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BUYING AND SELLING DISTRESSED BUSINESSES, PART 1 & PART 2 First Run Broadcast: October 11 & 12, 2016 1:00 p.m. E.T./12:00 p.m. C.T./11:00 a.m. M.T./10:00 a.m. P.T. (60 minutes each day) Buying financially distressed companies or assets can offer great opportunities buying assets at a discounted price with the expectation that they will recover in time. The upside, however, comes with substantial risk beyond making the right business decision. The legal challenge is structuring the transaction to preserve the value of the assets involved while identifying and limiting liability that often attaches to those discounted assets. Assets may be purchased pre- bankruptcy or in a variety of structures through bankruptcy proceedings, or even in a bankruptcy auction. Each type of transaction involves special structuring and procedural considerations. This program will provide you practical guide to advising your clients about buying financially distressed companies and assets before or during the bankruptcy process. Day 1 October 11, 2016: Overview of the market distressed loans, assets and operating businesses What deals are getting done/not done Identifying and quantifying value in distressed businesses Legal framework of buying/selling distressed businesses Acquiring value while limiting successor liability Non-bankruptcy strategies for acquiring/selling businesses Day 2 October 12, 2016: Bankruptcy framework for buying distresses businesses Practical process of negotiating and obtaining approval for an acquisition out of bankruptcy Bankruptcy auctions - how they work, the players and traps for those new to the process "Loan to own" strategies for acquiring distressed businesses Risks and liability issues of buying assets or businesses out of bankruptcy and techniques to limit liability Speakers: William L. Norton is a partner in the Nashville office of Bradley Arant Boult Cummings, LLP, where he focuses his practice in the business bankruptcy area, dealing in all aspects of bankruptcy cases, creditor rights and insolvency. He is the Managing Editor of Norton Bankruptcy Law and Practice 2d (Thomson West), a premier 12 volume treatise and is the co- author of Norton Creditors' Rights Handbook (Thomson West). He is a Fellow of American College of Bankruptcy and is adjunct professor at Vanderbilt Law School. He formerly served as president of the American Board of Certification, which certifies attorneys who specialize in the areas of creditor rights and bankruptcy law and is a leader in the Business Bankruptcy Committee of the ABA’s Business Section. Mr. Norton received his B.A. from Vanderbilt University and his J.D. from Vanderbilt University Law School.

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  • BUYING AND SELLING DISTRESSED BUSINESSES, PART 1 & PART 2

    First Run Broadcast: October 11 & 12, 2016

    1:00 p.m. E.T./12:00 p.m. C.T./11:00 a.m. M.T./10:00 a.m. P.T. (60 minutes each day)

    Buying financially distressed companies or assets can offer great opportunities – buying assets at

    a discounted price with the expectation that they will recover in time. The upside, however,

    comes with substantial risk beyond making the right business decision. The legal challenge is

    structuring the transaction to preserve the value of the assets involved while identifying and

    limiting liability that often attaches to those discounted assets. Assets may be purchased pre-

    bankruptcy or in a variety of structures through bankruptcy proceedings, or even in a bankruptcy

    auction. Each type of transaction involves special structuring and procedural considerations.

    This program will provide you practical guide to advising your clients about buying financially

    distressed companies and assets before or during the bankruptcy process.

    Day 1 – October 11, 2016:

    Overview of the market – distressed loans, assets and operating businesses

    What deals are getting done/not done

    Identifying and quantifying value in distressed businesses

    Legal framework of buying/selling distressed businesses

    Acquiring value while limiting successor liability

    Non-bankruptcy strategies for acquiring/selling businesses

    Day 2 – October 12, 2016:

    Bankruptcy framework for buying distresses businesses

    Practical process of negotiating and obtaining approval for an acquisition out of bankruptcy

    Bankruptcy auctions - how they work, the players and traps for those new to the process

    "Loan to own" strategies for acquiring distressed businesses

    Risks and liability issues of buying assets or businesses out of bankruptcy – and techniques to limit liability

    Speakers:

    William L. Norton is a partner in the Nashville office of Bradley Arant Boult Cummings, LLP,

    where he focuses his practice in the business bankruptcy area, dealing in all aspects of

    bankruptcy cases, creditor rights and insolvency. He is the Managing Editor of Norton

    Bankruptcy Law and Practice 2d (Thomson West), a premier 12 volume treatise and is the co-

    author of Norton Creditors' Rights Handbook (Thomson West). He is a Fellow of American

    College of Bankruptcy and is adjunct professor at Vanderbilt Law School. He formerly served

    as president of the American Board of Certification, which certifies attorneys who specialize in

    the areas of creditor rights and bankruptcy law and is a leader in the Business Bankruptcy

    Committee of the ABA’s Business Section. Mr. Norton received his B.A. from Vanderbilt

    University and his J.D. from Vanderbilt University Law School.

