Bankruptcy Basics:

A Primer Course on the Fundamentals ofV.S. Bankruptcy Law

Thursday, February 26,2009

Table of Contents

Tah I

Presentation Slides

Tab 2

Practice Information

Tab 3

Speaker Biographies

Tab 4

Introduction to Bankruptcy Law Selected Articles

tn (J

•

tn

ca

III

.

(J)

.

::>

'+-

a

en

-

ro

.......

c Q)

E

ro -0 c :::l U.

Q) s:

+--6

'" o

o N

c a

Q)

~ ~

:::l ro o_J

()~

s- .......

Q) c..

E 2

·c ~

CL ffi «co

c

s:

ro

:c

·0 LLI""C ._

L....c

~o.~ ~ O::::~

11. -'

-'

z o ln. ~

-

-'

n,

o > W

III W o

n... .J ..J

z o ln...

2

-

.J

0....

~

w fJ}

o > W

III W o

>.
o Cl) N
......, ...-
o, CO
::J >. ...-
(J) s- ro VJ
a.> ~ Q)
> C "'0 ~
'+-
+-' ro ........ ~ 0
o ..c (J) s-
a.> s- O) (J'J
-_,. '+- t+= ......, Q)
..c 0 c o, --
0 ro +-'
......, 0
C ..c .......
~ ..c
Q) en 0 ct5
CO E c -- en
~ Q) c -
>. Q) ~ (j)
a. "'C (J)
CD o o Q) 0. C> C o
+-' C
a. >. ro c CO 0
.- Q) CO .- '-
c= ::J ..c +-' en
E - ro c..
s- a. ......,
.::s:. +-' s- a>
E CO Q) c:
e c >. ..c en 'ro
ro 0 Q) o, (J)'
> $: -
CO 0 ~ 0 <t:. o,
0 • • • • • • • en a.
"'--
0 _J
......., _J
._
"'C z
"'-- CD C/) 0
0 "'-- CD f-.
'+- 0 ._ a.
......
C/) Ol .;:: l:
Q) C 0 -
._ o "L. _J
"'-- 0...
Q) E a.
> 1<1
t/J 0 CO .=
CD o 2~ LaJ
Q) If)
> "'-- Q) ~
.- Q) C/) ..c 0
+' C/) ~ >
N .-
o .- CO ~ w
E m
Cl) CIJ Q) w
._ ...
.~ X "'-- U 0
.c CO B c
0 E C/) ..c co
,,,,-- Q) "0
0 (J.) "'C L.
~ ......., "'C 0
"'-- '+- C,..)
- 0
0 0 C,.)
CO ~ ..c c ro
.o
....I (J.)' ~ 0 c
._
"'C~ ...... .-
~ ::J ::J C/)
'+-0- ..c s....
CJ o CD ._ (])
s-
C ~ "'C
+' 0"'0 C/) -
c. ._ 0
.~ C "'C .c
:1. CO CO '+- Z'
~ (f) 0
.... ._
.- L. c·S
~ .o .9
e ro .- ==0"
..c "'0 ro Q)
CO (J.) CJ.) :::J-c
0:: s- O".
III o w ffi
•
• n,
_J
_J
s...
0 Z
+-' 0
..0 I-
CD u
"'0 l:
-
"'0 ....J
~ 0...
(f)
s... J.3
tn (]) 'C
"'0 CO w
tn - 0> '+- U)
CD 0 s... 0
.c 0 c::: 0
CJ (]) (J.) >
~ s... CO w
0 co -
s... a. ID
.... +-' ~ W
(/) '+-
a.. a 0
0 C
+-' C"O C
~ Q) - a
~ c, +-'
~ U .o (f) co
+-I' co en +-I'
.... C Q.. C
CI) :::J eo '0) Q)
0 s... > c en E
...... +-' ~ ro -- (J.) c
(f) en
C. ro c en :::J -- Q) 0
s... Q) +-' - --
ro (J.) -_ Cl.+-'
m co ..0 -
a. ..0 e: :::J .o co
- I+- E"'O
.c: Q) I+- -- ro 0 co
en -_ -_
U s... a :::J > "'0 :::J
a.. ......, CJ) C'"
+" ..0 l+- e: '+- c
~ c a Q) CJ) a -
CD ..... CD co --
- o a c E c c
CO +-' E o +-'
o, C 0 o, 0 0 c 0
e Q) -_ -_ -_
:::J 0 +-' 0 s... +-' CD +-'
0 s... U -- ro - o, ro E co
~ c::: ......, c Q) C N
.- c CD co -_ > Q) -._ Q.. -_
N E - E c
...... co E CD co ..Q co
.- ..0 s... 0 (J) L-
-c I E ..0 Q) Q) Q) C)
Q) ro +-I' +-' > L-
m s... a +-' OJ Q) CD 0
.... o, o U) 0 0 0 Q)
s...
l- • • • • • • a.
...J
...J
Z
>- 0
(J f-
a.
...., :I
C. -
...J
::l n,
L.. I<!
~ W
e U')
-
eo 0
m >
w
ID
'I- w
0 0
....,
C
CD
E
CD
o
C
CD
E
E
0
(J C'.

G)

- .-

LL

>. .1:

;:

t

::J en 0 s..... 0

o'+-

.p.i'

=0 0

0) ....... L.. ::J o 0

..em

.p.i' Q)

-_

3:..c Q) en .p.i' Q.) co ' ~

._ .._.,

.p.i' c o co 0)-

Q) co a>

c..o >

--

en

c Q) '+a. 0

>< Q)

o Q)

....... s-

.p.i' ::::J

0.1:5 E ::::J Q).l::;

.p.i' (IJ .p.i' Q) co s.p.i'

en 0

s..... +-'

'+=00 C sQ) Q)

.:t=32 o 0 (IJ..c

CD ~

.- .......

c .-

ro ::::J

c..g

E-o

o c

o co

•

en c o

.-

+-'

co

._

+-0#

o C> Q)

C

Q. o (f)' s-

en "'0 Q) .s: o

"'0 co C ..0

co

s-

2

CJ)

~

c Q)

~ o

en

.-

~ o

......

a. ::J

s-

..::.::: c co rn

I

c o

.-

.......

o,

o

s- -~

o 1i)

.-

~ro ._ Q)

-0 s.....

~ ·5 ....... ._ C'" 0 (]) ._ c

(IJ

.-

0) c

s-

O o ...._.

...... -0

"'C C

Q) co

u Q) s..... E

S .-

......,

Q) '+-

..0 0

~.p.i' co ::::J

E 0

c

en ::J Q) s-

C >. co Q) o...c

E I-

o

o

-

~

•

Il. _j _j

z o lll.

l:

-

_j

Q..

w (f)

o > w

m w o

·c ::J

+-'

C,)

::J ,,_

+-'

CIJ Q)

,,_

t :J o C,)

~ o

I ..-

:J

o

c

~

CD a.

e

0..

,_

o (j) en Q)

C

--

en

::J ..c "t-

o

OJ o ro

0..

..

OJ

-

-_

o

--

E o

"'C

Q) > ro

..c

I-

o

.......

..c - 0,)00

0::)

•

~ co

E

en CD

--

.......

--

+--'

C Q)

s.....

a.> ..c

.......

o

C

--

ro (])

~"'C Q) 0 Ut)

"'0

C ~

roB (fJ g-

O,) '-

-- .:::£ C

ro c

0.. co

EOJ

- L...

o ,-

()~

0,) C o ::1- e

ro -~

-s.... 0 ::1 ....... en..o c OJ

--_ "'C

en CD ..::£..0 C+-, ro 0 CO c

•

n. _J _J

en Q)

z o In,

~

-

..J

o,

'+- ~

"'C 0 -c

c en ::J

co C (J

o Q)

~U (f)

ro cD Q;

o en ..,...,

s..... - ....,

:-= co c:

co __ ::::J

'- U

.. Q) 2 .-

~ 0.. al «~~

Q) CfJ "'C

~ ~ -- a..

0..0 ::J-

'- crCfJ

..0"0 :.::._.

~_ cCD ~ t5

:t= '- co «

"'0 Q) ::J

0> we

E 0 ::1- _Q

E 0)- (J) t5

'0~Q) Ci;2

o co "'C ~ 0

.. 0 ro'-

en (/') () CO a..

I-Q) "'C

CD :.;::; ~I '-

..::£ == 0 I- 0

e~Q_~U)

..0 -- ::J 0, >Q) ~Ul- '-

o --.::L. rn C

o c C

+--' :J '"

en E,d)

w (f)

o > w

m w o

•

0..
~ .J
-s J
~ Z
c:-
-t;:;- I.... 0
-:0. 0 I-
~
~ 0..
en 0) en ~
-w- en c Q) -
~ Q) .- J
C -0 0) 0...
C -c
Q.) en Q) :::J ~
L- :::J L- a. ........
(J) ..c a Lt- IJ.I
..c '+- (J) 0 U)
s: 0 ...
"'C s..... C 0
...., Q) Q) 0 0 >
--
o o ...., +-' +-' w
Wi:: co co ..Q ro m
+-' - o CD o IJ.I
en c. 0 "'C .- 0
-- en
"C Q) '+-
co 0 .-
c C. L- CD ..c
.- .- co Q), o,
"'0 o s..... ....., "'C 0
Q) c 0 co ::J (f) t::
-t: - :::J
+-' tt:: o l+-
i+:: a...Q c 0 0
Q) ... Q) co o
..Q Q) "'C t.+- C/) (J.)
U t.+- o C > co
~ c 0 Q) 0 Q) o
('. co CD -- 0 +-'
(J) (J) +-'
CI) E "'C ...., co co "'C 4- C
-- (J.) s..... C Q)
- Q) (J) C/) o (J.) co 0 "'C
.- en CD C/) >- "'C C/) Q)
LL L- .- e
ro co o (j) Q) o
o .. ...... 0 Q)
Q) - Q. C -- .c
0 ~ - ro 0 +-' ....., s.....
-- a. ::::J co co c.
..... o U L. o .....,
....., .- -- oX :::J c... -
c. E o o E co
(1) C t:: .- o, 0)
:::J 0 -- co 0) Q.) >.
... L- 0 I.... Q) Q)
(1) .:::£ a. co +-' a:: (J) _J
c co
.J: co I L..
+-'
~ (Q C/)
• • a..
...J
...J
C
Z
L- 0
0 l-
I ~ u
..c
1: CD ~
::J CD -
0 ""C ...J
0 - U 0.
CJ) -
o en CO
-
CO - l<I
~ OJ a..
..0 VJ ~ C w
...... Q) (J)
::J E CD (() 0
U'J 0 .- c c >
...... .-
G) "'0 Q) CIJ CO rJ) w
Q) E ::l E C) co
U'J ·c ..0 w
0 CD c:
L- ._ 0
n:s CO CJ) CIJ L- "'0
U U ...... ...... ~ CD
::J CD - (])
s..... -
a ..0 '+-' co o
>. '+-' I co ::J 0
..0 s..... (f') L-
e CD C Q) ::J c..
... ""C 0 a. '+-' L-
a. '+- .- L- 0' C CD
+-' 0
0 co Q) -e
:l ...... 0
C N ..c ...... E
... '0 Q) c CD en 0
~ OJ co '"C Q) OJ ..c
...... ...... CJ) I
C co CIJ 0) '+- ::1 ro CIJ
""C ::1 s..... 0:- C C CIJ
ca :::J L- g 11"sc =c: co 0
...... L-
m "0" "'0 So... C"'; 0 0 E o
- OJ .>. o ~() " Ci.i rJ)'
>. +-' ---- ......... ...:l _" C)
..... -c ~ - +-' '" L- CIJ C LC) C
0 ,...._ L-. "_ ~ ro,lo a.> L-
~ o_ ~ CD
CD 0 . - :Q '+-' (j) +-'
L- -0 c.. L- Q..::J..QCIJ (j) s..... >
'U'J CD CD .- (1.) 0
L- o, >'0-0.>0 ><
+-' 0 ....... +-' <.9
CD o, co a. t- Oc. W Q..
a. co ro .I ro
s: ..c s:
>. 0 o o
t- • • • Il.
Q) _j
_j
en :::J
........ "'0 z
'-
0 ro Q) 0
........ ..c l-
.- ........ E Il.
"'0 ""C z
C Q) 10 0
0 f'... C -
'- o _j
o ~ .-
........ '+- ~ o,
.-
........ Q) ... ........
.CD ("l') (J) (],) 1.6
'- ..c
a. aT- ::J
EY7 E +-' W
.0) '- (J) Ul
c B ........ co
'- en t 0
~ ._ 0 ro
._ ..c ::J en >
'+- Q)
Q) C") 0 ........ w
>e. - ...c
CO "'C U m
.o ~+-' Q) W
.., -0 ~" ..c co ... "'C 0
C ..0 II+-- -0"
Q) "'0 0 Q.) en
:::s 0 "'0 Q) ...., +-i
en en ._
c Q) ........
- Q) +-' co E Q) 0>
0 co ._ ........ c
E ~ ._ c 0
.- .- ro ~...;, ._ .,....
> +-' C 0 >.
E .- ()~ co
c '- o
C ~ a.
0 .- (fJ b
(fJ .- "'C (fJ
- o Q) Q) ~ ._ (5
._
• (fJ Q) " '- .... c
(J) :::J ~ . c
In .- en ' ~ a
Q) ro()'l~>'
> cu .() Q) ._-
en o ........ -
eo ~cn~Q)CO
~ o e- c c_'-
CU::J "Q)
>. co +-' . C
CU o +-' C 0') '- Q)
+-' C ::J.~ S C)
.., a. :::l
e ::J - 0-0 Coo
L- a > 0 ::J.-
::l ..::t::. > c_co'-
- c >.8
0 ro c ...c
co 0- Q)
> '+-
• - "'C
• a _j _j

z o Io,

~

-

_j

n,

I<S

w II)

o > W

10 W o

c

--

a> o

--

o

> s:

....."

--

~

C/) CD

t

CO Q..

'+-

o

L-

a>

..0

E

::l C

C/)

Q) en C/) en

ro a>

~ g

C,.) sco.

-- C) ~c (.) --

....... L-

c...::l

21:5

~ ::l

cob ro en

co ~

•

(])

"C ::l

o C

CIl Q)

.t ro o,

D.. .J .J

z o ID..

:I

-

.J

n,

"'0 Q)

L-

o

o > W

m W o

. -

"C
Q)
L-
::l
o
Q)
en
~_c
c ::J
0 ~ '+-
-- ..__ a
rJ)
C/) L en Q) -
..
Q) s- a.> +-'
C/') ::l 0 +oJ CJ)
0 ....." ......, Q)
(J) --
-- E
C,.) -0 L-
a a>
c.. ~ a> E Q) .+-oJ
U s- a> c
c ......., o 0 +-' --
-- 0.. o en L- c
"'0
L.. ::l Q) ::l a> --
a s- s..... c en
+oJ ~ L.. cu ~
...c ::l -- -_ Q)
Q) c o o . E .-
0 co Q) ~ (f) co 1::
CO (f) 0 . >< co
I ::> W o,
I ..
..
I •

11.
'+- -'
a '"'0 -'
(]) c z
en So.... eu 0
L- CD en I-
:J > ......, 11.
0 (]) Q) ~
U L- en -
z- (]) (J') -'
s: eu 0...
ro 3: c 1<1
C So.... a
._
~ a w
L- -+-' (]) (1)
0 .o -
(]) .0 0
(]) ro
"'C CD >
"'C '+- lIJ
.- o
en 0 L- ID
+-I .s w
:J ~ 0
0' C
L- (]) (])
~ 0 a. Q.)
........ 0
..0 L- ..c (")
::J (]) a. ......, ..-
.
"'C 0 (f)
0 '+- OJ c:::i
(J 0 So.... >.
en (]) eu Q)
......... > E "0
~ U 0 .-
co ~
(.) en
Q) c So.... :J
... 0 Q)
c. > .- "'0 0
0 u So.... en
::J So.... .- 0 So....
0.. en '"C 0
s... 0.. en VJ t ......,
~ co ........ o_
Q) So.... "'C ::J "'C
C +-' c: :::J Q) 0 (])
en o_ . __ 0 L-
en .,._, o
ns ::J in co
~ :J ro o
m .o I 0
•
• a.
.J
'+- .J
0 en
0) +-oil "'C C en z
~ en 0) 0) en 0
0
- So... '+- .- 0) I-
o -
co :::J 0 o a.
> So... o en 0 ~
0) Q) '0) ........
'+- s- -
0 ..c en ~ '+- C. .J
+-I So... - 0 n,
+-' 0 (]) CO c
c > s-
en > CO CO KI
0) -+-' "C 0 C -
-+-' s: c '<1> o, I.!J
>< --
co en - Ul
Q) 0) 0) U C
0 ·C en So... en "'0 0
0) 0 co - >
C -
+-' CO C
Q) ........ 0) CO co w
>. ._ .- ~
U '+- -0 s;_ '- £0
- U
C Q) ... Q) 0) Q) 0 W
.,._, 0)
0 a. en 1- 0) +-I "'0 0
Ul (J.) U "'C s..... ro E
"'C '+- -
"- +-oil .,._, -
0) 0) (J.) CO (j) CO 0 CO
s..... > +-I ...c c 1- U So...
::l ro c +-' -_ (J.) '+- o "<.t
ro .....
o 0 .. en ..-
..c +-' ......,
0) c C 0> ro +-I "-
tn en en 0 0) co 0) (j) a
- c .,._,
... E +-I 0 ro .-
en +-I >< C -_ "'C
0 ._ o (J) co
-- +-I (J.) 0 co 0)
c co (J.) '+- 0>
....., ._ s..... C '-
a. a .,._, 0 co
.- 0) o o cD' .- o
-c I +-' (J.) +-' (J.)
"'C +-' +-' co E c:: "'C
en +-' -
>. (J.) o - co 0 (])
CD 0 0 -
..c "- co 0 en co .- 1-
a. s- '+-'
... ::l "- a. o o o ~
"'C o +-I 0 (J.) o
(J '+- C
(l) Q) 0 (J.) C +-I "'C ......, 0)
"- (j) 8 +-' -- +-I -- 0 to
-c ::l co ro +-oil c .0, s- C
U '+- ::J (j), (J.) o,
0 ::J 1- Q) +-' ::J
Q) (J.) co s- O), 0- s.... C/) '"0 0)
... (/) s.... en o "'0 (J.) (J.) c So... c
CD s- o c -c 0 (J.) 0 co
::J E co +-' '-
+-' « ::J « c 0 0 ~ ..c
co "0 .~
(J co - +-'
0 0
CD -
0 o I
U) • • CD CD

... ...

.-

E E o

o

~

U'J ....

o

.....

.-

1J CD ....

U

't:J CD ....

::::s (J

CD U)

c

::l

-

CO

.-

(J

.-

tt:

o

+-I

C 0) (J') 0)

L-

a. CD

L-

o

+-I

Q) Q)

+-I ........

E' E o o

... '(j) (J) 1- 1- 0 0 ........

