Break-out-session 4

1. Break-out-session 4

2. Cross border protocols and co-operation Glen Flannery (Nabarro LLP) Ian Wormleighton (Deloitte LLP) Frederic Verhoeven (Houthoff Buruma) Mike Jervis (PricewaterhouseCoopers LLP)

3. Cross border protocols and co-operation A case study based panel session which will highlight key merits, limitations, and practicalities of cross-border protocols, by reference to current cases. This will include (i) an update on the multilateral and bilateral approaches at play between entities in the Lehman Brothers group insolvency, and (ii) an explanation of a protocol in use in the Eurodis case, to streamline the conduct of main and secondary proceedings over the same Dutch entity.

4. History and select resources • Maxwell Communications Corporation plc (1991/2) • Cross-Border Insolvency Concordat (International Bar Association1995/6) • UNCITRAL Model Law on Cross-Border Insolvency (UNCITRAL 1997) • Guidelines Applicable to Court-to-Court Communications in Cross-Border Cases (American Law Institute and International Insolvency Institute 2000/1) • European Insolvency Regulation (Council Regulation No. 1346/2000, Operative 31 May 2002) • European Communication and Cooperation Guidelines (CoCo Guidelines) (INSOL Europe Academic Wing 2007) • UNCITRAL Practice Guide on Cross-Border Insolvency Cooperation (UNCITRAL 2009/10) • Global Principles for Cooperation in International Insolvency Cases (Fletcher and Wessels April 2010)

5. Lehman Brothers – Europe

6. Lehman Brothers - overview • Over 1,000 separate legal entities • Fourth largest investment banking group in world • Run on global product lines • Hubs in New York, London, Hong Kong and Tokyo • Trading through and between group companies for cost, taxation, geographical and regulatory capital reasons • Enormous infrastructure, e.g. IT- 29 data centres, 26,500 servers, 6,000 IT staff

7. Lehman Brothers – the multilateral protocol • Protocol discussions between foreign affiliates six months after Lehman collapse • First draft proposed by Lehman Brothers Holdings Inc. (“LBHI”) • All key Lehman Brothers entities signed in May 2009, save for Lehman Brothers (International) Europe • Need for Protocol • Lehman’s activities were integrated before its collapse • Assets and activities were spread across different jurisdictions • Co-operation among affiliates contributes to efficient administration of each of the foreign proceedings • Enables court-to-court communication • Aim of Protocol • Sharing of data and information • Coordination of related activities by informing affiliates of key developments • Claims reconciliation • Comity • Current status • 8 physical meetings held • Bi-weekly/monthly Procedures Committee calls • First joint report of activities filed in January 2010

8. Eurodis Texmin Electronics BV NED Eurodis Distribution Services BV NED Eurodis Electron Holding BV NED Eurodis Electronic Services GmbH GERMANY Eurodis Group KEY English Administration Eurodis Electron PLC UK English Administration (main proceedings) Dutch Bankruptcy (secondary proceedings) Eurodis Electronics UK Ltd UK Eurodis Electronics PLC UK Eurodis Information Systems UK Eurodis Holding AG SWISS Eurodis Electronics France SA FRANCE Eurodis Electronics GmbH Austria Eurodis Electronics AS SWEDEN Eurodis Micros Holding AG SWISS Eurodis Holding AG SWISS Eurodis Electronics AS NORWAY Eurodis Electronics OY FINLAND Eurodis Electronics A/S DENMARK Eurodis Microdis Electronics BRO SLOVAKIA Eurodis Microdis Electronics KFT HUNGARY Eurodis Microdis Electronics SRO CZECH Eurodis Microdis Electronics SP ZOO POLAND Eurodis AV NED Eurodis Texim Electronics SA/NV BELGIUM Eurodis ENA Holding GmbH GERMANY Eurodis Italia Spa ITALY Eurodis LCH BV NED Central distribution hub Eurodis Enatechnik Electronics GmbH GERMANY

9. Eurodis – overview • Third largest electronic components distributor in Europe • UK head office with Dutch distribution hub and sales offices throughout Europe • Equity raisings failed to cure ongoing liquidity issues and trading continued to be impacted • English Administrators appointed to Topco and Intermediate Holdco to seek rapid sale of the operating subsidiaries • Sale not possible therefore English Administrators appointed to main Dutch and Belgian subsidiaries • In respect of Dutch subsidiaries, secondary proceedings (Bankruptcy) also opened locally in the Netherlands to assist with cost rationalisation and sale of business assets • Core asset realisation achieved via work out deal with former management

10. Eurodis – claims handling, distributions and exits • Dutch companies subject to both main and secondary proceedings (English Administration and Dutch Bankruptcy, respectively) • More than 400 claims exceeding more than €35m • By itself, the EC Regulation scheme for claims handling and distributions would be complex and costly • To streamline the process, court sanctioned protocol agreed between English Administrators and Dutch Bankruptcy Trustee • Secured, preferential and expense type claims agreed by each estate according to applicable law in each estate • For unsecured claims, a de facto single claims handling and distribution process, principally conducted by Dutch Trustee • English law and Dutch law flexible enough to achieve this outcome • Administrative consolidation or substantive consolidation?

11. Question 1 • In assessing whether to support the multi-lateral protocol in Lehman Brothers, what were the main advantages and drawbacks of the protocol approach?

12. Question 2 • Post adoption of the multi-lateral protocol in Lehman Brothers, which (if any) areas of the protocol proved helpful and which (if any) have proved contentious?

13. Question 3 • Is the current EC Regulation scheme for claims handling and distributions fit for purpose or in need of reform?

14. Question 4 • Are protocols the ideal solution to resolution of conflicts and lacuna in cross-border insolvency cases?