Requested Hearing Date: November 10, 2010 at 10:00 a.m.

(Prevailing Eastern Time) Objection Deadline: To Be Determined

MORRISON & FOERSTER LLP 1290 Avenue of the Americas New York, New York 10104 Telephone: (212) 468-8000 Facsimile: (212) 468-7900 Brett H. Miller Lorenzo Marinuzzi Stefan W. Engelhardt Jordan A. Wishnew Attorneys for the Official Committee of Unsecured Creditors of Innkeepers USA Trust, et al. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: Innkeepers USA Trust, et al.,1 Debtors. Chapter 11 Case No. 10-13800 (SCC) Jointly Administered

MOTION TO COMPEL APOLLO INVESTMENT CORPORATION TO PRODUCE DOCUMENTS IN RESPONSE TO THE COMMITTEES SUBPOENA FOR RULE 2004 EXAMINATION The Official Committee of Unsecured Creditors of Innkeepers USA Trust, et al. (the Committee), by its undersigned attorneys, respectfully submits this motion for an order pursuant to section 105(a) to title 11 of the United States Code (as amended, the Bankruptcy Code) compelling Apollo Investment Corporation (AIC) to immediately produce documents in response to a pending subpoena. In support of this motion, the Committee states as follows:

The list of Debtors in these Chapter 11 Cases along with the last four digits of each Debtors federal tax identification number can be found by visiting the Debtors restructuring website at www.omnimgt.com/innkeepers or by contacting Omni Management Group, LLC at Innkeepers USA Trust c/o Omni Management Group, LLC, 16161 Ventura Boulevard, Suite C, PMB 606, Encino, California 91436. The location of the Debtors corporate headquarters and the service address for their affiliates is: c/o Innkeepers USA, 340 Royal Poinciana Way, Suite 306, Palm Beach, Florida 33480.

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PRELIMINARY STATEMENT By Order dated August 25, 2010, this Court granted the Committees motion to obtain discovery, pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules), from Innkeepers USA Trust, et al. (the Debtors or Innkeepers), certain of its secured creditors, and AIC, through subpoenas and discovery requests. Pursuant to that Order, AIC was required to submit written objections and responses to the Committees subpoena and produce documents responsive thereto by certain deadlines. AIC failed to timely submit its written objections and responses, and has failed entirely to produce any responsive documents. Indeed, although AIC represented to this Court and to the Committees counsel that it would cooperate with the Committee and fully comply with all reasonable requests for discovery, it has repeatedly delayed producing any documents and has outright ignored the Committees efforts to secure compliance with the Subpoena. The Committees numerous phone calls and emails to AICs counsel have, for the most part, gone unanswered. Accordingly, the Committee respectfully requests that this Court direct AIC to comply with the subpoena and immediately produce documents responsive thereto. JURISDICTION, VENUE, AND STATUTORY PREDICATE 1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and

1334. Venue is proper pursuant to 28 U.S.C. 1408 and 1409. This matter is a core proceeding pursuant to 28 U.S.C. 157(b). The statutory predicates for the relief requested herein are 105(a) of the Bankruptcy Code and Bankruptcy Rule 2004.

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BACKGROUND 2. On August 17, 2010, the Committee filed a motion (the Motion) pursuant to

section 105(a) of the Bankruptcy Code and Bankruptcy Rule 2004 for entry of an order permitting the Committee to conduct discovery, in the form of document production and witness testimony, from Innkeepers, its current and former controlling shareholder, and other creditors, in order to examine prepetition transactions and conduct of the Debtors and their officers and trustees, and determine whether there was wrongdoing that harmed the Debtors. Specifically, the Committee moved for entry of an order authorizing it to issue subpoenas and discovery requests in that regard, as exemplified in Exhibit 1 to the Motion. 3. The Committee primarily sought to examine the transaction in 2007 by which

AIC acquired its ownership interest in Innkeepers (the 2007 Transaction). In June 2007, AIC, through certain subsidiaries, acquired Innkeepers, formerly a publicly traded company. The 2007 Transaction primarily was funded by secured debt incurred at the time of the transaction; Innkeepers incurred in excess of $1 billion in debt secured by various hotel properties. A significant portion of the funds advanced by the lenders was used to pay existing equity holders and left Innkeepers in a precarious financial position. The Debtors were unable to meet the substantial debt burden incurred in conjunction with the 2007 Transaction and defaulted on all of their loan agreements. See Amended Declaration of Dennis Craven, Chief Financial Officer of Innkeeper USA Trust, In Support of First Day Pleadings, dated July 19, 2010 at 7. As a result of such defaults, Innkeepers, together with its affiliates, filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. See id. at 42. 4. The Committee brought its Motion in order to examine the facts and

circumstances surrounding the 2007 Transaction. In addition, the Committee intends to evaluate

