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An Objection to Fees Filed by the United States Trustee

An Objection to Fees Filed by the United States Trustee

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Categories:Types, Business/Law
Published by: DealBook on Feb 04, 2011
Copyright:Attribution Non-commercial

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12/01/2011

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UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK
HEARING DATE: T.B.AHEARING TIME: T.B.A.
-------------------------------x:
In re
::
INNKEEPERS USA TRUST, et al.,
::: 
Debtors.
::-------------------------------x
Case No. 10-13800 (SCC)(Chapter 11
)
OBJECTION OF THE UNITED STATES TRUSTEE TO FIRST INTERIMAPPLICATIONS FOR COMPENSATION AND REIMBURSEMENT OF EXPENSESTO THE HONORABLE SHELLY C. CHAPMAN, BANKRUPTCY JUDGE:
Tracy Hope Davis, the United States Trustee for Region 2(the "United States Trustee"), files this objection to thefollowing interim applications for compensation andreimbursement of expenses submitted in these cases for theperiod of July 19, 2010 through November 30, 2010:
ProfessionalFeesExpenses
Kirkland & Ellis, LLPCounsel to Debtors$6,276,488.50$407,520.25Moelis & Company, LLCFinancial Advisor andInvestment Banker to Debtors$709,489.83$50,435.94Morrison & Foerster, LLPCounsel to Committee$1,396,631.67$35,510.51Jefferies & Company, LLCFinancial Advisors toCommittee$508,064.52$23,111.04Fried Frank Harris Shriver &Jacobson, LLPCounsel to Independent Board$328,465.00$6,640.60Members of Committeen/a$521.14Totals:$9,219,139.52$523,739.48
 
The United States Trustee makes the following comments andobjections to the interim awards of compensation andreimbursement of expenses in the amounts sought for the reasonsset forth below.
Introduction
The professionals seek allowance of $9,219,139.52 in feesand $523,739.48 in expenses for this fee period. A plan ofreorganization and disclosure statement have not yet beenfiled. The outcome of these cases is unresolved. Therefore,allowance of the full amount of fees requested on the basis ofoverall case results would be premature at this point. Accordingly, the full payment of the interim fees to theapplicants at this time pursuant to 11 U.S.C. § 331 would beinappropriate. For these reasons, the United States Trusteerespectfully requests that the Court impose a percentage feereduction (colloquially known as a “hold back”), with areservation of rights to object to the allowance of theseinterim fees based upon the results of this case.
 
The United States Trustee also asserts specific objectionsto the amounts of fees and expenses sought by the applicants.The specific objections are more fully described below.
BackgroundGeneral Background
1.On July 19, 2010 (the “Petition Date”), Innkeepers USATrust (“Innkeepers”) and certain of its affiliates (collectively,2
 
the “Debtors”) filed voluntary petitions for relief under theBankruptcy Code.2.The Debtors own and operate a portfolio of 72 hotelslocated in 20 states across the United States. Declaration ofDennis Craven, Chief Financial Officer of Innkeepers USA Trust, inSupport of First Day Pleadings (the “Craven Declaration”) at ¶ 6,ECF No. 2.3.Since the Petition Date, the Debtors have operated theirbusinesses and managed their properties as debtors in possessionpursuant to Bankruptcy Code Sections 1107 and 1108. By Order datedJuly 20, 2010, the Debtors’ cases are being jointly administered.ECF No. 51.4.On July 28, 2010, the United States Trustee, pursuant toSection 1102(a)(1) of the Bankruptcy Code, appointed the officialcommittee of unsecured creditors (the “Creditors Committee”). ECFNo. 82.5.On August 12, 2010, the Court entered an AdministrativeOrder Establishing Procedures for Interim Compensation andReimbursement of Expenses of Professionals (the “MonthlyCompensation Order”). ECF No.189. According to the MonthlyCompensation Order, professionals in these cases may be paid 80% oftheir fees and 100% of their expenses on a monthly basis. Id.3

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