George A. Zimmerman SKADDEN, ARPS, SLATE, MEAGHER & … · Hearing Date: July 13, 2010 at 9:45 a.m....

Hearing Date: July 13, 2010 at 9:45 a.m. (ET)Objection Deadline: July 6, 2010 at 4:00 p.m. (ET)

Jay M. GoffmanGeorge A. ZimmermanSKADDEN, ARPS, SLATE, MEAGHER & FLOM LLPFour Times SquareNew York, New York 10036Telephone: (212) 735-3000

Proposed Counsel for the Official Committee of Equity Security Holders

UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

In re:

CHEMTURA CORPORATION, et al.,

Debtors.

:::::::

Chapter 11

Case No. 09-11233 (REG)

Jointly Administered

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

NOTICE OF APPLICATION FOR ENTRY OF AN ORDER UNDER11 U.S.C. §§ 328(a) AND 1103(a), FED. R. BANKR. P. 2014 AND LBR 2014-1

AUTHORIZING THE EMPLOYMENT AND RETENTION OF UBS SECURITIESLLC AS FINANCIAL ADVISOR TO THE OFFICIAL COMMITTEE OF

EQUITY SECURITY HOLDERS NUNC PRO TUNC TO JANUARY 7, 2010

PLEASE TAKE NOTICE that a hearing on the Application for Entry of an Order Under

11 U.S.C. §§ 328(a) and 1103(a), Fed. R. Bankr. P. 2014 and LBR 2014-1 Authorizing the

Employment and Retention of UBS Securities LLC as Financial Advisor to the Official Committee

of Equity Security Holders Nunc Pro Tunc to January 7, 2010 (the "Application") will be held

before the Honorable Robert E. Gerber of the United States Bankruptcy Court for the Southern

District of New York (the "Bankruptcy Court"), Alexander Hamilton Custom House, Room

621, One Bowling Green, New York, New York, on July 13, 2010 at 9:45 a.m. (ET).

PLEASE TAKE FURTHER NOTICE that any responses or objections to the

¨0¤{,A*&0 &w«

0911233100616000000000006

Docket #2901 Date Filed: 6/16/2010

2

Application must be in writing, shall conform to the Federal Rules of Bankruptcy Procedure and

the Local Rules of the Bankruptcy Court, and shall be filed with the Bankruptcy Court

electronically by registered users of the Bankruptcy Court's case filing system (the User's

Manual for the Electronic Case Filing System can be found at www.nysb.uscourts.gov, the

official website for the Bankruptcy Court) and, by all other parties in interest, on a 3.5 inch disk, in

text-searchable Portable Document Format (PDF), Wordperfect or any other Windows-based

word processing format (in either case, with a hard-copy delivered directly to Chambers), and

shall be served upon: (a) the undersigned proposed counsel to the Equity Committee, Attn: Jay

M. Goffman, George A. Zimmerman and David M. Turetsky; (b) counsel to the Debtors,

Kirkland & Ellis LLP, 601 Lexington Avenue, New York, New York 10022-4611, Attn: M.

Natasha Labovitz; (c) the Office of the United States Trustee for the Southern District of New

York, 33 Whitehall Street, 21st Floor, New York, New York, 10004, Attn: Susan Golden, Esq.

and Brian S. Masumoto, Esq.; (d) counsel to the statutory committee of unsecured creditors

appointed in these chapter 11 cases, Akin Gump Strauss Hauer & Feld LLP, One Bryant Park,

New York, New York, 10036, Attn: Philip C. Dublin, Esq.; (e) counsel to the agent for the

Debtors' postpetition and prepetition secured lenders, Shearman & Sterling LLP, 599 Lexington

Avenue, New York, New York, 10022, Attn: Fred Sosnick, Esq.; (f) the Internal Revenue

Service and the Environmental Protection Agency, Assistant United States Attorney, Southern

District of New York, 86 Chambers St. 3rd Floor, New York, New York 10007, Attn: Matthew

L. Schwartz, Esq.; (g) the Trustee for the 2016 Corporate Notes, U.S. Bank National Association,

Corporate Trust Services, 60 Livingston Avenue, St. Paul, Minnesota 55107, Attn: Cindy

