Global Insolvency Update for U.S. Multinationals April 29, 2009 Washington, D.C.

1. Global Insolvency Update for U.S. Multinationals April 29, 2009 Washington, D.C.

2. Global Insolvency Update Introducing Our Panel • Peter Bert, Taylor Wessing Partnerschaftsgesellschaft, Frankfurt, Germany • Jeanne Darcey, Edwards Angell Palmer & Dodge LLP, Boston, MA • Soledad Matteozzi, Alfaro Abogados, Buenos Aires, Argentina • Yi Zhang, King & Wood, Shanghai, China

3. Global Insolvency Update What We’ll Cover • Doing Business Globally: USCorp Hypothetical • European Insolvency of multi-national companies: Joint Administration, Determination of COMI • Reorganization or Insolvency? • Specific Issues: • Reorganization, Sale or Liquidation • Management in Control or Trustee/Administrator • Director Liability, Priority of Debts, Treatment of Executory Contracts, Employee Claims, Insider Claims • Reorganization Plans & Creditor Input • Your questions

4. Global Insolvency Update Doing Business Globally: USCorp Hypothetical • USCorp sells its products throughout Europe, through its direct subsidiary Eurocorp, headquartered in London, and Eurocorp’s 2 subsidiaries located in Rome and Berlin; • Eurocorp’s 7-member board is comprised of 3 German directors, 3 Italian and 1 UK; board meetings are held telephonically; • Upper management resides in London and consolidated accounting is performed in London; • USCorp also sells its products throughout South America, through S.A. Corp, a distributor with a long-term licensing agreement; • USCorp’s products are manufactured in China, and USCorp loaned $5 million to Chinacorp for to purchase new manufacturing equipment; USCorp has a lien on the new equipment to secure the loan; • USCorp, S.A. Corp and Chinacorp (all financed by Lehman) can no longer access credit after Lehman’s bankruptcy filing, and USCorp can no longer finance Eurocorp. Creditors are demanding payment, employees are threatening to leave and USCorp needs advice on how to proceed.

5. Global Insolvency Update Doing Business Globally: USCorp Hypothetical US Corp. 100% Supply Agreement Eurocorp Ltd., London Licensing Agreement Loan US$ 5,000,000 100% 100% Berlin GmbH Rome S.p.a Argentina MedDistribution S.A., Buenos Aires China Corp Manufacturing Ltd., Shanghai

6. Insolvency Proceedings In Various Jurisdictions Eurocorp • Should Eurocorp file each entity separately, or file a joint administration proceeding for itself and the subsidiaries? • What is COMI? • Is one jurisdiction more favorable than another? • What factors are considered in choosing where to file a joint administration proceeding? • What happens if the proceedings are not coordinated and one subsidiary determines to file separately? • Can a creditor file an involuntary petition?

7. Center of Main Interest (COMI) Center of Main Interest (COMI) Meaning/relevancy The competent jurisdiction for insolvency proceedings in the European Union is the court of the Member State where the debtor's center of main interest (COMI) is located (Art. 3 para.1 of the Regulation (EC) No. 1346/2000 on Insolvency Proceedings) Definition The Regulation does not provide for a clear definition; the only guidance emerges from recital 13 and Art.3 para.1 COMI has therefore been defined by case law However the definiton is controversial among Member States' courts

8. Center of Main Interest (COMI) Center of Main Interest (COMI) Factors Visible presence of the company, decision-making, management etc. Jurisdictional Differences The approach adopted in continental Europe can be referred to as the “centre of operations approach” insofar as the debtor's COMI is determined by the place where he is “ascertainable by third parties” The Anglo Saxon approach is known as the “mind of management approach” insofar as the debtor's COMI is situated where decisions are actually made

9. Insolvency Proceedings In Various Jurisdictions Eurocorp, Chinacorp and S.A. Corp – Questions arise such as: What are USCorp’s rights in the bankruptcy proceedings of these entities? Is there a reorganization? Can creditors file an involuntary petition? Does management remain in possession, or is a third party trustee/administrator appointed? What rights do creditors have in the proceedings? Is there a creditors’ committee? Can creditors force a sale of the companies to satisfy their debts? What happens with USCorp’s license agreement with S.A. Corp? Does it survive the bankruptcy filing? Can USCorp terminate the license and obtain a different sales distributor? Can the administrator or a trustee terminate the license agreement – or sell it to another party? Can USCorp get its loan to Chinacorp repaid? Will it continue to receive its products timely? Can its contracts with Chinacorp be terminated? Under what circumstances can the directors be held personally liable? As a lender, does Lehman get repaid first? How is a plan of reorganization or rehabilitation implemented? Is there a creditor vote?

