Lee S. Attanasio John G. Hutchinson Benjamin R.

Nagin SIDLEY AUSTIN LLP 787 Seventh Avenue New York, NY 10019 (212) 839-5300 (tel) (212) 839-5599 (fax) Attorneys for Appaloosa Investment L.P. I, Palomino Fund Ltd., Thoroughbred Fund L.P., and Thoroughbred Master Ltd. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------------------x In re : : Innkeepers USA Trust, et al., : : Debtors. : ------------------------------------------------------x

Chapter 11 Case No. 10-13800 (SCC) Jointly Administered

UPDATED OBJECTION LIST OF APPALOOSA INVESTMENT L.P. I, PALOMINO FUND LTD., THOROUGHBRED FUND L.P., AND THOROUGHBRED MASTER LTD. Appaloosa Investment L.P. I, Palomino Fund Ltd., Thoroughbred Fund L.P., and Thoroughbred Master Ltd. (collectively, Appaloosa), by its counsel hereby identifies the following objections that it intends to assert at the hearing on the Debtors Motion for Entry of an Order (i) Authorizing the Debtors to Enter into the Commitment Letter with Five Mile Capital II Pooling REIT LLC (Five Mile), Lehman ALI Inc. (Lehman), and Midland Loan Services (Midland), (ii) Approving the New Party/Midland Commitment Between the Debtors and Midland, (iii) Approving Bidding Procedures, (iv) Approving Bid Protections, (v) Authorizing an Expense Reimbursement to Bidder D, and (vi) Modifying Cash Collateral Order to Increase Expense Reserve (the Stalking Horse Motion) [Docket No. 820], as modified by the Amended and Restated Binding Commitment Agreement Regarding the Acquisition and Restructuring of Certain Subsidiaries of Innkeepers USA Trust, dated March __, 2011 (the Revised Five

Mile/Lehman Bid), and the related Bidding Procedures for the Fixed/Floating Debtors (the Revised Bidding Procedures):1 1. The Revised Bidding Procedures are improper.

A. The Revised Bidding Procedures do not permit a non-enterprise bid to be qualified for purposes of an auction. This provision necessarily will chill potential pool bids; bidders will hardly be willing to invest the time and money to prepare a bid that is definitionally not permitted to participate in the Auction. The provision is wholly inconsistent with the Debtors commitment, repeatedly stated to this Court and in multiple filings, that they will entertain any and all bid structures.

B.

The Overbid Allocation is improper. Like the enterprise-only limitation on bidding, the Overbid Allocation has the effect of improperly restricting bidders ability to separately value and bid on pool assets.

C. bidding.

The Lehman Cash-Out creates an unsupportable hurdle to competitive There is no precedent for a bidding procedure that increases by more than 100% the cash requirement to bid in order to dictate a cash recovery to an undersecured creditor. The argument that the provision is necessary to maintain a certain debt to capitalization ratio is a red herring. Moreover, third party bidders should not be bound by the economics negotiated by Five Mile and Lehman.

D. Procedures.

The Fiduciary Out Does Not Cure the Infirmities in the Revised Bidding No bidder is likely to put in the time and money to prepare a Bid for consideration knowing that such bid is definitionally unable to be Qualified to participate in the Auction, based solely on the prospect that the Debtors which Debtor(s) being fundamentally unclear might exercise a fiduciary out. The determination of a Qualified Bid and a Successful Overbid should be based on the Debtors again, which Debtor(s) becomes a critical inquiry business judgment, not the separate standard implied

Notably, as of the service of this Updated Objection List, the Debtors have not filed, much less provided their constituents with, a final, signed version of the Revised Five Mile/Lehman Bid.

by a fiduciary out. While the concepts overlap, they are not identical, and the proposed structure creates substantial litigation risk. 2. The Revised Bidding Procedures improperly mandate plan terms, in respect of both the Revised Five Mile/Lehman Bid and any other Successful Overbid.2 A. As a general matter, the Revised Five Mile/Lehman Bid and the Revised Bidding Procedures improperly dictate plan terms that go far beyond the scope of the investment terms encompassed by the bid. B. The term sheet attached to the Revised Five Mile/Lehman Bid requires that the negotiated plan terms apply to any Successful Overbid. C. case. The scope of the plan releases is overly broad, and should not be approved absent the consent of each releasing party. No bidder should be bound by the release terms of the Revised File Mile/Lehman Bid. The Special Servicer Release is for less than reasonable value, and is effectively a non-debtor settlement of litigation that should not be approved if at all other than in the context of a plan. Under no scenario should bidders be bound by the terms of the Special Servicer Release. Respectfully submitted, SIDLEY AUSTIN LLP By:/s/ Lee S. Attanasio Lee S. Attanasio John G. Hutchinson Benjamin R. Nagin 787 Seventh Avenue New York, New York 10019 Telephone: (212) 839-5300 Facsimile: (212) 839-5599 lattanasio@sidley.com Attorneys for Appaloosa Investment L.P. I, Palomino Fund Ltd., Thoroughbred Fund L.P., and Thoroughbred Master Ltd. The release provisions are particularly problematic at this stage of the

Dated: New York, New York March 9, 2011

In any order approving any form of the Revised Bidding Procedures, it must be clear that all objections to a subsequently-filed plan of reorganization are preserved, and, in particular, objections based on valuation, classification and voting, treatment and releases.

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