Page 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

VERITEXT REPORTING COMPANY www.veritext.com

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK Case No. 10-13800-scc - - - - - - - - - - - - - - - - - - - - -x In the Matter of:

INNKEEPERS USA TRUST, et al,

Debtor.

- - - - - - - - - - - - - - - - - - - - -x

United States Bankruptcy Court One Bowling Green New York, New York

August 25, 2010 10:58 AM

B E F O R E: HON. SHELLEY C. CHAPMAN U.S. BANKRUPTCY JUDGE

212-267-6868

516-608-2400

Page 2 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 VERITEXT REPORTING COMPANY www.veritext.com Transcribed by: Ellen S. Kolman Motion of the Official Committee of Unsecured Creditors of Innkeepers USA Trust, et al. for an Order Permitting the Committee to Conduct Rule 2004 Discovery of Innkeepers USA Trust et al. and Other Parties

212-267-6868

516-608-2400

Page 3 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 BY: LORENZO MARINUZZI, ESQ. PAUL A. GALANTE, ESQ. MORRISON FOERSTER LLP Attorneys for Official Committee of Unsecured Creditors 1290 Avenue of the Americas New York, NY 10104 BY: PAUL BASTA, ESQ. KIRKLAND & ELLIS LLP Attorneys for Debtor Citigroup Center 153 East 53rd Street New York, NY 10022 BY: PATRICK M. BRYAN, ESQ. A P P E A R A N C E S : KIRKLAND & ELLIS LLP Attorneys for Debtor 655 Fifteenth Street, N.W. Washington, DC 20005

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

Page 4 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
VERITEXT REPORTING COMPANY www.veritext.com

KASOWITZ, BENSON, TORRES & FRIEDMAN LLP Attorneys for Five Mile 1633 Broadway New York, NY 10019

BY:

DANIEL A. FLIMAN, ESQ.

PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP Attorneys for Apollo 1285 Avenue of the Americas New York, NY 10019

BY:

LAUREN SHUMEJDA, ESQ.

HAYNES AND BOONE LLP Attorneys for Midland Loan Services, Inc. 2323 Victory Avenue Suite 700 Dallas, TX 75219

BY:

MARK ELMORE, ESQ.

212-267-6868

516-608-2400

Page 5 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
VERITEXT REPORTING COMPANY www.veritext.com

BRYAN CAVE LLP Attorneys for LNR Partners, LLC 1290 Avenue of the Americas New York, NY 10104

BY:

LAWRENCE P. GOTTESMAN, ESQ.

DECHERT LLP Attorneys for Lehman ALI, Inc. 1095 Avenue of the Americas New York, NY 10036

BY:

NICOLE HERTHER-SPIRO, ESQ.

212-267-6868

516-608-2400

INNKEEPERS USA TRUST

Page 6 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 THE CLERK: THE COURT: P R O C E E D I N G S All rise. Good morning. Please be seated.

MR. MARINUZZI: THE COURT: THE CLERK:

Good morning, Your Honor. Please.

All right.

Innkeepers USA Trust. Good morning, Your Honor.

MR. MARINUZZI: THE COURT:

Good morning. Lorenzo Marinuzzi and Paul Galante of

MR. MARINUZZI:

Morrison & Forester on behalf of the official committee of unsecured creditors. Your Honor, we filed a motion seeking to take discovery of the debtors, Apollo Investment Company Corporation, Lehman, and the debtors other secured creditors that are parties or special servicers to the securitized trusts, and the way we've set this up is first step is getting an order from this Court deeming the committee the appropriate party to undertake this investigation under Rule 2004. we've set it up so that the parties who have particular objection to the form of document demand or any particular discovery demand could then deal with the objections after the order was entered. And we've received to the motion informal And

responses from the debtors and the debtors were kind enough to mark up the order to address some of their concerns and just circulated the order to the parties in the courtroom. We're

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

INNKEEPERS USA TRUST

Page 7 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 Honor. copy? MR. MARINUZZI: There were three -- well, actually, I fine with it. The debtors, obviously, are. And I'm not

hearing any objections from any of the parties in the courtroom that have reviewed it. THE COURT: Okay. And I'm happy to hand up the order to

MR. MARINUZZI: the Court. THE COURT:

Okay. Lorenzo, do you have an extra

UNIDENTIFIED SPEAKER:

understand four because the fourth response was filed this morning. THE COURT: I have -- I'll tell you what I have. I

have Lehman, Wells Fargo, Apollo and Midland. MR. MARINUZZI: Those are the ones I'm aware of, Your

I have not seen the Wells Fargo objection and while I

was on my way over to court, what I was told it says is that they're willing to cooperate. They don't oppose the 2004s and

they just want to make sure that it's not overbroad which was the same message that Apollo and Lehman essentially voiced in their objections. with those. And as I describe to the Court, we can deal

