BRYAN CAVE LLP Lawrence P.

Gottesman (LG-7061) Michelle McMahon (MM-8130) 1290 Avenue of the Americas New York, New York 10104 (212) 541-2000 and DUANE MORRIS LLP Phillip K. Wang, Esq. (admitted pro hac vice) One Market Plaza, Spear Tower, Suite 2200 San Francisco, CA 94105-1127 (415) 957-3185 Attorneys for Wells Fargo Bank, N.A., as Trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2007-C1 and U.S. Bank National Association, as Trustee for the registered holders of ML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x In re: INNKEEPERS USA TRUST, et al., : : (Jointly Administered) Debtors. : x DECLARATION OF RONEN BOJMEL I, Ronen Bojmel, declare as follows: 1. I am over the age of 18 years and am in all ways competent to submit this Chapter 11 Case No.: 10-13800 (SCC)

declaration (the Declaration). 2. I am a Managing Director of Miller Buckfire & Co., L.L.C. (Miller Buckfire). I

was one of the original members of Miller Buckfire when it was formed in 2002. From 2002 to 2006, I held the position of Principal. In 2006, I was promoted to Managing Director and I currently serve on the firms Valuation Committee, which ensures that valuations performed by

C053239/0312771/1601296.9

Miller Buckfire and relied upon in issuing formal valuation advice are correctly and properly done, along with the Investment Banking Commitments Committee, which is responsible for approving all new client engagements. From 1996 to 2002, I was a member of the financial restructuring group of Dresdner Kleinwort Wasserstein. Accordingly, I have more than a decade of experience in providing financial advisory services to distressed companies and their stakeholders, in and outside of chapter 11, including, among others: General Growth Properties, Neff Corp., Simmons Bedding Company, Questex Media Group, Inc., Standard Pacific Corp., Foamex, JL French, Autocam, Progressive Moulded Products, Vulcan on Charter Communications, Grupo TMM, Independence Air, Brokat, Crown Cork & Seal, Telenet, Gilat Satellite Networks, CRIIMI MAE, and Avianca. I have also represented companies in various leveraged finance and M&A transactions involving Philip Morris Companies, Inc., Rohm & Haas Co., Imax Corporation, Power Bar, Inc., Washington Homes, Inc., BCP Management, Anvil Knitwear, Nortek Inc., Casino Magic, Keystone Consolidated Industries, and Shoppers Food Warehouse Corporation. I have been recognized by the Turnaround Management Association, receiving the first place award in the mid-size company transaction category in 2004 for the Grupo TMM restructuring and the first place award in the large company transaction category in 2010 for the Simmons Bedding Company restructuring. 3. From July 2009 to October 2010, I advised Neff Corp. (Neff) on its financial

restructuring. Based on a strategy that I designed, Neff Corp. pursued an extensive sale and marketing process that involved, among other efforts, an auction for an initial plan sponsor and a separate auction to determine the ultimate sponsor for the emerging entity. The plan was subject to multiple market tests, obtaining the highest and best value for the estates and resulting in a plan that was supported by the overwhelming majority of Neffs creditors. Neffs Chapter 11

2
C053239/0312771/1601296.9

case was confirmed by this Court on September 21, 2010. From December 2008 to November 2010, I advised General Growth Properties, Inc. (GGP) on its financial restructuring, which involved an extensive and transparent marketing process that, among other things, enabled the Debtors to uncover the highest and best value for their estates for the benefit of all stakeholders. After receiving nearly 100% support from all classes that were entitled to vote, including the GGPs shareholders, GGPs chapter 11 case was confirmed in the Southern District of New York by Bankruptcy Judge Gropper on October 21, 2010 and the plan is expected to become effective on November 9, 2010. 4. I submit this Declaration in accordance with Rule 1007-2 of the Local Bankruptcy

