BRYAN CAVE LLP Lawrence P.

Gottesman (LG-7061) Michelle McMahon (MM-8130) 1290 Avenue of the Americas New York, New York 10104 (212) 541-2000 and DUANE MORRIS LLP Phillip K. Wang, Esq. (admitted pro hac vice) One Market Plaza, Spear Tower, Suite 2200 San Francisco, CA 94105-1127 (415) 957-3185

Objection Deadline: Nov. 5, 2010 Hearing Date: Nov. 10, 2010 at 10:00 a.m.

Attorneys for Wells Fargo Bank, N.A., as Trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-C1 and U.S. Bank National Association, as successor to LaSalle Bank N.A., formerly known as LaSalle National Bank, as Trustee for the registered holders of ML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x In re: INNKEEPERS USA TRUST, et al., Debtors. : : (Jointly Administered) : x OBJECTION OF WELLS FARGO BANK, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-C1 AND U.S. BANK NATIONAL ASSOCIATION, AS SUCCESSOR TO LASALLE BANK N.A., FORMERLY KNOWN AS LASALLE NATIONAL BANK, AS TRUSTEE FOR THE REGISTERED HOLDERS OF ML-CFC COMMERCIAL MORTGAGE TRUST 2006-4, COMMERCIAL MORTGAGE PASSTHROUGH CERTIFICATES, SERIES 2006-4 TO DEBTORS MOTION FOR ENTRY OF AN ORDER EXTENDING THE EXCLUSIVE PERIODS DURING WHICH ONLY THE DEBTORS MAY FILE A CHAPTER 11 PLAN AND SOLICIT ACCEPTANCES THEREOF AND OMNIBUS OBJECTION TO MOTIONS TO TERMINATE EXCLUSIVITY Chapter 11 Case No.: 10-13800 (SCC)

Wells Fargo Bank, N.A., as Trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-C1 and U.S. Bank National Association, as successor to LaSalle Bank N.A., formerly known as LaSalle National Bank, as Trustee for the registered holders of ML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 (jointly, the Property Level Lenders), by their undersigned counsel, oppose on the bases set forth below the Debtors Motion For Entry Of An Order Extending The Exclusive Periods During Which Only The Debtors May File A Chapter 11 Plan And Solicit Acceptances Thereof And Omnibus Objection To Motions To Terminate Exclusivity (the Debtors Exclusivity Motion), filed by the above-captioned debtors (the Debtors). In support of this Objection, the Property Level Lenders respectfully state as follows: PRELIMINARY STATEMENT1 1. As set forth in detail below and in the supporting Declaration of Ronen Bojmel

(the Bojmel Decl.), the Property Level Lenders have been working with the Debtors major creditor and shareholder constituents toward a marketing and sale or recapitalization process that would be supported by all major stakeholders with the goal of reaching a consensual process with the Debtors. These discussions are intense and ongoing. In order to provide additional time to reach such a consensus, the Property Level Lenders have decided to briefly adjourn the Property Level Lenders Exclusivity Motion (defined below), which was also scheduled for hearing on November 10, 2010, for approximately one month to the next omnibus hearing date on December 14, 2010 (the Continued Hearing Date). The Property Level Lenders and the supporting constituents also requested that the Debtors continue the hearing on the Debtors
Unless otherwise defined herein, all capitalized terms used herein shall have the same meanings ascribed to such terms in the Property Level Lenders Exclusivity Motion.
1

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Exclusivity Motion to the Continued Hearing Date based on a short extension of the Debtors Exclusive Periods (defined below) through this date. The Debtors would not agree to the proposed limited extension and continuance. Accordingly, the Property Level Lenders assert this Objection and object to any extension of the Debtors Exclusive Periods beyond the Continued Hearing Date. FACTUAL BACKGROUND General Background 2. On July 19, 2010 (the Petition Date), the Debtors filed voluntary petitions for

relief under chapter 11 of the Bankruptcy Code commencing these bankruptcy cases. 3. The Debtors are debtors-in-possession and continue to operate their businesses

pursuant to 11 U.S.C. 1107 and 1108. 4. July 28, 2010. 5. The Property Level Lenders hold secured debt with an aggregate unpaid principal An official committee of unsecured creditors (the Committee) was appointed on

balance of approximately $160 million (the Property Level Loans). A complete description of the Property Level Loans is set forth in the Declaration of Edward C. Brown in Support of the Objections of Certain Prepetition Lenders [Docket No. 258] 1-5 and incorporated herein. 6. Prior to and during the first forty days of this case, the Debtors singularly pursued

negotiation and execution of, and Court authority for, a Plan Support Agreement with only a minority secured creditor and an out-of-the-money equity holder of the Debtors. The Debtors made information and documents available only to these parties. The Debtors did not engage in any shopping of the proposed transaction or negotiations with the vast majority of their secured