We have no intention of serving people with

document demands that they don't intend to comply with because they're too broad. We just want the order from the Court and

the ability to serve the document demands and subpoenas as

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

INNKEEPERS USA TRUST

Page 8 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 necessary so we start the process. Midland has also filed an objection. His position is

that -- it's now moot since they have produced documents to the committee and -THE COURT: Right. -- I don't want to say no good deed

MR. MARINUZZI:

goes unpunished and I'm very happy that Midland was forthright in providing us with lots of documents which we still have to go through. But I think if that's the position then if they

are served with a formal discovery demand, their responses are pretty simple and you already have it, we have nothing else to produce to you rather than discover that something's missing and have it come back to this Court on short notice to request 2004 authorities. So, with respect to that objection, we

simply say that's fine and when we serve them, if they serve them a formal discovery their response could be you have everything that we have so there's nothing left to produce. THE COURT: MR. ELMORE: THE COURT: MR. ELMORE: Did they agree to that proposal? Good morning, Your Honor. Good morning. Mark Elmore, Haynes & Boone on behalf of Yes, that's correct. We agreed to

Midland Loan Services, Inc. that. THE COURT: MR. ELMORE: Okay.

And that is well.

And we've already produced over 200,000

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

INNKEEPERS USA TRUST

Page 9 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 received. changed? MR. MARINUZZI: No, it's the same exact order you documents, printed thousands of pages of documents which I will represent is our collateral loan file. So, we believe it's

moot but, you know, our response here is short. THE COURT: Very good. Next one.

MR. MARINUZZI:

Your Honor, unless Your Honor has any

questions about the relief, maybe we could just go through the order and I'll address the changes that the debtors have -THE COURT: All right. Does everybody who needs to

see a copy of the revised order have a copy? MR. ELMORE: I have it from last night. Has it

I -- Your Honor, I unfortunately I expected a

package to be delivered here this morning with additional copies in it but it didn't make it down here. THE COURT: Well, we've been having -- you folks have

been delivering a lot of packages here and we've been having some problems actually getting a hold of them but we're working on that, so -MR. MARINUZZI: to me, Your Honor -THE COURT: Come to you. Oh. No, the package was supposed to come

MR. MARINUZZI: THE COURT:

-- I just haven't --

Well, if I can't get any packages then -Okay.

MR. MARINUZZI:

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

INNKEEPERS USA TRUST

Page 10 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 THE COURT: Okay. So --

MR. MARINUZZI:

If you see the clarifications that the

debtors have built into the order and you start on the second page of the order, they have defined the parties that are being served with the document demands and subpoenas and that's fine. I'm advised, though, LNR Partners, Inc. is now LNR Partners, LLC? MR. GOTTESMAN: MR. MARINUZZI: That's correct. Okay. So, we'll make that change in

the order and when we submit it to the Court later by e-mail if that's okay. We'll have that change in the order. And just to

clarify, and it's perfectly fine to clarify it even further, the addition of the old paragraph that provides that "This authorization in no way limits the rights of the recipients of the subpoenas and discovery requests to object to the subpoenas and discovery requests consistent with the relevant Federal Rules of Civil Procedure made applicable to the pending matter by the relevant Federal Rules of Bankruptcy Procedure under this further order." Honor. And we have no problem with that, Your

That's exactly the process we envisioned. We did provide in the order that the proposed what I

call a compressed schedule for responses.

And the thought

process here was that we expected people to voluntarily produce to us documents. So, at the end of the day, we wouldn't have But in the event

to serve formal document demand or subpoena.

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

INNKEEPERS USA TRUST

Page 11 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 that we did because two three weeks into the process we realized that one party or several parties were not cooperating, then we wanted to serve the subpoenas and know we had a tight time frame to get those responses. The debtors understandably we did not want a tight time frame and if I'm supposed to serve the subpoenas today I understand that. So, what the debtors have asked for is to

extend the date by which they must make reasonable production from fourteen days to thirty days and that's reflected in the next ordered paragraph. And I'll read the paragraph into the

record; it's easier that way for the people in the courtroom. "Ordered that unless otherwise agreed upon by the committee and the effected party, the debtors, AIC, Midland, Lehman, LNR, CW and C-III shall submit written responses and objections to the subpoena and discovery request within fourteen days of service and make reasonable efforts to complete production of documents in response to the subpoenas and discovery requests subject to their written objections within thirty days of service." THE COURT: All right. And that's reasonable from our

MR. MARINUZZI:

perspective, Your Honor, as well. THE COURT: Okay. And the next ordered paragraph an

MR. MARINUZZI:

additional change requested by the debtors, and I'll read the

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

INNKEEPERS USA TRUST

Page 12 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 entire paragraph again, I apologize. "Ordered that unless otherwise agreed upon by the committee and the effected party, the debtors, AIC and Lehman, shall produce witnesses for deposition testimony subject to their written objections within forty, 4-0, days of service of the subpoenas and discovery requests." THE COURT: That's designed to occur after the

completion of the production of documents, obviously? MR. MARINUZZI: THE COURT: Right.

