363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

1. 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

2. Dechert Panelists • Carmen J. Romano – Partner, Private Equity • Represents private equity and strategic clients in mergers and acquisitions across a wide variety of industries. • Glenn E. Siegel – Partner, Business Restructuring and Reorganization • Represents bondholders, indenture trustees, creditor committees, acquirers of troubled businesses, and other participants in bankruptcy and workout matters. • Charles I. Weissman – Partner, Business Restructuring and Reorganization and Private Equity • Represents clients in leveraged and unleveraged M&A deals and in consensual and distressed restructuring transactions inside and outside of bankruptcy. • Brian E. Greer – Counsel, Business Restructuring and Reorganization • Represents debtors, creditors, creditors’ committees, equity sponsors, and other participants in distressed M&A transactions, bankruptcy, and workout matters. 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

3. Presentation Outline • Early Planning • Corporate Governance: Pre-Bankruptcy • Corporate Governance: Post-Bankruptcy • Litigation Risks • Strategic Considerations • Bankruptcy Process • Post-Closing Issues 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

4. Early Planning • Start preparing when early signs of alarm appear • Fully vet business’s valuation • Better practice to hire outside financial advisor • Analyze cash needs for the projected reorganization process 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

5. Corporate Governance: Pre-Bankruptcy • Understand fiduciary duties in the zone of insolvency • Directors must understand the distinction between the company and its sponsor • Be aware of the Corporate Opportunity Doctrine • Understand the role of the independent director/committee • Separate counsel and/or financial advisor for the independent director/committee? 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

6. Corporate Governance: Post-Bankruptcy • Likelihood of obtaining a release • Minimal risk going forward since all major decisions are approved by the Bankruptcy Court • Company likely to be authorized to pay D&O insurance premiums and purchase tail coverage 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

7. Litigation Risks • Bankruptcy cases provide fertile grounds for litigation • Insider litigation involves: • Preferences (1 year period; not 90 days) • Fraudulent transfers • Equitable subordination • Alter ego, veil piercing, mere instrumentality, substantive consolidation • Recharacterization (of debt) • Carefully evaluate these risks/exposure as opposed to consensual/out of court restructuring • After the company files, you may lose control over the process (trustee, examiner) 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

8. Strategic Considerations • Considerations in acquiring secured debt: • What is the fulcrum security? • Is the sponsor contractually prohibited from purchasing it? • What is the likely recovery on the purchased debt if you are not the successful bidder? 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

9. Bankruptcy Process • Stay in control over the process from before the filing • Act as the stalking horse bidder • Break-up fee issues • Expense reimbursement issues • Provide the DIP financing • Propose reasonable milestones for transaction completion • Consider impact of due diligence by strategic buyers • Propose a rational and transparent sales process • Overreaching can have significant adverse consequences • Consider most effective tax structure 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

10. Post-Closing Issues • Should you care about the debtor post-closing? • If the sale is followed up by a chapter 11 liquidating plan, sponsor and D&O likely to obtain releases • Cost of the release: • Funding the case through plan confirmation process • Agreeing to fund distribution to creditors via cash contribution of leaving some assets behind • Evaluate the cost of the release vs. the likely exposure 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

11. Dechert Panelists Carmen J. Romano Partner Dechert LLP + 1 215 994 2971 carmen.romano@dechert.com Glenn E. Siegel Partner Dechert LLP +1 212 698 3569 glenn.siegel@dechert.com Charles I. Weissman Partner Dechert LLP +1 212 698 3847 charles.weissman@dechert.com Brian E. Greer Counsel Dechert LLP +1 212 698 3536 brian.greer@dechert.com 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

