 0851 Mastin, 6th Floor
Overland Park, KS 6621 0
Attention: Kevin S. Semon
Email: kevin.semon@midlandls.com
Facsimile: (913) 253-9723
FlVE MilE CAPITAl P A R T ~ F R S llC:
This Commitment Letter, the rights of the parties, and all actions arising in whole or part under or in
connection herewith will be governed by and construed in accordance with the laws of the State of
New York.
This Commitment Letter constitutes the entire agreement between the parties and supersedes any
and all prior discussions, negotiations, proposals, undertakings, understandings and agreements,
whether written or oral, between you (or the Company), on the one hand, and us, on the other hand.
No modification or waiver of any provision hereof shall be enforceable unless approved by you and
us in writing. Neither you, on the one hand, nor us, on the other hand, is relying upon any
statement or representation made by or on behalf of the other, except as expressly provided in the
Commitment Letter.
We are prepared to enter into a transaction on the terms set forth herein. Upon receipt of a fully
executed counterpart to this Commitment Letter, both parties agree to negotiate in good faith
regarding the implementation of the Transaction contemplated in this Commitment Letter,
including engaging in the preparation and negotiation of definitive documents, and Midland agrees
to move forward with its undertakings described in Section VIII herein.
This Commitment Letter shall be considered withdrawn and can no longer be accepted if we have
not received from you, in accordance with the notice provisions herein, a fully-executed counterpart
to this Commitment Letter on or before August 25, 2010, at 5:00PM (Eastern time), unless we
extend such deadline in writing.
9
APP-00648
flVE MILE <:APlTA!.. U.C.
Should you have any questions regarding this Commitment Letter, please do not hesitate to contact
James Glasgow fjglasgow@fmcp.com) or AI Nickerson (anickerson@fmcp.com) at (203) 905-0950.
Sincerely yours,
Five Mile Capital II Pooling REIT LLC,
By: Five Mile Capital Partners LLC,
its manager
By:
Acknowledged and Agreed:
Midland Loan Services, lnc.
By:
Name:
Title:
APP-00649

EXHIBIT D
)>
"'U
"'U
I
0
0
01
01
0)
I
G)
I
r
-<
()
0
z
"'Tl
0
m
z
-I
)>
r
z
z
I
s:
0
0
0
0
0
V>
CJl
V>
V>
HIGHLY CONFIDENTIAL DRAFT
PROJECTIONS SUBJECT TO CHANGE
FOR SETTLEMENT PURPOSES ONLY
SUBJECT TO FRE 408
EXHIBIT 9
)>
"U
"U
I
0
0
01
01
.t:>.
I
I
G)
I
r
-<
()
0
z
"'Tl
0
m
z
-I
)>
r
z
z
s:
0
0
0
0
0
V>
CJl
V>
.j:::o..
SUBJECT TO FRE 408
MOELIS
Moelis & Company prepared this presentation based on information received from third parties. Moelis
has not and does not intend to verify independently any of such information, all of which Moelis
assumes is accurate and complete in all material respects. If this presentation contains projections,
forecasts or other forward-looking statements, Moelis assumes that they were prepared based on the best
available estimates of the future events underlying such statements. This presentation speaks only as of
its date and Moelis assumes no duty to update it or to advise any person that its conclusions or advice
has changed.
This presentation is solely for your information purposes only. Consider it along with all other facts,
advice and its own insights before making your own independent decisions. Do not provide a copy of
this presentation to any person without Moelis' prior consent. No other person should rely on it for any
purpose. Moelis does not offer tax, accounting or legal advice.
Moelis & Company provides mergers and acquisitions, restructuring and other advisory services to
clients and its affiliates manage private investment partnerships. Its personnel may make statements or
provide advice that is contrary to information contained in this material. Our proprietary interests may
conflict with your interests. Moelis may from time to time have positions in or effect transactions in
securities described in this presentation. Moelis & Company may have advised, may seek to advise and
may in the future advise or invest in companies mentioned in this presentation.
)>
"'U
"'U
I
0
0
01
01
01
I
G)
I
r
-<
()
0
z
"'Tl
0
m
z
-I
)>
r
z
z
I
s:
0
0
0
0
0
V>
CJl
V>
CJl
SUBJECT TO FRE 408
MOELIS
)>
"'U
"'U
I
0
0
01
01
(J)
I
G)
I
r
-<
()
0
z
"'Tl
0
m
z
-I
)>
r
z
z
I
s:
0
0
0
0
0
V>
CJl
V>
(J)
SUBJECT TO FRE 408
MOELIS
In this presentation we are running a scenario where projections have been developed on a hotel-by-hotel
basis for the portfolio
Management estimates financial performance will not return to 2007levels for at least four to six years
2010 reflects management budget, with actual data for January and February
Management anticipates 5-10 properties to be deflagged by 2015, regardless of PIPs
FISCAL YEAR 2010 - SCENARIO ASSUMPTIONS
ADR level assumptions range $107-$113
Slightly down from FY2009
Downward estimates mainly due to price
pressure as a result of continued effects of
economic environment
Occupancy levels 63%-67%, slightly down from
FY2009
RevPAR $70-$75, down approximately 2%-4%
from FY2009 levels
Expenses in line with FY2007-FY2009 average
margins
Estimates take into consideration adjustments due
to cycle renovations
FISCAL YEAR 2011 - SCENARIO ASSUMPTIONS
ADR levels $110-$116
Occupancy levels 65%-70%, up from FY2010
and back at FY2009 levels
RevPAR $74-$79, up approximately 4%-7%
from FY2010 levels
Expenses in line with FY2007-FY2009 average
margins
I
G)
I
r
-<
SUBJECT TO FRE 408
()
0
MOELIS
z
($in millions)
"'Tl
0
m Yearly
z
-I
2007A 2008A 2009A 2010E 2011E
)>
Key Operating Statistics:
r
ADR ($) $123 $126 $111 $110 $113
Growth -- 2.3% (11.8%) (0.8%) 2.6%
Occupancy (%) 74.2% 72.8% 67.2% 65.5% 67.4%
Growth (bps) -- (141) bps (565) bps (168) bps 195 bps
RevPAR ($) $92 $92 $75 $72 $76
Growth -- 0.4% (18.6%) (3.3%) 5.7%
Revenue $337 $352 $290 $282 $288
Growth -- 4.3% (17.5%) (2.8%) 2.1%
Department Expenses 83 84 74 74 75
Gross Operating Income $254 $268 $216 $209 $213
Margin 75.4% 76.2% 74.6% 73.9% 73.8%
Operating Expenses 110 112 101 100 106
House Profit $145 $156 $115 $109 $107
Margin 42.9% 44.3% 39.6% 38.5% 37.1%
Other Expenses 17 20 19 17 17
Hotel EBITDA $127 $136 $96 $91 $90
Growth -- 6.9% (29.5%) (5.0%) (1.7%)
Margin 37.7% 38.7% 33.1% 32.3% 31.1%
Corporate Expenses 11 12 12 9 9
Corporate EBITDA $116 $125 $84 $82 $80
Growth -- 7.0% (32.2%) (2.7%) (2.1 %)
Margin 34.5% 35.4% 29.1% 29.1% 27.9%
z
z Cap Ex
I
s:
FF&E $19 $19 $16 $21 $29
-
0 PIPs 0 0 0 24 21
0
Total CapEx $19 $19 $16 $45 $51
)> 0
"U 0
% ofRevenue 5.5% 5.5% 5.5% 15.9% 17.7%
"U
0
I
V>
0
CJl
0
V>
01
-.....!
01
-.,J
I
G)
I
r
-<
SUBJECT TO FRE 408
()
0
MOELIS
z
($in millions)
"'Tl
0
m Yearly
z
2007A 2008A 2009A 2010E 2011E
-I
)>
r
ADR ($) $120 $124 $109 $109 $111
Growth -- 3.1% (12.0%) (0.7%) 2.2%
Occupancy (%) 76.0% 74.1% 69.2% 68.2% 69.5%
RevPAR ($) $92 $92 $76 $74 $77
Growth -- 0.6% (17.8%) (2.2%) 4.1%
Revenue $195 $197 $161 $158 $164
Growth -- 0.8% (18.1 %) (2.1%) 4.1%
Margin 45.7% 44.6% 43.4% 43.6% 44.3%
House Profit $91 $94 $70 $67 $67
Margin 26.9% 26.7% 24.0% 23.8% 23.1%
Hotel EBITDA $81 $83 $60 $58 $57
Growth -- 2.3% (28.1%) (3.4%) (1.2%)
Margin 24.1% 23.6% 20.6% 20.5% 19.8%
Cap Ex
z
FF&E $11 $11 $9 $12 $18
z PIPs 0 0 0 6 21
I
Total CapEx $11 $11 $9 $18 $39
s:
-
% ofRevenue 3.2% 3.1% 3.0% 6.3% 13.6%
0
0
)> 0
"U 0
"U
0
I
V>
0
CJl
0
V>
01
CX>
01
(X)
I
G)
I
r
-<
SUBJECT TO FRE 408
()
0
MOELIS
z
($in millions)
"'Tl
0
m Yearly
z
2007A 2008A 2009A 2010E 2011E
-I
)>
r
ADR ($) $118 $121 $108 $107 $112
Growth -- 2.5% (10.1%) (1.0%) 4.5%
Occupancy (%) 66.7% 67.7% 61.2% 57.9% 60.0%
Growth (bps) -- 95 bps (650) bps (331) bps 211 bps
RevPAR ($) $78 $82 $66 $62 $67
Growth -- 3.9% (18.7%) (6.4%) 8.3%
Revenue $79 $93 $80 $76 $73
Growth -- 18.3% (14.1 %) (4.9%) (3.8%)
Margin 16.0% 18.5% 18.7% 17.7% 16.8%
House Profit $26 $34 $25 $22 $21
Margin 7.8% 9.7% 8.7% 7.8% 7.2%
Hotel EBITDA $22 $29 $20 $17 $16
Growth -- 30.3% (31.1%) (13.2%) (5.4%)
Margin 6.6% 8.3% 6.9% 6.2% 5.7%
Cap Ex
z
FF&E $4 $5 $4 $6 $7
z PIPs 0 0 0 14 0
I
Total CapEx $4 $5 $4 $20 $7
s:
-
% ofRevenue 1.3% 1.5% 1.5% 7.1% 2.5%
0
0
)> 0
"U 0
"U
0
I
V>
0
CJl
0
V>
01
<D
01
<D
I
G)
I
r
-<
SUBJECT TO FRE 408
()
0
MOELIS
z
($in millions)
"'Tl
0
m Yearly
z
2007A 2008A 2009A 2010E 2011E
-I
)>
r
ADR ($) $144 $145 $125 $124 $126
Growth -- 0.5% (13.3%) (1.0%) 1.0%
Occupancy (%) 79.7% 77.6% 71.2% 69.8% 72.5%
RevPAR ($) $115 $112 $89 $87 $91
Growth -- (2.1 %) (20.5%) (2.9%) 5.0%
Revenue $64 $62 $49 $49 $51
Growth -- (2.6%) (20.3%) (1.4%) 5.1%
Margin 13.7% 13.1% 12.4% 12.6% 12.8%
House Profit $27 $28 $20 $19 $20
Margin 8.1% 7.9% 6.9% 6.8% 6.8%
Hotel EBITDA $24 $24 $16 $16 $16
Growth -- 0.4% (32.3%) (0.5%) 0.7%
Margin 7.0% 6.8% 5.6% 5.7% 5.6%
Cap Ex
z
FF&E $4 $3 $3 $4 $4
z PIPs 0 0 0 4 0
I
Total CapEx $4 $3 $3 $7 $4
s:
-
% ofRevenue 1.0% 1.0% 0.9% 2.5% 1.5%
0
0
)> 0
"U 0
"U
0
I
V>
0
CJl
0
.j:::o..
01
0
(J)
0
I
G)
I
r
-<
SUBJECT TO FRE 408
()
0
MOELIS
z
"'Tl
0
m
z
Addison RI Marriott Residence Inn 150 6 14 $0.0
-I Altamonte Springs Marriott Residence Inn 128 1 25 Yes 0.0
)>
Arlington Marriott Residence Inn 114 4 15 0.0
r Atlanta Downtown Marriott Residence Inn 160 Custom 14 0.0
Atlanta Peachtree Marriott Residence Inn 120 6 12 0.0
Bellevue Marriott Residence Inn 120 1 26 0.0
Belmont Summerfield Suites 132 14 0.0
Binghamton Marriott Residence Inn 72 1 22 Yes 1.3
Bothell Marriott Residence Inn 120 4 19 0.0
Cherry Hill Marriott Residence Inn 96 1 21 Yes 0.0
Columbia Hampton Inn 83 9 0.0
Denver Downtown Marriott Residence Inn 159 1 28 Yes 2.5
Denver Tech Marriott Residence Inn 128 1 29 Yes 2.1
ElSegundo Summerfield Suites 122 15 0.0
F art Lauderdale Marriott Courtyard 136 11 0.0
Fremont Marriott Residence Inn 80 1 25 Yes 1.4
Gaithersburg Marriott Residence Inn 132 6 12 0.0
Germantown Hampton Inn 178 14 0.0
Horsham Marriott Towneplace Suites 95 11 0.0
Islandia Hampton Inn 120 22 0.0
Las Colinas Summerfield Suites 148 14 0.0
Lexington KY Marriott Residence Inn 80 1 24 Yes 1.1
Livonia Marriott Residence Inn 112 6 11 0.0
Lombard Hampton Inn 128 22 Yes 0.0
Louisville RI Marriott Residence Inn 96 1 26 Yes 1.7
Lynnwood Marriott R<>sidence Inn 120 1 23 0.0
Mount Laurel Summerfield Suites 116 14 0.0
Mountain View Marriott Residence Inn 112 1 24 1.9
Naples Hampton Inn 107 19 0.0
Portland ME Marriott Residence Inn 78 5 14 1.3
Richmond Marriott Residence Inn 80 1 24 Yes 1.1
RichmondNW Marriott Residence Inn 104 6 12 0.0
Rosemont Marriott Residence Inn 192 6 12 0.0
Saddle River Marriott Residence Inn 174 6 7 0.0
San Jose Marriott Residence Inn 80 1 24 Yes 0.0
San Jose South Marriott Residence Inn 150 6 12 0.0
San Mateo Marriott Residence Inn 160 1 25 2.9
Schaumburg Hampton Inn 128 23 Yes 0.0
z
Shelton Marriott Residence Inn 96 1 22 Yes 1.7
z
Silicon Valley I Marriott Residence Inn 231 1 26 4.1
I
s:
Silicon Valley II Marriott Residence Inn 247 1 25 4.4
-
Tukwila Marriott Residence Inn 144 1 25 0.0
0 Westchester Hampton Inn 112 22 0.0
0
Willow Grove Hampton Inn 150 19 0.0
)> 0
-u 0
Windsor Marriott Residence Inn 96 1 24 Yes 1.7
-u
0 Total/ Average 5,686 19 $29.3
I
V>
0
CJl
0
.j:::o..
01
(J)
.......
.....>.
)>
"'U
"'U
I
0
0
01
(J)
1\.)
I
G)
I
r
-<
()
0
z
"'Tl
0
m
z
-I
)>
r
z
z
I
s:
0
0
0
0
0
V>
CJl
.j:::o..
I'V
Altamonte Springs Marriott Residence Inn
Binghamton Marriott Residence Inn
Cherry Hill Marriott Residence Inn
Denver Downtown Marriott Residence Inn
Denver Tech Marriott Residence Inn
Fremont Marriott Residence Inn
Lexington KY Marriott Residence Inn
Lombard Hampton Inn
Louisville RI Marriott Residence Inn
Richmond Marriott Residence Inn
San Jose Marriott Residence Inn
Schaumburg Hampton Inn
Shelton Marriott Residence Inn
Windsor Marriott Residence Inn
Total
128 1 12/31/2021
72 1 12/31/2021
96 1 12/31/2021
159 1 12/31/2021
128 1 12/31/2021
80 1 12/31/2021
80 1 12/31/2021
128 6/30/2013
96 1 12/31/2021
80 1 12/31/2021
80 1 12/31/2021
128 6/30/2013
96 1 12/31/2021
96 1 12/31/2021
1,447
SUBJECT TO FRE 408
MOELIS
$0.7 $0.8
0.9 0.8
1.1 1.0
1.7 1.8
1.0 1.0
0.4 0.4
1.0 1.0
0.6 0.5
0.8 0.6
0.4 0.3
1.0 1.0
0.4 0.3
0.8 0.7
0.5 0.4
$11.4 $10.4
I
G)
I
r
-<
SUBJECT TO FRE 408
()
0
MOELIS
z
($in millions)
"'Tl
0
m Yearly
z
2007A 2008A 2009A 2010E 2011E
-I
)>
r
Revenue $150 $151 $125 $123 $128
Growth 0.5% (17.3%) (1.7%) 4.7%
Hotel EBITDA $64 $65 $48 $47 $47
Growth 1.1% (25.6%) (2.4%) (0.6%)
Margin 19.1% 18.5% 16.7% 16.8% 16.3%
Cap Ex
FF&E $8 $8 $7 $9 $13
PIPs 0 0 0 3 11
Total CapEx $8 $8 $7 $12 $25
% ofRevenue 2.4% 2.4% 2.4% 4.4% 8.7%
Yearly
2007A 2008A 2009A 2010E 2011E
Revenue $45 $46 $36 $35 $36
Growth 1.9% (21.0%) (3.6%) 2.1%
Hotel EBITDA $17 $18 $11 $10 $10
Growth 7.1% (36.9%) (8.0%) (3.8%)
Margin 5.0% 5.1% 3.9% 3.7% 3.5%
Cap Ex
FF&E $2 $3 $2 $3 $4
z
PIPs 0 0 0 3 10
z Total CapEx $2 $3 $2 $5 $14
I
% ofRevenue 0.7% 0.7% 0.7% 1.9% 5.0%
s:
-
0
0
)> 0
"U 0
"U
0
I
V>
0
CJl
0
.j:::o..
01
V>
(J)
0)
)>
"'U
"'U
I
0
0
01
(J)
.t:>.
I
G)
I
r
-<
()
0
z
"'Tl
0
m
z
-I
)>
r
z
z
I
s:
0
0
0
0
0
V>
CJl
.j:::o..
.j:::o..
Lehman Hotels (lJ
($ in millions)
Illustrative Value [$150- $190]
Multiples
2010E EBITDA 8.6x -10.9x
2011E EBITDA 9.1x -11.5x
Cap Rates
2010E NOI 6.2%- 7.8%
2011E NOI 4.8%-6.1%
(1) Lehman hotels consists of all core and terminal hotels in the floating pool
SUBJECT TO FRE 408
MOELIS
Fixed Pool Hotels
Other
Hotels
Core Terminal
[$400 - $525] [$25- $50] [$125 - $175]
8.5x -11.1x 2.4x- 4.8x 8.0x -11.1x
8.5x -11.2x 2.5x- 5.0x 7.7x -10.8x
7.3%-9.5% 15.7%-31.4% 6.9%-9.6%
6.4%- 8.4% 11.5%-23.1% 6.7%-9.4%
)>
"'U
"'U
I
0
0
01
(J)
01
I
G)
I
r
-<
()
0
z
"'Tl
0
m
z
-I
)>
r
z
z
I
s:
0
0
0
0
0
V>
CJl
.j:::o..
CJl
Debt Amount [$400- $575]
Maturity
Coupon
Hotels
2017-2019
0-10 Hotels
to CMBS Pool
[6%]
35-45
Lehman/ Investor
Others
Debt Amount
Maturity
Coupon
Hotels
[95%]
[5%]
[$0- $50]
2017
[6%]
20
SUBJECT TO FRE 408
MOELIS
Key Statistics
2010E EBITDA
Debt Amount [$125 - $175]
Maturity 2016-2018
Coupon [6%]
Hotels 6-7
)>
"'U
"'U
I
0
0
01
(J)
(J)
I
G)
I
r
-<
()
0
z
"'Tl
0
m
z
-I
)>
r
z
z
I
s:
0
0
0
0
0
V>
CJl
.j:::o..
(J)
Fixed Pool
Floating Pool
Other Pools
Total
Equity Value
Fixed Pool
Floating Pool
Other Pools
Total
$825
351
238
$1,414
[144%- 206%]
[185% - 234%]
[136% -190%]
[155%- 209%]
[$250 - $425] [$400 - $575]
[301- 351] [0- 50]
[63- 113] [125- 175]
[$689 - $889] [$525 - $725]
[$150- $190]
[100%]
[0%- 26%]
[100%]
[73%- 83%]
[6%]
[6%]
[6%]
[6%]
SUBJECT TO FRE 408
MOELIS
I
G)
I
r
-<
SUBJECT TO FRE 408
()
0
MOELIS
z
"'Tl
0
m
Fixed Pool 2009A 2010E 2011E
z
-I
NOI $51 $46 $39
)>
r
Interest [24- 35] [24- 35] [24- 35]
DSCR [1.5x- 2.1x] [1.3x- 1.9x] [1.1x- 1.6x]
Floating Pool 2009A 2010E 2011E
NOI $16 $12 $9
Interest [0- 3] [0- 3] [0- 3]
DSCR [5.2x- NM] [3.9x- NM] [3.1x- NM]
Other Pools 2009A 2010E 2011E
NOI $13 $12 $12
Interest [8- 11] [8- 11] [8- 11]
DSCR [1.3x- 1.8x] [1.1x- 1.6x] [1.1x- 1.6x]
Consolidated 2009A 2010E 2011E
NOI $68 $61 $51
Interest [32- 44] [32- 44] [32- 44]
DSCR [1.6x- 2.2x] [1.4x- 1.9x] [1.2x- 1.6x]
-
z
z
I
s:
-
0
0
)> 0
-u 0
-u
0
I
V>
0
CJl
0
.j:::o..
01
-.....!
(J)
-.,J
)>
"'U
"'U
I
0
0
01
(J)
(X)
I
G)
I
r
-<
()
0
z
"'Tl
0
m
z
-I
)>
r
z
z
I
s:
0
0
0
0
0
V>
CJl
.j:::o..
CX>
Lehman and Investor to share control of the Trust
[2] board members selected by Lehman
[2] board members selected by Investor
SUBJECT TO FRE 408
MOELIS
[3] independent board members mutually acceptable to Lehman and Investor