Woodward; (h) the Trustee for the 2009 Corporate Notes, The Bank of New York Mellon Trust

Company, 6525 West Campus Oval Road, Suite 200, New Albany, Ohio 43054, Attn: Donna

3

Parisi; (i) the Trustee for the Corporate 2026 Debentures, Manufacturers & Traders Trust Co.,

25 South Charles Street, 16th Floor, Baltimore, Maryland 21201, Attn: Robert D. Brown; and

(j) all those persons and entities that have formally requested notice by filing a written request

for notice, pursuant to Bankruptcy Rule 2002 and the Local Bankruptcy Rules, so as to be

actually received no later than July 6, 2010 at 4:00 p.m. (ET). Only those responses that are

timely filed, served and received will be considered at the Hearing. Failure to file a timely

objection may result in entry of a final order granting the Application as requested by the Equity

Committee.

Dated: New York, New YorkJune 16, 2010

/s/ Jay M. GoffmanJay M. Goffman

Jay M. GoffmanGeorge A. ZimmermanSKADDEN, ARPS, SLATE, MEAGHER &FLOM LLPFour Times SquareNew York, New York 10036-6522Telephone: 212-735-3000Fax: 212-735-2000Email: [email protected],[email protected]

Proposed Counsel for the Official Committeeof Equity Security Holders





- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

In re:


Debtors.

:::::::

Chapter 11

Case No. 09-11233 (REG)


- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

APPLICATION FOR ENTRY OF AN ORDER UNDER11 U.S.C. §§ 328(a) AND 1103(a), FED. R. BANKR. P. 2014

AND LBR 2014-1 AUTHORIZING THE EMPLOYMENT ANDRETENTION OF UBS SECURITIES LLC AS FINANCIALADVISOR TO THE OFFICIAL COMMITTEE OF EQUITY

SECURITY HOLDERS NUNC PRO TUNC TO JANUARY 7, 2010

TABLE OF CONTENTS

Page

Jurisdiction..................................................................................................................................1

Background.................................................................................................................................1

Relief Requested .........................................................................................................................2

Services to be Rendered ..............................................................................................................3

Basis for Relief ...........................................................................................................................4

Connections of UBS....................................................................................................................5

Terms of Retention......................................................................................................................9

Waiver of Requirements Regarding Time Detail .......................................................................11

Retention Pursuant to Bankruptcy Code Section 328(a).............................................................12

Indemnification.........................................................................................................................13

Motion Practice.........................................................................................................................14

Notice .......................................................................................................................................14

ii

TABLE OF AUTHORITIES

CASES Page(s)

In re Caldor, Inc.,193 B.R. 165 (Bankr. S.D.N.Y. 1996)..............................................................................8

In re Carlton House of Brockton, Inc.,Case No. 93-21122-CJK, 1996 Bankr. LEXIS 170 (Bankr. D. Mass.Feb. 20, 1996) .................................................................................................................8

In re eToys,331 B.R. 176 (Bankr. D. Del. 2005).................................................................................8

In re Enron Corp.,No. 01-16034, 2002 WL 32034346 (Bankr. S.D.N.Y. May 23, 2002), aff'd, ExcoResources, Inc. v. Milbank, Tweed, Hadley & McCloy LLP (In re Enron Corp.),No. 02 Civ. 5638, 2003 WL 223455 (S.D.N.Y. Feb. 3, 2003) ..........................................8

In re Jensen-Farley Pictures, Inc.,47 B.R. 557 (Bankr. D. Utah 1985)..................................................................................8

In re Pierce County Housing Authority,414 B.R. 702 (Bankr. W.D. Wash. 2009).........................................................................8

United Steelworkers of America v. Silvestri (In re Mesta Machine Co.),67 B.R. 151 (Bankr. W.D. Pa. 1986)................................................................................8

STATUTES

11 U.S.C. § 101(14) ................................................................................................................5, 8

11 U.S.C. § 327(a) ......................................................................................................................8

11 U.S.C. § 328(a) .................................................................................................... 1, 11, 12, 13

11. U.S.C. § 328(c) .....................................................................................................................8

