1. Turnaround Lending 2016: What Lenders and Borrowers Need to Know Panel #2 – Getting Out
Howard Brownstein Michael St. Patrick Baxter
The Brownstein Corp Covington & Burling LLP
Norbert Schmidt Joyce A. Kuhns, Moderator
AloStar Bank Offit Kurman, P.A.
Allen D. Wilen, Panelist
Eisner Amper
Patricia B. Jefferson, Panelist Robert P. Gbric, Panelist
Miles & Stockbridge PC Capital Business Credit

2. ROLES AND DUTIES OF KEY PLAYERS: LENDER, FINANCIAL ADVISOR/CRO, LAWYER
Turnaround Lending 2016
ROLES AND DUTIES OF KEY PLAYERS: LENDER, FINANCIAL ADVISOR/CRO, LAWYER

3. Credit Matrix Strong Weak Strong Norbert Schmidt AloStar Bank Weak
Watch/Evaluate
Expand
Exit
Extrinsic Factors:
Competitive Landscape
General Market Conditions
Geo Political Factors
Capital Markets
Rate Environment
Weak
Strong
Norbert Schmidt
AloStar Bank
Weak
Credit Factors:
Capital Structure / Liquidity / Management / Competitive Advantage / Assets / Cash Flow

4. Strategies and Options on Exits, Pros and Cons
Turnaround Lending 2016
Strategies and Options on Exits, Pros and Cons
Sales: Why Outside? Why Section 363 Sale?
Restructure: When Should You Restructure Outside? What Are Benefits of Plan Process?
Structured Dismissal: Much to Do About Nothing? Why Shouldn’t Lender Pay Its Tip and Walk?

5. TURNAROUND LENDING 2016 Short and Long Term Horizons:
What Might Affect Outcomes and Approaches?

6. Conclusions and Take-Aways
Turnaround Lending 2016
Conclusions and Take-Aways

7. Turnaround Lending 2016
ADDITIONAL MATERIALS
AND REFERENCES

8. Links to Relevant Articles
Evolving DE Law:
Set me Free:
You Keep Using that Word:
Transfer of Claim:
Compiled by Michael St. Patrick Baxter
Covington & Burling LLP

9. Turnaround Professional Roles
Financial Advisor
Not an agent of the Debtor, no authority to act on Debtor’s behalf
Fiduciary duty under applicable state law, plus §327 standards
Duties limited by Scope of Work in Employment Application, must seek amendment if duties need to change
Chief Restructuring Officer (CRO)
Resolution by Board of Debtor, consistent with bylaws
Duties and authority specified in board resolution and Employment Application (may be under §365)
Generally, FA/CRO deals with bankruptcy-related matters, e/g/. MRO’s, communications with stakeholders in the bankruptcy process: Debtor management, secured and unsecured creditors, shareholders, attorneys, UST, court.
Communication and management of expectations are key to avoiding unnecessary disputes and narrowing unavoidable ones
Howard Brownstein
The Brownstein Corp.

10. Key Strategic Alternatives & Timeline - I
§363 Sale
Coordinate bidding and sale procedures with Debtor counsel
Identify stalking-horse bidder, negotiate terms and coordinate Asset Purchase Agmt (APA) with Debtor Counsel
Design and manage robust sale process: coordinate NDA’s with Debtor counsel, manage VDR, cull proposals and support auction process in coordination with Debtor counsel (and UST?)
Testify about sale process
If included in Scope of Work, support ownership transition process, manage or support claims adjustment/administration, and distribution of sale proceeds
Maintain communications throughout
Howard Brownstein
The Brownstein Corp.

11. Key Strategic Alternatives & Timeline - II
Reorganization
Lead creation of restructuring plan, consistent with projected operations of Debtor post- confirmation
Assist Debtor counsel in creating Disclosure Statement and Plan of Reorganization
Assist counsel in soliciting support from stakeholder classes, including answering questions from stakeholders within applicable rules
Testify about Plan process and feasibility
Maintain communications throughout
Structured dismissal is variation on above, where permitted
Howard Brownstein
The Brownstein Corp.

12. Key Strategic Alternatives & Timeline - III
Liquidation (if sale or liquidation not possible)
Coordinate with Debtor counsel creation of Liquidating Plan and Liquidating Trust documents
Transition to Liquidating Trustee, if appropriate
Howard Brownstein
The Brownstein Corp.