EXHIBIT E
-----------------------------*
In re: Chapter 11
INNKEEPERS USA TRUST, et al., CASE NO.
Debtors. 10-13800 (SCC)
-----------------------------*
Deposition of MICHAEL LASCHER,
called as a witness for examination,
held at the offices of Dechert LLP, 1095
Avenue of the Americas, New York, New
York, on Thursday, the 19th day of
August 2010, commencing at 12:18 p.m.,
before Jennifer Ocampo-Guzman, a
Certified Livenote Reporter and Notary
Public of the State of New York.
JOB NO. 19803
1
APP-00406
EXHIBIT 7
2 4
1 1
2 APPEARANCES:
3
3
KIRKLAND & ELLIS, LLP
MORRISON & FOERSTER, LLP
4 Attorneys for Debtors and
4 Attorneys for Unsecured Creditors
Debtors-in-Possession
5 655 Fifteenth Street, N. W.
Committee
Washington, DC 20005-5763
BY: JEFFREY M. GOULD, ESQ. 6
7 jgould@kirkland.corn BY: PAUL GALANTE, ESQ.
8 -and-
7 pgalante@mofo.com
9 KIRKLAND & ELLIS, LLP
8
Attorneys for Debtors and
9 WILLKIE F ARR & GALLAGHER, LLP
10 Debtors-in-Possession
Attorneys for Appaloosa Investment L.P. I
300 North LaSalle Street
11 Chicago, Illinois 60654
10 787 Seventh Avenue
12 BY: JEFFREY D. PA WLITZ, ESQ.
New York, New York 100 19-6099
jeffrey. pawli tz@kirkland. corn
11
13 BY: BRIAN R. FAERSTEIN, ESQ.
14 12 bfaerstein@willkie.com
HAYNES and BOONE, LLP
13
15 Attorneys for Midland Loan
KASOWITZ, BENSON, TORRES & FRIEDMAN, LLP
Services, Inc.
14 Attorneys for Five Mile Capital Partners
1633 Broadway
17
BY: LENARD M. PARKINS, ESQ.
16 BY: DANIEL A. FLIMAN, ESQ.
18 Lenard.parkins@haynesboone.corn dfliman@kasowitz.com
19 -and- 17
20 HAYNES and BOONE, LLP 18
Attorneys for Midland Loan Services, Inc.
19
21 2323 Victory Avenue, Suite 700
20
Dallas, Texas 75219
21
22
22
BY: MARK ELMORE, ESQ.
23 rnark.elrnore@haynesboone.corn
23
24
24
25 25
3 5
1
1
2 APPEARANCES (cont'd)
3 2 MICHAEL L A S C H E R, having been
KILPATRICK STOCKTON, LLP
3 duly sworn, was examined and testified as
4 Attorneys for Trimont Real Estate
Advisors
4 follows:
5 31 West 52nd Street, 14th Floor
New York, New York 10019 5 EXAMINATION BY
6
6 MR. PARKINS:
BY MICHAEL D. CRISP, ESQ.
7 mcrisp@KilpatrickStockton.com
7 Q. Would you state your name, please.
8
BRYAN CAVE, LLP 8 A Michael Lascher.
9 Attorneys for LNR Partners, LLC
9 Q. And, Mr. Lascher, how have you
10 presently employed?
11 BY LAWRENCE P GOTTESMAN, ESQ.
lawrence.gottesrnan@bryancave.corn 11 A I'm an employee of Lamco.
12
13 PAUL, WEISS, RIFKIND,
12 Q. Lam co is an affiliate of Lehman
WHARTON & GARRISON, LLP
13 Brothers?
14 Attorneys for Apollo Investment
Corporation
14 A Yes.
15 Q. Before we get further in the
16
16 deposition I think we will go around the
BY ANDREW J EHRLICH, ESQ.
17 aehrlich@paulweiss.com
17 table and make appearances for your
-and-
18 BY AMY P DIETERICH, ESQ. 18 deposition.
adieterich@paulweiss.corn
19 MR. PARKINS: My name is Lenard
19
20
20 Parkins. I'm with the law fiml of
DECHERT, LLP
21 Attorneys for Lehman ALI Inc. 21 Haynes and Boone and next to me is Mark
22 Elmore, and we represent Midland Loan
23 BY KEVIN J O'BRIEN, ESQ.
23 Services, Inc.
kevin.obrien@dechert.com
24 -and- 24 MR. GOTTESMAN: Lawrence Gottesman,
BY BRIAN E GREER, ESQ.
25 Bryan Cave, LLP on behalf of the LNR
25 Brian.greer@dechert.com
2 (Pages 2 to 5)
APP-00407
6 8
1 Lascher 1 Lascher
2 Partners, LLC. 2 it sometimes happens okay?
3 MR. GOULD: Jeff Gould, Kirkland & 3 A Okay.
4 Ellis on behalf of the debtors. 4 Q. Lastly, there will be times when
5 MR. PAWLITZ: JeffPawlitz, 5 your counsel or other may interject
6 Kirkland & Ellis on behalf of the 6 objections and those have to be put on the
7 debtors. 7 record and handled here as we go along. But
8 MR. GALANTE: Paul Galante, 8 we will deal with those as it's happening.
9 Morrison & Foerster for the Unsecured 9 Is that acceptable?
10 Creditors Committee. 0 A Yes.
11 MR. CRISP: Mike Crisp from 1 MR. EHRLICH: Len, let me just
12 Kilpatrick Stockton for Trimont as the 2 state for the record before we start
13 special servicer on the mezz loans. 3 that Mr. Lascher is appearing today
14 MR. F AERSTEIN: Brian Faerstein, 4 subject to all of the objections, I this
15 Willkie Farr & Gallagher for Appaloosa 5 we filed two sets in response to
16 Investment L.P. I. 6 different notices of deposition, two
17 MR. FLIMAN: Dan Fliman, Kasowitz, 7 objections, two sets of objections in
18 Benson, Torres & Friedman on behalf of 8 this matter.
19 Five Mile Capital. 9 MR. PARKINS: We got them both.
t2o MS. DIETERICH: Amy Dieterich on
?0 Would you mark this Exhibit 1.
t21 behalf of Paul Weiss for Apollo. 21 (Exhibit Lascher-1, Amended Notice
t22 MR. EHRLICH: Andrew Ehrlich, also 22 of Deposition of Corporate
t23 Paul Weiss, on behalf of Apollo 23 Representative of Lehman ALI, Inc. and
t24 Investment Corporation. 24 subpoena duces tecum, marked for
t?5 MR. GREER: Brian Greer of Dechert 25 identification, this date.)
7 9
1 Lascher 1 Lascher
2 for Lehman ALI. 2 Q. Mr. Lascher, I've handed you what
3 MR. O'BRIEN: Hopefully you know me 3 I've marked as Exhibit 1. It's entitled
4 by now. Kevin O'Brien of Dechert. 4 Amended Notice of Deposition of Corporate
5 BY MR. PARKINS: 5 Representative of Lehman ALI, Inc. and
6 Q. Mr. Lascher, I'm going to be asking 6 subpoena duces tecum.
7 some questions and other lawyers are going to 7 Are you here today as the
8 be asking you some questions this afternoon 8 representative of Lehman ALI, Inc.?
9 and my first question is, have you ever been 9 A Yes.
10 deposed before? 10 Q. What did you do to prepare for
11 A Yes. 11 today's deposition?
12 Q. So you understand that when people 12 A Spoke with my attorneys.
13 ask you questions you need to respond 13 Q. Did you review documents of Lehman
14 verbally so that the court reporter can take 14 ALI, Inc.?
15 down your answers? 15 A Some of them, yes.
16 A Yes. 16 Q. Did you talk to other employees of
17 Q. If there's any issues of not 17 Lehman ALI, Inc.?
18 understanding my questions or I'm sure other 18 A Yes.
19 counsel's questions, let us know, we will try 19 Q. Did you review documents that were
20 to clarify the questions for you. 20 produced to Midland in response to its
21 Do you understand that? 21 document requests?
22 A Yes. 22 A Yes.
23 Q. And we will attempt, all of us, try 23 Q. For ease of getting through this,
24 to not to talk over each other. In the 24 I'm going to use Lehman ALI, Inc. as Lehman
25 enthusiasm in asking and answering questions 25 for the purposes of this deposition only,
3 (Pages 6 to 9)
APP-00408
10 12
1 Lascher 1 Lascher
2 okay, so I don't get tied up. 2 A Yes.
3 A Okay. 3 Q. Describe for me your involvement.
4 Q. Is that acceptable? 4 A I was involved in most, if not all,
5 A Yes. 5 of the discussions about the PSA
6 Q. If it changes in the context of our 6 Q. Were you the person most
7 questioning other than in the context of 7 responsible for those negotiations from the
8 Lehman ALI, Inc., we will try to clear that 8 Lehman side?
9 up as we go, okay? 9 A Yes.
10 A Okay. 0 Q. So you were in charge of those
11 Q. Thank you. Lehman and Innkeepers, 1 negotiations?
12 sometimes I'll refer to them as the debtors, 2 A Yes.
13 have signed a plan support agreement which we 3 Q. When did you first become involved
14 will call a PSA; is that correct? 4 in negotiations with the debtors with respect
15 A Yes. 5 to the PSA?
16 Q. And I believe yesterday in Lehman's 6 A We started having conversations
17 bankruptcy case, the Lehman bankruptcy court 7 with Innkeepers about their filing and
18 approved Lehman's authority to enter into the 8 potentially entering into a plan support
19 PSA; is that correct? 9 agreement in April of this year.
20 A Yes. 12o Q. And when did you first have
21 Q. Among other relief requested with 121 discussions with Apollo or I'll call them AIC
22 respect to that transaction? 122 -- I'm going to use Apollo to be AIC for the
23 A Yes. 123 purposes of this deposition -- with respect
24 Q. It approved Lehman's authority to 124 to aPSA?
25 enter into a transaction with Apollo 125 A Around the same time.
11 13
1 Lascher 1 Lascher
2 Inveshnent Corporation, correct? 2 Q. Was your law-- was Dechert your
3 A Correct. 3 law firm during the entirety of the
4 Q. Were you present in court 4 representation?
5 yesterday? 5 A Yes.
6 A Yes. 6 MR. EHRLICH: When you say his law
7 Q. You also submitted a declaration in 7 firm, you mean Lehman's law firm?
8 support of those motions, didn't you? 8 MR. PARKINS: Lehman's law firm.
9 A Yes. 9 A Yes, they were.
10 MR. PARKINS: Mark this as 0 Q. In the context of the negotiations
11 Exhibit 2, please. 1 if a proposal was made on behalf of Lehman
12 (Exhibit Lascher-2, E-mails, Bates 2 through your law firm Dechert, do you know
13 Nos. LEH-ALI 005298 and LEH-ALI 005299, 3 whether that it would have been blessed by
14 marked for identification, this date.) 4 you or at least discussed with you before
15 Q. Mr. Lascher, I've handed you what 5 such an offer was made?
16 I've marked as Exhibit 2. It is a two-page 6 MR. EHRLICH: Object to the form.
17 document with Bates stamp numbers from Lehman 7 A It depended on the circumstance.
18 ALI 5298 and 5299. Would you take a moment 8 In some -- in many cases, yes. In certain
19 to review that, please. 9 cases, no.
20 A. Yes. l2o Q. Well, let's go back to Exhibit 2.
21 Q. Just let me know when you are done. l21 A Okay.
22 A. Okay. l22 Q. This is an e-mail from, at the top
23 Q. Mr. Lascher, were you involved in l23 of the page from Brian Greer at Dechert to
24 the negotiation of the PSA from the Lehman l24 Joseph Glatt with a cc to a number of people,
25 side? l25 including you.
4 (Pages 10 to 13)
APP-00409
14 16
1 Lascher 1 Lascher
2 The letter -- the e-mail reads, 2 date?
3 Joseph has requested below are the terms on 3 A. I don't recall.
4 which Lehman will resolve the open issues 4 Q. Did you instruct them to put this
5 with Apollo. The following remains subject 5 bullet point in here?
6 to client review and comment and this e-mail 6 A. I don't recall.
7 is subject to Rule 408. All over caveats 7 Q. Do you view this bullet point as
8 apply. And then there's a number of bullet 8 significant in your mind with respect to the
9 points under that. Do you see that? 9 negotiations of the PSA?
10 A. Yes. 0 MR. O'BRIEN: Object to the form.
11 Q. Was this e-mail authorized to be 1 A. No.
12 sent? 2 Q. Do you view whether AIC was a
13 A. I don't remember. 3 signatory to the PSA significant or not?
14 Q. Did you ever see this e-mail before 4 MR. O'BRIEN: Object.
15 today? 5 A. Isn't that what you just asked me?
16 A. In that I'm copied on it, but I 6 Q. I'm asking it again. Do you view
17 don't remember it. 7 it as significant?
18 Q. This e-mail was dated 4 or 5 days 8 A. Do I view it -- do I view
19 before the filing of the Innkeepers 9 whether--
20 bankruptcy; is that correct? tzo
Q. Whether they were signatory to the
21 A. Yes. t21 PSA significant or not?
22 Q. And during this period of time t22 MR. O'BRIEN: Same objection.
23 there were ongoing regular negotiations t23
A. No.
24 between Lehman and Innkeepers and Apollo with t?4
Q. The next line, AIC or an affiliate
25 respect to the PSA; is that correct? t?5 of AIC shall be the purchaser of the new
15 17
1 Lascher 1 Lascher
2 A. We were having negotiations with 2 equity. Do you see that?
3 Innkeepers on the PSA and we were having 3 A. Yes.
4 negotiations with Apollo on our sale 4 Q. Lehman will not consent to a
5 transaction, yes. 5 third-party purchaser?
6 Q. Well, let's look at this e-mail 6 A. Correct.
7 here. 7 Q. Was that Lehman's position on the
8 First bullet point, mutual 8 day this was sent out?
9 termination of after 45 days from petition 9 A. It was our position generally.
10 date. I take it that's the Innkeepers 0 Whether it was on that specific day, I don't
11 petition date? 1 know.
12 A. That is. 2 Q. So this is an accurate statement of
13 Q. AIC will not be signatory to the 3 Lehman's position?
14 PSA. Do you see that? 4 A. Correct.
15 A. Yes. 5 Q. As of this date, are the rest of
16 Q. But it was contemplated in earlier 6 the bullet points an accurate statement of
17 documentation exchanged by the parties that 7 Lehman's position?
18 Apollo would be a signatory to the PSA. Do 8 MR. O'BRIEN: You're asking just
19 you recall that? 9 about the bullet points.
20 MR. O'BRIEN: Objection. PO MR. PARKINS: Yes.
21 You can answer. P1
A. The bullet points below that one,
22 Q. Do you recall that? P2 right?
23 A. Yes, I do. P3
Q. All the bullet points, mutual, from
24 Q. Do you know why Lehman through its P4
all the bullet points --
25 counsel put this bullet point in here on this ?5
A. Oh, okay. So mutual termination,
5 (Pages 14 to 17)
APP-00410
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
yes.
18
Lascher 1
2
AIC not being a signatory, yes. 3
Yes, on AIC being the purchaser of 4
the equity. 5
Materiality thresholds, I don't 6
remember where we came out on that point. 7
Yes, on AIC's counsel fees. 8
On the -- on the language regarding 9
the guaranty, this was a proposal at some 10
point. 11
Q. With respect to the guaranty issue, 12
this involved a guaranty that had been 13
executed by Apollo in 2007 as part of the 14
acquisition transaction. Are you aware of 15
that? 16
A Correct, yes. 17
Q. And part of the negotiations that 18
was going on with Apollo, which was copied on 19
the company also, was a method to release 2 0
Apollo from liability under that guaranty; is 21
that correct? 2 2
A No. 23
Q. No? 24
Okay. Well, let's look at this 2 5
19
Lascher 1
document and see what it says, this e-mail 2
from your counsel. 3
A Okay. 4
Q. Especially starting three lines 5
from the bottom of that, four lines really, 6
in addition Lehman shall not object to the 7
settlement or termination of the guaranty so 8
long as such settlement or termination occurs 9
at least 45 days after the petition date. 1 0
Do you see that sentence? 11
A Yes,Ido. 12
Q. What settlement or termination of 13
the guaranty was in your mind on this date 14
that this refers to? 15
A If Apollo was to come to terms with 16
Midland on the settlement of the guaranty, 17
that I would --that Lehman wouldn't object 18
to that. 19
Q. And why would Lehman believe it had 2 0
a reason to object? 21
A I didn't necessarily think we did. 2 2
Q. Well, let's go earlier on in this 2 3
document. 2 4
In this paragraph here with respect 2 5
Lascher
to the guaranty, it says, Lehman shall not
object to Innkeepers' performance of the
primary obligations underlying the required
capital improvements guaranty dated as of
June 29,2007.
Do you see that?
A Yes.
Q. Did you review that guaranty that's
referred to here?
A I haven't looked at it in years.
20
Q. Did you know how much obligation at
least the company thought Apollo had as of
this date with respect to that guaranty?
A You mean a dollar amount or --
Q. Yes.
A They -- they did -- they had an
idea, yeah.
Q. Do you recall what that number is?
A No.
Q. Did you ever have discussions with
anyone from the company regarding what that
number of exposure of Apollo was?
A Yes.
Q. In the context of these
21
Lascher
negotiations with the debtors and Apollo,
with respect to the -- related to the PSA,
who else negotiated on behalf of Lehman?
A Say that again, please.
Q. In the context of these
negotiations with Innkeepers and Apollo, who
else was negotiating this on the Lehman side,
other than you?
A It was Susanne Frey and Nancy
Shanik, who is an A & M employee.
Q. But you had ultimate responsibility
and authority with respect to those
negotiations; is that correct?
A I mean I was in the middle of those
negotiations. I mean in terms of our
technical chain of command, Nancy Shanik, who
works for A & M is my boss. So --
Q. And A & M stands for Alvarez &
Marsal?
A Correct.
Q. And what role does Alvarez & Marsal
have with respect to being your boss?
A They are members of-- they are
employees of Alvarez & Marsal who work within
6 (Pages 18 to 21)
APP-00411
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
12o
121
122
123
124
125
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
22
Lascher 1
the commercial real estate area at Lehman and 2
oversee what we did. 3
Q. Did you report to this person with 4
respect to these negotiations concerning the 5
PSA? 6
A. Yes. 7
Q. And before this e-mail was sent out 8
by counsel for Lehman, was that discussed 9
with Alvarez & Marsal? Did you have 0
discussions with Alvarez & Marsal? 1
MR. O'BRIEN: You mean the top 2
e-mail in Exhibit 2? 3
MR. SOLOMON: Yes, the top e-mail. 4
A. ~ - 5
Q. What did you --when did you have 6
discussions with Alvarez & Marsal in the 7
context of seeking approval to enter into the 8
PSA? 9
A. Well, Nancy Shanik works within our ? 0
real estate group and is, you know, ? 1
day -to-day a part of what we do, so she was ? 2
aware of the ongoing discussions. She just 2 3
wasn't on every phone call or e-mail, so, you 2 4
know, in terms of specific terms it was 2 5
Lascher
fluid, you know, a fluid discussion with her.
Q. So it's your testimony, let me
clear it up before we move on, that you
didn't authorize this e-mail to be sent by
Dechert before it was sent, did you?
A. I think I told you I don't -- I
don't really remember. I don't think so.
Q. I'm sorry. I didn't mean to talk
over you. It's my fault.
23
A. It's okay.
Q. But you agree that this
represented, at least on this date, Lehman's
position with respect to the transaction on
these points, correct?
A. Yeah, I would say it's likely he
did.
MR. O'BRIEN: I think he testified
he wasn't sure about one or more bullet
points to be accurate.
Q. Now, this guaranty language,
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
generally the concept, as I understand it, 2 2
and tell me if I'm correct, was that if the 23
DIP financing being provided by Five Mile 2 4
paid for the project improvement plan or the 25
Lascher
PIPs. You understand what a PIP is?
A. Yes.
Q. The PIPs, that Lehman would view
that as satisfying the guaranty that Apollo
had entered into. Is that basically what was
being discussed?
A. No.
Q. Okay. Well, tell me what was being
discussed in the context of this paragraph?
24
A. What was being discussed is that if
Apollo was able to come to some agreement
with its lender, meaning Midland, on the
guaranty, that I wouldn't get in the way.
Meaning Lehman wouldn't stand in their way or
object to that happening, and that as long as
there were funds available, whether it be
from a DIP or cash flow, in order to do the
PIP work, we wouldn't stand in the way of
their doing that either.
Q. Now, in your recollection during
the various iterations of documents that were
exchanged by the various parties, and we will
look at them in particular in a while--
A. Uh-huh.
Lascher
Q. -- do you recall testimony that
Apollo limiting or coming off its guaranty
had come up time and time again in
negotiations as reflected in the various
documents?
A. I remember that it --
MR. EHRLICH: Objection to the
form.
A. I remember that it came up, yes.
Q. And were you involved in those
discussions of that point with Apollo in the
context of negotiations that led up to the
25
signing of the PSA and the Apollo Lehman term
sheets?
A. I'm sorry, say that again.
Q. Were you involved personally in the
discussions regarding that point?
A. The point of?
MR. O'BRIEN: Which point?
Q. The point of Apollo getting off its
guaranty liability?
MR. EHRLICH: Objection to the
form.
A. I was involved in discussions about
7 (Pages 22 to 25)
APP-00412
26 28
1 Lascher 1 Lascher
2 their guaranty, yes. 2 any more questions.
3 Q. And this was since the commencement
3 Q. I've handed you what's been marked
4 of the negotiations regarding this PSA which 4 as Exhibit 3. It's a document entitled
5 you said started sometime in April of2010; 5 Required Capital Improvements Guaranty. Do
6 is that correct? 6 you see that?
7 A I mean there's two --there's two 7 A Yes.
8 separate documents here and our document with 8 Q. Look back with me at Exhibit 2.
9 Apollo is, you know, represents the sale 9 A Okay.
10 transaction. It's all part of the PSA so on 10 Q. And the first two lines under the
11 some level I'm just getting confused when you 11 guaranty language it refers to required
12 are asking me about this because really our 12 capital improvements guaranty dated as of
13 discussions with Apollo were about this sale 13 June 29, 2007?
14 transaction. 14 A Yes.
15 Q. And you say they weren't involved
15 Q. As you look now at Exhibit 3,
16 in the negotiations that Innkeepers was 16 that's the date of this document, marked as
17 involved in? 17 Exhibit 3, correct?
18 MR. O'BRIEN: Object to the form. 18 A Yes.
19 A No, I'm not saying they weren't 19 Q. As far as you know, is this the
20 involved in any of those discussions but in 20 guaranty referred to in this Exhibit 2?
21 terms of my discussions with them about a 21 A Yes.
22 guaranty, they were my discussions with them 22 (Exhibit Lascher-4, Handwritten
23 about their guaranty. 23 notes, Bates Nos. LEH-ALI 004721 through
24 Q. Are you testifying that those 24 LEH-ALI 004731, marked for
25 discussions with Apollo with respect to this 25 identification, this date.)
27 29
1 Lascher
1 Lascher
2 guaranty weren't part of an integrated single
2 MR. PARKINS: Off the record.
3 document for such of the negotiating period
3 (Discussion off the record.)
4 before the PSA was signed? 4 Q. Mr. Lascher, I've handed you what
5 MR. O'BRIEN: Object to the form.
5 has been marked as Exhibit 4.
6 A It was all one document at one 6 A Yes.
7 point.
7 Q. It is a series of documents with a
8 Q. Almost up to the time it was signed 8 Lehman production Bates stamp numbers 4721
9 it remained one document, isn't that your
9 through 4731. Do you see that?
10 recollection?
10 A Yes.
11 A It changed at some point and I
11 Q. Would you take a moment and review
12 don't remember. 12 these, please. I want to ask you some
13 Q. About a week before the filing, is
13 questions about them.
14 that your recollection?
14 MR. O'BRIEN: You want him to look
15 MR. O'BRIEN: Objection.
15 at every single page?
16 A I don't remember. 16 MR. PARKINS: Yes.
17 MR. PARKINS: Mark this. 17 A Okay.
18 (Exhibit Lascher-3, Required 18 Q. Mr. Lascher, you're an attorney by
19 Capital Improvements Guaranty, marked
19 education; is that correct?
20 for identification, this date.) 20 A Yes.
21 MR. O'BRIEN: Do you have any more 21 Q. And you worked as an attorney for
22 of those, Len? 22 5 years, I believe, at Cadwalader here?
23 MR. PARKINS: They're coming
23 A Yes.
24 around. 24 Q. And did you have an area of
25 I will wait a second before asking 25 specialization?
8 (Pages 26 to 29)
APP-00413
30 32
1 Lascher 1 Lascher
2 A. Real estate. 2 deal role that I had from prior to the
3 Q. And since leaving Cadwalader you 3 bankruptcy.
4 work for Lehman; is that correct? 4 Q. In the context of restructurings,
5 A. Correct. 5 with respect to hospitality, that
6 Q. In your experience, either at 6 responsibility has really started since you
7 Cadwalader or Lehman, have you been involved 7 took on this most recent position at Lehman;
8 in bankruptcy cases before? 8 is that correct?
9 A. No. 9 A. Correct.
10 Q. Have you ever been involved in 0 Q. Looking at Exhibit 4 --
11 out-of-court restructurings? 1 A. Yep.
12 A. Yes. 2 Q. -- are any of these handwritten
13 Q. And is that at Cadwalader or Lehman 3 notes on any of these pages yours?
14 or both? 4 A. Yes.
15 A. Lehman. 5 Do you want me to give you the
16 Q. And describe your job 6 numbers?
17 responsibility at Lehman in the context of 7 Q. Yes.
18 restructurings? 8 A. Just the last two numbers okay?
19 MR. O'BRIEN: Currently? 9 Q. Yes.
20 MR. PARKINS: Currently. 12o A. 24, 25, 26, 27.
21 A. I oversee our hotel investments and 121 Q. Do you recognize the handwriting
22 a lot of those hotel investments are in 122 from other people?
23 various stages of workout and foreclosure. 123 A. Yes.
24 So depending on the exact deal, I'm, you 124 Q. Okay. Can you tell me who they
25 know, involved more day-to-day or just in an 125 are?
31 33
1 Lascher 1 Lascher
2 oversight capacity. 2 A Susan Frey.
3 Q. And how long have you been in that 3 Q. And identify them by number,
4 responsibility with respect to Lehman's hotel 4 please. So it's easier--
5 investments? 5 A On 21, 22, 23. Those look like
6 A. About, since the beginning of this 6 Susanne Frey's notes.
7 year. 7 And 28, 29, 30,31 I believe are
8 Q. Beginning of 2010? 8 from Sam Gleason.
9 A. Correct. 9 Q. Who?
10 Q. Prior to that time what was your 0 A Sam Gleason who is a junior -- who
11 job responsibility at Lehman? 1 is an associate in our group who is
12 A. Starting with? When I started at 2 supporting us on the deal.
13 Lehman? 3 Q. Go with me to the page that has
14 Q. Yes. 4 Bates stamp number 4726 on it.
15 A. So in mid 2004 I started Lehman in 5 A Okay.
16 a group called large loan origination, which 6 Q. The top of that page says
17 basically originated, structured and closed 7 "Innkeepers Meeting 5/20"?
18 large commercial real estate loans, many of 8 A Correct.
19 which were securitized and, you know, and/or 9 Q. I take it, it was 5/20 of this
20 syndicated. And so I worked in that area PO
year, correct?
21 through the bankruptcy, and then after the P1
A Yes.
22 bankruptcy I was an in-house attorney from P2
Q. Do you recall where this meeting
23 September of '08 until just before, you know, P3
was?
24 until the end of last year essentially. And P4
A No.
25 in certain instances, you know, maintained my 75
Q. Do you recall who was there from
9 (Pages 30 to 33)
APP-00414
34 36
1 Lascher 1 Lascher
2 Lehman? 2 MR. O'BRIEN: Object. Object.
3 A No. 3 Q. You can answer.
4 Q. Well, you were there from Lehman? 4 A I don't really remember.
5 A I would imagine I was. 5 Q. The second is "impaired accepting
6 Q. You don't recall -- you don't 6 class"?
7 recall if you were alone in that meeting from 7 A Yes.
8 Lehman? 8 Q. Do you know what "impaired
9 A I just don't remember which meeting 9 accepting class" meant in the context of your
10 it was. 0 notes here?
11 Q. Do you recall whether your lawyers 1 A Not exactly.
12 from Dechert were at this meeting with you? 2 Q. Well, tell me what you understood
13 A I don't remember. 3 it to be at the time, as best you can recall.
14 Q. Who was there from Innkeepers? 4 A I think it's having a class who's
15 A I don't remember. 5 not recovering at par vote in favor of a
16 Q. Well, was Marc Beilinson there from 6 plan.
17 Innkeepers? 7 Q. And who told you that at this
18 A Based on there's a reference to MB 8 meeting, Mr. Beilinson?
19 on this page I would -- I would guess that he 9 A Based on the notes it looks like
20 was. 20 that, yes.
21 Q. Well, without guessing from the 21 Q. Going back to number 1, what is
22 Innkeepers side who else would you have 22 Apollo and Lehman need to agree to a
23 written down initials for MB for? 23 capitalization, what is your understanding of
24 A He would have been it. 24 what that meant?
25 Q. So was there anyone else from the 25 A What the debt and equity in the new
35 37
1 Lascher
1 Lascher
2 Innkeepers side at this meeting on 5/20?
2 company would look like, in a reorganized
3 A I don't remember.
3 company would look like.
4 Q. So we know at least you were there
4 Q. Why is Apollo on this line?
5 and Mr. Beilinson was there, correct?
5 MR. O'BRIEN: Objection.
6 A Yes.
6 A Because our plan was to sell them
7 Q. Let's look at some of the line
7 half of the equity.
8 items here, 1, 2, 3 and 4. Under risks it
8 Q. Thank you.
9 says per MB, per Mr. Beilinson, correct?
9 Number 3, sub rosa new value plan,
0 A Yes.
0 Mr. Beilinson mentioned that to you?
1 Q. LB and Apollo need to agree to a
1 A Based on the notes it looks like
2 capitalization?
2 it.
3 A Yes.
3 Q. Is that a phrase that you use
4 Q. Now, Mr. Beilinson identified that
4 commonly?
5 as a risk?
5 A No.
6 MR. O'BRIEN: Is that right,
6 Q. Do you know what sub rosa new value
7 Michael? What do you remember?
7 plan means?
8 A Yes.
8 A I have a good idea of what it
9 Q. Or is this your interpretation of
9 means.
PO what Mr. Beilinson said?
20 Q. Tell me what it means in your own
P1
A It's what I wrote down.
21 words.
P2
Q. So did Mr. Beilinson say, Mr.
22 A That it's due value plan, that what
P3
Lascher, these are the risks I see? Do you
23 we were trying to do would be -- could be
P4
recall?
24 construed adds a new value plan even though
~ 5 A I don't--
25 it was presented as one.
10 (Pages 34 to 37)
APP-00415
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
ro
t?1
t?2
t?3
~ 4
~ 5
38
Lascher 1
Q. And that's because-- that's 2
because Apollo is going to end up with 3
50 percent of the equity in the restructured 4
company, correct? 5
MR. O'BRIEN: Objection. 6
Q. Is that your understanding? 7
A. Yes. 8
Q. What does sub rosa mean in the 9
context of this line item here? 0
A. That I thought was the part where I 1
said even though it's not presented as a new 2
value plan, it is one. 3
Q. Okay. 4
A. Or it could be construed as one. 5
Q. Well, it is true that under the 6
transaction you were negotiating, Apollo was 7
going to end up with 50 percent of the 8
equity, correct? 9
MR. O'BRIEN: Objection. ? o
A. That's our plan. ? 1
Q. And it is true that at this time ? 2
and at the time of these meetings Apollo 2 3
owned 100 percent of the equity, ultimate 2 4
equity on it, correct? 2 5
39
Lascher 1
A. That's correct. 2
Q. So they were going to go from 3
100 percent equity owner to after this 4
transaction closed 50 percent equity owner, 5
correct? 6
MR. EHRLICH: Objection to form. 7
A. At the end -- at the end of all the 8
different pieces, yes. 9
Q. And you are talking about pieces of 0
the entire deal that was being put together, 1
correct? 2
A. All the different pieces of the 3
transaction, yeah. 4
Q. Thank you. 5
Go to the next page, please, the 6
number 4727. 7
A. Okay. 8
Q. Could you tell me what the -- read 9
the first line to me, because I could not 2 0
make out what some of these words. 21
If LB and -- I couldn't make out 2 2
who that is. ? 3
A. Marriott. ? 4
Q. Marriott. ? 5
Lascher
A. Have plan support agreement in
place, Midland is the only major impediment.
Q. Per MB, I take it that's
Mr. Beilinson, plan is to ask for valuation
hearing early on?
A. Correct.
Q. I take it this is what he told you
and you took notes on that, correct?
A. That's likely, yes.
Q. And it goes down a couple of
40
spaces, Midland's attorneys will argue and it
has dash valuation, right, and it has dash
question mark?
A. Yeah, I didn't understand whatever
it was he said next.
Q. And the next one says, I take it,
subcon?
A. Correct.
Q. Do you know what subcon stands for?
A. Substantive consolidation.
Q. Do you have any idea what that
means?
A. Yes.
Q. What is that?
Lascher
A. That all the entities would be
collapsed into one case.
Q. And did you come to learn that in
the context of these negotiations or in your
experience in other restructurings?
A. I knew about it from, you know, we
get a these nonconsolidation opinions in real
estate loan transactions and at Cadwalader I
learned a little bit about it.
Q. Did you learn of the phrase sub
41
rosa a new value plan in the context of these
negotiations or elsewhere?
A. These negotiations.
Q. This is where you heard of that
phrase, correct?
A. Correct.
Q. And Mr. Beilinson told you that,
correct?
A. I don't know if he was the first
person to tell me that or if-- or my lawyer
-- I don't know.
Q. Well, it was certainly in your
notes from your meeting with Mr. Beilinson
here, right, we just read them?
11 (Pages 38 to 41)
APP-00416
42 44
1 Lascher 1 Lascher
2 A Correct. 2 Q. Does it look like 6/25 to you or
3 Q. Okay. Artificial; is that right?
3 not?
4 A Uh-huh. 4 A It looks like it could say 6/25.
5 Q. Artificial and it has a comma. 5 Q. Okay. The first line says, "DIP
6 What does artificial mean?
6 cash collateral, consistent across lenders."
7 A I think it says artificial 7 First phrase underlined. Do you see that?
8 impairment. 8 A I see it. I mean this is all hard
9 Q. Artificial impairment? 9 to read but.
0 A I don't really know what that 0 MR. O'BRIEN: I object on that
1 means. 1 basis.
2 Q. So you just wrote down what 2 Q. Were you at a meeting on June 25 --
3 Mr. Beilinson said? 3 A. I don't remember.
4 A What somebody was saying. I don't 4 Q. -- regarding Innkeepers?
5 know if-- 5 A. I don't remember.
6 Q. Who else was there if it wasn't 6 Q. Do you have a calendar?
7 Mr. Beilinson? 7 A. Do I have a calendar?
8 A I told you, I don't remember who 8 Q. Do you keep a calendar?
9 else was there. 9 A. I have a calendar, yes.
PO
Q. Then it's sub rosa new val plan,
20
Q. Did you produce your calendar?
P1 right?
21 A. I don't think so.
P2
A Correct.
22 MR. PARKINS: I would like to see
1/3
Q. So let me ask you, was the issue of
23 the calendar so we can see who's at--
174
a sub rosa new value plan the subject of
/4
MR. O'BRIEN: We will take it under
175
discussions several times during this
/5
advisement. It frankly falls way
43 45
1 Lascher 1 Lascher
2 meeting? 2 outside the scope of what the judge
3 A. It looks like it was. 3 articulated at our discovery conference.
4 Q. Go with me to the first page of 4 MR. PARKINS: I want to know the
5 this exhibit, if you would, 4721. 5 dates he was meeting on the PSA,
6 A. Okay. 6 Counsel.
7 Q. This says 6/25, Innkeepers meeting? 7 MR. O'BRIEN: I know you want to
8 MR. O'BRIEN: Objection. 8 know. I'm just saying it falls outside
9 MR. PARKINS: Sorry. 9 the scope of what the judge ordered for
10 MR. O'BRIEN: It's not clear it 10 this case. But we'll take it under
11 says that. 11 advisement.
12 Q. Sorry. Can you read the top of-- 12 MR. PARKINS: We will send you a
13 the left-hand corner of this page, what do 13 letter to that effect so it's on the
14 you read it to say? 14 record.
15 MR. O'BRIEN: I object. It's not 15 Q. Do you recall a meeting where the
16 his handwriting, you're asking him to 16 issue of Innkeepers' exposure for breach of
17 speculate. 17 fiduciary duty ever came up, did you ever
18 MR. PARKINS: I'm asking him to 18 hear of that phrase?
19 read what he thinks it says. 19 A. This is a discussion about a
17o MR. O'BRIEN: What's your guess? 20 fiduciary out, is that what you're talking
171 A. I'm not 100 percent sure. 21 about?
172
Q. So you can't read that. Does it
22 Q. My first question is about
173 say -- can you read Innkeepers in that first
23 Innkeepers' exposure for breach of fiduciary
~ 4 line?
?4 duty.
~ 5 A. Yes. ?5 A. No.
12 (Pages 42 to 45)
APP-00417
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
120
121
122
P3
P4
P5
Lascher
Q. Did you ever have discussions
regarding Innkeepers' fiduciary duty with
anyone from Innkeepers?
A No.
Q. Did you have discussions with
anyone from Innkeepers with what's been
called a fiduciary out?
A Yes.
Q. In your practice oflaw, do you
know what a fiduciary out is?
A Not from my practice of law. This
is the first time I've heard of it.
Q. In the context of--
A Ofthis.
Q. -- these negotiations for the PSA?
A Correct.
Q. And when was the first time the
46
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
issue of fiduciary out came to your knowledge 19
in the context of these negotiations?
A I don't remember.
Q. Go with me to the page marked --
numbered 4724, please, to 4725.
A Okay.
Q. These are your notes, right?
47
20
21
22
23
24
25
Lascher 1
A Correct. 2
Q. At the top of this page says 3
Innkeepers meeting 4/22? 4
A Uh-huh. 5
Q. Do you recall being at a meeting 6
regarding Innkeepers on April 22nd of this 7
year? 8
A I don't remember the exact date but 9
if-- if that's what's in the notebook, I'm 10
sure there was a meeting. 11
Q. Was this a meeting at which 12
financial advisors for Innkeepers, Moelis, 13
was present? 14
A Yes. 15
Q. And you received a handout from 16
Moelis and Innkeepers during that meeting, 17
correct? 18
A. Yes. 19
Q. Prior to this meeting on April 22, 2 0
2010, had you personally been involved with 21
discussions with anyone from Innkeepers 2 2
regarding a restructuring of Innkeepers?
A We had one meeting with them prior
to this one where we got just a general, just
23
24
25
48
Lascher
a general description of what was going on
with the company and we talked about working
together to, you know, possibly enter into
some plan support agreement.
Q. Do you recall where that was
meeting was, sir?
A I would say -- I don't remember
exactly but I would say it was somewhere
within a week or 10 days before.
Q. Prior to this meeting?
A Yeah.
(Exhibit Lascher-5, Plan Support
Agreement, marked for identification,
this date.)
Q. Mr. Lascher, I've handed you what
I've marked as Exhibit 5 and I would like you
to agree with me that it is a complete copy
of the executed PSA with all attachments for
the purposes of this deposition without
having you go through every page of it?
A And it looks like it.
Q. Okay. This document seems to be
signed by Lehman, by Nancy Shanik; is that
right?
Lascher
A Correct.
MR. O'BRIEN: Can you give us a
page?
MR. PARKINS: Sure. It doesn't
have a page number, but looks like 19.
MR. O'BRIEN: Right.
Q. And then the next page appears to
49
be signed by Mr. Beilinson and Mr. Murphy on
the next page for several entities, correct?
A Correct.
Q. Did you negotiate this PSA on
behalf of Lehman?
A Yes.
Q. What was Lehman's goal in
negotiating this PSA?
A The goal was to convert our, our
debt, into, you know, essentially 100 percent
ownership in the company subject to certain
requirements and milestones being met.
Q. Was it your goal that, in fact,
upon execution of this PSA that the parties
would pursue what is defined in here as the
plan and no other plan?
A Yes.
13 (Pages 46 to 49)
APP-00418
50 52
1 Lascher 1 Lascher
2 Q. And that was important to Lehman? 2 July 17, and I see here a reply from
3 Was it important to Lehman, that the company, 3 Mr. Beilinson on Sunday, July 18?
4 the debtors pursue the plan as defined in 4 A Correct.
5 this agreement and no other plan? 5 Q. And the e-mail was sent back to
6 A I never really thought about it 6 you. Do you recall receiving this e-mail?
7 that way. I mean this was the plan that we 7 A Yes.
8 were pursumg. 8 Q. Mr. Beilinson's e-mail says not
9 Q. But I take it, you, Lehman, wanted 9 inclined. I understand it's only a word, but
10 the company to pursue that plan exclusively, 0 it gives Midland a real hook and I'm filing
11 correct? 1 the motion to assume on day one and already
12 MR. O'BRIEN: Asked and answered. 2 reviewing the plan.
13 A I never -- I never thought that 3 Did you understand that to mean
14 they would do otherwise. 4 he's already reviewing the plan of
15 Q. Okay. 5 reorganization?
16 MR. PARKINS: Give me one second. 6 A I didn't really --
17 We're looking for an exhibit. 7 MR. O'BRIEN: Objection.
18 MR. O'BRIEN: Sure. 8 A I didn't really understand what he
19 (Exhibit Lascher-6, E-mails, Bates 9 meant.
20 No. LEH-ALI 005676, marked for I?O
Q. I won't be amending our deal
21 identification, this date.) 121 without your consent. I am trusting that you
22 Q. I've handed you what's been marked 122 won't terminate AIC in first 45 days. Four
23 Exhibit 6. 123 dots. Please do the same with me on this
24 A Yes. 124 issue for this short period of time.
25 Q. It is a single piece of piece with 125 Do you see that?
51 53
1 Lascher 1 Lascher
2 a Lehman Bates stamp number 5676, which has 2 A Yes.
3 two e-m ails on it. Do you see that there? 3 Q. Did you have discussions with
4 A Yes, I do. 4 Mr. Beilinson regarding his reply e-mail?
5 Q. Let's start with the bottom part of 5 A Yes, I did.
6 the page, looks like an e-mail from you to 6 Q. Did the discussions take place on
7 Mr. Beilinson. Do you see that? 7 Sunday, July 18th?
8 A Yes, I do. 8 A Yeah, they must have.
9 Q. Subject one more decision? 9 Q. The filing occurred on Monday,
10 A Uh-huh. 0 July 19th, correct?
11 Q. The e-mail states, can you live 1 A Right.
12 with giving me the ability to terminate cash 2 Q. So the discussions took place
13 collateral if you, quote, breach your 3 before the filing in any event?
14 obligations to Lehman in connection with the 4 A Yes.
15 restructuring, quote. 5 Q. Sometime after this e-mail and the
16 A Right. 6 filing, correct?
17 Q. Question mark. 7 A Yes.
18 A Uh-huh. 8 Q. Did you call Mr. Beilinson to
19 Q. What did you mean by the word 9 respond to his e-mail?
20 "restructuring" when you sent this? PO
A I don't remember but I know we
21 A Basically the PSA Pl ended up talking about it.
22 Q. I'm sorry, I didn't hear you. P2
Q. And what did -- and what did you
23 A Basically what we were doing under P3
talk to him about?
24 the PSA P4
A That we were letting them use cash
25 Q. Okay. And this was sent Saturday, P5 collateral on an interim basis assuming that
14 (Pages 50 to 53)
APP-00419
54 56
1 Lascher 1 Lascher
2 they were, you know, moving ahead with trying 2 you, section 4.
3 to get our plan done and that if they did 3 A All of section 4?
4 something that was contrary to that, I wanted 4 Q. Yes.
5 to be able to terminate the interim cash 5 A Okay. Well, I've read (a), do you
6 collateral. 6 want me to read (b) and (c) too?
7 Q. The e-mail from Mr. Beilinson says 7 Q. Sorry?
8 not inclined. Do you see that? 8 A I've read 4(a). Do you want me to
9 A Yes. 9 read (b) and (c) as well?
10 Q. In fact, Innkeepers agreed to that 10 Q. No, (a) is rme.
11 provision, dido 't they? 11 A Okay.
12 A I believe that's right. 12 Q. Now, this provision embodies
13 Q. Look with me at Exhibit 5, the 13 certainly -- I think your testimony was a few
14 PSA-- 14 minutes ago that you wanted the company to
15 A Okay. 15 perform under this agreement or you wanted
16 Q. -- I handed you before. 16 the right to terminate cash collateral from
17 A Uh-huh. 17 Lehman's side, correct?
18 Q. I take it you're pretty familiar 18 A Yes.
19 with this document, correct? 19 MR. O'BRIEN: Objection.
20 A I'm very familiar with the terms 20 Q. So going back to your e-mail we've
21 included in the document. I'm more familiar 21 referenced on Exhibit 6, please, the bottom
22 with the term sheet than the -- but yeah. 22 part of that?
23 Q. Look with me at, it's Section 6, 23 A Yes.
24 which is called "Termination of this 24 Q. The company agreed with you because
25 Agreement"? 25 it's embodied in the PSA that you would have
55 57
1 Lascher 1 Lascher
2 A Okay. 2 that right if they breached their obligation
3 Q. Were you involved in negotiating 3 in connection with the restructuring then,
4 this section as well as other sections of 4 correct?
5 this agreement? 5 MR. O'BRIEN: Objection.
6 A Yes. 6 A I don't think this is about cash
7 Q. Look with me then on page 10 of 7 collateral, that the e-mail is about cash
8 this document, I think it's section 6(r). 8 collateral and this is about the plan support
9 A Okay. 9 agreement.
10 Q. (r) reads: "The material breach by 0 MR. O'BRIEN: Len, to the extent
11 any Party of any of their undertakings, 1 you are asking him for a legal opinion,
12 representations, warranties or covenants set 2 it's an inappropriate question. I mean
13 forth this Agreement." Did I read it 3 you want to ask him about a specific
14 correctly? 4 discussion --
15 A Yes. 5 MR. PARKINS: I'm asking whether he
16 Q. Go with me to section 4 on page 5 6 believes this satisfied the request he
17 of this document, if you would. 7 made of Mr. Beilinson in his e-mail.
18 A Section 4 you said? 8 MR. O'BRIEN: I object. It calls
19 Q. Section 4, yes, on page 5, and it 9 for a legal opinion from this witness.
120 carries over to page 6. 20
Q. Were you satisfied that this
121 A Okay. /1 document satisfied your request from
122
Q. Section 4 is entitled "Support of
/2
Mr. Beilinson?
P3 the Transaction; Additional Covenants"? /3 MR. O'BRIEN: Same objection.
P4 A Yes.
/4
A. I'm not really -- I'm not really
P5
Q. Take a moment to read that, would
/5
sure. I think this is about cash-- the
15 (Pages 54 to 57)
APP-00420
58 60
1 Lascher 1 Lascher
2 e-mail is about cash collateral. 2 Midland a real hook meant?
3 Q. All right. Well, let's look at 3 A No, I don't -- I don't really know
4 section 8 of this agreement, please. 4 what he meant.
5 A Section 8? 5 Q. Did you have discussion with
6 Q. Yes. 6 Mr. Beilinson about his e-mail?
7 A Okay. 7 A I told you I did, but I had
8 Q. Now, section 6 we looked at a few 8 discussions with him about wanting to get
9 minutes ago is called "Termination of This 9 what I wanted to get out of this, which was
10 Agreement" and it defmes termination events, 0 the ability to terminate cash collateral.
11 correct, section 6? 1 Q. And he said in this e-mail he was
12 A Yeah. 2 not inclined to do so, right?
13 Q. Section 8 says "Effect of 3 A Right.
14 Termination." Read 8 through 8(a). 4 Q. So in your discussions did he give
15 A Okay. 5 you any particulars as to why he was not
16 Q. So going back to your testimony a 6 inclined to do so?
17 few minutes ago, your e-mail of July 17 7 MR. O'BRIEN: Asked and answered.
18 related to the ability of Lehman to terminate 8 A I don't remember.
19 the use of cash collateral, correct? 9 Q. The last -- well, not the last, in
20 A Say that again. 20 the second line of Mr. Beilinson's e-mail--
21 Q. Your e-mail -- 21 A Yes.
22 A Yes. 22 Q. -- it starts, "I'm trusting that
23 Q. -- Exhibit 6 -- 23 you won't terminate AIC in first 45 days."
24 A Yes. 24 A Right.
25 Q. --okay, related-- I think your 25
Q. "Please do the same with me on this
59 61
1 Lascher 1 Lascher
2 testimony was Lehman wanted the desire to 2 issue for this short period of time."
3 terminate cash collateral if the company 3 Did you discuss that part of his
4 breached, correct? 4 response with Mr. Beilinson?
5 A That's right. 5 A I kind of remember having a
6 Q. And 8(a) appears to say that, does 6 conversation about it.
7 it not? 7 Q. Well, this is one day before the
8 MR. O'BRIEN: Objection. 8 filing of bankruptcy for Innkeepers. Fairly
9 A I mean, look, it says if there's a 9 close to a fairly significant day for
10 termination event, we can terminate the use 0 Innkeepers and Lehman with respect to the
11 of our cash collateral. 1 PSA, correct?
12 Q. Now, termination event, we just 2 A Yes.
13 read, includes breach of any covenant by any 3 Q. So as you remember that
14 party, correct? That's 6(r). 4 transaction -- that discussion, I'm sorry,
15 MR. O'BRIEN: Same objection. 5 tell me what you remember.
16 A Yeah. 6 MR. O'BRIEN: We're talking now
17 Q. And section 4 says support of 7 about the discussion that was a
18 transaction additional covenants, correct? 8 follow-up to this e-mail?
19 A 4 is the additional covenants, 9 MR. PARKINS: Correct, Counsel.
20 yeah. 20 That's correct.
21 Q. Now, going with me to Exhibit 6 21 MR. O'BRIEN: Generally or some
22 here. Mr. Beilinson's response. The second 22 specific --
23 sentence, I understand it's only a word but ?3 Q. I'm trusting you won't terminate
24 it gives Midland a real hook. Did you ?4 AIC in the first 45 days. Please do the same
25 discuss with Mr. Beilinson what giving ?5 with me on this issue for this short period
16 (Pages 58 to 61)
APP-00421
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
t2o
t21
t22
t23
t24
t?5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
tzo
t21
t22
t?3
t?4
t?5
62
Lascher 1
of time, yes. 2
A. There is a 45 day out for both us 3
and Apollo in our sale -- I just can't 4
remember the name of that document -- but in 5
our sale transaction with them that he didn't 6
want me to terminate but there was no, you 7
know, there was no-- it was just a 45-day 8
termination right, he would have no control 9
over whether I exercised that or not. o
Q. Did you respond to him with respect 1
to his statement that I'm trusting you won't 2
terminate AIC? 3
A. Well, I mean just to finish 4
answering your other question. 5
Q. Okay. 6
A. He was saying he was trusting me 7
not to terminate my sale agreement with 8
Apollo and so I should just trust him not to 9
do any -- not to --what does it say breach ? o
his obligations to us under the PSA. ? 1
Q. Okay. But you wanted it in ? 2
writing, I take it, because you got the PSA? 2 3
MR. O'BRIEN: Objection. 2 4
A. I mean I wanted it in writing, 2 5
63
Lascher 1
yeah. 2
Q. And you did not terminate AIC from 3
this date through at least -- 4
A I have not. 5
Q. --today, correct? 6
A I have not. 7
Q. Is it your present intention to 8
terminate AIC? 9
A. ~ . 0
MR. PARKINS: Take a five-minute 1
~ ~ . 2
MR. O'BRIEN: Sure. That would be 3
~ ~ . 4
(A brief recess was taken.) 5
MR. PARKINS: Back on the record. 6
Q. Mr. Lascher, before I ask you any 7
more questions, I just want to state I'm 8
getting notes from people to state that we're 9
going to treat exhibits and testimony about ? 0
the exhibits pursuant to the agreed-upon ? 1
protective order that we have in this case. ?2
I'm putting it on the record. Every counsel, ? 3
I think, is nodding acquiescence. ? 4
MR. O'BRIEN: We're in agreement ?5
64
Lascher
with that.
MR. GOULD: Just a clarification.
(Discussion off the record.)
MR. GOULD: I just wanted to
clarify whether Appaloosa had executed
the protective order in this case. And
he said yes.
MR. F AERSTEIN: Yes, we sent it to
Kirkland & Ellis last week.
(Exhibit Lascher-7, Document
entitled, "Project Tavern, Lehman
Discussion Materials, April22, 2010, by
Moelis," Bates Nos. INN_MID00003533
through INN_ MID00003 548, marked for
identification, this date.)
Q. Mr. Lascher, I've handed you what
I've had marked as I think is Exhibit number
7. It's a document with Innkeepers Bates
stamp numbers 3533 through 3548.
A Okay.
Q. And it's entitled, "Project
Tavern"--
A Yes.
Q. -- "Lehman Discussions Materials
65
Lascher
dated April22, 2010," by Moelis. Correct?
A. Yes.
Q. Do you recall receiving a copy of
this document?
A. Yes.
Q. Going back to Exhibit number 4,
Bates stamp number 4724, is this the
April 22nd meeting?
A. Yes.
Q. Okay. To which your notes on
Exhibit 4 refresh your recollection about?
A. Yes.
Q. If you would go with me to page 13
of Exhibit number 7.
A. Okay.
Q. Do you recall seeing this page as
part of presentation?
A. Yes.
Q. It's entitled, "Illustrative Pro
Forma Structure."
A. Yes.
Q. It shows at the top center, "Parent
Equity Lehman Deal/Investor 95 percent,
Others 5 percent."
17 (Pages 62 to 65)
APP-00422
66 68
1 Lascher 1 Lascher
2 Do you see that? 2 Q. Do you know Mr. Hewes?
3 A Yes. 3 A Yes.
4 Q. Was the transaction reflected by 4 Q. Have you had discussions with Mr.
5 the illustrative pro forma structure on page 5 Hewes regarding the transaction relating to
6 13 that we see here, was April 22nd the first 6 thePSA?
7 time you had seen a document reflecting the 7 A I mean most of my discussions with
8 structure of that transaction? 8 him have really been about Apollo buying half
9 A Yes. 9 of our equity and what the company would look
10 Q. Was it the first time you had 0 like. You know, it's probably a little bit
11 discussed the structure of the transaction, 1 on the PSA, but not, you know, more
12 albeit without a document, memorializing it 2 informative.
13 in a picture? 3 Q. Between the time period -- and I'm
14 A Yes, there was that one other 4 sorry, but going back to the prior meeting,
15 meeting that was a week or 10 days before 5 Mr. Beilinson was there for the company; is
16 this one. 6 that correct?
17 Q. Okay. Now in the, we will call it 7 A Correct.
18 the prior meeting-- 8 Q. Do you recall who else was there
19 A Okay. 9 from the company?
20 Q. --in the prior meeting--
?0 A Mark Murphy, Dennis Craven.
21 A Uh-huh. ?1
Q. Were there lawyers at this meeting?
22 Q. -- this structure reflected in this
?2
A Yes.
23 document was, in fact, discussed then, right? 23 Q. Were your lawyers from Dechert at
24 A The idea of reducing the amount of 24 that meeting?
25 debt outstanding on the other collateral 25 A Yes.
67 69
1 Lascher 1 Lascher
2 pools was discussed. But I don't think the 2 Q. Was Kirkland & Ellis at the
3 specifics of -- I don't think we had any 3 meeting?
4 numbers that we talked about then. 4 A Yes.
5 Q. Was Lehman being the 100 percent 5 Q. Was Paul Weiss at the meeting?
6 equity owner as a result of that 6 A I don't think so.
7 restructuring discussed in the prior meeting? 7 Q. Did Apollo have an in-house lawyer
8 A I'm -- I think we, you know what, 8 at the meeting?
9 I'm not 100 percent sure. 9 A I don't think so.
10 Q. Do you recall who was at the prior 0 Q. Mr. Glatt, do you know Mr. Glatt?
11 meeting from Lehman other than yourself? 1 A I've spoken to him, but I've never
12 A Susanne Frey, Sam Gleason, Nancy 2 met him in person.
13 Shanik from Alvarez & Marsale, as well as 3 Q. So as far as you recall no one
14 Jeff Fitts from Alvarez & Marsale. 4 identified themselves as in-house counsel for
15 Q. Do you recall where that meeting 5 Apollo at that meeting, correct?
16 was? 6 A Correct.
17 A The prior meeting was at Lehman's 7 Q. Between the prior meeting and the
18 office. 8 April22nd meeting, did you have discussions
19 Q. And there was a representative from 9 with anyone from Apollo regarding what had
20 Apollo there too, wasn't there? 20 been discussed at the prior meeting?
21 A Yes. 21 A I don't think so.
22 Q. Do you recall who it was? 22 Q. Between the prior meeting and the
23 A I can't remember if it was Schuyler 23 April22nd meeting, did you have discussions
24 Hewes or Justin -- I can't remember his last 24 with anyone from the company?
25 name. 25 A With Mark Beilinson.
18 (Pages 66 to 69)
APP-00423
70 72
1 Lascher 1 Lascher
2 Q. And how often did you have 2 A Yes.
3 discussions between the prior meeting and the 3 Q. Did you ever go to a meeting with
4 April22nd meeting? 4 Innkeepers regarding this structure --
5 A I talked to him pretty regularly, 5 A Uh-huh.
6 but I don't --but, you know, how many times 6 Q. -- where someone other than Apollo
7 in that week or so period, I don't really 7 was intended to be the investor?
8 remember. 8 A No.
9 Q. Did you begin talking to him pretty 9 Q. So it is correct that from the
10 regularly because-- after the prior meeting 10 beginning of these negotiations, Apollo was
11 or was it before the prior meeting? 11 to be the investor?
12 A I had spoken to him -- I mean the 12 MR. O'BRIEN: Objection.
13 conversations became much more regular again 13 A Yes.
14 after the prior meeting. 14 Q. Look with me on page 12, if you
15 Q. Saved me a question. Okay. 15 would, sir.
16 And did you discuss the anticipated 16 A Okay.
17 presentation that was provided to you on 17 Q. Page 12 is entitled, "Illustrative
18 April22nd with Mr. Beilinson prior to the 18 Valuation Ranges."
19 actual date of the meeting? 19 Do you see that?
20 A We talked about the fact that there 20 A Yes.
21 was going to be a presentation at this 21 Q. Did you have discussions with
22 April 22nd meeting and about the fact that I 22 Innkeepers or anyone from Moelis regarding
23 thought at the prior meeting there would have 23 these numbers that were handed out to you on
24 been, you know, some kind of presentation but 24 the 22nd at that meeting?
25 that there wasn't. 25 A I mean they talked us through the
71 73
1 Lascher 1 Lascher
2 Q. There wasn't a handout? 2 whole book.
3 A Right. 3 Q. Did they explain to you the genesis
4 Q. And he assured you there would be a 4 of the various numbers that appear on page
5 handout at the April22nd meeting? 5 12?
6 A Yes. 6 A What do you mean by that?
7 Q. Now at the April22nd meeting, 7 Q. Did they tell you where the numbers
8 where did that take place? 8 came from, how they got to these numbers?
9 A That was at Kirkland's office. 9 A Yes.
10 Q. And from Lehman, other than you, 0 Q. And who did that part ofthe
11 who else was there for that meeting? 1 presentation?
12 A Susanne Frey, Sam Gleason, and I 2 A I don't really remember.
13 believe Nancy Shanik had to dial in. 3 Q. Well, what-- did the Innkeepers
14 Q. And from Innkeepers? 4 side of the presentation tell you how they
15 A Mark Beilinson, definitely Mark 5 got to these numbers?
16 Murphy, I think Dennis Craven as well. 6 A How they got to these --
17 Q. And from Apollo? 7 Q. Illustrative value numbers, let's
18 A I think both Schuyler and Justin 8 take the first line, the illustrative value
19 were there. 9 numbers for the Lehman hotels and the other
20 Q. As we look at page 13 here -- 20 colunms that are there?
21 A Uh-huh. 21 A I mean I don't remember the exact
22 Q. --it says, "Parent Equity, 22 conversation, but they took us through, you
23 Lehman/Investor," Apollo was intended to be 23 know, cash flow projections for 2010, 2011,
24 the investor; isn't that correct, in your 24 assumptions they were making on, you know,
25 understanding? 25 PIP work and other cap ex that needed to be
19 (Pages 70 to 73)
APP-00424
74 76
1 Lascher 1 Lascher
2 done, assets that, you know, were running out 2 proceedings.
3 of time on their franchise agreements and 3 The judge was very clear that the
4 would be losing their flag and how they 4 emphasis -- let me just finish so it's
5 accounted for a loss in revenue from those 5 on the record since you've raised it.
6 assets and plans to sell those assets within 6 The focus of these discovery
7 certain periods of time following the 7 proceedings should be on the business
8 de flagging. 8 judgment of the debtor, not Lehman.
9 Q. Okay. Following the deflagging? 9 That subject was raised in the
10 A Yes, so when the franchise 0 conference with the judge, your partner
11 agreement ran out. 1 was there, I was there and she couldn't
12 Q. At the time of the April22nd 2 have been clearer so on those grounds we
13 meeting, at least as to the Lehman hotels, 3 declined to produce anything along those
14 did Lehman have any ideas as to what the 4 lines.
15 value of its hotels were relative to the 5 MR. PARKINS: Okay. We will deal
16 illustrative value presented by the company? 6 with that issue, but certainly to the
17 A And why did that matter? 7 extent you're claiming privilege as work
18 Q. Well, I'm asking-- it will be the 8 product, I'll acknowledge and accept
19 judge to decide whether it matters. 9 that. As to the other we'll see what
20 My question is: Did you have any ?0
happens.
21 values in mind for your hotels as compared to ?1
MR. O'BRIEN: Okay. And that's all
22 the illustrative values presented by Moelis? ?2
a prologue, I guess, to my instruction
23 A Yeah. ?3 to this witness not to answer any
24 Q. Did you have any values in mind ?4 questions about the substance of what
25 with respect to the other pools of collateral ?5 Lazard may or may not have done as far
75 77
1 Lascher 1 Lascher
2 other than yours at the time of this meeting? 2 as valuation.
3 A At this point the -- no. 3 MR. PARKINS: Counsel, if you're
4 Q. Okay. Now, Lazard Freres, I will 4 claiming work product privilege and
5 call them Lazard for the deposition, okay, 5 attorney -client privilege certainly,
6 has been retained as the investment banker 6 that's what the rule says you're
7 for Lehman. 7 entitled to do and I will honor that for
8 A Correct. 8 purposes of the deposition.
9 Q. And Lazard, was Lazard at this 9 MR. O'BRIEN: I appreciate it.
10 meeting? 10 MR. PARKINS: If we have a problem
11 A No. 11 with that, that's what the judge is for.
12 Q. Lazard was charged by Lehman to go 12 Q. So particular meeting --
13 do some work, due diligence work with respect 13 MR. O'BRIEN: Sorry.
14 to this presentation; is that correct? 14 Q. At this April22nd meeting, were
15 A Yes. 15 there any next steps discussed with respect
16 Q. And they did do work, didn't they? 16 to going forward with the proposal embodied
17 A Yes. 17 in this document?
18 Q. Do you know if that work has been 18 A Yes, they were, I think Moelis was
19 presented to us in document production? 19 going to send us detailed cash flows that we
20 A I don't know. 20 could look at.
21 MR. O'BRIEN: Len, it has not and 21 Q. And I take it that Lehman was going
22 the reason is, number 1, it's protected 22 to think on the proposal that was made, I
23 by the attorney-client privilege as well 23 take it, is that accurate?
24 as work product. And number 2, it's 24 A Yes.
25 well outside the scope of these 25
Q. And what was said, if anything, by
20 (Pages 74 to 77)
APP-00425
78 80
1 Lascher 1 Lascher
2 the Apollo representatives at the meeting? 2 identification, this date.)
3 A Nothing. 3 Q. I've handed you what's been marked
4 Q. And what was said by Innkeepers at 4 as Exhibit number 8, it is a Lehman
5 the meeting as sort of the next steps from 5 production document marked Bates stamped
6 their point of view? 6 numbers 1 through 4, do you have it in front
7 A I don't really remember. 7 of you, sir?
8 Q. Was a timing issue discussed at 8 A Exhibit 8, yes.
9 this meeting with respect to a need to file 9 Q. Do you recall whether this document
10 Chapter 11 from Innkeepers' point of view by 0 was prepared by Lehman or its counsel
11 a certain date? 1 Dechert?
12 A Yes. 2 A This was not prepared by Lehman.
13 Q. And do you recall what the nature 3 Q. Was it prepared by Lehman's
14 of that discussion was regarding the timing 4 counsel, Dechert?
15 of filing? 5 A No.
16 A Yeah, they needed to file in 6 Q. Who prepared this document?
17 advance of Marriott having the ability to 7 A Lazard.
18 terminate the franchise agreements on a 8 (Exhibit Lascher-9, Document
19 number of their hotels. 9 entitled, "Illustrative Terms of
20 Q. Was it discussed at that meeting by
?0 Proposed Restructuring, June 2, 1010,"
21 Innkeepers a desire that an agreement, call 21 Bates Nos. LEH-ALI 000014 through
22 it a PSA or other similar agreement, be 22 LEH-ALI 000022, marked for
23 entered into by the parties at that meeting 23 identification, this date.)
24 prior to the filing of a bankruptcy case? 24 Q. I've handed you what's been marked
25 A You mean with Lehman or with 25 Exhibit number 9. It's also a Lehman
79 81
1 Lascher 1 Lascher
2 Marriott? 2 production document. Bates stamped numbers
3 Q. I'm asking with the parties at that 3 14 through 22.
4 meeting. You didn't mention Marriott being 4 Do you have it?
5 at the meeting. 5 A Yes.
6 A Right, they weren't there. 6 Q. I'd ask you, this document on the
7 Q. Let me ask the question again. 7 right-hand top of the page says, "Dechert
8 Was-- did Innkeepers raise a 8 draft 6/1110 Preliminary and Confidential
9 desire to have an agreement reached among the 9 Subject to FRE 408."
10 parties at that meeting prior to the filing 10 Do you see that?
11 of their bankruptcy case? 11 A Yes.
12 A I mean the goal was for Lehman to 12 Q. I would ask you to go down to the
13 enter into some agreement with Innkeepers, 13 left-hand corner of this page where it has
14 yeah. 14 some numbers.
15 Q. Was the goal mentioned that Apollo 15 A Right.
16 would also enter into some agreement? 16 Q. 15703581.3 Business; do you see
17 A Yeah. 17 that?
18 Q. The structure of that agreement was 18 A Yes.
19 discussed, was it to be one agreement, 19 Q. Now go with me to Exhibit number 8.
20 multiple agreements at that meeting? 20 A Okay.
21 A Didn't discuss that. 21 Q. And look at the numbers on the
22 (Exhibit Lascher-8, Illustrative 22 left-hand corner of this page and they are
23 Terms of Proposed Structuring, May 25, 23 15703581.1 Business, correct?
24 2010, Bates Nos. LEH-ALI 000001 through 24 A Yes.
25 LEH-ALI 000004, marked for 25 Q. Does this refresh your recollection
21 (Pages 78 to 81)
APP-00426
82 84
1 Lascher 1 Lascher
2 as to whether Dechert prepared Exhibit number 2 Q. So there was to be, as I see, a
3 8? 3 primary and secondary offering of shares, if
4 A My recollection is still that this 4 you understand it correctly; is that correct?
5 is something Lazard prepared. 5 A Yeah, that's right.
6 Q. Okay. We will go with your 6 Q. The backstop portion provided that
7 recollection. 7 Apollo would provide a backstop to purchase
8 A That is number 8, that's Exhibit 8 the 62.18 percent of the equity in the equity
9 number 8 we're talking about. 9 offering at a price of $171 million, in
10 Q. Yes, correct. 0 brackets, which consists of 95 million, in
11 Do you recall reviewing this 1 brackets, for the 34.91 percent of the
12 document before today? 2 secondary shares and 75 million for the
13 A Yes. 3 27.27 percent of the primary shares. Do you
14 Q. Go with me to the first page. 4 see that?
15 A We're on 8? 5 A Yes.
16 Q. Yes, on Exhibit 8. 6 Q. Do you know what a backstop is?
17 A Okay. 7 A Yes.
18 Q. The second paragraph speaks to the 8 Q. What is a backstop?
19 transaction structure outlined herein assumes 9 A That they would commit to buy at a
20 an enterprise value for their organized I? o price with the intention of an auction being
21 company, it has bracketed, 975 million with a In conducted.
22 footnote, and a value of the floating rate 1?2
Q. Okay. And the auction being
23 collateral of bracket, 200 million, correct? 123 conducted leads us to the next paragraph of a
24 A Yes. 124 break-up fee discussion, correct?
25 Q. And the footnote 1 without reading 125 A Right, yes.
83 85
1 Lascher 1 Lascher
2 the whole thing says, "Values are based on 2 Q. Do you recall having discussions
3 the Moelis presentation" -- 3 with Apollo regarding a backstop and a
4 A Right. 4 break-up fee?
5 Q. -- "and have been included for 5 A I don't remember having discussions
6 illustrative purposes only." 6 this early on with them about that, but at
7 A Yes. 7 some point, yes.
8 Q. Is the Moelis presentation, as you 8 Q. And at what point do you recall
9 understand, the one we looked at before? 9 having discussions about Apollo being a
10 A Yes. 0 backstop, let's take that point first, as a
11 Q. Go with me to page number 2 of this 1 backstop?
12 Exhibit number 8. 2 MR. O'BRIEN: For the first time?
13 A Okay. 3 MR. PARKINS: For the first time.
14 Q. In the area identified as "Equity 4 A I don't remember exactly.
15 Offering," there it appears that Lehman will 5 Q. Was it after this date?
16 receive, the company will conduct an equity 6 A Yes.
17 offering in which the company will sell a 7 Q. After May 25?
18 total of 62.18 percent, in brackets, of its 8 A Yes.
19 equity to a new holder, new owner. 9 Q. At the same time would there have
20 27.27 percent of the equity will be sold PO been a first discussion regarding Apollo
21 through a primary issuance by the company, P1
getting a break-up fee?
22 the primary shares. P2
A For-- for providing the backstop
23 And the rest I won't go through P3
you're saying?
24 each reading here, okay? P4
Q. Yes.
25 A Yes. ?5
A Yes.
22 (Pages 82 to 85)
APP-00427
86 88
1 Lascher 1 Lascher
2 Q. So those discussions would have
2 Q. Did you have discussions with
3 been in tandem?
3 Innkeepers during this period of time with
4 A Yes. 4 respect to the transactions reflected in
5 Q. Backstop, break-up fee; is that
5 these documents?
6 correct?
6 A. Probably.
7 A Yes.
7 Q. Okay. And with who would you have
8 Q. How many discussions with Apollo 8 had discussions at Innkeepers?
9 did you have regarding a structure where
9 A. Mark Beilinson.
0 Apollo would be a backstop?
0 Q. On behalf of Innkeepers did you
1 A Very few.
1 talk to anybody else but Mr. Beilinson,
2 Q. Very few. And who did you have 2 businessperson to businessperson?
3 discussions with from Apollo?
3 A. For the most part it was really
4 A Jim Zelter, from Apollo at the 4 with Mark. We had some conversations about
5 early stage it was mostly him.
5 specific items with Dennis or with Mark
6 Q. And do you know the position that 6 Murphy.
7 Mr. Zeiter held at Apollo at that time?
7 Q. Okay. If you look with me in the
8 A I don't remember his title but he 8 first paragraph of Exhibit 9 --
9 runs Apollo Investment Corporation.
9 A. Yes.
~ 0
Q. Okay. Look with me at Exhibit 20 Q. -- six lines from the bottom, the
tn number9.
21 sentence that starts, "As a condition ... "
P2 A Okay. 22 Do you see that?
P3
Q. This is a document that on the
23 A. Yes.
P4 right-hand part of the page top says,
24 Q. Just read that for a second. I
P5
"Dechert Draft 6/1/10 Preliminary and
25 want to ask you a question or two about it.
87 89
1 Lascher 1 Lascher
2 Confidential Subject to FRE 408." 2 A. Okay.
3 Do you see that? 3 Q. The reference there that is part of
4 A. Yes. 4 the offering Lehman will sell a portion of
5 Q. Do you recall whether or not you 5 its equity; do you see that?
6 authorized this document to be prepared by 6 A. Yes.
7 your counsel? 7 Q. Was it Lehman's intention to sell a
8 A. To be prepared? 8 portion of its equity to Apollo as of this
9 Q. Yes. 9 date?
10 A. Yes. 0 A. Yes.
11 Q. Did you authorize to prepare this 1 Q. Okay.
12 document? 2 A. Well, actually, it was to Apollo,
13 A. Yes. 3 but I think we may have had something in here
14 Q. Was this document prepared in 4 about an auction, so if we ended up doing an
15 response to Exhibit number 8? 5 auction, I don't know.
16 A. I believe they took number 8 and 6 Q. Then we will go to the document.
17 expanded on it. 7 Go with me to page 5 of Exhibit 9,
18 Q. Okay. Between the preparation -- 8 please.
19 between the date of Exhibit number 8, which 9 A. Okay.
20 is May 25, 2010, and June 2nd, or June 1, 20
Q. This again speaks to equity
21 2010, when this Dechert draft notes it was 21 offering, an equity offering backstop; is
22 prepared, did you have discussions with 22 that correct?
23 Apollo with respect to the transactions 23 A. Yes.
24 reflected in these documents? ?4
Q. And this still has Apollo providing
25 A. I don't remember. ?5 a backstop and Apollo getting a break-up
23 (Pages 86 to 89)
APP-00428
90 92
1 Lascher 1 Lascher
2 fee-- 2 Q. AIC being the purchaser?
3 A Yes. 3 A Well, there's a--
4 Q. --correct? 4 MR. O'BRIEN: He did talk about the
5 Now after this document was 5 auction.
6 prepared, did you have discussion with Apollo 6 A Well, there's a break-up fee or a
7 with respect to the structure of this 7 backup, backstop here, if they're not the new
8 transaction as reflected in this Exhibit 8 owner.
9 number9? 9 Q. But it says here, "Condition
10 My question is the structure. 10 precedent to Lehman's obligation under the
11 A Of the backstop you're saying? 11 PSA was agreement reached with AIC."
12 Q. Correct. 12 A Right.
13 A I don't know if we had discussions 13 Q. It didn't say AIC or an alternative
14 with them or once we showed this to Mark 14 to AIC, does it, anywhere?
15 Beilinson he showed it to them and they told 15 A It could have been an agreement as
16 him that they didn't want to do that. 16 to the backstop.
17 Q. Did you have direct input from 17 Q. Who was going to pay the backstop
18 Apollo with respect to this document? 18 fee, Lehman or the company?
19 MR. O'BRIEN: Objection. 19 A I mean it was Lehman who would have
20 A Not this draft but, you know, the 20 been selling the equity so I assume Lehman.
21 document at certain points, we did, yeah. 21 Q. Lehman would have paid the backstop
22 Q. This document under the "Conditions 22 fee?
23 Precedent" section there? 23 MR. O'BRIEN: That's what he
24 A Yes. 24 assumes.
25 Q. Provides from your counsel that, 25 A That's what I assume, I mean --
91 93
1 Lascher 1 Lascher
2 that the transaction will become binding on 2 Q. Well, when this proposal was-- was
3 Lehman when Lehman, AIC and the company 3 this proposal authorized by you to be sent
4 execute a plan support agreement that 4 out by your counsel?
5 incorporates the transaction set forth 5 A I don't know that it was ever sent
6 herein, correct? 6 out.
7 A Yes. 7 Q. Was it sent, it was clearly sent to
8 Q. So approximately 45 days from the 8 the debtor because you said the debtor and
9 filing of the bankruptcy case it was Lehman's 9 you discussed it, correct?
10 proposal that contemplated a single document 10 A Yeah.
11 with Apollo, Lehman and the company signing, 11 Q. So was it your instruction that,
12 correct? 12 was it your instruction that this, or
13 A That's what it says here. 13 intention, I'm sorry, at the time that Lehman
14 Q. Right. The third bullet point 14 would be paying the backstop fee?
15 under "Conditions Precedent" on page 5? Do 15 A Yeah, we were selling the equity.
16 you see that? 16 I mean that would make sense.
17 A Yes. 17 Q. Before we leave Exhibit number 9, I
18 Q. "Agreement reached with AIC in form 18 want you to look at footnote number 2 again,
19 and substance satisfactory to Lehman." 19 and provides here that "values are based on
20 A Yes. 20 Moelis presentation and have been included
21 Q. Is there anywhere in this document 21 for illustrative purposes only"?
22 I can see that-- find where an alternative 22 A Yes.
23 to AIC is discussed or contemplated by 23 Q. So you're still using the Moelis
24 Lehman; do you know? 24 numbers from the presentation we talked about
25 A An alternative to what? 25 earlier?
24 (Pages 90 to 93)
APP-00429
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Lascher
A. Yes.
MR. PARKINS: Exhibit 10.
(Exhibit Lascher -10, Document
entitled, "Illustrative Terms of
Proposed Restructuring, June 2, 1010,"
Bates Nos. LEH-ALI 000023 through
LEH-ALI 000031, marked for
94
1
2
3
4
5
6
7
8
identification, this date.) 9
10
as Exhibit number 10. It has, it's a Lehman 11
production Bates stamp numbers 23 through 31. 12
Q. I've handed you what's been marked
You have that in front of you, sir?
A. Yes.
Q. It's also marked a "Dechert Draft
6/1110 Preliminary and Confidential Subject
to FRE 408."
A. Right.
Q. Now, let's start with footnote
number 2 in this document. Footnote number 2
now has an added sentence that "Lehman is
completing its own quantitative analysis of
the value of the company and will
13
14
15
16
17
18
19
20
21
22
23
supplemental this term sheet once that 2 4
analysis has been completed." Do you see 2 5
Lascher
that?
A. Yes.
Q. Did, in fact, Lehman do such a
95
1
2
3
4
quantitative analysis? 5
A. We, I think it was part of what we 6
hired Lazard to do. 7
Q. Okay. And do you recall whether or 8
not Lehman supplemented this term sheet at 9
any point in time with respect to the 1 0
consequences of that subsequent analysis? 11
A. I don't really know what's meant by 12
that but, you know, at some point a real 13
purchase price would go in for Apollo buying 14
the equity. We have to agree with the 15
company on the numbers for the debt levels at 16
all the other, all the other silos of debt. 17
Q. So this is part of the iterative 18
process with respect to the economic terms of 19
this term sheet that led to the PSA; is that 2 0
correct? 21
A. Yes.
Q. Look with me at pages 4 and 5 of
this document, this exhibit?
A. Okay.
22
23
24
25
96
Lascher
Q. Like the prior exhibit, this
document contemplates an equity offering, an
equity backstop by Apollo and a break-up fee,
correct?
A. Yes.
Q. And this draft also in "Conditions
Precedent" provides that Lehman, Apollo and
the company will execute the PSA, correct?
A. Yeah.
Q. Go with me to page 8 of this
document, please.
A. Okay.
Q. Specifically the pro forma capital
structure.
A. Uh-huh.
Q. These numbers here appear to be the
ones from the Moelis presentations; am I
correct?
A. Yes.
Q. The governance provisions here,
board of directors to initially consist of
seven members, seven in brackets, I want to
read it for the record correctly, which three
to be nominated by Lehman and four to be
Lascher
nominated by new owner?
A. Right.
Q. New owner was to be Apollo,
correct?
A. Or whoever was the highest bidder
at the auction.
Q. Tell me about this auction that
occurred. Was there ever an auction?
A. No.
(Exhibit Lascher -11, Document
Proposed Restructuring, June 2, 1 010,"
97
as Exhibit number 11. It has, again, Lehman
production Bates stamped numbers 32 through
MR. FLIMAN: Do you have any more
copies?
MR. PARKINS: Is it going around?
MR. ELMORE: We must have run out.
25 (Pages 94 to 97)
APP-00430
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
98
Lascher 1
MR. PARKINS: Back on the record. 2
Q. What has been marked as Exhibit 3
number 11, sir? 4
A ~ s . 5
Q. It's a Dechert draft dated 6/2/10, 6
Illustrative Terms of Proposed Restructuring 7
with a date of June 2, 2010. Do you see 8
fuill 9
A Yes. 10
Q. The second paragraph on page 1 11
reflects an assumption of enterprise value 12
for the reorganized company of975 million 13
and a value of the floating rate collateral 14
of 200 million, correct? 15
A Correct. 16
Q. Floating rate collateral was a 17
Lehman collateral, correct? 18
A Correct. 19
Q. These numbers again were Moelis 2 0
numbers, correct? 21
A Correct. 2 2
Q. Now, before this June 2nd draft 23
document was prepared did you have 2 4
discussions with Apollo regarding, again, the 2 5
Lascher
structure of the transaction embodied in the
term sheets here?
Mr. Beilinson regarding the structure?
A You mean between the first and the
second?
Q. Yes, and the date between the first
and the second?
A I don't remember. I don't
remember.
Q. Do you recall whether Mr. Beilinson
in response to the term sheet dated June 1
said, I'm not going to agree to that
structure?
A I don't know which, if any, of
these went out.
Q. Okay. Were the exhibits we've
looked at so far that reflect Dechert drafts,
99
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
were they authorized to be prepared by you on 21
behalfofLehman? 22
MR. O'BRIEN: You mean did he 23
authorize them?
MR. PARKINS: Yes.
24
25
Lascher
A Yeah. I mean they were our counsel
on the deal.
Q. This document, likewise, ifyou
100
look at the equity offering, equity offering
backstop and conditions precedent seem to be
identical as in the prior draft.
MR. O'BRIEN: Is that a question?
Q. Do you agree with that?
MR. PARKINS: That's the question.
A I'll tell you in a second.
They look a little bit different,
the equity offering section has dollar
amounts instead of percentages.
Q. But the structure is the same,
correct?
A It's pretty similar, yeah.
Q. And, again, and this document
prepared by your counsel, the conditions
precedent the transaction contemplates being
binding on Lehman, on Lehman, Apollo and the
company, execute a plan support agreement,
correct?
A This is in 11 you're asking me
about?
Lascher
Q. Yes, at the bottom of page 5.
MR. O'BRIEN: Top of6.
A. The conditions precedent was, which
one were you asking about?
Q. The first, the introduction to
"Conditions Precedent," if you look at the
bottom of page 5, "The transaction will
101
become binding on Lehman when Lehman, AIC and
the company execute a plan support
agreement."
A. That's correct, it says that.
(Exhibit Lascher-12, Document
Proposed Restructuring, June 2, 1010,"
Q. The document I've handed you, sir,
is marked Exhibit number 12. It's a document
titled "Dechert Draft Designation 6/4/10,"
and it's entitled, "Illustrative Terms of
Proposed Restructuring," dated June 4, 2010;
do you see that?
A. Yes.
26 (Pages 98 to 101)
APP-00431
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
120
121
122
P3
P4
r5
102 104
Lascher 1 Lascher
Q. On the first page, second 2 will become binding on Lehman when Lehman,
paragraph, the same numbers for the 3 AIC and the Company execute a plan support
enterprise value of 975 and the value of the 4 agreement."
floating rate collateral is at 200 still, 5 A Right.
correct? 6 Q. The third bullet point there under
A Yes. 7 that says, "Agreement reached with AIC in
Q. Go with me, however, to pages 5 and 8 form and substance satisfactory to Lehman."
6, under "New Equity, New Equity 9 What agreement would that have
Capitalization Options." 10 been, sir?
A Uh-huh. 11 A Again, it's, you know, sort of same
Q. Which continues on to page 6 as 12 as the last one. It could have been an
well as "Conditions Precedent." 13 agreement on the backstop.
Do you want to take a moment to 14 Q. Was it an agreement to sell shares?
read them? 15 A I don't know.
A Wait. I'm sorry, just tell me 16 Q. Who would know if you don't know
again, which sections did you want me to look 17 for Lehman's side?
at? 18 MR. O'BRIEN: Are you finished
Q. "New Equity Capitalization Options" 19 answering his first question?
and "Conditions Precedent." 20 THE WITNESS: What's the first
A Okay. 21 question?
Okay. 22 MR. O'BRIEN: What agreement was
Q. Under the provisions of the "New 23 contemplated by that provision? The
Equity Capitalization Options," okay, it 24 agreement with AIC in form and substance
provides that "Lehman, in its sole 25 satisfactory to Lehman.
103 105
Lascher 1 Lascher
discretion, shall select one of the following 2 THE WITNESS: Yeah, I mean, yeah,
post effective date new equity capitalization
3 I'm done answering.
options." 4 Q. Could that agreement be the
A Yes. 5 agreement to sell shares to Apollo?
Q. "Capitalization Option A," and then 6 A Under this construct it looks like
on the next page is "Capitalization Option
7 there's one scenario where they would provide
B." 8 a backstop and we would auction the equity.
A Right. 9 In another scenario where we would just hold
Q. A, involves an equity offering with 10 all the equity ourselves.
Apollo being a backstop with a break-up fee
11 Q. So is it, in the contemplation of
again, correct? 12 Lehman that it would, it would be prepared to
A Correct. 13 assume the risk of owning all this stock of
Q. B, involves Lehman retaining all 14 the reorganized company?
the shares no backstop by Apollo and no
15 A I mean this is really just a
break-up fee, correct? 16 negotiation.
A Right. 17 Q. Well, do you know if this went out
Q. Did B still contemplate Lehman 18 to anybody?
selling a portion of the equity it was going
19 A I don't.
to get? 20 Q. So I'm asking you at this point in
A It doesn't look like it does. 21 time was it your contemplation that Lehman
Q. Well, if I look at the "Conditions 22 would agree to own all the stock of the
Precedent" next section.
23 company?
A Uh-huh. 24 A We didn't want to own the whole
Q. It says, again, "The transaction
25 company.
27 (Pages 102 to 105)
APP-00432
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
tzo
t21
t22
t23
t?4
t?5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
106
Lascher 1
Q. In fact, I think in the court 2
filings in the Lehman case it was the 3
company's position that they wanted to lay 4
off some of the risk, 50 percent of the risk, 5
correct? 6
A. It was Lehman's position? 7
~ Ya 8
A. Yes. 9
Q. Was that the position of Lehman at 0
this time? 1
A. Yes. 2
Q. Did Lehman have anybody else that 3
was intending to sell to but Apollo at this 4
time? 5
A. The equity at -- 6
~ Ya 7
A. -- at emerging from bankruptcy? 8
~ Ya 9
A. No. 20
MR. PARKINS: Give me a moment, 21
please. 22
MR. O'BRIEN: Sure. 23
(Exhibit Lascher-13, E-mail dated 2 4
6/17/10 with attachment, "Illustrative 2 5
107
Lascher 1
Terms of Proposed Restructuring, June 2
17, 1010," Bates Nos. LEH-ALI 004791 3
through LEH-ALI 004803, marked for 4
identification, this date.) 5
Q. I'm handing you what's been marked 6
as Exhibit 13. 7
A ~ s . 8
Q. This is a document with Lehman 9
Bates stamp numbers 4791 through 4803. 0
A ~ s . 1
Q. The first page of this exhibit is 2
an e-mail from Mr. Brian Greer at Dechert -- 3
A ~ s . 4
Q. -- to Mr. Zeiter at Apollo and a 5
number of other people cc'd, correct? 6
A ~ s . 7
Q. And you received this document, 8
didn't you? 9
A Yes. 20
Q. Okay. Do you remember receiving 21
this document? 2 2
A No. I don't remember specifically 2 3
receiving it. ? 4
Q. This document is dated June 17, ? 5
108
Lascher
2010, approximately 30 days before the filing
of the Innkeepers bankruptcy, correct?
A. No. Innkeepers filed in July.
Q. I said 30 days before Innkeepers
filed bankruptcy.
A. Yes.
Q. About 30 days.
A. Yes.
Q. Look with me on page 4 of this
document.
A. Okay.
Q. "Use of Cash Collateral."
A. Yes.
Q. The third bullet of page 4 that
flows over to the next page.
A. Right.
Q. "Company's use of Lehman's cash
collateral shall be limited to use for the
benefit of the floating rate collateral. "
A. Correct.
Q. That's Lehman's collateral,
correct?
A. Yes.
Q. That was the proposal that Lehman
Lascher
made?
A Yes.
Q. Going on to the -- down on page 5
the "AIC Purchase of New Equity."
A Uh-huh.
Q. This provides that Apollo will
acquire for cash an amount equal to
109
$117 million of equity, which is 50 percent
of the Lehman shares, correct?
A That's right.
Q. It also provides later on in that
box that there shall be a $70 million senior
secured debt made available by Apollo as an
equity contribution. Do you see that?
A (Witness reading document.)
Q. I'm sorry, I read that wrong.
There will be $75 million of new debt less
the amount of the AIC equity contribution
defined as the new debt.
A Right, I see that.
Q. And that's to be provided by
Apollo, correct?
A Yes.
Q. And if we turn the page to page 6,
28 (Pages 106 to 109)
APP-00433
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
110
Lascher 1
we see that AIC shall make an additional 2
equity contribution in an amount equal to 3
blank million in respect of its guaranty of 4
the company's PIP obligations with respect to 5
the fixed rate pool; do you see that? 6
A Yes. 7
Q. That's defined as AIC's equity 8
contribution? 9
A Right. 0
Q. Prior to this document being 1
prepared by your law firm, Lehman's law firm, 2
and it's dated 6/17/10, did you have 3
discussions with Apollo regarding the change 4
in the structure from this document to the 5
prior term sheets prepared? 6
A I believe this term sheet probably 7
represents the term sheet, you know, the 8
first time we really shared a draft of it 9
with Apollo. 2 0
Q. My question again, sir, and I 21
appreciate your answer. Between the prior 22
term sheets dated earlier than June 17 and 2 3
June 17, did you have discussion with Apollo /4
with respect to what was going to be in the /5
111
Lascher
substance of this document?
MR. O'BRIEN: By that earlier date,
do you mean June 4th?
MR. PARKINS: Yes.
MR. O'BRIEN: 20107
A I don't remember.
Mr. Beilinson on behalf of the company with
1
2
3
4
5
6
7
8
9
respect to what was going to come out on this 10
document?
A Yes.
Q. And when did you have those
discussions?
A I don't remember.
Q. Did you tell him there was going to
be two different proposals prepared by
Lehman?
A What do you mean?
Q. Well, my question is: Did you tell
Mr. Beilinson there were going to be tough
different proposals prepared?
A I don't remember.
I believe only one proposal went to
Apollo.
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Lascher
THE WITNESS: You know what, I
remember.
112
A. There were two proposals that were
sent to Innkeepers and only one was sent to
Apollo. Whether we had a conversation with
Mark to highlight that, I don't remember.
Q. The reason I ask, sir, because the
first page of the term sheet says, "Term
Sheet Alternative A"?
A. Right.
Q. There was a different alternative I
take it considered?
A. Yeah, and I think it was similar to
what was in the previous exhibit which stated
that Lehman would own all of the equity.
Q. So look with me again on page 6.
A. Okay.
MR. O'BRIEN: Exhibit 13?
MR. PARKINS: Yes.
A. Okay.
Q. Exhibit 6 shows in the top box,
after the definition of" AIC equity
contribution," it says, "on the effective
date Innkeepers shall distribute the new
Lascher
113
equity as follows:" 48 and a half percent to
Lehman, same to AIC and 3 percent to
company's management and/or unsecured
creditors.
Do you see that?
A Yes.
Q. The "Conditions Precedent" which is
the next box?
A Yep.
Q. Reflects that the PSA is a
condition precedent would be binding on
Lehman when Lehman, AIC and the company
executed a PSA. Do you see that?
A Yes, I do.
Q. You see here in the third bullet
point in that box "Conditions Precedent," the
language we saw earlier, "Agreement reached
with AIC in form and substance satisfactory
to Lehman"?
A Right.
Q. Do you understand what that meant
at this time?
A It would have meant a sale of the,
of half the equity to Apollo.
29 (Pages 110 to 113)
APP-00434
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
12o
121
122
123
124
125
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
114 116
Lase her
1 Lascher
Q. And if we tum to page 7 of this
2 LEH-ALI 000241, marked for
document, the proposal embodied in this
3 identification, this date.)
document, if you go down to the first dark
4 (Discussion off the record.)
bullet point on page 7?
5 Q. I've handed you an exhibit marked
A. Yes.
6 number 14 that says on the first page, "PW
Q. It says, "The failure by AIC to
7 Comments." Do you know what PW stands for?
purchase the shares by April15, 2011."
8 A. Paul Weiss.
Correct?
9 Q. 6/22/10.
A. Yes.
10 As presented to us, this document,
Q. Now as I go to page 9 of this
11 if you go to the next page, has Dechert draft
document.
12 6/17, 18, do you have any reason why it reads
A. Okay.
13 like that?
Q. The last two bullet points on that
14 A. I would imagine they were working
page provide, next to the last one is the
15 off a Dechert document and didn't change the
occurrence of, one, a change that has
16 header.
material adverse effect on the use, value or
17 Q. But you don't know?
condition of the company or Apollo.
18 A. No.
A. Right.
19 Q. Me neither.
Q. Their respective assets or the
20 Okay. I see that on this document,
legal or financial status or business
21 Exhibit 14, the language with respect to
operation of the company or Apollo or, two,
22 Lehman conducting its own analysis in
material disruption or material adverse
23 footnote 2 is gone, in fact, there is no
change in the financial real estate, banking
24 footnote 2 any more, correct?
or capital markets?
25 A. There's a footnote 2 on the second
115 117
Lascher 1 Lascher
A. Right. 2 page.
Q. And then the last one is when the 3 Q. But it's not footnote 2 with
Lehman determined to the sole discretion 4 respect to Lehman conducting its own analysis
after completion of its tax due diligence 5 any more, correct?
that the anticipated tax obligations of the 6 A. It's not --the one that had been
company on the effective date are 7 there in some of the previous versions isn't
unacceptable to Lehman? 8 there.
A. Yes. 9 Q. Do you know whether Lehman had
Q. Now this bullet point has embodied 10 completed its analysis by June 17th?
similar language in the PSA? 11 A. I don't remember.
A. The last bullet you're talking? 12 Q. How about by June 22nd?
Q. Yes. 13 A. I don't remember.
A. Yes. 14 Q. Go with me to page 4 of this
Q. And there's a 45-day deadline by 15 exhibit, please. "Use of Cash Collateral."
which Lehman has to make that determination, 16 A. Okay.
correct? 17 Q. In the first paragraph under "Use
A. Correct. 18 of Cash Collateral." "In addition to
Q. Has Lehman made that determination 19 providing the Floating Rate DIP Facility,
yet? 20 Lehman will consent to the use of its cash
A. No. 21 collateral in terms acceptable to Lehman
(Exhibit Lascher-14, Document 22 provided however the company's use of
entitled, "Illustrative Terms of 23 Lehman's cash collateral shall be limited to
Proposed Restructuring, June 17, 1 010," 24 use for the benefit of floating rate
Bates Nos. LEH-ALI 000230 through 25 collateral."
30 (Pages 114 to 117)
APP-00435
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
118
Lascher 1
A I see that. 2
Q. That's similar to the language in 3
the prior term sheet that was created, 4
correct? 5
A Yes. 6
Q. Reading on, on the "Use of Cash 7
Collateral" provides, "Company's use of 8
Lehman's cash collateral will terminate 9
immediately upon the occurrence of a 10
termination event, as defined below, 11
including the failure of the company to meet 12
the plan milestones as defined below." 13
Do you see that? 14
A Yes. 15
Q. Then as we get into the "AIC 16
Purchase of New Equity" provision of this 17
document, I see that the price has changed 18
from the prior term sheet. Take a moment and 19
take a look. 2 0
A Yes, I see that. 2 1
Q. The price went down? 22
A Yeah. 23
Q. The price went down still for a 2 4
50 percent of the stock, though, correct? 2 5
119
Lascher 1
A Yes. 2
Q. Explain to me why you made an offer 3
with the price going down? 4
A I didn't make an offer. This is 5
their counteroffer to me. 6
Q. Okay. Good. 7
Now it also provides in here for 8
AIC making, paying Lehman an option premium 9
of $10 million at closing. 10
A Uh-huh. 11
Q. Do you know what that option 12
premium was for? 13
A I mean -- the truth -- I didn't 14
care about any of this. I wanted money. I 15
wanted the most money that I could get from 16
them in selling the equity. Whatever all 17
this means is irrelevant to me. 18
Q. And my question is, do you know 19
what is meant by the option premium on what, 2 0
is what I'm asking, do you know what that 21
meant? 22
A To buy the equity. 2 3
Q. To buy the rest of the equity, the 2 4
other 50 percent? 2 5
Lascher
A No, to buy the 50 percent we were
selling.
Q. Okay. Then it says in here --
A Without us auctioning.
Q. I'm sorry, okay.
120
"AIC may consider an additional
capital commitment of up to five million to
fund property improvement plans in exchange
for a complete release of any liability for
payment or performance of any PIP related
obligations, if any, of AIC"; do you see
that?
A Yes.
Q. Now, did you have discussions
regarding Apollo's desire to get a complete
release on any guaranty to do PIP work on or
about the date of this document?
A I mean this definitely came up in
the context of what they wrote here. But I
have no ability to release them from a
guaranty that's not for my benefit.
Q. But it was something that Apollo
asked for?
A That's what it says here.
Lascher
MR. EHRLICH: Object to fonn.
Q. Going to the next page, page 6 of
this document, likewise, it has in the top
box that the equity ownership would be 48.5
to Lehman, 48.5 to AIC or to one of more of
its designees?
A Right.
Q. That's a new add from the prior
draft, correct?
A Right.
Q. And then "Conditions Precedent"
121
still provide that there will be transactions
binding on Lehman when Lehman, again, Apollo
and the company execute a plan support
agreement, correct?
A Yes, I see that.
Q. So at least whichever date you
pick, June 17 or June 22nd, okay, as a
proposal from Apollo everybody sign--
everyone, AIC, Lehman and the company are
still signing a single PSA for this to be
binding on Lehman, correct?
A That's what it says in the term
sheet.
31 (Pages 118 to 121)
APP-00436
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
122 124
Lascher
1 Lascher
Q. Going to page 7, you have the first
2 authorizing the preparation of this term
dark box bullet point again a failure by AIC
3 sheet?
to purchase the shares by blank date in 2011?
4 A. Specifically this term sheet?
A Right.
5 Q. Yes.
MR. PARKINS: Take a break.
6 A. No.
MR. O'BRIEN: How long?
7 Q. Do you remember discussing this
MR. PARKINS: How long you want,
8 term sheet with Mr. Beilinson?
10 minutes, is that good for you?
9 A. I remember discussing all, you
MR. O'BRIEN: Sure. 10 know, a lot of the term sheets with Marc, but
MR. EHRLICH: Could we say 15?
11 whether it was this specific one, I don't
MR. PARKINS: You want to pick up
12 really know.
at ten before the hour? Is that good?
13 Q. Okay. Go with me to page 5 of this
MR. O'BRIEN: Sure. 14 document, please.
(A brief recess was taken.)
15 A. Okay.
(Exhibit Lascher-15, Dechert Draft
16 Q. Under "Distribution of New Equity"
6/29110, Term Sheet Alternative A,
17 it provides that Lehman will get 97 percent,
Illustrative Terms of Proposed
18 correct?
Restructuring, June 29, 2010, Bates Nos.
19 A. Yes.
LEH-ALI 000254 through LEH-ALI 000264,
20 Q. And "Conditions Precedent to
marked for identification, this date.)
21 Lehman's Obligations Under PSA"?
Q. I've handed you a document marked
22 A. Yes.
Exhibit 15.
23 Q. This document provides it will be
A Yes.
24 binding on Lehman when Lehman and the company
Q. Again, it's a Lehman production,
25 execute a plan. It doesn't have Apollo in
123 125
Lascher 1 Lascher
Bates stamp numbers 254 through 264. 2 here, this draft, does it?
A Yes. 3 A That's right.
Q. On the right-hand top of the first 4 Q. It does have in the third bullet
page it says "Dechert Draft 6/29/10, Term 5 point "Agreement reached with Apollo
Sheet Alternative A, Illustrative Terms of 6 Investment Corp. ('AIC') in form and
Proposed Restructuring, June 29, 2010." 7 substance satisfactory to Lehman." Is that
A Yes. 8 the purchase of equity --
Q. Go with me to page 3 of this 9 A Yes.
document. Looking at the "General Unsecured 0 Q. --It's referring to here?
Claim" box? 1 Yes?
A Yes. 2 A Yeah, I would imagine.
Q. It says "Shall not receive any 3 Q. Was there any other agreement you
recovery under the Plan and shall be deemed 4 were contemplating with Apollo Investment
and voted against the Plan. Lehman shall 5 Corporation at this time other than the
determine, in its sole discretion, whether to 6 purchase of equity?
provide a gift of cash or equity to any class 7 A I can't remember if at this point
of general unsecured claims. [Discuss 8 we were still talking about Apollo providing
impaired accepting class and REIT issues]." 9 a backstop for a sale of the equity.
A Yes. 20 Q. Well, you don't see any backstop in
Q. Do you know if this document, 21 this document, do you? Take a look if you
Exhibit 15, this term sheet, was distributed /2 need to.
to Innkeepers and Apollo? /3 A That's right, but I also don't see
A I don't know. /4
anything about a sale.
Q. Do you remember discussing and /5
Q. Well, were you intending to sell
32 (Pages 122 to 125)
APP-00437
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
126 128
Lascher 1 Lascher
50 percent of your stock, Lehman stock, if it 2 Mr. Glatt at Apollo to Mr. Beilinson.
got it all, still at this time to Apollo? 3 Do you see that?
A Yes. We were still planning on 4 A Yes.
selling half of it whether we were settled on 5 Q. Did you ever see they e-mail
at that point selling it to Apollo or not? 6 before?
Q. Weren't you about to sign a term 7 A I don't remember seeing it.
sheet with Apollo on or about this date to 8 Q. Go with me to the documents behind
sell the stock to Apollo, contemplate a sale 9 the e-mail.
of stock to Apollo? 10 A Okay.
A I'm just saying in terms of the 11 Q. If you look with me at pages 128,
time continuum I can't remember where we were 12 the Bates stamp numbers 128 through 133 --
in our thinking on June 23rd -- or 29th or 13 A Yep.