11 U.S.C. § 330...................................................................................................................11, 13

11 U.S.C. § 331.........................................................................................................................11

11 U.S.C. § 504(b)(1)................................................................................................................12

iii

11 U.S.C. § 1103(a) ....................................................................................................................1

28 U.S.C. § 157...........................................................................................................................1

28 U.S.C. § 1334.........................................................................................................................1

28 U.S.C. § 1408.........................................................................................................................1

28 U.S.C. § 1409.........................................................................................................................1

RULES

Fed. R. Bankr. P. 2014 ................................................................................................................1

Fed. R. Bankr. P. 2016(a)..........................................................................................................12

LBR 2014-1 ................................................................................................................................1

LBR 2016-1 ..............................................................................................................................12

LBR 9013-1(a)..........................................................................................................................14

MISCELLANEOUS

7 Collier on Bankruptcy ¶ 1103.04 (Alan N. Resnick & Henry J. Sommer eds., 16th ed.rev.).................................................................................................................................8

The Official Committee of Equity Security Holders (the "Equity Committee")

appointed in the above-captioned jointly administered chapter 11 cases (the "Chapter 11 Cases")

submits this Application (the "Application") for entry of an order under sections 328(a) and

1103(a) of title 11 of the United States Code (the "Bankruptcy Code"), Rule 2014 of the

Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), and Rule 2014-1 of the

Local Bankruptcy Rules for the Southern District of New York (the "Local Rules"), authorizing

the employment and retention of UBS Securities LLC ("UBS") as financial advisor to the Equity

Committee nunc pro tunc to January 7, 2010. In support of the Application, the Equity

Committee relies upon and incorporates by reference the Affidavit of Douglas P. Lane in

Support of Application for Entry of an Order Under 11 U.S.C. §§ 328(a) and 1103(a), Fed. R.

Bankr. P. 2014 and LBR 2014-1 Authorizing Employment and Retention of UBS Securities LLC

as Financial Advisor to the Official Committee of Equity Security Holders Nunc Pro Tunc to

January 7, 2010 (the "Lane Affidavit"), attached hereto as Exhibit A. In further support of the

Application, the Equity Committee respectfully represents as follows:

Jurisdiction

1. This Court has jurisdiction to consider this Application under 28 U.S.C.

§§ 157 and 1334. This is a core proceeding under 28 U.S.C. § 157(b). Venue of this Application

in this District is proper under 28 U.S.C. §§ 1408 and 1409. The statutory predicates for the

relief requested herein are Bankruptcy Code sections 328(a) and 1103(a).

Background

2. On March 18, 2009 (the "Petition Date"), each of the Debtors filed a

voluntary petition for relief under chapter 11 of the Bankruptcy Code. The Debtors continue to

operate their respective businesses and manage their properties as debtors in possession pursuant

to Bankruptcy Code sections 1107(a) and 1108.

2

3. The Chapter 11 Cases involve twenty-seven Debtors, with assets and

operations in twelve states. Together with their non-Debtor affiliates, the Debtors form one of

the largest specialty chemical companies based in the United States.

4. On December 29, 2009, the Office of the United States Trustee for the

Southern District of New York (the "U.S. Trustee") filed the Appointment of Committee of

Equity Security Holders, appointing a seven-member committee. On January 7, 2010, the U.S.

Trustee filed the First Amended Appointment of Committee of Equity Security Holders and on

January 12, 2010, the U.S. Trustee filed the Second Amended Appointment of Committee of

Equity Security Holders. The current members of the Equity Committee are: Strategic Value

Master Fund, Ltd. c/o Strategic Value Partners, Kwok S. Wong, Canyon Capital Advisors LLC,

Chemtura Corporation Employee Savings Plan Fiduciary Counselors Inc., Michael Flynn, Pete

Esmet, and Jon Eric Jacks.

5. On January 7, 2010, the Equity Committee selected UBS to serve as its

financial advisor in the Chapter 11 Cases.

6. Since January, UBS has explored restructuring alternatives and advised

the Equity Committee with respect to a variety of matters, including issues related to asset sales,

the idling of certain assets, the refinancing of the Debtors' DIP facility and other financing issues.

