HEARING DATE AND TIME: JUNE 7, 2011 AT 2:00 P.M.

Alan W. Kornberg Andrew J. Ehrlich PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 1285 Avenue of the Americas New York, NY 10019-6064 Tel. (212) 373-3000 Fax (212) 757-3990 akornberg@paulweiss.com aehrlich@paulweiss.com Attorneys for Apollo Investment Corporation 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

APOLLO INVESTMENT CORPORATIONS OBJECTION AND RESERVATION OF RIGHTS REGARDING MIDLAND LOAN SERVICES MOTION FOR AN ORDER DETERMINING ITS GUARANTY CLAIM AGAINST GRAND PRIX HOLDINGS LLC TO BE ALLOWED IN FULL Apollo Investment Corporation (AIC), by and through its counsel, hereby files this objection and reservation of rights (the Objection) regarding Midland Loan Services (Midland) Motion for an Order Determining its Guaranty Claim against Grand Prix Holdings LLC to be Allowed in Full [Dkt. No. 1482] (the Motion) and states as follows:1 I. Temporary Allowance of the Guaranty Claims Appropriately Protects Midland (and Other Claimants) for Purposes of Confirmation. 1. As this Court is aware, disputes exist between a number of parties concerning the

validity of certain purported guaranty claims (collectively, the Guaranty Claims) asserted
1

All capitalized terms used but otherwise not defined herein shall have the meanings set forth in the Motion or the Debtors Plans of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code (the Plans) [Dkt. No. 1445], as applicable.

against Debtor Grand Prix Holdings LLC (Grand Prix). Until those disputes are resolved, it will not be clear who is entitled to the value, if any, at Grand Prix. However, these disputes need not be determined before or even in conjunction with confirmation of the Plans. All parties respective rights with respect to these disputes are fully preserved, and value will be distributed to creditors and/or equity holders at Grand Prix only in accordance with the Distribution Waterfall. See Plans at Art. III.B.4, Treatment of Classes R4B and R11 (distributions at Grand Prix to be made in accordance with the Distribution Waterfall); see also Disclosure Statement at Art. IV.I (full reservation of rights concerning disputes over the Guaranty Claims). 2. Moreover, the Debtors have agreed to temporarily allow all of the disputed

Guaranty Claims at Grand Prix for purposes of voting to accept or reject the Plans. AIC agrees that temporary allowance is the right way to address these disputes at this juncture; it will ensure that the votes of these potential creditors are counted for confirmation purposes without bogging down the confirmation process with unnecessary litigation. It appears that Midland and other holders of asserted Guaranty Claims concur. See Motion at 5 (describing temporary allowance as appropriate alternative relief); see also C-III Asset Management LLCs Motion for an Order Temporarily Allowing its Claim against Grand Prix Holdings, LLC and Grand Prix Ontario Lessee, LLC, for Purposes of Voting Pursuant to Bankruptcy Rule 3018(a) [Dkt. No. 1516] (requesting temporary allowance of another asserted Guaranty Claim against Grand Prix). 3. Because Midlands rights with respect to its purported Guaranty Claim are fully

preserved, and because the Debtors are willing to temporarily allow the claim in full for voting purposes, the Motion is premature. This Court should permit the confirmation process to

proceed in an orderly manner, without the distraction of hasty, piecemeal litigation over one claim.

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II.

Midlands Asserted Guaranty Claim Should Be Addressed in Conjunction with All Other Asserted Guaranty Claims. 4. Resolution of the alleged Guaranty Claims will impact a number of parties.

Accordingly, questions surrounding these claims should be addressed in a coordinated and comprehensive manner not on a one-off basis. AIC understands that the Debtors are working to establish a consensual litigation schedule to address all of the asserted Guaranty Claims immediately following confirmation of the Plans. AIC supports the Debtors efforts in this regard, because it believes that such a schedule will ensure a timely, organized and comprehensive resolution of these issues. 5. Resolving these disputes after confirmation, if they persist at that time and have

not been consensually resolved, will serve two important objectives. First, it will prevent litigation over the alleged Guaranty Claims from delaying confirmation of the Plans. A timely confirmation of the Plans is in the best interests of all parties in interest, and should not be jeopardized by litigation that impacts a discrete number of stakeholders. 6. Second, a fixed litigation schedule after confirmation will ensure that the parties

have a full and fair opportunity to analyze the merits of the alleged Guaranty Claims. AIC does not believe that litigation concerning these claims will be particularly complex; however, there are a number of disparate issues to consider that likely will involve multiple parties. In fact, the parties have not yet fully articulated the arguments concerning each of these claims. And additional analysis and information may be required with respect to those arguments that have been raised. For example, AIC was not a direct participant in virtually any of the negotiations that led to the Five Mile/Lehman Commitment Letter and its related plan term sheet, but has reason to believe that Midland waived its right to assert the Guaranty Claim that it is now pursuing. Because AICs understanding of these negotiations is based on limited data, some

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narrowly tailored discovery may be necessary to properly establish the waiver argument. Thus, a litigation schedule that lets the parties fully articulate their positions and allows for the possibility of limited discovery, if necessary, will facilitate an appropriate adjudication of these disputes. 7. For these reasons, questions regarding the validity of Midlands Guaranty Claim

against Grand Prix should be addressed after confirmation as part of a comprehensive litigation concerning all the Guaranty Claims at issue in these cases. Conclusion 8. By temporarily allowing the asserted Guaranty Claims for voting purposes and

proposing a post-confirmation litigation schedule that will permit all interested parties to fully formulate and analyze their arguments concerning these claims, the Debtors have offered a reasonable path forward for these claims. Because Midlands alleged Guaranty Claim should be resolved through that process, the Motion should be denied, or adjourned until after confirmation. For this reason, AIC has not responded herein to the substantive arguments presented in the Motion. AIC reserves its right to respond more fully at the appropriate time to arguments concerning Midlands purported Guaranty Claim and all other disputed Guaranty Claims asserted against Grand Prix.

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WHEREFORE, for the reasons set forth herein, AIC requests that the Court deny the Motion, or adjourn it until after confirmation, and grant such other relief as is just and proper. Dated: New York, New York June 3, 2010 PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP

By:

/s/ Andrew J. Ehrlich Alan W. Kornberg Andrew J. Ehrlich 1285 Avenue of the Americas New York, New York 10019-6064 (212) 373-3000

Attorneys for Apollo Investment Corporation

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