December 2019 Turnarounds VOLUME 33, NUMBER 12 & Workouts News for People Tracking Distressed Businesses www.TurnaroundsWorkouts.com

In This Issue: Chrysler Dealers to Appeal Loss Sorry, No Compensation for in Claims Court Chrysler Dealers by Frauline S. Abangan 2nd Cir. Limits General Motors’ Liability in Ignition After nearly a decade of litigation, Chrysler car dealers found themselves at Switch Cases the losing end when the U.S. Court of Federal Claims denied their claim that the U.S. government is liable for taking their franchise agreements without just Click on a title below to compensation in contravention of the Fifth Amendment. jump to that section In a 183-page trial opinion, Senior Judge Nancy B. Firestone noted that while the “court sympathizes with many of these owners who testified as to how the loss Research Report: Who’s Who in Purdue of their franchise agreements devastated not only their businesses but their lives,” Pharma L.P. the plaintiffs failed to prove that the United States coerced Chrysler into rejecting Page 5 → their franchise agreements. But it isn’t over for the Chrysler dealers who are taking their loss to the appellate Research Report: Who’s Who in Jack Cooper Continue on page 2 → Ventures, Inc. Page 12 →

Special Report: Drivers Lose Appeal Sources of Debtor-in- Possession Financing Punitive Damages Not Assumed in GM Sale Contract Page 15 → by Christopher Patalinghug Worth Reading: Unique Value: The Secret of General Motors LLC, the entity that emerged from the ashes following General All Great Business Strategies Motors Corp.’s high-profile Chapter 11 filing a decade ago, has been cleared of Page 20 → liability over punitive damages related to automotive accidents that occurred following the sale of the company’s business. Special Report: Outstanding Restructuring Last month’s ruling by the U.S. Court of Appeals for the Second Circuit thumbed Lawyers - 2019 down attempts by a group of drivers seeking punitive damages over post-sale Page 21 → automotive accidents involving old GM vehicles, ruling that New GM did not Gnome de Plume: “contractually assume liability” for punitive damages. Dean Garrett on Avoiding 1929 General Motors Corp. or Old GM sought creditor protection at the height of Page 28 → Continue on page 10 → 2 Turnarounds & Workouts DECEMBER 2019

Chrysler, from page 1 About 500 dealers chose not As the Federal Circuit suggested, to participate, according to the plaintiffs in all three cases filed court, according to their lawyer Automotive News. amended complaints in September Len Bellavia of Bellavia Blatt PC The Colonial Chevrolet case 2014 in which they posited that in an interview with Auto Dealer reached the Federal Circuit’s their franchise agreements would Today. interlocutory review. The Circuit have had value under several “but held that the plaintiffs had alleged for world” scenarios in which Taking Claims Suit sufficient facts to support potential the government did not provide Chrysler LLC filed for Fifth Amendment taking claims financial assistance to Chrysler bankruptcy during the Great based on a theory of coercion. or GM. Recession in April 2009 working If the plaintiffs could establish The government moved to under a government-negotiated that Chrysler’s decision to enter dismiss the amended complaints. prepackaged plan that called for bankruptcy under government- On September 9, 2015, the the rejection of 789 franchise negotiated terms was not voluntary, Claims Court granted in part and agreements, including the a potential taking may be found, denied in part the government’s plaintiffs’ agreements. according to the Federal Circuit. motion, holding that certain According to the plaintiffs, if the of plaintiffs’ “but for world” government had not gotten involved Nearly 300 dealers joined scenarios were consistent with in the Chrysler bankruptcy, their the lawsuits looking for the Federal Circuit’s decision in franchise agreements would not compensation totaling as A&D Auto Sales, Inc. v. United have been rejected by Chrysler in much as $850 million. States, 748 F.3d 1142 (Fed. Cir. bankruptcy but would have been 2014). The court also severed the assumed by the owner of New GM plaintiffs from the Chrysler Chrysler. The Federal Circuit, however, plaintiffs and put the GM plaintiffs’ The taking claims addressed in held that the plaintiffs failed to claims on a separate discovery the Federal Claims Court decision allege sufficient facts to show time table. relate to three separate lawsuits— that their franchise agreements In December 2015, the court Colonial Chevrolet Co., Alley’s of would have had economic value consolidated the three lawsuits for Kingsport, Inc. and Union Dodge, in a “but for world” where the the purposes of case management, Inc. with Case Nos. 10-647, 11- government had not provided discovery, and for trial on the 100 and 12-900, respectively. The financial assistance to Chrysler or merits of the Chrysler plaintiffs’ plaintiffs of these lawsuits owned GM. To prove a taking, the Circuit taking claims. A motion for class franchise agreements with either said, the plaintiffs would need certification was denied in April Old Chrysler or Old General to establish that their franchise 2016. Motors that were rejected in the agreements would have had value For purposes of discovery and Chrysler and GM bankruptcies. in a hypothetical “but for world” trial, nine representative plaintiffs Nearly 300 dealers joined the where the government had not were chosen and divided into two lawsuits looking for compensation provided financial assistance to groups: the Alley’s group with totaling as much as $850 million. Chrysler or GM. seven plaintiffs including Taylor

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Chrysler, from page 2 need the government’s financial accepted the government’s assistance. prepackaged bankruptcy plan & Sons, Inc., Cedric Theel, Inc., based on Chrysler’s best business Whitey’s Inc., RFJS Company, Federal Claims Court judgment after consideration of its Jim Marsh American Corp., Decision options; (6) had the government Livonia Chrysler Jeep, Inc., Barry After considering all of not provided financial assistance Dodge, Inc., and the Colonial the fact and expert evidence, to Chrysler, Chrysler would have group with two plaintiffs including Judge Firestone finds that the been forced into liquidation under Guetterman Motors, Inc. and plaintiffs failed to establish by a Chapter 7 of the Bankruptcy Code Mike Finnin Motors, Inc. The two preponderance of the evidence and, in that circumstance, all of groups of plaintiffs are represented that the United States by its actions plaintiffs’ franchise agreements by different attorneys. coerced Chrysler into filing for would have been rejected by Trial was held in Washington, bankruptcy under the government’s the bankruptcy trustee; and (7) D.C. between April 8, 2019 and negotiated bankruptcy terms or Chrysler’s decision to accept May 8, 2019. The goal was to into rejecting any of the plaintiffs’ the government’s prepackaged determine principally whether Chrysler franchise agreements in bankruptcy terms was a voluntary there was government action the Chrysler bankruptcy. decision and not coerced. through coercion and whether The Federal Claims Court finds plaintiffs’ franchise agreements During trial, the court heard that the testimony of Chrysler’s would have had economic value testimony from 36 witnesses executives established that the in a “but for world” without and received 542 exhibits government never threatened government assistance. Post-trial into evidence. Chrysler’s management in arguments were held on June 19 order to secure acceptance of and June 20, 2019. During trial, Judge Firestone pointed out the government’s prepackaged the court heard testimony from that the evidence established that bankruptcy plan. 36 witnesses and received 542 (1) the government did not force One of the testimonies exhibits into evidence. Chrysler to accept its bankruptcy highlighted in the decision was that Judge Firestone noted that at terms; (2) the government was of Steven Rattner, who testified trial the representative plaintiffs did willing to give $750 million to for both the plaintiffs and the not focus their coercion evidence Chrysler if Chrysler wished to United States at trial. Appointed on Chrysler being forced to accept proceed to bankruptcy alone; (3) by Timothy Geithner, President the government’s negotiated the government through its actions Obama’s Secretary of Treasury, at bankruptcy terms (including a did not interfere with potential the end of February 2009, Rattner reduction in Chrysler franchises) acquirers from coming forward to headed a newly formed Auto Team because Chrysler needed the purchase Chrysler in bankruptcy; Task Force at the Department of government’s financial assistance. (4) none of the potential acquirers Treasury. Instead, she noted that the plaintiffs the plaintiffs’ identified were According to Rattner, the Auto presented opinion testimony to interested or capable of purchasing Team gave serious consideration the effect that Chrysler did not Chrysler in April 2009; (5) Chrysler to allowing Chrysler to liquidate