In addition, UBS has advised the Equity Committee regarding the Debtors' business plans and

forecasts, restructuring alternatives for the Debtors, industry-related analyses and various

strategies to address material issues raised by the Debtors. UBS has also advised and represented

the Equity Committee at various meetings with the Debtors' management.

Relief Requested

7. By this Application, the Equity Committee requests entry of an order

authorizing it to employ and retain UBS as its financial advisor in the Chapter 11 Cases nunc pro

3

tunc to January 7, 2010, which is the date that UBS was selected to represent the Equity

Committee and commenced work on behalf of the Equity Committee. The Equity Committee

requests that UBS be retained to perform the services described in the Application on the terms

set forth herein and in the Engagement Agreement (as defined below).

8. The Equity Committee additionally requests that UBS be authorized to

participate in the compensation procedures set forth in the Order Establishing Procedures for

Interim Compensation and Reimbursement of Expenses for Professionals dated April 1, 2009

(Dkt. No. 112).

Services to be Rendered

9. The Equity Committee respectfully submits that the retention of UBS as

its financial advisor is necessary and appropriate to enable the Equity Committee to represent the

interests of equity security holders in the Chapter 11 Cases. It is expected that UBS will provide,

(and has provided) without limitation, the following services:

(a) Analyze, evaluate, and assess the business plans, historical performance, andforecasts of the Debtors;

(b) Analyze, evaluate, assess, and assist in the determination of an appropriate capitalstructure for the Debtors;

(c) Analyze, evaluate, and assess strategic alternatives for the Debtors;

(d) Analyze, evaluate, and assess the Debtors' debt capacity in light of their projectedcash flows;

(e) Advise and assist the Equity Committee in analyzing, structuring and negotiatingthe financial aspects of any Transaction (as defined in the EngagementAgreement), including without limitation: (i) advising and assisting the EquityCommittee in reviewing, analyzing, structuring and negotiating the financialaspects of potential Transactions, including but not limited to, debt to equityconversions, debt maturity extensions, modifications to interest rates and financialcovenants of debt obligations and (ii) advising and assisting the EquityCommittee in reviewing, analyzing, structuring and negotiating any plan ofreorganization and the confirmation process (including preparing an analysis ofthe estimated range of going-concern enterprise value of the reorganized Debtors)

4

and in formulating a plan of reorganization (if exclusivity terminates underBankruptcy Code section 1121);

(f) Represent the Equity Committee in negotiations with the Debtors and third partieswith respect to any of the foregoing;

(g) Provide testimony in depositions or court on behalf of the Equity Committee withrespect to any of the foregoing, if necessary; and

(h) Render other financial advisory services, financing services, or other investmentbanking services as may from time to time be agreed upon by the applicableparties; it being understood and agreed that UBS shall not be obligated to provideany such additional services except as may be agreed to by UBS in its solediscretion, including with respect to such additional fee arrangements as may beagreed upon by the applicable parties and approved by the Bankruptcy Court.

Basis for Relief

10. It is necessary and essential that the Equity Committee employ a financial

advisor to render the foregoing professional services. The Equity Committee selected UBS to

serve as its financial advisor because it believes that UBS is well positioned to provide the

financial advisory services that the Equity Committee will require, and has required, during these

Chapter 11 Cases.

11. UBS is an internationally recognized investment banking and financial

advisory firm. UBS's Leveraged Finance and Restructuring Group is one of the leading advisors

to parties in interest with respect to financially troubled companies both inside and outside of

bankruptcy. UBS has been, and is, involved in many large restructuring cases in the United

States, including serving as financial advisor to the debtors in In re Protostar Ltd, In re Young

Broadcasting, In re Quebecor World (USA), Inc., In re Leap Wireless, Inc., In re Satelites

Mexicanos S.A. de C.V., and In re Redback Networks, and advising informal committees of

creditors in In re ION Media Networks, Inc., In re Charter Communications, Inc., and In re

DBSD North America, Inc. UBS is also the nonexclusive capital markets and M&A advisor to

the debtors in In re General Growth Properties, Inc.

