Banking and Finance, Corporate and Commercial, Employment, Litigation and Arbitration, Real Estate, Regulatory, Restructuring and Insolvency, and Tax.

Transcription

1 N EW S CE M ST AN CU CI R AN EM D D N EW LU SO TI O N S

2 The turmoil in global financial markets has created an uncertain, and in many ways unprecedented, corporate landscape. Credit is restricted, asset values have fallen, markets are volatile and demand in some areas has sharply declined. All sectors of business worldwide are facing new challenges. Challenges that require new thinking. Salans is a dynamic international law firm with 20 offices and over 750 lawyers worldwide. Our international network enables us to unlock opportunities for our clients across borders and find comprehensive solutions. While our deep roots in each location mean that we can provide focused legal advice tailored to each of the jurisdictions in which we operate. To provide you with an agile response to the downturn we have combined our practice experts into one multijurisdictional team. It is made up of the following legal disciplines: Banking and Finance, Corporate and Commercial, Employment, Litigation and Arbitration, Real Estate, Regulatory, Restructuring and Insolvency, and Tax. A key feature of Salans is our ability to innovate in response to the commercial needs of our clients. This also enables us to help you identify opportunities, which we then work with you to realise. Salans advises financial institutions and other lenders, borrowers, sellers or purchasers of debt and corporates engaged in all types of re-structuring and turnarounds. Whatever the role and need of our clients, they come to us for one thing: solutions. And there has never been a greater need for those than now.

3 RESTRUCTURING SOLUTIONS DISTRESSED DEBT SOLUTIONS FOR LENDERS FAILED BANK SOLUTIONS CONTACT US CORPORATE RESTRUCTURING SOLUTIONS Our highly-rated restructuring reorganisation and insolvency team is located across our network of offices. We are one of the few law firms who can provide true cross-border solutions as well as domestic answers to the most complex restructuring reorganisation and insolvency questions. The advice we offer covers: Initial analysis of contractual positions, rights, obligations and risk, to assist clients in developing a sound commercial strategy; Corporate, debt and asset (including real estate) work-outs, restructurings, recoveries and turnarounds; Management and/or disposal of distressed debt and other assets, for sellers and purchasers; Advice on dispute resolution, including local and global coverage of arbitration and litigation, and cross-border recognition and enforcement of arbitral awards and of legal judgements; Regulatory and tax advice in relation to distressed assets and restructurings; Foreclosure and loan-to-own strategies; Formal bankruptcy and insolvency advice.

4 RESTRUCTURING SOLUTIONS CORPORATE RESTRUCTURING SOLUTIONS Our highly-rated restructuring reorganisation and insolvency team is located across our network of offices. We are one of the few law firms who can provide true cross-border solutions as well as domestic answers to the most complex restructuring reorganisation and insolvency questions. Our team can advise on the key area of directors responsibilities and corporate governance issues. We advise on the liquidation of non-performing assets and, where appropriate, the introduction of potential investors to additional funding from hedge/turnaround funds. We can also devise sale and leaseback plans to ease liquidity. Our specialists lead negotiations with banks and other funders, and with other stakeholders such as credit card companies, credit insurers, suppliers and customers. Their expertise with banking covenants is usually an integral part of these negotiations. Our team advises on insolvency protection regimes and works with our clients to formulate and implement restructuring plans with or without court protection. Each client s needs are different: our first task is to rapidly assess the issues, to bring together the team with the right expertise across jurisdictions and different areas of practice, and then to work closely with you to deliver solutions that are both timely and cost-effective.

