2. Bankruptcy Case Study Debtor owns a limited service hotel in Detroit (Hampton Inn). The hotel is part of a master-planned, mixed-use development that includes the hotel, restaurants, retail, and multi-family housing. Only the hotel has been constructed. The Property is a 120-room, four story interior corridor hotel, constructed in 2007 and in good condition. It satisfies the Hampton Inn quality standards and has high satisfaction guest reviews. Debtor has no employees. An affiliated property manager provides all services, including employees, to operate the hotel. Yet, Debtor is obligated on all vendor contracts and payables. Then, the “Great Recession” hits. Despite not meeting its original (or revised) financial projections, Debtor’s ownership and management are now convinced that improvements in the local economy and in the hotel’s operations will soon provide positive financial returns.

3. Existing Terms v. Cramdown Terms Existing Loan TermsCramdown Loan Terms Principal$10,000,000TBD Maturity10/31/201210/31/2027 Term5 years10 years Interest Rate6.0%5.0% fixed Amortization2030 Collateral Real Property FF&E Assignment of Leases & Rents UCC-1 covering all revenues Same EquityNoneNew Equity Investment = $50,000 (enough to cover administrative cost of bankruptcy)

4. Valuation Scenarios Oversecured (Cramout) Undersecured (Cramdown) Scenario 1Debtor’s ValuationLender’s Valuation As of Loan Closing$12,500,000$12,000.000 As of Plan’s Effective Date$12,000,000$10,000,000 Scenario 2Debtor’s ValuationLender’s Valuation As of Loan Closing$12,500,000$12,000.000 As of Plan’s Effective Date$8,000,000$6,000,000

5. Valuation Scenarios Undersecured (Cramdown) Scenario 2Debtor’s ValuationLender’s Valuation As of Loan Closing$12,500,000$12,000.000 As of Plan’s Effective Date$9,000,000$6,000,000 Scenario 3Debtor’s ValuationLender’s Valuation As of Loan Closing$12,500,000$12,000.000 As of Plan’s Effective Date$6,000,000$9,000,000

6. Oversecured (Cramout)

7. Undersecured (Cramdown)