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Chrysler, from page 3 business judgment” when voting take a victory lap. We all knew in favor of bankruptcy. the appellate court will decide the in bankruptcy without government The Federal Claims Court unique legal issues in this case.” involvement but came to also finds that plaintiffs failed to The decision, Bellavia stressed, understand that Chrysler needed prove their franchise agreements did not mention the provision to survive in some form so that its would have had value in a “but in the government-drafted loan suppliers would also survive. for world” without government documents that mandated the If Chrysler was no longer assistance because the evidence closure of a certain number of making cars and trucks, Rattner established that Chrysler would dealerships. Bellavia contends that said the Auto Team thought the have faced immediate liquidation this provision amounts to coercion whole industry could shut down, in a Chapter 7 bankruptcy without by the government. He noted that at least for a bit, in a Chrysler government assistance. In a this is an uncommon claim in liquidation. If Chrysler was Chapter 7 bankruptcy scenario, Takings Clause cases and that the to continue to make cars and all of Chrysler’s franchise court erred in misunderstanding trucks during bankruptcy, Rattner agreements would have been their “coercion” argument. explained that Chrysler needed the rejected by the bankruptcy “Coercion in the takings context federal government’s assistance. trustee to preserve the assets of is not a common matter of proof. Rattner also made clear in his the bankruptcy estate and that ‘Coercion’ connotes this notion testimony that the Auto Team plaintiffs’ franchise agreements of almost a physical force. And never targeted specific dealers for would have had no economic that’s not what we were arguing. rejection. value in that circumstance. We weren’t saying the government Robert Nardelli, who was the Thus, Judge Firestone finds that twisted Chrysler’s arm to file for CEO of Chrysler from late 2007 plaintiffs failed to prove that any bankruptcy and terminate dealers,” until early 2009, testified that property of value was “taken” Bellavia told Auto Dealer Today. Chrysler provided a Viability from them. “We claimed the coercion as a Plan to Congress in December condition of the bailout. It was 2008 which estimated that in Economic Coercion economic coercion. If Chrysler order to wind-down Chrysler and In an email to Automotive wanted the bailout, they had provide its dealers with support News, Bellavia explained that the to accede to the government’s and floor plan financing Chrysler dealers have always understood directive.” would need between $17 to $20 that the case would not end at “It was never plaintiffs’ argument billion. But Chrysler couldn’t get this stage, regardless of which that the government forced it to financing from its first lien lenders. side prevailed at trial, and would file bankruptcy, but rather that So when the Auto Team presented work its way up the appellate the loan agreement drafted by Chrysler with the prepackaged ladder, possibly all the way to the government mandated that bankruptcy plan, Chrysler’s board the U.S. Supreme Court. the Chrysler dealership network felt it was the best course of action. Bellavia told Auto Dealer be reduced. The court failed to According to Nardelli, every Today, “Even if we won, I would address this key claim,” Bellavia member of the board used “good have advised my clients not to told Automotive News. ¤

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Who’s Who in Purdue Pharma’s Bankruptcy Cases by Carlo Fernandez rivately-held Purdue Pharma 19-23649. namely, American Samoa, Guam, PL.P. traces its roots to 1952, As part of the deal, Purdue agreed Northern Mariana Islands, Puerto when three doctors—brothers to dissolve and transfer assets to a new Rico, and the U.S. Virgin Islands; Arthur, Mortimer and Raymond company, which will continue selling and Sackler—founded the company after OxyContin, with the sales revenue • The court-appointed Plaintiffs’ taking over a small New York drug going to claimants. Purdue will Executive Committee and Co- manufacturer. Purdue Pharma grew to donate drugs for addiction treatment Lead Counsel in the federal multi- a pharmaceutical giant after it began and overdose as well. The settlement district litigation pending in Ohio, selling OxyContin, a long-lasting, does not involve an admission of which comprises attorneys at law narcotic pain reliever. OxyContin has wrongdoing. firms that collectively represent reportedly generated some $35 billion The proposed “settlement over 1,000 counties and cities, and in revenue for Purdue as of 2017. framework” specifically provides that Native American Tribes. Opioid makers in the U.S. are the Sacklers will relinquish all their Oklahoma and Kentucky facing pressure from a crackdown equity interests in Purdue and transfer separately have already settled with on the addictive drug in the wake all of Purdue’s assets to a trust for the Purdue Pharma. of the opioid crisis and as state benefit of claimants and the American Not everyone who’s suing Purdue attorneys general file lawsuits against public. In addition to 100% of Purdue, and other opioid manufacturers manufacturers. More than 2,000 the Sackler families will contribute a and distributors for their role in the states, counties, municipalities and minimum of $3 billion over seven overdose crisis is on board with the Native American governments have years, plus an additional $1.5 billion settlement. The attorneys general of sued Purdue Pharma and other contingent on the sale of their global the non-settling states and other hold- pharmaceutical companies for their opioid business, Mundipharma. out claimants are demanding that the role in the opioid crisis in the U.S. Parties that agreed to the company and the Sacklers pay more Facing more than 2,600 lawsuits, framework for a comprehensive than what they have offered, and Purdue Pharma sought Chapter 11 settlement are comprised of: intend to pursue the company and its bankruptcy protection after reaching • Attorneys general for 24 states: owners in court. terms of a $10 billion deal with certain Alabama, Alaska, Arizona (which Purdue has not submitted a Chapter of the litigants. later backed out), Arkansas, 11 plan nor presented a definitive On Sept. 15 and Sept. 16, 2019, Florida, Georgia, Indiana, Kansas, settlement to the bankruptcy court for Purdue Pharma and 23 affiliates Louisiana, Michigan, Mississippi, scrutiny or approval. each filed a voluntary petition for Missouri, Montana, Nebraska, Purdue has commenced in relief under Chapter 11 of the United New Mexico, North Dakota, Ohio, bankruptcy court an adversary States Bankruptcy Code in the U.S. South Carolina, South Dakota, proceeding seeking to preliminarily Bankruptcy Court for the Southern Tennessee, Texas, Utah, West enjoin more than 2,600 lawsuits for District of New York. The cases are Virginia, and Wyoming; 270 days. jointly administered under Case No. • Officials from five U.S. territories, The Debtors disclosed consolidated

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Who’s Who in Purdue Pharma’s Bankruptcy Cases Continued from page 5

assets of $12.18 billion against total Skadden, Arps, Slate, Meagher in connection with certain inquiries liabilities of $1.45 billion as of Oct. & Flom LLP is representing Purdue by Congressional committees into 31, 2019. in connection with civil and criminal opioid product sales and marketing investigations initiated by state practices. Reginald Brown, a DEBTORS attorneys general and state agencies, partner at WilmerHale, leads the Davis Polk & Wardwell LLP, the Department of Justice, and engagement. led by Restructuring Group partners certain other United States agencies, Jones Day is representing the Marshall S. Huebner, Timothy as well as 51 cases filed in Texas Debtors in several patent litigation Graulich, and Eli J. Vonnegut, state courts, most of which have matters. John J. Normile is the and Litigation Department partner been consolidated into a Texas state partner with primary responsibility Benjamin S. Kaminetzky, is multi-district litigation. Patrick for the matter. serving as restructuring counsel to Fitzgerald, a partner in Skadden’s Arnold & Porter Kaye Scholer Purdue Pharma. Litigation and Government LLP has been providing Purdue AlixPartners LLP is serving Enforcement and White Collar advice in connection with intellectual as financial advisor to the Debtors. Crime practices, and Jennifer property licensing and disputes for Lisa Donahue is the managing Bragg, a partner in the Litigation, the past 15 years. Rory Greiss, a director responsible for the overall Government Enforcement and White partner at Arnold & Porter, leads the engagement. Collar Crime, and Health Care and engagement. PJT Partners LP is Purdue’s Life Sciences practices, lead the Ernst & Young LLP is Purdue’s investment banker. Timothy firm’s representation of the Debtors auditor. Devon M. Brady is the Coleman, a partner in and the in government investigation, and audit partner responsible for the global chairman of the Restructuring litigation matters. Noelle Reed, provision of E&Y’s audit services. and Special Situations Group at a partner in the Litigation and Brady, senior manager Jessica PJT, is one of the lead restructuring Government Enforcement and Seenarraine and manager Justin advisors involved in the chapter 11 White Collar Crime practices, and Furtado will work closely with cases. who is based in Skadden’s Houston management in performing all Dechert LLP is in charge of Office, leads the representation of required audit services. national coordination of nearly the Debtors in the cases filed in Prime Clerk LLC is the claims 2,600 civil actions, including cases Texas state courts. agent and administrative advisor. filed by the Attorneys General of King & Spalding LLP, led almost every state and territory, by partner Jeffrey S. Bucholtz, CREDITORS’ COMMITTEE pending in various state and federal is representing the Debtors in On Sept. 26, 2019, the U.S. courts across the United States and matters relating to opioid claims Trustee for Region 2 appointed an its territories. Hayden Coleman, and investigations. official committee of unsecured a partner of the firm, leads the Wilmer Cutler Pickering Hale creditors, comprised of (1) healthcare engagement. and Dorr LLP is advising Purdue coverage provider Blue Cross

