Jwnoble, you seem to be correct. My question is will the bk court be able to account for the funds in LBHI2, how it's funds are being moved and if it has any affiliates of any kind? I do not think LBHI2 is obligated to disclose any transactions to LBHI. That is how LBHI is trying to get away with it. LBHI will play stupid to the activities of LBHI2.
"Distributions shall be made quarterly, and, in the case of LBHI2 only,
deferred consideration payable, (subject to certain adjustments, based on
certain contingencies and outstanding disputes, payment of interest to
LBHI2 in certain circumstances, and the retention of amounts to meet
certain payment obligations, by way of distributions on various classes of
interests in the Cayman LP, and payments in respect of other contractual
obligations between the Parties and their Affiliates), in the order set out
below:
(a) 100% to the Funds until the Funds receive the Tier 1 Pool Threshold
Amount;
(b) 70% to the Funds and 30% to LBHI2 until the Funds and LBHI2 have
received, in aggregate, the Tier 2 Pool Threshold Amount;
(c) 50% to the Funds and 50% to LBHI2 until the Funds and LBHI2 have
received, in aggregate, the Tier 3 Pool Threshold Amount; and
(d) all surplus above the Tier 3 Pool Threshold Amount to be paid 75% to
LBHI2 and 25% to the Funds.
Proceeds from the portion of economic interests represented by the
Preferred Equity sub-participated to the Equity Claims SPV will be
distributed to the Funds.
Proceeds from recoveries in respect of Future Claims will be distributed to
participating Parties by reference to their interests in those Future Claims.
6. Funding Expenses in respect of matters other than Future Claims will be funded by
loans from the partners of the Cayman LP based on the voting interests
held (e.g., initially 1/3, 1/3, 1/3 for each of Elliott, KS and LBHI2). These
loans will be required to fund expenses in an amount equal to GBP 10
million in the first year of operations, GBP 5 million in the second and
third years of operations and GBP 2.5 million in each of the fourth and
fifth years of operations. These loans will be contributed equally by LBHI2
and the Funds. Usage of these amounts will be pre-agreed between the
partners.
The majority of Voting Shareholders may cause the Cayman LP to enter
into loans with interest at 3 month Libor + 3 year HY CDX spread plus 1%
p.a. not to exceed GBP 25 million in the aggregate for the purpose of
funding expenses, provided that loans with parties other than partners or
LBHI will require unanimous consent of the Voting Shareholders.
Additional funding (including the terms of interest thereon) above GBP 25
million in aggregate for the expenses of the Cayman LP, Cayman GP and
their direct or indirect subsidiaries (including the Recovery SPVs) shall be
subject to the unanimous consent of the Voting Shareholders. If any
partner determines that it shall not make a loan, the other Voting
Shareholders can choose to lend in an amount equal to the deficit on a pro
rata basis, provided that in the event that LBHI2 declines to lend, LBHI
may assume LBHI2’s rights and responsibilities with respect to such
additional funding, and shall be entitled to lend as if it were a Voting
Shareholder for that purpose on the same terms as would otherwise have
applied to LBHI2. For the avoidance of doubt, no shareholder or LBHI
shall be required to provide any loan to the Cayman LP (other than the
loans described in the first paragraph of this Section 6).
Loan Amounts shall first be repaid out of proceeds from the Recovery
Pool, and may only be repaid out of other Loan Amounts if all Voting
Shareholders agree that there is sufficient funding remaining in the
Cayman LP, the Cayman GP and their direct or indirect subsidiaries
(including the Recovery SPVs).
All proceeds received in the Recovery Pool on and after such time as any
partnership loan is made shall first be used to discharge the Loan Amounts
before distributions are made to the partners pursuant to Sections 5(a), (b),
(c), and (d). For the avoidance of doubt, payments in respect of the Loan
Amounts shall not count towards the amount of distributions payable to
partners pursuant to Section 5(a) – (d) (or the determination of the Tier 1
Pool Threshold Amount, the Tier 2 Pool Threshold Amount or Tier 3 Pool
Threshold Amount or payment of amounts in respect thereof or otherwise).
A form of the loan agreement shall be attached as an exhibit to the
Partnership Agreement.
All loans to the Cayman LP, Cayman GP and their direct or indirect
subsidiaries (including the Recovery SPVs) shall be limited recourse loans.
All loans down the corporate chain shall also be limited recourse. This is
to ensure that the Cayman LP, Cayman GP and their direct or indirect
subsidiaries (including the Recovery SPVs) are insolvency remote.
Each Party shall have full visibility into reserve accounts, which accounts
shall be established with a third party custodian. Until Cause has occurred,
the administrator of the Cayman LP, Cayman GP, and/or a direct or
indirect subsidiary of the Cayman LP and Cayman GP (including the
applicable Recovery SPV) shall be entitled to withdraw from such account
to fund pre-agreed expenses incurred by the relevant Recovery SPV. Upon
Cause, no withdrawals may occur from any account without the unanimous
written consent of the Voting Shareholders."
