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EUROPEAN RESTRUCTURINGDAY 2014
9 May 2014, Frankfurt/Main
Refinancing and Restructuring Trends for
2014/2015
2
Programme (I)
9.00 am Registration and Welcome Coffee
9.30 am Opening Remarks
Dr. Thomas Hoffmann, Co-Head Restructuring and Insolvency, Noerr LLP
9.45 am Keynote – Insolvency Legislation in a European Context: Group Insolvencies et al.
Prof. Dr. Heribert Hirte, Member of the German Bundestag, Member of the Committee on
Legal Affairs and Consumer Protection & Member of the Committee on the Affairs of the
European Union, German Bundestag
10.15 am Releasing the Brakes – The A.T.U Case
Christian Sailer, CFO, A.T.U Auto-Teile-Unger Handels GmbH & Co. KG
Detlef Specovius, CRO, A.T.U Auto-Teile-Unger Handels GmbH & Co. KG
10.45 am Getting Back on Track – The Nürburgring Experience
Dr. Alexander Jüchser, Partner, Lieser Rechtsanwälte
Alexander Bischoff, Partner Corporate Finance – M&A, KPMG
11.15 am Smartphone Break
11.30 am The Shipping Crisis – Proposals for a Solution
Wolfgang Topp, Head of the Restructuring Unit, HSH Nordbank AG
12.00 am Sewing Company Arrangements – The Miss Sixty Case, Italy
Paolo Bodo, CEO, Sixty Far East Ltd. (Miss Sixty)
Giovanni Nardulli, Legance Avvocati Associati
12.30 pm Lunch & Networking
3
Programme (II)
1.30 pm Critical Success Factors within the Restructuring Process – (New) Rules of Corporate
Restructuring
Hans Joachim Weidtmann, Managing Director, Head of Group Intensive Care Corporates,
Commerzbank AG
2.00 pm New Players, New Rules?
The Role of Distressed Investors in European Restructurings and Insolvencies
Prof. Dr. Reinhard Bork, Managing Director of the Seminar for Civil- and General Procedural
Law, University of Hamburg
Mia Drennan, Principal, Global Loan Agency Services Ltd.
Oliver Kehren, Managing Director, Morgan Stanley
Hans Joachim Weidtmann, Managing Director, Head of Group Intensive Care Corporates,
Commerzbank AG
Hosted by Dr. Thomas Schulz, LL.M., Partner, Noerr LLP, London
2.45 pm Smartphone Break
3.00 pm Distressing Bonds – The Global PVQ (formerly known as QCells)-Case
Martin Schoebe, LL.M., Partner, Insolvency Administrator and Sequestrator, hww wienberg
wilhelm Insolvenzverwalter Partnerschaft
3.30 pm Building New Financing – The Asamer Case, Austria
Jörn Trierweiler, CRO, Asamer Holding AG
Dr. Peter E.J. Winkler, LL.M. (Harvard), Partner, Eisenberger & Herzog, Wien
4.00 pm Closing Remarks
4.15 pm Stay Together with Finger Food
RELEASING THE BRAKES
Christian Sailer, CFO, A.T.U Auto-Teile-Unger Handels
GmbH & Co. KG
Detlef Specovius, CRO, A.T.U Auto-Teile-Unger Handels
GmbH & Co. KG
9 May 2014, Frankfurt/Main
The A.T.U Case
Releasing the brakesThe A.T.U case
09 May 2014
Christian Sailer /// CFO, A.T.UDr Christoph v. Wilcken /// Schultze & Braun GmbH
2014 Restructuring
9 May 2014 /// 06
Agenda
1. A.T.U - Overview of the company
2. Restructuring liabilities and shareholders' equity: background
3. Financial restructuring plan
2014 Restructuring
9 May 2014 /// 07
A.T.U in figures
○ Founded by Peter Unger in 1985
○ Sales revenues: EUR 1.1 billion
○ 646 branches in Germany, Austria, the Czech Republic, Italy, Switzerland and the Netherlands
○ Around 11,000 employees
○ Product range of ca. 140,000 different items
Data and facts about A.T.U
A.T.U - Overview of the company
2014 Restructuring
9 May 2014 /// 08
A.T.U: The master workshop
5.7 millionA.T.U auto repair shops handled more than 5.7 million maintenance and repair jobs in 2013. At the company's glass-facade workshops, customers can observe the speed and professional skills of A.T.U experts in real time.
A.T.U - Overview of the company
2014 Restructuring
9 May 2014 /// 09
A.T.U's auto parts shops: comprehensive & with reas onable prices
15,000 itemsThe huge product range includes tyres and rims, motor oils, replacement parts and consumables, auto-care products, anti-freeze, tools, child seats, roof cargo boxes and bicycle racks, trailers, car radios and GPS units, scooters and bicycles.
A.T.U - Overview of the company
2014 Restructuring
9 May 2014 /// 010
A.T.U logistics
60,000A.T.U's success is also based on logistics. Two distribution centres keep approximately 60,000 items organised. This means products can be delivered quickly to customers - and buying directly from manufacturers cuts out intermediaries and ensures favourable purchasing terms.
A.T.U - Overview of the company
2014 Restructuring
9 May 2014 /// 011
The lorry fleet
15.6 millionA.T.U's fleet delivers 15.6 million sets of products to 646 branches each year. Merchandise management is a closed cycle: the lorries supply branches upon arrival and dispose of old parts on the way back.
A.T.U - Overview of the company
2014 Restructuring
9 May 2014 /// 012
A.T.U's environmental approach
6.7 million95% of scrap materials collected by the A.T.U branches are disposed of at the company's own recycling plants. Each year, A.T.U recycles around 6.7 million old tyres. In addition, 26,500 tonnes of scrap metal and 3.7 million litres of used motor oil are recycled.