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Who’s Who in Purdue Pharma’s Bankruptcy Cases Continued from page 6

and Blue Shield Association, (2) tribal nations, six hospital, two Kurtzman Carson Consultants trade creditors CVS Caremark districts, 34 medical groups, two LLC is the information agent to the Part D Services L.L.C. and funds, and one veterans’ class across Committee. Evan Gershbein, a CaremarkPCS Health, L.L.C., 36 states, representing the interests senior vice president of Corporate (3) opioid addiction recovery of 60 million individuals to serve Restructuring Services with KCC, advocate and former White House on the Committee in an ex officio leads the engagement. staffer Ryan Hampton, (4) Cheryl capacity. The Multi-State Group has Juaire, who lost her 23-year old designated Cameron County, Texas EQUITY HOLDERS son to an opioid overdose in 2011, to act as an ex officio member of the Milbank LLP, led by partners (5) transdermal patches supplier Committee. Gerard Uzzi and Eric K. Stodola, LTS Lohmann Therapy Systems Akin Gump Strauss Hauer & and Joseph Hage Aaronson LLC, Corporation, (6) Pension Benefit Feld LLP is serving as lead counsel led by attorney Gregory P. Joseph, Guaranty Corporation, which has to the Committee. Attorneys that are representing the Raymond unliquidated claims arising from have primary responsibility for Sackler family, comprised of Dr. unfunded benefit liabilities and providing services to the Committee Richard Sackler, Jonathan Sackler, premiums, (7) Walter Lee Salmons, are partners Ira S. Dizengoff, Arik David Sackler, and Beverly Sackler. who is seeking certification of a Preis, Mitchell P. Hurley, Allison Bracewell LLP, led by managing class action to provide medical Miller, and Sara L. Brauner; and partner Daniel S. Connolly and monitoring for children born with associates Edan Lisovicz, James partner Robert G. Burns, is also neonatal abstinence syndrome, (8) Salwen, and Brooks Barker. representing the Raymond Sackler Kara Trainor, who filed product Bayard, P.A., led by directors Family. liability and nuisance claims Justin R. Alberto and Erin R. Fay, Debevoise & Plimpton LLP, against Purdue over her son’s NAS and associates Daniel N. Brogan, led by partners Jeffrey J. Rosen, caused by her use of prescription Gregory J. Flasser and Sophie E. Maura Kathleen Monaghan, and opioids, and (9) West Boca Medical Macon, is serving as the efficiency M. Natasha Labovitz, is counsel Center, which filed a complaint for counsel to the Committee. to Beacon Company, the entity RICO violations and misleading Province, Inc., is the Committee’s through which certain members of advertising, which case was selected financial advisor. Michael Atkinson, the Sackler family hold a beneficial as the bellwether for hospital cases a principal with the firm, leads the interest in Purdue Pharma. in the MDL. engagement. On Oct. 21, 2019, the Creditors’ Jefferies LLC is the investment GOVERNMENTAL Committee granted the request of a banker to the Committee. Leon CLAIMANTS multi-state group comprising 1,222 Szlezinger, a managing director and Kramer Levin Naftalis & entities, including 1,172 cities, joint global head of Restructuring Frankel LLP, led by bankruptcy counties and other governmental and Recapitalization at Jefferies, and restructuring co-chair Kenneth entities, seven Native American heads the engagement. H. Eckstein and partner Rachael

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Who’s Who in Purdue Pharma’s Bankruptcy Cases Continued from page 7

Ringer; Brown Rudnick LLP, led Pillsbury Winthrop Shaw Ham, and Erica D. Entsminger, by partners David J. Molton and Pittman LLP, led by partner Andrew are representing the Nevada counties Steven D. Pohl; Gilbert LLP, led M. Troop, is representing the Non- and municipalities, which include the by partners Scott D. Gilbert and Consenting States, comprised of cities of Reno and Las Vegas. Craig Litherland; and Otterbourg California, Colorado, Connecticut, Godfrey & Kahn, S.C., led by P.C., led by attorney Melanie L. Delaware, the District of Columbia, shareholders Katherine Stadler and Cyganowski, and of counsel Jennifer Hawaii, Idaho, Illinois, Iowa, Maine, Brady C. Williamson, and associate S. Feeney, are representing the ad Maryland, Massachusetts, Minnesota, Erin A. West, is representing hoc committee of governmental and Nevada, New Hampshire, New Jersey, the Arkansas and Tennessee other contingent litigation claimants. New York, North Carolina, Oregon, Municipalities. The committee includes the attorneys Pennsylvania, Rhode Island, Vermont, general for the states of Florida and Virginia, Washington, and Wisconsin. HOSPITALS New Mexico and 8 other states, as Caplin & Drysdale, Chartered, Schulte Roth & Zabel LLP, led well as the court-appointed Plaintiffs’ led by members Kevin C. Maclay, by partner Kristine Manoukian and Executive Committee (the “PEC”) in James P. Wehner, Jeffrey A. special counsel James T. Bentley, the multi-district litigation captioned Liesemer, and Todd E. Phillips, is serving as counsel to the Ad Hoc In re National Prescription Opiate is counsel to the Multi-State Group of Hospitals, which currently Litigation, Case No. 17-md-02804, Governmental Entities Group. The represents 10% of the hospitals in MDL No. 2804 (N.D. Ohio). The group has opposed the settlement with the United States that collectively members of the Ad Hoc Committee the Sacklers. assert in excess of $303 billion of negotiated and support a settlement In the Debtors’ adversary claims against the Debtors. On Nov. structure with the Debtors and proceeding seeking a preliminary 30, 2017, certain members of the Ad their equity shareholders, on behalf injunction against lawsuits, Hoc Group of Hospitals, as putative of a larger group of supporting Scott+Scott Attorneys at Law class representatives on behalf of governmental and other contingent LLP, led by New York attorney themselves and all hospitals who litigation claimants. Beth A. Kaswan, is counsel to the have treated patients for conditions Consovoy McCarthy PLLC, led Consortium of Some Massachusetts related to the use of opiates, filed a by partners William S. Consovoy Municipalities, comprised of 20 class action suit against Purdue and and J. Michael Connolly, is counsel cities and towns, including the City other opioid manufacturers. to the State of Arizona, which was of Cambridge. The law firms ofCuneo Gilbert initially part of the $12 billion opioid Loeb & Loeb LLP, led by partner & LaDuca, LLP, led by founding settlement but later backed out, Vadim J. Rubinstein, and Eglet partner Jonathan W. Cuneo; raising the number of states opposing Adams, led by Las Vegas trial lawyers Barrett Law Group, P.A., led by the deal to 25. Robert M. Adams, Artemus W. founding partner Don Barrett; and

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Who’s Who in Purdue Pharma’s Bankruptcy Cases Continued from page 8

Teitelbaum Law Group, LLC, led Restructuring Practice co-chair Scott NEGOTIATION CLASS by founder Jay Teitelbaum, are S. Markowitz, partner Rocco A. Simmons Hanly Conroy representing Community Health Cavaliere, and counsel Michael shareholder Jayne Conroy Systems, Tenet Healthcare Corp. Z. Brownstein, is representing the and Seeger Weiss LLP partner and its affiliates and subsidiaries, Ad Hoc Committee of NAS Babies, Christopher A. Seeger are co-lead and Infirmary Health System, Inc. which represents guardians who are counsel and Branstetter, Stranch and its affiliates and subsidiaries responsible for the babies diagnosed & Jennings, PLLC partner Gerard along with approximately 384 acute- at birth with NAS due solely to their Stranch, Renne Public Law Group care hospitals in 18 states. The birth mother’s use during pregnancy founding partner Louise Renne, City claims asserted or to be asserted of opioids manufactured by Purdue of Chicago’s corporation counsel on behalf of the Hospital Plaintiffs among other entities. The legal Mark Flessner, and city of New nationwide are attributable to the representatives of the NAS Babies Ad York’s corporation counsel Zachary Debtors’ illegal scheme to market Hoc Committee and their associates Carter are counsel for a proposed and distribute opioids exceed $400 are responsible for filing 87 actions negotiation class that would serve billion, plus punitive damages and on behalf of NAS Babies, including as a potential model to settle cases treble damages in some states. class actions covering 34 individual brought over the opioid crisis. Forty states and a national class. nine counties and cities, including INDIVIDUAL VICTIMS Stevens & Lee, P.C., led the County of Albany, New York, the ASK LLP, led by managing by Bankruptcy and Financial City of Atlanta, Georgia; the Bergen partner Edward E. Neiger and Restructuring Department co-chair County, New Jersey, serve as the partner Jennifer A. Christian, is Nicholas F. Kajon and shareholder Negotiation Class representatives. In representing the Ad Hoc Group of Constantine D. Pourakis; and September 2019, U.S. District Judge Individual Victims, representative Morgan & Morgan, P.A., led by Dan A. Polster, who’s presiding over of the more than 1,000 individual attorneys James Young and Juan R. the multidistrict opioid litigation victims of Purdue, including over 250 Martinez, are representing privately (MDL) centered in Cleveland, Ohio, victims with wrongful death claims. insured parties who are plaintiffs and approved the first-ever Negotiation Members of the group include Lindsey proposed class representatives in Class in U.S. history that is aimed at Arrington, founder of Hope Soldiers, their individual and representative reaching settlements with the opioid an Everett, Washington-based non- capacities in suits brought against defendants quickly. profit that helps individuals and Debtor-Defendant Purdue Pharma in families affected by the OxyContin actions in 25 states, all of which have JUDGE epidemic. been and remain stayed in connection The Hon. Robert Drain is the Tarter Krinsky & Drogin LLP, with the MDL. case judge. ¤ led by Bankruptcy and Corporate