Rules for the Southern District of New York and in support of the Objection (the Property Level Lenders Exclusivity Objection) to the Debtors Motion for Entry of an Order Extending the Exclusive Periods During Which Only the Debtors May File a Chapter 11 Plan and Solicit Acceptances Thereof and Omnibus Objection to Motions to Terminate Exclusivity (the Debtors Exclusivity Motion) and the Objection Of Wells Fargo Bank, N.A., As Trustee For The Registered Holders Of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-C1 And U.S. Bank National Association, As Successor To Lasalle Bank N.A., Formerly Known As Lasalle National Bank, As Trustee For The Registered Holders Of Ml-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 To The Debtors Motion For The Entry Of An Order Pursuant To Section 363 Of The Bankruptcy Code (I) Approving The Debtors Undertaking To Compensate Fried, Frank, Harris, Shriver & Jacobson LLP As Counsel To The Independent Committee Of The Board Of Trustees Of Innkeepers USA Trust And Authorizing The Payment Of Such Compensation By The Debtors And (II) Authorizing The Debtors To Compensate The

3
C053239/0312771/1601296.9

Members Of The Independent Committee (the Compensation Objection). The Property Level Lenders Exclusivity Objection and the Compensation Objection are filed contemporaneously herewith by Wells Fargo Bank, N.A., as Trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates, Series 2007-C1 and U.S. Bank National Association, as successor to LaSalle Bank N.A., formerly known as LaSalle National Bank, as Trustee for the registered holders of ML-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 (jointly, the Property Level Lenders). 5. The Property Level Lenders hold secured debt with an aggregate unpaid principal

balance of approximately $160 million (the Property Level Loans). A complete description of the Property Level Loans is set forth in the Declaration of Edward C. Brown in Support of the Objections of Certain Prepetition Lenders [Docket No. 258] 1-5 and incorporated herein. 6. LNR Partners, LLC (LNR) is the special servicer for the Property Level Loans

pursuant to the applicable Pooling and Servicing Agreements. 7. The other significant secured creditor groups are Lehman ALI, Inc. (Lehman),

which holds the loan in the amount of approximately $238 million referred to in these cases as the Floating Rate Loan, and the LB-UBS Commercial Mortgage Trust 2007-C7 (the C7 Trust) and LB-UBS Commercial Mortgage Trust 2007-C6 (the C-6 Trust and together with the C7 Trust, the C6-C7 Trusts), which hold the loan in the amount of approximately $825 million referred to in these cases as the Fixed Rate Loan. Midland is the special servicer for the C6 Trust and LNR is the special servicer for the C7 Trust. The Fixed Rate Loan is specially serviced by Midland. It is my understanding, based upon discussions with Midlands advisors, that Midland

4
C053239/0312771/1601296.9

is solely a special servicer with respect to the Fixed Rate Loan and does not have any economic interest in the certificates issued by the C6-C7 Trusts.1 Introduction 8. Miller Buckfire was retained by the Property Level Lenders as financial advisors

in connection with these chapter 11 cases on or about October 21, 2010. Since Miller Buckfires engagement, I and the other members of our team have begun to familiarize ourselves with the Debtors and their businesses, capital structure, operations, financial condition and prospects, as well as the relevant prior history of these cases. We have been involved in these cases for only a short time, and as such, our due diligence process is ongoing. In conducting due diligence, our team has, among other things, reviewed (a) certain documents and financial information made available in the online data room established by the Debtors, (b) relevant pleadings, motions and transcripts filed to date, including but not limited to those relating to the Debtors Exclusivity Motion, the Declaration of William Q. Derrough in Support of Debtors' Motion for Entry of an Order Extending the Exclusive Periods During Which Only the Debtors May File a Chapter 11 Plan and Solicit Acceptances Thereof and Omnibus Objection to Motions to Terminate Exclusivity (the Derrough Declaration), Midland Loan Services, Inc.s Motion to Terminate Exclusivity (the Midland Exclusivity Motion), the Motion Of Wells Fargo Bank, N.A., As Trustee For The Registered Holders Of Credit Suisse First Boston Mortgage Securities Corp.