A.T.U - Overview of the company
2014 Restructuring
9 May 2014 /// 013
Agenda
1. A.T.U - Overview of the company
2. Restructuring liabilities and shareholders' equit y: background
3. Financial restructuring plan
2014 Restructuring
9 May 2014 /// 014
Simplified corporate structure before transaction
o EUR 150 million junior bond at the level of the Investment Co
o Issuance of EUR 450 million of senior bonds (EUR 375 million + EUR 75 million) in October 2010 to refinance maturing bank loans
o EUR 45 million working capital facility with variable utilisation to finance working capital requirements
Holding Co (Holding GmbH)
Affiliated Co (Beteiligungs
GmbH)
Investment Co (Investment KG)
Trading Co (Handels KG)
(OpCo)
Oper. subsidiaries
Junior secured notesEUR 150 million (JSN)
Senior secured notes
EUR 450 million (SSN)
Working capital facility
EUR 45 million (RCF)
Lux Co
Profittransfer agreement
Restructuring liabilities and shareholders' equity: background
2014 Restructuring
9 May 2014 /// 015
Restructuring A.T.U's corporate bonds
Maturity structure of A.T.U's financial liabilities before transaction
375 150
45
May
450
Jan MarFeb Jul SepAugJun
75
Apr Oct
Senior bonds(EUR 375 bond with 11% fixed interest rate, EUR 75 million bond with variable interest of 9.75% plus 6-month Euribor)
Junior bond(EUR 150 million bond with variable interest of 7.25% plus 3-month Euribor)
2014
RCF line(EUR 45 million with variable utilisation to finance working capital)
Restructuring liabilities and shareholders' equity: background
2014 Restructuring
9 May 2014 /// 016
Restructuring of A.T.U's corporate bonds
Chronology of the restructuring
Restructuring liabilities and shareholders' equity: background
2014 Restructuring
9 May 2014 /// 017
Agenda
1. A.T.U - Overview of the company
2. Restructuring liabilities and shareholders' equity: background
3. Financial restructuring plan
2014 Restructuring
9 May 2014 /// 018
The restructuring plan at a glance
○ Package of measures designed to overcome the company crisis, thereby saving the A.T.U Group. Fresh money was injected into the company.
○ Substantial reduction in debt (including fresh money) and the associated future annual interest expense led to improvements in cash flow and the main loan covenant ratios
○ The three biggest investors in the secured note (Centerbridge, Goldman Sachs and Babson) entered as new shareholders, injecting fresh money to strengthen the company's capital base. KKR, previously the main shareholder, exited as an A.T.U Group shareholder
Financial restructuring plan
2014 Restructuring
9 May 2014 /// 019
Main steps in the financial restructuring plan
Comprehensive reorganisation opinion on the A.T.U G roup's ability to be reorganised, based on IDW Standard S6
The previous shareholder waived in its entirety the shareholder loan in the amount of EUR 103 millionand completely surrendered its shares for EUR 1.
The A.T.U Investment KG (Investment Co) junior bond was released , leading to a EUR 131 million debt reduction . The remaining EUR 19 million were held by A.T.U.
As part of the debt-to-equity swap , the secured notes from A.T.U Handels AG (Trading Co) (EUR 450 million) were converted into preference shares in a new foreign holding company. In addition, around 92% of these bond creditors provided a total of EUR 109 million of new funds .
The working capital loan (EUR 45 million) and the bridg e loan (EUR 25 million) were repaid from funds provided by the new shareholders. At the same time, a new financing source provided a new working capital facility in the amount of EUR 25 million and a super senior loan in the amount of EUR 50 million.
Along with the remaining liabilities from the old senior bonds and the new borrowings, A.T.U's debt is therefore being reduced to EUR 160 million with a net cash inflow of around EUR 40 million.
1
2
3
4
5
Financial restructuring plan
2014 Restructuring
9 May 2014 /// 020
Simplified Group structure and inclusion of the UK New Co in the SSN
o Merger of Affiliated Co (Beteiligungs GmbH) into Holding Co (simultaneous termination of the profit-and-loss transfer agreement)
o Absorption of Investment Co into Holding Co (& thus assumption of the JSN by the Holding Co)
o Inclusion of a UK New Co (newly founded by Trading Co) which acquires the status of an obligor of the SSN
Holding Co (Holding GmbH)
Affiliated Co (Beteiligungs
GmbH)
Investment Co (Investment KG)
Trading Co (Handels KG)
Oper. subsidiaries
EUR 150 millionJunior bond (JSN)
EUR 450 million
Senior bonds (SSN)EUR 45 million
RCF line
Lux Co
1. Merger
2.Absorption
3. New Co becomes obligor for the SSN
UK New Co Ltd.
Financial restructuring plan
2014 Restructuring
9 May 2014 /// 021
"Flip-up" of the UK NewCo whilst maintaining obligo r status
o Equity investment in UK NewCo is transferred from Trading Co to the LuxCo
o Status of the UK NewCo as obligor of the SSN is maintained
Holding Co (Holding GmbH)
Trading Co (Handels KG)
Oper. subsidiaries
EUR 450 million
Senior bonds (SSN)EUR 45 million
RCF line
Lux Co
UK NewCo Ltd.(Obligor for SSN)
EUR 150 million
Junior bonds (JSN)
Financial restructuring plan
2014 Restructuring
9 May 2014 /// 022
Transfer of German companies to UK NewCo
o LuxCo transfers the ATU Group's German companies to its subsidiary UK NewCoLux Co
UK NewCo(Obligor for
SSN)
HoldingCo (Holding GmbH)
Trading Co (Handels KG)
Oper. subsidiaries
EUR 45 million RCFEUR 450 million
Senior bonds (SSN)
EUR 150 million
Junior bonds (JSN)
Financial restructuring plan
2014 Restructuring
9 May 2014 /// 023
Pre-pack administration sale to BidCo and release of old bonds
o UK NewCo applies for UK administration
o Court appoints the proposed administrators, who sell the equity stake in the Holding Co to BidCo
o BidCo provides the capital to repay the RCF
o SSN and JSN (including collateral and guarantees) released through the Inter-creditor Agreement
Lux Co
UK NewCo(Obligor for SSN)
Holding Co (Holding GmbH)
Trading Co(Handels KG)
Oper. subsidiaries
UKadministration
EUR 45 million RCFrepaid
EUR 450 million SSN
released
EUR 150 million JSN
released
Bid Co
Capital injection
Financial restructuring plan
2014 Restructuring
9 May 2014 /// 024
Simplified Group structure after transaction
o Following the transaction, the A.T.U Trading Co, as the operating company, will be financed by a shareholder loan and a super senior loan providing a total amount of EUR 160 million
CayCo(Cayman)
HoldCo(Cayman)
BidCo(Lux)
A.T.U HoldingCo (Holding GmbH )
A.T.U Trading Co (Handels KG)
A.T.U subsidiaries
New owners
New junior instrument of the
former SSN holders
Shareholder loan
New senior instrument
(fresh money)
New super senior loan
Financial restructuring plan
2014 Restructuring
9 May 2014 /// 025
Thank you very much for your attention!