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General Motors, from page 1 GM, such as individuals who never General Motors LLC, Case No. 15A- the U.S. automotive industry crisis of owned Old GM vehicles but collided 1940-7 (State Court of Cobb County, 2008-2009 despite receiving billions with one, and those who bought Old Ga.), argued that they were not bound of dollars of bailout money under GM cars used after the sale. by the bankruptcy court’s November the U.S. government’s then Troubled The bankruptcy court entered an 2015 decision on the punitive damages Asset Relief Program. Old GM order on July 5, 2009, approving the issue because they were not yet party filed on June 1, 2009, in the U.S. sale terms, as revised. Five days later, to the Chapter 11 proceedings. The Bankruptcy Court for the Southern the sale closed. Old GM, renamed group is represented by multiple law District of New York after failing to Motors Liquidation Company, went firms including Butler Wooten & Peak meet a government-imposed deadline on to obtain confirmation of a plan LLP, Denney & Barrett, P.C., Hilliard to submit a viable long-term plan. of liquidation that became effective Martinez Gonzales L.L.P., and Turner Immediately after the bankruptcy in March 2011. & Associates, P.A. filing, Old GM moved to sell Between February 2014 and In a July 2017 decision, the substantially all of its assets at an October 2014, New GM recalled bankruptcy court said its November auction, “free and clear” of any certain vehicles manufactured by 2015 decision is the law of the case associated liabilities, under 11 U.S.C. its predecessor over safety issues, and that New GM cannot be held § 363(f). The assets were eventually including recalls to repair ignition liable for punitive damages on a sold to an entity that later became switches, prompting numerous contractual basis. The bankruptcy New GM, which was the lone bidder. lawsuits against the company. The court held that, since Old GM was The terms of the sale are governed ignition switch defect could cause deeply insolvent at the time of the by a contract under which New GM engine stalls and keep airbags from sale, the structure of the Bankruptcy assumed a narrow set of Old GM’s deploying, and has been linked to 124 Code’s claim priority scheme would liabilities while all other liabilities deaths, according to Reuters. The insulate it from having to pay punitive remained with the bankrupt entity. company recorded charges of roughly damages. The bankruptcy court New GM was formed by the $400 million for ignition switch concluded that New GM could not be U.S. government, which held a related legal matters in the year ended held liable as a successor corporation 60.8% stake in the entity; the federal December 31, 2018. for claims that its predecessor would government of Canada and provincial In response to the lawsuits, New never have paid. government of Ontario with an 11.7% GM asked the bankruptcy court to The district court upheld the July stake; the United and Canadian Auto enforce the “free and clear” provision 2017 decision. The Eason plaintiffs Workers unions’ VEBA fund, a retiree of the 2009 sale order, arguing that the elevated the matter to the Second trust fund, with 17.5%; and General order already extinguished all liability Circuit. Motors’ unsecured bondholders with arising out of Old GM’s assets other Both the district court and the a 10% stake. The U.S. and Canadian than those New GM agreed to assume. bankruptcy court did not address governments have since unloaded In November 2015, the bankruptcy whether the scope of the Sale Order their stake in the company. court resolved some questions bearing could preclude punitive damages In response to some objections to on which claims could proceed claims. Instead, they concluded that the deal, the sale contract was revised against New GM and concluded because Old GM was insolvent, the for New GM’s assumed liabilities to that under the sale agreement, New structure of the Bankruptcy Code’s include claims arising out of post- GM could not be liable for punitive priority scheme precluded punitive Sale car accidents involving Old GM damages imposed by reason of Old damages claims against New GM, vehicles. New GM agreed to assume GM’s conduct. The November 2015 the buyer. claims including those by persons ruling was never appealed. Circuit Judge Dennis Jacobs said, who did not transact business with Old A group of plaintiffs in Eason v. “We need not decide whether the www.TurnaroundsWorkouts.com DECEMBER 2019 Turnarounds & Workouts 11

General Motors, from page 10 • even if Old GM’s liabilities used vehicles after the sale or against for punitive damages were not purchasers who asserted claims Bankruptcy Code’s priority scheme contractually assumed, New GM relating to the ignition switch defect, precludes liability for punitive must pay them under the theory including pre-sale personal injury damages in the case of an insolvent of successor liability. claims and economic-loss claims. debtor such as Old GM. Here, punitive According to the Second Circuit, At that time, the Second Circuit damages are not an Assumed Liability New GM’s assumption of “all considered whether a bankruptcy in the Sale Agreement, and the Sale Liabilities” is limited to those that court may approve a sale “free and Order’s free and clear provision bars are “for” death and injuries and those clear” of claims if those claims arose punitive damages claims under a that “arise directly out of” death and from pre-petition conduct that had not theory of successor liability. These injuries. Punitive damages are not resulted in “detectable injury” at the conclusions are sufficient for us to paid “for” death and injuries. Rather, time of the bankruptcy sale, but that rule that Appellants may not seek they are paid to punish “egregious, might lead to a “tortious” injury after punitive damages against New GM reprehensible behavior,” Judge Jacobs the sale. based on Old GM’s conduct.” said, pointing to Virgilio v. City of According to Judge Jacobs, the New GM argued on appeal that New York, 407 F.3d 105, 116 (2d Cir. 2016 decision has no bearing on the doctrine of res judicata bars the 2005). punitive damages: a punitive damages Eason plaintiffs from challenging “Claims for punitive damages do claim is not a tort claim; it does not the bankruptcy court’s decisions. not ‘arise directly out of’ death and compensate for a “tortious” injury; New GM asserted that even if the injuries,” according to Judge Jacobs. and there is no “detectable injury.” Plaintiffs did not participate in the “If reprehensible conduct—such as Moreover, he continued, any alleged briefing leading to the November careless automobile design—led to egregious act committed by Old GM 2015 decision, they were a part of an accident that caused an injury, a that might justify punitive damages the larger bankruptcy litigation at that claim for punitive damages to punish was over and done by the time of the time and are thereby bound by their that conduct does not arise directly sale order. Therefore, those claims are failure to appeal that ruling. out of the injury. Arguably, the claim subject to the sale order’s successor The Second Circuit disagreed with might be said to arise out of the injury liability bar. New GM, noting that the group did indirectly. Most accurately, the claim “The default rule is that unless not join the bankruptcy proceedings for punitive damages does not arise the Sale Agreement states that New until sometime after June 2016. out of the injury at all.” GM assumed a Liability, the Liability The Eason plaintiffs’ arguments The Eason plaintiffs, pointing to a remained with Old GM,” Judge include that: 2016 decision by the Second Circuit, Jacobs said. • New GM assumed “all also argued that the sale order cannot The Eason plaintiffs were Liabilities,” including “all bar their punitive damages claims represented by Gory W. Fox and liabilities and obligations of every because they had no relationship with William P. Weintraub of Goodwin kind and description whatsoever,” Old GM at the time of the sale: They Procter LLP on appeal. and thereby assumed claims for were not identifiable when the sale New GM was represented by punitive damages; order was entered. Richard C. Godfrey, Andrew B. • because the sale agreement does In 2016, the Second Circuit held Bloomer, Erin E. Murphy and C. not expressly carve out punitive that the 2009 sale order could not be Harker Rhodes IV of Kirkland & Ellis damages, New GM must have enforced to bar claims for successor LLP; and Arthur J. Steinberg, David contractually assumed them as liability against New GM asserted M. Fine and Scott I. Davidson of King liabilities; and by either plaintiffs who purchased & Spalding LLP. ¤

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Who’s Who in Jack Cooper’s Bankruptcy Cases by Carlo Fernandez ased in Kennesaw, Georgia, debt by more than $300 million and including pension obligations and BJack Cooper Ventures, Inc., is preserve jobs for nearly 2,000 union work rules that limit the Debtors’ a specialty transportation provider workers. ability to respond to customer and one of the largest over-the-road Jack Cooper reported $195.5 requirements, making it difficult for finished vehicle logistics companies million in assets against $582.6 them to compete with non-unionized in North America. million in liabilities as of Nov. 2, competitors. These challenges have The Company provides premium 2019. As of the Petition Date, the caused the Debtors to face rapidly asset-heavy and asset-light based Debtors have $575.4 million in declining liquidity,” Greg R. May, solutions to the global new and funded debt, consisting: CFO of the Debtors, explains. previously-owned vehicle markets, • $49.8 million outstanding under In connection with the restructuring, specializing in finished vehicle a first-priority revolving credit the Company and the Teamsters transportation and other logistics facility from Wells Fargo Capital National Automobile Transporters services for major automotive original Finance, LLC, as administrative Industry Negotiating Committee equipment manufacturers and for fleet agent, and lenders; (“TNATINC”) have negotiated ownership companies, remarketers, • $188.7 million outstanding under modifications to the collective dealers and auctions. a first lien term loan facility from bargaining agreement (“CBA”) that Jack Cooper operates a fleet of Cerberus Business Finance Agency, will be presented to the bargaining over 1,600 active rigs and a network LLC, as agent, and lenders; unit members for ratification. of 39 terminals across the United • $45.5 million outstanding under a In addition, the Company’s largest States and Canada to haul vehicles. In 1.5 lien term loan due 2024, from lenders have agreed to cancel their debt 2018, it transported over 2.5 million lenders and Wilmington Trust, as part of a transaction to purchase all finished vehicles and generated National Association, as agent; and or substantially all of the Company’s operating revenue of $540.7 million. • $291.4 million outstanding under assets. The transaction will result in Jack Cooper also generated $55.9 a second-lien term loan due 2024 a significantly deleveraged company million of revenue in 2018 from from lenders, and Wilmington with new shareholders, who have asset-light services, including vehicle Trust, as agent. committed to invest new capital in inspections and technical services. “In recent years, the Debtors have the restructured Company that will Jack Cooper Ventures and 18 faced declining revenues and loss enable it to execute on its business affiliates and subsidiaries sought of market share amidst a changing plan. The Company’s lenders also Chapter 11 protection (Bankr. N.D. landscape for the carhaul industry have agreed to provide essential Ga. Lead Case No. 19-62393) in nationwide. Moreover, as one of debtor-in-possession financing to the Atlanta, Georgia, on Aug. 6, 2019, only two unionized carhaul providers Company that will allow it to maintain to implement a comprehensive in the United States, the Debtors are normal operations and pay employees restructuring that would reduce burdened with substantial labor costs, and suppliers in the ordinary course