  • Jacob A. Brown is a partner in the Jacksonville, Florida office of Akerman, LLP, where his

    practice focuses primarily on bankruptcy, commercial litigation, and business law representing

    secured and unsecured creditors, committees, trustees, and debtors. His practice also includes

    workouts and business reorganizations, as well as the analysis of complex legal and business

    issues associated with bankruptcy and real estate matters and representation of commercial

    landlords in bankruptcy cases throughout the United States. Prior to private practice, he served as

    judicial clerk for Bankruptcy Judge Jerry A. Funk of the Middle District of Florida. Mr. Brown

    earned his B.S. from North Carolina State University and his J.D. from Samford University

    School of Law.

  • VT Bar Association Continuing Legal Education Registration Form

    Please complete all of the requested information, print this application, and fax with credit info or mail it with payment to: Vermont Bar Association, PO Box 100, Montpelier, VT 05601-0100. Fax: (802) 223-1573 PLEASE USE ONE REGISTRATION FORM PER PERSON. First Name ________________________ Middle Initial____Last Name___________________________

    Firm/Organization _____________________________________________________________________

    Address ______________________________________________________________________________

    City _________________________________ State ____________ ZIP Code ______________________

    Phone # ____________________________Fax # ______________________

    E-Mail Address ________________________________________________________________________

    Buying & Selling Distressed Businesses, Part 1 Teleseminar

    October 11, 2016 1:00PM – 2:00PM

    1.0 MCLE GENERAL CREDITS

    PAYMENT METHOD:

    Check enclosed (made payable to Vermont Bar Association) Amount: _________ Credit Card (American Express, Discover, Visa or Mastercard) Credit Card # _______________________________________ Exp. Date _______________ Cardholder: __________________________________________________________________

    VBA Members $75 Non-VBA Members $115

    NO REFUNDS AFTER October 4, 2016

  • VT Bar Association Continuing Legal Education Registration Form

    Please complete all of the requested information, print this application, and fax with credit info or mail it with payment to: Vermont Bar Association, PO Box 100, Montpelier, VT 05601-0100. Fax: (802) 223-1573 PLEASE USE ONE REGISTRATION FORM PER PERSON. First Name ________________________ Middle Initial____Last Name___________________________

    Firm/Organization _____________________________________________________________________

    Address ______________________________________________________________________________

    City _________________________________ State ____________ ZIP Code ______________________

    Phone # ____________________________Fax # ______________________

    E-Mail Address ________________________________________________________________________

    Buying & Selling Distressed Businesses, Part 2 Teleseminar

    October 12, 2016 1:00PM – 2:00PM

    1.0 MCLE GENERAL CREDITS

    PAYMENT METHOD:

    Check enclosed (made payable to Vermont Bar Association) Amount: _________ Credit Card (American Express, Discover, Visa or Mastercard) Credit Card # _______________________________________ Exp. Date _______________ Cardholder: __________________________________________________________________

    VBA Members $75 Non-VBA Members $115

    NO REFUNDS AFTER October 5, 2016

  • Vermont Bar Association

    CERTIFICATE OF ATTENDANCE

    Please note: This form is for your records in the event you are audited Sponsor: Vermont Bar Association Date: October 11, 2016 Seminar Title: Buying & Selling Distressed Businesses, Part 1 Location: Teleseminar - LIVE Credits: 1.0 MCLE General Credit Program Minutes: 60 General Luncheon addresses, business meetings, receptions are not to be included in the computation of credit. This form denotes full attendance. If you arrive late or leave prior to the program ending time, it is your responsibility to adjust CLE hours accordingly.

  • Vermont Bar Association

    CERTIFICATE OF ATTENDANCE

    Please note: This form is for your records in the event you are audited Sponsor: Vermont Bar Association Date: October 12, 2016 Seminar Title: Buying & Selling Distressed Businesses, Part 2 Location: Teleseminar - LIVE Credits: 1.0 MCLE General Credit Program Minutes: 60 General Luncheon addresses, business meetings, receptions are not to be included in the computation of credit. This form denotes full attendance. If you arrive late or leave prior to the program ending time, it is your responsibility to adjust CLE hours accordingly.

  • Buying and Selling Distressed Businesses

    Jacob A. Brown

    Akerman, LLP – Jacksonville, Florida

    (o) (904) 598-8630

    [email protected]

    mailto:[email protected]

  • Akerman | 2

    Overview of the market

    Distressed loans, assets and operating businesses

    What deals are getting done/not done

    Identifying and quantifying value in distressed businesses

    Legal framework of buying/selling distressed businesses

    Acquiring value while limiting successor liability

    Non-bankruptcy strategies for acquiring/selling businesses

    Strict Foreclosure

    Article 9 Sale

    Bankruptcy

    Assignment for Benefit of Creditors

    Buying and Selling Distressed

    Businesses – Part 1

  • Akerman | 3

    Somewhat of a holding pattern with interest rates and November election

    The Federal Reserve will eventually raise rates. More and more pressure

    to do so.

    Expect more commercial loans to mature in 2017, some from the kick the

    can down the road type forbearance agreements from the last few years

    and lenders being more willing to take back their collateral

    Overview of the market Distressed loans, assets and operating businesses

  • Akerman | 4

    In the distressed world, oil and gas bankruptcy cases remain active. West

    Texas Intermediate, an oil pricing benchmark, is expected to remain

    relatively flat for the foreseeable future.

