Defining Matters Explores the Intersection of a Number of Current Topics and Our Ongoing Work Across Sectors and Practice Areas

Foreword

Since our founding in 1968, we have remained at the forefront of solving a divergent range of contemporary challenges that our clients face in the marketplace.

This 50th anniversary commemorative edition of Defining Matters explores the intersection of a number of current topics and our ongoing work across sectors and practice areas. From assessments of cryptocurrencies and mixed reality to the rise of nonbank lenders and immigration policy, we present the trends and topics that matter most to our clients and the broader global society in which we operate.

As we look to the future and our next 50 years, we will continue to anticipate client needs and provide creative and practical solutions that advance our clients’ objectives.

We invite you to join us as we explore some of the most complex and talked-about issues of the current business climate and how our clients are addressing them.

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 3

Contents

6 One for the books: 28 50th anniversary: Celebrating A record-setting REIT IPO leadership, service and innovation

8 After the storm: US housing player 32 The #MeToo movement: sees bright skies ahead An opportunity for positive change

10 Retail industry swoons 34 Private equity fund sues Petrobras to recover investment lost in ‘Car Wash’ scandal

12 A tale of two sides of M&A: 36 Hudson Yards puts far west Financial and strategic Manhattan back on the map

14 Reimagining iconic landmarks: 38 A pioneer in claims trading: The Waldorf Astoria and the Palace Theatre Defining the distressed investing market

15 The revitalization of Brooklyn, 40 Credit default swaps and a new technique Queens and the Bronx involving ‘unconventional’ credit events

16 DOJ prosecutors continue 42 The future is now: Self-driving to target individuals cars and mixed reality

18 LBOs and the rise of 44 The evolution of cybersecurity nonbank lenders

20 Energy sector not 46 The largest auto industry recall in history out of the woods yet

22 Sweeping new immigration restrictions 48 Trends in advertising litigation hurting American companies

24 Tax reform: A seismic shift in 50 Regulators eye cryptocurrencies the US economic landscape

26 The sun rises in the East: East Midtown 52 Clean energy: Solar and property-assessed experiences a renaissance clean energy (PACE)

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 5 One for the books: A record-setting REIT IPO

VICI Properties is no stranger to represent: 36.6 million square feet of • A $1.14 billion sale/leaseback creating unforgettable, groundbreaking space; more than 15,000 hotel rooms; a transaction to acquire and lease experiences. As one of the country’s collection of more than 150 restaurants, back the land and real property premier experiential-asset real estate bars and nightclubs; 780,000 square feet improvements associated with investment trusts (REITs), VICI owns of conference and exhibit space; and a the iconic Harrah’s Las Vegas and develops an extensive portfolio staggering 2.1 million square feet of • A $73.6 million sale to Caesars of of best-in-class gaming, hospitality and gaming space. undeveloped land adjacent to the entertainment destinations, providing Las Vegas Strip, upon which Caesars exceptional customer experiences to Kramer Levin began representing VICI intends to construct a 300,000- all who patronize its establishments. from its inception in October 2017. But square-foot convention center Among the market-leading properties our story begins in 2014 — the year • A $1 billion equity financing in a in its real estate portfolio, the company prior to the commencement of Caesars private placement and agreements counts various Caesars (including Entertainment Operating Co. Inc.’s for the repurchase of $400 million the world-renowned Caesars Palace), Chapter 11 bankruptcy case. Kramer of Caesars Palace Las Vegas CMBS Horseshoe, Harrah’s and Bally’s brands, Levin represented holders of more mezzanine debt as well as four championship golf courses. than $3 billion of Caesars-issued first-lien notes — the largest and key creditor • A $2.6 billion credit agreement and VICI continues to blaze trails and create constituency — throughout the debt refinancing to finance, in part, new milestones in the marketplace. In restructuring. The reorganization split the Harrah’s Las Vegas purchase February 2018, the company completed Caesars’ gaming and hotel businesses a record-setting $1.4 billion initial public into two companies: a REIT (VICI) to The combined $4.81 billion value of these offering (IPO), the fourth-largest REIT IPO hold Caesars’ real estate assets, and deals attests to the great trust clients in history and the largest in the hotel an operating company to manage place in Kramer Levin’s ability to deliver and leisure sector, eclipsing MGM Growth its gaming and hotel operations. world-class counsel and solutions Properties, which previously held the Kramer Levin subsequently advised with a view toward future opportunity. top spot. Shares began trading on the VICI on four strategic and capital New York Stock Exchange on Feb. 1. transactions that simultaneously closed on Dec. 22, 2017: This transaction’s magnitude matches the equally impressive scale that the properties in the portfolio collectively

6 Top five hotel/leisure REIT IPOs in history* Shown in millions of U.S. dollars

VICI Properties Feb. 2018 $1,391.50

MGM Growth Properties Apr. 2016 $1,207.50

RLJ Lodging Trust Inc. May 2011 $569.25

Sunstone Hotel Investors $412.51 Oct. 2004

Pebblebrook Hotel Trust $402.50 Dec. 2009

* At press time, as of May 2018

Source: Nareit, reit.com, May 2018

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 7 After the storm: US housing player sees bright skies ahead

The effects of the 2007 subprime mortgage crisis continue have remained unusually strong. One of the largest servicers to reverberate across the housing and financial markets to of subprime loans, Ocwen worked diligently to avoid foreclosure this day. The factors that caused the crisis are well-known on properties in distressed situations and to keep people in their and documented: increased liquidity in the marketplace due homes whenever possible. Indeed, Ocwen has to date modified to low interest rates, subprime mortgages being extended upward of 800,000 mortgages under the Home Affordable to less qualified borrowers with poor credit, speculation on Modification Program, designed to help financially struggling continuously rising home prices, nontraditional mortgages that homeowners avoid foreclosure through loan adjustments that carried hidden risks, and banks and lenders selling volumes make the payments more affordable, and sustainable long term, of subprime mortgages to the secondary mortgage market to for borrowers. collect originating fees. A decade later, those hardest hit by the crisis are still digging out. Working together since early 2014, Ocwen and Kramer Levin have defended a range of civil litigation matters and resolved Ocwen, one of the country’s largest nonbank mortgage servicers, issues arising from investigations by regulatory bodies, including: has been a major player in dealing with the fallout of the crisis • Dismissal with prejudice at the pleading stage of a securities and experienced significant challenges during the crisis and class action predicated on regulatory proceedings brought beyond. The company is only now rebounding, with the help of in 2017 by the Consumer Financial Protection Bureau and Kramer Levin, from numerous legacy issues that stemmed from other regulators the 2007 crisis. The confluence of several events stalled the company’s progress: • Several favorably settled securities class actions and opt-out • Intense criticism and review of its mortgage servicing lawsuits filed by Ocwen shareholders and arising from various regulatory actions during 2012 – 2014 practices and its responses to struggling homeowners • Securities class actions • Successful resolution of several SEC investigations, with two • Opt-out securities litigation probes resolved without charges and a third resulting in a • Shareholder derivative litigation non-fraud consent order and a modest penalty • Securities and Exchange Commission (SEC) investigations • Negotiations with the NYDFS, resulting in the termination • New York Department of Financial Services (NYDFS) of a multiyear NYDFS-imposed monitorship enforcement requiring a costly on-site monitor Today, Ocwen is well on its way to leaving its legacy issues Although painted with the same negative brushstrokes as behind and focusing its energies on future growth. were other players in the mortgage landscape, Ocwen played a significant role in stabilizing the mortgage market while operating in an environment in which the regulatory and legal headwinds