23rd, whatever. 14 Q. -- I see there a document marked
Q. You were negotiating at this time, 15 Term Sheet, Lehman/AIC. Do you see that?
though, a term sheet with Apollo to sell this 16 A Right.
50 percent of the stock to Apollo, correct? 17 Q. Have you ever seen this term sheet
MR. O'BRIEN: Do you mean at or 18 before?
around June 29th? 19 A I think SO.
MR. PARKINS: Yes. 20 Q. Okay. This term sheet has at the
A I'm just telling you, I can't 21 top right, doesn't it, the initials of Paul
remember in terms of the time continuum when 22 Weiss law firm, draft 7/6/10, correct?
we started doing that, but yes, at some point 23 A Yes.
we settled on we were going to sell it to 24 Q. And this document from the Paul
Apollo. 25 Weiss firm who represents Apollo, provides--
127 129
Lascher 1 Lascher
Q. Okay. Did you ever have 2 if you look with me on Bates stamp number
discussions with anybody else about a 3 128, this is the first page of that. Do you
specific term sheet where Lehman would sell 4 have it?
50 percent of the stock to anybody else other 5 A Yes.
than to Apollo? 6 Q. -- the seller of stock is going to
A No. 7 be Lehman and the acquirer is going to be
Q. Okay. 8 Apollo, correct?
(Exhibit Lascher-16, E-mail dated 9 MR. O'BRIEN: Under this term
7/7/10 with attachment, Bates Nos. AIC 0 sheet.
00000127 through AIC 00000144, marked 1 MR. PARKINS: Under the term sheet,
for identification, this date.) 2 correct, that's what the term sheet
Q. Mr. Lascher, I've handed you what 3 provides.
has been marked as Exhibit 16. 4 A It says after confirmation Lehman
A Yes. 5 will agree to sell AIC the right to receive
Q. These documents were produced by 6 half the equity in the company.
Apollo. They have AIC numbers, Bates stamp 7 Q. Right. Going on to the next page,
numbers 127 through 144. 8 Bates stamp number 129, "Distribution of
A Yes. 9 Innkeepers Equity" provides 48.5 percent to
Q. The first page of this document has 20 Lehman, 48.5 to Apollo, correct?
two e-mails on it. The earlier-- the 21 A Right.
earlier dated e-mail and time is an e-mail 22
Q. Conditions precedent -- I'm
from Mr. Alan Kornberg at Paul Weiss to a 23 sorry-- "Conditions to Execution of Stock
group of people, lawyers, both at Dechert and ?4 Purchase Agreement," that paragraph starts
at Kirkland and the second was an e-mail from ?5 out, the execution of the Stock Purchase
33 (Pages 126 to 129)
APP-00438
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
130
Lascher 1
Agreement will be subject to the satisfaction 2
or waiver by Lehman or Apollo, as applicable, 3
to the following conditions. 4
So pursuant to this term sheet, 5
there was going to be a stock purchase 6
agreement? 7
A Right. 8
Q. Ifl go to the next page, which is 9
130, "Conditions to Closing," that section 10
starts out, "The consummation of a 11
transaction on the terms described herein 12
will be" the subject-- "will be subject to 13
the satisfaction or waiver by Lehman or AIC, 14
as applicable, of customary closing 15
conditions including, without limitation, the 16
following." 17
And it lists there as a customary 18
closing condition the third bullet point, the 19
termination of the guaranty we talked about 2 0
earlier, correct? 21
A Yes, that's what it says. 2 2
Q. Moving on, sir, to the Bates stamp 2 3
number page 134 -- 134, that's a Paul Weiss 2 4
draft document dated the same day, 7/6/10, 25
131
Lascher 1
"Term Sheet Alternative A (Lehman 2
Innkeepers)." 3
Do you see that? Have you seen 4
this document before? 5
A. Yes, I believe so. 6
Q. Now, if you go with me to page 5 of 7
this document, Bates stamp number 138 -- 8
A. Okay. 9
Q. --under the "New Equity" box 97 0
percent of the new equity is going to go to 1
Lehman under this proposal. 2
A. Right. 3
Q. Okay. And a condition precedent to 4
this term sheet proposal is the transaction, 5
again, becoming binding on Lehman with Lehman 6
--when Lehman, Apollo Investment Corp. (AI C) 7
and the company execute a Plan Support 8
Agreement, correct? 9
A. That's what it says. 2 0
Q. And if you go to the next page, 2 1
this document, at the top box, the second 2 2
bullet point says "Execution of the 2 3
definitive agreements contemplated by the 2 4
term sheet, dated as of July [ ], 2010, by 2 5
132
Lascher
and between Lehman and AIC (the 'Lehman-AIC
Term Sheet')."
A. Yes.
Q. Does this refresh your recollection
that on or about or prior to July 6th there,
in fact, did exist a term sheet reflecting an
agreement to sell the shares to AIC?
A. Wasn't that the term sheet that we
just went through?
Q. I'm asking you whether or not you
recall there being a definitive term sheet,
if there is such a thing, a term sheet.
A. There is a draft term sheet that
was attached--
Q. A term sheet reflecting the terms
under which Lehman would sell 50 percent of
the stock to Apollo.
A. The term sheet that we just went
through that was attached to this e-mail was
the term sheet to sell half of what we got to
Apollo.
Apollo regarding their proposal reflected in,
as attached to this cover e-mail, the two
Lascher
proposals?
MR. O'BRIEN: Wait a minute.
133
You're asking ifhe had discussions with
Apollo--
MR. PARKINS: With Apollo.
MR. O'BRIEN: -- about this
specific term sheet?
MR. PARKINS: Both of them. Both
of them that are attached to this cover
e-mail.
MR. O'BRIEN: Well, one is a term
sheet with Apollo, the other is an
agreement with Innkeepers.
MR. PARKINS: Right, but both
involve Apollo participating to some
extent.
Q. My question is did you have
discussions with the Apollo regarding both of
these term sheets?
MR. EHRLICH: Objection to form.
A I don't remember.
Q. Were you having discussions with
Apollo at this time regarding the acquisition
of stock that Lehman was going to get as part
34 (Pages 130 to 133)
APP-00439
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Lascher
of the PSA?
A Yes.
Q. So you don't remember specifically
talking about these term sheets; is that your
answer?
A Yes. These versions of the term
sheets.
Q. I'm sorry?
A These versions of the term sheets.
Q. Okay.
MR. PARKINS: Give me a second.
(Exhibit Lascher-17, E-mail dated
134
1
2
3
4
5
6
7
8
9
10
11
12
13
14
7/17/10 with attachment, Bates Nos. 15
INN_MID000033ll andiNN_MID00003312, 16
marked for identification, this date.)
as Exhibit 17.
A Yes.
Q. It's a document that is an
Innkeepers production.
number 3311 to 3312.
A Right.
It's Bates stamp
Q. Contains on the first page of it
135
17
18
19
20
21
22
23
24
25
Lascher 1
two e-mails. 2
The first is an e-mail from -- on 3
the lower part of the document -- the first 4
an e-mail from Mr. Marc Beilinson to Joseph 5
Glatt and Schuyler Hewes, subject Guaranty 6
Analysis Based Upon Reading of Schedule 11 7
Only. 8
And the second top part of this 9
document is an e-mail from Mr. Hewes to 10
Mr. Beilinson and Mark Murphy and other 11
individuals at Apollo. Do you see that? 12
A Yes. 13
Q. The second page of this document 14
has a bunch of numbers on it. It's entitled 15
"Innkeepers USA Trust Summary of Schedule 16
XI."
A Right.
Q. Have you seen this document before?
A I've seen something like this.
Q. And when you say this, are you
referring to the second page or both the
entire document I've handed you?
A I never saw the e-mail. But I've
seen something like this schedule.
17
18
19
20
21
22
23
24
25
136
Lascher
Q. Okay. If you look at the schedule
here, when you look at the right-hand column,
the very right column, it says $13,665,381
(sic), right?
A 13,665,581.
Q. Right. Is that the number you
understand to be the company's position on
what Apollo's exposure is on a guaranty?
MR. EHRLICH: Objection to form.
Please note my objection. This is a
totally improper question, beyond the
scope of this notice and improper
discovery in a state court litigation
that Midland has brought.
MR. PARKINS: Okay. You can
answer.
THE WITNESS: Can I answer it?
MR. O'BRIEN: I join in the
objection. It is outside the scope, but
I'm not going to instruct the witness
not to answer the question.
A I don't really know what they think
is there -- actually, can you just ask me the
question again.
Lascher
Q. This $13 million odd number is that
137
a number you had discussed with Innkeepers as
their view of the exposure of Apollo on the
guaranty we've been talking about?
MR. O'BRIEN: Well, you make it
sound like his numbers.
MR. PARKINS: No, I'm asking if
this is what Innkeepers --
MR. O'BRIEN: All my client said
was that he had seen a schedule like
this before.
Q. And my question is, did Innkeepers
discuss this number in the context of
developing the PSA as dealing with the Apollo
guaranty problem with this magnitude of
dollars?
MR. EHRLICH: Objection.
A I don't remember the number. We
looked at this schedule, we looked at a
schedule similar to this in agreeing to what
scope of work we would commit to having the
company do as long as there were funds
available post emergence from bankruptcy,
assuming that we own the company together.
35 (Pages 134 to 137)
APP-00440
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
138
Lascher 1
Q. That was in the context of these 2
negotiations for the PSA, correct? 3
A. It was in the context of our 4
negotiations over the sale of the equity to 5
Apollo. 6
Q. Bu you didn't just mention what the 7
company would do, you are going to end up 8
owning the company pursuant to the PSA if 9
it's implemented, right? 10
A. Yes, yes. 11
MR. EHRLICH: Objection to form. 12
A. But in terms of what their 13
perspective, on whether, you know, this was 14
the number that they were liable for under 15
the guaranty, no. 16
Q. I understand. I just want to know 17
if this was discussed between Innkeepers and 18
you. 19
MR. PARKINS: I pass the witness.
I think there is other counsel who have
questions here.
MR. O'BRIEN: Next.
EXAMINATION BY
MR. GOTTESMAN:
139
20
21
22
23
24
25
Lascher 1
Q. Good afternoon. My name is 2
Lawrence Gottesman of Bryan Cave. We 3
represent LNR Partners, LLC, which is the 4
special servicer group to securitization 5
trust. Just for the record one of those is 6
CSFB 2007-Cl which services two loans, one of 7
which relates to the Residence Inn Mission 8
Valley in San Diego and the other of which 9
relates to the Residence Inn Garden Grove. 10
The other trust is called ML-CFC 2006-4 and 11
that trust has three Innkeepers' loans, one 12
of which is the Doubletree Guest Suites in 13
Washington, D.C., another of which is a 14
Residence Inn Tyson's Corner, Vienna, 15
Virginia, and the third is the Homewood 16
Suites in San Antonio. 17
Are you familiar with any of those 18
loans as part of the planned negotiation and 19
plan support process that you described in 2 0
your prior testimony? 21
A Yes. 22
Q. Can you tell me what your 23
familiarity is? 2 4
A As part of our PSA, we -- you know, 2 5
Lascher
there's about $150 million of debt that would
remain on those assets and one other in the
restructured company.
140
Q. And were there discussions between
Lehman on the one hand and Innkeepers on the
other with respect to those hotels?
A About the debt on those hotels.
Q. And let me-- probably it's just
easier if we go back to what was marked
earlier today as Exhibit 5, which is the Plan
Support Agreement.
A Okay.
Q. And I would direct your attention
to, it's the one that's bound, to the term
sheet that's annexed to the Plan Support
Agreement. I guess page 2 of that, if you
could get there, please.
A Okay.
Q. And your answer a moment or two
ago, you were referring to what's called
other secured debt in the term sheet; is that
correct?
A Yes.
Q. And were there discussions between
Lascher
141
Lehman on the one hand and Innkeepers on the
other with respect to that other secured
debt?
A Yes.
Q. Can you tell me when the
discussions with respect to the other secured
debt started in the process that you
described earlier today?
A I mean they would have started at
our first meeting back in April, I think it
was the April22nd meeting. They were part
of the, you know, the organizational chart
that's attached to the Moelis presentation
and there was always an amount of debt that
was allocated to assets other than the fixed
rate and floating rate pools.
Q. What I would like to know is in
this process who allocated that debt? I mean
there was a certain amount outstanding; is
that correct?
A Yes.
Q. And what's that amount
approximately, if you know?
A I don't remember offhand.
36 (Pages 138 to 141)
APP-00441
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Lascher
Q. Okay. And there was a certain
amount allocated in terms of treatment; is
that correct?
A That's right.
142
Q. Do you know who initially made that
allocation?
A We started with the Moelis
presentation.
Q. Okay. And was there a bid and ask
1
2
3
4
5
6
7
8
9
10
in terms of what Innkeepers wanted as opposed 11
to what Lehman wanted with respect to that,
or was there immediate agreement as to how
that allocation would proceed or be made?
A I mean there wasn't immediate
agreement, because we wanted to do our own
investigation into, you know, what we thought
the value of the assets were.
Q. Well, let me state it different.
Was there a deal point for Lehman that there
be a particular number attached to that
bucket?
A To the bucket other than fixed and
floating rate pool assets, yes.
12
13
14
15
16
17
18
19
20
21
22
23
24
Q. And did Lehman ever make a proposal 2 5
143
Lascher 1
as to what that number should be? 2
A I mean we ended up with 3
$150 million. I don't remember -- I don't 4
remember-- 5
Q. I have the term sheet. I'm trying 6
to understand where you started as opposed to 7
where you ended up. 8
A I don't remember. We started with 9
the Moelis number and we ended up with what's 10
in the term sheet. 11
Q. Let me see ifl can try and get to 12
this a different way. 13
Was there negotiation, sort of the 14
normal back and forth with respect to the 15
number between Lehman and Innkeepers? 16
A It wasn't really a negotiation. I 17
mean we had a conversation about whether -- 18
we had conversations about whether we agreed 19
with their number or not. It wasn't -- I 2 0
mean, I don't know if I would characterize it 21
as negotiations. There were discussions 2 2
about it. 2 3
Q. Well, was there ever a point where 2 4
Lehman indicated that it was unwilling to 2 5
Lascher
proceed with the deal if it were a different
number?
MR. O'BRIEN: On this subject?
144
MR. GOTTESMAN: With respect to the
treatment of the other --
MR. O'BRIEN: Yes.
MR. GOTTESMAN: --what is called
the other secured debt in the term
sheet.
MR. O'BRIEN: Exactly.
A I don't think we were ever that far
apart on what the number should be, but the
interim discussions I really don't remember
specifically.
Q. Did Lehman have an internal
analysis as to what number it would accept as
part of this process in order to go forward
with the transaction contemplated by the plan
term sheet and the Plan Support Agreement?
A I mean it was part of what we -- it
was part of what Lazard was engaged to help
us with.
Q. Let me state it differently.
The basic economic deal from
Lascher
Lehman's perspective is that it was willing
to convert its debt to equity; is that
correct?
A Yes.
Q. And was it a condition of that that
the other debt of the company somehow be
addressed?
A Yes.
Q. Okay. Who, who stated at the
outset as to what that treatment had to be?
A Well, if you go back to the Moelis
presentation, you can see what's proposed in
terms of-- and then we had discussion about
it. I mean I don't -- we had discussions
145
about the debt and where we thought the
outstanding debt should be when the company
emerged from bankruptcy.
Q. Let me state it differently. If
the debt were reinstated, was Lehman willing
to proceed with the Plan Support Agreement?
A Reinstated in full you're saying?
Q. Correct.
A I mean the Plan Support Agreement
says $150 million of debt, that those are the
37 (Pages 142 to 145)
APP-00442
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
146
Lascher 1
terms under which we're willing to proceed. 2
Q. No, I understand. I asked the 3
question in terms of what Lehman's goal was 4
in the negotiations, which went on for some 5
period of time, right? 6
A. Right. 7
Q. Was Lehman willing to live with an 8
outcome in which that debt was reinstated? 9
A. And when you say reinstated, you 10
~ m ~ ~ ? 11
Q. Correct. Unimpaired. 12
A. No, that's why we have $150 million 13
as where we want to see the debt on the other 14
asset. 15
Q. So Lehman's position as part of the 16
negotiation was that in order for it to 17
convert its debt to equity it needed to reach 18
agreement or at least dictate the terms of 19
how other creditors would be treated in the 2 0
context of an overall reorganization; is that 21
correct? 22
MR. O'BRIEN: Object to the form. 2 3
A. No -- I mean we had a discussion 2 4
with our borrower and this is where we agreed 2 5
147
Lascher 1
would be an appropriate debt level on those 2
assets. 3
Q. Does Lehman have claims against the 4
borrowers with respect to the other secured 5
debt? 6
A. No. 7
Q. So in the context of Lehman 8
deciding its own treatment or negotiating its 9
own treatment, more accurately, there were 1 0
discussions as a condition to that as to how 11
other creditors would be treated; is that 12
correct? 13
A. I mean that's what's laid out in 14
the PSA, right? 15
Q. I understand. I'm asking about the 16
discussions as opposed to what's in the 17
document itself. 18
A. I mean, yeah, we would never -- it 19
would have never gotten into the document if 2 0
we didn't have a discussion about it. 21
Q. Was Lehman willing to simply do a 2 2
deal where it converted its debt to equity 2 3
and then left the company off to figure out 2 4
how to deal with its other issues? 25
Lascher
A. I wouldn't invest in a company
without being comfortable with the capital
structure of the company.
148
Q. And Lehman viewed the conversion of
its existing debt to equity as an investment?
A. I mean as part of our workout, we
would be an owner of this company.
Q. Did you have any discussions with
any of the other, with any of the debtor
holders of the unsecured debt as part of
these discussions?
A. Like who?
Q. Any of the securitization of or the
services with respect to that.
A. With which, for which loans?
Q. With respect to what's called the
other secured debt in the term sheet.
A. Well, you're the servicer for--
your client is a servicer for all of those
loans except for one; is that right? I'm
just trying to figure out who you're asking
me ifi talked to.
Q. What I'm trying to find out, during
the process that you described, was Lehman a
149
Lascher
party to any discussions with anyone other
than Innkeepers and Apollo as to the
transactions that are ultimately memorialized
in the Plan Support Agreement and in the term
sheet annexed to that?
A. We had conversations with Marriott
and we had conversations with -- we had a
conversation or two with Trimont.
Q. Anyone else?
A. I mean who else? I don't know who
else there is.
Q. Did you have a conversation with
any of the special servicers for the other
secured debt?
A. I don't remember having
conversations.
Q. Okay.
MR. GOTTESMAN: I have no further
questions.
MR. CRISP: Can we take a
two-minute break so I can move down
there a little closer?
MR. O'BRIEN: Sure.
(A brief recess was taken.)
38 (Pages 146 to 149)
APP-00443
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
150
Lascher 1
EXAMINATION BY 2
MR. CRISP: 3
Q. Mr. Lascher, my name is Mike Crisp. 4
I'm with the firm of Kilpatrick Stockton and 5
we represent Trimont Real Estate Advisors, 6
which is a special servicer on the floating 7
rate mezz loan and also on the Anaheim mezz 8
loan. Are you familiar with those two loans 9
generally? 10
A Yes. 11
Q. And I remind you, you are still 12
under oath even though the interrogator has 13
changed. 14
A Okay. 15
Q. When did you first get involved 16
with the workout of the Innkeepers debt, 17
Lehman's Innkeepers debt? 18
A The workout that's going on right 19
=wm- 20
Q. Right. 21
A I mean we started having detailed 2 2
conversations about it in April of this year. 2 3
Q. When was the default on the Lehman 2 4
loan by Innkeepers? 2 5
151
L M c ~ r 1
A I think they officially went into 2
default, I can't remember the exact date, but 3
it was -- there was a default if a certain 4
number of days had passed after they lost a 5
flas 6
Q. Was it a default that led to your 7
involvement? 8
A No, I had been involved for quite 9
some time. 0
Q. Did Innkeepers at any point stop 1
paying on the Lehman debt? 2
Q. When did you learn from Innkeepers 4
that the company was going to be unable to 5
continue the services debt? 6
A Its debts generally you're saying? 7
Q. Uh-huh. 8
A In April. 9
Q. That's what we referred to earlier 2 0
as the prior meeting? 21
A Yes. 22
Q. Which was the meeting a week or 2 3
10 days prior to the April22nd meeting? 2 4
A Yes. 25
152
Lascher
Q. Okay. And when you went to that
meeting, was it your view that -- let me back
up one step.
The Lehman loan is an asset that
Lehman, is it Lehman-ALI that holds that
asset or is it some other Lehman entity?
A I think Lehman-ALI is the named
lender on it. There's -- I think Lehman
commercial paper has the economic interest in
the loan but Lehman-ALI is the lender of
record.
Q. Okay. And when you went to the
prior meeting, was it your view that the
Lehman loan was fully secured?
A When I went to the prior meeting
did I think that that senior -- the senior
debt was fully secured?
Q. Right.
A No.
Q. No, you did not think that?
A No, I did not think that.
Q. Okay. Has any Lehman entity,
either ALI or Lehman commercial paper, ever
taken any impairment or reserve against loan
Lascher
losses for the loan to Innkeepers?
A. I mean we don't, because we're
bankrupt we don't hold reserves against
positions. The last time we did a valuation
was over 6 months ago and I can't remember
offhand what the -- what we thought the
current value of the assets were.
Q. But the answer is as of today,
153
either because of bankruptcy or any other
reason, there has been no impairment or loan
loss reserve against that asset?
A There is no reserve against the
asset.
Q. Has there been any impairment of
the asset in any other sense from an internal
accounting standpoint to any Lehman entity,
to your knowledge.
A I'm not sure I understand what you
mean.
Q. Well, you've testified about there
not being a loan loss on the asset.
A You mean that we didn't -- I didn't
think they were fully secured.
Q. And my question is internally by
39 (Pages 150 to 153)
APP-00444
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
120
121
122
P3
P4
P5
154 156
Lascher 1 Lascher
any other mechanism, have you indicated there 2 suites in Anaheim, California. Are you
is an impairment of that asset? 3 familiar with that loan?
A I don't know. 4 A Yes.
Q. Let's talk for a minute about 5 Q. And then there's also a
the-- the original face amount of the Lehman 6 $21.3 million junior mezzanine loan on the
loan was $250 million? 7 same property. Are you familiar with that?
A 238 million. 8 A Yes.
Q. That that was the original? 9 Q. And what is the treatment, we'll
A Oh, no. 250, you're right, and 10 call that the Anaheim mezzanine loan, if
there were some paydowns with asset sales. 11 that's okay with you?
Q. Is 238 roughly the current 12 A Okay.
outstanding balance on the loan? 13 Q. What, under the PSA in the term
A 220.2. 14 sheet, is the treatment of the Anaheim mezz
Q. And that loan is secured by the 20 15 loan?
hotels that are in that pool? 16 A There's $150 million of debt
A Yes. 17 available for seven assets and so however
Q. Now, I don't want to ask you what 18 that plays out. I think there is something
the Lazard analysis was, but was a valuation 19 that's contradictory in the term sheet that
of those 20 hotels part of what Lazard did 20 says it would be wiped out but from our
for Lehman? 21 perspective whatever, whatever happens with
A Yes. 22 that -- the $150 million is available for the
Q. And then you understand there's a 23 seven assets.
borrower on a junior mezzanine loan where the 24 Q. So sitting here today, your view is
collateral is the equity interest in the 20 25 that the Anaheim mezzanine loan would be not
155 157
Lascher
1 Lascher
entities that own the 20 properties that
2 treated the way the mezzanine loans are
secured the Lehman loan?
3 indicated to be in the PSA in the term sheet
A Yes. 4 but it would be moved over into the $150
Q. And do you have an understanding
5 million available to fund the secured loans
about the treatment --let's just call that
6 on not just the six hotels for which LNR is
the floating rate mezz, if that's okay with
7 the servicer but also for the Anaheim
you?
8 property?
A That's fine. 9 A That could be.
Q. Do you have an understanding about
10 Q. Is that your understanding today?
what the treatment is of the floating rate
11 A I mean that's my view. I don't--
mezz under the PSA in the term sheet?
12 I'm not sure that that's entirely, that's
A Yeah, they would get wiped out.
13 accurately reflected in the PSA
Q. And is Lehman supportive of that
14 Q. There's a disconnect between the
treatment?
15 PSA and what you currently understand today;
A Yes. 16 is that correct?
Q. Why?
17 A Yes.
A Because we don't think there is any 18 Q. Has Lehman undertaken any efforts
value in the position.
19 to test the market's appetite for equity in
Q. Based on what?
20 the post reorganization company?
A Based on our -- the work that we 21 A No.
did or that Lazard did to understand the
22 Q. Is it Lehman's intention post
value of the assets.
23 reorganization to at some point in the future
Q. Let's talk about the Anaheim one.
24 market its 50 percent of the-- of the
There's a $13.7 million loan on the Hilton
25 distribution equity that it's retaining?
40 (Pages 154 to 157)
APP-00445
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
158
Lascher 1
A. Not in the near term. 2
Q. Well, there's a provision in the 3
term sheet, isn't there, that indicates that 4
Lehman and AIC within 3 years would undertake 5
to retain the services of a banker to market 6
and sell the stock in Innkeepers, sell the 7
company? 8
A. There's something to that effect in 9
there, yes. 110
Q. Other than the reorganization Ill
transaction that's reflected in the PSA in 112
the term sheet with Innkeepers, and the 113
various iterations going back of the term 114
sheets that went back and forth, did Lehman 115
ever consider any other form of restructuring 116
other than the general scope, general 117
character of the transaction that's reflected 118
in those documents? 119
A. I mean we -- another restructuring 12 0
with -- with the company or the borrower 121
you're saying? 12 2
Q. Yes, something other than that a 12 3
debt for equity swap and the general 12 4
structure that we see pretty much from mid 12 5
Lascher
April through the documents that were filed
with the court.
A. We weren't--
MR. O'BRIEN: Object to the form.
A. We weren't willing to enter into
another restructuring. I mean we would have
taken the assets back but we weren't -- we
didn't want to restructure the loan.
Q. Was there ever any discussion
between you and Innkeepers about simply
modifying the terms of the Lehman loan?
A. Isn't that the same --
Q. In other words, push out the
159
1
2
3
4
5
6
7
8
9
10
11
12
13
14
maturity, reduce the interest rate, was there 15
any discussion between Lehman and Innkeepers 16
about that in April of 2010? 17
A. Previously, there were other
discussions with Innkeepers about that.
Q. Prior to April2010?
A. Yeah.
18
119
120
121
Q. And tell me generally about those 12 2
discussions. 12 3
A. We talked about, you know, we were
asked if we would restructure the debt
124
125
Lascher
perhaps, you know, forgive some of the
principal balance in exchange for some piece
of equity in the company but we never got to
terms that we were comfortable with.
MR. CRISP: That's all I've got.
Thank you, Mr. Lascher.
MR. O'BRIEN: Anyone?
MR. GOULD: I have just a couple of
questions.
EXAMINATION BY
MR. GOULD:
160
Q. Mr. Lascher, I'm Jeff Gould with
Kirkland & Ellis on behalf of the debtors. I
just wanted to circle back to a couple points
you were asked about earlier.
A. Okay.
Q. This morning you were asked if you
had knowledge of whether Innkeepers was
considering any other plan other than that
anticipated by the PSA, and if I got my notes
right, your answer was that you never thought
they would do otherwise?
A. Right.
Q. Now, I just want to go back and ask
161
Lascher
you about that particular question, Your
knowledge of whether the debtor, whether
Innkeepers was considering any other plans.
So do you have any knowledge one way or
another?
A. No.
MR. O'BRIEN: Why don't you listen
to that?
Were you-- Mr. Gould, did you
complete your question? I just wanted
to make sure.
MR. GOULD: I did, but for the sake
of the record, let's clarify.
Q. Do you have knowledge one way or
the other whether Innkeepers was considering
any other plan other than that anticipated by
thePSA?
A. No.
Q. On another point I thought you said
a bit earlier this afternoon that Apollo --
that AIC would be getting equity pursuant to
the PSA and I just want to clarify that point
as well.
The PSA does not provide for AIC to
41 (Pages 158 to 161)
APP-00446
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
0
1
2
3
4
5
6
7
8
9
17o
171
172
173
174
175
162 164
Lascher
1 INSTRUCTIONS TO WITNESS
get equity, does it?
2
A That's correct. It's a -- 3 Please read your deposition over carefully
Q. It's a separate agreement between
4 and make any necessary corrections. You should state
Lehman-ALI and AIC by which Apollo would
5 the reason in the appropriate space on the errata
purchase any equity distribution in the event
6 sheet for any corrections that are made.
such a plan occurs; is that correct?
7 After doing so, please sign the errata sheet
A That's correct. 8 and date it.
MR. GOULD: Thank you. That's all. 9 You are signing same subject to the changes
MR. O'BRIEN: I think we're done, 10 you have noted on the errata sheet, which will be
Jennifer.
11 attached to your deposition.
(Time noted: 3:43p.m.)
12 It is imperative that you return the original
13 errata sheet to the deposing attorney within thirty
14 (30) days of receipt of the deposition transcript by
15 you. In you fail to do so, the deposition transcript
16 may be deemed to be accurate and may be used in court.
17
18
19
20
21
22
23
24
25
163 165
1 ERRATA
JURAT
2
3
I, MICHAEL LASCHER, the witness
4
herein, the foregoing testimony of the
5 I wish to make the following changes,
pages of this deposition, do hereby
6 for the following reasons:
certifY it to be a true and correct
7
transcript, subject to the corrections,
8 PAGE LINE
if any, shown on the attached page.
9 CHANGE:
--
10 REASON:
MICHAEL LASCHER
11 CHANGE:
--
12 REASON:
Subscribed and sworn to before me
13 CHANGE:
--
this _day of '2010.
14 REASON:
15 CHANGE:
--
16 REASON:
NOTARY PUBLIC
17 CHANGE:
--
18 REASON:
19 CHANGE:
--
20 REASON:
21
22
23 WITNESS' SIGNATURE DATE
24
25
42 (Pages 162 to 165)
APP-00447
166
1
2 CERTIFICATE
3
STATE OF NEW YORK )
4 : SS.
COUNTY OF NEW YORK )
5
6 I, JENNIFER OCAMPO-GUZMAN, a
7 Shorthand Reporter and Notary Public within
8 and for the State of New York, do hereby
9 certify:
10 That MICHAEL LASCHER, the witness
11 whose deposition is hereinbefore set forth,
12 was duly sworn and that such deposition is a
13 true record of the testimony of such witness.
14 I further certify that I am not
15 related to any of the parties to this action
16 by blood or marriage, and that I am in no way
17 interested in the outcome of this matter.
18 IN WITNESS WHEREOF, I have hereunto
19 set my hand this 20th day of August 2010.
20
21
22 JENNIFER OCAMPO-GUZMAN
23
24
25
1
2
3
4
INDEX
WITNESS
MICHAEL LA SCHER
BY MR PARKINS
BY MR GOTTESMAN
BYMR CRISP
BYMR GOULD
EXHIBITS
PAGE
5
138
150
160
DESCRIPTION PAGE
10
11
12
13
Exhibit Lascher-1. Amended Notice of
Deposition of Corporate Representative
of Lehman ALI. Inc. and subpoena
duces tecum ................................ 8
Exhibit Lascher-2. E-mails. Bates Nos.
LEH-ALI 005298 and LEH-ALI 005299 ......... 11
Exhibit Lascher-3. Required Capital
14 Improvements Guaranty ..................... 27
15 Exhibit Lascher -4. Handwritten notes.
16 LEH-ALI00473L ......................... 28
17 Exhibit Lascher-5. Plan Support
Agreement... ............................. .48
18
Exhibit Lascher-6. E-mails. Bates No.
19 LEH-ALI 005676 ............................ 50
2 0 Exhibit Lascher-7. Document entitled.
"Project Tavern, Lehman Discussion
21 Materials. April22. 2010. by Moelis."
Bates Nos. INN_ MID00003533 through
22 INN MID00003548 ............................ 64
2 3 Exhibit Lascher-8. Illustrative Terms of
Proposed Structuring. May 25. 2010.
2 4 Bates Nos. LEH-ALI 000001 through
LEH-ALI 000004 ............................ 79
25
167
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
(Continued):
EXHIBITS
DESCRIPTION PAGE
Exhibit Lascher-9, Docwnent entitled,
"Illustrative Terms of Proposed
Restructuring, Jrme 2, 1010," Bates Nos.
LEH-ALI 000014through LEH-ALI 000022 ..... 80
Exhibit Lascher-1 0, Doclllllent entitled,
LEH-ALI 000023 through LEH-ALI 000031 ..... 94
Exhibit Lascher-11, Doclllllent entitled,
LEH-ALI 000032through LEH-ALI 000040 ..... 97
LEH-ALI 000041throughLEH-ALI 000050 .... 101
Exhibit Lascher-13. E-mail dated 6117110
with attachment, "Illustrative Terms of
Proposed Restructuring, Jrme 17, 101 0,"
LEH-ALI 004803 ............................ 1 06
LEH-ALI 000230 through LEH-ALI 000241 .... 115
Exhibit Lascher-15. Dechert Draft 6/2911 0.
Term Sheet Alternative A, Illustrative
Terms of Proposed Restructuring, Jrme 29,
2010. Bates Nos. LEH-ALI 000254through
LEH-ALI 000264 ............................ 122
Exhibit Lascher-16. E-mail dated 717110
with attachinent. Bates Nos. AIC 00000127
throughAIC 00000144 ...................... 127
(Continued):
EXHIBITS
DESCRIPTION PAGE
Exhibit Lascher-17, E-mail dated 7117110
with attachment, Bates Nos.
168
169
INN MID00003311 and INN MID00003312 ....... 134
DOCUMENT REQUEST
Page Line
44 22
43 (Pages 166 to 169)
APP-00448
170
A
3:17 AIC 12:21,22 2:16 3:9,15,21 18:14,19,21
ability 51:12
affiliate 5: 12 15:13 16:12,24 4:5 19:16 20:13,23
58:18 60:10
16:24 16:25 18:3,4 amount20:15 21:2,7 24:5,12
78:17 120:21
afternoon 7:8 52:22 60:23 66:24 109:8,19 25:3,12,14,21
able 24:12 54:5
139:2 161:21 61:24 62:13 110:3 141:15 26:9,13,25
accept 76:18
ago 56:14 58:9 63:3,9 91:3,18 141:20,23 35:1136:22
144:17
58:17 140:21 91:23 92:2,11 142:3 154:6 37:4 38:3,17
acceptable 8:9
153:6 92:13,14 101:9 amounts 100:14 38:23 62:4,19
10:4 117:21
agree23:12 104:3,7,24 Amy3:18 6:20 67:20 68:8
accepting 36:5,9
35:11 36:22 109:5,19 110:2 Anaheim 150:8 69:7,15,19
123:19
48:18 95:15 112:23 113:3 155:24 156:2 71:17,23 72:6
accounted 7 4:5
99:15 100:9 113:13,19 156:10,14,25 72:10 78:2
accounting
105:22 129:15 114:7 118:16 157:7 79:15 84:7
153:17
agreed 54: 10 119:9 120:7,12 analysis 94:22 85:3,9,20 86:8
accurate 17: 12
56:24 143:19 121:6,21 122:3 94:25 95:5,11 86:10,13,14,17
17:16 23:20
146:25 125:6 127:10 116:22 117:4 86:19 87:23
77:23 164:16
agreed-upon 127:11,17 117:10 135:7 89:8,12,24,25
accurately
63:21 129:15 130:14 144:17 154:19 90:6,18 91:11
147:10 157:13
agreeing 137:21 131:17 132:2,8 Andrew3:16 95:14 96:4,8
acknowledge
agreement 10:13 158:5 161:22 6:22 97:4 98:25
76:18
12:19 24:12 161:25 162:5 and/or 31:19 100:21 103:11
acquiescence
40:2 48:5,14 168:23,24 113:4 103:15 105:5
63:24
50:5 54:25 AIC's 18:8 110:8 annexed 140: 16 106:14 107:15
acquire 109:8
55:5,13 56:15 all :5 149:6 109:7,14,23
acquirer 129:7
57:9 58:4,10 Alan 127:23 answer 15:21 110:14,20,24
acquisition
62:18 63:25 albeit 66:12 36:3 76:23 111:25 112:6
18:15 133:24
74:11 78:21,22 ALI 3:21 7:2 110:22 134:6 113:25 114:18
action 166:15
79:9,13,16,18 8:23 9:5,8,14 136:17,18,22 114:22 120:23
actual70:19
79:19 91:4,18 9:17,24 10:8 140:20 153:9 121:14,20
add 121:9
92:11,15 11:18 152:24 160:22 123:23 124:25
added 94:21
100:22 101:11 167:10 answered 50:12 125:5,14,18
addition 19:7
104:4,7,9,13 allocated 141:16 60:17 126:3,6,8,9, 10
117:18
104:14,22,24 141:19 142:3 answering 7:25 126:16,17,25
additional55:23
105:4,5 113:18 allocation 142:7 62:15 104:19 127:6,17 128:2
59:18,19 110:2
121:16 125:5 142:14 105:3 128:25 129:8
120:7
125:13 129:24 alternative answers 7: 15 129:20 130:3
addressed 145:8
130:2,7 131:19 91:22,25 92:13 anticipated 131:17 132:18
adds 37:24
132:8 133:14 112:10,12 70:16 115:6 132:22,24
adieterich@p ...
140:12,17 122:17 123:6 160:21 161:17 133:5,6,13,16
3:18
142:13,16 131:2 168:20 Antonio 139:17 133:19,24
advance 78: 17
144:20 145:21 Alvarez 21 : 19 anybody 88:11 135:12 137:4
adverse 114: 17
145:24 146:19 21:22,25 22:10 105:18 106:13 137:15 138:6
114:23
149:5 162:4 22:11,17 67:13 127:3,5 149:3 161:21
advisement
167:17 67:14 apart 144:13 162:5
44:25 45:11
agreements 74:3 Amended 8:21 Apollo3:14 6:21 Apollo's 120:16
advisors 3 :4
78:18 79:20 9:4 167:9 6:23 10:25 136:9
47:13 150:6
131:24 amending 52:20 12:21,22 14:5 Appaloosa 4:9
aehrlich@pau ...
ahead 54:2 Americas 1:11 14:24 15:4,18 6:15 64:6
APP-00449
171
appear 73:4 57:15 74:18 3:14,214:4,9 86:5,10 89:21 167:12,15,18
96:17 79:3 100:24 4:14 9:12 89:25 90:11 167:21,24
appearances 101:5 105:20 40:12 92:7,16,17,21 168:5,8,10,13
5:17 119:21 132:11 attorney-client 93:14 96:4 168:16,18,21
appearing 8: 13 133:4 137:8 75:23 77:5 100:6 103:11 168:23 169:5
appears 49:8 147:16 148:22 auction 84:20,22 103:15 104:13 becoming
59:6 83:15 asset 146:15 89:14,15 92:5 105:8 125:19 131:16
appetite 157:19 152:5,7 153:12 97:7,8,9 105:8 125:20 beginning 31:6,8
applicable 130:3 153:14,16,22 auctioning 120:5 backup 92:7 72:10
130:15 154:3,11 August 1:12 balance 154:13 behalf5:25 6:4,6
apply 14:8 assets 74:2,6,6 166:19 160:3 6:18,21,23
appreciate 77:9 114:20 140:3 authority 10: 18 banker 75:6 13:1121:4
110:22 141:16 142:18 10:24 21:13 158:6 49:13 88:10
appropriate 142:24 147:3 authorize 23:5 banking 114:24 99:22 Ill :9
147:2 164:5 153:8 155:23 87:11 99:24 bankrupt 153:4 160:14
approval22: 18 156:17,23 authorized bankruptcy 1:2 Beilinson 34:16
approved 10:18 159:8 14:11 87:6 10:17,17 14:20 35:5,9,14,20
10:24 associate 33:11 93:3 99:21 30:8 31:21,22 35:22 36:18
approximately assume 52:11 authorizing 32:3 61:8 37:10 40:5
91:8 108:2 92:20,25 124:2 78:24 79:11 41:18,24 42:13
141:24 105:13 available 24: 17 91:9 106:18 42:17 49:9
Aprill2: 19 26:5 assumes 82:19 109:14 137:24 108:3,6 137:24 51:7 52:3 53:4
47:7,20 64:13 92:24 156:17,22 145:18 153:10 53:1854:7
65:2,9 66:6 assuming 53:25 157:5 based34:18 57:17,22 59:25
69:18,23 70:4 137:25 Avenue 1:11 36:19 37:11 60:6 61:4
70:18,22 71:5 assumption 2:16,21 3:9,15 83:293:19 68:15 69:25
71:7 74:12 98:12 3:21 4:5,10 135:7 155:20 70:18 71:15
77:14 114:8 assumptions aware 18:15 155:21 88:9,11 90:15
141:11,12 73:24 22:23 basic 144:25 99:6,13 Ill :9
150:23 151:19 assured 71 :4 basically 24:6 111:21 124:8
151:24 159:2 attached 132:15
B
31:17 51:21,23 128:2 135:5,11
159:17,20 132:20,25
b56:6,9103:8
basis 44:11 Beilinson's 52:8
167:21 133:10 141:14
103:14,18
53:25 59:22 60:20
area 22:2 29:24 142:21 163:9
167:7 168:2
Bates 11:12,17 believe 10:16
31:20 83:14 164:11
169:2
28:23 29:8 19:20 29:22
argue 40:12 attachment
back 13:20 28:8
33:14 50:19 33:754:12
articulated 45:3 106:25 127:10
36:21 52:5
51:2 64:14,19 71:13 87:16
artificial42:3,5 134:15 168:15
56:20 58:16
65:8 79:24 99:4 110:17
42:6,7,9 168:23 169:5
63:1665:7
80:5,21 81:2 111:24 131:6
asked 16:15 attachments
68:14 98:2
94:7,12 97:14 believes 57: 16
50:12 60:17 48:19
140:10 141:11
97: 19 1 0 1 : 16 benefit 108:20
120:24 146:3 attempt 7:23
143:15 145:12
107:3,10 117:24 120:22
159:25 160:16 attention 140: 14
152:3 158:14
115:25 122:19 Benson4:13
160:18 attorney 29: 18
158:15 159:8
123:2 127:10 6:18
asking 7:6,8,25 29:21 31:22
160:15,25
127:17 128:12 best 36:13
16:16 17:18 164:13
backstop 84:6,7
129:2,18 beyond 136:12
26:12 27:25 attorneys 2:4,9
84:16,18 85:3
130:23 131:8 bfaerstein@wi ...
43:16,18 57:11 2:15,20 3:4,9
85:10,11,22
134:15,22 4:12
APP-00450
172
bid 142:10 107:13 66:17 75:5 31:25 49:19 client 14:6
bidder 97:6 Brian.greer@ ... 78:21 155:6 74:7 78:11 137:10 148:20
binding 91:2 3:25 156:10 90:21 141:20 close61:9
100:21 101:9 brief63:15 called 1:10 31:16 142:2 151:4 closed 31: 17
104:2 113:12 122:15 149:25 46:8 54:24 certainly 41 :23 39:5
121:14,23 Broadway 4: 14 58:9 139:11 56:13 76:16 closer 149:23
124:24 13 1 : 16 Brothers 5: 13 140:21 144:8 77:5 closing 119:10
bit 41:10 68:10 brought 13 6: 15 148:17 Certified 1: 13 130:10,15,19
100:12 161:21 Bryan 3:8 5:25 calls 57:18 certify 163:7 collapsed 41 :3
blank 110:4 139:3 cap 73:25 166:9,14 collateral44:6
122:4 Bu 138:7 capacity 31 :2 chain 21:17 51:13 53:25
blessed 13:13 bucket 142:22 capital4:14 6:19 change 110:14 54:6 56:16
blood 166:16 142:23 20:5 27:19 114:16,24 57:7,8 58:2,19
board 96:22 bullet 14:8 15:8 28:5,12 96:14 116:15 165:9 59:3,11 60:10
book 73:2 15:25 16:5,7 114:25 120:8 165:11,13,15 66:25 74:25
Boone 2:14,20 17:16,19,21,23 148:3 167:13 165:17,19 82:23 98:14,17
5:21 17:24 23:19 capitalization changed 27:11 98:18 102:5
borrower 91:14 104:6 35:12 36:23 118:18 150:14 108:13,19,20
146:25 154:24 108:15 113:16 102:10,19,24 changes 10:6 108:22 117:15
158:21 114:5,14 103:3,6,7 164:9 165:5 117:18,21,23
borrowers 14 7:5 115:10,12 care 119:15 Chapter 1:4 117:25 118:8,9
boss 21:18,23 122:3 125:4 carefully 164:3 78:10 154:25
bottom 19:6 130:19 131:23 carries 55:20 character column 136:3,4
51:556:21 bunch 135:15 case 1 : 5 1 0: 1 7 158:18 columns 73:20
88:20 101:2,8 business 76:7 41:3 45:10 characterize come 19:16
bound 140:15 81:16,23 63:22 64:7 143:21 24:12 25:4
box 109:13 114:21 78:24 79:11 charge 12:10 41:4111:10
112:22 113:9 businessperson 91:9 106:3 charged 75:12 comfortable
113:17 121:5 88:12,12 cases 13: 18, 19 chart 141 : 13 148:3 160:5
122:3 123:11 buy 84:19 30:8 Chicago 2: 11 coming25:3
131:10,22 119:23,24 cash 24:18 44:6 circle 160:15 27:23
bracket 82:23 120:2 51:12 53:24 circumstance comma42:5
bracketed 82:21 buying 68:8 54:5 56:16 13:17 command 21:17
brackets 83: 18 95:14 57:6,7,25 58:2 Claim 123:11 commencement
84:10,11 96:23 58:19 59:3,11 claiming 76:17 26:3
breach 45:16,23
c
60:10 73:23 77:4 commencing
51:13 55:10
c2:2 3:2 4:2 5:2
77:19 108:13 claims 123:18 1:12
59:13 62:20
5:2 56:6,9
108:18 109:8 147:4 comment 14:6
breached 57:2
166:2,2
117:15,18,20 clarification Comments
59:4
Cadwalader
117:23 118:7,9 64:3 116:7
break63:12
29:22 30:3,7
123:17 clarify 7:20 64:6 commercial22:2
122:6 149:22
30:13 41:9
Cave3:8 5:25 161:14,23 31:18 152:10
break-up 84:24
calendar 44: 16
139:3 class 36:6,9,14 152:24
85:4,21 86:5
44:17,18,19,20
caveats 14:7 123:17,19 commit 84: 19
89:25 92:6
44:23
cc 13:24 clear 10:8 23:4 137:22
96:4 103:11,16
California 156:2
cc'd 107:16 43:1076:3 commitment
Brian 3:24 4: 11
call10:14 12:21
center 65 :23 clearer 76:12 120:8
6:14,25 13:23
22:24 53:18
certain 13 : 18 clearly 93:7 Committee 4:4
APP-00451
173
6:10 131:14 145:6 contemplate convert 49:17 96:19 97:5
commonly 3 7: 14 147:11 103:18 126:9 145:3 146:18 98:15,16,18,19
company 18:20 conditions 90:22 contemplated converted 98:21,22
20:13,22 37:2 91:15 96:7 15:16 91:10,23 147:23 100:16,23
37:3 38:5 48:3 100:6,19 101:4 104:23 131:24 copied 14:16 101:12 102:6
49:19 50:3,10 101:7 102:13 144:19 18:19 103:12,13,16
56:14,24 59:3 102:20 103:22 contemplates copies 97:22 106:6 107:16
68:9,15,19 113:8,17 96:3 100:20 copy48:18 65:4 108:3,21,23
69:24 74:16 121:12 124:20 contemplating corner 43: 13 109:10,23
82:21 83:16,17 129:22,23 125:14 81:13,22 114:9 115:17
83:21 91:3,11 130:4,10,16 contemplation 139:15 115:18 116:24
92:18 94:23 conduct 83: 16 105:11,21 Corp 125:6 117:5 118:5,25
95:16 96:9 conducted 84:21 context 10:6,7 131:17 121:10,16,23
98:13 100:22 84:23 13:10 20:25 Corporate 8:22 124:18 126:17
1 0 1 : 1 0 1 04: 3 conducting 21:6 22:18 9:4 167:10 128:22 129:8
105:14,23,25 116:22 117:4 24:10 25:13 Corporation 129:12,20
111:9113:13 conference 45:3 30:17 32:4 3:14 6:24 11:2 130:21 131:19
114:18,22 76:10 36:9 38:10 86:19 125:15 138:3 140:23
115:7 118:12 Confidential 41:5,12 46:14 correct 10:14,19 141:21 142:4
121:15,21 81:887:2 46:20 120:20 11:2,3 14:20 145:4,23
124:24 129:16 94:16 137:14 138:2,4 14:25 17:6,14 146:12,22
131:18 137:23 confirmation 146:21 147:8 18: 1 7,22 21 : 14 147:13 157:16
137:25 138:8,9 129:14 continue 151:16 21:2123:15,23 162:3,7,8
140:4 145:7,17 confused 26:11 Continued 168:2 26:6 28:17 163:7
147:24 148:2,4 connection 169:2 29:19 30:4,5 corrections
148:8 151:15 51:14 57:3 continues 31:9 32:8,9 163:8 164:4,6
157:20 158:8 consent 17:4 102:12 33:18,20 35:5 correctly 55: 14
158:21 160:4 52:21 117:20 continuum 35:9 38:5,19 84:4 96:24
company's consequences 126:12,22 38:25 39:2,6 counsel8:5
106:4 108:18 95:11 contradictory 39:12 40:7,9 15:25 18:8
110:5 113:4 consider 120:7 156:19 40:19 41:16,17 19:3 22:9 45:6
117:22 118:8 158:16 contrary 54:4 41:19 42:2,22 61:19 63:23
136:8 considered contribution 46:17 47:2,18 69:14 77:3
compared 74:21 112:13 109:15,19 49:2,10,11 80:10,14 87:7
complete 48:18 considering 110:3,9 112:24 50:11 52:4 90:25 93:4
120:10,16 160:20 161:4 control62:9 53:10,16 54:19 100:2,19
161:11 161:16 cont'd 3:2 4:2 56:17 57:4 138:21
completed 94:25 consist 96:22 conversation 58:11,19 59:4 counsel's 7:19
117:10 consistent 44:6 61:6 73:22 59:14,18 61:11 counteroffer
completing consists 84: 10 112:6 143:18 61:19,20 63:6 119:6
94:22 consolidation 149:9,13 65:2 68:16,17 COUNTY 166:4
completion 40:21 conversations 69:15,16 71:24 couple 40:11
115:5 construct 105:6 12:16 70:13 72:9 75:8,14 160:9,15
concept 23:22 construed 37:24 88:14 143:19 81:23 82:10,23 court 1:2 7:14
concerning 22:5 38:15 149:7,8,17 84:4,24 86:6 10:17 11:4
condition 88:21 consummation 150:23 89:22 90:4,12 106:2 136:14
92:9 113:12 130:11 conversion 91:6,12 93:9 159:3 164:16
114:18 130:19 Contains 134:25 148:5 95:21 96:5,9 covenant 59:13
APP-00452
174
covenants 55:12 127:12 134:17 147:2,6,23 definitive 131 :24 Dieterich 3 : 18
55:23 59:18,19 151:3 164:8 148:6,11,18 132:12 6:20,20
cover 132:25 165:23 149:15 150:17 deflagging 74:8 different 8:16
133:10 dated 14:18 20:5 150:18 151:12 74:9 39:9,13 100:12
Craven 68:20 28:12 65:2 151:16 152:18 Dennis 68:20 111:17,22
71:16 98:6 99:14 156:16 158:24 71:16 88:15 112:12 142:19
created 118:4 101:23 106:24 159:25 depended 13: 17 143:13 144:2
creditors 4:4 107:25 110:13 debtor 76:8 93:8 depending 30:24 differently
6:10 113:5 110:23 127:9 93:8 148:10 deposed 7: 10 144:24 145:19
146:20 147:12 127:22 130:25 161:3 deposing 164: 13 diligence 7 5: 13
Crisp 3:6 6:11 131:25 134:14 debtors 1:6 2:4,9 deposition 1:9 115:5
6:11 149:21 168:14,23 6:4,7 10:12 5:16,18 8:16 DIP 23:24 24:18
150:3,4 160:6 169:4 12:14 21:2 8:22 9:4,11,25 44:5 117:19
167:5 dates 45:5 50:4 160:14 12:23 48:20 direct 90: 1 7
CSFB 139:7 day 1: 11 17:8, 10 Debtors-in-Po ... 75:5 77:8 140:14
current 153:8 52:11 61:7,9 2:4,10 163:6 164:3,11 directors 96:22
154:12 62:3 130:25 debts 151: 17 164:14,15 disconnect
currently 3 0: 19 163:14 166:19 Dechert 1: 10 166:11,12 157:14
30:20 157:15 days 14: 18 15:9 3:20 6:25 7:4 167:10 discovery 45:3
customary 19:10 48:10 13:2,12,23 describe 12:3 76:6 136:14
130:15,18 52:22 60:23 23:634:12 30:16 discretion 103 :2
61:24 66:15 68:23 80:11,14 described 115:4 123:16
D
91:8 108:2,5,8 81:782:2 130:12 139:20 discuss 59:25
D2:12 3:6 167:2
151:5,24 86:25 87:21 141:9 148:25 61:3 70:16
Dallas 2:21
164:14 94:15 98:6 description 48:2 79:21 123:18
Dan6:17
day-to-day 99:20 101:21 167:8 168:3 137:14
DANIEL4:16
22:22 30:25 107:13 116:11 169:3 discussed 13: 14
dark 114:4
DC2:5 116:15 122:16 Designation 22:9 24:7,10
122:3
deadline 115:15 123:5 127:24 101:21 24:11 66:11,23
dash 40:13,13
deal8:8 30:24 168:20 designees 121:7 67:2,7 69:20
date 8:25 11:14
32:2 33:12 decide 74:19 desire 59:2 77:15 78:8,20
15:10,11 16:2
39:11 52:20 deciding 147:9 78:21 79:9 79:19 91:23
17:15 19:10,14
76:15 100:3 decision 51 :9 120:16 93:9 137:3
20:14 23:13
142:20 144:2 declaration 11:7 detailed 77: 19 138:18
27:20 28:16,25
144:25 147:23 declined 76:13 150:22 discussing
47:9 48:15
147:25 deemed 123:14 determination 123:25 124:7,9
50:21 63:4
dealing 137:15 164:16 115:16,19 discussion 23:2
64:16 70:19
Deal/Investor default 150:24 determine 29:3 45:19
78:11 80:2,23
65:24 151:3,4,7 123:16 57:14 60:5
85:15 87:19
debt36:25 49:18 defined 49:23 determined 61 : 14' 1 7 64 :4
89:9 94:9
66:25 95:16,17 50:4 109:20 115:4 64:13 78:14
97:16 98:8
109:14,18,20 110:8 118:11 developing 84:24 85:20
99:9 101:18
140:2,8,22 118:13 137:15 90:6 97:25
103:3 107:5
141:4,8,15,19 defines 58:10 dfliman@kaso ... 110:24 116:4
Ill :3 112:25
144:9 145:3,7 definitely 71: 15 4:16 134:13 145:14
115:7 116:3
145:16,17,20 120:19 dial71: 13 146:24 147:21
120:18 121:18
145:25 146:9 definition dictate 146: 19 159:10,16
122:4,21 126:8
146:14,18 112:23 Diego 139:9 167:20
APP-00453
175
discussions 12:5 86:23 87:6,12 98:6,23 100:7 25:23 39:7 94:5 97:12
12:21 20:21 87:14 89:16 101:21 110:19 121:2 122:11 101:14,22
22:11,17,23 90:5,18,21,22 116:11 121:10 133:21 136:10 115:23 135:15
25:12,18,25 91:10,21 94:4 122:16 123:5 137:18 138:12 167:20 168:4,7
26:13,20,21,22 94:20 95:24 125:2 128:22 either 24:20 30:6 168:9,12,17
26:25 42:25 96:3,12 97:11 130:25 132:14 152:24 153:10 entity 152:7,23
46:2,6 47:22 98:24 100:4,18 168:20 Ellis 2:3,9 6:4,6 153:17
53:3,6,12 60:8 101:13,19,20 drafts 99:20 64:10 69:2 equal109:8
60:14 64:25 107:9,18,22,25 duces 8:24 9:6 160:14 110:3
68:4,7 69:18 108:11 109:16 167:11 Elmore2:22 equity 17:2 18:5
69:23 70:3 110:11,15 due 37:22 75:13 5:22 97:24 36:25 37:7
72:21 85:2,5,9 111:2,11114:3 115:5 embodied 56:25 38:4,19,24,25
86:2,8,13 114:4,12 duly 5:3 166:12 77:16 99:2 39:4,5 65:24
87:22 88:2,8 115:22 116:10 duty45:17,24 114:3 115:10 67:6 68:9
90:13 98:25 116:15,20 46:3 embodies 56:12 71:22 83:14,16
99:5 110:14 118:18 120:18 D.C 139:14 emerged 145: 18 83:19,20 84:8
111:8,14 121:4 122:22 emergence 84:8 89:5,8,20
120:15 127:3 123:10,21
E
137:24 89:21 92:20
132:23 133:4 124:14,23
E 2:2,2 3:2,2,24
emerging 106:18 93:15 95:15
133:19,23 125:21 127:20
4:2,2 5:2,2
emphasis 76:4 96:3,4 100:5,5
140:5,25 141:7 128:14,24
165:1 166:2,2
employed 5:10 100:13 102:9,9
143:22 144:14 130:25 131:5,8
167:2,7 168:2
employee 5:11 102:19,24
145:15 147:11 131:22 134:21
169:2
21:11 103:3,10,19
147:17 148:9 135:4,10,14,19
earlier 15: 16
employees 9:16 105:8,10
148:12 149:2 135:23 147:18
19:23 93:25
21:25 106:16 109:5,9
159:19,23 147:20 167:20
110:23 111:3
ended 53:21 109:15,19
disruption 168:4,7,9,12
113:18 127:21
89:14 143:3,8 110:3,8 112:16
114:23 168:17 169:7
127:22 130:21
143:10 112:23 113:2
distribute documentation
140:11 141:9
engaged 144:22 113:25 118:17
112:25 15:17
151:20 160:16
enter 10:18,25 119:17,23,24
distributed documents 9:13
161:21
22:18 48:4 121:5 123:17
123:22 9:19 24:22
early 40:6 85:6
79:13,16 159:6 124:16 125:8
distribution 25:6 26:8 29:7
86:15
entered 24:6 125:16,19
124:16 129:18 87:24 88:5
ease 9:23
78:23 129:16,19
157:25 162:6 127:16 128:8
easier 33:4
entering 12:18 131:10,11
DISTRICT 1 :2 158:19 159:2
140:10
enterprise 82:20 138:5 145:3
document 9:21 doing 24:20
economic 95: 19
98:12 102:4 146:18 147:23
11:17 19:2,24 51:23 89:14
144:25 152:10
enthusiasm 7:25 148:6 154:25
26:8 27:3,6,9 126:23 164:7
education 29:19
entire 39:11 157:19,25
28:4,16 48:23 dollar 20:15
effect 45:13
135:23 158:24 160:4
54:19,21 55:8 100:13
58:13 114:17
entirely 157:12 161:22 162:2,6
55:17 57:21 dollars 13 7: 17
158:9
entirety 13:3 errata 164:5,7
62:5 64:11,19 dots 52:23
effective 103:3
entities 41 :2 164:10,13
65:5 66:7,12 Doubletree
112:24 115:7
49:10 155:2 Especially 19:5
66:23 75:19 139:13
efforts 157:18
entitled 9:3 28:4 ESQ2:6,12,17
77:17 80:5,9 draft 81:8 86:25
Ehrlich 3: 16
55:22 64:12,22 2:22 3:6,11,16
80:16,18 81:2 87:21 90:20
6:22,22 8:11
65:20 72:17 3:18,23,24 4:6
81:6 82:12 94:15 96:7
13:6,16 25:8
77:7 80:19 4:11,16
APP-00454
176
essentially 31 :24 32:10 43:5 19:2 22:8,13 favor 36:15 110:19 112:9
49:18 48:13,17 50:17 22:14,24 23:5 fee 84:24 85:4,21 114:4 116:6
estate 3:4 22:2 50:19,23 54:13 51:6,11 52:5,6 86:5 90:2 92:6 117:17 122:2
22:21 30:2 56:21 58:23 52:8 53:4,15 92:18,22 93:14 123:4 127:20
31:18 41:9 59:21 64:11,18 53:19 54:7 96:4 103:11,16 129:3 134:25
114:24 150:6 65:7,12,15 56:20 57:7,17 fees 18:8 135:3,4 141:11
et 1:5 79:22 80:4,8 58:2,17,21 fiduciary 45: 17 150:16
event 53:13 80:18,25 81:19 60:6,11,20 45:20,23 46:3 Fitts 67:14
59:10,12 82:2,8,16 61:18 106:24 46:8,11,19 five4:14 6:19
118:11 162:6 83:12 86:20 107:13 127:9 Fifteenth 2:5 23:24 120:8
events 58:10 87:15,19 88:18 127:22,22,25 figure 14 7:24 five-minute
everybody 89:17 90:8 128:5,9 132:20 148:22 63:11
121:20 93:17 94:3,4 132:25 133:11 file78:9,16 fixed 110:6
ex 73:25 94:11 95:24 134:14 135:3,5 filed 8:15 108:4 141:16 142:23
exact 30:24 47:9 96:2 97:11,18 135:10,24 108:6 159:2 flag 74:4 151:6
73:21 151:3 98:3 101:13,20 168:14,23 filing 12:17 Fliman 4:16
exactly 36:11 106:24 107:7 169:4 14:19 27:13 6:17,17 97:21
48:9 85:14 107:12 112:15 e-mails 11:12 52:10 53:9,13 floating 82:22
144:11 112:19,22 50:19 51:3 53:16 61:8 98:14,17 102:5
examination 115:22 116:5 127:21 135:2 78:15,24 79:10 108:20 117:19
1:10 5:5 116:21 117:15 167:12,18 91:9 108:2 11 7:24 141 : 1 7
138:24 150:2 122:16,23 filings 106:3 142:24 150:7
160:11 123:22 127:9
F
financial 4 7: 13 155:7,11
examined 5:3 127:14 134:14
F 166:2
114:21,24 Floor 3:5
exchange 120:9 134:19 140:11
face 154:6
financing 23:24 flow 24:18 73:23
160:3 167:9,12,13,15
Facility 117:19
find 91:22 flows77:19
exchanged 15: 17 167:17,18,20
fact49:21 54:10
148:24 108:16
24:23 167:23 168:4,7
66:23 70:20,22
fine 56:10 155:9 fluid 23:2,2
exclusively 168:9,12,14,17
95:4 106:2
finish 62:14 76:4 focus 76:6
50:10 168:20,23
116:23 132:7
finished 104: 18 Foerster 4:3 6:9
execute 91 :4 169:4
Faerstein 4: 11
firm 5:20 13:3,7 following 14:5
96:9 100:22 exhibits 63 :20
6: 14' 14 64:9
13:7,8,12 74:7,9 103:2
1 0 1 : 1 0 1 04: 3 63:21 99:19
fail164:15
110:12,12 130:4,17 165:5
121:15 124:25 exist 132:7
failure 114:7
128:22,25 165:6
131:18 existing 148:6
118:12 122:3
150:5 follows 5 :4 113 :2
executed 18: 14 expanded 87:17
fairly61:8,9
first 7:9 12:13 follow-up 61:18
48:19 64:6 experience 30:6
falls 44:25 45:8
12:20 15:8 footnote 82:22
113:14 41:6
familiar 54: 18
28:10 39:20 82:25 93:18
execution 49:22 explain 73:3
54:20,21
41:20 43:4,23 94:19,20
129:23,25 119:3
139:18 150:9
44:5,7 45:22 116:23,24,25
131:23 exposure 20:23
156:3,7
46:13,18 52:22 117:3
exercised 62:10 45:16,23 136:9
familiarity
60:23 61:24 foreclosure
exhibit 8:20,21 137:4
139:24
66:6,10 73:18 30:23
9:3 11:11,12 extent57:10
far28:19 69:13
82:14 85:10,12 foregoing 163:5
11:16 13:20 76:17 133:17
76:25 99:20
85:13,20 88:18 forgive 160:2
22:13 27:18 e-mail 13:22
144:12
99:7,9 101:6 form 13:16
28:4,8,15,17 14:2,6,11,14
Farr4:9 6:15
102:2 104:19 16:10 25:9,24
28:20,22 29:5 14:18 15:6
fault 23:10
104:20 107:12 26:18 27:5
APP-00455
177
39:7 91:18 48:2 123:10,18 56:20 58:16 28:12,20 110:4 46:13
104:8,24 158:17,17,24 59:21 63:20 120:17,22 hearing 40:6
113:19 121:2 generally 17:9 65:7 68:14 130:20 135:6 held 1:10 86:17
125:6 133:21 23:2261:21 70:21 77:16,19 136:9 137:5,16 help 144:22
136:10 138:12 150:10 151:17 77:21 92:17 138:16 167:14 hereinbefore
146:23 158:16 159:22 97:23 99:15 guess 34:19 166:11
159:5 genesis 73:3 103:19 109:4 43:20 76:22 hereunto 166: 18
forma 65:21 getting 9:23 110:25 111:10 140:17 Hewes 67:24
66:5 96:14 25:21 26:11 Ill: 16,21 guessing 34:21 68:2,5 135:6
forth 55:13 91:5 63:19 85:21 119:4 121:3 Guest 139:13 135:10
143:15 158:15 89:25 161:22 122:2 126:24 highest 97:6
166:11 gift 123:17 129:6,7,17
H
highlight 112:7
forward 77: 16 give 32:15 49:3 130:6 131:11
H 5:2,2 167:7
Hilton 155:25
144:18 50:16 60:14 133:25 136:21
168:2 169:2
hired 95:7
four 19:6 52:22 106:21 134:12 138:8 150:19
half37:7 68:8
hold 105:9 153:4
96:25 gives 52:10 151:15 158:14
113:2,25 126:5
holder 83: 19
franchise 74:3 59:24 good 37:18
129:16 132:21
holders 148: 11
74:10 78:18 giving 51:12 119:7 122:9,13
hand 140:6
holds 152:6
frankly 44:25 59:25 139:2
141:2 166:19
Homewood
FRE 81:9 87:2 Glatt 13:24 gotten 14 7:20
handed 9:2
139:16
94:17 69:10,10 128:2 Gottesman 3: 11
11:15 28:3
honor 77:7
Freres 75:4 135:6 5:24,24 138:25
29:4 48:16
hook52:10
Frey21:10 33:2 Gleason 33:8,10 139:3 144:5,8
50:22 54:16
59:24 60:2
67:12 71:12 67:12 71:12 149:19 167:5
64:17 72:23
Hopefully 7:3
Frey's 33:6 go 5:16 8:7 10:9 Gould 2:6 6:3,3
80:3,24 94:10
hospitality 32:5
Friedman 4: 13 13:20 19:23 64:3,5 160:9
97: 1 7 1 0 1 : 19
hotel30:21,22
6:18 33:13 39:3,16 160:12,13
116:5 122:22
31:4
front 80:6 94:13 43:4 46:22 161:10,13
127:13 134:18
hotels 73: 19
fulll45:22 48:21 55:16 162:9 167:6
135:23
74:13,15,21
146:11 65:14 72:3 governance
handing 107:6
78:19 140:7,8
fully 152:15,18 75:12 81:12,19 96:21
handled 8:7
154:16,20
153:24 82:6,14 83:11 great 63:14
handout 47:16
157:6
fund 120:9 157:5 83:23 89:16,17 Greer 3:24 6:25
71:2,5
hour 122:13
funds 24:17 95:14 96:11 6:25 13:23
handwriting
137:23 102:8 114:4,11 107:13
32:21 43:16
I
further 5: 15 116:11 117:14 grounds 76:12
handwritten idea20:18 37:18
149:19 166:14 123:9 124:13 group22:21
28:22 32:12 40:22 66:24
future 157:23 128:8 130:9 31:16 33:11
167:15 ideas 74:14
131:7,11,21 127:24 139:5
happening 8:8 identical 1 00:7
G
140:10 144:18 Grove 139:10
24:16 identification
Galante 4:6 6:8
145:12 160:25 guaranty 18: 10
happens 8:2 8:25 11:14
6:8
goal49: 15,17,21 18:12,13,21
76:20 156:21 27:20 28:25
Gallagher 4:9
79:12,15 146:4 19:8,14,17
hard44:8 48:14 50:21
6:15
goes 40:11 20:2,5,9,14
Haynes 2:14,20 64:16 80:2,23
Garden 139:10
going7:6,7 9:24 23:21 24:5,14
5:21 94:9 97:16
GARRISON
12:22 18:19 25:3,22 26:2
header 116:16 1 0 1: 18 1 07: 5
3:13
36:21 38:3,18 26:22,23 27:2
hear 45:18 51:22 116:3 122:21
general 4 7:25
39:3 48:2 27:19 28:5,11
heard 41:15 127:12 134:17
APP-00456
178
identified 3 5: 14 included 54:21 159:11,16,19 4:9 6:16,24 166:22
69:14 83:14 83:5 93:20 160:19 161:4 11:2 75:6 jgould@kirkl...
identify 3 3 :3 includes 59:13 161:16 86:19 125:6,14 2:7
Illinois 2:11 including 13:25 INN MIDOOO ... 131:17 148:6 Jim 86:14
illustrative 118:12 130:16 134:16 169:5 investments job 1:15 30:16
65:20 66:5 incorporates INN MIDOOO ... 30:21,22 31:5 31:11
72:17 73:17,18 91:5 134:16 169:5 investor 71:24 join 136:19
74:16,22 79:22 indicated 143:25 INN MIDOOO ... 72:7,11 Joseph 13:24
80:19 83:6 154:2 157:3 64:14 167:21 involve 133:16 14:3 135:5
93:21 94:5 indicates 158:4 INN MIDOOO ... involved 11 :23 judge 45:2,9
97:12 98:7 individuals 64:15 167:22 12:4,13 18:13 74:19 76:3,10
101:14,22 135:12 input 90:17 25:11,17,25 77:11
106:25 115:23 informative instances 31 :25 26:15,17,20 judgment 76:8
122:18 123:6 68:12 instruct 16:4 30:7,10,25 July 52:2,3 53:7
167:23 168:5,7 initially 96:22 136:21 47:21 55:3 53:10 58:17
168:10,12,15 142:6 instruction 150:16 151:9 108:4 131:25
168:18,20 initials 34:23 76:22 93:11,12 involvement 132:6
imagine 34:5 128:21 INSTRUCT!... 12:3 151:8 June 20:6 28:13
116:14 125:12 Inn 139:8,10,15 164:1 involves 103: 10 44:12 80:20
immediate Innkeepers 1:5 integrated 27:2 103:14 87:20,20 94:6
142:13,15 10:11 12:17 intended 71:23 in-house 31 :22 97:13 98:8,23
immediately 14:19,24 15:3 72:7 69:7,14 99:14 101:15
118:10 15:10 20:3 intending irrelevant 101:23 107:2
impaired 36:5,8 21:7 26:16 106:14 125:25 119:18 107:25 110:23
123:19 33:17 34:14,17 intention 63:8 issuance 83 :21 110:24 Ill :4
impairment 34:22 35:2 84:20 89:7 issue 18:12 115:24 117:10
42:8,9 152:25 43:7,23 44:14 93:13 157:22 42:23 45:16 117:12 121:19
153:11,15 45:16,23 46:3 interest 15 2: 10 46:19 52:24 121:19 122:19
154:3 46:4,7 47:4,7 154:25 159:15 61:2,25 76:16 123:7 126:13
impediment 47:13,17,22,23 interested 78:8 126:19 168:5,8
40:3 54:10 61:8,10 166:17 issues 7:17 14:4 168:10,13,15
imperative 64:19 71:14 interim 53:25 123:19 147:25 168:18,21
164:12 72:4,22 73:13 54:5 144:14 item 38:10 junior 33:10
implemented 78:4,10,21 interject 8:5 items 35:8 88:15 154:24 156:6
138:10 79:8,13 88:3,8 internal 144: 16 iterations 24:22 Justin 67:24
important 50:2 88:10 108:3,4 153:16 158:14 71:18
50:3 108:5 112:5,25 internally iterative 95:18
improper 123:23 129:19 153:25
K
136:12,13 131:3 133:14 interpretation
J
Kasowitz 4: 13
improvement 134:22 135:16 35:19
J3:16,23 163:2 6:17
23:25 120:9 137:3,9,13 interrogator
Jeff6:3,5 67:14 keep 44:18
improvements 138:18 139:12 150:13
160:13 Kevin 3:23 7:4
20:5 27:19 140:6 141:2 introduction
JEFFREY2:6 kevin.obrien ...
28:5,12 167:14 142:11 143:16 101:6
2:12 3:23
inappropriate 149:3 150:17 invest 148:2
jeffrey. pawlitz ... Kilpatrick 3:3
57:12 150:18,25 investigation
2:12 6:12 150:5
inclined 52:9 151:11,14 142:17
Jennifer 1:12 kind 61:5 70:24
54:8 60:12,16 153:2 158:7,13 investment 3: 14
162:11 166:6 Kirkland 2:3,9
APP-00457
179
6:3,6 64:10
L
103:1 104:1 Lascher-17 151:7
69:2 127:25
L5:2,2
105:1 106:1 134:14 169:4 left 147:24
160:14
laid 147:14
107:1 108:1 Lascher-2 11:12 left-hand 43: 13
Kirkland's 71:9
Lamco 5:11,12
109:1 110:1 167:12 81:13,22
knew41:7
language 18:9
111:1112:1 Lascher-3 27:18 legal57:11,19
know7:3,19
23:2128:11
113:1 114:1 167:13 114:21
11:21 13:12
113:18 115:11
115:1 116:1 Lascher-4 28:22 Lehman3:21
15:24 17:11
116:21 118:3
117:1 118:1 167:15 5:12 7:2 8:23
20:12 22:21,25
large 31: 16, 18
119:1 120:1 Lascher-5 48: 13 9:5,8, 13,17,24
23:2 26:9
LaSalle 2:10
121:1 122:1 167:17 9:24 10:8,11
28:19 30:25
Lascher 1:9 5:8
123:1 124:1 Lascher-6 50:19 10:17 11:17,24
31:19,23,25
5:9 6:1 7:1,6
125:1 126:1 167:18 12:8 13:11
35:4 36:8
8:1,13 9:1,2
127:1,13 128:1 Lascher-7 64: 11 14:4,24 15:24
37:16 40:20
10:1 11:1,15
129:1 130:1 167:20 17:4 19:7,18
41:7,20,22
11:23 12:1
131:1 132:1 Lascher-8 79:22 19:20 20:2
42:10,15 45:4
13:1 14:1 15:1
133:1 134:1 167:23 21:4,8 22:2,9
45:7,8 46:11
16:1 17:1 18:1
135:1 136:1 Lascher-9 80: 18 24:4,15 25:14
48:4 49:18
19:120:1 21:1
137:1 138:1 168:4 29:8 30:4,7,13
53:20 54:2
22: 1 23 : 1 24: 1
139:1 140:1 Lastly 8:4 30:15,17 31:11
60:3 62:8 67:8
25:126:1 27:1
141:1 142:1 law 5:20 13:2,3,6 31:13,15 32:7
68:2,10,11
28:129:1,4,18
143:1 144:1 13:7,8,12 34:2,4,8 36:22
69:10 70:6,24
30:1 31:1 32:1
145:1 146:1 46:10,12 48:24 49:13
73:23,24 74:2
33:1 34:1 35:1
147:1 148:1 110:12,12 50:2,3,9 51:2
75:18,20 84:16
35:23 36:1
149:1 150:1,4 128:22 51:14 58:18
86:16 89:15
37:1 38:1 39:1
151:1 152:1 Lawrence 3: 11 59:2 61:10
90:13,20 91:24
40:141:1 42:1
153:1 154:1 5:24 139:3 64:12,25 65:24
93:5 95:12,13
43:1 44:1 45:1
155:1 156:1 lawrence.gotte ... 67:5,11 71:10
99:17 104:11
46:147:1 48:1
157:1 158:1 3:11 73:19 74:13,14
104:15,16,16
48:16 49:1
159:1 160:1,7 lawyer 41 :21 75:7,12 76:8
105:17 110:18
50:1 51:1 52:1
160:13 161:1 69:7 77:21 78:25
112:2 116:7,17
53:1 54:1 55:1
162:1 163:4,11 lawyers 7:7 79:12 80:4,10
117:9 119:12
56:1 57:1 58:1
166:10 167:4 34:11 68:21,23 80:12,25 83:15
119:19,21
59:1 60:1 61:1
Lascher-18:21 127:24 89:4 91:3,3,11
123:21,24
62:1 63:1,17
167:9 lay 106:4 91:19,24 92:18
124:10,12
64:1,17 65:1
Lascher-10 94:4 Lazard 75:4,5,9 92:19,20,21
136:23 138:14
66:1 67:1 68:1
168:7 75:9,12 76:25 93 : 13 94: 11 ,21
138:17 139:25
69:1 70:1 71:1
Lascher-11 80:17 82:5 95:4,9 96:8,25
141:13,18,24
72:1 73:1 74:1
97:11 168:9 95:7 144:22 97:18 98:18
142:6,17
75:1 76:1 77:1
Lascher-12 154:19,20 99:22 100:21
143:21 149:11
78:1 79:1 80:1
101:13 168:12 155:22 100:21 101:9,9
154:4 159:24
81:1 82:1 83:1
Lascher-13 LB35:11 39:22 102:25 103:14
160:2
84:1 85:1 86:1
106:24 168:14 leads 84:23 103:18 104:2,2
knowledge
87:1 88:1 89:1
Lascher-14 learn41:4,11 104:8,25
46:19 153:18
90:1 91:1 92:1
115:22 168:17 151:14 105:12,21
160:19 161:3,5
93:1 94:1 95:1
Lascher-15 learned 41:10 106:3,10,13
161:15
96:1 97:1 98:1
122:16 168:20 leave 93:17 107:9 108:25
Kornberg
99:1 100:1
Lascher-16 leaving 30:3 109:10111:18
127:23
101:1 102:1
127:9 168:23 led 25:13 95:20 112:16 113:3
APP-00458
180
113:13,13,20 162:5 117:23 55:7 58:3 59:9 27:17 40:14
115:4,8,16,19 Lehman/AIC limiting 25:3 68:9 71:20 51:17 68:20
116:22 117:4,9 128:15 line 16:24 35:7 72:14 77:20 69:25 71:15,15
117:20,21 Lehman/loves ... 37:4 38:10 81:21 86:20 88:9,14,15
119:9 121:6,14 71:23 39:20 43:24 88:17 93:18 90:14 112:7
121:14,21,23 LEH-ALI 11:13 44:5 60:20 95:23 100:5,12 135:11
122:25 123:15 11:13 28:23,24 73:18 165:8 101:7 102: 17 marked 8:24 9:3
124:17,24,24 50:20 79:24,25 169:7 103:21,22 11:14,16 27:19
125:7 126:2 80:21,22 94:7 lines 19:5,6 108:10 112:17 28:3,16,24
127:4 129:7,14 94: 8 97: 14' 15 28:10 76:14 118:20 125:21 29:5 46:22
129:20 130:3 101:16,17 88:20 128:11 129:2 48:14,17 50:20
130:14 131:2 107:3,4 115:25 listen 161:8 136:2,3 50:22 64:15,18
131:12,16,16 116:2 122:20 lists130:18 looked 20:11 79:25 80:3,5
131:17 132:2 122:20 167:12 litigation 136:14 58:8 83:9 80:22,24 94:8
132:17 133:25 167:12,15,16 little 41:10 68:10 99:20 137:20 94:10,15 97:15
140:6 141:2 167:19,24,24 100:12 149:23 137:20 97:17 98:3
142:12,20,25 168:6,6,8,8, 11 live51:11 146:8 looking32:10 101:17,20
143:16,25 168:11,13,13 Livenote 1: 13 50:17 123:10 107:4,6 116:2
144:16 145:20 168:16,16,19 LLC3:9 6:2 looks 36:19 116:5 122:21
146:8 147:4,8 168:19,21,22 139:4 37:1143:3 122:22 127:11
147:22 148:5 Len 8:11 27:22 LLP 1:10 2:3,9 44:4 48:22 127:14 128:14
148:25 150:24 57:10 75:21 2:14,20 3:3,8 49:6 51:6 134:17,18
151:12 152:5,6 Lenard2:17 3:13,20 4:3,9 105:6 140:10
152:7,9,15,23 5:19 4:13 5:25 losing 74:4 market 157:24
152:24 153:17 Lenard.parki ... LNR3:9 5:25 loss 74:5 153:12 158:6
154:6,21 155:3 2:18 139:4 157:6 153:22 markets 114:25
155:14 157:18 lender 24: 13 loan2:15,20 losses 153:2 market's 157:19
158:5,15 152:9,11 5:22 31:16 lost 151:5 mark.elmore ...
159:12,16 lenders 44:6 41:9 150:8,9 lot30:22 124:10 2:23
167:10,20 letter 14:2 45: 13 150:25 152:5 lower 135:4 marriage 166: 16
Lehman's 10:16 letting 53:24 152:11,15,25 L.P4:9 6:16 Marriott 39:24
10:18,24 13:7 let's 13:20 15:6 153:2,11,22 39:25 78:17
13:8 17:7,13 18:25 19:23 154:7,13,15,24
M
79:2,4 149:7
17:17 23:13 35:7 51:5 58:3 155:3,25 156:3
M2:6,17 5:2
Marsal21 :20,22
31:4 49:15 73:17 85:10 156:6,10,15,25
21:11,18,19
21:25 22:10,11
56:17 67:17 94:19 154:5 159:9,12
magnitude
22:17
80:13 89:7 155:6,24 loans6:13 31:18
137:16
Marsale 67:13
91:9 92:10 161:14 139:7,12,19
maintained
67:14
104:17 106:7 level26: 11 147:2 148:16,21
31:25
material55:10
108:18,22 levels 95:16 150:9 157:2,5
major40:3
114:17,23,23
110:12 117:23 liability 18:21 long 19:9 24:16
making 73:24
Materiality 18:6
118:9 124:21 25:22 120:10 31:3 122:7,8
119:9
Materials 64: 13
145:2 146:4,16 liable 138:15 137:23
management
64:25 167:21
150:18 157:22 likewise 100:4 look 15:6 18:25
113:4
matter 8:18
Lehman-AIC 121:4 24:24 28:8,15
Marc34:16
74:17 166:17
132:2 limitation 29:1433:5
124: 1 0 13 5: 5
matters 74:19
Lehman-ALI 130:16 35:7 37:2,3
mark2:22 5:21
maturity 159:15
152:6,8,11 limited 108: 19 44:2 54:13,23
8:20 11:10
MB34:18,23
APP-00459
181
35:9 40:4 47:24 48:7,11 40:3 52:10 6:9 15:2,4 16:9
mcrisp@Kilp ... 65:9 66:15,18 59:24 60:2 motion 52:11 18:18 21:2,7
3:7 66:20 67:7,11 136:15 motions 11:8 21:14,16 22:5
mean 13:7 20:15 67:15,17 68:14 Midland's 40:12 move23:4 25:5,13 26:4
21:15,16 22:12 68:21,24 69:3 Mike6:11150:4 149:22 26:16 41:5,13
23:9 26:7 38:9 69:5,8,15,17 Mile4:14 6:19 moved 157:4 41:14 46:16,20
42:6 44:8 50:7 69:18,20,22,23 23:24 moving 54:2 72:10 138:3,5
51:19 52:13 70:3,4,1 0,11 milestones 49:20 130:23 143:22 146:5
57:12 59:9 70:14,19,22,23 118:13 multiple 79:20 neither 116:19
62:14,25 68:7 71:5,7,11 72:3 million 82:21,23 Murphy49:9 never 50:6,13,13
70:12 72:25 72:24 74:13 84:9,10,12 68:20 71:16 69:11135:24
73:6,21 78:25 75:2,10 77:12 98:13,15 109:9 88:16 135:11 147:19,20
79:12 92:19,25 77:14 78:2,5,9 109:13,18 mutuall5:8 160:4,22
93:16 99:7,23 78:20,23 79:4 110:4 119:10 17:23,25 new 1:2,11,11,13
100:2 105:2,15 79:5,10,20 120:8 137:2 2:16,16 3:5,5
111:4,19 141:11,12 140:2 143:4
N
3:10,10,15,15
119:14 120:19 151:21,23,24 145:25 146:13
N2:2 3:2 4:2
3:22,22 4:5,5
126:18 141:10 152:3,14,16 154:7,8 155:25
167:2
4:10,10,15,15
141:19 142:15 meetings 38:23 156:6,16,22
name5:7,19
16:25 36:25
143:3,18,21 members21:24 157:5
62:5 67:25
37:9,16,24
144:21 145:15 96:23 mind 16:8 19:14
139:2 150:4
38:12 41:12
145:24 146:11 memorialized 74:21,24
named 152:8
42:20,24 83:19
146:24 147:14 149:4 minute 133:3
Nancy 21:10,17
83:1992:7
147:19 148:7 memorializing 154:5
22:20 48:24
97:2,4 102:9,9
149:11 150:22 66:12 minutes 56:14
67:12 71:13
102:19,23
153:3,20,23 mention 79:4 58:9,17 122:9
nature 78: 13
103:3 109:5,18
157:11 158:20 138:7 Mission 139:8
near 158:2
109:20 112:25
159:7 mentioned 37:10 ML-CFC 139:11
necessarily
118:17 121:9
meaning 24: 13 79:15 modifying
19:22
124: 16 13 1 : 1 0
24:15 met 49:20 69:12 159:12
necessary 164:4
131:11 166:3,4
means 37:17,19 method 18:20 Moelis 4 7: 13, 1 7
need 7:13 35:11
166:8
37:20 40:23 mezz 6:13 150:8 64:14 65:2
36:22 78:9
nodding 63:24
42:11 119:18 150:8 155:7,12 72:22 74:22
125:22
nominated
meant 36:9,24 156:14 77:18 83:3,8
needed 73 :25
96:25 97:2
52:19 60:2,4 mezzanine 93:20,23 96:18
78:16 146:18
nonconsolidati ...
95:12 113:22 154:24 156:6 98:20 141:14
negotiate 49:12
41:8
113:24 119:20 156:10,25 142:8 143:10
negotiated 21 :4
normall43:15
119:22 157:2 145:12 167:21
negotiating 21:8
North2:10
mechanism Michael I :9 3:6 moment 11:18
27:3 38:17
Nos 11:13 28:23
154:2 5:8 35:17 29:11 55:25
49:16 55:3
64:14 79:24
meet 118:12 163:4,11 102:14 106:21
126:15 147:9
80:21 94:7
meeting 33:17 166:10 167:4 118:19 140:20
negotiation
97: 14 1 0 1 : 16
33:22 34:7,9 mid31:15 Monday 53:9
11:24 105:16
107:3 115:25
34:12 35:2 158:25 money 119:15
139:19 143:14
122:19 127:10
36:18 41:24 middle 21:15 119:16
143:17 146:17
134:15 167:12
43:2,7 44:12 Midland 2:15,20 months 153:6
negotiations
167:15,21,24
45:5,15 47:4,6 5:22 9:20 morning 160:18
12:7,11,14
168:5,8,10,13
47:11,12,17,20 19:17 24:13 Morrison 4:3
13:10 14:23
168:16,18,21
APP-00460
182
168:23 169:5 94:12 95:16 119:3,5 128:20 131:9 30:11
Notary 1:13 96:17 97:19 offering 83:15 131:14 134:11 overall146:21
163:17 166:7 98:20,21 102:3 83:17 84:3,9 136:2,16 oversee 22:3
note 136:11 107:10 123:2 89:4,21,21 140:13,19 30:21
notebook 4 7: 10 127:17,18 96:3 100:5,5 142:2,10 oversight 31 :2
noted 162:12 128:12 135:15 100:13 103:10 145:10 149:18 owned 38:24
164:10 137:7 offhand 141:25 150:15 152:2 owner 39:4,5
notes 28:23 N.W2:5 153:7 152:13,23 67:6 83:19
32:13 33:6 office67:18 71:9 155:7 156:11 92:8 97:2,4
36:10,19 37:11
0
offices 1 : 1 0 156:12 160:17 148:8
40:9 41:24
oath 150:13
officially 151 :2 once 90:14 94:24 ownership 49: 19
46:25 63:19
object 13:16
Oh 17:25 154:10 ones96:18 121:5
65:11 87:21
16:10,14 19:7
okay 8:2,3 10:2 ongoing 14:23 owning 105: 13
160:21 167:15
19:18,21 20:3
10:3,9,10 22:23 138:9
notice 8:21 9:4
24:16 26:18
11:22 13:21 open 14:4 O'Brien 3:23 7:3
136:13 167:9
27:5 36:2,2
17:25 18:25 operation 7:4 15:20
notices 8: 16
43:15 44:10
19:4 23:11 114:22 16:10,14,22
number 13:24
57:18 121:2
24:9 28:9 opinion57:11,19 17:18 22:12
14:8 20:19,23
146:23 159:5
29:17 32:18,24 opinions 41:8 23:1825:20
33:3,14 36:21
objection 15:20
33:15 38:14 opposed 142:11 26:18 27:5,15
37:9 39:17
16:22 25:8,23
39:18 42:3 143:7 147:17 27:21 29:14
49:651:2
27:15 37:5
43:6 44:5 option 103:6,7 30:19 35:16
64:18 65:7,8
38:6,20 39:7
46:24 48:23 119:9,12,20 36:2 37:5 38:6
65:15 75:22,24
43:8 52:17
50:15 51:25 options 102:10 38:20 43:8,10
78:19 80:4,25
56:19 57:5,23
54:15 55:2,9 102:19,24 43:15,20 44:10
81:19 82:2,8,9
59:8,15 62:24
55:21 56:5,11 103:4 44:24 45:7
83:11,12 86:21
72:12 90:19
58:7,15,25 order24:18 49:3,7 50:12
87:15,16,19
133:21 136:10
62:16,22 64:21 63:22 64:7 50:18 52:17
90:9 93:17,18
136:11,20
65:11,16 66:17 144: 18 146: 17 56:19 57:5,10
94:11,20,20
137:18 138:12
66:19 70:15 ordered 45:9 57:18,23 59:8
97:18 98:4
objections 8:6
72:16 74:9 organizational 59:15 60:17
101:20 107:16
8:14,17,17
75:4,5 76:15 141:13 61:16,21 62:24
116:6 129:2,18
obligation 20:12
76:21 81:20 organized 82:20 63:13,25 72:12
130:24 131:8
57:2 92:10
82:6,17 83:13 original154:6,9 75:21 76:21
134:23 136:7
obligations 20:4
83:24 84:22 164:12 77:9,13 85:12
137:2,3,14,19
51:14 62:21
86:20,22 87:18 originated 31: 17 90:19 92:4,23
138:15 142:21
110:5 115:6
88:7,17 89:2 origination 99:23 100:8
143:2,10,16,20
120:12 124:21
89:11,19 95:8 31:16 1 0 1: 3 1 04: 18
144:3' 13' 1 7
Ocam po-Guz ...
95:25 96:13 outcome 146:9 104:22 106:23
151:5
1:12 166:6,22
99:19 102:21 166:17 111:3,6 112:19
numbered 46:23
occurred 53:9
102:22,24 outlined 82: 19 122:7,10,14
numbers 11:17
97:9
107:21 108:12 outset 145:11 126:18 129:9
29:8 32:16,18
occurrence
112:18,21 outside 45:2,8 133:3,7,12
64:20 67:4
114:16 118:10
114:13 116:20 75:25 136:20 136:19 137:6
72:23 73:4,7,8
occurs 19:9
117:16 119:7 outstanding 137:10 138:23
73: 15' 17' 19
162:7
120:4,6 121:19 66:25 141:20 144:4,7,11
80:6 81:2,14
odd 137:2
124:13,15 145:17 154:13 146:23 149:24
81:21 93:24
offer 13:15
127:2,8 128:10 out-of-court 159:5 160:8
APP-00461
183
161:8 162:10 129:24 partner76:10 person 12:6 22:4 167:17
Parent 65:23 Partners 3:9 41:21 69:12 planned 139:19
p
71:22 4:14 6:2 139:4 personally 25: 17 planning 126:4
P2:2,2 3:2,2,11
Parkins2:17 5:6 party 55:11 47:21 plans 74:6 120:9
3:18 4:2,2
5:19,20 7:5 59:14 149:2 perspective 161:4
page 13:23 29:15
8:19 11:10 pass 138:20 138:14 145:2 plays 156:18
33:13,16 34:19
13:817:20 passed 151 : 5 156:21 please 5:7 11:11
39:16 43:4,13
27:17,23 29:2 Paul3: 13 4:6 6:8 petition 15:9,11 11:19 21:5
46:22 47:3
29:16 30:20 6:21,23 69:5 19:10 29:12 33:4
48:21 49:4,6,8
43:9,18 44:22 116:8 127:23 pgalante@mo ... 39:16 46:23
49:10 51:6
45:4,12 49:5 128:21,24 4:7 52:23 56:21
55:7,16,19,20
50:16 57:15 130:24 phone22:24 58:4 60:25
65:14,17 66:5
61:19 63:11,16 Pawlitz 2:12 6:5 phrase 37:13 61:24 89:18
71:20 72:14,17
76:15 77:3,10 6:5 41 : 11' 16 44:7 96:12 106:22
73:4 81:7,13
85:13 94:3 pay92:17 45:18 11 7: 15 124: 14
81:22 82:14
97:23 98:2 paydowns pick 121:19 136:11 140:18
83:11 86:24
99:25 100:10 154:11 122:12 164:3,7
89:17 91:15
106:21111:5 paying 93: 14 picture 66:13 point 15:8,25
96:11 98:11
112:20 122:6,8 119:9 151:12 piece 50:25,25 16:5,7 18:7,11
101:2,8 102:2
122:12 126:20 payment 120:11 160:3 25:12,18,19,20
102:12 103:7
129:11 133:6,9 people 7:12 pieces 39:9,10 25:21 27:7,11
107:12 108:10
133:15 134:12 13:24 32:22 39:13 75:3 78:6,10
108:15,16
136:16 137:8 63:19 107:16 PIP 24:2,19 85:7,8,10
109:4,25,25
138:20 167:4 127:24 73:25 110:5 91:14 95:10,13
112:9,17 114:2
part 18:14,18 percent 38:4,18 120:11,17 104:6 105:20
114:5,11,15
22:22 26:10 38:24 39:4,5 PIPs 24:2,4 113:17 114:5
116:6,11 117:2
27:2 38:11 43:21 49:18 place 40:3 53:6 115:10 122:3
117:14 121:3,3
51:556:22 65:24,25 67:5 53:12 71:8 125:5,17 126:6
122:2 123:5,9
61:3 65:18 67:9 83:18,20 plan 10:13 12:18 126:23 130:19
124:13 127:20
73:10 86:24 84:8,11,13 23:25 36:16 131:23 142:20
129:3,17 130:9
88:13 89:3 106:5 109:9 37:6,9,17,22 143:24 151: 11
130:24 131:7
95:6,18 133:25 113:2,3 118:25 37:24 38:13,21 157:23 161:20
131:21 134:25
135:4,9 139:19 119:25 120:2 40:2,5 41:12 161:23
135:14,22
139:25 141:12 124:17 126:2 42:20,24 48:5 points 14:9
140:17 163:9
144:18,21,22 126:17 127:5 48:13 49:24,24 17:16,19,21,23
165:8 167:3,8
146:16 148:7 129:19 131:11 50:4,5, 7,10 17:24 23:15,20
168:3 169:3,7
148:11 154:20 132:17 157:24 52:12,14 54:3 90:21 114:14
pages 32:13
participating percentages 57:8 91:4 160:15
95:23 102:8
133:16 100:14 100:22 101:10 pool110:6
128:11 163:6
particular 24:24 perform 56:15 1 04:3 118: 13 142:24 154:16
paid23:25 92:21
77:12 142:21 performance 121:15 123:14 pools 67:2 74:25
paper 152:10,24
161:2 20:3 120:11 123:15 124:25 141:17
par36:15
particulars period 14:22 131:18 139:20 portion 84:6
paragraph
60:15 27:3 52:24 140:11,16 89:4,8 103:19
19:25 24:10
parties 15: 1 7 61:2,25 68:13 144:19,20 position 17:7,9
82:18 84:23
24:23 49:22 70:7 88:3 145:21,24 17: 13' 17 23: 14
88:18 98:11
78:23 79:3,10 146:6 149:5 160:20 32:7 86:16
102:3 117:17
166:15 periods 74:7 161:17 162:7 106:4,7,10
APP-00462
184
136:8 146:16 38:12 74:16,22 139:20 141:8 161:25 122:4 125:8,16
155:19 75:19 116:10 141 : 19 144: 18 provided 23:24 129:24,25
positions 153:5 presently 5: 10 148:25 70:17 84:6 130:6 162:6
possibly 48:4 pretty 54: 18 produce 44:20 109:22 117:22 purchaser 16:25
post 103:3 70:5,9 100:17 76:13 provides 90:25 17:5 18:4 92:2
137:24 157:20 158:25 produced 9:20 93:19 96:8 purposes 9:25
157:22 previous 112:15 127:16 102:25 109:7 12:23 48:20
potentially 117:7 product 75:24 109:12 118:8 77:8 83:6
12:18 Previously 76:18 77:4 119: 8 124: 1 7 93:21
practice 46: 10 159:18 production 29:8 124:23 128:25 pursuant 63 :21
46:12 price 84:9,20 75:19 80:5 129:13,19 130:5 138:9
precedent 90:23 95:14 118:18 81:2 94:12 providing 85:22 161:22
91:15 92:10 118:22,24 97:19 122:25 89:24 117:19 pursue 49:23
96:8 100:6,20 119:4 134:22 125:18 50:4,10
101 :4' 7 102: 13 primary 20:4 project 23:25 provision 54: 11 pursuing 50:8
102:20 103:23 83:21,22 84:3 64:12,22 56:12 104:23 push 159:14
113:8,12,17 84:13 167:20 118:17 158:3 put 8:6 15:25
121:12 124:20 principall60:3 projections provisions 96:21 16:4 39:11
129:22 131:14 prior31:10 32:2 73:23 102:23 putting 63:23
Preliminary 47:20,24 48:11 prologue 76:22 PSA 10:14,19 PW 116:6,7
81:886:25 66:18,20 67:7 properties 155:2 11:24 12:5,15 p.m 1:12 162:12
94:16 67:10,17 68:14 property 120:9 12:24 14:25
premium 119:9 69:17,20,22 156:7 157:8 15:3,14,18
0
119:13,20 70:3,10,11,14 proposal 13: 11 16:9,13,21
quantitative
preparation 70:18,23 78:24 18:10 77:16,22 21:3 22:6,19
94:22 95:5
87:18 124:2 79:10 96:2 91:10 93:2,3 25:14 26:4,10
question 7:9
prepare 9:10 100:7 110:11 108:25 111:24 27:4 45:5
40:14 45:22
87:11 110:16,22 114:3 121:20 46:16 48:19
51:17 57:12
prepared 80:10 118:4,19 121:9 131:12,15 49:12,16,22
62:15 70:15
80:12,13,16 132:6 139:21 132:24 142:25 51:21,24 54:14
74:20 79:7
82:2,5 87:6,8 151:21,24 proposals 56:25 61:11
88:25 90:10
87:14,22 90:6 152:14,16 111:17,22 62:21,23 68:6
100:8,10
98:24 99:21 159:20 112:4 133:2 68:11 78:22
104:19,21
100:19 105:12 privilege 75:23 proposed 79:23 92:11 95:20
110:21 Ill :20
110:12,16 76:17 77:4,5 80:20 94:6 96:9 113:11,14
119:19 133:18
111:17,22 pro 65:20 66:5 97:13 98:7 115:11 121:22
136:12,22,25
present 11 :4 96:14 101:15,23 124:21 134:2
137:13 146:4
47:14 63:8 probably 68:10 107:2 115:24 137:15 138:3,9
153:25 161:2
presentation 88:6 110:17 122:18 123:7 139:25 147:15
161:11
65:18 70:17,21 140:9 145:13 167:23 155:12 156:13
questioning 10:7
70:24 73:11,14 problem 77:10 168:5,7,10,12 157:3,13,15
questions 7:7,8
75:14 83:3,8 137:16 168:15,18,21 158:12 160:21
7:13,18,19,20
93:20,24 proceed 142:14 protected 75:22 161:18,23,25
7:25 28:2
141:14 142:9 144:2 145:21 protective 63:22 Public 1:13
29:13 63:18
145:13 146:2 64:7 163:17 166:7
76:24 138:22
presentations proceedings provide 84:7 purchase 84:7
149:20 160:10
96:18 76:2,7 105:7 114:15 95:14 109:5
quitel51:9
presented 3 7:25 process 95: 19 121:13 123:17 114:8 118:17
quote 51:13,15
APP-00463
185
R
88:13 95:12 36:15 120:11 166:15 7:14 166:7
r2:2 3:2 4:2,11
105:15 110:19 recovery 123: 14 relates 139:8,10 represent 5:22
5:2 55:10
124:12 136:23 reduce 159:15 relating 68:5 139:4 150:6
163:2 165:1,1
143: 17 144: 14 reducing 66:24 relative 7 4: 15 representation
166:2
reason 19:21 refer 10:12 release 18:20 13:4
raise 79:8
75:22 112:8 reference 34:18 120:10,17,21 representations
raised 76:5,9
116:12 153:11 89:3 relief 10:21 55:12
ran 74:11
164:5 165:10 referenced remain 140:3 representative
Ranges 72:18
165:12,14,16 56:21 remained 27:9 8:23 9:5,8
rate82:22 98:14
165:18,20 referred 20:10 remains 14: 5 67:19 167:10
98:17 102:5
reasons 165:6 28:20 151:20 remember 14:13 representatives
108:20 110:6
recall15: 19,22 referring 125:10 14:17 18:7 78:2
117:19,24
16:3,6 20:19 135:22 140:21 23:8 25:7,10 represented
141:17,17
25:2 33:22,25 refers 19:15 27:12,16 34:9 23:13
142:24 150:8
34:6,7,11 28:11 34:13,15 35:3 represents 26:9
155:7,11
35:24 36:13 reflect 99:20 35:17 36:4 110:18 128:25
159:15
45:15 47:6 reflected 25:5 42:18 44:13,15 request 57:16,21
reach 146:18
48:6 52:6 65:4 66:4,22 87:24 46:21 47:9 169:7
reached 79:9
65:17 67:10,15 88:4 90:8 48:8 53:20 requested 10:21
91:18 92:11
67:22 68:18 132:24 157:13 60:18 61:5,13 14:3
1 04:7 113 : 18
69:13 78:13 158:12,18 61:15 62:5 requests 9:21
125:5
80:9 82:11 reflecting 66:7 67:23,24 70:8 required 20:4
read39:19 41:25
85:2,8 87:5 132:7,16 73:12,21 78:7 27:18 28:5,11
43:12,14,19,22
95:8 99:13 reflects 98:12 85:5,14 86:18 167:13
43:23 44:9
132:12 113:11 87:25 99:11,12 requirements
55:13,25 56:5
receipt 164: 14 refresh 65: 12 107:21,23 49:20
56:6,8,9 58:14
receive 83: 16 81:25 132:5 111:7,15,23 reserve 152:25
59:13 88:24
123:13 129:15 regarding 18:9 112:3,7 117:11 153:12,13
96:24 102:15
received 4 7: 16 20:22 25:18 117:13 123:25 reserves 153:4
109:17 164:3
107:18 26:4 44:14 124:7,9 125:17 Residence 139:8
reading 82:25
receiving 52:6 46:3 47:7,23 126:12,22 139:10,15
83:24 109:16
65:4 107:21,24 53:4 68:5 128:7 133:22 resolve 14:4
118:7 135:7
recess 63: 15 69:19 72:4,22 134:4 137:19 respect 10:22
reads 14:2 55:10
122:15 149:25 78:14 85:3,20 141:25 143:4,5 12:14,23 14:25
116:12
recognize 32:21 86:9 98:25 143:9 144:14 16:8 18:12
real3:4 22:2,21
recollection 99:6 110:14 149:16 151:3 19:25 20:14
30:2 31:18
24:21 27:10,14 120:16 132:24 153:6 21:3,13,23
41:8 52:10
65:12 81:25 133:19,24 remind 150:12 22:5 23:14
59:24 60:2
82:4,7 132:5 regular 14:23 reorganization 26:25 31:4
95:13 114:24
record 8:7,12 70:13 52:15 146:21 32:5 61:10
150:6
29:2,3 45:14 regularly 70:5 157:20,23 62:11 74:25
really 19:6 23:8
63:16,23 64:4 70:10 158:11 75:13 77:15
26:12 32:6
76:5 96:24 reinstated reorganized 78:9 87:23
36:4 42:10
97:25 98:2 145:20,22 37:2 98:13 88:4 90:7,18
50:6 52:16,18
116:4 134:13 146:9,10 105:14 95:10,19 110:4
57:24,24 60:3
139:6 152:12 REIT 123:19 reply 52:2 53:4 110:5,25
68:8 70:7
161:14 166:13 related 21:3 report22:4 111:10 116:21
73:1278:7
recovering 58:18,25 reporter 1: 13 117:4 140:7
APP-00464
186
141:3,7 142:12 52:14 82:11 runs86:19 123:13 129:14 15:14 17:2
143:15 144:5 RIFKIND 3: 13 130:22 131:20 19:2,11 20:7
147:5 148:15 right 17:22
s
131:23 136:4 28:6 29:9
148:17 35:16 40:13
S2:2 3:2 4:2 5:2
145:25 156:20 35:23 44:7,8
respective 41:25 42:3,21
167:7 168:2
sec 1:6 44:22,23 51:3
114:20 46:25 48:25
169:2
scenario 105:7,9 51:7 52:2,25
respond 7:13 49:7 51:16
sake 161:13
schedule 135:7 54:8 66:2,6
53:19 62:11 53:11 54:12
sale 15:4 26:9,13
135:16,25 72:19 76:19
response8:15 56:16 57:2
62:4,6,18
136:2 137:11 81:10,16 84:2
9:20 59:22 58:3 59:5
113:24 125:19
137:20,21 84:14 87:3
61:4 87:15 60:12,13,24
125:24 126:9
Schuyler 67:23 88:22 89:5
99:14 62:9 66:23
138:5
71:18 135:6 91:16,22 94:25
responsibility 71:3 79:6
sales 154: 11
scope45:2,9 98:8 101:24
21:12 30:17 81:15 83:4
Sam 33:8,10
75:25 136:13 109:15,21
31:4,11 32:6 84:5,25 91:14
67:12 71:12
136:20 137:22 110:2,6 113:6
responsible 12:7 92:12 94:18
San 139:9,17
158:17 113:14,16
rest 17:15 83:23 97:3 103:9,17
satisfaction
second 27:25 116:20 118:2
119:24 104:5 108:17
130:2,14
36:5 50:16 118:14,18,21
restructure 109:11,21
satisfactory
59:22 60:20 120:12 121:17
159:9,25 110:10 112:11
91:19 104:8,25
82:18 88:24 125:20,23
restructured 113:21 114:19
113:19 125:7
98:11 99:8,10 128:3,5,14,15
38:4 140:4 115:2 121:8,11
satisfied 57: 16
100:11 102:2 131:4 135:12
restructuring 122:5 125:3,23
57:20,21
116:25 127:25 143:12 145:13
47:23 51:15,20 128:16,21
satisfying 24:5
131:22 134:12 146:14 158:25
57:3 67:7 129:15,17,21
Saturday 51 :25
135:9,14,22 seeing 65: 17
80:20 94:6 130:8 131:13
Saved 70:15
secondary 84:3 128:7
97:13 98:7 133:15 134:24
saw 113:18
84:12 seeking 22: 18
101:15,23 135:18 136:4,5
135:24
section 54:23 seen 66:7 128:17
107:2 115:24 136:7 138:10
saying 26: 19
55:4,8,16,18 131:4 135:19
122:19 123:7 142:5 146:6,7
42:14 45:8
55:19,22 56:2 135:20,25
158:16,20 147:15 148:21
62:17 85:23
56:3 58:4,5,8 137:11
159:7 168:5,8 150:19,21
90:11 126:11
58:11,13 59:17 select 103:2
168:10,13,15 152:19 154:10
145:22 151:17
90:23 100:13 sell37:6 74:6
168:18,21 160:22,24
158:22
103:23 130:10 83:17 89:4,7
restructurings right-hand 81:7
says 19:2 20:2
sections 55:4 104:14 105:5
30:11,18 32:4 86:24 123:4
33:16 35:9
102:17 106:14 125:25
41:6 136:3
40:17 42:7
secured 109: 14 126:9,16,24
result 67:6 risk35:15
43:7,11,19
140:22 141:3,7 127:4 129:15
retain 158:6 105:13 106:5,5
44:5 47:3 52:8
144:9 147:5 132:8,17,21
retained 75:6 risks 35:8,23
54:7 58:13
148:18 149:15 158:7,7
retaining 103: 14 role21:22 32:2
59:9,17 71:22
152:15,18 seller 129:6
157:25 rosa 37:9,16
77:6 81:7 83:2
153:24 154:15 selling 92:20
return 164: 12 38:9 41:12
86:24 91:13
155:3 157:5 93:15 103:19
revenue 74:5 42:20,24
92:9 101:12
securitization 119:17 120:3
review 9:13,19 roughly 154:12
103:25 104:7
139:5 148:14 126:5,6
11:19 14:6 rule 14:7 77:6
112:9,24 114:7
securitized send45:12 77:19
20:9 29:11 run 97:24
116:6 120:4,25
31:19 senior 109: 13
reviewing 52:12 running 74:2
121:24 123:5
see 14:9,14 152:17,17
APP-00465
187
sense 93:16 118:19 121:25 49:9 150:7 state 1:13 5:7
153:16 122:17 123:6 significant 16: 8 specialization 8:12 63:18,19
sent 14:12 17:8 123:22 124:3,4 16:13,17,21 29:25 136:14 142:19
22:8 23:5,6 124:8 126:8,16 61:9 specific 17: 10 144:24 145:19
51:20,25 52:5 127:4 128:15 signing 25: 14 22:25 57:13 164:4 166:3,8
64:9 93:3,5, 7,7 128:17,20 91:11 121:22 61:22 88:15 stated 112:15
112:5,5 129:10,11,12 164:9 124:11 127:4 145:10
sentence 19:11 130:5 131:2,15 silos 95:17 133:8 statement 17:12
59:23 88:21 131:25 132:3,7 similar 78:22 specifically 17:16 62:12
94:21 132:9,12,13,14 100:17 112:14 96:14 107:23 states 1:2 51:11
separate 26:8 132:16,19,21 115:11 118:3 124:4 134:4 status 114:21
162:4 133:8,13 137:21 144:15 step 152:4
September 140:16,22 simply 147:22 specifics 67:3 steps 77:15 78:5
31:23 143:6,11 159:11 speculate 43: 17 stock 105:13,22
series 29:7 144:10,20 single 27:2 29:15 Spoke9:12 118:25 126:2,2
servicer 6: 13 148:18 149:6 50:25 91:10 spoken 69:11 126:9,10,17
139:5 148:19 155:12 156:14 121:22 70:12 127:5 129:6,23
148:20 150:7 156:19 157:3 sir48:7 72:15 ss 166:4 129:25 130:6
157:7 158:4,13 164:6 80:7 94:13 stage 86:15 132:18 133:25
servicers 149: 14 164:7,10,13 98:4 101:19 stages 30:23 158:7
services 2: 15,20 168:20 104:10 110:21 stamp 11:17 Stockton 3:3
5:23 139:7 sheets 25: 15 112:8 130:23 29:833:14 6:12 150:5
148:15 151:16 99:3 110:16,23 sitting 156:24 51:264:20 stop 151:11
158:6 124:10 133:20 six 88:20 157:6 65:8 94:12 Street2:5,10 3:5
set 55: 12 91:5 134:5,8,10 sold 83:20 107:10 123:2 structure 65 :21
166:11,19 158:15 sole 102:25 127:17 128:12 66:5,8,11,22
sets 8: 15, 1 7 short 52:24 61:2 115:4 123:16 129:2,18 72:4 79:18
settled 126:5,24 61:25 SOLOMON 130:23 131:8 82:19 86:9
settlement 19:8 Shorthand 22:14 134:22 90:7,10 96:15
19:9,13,17 166:7 somebody42:14 stamped 80:5 99:2,6,16
seven 96:23,23 showed 90:14,15 sorry23:9 25:16 81:2 97:19 100:15 110:15
156:17,23 shown 163:9 43:9,12 51:22 stand 24:15,19 148:4 158:25
Seventh 4:10 shows 65:23 56:7 61:14 standpoint structured 31: 17
Shanik 21: 11, 17 112:22 68:14 77:13 153:17 Structuring
22:20 48:24 sic 136:5 93 : 13 1 02: 16 stands 21:19 79:23 167:23
67:13 71:13 side 11:25 12:8 109:17 120:6 40:20 116:7 sub 37:9,16 38:9
shared 110:19 21:8 34:22 129:23 134:9 start 8:12 51:5 41:11 42:20,24
shares 83:22 35:2 56:17 sort 78:5 104:11 94:19 subcon 40:18,20
84:3,12,13 73 : 14 1 04: 1 7 143:14 started 12:16 subject 8: 14
103:15 104:14 sign 121:20 sound 137:7 26:5 31:12,15 14:5,7 42:24
105:5 109:10 126:7 164:7 SOUTHERN 32:6 126:23 49:19 51:9
114:8 122:4 signatory 15: 13 1:2 141:8,10 142:8 76:9 81:9 87:2
132:8 15:18 16:13,20 space 164:5 143:7,9 150:22 94:16 130:2,13
sheet 54:22 18:3 spaces 40:12 starting 19:5 130:13 135:6
94:24 95:9,20 SIGNATURE speaks 82:18 31:12 144:4 163:8
99:14 110:17 165:23 89:20 starts 60:22 164:9
110:18 112:9 signed 10: 13 special6: 13 88:21 129:24 submitted 11:7
112:10 118:4 27:4,8 48:24 139:5 149:14 130:11 subpoena 8:24
APP-00466
188
9:6 167:10 33:667:12 tecum 8:24 9:6 termination 71:16,18 77:18
Subscribed 71:12 167:11 15:9 17:25 77:22 89:13
163:13 swap 158:24 tell23 :23 24:9 19:8,9,13 95:6 106:2
subsequent sworn 5:3 32:24 36:12 54:24 58:9,10 112:14 128:19
95:11 163:13 166:12 37:20 39:19 58:14 59:10,12 136:23 138:21
substance 76:24 syndicated 41:21 61:15 62:9 118:11 141: 11 144: 12
91:19 104:8,24 31:20 73:7,14 97:8 130:20 151:2,13 152:8
111:2113:19 100:11 102:16 terms 14:3 19:16 152:9,17,21,22
125:7
T
Ill: 16,20 21:16 22:25,25 153:24 155:18
Substantive
T 163:2 165:1
139:23 141:6 26:21 54:20 156:18 162:10
40:21
166:2,2 167:7
159:22 79:23 80:19 thinking 126: 13
Suite 2:21
168:2 169:2
telling 126:21 94:5 95:19 thinks 43: 19
suites 139:13,17
table 5:17
ten 122:13 97:12 98:7 third 91:14
156:2
take 7: 14 11 : 18
term25:14 101:14,22 104:6 108:15
Summary
15:10 29:11
54:22 94:24 107:2 115:23 113:16 125:4
135:16
33:19 40:4,8
95:9,20 99:3 117:21 122:18 130:19 139:16
Sunday 52:3
40:17 44:24
99:14 110:16 123:6 126:11 third-party 17:5
53:7
45:10 50:9
110:17,18,23 126:22 130:12 thirty 164:13
supplemental
53:654:18
112:9,9 118:4 132:16 138:13 thought 20:13
94:24
55:25 62:23
118:19 121:24 142:3,11 38:1150:6,13
supplemented
63:11 71:8
122:17 123:5 145:14 146:2,4 70:23 142:17
95:9
73:18 77:21,23
123:22 124:2,4 146:19 159:12 145:16 153:7
support 10:13
85:10 102:14
124:8,10 126:7 160:5 167:23 160:22 161:20
11:8 12:18
112:13 118:19
126:16 127:4 168:5,7,10,12 three 19:5 96:24
40:2 48:5,13
118:20 122:6
128:15,17,20 168:15,18,21 139:12
55:22 57:8
125:21 149:21
129:9,11,12 test 157:19 thresholds 18:6
59:17 91:4
taken 63:15
130:5 131:2,15 testified 5:3 Thursday 1:11
100:22 101:10
122:15 149:25
131:25 132:3,7 23:18 153:21 tied 10:2
1 04: 3 121 : 15
152:25 159:8
132:9,12,13,14 testifying 26:24 time 12:25 14:22
131:18 139:20
talk 7:24 9:16
132:16,19,21 testimony 23:3 25:4,4 27:8
140:12,16
23:9 53:23
133:8,12,20 25:2 56:13 31:10 36:13
144:20 145:21
88:11 92:4
134:5,7,10 58:16 59:2 38:22,23 46:13
145:24 149:5
154:5 155:24
140:15,22 63:20 139:21 46:18 52:24
167:17
talked 48:3 67:4
143:6,11 144:9 163:5 166:13 61:2 62:2 66:7
supporting
70:5,20 72:25
144:20 148:18 Texas 2:21 66:10 68:13
33:12
93:24 130:20
149:5 155:12 Thank 10:11 74:3,7,12 75:2
supportive
148:23 159:24
156:13,19 37:8 39:15 85:12,13,19
155:14
talking39:10
157:3 158:2,4 160:7 162:9 86:17 88:3
sure 7: 18 23: 19
45:20 53:21
158:13,14 thing 83:2 93:13 95:10
43:21 47:11
61:16 70:9
168:20 132:13 105:21 106:11
49:5 50:18
82:9 115:12
terminate 51:12 think 5:16 19:22 106:15 110:19
57:25 63:13
125:18 134:5
52:22 54:5 23:7,8,18 113:23 125:15
67:9 106:23
137:5
56:16 58:18 36:14 42:7 126:3,12,15,22
122:10,14
tandem 86:3
59:3,10 60:10 44:21 55:8 127:22 133:24
149:24 153:19
Tavern 64:12,23
60:23 61:23 56:13 57:6,25 146:6 151:10
157:12 161:12
167:20
62:7,13,18 58:25 63:24 153:5 162:12
Susan 33:2
tax 115:5,6
63:3,9 78:18 64:18 67:2,3,8 times 8:4 42:25
Susanne 21:10
technical 21 : 1 7
118:9 69:6,9,21 70:6
APP-00467
189
timing 78:8, 14 147:12 157:2 151:18
v
105:24 122:8
title86:18 treatment 142:3 ultimate 21: 12
val42:20
122:12 138:17
titled 101:21 144:6 145:11 38:24
Valley 139:9
146:14 154:18
today 8:13 9:7 147:9,10 155:6 ultimately 149:4
valuation 40:5
159:9 160:25
14:15 63:6 155:11,15 unable 151:15
40:13 72:18
161:23
82:12 140:11 156:9,14 unacceptable
77:2 153:5
wanted 50:9
141:9 153:9 Trimont 3:4 115:8
154:19
54:4 56:14,15
156:24 157:10 6:12 149:9 underlined 44:7
value 37:9,16,22
59:2 60:9
157:15 150:6 underlying 20:4
37:24 38:13
62:22,25 64:5
today's 9:11 true 38:16,22 understand 7:12
41:12 42:24
106:4 119:15
told 23:7 36:17 163:7 166:13 7:21 23:22
73: 17' 18 7 4: 15
119:16 142:11
40:8 41:18 trust 1:5 62:19 24:2 40:15
74:16 82:20,22
142:12,16
42:18 60:7 135:16 139:6 52:9,13,18
94:23 98:12,14
160:15 161:11
90:15 139:11,12 59:23 83:9
102:4,4 114:17
wanting 60:8
top 13:22 22:12 trusting 52:21 84:4 113:22
142:18 153:8
warranties
22:14 33:16 60:22 61:23 136:8 138:17
155:19,23
55:12
43:1247:3 62:12,17 143:7 146:3
values 74:21,22
Washington 2:5
65:23 81:7 truth 119:14 147:16 153:19
74:24 83:2
139:14
86:24 101:3 try 7:19,23 10:8 154:23 155:22
93:19
wasn't 22:24
112:22 121:4 143:12 157:15
various 24:22,23
23:19 42:16
123:4 128:21 trying 37:23 understanding
25:5 30:23
67:20 70:25
131:22 135:9 54:2 143:6 7:18 36:23
73:4 158:14
71:2 132:9
Torres4:13 6:18 148:22,24 38:7 71:25
verbally7:14
142:15 143:17
total83:18 turn 109:25 155:5,10
versions 117:7
143:20
totally 136:12 114:2 157:10
134:7,10
way 24:14,15,19
tough Ill :21 two 8:15,16,17 understood
Victory 2:21
44:25 50:7
transaction 26:7,7 28:10 36:12
Vienna 139:15
143:13 157:2
10:22,25 15:5 32:18 51:3 undertake 158:5
view 16:7,12,16
161:5,15
18:15 23:14 88:25 111:17 undertaken
16:18,18 24:4
166:16
26:10,14 38:17 112:4 114:14 157:18
78:6,10 137:4
week27:13
39:5,14 55:23 114:22 127:21 undertakings
152:3,14
48:10 64:10
59:18 61:14 132:25 135:2 55:11
156:24 157:11
66:15 70:7
62:6 66:4,8,11 139:7 140:20 Unimpaired
viewed 148:5
151:23
68:5 82:19 149:9 150:9 146:12
Virginia 13 9: 16
Weiss 3:13 6:21
90:8 91:2,5 two-minute UNITED 1:2
vote 36:15
6:23 69:5
99:2 100:20 149:22 unsecured 4:4
voted 123:15
116:8 127:23
101:8 103:25 two-page 11:16 6:9 113:4 128:22,25
130:12 131:15 Tyson's 139:15 123:10,18 w 130:24
144: 19 15 8 : 12 148:11
wait 27:25
went99:18
158:18
u
unwilling 143:25
102:16 133:3
1 0 5: 1 7 Ill :24
transactions
u 163:2
USA 1:5 135:16
waiver 130:3,14
118:22,24
41:9 87:23
Uh-huh 24:25
use 9:24 12:22 want 29:12,14 132:10,19
88:4 121:13
42:4 47:5
37:13 53:24
32:15 45:4,7
146:5 151:2
149:4
51:10,18 54:17
58:19 59:10
56:6,8 57:13
152:2,13,16
transcript 163:8
66:21 71:21
108:13,18,19
62:763:18
158:15
164:14,15
72:5 96:16
114:17 117:15 88:25 90:16 weren't26:15,19
treat 63:20
102:11 103:24
117:17,20,22
93:18 96:23
27:2 79:6
treated 146:20
109:6 119:11
117:24 118:7,8
102:14,17
126:7 159:4,6
APP-00468
190
159:8 148:7 150:17 Zeiter 86:14,17 168:19 106168:16
West 3:5 150:19 107:15 000254 122:20 10951:10 3:21
we'll45:10 76:19 works 21:18 168:21 111:4 78:10
156:9 22:20
$
000264 122:20 97:18 98:4
we're 50:17 wouldn't 19:18
$10119:10
168:22 100:24 135:7
61:16 63:19,25
24: 14' 15' 19
$117109:9
00472128:23 167:12
82:9,15 146:2 148:2
$13137:2
167:15 115168:19
153:3 162:10 writing 62:23,25
$13,665,381
00473128:24 12 72:14,17 73:5
we've 56:20 written 34:23
136:4
167:16 101:20
99:19 137:5 wrong 109:17
$13.7 155:25
004791 107:3 12:181:12
WHARTON wrote 35:21
$150 140:2 143:4
168:16 122 168:22
3:13 42:12 120:20
145:25 146:13
004803 1 07:4 12212:16
WHEREOF
156:16,22
168:16 127127:18
166:18
X
157:4
005298 11: 13 168:24
whichever
X 167:2,7 168:2 $17184:9
167:12 128128:11,12
121:18
169:2 $21.3 156:6
005299 11: 13 129:3
willing 145:2,20
XI 135:17 $250 154:7
167:12 1285 3:15
146:2,8 147:22
$70109:13
005676 50:20 129129:18
159:6
y
$75 109:18
167:19 1290 3:9 4:5
Willkie4:9 6:15
yeah20:18 23:16
08 31:23 1365:14 66:6
wiped 155:13
39:14 40:15
0
71:20 107:7
156:20
48:1253:8 000001 79:24 1
112:19
wish 165:5
54:22 58:12 167:24
1 8:20 9:3 35:8
13,665,581 136:6
witness 1: 10
59:16,20 63:2 00000127 127:11
36:21 75:22
130130:10
57:19 76:23
74:23 78:16 168:23
80:6 82:25
133128:12
104:20 105:2
79:14,17 84:5 00000144 127:11
87:20 98:11
134 130:24,24
109:16 112:2
90:21 93:10,15 168:24
99:14
169:5
136:18,21
96:10 100:2,17 000004 79:25
10 48:10 55:7
138 131:8 167:5
138:20 163:4
105:2,2 112:14 167:24
66:15 94:3,11
14 81:3 116:6,21
164:1 165:23
118:23 125:12 000014 80:21
122:9 151:24
14th 3:5
166:10,13,18
147:19 155:13 168:6
10-13800 1:6
144127:18
167:3
159:21 000022 80:22
100 38:24 39:4
15114:8 122:11
word 51:19 52:9
year 12:19 31:7 168:6
43:21 49:18
122:23 123:22
59:23
31:24 33:20 000023 94:7
67:5,9
150 167:5
words 37:21
47:8 150:23 168:8
10019 3:5
15703581.1
39:21 159:14
years 20:11 00003194:8
10019-6064 3:15
81:23
work21:25
29:22 158:5 168:8
10019-6099 4:10
15703581.3
24:19 30:4
Yep 32:11 000032 97: 14
10019-6799 4:15
81:16
73:25 75:13,13
113:10 128:13 168:11
10020-1007 2:16
16 127:14
75:16,18,24
yesterday 10:16 000040 97: 15
10036-6797 3:22
160 167:6
76:17 77:4
11:5 168:11
101168:13
1633 4:14
120:17 137:22
York 1:2,11,11 000041 1 0 1 : 16
1010 80:20 94:6
17 52:2 58:17
155:21
1:13 2:16,16 168:13
97: 13 1 0 1 : 15
107:3,25
worked 29:21
3:5,5, 10,10,15 000050 1 0 1 : 1 7
107:3 115:24
110:23,24
31:20
3:15,22,22 4:5 168:13
168:5,8,10,13
115:24 121:19
working 48:3
4:5,10,10,15 000230 115:25
168:15,18
134:19 168:15
116:14
4:15 166:3,4,8 168:19
10104-0050 4:5
168:18
workout 30:23
000241116:2
10104-3300 3:10
17th 117:10
z
APP-00469
191
18 52:3 116:12 22nd 47:7 65:9 32:10 35:8 52nd 3:5 8 58:4,5,13,14
18th 53:7 66:6 69:18,23 55:16,18,19,22 529811:18 80:4,8 81:19
19 49:6 70:4,18,22 56:2,3 59:17 529911:18 82:3,8,9, 15,16
19th 1:11 53:10 71:5,7 72:24 59:19 65:7,12 5676 51:2 83:12 87:15,16
19803 1:15 74:12 77:14 80:6 95:23 87:19 96:11
117:12 121:19 101:23 108:10
6
167:11
2
141:12 151:24 108:15 117:14
6 50:23 54:23
S(a) 58:14 59:6
211:11,16 13:20
220.2154:14 4th Ill :4
55:20 56:21
80 168:6
22:13 28:8,20
23 33:5 94:12 4(a) 56:8
58:8,11,23
35:8 75:24
23rd 126:13,14 4/22 47:4
59:21 101:3
9
80:20 83:11
2323 2:21 40814:7 81:9
102:9,12 9 80:25 86:21
93:18 94:6,20
238 154:8,12 87:2 94:17
109:25 112:17 88:18 89:17
94:20 97:13
24 32:20 44 169:8
112:22 121:3 90:9 93:17
98:8 101:15
25 32:20 44:12 4515:9 19:10
153:6 114:11
116:23,24,25
79:23 85:17 52:22 60:23
6th 132:6 94 168:8
117:3 140:17
87:20 167:23 61:24 62:3
6(r) 55:8 59:14 95 65:24 84:10
168:5,8,10,13
250 154:10 91:8
6/1/10 81:8 97124:17 131:10
2nd 87:20 98:23
254 123:2 45-day 62:8
86:25 94:16 168:11
20 154:15,20,25
26 32:20 115:15
6/17 116:12 975 82:21 98:13
155:2
264 123:2 472129:8 43:5
6/17/10 106:25 102:4
20th 166:19
27 32:20 167:14 4724 46:23 65:8
110:13 168:14
200 82:23 98:15
27.27 83:20 472546:23
6/2/10 98:6
102:5
84:13 472633:14
6/22/10 116:9
20005-5763 2:5
2833:7167:16 4727 39:17
6/25 43:7 44:2,4
2004 31:15
29 20:6 28:13 473129:9
6/29/10 122:17
2006-4 13 9: 11
33:7 122:19 4791107:10
123:5 168:20
2007 18:14 20:6
123:7 168:21 48113:2 167:17
6/4/10 101:21
28:13
29th 126:13,19 48.5 121:5,6
60654 2:11
2007-C1 139:7
129:19,20
62.18 83:18 84:8
2010 1:12 26:5
3
4803107:10
64 167:22
31:8 47:21 3 28:4' 15' 17 3 5:8 655 2:5
64:13 65:2 37:9 113:3
5
73:23 79:24 123:9 158:5 5 14:18 29:22
7
87:20,21 98:8 3:43 162:12 48:17 54:13
7 64:19 65:15
101:23 108:2 3033:7108:2,5,8 55:16,19 65:25
114:2,5 122:2
111:6122:19 164:14 89:17 91:15
7/17/10 134:15
123:7 131:25 300 2:10 95:23 101:2,8
169:4
159:17,20 313:5 33:7 102:8 109:4
7/6/10 128:22
163:14 166:19 94:12 124:13 131:7
130:25
167:21,23 3297:19 140:11 167:4
7/7/10 127:10
168:21 3311 134:23 5/20 33:17,19
168:23
201173:23 114:8 3312 134:23 35:2
700 2:21
122:4 34.91 84:11 50 38:4,18 39:5
75 84:12
2133:5 3533 64:20 106:5 109:9
75219 2:21
22 33:5 47:20 3548 64:20 118:25 119:25
7874:10
64:13 65:2 120:2 126:2,17
79 167:24
81:3 167:21
4
127:5 132:17
169:8
4 14:18 29:5
157:24 167:19
8
APP-00470