5

12. UBS is expected to render (and has rendered) such financial advisory

services as the Equity Committee may consider (and has considered) necessary to discharge the

Equity Committee's responsibilities and further the interests of the Equity Committee's

constituents in these cases. Based upon the foregoing, the Equity Committee submits that the

retention of UBS is necessary, appropriate and in the best interests of the Equity Committee's

constituents.

Connections of UBS

13. To the best of the Equity Committee's knowledge, information and belief,

and except as set forth in the Lane Affidavit and below, the members and employees of UBS (a)

do not have any connection with any of the Debtors, their affiliates, their creditors, equity

security holders, or any other party in interest, or their respective attorneys and accountants, the

United States Trustee for the Southern District of New York or any person employed in the

office of the same, or any judge in the Bankruptcy Court for the Southern District of New York

or any person employed in the offices of the same, (b) do not represent any entity having an

adverse interest to the Equity Committee in connection with the Chapter 11 Cases, (c) do not

hold or represent any interest in the Chapter 11 Cases that is adverse to the Debtors' estates or the

Equity Committee on the matters for which UBS is proposed to be retained, and (d) are

"disinterested persons" as that term is defined in Bankruptcy Code section 101(14).

14. As set forth in the Lane Affidavit, prior to the Equity Committee's

selection of UBS to serve as its financial advisor, UBS served as financial advisor to the

following entities as an ad hoc committee of independent shareholders, on matters relating to

their (or affiliated entities') ownership of stock in Chemtura Corporation ("Chemtura") and

analyzing potential restructurings of Chemtura and the Chapter 11 Cases (including requesting

that the U.S. Trustee appoint an official committee of equity security holders): (a) Canyon

6

Capital Advisors LLC (now a member of the Equity Committee); (b) Drawbridge DSO

Securities LLC; (c) Drawbridge OSO Securities LLC; (d) JMB Capital Masters Fund LP; (e)

Latigo Partners, L.P.; (f) Longacre Fund Management, LLC; (g) Strategic Value Special

Situations Master Fund, L.P. (an affiliate of Strategic Value Master Fund, Ltd., a current Equity

Committee member); and (h) Strategic Value Master Fund, Ltd. (now a member and chairperson

of the Equity Committee) (the "Other Entity Representation"). Since being selected as the

Equity Committee's proposed financial advisor, UBS has ceased the Other Entity Representation

and will not represent any entity other than the Equity Committee in connection with such

matters for so long as UBS represents the Equity Committee.

15. In addition, as set forth in the Lane Affidavit, as a result of prior customer

facilitation orders, UBS holds debt and equity securities of Great Lakes Chemical Corporation.

"Customer facilitation orders" means trades whereby shares are continually purchased and sold

solely to facilitate the execution of purchase and sale orders from customers where the lot of

shares available for purchase or sale differs in size from the number of shares set forth in the

customer order. For example, to satisfy a customer purchase order for 120 shares where only a

lot of 150 shares is available for purchase, the 150-share lot would be purchased. The

differential of 30 shares is commonly referred to as customer facilitation shares. The 30

customer facilitation shares would then be available to facilitate subsequent customer orders.

For example, to satisfy a customer sale order for 100 shares where only a bid to purchase a lot of

130 shares is available, the 100 shares of the customer and the 30 customer facilitation shares

would be aggregated to facilitate the customer sale order relating to 100 shares. In general, UBS

holds securities purchased on account of customer facilitation orders for customer facilitation

purposes only. The number of customer facilitation shares held at any particular time

continually changes depending on the number and nature of customer buy and sell orders.

7

16. In addition to the foregoing, and as set forth in the Lane Affidavit, as of

June 3, 2010, UBS holds in the aggregate 2,318 shares of common stock of Crompton

Corporation, which became common stock of Chemtura following the 2005 merger between

Crompton Corporation and Great Lakes Chemical Corporation, forming Chemtura (the "UBS

Holdings"). The UBS Holdings represent less than 0.01% of the total outstanding shares of

Chemtura. UBS has indicated that it will waive its interest in the UBS Holdings, subject to the

Court's approval of the Application on terms acceptable to UBS.