It is my understanding that on October 27, 2010, LNR and LNR Securities Holdings, LLC commenced an action in the Supreme Court of the State of New York captioned LNR Partners, LLC and LNR Securities Holdings, LLC v. CRES Investment No. II, LP, Index No. 651850/2010 (the State Court Complaint). The State Court Complaint seeks, inter alia, (i) a preliminary and final injunction directing CRES Investment No. II, LP (CRES) to comply with the terms that certain Servicer Designation Agreement and to take all steps necessary to appoint LNR as special servicer of the Fixed Rate Loan; (ii) a declaration that CRES is required to perform all actions necessary to appoint LNR as Special Servicer with respect to the Fixed Rate Loan; and (iii) money damages in an amount to be determined at trial, together with pre-judgment interest. A hearing on the requested preliminary injunction is scheduled for November 12, 2010.

5
C053239/0312771/1601296.9

Commercial Mortgage Pass-Through Certificates, Series 2007-C1 And U.S. Bank National Association, As Successor To Lasalle Bank N.A., Formerly Known As Lasalle National Bank, As Trustee For The Registered Holders Of Ml-CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass-Through Certificates, Series 2006-4 To Terminate Exclusivity And Joinder To Midland Loan Services, Inc.'s Motion To Terminate Exclusivity (the Property Level Lenders Exclusivity Motion and together with the Midland Exclusivity Motion and the Debtors Exclusivity Motion, the Exclusivity Motions), and the Debtors' Motion for an Order (A) Authorizing the Debtors to Assume the Plan Support Agreement and (B) Granting Related Relief (the Plan Support Motion). We have also relied on our extensive restructuring experience and expertise, as well as our knowledge of current market conditions. 9. In addition, since I became involved in these cases, I and other members of my

team at Miller Buckfire, working in conjunction with Bryan Cave LLP (Bryan Cave), bankruptcy counsel for the Property Level Lenders, have sought the views of the financial and legal advisors of the Debtors and all of the major stakeholders in these cases. Since our engagement, we convened three all hands telephone conferences with major constituents and/or their advisors, including the Official Committee of Unsecured Creditors, Lehman, CWCapital Asset Management, LLC and C-III Asset Management, TriMont Real Estate Advisors, Inc. and the ad hoc committee of preferred shareholders, and have had numerous oneon-one meetings and telephone conferences with each. We have also held a meeting with advisors to Midland and with Five Mile and its advisors. 10. Through the discussions with the Debtors and their major stakeholders since our

engagement, it has become apparent that the Debtors have not yet articulated a clearly defined marketing and sale or reorganization process and associated timeline. Further, the Debtors have

6
C053239/0312771/1601296.9

not developed consensus among their stakeholders in support of marketing and sale or recapitalization process. While the Debtors may not be able to develop complete consensus among the constituents given the various differing agendas, in order to drive the process forward, the Debtors should propose a detailed process that would maximize value to all stakeholders. Many critical elements of a restructuring process or a sale have not been communicated to the stakeholders, including the proposed universe of purchasers, the proposed marketing materials, the business plan, the bidding procedures and the timing for the process. The delay in communicating this to the stakeholders may be because the Debtors may not yet have finalized these aspects of the marketing process - this is troubling in itself, given the amount of time that they have had to do so. Alternatively, they may simply have chosen not to communicate their intended process to the stakeholders, which is similarly troubling. 11. Further, we understand from communication with the Debtors advisors that they

believe they have already launched their process, which rings hollow. When credible marketing processes can be seriously considered to have been launched, business plans must exist in data rooms, RFPs defining the process must be available to bidders and those will typically articulate the process, type of transactions sought, rules of engagement and process timing and deadlines, without which potential bidders have no idea what they are supposed to do. We have not seen any of that as of yet. 12. Simply stated, the lack of transparency or a supportable sale process and the

continued burden to these estates of enormous ongoing professional fees made it essential in our view that we attempt to craft a viable alternative. The absence of a workable and articulated process is necessarily discouraging participation from potential bidders and sponsors, particularly given the history of these cases. The market does not understand what process the