THE SHIPPING CRISIS
Wolfgang Topp, Head of the Restructuring Unit, HSH
Nordbank AG
9 May 2014, Frankfurt/Main
Proposals for a Solution
The shipping crisis –
Proposals for a Solution
FRANKFURT, 09. MAI 2014
Wolfgang Topp
HSH NORDBANK AG
European Restructuring Day 2014
Conrad Hilton1950-1951
John Warner1976-1982
Larry Fortensky1991-1996
Michael Wilding1952-1957
Michael Todd1957-1958
Eddie Fisher1959-1964
Richard Burton1964-1974
Richard Burton1975-1976
How many lessons
does it take to learn?
28EUROPEAN RESTRUCTURING DAY 09.05.2014
What did banks and shipping companies not pay
enough attention to?
Basic attitude: “... it's not going to be as bad as that”
Banks
► Financing principles
► Permanent deployability of ships
► Changes in underlying economic conditions
► Quality of management
Shipping companies
► Business risks involved in newbuilds
► Strategic impact of changing underlying conditions
► Professionalisation of a shipping company's own business processes
► Creation of cost efficiency
29EUROPEAN RESTRUCTURING DAY 09.05.2014
Where do we stand today?
high
lowTime
Insolvency
Strategic crisis Earnings crisis Liquidity crisisS
co
pe
fo
r a
cti
on
Shipping going through a typical crisis cycle
today2 years ago
Pro-active
strategies
► Focus:– improving
performance
– strategic options
– margin targets
– low time pressure
Safeguarding existence
► Focus on
– protecting liquidity, stabilising earnings
– managing stakeholder interests (shareholders and financers)
– heavy time pressure
30EUROPEAN RESTRUCTURING DAY 09.05.2014
5 years ago
Opposing attitudes on restructuring for banks
Changed underlying conditions ... ... we must address
� Demands on capital resources are becoming more strict
� Accounting rules are constantly being tightened (IFRS 9 and 10, Basel III)
� Constant further development of restructuring standards (IDW, BGH)
� Rising cost pressure due to the increasing regulatory requirements
� Restructuring commences earlier or iscarried out faster
� Avoidance of consolidation as part of restructuring
� Renegotiation clauses, syndication deals as a firm element, shorter maturities
� Take losses earlier on restructuring cases with no prospect of success
31EUROPEAN RESTRUCTURING DAY 09.05.2014
Restructuring models ready for series production
Bank
+ Maintain potential for write-ups
▬ Assume operating risks
Banks turn into shipping companies
Legacy owners
+ Clear wind-down path▬ No potential for write-ups
Legacy owners
+ No obligation to repay disbursements
▬ No potential for write-ups
Bank
+ Improved credit rating of owner(s)
▬ No write-up of long-termasset value
Rescue financing
Deutsches Frachtkontor
+ No funding risk▬ Limited return
Legacy owners
+ Purchase on low value date▬ No potential for write-ups
Bank
+ Recovery potential assured▬ Partial waiver necessary
Nautilus finance model
Investor
+ Fleet integration expenses ▬ High own credit rating for
refinancing
32EUROPEAN RESTRUCTURING DAY 09.05.2014
Equity
Possible financing alternatives:
1. Single ship limited liability partnerships (KGs)
23.04.2014RU 33
Nautilus
Clear marketstrategy
Avoiding offinal losses
Participationin marketrecovery
Objectives of Nautilus transactions
Original loan amount
New structure
Loanrepayment
HSH Nordbank
HSH Nordbank
junior
tranche
HSH Nordbank x
New
senior loan
Liquidity
New working capital
Possible financing alternatives:
2. Combined share and asset transactions
09.05.2014 34
Prev. shareholder New equity
� Re-sized debt on LTAV* basis� Waterfall for senior/junior
tranches
• Ship management• Debt-free• Platform for expansion
VESSELCOS
XY ships
PROPCO
Company XY
OPCO
Operating Agreement
German shipping companies:
► Break co. down into OPCO/PROPCO
► Adjust debt/transfer vessels to PROPCO
► Nautilus construct at PROPCO level
► New investors for OPCO and PROPCO
► OPCO platform can be used for further capital investments
� Current pipeline: around US$ 4 bn
� But increased risk of insolvency
� Limited effect on reducing the overall portfolio
� Germany is still a place to do maritime business
EUROPEAN RESTRUCTURING DAY
Possible financing alternatives:
3. Investment fund cos.
35
Investment fund cos.
Banks Investment fund cos.
Banks
Investors
Current model: New model:
Management
Loan
Haircut
OwnershipNewCo
Fresh money
~~~~~~~~~~~~~~~~~~~~
~~~~~~~~~~~~~~~~~~~~
KG shareholders
Ownership
KG shareholders
► KG shareholders exchange shares for NewCo shares
► Banks that finance the ships grant haircut in return for NewCo shares
► New investors take over majority in NewCo as platform
► Exit for investors, banks and previous KG shareholders via IPO, for example
Shares
09.05.2014EUROPEAN RESTRUCTURING DAY
Approaches to capacity managementD
isa
dv
an
tag
esA
dv
an
tag
es
► Reduced capacity in ongoing business
► Reduction in bunker costs
► Positive effect only on freightrates, not on charter rates
Slow steaming
► Scalable andtimewise flexible
► Basically suitable for large parts of the fleet
► Complex
► Legal (anti-trust) concerns
► Industrysolution/restruc-turing of pools asprerequisite
Laid-up ship model
► Sustainable impact
► Solves age structure and capacity problem
► Only suitable for ships with a net value close to scrap
► Possible problems with tonnage tax
Pre-sale scrapping
► Avoids ordering new ships
► Reduces bunker costs
► Short-term amortisation in some cases
► Charterer must pass lower operating costs on to charter shipping company
Refitting instead of new
order
► New orders possible without increasing capacity
► Time lag temporarily reduces capacity
► Only for liner companies
► Possible problems with tonnage tax
New business aginst
scrapping
36EUROPEAN RESTRUCTURING DAY 09.05.2014
What strategic questions arise?
► Ship
– What technical requirements will apply in future (design,
motor, size, slow-steaming )?– Are there any sensible options for technical optimisation of
existing tonnage?– Impact of environmental requirements?
► Business model
– What is operational excellence in the areas oftechnical and business management?
– What requirements will liners have?– How do you get ready for the capital market?– What alternative sources of finance are available?– What size of company is economically viable?
► Market
– How will trade routes develop?– How can access to cargo be optimised?– Does it make sense to separate ship management from
ownership?