    This may be bad for oil and gas, but helps other industries.

    Pre-packaged bankruptcy cases.

    Still some speculative real estate deals, but nowhere near where we were

    a few years ago.

    Restaurant chains and retail filings.

    Don't seem to be sale cases, but some are.

    Many are to deal with underperforming locations and leases.

    Some are essentially liquidations.

    What deals are getting done/

    not done

  • Akerman | 5

    Due diligence.

    Consider outside expertise.

    Identifying and quantifying

    value in distressed businesses

  • Akerman | 6

    What are the issues revealed through the due diligence process?

    Frame deal around those

    Debt structure could drive deal. Who are the key players?

    secured vs. unsecured, bond debt

    Employee issues (key employee, plans, employee liabilities).

    Legal framework of

    buying/selling distressed

    businesses

  • Akerman | 7

    This starts with due diligence.

    Understand what liabilities are out there.

    Court approved bankruptcy sale with a strong court order is the best way

    to address any uncertainty with successor liability.

    Typical deal representations and warranties may be of limited value

    because the selling entity is likely defunct.

    Acquiring value while limiting

    successor liability

  • Akerman | 8

    Assignments for Benefit of Creditors

    Florida has a statute.

    Friendly foreclosure

    Acquire debt/loan to own

    Strict Foreclosure

    Article 9 Sale

    Out of Court Negotiations

    There are many options and strategies that could be developed and

    deployed here.

    Non-bankruptcy strategies for

    acquiring/selling businesses

  • Akerman | 9

    Bankruptcy framework for buying distresses businesses

    Practical process of negotiating and obtaining approval for an acquisition

    out of bankruptcy

    Bankruptcy auctions - how they work, the players and traps for those new

    to the process

    "Loan to own" strategies for acquiring distressed businesses

    Risks and liability issues of buying assets or businesses out of bankruptcy

    – and techniques to limit liability

    Buying and Selling Distressed

    Businesses – Part 2

  • ©Bradley Arant Boult Cummings LLP Attorney-Client Privilege.

    Buying and Selling Distressed

    Companies in Bankruptcy

    William Norton

    Bradley Arent Boult Cummings, LLP - Nashville

    (o) (615) 252-2397

    [email protected]

    mailto:[email protected]

  • Bankruptcy Issues

    363 Sales – Advantages

    – Procedures

    – Stalking horse vs. auction

    – Breakup Fees

    – Unsecured Creditors and Committees

    – Free and clear of liens

    – Credit Bidding

  • 11 U.S.C. §363(b)

    • (1) The trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate, except that if the debtor in connection with offering a product or a service discloses to an individual a policy prohibiting the transfer of personally identifiable information about individuals to persons that are not affiliated with the debtor and if such policy is in effect on the date of the commencement of the case, then the trustee may not sell or lease personally identifiable information to any person unless—

    • (A) such sale or such lease is consistent with such policy; or

    • (B) after appointment of a consumer privacy ombudsman in accordance with section 332, and after notice and a hearing, the court approves such sale or such lease—

  • 11 U.S.C. §363(f)

    • (f) The trustee may sell property under subsection (b) or (c) of this section free and clear of any interest in such property of an entity other than the estate, only if—

    • (1) applicable nonbankruptcy law permits sale of such property free and clear of such interest;

    • (2) such entity consents;

    • (3) such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property;

    • (4) such interest is in bona fide dispute; or

    • (5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.

  • 11 U.S.C. §363(k)

    • (k) At a sale under subsection (b) of this

    section of property that is subject to a lien

    that secures an allowed claim, unless the

    court for cause orders otherwise the

    holder of such claim may bid at such sale,

    and, if the holder of such claim purchases

    such property, such holder may offset

    such claim against the purchase price of

    such property.

  • 11 U.S.C. §363(m)

    • (m) The reversal or modification on appeal of an authorization under subsection (b) or (c) of this section of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale or lease were stayed pending appeal.

  • 11 U.S.C. §363(n)

    • (n) The trustee may avoid a sale under this section if the sale price was controlled by an agreement among potential bidders at such sale, or may recover from a party to such agreement any amount by which the value of the property sold exceeds the price at which such sale was consummated, and may recover any costs, attorneys' fees, or expenses incurred in avoiding such sale or recovering such amount. In addition to any recovery under the preceding sentence, the court may grant judgment for punitive damages in favor of the estate and against any such party that entered into such an agreement in willful disregard of this subsection.

  • Bankruptcy Issues

    Chapter 11 Plan – When required

    • No equity in property

    • Hostile secured creditor

    – Cramdown of secured debt

    • Dirt for Debt

    • Asset Sale

  • Buying & Selling Distressed Businesses, Part 1 & Part 2Registration Forms, Part 1 & Part 2Certificates of Attendance, Part 1 & Part 2Materials 1 of 2Materials 2 of 2