12. Carmen J. Romano Carmen J. Romano, member of the executive committee and former chair of the corporate and securities group, represents private equity and strategic clients in mergers and acquisitions across a wide variety of industries, such as health care, education, food and beverage, transportation, industrial, and consumer products. Mr. Romano has been recognized for the past five years as a leading lawyer for mergers and acquisitions and private equity by Chambers USA, a referral guide to leading lawyers in the United States based on the opinions of their peers and clients. Chambers has praised Mr. Romano as “‘a highly creative and insightful’ practitioner, with a special focus on private and public M&A deals.” Mr. Romano has also been noted for his work in the food and beverage sector by Chambers USA. In addition, he has been recognized as a leading lawyer for M&A by Practical Law Company and has been recognized for his work in private equity and M&A by TheLegal 500 (U.S.). He is also listed in The Best Lawyers in America. Mr. Romano handles transactions on behalf of leading private equity sponsors, such as One Equity Partners, Jefferies Capital Partners, Bruckmann, Rosser, Sherrill & Co., Leeds Equity Partners, and many of their portfolio companies. In addition, strategic buyers and sellers, including Select Medical Corporation, Bentley Systems, and Berwind Group, call on Mr. Romano to represent them in a full range of transactions and corporate matters. Examples of representative matters that Mr. Romano has handled in recent years include: • Select Medical Corporation (NYSE: SEM) in numerous transactions and financings, including its $300 million initial public offering as well as its prior $2.3 billion leveraged buyout by Welsh, Carson, Anderson & Stowe • The Brickman Group Ltd in its billion dollar plus recapitalization sponsored by Leonard Green Partners • Edgen Murray in its $700 million recapitalization sponsored by Jefferies Capital Partners • An investor group, led by One Equity Partners, in the $855 million acquisition of Vertrue Incorporated (Nasdaq: VTRU) • One Equity Partners in its acquisition of Polaroid Corporation out of bankruptcy and its subsequent $426 million sale of Polaroid to Petters Group Worldwide • Jefferies Capital Partners in its $965 million purchase of the Iowa local telephone exchange business from GTE • Berwind Group in its acquisition of Elmer’s Products, Inc. from an affiliate of Kohlberg Kravis Roberts & Co. • One Equity Partners in its $1.26 billion acquisition of publicly-traded NCO Group, Inc. • Bruckmann, Rosser, Sherrill & Co. in numerous buyouts and exits of restaurant chains, including most recently its $360 million sale of Real Mex Restaurants to Sun Capital Partners and its acquisition of the Bravo and Corner Bakery restaurant chains Mr. Romano is a graduate of The Wharton School of the University of Pennsylvania, B.S., summa cum laude, 1977, Beta Gamma Sigma, and Columbia Law School, J.D., 1980, Note Editor of the Columbia University Law Review (1979-80). He also clerked for the Honorable Dolores K. Sloviter, U.S. Court of Appeals for the Third Circuit. 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

13. Glenn E. Siegel Glenn E. Siegel has more than 25 years of high-level bankruptcy experience. He represents bondholders, indenture trustees, creditor committees, acquirers of troubled businesses, secured creditors, debtors, shareholders, and other participants in bankruptcy and workout matters. He has advised major stakeholders in numerous bankruptcy cases, including, most recently, Delphi Corporation; Lyondell Chemical Corporation; Towers Automotive; Tower Records; Refco; Worldcom; Formica Corporation; Exide Technologies; and Dow Corning Corporation. Some of Mr. Siegel’s representations include: • Counsel to hedge fund Elliot Associates as the largest senior secured DIP lender in a $3.5 billion credit facility related to the chapter 11 bankruptcy of Delphi Corporation, an auto-parts maker once owned by General Motors. • Trustee and bondholder counsel with respect to the Arco notes and Equistar notes in the chapter 11 case of Lyondell Chemical Corporation; • Debtor’s counsel in the Inland Fiber Group pre-negotiated chapter 11 case; • Committee counsel in the KCS Energy Ad Hoc Noteholders Committee’s litigation over the change of control provisions in the applicable indenture; • Committee counsel to the Ad Hoc Non-Insider Equity Committee in the chapter 11 case of Ultimate Electronics; • Committee counsel to the Ad Hoc Noteholders Committee in the restructuring in China of Zhuhai Highway Company Limited debt; • A major creditor of the defaulted indebtedness of Republic of Argentina; • A hedge fund in connection with its acquisition of a preferred equity position in a troubled financial institution; • The Indenture Trustee of Tom’s Foods secured notes in connection with the company’s chapter 11 case including a contested sales process and litigation over the extent of the security interest; • A significant bidder on Refco’s assets; and • A defrauded lessee of Computer Equipment in the chapter 7 of a call center business. Mr. Siegel lectures frequently on issues of importance to public debt holders, including claims trading, note holders’ rights, second lien loans, and subordination, and is a speaker at the biannual meetings of the American Bankruptcy Institute’s Committee on Public Companies. He also regularly authors and co-authors articles on bankruptcy-related topics and developments. Mr. Siegel is a graduate of Brooklyn College, B.A., 1979, Boston University School of Law, J.D., 1982, and New York University School of Law, LL.M. in corporate law, 1984. 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