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creditors or make any effort to ensure that one or more bankruptcy estates and their creditors were not preferred over the bankruptcy estates and creditors of other of the Debtors. 7. The Debtors closed process and failure to negotiate with the majority of their

creditors and other stakeholders resulted in overwhelming objection to the Plan Support Agreement. In response to this opposition, the Debtors chose a litigation route and continued to seek approval of the Plan Support Agreement, without any negotiations or attempt to compromise with the objecting creditors who hold the majority of the secured debt of the Debtors. Nor did the Debtors give serious consideration to a competing proposal presented to them by Five Mile Capital Partners LLC (Five Mile). Indeed, as the Court aptly found, the PSA created contempt rather than fostering negotiations. This is not what Chapter 11 is supposed to be about. Transcript of Hearing Held on September 1, 2010, pp. 422-23:24-1.2 The Debtors efforts to forcefully impose this wholly unacceptable deal on its secured creditor body, despite the staggering costs of doing so, has damaged the Debtors credibility as to both their creditors and stakeholders, as well as the market. Given this history, the Debtors must take decisive steps to re-establish credibility and confidence that they will run an open and transparent marketing and sale or recapitalization process. 8. On August 30, 2010, Midland Loan Services, Inc. (Midland) filed its Motion To

Terminate Exclusivity (the Midland Exclusivity Motion) seeking to terminate the Debtors exclusive periods to file and solicit acceptances of a plan of reorganization (the Exclusive Periods). Midland attached to its motion a letter from Five Mile regarding a potential proposal to fund a plan of reorganization, and indicated that it was seeking a termination of the Debtors

An excerpt of the cited portion of this transcript is attached hereto as Exhibit A.

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Exclusive Periods in order to pursue a transaction with Five Mile. The hearing on the Midland Exclusivity Motion has been continued to December 15, 2010. 9. On September 1, 2010, after a lengthy evidentiary hearing (the PSA Hearing)

the Court denied the Debtors request for authorization of the Plan Support Agreement. The Court found, among other things, that the Debtors flawed process failed to engage its significant creditors or properly market the Debtors assets in an open and neutral manner intended to maximize value. 10. On September 14, 2010, the Property Level Lenders filed the Motion Of Wells

Fargo Bank, N.A., As Trustee For The Registered Holders Of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-C1 And U.S. Bank National Association, As Successor To Lasalle Bank N.A., Formerly Known As Lasalle National Bank, As Trustee For The Registered Holders Of Ml-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 To Terminate Exclusivity And Joinder To Midland Loan Services, Inc.'s Motion To Terminate Exclusivity (the Property Level Lenders Exclusivity Motion and together with the Midland Exclusivity Motion and the Debtors Exclusivity Motion, the Exclusivity Motions). The Property Level Lenders Exclusivity Motion was scheduled for hearing on November 10, 2010, but, as discussed above, the Property Level Lenders have determined that it is appropriate to briefly adjourn the hearing on this motion to the Continued Hearing Date. 11. Following the PSA Hearing, throughout the week of September 13, 2010, the

Debtors and their professionals held initial meetings with the various creditor constituents, including the Property Level Lenders. This meeting was followed up by a conference call with the Debtors and their creditors and stakeholders on October 21, 2010. Despite the passage of 5
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approximately a month since the initial meeting, the Debtors were still very vague and unclear about the marketing and sale or recapitalization process they intend to embark upon. Bojmel Decl. 9. Unfortunately, it is abundantly clear that, more than two months after the Court ruled against the Debtors at the PSA Hearing, the Debtors have made no material progress towards a viable marketing and sale or reorganization process and, to the extent that the Debtors can be said to have a process, favor a single company transaction that will not necessarily maximize values for all constituencies and will unfortunately pave the way for potentially serious allocation disputes amongst the different stakeholders. Bojmel Decl. 9-10, 13-17 and 19. 12. The Debtors are now in the fourth month of these cases, and it is now eight

months since the Debtors financial and legal advisors were first retained to assist the Debtors in their restructuring efforts. Notwithstanding the passage of considerable time and the expenditure of many millions of dollars, the Debtors are effectively paralyzed and have yet to present to their key constituents any real marketing or plan process. 13. By their own admission, the Debtors (a) have not finished their business plan, (b)

have made no decision as to whether to proceed with or without a stalking horse, (c) have not proposed a process to select either a stalking horse or an initial round of bidders, (d) have not formulated or proposed bid procedures, (e) have not identified a meaningful cohort of potential bidders or plan sponsors, (f) have failed to establish meaningful oversight mechanisms so as to assure both stakeholders and potential bidders or plan sponsors that any process will be a fair and open one, thereby encouraging maximum participation and stakeholder support3 and (g) have not
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The Debtors have allegedly established a committee of independent trustees that would advise the full board on this process. Although the Property Level Lenders believe that the formation of a truly independent committee would be a step in the right direction and a positive development in the pursuit of an open and transparent marketing process, such committee must be truly independent and convey such independence to the Debtors stakeholders and to potential bidders/ investors. The current members of the independent committee supported the Debtors prior flawed process that resulted in the Plan Support Agreement. That process shut out the Property Level Lenders and

