Innkeepers USA's exclusivity in jeopardy; Midland seeks new plan

By Lisa Kerner

Charlotte, N.C., Aug. 31 - Midland Loan Services, Inc. asked the court to "level the playing field" and terminate Innkeepers USA Trust's exclusivity to allow for the filing of "a different, market-driven plan," according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District for New York.

"To date, the debtors have embarked upon a Chapter 11 process whereby they seek approval of a lock-up agreement with one secured creditor - Lehman, providing for a plan of reorganization that favors only Lehman and Apollo, the out of the money equity owner of the debtors," the filing said.

Midland said it was approached by Five Mile Capital II Pooling REIT LLC, an affiliate of Five Mile Capital Partners LLC, with a commitment to fund $236 million of new money as a basis for a proposed plan of reorganization.

The plan "could increase the debtors' enterprise value over the enterprise value implicit in the Lehman/Apollo plan, while providing the other creditor constituencies a higher recovery more reflective of the intrinsic value of their collateral."

Innkeepers USA, a Palm Beach, Fla., hotel real estate investment trust, filed for bankruptcy on July 19. The Chapter 11 case number is 10-13800.

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