Restructuring Our Fund Liquidation Desk: your team to manage stakeholders interests

Restructuring Our Fund Liquidation Desk: your team to manage stakeholders interests

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Our dedicated professional Liquidation Services Desk conducts a large number of liquidations with different levels of complexity each year. With proven expertise in the field, we accompany stakeholders throughout the liquidation process. They are provided with appropriate and independent advice to help them decide the proper course of action depending on their needs and objectives. Moreover, we ensure that the liquidation process is transparent to shareholders and unitholders and is dealt with in accordance with all legislative requirements. Thanks to this support, fund promoters can concentrate on launching new strategies and leave the liquidation tasks to dedicated and independent professionals. Restructuring Our Fund Liquidation Desk: your team to manage stakeholders interests 3 / 12

Why liquidate funds? The reasons to liquidate investment funds are manifold and can include: During the liquidation period, it is beneficial for the fund s directors to be released from their ongoing duties and responsibilities. As from the date of the appointment, the independent liquidator will take over all duties and responsibilities. The outgoing board of directors is formally discharged at an extraordinary general meeting of shareholders, and the audited financial statements as at the beginning of the liquidation are presented to the shareholders of the fund for approval. Restructuring Our Fund Liquidation Desk: your team to manage stakeholders interests 4 / 12

How we can help you? The successful delivery of a fund liquidation requires strong project management skills and a clearly defined execution step plan. Appropriate planning ensures that the project s steps, responsibilities, key milestones and project status are clear. Small or large, simple or complex, we have a proven track record in fund liquidations. Be it a voluntary or judicial dissolution, we can step in and rapidly assess the situation of the portfolio and optimize payouts. Our knowledge of audit, tax, financial advisory and consulting means that we can mobilize a team of highly experienced professionals to meet your needs. We can deliver our services in three languages: English, German and French. We also provide detailed itemized billing. Restructuring Our Fund Liquidation Desk: your team to manage stakeholders interests 5 / 12

Your benefits The successful delivery of a fund liquidation requires strong project management skills and a clearly defined execution step plan. Appropriate planning ensures that the project s steps, responsibilities, key milestones and project status are clear. 1 Benefit from a dedicated professional liquidations desk with full-time specialists, led by two partners with more than 40 years of combined experience 2 Optimize returns on divested assets 3 4 Achieve rapid payouts to investors Manage and divest illiquid and complex assets responsibly 5 Recover debts 6 Manage creditor demands 7 Conduct account and book closures 8 Control costs and free up management time 9 Accelerate the process through efficient organisation 10 Manage ongoing litigation 11 File tax returns and tax reclaims Restructuring Our Fund Liquidation Desk: your team to manage stakeholders interests 6 / 12

Typical steps in the voluntary liquidation of an investment fund Prepare a liquidation step plan, including key milestones and an estimated timeline for the closing of the liquidation Add ad hoc revisions to the liquidation step plan and communicate effectively with stakeholders in case of unforeseen delays Prepare preliminary review of last audited financial statements and draft management accounts to determine expected liquidation proceeds Liaise with international tax specialists to review and assess the tax situation of the fund and the upcoming tax declarations to be prepared 1 Liquidation planning and opening of the liquidation Review the contractual obligations of the fund and assess implications of termination Prepare termination agreements Liaise with service providers (e.g., custodian banks, transfer agents, accountants, tax experts, etc.) to discuss fee arrangements for the liquidation period and to establish necessary liquidation provisions Advise on the liquidation opening date and assist with the preparation of board minutes and convening notices for the first Extraordinary General Meeting (EGM) of shareholders resolving to put the fund into liquidation Advise on the liquidation process (e.g., advance on liquidation boni in cash or in kind) Clarify the situation of the fund in terms of distribution, listing on stock exchanges and regular publication of net asset values Assist in the preparation of required notices of the liquidation in official European Gazettes and newspapers (where applicable) Address the matters linked to the sale of the remaining portfolio investments Plan the mandatory audit of the opening as well as the closing liquidation accounts Perform an inventory of all assets and liabilities of the fund at the start of the liquidation Prepare quarterly rolling cash flow models (optional) 2 Administrative control Prepare new authorized signatories list and notify banks and service providers Prepare or instruct the preparation of all outstanding tax returns (VAT, subscription tax) and submit to the tax authorities Assess tax reclaim opportunities (e.g., the Aberdeen withholding tax ruling) Tax reporting in countries when required Prepare a schedule of all books and records to be archived and arrange for adequate storage facilities Restructuring Our Fund Liquidation Desk: your team to manage stakeholders interests 7 / 12

