AMERICAN COLLEGE OF BANKRUPTCY 10TH CIRCUIT EDUCATIONAL PROGRAM– SANTA FE NEW MEXICO August 23, 2019

WON’T YOU BE MY NEIGHBOR: CROSS BORDER CASES Annette W. Jarvis, Dorsey & Whitney LLP, Salt Lake City, Utah and Denver, Colorado, Co-Moderator Charles A. Beckham Jr., Haynes and Boone, LLP, Houston, Texas, Co- Moderator Panelists: Judge David R. Jones, Chief Judge, United States Bankruptcy Court, Southern District of Texas, Houston, Texas Patrick T. McCarthy, Borden Ladner Gervais LLP, Calgary, Canada Dario U. Oscos Coria, Oscos Abogados, Mexico

CANADIAN INSOLVENCY PROCEEDINGS Highlights of Canadian Insolvency Proceedings Companies’ Creditors Arrangement Act (CCAA) Debtor-in-possession proceeding Debtor company retains control of its business with the protection of a stay Court appoints a Monitor (licensed trustee in bankruptcy) who acts as eyes and ears of the Court and serves as liaison between debtor and creditors Goal of debtor company is to present a plan of compromise or arrangement to creditors who vote on the plan. If requisite majority vote in favour, debtor company brings application to Court to sanction the plan. Statute is relatively brief and gives broad discretionary powers to the Court to approve “any order that it considers appropriate in the circumstances”

CANADIAN INSOLVENCY PROCEEDINGS Highlights of Canadian Insolvency Proceedings (part 2) Bankruptcy and Insolvency Act (BIA) Bankruptcy proceeding Appointment of Trustee in Bankruptcy Debtor can voluntarily assign itself into bankruptcy or a creditor (typically unsecured) can apply to Court for a bankruptcy order Trustee takes possession of the business, assets and undertaking of the debtor Goal is to monetize the property for the benefit of the bankrupt estate Appointment of Receiver Process for secured creditors Application brought by secured creditor Court appointed receiver is a licensed trustee in bankruptcy whose mandate is to act in a commercially reasonable manner to realize value for the benefit of the receivership estate

MEXICAN INSOLVENCY PROCEEDINGS Highlights of Mexican Insolvency Proceedings (Part 1) Civil law system. Insolvency is of a federal exclusive jurisdiction. Governs insolvency of commercial companies and individuals engaged in commerce. Mexican Insolvency Law (Ley de Concursos Mercantiles (LCM) enacted 2000, amended as of 2014). Filing is not mandatory. Voluntary and involuntary. LCM provides a single insolvency proceeding, concurso mercantile, with two phases: Conciliation (reorganization – debtor in possession – pre-package). Bankruptcy (liquidation) under the possession and administration of a trustee.

MEXICAN INSOLVENCY PROCEEDINGS Highlights of Mexican Insolvency Proceedings Conciliation Debtor company retains control of its business with the protection of a stay under the overview of a conciliator. Court appoints a conciliator (licensed or private) who acts as eyes and ears of the Court and serves as liaison between debtor and creditors seeking a reorganization plan. Interventor – appointed by 10% of creditors. Protects creditors’ rights. Power to request and examine debtor’s accounting and administration. Serves as a liaison between debtor, conciliator and trustee. Public Policy: Preserve the business, keep business as an ongoing concern by means of a reorganization plan, prevent aggravation of cessation of payments of debtors and creditors. Reorganization plan. Approval of 51% of allowed claims in conciliation phase. Requires approval by the Court. Statute gives broad powers to the Court to approve “any order that it considers appropriate in the circumstances” to meet public policy.

MEXICAN INSOLVENCY PROCEEDINGS Highlights of Mexican Insolvency Proceedings Bankruptcy (Liquidation) Proceeding Debtor can voluntarily assign itself into bankruptcy, when conciliation expires, or conciliator or creditors files for bankruptcy. A trustee is appointed and takes possession of the business, assets and undertaking of the debtor. Goal is to monetize the property for the benefit of the bankrupt estate for distribution to allowed payment claims upon priority. Optimize state asset values.