8 KRAMER LEVIN NAFTALIS & FRANKEL LLP | 9 Retail industry swoons

While retailers are accustomed to season of the year), was unable to fix market fluctuations, fickle customers its operational issues, stem losses or and waiting until the fourth Friday in develop a feasible restructuring plan, November to turn a profit, they face resulting in a sudden decision to close increasingly strong headwinds and all of its U.S. stores. This unprecedented complex challenges to compete and liquidation will undoubtedly be the subject stay relevant in today’s marketplace. of investigations and, ultimately, lessons for future distressed retailers. Kramer Among the biggest challenges to Levin, representing the unsecured brick-and-mortar establishments are creditors committee in Toys R Us, has the disruptive effects of e-commerce a key role in preserving the rights of and shoppers’ desire for more engaging vendors, landlords and other creditors and personalized in-store experiences. as well as in maximizing the ongoing business value of Toys R Us’ Toys R Us is a case in point. The retailer’s international operations. website delivered a suboptimal online shopping experience when compared Other recent retail-industry bankruptcies with the websites of other major retailers. in which we played a key role include And its stores lacked the workers or Nine West, Aeropostale, BCBG, the environment to guide shoppers Gymboree and The Limited — all toward optimal purchasing decisions. underscoring our ability to apply In addition, its price-match policy was not market-leading restructuring communicated well to shoppers, and its experience to distressed retail. peak holiday season pricing strategy — keeping prices above those of competitors until they sold out of the merchandise, leaving Toys R Us as the only option at a premium price — backfired when other major retailers were able to maintain a sizable inventory and undercut on price.

Ultimately, Toys R Us, which commenced a “free fall” bankruptcy case in September 2017 (leading up to the biggest selling

10 KRAMER LEVIN NAFTALIS & FRANKEL LLP | 11 A tale of two sides of M&A: Financial ...

Private equity continues its historic rise. Fueled by available credit at low interest rates and high levels of committed capital, buyout volumes were up 27 percent in 2017 and are poised to accelerate in 2018. With so much money chasing deals, many business owners have elected to sell or complete financings through private channels. This environment has been favorable for Kramer Levin’s private equity firm clients, which have been acquiring companies and entering and exiting investments with increasing frequency.

In 2017, firm client Stone Point Capital led an investor group together with KKR that acquired a majority stake in Focus Financial Partners, a leading partnership of wealth management firms valued at approximately $2 billion. Soon afterward, in the first quarter of 2018, Stone Point acquired two companies — Genex Services, a provider of cost containment services to the workers’ compensation, disability and auto industries, and Grace Hill, a provider of online training courseware and administration for the property management industry — and announced an agreement to acquire a third company, LegalShield, a subscription-based provider of legal plans and identity theft solutions.

Other private equity clients that have been particularly acquisitive during this period include Atlantic Street Capital and its portfolio companies — which acquired Planet Fitness gym owner and operator Planet Fit Indy 10 LLC, Lori’s Gifts, SL Fashions and GAT Airline Ground Support — as well as Quad Partners, MFG Partners, Education Growth Partners, Paine Schwartz Partners, Shamrock Capital Advisors and York Capital, among others.

12 ... and strategic

Riding a wave of large cash reserves and available credit, strategic M&A helped push global M&A activity to a 17-year-record high in the first quarter of 2018. In the past 18 months, Kramer Levin clients BlackRock, Del Monte, Gener8 Maritime and Deloitte, among others, were active participants in this market.

Kramer Levin advised BlackRock on several strategic investments and acquisitions of companies whose technology improves and democratizes the investing process. These transactions include BlackRock’s investment in Scalable Capital, a Germany- and England-based robo-adviser, and its acquisition of FutureAdvisor, a U.S.-based robo-adviser. We also represented BlackRock in its just-announced strategic investment in Acorns, developer of the nation’s fastest-growing micro investing app, and iCapital, a financial technology firm that simplifies access to alternative investments. In addition, we advised BlackRock in its acquisition of Cachematrix, a provider of financial technology that simplifies the cash management process for banks and their corporate clients.

Also on the strategic front, we advised Gener8 Maritime in its $4 billion merger with Euronav AG and Deloitte in multiple M&A transactions, including the acquisition of innoWake GmbH, a Germany-based software company, and the acquisitions of substantially all the assets of Web Decisions LLC, an omnichannel data management and marketing services company, and Day1 Solutions Inc., a cloud consulting firm. Other recent M&A clients include Del Monte Foods Inc.; One Beacon Insurance; SKOR SE, a France-based reinsurance company; Calamos Partners LLC, a U.S.-based investment management firm; and Institutional Shareholder Services.

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 13 Reimagining iconic landmarks: The Waldorf Astoria and the Palace Theatre

The city that never sleeps is also the city that restlessly reinvents itself. Two legendary landmarks — the Waldorf Astoria at 50th Street and Park Avenue and the Palace Theatre at 1568 Broadway — are undergoing visionary changes.

Expansion of the Waldorf Astoria will recast it as a mixed-use luxury property that includes a completely renovated hotel, residential condominiums and extensive retail opportunities. Our team represented an affiliate of Anbang Insurance .,Co the new owner, on all land use and landmark processes for this extensive reimagining of the original hotel. The Landmarks Preservation Commission unanimously approved the project in April 2017 as a direct result of our counsel and work, determining that the planned renovations and upgrades of the hotel’s interior were sensitive to the special historical and architectural qualities of this storied East Side institution.

Judy Garland raised the roof of the Palace Theatre when she performed there in 1951 for an unprecedented 19-week concert run. Today, it’s the theater’s ground floor that’s getting a lift, with help from Kramer Levin. The project calls for elevating the ground floor of the legendary theater some 30 feet to accommodate on-grade retail on the ground floor in Times Square. In the process, the Nederlander Organization, which owns this interior landmark, will benefit from a comprehensive renovation and modernization of the 100-year-old theater.

14 The revitalization of Brooklyn, Queens and the Bronx

Brooklyn, Queens and the Bronx are of $160 million in lieu of a condemnation witnessing unprecedented levels of by the city of New York. development, and clients are enlisting our counsel for numerous exciting projects. Queens, Brooklyn’s northeast neighbor, stands as the city’s – and the world’s – During the past 15 years, Brooklyn has most ethnically diverse municipality. The evolved into a global brand and a borough continues to break new ground hotbed of creativity, artistic expression and rack up impressive statistics. Long and reinvented urban living. Our work Island City (LIC) is now the fastest-growing in the borough spans both commercial urban residential community in the United and residential real estate and land use States, surpassing Los Angeles and even projects. We recently provided land use Brooklyn. Our work with Plaxall to create advice that helped CIM Group acquire a special zoning district covering a the full residential block at 85 Jay St. as 15-acre area on the waterfront in LIC well as 25-30 Columbia Heights, a series will pave the way for the development of office buildings acquired from the of market-rate and affordable housing; Watchtower Bible Society. We provided arts and cultural, commercial, and light the land use advice necessary for Fortis manufacturing space; a new school; and Property and the NYU Hospitals Center to a bilevel waterfront open space. acquire the Long Island College Hospital campus in Cobble Hill for the purposes In the Bronx, Kramer Levin is involved in of redeveloping it into an emergency and projects from north to south. Soon, this ambulatory care facility and residential borough will be home to the city’s first buildings. We also are advising JDS continuing care retirement community, Development Group and The Chetrit River Spring Health. Kramer Levin is Group on the development of a new providing land use counsel for its 32-acre residential tower at 9 DeKalb — on the campus in Riverdale to secure special same site as the landmarked Dime permits and authorizations from the Savings Bank — which would rise 1,066 City Planning Commission. We are also feet in height and be the tallest building involved in the redevelopment and in Brooklyn. Our Condemnation team condemnation of sites along the obtained for the owner of waterfront Harlem River in the South Bronx. property in Williamsburg a settlement