Okay. And the final changes are in the final

MR. MARINUZZI:

ordered paragraph, and, again, this is really a reservation of rights but we'll -- because we had a broader reservation of rights. I think the debtors want some clarification which is And the final

fine with us because that's what we intended. paragraph reads,

"Ordered that entry of this order is without prejudice to the committee's right pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure or other applicable law to issue other forms of discovery allowable under the Federal Rules of Civil and Bankruptcy Procedure to the recipients of the subpoenas and discovery requests or to seek discovery from either affiliates of the recipients of the subpoenas and discovery requests or parties in possession, custody and control of documents of the recipients of the subpoenas and

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

INNKEEPERS USA TRUST

Page 13 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 ALI. rising. discovery request, to the extent such discovery is reasonably believed by the committee to result in the provision of information called for by the subpoenas and discovery requests in a more efficient manner." THE COURT: Okay. That makes sense to me.

MR. MARINUZZI: THE COURT: MR. BASTA:

Thank you, Your Honor.

Mr. Basta? Yes, Your Honor. We don't really -- we

hope we're not in this order ever. cooperatively with the committee. cushion in for us. THE COURT: MR. BASTA: Right.

I mean we intend to work This is just building more

If we're juggling multiple things at the

time, we need time to get back with information. THE COURT: we're done. MR. MARINUZZI: Unless anyone -- I see somebody's Okay. All right. So, bottom line is

We may not be done. NICOLE: Sorry. Nicole Herther-Spiro for Lehman ALI. I can't hear you. Could you

THE COURT:

I'm sorry.

come up to the podium? NICOLE: Nicole Herther-Spiro, Your Honor, for Lehman

And we just wanted to make clear that the motion attached

to various document requests in support, we thought that those were too broad for Lehman's purposes. You know, maybe they're

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

INNKEEPERS USA TRUST

Page 14 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 appropriate for the debtor but we wanted them to be narrowed somewhat. THE COURT: All right. In your pleading, you make two One is that

statements that I thought were quite reasonable.

you wanted the request narrow -- to include all the documents relevant to the particular issues the committee is seeking to investigate and document that the committee cannot obtain from the debtors or Apollo. That seems reasonable that if you bang

it from somebody else, you don't need it from them. MR. MARINUZZI: Your Honor, that's correct. I've got

a document that the debtors delivered to us; I don't need an additional copy. But what I don't want to have is an argument

in front of the Court in thirty to forty-five days that the debtor should have this document, they haven't been able to produce it and I have to pound them to try to get the document from them as opposed to getting it from -THE COURT: NICOLE: cooperate. I mean that is a problem.

Yes, I mean, I think that we're willing to

I guess we just -- we would prefer if they can go

to the debtors in Court first. THE COURT: I think what I'm being told is they're

going to try but they don't want to get -- they don't want to get jammed and run out of time and having spent the time with the debtor in good faith looking for the document and not finding it and then, kind of too little, too late, have them

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

INNKEEPERS USA TRUST

Page 15 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 Honor. THE COURT: All right. If it's okay with the Court, we'll ecome to you. out. The second concern that you raise is that you object to the scope of the examination to the extent that it seeks information not reasonably known by Lehman. But, you know, But, you know, this sounds like you can work it

they're going to ask a question and if you don't know you're going to tell them you don't know and that's going to be the end of it. So, I think in the first instance, they have the

right to ask and you certainly have the right to say you don't know. So, I don't feel that there's any live dispute and if

there is, you have the ability to come back and tell me. NICOLE: Thank you, Your Honor. All right. That's all from our perspective, Your

THE COURT:

MR. MARINUZZI:

MR. MARINUZZI:

mail a copy of the order then. THE COURT: All right. Is there anyone else in the Okay. So, I'm going to

courtroom wish to be heard for today? take the order back.

Should we just make that one change for

you or do we have a clean version of this order? MR. MARINUZZI: version of the order. I don't know that you have a clean It came from Kirkland. We'll send you

the order once we get it.

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

INNKEEPERS USA TRUST

Page 16 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 right. THE COURT: So, someone will send it to us -Correct. Okay. All

MR. MARINUZZI: THE COURT:

-- a clean version by e-mail.

Very well, I think I'll see most of you all again on All right. Thank you. We're adjourned.

Monday at 11 a.m.

(Proceedings concluded at 11:09 AM)

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400

Page 17 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 Date: August 26, 2010 Veritext 200 Old Country Road Suite 580 Mineola, NY 11501 I, Ellen S. Kolman, certify that the foregoing transcript is a true and accurate record of the proceedings. C E R T I F I C A T I O N

Ellen S. Kolman
ELLEN S. KOLMAN

______________________________________

Digitally signed by Ellen S. Kolman DN: cn=Ellen S. Kolman, c=US Reason: I am the author of this document Date: 2010.08.26 13:41:07 -04'00'

212-267-6868

VERITEXT REPORTING COMPANY www.veritext.com

516-608-2400