Table of Contents Class 1 Introduction The American Legal System - Law School Class 2 The American Legal System - The Courts Classes 3 and 4 Chapter 11 Bankruptcy - Fundamentals: Priority of Claims, Reasons for Chapter 11 and the Players Classes 5 and 6 Chapter 11 Bankruptcy- Planning, Venue and the Start of the Case Class 7 Chapter 11 Bankruptcy - Managing the Case Class 8 Chapter 11 - Managing the Case (Cont'd) Class 9 Chapter 11 - The Plan of Reorganization Class 10 Chapter 11 - Miscellaneous CINLibrary 0000000.0001531 1670846v.l Outline Class 1 (Continued) The American Legal System - Law School I. Law School Requirements. A. University degree B. Law School Admission Test II. Law Schools. A. Cost B. Courses C. Socratic Method of Teaching D. Practical Experiences 1. Practice trials 2. Moot court 3. Law review ■ Case Notes 4. Summer clerkships III. After Law School Graduation. A. State Bar Examination B. Alternative Jobs 1. Law firms 2. Court Clerkships 3. Business 4. Government; Politics ClNLibrary 0000000.0001531 1659038v.l Outline Class 2 The American Legal System - The Courts I. Federal Courts. A. Federal District Courts 1. Federal question jurisdiction 2. Diversity of citizenship jurisdiction 3. Class action jurisdiction B. Bankruptcy Courts 1. Consumer cases (a) Chapter 7 liquidation cases (b) Chapter 13 wage earner cases 2. Business cases (a) Chapter 7 liquidation cases (b) Chapter 11 reorganization cases C. Bankruptcy Appellate Courts (BAPs) D. Circuit Courts of Appeal E. United States Supreme Court F. Appointment and Tenure of Federal Judges II. State Courts. A. Trial Courts B. Appellate Courts C. Supreme Courts D. Election/Appointment and Tenure of State Court Judges CINLibrary 0000000.000153! 1665238v.l Outline Classes 3 and 4 Chapter 11 Bankruptcy - Fundamentals: Priority of Claims, Reasons for Chapter 11 and the Players Types of Cases A. Voluntary B. Involuntary The Filing of Chapter 11 A. Filings B. Preparation Absolute Priority Rule A. Secured Creditors B. Costs and Expenses of Administration C. Other Priority Claims: Employee Wages, Taxes D. General Unsecured Creditors E. Shareholders IV. The Reorganization Process A. Nature of the Process B. What It Accomplishes 1. Allows Tempers to Cool 2. Allows the Debtor to Stabilize its Business 3. Levels the Playing Field 4. Allows for Long Look at Debtor's Finances and Operations 5. Allows Alliances to Form and Negotiations to Begin 6. Allows a Consensus to Build 7. Allows Time to Handle Holdouts 8. Centralizes Disputes in the Bankruptcy Court 9. Allows for Formulation and Confirmation of a Plan 10. Allows Debtor Time to Sink or Swim C. Likelihood of Success V. The Players and Their Roles. A. Debtor-in-Possession (DIP) B. Secured Creditors 1. Working capital lender 2. Equipment lessor 3. Real estate mortgage holder 4. Taxing authorities C. Unsecured Creditors Committee D. Equity Committee E. Parties to Executory Contracts and Unexpired Leases F. U.S. Trustee G. Examiner; Trustee 1. Examiner - Grounds to appoint: ■ fraud, dishonesty, etc. ■ interest of creditors or shareholders ■ grounds to dismiss or convert the case ■ debts over $5 million 2. Trustee - Grounds to appoint: ■ fraud, dishonesty, etc. ■ interest of creditors or shareholders ■ grounds to dismiss or convert the case ■ motion of U.S. Trustee on suspicion of management fraud, dishonesty or criminal conduct H. Bankruptcy Judge I. The Professionals 1. Lawyers 2. Ordinary Course Professionals 3. Accountants 4. Financial Advisors 5. Valuation Experts 6. Public Relations Specialists 7. Turnaround Specialists 8. Auctioneers CINl.ibrary 0000000.0001531 1667365v.l Outline Classes 5 and 6 Chapter 11 Bankruptcy - Planning, Venue and the Start of the Case I. Planning an Exit Strategy A. The Business Problem B. Action Items to Achieve Exit Strategy C. Uses of the Bankruptcy Code to Implement Exit Strategy