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 15 DOJ prosecutors continue to target individuals

Although the number of white collar financial penalties and compliance representing large financial institutions, crime prosecutions has been steadily reforms from corporations accused corporations and board special declining across the United States of wrongdoing. In 2015, then-Deputy committees, we continue to represent over the past five years, activity in the Attorney General Sally Q. Yates issued executives and other individuals in Southern District of New York (SDNY) a memo, “Individual Accountability for the nation’s most significant white collar has been increasing. In 2017, there were Corporate Wrongdoing,” making it clear investigations and prosecutions. In 5,825 prosecutions nationally, down that the DOJ was focused on individuals the past 18 months, our clients have 25 percent from 2012. Meanwhile, the and would consider the provision of included New York Mayor Bill de Blasio, number of prosecutions in the SDNY information about the culpability of professional gambler and philanthropist jumped from 279 to 407, an increase of individual employees part of a company’s William “Bill” Walters, FIFA Secretary 46 percent. The SDNY has ranked first cooperation. Speaking at a conference in General Jérôme Valcke, former McKinsey in white collar crime prosecutions per April 2017, Attorney General Jeff Sessions managing director and Goldman Sachs capita for the past three years. reiterated the “Yates memo” guidance, board member Rajat K. Gupta, Deerfield saying, “The Department of Justice will Management partner and analyst This increased activity is in part a continue to emphasize the importance Theodore Huber, executives and result of the continued focus by the of holding individuals accountable for engineers of automobile manufacturers, U.S. Attorney’s Office in the SDNY on corporate misconduct.” Relatedly, in and senior executives and traders aggressively investigating and charging November 2017, Deputy Attorney at major investment banks. insider trading cases. Across the river in General Rod J. Rosenstein announced Brooklyn, the U.S. Attorney’s Office in a new enforcement policy for the the Eastern District has also continued Foreign Corrupt Practices Act (FCPA) to bring white collar cases, winning that incentivizes companies to high-profile trial convictions this past year self-report misconduct, which should in cases against two international soccer help prosecutors build cases against executives and pharmaceutical investor individual employees. In March 2018, Martin Shkreli. the DOJ announced nonbinding guidance that will apply the FCPA policy to all At the same time, recent Department criminal cases. of Justice (DOJ) policy initiatives have refocused prosecutors nationally on Kramer Levin’s White Collar Defense bringing charges against individual and Investigations practice is thriving employees, rather than simply seeking in this environment. In addition to

16 KRAMER LEVIN NAFTALIS & FRANKEL LLP | 17 LBOs and the rise of nonbank lenders

Over the past ten years, the financing community has experienced a sea change in the way leveraged buyouts are financed, most notably in the rapid rise of nonbank lenders as a regular, significant source of financing.

After the financial crisis of 2008, central banks globally sought to stimulate the economy by keeping interest rates extremely low and purchasing trillions of dollars in government and corporate bonds, thereby increasing the amount of readily available capital for investments and financing. This proliferation of debt capital created a space for new, nontraditional players in the leveraged finance marketplace, which previously was the nearly exclusive territory of large regulated banks. At the same time, post-crisis regulation significantly limited the ways that large banks could arrange loans.

Enter the era of nonbank lenders.

A decade ago, nonbank lenders (popularly referred to then as alternative lenders or debt funds) were not always a first resort for borrowers seeking capital to finance their acquisitions. But as traditional banks have become more limited in the types of transactions they fund — choosing to focus on larger transactions with lower leverage ratios — nonbank lenders, with their greater flexibility and higher tolerance for risk, have emerged as major players in the financing landscape. Today, nontraditional lenders service upward of 91 percent of leveraged buyout transactions for the middle market, which is defined as the economic segment made up of companies with annual revenues between $10 million and $1 billion (where most of the activity currently is recorded), up from only 29 percent in 1994.

Recognizing this trend early, Kramer Levin developed the ambidexterity necessary to represent nonbank lenders, as well as traditional banks, in debt financings. In the past year, our Leveraged Finance team has represented nearly all the traditional banks, including Barclays, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs, Jefferies LLC and JPMorgan Chase & Co., and some of the most active nonbank lenders, such as Antares Capital, Ares Capital NW LLC, The Carlyle Group, HPS Investment Partners LLC, KKR Capital Markets, Oak Tree Capital Management LP and Owl Rock Capital Partners LP, in acquisition finance transactions.

18 Recognizing this trend early, Kramer Levin developed the ambidexterity necessary to represent nonbank lenders, as well as traditional banks, in debt financings.

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 19 20 Energy sector not out of the woods yet

U.S. corporate bankruptcy and Management as holders of unsecured Other recent energy industry restructuring activity was dominated by notes before and during the Chapter 11 bankruptcies in which we have played the energy sector in 2017 as oil and coal proceedings, which culminated in a plan a key role, representing either creditors prices struggled to recover from their of reorganization that became effective committees or ad hoc groups of 2016 troughs, putting pressure on April 3, 2017. Our clients participated noteholders, include Energy Future producers, field services companies, in Peabody’s DIP financing, litigation Intermediate Holdings Inc., FirstEnergy and midstream and upstream companies and a mediation that achieved an Solutions, Southcross Holdings, Longview alike. In addition, independent power agreement enabling distributions to Power, Westmoreland Coal Corp., producers faced renewed headwinds unsecured creditors that were several Arch Coal Inc. and CHC Group Ltd. from stagnant consumer demand and a times larger than the recoveries in other lack of pricing power. recent coal industry bankruptcies.

The energy industry is certainly no Improved recovery in major stranger to volatility and cyclical highs offshore drilling restructuring and lows. Throughout the ups and downs Declining commodity prices — in this in the sector, Kramer Levin’s Bankruptcy case, oil prices — were also the driving and Restructuring team has been factor when one of the world’s largest actively engaged in the most significant offshore drilling companies, Seadrill Ltd., and complex cases, leading negotiations filed for Chapter 11 bankruptcy protection and finding consensual solutions. in September 2017. Prior to filing, Seadrill had reached an agreement with most of Extracting wins for unsecured its banks and certain noteholders to inject creditors when the bottom fell new capital into the company — but that out of the coal market agreement was not optimal for many of The largest coal producer in the Seadrill’s unsecured creditors. United States, Peabody Energy Corp., was caught short when prices for coal Kramer Levin is representing Seadrill’s sank relentlessly from 2012 to 2016, official committee of unsecured creditors. declining by more than 50 percent in that After extensive investigation and difficult period. Unable to service a debt load of negotiations, the committee agreed to $10.1 billion, Peabody filed for Chapter 11 support a revised plan under which bankruptcy protection in April 2016. unsecured creditors will receive a 50 percent greater recovery than that Kramer Levin represented Elliott Capital proposed under the debtor’s original plan. Management and Aurelius Capital

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 21 22 Sweeping new immigration restrictions hurting American companies

Few topics in the current national conversation incite more visceral — or polarizing — responses than immigration. Pro-immigration supporters cite the positive contributions that immigrants bring to the United States, including filling gaps in the U.S. workforce in a wide range of fields, such as the arts, sciences and business. Anti-immigration advocates argue, among other things, that immigrants displace American workers and burden social programs. Regardless of an individual’s position on the topic, one thing is certain: The spotlight on immigration has intensified under the Trump administration.