EXHIBIT F
From:
Sent:
To:
Cc:
Subject:
Attach:
Jim,
Greer, Brian <brian.greer@dechert.com>
Thursday, June 17,2010 11:51 PM (GMT)
jzelter@apollolp.com
Sage, Michael <michael.sage@dechert.com>; Forti, David <david.forti@dechert.com>;
Gdula, Justin <justin.gdula@dechert.com>; Buck, Andrew
<andrew.buck@dechert.com>; Smith, Steven <steven.smith@dechert.com>; Herther-
Spiro, Nicole <ni col e. herther -spiro@dechert. com>; 'Andrew .Domont@lazard. com';
'andrew.yearley@lazard.com'; 'Brandon.Aebersold@lazard.com';
'Adam.Preiss@lazard.com'; 'Jeffrey.Altman@Lazard.com';
'MBeilinson@BeilinsonPartners.com'; 'Lascher, Michael'
<michael.lascher@lamcollc. com>; 'Frey, Susanne' <susanne.frey@lamcollc. com>
Innkeepers - Restructuring Termsheet Alternative A.DOC
Attached is Lehman's proposal related to the Innkeepers transaction. Please call Michael Sage or me with any questions.
Brian
Brian E. Greer
Dechert LLP
New York, NY 1 0036-6797
(212) 698-3536 telephone
(212) 698-0456 facsimile
www.dechert.com
This e-mail is from Dechert LLP, a law firm, and may contain information that is confidential or privileged. If
you are not the intended recipient, do not read, copy or distribute the e-mail or any attachments. Instead, please
notify the sender and delete the e-mail and any attachments. Thank you.
APP-00652
EXHIBIT 19
Term Sheet Alternative A
Dechert Draft 6/17/10
Preliminary and Confidential
Subject to FRE 408
Illustrative Terms of Proposed Restructuring
June 17, 2010
The following are the proposed principal terms of a restructuring transaction between
Lehman ALI Inc. ("Lehman"), as mortgage lender, and Innkeepers USA Trust
("Innkeepers" and, collectively with its subsidiaries, the "Company").
1
The transaction
(the "Transaction") contemplates a conversion of the Company's obligations under that
certain mortgage loan agreement, dated as of June 29, 2007, among Lehman and the
affiliates of the Company parties thereto (the "Floating Rate Debt") into significantly all
the equity ofthe reorganized Company. The Transaction would be effectuated through a
prepackaged or prearranged plan of reorganization (the "Plan") in chapter 11 bankruptcy
cases filed by Innkeepers and its subsidiaries (the "Chapter 11 Cases") in the United
States Bankruptcy Court for the Southern District ofNew York (the "Bankruptcy
Court"). This term sheet has been prepared for discussion purposes only and is non-
binding, but shall serve as the basis for further negotiations regarding a definitive
agreement.
The terms discussed herein are an integrated offer, are not divisible except as described
herein, and are subject to the terms and conditions hereof This term sheet is provided in
confidence and may be distributed only with the express written consent ofLehman.
This term sheet does not include a description of all of the terms, conditions and other
provisions that are to be contained in the definitive documentation governing such
matters, which remain subject to discussion and negotiation to the extent not inconsistent
with the specific matters set forth herein. This term sheet is proffered in the nature of a
settlement proposal in furtherance of settlement discussions, and is intended to be entitled
to the protections ofRule 408 of the Federal Rules ofEvidence and any other applicable
statutes or doctrines protecting the use or disclosure of confidential information and
information exchanged in the context of settlement discussions, and shall not be treated
as an admission regarding the truth, accuracy or completeness of any fact or the
applicability or strength of any legal theory.
The entry into any definitive transaction on the terms set forth in this Term Sheet, or
otherwise, are subject to approval of the United States Bankruptcy Court administering
the chapter 11 case ofLehman Brothers Holdings Inc.
THIS TERM SHEET IS NOT AN OFFER ORA SOLICITATION WITH
RESPECT TO ANY SECURITIES OF THE COMPANY OR A SOLICITATION
OF ACCEPTANCES OF A CHAPTER 11 PLAN. ANY SUCH OFFER OR
This term sheet is not being provided on behalf of SASCO 2008-C2, LLC (the "Mezzanine
Lender") in connection with the mezzanine loan with respect to the collateral securing the
Floating Rate Debt or the mezzanine loan with respect to the Anaheim property (the "Mezzanine
Debt"). Lehman does not make any representations with respect to the Mezzanine Lender.
15703581.13.BUSINESS
APP-00653
Subject to FRE 408
SOLICITATION SHALL COMPLY WITH ALL APPLICABLE SECURITIES
LAWS, IF ANY, AND/OR PROVISIONS OF THE BANKRUPTCY CODE.
Terms:
Treatment of Claims and Eguity Interests Under the Plan:L
Floating Rate Debt Lehman will receive, in full and final satisfaction of its secured
mortgage claims in respect of the Floating Rate Debt, 97% of the
issued and outstanding New Equity (as defined below).
Mezzanine Debt The Mezzanine Debt will be deemed cancelled, and the Mezzanine
Lender will not retain any property or interest on account of such debt
under the Plan. The Mezzanine Lender will be deemed to vote against
the Plan. No action by the Mezzanine Lender will be required under
this Term Sheet or any definitive documentation with respect to the
terms set herein.
Fixed Rate Debt Holders of the mortgage debt secured by the properties in the Fixed
Rate Pool (the "Fixed Rate Debt") will receive, in full and final
satisfaction of their claims in respect of such debt, new mortgage
notes in an aggregate face amount not to exceed $550 million, secured
by mortgages on the properties in the Fixed Rate Pool. The terms of
the new Fixed Rate Debt notes are subject to approval, in form and
substance, by Lehman and the Company.
If holders of the Fixed Rate Debt make a 1111 (b) election, the
present value of the new Fixed Rate Debt note reflecting such election
shall not exceed $550 million and the applicable discount rate and the
terms of such note shall be subject to approval, in form and substance,
by Lehman and the Company.
Other Secured Holders of mortgage debt secured by mortgages at the existing seven
Debt properties (the "Other Properties") outside the Floating Rate Pool
and the Fixed Rate Pool (the "Other Secured Debt") will receive, in
full and final satisfaction of their claims in respect of such debt, new
mortgage notes in an aggregate face amount not to exceed $150
million, secured by mortgages on the Other Properties. The terms of
the new Other Secured Debt notes are subject to approval, in form and
substance, by Lehman and the Company.
2
The descriptions herein of the expected treatment of holders of the Mezzanine Debt, the Fixed
Rate Debt and the Other Secured Debt are based on the Moelis & Co presentation.
15703581.13.BUSINESS 2
APP-00654
CJeneral lJnsecured
Claims
Deficiency Claims
Administrative
Claims
Priority Claims
Existing Equity
CONFIDENTIAL
Subject to FRE 408
If any holders of Other Secured Debt make a 1111 (b) election, the
aggregate present value reflecting any such election together with the
face amount of any non-electing Other Secured Debt shall not exceed
$150 million and the applicable discount rate and the terms of such
notes shall be subject to approval, in form and substance, by Lehman
and the Company.
Debt allocation among the Other Properties and identification of any
Other Properties that should be removed from the Company's system
shall be agreed between Lehman and the Company.
Shall not receive any recovery under the Plan and shall be deemed to
have voted against the Plan. Lehman shall determine, in its sole
discretion, whether to provide a gift of cash or equity to any class of
general unsecured claims.
lJnsecured deficiency claims of holders of Fixed Rate Debt and Other
Secured Debt shall not receive any recovery under the Plan without
the consent ofLehman and the Company, and shall be deemed to have
voted against the Plan.
Shall be paid in cash in the ordinary course of business or upon the
effective date of the Plan (the "Effective Date"), unless the holders of
such Administrative Claims agree to different treatment.
Shall be paid in cash on the Effective Date; provided, that on the
Effective Date Lehman and the Company may determine to defer
priority tax claims in accordance with the Bankruptcy Code.
On the Effective Date, all prepetition common and preferred shares of
Innkeepers will be cancelled, and holders of such interests would not
retain any property on account of such interests under the Plan. To the
extent Lehman and the Company determine that the Company's
existing corporate structure would be the most tax efficient for
Lehman and the Company on the Effective Date, the prepetition
equity interests of each of Innkeepers' subsidiaries will be deemed
reissued in accordance with the Company's prepetition corporate
structure. If Lehman and the Company determine that a different
structure would be more beneficial to Lehman and the Company on
the Effective Date, the Plan shall provide for such structure, provided,
however, that the tax objectives of Lehman shall be prevailing.
3
LEH-ALI 004794
APP-00655
Subject to FRE 408
Means of Implementation:
Bankruptcy
Pleadings
DIP Financing
Use ofCash
Collateral
CONFIDENTIAL
All material pleadings filed by the Company in connection with the
Chapter 11 Cases, including all first-day motions, shall be in form and
substance acceptable to Lehman.
DIP financing to be provided in two separate facilities:
(i) a DIP facility provided in an amount equal to $75 million, which is
necessary to complete certain Marriott PIP requirements, secured by
senior, priming liens on the Fixed Rate Collateral on terms to be
reasonably agreed by Lehman (the "Fixed Rate DIP Facility"). The
Fixed Rate DIP Facility shall have a maturity date at least 12 months
after the Petition Date and shall have no financial covenants or any
control features. On the Effective Date of the Plan which is consistent
with the terms hereof, all amounts outstanding under the Fixed Rate
DIP Facility shall be repaid from the proceeds of the New Debt and
the AIC Equity Contribution (each as defined below).
(ii) a DIP facility provided by Lehman in an amount equal to
approximately $18.9 million (funded by $12.5 million from the PIP
escrow and $6.4 million FF&E escrow), secured by senior, priming
liens on the Floating Rate Collateral on terms to be agreed between
the Company and Lehman (the "Floating Rate DIP Facility").
Immediately prior to the commencement of the Chapter 11 Cases,
Lehman will sweep all funds from various escrows/reserves and the
Company's blocked accounts that constitute its cash collateral, which
funds will be made available as loans under the Floating Rate DIP
Facility. The other terms of the Floating Rate DIP Facility are to be
determined. On the Effective Date of the Plan which is consistent
with the terms hereof, all amounts outstanding under the Floating Rate
DIP Facility shall convert to New Equity.
In addition to providing the Floating Rate DIP Facility, Lehman will
consent to the use of its cash collateral on terms acceptable to
Lehman, including the following:

Current payment ofLehman's legal and financial
advisors' fees and expenses;
Current payment of interest during the pendency of the
Chapter 11 Cases at an interest rate equal to the non-
default contract rate under the Floating Rate Debt;
Company's use ofLehman's cash collateral shall be
4
LEH-ALI 004795
APP-00656
New Equity
AIC Purchase of
New Equity
CONFIDENTIAL
Subject to FRE 408
limited to use for the benefit of the Floating Rate
Collateral; and
Company's use ofLehman's cash collateral will terminate
immediately upon the occurrence of a Termination Event (as defined
below), including the failure of the Company to meet the Plan
Milestones (as defined below).
The Plan shall provide that Innkeepers will issue new shares of
common stock (the "New Equity"), which shall be initially allocated
as follows:
Shares of the New Equity representing 97% of the
issued and outstanding New Equity will be distributed
to Lehman pursuant to the Plan in full satisfaction of
the Floating Rate Debt and the Floating Rate DIP
Facility (the "Initial Lehman Shares"); and
Shares of the New Equity representing 3% of the
issued and outstanding New Equity will be distributed
to the Company's management and/or unsecured
creditors.
The Plan shall provide that the issuance of the New Equity will be
exempt from (i) securities laws in accordance with section 1145 ofthe
Bankruptcy Code and (ii) transfer taxes in accordance with section
1146 of the Bankruptcy Code.
After confirmation of the Plan and prior to the Effective Date, Lehman
will sell, without any representations or warranties, its right to receive
50% ofthe Initial Lehman Shares (the "Shares"), to Apollo
Investment Corp. ("AIC") in exchange for cash in an amount equal to
$117.5 million, with the proceeds payable to Lehman (the "Sale
Proceeds"). In the event the transfer tax exception under 1146(a) of
the Bankruptcy Code is determined by the Bankruptcy Court to be
inapplicable, AIC and Lehman will cooperate to structure the sale of
such rights in a manner that will not incur transfer taxes; provided,
however, that in the event such taxes are incurred as a result of the
sale, AIC shall be responsible for payment of such taxes in addition to
the Sale Proceeds. Thereafter, Innkeepers will incur senior secured
debt in an amount equal to $75 million less the amount of the AIC
Equity Contribution (the "New Debt"), provided by AIC, with the
proceeds to be contributed to the Company to fund property
improvement plans ("PIPs") and cycle renovation. The New Debt
shall be on terms mutually agreeable to Lehman and the Company.
5
LEH-ALI 004796
APP-00657
Conditions
Precedent to
Lehman's
Obligations Under
PSA
Termination
Events Under
PSA, Floating Rate
DIP Facility and
Use ofCash
Collateral
CONFIDENTIAL
Subject to FRE 408
AIC shall make an additional equity contribution in an amount equal
to $[_] million in respect of its guarantee of the Company's PIP
obligations with respect to the Fixed Rate Pool (the "AIC Equity
Contribution").
On the Effective Date, Innkeepers shall distribute the New Equity as
follows:
48.5% to Lehman;
48.5% to AIC; and
3% to the Company's management and/or unsecured
creditors.
The Transaction will become binding on Lehman when Lehman, AIC
and the Company execute a plan support agreement (the "PSA") that
incorporates the Transaction as set forth herein, including:
Receipt by Lehman of a Plan term sheet incorporating
the terms set forth herein and otherwise acceptable in
form and substance to Lehman;
Agreement reached with Marriott in form and
substance satisfactory to Lehman;
Agreement reached with AIC in form and substance
satisfactory to Lehman; and
Innkeepers and each of its subsidiaries, including each
obligor under the Floating Rate Debt, shall be a
signatory to the PSA.
The PSA, Floating Rate DIP Facility and use ofLehman's cash
collateral shall terminate automatically upon the occurrence of any of
the following events (each, a "Termination Event"):
Failure to meet any of the following milestones (the
"Plan Milestones"):
o Motion to assume the PSA filed on the Petition Date;
o Order entered authorizing the assumption of the PSA
no later than 30 days after the Petition Date;
6
LEH-ALI 004797
APP-00658
CONFIDENTIAL
Subject to FRE 408
o Final Orders entered authorizing the Fixed Rate DIP
Facility, Floating Rate DIP Facility, the use of
Lehman's cash collateral and the use of the cash
collateral securing the Fixed Rate Debt consistent with
the terms hereof no later than 30 days after the Petition
Date;
o Disclosure Statement and Plan consistent with the
terms hereof filed no later than 20 days after petition
date;
o Disclosure Statement consistent with the terms hereof
approved by the Bankruptcy Court no later than 60
days after petition date;
o Order confirming a Plan consistent with the terms
hereof entered no later than 180 days after petition
date; and
o Effective Date of the Plan no later than the earlier of
(i) 240 days after the Petition Date and (ii) April 15,
2011.
The failure by AIC to purchase the Shares by April 15,
2011;
The taking of any action by Marriott, including without
limitation the filing of a motion seeking relief from the
automatic stay or seeking to terminate any franchise
agreement with respect to any ofthe Company's hotel
properties other than those franchise agreements listed
on Schedule A;
The entry of any order of the Bankruptcy Court
granting relief from the automatic stay, including (i) to
permit any exercise of remedies by the lenders or
special servicer under the Fixed Rate Debt other than
limited relief solely to permit the delivery of default
notices under the terms of the Fixed Rate Debt and