7
C053239/0312771/1601296.9

Debtors intend to conduct or the timing for such a process. While I believe there could be significant interest in the Debtors assets and businesses, until the Debtors develop a process that is likely to maximize value of the estates and is supported by its major stakeholders, the Debtors are unlikely to attract interest from a wide universe of potential bidders and sponsors. While the Debtors may believe they have launched a process, the performance of due diligence by a limited universe of buyers does not constitute a credible sale process. In fact, the special treatment being provided to this limited universe of buyers, while other potential buyers have not been invited into the process, is likely to discourage those other buyers from participating in the process in the future, without transparent rules of engagement that make it clear that there is a level playing field. Without any articulation of the rules for the process, potential bidders, sponsors and stakeholders have no reason to believe that they will be treated fairly or that they should expend time and resources conducting due diligence and preparing a bid. 13. In order to make progress toward a process that is supported by the Debtors

stakeholders, Miller Buckfire, in conjunction with Bryan Cave has worked to develop a marketing and sale or reorganization protocol that could achieve the support of a significant portion of the Debtors stakeholders, as described in more detail below. The protocol was designed to provide guidelines for the Debtors and their stakeholders to come to an agreement on the marketing and sale process. Our goal since our engagement was to reach agreement on such protocol with the Debtors so as to enable all or a portion of such stakeholder group to support a longer extension of exclusivity. In view of the number and different economic and legal interests of these various stakeholders, achieving consensus, much less having an opportunity to engage the Debtors and their advisors in discussions, was not possible in the short amount of time since Miller Buckfires engagement. Accordingly, the Property Level Lenders requested the Debtors

8
C053239/0312771/1601296.9

to agree to a brief adjournment of the Exclusivity Motions for approximately one month to the next Omnibus hearing date (with a concurrent extension of exclusivity to such adjourned date) in the hope that progress might be made towards such goal. The Debtors rejected such request. The Debtors Lack of a Plan or Marketing Process 14. This Court, having conducted an exhaustive and undoubtedly exhausting hearing

on the Debtors failed Plan Support Motion, is well aware of the flaws of the Debtors prior plan process. Because the Debtors failed to seek alternatives or engage in a marketing process, no effort was made to maximize values for all stakeholders. Equally problematic was the fact that the failed transaction pursued by the Debtors was on an entire company basis, thereby putting the putative acquiror in the position of arbitrarily allocating value between constituencies. The consequence was an inevitable litigation brought by those stakeholder groups who concluded, correctly, that such value had been allocated not based upon market realities but instead to obtain the support of what the ultimate acquiror (Apollo) viewed as an essential creditor group. 15. Unfortunately, it is abundantly clear that, more than two months after the Court

ruled against the Debtors and denied the Plan Support Motion, the Debtors have made no material progress towards a viable marketing and sale or reorganization process and, the elements of a process that the Debtors have finalized, favor transactions that will keep the Company together. I do not believe such a single company approach will necessarily maximize values for all constituencies and is likely to pave the way for serious value allocation disputes amongst the different stakeholders. Arbitrary value allocation among the various debt pools was a key contributing factor to the failure of the Debtors first plan, as Apollo Investment Corporation (Apollo) attempted to buy Lehmans support of their plan by allocating more

9
C053239/0312771/1601296.9

value to their asset pool. Continuing to support this approach will fail to resolve any value allocation disputes among the creditors. The Debtors must be prepared to market its assets in logical asset clusters, including, but not limited to, clusters based on the collateral pools supporting the various secured debt obligations. 16. The Debtors are now in the fourth month of these cases, and it is eight months

since the Debtors financial and legal advisors were first retained to assist the Debtors in their restructuring efforts. Notwithstanding the passage of considerable time and the expenditure of many millions of dollars, the Debtors are effectively paralyzed and have yet to present to their key constituents any real marketing or plan process. In an effort to see if we could reach a basis for supporting a longer extension of exclusivity, we have repeatedly sought the Debtors commitment to the timing of the development of a process and the completion of the necessary prerequisites thereto. The Debtors have refused to provide any such information. 17. By their own admission, the Debtors (a) have not finished their business plan, (b)