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the validity, priority, and extent of all security interests claimed by the Debtors major secured creditors to determine if any deficiencies are present. 5. AIC filed a response to the Motion, in which it stated: AIC is committed to providing the Creditors Committee and other parties in interest with information necessary to address the various matters and disputes arising in these chapter 11 cases. Accordingly, AIC does not object to the Motion and intends to work cooperatively with the Creditors Committee to comply with all reasonable and appropriate discovery requests. Response of Apollo Investment Corporation Regarding Motion of 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, dated August 24, 2010 at 1. 6. 7. On August 25, 2010, this Court held a hearing on the Committees Motion. By Order dated August 25, 2010, this Court granted the Committees Motion,

authorizing the Committee to seek discovery from the Debtors, its current and former controlling shareholder, certain creditors, and AIC, pursuant to Bankruptcy Rule 2004, by service of subpoenas and discovery requests substantially in the form and substance as those attached to the Motion. The Cash Collateral Order 8. On September 2, 2010, the Court entered the Final Order Authorizing the Debtors

to (i) Use The Adequate Protection Parties Cash Collateral and (ii) Provide Adequate Protection Parties Pursuant to 11 U.S.C. 361, 362 and 363 (as amended, the Cash Collateral Order). 9. The Cash Collateral Order provides, in pertinent part, that the Committee has a

right to investigate and challenge any liens or security interests of the Adequate Protection

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Parties (as defined in the Cash Collateral Order), or to assert any other claims or causes of action, at law or in equity, against any of the Adequate Protection Parties (the Challenge). See Cash Collateral Order at 13. 10. The date by which the Committee must file its Challenge is November 30, 2010

(the Deadline). Apollos Failure to Comply 11. This Court ordered the Debtors, as well as the other parties from whom the

Committee was authorized to seek such discovery (including AIC) to submit written responses and objections to the subpoenas and discovery requests within fourteen days of service thereof, and to 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. 12. On August 31, 2010, the Committee served a Subpoena for Rule 2004

Examination (the Subpoena) on AIC, which was substantially in the form and substance as the exemplar subpoena to AIC attached to the Motion. (Galante Decl.,2 Exs. A-1, A-2.) 13. In accordance with the Courts August 25, 2010 Order (id., Ex. A-3), AIC was to

submit written responses and objections to the Subpoena by September 14, 2010, and produce documents responsive to the Subpoena by September 30, 2010. 14. Having failed to receive AICs written responses and objections to the Subpoena

by the Court-ordered deadline, Paul Galante, counsel for the Committee, emailed Andrew Ehrlich, counsel for AIC, on September 19, 2010, advising that the Committee had not received

References to Galante Decl. are to the accompanying November 5, 2010 Declaration of Paul Galante in support of this Motion.

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AICs written responses and that Mr. Ehrlich should call if he wished to discuss the matter. (Id., Ex. B.) 15. The following day, Mr. Ehrlich responded by email, stating that AICs failure to

respond was an oversight, and that the written responses would be sent that day. (Id., Ex. C.) Mr. Ehrlich also stated that he was happy to meet and confer regarding the responses. (Id.) AIC, however, failed to submit its written objections and responses that day. (Id. 5.) 16. Subsequently, counsel for the Committee attempted to contact Mr. Ehrlich

regarding AICs failure to submit its written responses, but was informed that Mr. Ehrlich was out of the office. (Id. 6.) On September 22, 2010, Mr. Galante emailed Mr. Ehrlich to ask whether AIC needed more time to respond to the Subpoena, as the Committee still had not received AICs responses, and to request a meet and confer by phone. (Id. Ex. C.) No reply to this email was received. (Id. 7.) 17. On September 27, 2010, Mr. Galante again emailed Mr. Ehrlich, as well as his

colleague Amy Dieterich, stating that a week had passed since Mr. Ehrlich represented that AICs responses would be forthcoming. (Id. Ex. D.) Mr. Galante expressed his willingness to meet and confer, but advised that unless the Committee received a status update from AIC, the Committee would be forced to make a motion to compel AICs responses to the Subpoena. (Id.) Again, no reply to this email was received. (Id. 8.) 18. Counsel for the Committee continued its attempts to obtain from AICs counsel

an update on when the Committee could expect AICs responses to the Subpoena. (Id. 9.) These attempts were unsuccessful, as the Committees counsel was informed that Mr. Ehrlich was ill. (Id.)