MEXICAN INSOLVENCY PROCEEDINGS Highlights of Mexican Cross-Border Insolvency Title 12 (Part 2) Incorporates UNCITRAL Model Law on Cross Border Insolvency Limitations of Title 12 Public Policy Exception (prevailing fundamental principles of Mexican Law) Limitations on granting additional assistance consistent with Mexican Law and LCM Limited to merchants (commercial companies and individuals engaged in commerce (traders)) Limited to state assets and rights within territorial jurisdiction of Mexico International cooperation and assistance must be conducted by Mexican Court and the person appointed by the Mx Trustee Office. Provisional relief can be granted to protect assets while a petition for recognition is pending (stay). Additional relief upon recognition. Voidance action may be brought and enforced by Mexican trustee upon foreign representative request.

MEXICAN INSOLVENCY PROCEEDINGS Highlights of Mexican Cross-Border Insolvency Title 12 (Part 2) Incorporates UNCITRAL Model Law on Cross Border Insolvency Limitations of Title 12 Recognition as main proceeding or non-main proceeding. When there is an establishment, a full concurso shall be conducted. When there is no establishment, summary proceeding. Mexican Courts may allow relief and taking of evidence and extend the application of other sections of the LCM to the foreign representative in a foreign main proceeding or in a foreign non-main proceeding upon request. Including avoidance powers through the Mexican trustee. A foreign representative, once recognized, may also commence a concurso proceeding by involuntary filing. Recognition and enforcement of insolvency related judgments is automatic under the umbrella of the recognition in Mexico of the foreign insolvency proceeding. Rules of cooperation are included with respect to foreign courts and foreign representatives with respect to concurrent concurso proceedings.

CHAPTER 15 Limitations of Chapter 15 Public Policy Exception Limitations on granting additional assistance consistent with US Bankruptcy law policy Limited by debtor eligibility Provisional relief can be granted to protect assets while a petition for recognition is pending With recognition of a foreign representative in a foreign main proceeding, there is automatic application of sections 361, 362 and 363, among other sections, but only with respect to property within the territorial jurisdiction of the United States U. S. Courts may allow discovery and extend the application of other sections of the bankruptcy code to the foreign representative in a foreign main proceeding or may provide protections to a foreign representative in a foreign non-main proceeding upon request, except that avoidance powers may not be granted to a foreign representative in a chapter 15 A foreign representative, once recognized, may also commence a Chapter 11 proceeding by a voluntary filing by a foreign representative in a foreign main proceeding or by an involuntary filing by a foreign representative in a foreign non-main proceeding Rules of cooperation are included with respect to foreign courts and with respect to concurrent Chapter 11 and Chapter 15 cases

VENUE FORUM SHOPPING AND SELECTION OF COUNTRY Mexico, Canada and the U.S. COMI Factors Venue factors in the U.S. Location and types of assets or claims Relative experience of bankruptcy bench/practitioners Jurisdictional considerations within Mexico and the U.S. Location of assets and restructuring mechanisms Timing of relief needed Type of relief needed Jurisdictional considerations within Canada and the U.S. Relative experience of bankruptcy/commercial bench in state/province Availability of court resources Location of sales and restructuring mechanisms

CASE STUDY # 1 HSBC Bank Canada v Calmena Energy Services Inc. Canada – head office (2 employees) Mexico – conventional drilling business (rigs owned by Luxembourg entity and leased to Mexico entity) (114 employees); United States – directional drilling business with locations in Oklahoma and Texas (directional assets owned by US and Luxembourg entities) (4 employees) Libya – conventional drilling business (suspended in April 2014) (none as at filing date)   Process / Selection of Jurisdiction Receivership proceeding in Canada (main proceeding) Chapter 15 in the U.S. (Receiver appointed as foreign representative) No formal process in Mexico / Luxembourg / Libya Realization of Assets Receiver conducted sales process for assets in U.S., Mexico and Libya Sales of US assets approved in Canada (passing/vesting order) Canadian sales recognized in US as 363 sales