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meaningfully explored whether recoveries can maximized by aggressively pursuing transactions other than a single enterprise level plan.4 Derrough Declaration 8, 9, 13-15. Each of these items is an essential item of or prerequisite to any meaningful plan or marketing process. To state the obvious, a plan process that has a reasonable chance of success both in maximizing value and obtaining the support of key stakeholders simply is not possible without a well conceived business plan and, given the history of these cases, a meaningful oversight process. Bojmel Decl. 17. 14. The Debtors belief that they have a process in place, and have already launched

their process, rings hollow. A credible marketing processes cannot be seriously considered to have been launched until (i) business plans exist in the data room and (ii) RFPs that articulate the process, type of transactions sought, rules of engagement and process timing and deadlines, defining the process are available to bidders. Bojmel Decl. 10. Neither of these items have been done yet. Id. 15. The Property Level Lenders believe that the Debtors process, as outlined during

the call and in subsequent meetings, is inadequate for a number of reasons, as set forth in detail in the Bojmel Decl. and summarized below. Bojmel Decl. 20-33. First, the Debtors failure to adequately explore alternatives to a single company transaction renders the process fatally

the majority of the Debtors stakeholders. No competing proposals were solicited or considered. In order to develop consensus around a new marketing and sale or recapitalization process and eventual plan of reorganization the Debtors have to re-establish credibility with their stakeholders and potential bidders and plan sponsors by imposing meaningful oversight that must include the appointment of a creditor representative and expanding the committees role from its limited advisory capacity. Indeed, the Debtors pace can charitably described as leisurely, with no marketing materials prepared, much less even a firm deadline for commencing a marketing process. It is only within the next month that the Debtors advisors intend to address such critical issues as value allocation, preparation of materials to solicit interest in plan sponsorship, facilitate further due diligence by the stakeholders and unidentified certain parties who may have an interest in pursuing a transaction with the Debtors and continue to perform valuation, debt capacity, and allocation analyses. Derrough Declaration 15.
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flawed by precluding alternative transactions for logical clusters of assets that may well result in a higher overall recovery and that would assist in the ability to fairly allocate value among the Debtors different and competing stakeholder groups. Bojmel Decl. 20. The Debtors are inexplicably wedded to a single company transaction, based on the fallacy that there is an integrated enterprise whose value necessarily exceeds that of its component parts.5 Id. The Debtors have not, and it appears, will not, subject this dubious premise to the crucible of the market. Bojmel Decl. 21. In fact, this is just a random collection of assets. Id. There is no Innkeepers brand. Id. Each hotel is an individual operating business, with its own property management provided through an outside contract. Id. Each hotels brand is governed by a franchise contract. Id. There may be limited economies of scale by providing finance and accounting support through centralized functions. Bojmel Decl. 21 and 29. Indeed, both the Debtors and any potential bidder or plan sponsor will value each hotel asset separately (this is reflected in both the Moelis financial model, as well as the fact that the data room has been populated primarily with property specific information. Derrough Declaration 8). Bojmel Decl. 22. 16. Moreover, without the benefit of market generated data points that would assist in

the consensual allocation of value across different constituencies, the cost of allocating such value and resolving such intercreditor issues on a nonconsensual basis would almost certainly dwarf any savings resulting from a single company process. Bojmel Decl. 31. A single company transaction, either with a third party or Five Mile, poses the risk that such acquiror will unfairly allocate value to different stakeholder interests based not upon economic reality but

This is not to suggest that the Debtors should not, as part of this process, explore a single company transaction, since only a fair and open marketing process will determine the best outcome.