A key moment in the conversation occurred on April 18, 2017, when the president signed the Buy American and Hire American executive order, which sought to create higher wages, boost employment rates and protect economic interests for American workers through a much stricter interpretation of immigration laws and regulations. The order also increased the Department of Homeland Security’s purview to advance policies that increase scrutiny and restrictions around H-1B petitions, to ensure these clearances are awarded to only the most highly skilled or highest-paid beneficiaries.

The impact of this and other policy changes has been felt across industries and by people at every level in the marketplace, from entry-level skilled job seekers to highly trained professionals in medicine, technology and other occupations requiring advanced degrees and higher technical skills. Among the most notable consequences are increases in the difficulty of obtaining H-1B petition approvals; scrutiny and restrictive policies for students, new hires and L-1 intracompany transfers; the volume and frequency of “request for evidence” inquiries; the challenges international students, business visitors and other foreign nationals encounter when applying for visas at certain U.S. consulates; and employer sanctions enforcement.

U.S. companies face deepening concerns about whether they are in full compliance with the complex and oftentimes murky immigration rules. Kramer Levin’s Business Immigration group leverages the most up-to-date information and legal know-how to help in-house counsel interpret these constantly changing policies and take the appropriate action to make the immigration rules work for them.

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 23 24 Tax reform: A seismic shift in the US economic landscape

As Benjamin Franklin famously noted, death and taxes are the only certainties in this world, affecting everyone and everything. It’s as true now as it was in 1789, which is what makes Congress’ tax reform, known as the Tax Cuts and Jobs Act (TCJA), a monumental piece of legislation. The new law is the largest overhaul of the U.S. tax code in more than a generation, and its effects are reverberating throughout the economy and will continue to do so for years to come. Overall, the changes are expected to result in an approximately $950 billion net decrease in business sector tax liability and to increase the national GDP by 1.2 percent over the first five years, demonstrating the TCJA’s anticipated far-reaching impact across all sectors.

Kramer Levin’s Tax group has been working with our clients across the entire spectrum of our practice groups in analyzing the impact of tax reform on their businesses and on material transactions. For example, the reduction in corporate rates to 21 percent and the top noncorporate rates to 37 percent (and in many instances to 29.6 percent) affects the most basic decision as to whether to operate through a corporation or a tax partnership. Similarly, the 80 percent limitation on interest deductibility affects whether to raise equity or debt capital. State and local governments are adopting various changes in response to the new federal laws as well. Further, the move to a partial territorial system, with base-erosion backstops and incentives to retain intellectual property onshore, has fundamentally changed planning in the international context.

The above considerations come into play when structuring internal corporate reorganizations, acquisitions, dispositions, joint ventures, and a host of other corporate and noncorporate transactions. While the tax code has undergone massive changes, one theme remains constant: Kramer Levin’s cross-practice teams work to provide practical solutions to help clients accomplish their goals within the constantly shifting landscape.

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 25 The sun rises in the East: East Midtown experiences a renaissance

Distinct from Manhattan’s West Side in mood, ethos and On Manhattan’s gold coast, the Upper East Side, we have landscape, the island’s East Side has long been characterized collaborated on several recent development projects that have as more conservative and subdued. While there are plenty of accelerated interest in this distinct neighborhood, including for: historic landmarks here (Grand Central Station, the Seagram • Gamma Real Estate, in first obtaining a ruling by the New York Building, Lever House), overall, the effect is a stately, understated Supreme Court that our client could foreclose on Sutton 58, urban panorama. the site of a proposed 1,000-foot-tall condominium tower, and then securing a $147 million bridge financing package From a commercial real estate and land use perspective, there’s far less available new space to be developed compared with • CIM Group in the $91.1 million sale of three penthouses the West Side. This has led to a renewed focus on revitalizing totaling 12,000 square feet on the 92nd and 93rd floors of the existing buildings that have become functionally obsolete during super-tall 432 Park Ave., the second-most-expensive condo the past few decades. Both the city and the Real Estate Board sale in New York City history of New York (REBNY) have focused their efforts on creating • Alexico in its $265 million leasehold mortgage and mezzanine incentives for rezoning and redevelopment to unlock refinancing of The Mark Hotel, a luxury hotel, restaurant and the tremendous value embedded in the approximately cooperative apartment property at 25 East 77th St. 4 million square feet of air rights that currently remain unused. • Extell Development in assembling the development rights and securing the zoning approvals for The Kent, a recently We provided land use advice to REBNY and represented the completed building at 200 East 95th St. containing about organization in negotiations with the Department of City Planning 223,000 square feet of residential, retail and as well as during public review of the East Midtown rezoning. In educational space addition to our work on the reimagining of the storied Waldorf Astoria, our teams served as co-counsel for a group of lenders in their $781 million refinancing of 237 Park Ave. and represented a significant East Side religious institution in the sale of its air rights to JPMorgan Chase for its new headquarters building.

26 KRAMER LEVIN NAFTALIS & FRANKEL LLP | 27 A culture of service and giving back 50th anniversary: Our commitment to pro bono and public service is a legacy of our founding partners and early leaders. As one of Celebrating leadership, the first firms to institutionalize a pro bono practice, we have often taken on service and innovation controversial civil, social and human rights causes that few other firms would touch. Our firm does not limit the number of pro bono hours lawyers can count toward Since our founding 50 years ago in 1968, Kramer Levin has played a leadership their annual billing totals. role in the legal profession, establishing new practice areas, developing new firm governance models, and fostering a culture of philanthropy and Asylum, immigration and human rights community service. Asylum and related immigration and human rights work constitutes the In 2018, our 50th anniversary, we reflect on the people, events and achievements largest focus of our pro bono program. that define us. Our rich heritage informs who we are and the work we do, and We have obtained asylum for more than inspires us as we embark on our next 50 years. 100 refugees around the world. In the years following the 9/11 attacks, we Defining moments: What has set us apart helped secure the release of six male Our founders were committed to a culture based on principles that were unheard Uighurs, a Turkic Muslim minority group of in traditional law firms. An early commitment to recruiting diverse candidates, for native to western China that has example, brought fresh perspectives to our client work and the ethos of our firm. been oppressed and persecuted by A democratic, progressive operational model — a firm governed by committees the Chinese government, who were and a “one partner, one vote” structure — fostered a culture of mutual respect that wrongfully imprisoned by the U.S. military continues to define us. at Guantanamo Bay, Cuba. All the clients have since been released to Albania, Our associates — often referred to as our “secret weapon” — have always gained El Salvador and the Pacific island nation access to client-facing work at early stages in their careers, which accelerates of Palau. Over the years, our successful their professional development and provides higher value to clients. representation of more than a dozen Tibetan refugee cases has underscored We established new practice areas that at the time of their inception were unique our leadership in this sensitive and among law firms of our size. We understood the needs and the opportunities in the important area of pro bono work. areas of white collar defense, real estate, land use and intellectual property long before other leading firms.