Technic
al
managem
ent
Route
optio
ns
Ship
Success
factors
37EUROPEAN RESTRUCTURING DAY 09.05.2014
Lessons to be learned
► Development of new restructuring approaches and solutions forsector consolidation
► Compliance with financingprinciples
► Technical trainingfor staff
► Creating the necessary economies of scale
► Critical review of own business strategyand, if needed, systematic realignment
► Achievement of businessexcellence in fleet management
► Optimisation of the existing fleet
For the ship owners For the banks
► Joint tapping of alternative sources of finance
► Definition of uniformcriteria for improved assessment ofoperational excellence
► Setting up a competence centre forongoing monitoring of market trends and technical developments
38EUROPEAN RESTRUCTURING DAY 09.05.2014
“ The objective of returning shipping to
profitability can only be achieved by going
beyond financial restructuring and
working intensively on addressing the
strategic issues.”
Wolfgang Topp, HSH Nordbank
39EUROPEAN RESTRUCTURING DAY 09.05.2014
SEWING COMPANY ARRANGEMENTS
Paolo Bodo, CEO, Sixty Far East Ltd. (Miss Sixty)
Giovanni Nardulli, Legance Avvocati Associati
9 May 2014, Frankfurt/Main
The Miss Sixty Case, Italy
SEWING COMPANY ARRANGEMENTS
The Miss Sixty Case
Paolo Bodo
Giovanni Nardulli
European Restructuring Day 20148-9 May 2014, Frankfurt
INTRODUCTION
• In recent years the Italian Bankruptcy Law has been substantially revised inorder to improve the set of rules applicable to turn-around of insolventcompanies by way of an agreement with creditors (including the compositionagreement -Concordato preventivo- proceeding.
• The Concordato– a US Chapter 11-like proceeding – has been widely utilisedby Italian companies, especially in its “early petition” form (so-called“Concordato in bianco”), mainly due to its flexibility and its several advantages.
• The Miss Sixty case may be deemed as an example of successfulConcordatowith continuation of business (“Concordato preventivo in continuità aziendale”)in the context of an M&A transaction and provides an overviewof the keyissues which shall be addressed in the context of any such proceeding.
424242424242424242
Part I
The Sixty structure before and after Concordato
43
The Sixty Group before Concordato
44
Sixty S.p.A.
Murphy & Nye ItalyRetail S.r.l.
Sixty Italy Retail S.r.l.
Bank debt
Crescent HydePark(indirectly)
100%
100% 100%
Trademark license
The Sixty Group after the Concordatotransfer
45
Sixty S.p.A.(in Concordato)
Crescent HydePark(indirectly)
Sixty Distribution S.r.l.(NEWCO)
Purchase Price
Transfer of Business and Employees (debt-free)
100%
Sixty Italy Retail S.r.l.Murphy & Nye Italy
Retail S.r.l.
Part II
The growing number of Concordatoproceedings in Italy
46
Concordatoproceedings by Early Petition (“Concordati in bianco”)number of petitions per quarter
47
New Concordato rules(September 2012)
Non-bankruptcy procedures by type in the first half of 2013 in comparison with year 2011 and 2012
48
The growing number of insolvency proceedings in Italy
• Recession and credit-crunch have increased the number of insolvencyproceedings.
• The growth rate of theConcordatoproceedings is significantly higher thanthe other insolvency proceedings (see slide 9).
• The main reason for the wide recourse toConcordatomay be found in itsseveral advantages as highlighted in the following slides.
49
Part II
The main advantages of Concordato
50
ConcordatoGeneral features
• TheConcordatois a court-supervised proceeding aimed at rescuing a companyin a situation of financial crisis by means of financial and/or operationalreorganisation.
• The company is essentially free to determine the content ofthe proposal to thecreditors which may be satisfied either by liquidation of the company’s assetsor by the proceeds of the sale of the business. Italian Bankruptcy Law sets outspecific provisions applicable to theConcordatowith continuation of business(“Concordato preventivo in continuità aziendale”).
• Generally, the proposal must ensure the entire payment of the secured claimsand a portion of payment (so-called “soglia concordataria”) of the unsecuredclaims. The proposal must be accepted by creditors holding the majority ofunsecured claims and is binding on dissenting creditors.
51
Main advantages of Concordato
• Flexibility: the Concordatoproposal may be freely tailored by the companyand may allow,inter alia, the continuation, in whole or in part, of the existingbusiness.
• Early petition: the company may file very limited documentation while themain documentation (among which, theConcordato proposal and theConcordatoplan) shall be filed within a term fixed by the Court.
• Automatic stay: no enforcement or interim actions by the creditors over theassets of the Company starting from the filing of the petition (including theearly petition).
• Superseniority of claims: claims arising from: (a)interim financing dulyauthorised by the Court, (b) actions lawfully carried out bythe company, ranksupersenior.However, as far as the actions carried out after the filing oftheearly petition are concerned, the superseniority of claimsis conditioned uponthe delivery to the judge of the remaining documentation within the term fixedby the same and the actual issuance of the decree of opening oftheConcordatoby the Court.
52
• Management of the company: the company management may regularlycarry out its day-to-day activities but any extraordinary transaction is subjectto prior authorisation of the Court. Once the petition is admitted by the Court,the management of the company is carried out under supervision of thejudicial commissioner.
• No bankruptcy claw-back action: The acts, payments and security interestcreated over the company’s assets in performance of theConcordatoare notsubject to bankruptcy claw-back action.
• Safe harbour from bankruptcy crimes: The directors of the company mayenjoy a safe harbour from certain bankruptcy crimes.
Main advantages of Concordato
53
Part IV
The Miss Sixty Case
54
Miss Sixty
55
Murphy & Nye
56
Trend Sixty Revenues
57
0
50
100
150
200
250
300
350
400
450
500
Year 2009 Year 2010 Year 2011 Year 2012
EURO MILLIONS
• The financial indebtedness of Sixty S.p.A. was mainly unsecured andvis-à-visa fragmented number of Italian banks.
• The different size, nature and attitude of the banks was one of the main issuesto be dealt with by Sixty’s management during the negotiations in bonisof therestructuring.
• Due to failure to reach an agreementin boniswith such banks, Sixty S.p.A.filed an early petition for Concordato with continuation of business(“Concordato in continuità aziendale”).
The Miss Sixty Case – Main features
58
• The continuation of business was essentially aimed at permitting theacquisition of two branches of going concern by a NewCo controlled byforeign shareholder and the sale of certain inventory.
• For the above purposes the foreign shareholder executed an irrevocablepurchase proposal, which was filed by Sixty S.p.A. along with theConcordato plan, the Concordato proposal and the other documentationrequired by law.
• The acquisition of the branches of going concern was “debt-free” pursuant toItalian Bankruptcy Law (see slide 5 above).
• The Concordatoproposal envisaged the entire payment of Sixty’s secureddebts and satisfaction of roughly 16 per cent of unsecured debts.