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instead upon a perceived need to obtain the favor of certain creditor groups or pools, and issue that has already been before this Court and been flatly rejected. Id. Absent a preemptive bid that pays all secured stakeholders in full, such a strategy is doomed to failure inasmuch as no single creditor or group of creditors has the ability to impose a plan on dissenting creditors in view of the fact that none of these Debtors has been or could be substantively consolidated. Id. It is possible that a single company transaction will provide the highest and best bid for the Debtors business, however it will be impossible to know unless the Debtors pursue a solicitation process for both the single company and its component parts. Bojmel Decl. 20. 17. Second, the Debtors minimal process lacks sufficient oversight and input by the

Debtors stakeholders. The Debtors efforts to forcefully impose the Plan Support Agreement and the wholly unacceptable deal contemplated thereby on its secured creditor body, despite the staggering costs of doing so, has damaged the credibility of the Debtors to both their creditors and stakeholders as well as the market. Bojmel Decl. 18. Given this history, the Debtors must take decisive steps to re-establish credibility and confidence that they will run an open and transparent marketing and sale or recapitalization process. Bojmel Decl. 18 and 34. It is also critical to such a process that the Debtors convey independence to the marketplace. Bojmel Decl. 11 and 18. The Debtors prior process was unfairly stacked in favor of Lehman ALI Inc. and Apollo Investment Corporation, to the exclusion of all other competing offers. In order to have a robust marketing process, the Debtors must be able to convince potential bidders/investors that these mistakes will not be repeated. Bojmel Decl. 11 and 36-37. The Debtors process makes no provision for meaningful input and oversight by its constituents. 18. Third, the Debtors process does not target sufficient bidders/investors. Mr.

Derrough simply states that Moelis has identified a list of parties that are being considered as

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potential stalking horses as a plan sponsor, including Five Mile. Derrough Declaration 12. Through subsequent conversations with the Debtors advisors, the Property Level Lenders have learned that the Debtors intended to approach five potential purchasers, including Five Mile. Bojmel Decl. 32. While the Debtors may believe they have launched a process, the performance of due diligence by a limited universe of buyers does not constitute a credible sale process. Bojmel Decl. 11. In fact, the special treatment being provided to this limited universe of buyers, while other potential buyers have not been invited into the process, is likely to discourage those other buyers from participating in the process in the future, without transparent rules of engagement that make it clear that there is a level playing field. Id. The selection of Five Mile by Midland was not subject to a competitive marketing process, we have no reason to believe that such proposal would maximize recoveries for all constituencies. Bojmel Decl. 36-37. An agreement with Five Mile on a restructuring of the Fixed Rate Loan reached without the benefit of a fair and competitive process is akin to the agreement between Apollo and Lehman on the restructuring of the Floating Rate Loan pursuant to the Plan Support Agreement. Id. The lack of a competitive process works to the detriment of every other stakeholder involved in these cases and is not only likely to depress values, but could lead to non-market bidding protections and bid procedures, which further discourage a competitive process from ever developing and favor Five Miles ultimate purchase of the company. Id. The Debtors need to engage a broader group of strategic and financial bidders/investors to ensure a robust and competitive bidding process that will maximize value and restore legitimacy to these cases. Bojmel Decl. 32-33. 19. On October 27, 2010, the Debtors filed the Debtors Exclusivity Motion opposing

the relief sought in the Property Level Lenders Exclusivity Motion and Midland Exclusivity

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Motion and seeking a 120 day extension of the Debtors Exclusive Periods though March 16, 2011 (filing) and May 15, 2011 (solicitation). Property Level Lenders Efforts to Build Consensus Around a Marketing and Sale or Recapitalization Process 20. Since the initial meeting with the Debtors, the Property Level Lenders have

focused on how to develop and move forward with a process that will maximize value. On or about October 21, 2010, the Property Level Lenders retained Miller Buckfire & Co., LLC to advise them on developing a marketing and sale or recapitalization process and plan of reorganization that would be supported by all major stakeholders with the goal of reaching a consensual process with the Debtors. Over the last two weeks, the Property Level Lenders and their advisors have met with the Debtors and most of the Debtors significant stakeholder groups. The Property Level Lenders have also met with Five Mile regarding its proposal to acquire the reorganized Debtors pursuant to a plan of reorganization. As a result of these meetings, the Property Level Lenders have developed a protocol for a marketing and sale or recapitalization process that has been shared with all major creditor and shareholder constituents. 21. The protocol is intended to provide for an open and transparent marketing and

sale or recapitalization process that will address the deficiencies in the Debtors process and encourage robust bidding. The essential elements of such protocol would include: (i) The marketing process is to be run by the Debtors and their professionals in accordance with the protocol, subject to a commitment to a timetable and oversight by a truly independent committee of independent trustees, including a creditor representative (see (f) below). The Debtors and their advisors will market the company both as a whole and in logical clusters, which will be by debt pool as may also be by flag, asset type and other pertinent characteristics.

(ii)

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(iii)

The Debtors and subsets thereof will be marketed to a broad group of potential strategic and financial investors, soliciting interest in one or more of the following investments: (i) (ii) (iii) Plan sponsorship; Purchase of 100% of the Debtors; and Purchase of clusters of assets and/or equity interests of the Debtors, including, but not limited to, packaging the assets in three buckets: assets securing the Fixed Rate Loan, assets securing the Floating Rate Loan and assets securing the remainder of the properties.