+-I

-0"'0 Q) Q)

L- L-

a U

(J)"'O

E ,~ ·0 -~

o, Q) c...(J) ctS e Q) :=J

20

(J)

:=J UJ

~ +-I

en ~ Q)

• 1-

(1)Q)

• +-I

=> c

•

..

(J)

L-

CD ~

Q ..c -0 c

o ..c

..

(J) (])

ICD (j)

........

(J) C

:::J 0

.b c Q) :::J 1...-0

.ae 'C: co

CD(_)

"'C

c(.!)

Q)ea "'Ca..

:::J ..

-en (.) L.

C 0

._ +-I

>. "'0 Co Q)

~ u

>.'++-' 0

:=J C "'C 0 0'):;:;

c ~ Cf)'

._ ~

~.....iI+--'

:5 E

_ . ..c

O-+oJ

c ~ S

.. c c (J) ._

L. Q) 0 0).....,:;:;

~ co ro o .9- E

0..0 !I.... ._ a

"'Ct~ - c c: co ._

ro a. Q) (J) ........ Co

.0) Q _c

+-' -J (J) :::J"O

-oc'O ~Oc ~- u co

o

+-I (J) C

:::J "'io.., 0

10 .8 ~,

-+-,..,cco

C/) Q) N

(J) "'0 C co Q) co

..c ......, 0), rJJ coL.-+-,

~C) 0 c w .- Q) CD

l:j1i)L.:J

E CD '+-0 :::= > +-'

E c c ~ o ~ 0

o s a s

•

Q)

-+-'

to

-+-I' (J)

Q)

>.

.0

"0,

._

ro a.

Q)

L.

eo

(j)

co c o

.-

(J)

CJ)

~

o

L.

a.

Q) Q)

-+-'

-+-'

E E a

o

•

(J) en Q) Q)

2 C,)

+-' C

E ~ ES

8 ~

~ a \,u U

C ,_

.Q (]J

+-I_C

"'C ..."'Co

CUc

-+-'

C C

.- 0 o ._

c.. ...-

c..!9 co c

>.0) C\j (j)

E ~

to. Q) :J L.

a Q) u-+-' ... co

+-' :J (J) 0- 0) Q)

:::J-c 0- co' ~ Q)

c ,_ :=J a (J)

c..c => 0)

•

!l... ...J ...J

z o I!l...

~

-

...J

n,

KI W U)

o > w

OJ w o

•

en

•

:J

(J) c a

._

......,

o C :::J

'+-

(]) >

.......,

co

L.......,

(/)

c

._

E

"'C ro

"'C c co

e-

a (/)

.c:

Q) a.. :::J en

a> en a> E

+-' L-

rn a

:::::s 't: 5;.. Q)

I-a_

I

.

en

"

::>

•

L-

a>

E

L-

a 0

......, ~

L-"'C

,~ c

._ co

E+-'

c:: ctSCI)

>< L-

Q) 'L...

:::J C U

·0 "0 o..C

0.. co co en

>. .= ro ro

E::t::

co

t UJ :::J -L-

o 0 u.E

tiQ) ....

\,1.1 "'C C

Q) a> a> :::l +-' E 0"00

Q) 0) a> L- "oP 0>

'L... C en ro

Q.) oa>e

.c 0.. > co

E ::leE ell

x

W

•

"'C 'L...

co a>

..c

Q) ..c

"'0 c ro

'L-

eu CD o,

a. co

>. en

E

+-'

(J)

Q)

L-

a>

....

c

c >.

t (;\J Q.

>a c

<

•

n, ..I ..I

z o ln.

L

-

..I

a,

ILl 1.11

o > ILl

m ILl o

(J) L-

a> "'C

-

rJJ 0

L- .c

.9 ~

""C .......

Q) :::J L- c-

Ow

I

z o ._

0. ::E

-

...J

n,

k'I W en

.....

'en ...

.-

u,

c: o

en e Cl)

c.. c. CIS

J:

o > w [)

w o

-+-'

Q)

0...

'+- "'0 o C

o>C'O c C/)

._ ...,

- (.) LL CO

•

...

V).

s...;.

Q) o

tt:: (J) Oc en ro ":'s...;. "'0

o c

:E~

(J) CD

"'0 ""C

.......,'

t) 0

CD t)

..- s...;.

e 0 Q..CJ)

s...;.

......., 0 0...,

C c

en co

'-

(J) co

o :J 00>

~

Q)

"0 o

o

q:::

._

o Q)

a.. (J)

en s-

en 0 00"""" Q)"'O

C CD

=> U

•

0> C

"'0 ::::J

-

U

C

a _j _j

I

Q)

s-

a.

0> C

:l C

..-

C o U

s...;.

o

~

-t

CD 0... o

s...;.

0... C/)

z o lu l:

,

Q)

s...;.

a.

s...;.

Q)

> o o

~

-

_j

D....

s...;.

o

en c

CD en

'+- (J)

o

2 c 0> ~

C 0 C (/)

0) en·(3 co

E r.n (J) '- ...

~ """"u

_g>g>~cQ)

.2. =0 ~ Q) 0 c~c..ou ouco>.9 ~ 0 ·co c

..., s...;. ..., .- c

o...Q) 0... .c ~- 0

- - 0 ......, .-

eD .~ ~ 1:5

s...;. o B 0)- co E

a. .-

"'0 C) a.. >.. ro

C):lc .. cC .__:;:; en co U

._ C 0.. C '"'"" C

e 0 E :;::::; c~ 0

o ...- co· ._ .......,

'+-:;:; Q) Q) ~ .......,

c Q) ~ s...;. co Q)

Wc.«(_)~a..

I I

a > w (J]

w o

co

T"""

_...........

•

...

e o o

...........

>. ca

...

en

e

.-

..

ta

E o

..

::l

<C

"'C C (l) 0, (l) c

"0 (J.)

CIJ CO

..c

~ ce

+-'

CIJ

U

:;::;

CO

E o

+-'

:J en

E o

l.'+-

I....,;

o

c o

•

0.. .J .J

.. C/) C/) 01 C C o ·u

U c ro CO en C c'+CO '~ L. CO

+-' s....

C C)

.- I....,;

ro .-

t:= CO

Q)"'C C) C

o CO

....... CIJ

~t5 a.ro a.s....

roc ~, 0 ro U

+-' (l) en >

E+=i o CO L- >

'+- ·c

en Q) c"'C o

._ 01

c..c E 1:". (1).2 XU LU c

._

z o ln.

l:

-

.J

Q_

1(1' W In

-

o

> w

ro w o

•

tn
C
0
.-
......
0
:i
.~ . .
ca CI'J
C -
co
0
... C)
tn 0
.... ~
.- I-
U.
• en (j)

Q)

c

._

en :::J ..c

c o

(j'J

s......

Cl>

0) +-'

E 10 t+= E

't-

o <D > C ._

+-'

o co

:;:::::; s......

Q;,'+-'

:::J • CiJ

s...... c en ._

~ E Cl> "'0 N co

.- Q)

.§ ~

C C

~. ~

I

..c en (\1' o

't-

o

<D (J)

:J

"'C C co

0) C

._

C) C co C

t+=
..-...
. . o,
<D -
~ 0
::J .._..
- C
C,)
C 0
._ .-
CIJ en
en
C Q)
0 (/)
._ CJ)
+-'
0 0
E a. co_ CO

s...... s.....

o Q)

+-,+-'

.c co

<Do o c.l

•

a. ...I ...I

"t-
O
C
0 ..
. _
+-' CIJ
co Q)
::J CJ.)
C >-
.-
+-' 0
C -
0 o,
o E
"'C Q)
C 0
co ........ z o Ia.

~

-

...I

Q_

l.6 LI.I lI)

o > LI.I [I)

W o

a.
...I
...I
Z
0
~
n,
~
-
...I
~ a..
~ 1.6
... ILl
Q) II)
+' 0
Q. >
ILl
ca III
J: ILl
0
U
t:
.- ..--
N
OJ
C
.-
.....
CO
s..
(1)
Q.
0 C) e

.-

(J

e co e

.-

LL

e o

.-

.....

.-

...

CI)

a..

I ...

tn o

a..

"t-

o

Q) rn

5....

~ o o

~

ro c

.-

-0

5....

o

c

+-'

.o 0,)-

-0 CO >

-00 0) 5....

5.... 0.. ~ o, c.J CO Q) rnL c ~

:J 0

U

5.... :J+-' () ~

c 0

._ ..c

+-'

>. .-

ro ~

E U) 5.... en o Q)

+-' C ..c .-

Q) U)

:J 0.0

•

"'C.

5....

o

0)

""C

rn

.+-,

::s o

+-'

..c 0,)

"0

L. :J o C

.-

.~

CO E

CO en > en o Q) L. C

c.. ._

Cl. ,en co :J

t..o :J'+o 0 () Q)

.!: ~ ~ :J

S 8

•

""C

0) L.

0)5.... .0 0

C+-'

..0

EO,) ""0

en 0)

a CJ) :Q

C c >

~ c 0) .<D e

·c 0 -_ 0..

. 0 (;/) §. (J)

L. C 0) .-

0..0) en ~c

en=c 0

~. "'0 .~ ~ :;::::;

._ c (1) 0

:Jeoo :.=2

0'". .- 0

<D .(/) C ~

L.. .E:J COl c_

.........._.- . __

..::=' cu 5.... • - Q)

ro (3 0 .E 10

~>. 5....::J

(J) <D t _a. CT

~ U) . ,,..

c: <D +-' Q.)V I

5....0) a. C ""C C

~a. 0 ~ ro .~

C >< C. Ol~-

Q) CD 0-"'0

_ CD "'0 en en Q)

... >Q) _cE

E. L. IT"(

~ '(1) \,u (]) .-

..,.._. ._ L.

::s co..c c -0..

E L. E eo 0> "t-

._ 1i) '-: >. o C 0

c ._-' t:: .-

._c o 0,) 05.... 1;) ~

.E "E a3 a. :0 'x 0,) «"'Oce Q)Q)"'O ro~a.o,ao ~ ..c

I I

a. _j _j

z o Ia.

::a

5....

0)

> a

-

_j

n,

kl llJ (/)

o > w

III w o

N N

Q.)
en .~ a.
co t ..J
(J) 0) I+- ..J
~ t o, 0 z
0 '0 c 0
:J ~
- 0 'Q.~ I-
- ~
Q) a.
C,) Q) c... 0 ~
en
+-' en .0) +-'
..0 -
... :J C'Cl ..J
Q) 0 "'0 0) 0) CL
en Q) -_ C,) -c
.c:: - 00'
::l .- I(j
+-' ~ +-" ~ '+-
-- ::l
>, 3: 0 0 a. 0 ILl
co ..
.. (J) (j)
en - +-'
E Q) "'C en -+-"' -
(J) (f) c (]) CD 0
~ <D co (J) >
.9 c .. ..0 (J) w
-_ Q.) U) .-. "'0 co In
.0, 00 (J) ...
(J) ..
C/) c w
Q) :J ::) CD
..c Q) co co 0
'"0 C e - C>
... 1+- -- ro +-'
co (JJ c (J) ~
en 0 (f) -
o :::l -_ Q) -
c ~ co
0 Q) ~ ..0 ('i) co ..c -_
(J) 0 CD CD C> +-I ('I')
-_ l+- e N
+-II s.... +-i 0 ('t) s: --
co ::l ..c ..c co
+-' 0 CD Q) C "'0 .. +"'"
-_ ~ (J)
E 0 -0 en 0 c c ..c
s.... -_ ro -_
-_ ~ :::l +-.II co :::l
- ... 0
-
c co co 0 CD Q) ....... en
..c
M -_ > o (f) o ~
co c e -_ 0 Q)
(0 -- +-.II
t::: "'0' C'~ 0 ....... >
M Q) ~ c. ro c en 0
0 o, C :::J
() e 0 o
ro (J) E
e 0 c ._ -- Q) c:
"'C +-.II
+-I ._ t co
0 s.... s.... s.... ro
~- .-
1:5 1::'" ~ :::J 0 N :::J 0 0
.- 0 .- ........,
..... CD (J) c C'" ..0 Q)
(J - __ Q) 0 U "'C co Q) CD -
..0 a.'- ..c ._ C> 0:: 0 ro
CD :J 0 C. +-I en ~ en
CI) s.... o, ._ +"'" 0
en c. ro S ::l I I
0 Q) I
• '-
• a.
...J
....... ...J
:J L-
a Q) z
..c ~ 0
+-' ::J. I-
3: ..c a.
'+- - ::E
a E co -
.- .J
(]) eo .,._, n,
- c
ro o (]) k'I
s..... CJj '+- +-' ..........
. . 0 a a c w
'+- c: 0.. ::J U)
.- ........ s..... a
en .. c
en E' 0
c C :J 0 U >
._ ~ en
<J.) <J.) co 0 ~ .. - w
.- - E u"'C []J
- U
'+- '+- co C ....... w
0 0 -0 (J.) ro 0
._ (J.)
s..... (J.) ..0 s..... 0)
co o s.....
(J.) :J .......... ro ::::J c
(ij ._ o ._
o (J) -c '+- '"0
........ > Q) "'C 0)' ro ~
c (]) C\I
-c .. s..... .- c.!:::;
..
........... c Q.) -c o ..c :J ._
• (/) - "0 CJ)
...... ro Q) c ~ ro
e c Q) Q) co ro > "'0 ..........
<J.) o ._
Q) o ...- o E - ..c ..c
0 o x ::J co <J.)
s..... s..... s..... Q)
'+- s..... <J.) 0.. Q) s..... "'0
(J "'0 CD en "'C 0 Q) >
C/) ....... +-' "'0
............. "'0 .- co ...-
- -
0 - "'C "'0 0 "'0 o <J.)
0 -
- co
M en <J.) c ..c <J.) 0 s.....
..c CD s..... o s..... :J
CO Q) E o ...- o
c o Q) ~
M ..c Cl> e L- ""0 0 co Q)
co ro ...- (/)
c .- <J.) Q)
- 0.. - "'C
t: co o s..... ..0 <J.)
..c en :::J s.....
o U (]) C ""0 co co ~. s.....
0 - o Q)
(/) co ro Q.) (]) s..... 0') co
(]) (]) ..c
.- +-' W en _J s..... en Q) 2 3:
...... (]) :::J +-'
ro s.....
(J (j) I o -
(j) CD 0 I . I
CD « ~ ~ i~t
en •
@~~l~~~!
~ 4 <= ~J, _,£_
0' . ~~ .0> n.
..J
..J
"'C en Q)
0 ._ :::J L.. Z
-
C +-oJ Q) L- ""0 co 0 0
co o 0 .-
's..... o ..c l-
Q.) 0 c Q.) "0 s..... co a
.- ro Q.) Q) - x
E L... E
o, E ir C E "'C -
....... ..J
::J 'CD :::J "'C 0 E c 0..
en ~ en 0 .- ro
+-'
CJ) E r.tJ .- 0
E "'C en 1.3
co .- Q.) co c U
+-oJ Q) W
... >. c, 0 s- o OJ en
Q) 0 rn
C +-' C) C co
E co co L- "0 ._ Cl> 0
0 - '"C
:J .- CD co - >
+-' C s..... ........, Q) ::J
Q) +-' .- W
CJ) co 0 ..0 E 'co o - ~
(/) +-oJ CD Ie o [I
..... :;:::; co c
ro o "'0 .- (C c (J) w
CD E ........, .-
.- 0
~ ro N - '+- E c ... c..
L... Q.) 0 .- so 0
ro +-' ._ ,C L.. '+-
(/) ·E c c CD a."'C Q.) L- +-' s-
.... 0 ro E 0 +-oJ 0 o c,
o L- C) OJ ..c Q) co -
!: a .- >. s..... co It)
a s..... L- .0 +-' N
CO ....... ~ a ~ (/) o CD 0 C C
.0 Q) 0.. ~ +-' 0 a
s- a> 0 L- a CD 0 ,0 c. o VJ
.... +-' "'0 ....... s- C :::J
"'0 :::J 1.1- +-' CD l..-
e 0 ._ ~ 'C L- C Q)
0 :::J (/) .::if:.
. Q) 1:: ._
... C) ctS o,
0 - Cl.) c c: co
co (]) ..c Q) 0 o
> >< (U ........, en ..c co t ...
U (]) - >< 0 +-' .0 Q) (f)
0 0. Q) .0 >. (J) o o Q)
s- ......., co C/) en
o, o 4- 00 co c
~ 0 c s.... ... L- CO'
0.. (J.) ._ E .- +-II L- a
0 ..c c 0 a>
co .~ c: +-' ........, '+-
Q) U s- .- 0 +-'
0 t L.. 0 ro Q) 0 !: o ..c (/) ~
.- :::J Q) (])
.... ::J s- ' ....... L.... +-'
0 co +-' ""C .- +-' ~"'C
:::l 0 C "'0 (J) :::J Q)
o c E 0 - Q.) CD 0 0 L- c..(J)
CJ ._
0) .: G +-' L- °Qf +-' +-' - 0 .......
CD .J:: 0- '+-- en o :::J ~ ro I..- t)
~ en c s..... o ._ a.~
._ o
>< ~ (J) 0 Q) Q) Q.) - +-'
co () >< - ro c
W a o,
• W (f) en Q) 0
L.. (J
• • e o

.-

..

C.

E

~ tn In

«

+-'

(j)

Q.)

.o

C E

s.....

(J) 0

... t Q.) '+-a.

1:5 0

CO+-'

.!::J <D C..c

8 ro

rJ) >- .-

s.... L-

a 0

+-' +-'

::l.c UCl)

~~

Q)

a> E

::::J en en co

•

0). e

"0>Q)+-,

t: ·c :J 0 t) ·c

C 0..

(J) Q) > e """'" C.-

'-' 0'"

co c ._ co

.co.........,s.... +-' co +-' ,s..... o C) .~ Q.)-:.=e

£.~ -g"E

a c ... ~ rJ) COc "'0 co

.:! Q) OJ

:J ij:::: E > co So....

'+- 0 ::::J co

Q.) ........._ os s:

"'0 .....- (J) .........,

U ro o

coo..>.~ <D2=Cc

L.. ,"'" .- 0

~ -

::J C >C'O i"

, " '-'

'-' co s....

.c (J) Q)

+-,"'0 U e co ::::J

s.... s.....

C 0 015 t) (])

'+--0

Q) en

o c .!: 0 ... ~

L-

a

L- +-'

0..0 ......, (])

..0"'0 Q) 0

0 ...

I

L..

a

+-'

~~(JJ

o"'O~ +-' I .c

::J, C .-

,(_) a..c

Q) c 0

>< s....

'" '+- ,0..'-"'" \U 0 en

~ ... Su

(1) c co ct:S OOO,)-s.....

::J en ~ ... co cue

- ... 0 (J 0 Q..U

+-,O:::J c.......,s.....Q)

Q):J~ U

E_g ~"~ .

C +-' .0 Q.> C> os;: I VJ

0- > C

~"'O a co co Q) C C

Ie'" 0

• --- '\iIJ' en

"""'c 0>..0 L...