10. Jurisdictional Considerations • Treatment of Specific Issues By Jurisdiction

11. Jurisdictional Considerations Treatment of Specific Issues By Jurisdiction

12. Jurisdictional Considerations Treatment of Specific Issues By Jurisdiction

13. Jurisdictional Considerations Treatment of Specific Issues By Jurisdiction

14. Global Insolvency Update

15. Global Insolvency Update Peter Bert, Taylor Wessing Partnerschaftsgesellschaft, Frankfurt, Germany Peter is admitted both in Germany as Rechtsanwalt and as solicitor in England and Wales. He read law at University College Cardiff (as an ERASMUS exchange student) and at Passau University (first state exam, 1991) as well as economics at Konstanz University (post-graduate degree in international economics, 1992). In 1993, he was a visiting researcher at Harvard Law School. Since 1996, he  has been in private practice in Frankfurt  an a partner in Taylor Wessing since 2003. Peter has substantial experience in representing foreign, mainly US, UK and Indian clients investing in Germany, with a focus on M&A and private equity investments,  many of those in a distressed environment, and in restructurings. He also advises on cross-border disputes, be it in arbitration, litigation or mediation. In 1999, he was accredited as a mediator by CEDR, London.  Jeanne Darcey, Edwards Angell Palmer & Dodge LLP, Boston, MA Jeanne is a partner at the law firm of Edwards Angell Palmer & Dodge LLP and is co-chair of the Restructuring & Insolvency Department at the firm. Her practice focuses on the representation of indenture trustees and holders of public and private debt, and secured and unsecured creditors in workouts and chapter 11 proceedings. Jeanne also advises clients with respect to potential bankruptcy issues and implications in structuring transactions, purchasing assets, litigation and other strategies. Jeanne currently services as Chair of the Bankruptcy and restructuring Section of the World Law Group and as Co-chair of the CLE Committee for the Bankruptcy Section of the Boston Bar Association.

16. Global Insolvency Update Soledad Matteozzi, Alfaro Abogados, Buenos Aires, Argentina Mrs. Matteozzi is the partner in charge of the New York office of Alfaro-Abogados, an Argentine law firm with its main office in Buenos Aires, Argentina and offices in Madrid and New York. She is a Corporate and Finance attorney experienced in cross-border transactions, corporate restructuring and multijurisdictional advisory.  Her practice also focuses in Corporate Compliance and Governance matters representing US and European corporations doing business in Argentina. She is a Certified Compliance Officer Professional (CCEP), a degree issued by the Society of Corporate Compliance and Ethics for her knowledge of relevant regulations and expertise in compliance processes, and for her assistance to corporate industries in understanding and addressing legal obligations through the operation of effective compliance programs. She graduated from the University of Belgrano in Argentina, and gained her LL.M from Fordham Law School University in New York. She is admitted to practice law in Argentina and in New York. Yi Zhang, King & Wood, Shanghai, China Mr. Zhang is the managing partner of King & Wood Shanghai Office. His practice area mainly covers merger & acquisition, private equity, restructuring, securities law and etc. Mr. Zhang has earned extensive experience in his practice, and handled several milestone projects in China, including APP USD1.3 billion banking debt restructuring and equity restructuring in the PRC. He also assists in the formation of RMB funds and has gained extensive experience in this regard. Mr. Zhang earns fairly wide recognition in the legal profession and has been nominated for several times as one of the leading individuals in Chinese legal market. Mr. Zhang graduated from University of International Business and Economics with a LL.B. and gained his LL.M. from Stanford Law School. He also has an Executive MBA degree. Mr. Zhang is both qualified in PRC as well as New York.