• The Concordatoproposal has been approved by a very high majority ofcreditors (86.7 per cent).
The Miss Sixty Case – Main features
59
• Sixty has carried out a consultation procedure with the trade unions resultingin an agreement for reduction of work-force executed also before local andnational governmental authorities.
• The Concordato, and, in particular, the continuation of business granted thesaving of several jobs in Italy as opposed to bankruptcy.
• The trade unions agreement was essential for the approval oftheConcordatoproposal, since it provided Sixty with a significant leverage vis-à-vis thebanks.
• The Sixty Group is still pursuing a policy of development of its business inItaly also with the aim of increasing employment.
The Miss Sixty Case – Labour aspects
60
Part V
Final considerations
61
• The Miss Sixty Case is a perfect example of how the legal toolsprovided inthe Italian Bankruptcy Law may allow the turn-around of a company infinancial distress in the context of an M&A transaction.
• It is crucial to carry out negotiations and discussions withthe creditors,trade unions and (depending on the size of the company) localandgovernmental authorities in the early stages of the proceeding and alsoprior to the filing of the early petition.
• Concordatoprovides to the debtor leverage in negotiations with banks,unions and other stakeholders.
Final considerations
62
CRITICAL SUCCESS FACTORS WITHIN THE RESTRUCTURING PROCESS
Hans Joachim Weidtmann, Managing Director, Head of
Group Intensive Care Corporates, Commerzbank AG
9 May 2014, Frankfurt/Main
(New) Rules of Corporate Restructuring
Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt, 09.05.2014
Critical Success Factors within the Restructuring P rocess- (New) Rules of Corporate Restructuring -
Noerr LLP - European Restructuring Day 2014
65Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Agenda
2. Regulatory Changes and their Impact on Restructu rings2. Regulatory Changes and their Impact on Restructu rings
1. Some Preliminary Remarks1. Some Preliminary Remarks
3. New Stakeholder and new Products are challengin g3. New Stakeholder and new Products are challengin g
4. Conclusion and Outlook4. Conclusion and Outlook
66Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Agenda
2. Regulatory Changes and their Impact on Restructu rings2. Regulatory Changes and their Impact on Restructu rings
1. Some Preliminary Remarks1. Some Preliminary Remarks
3. New Stakeholder and new Products are challengin g3. New Stakeholder and new Products are challengin g
4. Conclusion and Outlook4. Conclusion and Outlook
67Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Possibilities of treatment of stressed and disstres sed credit exposure
PassiveApproach
The bank ...
� ... does nothing and ...
� ... is prepared to accept that the borrowers files for an insolvency proceeding
� atypical case
ActiveApproach
The bank ...
� ... recognises the crisis at a early stage...
� ... initiates a restructuring of the borrower ...
� ... preferably „out of court“ but if necessary „in court“ as well ...
� ... and aims the retransfer of the company into the „normal“ business
= GRM-IC
Sale ofSingle Assets/Portfolios
The bank ...
� ... sells single assets and/or portfolios and ...
� ... is able to release riskcapital within a short period
=> GRM - IC
68Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Primary objective of IC is the recovery of the client and the maintenance of a profitable client relationship
Philosophy and Role of Intensive Care
Rating and risk-related events (early warning syste m) drive the presentation of clients to GRM IC
GRM-IC is part of Credit Risk Management but acts autonomus from both Credit Officer and Client Relat ionship
IC is focused on the achievement of added value:
– decision on the restructuring strategy in each case individually on the basis of a restructuring concep t and the business model
– no lengthy restructurings if a restructuring seems not to be succesful
– no compulsory involvement of IC if the debt is full y collaterised
– no compulsory involvement of IC for clients with a positive development
Identification of economic crisis
Information to the client
Seem to be promising but fails
Restruc-turing had
been succesful
Retransferinto CRM
Active ExitManagement
Smooth Exit/ Work Out/Sale
Decision: Transfer into IC
Development and Validation of a Restructuring Concept
Decision: Restructuring seems to be promising
Restruc-turing
seems to be not
promising
69Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Data- and Dataquality-
management
Analysis und Reporting
Portfolio- and Risk-Transparency
Corporate Center of the Commerzbank Group for stressed, disstressed and defaulted borrower of all segments within the Core Bank
Responsibilities of Group Intensive Care
Measurement of SLLP
Policies, Processes, IT-Systems
Methods and Policies
Execution of portfolio- and single
asset-transactions
(e.g. NPL-Trading,
Debt-to-Equity-Swap)
Portfolio-Management
(credit related) Client
Relationsship- and
Riskmanagement for stressed,
distressed and defaulted clients
Operational Restructuring Units
70Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Agenda
2. Regulatory Changes and their Impact on Restructu rings2. Regulatory Changes and their Impact on Restructu rings
1. Some Preliminary Remarks1. Some Preliminary Remarks
3. New Stakeholder and new Products are challengin g3. New Stakeholder and new Products are challengin g
4. Conclusion and Outlook4. Conclusion and Outlook
71Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Regulatory Changes: The Banking Landscape is influen ced by fundamental Regulatory Changes in the coming years
Basel III / CRD IV
Additional requirements for Equity, Liquidity, Leverage und Gearing.