,'- Q)

co~~Q..

>- "" .-

C \.U -- ..

,"Q)Cl..ci> \,IJ ..0 0.. .

'+-C'OQ.> o ~ ..._..

c/) .... en co (J) C

U) E Q) (])

ID+-'CE

"'0 U ::::J C

s.... co

ro ..b >- 0) O>ctoo Q) 0 co (J)

a:: 0 0.. co

•

"0 Q)

E

::::J (J)

en co

Q)

..c

......,

o c c (\j

o

en c a

.-

+-'

co

"'0 o

E E o U o co

co

.-

o c co c

.-

LL

•

D. -' _J

z o ID.

I

-

_J

n,

III U1

o > III

co III o

e o

._

....

(.)

Q)

.~

Q)

~

CJ) en Q)

c

._

en :::J .0

.8

.......,

o 0)

._.,.

..0 :J en

...

+-'

o

co

s+-'

c:

o o

~

o

+-'

:J U Q)

>< OJ

+-'

o Q)

.~

Q)

s.... Q)

-

~::J

co s-

E

.......,

c s- CD

.8 E

..0 0) Q)"'C

o :J

•

. __

Q) E o (/)

c (J)

E

::J ..c

en

._

CD > o

s-

a.

+-'

o C

'"C CD Q)

c

s-

o Q)

+-' +-'

.o co

00) 1i5 Q)

en Q) CJ)

co a.>

a. ....J ....J

z o ln. ~

~

Q)

a. o

s....;

0..

0)(1) c en

·c .~

s.... (J) ::J <J.)

8 > o 00,

+-'

u"'C

co C !:; co

C '0)

8:§

....... t+= o ~

..c 0 o +-'0.. co' 0) 2

s.....:::t:.

~ ~oE

co..o~ '"'0 ,0 o Q)+-'

+-,' L.. ""C

co '0 Q) Q) 0_ s....

s.... 0..L.. ::J

+-,' U

CJ) .~ Q)

. __ en

c 2 c ~ E .Q .m :::l E Q) t5 "'0 C co "'0 0) 0).2 0 c

.iD E ~ ro

0::: .E ~ I

-

....J

a.

w Ul

CO"'C ~ Q)

wi-'

- .-

o > W

ID W c

.~E

u=== s....

a> 0)

E Co E (f) 01:5 u co

s.... s.... O)"._.

"'0 C C 0 ::J U

+-'

en C

E CD Oro E _>.

U 0

-

Q) 0..

•

c..
...J
...J
Z
Q) 0
I-
... a
n:J L
.., -
...J
tn a,
W L6
.... W
0 IJ)
0
tn >
w
Q) ill
.- W
.., 0
.-
-
.-
J:l
ca co
N
,.-
-I
-c
,C
CO
fA
....
'Q)
tn
tn
« Q) . . [L
- L... 0') _J
..0 0 C _J
CO ~ +-' ._
'+-" ..0 ..c -0 z
-_ m ~
~-o 0
-0 -
c- U I-
OJ C .... C [L
CO en
, -_ z
"'C L..
-c 0 .... -
c (J) _J
Cl) +-' s.... n,
CO .-
+"'" "0 ~
- CO ~ L<S
CO' o (f)
Q') 0 o c w
Q) O')~ (/)
L...
- Q.) c+-' 0
CO > 0 c >
CI) Q) E 0 W
L... .- ID
Q.) CO CO +-'
-_ W
+-'
"'C .e C Q.) 0
::s ~ 0 a.
-
o .- I
~ +-' Q.)
C ::J s....
+-' Cl) ..c c. (/') 0'>
.- Cl)
('\1 a. s.... C N
+-' U
CU ..c 0 CJ) -_
+-' s.... -_ CO (J) C
.... c.. -c t:: s.... ro
.... JQ
...
CO Q.) c Q) (]) ~
......, o (J) CD
.... CO -- -
t/) +-' L... .0 -c C >
(/) 0 CO eo c
-_
W .. (]) +-' +-' 0 s.... 0
..c -_ +-'
... "'C :::J > o
~ en Q) - 0- ro CO +-'
CD "'0 Q) Q) ._ C
0 s: 0 +-'
......, ~ C Q)
CG 0 s.... Q) +-' Q.) -
en <J) (]) +-' s.... ::l
0 Q) L...
s.... CJ) > JE "'0
.... U +-' E ~
(l) en Q) Q) ::J
0) Q) E 0 0 L... co
en c s.... L... 0.. a.. s....
-- ID 0 a. u,
U) - +-' ..c: en
-_ 0
c( LL c ~ ro I I
.- l- .e
•
• .8 n,
0> _j
'+- C -'
0 ._ .+-' Z
"'C .-
...... L.. "U 0
'(,), 0 0) I-
0) U '- a
a. o o :a
(J) ro "'0 -
Q) 0) CD _j
L.. :::J s.... D...
0 L..
- :::J
C CO
. k'!
.- > en o
0) en U) 0) I.JJ
s.... 3:
'"0 0) Q) 0) en U}
co C "'0 0) C C
.'- :::J 0
E ._ c
-- en en
- >
.- :::J
'+- C s.... +-I' >- I.LJ
en '+- .- ..e ..c en ..c
ID
L.. 0 s.... ~
JE Q '+- +-I' I.LJ
CD 0 Cl.) CD 0
en . I C> (f)
~ s.... CD +-'
C CO eo c' en c tI::
co ro -- 0
"'C <l> f-
s.... s: :J >-
+-' 0 ~ en .,._, ~
U 0 .- 0
c en ~ x o E L.. ......., M
.- ::J C
co Q) L..
C en ~Q) o Q)
t:: .- -- en Q) ::J
0) ..c CO.......,
+-' "'0 ::J (J) rr
o .- 0 0 C (J) Q)
:?: ._00 >.
tn .- m
"'C s.... "'0 Q) Q) (J)
CD .- +-' Q) C L.. C C .o
0 ..0 a. eo 0 .- 0 ::J
(J > CD L.. CJ) C/)
co "'0 ~ 0 C :::J 'E
o ......
e C o, wfooJ ..c CJ.)
+-' eo Q) C,.)
c . . E C
(1) co CD ..c en Q) >. C/) c
... o ~ c Q) L- eo CD
~ s.... "'C 0 0 +J E (tj ..c s....,;
0 Q) 0 .- c' c o Q)
o ....., 0 ~.- '+-
....., _J o, co ""0 s....
CI) ..0 Q) Q) U a.. L.. :J CD
Q) +-' a, L..
... c I o 0 a...
Il.. 0 eo x I I
• UJ I I
• tJ) Q) (J

e ca

>Q)

> e

o

U

Q.)

s.....

co

c o

._ r'T\

~ """I

+-' C

Q.) .c.. l+-

I 0 Q)..., s.....

c..'-

o "'C ~L:

.- "....

o ~

> C/)

~ ~

CO ~

UN

'-

o c

....., .-

...Q..c Q)+J

o .§

•

C/) . "'C o ·c Q)

a.

.::L.

U CO .0 .::L. o

o

~

-

..c

CO c o en co Q)

L..

'-

Q

Q.) "'0 co

E

s.....

Q)

0) C o

+J

fJ) C

(fi~

'+- CO (J) > C

co :::J '- 0'"

I- Q)

•

~ co a..

s.....

a B

..

+-'

C Q)

>

15 en c

.-

"'C Q)

s.....

CD

"'0 C C:D

L-

L-

a

(I)'

C/)

Q)

-

..a

cu

"'C

o > cu

o C/)

-

co

Q)

s.....

co

.s:

Q) "'0 co

E

,C/)

s.....

~

C/)

c 'cu

s.....

I-

E e

'+-

"'C Q)

!r....

Q)

> o (J

Q)

'-

•

Q.)

..c

>a cu' E .~

t::::

Q)

o,

o

'-

a..

I+-

o

<J.) :::J

-

ro

>

r....

o CD ~Q)

t:::: L..

Q)SB c_(f)

o C L- CD

Q...!::i

•

a. ..J ..J

z o Ia. ~

-

..J

D..

~ w II)

o > w

m w c

G)

..,

co

..,

t/)

W

'I-

o

f/) CD

.-

..,

.- .-

.c

em

.-

-I

s....

o

~

Q)

E Q)

..c C,,) CJ)

.(]) >

.-

CJ) C OJ

..c Q)

s....

c..

E o

o

en

.(1)

"'C

.-

> o

s....

_o..

Q)

"'C

o en

°E ~.-

u CO

'+-' 1''' :0. 1tJ

:J 0')

~ .E

c~ :CO C CD ro

s....

•

CJ)
'+-'
C
:::J
0
E
CO
"'C
Q)
.-
'+-
.-
o
Q)
a..
CJ)
0
+-'
a.
:::J
en
E
.- w
CO E
-
o .- 0. _J _j

z o I- 0.

~

-

_j

(L

~ w U)

o > W

III W o

CD

.....

CO

.....

en

W

....

o

til CD

.-

.....

.-

- .-

.c

CO

.-

....I

+-'

::J

o

_c -0 "CO)

+-' '

._ 0) +-'

3: >< ::J ._ a..

.. '+- 00

+-' '

C ~ .. _

O)"'C-C E 0) C

1U ::J

~-o ~

c.':J 0

o .~~

......... c+-' ...- --: :::l _C....Ja..

0> .. 00 's:: -a ._ 0)"'0

>. +-' C cu -0-

«:OQ) <5

A. ::J~' '+-

"I' 0"...- 0

._ CO e

E .00 E -'~ o,

'm +-' C ,,~'

~ ...c:::J "-'I

" ~ :,c

"-' "-'I .. .-

- .. _ "'C

'+-0 ~ <D, ' ir

0) s.... ". ~

c...c:2···..Q 0 ......... CO ""0

~ ~ E<D

.~::> .. t:::

'+- ::>...- Q)

O)oe en

-0 +-' Q) 00

~ -0' Ol co

.._, L.. C

cum:;::; E

o en C ~Q)o

LLls....C,)

s.....

ttl ..Q

m

-

o

m

-

o

•

. .

mOl

Cl C

._

"'0\4= ::J C C,) 0 Coo

.. E

00 ._

+-' CO ..c - 0) o

.-'

s.... "0

(l,)

s....

:J U Q)

en c ::J

._ -

0) "'C' o

o

•

'"0 Q)

a. a. CO o

roC]) (]) s..... 50- ro

('0 (/)

...... ...-

() C,)

03 ~

+-'

E c

E 0 o u

oc

'+- CD

o E c ~ .0 0

........,-

o o,

<D E

~_"",

Q) (J.)

Ls...."'O

Q~

(J) (fJ E Q) ·ro en

_ CO

o Q)

-

CD ~

0)1::

CO (l) E o, ro e

00.

a. _J _J

z o lll.

~

-

_J

0..

1.(\ W !J)

o > W

In W o

..._ a.
0 _,
. . CO Q) C]) _,
(J) CD N C) Q)
-+-' .- Z
..c ...- L- C .....,
C) CO Q) CO ro 0
"- C ...- ...- "'C ~
5.- C) CJ) .- CD a.
.- -
-c +-' CO .c 0 - l:
CO L- C) L- ::J CJ) ..0 -
::J 0 ::l ro ro _,
+-' ..0 "0 .c CJ) c ....., Il.
<..> 0 iIi ___
CO ::J C o U U ::l 1<1
,(/) 0 CD .- er
L- E
+-' U L- ~ Q) w
C ~ ~ 0 ro
0 'co C]) c (J)
............. o E - ro c E 0
• ..c E 0 0
... .... eo o L en >
e ~ L +-' t Q) ::J C]) w
::::J .-
B ::J 0 -- m
0 0 :;) 0 ...-
0- 0 o .- w
.- 0 ...- ...- 0
0 "'C Q) o ........ C
C]) C o l' C])
....._." L- l' -- l' &
0 c 0
G) C ~.
........ ,c 0 'c CD 0
...... U 0 '+-' "¢
-- M
CO & .- "'C 0 CD +-' ..._
+-' (J.) ._ > m 0
... CO +J
ro C/) CO -- '-cl
(/) C N C> .- en
a_ m - Q)
W >. "'C ..c a_ 0 0
s- .-
ro L- a> +-' C/) +-'
0 .-
E E +-' ~ C -
.-
..... ..c 0 0 ..c
--
0 (JJ ::J ro co .- 0 ro
:J
Q) (J'J - s- .-
o co 0- CJ.) -
...... c
tn L- a> '+- ...c: Q.) > "'C
0 0 o 0 .- C
CD .0 C/) .- ...-
(l,) Q) ........ C co
._ ..c ro 1:: L- eu o co en
... +oJ ro "'C
......, .- ro +-' E ........ (fJ
._ C ~ a. ..c (J) CJ) +-' C
- 0- .- C ..c Q) ::::J
._ ._ L- a> m (J)
.c co w eu :::J 0
L 0 0 o s- CI) (/) 5.-
CO ........ co CD
Q) I
._ 0
..J
• 0.
_j
_j
z
0
l-
u
:E
_j
Q_
1<1
W
(/)
tIJ 0
>
tIJ w
m
CI) w
c 0
0
....
c.. I.!)
M
C
CO
-
c.. t: o

.-

....

ns N

.-

e

CO

~

o Cl)

0::

\I-

o

e CO

-

D..

'-

.9

..c Q)

"'C

o~

.-

+-'

(j)

e

"OJ .c ~

OlC/)!.;....

ro ro o

en o c E ~ 0

'- .- cu~ o ~ :J""" +-' U en Q.)

..c - c..

Q) C :J I "'C 0 ..._. <1>

~ ~ 0.'-

'+- ~ 1:: oQ)Q)o

c C. Q.. +-' o I 0 ~

._ Q) '- +-'

10 '- 0..:;:; N Q.,+- e .- '+- 0 Q)

CO 0 "'C

:;_ Q) § Q)

ro 21 ~ "~

o co :J e (J) <1> s: ..c CO ss..... 0 ·CO) 0,)

.23 .!!2 ~- 0 32 ~OO~_g

~ I

W

•

a. ..J ..J

-

en

s-

o

.......

. -

z o ~ a.

:I

-

..J

n,

-

'-

.8

..c

0,),

"'C 00

Q.)

0).-

e U

o g

E :J CO:!::

+-'

,00 en c c o 0

.- "

+-' \...I

ro '-

~ Q.)

o...c

r"'r\+-' \...I~O

Q.)-

c"O en e

+-' CO U ....-.... Q.) (j)

~ ..._.

Q.) 0,) s- Q)

>.~

--

o > w

m w o

co E ~ E =:>8

•

~

\ .-

>

.-

tn

:::l

-

o

>< w

e CO

-

a..

OJ C ·c

::l '"'0

c co

a. Q)

-

'+=

o

.......

.......

..c OJ ·c

Q) Q) >..._ CO

Cf)"'C

~ C U 0 X+=i Q)~

en OJ CO c...

s: C) s- c

.9 .~

..co (1.)=

oS

•

..

(I.)

en ::l CO C,,)

s-

J2

en

t...c ::J"""'" OC C,,) 0

~E

...cco "'C ~.

Q)"'C

a5 §

t '>a se

..c..o

en"'C

s-

O (I.) "'C.

"'C C OJ Q)

-0. X

a3 OJ

....... Q) ><..0 CD

0)"-

..c g

c ~ CO CO

o E

Q. ...J ...J

z o IQ.

l:

-

...J

a,

l-6 w

c:

.-

~

CO o,

~ c ro

U)

o > w

CO w o

..

"'0 o

.-

s....

0) 0..

~

._

>

._

enC ::sCO

_-

C,,) 0..

X Q) 0)-

"f--,i.i= 0"'C C C o CO

:;::::; Q)

~ Cf)

.- 0 0..

X .0..

CD ·e c -0. o >.. o..ro

=> E

•

U'J

.....

t:

CD

.....

C

o (J

e ca

-

c..

en

~

en Q)O)

!I.- !I.-

(J.) co

....

c ~ ._ Q)

~..c

.,.._, ...-

._

:::J ~

0"" en Q) en

"'0 co

-

c u

ro Q)

E ~

·co en

-

o

._

'0"'0 en ~ '0) rn en -0.' en

~ Q) !I.U ..0 co Q) ~.+""' - E IT"I: c·-

C 0 (JJ

.0> ~ ,~ en ro-

Q) E:§

"'0 u, C

.,.._, \U co

~ .§ en

E co..o - ::l C O CJ)

CO

-

a..

c

•

...,_,

en ::J

E

(JJ en CO

-

U

Q)

E co en

c

._

(f) !I.-

Q)

"0

o+""' ..c c Q)

~E

-- .......

:::J co 0'"0) 0) L-

.......

"'C Cl>

~ E

en CO ~ en

E 0) ._ >

"'C .-

~ ~ o ~

a. ..J ...J

z o ~ u

::E

-

...J

Q_

1.6

ctS o,

E

__ en

+-0'00

o~ C u

en "'0

._ Q)

ro .:: ..c CO ......,0.

~ .E

~~ (.) c

~co c'+co 0

-+-'

CC :+=i 0)

c E

0)""'" "'0 ro ._ Cl)

......, s....

en-+-' :::J Q.)

E.a

·c

C 0 CO C/) - Q.) a.."'C

•

L!J {j}

o > w

m w o

C) e

.-

....

o

> c::::

CO

-

c,

o

..._,

-

~

._

~

c Q)

en

._

c CO

0.. ~c .0 co

-co..

Q)~

s.... ()

._ Q)

co .--. a.Q.)

E s....

._ 0

+-'

s....

(J.)-C "'OQ)

"0 E

..c (J.)

~Cl>

:t="O

::J en

g~

s.... C

o ::::J

s....

o ...

+-' C .- co "'C -

Q) C.

s....

() c

..c 0 () Q)

COo w >

•

"'0 .Q)

+-'

._

+-'

a5 '"C.

.(J.)

s....>"'O Q) 0 Q) ",os....+-'

o C. CO ..c c. Q) COs....

~t"'C

:J ::JC

c-oco Q) () C

s.... '"C co oc:s....CO o,

:0 c: 0')

:t= C "'C co .-

Cl> a..~

s.... s....