5 CASE HISTORIES Steering a German automotive manufacturer in a new direction The Background A German automotive manufacturer with financial problems was considering insolvency proceedings within Germany. Their corporate structure was complex, in that the holding company had subsidiaries in different Federal States, which would have led to significant insolvency issues. Our client required a different solution. The Transaction The debtor and the main creditors were seeking an insolvency procedure which was fast and flexible, and in which they could effectively force majority decisions, as they had an unsecured bond issue a New York Bond - amounting to EUR 200 million with additional unknown bondholders. Salans was tasked to advise the client in the proceedings of identifying a suitable vehicle to meet the needs of the creditors. The Solution The UK company voluntary agreement (CVA) was selected as the preferred choice since it avoided the requirement of German insolvency law to realise and distribute the assets, an outcome which was not acceptable to the creditors. The solution was to move the headquarters of the German holding company from Germany to the UK and that the new UK parent company was turned into a public limited company. The UK company voluntary agreement (CVA) was then implemented and the company restructured. The restructuring was made possible via a debt-forequity swap whereby the creditors removed liabilities of about EUR 300 million from the balance sheet and the bondholder released the EUR 200 million bond debt. In addition shareholder and related loans were deleted. There was a release of guarantees of the bond debt from the majority of the operating companies and several other subsidiaries. The approval of the New York bondholders to the CVA was achieved via Chapter 15 proceedings which enabled the majority to vote the other bondholders down. An acquisition story that paid dividends The Background Cadence Innovation France, a subsidiary of the American group Cadence Innovation, was placed in judicial liquidation on 21st September The company was, however, able to continue trading while waiting for offers from potential purchasers. Our task at Salans was to work with the Faurecia Group to identify acquisition solutions. The Transaction The French Court validated Faurecia s proposals, and the company took over Cadence Innovation France s site in Burnhaupt and some of its activities in Noeux-les-Mines. Prior to the takeover there had been considerable unrest within Cadence Innovation France, and a number of its plants came to a standstill, affecting several suppliers, leading to the temporary lay off of 15,000 employees and resulting in the closure of production lines among its principal customers. The Solution This was one of the first sale plans of its size to be undertaken during the course of a judicial liquidation. It proved to be a more appropriate takeover tool than those previously available. In addition, in a difficult social context, the plan and the conditions for its implementation enabled the business to be restructured, illustrating the value of the new flexibility now available under French law. Faurecia benefited from the close proximity of its acquired operations, creating synergies and improving competitiveness. The company also had support from its principal customers and together these enabled Faurecia to improve its market position. The Salans Restructuring Team worked closely with the Faurecia Group to find the most appropriate legal solution to fulfil its objectives. The final acquisition by Faurecia resolved the economic and social crisis within Cadence. Overall, an innovative solution that was ultimately acceptable to all parties.

6 DISTRESSED DEBT SALE AND PURCHASE OF DISTRESSED DEBT Distressed business can bring opportunities for those with the appetite and resources to exploit them. Our international network has the experience to support the most complex transactions and to ensure that our clients strategies are fully, and quickly realised. Our Restructuring, Reorganisation and Insolvency team evaluates different strategies to achieve the desired commercial outcome across diverse sectors and in many jurisdictions. Our firm s specialists review banking facilities, inter-creditor issues and evaluate the rights of different security interests such as mezzanine lenders, bond holders and other stakeholders. Depending on the strategy to be employed, whether loan-to-own, debt acquisition or injection of new finance or equity acquisition, the team recommends the optimal positioning for the client. The situation is often fast moving, with a number of competing interests of the parties involved. This requires lateral thought and creative solutions as many stakeholders have an influence in the turnaround. Our team deals with all facets of a transaction, including debt and/or equity acquisition documentation, shareholder agreements and employment issues. The team will often have a key role advising on the property aspects, both from a real estate perspective and also from a security point of view. These transactions will usually include consideration of tax issues. They may also require a review of competition issues where the buyer holds interests in similar businesses. Each client s needs are different: our first task is to bring together the team with the right expertise across jurisdictions and practice areas and then to work closely with our client to deliver innovative and effective solutions.

7 CASE HISTORY Saving a British Institution: the acquisition and restructuring of Little Chef. (a national restaurant chain) The Background RCapital Ltd, a turnaround-funding specialist, planned to purchase the business from the Administrators. The challenging aspect to this transaction was to structure the deal to minimise the working capital requirement of the business. This required a complex interplay between a number of stakeholders, including key suppliers, trade insurers and landlords. The Transaction Salans was involved in the deal from inception and worked closely with RCapital to save as many outlets as possible from closure. We were also involved in negotiating the purchase of the business and assets of Little Chef. The key stakeholder of the business was the landlord, Olympia Properties. We created a shareholding structure whereby Olympia Properties subscribed for a second class of shares which attracted no dividends nor benefit from any sale of the business or assets. This in effect meant that the Olympia Properties sites were rent-free. To assist working capital, we negotiated advantageous terms with trade insurers to ensure continuity of trade. In addition, we advised on new credit agreements with key suppliers to ensure continuity of supply. The Solution The dedicated Salans team of 27 lawyers and assistants covered legal due diligence, formation of a legal framework, banking, corporate governance, inter-creditor agreements and employment agreements - including new employment contracts and incentive schemes for the employees - as well as litigation and property matters. The resulting solution saved around 200 sites with the preservation of a significant number of jobs. The work was undertaken within a four-day period.