(iv)

The Debtors will pursue a multiple round process to solicit, as determined by the parties, either a stalking horse or nonbinding expressions of interest and ultimately a binding agreement with one or more parties following due diligence. The Debtors will agree with their stakeholders to reasonable bid procedures deigned to permit open and competitive bidding, with an agreed upon process to determine which bid or bids are the highest and best. There will be regular and comprehensive communications regarding process and progress between the Debtors advisors and the advisors to major stakeholders, including regular update calls, prompt communication of information regarding bids, expressions of interests and similar items and an open and collaborative sharing of views and information. There should be an appointment of an additional independent trustee to the Debtors board of trustees to assist in oversight and whose approval will be required in connection with the selection of any stalking horse or winning bidder.

(v)

(vi)

(vii)

Bojmel Decl. 34. The protocol would address the Debtors credibility issues with its stakeholders and the marketplace by providing for regular communication with and input by the Debtors stakeholders, appointing a creditor representative to the independent committee of the Debtors board of trustees, and demonstrating a commitment to openness and consensus that was lacking in the prior process. 22. In cases with this level of creditor discord and distrust, it is common for a trustee

or examiner to be appointed. Bojmel Decl. 35. Instead, the Property Level Lenders are seeking a less intrusive and expensive route of reaching an accord on the protocol.

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ARGUMENT Extension of the Debtors Exclusive Periods Should be Limited 23. The Property Level Lenders have determined that rather than moving forward

with their Exclusivity Motion on November 10, 2010, the best course is to briefly adjourn their motion to provide parties additional time to pursue a process that would be supported by all major stakeholders with the goal of reaching a consensual process with the Debtors. If such a consensual process is agreed upon, the Property Level Lenders and the other supporting constituents would likely agree to a greater extension of the Debtors Exclusive Periods, subject to the terms of a protocol underlying such consensual process. The Property Level Lenders do not object to a short extension of the Debtors Exclusive Periods through the Continued Hearing Date, but do object at this time to any extension of the Debtors Exclusive Periods beyond this date. 24. The Debtors proposed marketing and sale or recapitalization process is flawed.

The proposed bidder/investor targets are inadequate (Objection 18, supra; Bojmel Decl. 11, 32-33 and 36-37), there is not sufficient oversight or input by the Debtors major stakeholders (Objection 17, supra; Bojmel Decl. 18 and 34), and the Debtors are too focused on a sale of the Debtors businesses as a whole, even though this may not maximize value (Objection 14, supra; Bojmel Decl. 15-16, supra and 36-37). The Debtors are repeating their earlier mistakes of marginalizing the input of their constituents. Granting the lengthy extension of the Exclusive Periods sought in the Debtors Exclusivity Motion would only exacerbate this situation. 25. The Property Level Lenders have concluded that absent a consensual protocol that

has the support of a critical mass of the Debtors stakeholders, the process that Debtors are

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following is flawed and is no more likely to be successful or maximize value than the Plan Support Agreement. That process shut out the Property Level Lenders and the majority of the Debtors stakeholders. No competing proposals were solicited or considered. In order to develop consensus around a new marketing and sale or recapitalization process and eventual plan of reorganization the Debtors have to re-establish credibility with their stakeholders. It is also critical to such a process that the Debtors convey openness and neutrality to the marketplace. In order to have a robust marketing process, the Debtors must be able to convince potential bidders/investors that they are committed to an open and transparent process. 26. While the specific terms are under discussion, the protocol generally provides for

an open and transparent marketing and sale or recapitalization process that incorporates significant oversight and input by the Debtors creditor and shareholder constituents. The Property Level Lenders believe that such an open process that has the support of most major constituents would maximize value for the Debtors estates and that a limited extension of the Debtors Exclusive Periods to provide additional time to achieve such consensus is in the best interest of all. Debtors Cannot Demonstrate that Cause Exists to Extend the Exclusive Periods Beyond the Continued Hearing Date 27. As acknowledged by the Debtors, the cause that must be shown in order for the

Debtors to extend exclusivity is a standard that balances the competing interests of a debtor and its creditors and enables the debtor an adequate opportunity to stabilize its business operations and negotiate a plan with its creditors. Debtors Exclusivity Motion 17 (citations omitted). As set forth in detail in the Bojmel Decl., the Debtors have done none of these things during the initial Exclusive Periods, and the Debtors have provided no basis for the Court or their

