Help, My Business is in Trouble! (Series: Restructuring, Insolvency & Troubled Companies)

1. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe Insert the cover image for this webinar on this slide entirely 1 Co-Produced by: DailyDAC

2. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe Practical and entertaining education for attorneys, accountants, business owners and executives, and investors. 2

3. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT DailyDAC DailyDAC.com is the leading source of information about assignments, article 9, bankruptcy, receiverships, out-of-court workouts and vulture investing, designed for business owners and vulture investors. Visit us at www.dailydac.com. 3 Premium Public Notice Service DailyDAC’s Premium Public Notice Service helps market asset sales on behalf of fiduciaries (e.g., Chapter 11 debtors-in- possession and committees, trustees, receivers, assignees), secured lenders selling collateral under UCC Article 9, and auctioneers to a very large and self-selected group of potential bidders and their advisors. The Service also assists with noticing other events, deadlines, and milestones – including tombstones and other press releases. Our free weekly newsletter, DailyDAC contains our latest bankruptcy article, current Public Notices and all opportunistic deals added to our proprietary database that week. Sign up at: https://www.dailydac.com/dacyak-weekly-newsletter-signup/

4. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe DISCLAIMER The material in this webinar is for informational purposes only. It should not be considered legal, financial or other professional advice. You should consult with an attorney or other appropriate professional to determine what may be best for your individual needs. While Financial Poise™ takes reasonable steps to ensure the information it publishes is accurate, Financial Poise™ makes no guaranty in this regard. About this PowerPoint: if you are looking at this PowerPoint without the benefit of listening to the conversation that surrounded it then you are doing yourself a disservice. This PowerPoint was prepared in contemplation of being viewed in conjunction with listening to a one hour webinar on the topic. 4

5. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe MEET THE FACULTY Moderator: Whitney C. Fogelberg – Kirkland & Ellis LLP Panelists: Michael J. Riela – Tannenbaum Helpern Syracuse & Hirschtritt LLP Jonathan Friedland – Sugar Felsenthal Grais & Helsinger Jim Bienias – AlixPartners LLP 5

6. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THIS WEBINAR: HELP, MY BUSINESS IS IN TROUBLE! When a business becomes financially troubled, the business owner often experiences denial, paralysis, or both. Lenders commonly lose confidence and then trust in the business, as communications tend to break down, deadlines are missed, and promises are broken. Small business owners commonly have issued personal guarantees, so business failure can often lead to personal financial stress. The good news is the business and business owner usually has some options, and even some leverage. This webinar explains what a business owner should- and should not- consider and do when dealing with financial trouble. Specific topics include discussion of bankruptcy (Chapters 7 and 11); assignments for the benefit of creditors; and friendly foreclosures. This webinar provides the business owner and her advisors with an overview of various restructuring and liquidation methods, a framework for how to decide between them, and practical tips for traversing the difficult environment that is financial distress. 6

7. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THIS SERIES: RESTRUCTURING, INSOLVENCY & TROUBLED COMPANIES Companies fail all the time, for all sorts of reasons. Some companies become distressed, or even insolvent, because of mismanagement; others because of fraud; others for myriad other reasons- some intrinsic to the company and some extrinsic. Regardless of the cause, failing or failed companies create a unique set of issues, risks, and even opportunities for all involved. This area of law and finance has become so specialized that no fewer than five (American Bankruptcy Institute; Association of Insolvency & Restructuring Advisors; Commercial Law League of America; National Association of Federal Equity Receivers; Turnaround Management Association) national organizations exist to help those who specialize in the field to stay up to date on the latest developments, strategies, and tactics in the area. 7

8. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe EPISODES IN THIS SERIES 3/19/19 Episode #1: Help, My Business is In Trouble! 4/16/19 Episode #2: Opportunity Amidst Crisis- Buying Distressed Assets, Claims, and Securities for Fun & Profit 5/14/19 Episode #3: Bad Debtor Owes Me Money! 8 Dates shown are premiere dates. All webinars will be available On Demand approximately 4 weeks after they premiere.

13. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe KEY CONSIDERATIONS DRIVING STRATEGY ⚫ Senior secured creditors’ desired path ⚫ Potential buyer’s desired path ⚫ Presence of personal guaranties ⚫ Whether customers care about company’s financial problems ⚫ Status of company’s relationship to key vendors ⚫ Whether any vendors are irreplaceable as supply sources ⚫ Competition level of company’s industry ⚫ Whether entities affiliated/related to company are not troubled 1 3

14. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ADDITIONAL KEY CONSIDERATIONS DRIVING STATEGY ⚫ Secured debt ⚫ Real property leases ⚫ Contracts ⚫ Union liabilities ⚫ Pending litigation 1 4

15. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe CONSTITUENCIES TO CONSIDER ⚫ Equity sponsor ⚫ Secured lenders ⚫ Vendors ⚫ Customers ⚫ Landlords ⚫ Asset purchaser / Competitors 1 5

18. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe A BUYER'S PERSPECTIVE ⚫ Buyers like to buy cheap & want to avoid risk. But when dealing with troubled companies: ⚫ Some options are cheaper but carry higher risk; ⚫ Some carry lower risk but are more expensive 1 8

20. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe CHAPTER 11 BANKRUPTCY FILINGS ⚫ US Bankruptcy Code: Title 11 of the United States Code ⚫ Basics of Chapter 11: ➔ Petition filed with bankruptcy court (voluntarily or involuntarily) ➔ The debtor, as “debtor-in-possession,” acts as trustee of the business (a “debtor”) ➔ Fixed priority order for creditor distributions ➔ Automatic stay of creditor actions to collect debts ➔ Ability to seek debtor-in-possession (“DIP”) financing ➔ Ability to reject certain executory contracts & leases 2 0

24. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ASSIGNMENTS FOR BENEFIT OF CREDITORS (“ABCs”) (cont'd) ⚫ ABC is a state law remedy, so form of ABC will vary dependent on laws of relevant jurisdiction ⚫ Statutory vs. Common Law ABCs ➔ States may adopt statutes to govern ABCs (e.g. California, Delaware, New York) ✓ State law may set specific requirements Assignee must follow, e.g. claims bar dates for creditors, form of notice of ABC to creditors, etc. ➔ Others may have no statutory framework, but case law exists to govern ABCs (“Common Law” ABC) (e.g. Illinois) ✓ Under common law ABC, Assignment is simply a contract between debtor to transfers title, custody, and control of property to Assignee for sale/liquidation 2 4

27. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe CREDITOR COMPOSITIONS / COMPOSITOIN AGREEMENTS ⚫ Sometimes referred to as “Compositions,” “Creditor Compositions,” or out-of- court chapter 11s ⚫ Composition Agreement is a contract between a debtor and its creditors ⚫ Participating creditors agree to accept payments specified under agreement in full satisfaction of their claims against debtor ⚫ Appropriate where business is only capable of reorganizing by a reduction in overall debt, and creditor body is unified or small enough to make negotiating feasible 2 7

30. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe WORKOUTS ⚫ May be difficult to obtain consent of nearly all creditors as required for a composition, so company may opt to seek concessions solely from financial creditors (bank, equipment lessors, bondholders, etc.) ⚫ Workout Agreement restructures debt of a particular creditor 3 0

33. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe “NAKED” SALE BY DEBTOR ⚫ Debtor sells assets, generally to secured lender, or 3rd party (potentially its own shareholders) with consent of secured lender. ⚫ Advantages: ➔ Quick and relatively inexpensive method of liquidating a business ➔ May also serve as a quick method for the sale of a company as a going concern ⚫ Disadvantages: ➔ Requires consent of all lienholders ➔ Treatment of and impact on unsecured creditors. ➔ Possibility of being deemed a fraudulent transfer ➔ Breach of fiduciary duty concerns for board of directors of debtor 3 3

34. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ARTICLE 9 SALES ⚫ Fast & inexpensive way to sell secured creditor’s collateral ⚫ Uniform Commercial Code (“UCC”) permits secured party to take possession of its collateral &, without removing collateral from the debtor’s premises, dispose of it ⚫ Sale must be commercially reasonable ⚫ Secured party may purchase the collateral at public sale but not at private sale unless the collateral has a public market where price can be readily ascertained 3 4

35. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ARTICLE 9 SALES (cont'd) ⚫ Secured party must notify debtor, any other guarantors or obligors, & other junior secured parties ⚫ When rules are followed, all of debtor’s rights in collateral are transferred to buyer and subordinate security interests are discharged. ⚫ Good faith purchaser for value takes title free and clear even when secured party fails to strictly comply with statutes 3 5

36. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ARTICLE 9 SALES (cont'd) ⚫ Process basics: ➔ Notice of Default and Acceleration of Debt provided by secured party to debtor and guarantors ➔ Voluntary Repossession Agreement, Replevin Lawsuit or “Self Help” Repossession (no trespass or breach of peace such as use of physical force or threats; replevin bonds) ➔ 10-day UCC Notice of Private or Public Foreclosure Sale and Affidavit of Mailing provided by secured party to each debtor, guarantors, & lienholders identified from current UCC and tax lien search & potential interested purchasers ➔ Special procedures for tax liens (e.g. federal tax liens require 25-day notice) 3 6

37. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ARTICLE 9 SALES (cont'd) ⚫ Additional documentation needed: ➔ Proof of Advertising of UCC foreclosure sale in local newspaper or other relevant publication (including online) ➔ Power of Attorney from secured party for bidding at UCC public sale ➔ Script of UCC Public Foreclosure Sale or audio/video recording of sale ➔ Bill of Sale from secured party to purchaser 3 7

38. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THE FACULTY WHITNEY FOGELBERG– whitney.fogelberg@kirkland.com Whitney Fogelberg is a restructuring associate in Kirkland's Chicago office. Whitney represents both debtor and creditor clients in complex Chapter 11 reorganizations; advises purchasers and sellers in bankruptcy transactions and acquisitions; counsels boards of directors and senior officers regarding fiduciary duties and restructuring strategies; and advises financially troubled companies regarding the structure of various commercial transactions outside of bankruptcy. 3 8

39. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THE FACULTY MICHAEL REILA – riela@tshs.com Mike Riela is a partner in Tannenbaum Helpern’s Creditors’ Rights and Business Reorganization practice. With more than 15 years of experience, Mike advises companies on complex restructuring, distressed M&A, loan transactions and bankruptcy related litigation matters. Mike has in-depth experience in advising clients on corporate and real estate bankruptcies, workouts, Chapter 11 and Chapter 7 bankruptcy cases, debtor-in-possession (DIP) and bankruptcy exit loan facilities, secondary market trading of distressed debt and trade claims, Section 363 sales and bankruptcy retention and fee agreements and disputes. His clients include banks, administrative agents, indenture trustees, hedge funds, private equity firms, professional services firms, trade creditors, contract counterparties, shareholders, debtors and investors. To read more, go to https://www.financialpoise.com/financialpoisewebinars/faculty/michael-riela/ 3 9

40. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THE FACULTY JONATHAN FRIEDLAND – jfriedland@sfgh.com Jonathan Friedland, a senior partner with Sugar Felsenthal Grais & Helsinger, LLP, views his job simply: to make money for clients whenever possible and to protect their interests at every turn. Licensed in four states, Jonathan’s transactional work focusses on representing private funds and other owners of private businesses, and the businesses they own. He regularly advises on M&A activities, structuring new ventures and restructuring old ones, and on other commercial relationships. Jonathan is rated AV® Preeminent™ by Martindale-Hubbell, 10/10 by AVVO, and enjoys several other similar distinctions. Jonathan graduated from the State University of New York at Albany, magna cum laude (in three years) and from the University of Pennsylvania Law School. He clerked for a federal judge before entering private practice and served for several years as an Adjunct Professor of Strategic Management at the University of Chicago’s Graduate School of Business. Jonathan is lead author and editor of several significant treatises, several chapters in other treatises, and scores of articles on law and business. 4 0

41. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THE FACULTY JIM BIENIAS – jbienias@alixpartners.com Jim leverages more than 15 years of experience in working with underperforming and distressed large and middle-market companies to help navigate a company’s most challenging situations. Jim’s clients benefit from his experience in working with all levels of management, including managers, C-level executives and boards of directors as well as external stakeholders such as banks and private equity investors. Jim excels at turning data into information and using that information to provide cash flow and financial forecasts. Previously, he was with FGMK as a managing director. Jim has an MBA from the University of Michigan’s Ross School of Business and is a Certified Treasury Advisors, a Certified Insolvency and Restructuring Advisor and a Certified Turnaround Professional. 4 1

42. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe QUESTIONS OR COMMENTS? If you have any questions about this webinar that you did not get to ask during the live premiere, or if you are watching this webinar On Demand, please do not hesitate to email us at info@financialpoise.com with any questions or comments you may have. Please include the name of the webinar in your email and we will do our best to provide a timely response. IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education. 4 2

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