Basel 2,5 (CRD III)
Increased capital rquirements for Risks from the Trading Book
EBA-Requirements
Temporary EBA Core Tier 1 Quota of 9% as per 30. June 2012
„Einlagensicherung“
In addition to existing instruments statutory protected deposits (up to 100 T€)
„Bankenabgabe“
Implementation of a „Financial Crisis Responsibility Fee“
IFRS 9
New rules for the measurement of SLLP´s (Specific Loan Loss Provisions)
Basel III Start 2013
2018 fully implementedIFRS 9EBA-Requirements
Basel 2,5/ Bankenabgabe
Einlagensicherung
Dez. 2011 Juni 2012 Dez. 2018Dez. 2010 Jan. 2015
72Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
The 3 key aspects of Basel III: Capital, Leverage a nd Liquidity affect essentially the columns 1 an 3
Column 1
Minnimum Capital Requirements
Credit RiskMarket Risk
Operational Risk
Column 2
RegulatoryREVIEW PROCESS
All Risks
Column 3
MARKET-DISCIPLINE
All Risks
Standard-Approach
Internal Approach
Principles of an appropriate Risk
Management
Transparancy of Ris, Riskmanagement and
Equity
Quantitative Regulation
Qualitative Regulation
Regulation by th Market
Basel II
Implementation of a Leverage Ratio
Implementation of global Standards for
Liquidity Risks
Improvement of Equity
(Quantity and Quality)
Improved Measurement and Underlaying of Counterparty Risk
Reduction of Procyclicality and
Implementation of a Economic Buffer
Definition of Systemic Risks an Systemic
Banks
3
73Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
The Calculation of the Capital Adequancy Ratio diff ers between Banks and Companies
Capital Adequancy Ratio of BanksCapital Adequancy Ratio of Companies
Equity of Banks
Risk-Weighted Assets(RWA)
Equity of Companies
Total Assets
Capital Ade-quancy Ratio
=Capital Ade-quancy Ratio
=
› Calculation Logic stable › Changes in the regulatory envirement will change the Capital Adequancy Ratio => Calculation Logic not stable
74Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
…significant RWA – Differences within the Assets
P&L relevant Options
>><< Other
Assets Liabilities
Bankbilanz
RWA Management different RWA- and Equity Allocation for each instrument
high
low
Loans (uncollaterised
Investments
Trading Risk
Public Bondsnew : RWA Allocation for Marcet Price Risks
A
P&L Effects
Loans (collaterised)
Loans (securitised)
SCHEMATIC
Loans› to Banks › to Clients (Private &
Corporates)› to the Public Sector
Financial Asstes› Investments› Securities› … Equity
› subordinated› Core Capital
Provisions› e.g. Pensions
Deposits› from Clients (Private &
Corporates)› from Banks› Bonds
Trading Assets Trading Liabilities
75Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Factors of Risk Capital Calculation (KSA / AIRB)
• Extended Acceptance of Collateral• Acceptance of „Standard Collateral“
• Different risk weights dependig on asset class , external rating and collateral1• Different risk weights dependig on asset class and external rating1)
Internal Rating Based ApproachCredit Standard Approach (KSA)
Basis: External Rating Basis: Internal Ratings
Standardapproach AdvancedIRB-Approach (AIRB)IRB-Basisapproach
PDInternal valuation
MPresetting of the Bafin
LGD Presetting of the Bafin
EaDPresetting of the Bafin
PDInternal Valuation
MInternal Valuation
LGDInternal Valuation
EaDInternal Valuation
Risk Weight
External Rating
PD( Probability of Default): Ausfallwahrscheinlichkeit LGD (Loss Given Default): Verlustquote bei AusfallEaD (Exposure at Default): Kreditbetrag zum Zeitpunkt des Ausfalls M (Maturity): Restlaufzeit1) unrated loans carry a fixed assignment of risk weight
The regulatory capital requirements are generally d ecreasing by the application of risk-sensitive methods of risk measurement
76Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
The Cost of Risk Capital will increase under B - III
€ Mn. RWA5,000
4,000
3,000
2,000
1,000
0
CoC(bps)
300
200
100
0
Rating421 3 65
CCCBBB
Sub-Investment-GradeInvestment-Grade
RWA for EaD € 1 Mrd.Basel-III Cost of CapitalBasel-II Cost of Capital
Black-Book
Basel-III: 187bps
Basel-II: 110bps
∆ ~70bps
Example 4.6-RatingPD = 6,7%
Default
Grey-Book/ RestructuringWhite-Book
BBB≥ A
Quelle: BCG
77Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
GLLP – in total
„White-/ Greybook“
SLLP/PLLP (imp.) in total
„Blackbook“
Components of Loan Loss Provisons based on IRFS tod ay
General Loan Loss Provision (GLLP)
IL** = IA X PD x LGD X LIP***
Specific Loan Loss Provision (SLLP)
SLLP = Book Value ./. Present Value of the CFs
Portfolio Loan Loss Provision (PLLP non impaired)
IL** = IA X PD x LGD X LIP***
Portfolio Loan Loss Provision (PLLP impaired)
RV = IA X 1 X LGD
Significant Loans
Non-Significant Loans
* Based on Basel II ** IL = Incurred Loss *** LIP = Loss Idenfification Period
78Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Today: LLP – Accounting depending on IRFS Category
Loans and Receivables (LaR)
Held for Trading(HfT)
Revaluation Reserve(Neubewertungsrücklage
- NBR)
>><< Other
Assets Liabilities
Loan Loss Provisions
Results from Financial Investments
>><< Other
Loss Profit
Balance Sheet P&L
Trading Income
with Fair Value Option
Available for Sale(AfS )
Impairments
Impairments
Impairments
Impaiments
79Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
In Future: IFRS 9 introduces new requirements which may have an impact on restructurings
Loans which do not consist of simple interest and p rincipal payments will be booked at „Fair Value“ and shown with a corresponding volati le figure in the P&L
Terms an Condition which are not in line with the “c ontractual cash flow-criteria“ (ccc)1) may have the same consequenses (regardless of the bussiness model: „Hold“)
Instruments which may support a financial restructu ring (e.g. hope notes; warrants) bears the risk that loans which had been booked wit hin the position „LaR“ before the restructuring have to be valued under „Fair Value“ af terwards.
80Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Rules for Consolidation - before IRFS 10
0% 20% 50% 100%
Significant Influense
Dominant Influence
Investment Subsidary
Fair Value
(IAS 39)
At Equity
(IAS 28)Full Consolidation
(IFRS 10)
Associated Company
81Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
IFRS 10: Introduction of a new Control Approach
Power-Criteria The Investor has power about all relevant activities.
Variable Returns-Criteria
The Investor get´s variable returns.
Relationship between Power and Return
The Power can be used to influence the returns.
The Cumulation of Power and variable Return leads to Control
Control (IFRS 10):
A unified approach for all typs of corporates; including SPE`s
1
2
3
82Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Existence of variable returns from operation in connection with the power to manipulate the same.
Critical Instruments could be: „Hope-Notes, Warrants, Debt–to–Equity-Swaps etc.
The risk of consolidation may occur…
IFRS 10 since 2013 with Consequences for Restructur ings
Critical „Mandats“ could be:Supervisory Board, Steering-Committees, Creditors Committee´s (Gläubigerausschüsse?)