Investigate illiquid and toxic assets and claims to assess sales proceeds (e.g., researching publicly available information such as US bankruptcy court proceedings to verify the existence of the asset/claim, obtain additional documentation/information) Assess clawback claims related to financial fraud (e.g., Madoff, Petters, Harbinger) and evaluate participation in class action suits Follow-up on outstanding creditor claims related to bankruptcies (e.g., MF Global, Lehman etc.) Prepare detailed asset disposal/transfer step plans, including key milestones and estimated timeline for closing the transaction Plan and execute asset realizations in the secondary market 3 Realization and transfer of assets Evaluate and consult on the potential transfers of assets to shareholders and unitholders through liquidation boni in kind Assess illiquid assets, including - Hedge fund and private equity investments - Clawback claims related to financial fraud - Real estate, shipping and aircraft loans - Pledged assets with shareholder agreements limiting their disposal options - Alternative asset classes like wine, antique furniture, fine art, classic and luxury cars - Intangible assets (e.g. patents) - Precious metals and jewellery - Collateralized debt obligations (CDOs) and credit default swaps (CDSs) Analyse potential asset impairments in collaboration with the Management Company and the Investment Manager Prepare a sales pack for all portfolio investments (e.g., prospectus, latest audited financial statements, reported net asset values (NAVs), communication with the Investment Manager, etc.) Negotiate and review non-disclosure agreements (NDAs), sale and purchase agreements (SPAs) and escrow agreements in collaboration with legal counsel Organize a transparent and competitive bidding process with potential investors to optimize liquidation proceeds while limiting the liquidation period to the extent possible Review of the global tax position of the fund to align tax accruals to expected tax liabilities 4 Payment of creditor claims and interim liquidation boni Review creditor claims Provide administrative support, preparation and approval of payment instructions Advise on interim liquidation boni to shareholders (e.g., in cash or in kind) Obtain confirmation from underlying investment managers (e.g., hedge funds) that securities/claims are transferable Assist with the interim liquidation boni allocation Restructuring Our Fund Liquidation Desk: your team to manage stakeholders interests 8 / 12

5 Reporting to shareholders and regulatory authorities Review periodic liquidation NAVs prior to communication to the shareholders Report to the shareholders on a yearly basis in accordance with art. 150 of the Luxembourg Commercial Law Inform shareholders of significant events on an ad hoc basis Report quarterly to the Commission de Surveillance du Secteur Financier (CSSF) on the evolution and status of the liquidation (e.g., statutory reporting to other regulators where applicable) Arrange for the preparation of corporate and VAT tax returns Prepare and issue confirmation requests to service providers to ensure that all invoices have been received before the closure of the liquidation Deregistration from VAT Prepare the final liquidator s report to shareholders under Lux GAAP 6 Finalisation and closure of the liquidation Issue final liquidator s report under other financial reporting regimes such as IFRS (optional) Prepare the EGM that votes of the closure of the liquidation Pay final liquidation boni to shareholders. Close the bank account(s) of the fund and close the shareholders register Arrange for books and records of the fund to be archived in accordance with legal requirements De-register the fund, strike-off from the Luxembourg Trade Register, and file required documents with the CSSF Deposit liquidation proceeds that could not be distributed to the persons entitled to at the closure of the liquidation with the Caisse de Consignations Restructuring Our Fund Liquidation Desk: your team to manage stakeholders interests 9 / 12