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Who’s Who in Jack Cooper’s Bankruptcy Cases Continued from page 12

of business. On the Closing Date, JC Buyer counsel. Partner Sarah R. Borders, JC Buyer Company, Inc., an entity released and waived the avoidance and associates Leia Clement formed by Solus Alternative Asset actions and other causes of action Shermohammed and Britney Baker Management LP, signed a deal to that may exist against various third are the attorneys involved in the case. purchase substantially all of the parties. As a result, there are no estate Houlihan Lokey Capital, Inc., Debtors’ assets via a credit bid. claims to investigate and/or prosecute, is Jack Cooper Ventures’ investment Solus, a junior lender, has agreed and the Debtors have no remaining banker. Adam Dunayer, a managing to advance up to $15 million in the material assets. director of Houlihan, leads the form of a term loan to be provided in As no meaningful assets remain in engagement. In addition to Dunayer, addition to the debtor-in-possession the Debtors’ estates for the Debtors the principal professionals rendering financing from Wells Fargo, which to monetize or distribute to creditors, services to the Debtors are Justin shall be in the form of a “rollover” the Debtors sought a dismissal of the Zammit, senior vice president; Blake DIP on terms materially consistent cases. On Dec. 9, 2019, the judge Donovan, associate; and Morris with the prepetition revolving credit dismissed the Debtors’ cases. Herman, financial analyst. facility. As contemplated by the Stalking AlixPartners LLP is the Debtors’ As part of the sale, the first lien term Horse APA, the Debtors and Buyer financial advisor. David Orlofsky, loan facility with outstanding amount agreed to a budget solely for wind- a managing director, leads the of $188.65 million will be modified down and other post-closing expenses engagement. and assumed by the purchaser in the as set forth therein in an aggregate Ogletree, Deakins, Nash, Smoak form of an exit term loan facility. amount of $250,000. The Creditors & Stewart, P.C., is the Debtors’ The Oct. 4, 2019 auction was Committee is entitled to $35,000 for special labor relations counsel. cancelled as no rival offer was wind-down fees and expenses under John R. Woodrum, a shareholder received by the deadline. the wind-down budget. of Ogletree Deakins, leads the The sale of substantially all of engagement. the Debtors’ assets to stalking horse DEBTORS Osler, Hoskin & Harcourt LLP bidder JC Buyer was approved by the Paul, Weiss, Rifkind, Wharton is the Debtors’ Canadian restructuring Court on October 11, 2019 and closed & Garrison LLP is serving as lead counsel. on Nov. 4, 2019. Debtor Jack Cooper restructuring counsel to Jack Cooper. On the closing date of the sale, Ventures, Inc., changed its name to Partners Kelley A. Cornis and Brian the existing officers and all but one Legacy JCV, Inc., following the sale. S. Hermann, and associate John T. director (Gerry Czarnecki) resigned The assets acquired by JC Buyer Weber are the attorneys involved in from the Debtors. Compass Advisory included any and all causes of action the case. Partners, LLC, has been tapped by belonging to the Debtors and their King & Spalding LLP is the the Debtors to provide administrative estates, including avoidance actions. bankruptcy co-counsel and corporate oversight and coordination of the

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Who’s Who in Jack Cooper’s Bankruptcy Cases Continued from page 13

Debtors’ wind-down activities. John Jonathan S. Henes; and Bryan Cave senior notes due 2020 of Jack Cooper W. Teitz, a managing director at Leighton Paisner LLP, led by Mark Holdings Corp., (4) Selland Auto Compass, has been tapped to act as I. Duedall, are representing Solus Transport, Inc., and (5) Harrison the authorized officer of the Debtors Alternative Asset Management LP, Shaw. as of the closing date. the lender under the 1.5 lien term loan Sidley Austin LLP is serving as Prime Clerk LLC is the claims facility and second lien term loan the Committee’s lead counsel in the agent. facility. Chapter 11 cases. Restructuring Kirkland & Ellis is also representing partners Matthew A. Clemente LENDERS the purchaser, JC Buyer Company, and Michael G. Burke lead the Buchalter, P.C., led by shareholder a newly formed entity formed by or engagement. Robert J. Davidson; and Burr on behalf of an investment vehicle Scroggins & Williamson, P.C., & Forman LLP, led by Atlanta affiliated with Solus. is serving as local counsel to the office managing partner Erich N. Alston & Bird LLP, led by Committee. Shareholder and Durlacher, are representing the partner David A. Wender, is counsel president Robert Williamson and Debtors’ prepetition secured revolving to Wilmington Trust, N.A., which shareholder Ashley R. Ray are the lenders, led by Wells Fargo Capital is the DIP Term Administrative attorneys involved in the case. Finance, LLC, in its capacity as ABL Agent, Prepetition 1.5 Lien Agent and FTI Consulting, Inc., is the Agent and Revolver Administrative Prepetition Second Lien Agent. Committee’s financial advisor. Conor Agent. P. Tully, a senior managing director at Schulte Roth & Zabel LLP, led CREDITORS’ COMMITTEE FTI, heads the engagement. by partners Eliot L. Relles and Adam On Aug. 19, 2019, the United States Miller Thomson LLP is special C. Harris; and Kilpatrick Townsend Trustee for Region 21 appointed Canadian counsel to the Committee. & Stockton LLP, led by partners an official committee of unsecured Stephane Hebert, a partner in the Todd C. Meyers and Colin M. creditors, comprised of: (1) Central firm, heads the engagement. Bernardino, are serving as counsel to States, Southeast and Southwest Cerberus Business Finance Agency, Areas Pension Fund, (2) Teamsters JUDGE LLC, the first lien term loan lender National Automobile Transporters The Hon. Paul W. Bonapfel is the and agent. Industry Negotiating Committee case judge. ¤ Kirkland & Ellis LLP, led (TNATINC), (3) U.S. Bank National by partners Marc Kieselstein, Association, solely in its capacity as Alexandra Schwarzman and the indenture trustee of the 9.25%

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Sources of Debtor-in-Possession Financing

Company Name & Location Amount Lenders

PG&E CORPORATION $5,500,000,000 JPMorgan Chase Bank, N.A.; Bank of America, San Francisco N.A.; Barclays Bank PLC and Citigroup Global

DITECH HOLDING $1,900,000,000 Barclays Bank PLC and Nomura Corporate CORPORATION Funding Americas, LLC Fort Washington, Pa.

WEATHERFORD $1,500,000,000 Citibank, N.A. INTERNATIONAL, PLC Houston

WINDSTREAM HOLDINGS, INC. $1,000,000,000 Citigroup Global Markets Inc. Little Rock, Ariz.

HALCON RESOURCES $600,000,000 Wilmington Trust, National Association CORPORATION Houston

SPECIALTY RETAIL SHOPS $497,000,000 Wells Fargo Bank, National Association HOLDING CORP. Green Bay, Wis.

SOUTHERN FOODS GROUP, LLC $475,000,000 Rabobank AKA DEAN FOODS Dallas

MURRAY ENERGY HOLDINGS CO. $440,000,000 GLAS USA LLC and GLAS Trust Americas LLC St. Clairsville, Ohio

GYMBOREE GROUP, INC. $378,450,000 Bank of America, N.A. and Pathlight Capital LLC San Francisco

LEGACY RESERVES, INC. $350,000,000 Wells Fargo Bank, National Association Midland, Texas

FOREVER 21, INC. $350,000,000 JPMorgan Chase Bank, N.A. Los Angeles

EP ENERGY CORPORATION $315,000,000 JPMorgan Chase Bank, N.A. Houston

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Sources of Debtor-in-Possession Financing Continued from page 15 Company Name & Location Amount Lenders

SOUTHCROSS ENERGY $255,000,000 Wilmington Trust, National Association PARTNERS, LP Dallas

MONITRONICS INTERNATIONAL, $245,000,000 KKR Credit Advisors (US) LLC INC. Farmers Branch, Texas

BLACKHAWK MINING, LLC $240,000,000 Knighthead Capital Management, LLC Lexington, Ky.