Critical „Sructure“ could be:SPE´s (Projekt-Financing, Ship-Financing, Fund-Structure)
83Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Implementation of New Definitionen of non-performin g Exposures und Forbearance by EBA
* incl. non-material exposures >90 dpd
Non-Performing Exposures
› Differences between „NPE Defintion“ EBA and current „Default Definition“ of Commerzbank:
› Inclusion of LaR Bonds
› Inclusion of AfS Position
› Extension of 90 dpd definition
› Detailreporting for countries, sectors, accountinc categories, asset classes and differentiation between „Refinancing“, „Modifications“ and „Other“ necessary
Generic criteria:• past due more than 90 days • unlikely to pay (considering a minimum threshold)• all IFRS categories excl. HfT• all on- and off-balance exposures
90 days past due (not defaulted/impaired)
Non-performing exposuresPerforming exposures
3) Performing assets that have been renegotiated
Loans and debt securities which renegotiation of refinancing did not qualify as forbearance
1) Fully Performing
Loans and debt securities that not past-due, without risk of non-payment and performing off-balance sheet items
2) Performing assets past due below 90 days*
Loans and debt securities 1 - 30 days past dueLoans and debt securities 31 - 60 days past dueLoans and debt securities 61 - 90 days past due
Defaulted
Impaired
ForbearanceForborn loans and debt securities
(and eligible off-balance sheet commitments)
OtherRefinancingModification of
terms and conditions
84Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Forbearance =„Concessions“ + Borrower in financial Difficulties
Definition of Forbearance1
1) EBA FINAL Draft implementing technical Standards - On Supervisory reporting on forbearance and non-performing exposures underarticle 99(4) of Regulation (EU) No 575/2013 - § 163 – § 183
§163
… Forbearance measures consist of concessions towards a debtor facing or about to face difficulties in meeting its financial commitments (“financial difficulties”)
§ 172:
Exposures shall be treated as forborne if a concession has been made …
Exposures shall not be treated as forborne when the debtor is not in financial difficulties . …
„Official Wording“
Borrower is in financial difficulties
Basic Principle
+
Concessions)
=
Portfolio has to be flagged as „Forbearance“ and has to be reported
Concretisation
§ 174 (… rebuttable presumption that forbearance hat taken place), measurements which took place if
> 30 Tage dpd within the las 3 month or
using “embedded forbearance clauses” if the bowwower had been > 30 dpd or to avoid 30 dpd
§ 164
a modification of the previous terms and conditions of a contract …
a total or partial refinancing of a troubled debt contract…
…that would not have been granted had the debtor not been in financial difficulties .
+
=
Translation
„Forbearance“
1. Duldung, Nachsichtigkeit, Unterlassung, Langmütigkeit
2. Stundung, Tilgungsstreckung
85Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Agenda
2. Regulatory Changes and their Impact on Restructu rings2. Regulatory Changes and their Impact on Restructu rings
1. Some Preliminary Remarks1. Some Preliminary Remarks
3. New Stakeholder and new Products are challengin g3. New Stakeholder and new Products are challengin g
4. Conclusion and Outlook4. Conclusion and Outlook
86Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
That was once: „Complex Interests due to Addresse es Diversity“
Management
Public / BaFin
Employees/Workers Counsil
SupplierShareholder
Financing Institutions
Approach GRM-IC
Goal
Mediation of a sustainable consencus
Going Concern of the Compny
Company
Credit Insurers
Banks
Lessor
87Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Today Complexity looks sometimes like this:
Financial Instruments
„Classic“ Credit Products
Capital Markets Products
(Commercial-) Banks
Alternative Investors
Specialised Lenders
Bonds/
Promissory Notes
Equity –near
Instrumens
Loan to Own Strategists
Opportunistic
Investors
Collaterised / uncollaterised
German Law /
Foreign Law
88Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
This Case Study is also from the past
Major Borrower„X-AG“ (HoldCo)
� Stock Market listed� > 50% of the shares
owned by one family� Several of
subsidiaries
Man
agem
ent-
beha
vior
Main Shareholder
Industry enviroment
Financing Institutions� 5 Core Banks
� 2 Bankin Syndicates
� Several pur „Long-Term-Banks“
� Several Lessors
� Several Credit Insurers
Financing Structure� Working Capital of the Group
via X-AG (cash-pool)
� Long-Term Debt
each in the operating susidiary
� Substantial collateral options
via subsidiaries only
Sanierungs-bedarf
89Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Shareholder
Today I would imagine the following
Bond
Synloan
Currency Hedging
ABS-Factoring
Finance BV NL
Cash Pool
OpCoUSA
HoldCoD
OpCoD
OpCoI
Bilateral
SynLoan
OpCoPolen
Mezzanine
RingfencedFinancing
OpCoRUS
(HoldCo Garanty)
Bilateral
Shareholder Loan
90Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Agenda
2. Regulatory Changes and their Impact on Restructu rings2. Regulatory Changes and their Impact on Restructu rings
1. Some Preliminary Remarks1. Some Preliminary Remarks
3. New Stakeholder and new Products are challengin g3. New Stakeholder and new Products are challengin g
4. Conclusion and Outlook4. Conclusion and Outlook
91Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
(Re-) Thinking is required!?
In principle we are open to all measures which “pro mise a success”
As before, the restructuring „Out of Court“ is give n top priority. But by the ESUG the possibilities for „Plan B“ in some cases have signi ficantly improved. A good preparation is an essential prerequisite of an „In – Court – Restructur ing“
The regulatory framework and the „Stakeholder-Envir onment“ have changed dramatically. Creative restructuring- and work out- concepts are re quired.
The success of a restructuring unit is measured not only in the pure recovery rate but also on the improvement of PD-, EAD, and LGD – Rates, the re duction of „Grey- and Black – Book“, the RWA – Optimisation and the generation of revenues.
The customer, his recovery and the maintenance of t he client for the bank are the most important goals of IC but the structure have to opt imise the risk profile of the bank as well. This also means: in principle no lengthy restructur ing without any prospect of success.
92Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Waivers Bank
We are open to all measures which “promise a succes s”
Defermentof Payments
Mezzanine
Standstill
“In Court” Restructuring
FreshMoney
Debt Equity-Swaps
Strengthening Collateral
PoolSubordination
InvestmentBanking, M&A,
High-Yield-Bonds,Synd. Loans
93Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Thank you very much for your attention
94Hans Joachim Weidtmann Head of GRM IC Corporates Frankfurt 09.05.2014
Kontakt
Hans Joachim WeidtmannManaging Director
Commerzbank AGHead of GRM IC Corporates
Tel.: +49 69 136 - 4 46 64Fax: +49 69 79 53 69 911Mail: hansjoachim.weidtmann@commerzbank.com
Adresse:Commerzbank AGGallusanlage 7D-60329 Frankfurt am Main
DISTRESSINGBONDS
Martin Schoebe, LL.M., Partner, Insolvency Administrator
and Sequestrator, hww wienberg wilhelm
Insolvenzverwalter Partnerschaft
9 May 2014, Frankfurt/Main
The Global PVQ (formerly known as QCells)-
Case
Distressing Bonds: The Global PVQ (formerly known as Q-Cells) Case.
Martin Schoebe, LL.M.