U '+-0 ro

..c . - E

o ~ E cog- ::J Q) () (()

... +-'

,eCl> C Q) > Q)

t6 .~ E

+-' CD Q)

.~ s.... m

, +-oil+-'

Q) en en

C5:::JQ)

> E :;

~ ,<1) en

oo..Q

'1i3>~ m.8=O

•

>.+""

~ en ._ :::J

a E

. ....._

COc)

E C

i!I!'_"'"

+-'

... 0

c, > co c..rJ)

~, E a. ·ro Q)o 0

o'+co 0

o ~c"

+-"II

en:l ~

s.... a ~

BE "'C

._ tT'C Q)

U '"u .....,

Q) C ro

s.... ._- C

o en .2>

'+- "'0 (J)

o .= Q)

(/) _c"'O

cn~ ::::

~ 0 CD

U ~ .0

'"C +-I >. ..c

Q) "'0 C ro:t= s.... c E ~'

• _ tT'C co ---

ro '"w - a.s....Q.CD""C

E' CD +-' +-' 0 '"'"' a. 0 0

.~ E Q)' > C)

o ::::J ()

u. c o co

C

•

Il.. ..J ..J

z o lll.. L

-

..J

n,

s....

a

k':I LL.J rJ)

o > LL.J

m w o

""C Q)

+-'

.-

U

.-

o

CJ)

.... a>
....... a
(l) > _j
E co _j
Q) ..c z
s- ""0 0
CO - I-
::J n,
(/) ~ 0 l:
+-' ..c S
c: I
Q) "'C c: C ..1
0 0 +-' n,
E Q) .~
4_ c: +-'
~ ...
Q) CO CO 106
s- O N ..c ..c
o (J) w
t/) :::J .- 3:
J2 c CO tf) ill
..... 0"' ct1 W ..... CO
e Q) 0') en 0
L- a> s- l' co o >
(1) c ..c 0 Q) "'0 w
.- ID ~ m
E CU 0 +-' C W
s- (J) +-'
t:: +-' co 0 0
Q) .-
~ s.... .- ,ro
(1) Q.) CD +-' ........
_' (J) co Q.
o Q) ..c '"
L.. .... Q) -0 E
.::£ t (J)
._ "l- s.... > .-
.- ._ ::l .-
::l - 2 0 --
~ +-' Q) C'" Q) 0
........ "<t
tT - O· 0- o .- e
c s- "'0 Q) _
Z S 0
Q) 0 Q) \- f'....
l' s- s- +-'
~ C "'C o s- (J)
0 Q)
co CD "l- +-' ........ co
- +-' (I.) 0 .- ID
a. en "'C a.
e E CD c (J) Q) ro
.......
0 +-' s- +-' s- s: co
s- ... 0 (J) o o
.- ... Q)
._ '+- ~ en ~
..... C -+-' C \- C .0
CO .- ID C .-
0 - 0
._ ....... . _
(J ..c .- .j;...I -0 ro
E +-' C
.- ro c Q) >
. - (J) Q) >
.- 00) ro "'C +-' 0
... S en en .-
e .- Q) s-
.- .- ID ::J Q) C U a.
\l- t::: "'C I.L 0'" CO 0 a.
c ... ,~
:J :::J ... ... o «
...
-
0 0 o
o c
0
• "'0 a.
O)c Q) '"C Q) _J
c - Q) 0
._ ro co ::J _J
+-' C/) ~ - ..c c
c ... ro
... +-' Z
>. 0 .- en
Q) I- > S 0
'"C 0 - (fJ
..--.... en - l-
,- ro 0 Q)
• c ~ en +-' C a.
... 0 +-' Ol- a c ~
C o c Q) c eu ." ..... ::J -
I :::J CJ) +-' _J
-_ :J :::J
0 C en en - E o,
0 Q) en ro eo 0- ..0
e +-' co +-' Q) -_ ._ l.oi5
C co 0 ,_ ro
c .......,
............ c 0 +-' (I.) en 0 w
'"C ._ a E :::J -_
en (]) E ..c '"0 ~ IJ)
en -
s- o co co --
...... -- -- c Q) -0) 0
cu s..... :::J (]) > c
C o CD > s: >
o, en s- o
en -- +-' +-' . .-- +-' W
(1) E - c Cl) .-
-- a c_en '+- .... m
E -_ "'0 +-' Q) U 0 :::J w
:::: +-' Q)
C +-' (]) C en +-' ..c 0
+-' o (]) Q) Q.) s..... C -_
a a s-
CI) Q) .:::s::. . ~ ........ :::J ........
... c o, E o, en a _en
.... ... +-' :J
C cn (I) en >._c E '"C
.- :: ~
:l Q) (]) :::J cu+-' >. .....
~ Cl. -- ro '<t
0 0 ~ Q) :: + c
tr '"C "'C ..c "'C co
+-' l' > E (])
C1) "'0 C -- en
~ - ID 'ro :: en
~ Q) ro ,_ (])
E 0.:: en ()- Q a >
s..... Q) t) ........ -
(]) a I!I'_" - --
E !of- - l- s- "'0 cu Q)
e .0 +-'
.- ._ -- CD o
0 co CJ) co -c "'C (]) s- o (])
s- s- +-' (]) t: ..c o +-' s-
o .-
0 ::J L- eu +-' - -
.- ... o co "'C co en
... +-' C'" !of-
.- s- en
ca Q) .-0 Q) "'C en 0 (]) Q) :::J
..c Q) "'C s..... o-~
Q) +-' +-' :::J
E I- "'0 Q) C ro (]) o
>. o s- o
C ::J Q) :::J -
-'
ell 0 OJ (]) s-
a.. I+- ro C) o 0 0
.- E 0 Q) 0 E o CI) ::J .-
..._ s- s- C - c
en .- c/) !of- co
e c en ro o, ro 0 ::J > :::J
ro t- .........
0 - co I
a... - en
o
U .-
• Q) en

'+- co o 0

c ~ co U 0."-

o,

s..... ::J

EJ2

en C 0) co -+-I ..c O,+>.

'+- 0

0"c

c Q)

.Q E

........ .

'" Q) ~ o

.(3 C

== CD

o E

CJ) E

2 0 ._ u

E °

0)""""

0.0 0) ·c

-00..

o C

o 0 ~:;::::; u co

0.. .~

::J C s..... co ~ 0') C L..

eo 0

m ~

•

Q)

s.....

0) ~ ::c 0 co o u CJ)

. ._.. .-

c_"C

c..'+co 0

.c, ~

.......,

.s: ~

(J.) 0'" U 0) c-O co co

._

- Cl o.c

E ·c

o s..... U ,0)

C >

__ 0

Q) 0) .os:cn 1J)~s

:::J >. co

E .8 (J) (J)' o, Q)

:::J:P C s..... .o .. _, s..... ._ ..... :::J

......, C U co co

:!:_c0)

U 1 (J)

·0 C (J) eng::J

......._...

.. ...

.......,

a.> Q)

.c en

Q) o c ro

-

co

..c

-

L..

~

2

<J.) C/)

:::J

.....,

(J)

o

E (1)

s.....

CO

en c co

-

o,

-c CJ) CD 0) O')c co .-

..:::.::::: L-

u :::J

........

co U c..:::J

1 5......

CDoo

s..... (1)

a.. s.....

•

0) c

u ...J ...J

il •

o

......,

s.....

o

.t::

c..

r.tJ

C. :::Jc.. o ::s s..... 0 0) L..

s.... 0)

B L.. .- 0 -c +-'

.-

~ -c u Q)

s.....

~ U co .5: (J) ..c (J) ...,

~ .~

Q) en C +-I

:::J

..c 0

+-' I

.§ 32

o "0 .I:

2 CJ)

co _......,

~ C o Q) 0') > Q) 0)

zQ:

I

z o ln.

~

-

...J

0..

L<I W (fJ

o > w

m w

o

a..
C ...J
C/) ...J
co C/J Q)
C) 0 c ......., z
0 0
c ..c 0 > (]) r
0 ._ -c
-,.-........ ......., +-' '+- a..
• 0 ..c CO 0 0 ~
> .-
.... 3: ......, 0 -
e en 0 c ...J
-c c 0> 0> 0 >. 0..
0 C 0 (]) ._ o
CO c ..- 1<1
.'- e CO +-'
e +-' ·c a.
c 0 ......, w
CO C .- :J
..__..... 0 E Q) CO C) s.... U)
.-
._ - ~
en +-' ..c - 0
co ~ 0.. C 0
CD N co C U") co >
.- -c 0 s: ci)a:l w
.- C 0) III
(.) ctS +-' +-' :J C s: w
.... C> en ctS 0 .- +-' 0
s.... E -
C. s.... q- ..c q- ~
0 s.... +-' 0
CD ..c t+= en -
:::::I s.... +-' C ~ « +-' Q)
.- o
... '+- ~ 0 co l' s....
0 e C"')
~ Q o "'C "V
s.... .- ro
s....
e c Q) (j) 0 Cf) o, "'C
co ..c '- co Q) s....
CO - ..- 0. .- ID 0
,0. Q) 0 0 e o Cf)
m 0> CD..- ......., 0 0 ..-
, ... +-I C. C
,"_' 0 UJ 0 co
C +-' 0>CV') :J "'0 Q)
-c Q) s.... e c E
E "'0 C .:::£ .-
eI) (]) c c 0 Q)
.- .- e>
Q.) c ro .- s....
C) .- ..c +-' c
+-' '+- ,.- +-' ..c co ::J
co CO ._ +-' .-
ta Cl) 3: - cr
+-' E -0 C i;r-
(/) s.... Q) OJ
~ ro Q) "'0 Q) L... s....
e OJ s.... - 0> ,E ,Q)
s.... c OJ C ::J ~ Q)
ta ::J 0 ~.r::. co 0 ctS s....
en .- e ::J
'+-' t: 0
C. 0 ro 0 CD ,m (fJ
- ..0 co -0 s.... 0
• o ::J I :J o
CI) en ..c Q) "'C o
.- co ,_ c o UJ
s- O o, .-
+-' co 0 "0
c, • • 0') c

.......,

..0 CD ""0

~ Q)

s-

::::J o Q) CJ)

0') c

.-

o C CO C

.-

u,

I

•

..c

+-'

.-

~.

-c CD en ::::J

0) C

.,_....

Q)

..0 Q)

s-

co

en c o

+-'

0..

o

0) c

a ..I ..I

z o Ia.

::E

(j) Q)

.-

U

+J

a. ::::J en sC .s:

o c co ..c

"'C Q)

0> CO

-0. -a

c co co a.

I

~

a.

-

..I

a.

KI W U)

o > w

m w o

CJ) CD

co en "'C

(\") C <0 co (V)

•

DEBEVOISE

PLIMPTON

LLP

The Debevoise Bankruptcy and Restructuring Team

The U.S.

Steven R~ Gross

Partner

+1 2129096586

+1 917 691 4620 (cell) srgross@debevoise.com

Richard F. Hahn

Europe

Partner

+1 2129096235

+1 646472 9653 (cell) rfhahn@debevoise.com

Katherine Ashton

Colin Bogie

Partner, London +44 2077869040

+44 77 1109 9032 (cell) kashton@debevoise.com

Partner, London +44 207786 9060

+44 79 7980 0119 (cell) cwbogie@de:bevoise.com

George E.B. Maguire Michael E. W.i.1es

Partner Partner

+1 2129096072 +1 2129096653

+1 9175284522 (home) +1 646 775 5458 (cell)

gebmaguke@debevoise.cbm mewiles@debevoise.com

My Chi To Joan M. Stout

Partner Counsel

+1 2129097425 +1 2129096357

+1 917 667 5913 (cell) jmstout@debevoise .. com

mcto®:debevoise .cern

Peter Hockless

Partner, London +44 20 7786 9180

+44 77 3606 4898 (cell) phocklesesdebevoise.com

Antoine d'Ornano

International Counsel, Paris +331 4073 1245 +336132371 32 (cell) adornano@debevoise.com

February 2009

Who WeAre

Debevoise frequently plays a leading ro'le in high-profile bankruptcy and restructuring matters. From our representation of Chrysler Corporation and Chrysler Financial Corporation in the 1980s, through our recent representation of Delta Air Lines, we have conslstentty provided clients with practical and effective legal advice. Today, our lawyers advise cliMls oil all aspects of bankruptcy law, and we regularfy represent debtors, creditors, coriirolling shareholders and Investors In out-of-court reslrucluring.S, pre-packaged and pre-negotiated ban k ru ptcies andl C h a pter 11 cas es.

Our approach 10 bankruptcy and restructuring brings to bear the significant expertenoe and diverse resources of a major. lnternatlonel law firm, including subsiantive knowiEidge In corporate finance, mergers and acquisitions; employee benefits, real estate intellectual property, tax, capital markets and litigation. As an international firm, we handle restructuri'ngs in multiple jurisdictions and frequently confront cross-border issues. Our bankruptcy.team regularly wOrks with clients 10 create innovative solutions to restructuring problems, Some key highlightsJndude our representations of:

• American Airlines and Delta Air Line.s, as special aircraft financing counsel, In their highly comp:lex out-of-court restructurings, and Delta Air Lines as special aircraft counsel in ils Chapter 11 pro,teeding and ongoing aircraft financing claims litigation.

• Oaktree Capital Management and Franklin Mutua.1 in connection with the '$9.2 billion restructuring of Eurotunnel debt.

• \I'v1leeling-Pi,ttsburgh Steel Corporation, one of the few steel companies to reorganize successfully on a stand-alone basis, in its Chapter 11 case.

• Globe comuracacoes E Participa~es, the largest Brazilian media conglomerate and one of the world's leading media groups, in a restructuring of international bond and international and Bra;zilian bank debt.

Contacts:

NeY( York

Steven R. Gross

+1 212 909 6586 srgross@debevoise.com

My Chi To

+1 2129097425 mcto@debevciise.com

London

Katherine Ashton

+44 20 7786 9040 kashton@debevoise.com

Richard F. Hahn

+1 212 9096235 rlhahn@debevoise.com

Michael E. Wiles +12129096653 mewiles@debevoise.com

Colin Bogie

+44 20 7786 9060 cwbogie@debevoise.com

George E.B. Maguire

+1 212 909 6072 gebmagui@debevoise.com

Joseph p, Moodhe

+1 212909 6241 jpmcibdhe@debewoise.com

Peter Hockless

+44 20 77869180 phockles@debevoise,com

www.debevoise.com

What Others Say About Us

[Debevoise] represents a

sizable gmup,of debtors, creditors, controlling shareholders and investors, as well as' in suran ce companies. its la,wyers axe adept at handling out-of-court restrucnirings, prepackaged and p1:enegotiatcd bankruptcies and Chapter 11 proceedings.

{'_.HAMBtillS USA, 2008

This prominent group scores consis ten tly highly for its representation .of creditors, debtors 'and other institutional investors in bankruptcy and restructuring. Its "truly unique thinking" sets it apart, as well as irs "'abiliry to translate legal knowledge into outstanding results,"

Steven Gross is a "highly experienced bankruptcy lawyer,"

ruchasd Hahn is

"kn ow] edgeable, even -keeled and highly responsive."

Michael Wiles is,"eJfici(.'lH and one of the recognized experts in- tlre field."

OW;{BJ;RS USA, 2007

Ranked as a leading fum for Corporate Restructuring

LEGAL 500 US, 2007

Ranked as a leading finn for InsolvencySz Restructuring

IFLR 1000, 2008

Recommended for Restructuring and Ins 01 v ency P ractice

PLC WHICH LAI):!YT':.R?2007

Ranked among the top five law firms on the A-List for six consecutive years.

THE AMERICAN LAWYER

February 2009 ...

DEBEVOISE

'PL.IMPTON

Selected Recent Representations

In the currentflnanclal crisis, Debevoise is representrng a broad range of cnems with, claims against and interests lndlefressed companies. We are currently advising private, equity sponsorsln restruclurings of non-puotlc portfolio companies; real esla(e-focusedfunds In connection With their investments in distressed real estate assets; and ellents.ln various industries WItli respect to exposures-to Lehman Brothers, Washington Mutual and other-financial companies in di.stress.

The firm's full-service .capabilities and international presence - with offices throughout Europe and Asia - enables our Bankruptcy and Restructuring Group to provide comprehensiVe services in mul!iplejurispictlons.

• Trustees tlf the 1983 Sea Containers Pension Scheme, the largest creditor ofSe.a Containers Urnited in its Chapter n bankruptcy proceedings.

• Justice Gary S. Stein, as trustee and conservator of the TropiGana Atlantic City, in connecuon with the Chapter 1'1 bankruptcy proceedings of Tropicar:18 i=,ntertainmeril LtC and the sale of the Atlantic City casino.

• Pappas Teiecastinq in its pre-Chapter t tattempted restructuring.

• Pegas1Js.communications Corporation In the bankruptcy onts subsidiary, Pegasus Satellite Communications,

• PilioWlex Corporation in connection with rts Chapter 11 proceeding.

• Former directors and officers of RSL Gommwiicatibrlsand related ccrnpanles ln defense of actions brought by the debtor in possession and creditor's committee, obtaining dismissal of claims seeking $1.8 'billion for breaches of fiduciary duty and censtructlve.traud.

• Creditors of US.Gen New England holding more than $400 million in leveraged-lease claims in the USGen New England: Chapter 11 case.

• Verizon Communications ln the Chapter 11 sale of Genuity.

• Bruckmann Rosser and Sherrilll in an action Draught against them and their LBO fund in Mississippi state court by WeUS: Farg.Q as the bankruptcy trustee for Ji1ney Jungle Stores.

• Creditors of Parmala! Dairy and Bakery holding $300 million of notes.

• The Official Cornrnittee of UnseciJredCreditor.s of Aurora Foods ihits pre-negotiated Chapter 11 case.

• Creditors of Grown Pacific Limited Partnership holding $400 mill.ion of notes in Crown Pacific's Chapter 11 proceeding.

•• Net·SerJi90s de:Coml.lniGa~o .• latin America's.largest cable television company. In Its restructurtoq, '[educing debt from $420 million to less' than $240 rnnllon.

'LLP

Representative Clients

Ameticau Airlin.es Clayton.Dubilier & Rice Delta Air Li,nes

Globo Comuuica~/jes E Participacoes

Houlihan Lokey Howard & Zukin

John Hancock Life II).S~ce

Kelso & CO.II\'PII,IlY

Miller Buddire & ce, LLC Oakrree Capital

Manageri1~t

Prudential Insurance Company of America

Rothschild Inc. Teachers insurance. and Annuity Association of Aroerica

Publications

Collier Business Workout Gulile

Who We Are

Our senior bankruptcylitigators have worked b.oth a.s bankruptcy lawyers and as general commercial trial lawyers. They bring extensive trial experience and an in-depth knowletlge of bankruptcy law to the handling of complex bankruptcy disputes.

In recent years, vie have handled claims litigalion as weJI as disputes relating to plan confirmation, debtor-in-possession financing, contract assumption, professlonal retenfion and compensation, preference and fraudulent conveyance claims, and other issues. We have also handled litigation relating to involuntary Chapler 11 filings, alleged breaches of fiduciary duty by direQ!ors and offiCers of d.istressed compantee.ano lender liability claims. Our litigalors WOrk closely With corporate restructertnq lawyers on these and other aspects of major debt restructurings.

Our Liligation Department also has a wide range af experience in seeurities law,. mass tort claims" white.-collar criminal investigations, employment disputes, erwironmental.law and other commercial disputes. Our bankruptcy teams regularty call orr these lawyers fpr assistance In connection with particular bankruptcy and restructuring issues.