8 SOLUTIONS FOR LENDERS SOLUTIONS FOR LENDERS Volatile market conditions bring new challenges for lenders to businesses and commercial enterprises that require wide experience and agile thinking. At Salans, we combine depth of resource through our international network with a flexible structure that delivers robust solutions for lenders, on time and on budget. Our banking team regularly conducts Independent Business Reviews on behalf of lenders and calls upon property and insolvency specialists as required. Integral to this is an understanding of the relationships of key stakeholders. We advise on covenant breaches and intercreditor agreements. We can assess obligations to provide new funds. Our litigation team can enforce security against companies and guarantors. Our banking team works closely with the corporate and insolvency practices to formulate and implement restructuring plans. These may include debt equity swaps, standstill agreements or administration. Each client s needs are different: our banking team s first task is to bring together the right expertise across jurisdictions and practice areas and then to work together to deliver solutions that are both timely and cost-effective.

9 CASE HISTORIES Advising Vivendi S.A. on cross border legal issues The Background The Polish conglomerate Elektrim S. A. went bankrupt on a massive scale with creditors exceeding EUR 12 billion. Our client Vivendi S.A. and its subsidiaries made claims of EUR 1.9 billion against Elektrim. This was due to breaches by the company over an investment agreement concerning the Polish telecommunications market. It was a complex bankruptcy as the company was involved in a major dispute over a majority stake in the Polish mobile operator PTC, as well as in asset-stripping transactions to the detriment of its creditors. The Task Salans in Warsaw was involved in a variety of aspects of the PTC dispute and subsequent Elektrim bankruptcy proceedings and worked with a number of colleagues in other Salans offices to provide cross-border advice. The team obtained freezing injunctions on Elektrim s assets which also involved working with lawyers in Berlin on an injunction attaching claims of Elektrim against Deutsche Telekom AG in Germany. The international team was also involved in the pending LCIA arbitration in England. It provided advice regarding the challenge by Elektrim of the jurisdiction of the Swiss ICC and English LCIA Tribunals in pending arbitrations against Elektrim based on Polish insolvency law, among other areas. The Solution In March 2008 the LCIA Tribunal issued an award in favour of the client confirming Elektrim s liability for breaches of the investment agreement with Vivendi and confirmed its continued jurisdiction over the dispute. Elektrim s subsequent challenge was dismissed by the High Court in September The case is now pending over an appeal to the English court judgement. The Elektrim case confirms the ability of the Salans international network to provide comprehensive solutions to creditors on extremely complex legal issues that have cross border implications. Global EPP Limited The Background Salans acted for a group of 17 asset based lenders ( the ABLs ) following the financial collapse of Global EPP Limited, owing, inter alia, circa 50 million to the ABLs, Fraud had allegedly been perpetrated by Global s management in removing the serial numbers of the assets funded by the ABLs, without which the ABLs could not identify their assets. The Litigation We were instructed at 6pm on the day before the Administrators were due to appear at the High Court in London. The Administrators were seeking an order authorising them to sell the assets of the ABLs. By midnight, we had circulated advice to the ABLs that they should oppose the Administrators application. Under English insolvency law, it was premature for the court to authorise the Administrators to sell the ABLs security before the Administrators had found a buyer for Global s business; without the Administrators satisfying the ABLs that the sale would reflect the market value of their security. From a commercial perspective, the Administrators needed to restore dialogue with the ABLs regarding the sale of their assets. This was in order to address the conflict between the ABLs interests and those of the Administrators which were claiming security over the goods funded by the ABLs. The Solution Less than 24 hours after being instructed, we successfully opposed the Administrators court application and obtained an order that the funders costs be paid as an expense of the administration. This resulted in the Administrators reaching an agreement with the ABLs regarding the sale of their assets and a process for resolving the conflict between the ABLs and the administrators. To achieve this solution, Salans drew upon the breadth and depth of its expertise in asset finance and insolvency.