D. Prepackaged Bankruptcy II. Venue III. Let the Game Begin! A. The Order for Relief B. Bankruptcy Estate C. The Automatic Stay 1. General 2. Exceptions 4. Relief from Stay a. For cause b. Lack of equity D. First-Day Orders - Generally E. Employee Agreements 1. Non-Senior Level Employees - Pre Plan Confirmation 2. Senior-Level Executives - Post Confirmation F. Financing the Bankruptcy Operations 1. Cash Collateral Orders 2. Ordinary Course Debt 3. DIP Financing CINLibrary 0000000.0001531 1681099v.l Outline Class 7 Chapter 11 Bankruptcy - Managing the Case I. The Lawyers for the Debtor and the Lender II. Day to Day Operations A. Stabilizing the Business B. Suppliers C. Ordinary Course of Business Transactions D. Statements and Schedules E. Interim Operating Reports and Fees F. Utility Companies G. Publicly - Held Companies H. Directors' and Officers' Exposure I. Environmental Claims J. Pension Matters K. Unpaid Withholding Taxes L. Retiree Benefits and Union Contracts CINLibrary 0000000.0001531 1697885v.l Outline Class 8 Chapter 11 Bankruptcy - Managing the Case (Cont'd) to Day Operations Sale of Assets 1. Generally 2. Free and Clear 3. Credit Bids 4. Every Sale an Auction Sale 5. Bidding Procedures Motion (a) Break-Up Fees (b) Overbid Protection (c) Window Shop Provisions (d) Proof of Financial Ability (e) Other Provisions 6. The Bidding Process The "Strong Arm" Powers - Preferences and Fraudulent Conveyances. 1. Preferences (a) Generally (b) Non-Preferential Transfers (c) Defenses to Preference Claims (1) New Value (2) Subsequent Advances (3) Ordinary Course of Business 2. Fraudulent Conveyances (a) Actual Fraud (b) Constructive Fraud (c) Time (d) Remedies (e) Leveraged Buyouts 3. Secret Liens 4. Statute of Limitations C. Executory Contracts and Unexpired Leases 1. Assumption 2. Assignment 3. Rejection 4. Court Approval CINLibrary 0000000.0001531 1702887v.l Outline Class 9 Chapter 11 Bankruptcy -The Plan of Reorganization Introduction. A. The Concept of Reorganization B. Defining Success in Chapter 11 C. Quantifying the Debts - The Bar Date Order Step One - The Negotiation Process. A. Generally B. Exclusivity C. Understanding What Constituent Groups Wantand Need 1. Secured Creditors 2. Unsecured Creditors 3. Bondholders 4. Shareholders Step Two - Drafting the Plan. A Types of Exit Strategies B. Parts of the Plan Document Step Three - The Disclosure Statement. A. Necessary Components of the Disclosure Statement B. Disclosure Statement Projections C. Valuations D. The Approval Process Step Four - The Solicitation Process. A. The Solicitation Package B. Who is Entitled to Vote? 1. Allowed Claims 2. Impaired Claims C. Class Voting D. Bad Faith Votes E. Changing Votes F. The Tabulation Process Step Five - The Plan Confirmation Process. A. The 12 Requirements for Plan Confirmation 1. Compliance with the Bankruptcy Code 2. Good Faith 3. Professional Fees 4. Postconfirmation Officers and Directors 5. Regulatory Approval 6. Best Interests of Creditors Test 7. Consensual Plan 8. Administrative and Priority Claims 9. Prohibition of Total Cramdown Plans 10. Feasibility 11. U.S. Trustee's Fees 12. Retiree Benefits B. Non-voting Equity Securities C. Feasibility D. Cramdown 1. Secured Creditors 2. Unsecured Creditors 3. Equity (Shareholders) E. Discharge F. Releases 1. Actions Taken in Bankruptcy 2. Pre-Bankruptcy Actions VII. Step Six - Going Effective A. Effective Date B. Legal Effect of Confirmed Plan C. Channeling Injunctions CINLibrary 0OOOOÜÜ.OOO1531 1703510v.l Outline Class 10 I. Post-Confirmation A. Clean-up Work B. Plan Defaults 1. Amendment 2. Default Remedies 3. Serial Filings C. The Final Decree II. Small Business Bankruptcies HI. Single Asset Real Estate Cases IV. Alternatives to Chapter 11 Bankruptcies A. Composition of Creditors B. Out-of-Court Liquidation C. State Court Receiverships CINLibrary 0000000.0001531 1704674v. 1