Contacts:

MlchaeTE. Wiles

+1 2129096653 mewiles@debevoise.com

Richard F. Hahn

+1 2129096235 rfhahn@debevoise.com

George. E.B. Maguire +1212·9096072 gebmagui@debevoi'se.oom

www.debevoise.com

What Others Say About Us

Ranked as a leading New York firm for General Commercial Litigation and for Bankruptcy and Restructuring

* .. :+;;;;

Debevoise lawyers are praised as "thoroug;'. a~ds~ with a1l. U1Idetft.andiIJg.tif whar needsto be dime.;'

Clients note Richard Hahn's "~alm tempmnent in tl;e middle of a aisis miJarIJ he is groat to hiJlIe Q1I YIJur team as be ktpr uveryOTlll baltmad."

Michael E.WUes is commended for representing his -clien rs' in rerests effectively: "He J not someonr who nece!!arijywants to be fik~d b thq opposition, but he ~ absolNtefJ mper:tfo! and po/i,hed in ftont if acourt"

CHAMBERS USA,200B

Ranked among the top five law firms on the A-List for six consecurive years.

THE AMERICAN LAWYER

February 2009 ..

[)'EBEVO IS E

'£" c.x

P'LIMPTON

Selected Representations

• Deita Air Lines as special airorafteounselin its. Chapter t tcase in New YorK litigaUl1gissues relating to Seclion 1110 of the Bankruptcy Code, lease rejections and related air{;;raft motions,

• Pillowtex Cor:poration" a rna nufacturer of home textile goods, in ilS Chapter 11 case in De'laware including the:

- Successful (rial in May 2005 of recei\!ables cJ,aimsagainst Mervyn's,a CaHfomia-ba~ed retail chain, and defense of damage claims asserted by Mervyn's as a result of Pillowtex's bankruptcy and

- Trial. {and subsequent settlement) of easement claims .asserted against corporate headq uarters.

• Indenture trustee and "Bea.r SWamp" certificate holders in a June 2004 trlal and a later settlement of claims relating to the characterization ,01 a leveraged lease transaction in the Cilapier t tcase of USGeil' New England in ihe BanKruptcy Court ih Maryland.

• Wheeling-PittSburgh Steel Corporation,the nation's ninth·iargest inteqrafedsteelcempany, and a-number of its affiliates in Chapter 11 cases flied in Youngstown, Ohio_Recent litigation work has included a successful trial in April 2005 of declaratory judgrileritd'aims relatlngto interpretation of a Coal Supply Agreement.

• Globo Comunioag6es ePanicipa¢es .. a Brazilian media company, in obtaining dismissal of an involUntary Chapter 11 petition in tile Southern District of New York,

• Former directors and officers of RSL Communications and related companies in defense of actions brought by the debtor in possession and creoltor'scernrrilttee in the US District Court for the seumern District of New York Bankruptcy Court, obtaining dismissal 01 claims seeking $1.8 billion for breaches of fiduciary duty and-constructive fraud_

• Owens Coming and Fibreboard Corporation and their affiliates, as special counsel, in connection wIth their asbestos liabiHties and other issues in Chapter 11 cases in Delaware.

• Bruckmann Rosser and SherriUinan action brought against them and their LBO fund in Mississippi state court by Wells Fargo as the bankruptcy trustee for Jitney Jungle Stores, seeking recovery of $1.2 bil.lionin unrecovered creditor losses based en alleged breaches of fiduciary duty in weakening thecompany to the point of failure through: an overleveraged lBO.

• Reliance Group Holdings and Reliance Financial Services Oorporation .. lheholding companies lor Reli_ance Insurance Company, as counsel. in Chapter ,11 cases flied in the US District Court for Ihe Southern District 01 NeW York,

• John Hancock life Insurance Company, IDS, The Equiiable Companies, Prini::ipal Muluallife lnsurance Company, Teachers Insurance. and Annuity Association, and many other creditors in a number of Chapter 11 cases and workouts.

LLP

Representative Clients

A:w:o(a Foods

Brockmann Rosser and ,sherrill

Delta, Air Lines

Equitable Insurance

Fibreboard

Globopar

IDS

John Hancock

Owens Corning

Pillowtex

Principal Mutual Life

Prudential

Reliance

RSL

Teachers Ill$urance and Annuity

Association .

Verizon

Wheeling- PittsbueghSteel XL Capital Assurance

DEBEVOISE 0. PLIMPTON LLP

RICHARD F. HAHN

PARTNER

Richard Hahn is Co-Chair of the fum's Bankruptcy & Restructuring Group. He regularly represents debtors, creditors and other parties in workouts, prepackaged bankruptcies and Chapter 11 proceedings, including the representation of Justice Gary Stein as the trustee and conservator of the Tropicana Atlantic City and the representation of Delta-Air Lines, Inc. as special aircraft counsel in its Chapter 11 proceeding. Chambers USA (2008) recognized him as a leading lawyer in his field; with clients noting that "his calm temperament in the middle of a crisis means he is .great to have on your team as he keeps everyone balanced. ,; Mr. Hahn is also recognized as a leading lawyer in Legal500 U5 (2008).

Mr. Hahn is co-author ofColl,~r Bu.dn'm Workotit Guide (Matthew Bender, 2002), and between 1992 and 1995, was a member of the Association of the Bar of the City of New York's Committee on Bankruptcy and Corporate Reorganization. Mr. Hahn is currently a memb-er of the American Bar Association and the American Bankruptcy Institute. Mr. Hahn is a contributing author of The Private Equi!y Primer: The Best of the Debeoaise & Plimpton Prioat« Equi!;Y Report and the Debeooise & Plimpton Private Equi!J Report.

Mr. Hahn joined Debevoise in 1984 and became a partner in 1991, He received both an A.B. in 1978 and aa M.A in 1980 from Harvard University, and his J.D. from Columbia University School of Law in 1983,. where he was Managing Editor of me Columbia Law ReJ'iew. From 1983 to 1984, Mr. Hahn served as a Law Clerk to the Honorable William A. Norris, US Court of Appeals for the Ninth Circuit.

Mr. Hahn's other: representations include:

• Pillowtex Corporation in its Chapter 11 proceeding.

• Wheeling Pittsburgh Steel Corporation in its Chapter 11 reorganization.

• Verizon in the Chapter 11 sale of GenUity.

New York • Washington, D.C. • London • Paris • Frankfurt • Moscow • Hong kong • Shanghai

• Pegasus Communications Corporation in the Chapter 11 sale of Pegasus Satellite Communications.

• AMR Corporation and American Alrlihes in their consensual out-of-court restructuring program with more than 100 aircraft financing parties.

Mr. Hahn CaO bereached by telephone in our New York office at +1 2129096235 and bye-mail at rfhahil@debevoise..com.

2

DEBEVOISE s PLIMPTON LLP

PARl'NER

MY CHI TO

My Chi To isa partner at Debevoise and a member of the fum's Bankruptcy & Restructuring Group. She has experience representing debtors, creditors and investors in complex restructurings, bankruptcies and acquisitions of troubled companies. Ms. To advises a wide range of clients in connection with second-lien, mezzanine and real estate financings and restructurings,

Ms. To joined the finn in 1998 and became a partner in 2005. She-received her LLL. and LL.B. from the University of Ottawa in 1994 and 1995, respectively. From 1995 to 1996, Ms. To served as a Law Clerk to the Honorable Claire L'Heureux-Dube, Supreme Court of Canada. In 1998, she received an M.Phil. in Politics from the University of Oxford, where she was a Rhodes Scholar.

Ms. To is bilingual in French and English.

Ms. To is a Fellow of the American College of Investment Counsel, a member of the Association of the Bar of the City of N ew York, and a member of the American Bar Assocjation-Section of Business Law, where .she is Vice-Chair of the Sub-Committee on Partnerships and Limited Liability Entities in Bankruptcy. She is also a member of the firm's Diversity Committee and a Board member of the Asian American Law Fund of New York, Inc.

Ms. To has written articles on manybankruptcy-related topics. Her publications include:

"Anticipating The Downturn," M~ers & Acquisitions (2008), "Distressed Deals: Section 363 M&A:

How to Play the Game," The Dlral (2007), "Second-Lien Financings in Bankruptcy: Expectations vs. Reality," The ReviewoJBanking & Financial SlJroices (2007), ''Debt Recharacterization Looks Back on a Good Year," American BanktuptfY Ifl.rtih{1e journal (2007), ''Will Second-Lien Lenders Get Professional Fees Paid in Chapter t i>," Dow Jones Daify Bankrupto &viewSmall-Cap (2006), "\.'Uhat Borrowers (and Sponsors) Should Know About Second-Lien Financings in Bankruptcy," Debevoise & Plimpton Private Equity Rtport (2006) and "Underwriters Merit Inclusion in Chapter 11 Cases," Intemation{li Fi11ancial Low Review (2004). Ms. To is also a major contributor to the CfJlJier Business l.f7orkout Guide (Matthew Bender, 2005).

New York • Washingron, D.C. • london. Paris • Frankfurr • Moscow • Hong Kong • Shanghai

Ms. To also frequently speaks en issues relating to second-lien fmancings as well as other bankruptcy-related topics. Her speaking engagements include: "Recent Issues and Trends in Real Estate Restructurio~:' 11 to Annual American Bankrupiry Inititute's New YOrk Ci(y ClNiftren¢e (2009), ''Siblit;tg Riyru,gi. Intra- and Inter-Creditor Disputes," 82"; Annual National Conftrence.,y'Bankruptry Ji/tkit(2008),"Les'sbns from Recent Case Law: Calpine," ACIC Spring Forum (2008), "Section 363 $a1es.in the Next Downturn," The Dirtrem4 Debt Conjerenct (2008), "Impact of Second Liens on Wod~outs and Bankruptcies,' American Cmiference Itlitittlte J FOf:Umon Cl)ftJmerualLlJdtiS (2008), «C~pital1zing; 0C!- New Opportunities in Second Lien Lending and MaximizmgyoUI Returns," 6'h Anf!u!i! Diitfe.iied Inviaing rO'i7iw (2008), "2nd Lien, J unior & Other Junior Secured Debt," FiilcindQ.I F,;.eitmctHring t01 & 1'02 (2007), "Intercreditor Issues in Restructurings of First-Lien/Second-Lien Debt," 91h Ann"I1LAqtUjii;tm .Bankruptg Institutf/'s New YO'tk City Confttence (2007),"Interqeditor Agreements, Are They Written With Disappearing Ink?," The Secu!1!d Debt C(Jtljmn~ C2,007), "Substantive Consolidation Update: Is Doctrine Alive and Well After Owens CQrning?," 8,iJAflf1yal Ammcan Bankrnptry Institute J New York City Conference (2006), "Hidden Perils In. Second-Lien Loans:

.".. .

\Vhat Investors, Buyout Firms Need To Know," DOll! J())7U Web/nar (2006), "Distressed Debt and

In tercreditor Agreements in First Lien/Second Lien Financings,." Financial Researnb Assodatd Dist'!llssed De-bl S1{mmt"t(2006) and "Second Lien Finsncings," AGe Anniial Meeting arid Et/1il'(1tiofi Conference (2006).

Ms. To's recent represeatarsons.include:

• First-lien agent in connection with an out-of-court restructuring of the first- and second-lien facilicie.sofa privately-held international manufacturing company,

• Private placement noteholders in connection with the refmancing of a.prioately-held company in the food industry.

• Second-lien lenders in connection with an out-of-court restructuring of a privately-held technology company.

Ms. To can be reached bytelephone.in OUI New York office at +1 2129097425 and by e-mail at mdo@debev_oise;com.

2

DEBEVOISE & PLIMPTON LLP

February 2009

INTRODUCTION TO BANKRUPTCY LAW

I. OBJECTIVES OF THE BANKRUPTCY CODE.

American bankruptcy laws have two clear policy goals: rehabilitation where possible of the financially troubled debtor and equality of distribution among its creditors and interest holders.

A. REHABILITATION OF tHE DEBTOR.

1. Rehabilitation ofllie debtor is a fundamental goal of the Bankruptcy Code.

Unlike the insolvency laws of many countries, which contemplate "the expeditious liquidation of insolvent businesses, the insolvency laws of the United States have developed around the concepts of "reorganization'tand "rehabilitation", Chapter 11 of the Bankruptcy Code embodies these concepts and reflects a basic federal policy that a troubled business should be preserved as a going concern where rehabilitation maximizes ultimate recoveries for creditors and interest holders.

B. EQUALITY OF DISTRIBUTION AMONGCREDITORSAND INTEREST HOLDERS.

1. Equality of distribution of the assets of the estate is thes_econd

fundamental goal of the Bankruptcy Code. An equally important goal of American bankruptcy law is equality of distribution among creditors and interest holders ofequal rank and acoro llary equal sharing of losses. This obj ecti ve is embodied in many of the Code's provisions, including the sections on automatic stay, avoidanceactions, ranking of claims and interests and requirements for a plan of reorganization. This policy seeks to forestall "a race to the courthouse" by creditors seeking to enhance their interests at the expense.of other creditors and interest holders.

II. FILING FOR BANKRUPTCY.

A troubled company may attempt to negotiate a compromise of its obligations outside of court, In many cases, the lesser expense and greater speed of an out-of-court .restrucruring will make, such aCOUfS"e preferable. However, an out-of-court workoutis not always a realistic option, and cash flow or other considerations may leave the troubled company with little choice but to file for protection under the bankruptcy laws.

New York • WashingTOn,D.C. • London • Paris • Frmkfurt • Moscow • HongKang • Sha.nghai

DEBEVOISE & PLIMPTON LLP

A. ELIGIBILITY FOR BANKRUPTCY PROTECTION.

1. Not all entities are eligible for bankruptcy protection. Sections 109 and

303(a) of the Code limit the availability of Bankruptcy Code protection. A debtor must reside or have a domicile, place of business or property in the United States. Additionally, such entities as stockbrokers, commodity brokers, railroads, municipalities and. banking and insurance institutions cannot be debtors under chapter 11. While there are special provisions in the Code for bankruptcy proceedings with respect to stockbrokers, commodity brokers, railroads and municipalities, insolvency proceedings with respect to banking and insurance institutions are wholly outside of the federal bankruptcy scheme.

B. CHAPTER 11 VS. CHAPTER 7.

1. The goal of chapter 11 is a reorganization of the troub1ed company. If the

goal of the bankruptcy filing is rehabilitation, the debtor should file for protection under chapter 11. Chapter 11 gives the debtor time and certain protections to restructure its debt and reorganize its affairs. No other provision of the Code provides for the reorganization of corporate debtors.

2. The goal of chapter 7 is an orderly liquidation of the debtor. If the goal of

the bankruptcy filing is an orderly liquidation, a petition may be filed under chapter 7. In a chapter 7 liquidation, all property of the debtor (except exempt property in the case of individual debtors) becomes property of the estate which is then liquidated by a courtappointed trustee. Generally, the trustee abandons any property in which the debtor has no equity and sells the remaining property. If the property is subject to a lien, the prooeeds are first applied to the claims oflienholders, and the balance of the proceeds, if any, goes into the estate. All property of the estate is converted into cash, which is first used to pay administrativeexpenses, and the remainder is distributed to the holders of allowed pre-petition claims..

3. The Code allows a debtor to liQuidate in chapter 11. A debtor can also file

a liquidating plan within a chapter 11 proceeding. This course of action.has certain advantages over a chapter 7 liquidation. Generally, no trustee is appointed ina chapter 11, and liquidation is carried out by existing management. Such management is often more familiar with the peculiarities of both the debtor's business and the particular industry and may be able to obtain a better price for its assets. In addition, because chapter 11 debtors are permitted to continue operating their businesses indefinitely while liquidating, the debtor's going concern value can be preserved and asset values may be further maximized.

C. VOLUNTARY AND INVOLUNTARY FILINGS.

1. There are different ways Qfcommencing a bankruptcy case. A case under

the Code is commenced by the filing of a petition with the clerk of the bankruptcy court. A voluntary petition is filed by the debtor. An involuntary petition can be filed by three or more creditors holding claims that are neither contingent nor subject to a bona fide

Page 2

www.debevoise.com

DEBEVOISE 0. PLIMPTON LLP

dispute ifthe aggregate amount of such claims is at least $"13.,475 in excess of the value of any property of the debtor securing such claims, The bankruptcy court is required to enter an order for relief in an involuntary case if the debtor is generally not paying its debts as they become due or if within 120 days before the filing of the petition a custodian was appointed or took possession. The precise scope.and meaning of the term "generally not paying" are left to the courts for interpretation and determination, but generally, it means that the debtor either regularly misses a significant number of payments to creditors or regularly misses payments that are significant in amount in. relation to the size of the debtor's operations. In a voluntary case, there is no requirement that the debtor be insolvent.

2. There are several reasons why creditors may decide to put a company into

bankruptcy involuntarily. Unsecured creditors may decide to file an. involuntary petition against a debtor for a variety of reasons, ~.g., to control the choke of venue or to prevent the passing of time that would cut off preference or fraudulent conveyance causes of action. In addition, the threat of an involuntary filing is often used for negotiating

leverage. .

However, creditors must be aware that commencementof an involuntary case is not a matterto be taken lightly; If the court dismisses an involuntary petition, as filed in bad faith-or for similar reasons, the petitioning creditors may be held liable for the debtor's damages and costs OF even for punitive damages.

D. VENUE.

1. A debtor is given several choices of venue. A petition may be filed in the

district where the debtor is domiciled, has its residence or principal place of business, or where its principal assets are located. Venue is also proper in a, district where_ a bankruptcy proceeding involving the debtor's affiliate is pending. Since venue may be proper in several districts, the debtor and its counsel should evaluate the options in light of a number ofpractical considerations.

a. Physical location should be evaluated. The debtor should consider

the proximity of the various districts to its principal place of operations, its attorneys and its major creditors. Because a bankruptcy case can involve frequent court appearances by the debtor's personnel and management, the debtor will decrease its administrative costs and lessen the number of interruptions in its operations if it files.in a nearby district. In addition, a bankruptcy court in the debtor's home district may be more sympathetic to a business that provides employment to the area's citizens.

b. The debtor should consider local rules. practice and substantive

law. The relevant substantive law" procedural rules' and practices of each of the potential venues should also be considered.

c. The district's orientation, experience and docket status are relevant

considerations. A given district's "pro-debtor" or "pro-creditor" orientation is relevant to the venue decision. More important, the courts' experience and familiarity with chapter

Page 3

www.debevoise.com

DEBEVOISE 0. PLIMPTON LLP

11 cases of similar nature, size and complexity should be considered. Attentionshould also be paid to the status of the relevant courts' dockets.

2. A bankruptcy case may be transferred to another district in the interest of

justice and for the convenience of the parties. It is not enough to demonstrate that venue is inconvenient, the movant must show by a preponderance of the evidence that the overall equities of the case clearly indicate that a transfer is warranted and is in the interest of the majority of the parties involved. Absent compelling reasons, the debtor's choice of venue willbe respected by most courts.

Ill. THE PLAYERS.

Each bankruptcy proceeding involves a more or less uniform cast of characters, each with its particular role in the bankruptcy process.