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19.

On October 1, 2010seventeen days beyond the Court-ordered deadline and one

day after the date on which responsive documents were duein an email from Mr. Ehrlich to Mr. Galante, the Committee finally received AICs written objections and responses to the Subpoena. (Id., Exs. E-1, E-2.) In his email, Mr. Ehrlich wrote: There is really no specific area that you have identified concerning the 2007 transaction about which we object to producing documents; the question really is one of time frame. (Id., Ex. E-1.) Counsel then agreed to have a meet and confer on October 4, 2010. (Id. 10.) 20. On October 4, 2010, AICs counsel and the Committees counsel spoke by phone

regarding AICs document production in response to the Subpoena, which, per the Courts August 25, 2010 Order, had been due 4 days earlier. (Id. 11.) During the meet and confer, counsel agreed upon a time frame for responsive documents, and counsel for AIC agreed to provide the Committee with a list of search terms to be used for collecting electronic documents, as well as a list of custodians. (Id.) Based on AICs representations, and given AICs alreadybelated production efforts, it was the Committees understanding that those items, as well as the actual responsive documents, would be provided promptly. (Id.) 21. Over a week later, after AIC failed to provide the Committee with the list of

proposed search terms and list of custodiansindeed, AIC failed to make any contact with the Committee regarding its responses to the Subpoenaon October 13, 2010, Leah Ramos, counsel for the Committee, emailed Mr. Ehrlich to inquire as to the status of AICs document production. (Id., Ex. F.) AICs counsel did not respond to this email. (Id. 12.) 22. On October 21, 2010more than a week since the Committees counsel inquired

about the status of AICs document production to no avail, and more than two weeks since the meet and confer regarding AICs responses to the subpoenaMs. Ramos contacted Ben

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Rothstein, counsel for AIC, to again inquire about the status of AICs document production. (Id. 13) Mr. Rothstein stated that he had spoken to Mr. Ehrlich and that they would provide a status update the next day. (Id.) After conferring with Mr. Galante, Ms. Ramos again phoned Mr. Rothstein and told him that AICs failure to provide its list of proposed search terms and custodians, much less the documents in response to the Subpoena, was unacceptable and that the Committee was prepared to file a motion to compel early the following week. (Id.) 23. On October 25, 2010, Mr. Ehrlich sent an email to the Committees counsel,

apologizing for the delay in getting this rolling, and proposing a number of electronic document search terms and custodians. (Id., Ex. G.) Mr. Ehrlich stated that AIC could proceed with its collection of documents using those search terms and custodians or he would be happy to have a meet and confer. (Id.) 24. After additional emails to clarify AICs proposed search terms and a meet and

confer by phone on October 26, 2010, AIC agreed to search for electronic documents using its proposed terms as well as additional terms proposed by the Committee. (Id. Ex. H.) Mr. Ehrlich stated that the process of collecting hard copy documents had already commenced and that he expected to be in a position to produce such documents the following week. (Id. 15.) Based on Mr. Ehrlichs representations during the meet and confer, the Committee expected that AIC would begin producing documents in short order. (Id.) 25. After receiving neither any documents from AIC nor any update as to when

documents would be produced, counsel for the Committee made a follow-up phone call and sent a follow-up email to Mr. Ehrlich on November 1, 2010 and November 3, 2010, respectively, both of which went unanswered. (Id. 16, Ex. K.)

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26.

On November 4, 2010, the Committees counsel left Mr. Ehrlich a voice mail,

informing him that unless the Committee received documents from AIC in response to the Subpoena by the following day, the Committee would bring a motion to compel the production of such documents. (Id. 16.) 27. The following day, Mr. Ehrlich e-mailed the Committees counsel, stating: We

should be in a position to begin our rolling production shortly; the e-discovery review (which is a little more time-consuming) is underway. I will call you later today to give you a more precise timeframe. (Id., Ex. L.) 28. It has been over two months since the Committee served AIC with the Subpoena,

and over a month since the deadline ordered by this Court for the production of responsive documents. Throughout this time, AIC has continually represented that it will work cooperatively with the Committee to provide discovery, and AICs counsel has repeatedly promised that documents will be forthcoming, yet AIC has not produced a single document in response to the Subpoena. (Id. 18.) RELIEF REQUESTED 29. By this Motion, the Committee seeks an order directing AIC to comply fully with

the Subpoena by producing documents responsive to the Subpoena, including electronic documents collected pursuant to search terms that are acceptable to the Committee, within three (3) business days. BASIS FOR RELIEF 30. This Court, in its August 25, 2010 Order, authorized the Committee to seek

discovery from AIC pursuant to Bankruptcy Rule 2004 and explicitly directed AIC to (1) submit written responses and objections to the Committees Subpoena, and (2) make reasonable efforts