28 Civil rights and civil liberties Civil legal services for We are proud and honored that our Our firm has been fighting for lesbian, low-income individuals lawyers contribute their talents in gay, bisexual and transgender (LGBT) Our award-winning pro bono program civic leadership to a wide diversity rights since the early 1980s, long before is committed to helping reduce the of organizations, including Broadway other prominent firms took up the cause. “justice gap” by providing free legal Cares/Equity Fights AIDS, Brooklyn Arthur Kramer’s brother, Larry Kramer, services to the poor in connection Prospect Charter School, City Parks was a founder of Gay Men’s Health with housing, public benefits and other Foundation, Coalition for the Homeless, Crisis (GMHC) and a pivotal figure in AIDS crucial life needs. In the 1980s, we began Everytown Gun Safety, Holocaust and activism. Their story was immortalized representing low-income adults and Human Rights Education Center, Lambda in Larry’s 1985 play The Normal Heart. children seeking Social Security disability Legal, Legal Aid Society, Legal Aid Society Kramer Levin incorporated GMHC and benefits. Working mainly with the Center of San Mateo County, Legal Services NYC, continues to work with the organization for Disability Advocacy Rights (CeDAR), Museum of the City of New York, New to this day. our summer associates and lawyers have Jersey Performing Arts Center, New York represented scores of claimants in Civil Liberties Union, New York Legal Our firm served as co-counsel with individual hearings and federal court Assistance Group, Peter Cicchino Youth Lambda Legal Defense and Education appeals, often getting legal fees Project, UJA-Federation of New York Fund in Hernandez v. Robles, the reimbursed by the government. and Volunteers of Legal Services, New York State case that helped among others. advance marriage equality in the state In the late 1990s, we were one of the first (eventually enacted in June 2011), law firms to establish an externship with Looking forward and submitted crucial Supreme Court Brooklyn Legal Services (formerly South In 1676, Isaac Newton penned, “If I have amicus briefs in United States v. Windsor Brooklyn Legal Services), where a full-time seen further, it is by standing on the and Obergefell v. Hodges, which Kramer Levin lawyer represents poor shoulders of giants.” In 2018, as we mark achieved marriage equality nationally. tenants in housing court. We have saved a half-century since our beginnings in hundreds of families from eviction. 1968, it is clear that we are the unique firm We have a long-standing association we are today in large part because of the with the National Alliance on Mental Service to nonprofit organizations significant achievements of our founders Illness of New York City Inc., a grassroots Our lawyers contribute thousands of and early leaders. As we look forward organization that provides support, hours each year to an extensive network to our next 50 years of service, we are education and advocacy for families of worthy nonprofit community and grateful for the example set by those and individuals of all ethnic and philanthropic organizations, both through who came before us and eager to set socioeconomic backgrounds who direct legal services for such groups as an example worthy of those who will live with mental illness. Coalition for the Homeless and the LGBT come after us. Community Center, and through board service and other leadership roles.

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 29 50th anniversary: A legacy of significant contributions

Our founders set out to establish a different type of law firm — one that advances human dignity, respect and collegiality both within the firm and across society. Over the years, other leaders have demonstrated an unwavering commitment to these principles as well. These principles continue to define us. Below is a list of our name partners and a timeline of the evolution of our firm’s name.

• Arthur Kramer, a founding partner (1968 – 1996), played a • Sherwin Kamin, a founding partner (1968 – 2000), significant role in shaping the conversation around GBTL established,built and led the firm’s Tax and Individual Client advocacy and representation. He served on the boards of the groups. A celebrated figure among prominent tax lawyers in Center for Educational Innovation-Public Education Association, the New York legal community, Sherwin, known as a “lawyer’s the Salk Institute and the Hospital for Joint Diseases, and made lawyer,” was long associated with the American Law Institute. generous contributions to the Child Study Center at Yale, the • was a name partner (1971 – 1977) Jewish Fund for Justice, the Coalition for the Homeless and Judge Eugene Nickerson and a federal judge (U.S. District Court for the Eastern District the Larry Kramer Initiative for Lesbian and Gay Studies at Yale. of New York, 1977 – 2002). Prior to joining the firm, he was • Louis Lowenstein, a founding partner (1968 – 1978) and the first Democrat since 1912 elected to a countywide seat in former Columbia Law professor, worked tirelessly throughout Nassau County, where he served as county executive from his career in support of the Coalition for the Homeless. 1962 to 1970. Louis went on to become president of Supermarkets • , who joined the firm in 1979 and became a name General (now known as Pathmark). Ezra Levin partner in 1981, has been involved in numerous civil rights • Maury Nessen, an early firm leader (1968 – 1999) and a and Jewish community activities. As co-chair of the New York passionate advocate for social justice, served as president Coalition for Soviet Jewry, he traveled to the Soviet Union, of the Legal Aid Society (1985 – 1987). He received the where he advocated for the civil and social rights of Soviet Thurgood Marshall award for his pro bono representation Jews. He has served as president of the Jewish Community of a death row prisoner. Relations Council of New York and was the founding chair of Solomon Schechter High School.

1968 1971 1973 1977 1981 Kramer Lowenstein Nickerson Nickerson Kramer Kramer Lowenstein Kramer Levin Nessen & Kamin Kramer Lowenstein Nessen Nessen Kamin & Soll Nessen Kamin Lowenstein Kamin & Soll & Soll Nessen & Kamin

30 50th anniversary: A legacy of significant contributions

• George Soll joined the firm as a name partner in 1973. George • Gary Naftalis served as an assistant U.S. attorney in was a member of the American Judicature Society, the Citizens the Southern District of New York (1968 – 1974), holding Union and the National Association for the Advancement of the title deputy chief of the Criminal Division prior to joining Colored People, and the president of the Rosyln Democratic Kramer Levin in 1981. A name partner since 1992, Gary Club. He was the Democratic candidate for the U.S. House established our White Collar Defense and Investigations of Representatives in New York’s 3rd District in 1962. practice and currently co-chairs the firm and the Litigation department. His work for clients such as Kidder Peabody, • Judge Marvin Frankel, the celebrated legal scholar, federal Michael Eisner and Ian Schrager, as well as his pro bono judge (U.S. District Court for the Southern District of New York, representation of Touro Synagogue, has earned Gary a 1965 – 1978), Columbia Law professor (1962 – 1965) and place as one of the premier litigators in the profession. Kramer Levin name partner (1983 – 2002), helped establish sentencing guidelines for the federal courts. He was a lifelong advocate for human rights, serving 24 years on the board of Human Rights First (HRF), including 16 years as chair. Judge Frankel made his last argument before the U.S. Supreme Court in February 2002, days before his passing and the 50th anniversary of his first argument before the Court.

1983 1992 1996 Kramer Levin Kramer Levin Naftalis Kramer Levin Nessen Kamin Nessen Kamin & Frankel Naftalis & Frankel & Frankel

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 31 32 The #MeToo movement: An opportunity for positive change

The No. 1 topic in the employment world today is sexual revamping policies governing employee conduct, both in harassment and the rise of the #MeToo movement. Indeed, it is and out of the office; expanding reporting procedures for one of the top issues in American society generally, touching all inappropriate behavior; dedicating additional resources for industries. With new allegations making headlines at a shocking investigations; reviewing protocols for responding to complaints rate, a spotlight has been cast on the culture of the American of inappropriate conduct; and re-evaluating practices for workplace — and employers’ reactions to these events — leaving imposing disciplinary action in response to misconduct. employers uneasy about how to proceed. Many employers are finding, however, this is a time of opportunity that can bring Employers of all sizes across a wide array of industries about dramatic and positive changes for both employers consistently turn to Kramer Levin’s Employment Law team and employees. for counsel, guidance and support in navigating this complex and ever-changing landscape. In the #MeToo era, few legal The advent of the #MeToo movement and the resulting precedents exist from which to draw. With a long-standing national conversation about the American workplace have reputation for interpreting and addressing contemporary given employers the opportunity to positively and clearly employment issues, our lawyers help shape conversations redefine the boundaries of acceptable workplace conduct and and create opportunities for employers and employees alike to expand the channels of communication with employees. in these challenging and unprecedented times. At this moment, employers are uniquely positioned to send a message to their employees that they are valued and that the employer is committed to providing a respectful workplace — not merely because the employer wishes to mitigate legal risk or prevent a PR disaster, but because it is the right thing to do. A respectful workplace, in which discrimination and harassment are prohibited, is also good for business because it demonstrably increases employee productivity, reduces costly absenteeism associated with harassment and enhances retention of valued employees. Moreover, employers with respectful workplace cultures can expect increased job satisfaction and organizational commitment on the part of their personnel.