A. DEBTOR IN POSSESSION OR TRUSTEE.

1. Debtor's continuation in the management of its business is the rule. In a

chapter 11 reorganization, the debtor usually remains in possession of the estate and is automatically authorized to operate its. business, eubject to the restrictions imposed by the Code and the bankruptcy court, In chapter 11, the debtor has essentially the same rights and responsibilities as a trustee under the Code. Courts are generally reluctant to interfere with the debtor in possession's business judgment and practices. The management of the debtor owes a fiduciary duty to the debtor's creditors as well as its shareholders.

2. In extraordinary cases a trustee may be appointed in chapter 11.

Appointment of a chapter 11 trustee is an extraordinary remedy. Although any party in interest may request suchappointment, and even though the Code provides for such appointment if it is in the interest of creditors and other parties, in reality the court will generally only honor such request on a showing of fraud, dishonesty, gross mismanagement or incompetence by the debtor's management,

B. STATUTORY COMMITTEES.

1. A creditors' committe.e is appointed to represent the. interests of the

unsecured creditors. Under Section 11 02 of the Code, the United States trustee appoints a committee of unsecured creditors. The Code creates a presumption that the committee will ordinarily consist of the seven largest unsecuredcreditors willing to serve. However, the United States trustee is permitted wide discretion in determining the size and composition of the committee. On request of a partyin interest, the bankruptcy court may order the United States' trustee to change the membership of a committee if the court determines that the change is necessary to ensure adequate representation of unsecured creditors.

2. Multiple committees are sometimes neoessaryto ensure adequate

representation of creditors and interest holders. On request, the court may authorize

Page 4

www.debevoise.com

DEBEVOISE 0. PLIMPTON LLP

appointment of additional committees of creditors or equity security holders to ensure adequate representation of creditors or equity holders with differing interests.

3. The official committees are charged with statutory duties. The creditors'

committee consults With the debtor, investigates the debtor and participates in the negotiation and formulation of a plan of reorganization. The committee serves as a watchdog with respect to the debtor's compliance with various provisions of the Code. It is also required to share information With the constituents it represents.

Official committees are authorized to employ counsel and other professionals to assist them in fulfilling their statutory duties. The expense of such assistance, with the court's approval, is funded through an adminlstrative claim against the debtor's estate. Consequently, the committee will usually have the resources to pursue vigorously a

disagreement with the debtor or a cause of action on the estate's behalf. '

The creditors serving on the official committee owe a fiduciary duty to all the creditors such committee represents. Members of the committee are also charged with a duty against using-their position to further their ownself interest at the expense of those they represent. Committee members necessarily receive material nonpublic information about the debtor. In the past, this resulted in a prohibition against the committee members' trading in the debtor's securities. More recently, however, such prohibition has been modified in large chapter 11 cases to. all ow committee members to trade as long as proper information wall procedures are instituted by them.

C. BANKRUPTCY COURT.

1. The bankruptcy process is closely supervised by the court. The United

States district courts have original and exclusive jurisdiction over all cases under the Code and over all of the property; wherever located, of the debtor and the estate. The district courts have-original, but not exclusive, jurisdiction over civil proceedings arising under the Code, or arising in or related to cases under the Code. Bankruptcy judges are appointed within each district to serve as judicial officers of the district court and constitute a division of the district court known as the bankruptcy court. Congress

. intended that district courts would refer cases and proceedings arising under the Code to the bankruptcy courts, and the district courts have done so by local rules OT general orders. Bankruptcyjudges are not supposed to he involvedin the day-to-day administration of the bankruptcy cases.

D. OTHER PLAYERS.

1. United States trustee. The United States trustee performs supervisory and

administrative functions formerly-performed by bankruptcy judges. A United States trustee has the status of a "party in interest". He may appear and be heard on any issue in any case, but may not file a plan of reorganization. A United States trustee's duties include monitoring and commenting upon CD applications to retain professionals;

@ applications for compensation and reimbursement of professionals; and (lli)chapter 11 plans and disclosure statements. In addition, the United States trustee must determine

PageS

www.debevoise.com

DEBEVOISE &. PLIMPTON LLP

how many .staratory committees to appointandwho to appoint to suchcommittees, as well as monitor cemmirteesactivities. The United Statestrustee must also generally monitor the progress of a chapter 11 case to prevent undue delay and notify the United States attorney in respect of matters that may constitute-federal crimes.

2. Examiner. If the court does not appoint a chapter 11 trustee, upon request

of a party In interest and if'it determines that such appointment is: in the interest of creditors, equity holders or other interests of the estate, thecourt may order an appointment of an examiner to investigate the. affairs of the debtor and its current and former management. If the debtor's fixed, liquidated, unsecured debts, other than debts for goods, services or taxes, or those owing to an insider, exceed $5,000,000, such appointment is mandated by the Code if a party in interest 'so requests. The-examiner does not displace the debtor's management

IV. OPERATING IN" CHAPTER 11 ..

The critical path ofa chapter 11 is the following: (D stabilization of operations; Gil development of a business plan and reconstruction ofthe asset side ofthe balance sheet and (iii) development and implementation of a plan of reorganization and recapitalization of the debtor.

The Bankruptcy Code contains a variety of provisions designed to facilitate the debtor's operations.

A.AUTOMATIC STAY.

1. Thealltomatic stay permits thedebtor to operate free from creditor

interference. Section 362( a) of the Code provides fot an -imntediate and automatic injunction against substantially all acts and proceedings against the debtor and its property, including enforcement of a judgment, arty act to obtain possession of property of the estate; any actto create, perfect or enforce a lien or any act to recover a claim. This sweeping injunction protects a debtor from having its property eroded and relieves the debtor of the time and expense involved in defending lawsuits and other recovery actions.

Certain acts are not subject to the automatic stay, most notably, the commencement or continuation of a criminal action against the debtor or proceeding ofa governmental unit to enforce its police or regulatory powers. In addition, the right to terminate, certain types of financial contracts is not subject. to the automatic stay.

2. The automatic stay supports the P0liCY of equality of distribution. In cases

commenced under both chapters 7 and 11 of the Code, the automatic stay prevents individual' creditors from "grabbing assets" or obtaining payment for their claims to the detriment of other creditors. In a liquidation under chapter 7 the stay permitsan orderly marshalling of assets and enables a distribution to creditors .in conformity with the notion of equal treatment for creditors of equal rank. The automatic stay-also serves as a key component of the rehabilitation process. The importance ofthis provision is underscored

Page 6

www . debevoise.eom

DEBEVOISE s PLIMPTON LLP

by the remedies available for violation of the stay. Violations of the automatic stay may result in sanctions of contempt, payment of thedebtor'sactnal damages, including attorney fees, and punitive damages.

3. A party in interest may obtain relief from the automatic stay. Although

the automatic stay is broad in scope, the Code recognizes, with due regard to the constitutional concern for property rights, that in certain circumstances, the debtor's right is not absolute. Section 362{d) governsthe terminationofthe stay upon request of a party in interest Grounds for relief from the automatic stay include (~ cause, including lack of adequate protection or the need to liquidate a disputed claim, or(Q) with respect to an act against property, the lack of the debtor's equity'in such property and a showing

that such property is not necessary for an effective reorganization. '

4. Adequate protection is an important concept tinder the Code. Lack of

adequate protection of a party's interest.in property is a justification for the court in oertain circumstances to lift application oftbe automatic stay.

"Adequate protection", which is define-d in Section 361 ,refers to protection against the decrease in value of the interestof an entity other than the debtor in the property of the estate. Section 361 specifies three methods of providing adequate protection. To the extent .that the automatic stay (or the use, sale Or leaseof property or grant of a lien to secure post-petition extension of credit discussed below) results in a decrease in the value ofan entity's interest in such property, adequate protection may be provided by:

(a) _ requiring the debtor to make cash payments to such entity to the

extent of such decrease;

(b) providing to such entity an additional or replacement lien; or

(c) providing other relief that would result in the realization by such

entity of the indubitable equivalent ofsuch entity's interest in 'such property.

A number of courts have 'concluded that, Where the-debtor has an equity in the property (that is the value of the property exceeds the interest of'thecreditorj.fhere may be an "equity cushion" for the creditor that will adequately protect it without more, Furthermore; a creditor's interest in property protected by the Code does not include the mere right to immediate foreclosure and, therefore; an underseeuredereditor is not entitled to interest on its claim in order to assure adequate protection.

5. The automa.ticstay is limited in scope to the debtor. Officers, directors,

affiliates, guarantors, co-debtors or co-defendants are not protected by the automatic stay. There is authority, however, under appropriate circumstances.rto protect these entities under the general equitable powers of the bankruptcy court if such protection is sufficiently related and necessary to the success of the debtor's reorganization,

Page?

www.debevoise.com

DEBEVOISE 0. PL.IMPTON LLP

3. Other plan provisions mentioned in the Code are merely pennissive. First,

a plan may impair or leave unimpaired any class of secured or unsecured claims. Second, a plan may provide. for the assumption, rejection or assignment of any of the debtor's executory contracts or unexpired leases not previously rejected. Third, a plan may provide for the settlement or adjustment of claims belonging to the debtor or the continuation of any litigation by the debtor or its 'representative. Finally, a plan may provide for the sale of all or substantially all of the estate's assets and the distribution-of the proceeds from such sale among holders of claims or interests. Joint plans are permitted. A new investor or acquirer may be a co-proponent of a plan.

4. The plan must rank all claims and interests. The claims of creditors and

the interests of equity security holders are classified according to rank for purposes of voting and distributions under the plan. Claims or interests may be placed in the same class only if they are "substantially similar" to one another. Although general unsecured creditors are generally put into one class, separate classification is sometimes upheld if it is found to be just and reasonably necessary to effectuate a plan (~.g., for subordinated \ debt, for claims of insiders or unions).

5. A plan of reorganization is submitted for a class vote. Before a vote is

taken, each creditor or interest holder must receive a eepy of the plan or a summary of the plan and a written disclosurestatement approved, after notice and a hearing, by the court as containing adequate infonnation. As defined in the Code, "adequate information" is information of a kind, and in sufficient detail, to enable a hypothetical reasonable

investor typical of holders of claims or interests of the relevant claim to make an informed judgment about the plan.

Then adequate time is given to allcreditors and interest holders entitled to vote on the plan to formulate their vote based on the information contained in the disclosure statement. Individual claimants are bound by the 'Vote of their respective classes.

A class that is not impaired is conclusively presumed to have accepted the plan and its vote is not required. Any class for which no provision is made in the plan is deemed to have rejected the plan. For an impaired class of creditors to accept a plan, a majority in number and two-thirds in amount of allowed claims voting must accept the plan. For a class of impaired interests to accept a plan, two-thirds in amount of allowed interests voting must accept the plan.

B. CONFIRMATION OF A PLAN.

i . After the votes are cast, the court conducts a hearing to deterIDine whether the plan can be confirmed. The. court may confirm a plan only if the requirements of Section 1129(a) are met. The import of the confirmation requirements is that a plan must be feasible and in the best interests of creditors. Any party in interest may object to confirmation.

"Feasibility" is a term of art whioh means that confirmation is not likely to be followed by liquidation or further capital restructuring, unless liquidation or further

Page 18

www.debevoise.com

DEBEVOISE 0. PLIMPTON LLP

reorganization are proposed in the plan, Feasibility requires the court to determine that the reorganizeddebtor's operations can support the new capital structure.

Even though the Code gives a majority of an impaired creditor class the ability to bind a dissenting minority, the Cede does not leave the minority dissenters without protection. This protection is embodied in what is called the ''beat interests of creditors" test. At a minimum, the plan must provide each creditor with the value it would receive in a chapter 7 liquidation. In order to demonstrate that this requirement has been satisfied, a debtor will typically include a liquidation analysis in its plan.

2" A plan may be crammed down ona dissenting class. If an impaired class

of creditors or equity security holders votes against a plan that otherwise meets all of the requirements of Section 1129(a), the court may still confirm the plan, if aIJ of the requirements of the "cramdown" provisions of Section 1129(b) are inet. The court must find that the plan is "fair and equitable" with respect to the dissenting class and that it does not discriminate unfairly, The "fair and equitable" standard means that the dissenting class may insist onits legal priority relative to other classes of creditors and shareholders. This so-called "absolute priority rule" requires that members of the dissenting class receive in full the allowed amounts of their claims. before any class junior to the dissenting class receives any distribution at all.

3. Confirmation discharges the debtor from its liability on pre-petition debt.

The confirmation of a plan discharges the debtor from any debt that arose before the date of confirmation whether or not a proof of claim was filed or deemed filed, whether or not the claim was allowed and whether or not the holder of the claim accepted the plan. The confirmation order substitutes for such pre-petition debt the obligations under the confirmed plan. Discharge provides the debtor with a fresh start.

VII. ANCILLARY AND OTHER CROSS-BORDER CASES.

Newly enacted chapter 15 of the Bankruptcy Code is intended to provide effective mechanisms for dealing with transnational bankruptcies. The statute specifies five objectives: (1) cooperation between the United States courts and parties in interest and the courts and other competent authorities of-foreign countries involved in cross-border insolvency cases; (2) greater legal certainty for trade and investment; (3) fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested entities, including the debtor; (4) protection and maximization of the value of the debtor's assets; and (5) facilitation of the rescue of financially troubled businesses, thereby protecting investment and preserving employment.

Generally, a chapter 15 case is ancillary to a primary proceeding brought in another country, typically the debtor's home country. As an alternative, the debtor or a creditor may commence a:full chapter 7 or chapter 11 case in the United States if the assets in the United States are SUfficiently complex to merit a full-blown domestic bankruptcy case. In addition, under chapter 15 a U.S. court may authorize a trustee Or other entity (including an examiner) to act in a foreign country on behalf of a U.S. bankruptcy estate.

Page 19

www.debevoise.com

DEBEVOISE 5: PLIMPTON LLP

An ancillary case is commenced under chapter 15 by a «foreign representative" filing a petition for recognition of a "foreign proceeding." After notice and a hearing, the court is authorized to issue an order recognizing the foreign proceeding as either a "foreign main proceeding" (a proceeding pending in a country where the debtor's center of main interests, are located) or a "foreign non-main proceeding" (a proceeding pending in a country where the debtor has an establishment, but Rot its center of main interests). Upon the recognition of a foreign-main proceeding, the automatic stay and selected other provisions of the Bankruptcy Code take-effect within the United States. The foreign representative is also authorized to operate the debtor's business in the ordinary course.

Chapter 15 also gives foreign creditors the right to participate in U.S. bankruptcy cases and it prohibits discrimination against foreign creditors (except certain foreign governmentand tax claims, which may be governed by treaty). It also requires noticeto foreign creditors concerning a US. bankruptcy case.

If a full bankruptcy case is initiated by a foreign representative (when there is a foreign main proceeding pending in another country), bankruptcy court jurisdiction is generally limited to the debtor's assets that are located in the United States. The limitation promotes cooperation with the foreign main proceeding by limiting the assets subject to U.S. jurisdiction, so as notto interfere with the foreign main proceeding.

** - ** - **

Page 20

www.debevoise.com

DEBEVOISE 0. PLIMPiON LLP

Selected Articles

Best Planning for the Worst Assuring Insurance Coverage for Private Equity Sponsors and Portfolio Company Directors in Bankruptcy

Fall 2008 Private Equity Report

By: Steven R. Gross, Heidi A. Lawson

London Market AssooationWeighs in on Debt Buy-Backs Summer 2008 Private Equity Report

By: Katherine Ashton, Jason Wilkinson

AnticipatingThe Downturn Winter. 2008 Private Equity Report By: My Chi To

Section 363 Sales: How to Play the Game Summer 2007 Private Equity Report

By: My Chi To,Jasmine Powers

Second-Lien Financings in Bankruptcy: Expectations vs, Reality August-September 2007 - The Review ofIhnking & Financial Services By: My Chi To, Maureen A. Cronin

What Borrowers (and Sponsors) Should Know About Second-Lien Financings in Bankruptcy

Fall 2006 Private Equity Report By: My Chi To, Maureen A. Cronin

'Minimum Contact' Shouldn't Be Enough To Establish Involuntary Jurisdiction August 23,2006 - Daily Bankruptcy Review Small-Cap

By: Michael E. Wiles

New York. W-aShingron, D.C. • London. Paris • Frankfurt • Mosoow. Hong Kong. ShaJ:lghai

Best Planning for the Worst:

Assuring Insurance Coverage for Private Equity Sponsors and Portfolio Company Directors in Bankruptcy

This artide has b.een prepared by endis the copyright of the law firm, Oebe\loise 8. Plimpton LLP. All rights are res.erved. It may m:>t be. reproduced in whole or in part without theii:permission. The artic:leproVide.s siJmmary information only and is hot intended.a.; lega! advice. Readers should seek specifi'c !ega!advice before taking ~ny action with respecf to the matters discussed ther<;!in.

Best Planninq for the Worst:

Assuring Insurance Coverage for Pr ivat e: Equity Sponsors and Portfolio Company Directors in Bankruptcy

Introduction

In the current environment; .. there is little doubr ehat there 'i'IiIl bCD;lQre compaeies entering bankruptcy preceedingsIn thenext yt;ar or twd,including pFi.vate equio/~ portfolio €Otopanies. Insuranoe can he avery valuahleasser;i!) a, bankruptcy,am:ountiD,g ttil millions ofdollars,potenoally protecting the prmteeqllitysporuor,. the pQri:fulio cDmpany;and. the funds managed by thCl PE spbnsor. H:i~riCa.llY; PE SPOIlSOl'S, have dien relied on the b&O' coveriige purchased by their portfolio companies to address thell:

D&O insurance needs, hv~n so,many private_equity sponsors have not accively managed this coverage in ways besr designed to ensure this QOv~- is always available to-it in a bankruptcy scenario. As a result, some sponso~, as described below, have been blocked from-accessing this coverage when it may well be most needed: UpCin Che, bankruptcy of irs ponfolio company;

Recently, it~ become more common for some private equity, sponsofS' (0 protect against this risk by purchasing ~cs: at the sponsor level. to COYer their own. activities and thost: of the funds they manage. While such coverage may well provideadditioual proreerionte a 5pons0r and it$,managed funds, it (QQ, ifnot properly strucrured, can he subject to i,tp,pot:tant limitations on COV~~ in- the even! of the bartkrupt.cy .ofa ponfoliocernpany A$a resu1t,~ponsoFS_are well. advised. in the current environrnen r to review the scope-of their current coverag~ ~;o make sure the;:e are no gaps orconlliccing terms between rhe, insurance coverage' at me porrfoliecompanylevel, on die one hand; and any such insuranceat the fund level, Qn the other hand.

Unf0rnmatdy, many private equitY- firms

take their frIO'( close look.at their own coveril,li;e and the coverage at me portfolio company levelonly once a bankruptcy I~ imminent. In 'some 9iSeS, PEspoosors"fiild that anyc¢verage they have p_ur~as~d-:u eiih.er the ponfblib company levd or fund Iev_cl is not appropri_atety tailored for b~tipteyeXp6sureS. As a result, some private equity Spt)lllSOl'S al'_e findill.g themselves financially eX'I'osed,at it stage, when it-i$ tot> late to Dike r~edi::\:l~on.

