James H.M. Sprayregen, P.C. Paul M.

Basta KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York 10022-4611 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 and Anup Sathy, P.C. Marc J. Carmel (admitted pro hac vice) KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, Illinois 60654-3406 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 Counsel to the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: INNKEEPERS USA TRUST, et al.,1 Debtors. ) ) ) ) ) ) ) Chapter 11 Case No. 10-13800 (SCC) Jointly Administered

DEBTORS RESPONSE TO DOCUMENTS FILED BY GARETH TOOLY REGARDING THE SERIES C PREFERRED SHARES ISSUED BY INNKEEPERS USA TRUST1 Innkeepers USA Trust and certain of its affiliates, as debtors and debtors in possession (collectively, the Debtors), hereby submit this response (the Response) to various

The list of Debtors in these Chapter 11 Cases along with the last four digits of each Debtors federal tax identification number can be found by visiting the Debtors restructuring website at www.omnimgt.com/innkeepers or by contacting Omni Management Group, LLC at Innkeepers USA Trust c/o Omni Management Group, LLC, 16161 Ventura Boulevard, Suite C, PMB 606, Encino, California 91436. The location of the Debtors corporate headquarters and the service address for their affiliates is: c/o Innkeepers USA, 340 Royal Poinciana Way, Suite 306, Palm Beach, Florida 33480.

K&E 17925845

documents filed on the Debtors docket by Gareth Tooly (collectively, the Documents).2 In support of this Response, the Debtors respectfully state as follows: Response 1. In the Documents, Mr. Tooly states that he is a holder of 8% Series C cumulative

perpetual preferred stock issued by Debtor Innkeepers USA Trust (the Preferred C Shares). Mr. Tooly requests that the Court enter a judgment declaring that Apollo Investment Corporation (AIC) is obligated to honor the value of the Preferred C Shares and states that the Preferred C Shares should not be eligible for restructuring in Innkeepers Chapter 11 bankruptcy. 2. Mr. Toolys current holdings of Preferred C Shares represent his interests in

Innkeepers USA Trust, one of the Debtors.3 As an interest in an entity that is part of the Debtors chapter 11 cases, the Preferred C Shares are obviously part of these cases. Deciding otherwise would deprive the Debtors of their rights in the bankruptcy process, including the equitable resolution of all of their prepetition claim and interests in a single forum and the
2

The Documents consist of: (a) Statement of Retired Investor Re: Debtors Bankruptcy Filing [Docket No. 261]; (b) Statement of Retired Investor (Additional Information) Re: Debtors Bankruptcy Filing [Docket No. 262]; (c) Letter to the Honorable S.C. Chapman re Declaration of Dennis Craven, CFO of Innkeepers USA Trust [Docket No. 324]; (d) Motion for Judgment [Docket No. 414] (the September 2 Docket Entry); (e) Motion for Adjournment re: Motion for Judgment [Docket No. 454]; (f) Letter, dated 10/8/2010, to the Honorable Shelley Chapman in Support of Motion for Judgment [Docket No. 574]; and (g) Notice of Hearing [Docket No. 586]. In January 2004, an entity named Innkeepers USA Trust (Original Trust Entity), which is not the same entity as the Debtor in these chapter 11 cases with that name, completed an offering of 8% series C cumulative perpetual preferred stock (the Original Preferred Shares). The 2007 transaction with AIC involving the Original Trust Entity and its subsidiaries (the 2007 Transaction) merged the Original Trust Entity into Grand Prix Acquisition Trust (an entity 100% owned by Grand Prix Holdings LLC, which was and continues to be a wholly-owned subsidiary of AIC). The terms of the 2007 Transaction provided that upon the merger, each Original Preferred Share was automatically converted into one [Preferred C Share] of beneficial interest, par value $0.01 per share, of the surviving entity. See Innkeepers USA Trust, Definitive Proxy Agreement (Schedule 14-A), at 49 (May 27, 2007) (the Definitive Proxy Statement). The Definitive Proxy Statement and Merger Agreement explain that the surviving entity after the merger was Grand Prix Acquisition Trust. See Id.; Agreement and Plan of Merger, dated as of April 15, 2007, by and among Grand Prix Holdings LLC, Grand Prix Acquisition Trust, Innkeepers USA Trust, Innkeepers USA Limited Partnership, and Innkeepers Financial Corporation at A-5, attached as Exhibit A to the Definitive Proxy Statement at A-4. Grand Prix Acquisition Trust was subsequently renamed Innkeepers USA Trust. That (surviving) entity, which is Debtor Innkeepers USA Trust, is the issuer of the Preferred C Shares.

2
K&E 17925845

resulting fresh start upon exit from bankruptcy.

Any distributions from the Debtors

chapter 11 estates on account of Preferred C Shares will be made pursuant to a confirmed chapter 11 plan in accordance with the Bankruptcy Code. If Mr. Tooly is a holder of record of the Preferred C Shares during the confirmation process, he will have all of his rights under the Bankruptcy Code and other applicable law to participate in the process, including the right to raise any appropriate objections.

3
K&E 17925845

Conclusion For the foregoing reasons, the Debtors respectfully request that this Court (a) deny any request in the Documents, including the request for a declaration that the Preferred C Shares are not eligible for restructuring in the Debtors chapter 11 cases, and (b) grant such other relief as is just and proper. New York, New York Dated: November 3, 2010 /s/ Paul M. Basta James H.M. Sprayregen, P.C. Paul M. Basta KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, New York 10022-4611 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 and Anup Sathy, P.C. Marc J. Carmel (admitted pro hac vice) KIRKLAND & ELLIS LLP 300 North LaSalle Street Chicago, Illinois 60654-3406 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 Counsel to the Debtors and Debtors in Possession

4
K&E 17925845