Innkeepers to select new bankruptcy plan in weeks

WILMINGTON, Del. Oct 28 (Reuters) - Bankrupt hotel owner Innkeepers USA Trust (INKPQ.PK) was considering a reorganization plan backed by asset manager Five Mile Capital LLC, after a judge scuttled a deal to turn the company over to creditor Lehman Brothers Holdings Inc LEHMQ.PK.

Innkeepers has been looking for options to exit bankruptcy since a U.S. bankruptcy judge in Manhattan shot down the Lehman agreement. The company filed for Chapter 11 bankruptcy protection in July.

In court papers, Innkeepers said it would select a sponsor for a plan of reorganization within the next month, and that it was examining Five Mile's proposal.

The company's investment banker, William Derrough of Moelis & Co, said in a filing he considered a plan that would keep the company intact to be the best option, although the company's board would consider all options.

To complete a restructuring deal, the company asked the bankruptcy court to extend the period for the exclusive right to propose a plan to March 16. The current exclusive period expires on Nov. 16.

Midland Loan Services Inc, a creditor, said in August that Five Mile Capital had committed to invest $236.6 million in the hotel chain. Innkeepers criticized the plan and said it would allow for the break-up of the company.

The company's portfolio includes some Residence Inn and Hampton Inn hotels. It has 72 properties in 19 states.

The case is In re Innkeepers USA Trust, U.S. Bankruptcy Court, Southern District of New York, No. 10-13800. (Reporting by Tom Hals; Editing by Ted Kerr)