17. UBS is a global investment banking firm with broad activities covering

trading in equities, convertible securities and corporate bonds in addition to its investment

banking and financial advisory practice. With customer accounts and investment banking and

financial advisory clients around the world, it is possible that certain of its clients or counter-

parties to transactions may hold claims or otherwise be parties in interest in the Chapter 11 Cases.

Furthermore, as a major market maker in equity securities as well as a major trader of corporate

and securitized bonds and convertible securities, UBS regularly enters into securities transactions

with other registered broker-dealers as part of its daily activities. Some of these counterparties

may be creditors of the Debtors. To the best of the Equity Committee's knowledge, information

and belief, none of these business relationships constitute interests materially adverse to the

estates in matters upon which UBS is to be employed by the Equity Committee in the Chapter 11

Cases, and none are in connection with the Chapter 11 Cases. The business units engaging in the

trading activities referred to above are separate from the business unit that will be providing

services to the Equity Committee in the Chapter 11 Cases.

18. The Equity Committee is satisfied that UBS does not represent any entity

having an adverse interest to the Equity Committee in connection with the Chapter 11 Cases,

does not hold or represent any interest in the Chapter 11 Cases that is adverse to the Debtors'

8

estates or the Equity Committee on the matters for which UBS is proposed to be retained, and

that, based upon UBS's willingness to waive its interest in the UBS Holdings, subject to the

Court's approval of the Application on terms satisfactory to UBS, UBS is "disinterested" as that

term is defined in Bankruptcy Code section 101(14).1 Moreover, as set forth in the Lane

Affidavit, as a result of prior customer facilitation orders, UBS holds debt and equity securities

of Great Lakes Chemical Corporation. Because such holdings are for customer facilitation

purposes only, the Equity Committee is satisfied that UBS is "disinterested."

1 While UBS's status as a "disinterested" person within the meaning of Bankruptcy Code section 101(14) issubject to its waiving its interest in the UBS Holdings, the Equity Committee notes that there is no requirementin Bankruptcy Code section 1103 that professional persons sought to be employed by a statutory committee bedisinterested. See In re Pierce County Hous. Auth., 414 B.R. 702, 720-21 (Bankr. W.D. Wash. 2009) (findingplan of reorganization unconfirmable because, among other reasons, it included a provision requiring thatcounsel for the post-confirmation committee of unsecured creditors be a disinterested person as defined inBankruptcy Code section 327(a), which the court held was not required by the Bankruptcy Code); In re eToys,331 B.R. 176, 197 (Bankr. D. Del. 2005) (observing that Bankruptcy Code section 1103(b) "is different fromsection 327(a) because (unlike counsel for the debtor) it does not require that counsel to a committee bedisinterested."); In re Carlton House of Brockton, Inc., Case No. 93-21122-CJK, 1996 Bankr. LEXIS 170, at*11 (Bankr. D. Mass. Feb. 20, 1996) (noting that "[c]ommittee counsel need not be a disinterested person asdefined in 11 U.S.C. § 101(14)"); 7 Collier on Bankruptcy ¶ 1103.04 (Alan N. Resnick & Henry J. Sommer eds.,16th ed. rev.) ("Because section 1103(b) does not require a professional representing a committee to be adisinterested person or not to hold an interest adverse to the estate a professional that holds an adverse interestor not qualifying as a disinterested person is not per se precluded from representing a committee."); see also Inre Enron Corp., No. 01-16034, 2002 WL 32034346, at *7 (Bankr. S.D.N.Y. May 23, 2002) (noting that on itsface Bankruptcy Code section 1103(b) does not disqualify an attorney or accountant that is not disinterested),aff'd, Exco Res., Inc. v. Milbank, Tweed, Hadley & McCloy LLP (In re Enron Corp.), No. 02 Civ. 5638, 2003WL 223455, at *7 (S.D.N.Y. Feb. 3, 2003); but see In re Caldor, Inc., 193 B.R. 165, 170-71 (Bankr. S.D.N.Y.1996) (concluding that Bankruptcy Code section 327(a) is relevant to retention of professionals underBankruptcy Code section 1103(b) and it is appropriate to consider whether such professionals meet thestandards set forth in Bankruptcy Code section 327(a)). In addition, although courts have the discretion underBankruptcy Code section 328(c) to deny compensation based on a lack of disinterestedness, if appropriatedisclosure is made, courts may approve a professional's compensation terms and conditions upon retention evenif the professional is not disinterested. See United Steelworkers of Am. v. Silvestri (In re Mesta Mach. Co.), 67B.R. 151, 157-58 (Bankr. W.D. Pa. 1986) ("[I]f counsel is not a 'disinterested person', compensation for servicesrendered and reimbursement of expenses incurred may be denied by the court under Section 328(c) of the Codeunless adequate disclosure is made and prior approval of the court is obtained.") (emphasis added); In re Jensen-Farley Pictures, Inc., 47 B.R. 557, 579-80 (Bankr. D. Utah 1985) (finding that if a professional is not a"disinterested person" then "compensation for services rendered and reimbursement for expenses incurred maybe denied by the Court unless adequate disclosure is made and prior approval of the Court is obtained")(emphasis added). Accordingly, even if UBS were somehow deemed to be not "disinterested", UBS would notbe disqualified from serving as the Equity Committee's financial advisor in the Chapter 11 Cases or from beingcompensated in the Chapter 11 Cases.