NOERR. European Restructuring Day 2014. Frankfurt/Main, 9 May 2014
Frankfurt/Main, 9 May 2014 | 97
Today's topic:
The Global PVQ case ...
Before filing for
insolvency
Before filing for
insolvency
Course of the
proceedings
Course of the
proceedings
Upshot for bond
creditors
Upshot for bond
creditors
1. 2. 3.
Frankfurt/Main, 9 May 2014 | 98
The Global PVQ team of the insolvency administrator.
Back office with a team of approx. 10 lawyers, etc.
Martin Schoebe, LL.M.
Communication to
creditors
Martin Schoebe, LL.M.
Communication to
creditors
Henning Schorisch
Insolvency Administrator
Henning Schorisch
Insolvency Administrator
Oliver Vahl
Proceedings
Management
Oliver Vahl
Proceedings
Management
Bond creditors.
• Here: non-subordinated insolvency creditorsunder § 38 German Insolvency Code (InsO)
• Unsecured
• What's special about that?
• Distressing? Enriching!
Frankfurt/Main, 9 May 2014 | 99
A matter of perspective ...
Global PVQ bond performance (approximately)
Frankfurt/Main, 9 May 2014 | 100
,000 €
10,000 €
20,000 €
30,000 €
40,000 €
50,000 €
60,000 €
70,000 €
80,000 €
90,000 €
Source: Finanzen.net
Q-Cells International Finance B. V.
WKN A1AG20
Global PVQ NL 09/14 CV
Q-Cells International Finance B. V.
WKN A1AG20
Global PVQ NL 09/14 CV
Market: increasing overcapacity since 2008.
Frankfurt/Main, 9 May 2014 | 101
Capacity in GWp
6 7
19
2731
7
13
25
40
50
2008 2009 2010 2011 2012
= 19= 19
= 13= 13
= 6= 6
= 6= 6
= 1= 1
Market volume
Production capacity
Overcapacity
Global PVQ was subject to strong fluctuations in revenue.
Frankfurt/Main, 9 May 2014 | 102
Revenue in EUR millions
,0
200,0
400,0
600,0
800,0
1000,0
1200,0
1400,0
2008 2009 2010 2011
-37%
+71%
-25%
• 2008: dynamic growth until 2008
• 2009: decline in revenue due to decrease in volume and price
• 2010: disproportionately high growth due to expansive fiscal policy
• 2011: decline in revenues (background: excess supply)
Global PVQ before filing for insolvency.
Frankfurt/Main, 9 May 2014 | 103
• Swap for bonds
• Measures to reduce costs
• Capital writedown
• Waivers by different parties
• Temporary production cutback in Germany and Malaysia
• Mass production in Malaysia only
Measures in 2011:Measures in 2011:Planned financial
restructuring:Planned financial
restructuring:
Frankfurt/Main, 9 May 2014 | 104
The proceedings: milestones.
filing for insolvency
preliminary insolvency administrator
filing for insolvency
preliminary insolvency administrator
institution of insolvency proceedings
institution of insolvency proceedings
first creditors' meeting
first creditors' meeting
second creditors' meeting
second creditors' meeting
meetings of the creditors' committee
meetings of the creditors' committee
3 Apr 20123 Apr 2012 1 Jul 20121 Jul 201218 Jul 201218 Jul 2012
15 / 29 Aug 201215 / 29
Aug 2012
third creditors' meeting
third creditors' meeting
29 Aug 2013
29 Aug 2013
Global PVQ financed itself via three bonds.
Frankfurt/Main, 9 May 2014 | 105
Volume(in Mio. EUR)
InterestDenomination
(in EUR)
2012Q-Cells International Finance B.V.
492,50 1,375% 100.000,00
2014Q-Cells International Finance B. V.
250 5,75% 100.000,00
2015Q-Cells SE
128,7 6,75% 4,38
Frankfurt/Main, 9 May 2014 | 106
• Members
• Non-disclosure duties
• Cooperation in the interests of all creditors
Creditors' committeeCreditors' committee
Joint representative:
• Which law controls?
• Applicability of the German Bond Act (SchVG)
• Dealing with the existingjoint representative
Frankfurt/Main, 9 May 2014 | 107
Bond creditors ... ... with the joint representative
Bond creditors ... ... will be approached directly:
Insolvency Administrator
Insolvency plan:
• Joint representative's role?
• Accompanying insolvency planand distribution
Frankfurt/Main, 9 May 2014 | 108
Accompanying insolvency plan – new since
the introduction of the German Act for Further
Facilitating the Restructuring of Companies
(ESUG) as at 1 March 2012.
NEW:Accompanyinginsolvency plan
Insolvency proceedings vs capital markets law.
Frankfurt/Main, 9 May 2014 | 109
Confidential information Transparency
Creditors' collective insolvency
proceedings
Creditors' collective insolvency
proceedings
Market interestsMarket interests
Duties under
capital markets law
Duties under
capital markets law
Preparation of creditors' meetings:
• Relationship withcreditors' committee
• Language, approach and consultation
• Preparation
Frankfurt/Main, 9 May 2014 | 110
Bond creditors ... ... will be approached directly:
Insolvency Administrator
Who is a creditor?
Frankfurt/Main, 9 May 2014 | 111
• Company in the Netherlands
vs
• Company inGermany
1. “Double Dip”1. “Double Dip”2. Insolvency schedule vs
trading2. Insolvency schedule vs
trading
procedure for defining creditors
Summary
• Bond creditors are no different than any other creditors
• They have a special need for information
• The primary interest is in swift and successful proceedings.
Frankfurt/Main, 9 May 2014 | 112
Thank you!
Frankfurt/Main, 9 May 2014 | 113
Martin Schoebe, LL.M.
Partner,
Insolvency Administrator, Attorney at Law,
certified specialist in insolvency law
hww wienberg wilhelm
Insolvenzverwalter Partnerschaft
Ainmillerstraße 11
D – 80801 Munich
T +49.89.18 93 77-0
F +49.89.18 93 77-50
E martin.schoebe@hww.eu
Frankfurt/Main, 9 May 2014 | 114
With nearly 350 employees (including some 80 professionals), the hww Group is represented nationwide at over 20 locations in Germany.
hww wienberg wilhelm also has an international network of 27 cooperation partners. hww insolvency cooperation partners is an association of
international insolvency specialists who cooperate closely with hww's German insolvency administrators, consultants and lawyers, and are available on site when needed.
International cooperation partnersOffices in Germany
Cooperation partnersOffices
EUROPEAN RESTRUCTURINGDAY 2014
9 May 2014, Frankfurt/Main
Refinancing and Restructuring Trends for
2014/2015
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