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stakeholders to believe that this will improve if they are granted the requested four month extension of the Exclusive Periods. Bojmel Decl. 9-10, 13-17 and 19. 28. The Debtors analysis of the applicable nine-factor test6 for assessing whether

cause exists to extend their Exclusive Periods significantly skips two of the factors most critical in this case: (i) whether the Debtors have demonstrated reasonable prospects for filing a viable plan and (ii) whether the Debtors have made progress in negotiations with their creditors. The reason is simple, they cannot satisfy either factor. The Debtors Have Not Demonstrated Reasonable Prospects for Filing a Viable Plan 29. As set forth in the Bojmel Decl., the Debtors have not accomplished the necessary

prerequisites to developing a viable plan, or even the marketing and sale or reorganization process that will underlie such a plan. Bojmel Decl. 9-10, 13-17 and 19. By their own admission, the Debtors (a) have not finished their business plan, (b) have made no decision as to
Although the Bankruptcy Code does not state what constitutes cause, the courts have considered the following factors: (i) the size and complexity of the case;
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(ii) the necessity of sufficient time to permit the debtor to negotiate a plan of reorganization and prepare adequate information; (iii) (iv) (v) (vi) (vii) the existence of good faith progress toward reorganization; the fact that the debtor is paying its bills as they become due; whether the debtor has demonstrated reasonable prospects for filing a viable plan; whether the debtor has made progress in negotiations with its creditors; the amount of time which has elapsed in the case;

(viii) whether the debtor is seeking an extension of exclusivity in order to pressure creditors to submit to the debtors reorganization demands; and (ix) whether an unresolved contingency exists.

See, e.g., In re Adelphia Communications Corp., 352 B.R. 578, 587 (Bankr. S.D.N.Y. 2006).

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whether to proceed with or without a stalking horse, (c) have not proposed a process to select either a stalking horse or an initial round of bidders, (d) have not formulated or proposed bid procedures, (e) have not identified a meaningful cohort of potential bidders or plan sponsors, (f) have failed to establish meaningful oversight mechanisms so as to ensure to both stakeholders and potential bidders or plan sponsor that any process will be a fair an open one, thereby encouraging maximum participation and stakeholder support7 and (g) have not meaningfully explored whether recoveries can be maximized by aggressively pursuing transactions other than a single enterprise level plan.8 Derrough Declaration 8, 9, 13-15. The Debtors belief that they have a process in place, and have already launched their process is not credible because they have not yet (i) completed business plans and made them available in the data room and (ii) developed and distributed to potential bidders/investors RFPs that articulate the process, type of transactions sought, rules of engagement and process timing and deadlines, defining the process. Bojmel Decl. 10. The Debtors have not, and absent the development of a business plan cannot, demonstrate that they have a reasonable prospect of filing a viable plan of reorganization. Bojmel Decl. 17.

Although the Property Level Lenders believe that the formation of the independent committee is a step in the right direction and a positive development in the pursuit of the an open and transparent marketing process, such committee must be truly independent and convey such independence to the Debtors stakeholders and potential bidders/ investors. The current members of the independent committee supported the Debtors prior flawed process that resulted in the Plan Support Agreement. That process shut out the Property Level Lenders and the majority of the Debtors stakeholders. No competing proposals were solicited or considered. In order to develop consensus around a new marketing and sale or recapitalization process and eventual plan of reorganization the Debtors have to re-establish credibility with their stakeholders by imposing meaningful oversight that must include the appointment of a creditor representative and expanding the committees role from its limited advisory capacity. Indeed, the Debtors pace can charitably described leisurely, with no marketing materials prepared, much less even a firm deadline for commencing a marketing process. It is only within the next month that the Debtors advisors intend to address such critical issues as value allocation, preparation of materials to solicit interest in plan sponsorship, facilitate further due diligence by the stakeholders and unidentified certain parties who may have an interest in pursuing a transaction with the Debtors and continue to perform valuation, debt capacity, and allocation analyses. Derrough Declaration 15.
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The Debtors Have Not Made Good Faith Progress in Their Limited Negotiations with Creditors 30. The Debtors have engaged in minimal discussions with their creditors and no

meaningful negotiations regarding their marketing and sale or reorganization process. Many critical elements of a restructuring process or a sale have not been communicated to the stakeholders, including the proposed universe of purchasers, the proposed marketing materials, the business plan, the bidding procedures and the timing for the process. Bojmel Decl. 9. The delay in communicating this to the stakeholders may be because the Debtors may not yet have finalized these aspects of the marketing process -- this is troubling in itself, given the amount of time that they have had to do so. Id. Alternatively, they may simply have chosen not to communicate their intended process to the stakeholders, which is similarly troubling. Id. 31. As set forth above and in the Bojmel Decl., the Property Level Lenders believe