have made no decision as to whether to proceed with or without a stalking horse, (c) have not proposed a process to select either a stalking horse or an initial round of bidders, (d) have not formulated or proposed bid procedures, (e) have not identified a meaningful cohort of potential bidders or plan sponsors, (f) have failed to establish meaningful oversight mechanisms so as to assure both stakeholders and potential bidders or plan sponsors that any process will be a fair and open one, thereby encouraging maximum participation and stakeholder support and (g) have not meaningfully explored whether recoveries can maximized by aggressively pursuing transactions other than a single enterprise level plan. Derrough Declaration 8, 9, 13-15. 18. The items that Mr. Derrough outlined, including developing a revised business

plan, constructing a buyers list, formulating oversight procedures and designing bidding

10
C053239/0312771/1601296.9

procedures, are each essential prerequisites to any meaningful marketing process. To state the obvious, a process that has a reasonable chance of success - both in maximizing value and obtaining the support of key stakeholders - simply is not possible without a well conceived business plan and, given the history of these cases, a meaningful oversight process. 19. I note that the Debtors have allegedly established a committee of independent

trustees that would advise the full board on this process. Although the Property Level Lenders believe that the formation of a truly independent committee would be a step in the right direction and a positive development in the pursuit of an open and transparent marketing process, such committee must be truly independent and convey such independence to the Debtors stakeholders and to potential bidders/investors. The current members of the independent committee supported the Debtors prior flawed process that resulted in the Plan Support Agreement. That process shut out the Property Level Lenders and the majority of the Debtors stakeholders. No competing proposals were solicited or considered. In order to develop consensus around a new marketing and sale or recapitalization process and eventual plan of reorganization the Debtors have to re-establish credibility with their stakeholders and potential bidders and plan sponsors by imposing meaningful oversight that must include the appointment of a creditor representative and expanding the committees role from its limited advisory capacity. 20. It is critical that the Debtors begin to show any evidence of forward progress

toward being prepared to launch a marketing process. With two months having passed since this court denied the Plan Support Motion, it is inconceivable that the Debtors have not been able to even propose a marketing process to the constituents, following which constructive negotiations could commence. Mr. Derrough notes in his declaration that the Debtors met with all of the key

11
C053239/0312771/1601296.9

constituents following the September 1 hearing. While any meetings with the Debtors and their advisors are welcomed, the meetings since the September 1 hearing have not included any constructive engagement with respect to the process the Debtors plan to run. We believe that the Debtors may be looking for feedback from the stakeholders to understand the various desires of the groups, but have been unable to synthesize this feedback into a cohesive process, much less a process that could be supported by the stakeholders. Single Company Solicitation Approach 21. Equally critical is the Debtors failure to adequately explore alternatives to a

single company transaction - a failure that, to the extent any process by the Debtors can be said to currently exist, makes such process fatally flawed, since alternative transactions for logical clusters of the assets may well result in a higher overall recovery and would assist in the ability to fairly allocate value among the Debtors different and competing stakeholder groups. The Debtors are inexplicably wedded to a single company transaction, based on the baseless assumption that there is an integrated enterprise whose value necessarily exceeds that of its component parts. It is possible that a single company transaction will provide the highest and best bid for the Debtors business, however it will be impossible to know unless the Debtors pursue a solicitation process for both the single company and its component parts. 22. The Debtors have not, and it appears, have no intention to, subject the dubious

single company premise to the crucible of the market. In fact, the Debtors business is just a random collection of assets. There is no Innkeepers brand. Each hotel is an individual operating business, with its own property management provided through an outside contract. Each hotels brand is governed by a franchise contract. There may be limited economies of scale by providing finance and accounting support through centralized functions.

12
C053239/0312771/1601296.9

23.