14. Charles I. Weissman Charles I. Weissman represents private equity sponsors and distressed investors as well as public and privately-held corporations in connection with mergers and acquisitions and restructuring matters. He has structured and negotiated friendly and unfriendly transactions on behalf of buyers and sellers in leveraged and unleveraged deals, and has advised on consensual and distressed restructuring transactions inside and outside of bankruptcy. He has also represented investment banking firms in connection with more than 100 transactions involving M&A structuring issues and fairness opinions. He is recognized as a leading lawyer by The Legal 500 (U.S.). Representative matters that Mr. Weissman has handled in recent years include: • 363 bankruptcy sale of “Crunch” branded health clubs to CH Fitness Investors, LLC • acquisition by First Savings Financial Group, Inc. of Community First Bank from Community First Financial Group, Inc. • $3.5 billion acquisition of OSI Restaurant Partners, Inc. by Bain Capital, Catterton Partners, and company founders. • $1.05 billion sale of Advantage Sales & Marketing, Inc. to J.W. Childs Associates, L.P. and Merrill Lynch Global Private Equity. • $700 million acquisition by Diamond Resorts, LLC, a leading company specializing in vacation ownership, of Sunterra Corporation • $591 million acquisition by GHL Acquisition Corp., a SPAC, of Iridium Holdings, LLC • $473 million going-private sale of Thomas Nelson, Inc to private equity firm InterMedia Advisors LLP • C$395 million acquisition by Garda World Security Corp. of ATI Systems International Inc. and ATI Systems’ acquisition of CDC Systems • $150 million sale of the parent company of Marietta Corporation to an affiliate of Ares Management LLC. • $150 million recapitalization of Hawaiian Holdings in connection with Hawaiian Airlines' emergence out of bankruptcy. • $100 million sale of Campus Door to an affiliate of Lehman Brothers. • $75 million acquisition by Angelo, Gordon & Co. and Eureka Capital Partners of National Home Health Care Corp. • acquisition by an investor group, including Angelo, Gordon & Co., MTN Capital Partners LLC, and Bruce Weitz, of Kings Super Markets, Inc. from Marks & Spencer. • acquisition by an investor group led by Jim Demme, senior adviser to Angelo, Gordon & Co., of six stores and licensing operations from Balducci’s LLC. Mr. Weissman is a graduate of State University of New York at Binghamton , B.A., with honors, 1978, and Rutgers University - Newark School of Law, J.D., 1982, project editor for the Rutgers Law Review. 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy

15. Brian E. Greer Brian E. Greer has substantial experience in complex out-of-court and in-court restructuring matters. His practice focuses on the representation of domestic and foreign debtors, secured and unsecured creditors, creditors’ committees, equity sponsors, senior management, financial advisors, and purchasers, sellers, and lenders in distressed M&A transactions. Mr. Greer’s recent significant transactions include: • Global counsel to Arclin US Holdings Inc., Arclin Canada Ltd., and their affiliates which manufacture adhesive resins and overlay products utilized in construction, furniture, industrial and automotive applications, in connection with the restructuring of $235 million in total funded secured debt and the chapter 11 cases of Arclin US Holdings Inc. and its domestic subsidiaries. • Representation of the outside directors of Lehman Brothers Holdings, Inc. in connection with Lehman’s chapter 11 cases. At the time of its chapter 11 filing, Lehman’s consolidated assets totaled approximately $639 billion, and its consolidated liabilities totaled approximately $613 billion. • Representation of the management of BearingPoint EMEA in connection with the chapter 11 management buyout of BearingPoint EMEA. • Counsel to a leading international money management firm in connection with the chapter 11 cases and Bermuda liquidation proceedings of failed hedge fund SageCrest Holdings Limited and its affiliated funds. • Counsel to a market leading auto parts company specializing in, among other things, aftermarket ignition products, in connection with its out-of-court restructuring of in excess of $100 million in debt obligations. • Representation of Jancor Companies, Inc. and its affiliates in connection with their chapter 11 cases. He has also led or had significant involvement in the representation of various debtors in chapter 11 cases, including Carmike Cinemas, Curative Health Services, DIMAC Holdings, Sunbeam, Teleglobe, and Williams Communications Group. Mr. Greer has significant experience advising clients in connection with their rights under repurchase agreements, securities, contracts, and swap agreements. In addition, Mr. Greer has advised clients with respect to the restructuring of SIVs and CDOs. He is a frequent author and speaker on restructuring issues and market developments. Mr. Greer is a graduate of State University of New York at Stony Brook, B.A., 1995, Psi Chi National Honor Society, and Hofstra University School of Law, J.D., 1998, Research Editor of the Hofstra Law Review. 363 Sales: Critical Issues to Consider When Buying Companies Out of Bankruptcy