that the Debtors proposed process is deeply flawed and will not maximize value for the Debtors estates. The Property Level Lenders, through their advisors, have shared these concerns and the bases therefore with the Debtors and their advisors. The Property Level Lenders concerns have been dismissed and the Debtors have refused to alter the structure of their process. The Debtors are repeating their earlier mistakes of disregarding the input of their constituents. This is most recently demonstrated by the Debtors refusal to continue the Debtors Exclusivity Motion to the Continued Hearing Date in order to provide time to pursue a consensual process that would provide a basis for creditor agreement to a longer extension of the Debtors Exclusive Periods. The Debtors Are Not Making Good Faith Progress Toward Reorganization 32. Since the PSA Hearing over two months ago, the Debtors have made no

significant progress toward reorganization. The efforts outlined in the Debtors Motion are superficial and have not resulted in any meaningful progress. Moreover, the majority of these

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tasks were accomplished in the first 40 days of these cases, prior to the PSA Hearing. The Debtors have not made productive use of the time following the PSA Hearing. The Debtors have met with their stakeholders only a few times, and have only delivered a vague and unclear plan for marketing and selling or recapitalizing the Debtors businesses. As set forth above and in the Bojmel Decl., the Debtors have not accomplished the necessary prerequisites to developing a viable plan, or even the marketing and sale or reorganization process that will underlie such a plan. Bojmel Decl. 9-11, 13-17 and 19. Moreover, the Debtors have refused to address the Property Level Lenders concerns regarding the inadequacy of the Debtors proposed process. The Debtors continue to shut their creditors out of the process and pay only lip service to their obligation to engage in meaningful negotiations. The wrong process or no process will inevitably result in more expensive and burdensome litigation to the detriment of the estates and their stakeholders. Although the Debtors May be Paying Their Bills as They Come Due There is a Significant Cost of Delay in These Cases 33. The Debtors lack of urgency overlooks the history and circumstances of these

cases. The Debtors have largely wasted the pre-filing period and their initial Exclusive Periods pursuing a course of action that was found to be a breach of their fiduciary duty and opposed by most of their major constituents. In doing so, they have racked up and continue accrue immense legal costs. As the Property Level Lenders and the Court have previously noted, the burden of legal fees and expenses incurred in these cases is significant. The Property Level Lenders oppose granting the Debtors another four months to waste and incur legal expenses pursuing a process that is similarly opposed by their creditors and other stakeholders.

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The Debtors Businesses Are a Collection of Hotels and Are Not Large and Complex 34. As set forth above and in the Bojmel Decl., the Debtors businesses are a not

large, complex integrated enterprise, but rather are a collection of assets managed by a third party manager. Bojmel Decl. 21. Thus, the Debtors do not have significant operational issues to address. Nor, do the Debtors have an overwhelming number of creditors. The economic interests in the Debtors cases are dominated by about half a dozen constituents, all of which are sophisticated entities represented by competent and experienced advisors. The Debtors lack of progress is not a product of the size and complexity of these cases, but rather to the Debtors lack of focus and direction in the two months following the PSA Hearing. Bojmel Decl. 9-10, 1317 and 19. Despite Having Sufficient Time, the Debtors Have Not Negotiated With Their Creditors Regarding a Plan of Reorganization or Protocol 35. The purported accomplishments listed in the Debtors Exclusivity Motion were

largely accomplished in the first forty days of these cases. The Debtors squandered the eight months since they retained their advisors, at least half of which was prior to bankruptcy. Bojmel Decl. 15. As discussed above, the Debtors singularly pursued the Plan Support Agreement despite the near unanimous opposition of their constituents and refused to engage in any meaningful negotiations regarding the Plan Support Agreement. In the period following the PSA Hearing, the Debtors have made no significant progress toward a plan of reorganization, or even the marketing and sale or reorganization process that would underlie it. Bojmel Decl. 9-10, 13-17 and 19. The Debtors have met with their stakeholders only a few times, and have only delivered a vague and unclear plan for marketing and selling or recapitalizing the Debtors businesses. Bojmel Decl. 9 and 11. The Debtors have not taken the steps necessary to move