Indeed, both the Debtors and any potential bidder or plan sponsor will value each

hotel asset separately. (This is reflected in both the Moelis financial model, as well as the fact that the data room has been populated primarily with property specific information. Derrough Declaration 8.) Because of this, allowing for a marketing process that would permit proposals of offers based upon logical clusters (based upon the Floating Rate/Lehman, Fixed Rate/C6-C7 Trusts and the remaining assets, including the Property Level Loans) would not impose any additional burden on either the Debtors or potential bidders. 24. The reasons advanced by Mr. Derrough that an enterprise based restructuring

will maximize value and that the Debtors should therefore pursue such a transaction (Derrough Declaration 14) are unpersuasive. Mr. Derroughs assertion that the relatively lower cost of capital due to the Debtors size and the diversity of their assets supports the Debtors focus on a single transaction ignores that many potential acquirors or sponsors may have equal or better access to capital than the Debtor. 25. Mr. Derrough references the operational and management benefits of brand and

geographic diversity in relation to the Debtors business. While this may be a nonpejorative way to describe a random collection of assets, he provides no basis for concluding that this diversity would give rise to an enterprise value sufficient to warrant foregoing a market testing of other alternatives to a single transaction. 26. I have discussed with the Debtors a marketing approach that solicits interest for

both the Debtors business as a whole, and for logical clusters of the Debtors assets. Such clusters would include, but not be limited to, the collateral pools underlying the Fixed Rate Loan, the Floating Rate Loan and the Project Level Loans. I believe such an approach will both maximize value and will drive consensus among the stakeholders.

13
C053239/0312771/1601296.9

27.

The buyers of lodging assets are many and diverse. While the investors that

typically participate in and sponsor chapter 11 plans could be interested in the Debtors business, there are many other financial and strategic buyers of hotel assets. There is likely to be a significantly broader universe of interested buyers for subsets of the Debtors assets, who would not be interested in purchasing the Debtors business as a whole. 28. Further, while the financing market is open for enterprise-level transactions,

financing is very widely available for the purchases of smaller subsets of the Debtors assets. In order to uncover the maximum possible value that could be garnered for the Debtors assets, it is necessary for the Debtors to actively solicit likely buyers for both the business as a whole as well as in parts. In fact, potential bids for asset clusters could contemplate keeping existing secured debt intact, if this is in fact a better alternative. Such an alternative is unlikely to be available in a whole company sale. 29. Mr. Derrough further relies on the ability to take advantage of tax and cost of

capital benefits of the public REIT status of a reorganized enterprise. This argument is unpersuasive. While there could be increased value attributable to the public REIT tax pass through structure, certain potential acquirors or plan sponsors could be public REITs, for whom this platform could have little or no value. Such acquirors could ascribe incremental value to hotels in one geographic location or under one brand and no value to the REIT platform. Such bidders could participate in the whole company process, but the value of their bid could be higher if the Debtors actively marketed the portfolio in component parts, soliciting bids for clusters that woud be attractive for potential buyers. 30. Mr. Derrough cites economies of scale for corporate and management functions

to support pursuing only a single enterprise transaction. The hotels owned by the Debtors are

14
C053239/0312771/1601296.9

run by outside management companies. While the corporate staff provides support functions for the hotel operation, it brings little, if any, value separate and apart from the underlying hotels. Many acquirors would be in a position to transition the oversight of the hotels onto a pre-existing platform, rendering the Debtors corporate functions valueless for many potential buyers. 31. Mr. Derrough also points to the relationships [of the Debtors] with key

franchisors as a basis for pursuing a single company transaction. In view of the Debtors at times tortured and contentious history with Marriott, it is hard to credit any positive affect on value of the Debtors relationships with its franchisors. In any event, there are a large number of potential strategic and financial investors who have excellent relationships with franchisors.2 32. Finally, Mr. Derroughs statement that avoiding additional incremental

marketing costs associated with a disparate marketing process with multiple transactions, including likely higher administrative and transaction costs favors a single company transaction is erroneous. The savings accruing from a single company transaction, if any, are likely to be dramatically outweighed by the expense of litigating the result of a process that is flawed and does not have broad creditor support. Without the benefit of market generated data points that would assist in the consensual allocation of value across different constituencies, the cost of allocating such value and resolving such intercreditor issues on a nonconsensual basis would almost certainly dwarf any savings resulting from a single company process. A single company transaction, either with a third party or Five Mile, poses the risk that such acquiror will unfairly allocate value to different stakeholder interests based not upon economic reality but instead upon a perceived need to obtain the favor of certain creditor groups or pools, an issue that has already been before this Court and flatly rejected. Absent a preemptive bid that pays all secured

It is my understanding that the Property Level Lenders also have excellent relationships with the franchisors.