Our case studies Portfolio transfer through subscription in kind We were appointed liquidator to the voluntary liquidation of a flagship hedge fund with an investment portfolio of 420 million (mainly hedge funds and several British Virgin Islands wholly-owned subsidiaries) by a renowned asset manager in the United Kingdom. The shareholders had resolved to transfer the investment portfolio into a new umbrella structure through a subscription in kind in exchange for shares in the new structure. We distributed the shares in the new structure through a payment in kind (PIK) to the shareholders of the liquidating fund. In a single day, we completed the whole portfolio transfer, issuance of shares in the new investment structure, and the subsequent distribution of the shares to the shareholders of the liquidating fund through a PIK. Daily liquidation NAVs per share were published throughout the liquidation period. Liquidation of a multi-jurisdiction investment structure We were appointed liquidator to the voluntary liquidation of an investment structure with a wholly-owned Mauritian subsidiary by an asset manager in the United States. We liaised with the board of directors of the Mauritian subsidiary about the conversion of participating redeemable preference shares into founders shares to simplify the shareholder structure and minimize the administrative burden for the payment of dividends and liquidation boni. We also investigated the potential recoverability of withholding tax leveraged on dividends and interest received from a Taiwanese investment on the basis of a recent double tax treaty. The tax reclaim is currently under assessment. Liquidation of an investment fund with illiquid assets We liquidated a multi-compartment investment structure (Part II SICAV) with three sub-funds and a large portfolio of illiquid hedge fund investments. The divestment of the most illiquid securities was undertaken via a secondary market sale. A sales pack for each portfolio security was prepared to optimize sales proceeds and to limit the time to the closing of the transaction. Secondary market bidders were required to provide bids on a line by line basis as well as on a portfolio basis. Restructuring Our Fund Liquidation Desk: your team to manage stakeholders interests 10 / 12

Liquidation of a fund of funds We were appointed liquidator to the voluntary liquidation of a fund of funds with an NAV of 630 million at the beginning of the liquidation. The shareholders had resolved that in liquidation we would continue hedging the various share classes and portfolio during the liquidation period. As many assets were illiquid, we entered into four different sales of sub-portfolios during the liquidation period. The liquidation process lasted about four years, but ultimately, investors received between 91 percent and 100 percent of the NAV at the beginning of the liquidation. Liquidation and PIK to shareholders We liquidated a specialized investment fund (SIF) with a 92.5 million securities portfolio of illiquid hedge funds, private equity investments (with uncalled capital commitments) and holdbacks. We distributed approximately 67 percent of the investment portfolio through payment in cash and in kind as a first advance on liquidation boni to the shareholders. We distributed a further 30 percent of the portfolio securities through a second payment in kind including private equity investments with open capital commitments and currency hedging contracts. The two advances of liquidation boni were completed within a four month period. Other special situations we have been dealing with Settling a Madoff-related clawback claim Filing the Aberdeen withholding tax reclaims with foreign tax authorities Asset tracing and recovery procedures Restructuring Our Fund Liquidation Desk: your team to manage stakeholders interests 11 / 12

Contact Forensic & Restructuring Michael JJ Martin Partner +352 451 452 449 michamartin@deloitte.lu Eric Collard Partner +352 451 454 985 ecollard@deloitte.lu Dr. Sebastian Bos Senior Manager +352 451 454 991 sebos@deloitte.lu Olivier Peter Senior Manager +352 451 452 345 opeter@deloitte.lu Laurence Kreder Manager +352 451 453 234 lkreder@deloitte.lu Deloitte Luxembourg 560 rue de Neudorf L-2220 Luxembourg Grand Duchy of Luxembourg Tel.: +352 451 451 Fax: +352 451 452 401 www.deloitte.lu Deloitte is a multidisciplinary service organisation which is subject to certain regulatory and professional restrictions on the types of services we can provide to our clients, particularly where an audit relationship exists, as independence issues and other conflicts of interest may arise. Any services we commit to deliver to you will comply fully with applicable restrictions.due to the constant changes and amendments to Luxembourg legislation, Deloitte cannot assume any liability for the content of this leaflet. It shall only serve as general information and shall not replace the need to consult your Deloitte adviser. About Deloitte Touche Tohmatsu Limited: Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/lu/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 210,000 professionals, all committed to becoming the standard of excellence. 2015 Deloitte General Services Designed and produced by MarCom at Deloitte Luxembourg