Here are some of me questions that' private equity sponsors sh~uld be ~king about insurance when it comes to prbtecri,ng theraselvesand me funds ih.~ manage from jUst such a fare,

4 the Portj-o[i-o Company Director» pUiOJ}it.ef-s ]ilsJ.ittinq PolU:y an Asset of the Ban'ltruptcy Estdu under the Bankruptcy Code?

Pursuant to Section 541 CaW) ofrhe Bankruptcy Code.rassecs !?If adebtors bW:kruprcY estate 'ate subject to die automatic stay. The automatic Stay acts .co preserve the estate arrd prevents disuibumon of esta~e assetswithout bankruptcy court approval. In me insurance ,conteXt, to me extent a policy and me proceeds of apolig.r are determined to 'be assets 0f the estate, me insurer is no rpermi tred to pay defense cesrs, serrlemeats or judgments under the policy. Directors, who most J~~ly cannot !get._indemn,i'licahon from the financially rrouble_d portfolio oompany, could Snd themselves exposed,

For this' reason, the 'first quescien maE a p.n:iro,ce equiW'$pOnSbr shQuid be asking is whether or not me portfolio company directors and offiCers-insurance policy will likely become an asset of me bankruptcy estate. The determination as. to whether a

diFeq~m; and offieeFspolicy'andior die proee:eds belong to me estate is very facr~ specifi:o; and may vary dependi.~g'u.pon the j)I,risd.icib:nan~d clle:potiay lan:gu~e. The o/Pes ofcovera:glt (Sides A, B and:C) I as well as:1:he-terms'ohhe polley are crucial to [he determination. The factcspecific nature of the inquiry res:uJ.tsin some urtce(tainry reg;u-di,ng -how a'bankruptcy-court 'Would decide thes~ issues,

Forc:x:ample,·a polley maybem asset·of mebankr,u,Ptey eseare whlle me proceeds

CONTINUEO ON PAGE 20

1 sid.~.A,p;.@ide,s CQYe1'4g~ for .dl',~,t~ru;nJ4ficm irl cases whe,. -r/1e C~rnpit7J.Y ~a"filir in4t71t'nif1. rh~ 'l"ditJidw/'" (~;K:,b~C'4"-'( the claims '(~t."n.~t

indemn Ijiab./e "nd~, 'applicahk law J. ;'Si(k.A coverage haS no ,...~niiiiil,

'Silk B" Prpvid:b ciiiji't<ig_tf~r"tt;. comp"'?' whl';;' Ii", CQ'VIJ'l1.n;l ini:hm1l;ifi~,$.'lh~-,d;t~cror~.l1.ndjfficro. ~SiPe.. B' c""~g. ,;wiJlJ.kn,s a_;rigrlift C41ii""ttOJ#Ji!??i eX, i#l, (lOO,,f)()lJi'.

side C:'Pi:IWUk", coverag.for.th .• 1:ompany for 1t.~biiiil;itftsmg,l1:ftk _of"C{r-t/k.typ4 ,{clai";'., ,qg4'(ni,r, .tlj~ ~,!>.mp{t'f1i:'ni:cj; <4. ,1JtjrrtJ In:o'fgYt by :5hfWkQl4i~ orn'edittJii uitd4r Tk~N"uri;kslitU/j. sitk -;}t~;;'ag~dw ;"ually'h4S~sign;ficl!nl •

- intmcWi,,,-,,oi;e,g .. $J,fJ.o.f)~odo+, -'

... [T] he first question that a private equity sponsor should be asking is whether or not the portfolio company directors and officers insurance policy will likely become an asset of tile bankruptcy estate.

, "

CO'NTIN'lJm.oN PA~E_ 3'0

~io.g may be mggeI:ed." , , Tl:ietefbre, most \'n,~¢& ms:is! 'ep"an_

I

=p1liOft to the ins'rrrea vs. insUl'eliL '

~lon [0 allow G0v~e forclaiins brought: by a bankruprcy ITUStee. an: ' .~er 1;)1' their r:es_pea;i",e assi:gI;Iees. Careful attention to the wordingof IDi.s '_ e.xreprien is necessary to make sure-all possible claimants are excepted 0$ of tile exclesion. 1£ a _portfolio com.p;my has operations ill various foreign junisdictions,

inasmuch as their insurance protecrion cease's f0I any Wl'ongfdl MtS; orree a bankrupocy filiD:g .. is..m.ade.Obvi0usLy, me insmooslwuld se¢k [Q liave'$,is wording

CONTINU'ED ON PAGE 31

London Market Association

Weighs

•

In on

Debt Buy-Backs

This. article has been prepared by and is the copyright of the law firm, Debevoise & Plimpton LLP .. All rights are reserved. it may not be reproduced in whole or in part without their permission. The artide provides summary information O'nly arid is riot intended as legal advice. Readers ~hoLild seekspetific legal advice befciretaking any acnon with respect to the matters. discussed therein.

Will the Next Downturn

Be That Different?

This article nss been prepared by and is the copyright of the law firm, Debevoise & Plimpton LLP..AII rights are reserved. It may not be reproduced in whole. or in part without their permission.' The article provides summary information only and is not intended as legal advice. Readers should seek specific legal advice before takihg any action with respect to the matters discussed therein.

"

Will the Next Downturn Be That Different?

Default rates and bankruptcy fllings hit historic lows in 2007. Until last summefs. ~redit crunch, me availability-of fm;anang . on very favorable terms.allowed companies faciog;l liquidity problem or a potencial default [0 borrow -their way OUt of trouble. With the lending win9;OW aow all but shucrered, more and :.wore businesses will fi;p,d themselves (orced to reach OUt to their creditors to restructure.

Professionals active ituhe -£i.eJ.q. gener:ally agr-ee mar the nesrwsve.cf resrrucrurings will be-very dif(eren t man the last. A recurrent theme is that workouts and bankruptcies will be mare contennous and more complex-and therefore more costly-e-than in the pasr. Some go even further and argue that a fundamental shift in restructuring ~C$ has quiecly taken place overthe iast few, years, leading certain investors [0 complain that Chapter 11 is no longer about fixing companies.

Restrucrurings ~s'hap~, to a large extent, by the credit cycle that gave rise to them as well as constraints imposed by bankruptcy laws. As both the lending market and the Bankruptcy COde have undergone significan» changes since the lase downturn, iUnafe co predict that these

changes will affect how the restructuring g;une is played. Given. the low numberof eecent large corporare baokmptcies, . however, the impact of these changes has yet to be fully observed.

New Players'

In the old days, when a company.needed covenant relief, it would speak to its bank ag~nt, who would herd the lenders in the syndieiteand, after some negotiazion, deliver the requested amendment or waiv:er. The corapaay knew who its lenders.were and,· in mosreases, they wereprepared t;0 work wim the company [0 address its problems. Things could get trickier if die company also had bond debt. But even in that case, the company could, with the banks' s)lppon,fil:e for bankruptcy. ooWn post-petition -financing permitting the COrllR:any too continue to operate, an4 threaten [0 cram down a plan of reoI'g~ii;u:ion o,n rli,e bondholders. While this picture oversimplifies the complexities of die proce,<ls, borrowers could us~y rely on a degree. of cooperation from their .senior lenders In ti;mes of need, at a price to be negotiated.

One of the defining features of the last. credit cycle was the rise of hedge fu,nciscand other non-lastirutional lenders, which have effectively,stepped inro. the shoes ofbanks and other financial institutions as primary investors in corporate loans. In addition, while a co-mpany, may know who its lenders area): the GUISer, it may be difficult to determine who holds we debt nnee the _company becomes distressed, 1£ the company- needs to negotiate with its creditors, it may not readilyknow who to speak to or who represents a majority of the debt. In many eases, the rompany may discover that substantially all of its debt-is new held by distressed funds,

which have raised billions of dollars in anticipation of the tide of investment oppcmmiries that me- next a.owntum is' expected eobring, Evenafier a lender grou,p coalesces.and negotiations commence, dramatic.shifts in holdings and, as .a consequence, negQtiating-p6sitiolls may OCUlI.

People tend to m:lk about.distressed funds, ~ acm'en01ithictp'0up. However, their interes,ts in any given ,workou! may be far froIil -uniform or predictable. For example, differendi.mdshave different investirrent-stfaregies. Certain funds have a trading mentality, with a shafter-term investment horizon that may be at odds' with the operarional'rurnaround of a business. Otherfunds-adopc loan-eo-own strategies, which tend to - be consistent with a -longer, more traditional reorganization process, burmay'be.incemparihle with the wishes of management or other creditor ~PU:ps. Further coII):p;licating,,!ite a:nal~~, ihves·£ors often, a(O=1il~te poiitions in lPcl·gl~ lay~s'9f,clebt and may have &Ei'~t me same d:eD.to af"suh5tantiaUy: dlffeteot pz:ices.~mpared.-tOr.he last de:wnru:rJ], w0Fk'O.Uts and baakruptcies'will like)y- illvglve '~greaser llWIibero'r play;~rs Vi,lih :potejlciily; ,mor.e va;r)l;:d anI'!. less pl'ePicmb1e -m~ests. iAs a'Tesul~~i1,.may ]j¢eomemOte.ffiffiiii1i .(ol'-tbmpzapies, tp ha C0IIJ'IDen'grOllll(i within and among th~G.rediror· rolls6tu~ci~;

More t:rou.b!ing:is:~epoteg:ciaI 'im_pact of credit ilIef.i.ult ·~ps and other derivativeson _cr.edi~or clE.Qtivari!7)ns. Fo]:' example, '3. :ae'ditOl'wJ:i:o h01d$.a cr#4tde,rawi -swap mayac:ro:Jly be better offh)!' pushi'r!g,a. troub~~ company :int'O~pcPy. B«ause_cf~tiv~_ tran,saetIons.are_not pUblicly disclosed, credllor:s' real ecenemic !n1;eIesrs may_ be1,mpO:SSible t9 .. de~in;line. Ge:rtalnC0mmentat0rs bel:ieve cliat the ~wth of thedOl'iWoiI:_iYes,~kedias -incre$ed Che 5}!Stemie. risk. of default and

eGfir(;ij\Ju.'Ep~Q'tiI~A'GE 4

Section 363' Sales: How to Play the Gam,e

The $64 billion question these days-is not whether the sky will falL but when. Restructuring gurus have been p:.(~d.ic:ting for more than a" year now that the Fle}i:t wave of bankruptcies is twelve to eighreenmonths away_ Th1-s sgmme.r'stight.ening Qfthe credit markets has' made these predictions an in~reasiJ1,gly safe bet.

With me ,U:l'ticipated rf$ifill, default rates wJJJ. come a steady stream ofuoubled companies, sonie:ofwhich m~y be affi'accive:tlti-ger:sfor private equity buyers. So called "seceien 363, $aI¢s~ -.aSstt sales by debtOl.' c;6mpanies in reliance on Section 363 o:f>the'i3al:!b:u;p:tqr Code - are likely to be an important feature ofthe restruemring ciIiven·M&A'marW· in the -nexr downturn. Given the. large number of players in the-distressed mark~; ~cludia:g, "loan moWn'" invesro~,private equity buyers must be familiar with me secciouQ63 process t-GtakeadVan:tageofthe opportunities that this will pr~eDt.

More Section 363 Sales in Bankruptcy

Section 363 sales take their name &om the secdoa of the Bankruptcy Code thatallows a debtor, with OOUIr approval, to-sell assetSindl,uiillg ~.ub~i:arJ:ci'allyal1;ofth~ debtor's assets - outside the ordi:n~ 00= ofhs bus.4t$, J:-,5 ~ resuk of ~rtain ~est!il the BaakFq.ptc:yCode; section 363 salesdu:rin~ the wi}" s<?ges: of C~Pte,r Il'ta'seswill~ly increase. One of these changes is the 18- month ,lJ:mjr on the exclU$iVe rigltt ofa debtor to file a plan (if reorganization. This limi r is expec:t:e4 to plltmore pressure 0:11, many companies Contemplating bankruptcy to develop- aneXitsttategy eatly,.in many'caseS even b'efore filing for Chapter U proreedon,

Asset-sales may beparticularly ~ppealiag for companies with luge amounts of secured-debt -al). jncfdS'mgly cemrnen feature of leveraged capiralscrucrures. If secured lenders can he paid in. full from-a quick sale of me business; they may be reluctant to take me risk ofa potential

de<;.line ineriterprj.,se¥ailJe dUri~g fue Chapter 11 case QJ to expend resourcesmoni:tQtll.:i'g,ili:e·ban kn.iptq.

AlmGugh.a seccion~;63 sale has some im,p-bn3l:tt b~ndits fdfa pr'cspec.tive purchaser; Ban:kru,ptcy Code protecrions designed to ensure the triiJ.spar~oiy' of me' safe~ptocess:raisesignifiqmt issues of deal secu.rhy an.d a h6-st; €If tactical quesrions;fur a pwt:.has~r as towhen and at what leve] in dies~ct:i6n 3'63 sale process t.ooogag¢ wid:!. me seller, While ffiaIlY €If thes~ ql.lssSons are -sirnilar tothose rhatatise in any' C0mp~llve'bidding environment, it is -Importaat toundersrand the pank1l1aljti:~ of the se\ttion363 sale pmdlSS to fW!r appreciare hoth the risks and rewards of acquiringaoempany in a section' 363 sale.

Key Advantages

of Section 363 Sales

Fromrhe perspective .of a purchaser. a se;;don.3·63:s~kis attractive becaus.e the bankruptcy court has the power· to, approve mesaL~,&ee and clear of liens andrn:os't liabilities anached to me\assetS;·Excepuons to keep in mitid areepvironmeti.ta1· liabilities and successor liabilities relating to certain typesof t(Jrc claims. .A1thQ.Q'gh 'dUE; diligence should still he, moro~" €Qun app:rav;i.L€3_n prOteyr me purchaser agah}sr ffi0st.trailing liabilities.

The. buyer in a seco()n363 sale a1S0 ' benefl{f from me Figtrts grancedcea good faith pllI£h:ase~ of:iSs.ets •. Am0ng peher clllngs,~ the buyer is protectedagairrst any subsequent ~duleat conveyance challenge. Large acquisirlens of distressed busineSScs are frequendy impleIJien'(ed

thr~lUgh.seGill.on .303:-sales beeausebuyers do Rot want to take the fisk ,mat, ina later h:anlrn;i;p'tq of me- seller, the ~;\Cti.on'Will be anadked as a ft.auduient C0nveyana'~ If tht:atta;ck. Vi sM.cestula:p.d the ,bu,yeris re"l'Uirea"-to renam the assets., ehe buyer mar hi: left with ;$ unsecured claim ,~nStthe bankrupresrate -tha~ 'may· not he. worm much.

Notice ana Hearing

The .consiaeJ1able's-raturory prOteCtion's available toa buyer- in a section 363 sale cQD).e at-,a·pdt.e: 'TIre:saJeal1r'o~y be ~PPIOVed bynh:e b;m:kmp~cy'COu'ft-aft~ [10'i:i~ fu .ib;.~'r~ ,p-.ui;ie-,S,anu .a '!'iear~;

From the perspective of a purchaser, a section 363 sale is attractive because the bankruptcy court has the power to approve the sale free and dear of liens and most liabilities attached to the assets •••• Although due diligence should still be thorough, court approval can protect the purchaser against most trailing liabilities.

A .~g h0l!S~ usu:illy:'Il)ls ln9Ie Pn;;:e-oo , petfp~.due~~c:e; as well as the. oJiWerrnni:J:y eQ:se,t-athi~ela ~R€ej

p.g< u I Debevolse & Plimpton Private Eq~it~ Report I Summer 2007

Section 363 Sales:

How to Play the Game

This article h:ss.b'een prepared by and is the copyright of the lawn;rm, Debevo,ise & Plimpton llP. All rights are reserved. It may not b.e reproduced in whole or ih part ·without their permission. The article provides summary information only and is not intended as legal advice. Readers should seek specific; legal advice beiore taking any action with respsctto the matters disoZussed therein.

,. ,

hiiits,e pr~aili wiU· almost O€nainly: be f0~e.dpn p_riceaodStimulacio,g.;t)le_

Val. 23: Nos. 8-9 August'-September 2001

SECOND-LIEN FINANC.INGS IN BANKRUPTCY:

EXPECTATIONS VS. REALITY

Recent Chapter 11' Cases Show that Common Assumptions about the Leverage and Recovery Prospects of$econd~lie(iJ Creditors do Nor. Always-- Materialize in ·f3ractice. Recoveries ofSecond~llen Creditors in Oertain Cases Hav.e Not Been Substantially Better than Those of Unsecured CreditoJs. In Add#ion, Second~lien Creditors Have ShllJwn that They Will Ass.ert. Their S.eoured Creditor RightS in Bankruptcy, Sometimes COntrary IQ the Provisions of IntercreditorAgreements and Regardless of the Extent to Which They Are in Fact Secured.

By My Chi Tb' *

Fueled by unprecedented liquid:I1:¥, the second- lien market exploded in the past few years, 1 From 2003 to 2006; annual.issuances of seeond-iien loansjumped from approximately $7 billion to ahnos.t.$30 billion. 2

Although second-lien debt appears to have established itself as a standard component of leveraged capital structures, there remains much uncertainty about the leverage and recoveryprospects of second-lien

I For an excellent overviewef'the second,.J.ien.:miliketsee Fitch Ratings, The Evolution of the U.S.Secon\1·Lie.n, Leveraged Lo an Market - 2Q06 Year-End Update (Jim. 17, 2,001).

2Id. at! (citing Reuters Loan Pricing,CorpanitloniDea1Scan).

* MY CHI TO is apartner in Debevoise & Plimpton UP's New "York office arid a member bfthe firm's Bankruptcy & Restructuring Group. Her e-mail address is mcto@debevoise.com. Maureen-A: Cronin and Ilissa L. Watnik; both associates in the Group, provided valuable research assistance in the preparation of this article.

August-September 2001'

creditors in a.distressed scenario. The limited but grcwinguumberofeut-of-eourt restructurings and bankruptciesinvolving second-lien financings has not dispelled thisuncertainty. Chapter 11 experience to date does, however, suggest that what happens to second-lien finaneings in b~ruptq may not always be in line with certain assumptions made about fqtetcreditor dynamics arid ultimate recoveries of second-lien creditors in. a default Situation.