15
C053239/0312771/1601296.9

stakeholders in full, such a strategy is doomed to failure inasmuch as no single creditor or group of creditors has the ability to impose a plan on dissenting creditors in view of the fact that none of these Debtors has been or could be substantively consolidated. Simply stated, the wrong process or no process will inevitably result in more expensive and burdensome litigation to the detriment of the estates and their stakeholders. Limited Marketing Process 33. The Debtors have also failed to target a sufficient number and breadth of potential

bidders/investors. Mr. Derrough simply states that Moelis has identified a list of parties that are being considered as potential stalking horses as a plan sponsor, including Five Mile. (Derrough Declaration 12). Through discussions Miller Buckfire has engaged in with the Debtors advisors, at last count, Moelis intended to approach five potential purchasers, including Five Mile. One key goal of such a limited marketing process is to expedite these cases, a goal that I support. However, the speed with which these cases are completed can not come at the expense of maximizing value. Engaging with such a limited universe of potential buyers is highly unlikely to maximize value of these estates. 34. In connection with marketing the Debtors business in whole and in parts, the

Debtors need to engage a broader group of strategic and financial bidders/investors to ensure a robust and competitive bidding process that will maximize value and restore legitimacy to these cases. The Need for a Stakeholder Supported Marketing Protocol 35. Under the circumstances, it is clear that a protocol supported by key stakeholders

is essential. Following our engagement, we actively solicited the views of all major stakeholders and have worked to develop a protocol that we believe can achieve support, maximize values and

16
C053239/0312771/1601296.9

is consistent with the Debtors efforts to reorganize. We have shared this protocol with the Debtors and with the major stakeholders. While this protocol is still actively being discussed with such stakeholders and we cannot know with certainty either the final form that such protocol will take or which, if any, stakeholders will ultimately agree to such protocol, we believe that such a protocol has the best prospects for providing process oversight, achieving consensus among the many stakeholders for the process outcome, and ultimately maximizing values. In my view the essential elements of such protocol would include: a. The marketing process is to be run by the Debtors and their professionals in accordance with the protocol, subject to a commitment to a timetable and oversight by a truly independent committee of independent trustees, including a creditor representative (see (f) below). b. The Debtors and their advisors will market the company both as a whole and in logical clusters, which will be by debt pool as may also be by flag, asset type and other pertinent characteristics. c. The Debtors and subsets thereof will be marketed to a broad group of potential strategic and financial investors, soliciting interest in one or more of the following investments: i. Plan sponsorship; ii. Purchase of 100% of the Debtors; and iii. Purchase of clusters of assets and/or equity interests of the Debtors, including, but not limited to, packaging the assets in three buckets: assets securing the Fixed Rate Loan, assets securing the Floating Rate Loan and assets securing the remainder of the properties. d. The Debtors will pursue a multiple round process to solicit, as determined by the parties, either a stalking horse or nonbinding expressions of interest and ultimately a binding agreement with one or more parties following due diligence. e. The Debtors will agree with their stakeholders to reasonable bid procedures deigned to permit open and competitive bidding, with an agreed upon process to determine which bid or bids are the highest and best. f. There will be regular and comprehensive communications regarding process and progress between the Debtors advisors and the advisors to major stakeholders, including regular update calls, prompt communication of information regarding 17
C053239/0312771/1601296.9

bids, expressions of interests and similar items and an open and collaborative sharing of views and information. g. There should be an appointment of an additional independent trustee to the Debtors board of trustees to assist in oversight and whose approval will be required in connection with the selection of any stalking horse or winning bidder. 36. In cases with this level of creditor discord and distrust, it is common for a trustee