(ii) to permit termination of any franchise agreement
with Marriott or any other hotel brand other than those
franchise agreements listed on Schedule A;
The filing by the Company or Marriott of any motion
or other request for relief seeking to (i) dismiss any of
7
LEH-ALI 004798
APP-00659

CONFIDENTIAL
Subject to FRE 408
the Chapter 11 Cases, (ii) convert any ofthe
Chapter 11 Cases to a case under chapter 7 of the
Bankruptcy Code or (iii) appoint a trustee or an
examiner with expanded powers pursuant to
section 1104 of the Bankruptcy Code in any of the
Chapter 11 Cases;
(i) The filing by the Company of any motion or other
request for relief seeking an extension of the Plan
Milestones or any alteration of the remedies upon
termination set forth herein without the express written
consent ofLehman in its sole discretion; (ii) the filing
by the Company of any pleading supporting any
motion from any other party to obtain such extension
or alteration; or (iii) the failure of the Company to
oppose any motion from any other party to obtain such
extension or alteration;
The entry of an order by the Bankruptcy Court (i)
dismissing any of the chapter 11 cases, (ii) converting
any of the Chapter 11 Cases to a case under chapter 7
of the Bankruptcy Code, (iii) appointing a trustee or an
examiner with expanded powers pursuant to section
1104 of the Bankruptcy Code in any of the Chapter 11
Cases or (iv) making a finding of fraud, dishonesty or
misconduct by any officer or director of the Company,
regarding or relating to the Company;
The withdrawal, amendment or modification by the
Company of, or the filing by the Company of a
pleading seeking to amend or modify, the Plan or PSA,
which withdrawal, amendment, modification or
pleading is materially inconsistent with the terms
hereof or the Plan or is materially adverse to Lehman,
in each case in a manner not acceptable to Lehman, or
if the Company files any motion or pleading with the
Bankruptcy Court that is inconsistent in any material
respect with the terms hereof or the Plan (in each case
with such amendments and modifications as have been
effected in accordance with the terms hereof) and such
motion or pleading has not been withdrawn within
three (3) business days;
The filing of any motion to approve a disclosure
statement or Plan by the Company, AIC or Marriott, or
8
LEH-ALI 004799
APP-00660
CONFIDENTIAL
Subject to FRE 408
the approval by the Bankruptcy Court of any motion
filed by any other party, that incorporates a Pro Forma
Capital Structure or any other terms inconsistent with
the terms and conditions set forth herein;
The granting by the Bankruptcy Court of relief that is
inconsistent with the terms hereof or the Plan in any
material respect (in each case with such amendments
and modifications as have been as have been effected
in accordance with the terms hereof);
The issuance by any governmental authority, including
the Bankruptcy Court or any other regulatory authority
or court of competent jurisdiction, of any ruling,
determination or order making illegal or otherwise
restricting, preventing or enjoining the consummation
of a material portion of the Transaction, including an
order denying confirmation of either of the Plans and
such ruling, determination or order has not been
vacated or reversed within five ( 5) business days of
Issuance;