In response to the #MeToo movement, we are witnessing a significant and swift uptick in the rate at which companies are implementing anti-harassment and anti-discrimination training;

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 33 34 Private equity fund sues Petrobras to recover investment lost in ‘Car Wash’ scandal

It started out as an investigation of a car wash in Brazil. Now, that materials that did not mention they would use Sete as a vehicle investigation has resulted in the conviction of former Brazilian to perpetuate Petrobras’ long-standing bribery and kickback president Luiz Inácio Lula da Silva; the impeachment of another scheme. Through various managed funds, EIG invested more Brazilian president, Dilma Rousseff; guilty pleas and payment of than $221 million in Sete. billions of dollars in penalties by Brazilian and foreign companies for violations of the U.S. Foreign Corrupt Practices Act; and the When Brazilian prosecutors discovered that Sete was involved conviction of more than 100 Brazilians on corruption charges. in the Lava Jato scandal, Sete’s lenders, including the Brazilian Fittingly, Brazilians have dubbed this scandal “Lava Jato,” or National Development Bank, refused to provide Sete funding. “Car Wash.” Sete collapsed into bankruptcy, and EIG lost its entire investment.

At the center of Lava Jato is the Brazilian state-owned oil On behalf of EIG and its funds, Kramer Levin filed an action company Petróleo Brasiliero S.A., which had been controlled for against Petrobras in the U.S. District Court for the District of years by the dominant political party in Brazil, the Workers Party. Columbia, in which EIG alleged that it was defrauded by Brazilian prosecutors discovered that, since at least 2004, senior Petrobras and sought recovery of its lost investment. After executives of Petrobras required third parties to pay bribes for a six-hour oral argument, we defeated Petrobras’ motion to the privilege of doing business with their company. These bribes dismiss the complaint and have the case transferred to a were allocated to the senior Petrobras executives and to the Brazilian court. Petrobras has appealed one aspect of that Workers Party, which used the bribes to fund political campaigns. decision — the court’s refusal to dismiss the case on foreign One former executive of Petrobras alone garnered more than sovereign immunity grounds. $100 million in bribes.

In 2010, Petrobras executives expanded this corruption scheme to include Sete Brasil Participações S.A., a company that Petrobras formed as an off-balance-sheet vehicle to develop and lease back to Petrobras 28 ultra-deepwater drill ships, each of which would cost more than $700 million to build. Petrobras executives decided that the shipbuilders would have to pay Petrobras, Sete executives and the Workers Party a bribe equal to 1 percent of the cost of each ship.

Petrobras targeted EIG Global Energy Partners and other U.S. private equity companies to invest in Sete, sending promotional

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 35 Hudson Yards puts far west Manhattan back on the map

Long a patchwork of underutilized parcels on Manhattan’s far Downtown, we represented Atlas Capital Group and Westbrook West Side, Hudson Yards soon will emerge from its industrial past Partners in the creation of a new zoning mechanism to allow the as a futuristic collection of commercial and residential towers, transfer of development rights from Pier 40 in Hudson River Park extensive retail and restaurants, a mixed-use innovation center, for use in the redevelopment of the St. John’s Warehouse site public open space, and a new public school. Hudson Yards is at Houston Street, across the West Side Highway from the pier. the largest private real estate development in U.S. history, and We subsequently represented Douglaston Development in the upon its completion will represent the largest development in second transfer of air rights from Hudson River Park — this New York City since Rockefeller Center in the 1930s. The project time to 29th Street and 11th Avenue, the site of a proposed remains a shining example of the far West Side’s renaissance. two-building, 960,000-square-foot development, 25 percent of which will be affordable housing. Our role in this development began in 2011, working for Related/ Oxford to structure the master site-plan operating regime to Uptown, we secured a zoning variance from the NYC Board of govern interaction among all the buildings in the development. Standards and Appeals on behalf of Youngwoo & Associates We negotiated innovative commercial condominium structures for the construction of a 22-story building at 181st Street and for each Hudson Yards building. We also worked with the city Amsterdam Avenue. The new building, which will include a hotel, to create special zoning text to allow development of The Shed, office space and retail, takes the distinctive form of a series of a new multi-arts center adjacent to 15 Hudson Yards. More stacked volumes rising in height from the south to the north. It will recently, we represented Mitsui Fudosan America Inc., which mark a distinctive gateway into Manhattan and the Washington took a 90 percent development stake in 50 Hudson Yards in a Heights neighborhood. joint venture with the Related Companies. This 58-story tower, scheduled for completion in 2022, will boast approximately 2.8 million square feet of floor area and become the fourth-largest commercial office tower in New York City.

Our contributions to the transformation of Manhattan’s West Side also include condominium work for a joint venture of Vornado Realty and Related Companies in their redevelopment of the James A. Farley Post Office Building into the new Moynihan Train Hall at New York’s Penn Station. This $1.6 billion project entails constructing a new 255,000-square-foot hub for Amtrak and the Long Island Rail Road, and creating more than 700,000 square feet of retail and office space.

36 Hudson Yard fast facts:

18million sq ft of commercial and residential space 100+ shops 4,000 residences

14acres of public open space 750 -seat public school 23,000 construction jobs created

Source: hudsonyardsnewyork.com KRAMER LEVIN NAFTALIS & FRANKEL LLP | 37 A pioneer in claims trading: Defining the distressed investing market

The purchase and sale of securities and claims in distressed circumstances, or claims trading, an area pioneered by lawyers at Kramer Levin in the early 1990s, continues to create opportunity for strategic investors.

Kramer Levin provides counsel in more than 2,500 transactions each year involving billions of dollars of distressed debt through its representation of hedge funds and banks engaged in the purchase and sale of securities and claims of companies undergoing financial restructuring or in bankruptcy.

Our unique combination of restructuring, bankruptcy litigation and claims trading experience enables us to help sophisticated investors identify dislocations between the current market prices of securities and claims and their potential value in distressed situations.

We provide valuable and market-timely analysis of indentures and credit documents and help clients understand what alternative restructurings might look like for any given company, as well as calculate the advantages and disadvantages of various types of trades.

Notable recent transactions have involved investments in Alpha Natural Resources, Artec Industries, Commercial Barge Line, Concordia International, iHeart Communications, J. Crew Group, Lehman Brothers, Millennium Health, New Rue 21, Oi SA, Pacific Drilling, Payless Shoes, Velocity and Westinghouse Electric, among many others. Longtime leaders in the field of claims trading, we continue to set the pace for the marketplace today. Indeed, for many investors seeking holistic, high-end distressed investing analysis, Kramer Levin is the first call.

