Navigating Mergers and Acquisitions with Distressed Companies

Agenda

Market Overview

• Pre-COVID-19 M&A Market
• Even Before COVID-19, Increase in Bankruptcy Filings Started in Middle of 2019
• Over 187,000 Bankruptcy Filings in 2020 as of March
• Expect Surge in Bankruptcy Filings Caused by COVID-19
• Oil and Gas; Travel/Airline; Hospitality; Retail

Pre-Deal Documents and Issues in the Current Environment

• Recent Changes in the Art of Deal Making - Deal Sourcing/Marketing Considerations
• Confidentiality Agreements, Letters of Intent, and Preliminary Due Diligence
• Choosing the Deal Structure
• Establishing the Purchase Price

Drafting and Negotiating the Acquisition Agreements in the Current Environment

• Purchase Price Adjustment Issues and Considerations
• Earn-out Issues and Considerations
• Risk Allocation - Significance of Business Representations and Warranties
• Risk Allocation - Sources of Indemnification (Escrows/Holdbacks, Guaranties, R&W Insurance, etc.)
• Increased Transaction Scrutiny (CFIUS, PPP Loan Affiliation Issues, Antitrust Review, etc.)
• Closing Conditions and Defining Material Adverse Effect

Buying Assets in Bankruptcy

• Chapter 11 Exit Strategy
• Nuts and Bolts of Section 363 Sale
• Free and Clear
• Other Benefits of Sale Order
• Managing Successor Liability Risk
• Practical Considerations
• What Should Be in the Sale Order
• Chapter 11 Plan
• Pre-Arranged Chapter 11
• Prepacks

Assumption of Executory Contracts and Unexpired Leases

• Cum Onere
• Cure and Adequate Assurance of Prompt Cure

Assignment of Executory Contracts and Unexpired Leases

• Adequate Assurance of Future Performance by Assignee
• Anti-Assignment Provisions

Credits

Faculty

Steven (Steve) R. Cade

Foley & Lardner LLP

• Partner and business lawyer with Foley & Lardner LLP
• Represents clients in a broad range of general corporate law and transactional matters, with a focus on mergers and acquisitions, commercial transactions and venture capital financings including clients across a range of industries, including manufacturing, technology, financial services, food and beverage, and health care
• Completed a significant number of mergers, acquisitions, divestitures, joint ventures, and other business combination transactions for a wide variety of clients, including Fortune 500 companies as well as private equity and middle-market publicly traded and privately held clients
• Represents investors, including venture capital firms, family offices and angel investors in a number of emerging growth company investment transactions
• Vice chair of the Business Law Section of the Chicago Bar Association, and a member of the American Bar Association and the National Bar Association and currently serves on the firm’s Recruiting Committee and Diversity and Inclusion Council
• One of The Most Influential Minority Lawyers in Chicago by Crain’s Chicago in 2017
• Admitted to practice in the state of Illinois
• Law degree, Northwestern University Pritzker School of Law; undergraduate degree in finance and management, with honors and distinction, Iowa State University of Science and Technology

Joanne Molinaro

Foley & Lardner LLP

• Partner and trial lawyer with Foley & Lardner LLP’s Chicago Office
• Member of the firm’s Bankruptcy & Business Reorganizations and Business Litigation & Dispute Resolution Practices
• Representing the Official Committee of Unsecured Creditors in three complex Chapter 11 cases involving a 363 Asset sale as the primary exit strategy in the past 3 years
• Defending the liquidating trustee against over nearly $1 billion in claims in the second largest Ponzi scheme bankruptcy in United States history
• “Buyer Beware for Distressed Cannabis Assets,” Cannabis Industry Journal, April 17, 2020
• Selected for inclusion in the 2014 Illinois Super Lawyers–Rising Stars® Edition; selected for inclusion in the 2019 Illinois Super Lawyers® Edition

Christopher Rasmussen

Foley & Lardner LLP

• Partner and business lawyer with Foley & Lardner LLP
• Represents clients in transactional matters throughout all stages of the corporate life cycle, with a focus on mergers and acquisitions, joint ventures, securities, finance, corporate governance (including tax-exempt not-for-profit organizations), and general commercial transactions
• Represents clients across a range of industries, including financial services, insurance, sports, media and entertainment, food and beverage, technology, construction, health care, and manufacturing
• Member of the firm’s Manufacturing, Sports, International, and Food & Beverage Industry Teams
• Expertise in M&A, securities, and finance matters
• Experience with additional sports, media, and entertainment industries matters
• Selected for inclusion in the 2015 Illinois Super Lawyers–Rising Stars® list
• 2017 - 2018 chair of the Chicago Bar Association’s Business Law Committee and a member of the ABA Task Force on Legal Project Management in Mergers & Acquisitions
• Member of the Sports Lawyers Association, the Business Law and Sports & Entertainment Law Sections of the ABA, and the Illinois State Bar Association
• Admitted to practice in Illinois
• Before joining the firm, was a judicial intern to the Honorable David F. Hamilton, who at the time was U.S. District Judge for the Southern District of Indiana (Judge Hamilton now serves on the U.S. Court of Appeals for the Seventh Circuit)
• Law degree, magna cum laude and Order of the Coif, Indiana University Maurer School of Law in Bloomington; M.B.A. degree and undergraduate degree, honors college and summa cum laude, University of Southern Mississippi