BARNEYS NEW YORK, INC. $217,000,000 B. Riley Financial and Brigade Capital Central Valley, N.Y. Management

SANCHEZ ENERGY $175,000,000 Wilmington Savings Fund Society, FSB CORPORATION Houston

CTI FOODS, LLC $155,000,000 Barclays Bank PLC and Wells Fargo Bank, Saginaw, Texas National Association

VANGUARD NATURAL $130,000,000 Citibank, N.A. RESOURCES, LLC Houston

PES HOLDINGS, LLC $120,000,000 Halcyon Capital Management LP and Credit Philadelphia Suisse Asset Management, LLC

HOLLANDER SLEEP PRODUCTS, $118,000,000 Wells Fargo Bank, National Association LLC New York

DELUXE ENTERTAINMENT $115,000,000 Credit Suisse Loan Funding LLC SERVICES GROUP, INC. Burbank, Calif.

EDGEMARC ENERGY HOLDINGS, $108,000,000 KeyBank National Association LLC Cannonsburg, Pa.

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Sources of Debtor-in-Possession Financing Continued from page 16 Company Name & Location Amount Lenders

SUNGARD AVAILABILITY $100,000,000 Cortland Capital Market Services LLC SERVICES CAPITAL, INC. Wayne, Pa.

SHERIDAN HOLDING COMPANY $100,000,000 Bank of America N.A. II, LLC Houston

MTE HOLDINGS, LLC $100,000,000 Great American Capital Midland, Texas

MDC ENERGY, LLC $100,000,000 Great American Capital Indianapolis

FTD COMPANIES, INC. $94,500,000 Bank of America, N.A. Downers Grove, Ill.

ARSENAL RESOURCES $90,000,000 Citibank, N.A. DEVELOPMENT, LLC Wexford, Pa.

DURA AUTOMOTIVE SYSTEMS, $84,000,000 Bardin Hill Investment Partners LP LLC Auburn Hills, Mich.

BRISTOW GROUP, INC. $75,000,000 U.S. Bank National Association Houston

CENTER CITY HEALTHCARE, $65,000,000 MidCap Financial Trust LLC Philadelphia

ACETO CORPORATION $60,000,000 Wells Fargo Bank, National Association Port Washington, N.Y.

FUSION CONNECT, INC. $59,500,000 Wilmington Trust, National Association New York

LIFECARE HOLDINGS, LLC $57,700,000 White Oak Healthcare Finance, LLC Plano, Texas

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Company Name & Location Amount Lenders

GCX LIMITED $54,500,000 Wilmington Trust, National Association Aurora, Colo.

CHARLOTTE RUSSE HOLDING, $50,000,000 Bank of America, N.A. INC. San Diego

TRIDENT HOLDING COMPANY, $50,000,000 Silver Point Capital LLC Sparks, Md.

JOERNS WOUNDCO HOLDINGS, $40,000,000 Prepetition Lenders INC. Charlotte, N.C.

ASTRIA HEALTH $36,000,000 JMB Financial Advisors Sunnyside, Wash.

CLOUD PEAK ENERGY, INC. $35,000,000 Ankura Trust Company, LLC Gillette, Wyo.

STEARNS HOLDINGS, LLC $35,000,000 Blackstone Capital Partners VI NQ/NF L.P. and Lewisville, Texas Blackstone Family Investment Partnership VI-NQ - ESC L.P.

EMERGE ENERGY SERVICES, LP $35,000,000 HPS Investment Partners LLC Fort Worth, Texas

FRED’S, INC. $35,000,000 Regions Bank and Bank of America N.A. Memphis, Tenn.

PERNIX SLEEP, INC. $34,100,000 Highbridge Capital Management Morristown, N.J.

WHITE STAR PETROLEUM $28,500,000 MUFG Union Bank N.A. HOLDINGS, LLC Oklahoma City

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Sources of Debtor-in-Possession Financing Continued from page 18

Company Name & Location Amount Lenders

PAYLESS HOLDINGS, LLC $25,000,000 Wilmington Savings Fund Society, FSB Topeka, Kan.

ACHAOGEN, INC. $25,000,000 Silicon Valley Bank South San Francisco

AEGERION PHARMACEUTICALS, $20,000,000 Highbridge Capital Management and Athyrium INC. Capital Management Cambridge, Mass.

APPROACH RESOURCES, INC. $16,500,000 JPMorgan Chase Bank, N.A. Fort Worth, Texas

IPIC-GOLD CLASS $16,000,000 Teachers’ Retirement System of Alabama and the ENTERTAINMENT, LLC Employees’ Retirement System of Alabama Boca Raton, Fla.

JACK COOPER VENTURES, INC $15,000,000 Solus Alternative Asset Management LP Kennesaw, Ga.

ORCHIDS PAPER PRODUCTS $11,000,000 Orchids Investment LLC COMPANY Brentwood, Tenn.

NORPAC FOODS, INC $10,000,000 CoBank Salem, Ore.

NEW COTAI HOLDINGS, LLC $6,250,000 Silver Point Capital Greenwich, Conn.

BLACKJEWEL, LLC $5,000,000 Riverstone Credit Partners – Direct, L.P. Milton, W.Va.

www.TurnaroundsWorkouts.com 20 Turnarounds & Workouts DECEMBER 2019 Worth Reading

Unique Value: profitable acquisitions, and adroitly manage all the other activities upon The Secret of All Great which the success of the corporation Business Strategies depends. Mid- and lower-level Authors: Andrea Dunham and Barry Marcus, employees may not even know there with Mark Stevens and Patrick Barwise is a core concept of unique value, but they will embody it when it is Publisher: Beard Books practiced by executives and managers. Softcover: 303 pages IBM, Frito-Lay, Seagram’s, List Price: $34.95 Yamaha, and Holiday Inn are some of the many companies used as Order This Book Online Now » examples of how unique value can be applied to ROI. Aspects of the model “Never stop leveraging what reader draws the conclusion that ROI are already widely practiced by many you do uniquely well,” the authors is as much a result of image or market successful corporations. After reading advise. Every good manager knows presence as it is financial planning and this book, it’s hard to imagine how a how to leverage business strengths. management. corporation can be successful without The challenge is identifying a The Unique Value Model is heeding the principles of unique value. corporation’s unique value, which, best seen as a pyramid with the The challenges posed by today’s in most cases, is an interrelated set of “informing concept” of unique business environment are greater strengths. This 1993 reprint instructs value at its peak. The pyramid has than ever. Competition is fierce, both the reader on the process and method four bases: Consumer/Customer, at home and from abroad; consumer for determining unique value: how to Business Systems and Skills, Product/ demands are fickle; and government recognize it, how to inculcate it into Technology, and Competition. These policy pervades everything from the corporate culture, and how to are the four major interrelated factors taxes to the environment to health keep it in focus and preserve it during of any business organization. The care. Corporations that can clearly changing business conditions. authors posit that each of these factors articulate and unerringly implement Employing charts and diagrams, must be analyzed, structured, and their unique value have an advantage Dunham and Marcus illustrate their fully understood for the Unique Value over their competitors. trademarked Unique Value = ROI = ROI Model to be informative and Model. ROI—return on investment— effective. About The Authors is a familiar measure of business Unique value is ultimately Andrea Dunham and Barry Marcus productivity. However, it is not concerned with decision-making were partners in founding Dunham & ordinarily linked to something called and operations. This is what Marcus Marcus. Marcus is co-founder and “unique value.” The authors make a and Dunham mean by their advice CEO of Unique Value International, compelling argument that the two are to “never stop leveraging what you a consulting firm in the areas of related. In fact, a case can be made do uniquely well.” The authors marketing and brand development. ¤ that nearly every business achieves demonstrate how corporate leaders its ROI from its unique value. can apply their knowledge of unique With Dunham and Marcus offering value to shape employee behavior this new perspective on ROI, one and interactions with customers and TO ORDER THIS BOOK: quickly realizes that unique value clients, plan marketing campaigns, Call: 888-563-4573 or visit (and ROI) is a function of marketing, decide upon the content and style www.Beardbooks.com customer relations, strategic planning, of advertising, follow closely what and other less tangible factors. The certain competitors are doing, look for

www.TurnaroundsWorkouts.com DECEMBER 2019 Turnarounds & Workouts 21 Special Report

Outstanding Restructuring Lawyers - 2019

Professional Recent Representative Engagements

MATT BARR Leads $4.9B chapter 11 of EP Energy, the largest U.S. energy bankruptcy Weil, Gotshal & Manges LLP since 2016. Spearheaded syncreon’s groundbreaking $1.1B cross-border New York restructuring effectuated through English schemes of arrangement and parallel [email protected] recognition proceedings in the U.S. and Canada. Led prepack for CTI Foods that eliminated more than $400M of debt and secured $110M in new financing. Led Fieldwood Energy’s innovative $1.6B restructuring that used chapter 11 to make a major acquisition. Creditor-side achievements include advising ad hoc group in Cobalt International Energy; ad hoc group in Uniti; Bain Capital and Thomas H. Lee Partners as major holders of equity and debt in $16B iHeartMedia chapter 11 case; secured lenders in Emerge Energy’s $339M chapter 11 case; secured lenders in Bumble Bee’s chapter 11; and ad hoc group of lenders in out-of-court restructuring of Sable Permian Resources.