9

19. UBS has informed the Equity Committee that throughout these cases,

UBS will continue to conduct periodic conflicts analyses to determine whether it is performing

or has performed services for any significant parties in interest in these cases and that it will

promptly update the Lane Affidavit to disclose any material developments regarding these cases

or any other pertinent relationships that come to UBS's attention.

Terms of Retention

20. The Equity Committee's retention of UBS for the Chapter 11 Cases is

governed by an engagement letter agreement dated May 11, 2010 (the "Engagement

Agreement").2 A copy of the Engagement Agreement is attached as Exhibit 1 to the Lane

Affidavit.

21. Subject to the Court's approval, UBS will be entitled to be compensated in

accordance with the structure set forth below for its services pursuant to, and as further explained

by, the Engagement Agreement.

22. For UBS's services rendered hereunder to and on behalf of the Equity

Committee, the Debtors shall pay to UBS the following fees in cash:

(a) The aggregate of:

(i) a nonrefundable monthly cash advisory fee (each, a "Monthly AdvisoryFee") of $150,000 per month, in advance on the first business day of eachmonth, beginning on January 7, 2010, provided, however, that (x)following the payment of the first six Monthly Advisory Fees, alladditional Monthly Advisory Fee payments shall be credited against the"Transaction Fee" (as defined below); and (y) the Monthly Advisory Feeshall be prorated for the month of January 2010; provided, further, thatUBS shall not be required to rebate any portion of the creditable MonthlyAdvisory Fees paid in excess of the Transaction Fee; and

2 While the Engagement Agreement is dated as of May 11, 2010, it is effective as of January 7, 2010.

10

(ii) a transaction fee (the "Transaction Fee"), payable on the date aTransaction is consummated that results in any Common Equity SecurityRecovery, determined according to the following schedule:

(x) If the Common Equity Security Recovery is greater than$225,000,000 but less than $450,000,000, UBS shall be entitled toa Transaction Fee equal to 1.25% of the amount by which theCommon Equity Security Recovery exceeds $225,000,000(determined as set forth below), payable on the date a Transactionis consummated.

(y) If the Common Equity Security Recovery is greater than$450,000,000, UBS shall be entitled to a Transaction Fee equal to(A) 1.25% of the amount by which the Common Equity SecurityRecovery exceeds $225,000,000 up to a maximum CommonEquity Security Recovery of $450,000,000 (determined as set forthbelow), plus (B) 2.00% of the amount by which the CommonEquity Security Recovery exceeds $450,000,000 (determined asset forth below), payable on the date a Transaction is consummated.

(b) The Transaction Fee shall be calculated as follows:

(i) "Common Equity Securities" means the issued and outstanding commonstock, par value $0.01 per share, of Chemtura as of the date Chemturafiled the Chapter 11 Cases with the Bankruptcy Court (the "CommonStock"), including without limitation, any exchange, conversion,repurchase, repayment or distribution (including any repayment inliquidation using proceeds from the sale of the Debtors' assets) of or onaccount of any such common stock.

