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Michael G. Helms (admitted pro hac vice) THE HELMS LAW FIRM, P.L.C. 2600 North Central Avenue, Suite 940 Phoenix, Arizona 85004 Telephone: (602) 358-2060 Fax: (602) 358-2055 mghelms@mghlawfirm.com Attorneys for Best Western International, Inc. IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK In re: Case No. 10-13800 (SCC) INNKEEPERS USA TRUST, et al., Chapter 11 Debtors. Jointly Administered REPLY OF BEST WESTERN INTERNATIONAL, INC., TO OBJECTION OF LEHMAN ALI INC. TO MOTION FOR ALLOWANCE OF ADMINISTRATIVE EXPENSE CLAIM PURSUANT TO 11 U.S.C. 503

Best Western International, Inc. ( Best Western ), a creditor and interested party herein, submits the following Reply to the objection of Lehman ALI Inc. ( Lehman ) to Best Western s Motion for Allowance of Administrative Expense Claim herein: Lehman s objection (Dkt. No. 1452) suggests that much of Best Western s claimed expenses are for fees and charges that arose after the rejection of the Membership Agreement on February 13, 2011. Lehman is incorrect. Most of the Best Western claim consists of monthly fees and advertising assessment. These fees and assessments are due December 1 of each year, but payable in monthly

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installments. If a member resigns or is terminated during a fiscal year, the monthly fees and

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assessments for the remainder of the fiscal year are immediately due and payable. Debtors executed a Best Western Membership Agreement with respect to the Best Western West Palm Beach Airport Inn on May 29, 2007. The Best Western Membership Agreement was for a term ending November 30, 2007, but renewable by Debtors each year for additional one year terms upon payment of annual dues each year.

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Debtors filed their petitions for relief herein on July 19, 2010. In the ordinary course, Debtor s Membership Agreement would have terminated November 30, 2010, unless renewed by Debtors. However, in late August, 2010, Debtors paid their annual renewal fees in the ordinary course of business for the year commencing December 1, 2011, thereby

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renewing the membership agreement for the fiscal year ending November 30, 2011. Pursuant to paragraph 14 of the agreement, a Best Western Membership Agreement may be terminated by the member (Debtors) at any time. On January 26, 2011, pursuant to request of Debtors, the Court authorized Debtors to reject the Best Western Membership Agreement effective February 13, 2011. A rejection of an executory contract ordinarily

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constitutes a breach of the agreement immediately prior to the filing the petition for relief (see, 11 U.S.C. 365(g)(1)). When a debtor makes use of an executory contract prior to its rejection, the parties to the executory contract may be entitled to an administrative claim pursuant to 11 U.S.C. 503. In re Globe Mettalurgical, Inc., 312 B.R. 34 (Bank. S.D.N.Y. 2004). In this case the rejection of the Best Western Membership Agreement was not effective and such breach did not occur, until February 13, 2011. The Membership Agreement was thereby effective, and enforceable, until such date. Even if the Debtors had

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not requested, and the Court had not granted, rejection effective as of February 13, 2011, however, the Debtors herein specifically requested use of the Best Western Membership Agreement and opposed Best Western s attempts to terminate the agreement in this proceeding, stating that the agreement was integral to its operations and necessary to maintain its debtor-in-possession financing facilities. As previously noted in Best

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Western s Motion, Best Western continued to provide membership services to the Debtors during the course of this bankruptcy proceeding, and the Debtor continued to promote its hotel to the general public as a Best Western affiliated hotel. Where a debtor elects to continue to receive benefits from the other party to an

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executory contract pending a decision to assume or reject the contract, the debtor-inpossession is obligated to pay the reasonable value of those services. There is a presumption that the contract terms are the reasonable value of the goods or services provided to the estate which can only be overcome with convincing evidence to the contrary. In re Globe Mettalurgical, Inc., 312 B.R. at 43; In re Bethleham Steel

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Corporation, 291 B.R. 260, 264 (Bank. S.D.N.Y. 2004). The Membership Agreement incorporates in its provisions, at paragraph 11 of the agreement, the Best Western Articles and Bylaws. Article II, Section 5 of the Best Western Bylaws provides that if a member resigns or is terminated, fees and dues for the remainder of the fiscal year are immediately due and payable. In this case, Debtors renewed the Best Western Membership Agreement post-petition for the term ending November 30, 2011, though retaining the right to terminate the agreement at any time. In January, 2011, Debtors

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exercised their right to terminate the agreement, and the Court authorized Debtors to reject the agreement effective February 13, 2011, as the Debtors had requested. Pursuant to the terms and conditions in effect until such date, the Debtors agreed to pay the dues and fees to the end of the fiscal year, or November 30. Pursuant to Section 503(b) of the Bankruptcy Code, Best Western s claim for

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administrative expense for services provided to Debtors during the course of this bankruptcy case is entitled to administrative expense priority. WHEREFORE, Best Western renews its request that this Court enter an order allowing Best Western s administrative expense claim.

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Dated this 25th day of May, 2011. THE HELMS LAW FIRM, P.L.C. By: /s/ Michael G. Helms Michael G. Helms 2600 North Central Avenue Suite 940 Phoenix, Arizona 85004 Telephone: (602) 358-2060 Attorney for Best Western International, Inc.