CASE STUDY # 1 Process / Selection of Jurisdiction Receivership proceeding in Canada (main proceeding) Chapter 15 in the U.S. (Receiver appointed as foreign representative) No formal process in Mexico / Luxembourg / Libya Realization of Assets Receiver conducted sales process for assets in U.S., Mexico and Libya Sales of US assets approved in Canada (passing/vesting order) Canadian sales recognized in US as 363 sales

Calmena Energy Services Inc. (continued from page 1) Calmena Energy Holdings Ltd. (NS) Calmena Energy Services (Barbados) Inc. Calmena Luxembourg Holding S.a.r.l. BW Services Luxembourg Sarl (Luxembourg) Calmena Energy Holdings Ltd Luxembourg Branch Services Limited (Dubai JAFZA) Calmena Libya Petroleum Services Company Services Do Brasil Ltda. Servicos Ltda. (Inactive Brazil) Calmena Energy Services (Barbados) Inc- Surcursal Colombia (Branch) Iraq Representative Office (4) 100% 100% 99% 10% 90%

Calmena Energy Services Inc. (continued on page 2) CALMENA ENERGY SERVICES DE MEXICO S DL RL DE CV (1) 1414995 Alberta Ltd. BWES de Mexico S. De R.L. de C.V. (Mexico) (1) BW HR pro. Calmena Energy Services (USA) Corp (Delware) Calmena Drilling Services LLC (Nevada LLC) Calmena Drilling Services US LP (Texas LP) Pan American Drilling Services S. de R.L. de C.V. Calmena Energy Services Operating Limited Partnership Limited Partner: 100% Class B LP Units 100% Class C preferred units 100% 99.9% 0.01% GP: 1 Class A common GP unit

CASE STUDY #2 In re Xacur, 216 B.R. 187 (Bankr. S.D. Tex. 1997) 7 Mexican Banks commenced involuntary Chapter 7’s in Houston against 4 Mexican citizens (all brothers) for $240 million in loan obligations incurred in Mexico 3 of the 4 brothers had substantial assets or were living in the United States Relief was granted against 3 of the brothers but not the 4th Chapter 7 Trustee was appointed; Chapter 7 Trustee seized assets in the United States valued at over $7 million In 2001, Chapter 7 Trustee sought UNCITRAL Treaty recognition in Mexico which was granted in 2003 Following recognition, Chapter 7 Trustee sought to enforce remedies in Mexico

CASE STUDY #3 In re Vitro, S.A.B. de C.V. 473 B.R. 117 (Bankr. N.D. Tex. 2012); In re Vitro, S.A.B. de C.V., 701 F.3d 1031 (5th Cir. 2012) Vitro is an international glass manufacturing company based in Monterrey, Mexico In 2011, Vitro filed an insolvency proceeding in Monterrey, Mexico to reorganize under the Ley de Concursos Mercantiles in Mexico In 2012, Vitro filed a Concurso Plan which was approved by the Mexican Court In 2012, Vitro filed a Chapter 15 recognition proceeding in Dallas for the Mexican proceeding and sought enforcement of the Concurso Plan in Bankruptcy Court in the United States The Bankruptcy Court in Dallas recognized the Mexican proceeding but refused to enforce the Concurso Plan primarily because third party releases of guarantor liabilities contained in the Concurso Plan were “manifestly contrary to public policy” (Section 1506) In 2012, Fifth Circuit affirmed the Bankruptcy Court decision to not enforce the Concurso Plan in the United States on slightly different grounds (Sections 1507 and 1521) than the Bankruptcy Court

DUAL JUDICAL COORDINATION AND PARAMETERS Judicial Insolvency Network Guidelines Practical approaches for better coordination Solv-Ex case – The 10th Circuit Solution Timing and sequencing of dual hearings Concurrent hearings Dealing with conflicting law provisions Ensuring fairness for claimants Noted difficulties of coordination Lessons learned?