Lenard M. Parkins (NY Bar No. 4579124) John D. Penn (NY Bar No.

4847208) Mark Elmore (admitted pro hac vice) HAYNES AND BOONE, LLP 30 Rockefeller Plaza, 26th Floor New York, New York 10112 Telephone: (212) 659-7300 Facsimile: (212) 918-8989 Attorneys for Midland Loan Services, a Division of PNC Bank, N.A. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: INNKEEPERS USA TRUST, et al., Debtors. ) ) ) ) ) ) Chapter 11 Case No. 10-13800 (SCC) Jointly Administered

OBJECTION OF MIDLAND LOAN SERVICES TO THE SECOND INTERIM APPLICATION OF MORRISON & FOERSTER LLP AS COUNSEL FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR COMPENSATION AND REIMBURSEMENT OF EXPENSES INCURRED FOR THE PERIOD DECEMBER 1, 2010 THROUGH MARCH 31, 2011 Midland Loan Services, a division of PNC Bank, N.A. (Midland)1 hereby files this Objection of Midland Loan Services (the Objection) to the Second Interim Application of Morrison & Foerster LLP (Morrison Foerster) as Counsel for the Official Committee of Unsecured Creditors (the Committee) for Compensation and Reimbursement of Expenses

Midland is the special servicer pursuant to the Pooling and Servicing Agreement dated as of August 13, 2007 (the Special Servicing Agreement) for that certain secured loan in the amount of not less than $825,402,542 plus interest, costs and fees (the Fixed Rate Mortgage Loan) owed by certain of the above captioned Debtors. The Fixed Rate Mortgage Loan is secured by cross-collateralized and crossdefaulted first priority mortgages, liens and security interests on forty-five (45) hotel properties and their contents and assets related thereto (collectively, the Midland Properties) and the other collateral, including all cash collateral as such term has meaning under section 363 of the Bankruptcy Code, generated by the Midland Debtors hotel and business operations with respect to the Midland Properties (the Midland Cash Collateral), as set forth in the Fixed Rate Mortgage Loan Agreement.

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Incurred for the Period December 1, 2010 Through March 31, 2011 (the Second Interim Fee Application),2 and in support thereof, respectfully represents as follows: Background 1. On August 12, 2010, the Court entered its Order Authorizing the Establishment of

Procedures for Interim Compensation and Reimbursement of Expenses for Professionals and Official Committee Members (the Fee Procedures Order).3 The Fee Procedures Order provides that nothing in this Order shall affect in any way any special servicers right to object to the use of its cash collateral to fund all or part of the fees and expenses of professionals compensated from the Debtors bankruptcy estates in monthly, interim, or final fee requests nor rule on the appropriateness of such cash collateral use or any entities rights with respect thereto. Fee Procedures Order at p. 7, 10. 2. On May 13, 2011, Morrison Foerster filed its Second Interim Fee Application.

Morrison Foerster has previously filed monthly fee applications for December of 2010 and January, February, and March of 2011.4 Midland has filed objections (the Midland

Objections) to all four of the Morrison Foerster monthly fee applications related to the time period covered by the Second Interim Fee Application.5 3. The use of Midlands Cash Collateral is governed by the Final Order Authorizing

the Debtors to (i) Use the Adequate Protection Parties Cash Collateral and (ii) Provide Adequate Protection to the Adequate Protection Parties Pursuant to 11 U.S.C. 361, 362, and

2 3 4 5

Docket No. 1375. Docket No. 189. Docket Nos. 877, 982, 1084, and 1192, respectively. Docket Nos. 936, 1030, 1163, and 1478.
2

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363 dated September 2, 2010 (as amended, the Final Cash Collateral Order).6 The Final Cash Collateral Order establishes, among other things, a maximum amount that may be spent from Cash Collateral to investigate the Loan Obligations and the Prepetition Collateral and/or a potential Challenge (as those terms are defined in the Final Cash Collateral Order) of $150,000 (the Lien Review Cap). Objection 4. Midland objects to the payment of fees and expenses in the amounts requested in

the Second Interim Fee Application for the reasons more fully stated in the Midland Objections. 5. As discussed in the Midland Objections, fees for categories of time identified by

Morrison Foerster as Lease / Real Estate Analysis, 2007 Transaction Investigation, and Prepetition Lien Review, are subject to the $150,000 Lien Review Cap.7 Accordingly,

Midland objects to the payment of fees in excess of $150,000 from Midlands Cash Collateral for categories of time subject to the Lien Review Cap. 6. While Midland continues to attempt to resolve these objections consensually with

Morrison Foerster, to the extent that an agreement is not reached, Midland incorporates herein by reference, the Midland Objections as well as the arguments contained in the Objection of Midland Loan Services to the First Interim Application of Morrison & Foerster LLP as Counsel for the Official Committee of Unsecured Creditors for Compensation and Reimbursement of Expenses Incurred for the Period July 28, 2010 Through November 30, 2010 (the Objection to the First Interim Fee Application).8 Midland anticipates that agreed orders will be presented at

6 7

Docket No. 402.

See, e.g., Midland Loan Services, Incs Limited Objection to the Monthly Application of Morrison & Foerster LLP for Compensation for Services and Reimbursement of Expenses as Attorneys for the Official Committee of Unsecured Creditors for the Period from October 1, 2010 Through October 30, 2010 [Docket No. 770].
8

Docket No. 937.

3

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the hearing on June 7, 2011 resolving this Objection and the Objection to the First Interim Fee Application. Local Rule 9013-1(a) 7. This pleading, together with the documents attached hereto, includes citations to

the applicable rules and statutory authorities upon which relief requested herein is predicated and a discussion of their application to this pleading. pleading satisfies Local Bankruptcy Rule 9013-1(a). WHEREFORE, Midland respectfully requests that the Court enter an order (i) sustaining this Objection; (ii) substantially reducing the compensation requested under the Second Interim Fee Application; and (iii) granting Midland such other and further relief as is equitable and just. Dated: May 27, 2011 New York, New York Accordingly, Midland submits that this

HAYNES AND BOONE, LLP

/s/ John D. Penn Lenard M. Parkins (NY Bar #4579124) Mark Elmore (admitted pro hac vice) 30 Rockefeller Plaza, 26th Floor New York, New York 10112 Telephone No.: (212) 659-7300 Facsimile No.: (212) 884-8211 - and John D. Penn (NY Bar # 4847208) Haynes and Boone, LLP 201 Main Street, Suite 2200 Fort Worth, Texas 76102 Telephone No.: (817) 347-6610 Facsimile No.: (817) 348-2300 ATTORNEYS FOR MIDLAND LOAN SERVICES, A DIVISION OF PNC BANK, N.A.

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