This article explores the lessons that can be learned frOID" reeent.banknrptcies of cO;ri1pa;aieswitb second-lien debt, and highlights potential opportunities and.risks for botsfirst-and second-lien investors .. Section A introduces key assumptions underlyingthe second-lien

IN THIS ISSUE

• SECOND·DEN FINANCINGS IN BANKRUPTOY:

EXPECTATIONS VS. REAUTY

Pa~e85

RS:CR ~ublic_iitiims IJLe' Fiiblislled 1.21l~d a y,€.wpy RSCR Publications LLC. Ex:esntjve lfudi,EdiiOria:l ,QffiGllS, 2SEast 86'" St, Soi~ 13,0;~t\ll

-Yode; NY lo02~i:li53., 'Subscrip'tio~ rates: $650 per.year.'in'tjc~S .. Canaib, 1!Dd MeXico; S69§ elsl:wJ{~ (~ir 1Iiai1:Cle1iyeroo):-:A; ,15%'di(.ro¢;!i'1~ ,

(avai(able fot qualified ~c libraries IIIIUu!l-timej~h~. For subscriptioninformation and"custoplef selN!ee ca!l,(866}425-1l11 o~vih'foUl' Web site !it. W'W)"'.l's'llYilbs,~o~ Ge#i:rB1 Editon MiChael 0: F 1nke!S!!:liq;:leL 212.S'l6·l115; e-nla.il.mo.mueelstmfl@lP0tm;ai\. com, A:sso~a~e Editor. Saiah Strauss _ Himmelfiifb; ter ~QJ"'29A-:6233; e-lhai1-shlmmelf~b@,*ill~'b~ "["0 SubDijt.a m1lI!lIS)'i:ipifOrp\l,\jI~c;ifon99n~:Ms: E:inniielfarb.Copyright02007 by RSCR Fub1ica:ti~IJJC. IS$N: fO~'1""17.4.)', RepI:Ci.auGp-qo iri; W!lole,orinp¢ pr~hib'ite:il'except&,¥~iqn. Jliil} dgptf~efVoo. lrifa.llIIIiI1ti!lliaS)e,eo obtlined'by '~ReJie"'MfBMKing & Fhumcial Services fi:om sources believed to bereli~le,B.O.woy"" becaUSe"cf th~l'o~!ibgit}' &thumWl O1mechin$'CiI,~r by 'but. sourUs.P;"'Reir!~ cf'lJj:rn,/jiiJg '& F"liuindal '&Irvicp, does nocg1!8r8Jlte .. :the .accuracy, adequacy, of completeness, o( 2ny info~tfon:and,fs .ridl ri;Spo,nS!ble fo'nD.Y errors or oritiss1Qi1l:, or for tile results obtained from l!i~ use iof such information,

market. Section B sets the conceptual framework for the discussion: What rights do secured creditors have and how may these rights be exercised? Section C focuses on lien subordination. Section D describes the rights typically waived by second-lien lenders In the intercreditor agreement executed at the time the secondlien financing is put in place. 'Section E e.x'lllll1m'es t:b:e core issue of the extent to which the claims heJ~ by second-lien lenders are actually secured. Filially, Section F deals with the enforceability of waivers of rights by second-lien lenders.

There aremany different types of second-lien financings. In the past, second liens were sometimes granted as part of so-called rescue financings. By contrast, second-lien debt is used today rna, broad range of transactions, from recapitalizations andleveraged buyouts to debtor-in-possession (DIP)' and exit financings. Second-lien debt can take the form ofloans . or bonds; it can be widely syndicated or issued to a few

investors _in private club deals; it can be secured by a junior lien onsubstantiallyall of the borrower's assets or, in split collateral deals, by a first lien on the borrower's property and equipment arid a second lien on inventory and receivables; it may be issued concurrently with first-lien debt along with third-lien debt or added to an existing capital .structure with a single layer of secured debt. \\Ihile there-are merket variations among the terms of these different types ofsecond-lien financings, this article attempts to examine issues that are common to all of them. For purposes ofour discussion, we will generally assume that the-first- and second-lien debt is secured by liens on substantially all of the borrower's assets, which is a eemmonsecond-liea financing structure.

A~ SECOND·~IEN BEST: EXPECTATIONS VS. REALITY

"Silent" Second U&IlS

Although the concept of a junior lien is not new, today'ssecond-lien financings are different from their predecessors. In.the past, banks and other tIallitional senior lenders.often resisted junior security .interests out of concern that the rights of junior lien holders would inhibit the ability of senior lien holders to foreclose on their collateraL In an attempt to address these concerns,

August-September 2007

second-lien financings are now governed by intercreditor agreements spelling outthe rights offirst-and secondlien holders with respect to everything from the exercise of remedies and sale of collateral both prior to and during bankruptcy, to the use of, or grant of senior liens on, collateral as part of DIP financing or cash collateral arrangements in a Qhapter 11 case.

In order to remain competitive in an extraordinarily liquid market, senior lenders had to give up their lien exclusivity. However, senior lenders expect that carefully drafted, inter creditor agreements will ensure not only the seniority of their lien, but also that, as senior lenders, they win control key decisions affecting the collateral in a restructuring.

Notwithstanding first-lien- friendlyintercreditor arrangements, isecend- lien investors expect that a junior lien will give them priority overtrade and other unsecured creditors in a bankruptcy, Thisexplains why second- lien debt is priced at a lower interest rate than unsecured debt

Whether the expectations of first- and second- li en investors will be met depends on the facts of each case. To what extent have second-lien holders agreed to be silent under the inter creditor agreement anii,regardless of the terms oifue intercreditoragr-eement, will they actually he SIlent in. a-distressed situation? What is the collateral value in excess of the first-lien debt and have second-lien holders waived their-right to protect that value?

RecenrChapter 11 experience suggests.that, in.many cases, both groups may be disappointed, As discussed below, while second-lien lenders have proven that they can be quite noisy ihbailkruptcy court, it IS to date unclear that theii secured status (or noisy behavior) will translate into materially better recoveries than: those obtained by unsecured creditors.

A/loOr-Nothing Intercreditor Negotiations

The negotiations of intercreditor terms reflect a fundamental tension between two irreconcilable

. objectives. 'On the one hand, first-lien lenders want exclusive con1T01 over the collateral, On the other, second-lien lenders reasonably worry that, without

Page 86

imposing certain restrictions on the actions of first-lien lenders, nothing would prevent first-lien lenders from destroying collateral value otherwise.available to pay second-lien debt. Once first-lien lenders agree to restrictions, however, they lose-exclusive control and give second-lien lenders a seat at the restructuring table.

Although intercreditor agreements are negotiated at the time the second-lien financing is put in place, they matter most ifand when the borrower becomes distressed: So long as the borrower services its debt and is not otherwise in default, important decisions affecting the collateral are likely to be taken consensually because the interests of first- and second-lien creditors will coincide. In a distressed situation, however, these interests Will almost certainly diverge unless the collateral value fat exceeds the combined first- and second. lien debt (which, to date, has netoften.been the case). In particular, first- and second-lien holders will have very different views about whether, When, and at what price collateral should be sold; and assuming no sale occurs; they may disagree about the value of the collateral and how that value.should be distributed under a plan of reorganization.

In the widely syndicated second-Hen market, investors today generally have a limited ability to negotiate .intercreditor terms, The intercreditor agreement is usually based on the standard form used by the arranger for the first- and second-lien financing, which also often acts, as first-lien agent and-second-lien agent} Potential investors routinely have only one or two days to review the form of intercreditor agreement prior-to making an investment decision. In.a.market where deals are often oversubscribedseveral times, an investor's comments on the intercreditor agreement might result in its replacement by a more complacent investor. As a result, intercreditor agreements in this context are generally not the subject of much (if any) negotiation. By contrast, intercreditor agreements for private club deals tend to be heavily negotiated and mote second-lien friendly than those in the syndicated market. In addition to being represented by separate counsel, second-lien holders will ofteIl have mote leverage because the deal usually canno.t happen without their participation.

Although intercreditor agreements contain many provisions that-rarely vary from deal to deal, certain key provisions ate not standardized. It is therefore critical to review each contract carefully.

3 Certainarrangers retain a separate law firm to represent the interests of second-lien holders in connection with the financing documentation and the intercreditor agreement;

August-Septerriber 2007

B. RIGHTS OF SECURED CREDITORS

Secured creditors, including holders of'junior liens, have a,'b.uzp.ber of,s.Pecial Tights under the Bankruptcy Code W? well as, applicabJe non-bankruptcy law. The'se rights -and the extent to wJ:ll<ili~ second-lien.holders have waived them in the intercreditor agreement - provide the l~glli framework for intercreditor dynamics in restructurings of second-lien debt.

Priority Qy~r Vns.ecured Creditors

A secured creditor has priority over unsecured creditors to the extent of the value of its interest in the oollateral." In fact, th~13an:k;nlptcy Code does not speak in terms of secured creditors .and unsecured creditcrs, but rather .in terms of holders of secured claims and' holders of unsecured claims. If the creditor's claim exceeds the value ofthe.eollateral.the claim will be bifurcated. into a.secnred claim equal to the value of the collateral, and an unsecured claim ranking pari pa,ss,~ With the claims of the debtor's other unsecured creditors for the excess. Thus. a ~~"cpred creditorcan hold both a secured and an unsecured claim,

Post-Petition Interest

If a secured creditor is oversecured, it will be entitled to post-petition interest and reasonable fees, costs, or charges .provided for under its agreement with the debtor to the extent of the excess collateral value.5 If a junior lien exists and there is enough collateral value to pay the first-lien debt but not both the first- and.second-lien debt, only the first-lien.holder will he entitled to a secured claim for pest-petition interest6

4 1] U.S.c. .§ 506(a).

5 Id. § 506(b). A secured creditor is oversecured if the value of the collateral securing its claim exceeds the amount of the claim.

6 See First Fi4, Bank v. Midlantic Na((Sank (lti re Ionosphere), 134 B.R. 528 (Bankr. S.D.N.Y. 1991) (where 3,Il indenture granted a single lien to first-, second- and til ira-priority equipment certificate holders as a group, first-priority certificate holders were, net entitled to post-petition interest because the indenture created a single large undersecured ciaim,despite the fact that'had they been granted a separate lien, theft claim would have ,been oversecured and, therefore, entitled to post-petition interest). Although a single agreement can be-drafted to grant distinct liensto separate creditor groups, the market practice is to have separate sets of financiag-and security documents for first-rand .second-lien creditors.

Page 87

not surprising, therefore, that first-lien holders want second-lien holders to waive certain of their unsecured creditor rights.31 Because of these waivers, however; second-lien boldersmay have less leverage (and fewer opportunities to extract concessions such as-an interest rate increase or a forbearance fee) than unsecured creditors of the borrower.

Given how they are usually worded; many bankruptcy-related waivers granted by seeond-Iien holders constitute waivers of both their securedand unsecured creditor rights. For example, the advance consent of second-lien holders to a DIP financing or collateral sale is usually not granted solelyin their capacity as secured creditors. To the extent that these waivers: are obtained and 'enforced" undersecured second-lienholders couldnot, in theory, objecrt0ithe DIP financing or salein their capaeity'as Unsecured creditors on the basis that it-is not in the best interest of the estate. ill addition, intercreditor agreements sometimes expressly prohibit second-lien holders from taking actions that other unsecured creditors of the borrower are free totake, such as accelerating, commencing an involuntary bankruptcy, or acting in a way that would hinder the exercise ofremedies by firstlien hojders.

The intercreditor agreement ordinarily COntains a reservation ofsecond-lien holders' unsecured creditor rights, which reservation itself is usually expressly subject to" other provisions of the interereditor agreement specifically waiving certain of those rights. Sometimes, the reservation of rights is subject to some, but netall, of the waivers of unsecured creditor rights. The question then becomes whether the general provision containing the reservation of rights1n:un:ps"a more specific

provision containing a waiver, Although it will depend on the exact language of the contract, the specific provision should prevail absent a clearly expressed

intent that second-lien holders could somehow free themselves from a waiver (perhaps if they are in fact completely unsecured or if they decide to relinquish their lien).

Purchase Option

Intercreditor agreements usually grant second-lien lenders the rightto purchase the first-lien debt atpar (Plus unpaid and accrued interest) within a specified period of time after the occurrence of certain events, Including the acceleration of the first-lien debt and a

37 Normally, second-lien holders waive-their unseeured creditor rights only 'in t1ieircapa_city'" as holders of second-tien debt; and not in their capacity as holders of other debt of the borrower.

Augusl-Seplember 2007

bankruptcy of the borrower. 38 Unlike many other provisions of the intercreditor agreement, the purchase option should be less' controversial to negotiate because, in most cases, first-lien lenders.should not be opposed to being boughtout at par (unless they hold fixed-rate 'debt subject to a prepayment premium).

The purchase option is an important interoreditor term for second-lien creditors, particularly if the first- lien debt is notpublicly traded. By allowing second-lien creditors to free themselves from an unfavorable interereditor agreeraent and to take control over the collateral, exercisin~ the purchase ~ption m,ay ,Q~ ~heir only hope of recovery, 9 If thefirst-lien debt IS trading.at less than par, second-Iienereditors rn,ay·beable to acquire Ii controlpositionin the first-lien debt byoffering to buy it at a discount, Wi1hout a centractual purchase option, however; there is no guarantee that first-lien-creditors will agree to sell their debt or will sell it in a timely way.

On the other hand, exercising the purchase option may be expensive lithe first-Hen debt is not worth par. In addition, if the purchase option must be exercised within a short period after acceleration or bankruptcy, it

38 Instead of stating that second-Hen lenders have the optionor purchasing the first-lien debt under certain conditions, certain intercrediton agreementsprovide thatfirst-lien holders 'agree to grant to seeead-lien holders an option to purchase the first-lien. debtatany time after the first-lien debt is accelerated, Although the parties may intend to allow second-lien lenders to exercise the. option at anytime after the first-lien debt is accelerated, thesecond formulation could also. be read as giving first-lien lenders the abi-lity to decide when to offer to second-lien. lenders the option to pureliasethe first-lien debt

39 Exercising the option may riot always give second-lien lenders control over the eollareral, as illustrated bY the Chapter 11 case of Werner Holding Co. In that ease, second-lien lenders exercise a the optiQ!:!.but still found themselves at odds with the DIP/first~lien lenders .ever control over the collateral in a § 3.63(b) sale process. The debtors received oompeting bids to purchase their business from a group representing a majority of the second-lien debt"aportio)l,ofthe first-lien debt and certain unsecured creditors, and from an affiliate of their.Dllelenders (whish a1110 held a significant portion of'the first-lien debt) and another.Investor. The nIP,tfust,.lien lenders' bid, which was selected by the debtors as the stalking horse bid, wasapproved by the court-after the competing groups reached a.settlement that resolved the objections to the sale of the second-lien lenders' grQUP and the unsecured creditors' committee.

Among other things, the .settlement pr-ovided for .a cash payment t-o second-lien lenders at the closing ofth:e sale and outlined distributions to unseenred creditors undera plan of liquidation,

Page 94

may be too' early to decide whether it makes sense to exercise the option,

E. SECOND-LIEN DEBT: SECURED OR NOT?

Whether second-lien debt is in fact secured depends on the value of thecollateral in excess oi,the first-lien debt. Given that both the collateral value and the amount of first-lien debt will vary from issuer to issuer, it is, difficult to make generalizations about expected second-lien recoveries. Experience to date suggests that, in spite of its name, second-Hen debt may be nothing more than disguised unsecured debt in many cases. However, regardless of whether second-lien lenders are in fact secured, they are behaving as if they were secured, which, in turn, has a profound impact on intercreditor dynamics ..

Cap on i=jrst~Lietl Debt

Given that second-lien debt is only secured to the extent that the collateral value exceeds the amount of first-lien debt, it is critical for second-lien holders to restrict the amount of first-lien debt thatcan be incurred by the borrower. The second-lien financing agreement normally prohibits the borrower from incurring first-lien debt above a certain limit. 40 Inadd.ition, the interereditor agreement usually prevents first-lien holders from amendingthe first-lien financing agreement to increase the first-lien debt above that limit4!

In bankruptcy, contractual restrictions on th.e debtor's incurrence of first-lien debt are not enforceable. Pursuant to section 364 of the Bankruptcy Code, a debtor may, subject to the adequate protection rights of first- and second-lien holders; Incur indebtedness secured by liens priming those securing the first- and second-lien debt, Just like additional first-lien debt, priming liens can take away any collateral value that would otherwise have been available to second-lien holders, pushing them down in the capital structure, In addition, DIP financings (which are frequently provided by first-lien holders) are often used as a way to take control of the Chapter 11 process and the reorganized business.

40 Typically, the limit only .applies to principal and is reduced by permanent repayznentsor eomrnitment reductions ef first-lien debt.

41 If'first-lien debt is incurred in violation of'these provisions, the intercreditor agreement may provide that the excess first-lien debt does' not benefit from the second-lienholders' agreement to subordinatetheir lien, although the ranking of the excess first-lien debt israrely specified.

August-September 2007

Interestingly, however, second-lien holders often unc0:i:1dino~allY waive their right t~ obj ect to ~!ri1ning DIP financing supported by first-lien holders. As discussed below the lack of a market consensus On this critical intercr~ditor:tenn.tnust be considered in light of the sigaificsnt leverage that second-lien holders have in ·this context, resulting from the n:ee4 of'mostdebtors to gain access to DIP financ)ng very quickly in order to contiml.e to operate.

RecaveryStatistics

Recovery rates of second-lien holders in recent Chapter 11 cases cover a broad spectrum, ranging from 7% (Meridian Automotive) to 100% (Faamex International).4-3 In these cases, except where secondlien holders were paid in full, second-lien recoveries were-closer to the recoveries of unsecured or subordinated creditors than to the recoveries of first-lien holders.

According to Moody's Investors Service, second-lien holders have recovered, on average.epproximarely 58% of their investment in bankruptcy or out-of-court . restructurings, compared to approximately 92% for firstlien holde'rs.44 Moody'S found that the average secondlien recovery Props to 45% where the s econd- lien debt is the most junior layer of debt in the capital structure and

4(2 rftheDrPfinancing refinances.the first-lien debt, second-lien holders mily be able to argue thafthe pre-bankruptcy restriction on the incurrence offirst-Iiendebt, which usuallyappliesto refinancings ciffii"st-lien debt, should apply to the DIP flllancing.T.he strength oflhat argument will depend on the exact' wording of the relevant provisions,

43 A summary of actual recovery rates of creditors under six recent confirmed plans of reorganization of companies with second-lien debt is attached as an appendix.

44. Unpublished data. based on Moody's Investors Service's Ultimate Recovery Database. At the time of writing this article, the database covered 54 second-lien debt issuers that have 'emerged from a bankruptcy 01 an out-of-court .restructuring following a.peyment-related default, To the extent that second-lien holders, received debt instead of cash as part of a restructuring, the debt's.trading value upon the issuer's emergence Was used to calculate their recovery .. In addition, the recovery of second-lien holders is based on the amcuntof their claims at the time of the bankruptcy filing' or payment-related default

Page 95

What Borrowers

(and Sponsors) Should Know About Second-Lien Financings in Bankruptcy

This ertide has been prepared by and is the copyright.ofthe law firm, Debelloise 8< Plimpton LLP All Fights EIre reserved. It may not be reproduced in whole. 0-( 'fl part without their per'mission, The- article provides summary information only end is not intended as legal advice:

Readers should s_eek speCific lega,! ad"iee before taking any action with respect to the matters discussed therein.