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to complete production of documents in response to the Subpoena, by September 14, 2010 and September 30, 2010, respectively. AIC has failed to comply with the Courts Order in both those respects. 31. First, the Committee did not receive AICs written objections and responses to the

Subpoena until October 1, 2010, well after the Courts imposed deadline of September 14, 2010, and only after the Committees counsel made numerous inquiries of AICs counsel as to the status of those responses. 32. Second, AIC has failed to produce a single document in response to the

Subpoena, notwithstanding that this Court directed that responsive documents be produced over one month ago. Counsel for the Committee has made sincere, good faith efforts to work cooperatively with AICs counsel to secure the timely production of documents responsive to the Subpoena. The Committees efforts to do so, however, have been either entirely ignored, or AICs counsel has purposefully delayed responding to the Committee. 33. AIC has not provided any basis for refusing, or indefinitely delaying, its

production of documents responsive to the Subpoena. To the contrary, AIC did not object to the Committees Motion seeking Bankruptcy Rule 2004 discovery and, in fact, averred its commitment to provide the Committee with relevant information and to work cooperatively with the Committee towards that end. Mr. Erhlich reiterated AICs commitment to complying with the Committees Bankruptcy Rule 2004 discovery efforts in his email of October 1, 2010, wherein he stated that [t]here is really no specific area that you have identified concerning the 2007 transaction about which we object to producing documents. (Galante Decl., Ex. E-1.) Moreover, during the October 26, 2010 meet and confer, Mr. Ehrlich represented that documents would be forthcoming, and that the process of collecting hard copy documents had already

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commenced. (Id. 15.) Despite the Committees subsequent attempts to obtain an update from AIC as to when documents would be produced, it was only after the Committees counsel informed Mr. Ehrlich that the Committee would be filing a motion to compel that AIC responded, as it had promised on numerous occasions, that documents would be produced shortly. (Id. 16, 17.) As of the date of filing, however, AIC has not produced a single document in response to the Subpoena. (Id. 18.) 34. All other parties from whom the Committee sought Bankruptcy Rule 2004

discovery pursuant to its Motion, including the Debtors and its major secured creditors, have provided the Committee with approximately 352,404 pages of documents, and continue to supplement those document productions. (Id. 19.) 35. Importantly, the Deadline is quickly approaching, yet because of Apollos

inordinate delay, the Committee is at risk of being unable to complete its investigation, and it will be forced to request that the Court further amend the terms of the Cash Collateral Order in order to extend the Deadline. MOTION PRACTICE 36. This Motion includes citations to the applicable rules and statutory authorities

upon which the relief requested herein is predicated, and a discussion of their application to this Motion. Accordingly, the Committee submits that this Motion satisfies Local Bankruptcy Rule 9013-1(a). NOTICE 37. The Committee will serve notice of this Motion on: (a) the Debtors and their

counsel; (b) the Office of the United States Trustee; (c) AIC; and (d) those parties requesting

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notice pursuant to Bankruptcy Rule 2002. In light of the nature of the relief requested herein, the Committee submits that no other or further notice is necessary. NO PRIOR REQUEST 38. Court. WHEREFORE, the Committee respectfully requests that this Court enter an Order consistent with the form submitted herewith: (i) directing AIC to comply with the Courts August 25, 2010 Order and producing all documents responsive to the Committees subpoena within three (3) business days; and (ii) granting such other and further relief as the Court may deem just and proper. Dated: November 5, 2010 Respectfully submitted, MORRISON & FOERSTER LLP No previous request for the relief sought herein has been made to this or any other

/s/ Stefan W. Engelhardt Brett H. Miller Lorenzo Marinuzzi Stefan W. Engelhardt Jordan A. Wishnew 1290 Avenue of the Americas New York, NY 10104-0050 Tel.: 212.468.8000 Fax: 212.468.7900 brettmiller@mofo.com lmarinuzzi@mofo.com sengelhardt@mofo.com jwishnew@mofo.com Attorneys for the Official Committee of Unsecured Creditors of Innkeepers USA Trust, et al.

By:

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