or examiner to be appointed. Instead, the Property Level Lenders are seeking a less intrusive and expensive route of reaching an accord on the protocol. The Five Mile Proposal 37. On August 30, 2010, Midland filed the Midland Exclusivity Motion; attached

thereto was a letter proposal from Five Mile regarding a potential proposal to fund a plan of reorganization. The Five Mile proposal contemplated Five Miles acquisition of the entire company on a single transaction basis, with the consideration allocated by Five Mile to Lehman, the C6-C7 Trusts and the other secured creditors. In addition, the Five Mile proposal required substantial and, in my view, highly onerous and nonmarket bid procedures and bid protections that would almost certainly discourage a competitive bidding process.3 The Midland Exclusivity Motion seeks a termination of the Debtors exclusive periods in order to pursue a transaction with Five Mile. Based upon my discussions with Midlands advisors, it my understanding that Five Mile is currently preparing a revised proposal and, assuming that Midland is agreeable to

The bid protections outlined in the Five Mile proposal include: (i) a break-up fee of $10 million (the "Break-Up Fee") if an alternative Chapter 11 plan financed by a different party is confirmed by the Court and consummated; (ii) a first over-bid in the competing plan in the form of additional capital into the Company in the minimum amount of $25 million in cash (inclusive of amount allocable to pay the Break-Up Fee, which shall only be payable from the cash realized from the first overbid), with subsequent over-bids in the form of additional capital into the company in minimum $10 million increments of additional cash (or additional debt on identical terms as described in the Five Mile proposal), and (iii) a reimbursement of all of Five Miles legal fees and expenses incurred in connection with the proposal and confirmation and consummation of the transaction contemplated thereby (including due diligence fees and expenses) in an amount not to exceed $2,000,000. In addition, the proposal would preclude transactions other than a sale of equity interests in the reorganized company, including a sale of the company or any of its assets pursuant to section 1129 (b)(2)(a)(ii) or (iii) or section 363 of the Bankruptcy Code, and therefore also preclude credit bidding by any of the Debtors secured creditors.

18
C053239/0312771/1601296.9

such proposal or some iteration thereof, that Midland intends to pursue a plan of reorganization based upon such proposal. For this reason, Midland has expressed no interest in reaching agreement on a protocol regarding a consensual marketing and sale or reorganization process. To our knowledge, Midlands selection of Five Mile has not been subject to a competitive process of any kind. 38. As noted above, Five Mile has not submitted a proposal, and therefore I am not in

a position to comment as to whether such proposal may form an acceptable framework or stalking horse bid. That said, we are seriously concerned that any Five Mile proposal or plan based upon such proposal would share many of the same flaws of the failed Plan Support Agreement and the Lehman-Apollo plan contemplated thereby. In particular, because the selection of Five Mile by Midland was not subject to a competitive marketing process, we have no reason to believe that such proposal would maximize recoveries for all constituencies. An agreement with Five Mile on a restructuring of the Fixed Rate Loan reached without the benefit of a fair and competitive process is akin to the agreement between Apollo and Lehman on the restructuring of the Floating Rate Loan pursuant to the Plan Support Agreement. The lack of a competitive process works to the detriment of every other stakeholder involved in these cases and is not only likely to depress values, but could lead to non-market bidding protections and bid procedures, which further discourage a competitive process from ever developing and favor Five Miles ultimate purchase of the company. We are equally concerned that because the Five Mile proposal is premised on a single company transaction, there is a material risk that value will be allocated in a manner not reflective of true, market values but rather based upon the perceived need to obtain the support of one or more key groups, which is no more likely to lead to a consensual plan than the failed Lehman-Apollo plan.

19
C053239/0312771/1601296.9

I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge, information and belief. Dated: November 5, 2010 /s/ Ronen Bojmel Ronen Bojmel Managing Director of Miller Buckfire & Co., LLC

20
C053239/0312771/1601296.9