The occurrence of (i) a change that has a material
adverse effect on the use, value or condition of the
Company or AIC, their respective assets or the legal or
financial status or business operations of the Company
or AIC or (ii) a material disruption or material adverse
change in the financial, real estate, banking or capital
markets; and
Lehman determines, in its sole discretion, after
completion of its tax due diligence, that the anticipated
tax obligations of the Company on the Effective Date
are unacceptable to Lehman.
9
LEH-ALI 004800
APP-00661
Remedies Upon
Termination
Bankruptcy Court
Approval ofPSA
Pro Forma Capital
Structure
CONFIDENTIAL
Subject to FRE 408
Upon the occurrence of a Termination Event, the Company will be
deemed to have consented to the modification of the automatic stay to
permit Lehman to take any or all of the following actions without
further order of or application to the Bankruptcy Court:
Terminate the Company's use of cash collateral and
use of proceeds under the Floating Rate DIP Facility;
Declare all adequate protection obligations owed to
Lehman to be immediately due and payable;
Require the Company to file a motion to conduct a sale
of the Floating Rate Collateral pursuant to 363 of the
Bankruptcy Code;
Require the Company to consent to the termination of
exclusivity to permit Lehman to file a Plan; or
Exercise rights and remedies as to all or such part of
the Floating Rate Collateral that Lehman shall elect in
its sole discretion, including, without limitation,
foreclosing upon and selling all or a portion of such
collateral.
The Company shall, on or immediately after the commencement of
the Chapter 11 Cases, file a motion seeking authorization to assume
the PSA. The order approving the PSA shall include provisions that
the Company (i) shall not seek an extension of the Plan Milestones or
any alteration of the remedies upon termination set forth herein
without the express written consent of Lehman in its sole discretion,
(ii) shall not support any motion from any other party to obtain such
extension or alteration; and (iii) will oppose any motion from any
other party to obtain such extension or alteration.
Following the consummation of the Transaction, the reorganized
Company will have at least $50 million in pre-funded Marriott capital
expenditures and brand standard work and $10 million of cash on
hand after repayment of the Fixed Rate DIP Facility and be capitalized
as follows:
Fixed Rate Debt: less than or equal to $550 million
Other Secured Debt: less than or equal to $150 million
10
LEH-ALI 004801
APP-00662
Governance
Shareholders
Agreement
Management
Incentive Plan
REIT Status
Property Manager
CONFIDENTIAL
Subject to FRE 408
New Debt: less than or equal to $75 million less the amount of the
AIC Equity Contribution
Except as set forth above, on the Effective Date, the Company shall
not have any debts or liens encumbering the Company's assets.
The Board ofDirectors will initially consist of7 members: 2 members
nominated by Lehman, 2 members nominated by AIC and 3 members
to be mutually agreed.
A super-majority vote of 66 2/3% vote will be required for material
transactions, including, among others, a merger or consolidation,
equity issuances, debt issuances in excess of $10 million in the
aggregate, sale or disposal of a property and such other events as
determined by Lehman and the Company.
Lehman and the Company shall agree on a future date by which the
Company shall engage an investment banker to market and sell the
Company; provided, that such date shall not be later than three years
after the Effective Date unless otherwise agreed by Lehman.
The Plan shall provide that, on the Effective Date, Lehman, AIC and
all other holders ofNew Equity to be issued pursuant to the Plan shall
enter into a shareholders agreement that provides, among other things,
for restrictions on the transfer of the New Equity and customary
protections, including, but not limited to, tag-along/drag-along rights,
all on terms to be mutually agreed.
The Plan shall provide for a management incentive plan in form and
substance acceptable to Lehman and the Company providing for a
reserve of up to 3% of the New Equity for options to be allocated to
management under the management incentive plan.
Lehman and the Company shall, after the Effective Date, determine
whether to maintain Innkeepers' status as a real estate investment
trust.
Prior to the Effective Date of the Plan, Lehman and the Company
shall designate a manager for the Company's properties. If Island
Hospitality Management, Inc. ("Island") is not selected as the
manager, the Plan shall provide that Island shall cooperate with the
Company and the replacement manager to effectuate an orderly
transition to the replacement manager. Any agreement to effectuate
such transition shall be in form and substance acceptable to Lehman.
11
LEH-ALI 004802
APP-00663
Releases
Professional Fees
CONFIDENTIAL
Subject to FRE 408
The Plan shall include a full discharge and release of liability in favor
of (a) the Company and each of its subsidiaries, (b) Lehman, and
(c) each oftheir respective principals, employees, agents, officers,
directors, and professionals from: (i) any and all claims and causes of
action arising prior to the Effective Date and (ii) any and all claims
arising from the actions taken or not taken in good faith in connection
with the Transaction.
The Company shall pay the professional fees and expenses incurred
by Lehman in connection with the Transaction.
12
LEH-ALI 004803
APP-00664