38 For many investors seeking holistic, high-end distressed investing analysis, Kramer Levin is the first call.

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 39 Credit default swaps and a new technique involving ‘unconventional’ credit events

Once a relatively simple investment generally expanded, with sophisticated Taylor Swain referred to a Kramer Levin product, credit default swaps (CDSs) investors now taking both long and short article outlining certain options available have steadily gained popularity in CDS positions — essentially anticipating to the CDS market to address concerns recent years, and have become more whether the debt issuer will default — about the proliferation of unconventional esoteric and complex in the process. which has naturally spawned increasingly credit event strategies. While the No longer used purely for hedging and activist behavior from CDS participants ramifications of such cases remain to passive investment, they have become seeking to achieve particular outcomes. be seen, the CDS market will have to an opportunistic, stand-alone These trades have given rise to a new decide whether these unconventional investment strategy. technique involving an “unconventional” strategies simply need to be priced into credit event. Kramer Levin has been a the market, or whether contracts need A CDS is a derivative transaction that thought leader on this evolution in the to be changed to limit the availability of essentially acts as a form of insurance CDS market, identifying the opportunities these strategies to market participants for bondholders and creditors when a presented in the cases of Codere and in the future. company or sovereign issues a loan, or iHeart, and more recently in the ongoing credit, in order to raise funds. Since every case of Hovnanian Enterprises Inc. debt obligation carries the risk of default, a CDS allows the creditor to shift that In the Hovnanian example, the risk onto the CDS protection seller in distressed company was offered a exchange for a certain premium, favorable refinancing package in depending on the level of risk involved exchange for agreeing to miss a payment with the debt obligations and the chance on certain bonds it had issued. It was of default. In return, the CDS protection anticipated that this would trigger the seller insures the return of the debt CDS contracts issued on its debt, thereby obligation’s principal amount to the providing a windfall to those offering the creditor in the event of a default. If favorable refinancing to the company. there’s no default, the CDS protection In addition, Hovnanian issued long-dated, seller keeps the premium as profit. inexpensive paper designed to trade significantly below par, likely as an Previously controversial due to the economic incentive for CDS market role some CDS trades played in the participants to offer the improved financial crisis, these transactions have refinancing terms. In the ensuing and since evolved and the market has ongoing litigation, SDNY Judge Laura

40 KRAMER LEVIN NAFTALIS & FRANKEL LLP | 41 42 The future is now: Self-driving cars and mixed reality

2062. That was the year in which The Jetsons — that iconic, futuristic Hanna-Barbera animated series — was set when it Today, as technology premiered on Sept. 23, 1962, on televisions in households continues to push across America. It gave the country a glimpse into what the creative minds at the time envisioned as the future: flying cars; boundaries, we are autonomous, robotic servants; jet packs; sky cities — each beginning to realize element projected a tableau vivant of what we could expect to some of the possibilities encounter in the future some 100 years out. While The Jetsons that lasted only one season (24 episodes total), the series shaped a envisioned for narrative of the future that remains relevant. our future.

Fast-forward to 2018. Today, as technology continues to push boundaries, we are beginning to realize some of the possibilities that The Jetsons envisioned for our future, including autonomous, self-driving vehicles; artificial intelligence and virtual reality; and voice-activated service providers such as Siri and Alexa. Kramer Levin remains at the forefront of these and other new technologies. Through our work for companies such as Civil Maps, which provides mapping technology for autonomous vehicles, and Magic Leap, a successful startup that is pushing the boundaries in mixed-reality environments, where physical and digital objects co-exist and interact in real time, we are helping clients create the future now.

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 43 The evolution of cybersecurity

Networked computer systems and the data they store and transmit have been the target of threats and attacks ever since the early days of the internet. As digital systems have become ubiquitous in our professional and personal lives — including the meteoric rise of mobile devices, the proliferation of social media and the rapid expansion of connectivity — cyberattacks have become persistent risks that require vigilance, ongoing analysis and pre-emptive procedures.

Today, ransomware, fileless malware and nation-state attacks dominate the cybersecurity conversation, one that has expanded beyond IT teams to involve the entire C-suite. Companies are shifting from previously reactive stances to more proactive ones. Real-time threat analysis, breach detection and predictive modeling all signal a significant shift away from information security toward intelligent security.

Kramer Levin has counseled generations of cybersecurity technology pioneers, including Finjan Inc., an early innovator in internet security that has generated more than $350 million in income from licensing its intellectual property; AVG Technologies; CUPP Cybersecurity; and Centripetal Networks, whose RuleGate technology was named one of the top 16 cyber technologies for 2017 by an independent panel of the world’s premier cyber experts.

A (very) brief history of cybersecurity

Mid 1990s Computer viruses such as “Melissa” and “ILOVEYOU” target enterprise email systems, giving birth to antivirus software

44 2005 2007 2013 2017 2018 Wide-scale serial data breaches of consumer Attacks on Target’s Widespread Facebook reports credit card activity (T.J. Maxx attacks) point-of-sale systems data breaches 87 million users’ of consumer data compromised credit reporting agency Equifax

Sources: Infosecurity Magazine, Dec. 4, 2014; Wall Street Journal, Sept. 2017; Wall Street Journal, April 2018

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 45 The largest auto industry recall in history

The recall of millions of automobiles largest automotive industry bankruptcies, equipped with defective airbag including those of General Motors We served as an honest inflators manufactured by Takata Corp. Corp., Chrysler LLC and Dana Corp. broker among the was called “the largest and most Even by those standards, Takata is complex safety recall in U.S. history” exceedingly complex. OEMs, helping to build by the National Highway Traffic Safety consensus among Administration. The automotive industry In April 2018, Takata sold its business Takata, the buyer, the is still reeling from the impact. for $1.59 billion. A truly global transaction, committees and other it required the support of the car case constituents and Although the first recall was initiated in manufacturers that had purchased drive toward a mutually 2008 by Honda, the onslaught began Takata inflators across Asia, EMEA and acceptable position. in May 2015, when Takata admitted the Americas. The transaction and that previous studies the company had the restructurings provide meaningful conducted (but not released) revealed recoveries to the OEMs, the tort that the inflator was defective. That claimants, governmental entities and disclosure triggered approximately unsecured creditors. 22 million recalls that year alone, and has remained a central tenet in the Our representation of Subaru and Mazda legal proceedings to this day, including together helped both manufacturers thousands of personal injury and realize an influential voice at the table wrongful death class actions and for the midsize OEMs. We served as an suits aimed at recovering economic honest broker among the OEMs, helping damages for the more than 55 car to build consensus among Takata, the manufacturers, or original equipment buyer, the committees and other case manufacturers (OEMs). constituents and drive toward a mutually acceptable position — one designed to Kramer Levin is representing Subaru and ensure the continuity of a business that to Mazda, two of 15 OEMs spearheading many observers, and for many years, has a restructuring transaction of Takata’s seemed doomed to fail. seatbelt, sensor and other non-recalled business lines while providing for continued warehousing, shipping and disposal of recalled inflators globally. We have played a key role in some of the

46 Key statistics in the Takata recall:

More than 124million 55+ recalls worldwide to date separate car manufacturers affected by the recall

$1billion 2002 2015 obligation of Takata Corp. under the span of time during which most of the the DOJ plea agreement in the United airbag inflators in question were installed States: $850 million in funds for the victim OEMs as a result of the fraud; $150 million for personal injury and wrongful death claimants

Compromise of $47billion of claims asserted in the Chapter 11 cases Billions of yen in unsecured claims from the car manufacturers to cover the associated with recalls in Japan costs of the recalls and indemnification for economic loss to the business