10 FAILED BANK SOLUTIONS FAILED BANK SOLUTIONS When a bank fails, acting quickly is paramount, whether as a customer, counterparty or administrator. At Salans, we have the resources and the flexibility to put together teams for our clients with all the necessary expertise, across jurisdictions. And we do it fast. For customers and counterparties, our banking team can develop strategies for dealing with administrators; we will typically also lead the negotiations with them. Our advice will usually include an appraisal of the obligations on the administrator to make further advances. Our re-structuring experts will look at options such as the buy-back of debt and other refinancing routes. Our team will work closely with relevant regulators to ensure an orderly restructuring or disposal of the business to third parties, which secures our clients position. Whatever the strategy, the team at Salans will be focused on one outcome: the right solution, delivered speedily and to maximise value. Our insolvency team works with major creditors holding bank debt and advises on the sale of assets such as the bank loan book or packages of distressed debt.

11 CASE HISTORY Lehman Brothers: protecting our clients interests The Background On the 15th September 2008 Lehman Brothers Holdings Inc. (the ultimate parent company in the Lehman group) filed a voluntary petition under Chapter 11 of the US Bankruptcy Code. Following the US filing, a number of group entities in the UK also entered into administration. Insolvency and banking moratorium proceedings were commenced in Switzerland, Germany and Japan. The Task Salans in London, New York and Warsaw immediately moved to draft and issue close-out notices to assist clients with exposures to Lehman entities. In London and New York our teams helped clients in their dealings with the relevant bankruptcy and administration bodies. We advised on default, termination and netting procedures, participated in organisational activities for unsecured creditors, assisted in cash management negotiations with the US debtors, assisted in the transition of operating agreements from the Lehman debtors to asset purchasers and, on behalf of lenders, we have assumed responsibility for real estate development projects, which have become troubled as a result of the Lehman filing. Furthermore, we issued legal opinions on collateral. The Solution Our global network and collaborative culture enabled Salans to act swiftly to protect our clients positions. Our banking teams in New York, Warsaw, Paris and Moscow worked together to ensure that all available information and know-how was shared across our offices without delay. By doing so, we protected our clients from any potential further losses from various trades with Lehman entities, as well as ensuring that all the relevant legal procedures were followed correctly. New circumstances often demand fast solutions. Our response to the Lehman bankruptcy demonstrated both our depth of resource and agility of operation at a time when both were urgently needed.

12 CONTACT US CONTACT US Wherever you are in the world, we have lawyers who can be contacted to discuss your needs: ALmATY Aigoul Kenjebayeva BRATISLAv va Ladislav Storek KYI v Oleg Batyuk obatyuk@salans.com paris Pierre-Gilles Wogue pwogue@salans.com BAKU James Hogan jhogan@salans.com BUCHAREST Tiberiu Csaki tcsaki@salans.com LONDON Bryan Green bgreen@salans.com prague Stewart Middleman smiddleman@salans.com BEIjING Matthias Mueller mmueller@salans.com BUDApEST Tamas Tercsak ttercsak@salans.com madrid Jose Maria Buxeda Maisterra jmbuxeda@salans.com SHANGHAI Dr Bernd Uwe Stucken bstucken@salans.com BARCELONA Juan Ignacio Alonso jalonso@salans.com FRANKFURT Andreas Ziegenhagen aziegenhagen@salans.com moscow Mathieu Fabre-Magnan mfabre-magnan@salans.com ST petersburg Mikhail Ivanov mivanov@salans.com BERLIN Andreas Ziegenhagen aziegenhagen@salans.com ISTANBUL Haluk Can Ozel hcozel@salans.com NEw YORK Claude Montgomery cmontgomery@salans.com warsaw Anna Pukszto apukszto@salans.com

13 Both Salans and Salans LLP are regulated by the Solicitors Regulation Authority. In certain jurisdictions this brochure may constitute attorney advertising. Salans LLP is a Limited Liability Partnership registered in London with Registration Number OC Registered Office Millenium Bridge House, 2 Lambeth Hill, London EC4 4AJ, United Kingdom. A list of Members of Salans LLP is available at the above Registered Office Salans, Salans LLP. All rights reserved.