EXHIBIT G
'I t
- -- -- --- - --- -----
. - - .. . ... -- ... -....
______ -------- ___ _ .....

... .. __________ ..... _____________________ _
... ----- __ --- ----- - --- ------- ----------- ---- .. ---- - -- _ -- ------ -----
-- .... ::::-.. ---------------------- ------------------------- --------- ------------- --------------------
---- __ ------ --- .... -------------------------- --- --- ------ .... -- ... --- ---- --- -- ---
..... - - ............ --------------- -------------- ----------
l.... t:1""H....:.t.. M w.._ C.....L./1
.. . . . - ............................................. -..... .. ........ - - ........ ............. .......... ... .... ..... - .. . .. ................... ........... ---- ... --- ...................... .- ........ - .. ----------
..................... , ... -- .
.... L. Lk __ ------ --- -- ---- ........ --- ----- --
. - .... ---- --- .... --

... ; Pp ___ ...
. -
---

.lf ______ _
- .q - .... -- -- .
.... _ ____ f...,&t,-{,""

q __ ....
LEA-AU 004721 ..
-........................ Gth.'
- ......

APP-00584
EXHIBIT 11
REDACTED
----- --- --- - --------- ---
- --j .
f<
. - -
. ..... .. .. .
_ cfl'
1
tv-1 wuA ..{.)J'b r......
-- - .. .. ... . ------ --- .
.. .J-,-- 1-tJ_h.Jtr- .
. 11 ... 11 .-.-<-- L.) 1 k-A,_ to r-:
_ __..
--+--. . .. . ... . ... - -. -
., A

. , ',)r
REDACTED
---- .. .. .. - --. -- -- . -- -- -- -- --- - - -- - - -- ----- ..... --- - -- . ----- ----- ---- .. -- -- -- ...... - ----- -------- ------------------- ----- - - ---------------- ----------- ---------- ------- - -- --;-----
. -- -. - -- . --- -------- -- -------- - . -.. -... - ... --------- -- -- --. -- --- ... ... --- --------- .. ----- ------- ----------- - _, ____________________ --- ---- - -- --- - --- -- --- .......
I .. _ 4
i' 1 --- -- - - .... _., -......
- ---. ,-;;. "':P'::ijl,l"l"'- .... ;- ----- '- 1
APP-00585
. . ... .... -- -- --- .. . - ....... . ... . ... . . . --- ...... . ..... -.. ------------_ ,, . .. .. . -. .. . __ ._. .... . ____ . - -- -- ----. - -- -- - . ,_ ... .... ......... ..... . , . . , ,. ___ _
: ... .. .... .... .. - ----- ..... -- --------.- .
...... __ ___ rc,.,cdr ---- -- ----- .... -------- ------- - ___ __ ___ --- -________ ___ .... .... ___ ______ _
- .. - - -: :
-
- --- ----- ----. ... - - --- ------- -- -
.. .t:t:. .
. .. . - .. ... . -
...... . .. ... . .... ..... ... .. -- - ...... . .. ____
n. _ ....
'd'
c . .
\ .. ., .
.. . .. "::'U_,J\ . I. t ... .. .... -
(._ r-""" lbt._
.. - .. . . -- . _; _ -- . . . ..

REDACTED
' I I
I
, _ :. _ _. : _!__ .: ......
.... ..-.: .. -: .... .. .. - ---- . . .

APP-00586

'
I
I
\.. '-f/2-2.- . . ; . .
2-oto __ J, __ f,_ v.-- L _ . . ..
. .-, ...
1- CM .. -"> . .
I - L p (.,J- h> lo-A- '(<A-1'" I t-> I rfb.s L (, -e ;<.p-e
I 1J V(wP--1-- . .. . . . . . . . .. . ... . . .
. . ,.
I (, b p.. Lot I
I .G
I fUv &-.vwY!-.. z:>df.._Ji'QO a-uu.,__<f-f..
_ I , . . . .. . &--,_,. Dvt,..i
I . (IJ-Y1 vv a ... J,
1

ol- (.:> o.l- fiw . :S M.v..._
I f<-"." d. . r..r;=1 ,se-t- s (t U
of ur"-Jf)':P i5. "<fr"- 43d/C.... r--_ .. (
(b--s.l.::t ..
' c: (f .e_"
REDACTED
LEH-ALI 004724
APP-00587
-
- wd( f.k .
-hJ /l-to--rt.t"ff c.r.e.-icb>- . r.- ... . . _
- ... _ .. . . --- -- ---------- --- --
- 1.0 I ,> C UV.. fv-.{( \ L I " c if" ( 7-
. . . . .. .
REDACTED
LEH-ALI 004725

e
&
&.
..
-0
-- --
- -C};

. .e}
--
e;

- -r
r

APP-00588
: }_... , .,. . '. \ .
. . .
. t. ;. :,
REDACTED
~
~

~

,.
,,
i

-
. , / : ~ ~
APP-00589
..- . Ot-v-A At.ll--fl
I U . _- ' ,-c:Jc--._
;!t C"--
- . . . :i' .
REDACTED
. :: '-.. . . .. :.
. . .. '
. . -- .:. . .. :.- . : . .-- -- ,
. ' . -.. .
.. -
. .. : , . _: . . . . ..
,. : ,-
.. . ..... : . : ": .
, ; : I ' :,
. 4
, ... -..
. . : -,: ;.. . . .. : ...
. ':
. : .. .
' . :l ... ... 'J-, .. ' : .
'.". , I
LEH-ALI 004727
APP-00590

. . J} \1---. _ _l_l __
11
___ c ___ --11
. .. - -- .. ------- --- -- - -- -----
. - --
- - . .1-.:. ---- ----------- ---- ---r
.
i
. ----- - .
,. - - -- --- --

.--- --

- -- --

- -- --- -
J
J
J

------1-- -
-
I
-
I
. --- - . -- - . ------ ---- - ----- ----------- - --
. - -.. .... . - ... . - -------- - - ---- . . . -
1-boL.r - -. . -- - ___ ( _- ____ -. --------- ---
-"h-, - fiT(. -- ---- - ---
. I b
. t.JA.I\\- 'h. _ _ _ "' - .
. ---- ------ -----1
---- - --------- -- . . ------1
REDACTED
- --- ---- . -- --------1
----- .. --- -- -- . .. - -------------------- - ------
. - - - --- --- - -- -- -----------------------1
. . - --- - - - - ------ ---- -- - -- ------!
REDACTED
---- ---------------- --------------1
---------- ---- -- --
- - ---- ---- --------------------t
--------------- ---
--+-- -- -------- - ---- ------- . ------- ----- --
APP-00591
.. ,
I
r----
t
'------
: . ,, ... . ..
. ~
Y
.
,.. ..
_.= . . .
REDACTED
-------- -- .
- - - - ~ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ ~
------------
APP-00592
--+---- -----. ----------- - -- . -
REDACTED
----
--... - -- - .. - ----- -- --It
--- -*,j --:...-,
-i?li . .. . . : . .. ... .rv\L.
,.,.. : -/ J \-1 . - ( > \ . , J., .. ..' . " . . .-11" J! ;I... ' ' ;'.
- .. ---- .. - -- - ___ :... f=-.JJ-f I i' .>-' --- - - - - - --- ---
:--- . . _-
:.-- .
=-- -- -..
:.--- - - ... .
- ---.
Ja- . -
a- .
---------
. --
------------ ..
REDACTED
.. _____ _____ .. _______ _
---- -- . ... ------------------- -- ------'--'
. ..... _. ________ ----------- -- - - --- .... - - .
___ .. __ , _______ __ _
. ... --- -- - - --------- ... .. . . .. ----------- ------- - - ______________________________ ____,
lil!'2.-----l------'---------- _____ __ , _____ ----,----
004730
APP-00593
l
i
J
r
I
1--
1

REDACTED

l-

i-'
r--------r------ --,----------- ------------------,
I
r
-----1=--.--
REDACTED
----
1 .
APP-00594

EXHIBIT H
1
2 UNITED STATES BANKRUPTCY COURT
3 SOUTHERN DISTRICT OF NEW YORK
4 Case No. 10-13800-SCC
5 - - - - - - - - - - - - - - - - - - - - -x
6 In the Matter of:
7
8 INNKEEPERS USA TRUST, et al.,
9
10 Debtors.
11
12 - - - - - - - - - - - - - - - - - - - - -x
13
14 United States Bankruptcy Court
15 One Bowling Green
16 New York, New York
17
18 July 20, 2010
19 11:11 AM
20
21 B E F O R E:
22 HON. SHELLEY C. CHAPMAN
23 U.S. BANKRUPTCY JUDGE
24
25
Page 1
VERITEXT REPORTING COMPANY
212-267-6868 www.veritext.com 516-608-2400
INNKEEPERS USA TRUST, ET AL.
1 THE COURT: Okay.
2 MR. SATHY: Your Honor, there is -- there was one
3 point that I do want to raise with respect to the plan support
4 agreement. And Midland makes some issue with the relationship
5 between Lehman and Apollo, with respect to their agreement.
6 The agreement with the company and Lehman is that Lehman will
7 be converting a hundred percent of its debt into equity.
8 That's our plan support agreement. Lehman has reached an
9 agreement with Apollo that allows for Lehman to sell fifty
10 percent of the equity, should this transaction be approved --
11 THE COURT: To --
12 MR. SATHY: -- for a fixed price. And that was
13 Lehman's decision. Our agreement with Lehman does not require
14 that Apollo receive anything. Our agreement with Lehman is
15 that they find a purchaser for half of the equity, presumably
16 for the business reasons that they believe is important for
17 them and their estates, and presumably the way that they will
18 present that request to Judge Peck. It's a termination event
19 under our plan support agreement, if that agreement -- if their
20 agreement -- if they're not able to find a purchaser. So in
21 some ways they are related. But our agreement is not that --
22 THE COURT: And that's the sentence that was added to
23 the new affidavit that I got, correct?
24 MR. SATHY: That's right, Your Honor. And I do -- and
25 I should correct that point. This is, frankly, a mea culpa on
Page 23
212-267-6868 www.veritext.com 516-608-2400
INNKEEPERS USA TRUST, ET AL.
1 us. We had had that disclosure in probably twenty or thirty
2 versions of the affidavit that we were working on. We know
3 that's important disclosure, obviously. In a draft of an
4 affidavit that we sent to Midland last week, it included that
5 disclosure. And they will agree that on July 14th we sent them
6 an affidavit that includes that disclosure. And we met with
7 them the very next day and told them about it, obviously.
8 So this is not one of these issues that people are
9 trying to hide. And I hope that this case does not become "I
10 gotchas". But that is disclosure that we thought was
11 important --
12 THE COURT: Okay.
13 MR. SATHY: -- and it needed to be made.
14 THE COURT: Fair enough.
15 MR. SATHY: Your Honor, before I conclude, just a
16 general sense of our next steps. Obviously, we want to operate
17 the business seamlessly, with our guests not being aware of the
18 Chapter 11 filing or not being affected by it. We want to
19 build more consensus around our restructuring plan. And we
20 intend to do so. And we intend, in the next forty-five days,
21 to reach a resolution on definitive documents with respect to
22 our DIPs, with respect to the plan, and ultimately, assuming
23 that things move forward with Lehman in their court, that we'd
24 be filing our plan within the next forty-five days.
25 The PSA provides for a relatively aggressive time
Page 24
212-267-6868 www.veritext.com 516-608-2400

10000003719

Caricato da

Informazioni sul documento

Descrizione originale:

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

10000003719

Caricato da

Copyright:

Formati disponibili

DEWEY & LEBOEUF LLP FILED UNDER SEAL

1301 Avenue of the Americas

.... ..-.: .. -: .... .. .. - ---- . . .

Potrebbero piacerti anche