RONIT BERKOVICH Representing Insys Therapeutics in high-profile Chapter 11 case involving Weil, Gotshal & Manges LLP massive opioid-related litigation, investigations and complex asset sales; New York EP Energy in its $4.9B chapter 11 restructuring, the largest U.S. energy [email protected] bankruptcy since 2016; and Johnson & Johnson in chapter 11 of its talc supplier Imerys. Guided Catalina Marketing in prepackaged chapter 11 case that shed more than $1.5B of debt; CTI Foods in prepackaged chapter 11 case that eliminated more than $400M of debt; and Tweddle Group in out-of-court restructuring that transferred full equity to lenders.

GEORGE DAVIS Guided Hexion in restructuring $4B debt load, emerging in July with $2.3B Latham & Watkins LLP of capital raised and trade creditors unimpaired; Savers Inc., the biggest for- New York profit thrift-store chain in the US, in an out-of-court restructuring of $1B debt; [email protected] and American Energy-Permian Basin in a successful out-of-court exchange involving $2.2B in note debt and other debt obligations. Representing Weatherford International in Chapter 11 restructuring of $8.6B+ debt; and Imerys, a Johnson & Jonson talc supplier, in U.S. and Canada restructuring proceedings. Advising Alta Mesa Resources over a myriad of complicated governance, intercompany, and structuring issues. Extensive experience representing creditors and investors, including Apollo, Franklin Templeton, General Motors, Bank of America, PSEG, AIG, Avenue Capital, Solus Capital, Oaktree, Centerbridge, and TCW.

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Outstanding Restructuring Lawyers - 2019 Continued from page 21

Professional Recent Representative Engagements

JAYME GOLDSTEIN Represents ad hoc group of lenders on Ultra Petroleum’s $975M secured Stroock & Stroock & Lavan LLP term loans (Total matter value: $2B); an ad hoc group of holders of Harland New York Clarke’s $800M of secured notes due 2022 (Total matter value: $3B); and the [email protected] Unsecured Creditors’ Committee of Aceto Corp. (Total matter value: $550M). Advised ad hoc group of Term Loan B lenders representing over 80% of the secured lenders to Empire Generating (Total matter value: $500M); and ad hoc group of Second Lien Lenders in Animal Supply’s out-of-court restructuring (Total matter value: $425M). Closed an amendment and restatement of the First Lien Credit Facility of fast food chain Checkers (Total matter value: $365M). Advised ad hoc groups or significant lenders or equityholders on: Ferrellgas (ad hoc group of OpCo unsecured noteholders; $1.5B), American Renal (ad hoc group of first lien term lenders; $475M), China Medical Technologies (ad hoc group of unsecured noteholders/liquidation funders; $460M), Panda Temple (ad hoc group of first lien term lenders; $425M), Permian Production Partners (ad hoc group of first lien term lenders; $300M), Interactive Health (ad hoc group of second lien term lenders; $100M), VIP Cinema (ad hoc group of second lien term lenders; $85M), Vantage Mobility (ad hoc group of second lien term lenders; $75M) and Regional Health Properties (ad hoc group of senior secured lenders; $45M).

SCOTT J. GREENBERG Represented group of term lenders and certain DIP lenders of Monitronics Gibson Dunn & Crutcher LLP International; the Term Loan Lender Group in David’s Bridal’s prepackaged New York chapter 11; the First Lien Group to Catalina Marketing; the Term Lender [email protected] Group in Crossmark Inc.’s successful out-of-court restructuring; a group of Term Loan Lenders to Sungard AS; an ad hoc group of lenders of syncreon Group B.V.; and the TLLs in connection with Savers LLC’s successful out-of-court restructuring. Advising an ad hoc group in connection with Akorn, Inc.’s current restructuring efforts; an ad hoc group of first lien term loan lenders to NPC International on potential restructuring options; an ad hoc group of secured term loan lenders to 4L Technologies. (d/b/a Clover Technologies Group) in connection with a $648M secured term loan; ad hoc group of secured first lien term lenders to Skillsoft Corp. over a $1.3B first lien term loan due April 2021; an ad hoc group of secured term loan lenders to Mallinckrodt plc’s $1.8B secured term loan; and ad hoc group of first lien lenders on One Call Corporation’s efforts to restructure over $2B of debt.

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Outstanding Restructuring Lawyers - 2019 Continued from page 22

Professional Recent Representative Engagements

KRISTOPHER M. HANSEN Representing EP Energy’s Unsecured Creditors Committee; JPMorgan Stroock & Stroock & Lavan LLP Chase Bank, as administrative agent and lead arranger of $5.5B in DIP New York credit facilities provided to PG&E—the largest new-money DIP financing [email protected] transaction in history; Axar Capital Management, a large holder of prepetition term loans of Payless Holdings; and the ad hoc group of term lenders, first lien noteholders and second lien noteholders of J.C. Penney, which has $4B in aggregate institutional debt obligations. Advised an ad hoc group holding over 65% of senior unsecured notes due 2020 issued by Monitronics International, negotiating a deal on which the Ad Hoc Group and another ad hoc group of first lien term lenders would support a consensual restructuring pursuant to a partial prepackaged plan that allowed the Company to exit bankruptcy in August 2019; and an ad hoc group comprising the vast majority of Deluxe Entertainment Services Group’s secured lenders who also serve as DIP lenders, guiding the Group in negotiations to take ownership of Deluxe from its current equity sponsor, MacAndrews & Forbes Media Group, in exchange for slashing nearly $1B in debt, while also structuring and negotiating multiple rounds of rescue financing for the Company prior to the bankruptcy filing.

JONATHAN HENES Guided FullBeauty Brands, which had $1.27B in funded debt at the time of Kirkland & Ellis LLP filing, in obtaining confirmation of prepack plan in less than 24 hours and New York staying in Chapter 11 for less than 90 hours. Then represented Sungard AS [email protected] Capital—which had $1.26B in funded debt at Chapter 11 petition date and deleveraged by over $900M upon emergence—in winning plan confirmation in less than 19 hours while staying in Chapter 11 for less than 48 hours. Also guided One Call Corp. in a successful out-of-court recapitalization that reduced debt through a consensual equitization of nearly $1B of junior debt, slashed annual interest expense by ~$90M, and eliminated all near-term maturities; Deluxe Entertainment Services Group in a prepackaged Chapter 11; and Cenveo Inc. in a prearranged bankruptcy underpinned by a restructuring support deal with noteholders representing over 50% of first lien debt, and related agreements with certain of prepetition secured creditors to provide up to $290M DIP financing.

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Outstanding Restructuring Lawyers - 2019 Continued from page 23

Professional Recent Representative Engagements

MARSHALL HUEBNER Lead counsel to Purdue Pharma in connection with its chapter 11 restructuring Davis Polk & Wardwell LLP and 2,800+ governmental lawsuits regarding OxyContin, seeking hundreds New York of billions of damages; Southcross Energy Partners in connection with its [email protected] chapter 11 restructuring, including $255M DIP financing; Pernix Therapeutics in chapter 11 proceedings, DIP financing and sale of assets; Neovia Logistics in a recapitalization, which includes $200M second-lien term loan investment, and preferred equity investment of up to $165M; pre-petition and DIP lenders in connection with Nine West’s chapter 11 restructuring and DIP financing; and Citibank N.A. in connection with its rollover letter of credit facility as part of ESL Investment’s acquisition of Sears. Routinely advises purchasers, companies and boards of directors in many non-public distressed matters and provides risk management and bankruptcy advice on derivatives products and other complex transactions to clients such as Bank of America, Citibank, Goldman Sachs, J.P. Morgan and Morgan Stanley.

AUSTIN JOWERS Advised Goldman Sachs Specialty Lending Group and affiliate Special King & Spalding LLP Situations Investing Group as senior term loan lender ($85M) and DIP term Atlanta loan lender ($30M) for Gymboree Group. Represented Capital One and an ad [email protected] hoc group of term loan lenders (Barings Finance LLC, Benefit Street, Golub, Main Street and Wells Fargo) which held 80% of Joerns’ $300M first lien credit facility. Assisted Barings Finance and affiliates—prepetition term loan agent and lender under Hollander Sleep Products’ prepetition $170M term loan credit facility, and agent and lender under both a $28M DIP term loan facility and a $58M exit term loan facility (which includes $30M of new money)— on the bankruptcy matter and in reaching a restructuring support agreement with other prepetition lenders, Hollander and equity sponsor Sentinel Capital. Guided an affiliate of P/E firm Starwood Energy Group Global in completing a $144M leveraged buyout of FirstEnergy Solutions Corp.’s assets constituting the West Lorain Power Plant located in Lorain, Ohio, following a competitive Sec. 363 auction.

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Outstanding Restructuring Lawyers - 2019 Continued from page 24

Professional Recent Representative Engagements

SAMUEL MAIZEL Leads the representation of Verity Health System of California and 16 related Dentons entities, including 6 significant operating hospitals, in the second largest Los Angeles hospital bankruptcy case in American history, involving more than $1.4B [email protected] debt. Also counseled numerous healthcare organizations through complex bankruptcy proceedings, including prominent local businesses like Air Force Village West dba Altavita, and Gardens Regional Medical Center & Hospital.

