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HAYNES AND BOONE, LLP 1221 Avenue of the Americas, 26th Floor New York, NY 10020 Telephone: (212)

659-7300 Facsimile: (212) 918-8989 Lenard M. Parkins (NY Bar #4579124) John D. Penn (NY Bar # 4847208, admitted pro hac vice) Mark Elmore (admitted pro hac vice) Attorneys for Midland Loan Services, Inc. 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

MIDLAND LOAN SERVICES, INC.S LIMITED OBJECTION TO DEBTORS APPLICATION FOR THE ENTRY OF AN ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT OF KIRKLAND & ELLIS LLP AS ATTORNEYS FOR THE DEBTORS AND DEBTORS IN POSSESSION [Docket No. 20] Midland Loan Services, Inc. (Midland)1 hereby files its objection (the Objection) to the Debtors Application to Employ Kirkland & Ellis LLP as Attorneys for the Debtors and Debtors in Possession (the Application) and respectfully represents: 1. Generally, Midland has no opposition to Kirkland & Ellis LLP (K&E) being

employed as counsel for the Debtors. However, the disclosure of the relationships of K&E and
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 referenced Debtors. The Fixed Rate Mortgage Loan was made pursuant to that certain loan agreement dated as of June 29, 2007 (as amended, the Fixed Rate Mortgage Loan Agreement), and is evidenced by (i) a certain Replacement Note A-1 and (ii) a certain Replacement Note A-2, each dated as of August 9, 2007, and each in the original principal amount of $412,701,271. Replacement Note A-1 was assigned to LaSalle Bank National Association as trustee for the holders of the LB-UBS Commercial Mortgage Trust 2007-C6. Bank of America, N.A. is the successor-in-interest to LaSalle Bank National Association (the Fixed Rate Trustee). Replacement Note A-2 is currently held by the trustee for the holders of the LB-UBS Commercial Mortgage Trust 2007-C7.
LIMITED OBJECTION TO APPLICATION TO EMPLOY KIRKLAND & ELLIS LLP F-283968 Page 1 of 4
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Apollo are incomplete in that they do not include a corporate chart reflecting the relationship of the various Apollo entities K&E represents along with the principal officers of each. That will provide a more complete disclosure to better understand the relationships particularly given Apollos multiple relationships in these cases and the firms late supplemental disclosure. 2. Holding a secured claim in excess of $825 million, Midland is by far the largest

creditor in these cases and a larger percentage of its cash collateral is proposed to be used to fund these cases than any other creditor.2 As noted previously in its Objection [Docket No. 36] to the Debtors cash collateral motion [Docket No. 13], Midland does not consent to the use of the Cash Collateral as currently contemplated by the Debtors and specifically objects to the use of the Cash Collateral as the source for the payment of professional fees incurred in (a) the pursuit of the plan of reorganization (the Lehman / Apollo Plan) as described in the Declaration of Dennis Craven [Docket No. 33], and embodied in the proposed plan support agreement (the PSA/Lock-Up) between the Debtors and Lehman ALI, Inc. [Docket No. 15] or (b) otherwise to support any effort to cramdown Midlands secured claim, including as described in the Lehman / Apollo Plan. As K&Es fee requests are submitted, Midland will review each such request and anticipates consenting to the use of the Cash Collateral solely for the payment of fees incurred in administering these Chapter 11 cases. To be abundantly clear, Midland will not consent to the use of the Cash Collateral for payment of fees, including K&Es fees and

The Fixed Rate Mortgage Loan is secured by cross-collateralized and cross-defaulted 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 United States Bankruptcy Code, generated by the Debtors hotel and business operations with respect to the Midland Properties, as set forth in the Fixed Rate Mortgage Loan Agreement. The Midland cash collateral (the Cash Collateral)is comprised of all of the cash collateral as such term has meaning under section 363 of the United States Bankruptcy Code, generated before or after the petition date, from the Midland Properties, including, but not limited to, all profits, rents or proceeds of the Midland Properties.

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expenses, incurred in the Debtors prosecution of the PSA/Lock-Up, the Lehman / Apollo Plan or other efforts to cramdown Midlands secured position. 3. In a typical carve-out situation, a debtor (or other estate professional) is not

entitled to use a secured creditors cash collateral to finance efforts to challenge a secured lenders claims or interests in its collateral. Likewise, Midland specifically objects to the Debtors professionals, as estate professionals, using (and effectively surcharging) Midlands cash collateral to advocate the Lehman Plan, which is a direct challenge to Midlands secured position. Flagstaff Food Service Corp., 739 F.2d 73 (2d Cir. 1984) (holding that a secured creditors collateral may not be surcharged unless there is a direct benefit to the secured creditor); In re 680 Fifth Ave. Associates, 154 B.R. 38, 43 (Bankr. S.D.N.Y. 1993) (discussing the scenario where estate professionals must forego compensation when there are no unencumbered assets). Midland objects to the Application to the extent it might seek to use of its cash collateral without its express consent for the payment of estate professional fees incurred in pursuing approval of the PSA/Lock-Up, the Lehman / Apollo Plan or the cramdown of its claims. See In re Blackwood Associates, LP, 153 F.3d 61, 68 (2d Cir. 1998) (consent cannot be implied or taken lightly). Local Rule 9013-1(a) 4. This pleading includes citations to the applicable rules and statutory authorities

upon which the relief requested herein in predicated and a discussion of their application to this pleading. Accordingly Midland submits that this pleading satisfies Local Bankruptcy Rule 90131(a). WHEREFORE, Premises Considered, Midland prays that the Court will require more complete disclosure of the relationships between K&E and Apollo, sustain its objection to the

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use of cash collateral to fund professional fees and expenses without Midlands consent and grant Midland such other and further relief to which Midland might show itself justly entitled. Dated: August 5, 2010 New York, New York HAYNES AND BOONE, LLP

/s/ Lenard M. Parkins Lenard M. Parkins (NY Bar #4579124) Mark Elmore (admitted pro hac vice) 1221 Avenue of the Americas, 26th Floor New York, NY 10020-1007 Telephone No.: (212) 659-7300 Facsimile No.: (212) 884-8211 - and John D. Penn, Esq. (NY Bar # 4847208, admitted pro hac) 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, INC.

LIMITED OBJECTION TO APPLICATION TO EMPLOY KIRKLAND & ELLIS LLP F-283968

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