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these cases forward, and there is no indication that extending the Exclusive Periods beyond the Continued Hearing Date will improve the Debtors progress. The Debtors Have Not Used the Time Elapsed In These Cases Productively 36. As noted in detail above and in the Bojmel Decl., more than four months have

passed since this case was commenced, and eight months since the Debtors retained their legal and financial advisors, yet the Debtors have little progress to show for it. Bojmel Decl. 9-10, 13-17 and 19. Notwithstanding the passage of considerable time and the expenditure of many millions of dollars, the Debtors are effectively paralyzed and have yet to present to their key constituents any real marketing or plan process. Bojmel Decl. 15. The Debtors should not be granted a four month extension of the Exclusive Period just for showing up. 37. The nine-factor analysis does not weigh in favor of granting the Debtors an

additional four months to control the direction of these cases (or lack thereof). The Debtors fail to address the two factors that are most critical in light of the Debtors prior failed efforts to impose the Plan Support Agreement on its creditors and stakeholders over almost universal objection. The Debtors will not be able to proceed with a viable plan of reorganization absent reaching consensus with a critical mass of their creditors to which the Debtors have made no serious effort to date. Moreover, as detailed above, even the factors addressed by the Debtors do not support an extension of the Debtors Exclusive Periods. The Debtors request to extend their Exclusive Periods beyond the Continued Hearing Date should be denied. 38. The Property Level Lenders reserve their right to amend and supplement this

Objection, and incorporate to the extent applicable the arguments and factual and legal support set forth in objections filed by other parties.

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CONCLUSION 39. WHEREFORE, for all the foregoing reasons, the relief requested in the Debtors

Exclusivity Motion and the Midland Exclusivity Motion should be limited and/or denied as set forth above. Dated: November 5, 2010 New York, New York BRYAN CAVE LLP /s/ Lawrence P. Gottesman Lawrence P. Gottesman (LG-7061) Michelle McMahon (MM-8130) 1290 Avenue of the Americas New York, New York 10104 Tel: 212-541-2000; Fax: 212-541-4630
lawrence.gottesman@bryancave.com michelle.mcmahon@bryancave.com

and

DUANE MORRIS LLP Phillip K. Wang, Esq. (admitted pro hac vice) San Francisco, CA 94105-1127 Tel: (415) 957.3185; Fax: (415) 358.4725 pwang@duanemorris.com Attorneys for Wells Fargo Bank, N.A., as Trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007C1 and U.S. Bank National Association, as successor to Lasalle Bank N.A., formerly known as LaSalle National Bank, as Trustee for the registered holders of ML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4

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EXHIBIT A

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- 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 B E F O R E: HON. SHELLEY C. CHAPMAN U.S. BANKRUPTCY JUDGE September 1, 2010 8:30 AM U.S. Bankruptcy Court One Bowling Green New York, New York - - - - - - - - - - - - - - - - - - - - -x Debtors. INNKEEPERS USA TRUST, et al., UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK Case No. 10-13800-scc - - - - - - - - - - - - - - - - - - - - -x In the Matter of:

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INNKEEPERS USA TRUST, et al.

- 422 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 scrutiny and business judgment standards. Virtually all of the

other parties-in-interest in the debtors' capital structure aside from Lehman complain of having been shut out of the process. And even those parties who wanted to make a

restructuring proposal were denied access to a data room that was set up by the debtors for Lehman's use only. The intention for Apollo to end up with half of the debtors' equity which has been on the table since April has been, at best, downplayed and, at worst, obfuscated from parties-in-interest. For example, the debtors' largest

creditor, Midland, was not informed about the agreement to transfer fifty percent of the new equity to Apollo until just a few days before the petition date. Yet e-mail correspondence

introduced into evidence clearly reflect Mr. Beilinson's knowledge that Apollo's role in the related transactions was essential; Lehman wanted Apollo in the deal and Mr. Beilinson knew it. Nor did the debtors share the specifics of the plan

term sheet, including the proposed write-downs of the secured loans in the non-Lehman tranche with the other secured creditors. Due at least in part to the lack of transparency in the process, the proposed PSA has spurred extensive discovery requests and a motion for an examiner. One objector has, in my

view, correctly argued that the PSA created contempt rather than fostering negotiations. This is not what a Chapter 11 is

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INNKEEPERS USA TRUST, et al.

- 423 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 supposed to be about. To the contrary, a number of the

objectors point out that a debtor's exclusive period was intended by Congress to provide for an opportunity for the debtor to negotiate with its constituents and reach a consensual plan, a successful plan. And others cite to cases in this district for the proposition that exclusivity should not be employed as a tactical device to put pressure on parties to yield to a plan they consider unsatisfactory. The PSA has had such an effect

on the debtors' estates by tying all parties to a plan which lacks support from nearly the entire capital structure and preventing the debtors from negotiating in good faith with their numerous constituents who will eventually be required to vote on a plan. Finally, I will look at the alleged benefit to the debtors' estates in assumption of the PSA and whether the debtors have complied with their fiduciary duties in pursuing the proposed plan transaction thus far. The general standard under Section 365, which certain of the objectors argue is not applicable here, requires me to determine whether the assumption of the agreement at issue would be a good business decision based on a review of the totality of the circumstances. Here the PSA affords minimal

benefit to the debtors and there is little basis for me to conclude it is beneficial or appropriate for the estates of the

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