NANCY A. MITCHELL Leads the firm’s representation of California Governor Gavin Newsom O’Melveny & Myers LLP in the PG&E chapter 11 cases and was instrumental in drafting complex New York legislation that addresses wildfire litigants’ claims in California. Spearheads [email protected] representation of Puerto Rico’s electric company (PREPA) in its pending bankruptcy proceeding and in the firm’s representation of Puerto Rico’s water utility (PRASA).

ABID QURESHI Guided FirstEnergy Solutions in its $5B debt restructuring, ultimately winning Akin Gump Strauss Hauer & Feld plan confirmation in October. Representing ad hoc committee of senior LLP unsecured noteholders in PG&E’s $30B+ cases, successfully litigated to New York terminate exclusivity, allowing the ad hoc group and tort claimants’ committee [email protected] to submit a competing plan. Advised the unsecured creditors’ committee in Sears’ $5B restructuring, successfully negotiating a liquidating plan confirmed in October that establishes a trust to pursue claims against former CEO Ed Lampert, his ESL hedge fund and other parties. Represented Payless in $470M case (confirmed October 2019); an informal committee of certain unaffiliated senior unsecured noteholders of Weatherford International plc in its $8.34B cases (confirmed September 2019); the unsecured creditors’ committee in Aegean Marine’s $855M cases (effective April 2019); the ad hoc group of first lien noteholders in Hexion’s $3.8B case (emerged July 2019); an ad hoc group of noteholders and the indenture trustee for the notes in New Cotai Holdings’ ongoing bankruptcy case; Lantern Entertainment in $289M acquisition of The Weinstein Company’s assets (settled July 2018); an ad hoc group of second lien bondholders in Rex Energy’s $930M cases (confirmed October 2018).

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Outstanding Restructuring Lawyers - 2019 Continued from page 25

Professional Recent Representative Engagements

JOHN RAPISARDI Continues to lead team representing Government of Puerto Rico and the O’Melveny & Myers LLP agency of the Government of Puerto Rico (“AAFAF”) responsible for New York restructuring of over $100B in funded debt and pension liabilities, advising [email protected] the Government through two significant crises: the devastation and aftermath of Hurricane Maria in September 2017, and the political crisis this past July that led to the appointment of a new governor. Representing AAFAF with respect to governmental entities in need of financial restructuring, including several in-court (Title III) cases and out-of-court (Title VI) situations. These entities include: The Commonwealth of Puerto Rico, the Puerto Rico Highway and Transportation Authority, Puerto Rico Electric Power Authority, Puerto Rico Aqueduct and Sewer Authority, Government Development Bank of Puerto Rico (“GDB”), Employees Retirement System, Puerto Rico Sales Tax Financing Corporation (“COFINA”), Puerto Rico Public Building Authority, University of Puerto Rico, Puerto Rico Infrastructure Finance Authority and Puerto Rico Industrial Development Company. COFINA obtained confirmation of a plan of adjustment that restructured over US$17B of outstanding debt and avoided costly and protracted litigation; GDB consummated a deal under the creditor collective action procedures of Title VI of PROMESA restructuring ~$5B of debt. Advising and strategizing with the Government and its financial advisors in all aspects of a joint plan of adjustment for the Commonwealth that was filed in late September.

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Outstanding Restructuring Lawyers - 2019 Continued from page 26

Professional Recent Representative Engagements

ROBERT J. STARK Representing the unsecured creditors’ committees in Philadelphia Energy Brown Rudnick LLP Solutions; in Legacy Reserves, challenging the Debtor’s asset valuation; in New York EdgeMarc Energy, which filed after a catastrophic pipeline explosion; in [email protected] Alta Mesa Resources, which filed with more than $1B in debt, amid serious allegations of fraud and corporate malfeasance; in Aralez Pharmaceuticals which resulted in a settlement of 50% cash payment to all unsecured creditors; and in Rex Energy, handling the investigation and potential prosecution of claims against the first lien lenders, securing an extremely favorable settlement for the clients. Advising an ad hoc committee of Term Loan Lenders in Vanguard Natural Resources; the liquidation trustee in Performance Sports Group; the Term Loan Agent and Majority Lenders of Pier 1 Imports; Minority Term Loan Lenders of J. Crew (Eaton Vance and Highland Capital) in litigation challenging J. Crew’s infamous “step-down” transaction that released intellectual property as collateral for a $1.2B term loan; the Ad Hoc Committee of Bondholders of Amyris in an involuntary bankruptcy petition and subsequent negotiations; and the Ad Hoc Committee of Equity Holders of RAIT Financial, opposing the Debtors’ exit strategy. Secured a favorable result for the Unsecured Creditors’ Committee in EXCO Resources’ case.

STEPHEN ZIDE Notable transactions completed in the past year include: MZ Funding LLC Kramer Levin Naftalis & Frankel ($280M); Ad Hoc Group of first lien lenders and bondholders in Westmoreland LLP Coal Co. (Approx. $780M in secured debt); Payless DIP Financing ($25M); New York and Official Committee of Unsecured Creditors in Toys “R” Us Inc., et al. [email protected] ($5B+ of debt). Clients include official and creditor and equity committees, secured lenders, bondholders, investors, and debtors spanning a number of industries, including automotive, shipping, RMBS, retail, manufacturing, mining, and gaming.

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Dean Garrett on Avoiding 1929 by Deborah Hicks Midanek

harton School Dean Geoffrey Garrett offered Today, while a market correction and recession Wan interesting opinion in Knowledge@ seem likely sometime, a crash on the scale of 1929 Wharton on the similarities between 2019 and 1929. appears remote. This gives us time—time to do all we While worried, he suggests that armed with realistic can to reverse the ominous trends, time to make sure optimism, we can navigate—and help to reverse— the 2020s are not a replay of the 1930s. some daunting geo-economic and geo-political trends. While we must require more of our political He identifies three intersecting trends to combat: leaders—to be more open about challenges and more • After four decades of increasing engagement creative about potential solutions—bottom-up actions between China and the United States, the world’s by the many can change the world as much or more two leading powers seem determined to decouple than can even the most effective leaders. their economies—making a superpower war more Dean Garrett’s suggestions: likely. • While past technological revolutions have China-U.S. Relations improved the quality of both life and work, AI He suggests that ‘decoupling” the world’s two threatens to destroy more jobs than it creates— leading economies would destabilize the global undermining the foundations of a good life based economy and increase prices for consumers all over on a good job. the world. With flashpoints like Hong Kong, the South • While tempting to dismiss the recent rise of anti- China Sea and Taiwan, tying the hands of each side establishment politics as an aberration, the roots by binding their economies together is the best way of populism run much deeper—weakening the to ensure stability. foundations of democracy and increasing the It is easy today to deride American engagement chances of international conflict. as having failed to change China. But it has had How is 2019 like 1929? Ninety years ago, economic the massive benefit of reducing the likelihood of inequality was at an all-time high in America and superpower conflict. Reversing course now would Europe. The seeds of authoritarian nationalism were inevitably make conflict more likely. sprouting in Asia, Europe and Latin America. World War I had destabilized the old global order without The Future of Work creating a new one. The 1929 stock market crash was Economists are correct that new technologies followed by the depression, fascism and World War are increasing efficiency and safety while making II—arguably the worst 15 years in history. products better rather than cheaper. Any job that can

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Dean Garrett on Avoiding 1929 Continued from page 28

be automated (routine jobs that require rapid, error- really want that? free repetition) will inevitably be automated. But We must then not only empathize with those non-routine jobs—not only high-tech jobs for coders dislocated by technology and globalization but devise and engineers but also personal services jobs like ways of extending the benefits to them. Here, education nurses and teachers—are in high and rising demand, looms large. Issues of access and affordability are and aren’t vulnerable to automation. important, and so is changing the focus of education We need to prepare more people for non-routine to align skills with the new work demands. work; not only more education for more people, but And, adding the author’s own comments, we in education better targeted to the skills non-routine the restructuring world must prepare to add value in work requires, both hard (and technical) and soft (and a world full of systemic change and not only major social). In addition to non-routine jobs, work that job loss but serious job change. What will we need to requires empathy and emotional intelligence will be be able to do in an economy where estimates suggest tougher to automate. 85% of public company market value is intangible? ¤

Populism Deborah Hicks Midanek “Leadership” is the clichéd antidote to the nativist, President of Solon Group, Inc. and author of nationalist, anti-immigration, and anti-globalization The Governance Revolution: What Every Board sentiment prominent today. But providing this Member Needs to Know, Now! leadership is hard, because it means replacing emotive Contact: [email protected], slogans with plain speaking and proposals that are rooted to deep realities. In The Next Issue... Leaders must defend technology and globalization by explaining how they really work, and how the world over has benefited from them. With all the focus on ● Who’s Who in EP Energy Corporation job creation we tend to forget everyone is a consumer, ● Who’s Who in Dean Foods Company and consumers would lose big time from reversing ● Special Report: Largest Bankruptcy Filings – these megatrends—and not just because of tariffs. For 2019 example, having iPhones “made in America” (rather ● Special Report: Successful Restructurings – than assembled in China from components made all 2019 around the world) would probably increase their cost somewhere between 50% and 100%. Does anyone

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