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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, 26 th 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:

)

Chapter 11

)

INNKEEPERS USA TRUST, et al.,

)

Case No. 10-13800 (SCC)

)

Debtors.

)

Jointly Administered

)

LIMITED OBJECTION OF MIDLAND LOAN SERVICES TO THE THIRD INTERIM FEE APPLICATIONS FILED BY (I) MOELIS & COMPANY LLC, (II) FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP, (III) MORRISON & FOERSTER LLP, (IV) JEFFERIES & COMPANY, INC., AND (V) KIRKLAND & ELLIS LLP FOR THE PERIOD FROM APRIL 1, 2011 THROUGH JULY 31, 2011

Midland Loan Services, a division of PNC Bank, N.A. (“Midland”) 1 hereby files this

Limited Objection of Midland Loan Services (the “Objection”) to the Third Interim Fee

Applications Filed by (i) Moelis & Company LLC, 2 (ii) Fried, Frank, Harris, Shriver & Jacobson

LLP, 3 (iii) Morrison & Foerster LLP, 4 (iv) Jefferies & Company, Inc., 5 and (v) Kirkland & Ellis

1 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 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 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.

2 Docket No. 2085.

3 Docket Nos. 2087 and 2088.

LLP 6 for the Period from April 1, 2011 Through July 31, 2011 (the “Third Interim Fee

Applications” filed by the “Case Professionals”) and in support hereof, respectfully states as

follows:

Preliminary Statement

1. Midland joins the United States Trustee 7 in the objection to the full payment, at

this time, of the fees requested in the Third Interim Fee Applications.

Because the plans

affecting the majority of the debtors in these Cases have not yet become effective, it is still too

early to determine whether the significant fees requested by the Case Professionals are

reasonable, and as a result, the Court should continue the holdback of 20% for the Case

Professionals fees until such a time as the Cases are closer to resolution.

Background

2. 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”). 8 The Fee Procedures Order provides

that “nothing in this Order shall affect in any way any special servicer’s 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

4 Docket No. 2091.

5 Docket No. 2092.

6 Docket No. 2093.

7 See Docket No. 2112.

8 Docket No. 189.

D-1996823_1.DOC

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Procedures Order at p. 7, ¶10.

Pursuant to the Fee Procedures Order, Notice Parties must file

objections to the Third Interim Fee Applications on or before September 28, 2011. 9

A. The Plan Process

3. The Debtors’ Plans of Reorganization Pursuant to Chapter 11 of the Bankruptcy

Code (the “Joint Plans”), 10 which were confirmed on June 29, 2011, 11 involve four separate plans

for over ninety debtors.

Currently, the “Anaheim Plan” is effective, as is a portion of the

“Remaining Debtor Plan.” The “Fixed/Floating Plan” and part of the “Remaining Debtor Plan,”

which affect the majority of the debtors in these Cases, have not become effective.

4. On August 29, 2011, the Debtors filed a complaint against Cerberus Series Four

Holdings, LLC, Chatham Lodging Trust, INK Acquisition LLC, and INK Acquisition II LLC—

the Plan Sponsors—for breach of contract seeking specific performance of certain agreements

essential to consummate the Fixed/Floating Plan and the remaining parts of the Remaining

Debtor Plan. Trial in the adversary proceeding is not scheduled to begin until mid-October.

B. The Third Interim Fee Applications

5. On September 14, 2011, the Case Professionals each filed their respective Third

Interim Fee Application requesting payment of fees and expenses in the amounts specified in the

table below:

Case Professional

Fees Requested

Expenses Requested

Moelis & Company LLC

$600,000.00

$17,431.92

Fried, Frank, Harris, Shriver & Jacobson LLP

$202,489.00

$6,736.79

9 Midland is a Notice Party under the Fee Procedures Order.

10 Docket No. 1799.

11 See Findings of Fact, Conclusions of Law, and Order Confirming Debtors’ Plans of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 1804].

D-1996823_1.DOC

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Case Professional

Fees Requested

Expenses Requested

Morrison & Foerster LLP

$374,983.25

$7,119.57

Jefferies & Company, Inc.

$500,000.00

$3,774.18

Kirkland & Ellis LLP

$5,291,425.50

$273,652.98

Limited Objection

6. The fees requested in the Third Interim Fee Applications should continue to be

subject to a holdback. Until the current situation is resolved, the parties will not know whether

(1) the Fixed/Floating Plan and the rest of the Remaining Debtor Plan will ultimately become

effective, (2) the entire plan process will have to be repeated, (3) the Fixed/Floating Plan will be

amended and that plan will become effective or (4) some other outcome might occur.

It is,

therefore, premature to evaluate the reasonableness and appropriateness of the fees requested in

the Third Interim Fee Applications.

7. In light of the recent developments in these Cases, Midland objects to the Debtors

using Midland’s Cash Collateral to pay more than 80% of the fees requested in the Third Interim

Fee Applications.

General Reservation of Rights

8. Midland reserves its right to submit additional objections to the compensation

requested by the Case Professionals when they submit final fee applications. The failure to raise

additional objections at this time is not a waiver of any additional objections thereto.

Local Rule 9013-1(a)

9. This pleading includes citations to the applicable rules and statutory authorities

upon which relief requested herein is predicated and a discussion of their application to this

D-1996823_1.DOC

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pleading.

Accordingly, Midland submits that this pleading satisfies Local Bankruptcy Rule

9013-1(a).

WHEREFORE, Midland respectfully requests that the Court enter an order (i) sustaining

this Objection and continuing the holdback of 20% for fees requested in the Third Interim Fee

Applications; and (ii) granting Midland such other and further relief as is equitable and just.

Dated:

D-1996823_1.DOC

September 28, 2011 New York, New York

HAYNES AND BOONE, LLP

/s/ John D. Penn

Lenard M. Parkins (NY Bar #4579124) Mark Elmore (admitted pro hac vice) 30 Rockefeller Plaza, 26 th Floor New York, New York 10112 Telephone No.: (212) 659-7300 Facsimile No.: (212) 884-8211

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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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