Sources: Car and Driver, March 15, 2018; Consumer Reports, April 5, 2018; Takata Corp., 17-11713 (D. Del. 2018), Docket No. 19

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 47 Trends in advertising litigation

Johnson & Johnson, one of the world’s A second trend is the rise of startups medication, Zyrtec. NAD agreed with our leading and most trusted medical device, and new entrants challenging longer- argument that Chattem’s claims were false pharmaceutical and consumer goods established brands and products through and misleading because the differences in companies, relies heavily on advertising aggressive comparative advertising the drugs were not clinically meaningful to and marketing to promote its products campaigns. Hubble Contact Lenses, consumers, and recommended that most and differentiate them from other brands a startup offering subscription-based of the Xyzal campaign be discontinued in the marketplace. With that prominent mail-order delivery of contact lenses, or modified. global exposure, the company is no promoted its products as half the price of stranger to competitor and consumer those of leading competitors, including challenges to its advertising. Three recent J&J’s ACUVUE Brand Contact Lenses, cases in which J&J prevailed highlight when that was not the case. We prepared several key trends in advertising litigation. a Lanham Act complaint and, before filing, delivered a cease-and-desist demand to One trend is a proliferation of consumer Hubble. Faced with the threat of litigation class actions brought under state and the robust remedial provisions consumer protection laws. A trend available under the statute, Hubble within this trend is class action challenges quickly agreed to retract its offending to “natural” claims on food and consumer claims. The speed with which Hubble products. In one such action, consumers took this remedial action was a significant alleged that they had paid a premium for victory for J&J. J&J’s Neutrogena Pure & Free brand of sunscreen products because statements A third trend in advertising litigation is on the product labels such as “naturally the increase in challenges commenced sourced sunscreen ingredients” misled at the National Advertising Division (NAD). them into believing that the entire product Major advertisers frequently turn to NAD, a — as opposed to just those ingredients self-regulating body that can recommend that protect users from the sun’s rays — that advertisers discontinue or modify their was composed of natural ingredients. We advertising, as a cost-effective forum for secured a victory for J&J in this putative competitor disputes. J&J brought an NAD class action when the Central District of challenge against Chattem for statements California denied the plaintiffs’ motion to it made that its Xyzal over-the-counter certify a multistate class. allergy drug conferred a clinical benefit by having less medicine than, but providing the same relief as, J&J’s competing allergy

48 KRAMER LEVIN NAFTALIS & FRANKEL LLP | 49 Regulators eye cryptocurrencies

Bitcoin. Litecoin. Namecoin. PPCoin. A simple transaction using a SEC announced that these currencies Ethereum. The proliferation of cryptocurrency might go like this: A may be subject to U.S. securities laws, cryptocurrencies — digital or virtual person initiates a purchase by logging in though this announcement has done currencies that employ cryptography to a cryptocurrency wallet using a private little to reduce the growth of and interest as their primary security control — (and long) key, or password. In a traditional in cryptocurrencies. has captured the imagination of transaction, a third party, such as a bank, entrepreneurs and investors alike would record and verify the transaction Kramer Levin is one of a handful of law and, more recently, has elicited on both sides, subtracting the funds from firms at the forefront of the regulatory regulatory scrutiny. one account and adding them to another. and transactional aspects in the In a cryptocurrency transaction, the cryptocurrency space. Our Corporate Although first introduced in 2009 with transaction is shared with everyone across teams currently are advising on the the creation of bitcoin, cryptocurrencies the peer-to-peer network where the world’s first cryptocurrency exchange, as moved into the mainstream in 2017 after transaction is added to a shared ledger well as providing counsel on regulatory years of lingering on the periphery of of recent transactions called a “block,” issues, fund formation strategies and the financial markets. each carrying its own time stamp. investment strategies on behalf of fund managers, family offices, endowments A cryptocurrency is digital money bought Every few minutes, the newest block and funds of funds. A global participant and sold online that has no tangible of transactions is added on, or “chained,” in the space, our Paris team has been form and is not transmitted through a to all the previous blocks, constituting involved in a dozen ICOs in Europe, traditional third party (such as a financial a “blockchain.” The new transaction mainly as legal counsel to the issuer of institution or bank) for verification. Instead, block is then verified through another the tokens. Our work with DomRaider, the cryptocurrencies use a decentralized decentralized (and therefore tamper- first French ICO in July 2017 ($50 million), system called blockchain technology to resistant) process called “mining.” and the creation of an investment fund track transactions across the network. bringing together investors to participate In 2017, the market witnessed a rapid in Telegram’s ICO ($800 million) A blockchain is a distributed database rise in the number and value of initial underscore the firm’s ability to help of peer-to-peer networked computers coin offerings (ICOs), a fundraising clients navigate this complex and that records a continuous list of ordered model whereby a venture will issue a rapidly changing landscape. records called blocks, each carrying cryptographic token in exchange for its own time stamp and a link to a startup capital. Although cryptocurrencies previous record. It facilitates the transfer are not regulated by governments or of monetary value across the internet other centralized regulatory entities, their without the need for a central third party rapid rise has attracted the attention of for verification. regulatory agencies. Most recently, the

50 Although first introduced in 2009 with the creation of bitcoin, cryptocurrencies moved into the mainstream in 2017 after years of lingering on the periphery of the financial markets.

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 51

Selected clean and renewable energy statistics:

th 1/5 98GW of the world’s electricity produced of new global solar installations by renewable energy (2017)

$333.5billion 59GW of global clean energy of global wind installations investment in 2017 (projected for 2018)

10.3million 500,000 clean and renewable energy new renewable energy jobs jobs globally globally in 2017

Continued downward trend in costs: renewable energy costs down 62% since 2009

Sources: Bloomberg, Jan. 2017; International Renewable Energy Agency, May 2017; World Economic Forum, Jan. 12, 2008; Bloomberg, Jan. 16, 2018

52 Clean energy: Solar and property-assessed clean energy (PACE)

While traditional sectors of the energy industry such as coal and oil and gas are experiencing distress (see “Energy sector not out of the woods yet,” p. 20), renewable energy is expanding. The sector boasts 10.3 million jobs globally (as of 2017), with renewable energy providing one-fifth of the world’s electricity supply.

Investors seeking higher yields in a low-interest-rate environment are increasingly buying into securitization deals involving clean energy assets, which, due to their novelty and complexity, command higher returns. A leader in the securitization of esoteric assets, Kramer Levin has advised on many first-of-their-kind transactions over the years, including securitizations of solar assets, property-assessed clean energy (PACE) programs (which allow property owners to finance upfront energy costs and improvements and pay them back as a tax assessment) and energy efficiency installations at federal facilities; asset-backed securities backed by intellectual property, timeshares and commercial mortgages; and M&A transactions using securitization as the source of financing.

In the clean energy sector, we were deal counsel on the first-ever securitization of solar assets, the largest solar securitization to date and the first-ever residential PACE securitization. We are also currently involved in several innovative transactions involving commercial PACE assets.

KRAMER LEVIN NAFTALIS & FRANKEL LLP | 53 Offices

New York 1177 Avenue of the Americas New York, NY 10036 Paul S. Pearlman Managing Partner, Kramer Levin T 212.715.9100

Silicon Valley 990 Marsh Road Menlo Park, CA 94025 Paul J. Andre Managing Partner, Silicon Valley T 650.752.1700

Paris 47 avenue Hoche 75008 Paris Renaud Dubois Managing Partner, Paris T +33 (0)1 44 09 46 00

Photography sources: Getty Images, Pexels.com and Unsplash.com.