(ii) "Common Equity Security Recovery" means all consideration received,distributed or otherwise provided in the aggregate on account of any andall Common Equity Securities, including, without limitation, cash(whether immediately payable or payable in installments), securities (debtor equity), property or other interests in property, instruments, contractrights, contingent payments or obligations, or any other form ofconsideration, and including, without limitation, the Common EquitySecurities if unimpaired or otherwise retained or distributed. The value ofany equity security (including any Common Equity Securities) shall beequal to the price implied by the plan value determined by the Court or, ifno such determination is made, then the value shall equal the valueproffered by the chapter 11 plan proponent, except that the value of anyequity security listed, quoted, or traded on any securities exchange shall beequal to the greater of the price implied by such plan value and the meanof the prices at the close of business on each of the five business daysfollowing the consummation of a Transaction.

11

23. The terms of the Engagement Agreement were negotiated in good faith

and at arm's-length between the Equity Committee and UBS and reflect the Equity Committee's

evaluation of the extensive work that has been and will be performed by UBS and its expertise.

The Equity Committee acknowledges and agrees that the Monthly Advisory Fee and the

Transaction Fee were agreed upon by the parties in anticipation of a substantial professional

commitment of time and effort by UBS and its professional staff under the Engagement

Agreement, and in light of the fact that such commitment may foreclose other opportunities for

UBS and it professional staff and that the actual time and commitment required of UBS and its

professional staff to perform the services under the Engagement Agreement may vary

substantially from week to week or month to month, creating "peak load" issues for the firm.

Accordingly, the Equity Committee acknowledges and agrees that the Monthly Advisory Fee

and the Transaction Fee are both fair and reasonable under the standards set forth in Bankruptcy

Code section 328(a).

24. The Equity Committee also requests, and UBS has agreed, that in the

event that UBS seeks reimbursement for attorneys' fees pursuant to the terms of the Engagement

Agreement, the invoices and supporting time records from those attorneys will be included in

UBS's own application and the invoices and time records will be subject to the U.S. Trustee's

guidelines for compensation and reimbursement of expenses and the approval of the Court under

the standards of Bankruptcy Code sections 330 and 331.

Waiver of Requirements Regarding Time Detail

25. Customarily, financial advisors such as UBS do not charge for their

services on an hourly basis. Instead, their fees, as here, consist of monthly "flat" fees and

deferred compensation contingent upon the occurrence of specified events such as the

confirmation of a chapter 11 plan. As is the case with other financial advisors, UBS does not

12

customarily maintain time records like those maintained by attorneys and other professionals

compensated on an hourly basis. Moreover, the Equity Committee has also been advised that

requiring UBS to create the time entries for its restructuring personnel and its non-restructuring

personnel to record their time as prescribed by the Bankruptcy Rules, Local Rules and United

States Trustee Fee Guidelines would be, in each case, unduly burdensome and time consuming.

Accordingly, the Equity Committee requests that UBS be excused from the requirement to

maintain or provide detailed time records in accordance with Bankruptcy Rule 2016(a), Local

Rule 2016-1 and the United States Trustee Fee Guidelines or otherwise conform to a schedule of

hourly rates for its professionals.

26. Notwithstanding the foregoing, UBS will nonetheless maintain records (in

summary format) of its services rendered for the Equity Committee by financial restructuring

personnel employed by UBS, including reasonable descriptions of those services and the

approximate time expended in half-hour increments in providing those services, and will present

such records to the Court. UBS will provide a general narrative describing its general tasks and

activities performed on behalf of the Equity Committee, the identity of the professionals

performing such tasks and activities and the aggregate hours expended by each professional.

27. Except for such sharing arrangements among UBS, its affiliated entities,

and their respective members, UBS has no agreement with any other entity to share any

compensation received, nor will any be made, except as permitted under Bankruptcy Code

section 504(b)(1).

Retention Pursuant to Bankruptcy Code Section 328(a)

28. The Equity Committee is seeking to retain UBS under Bankruptcy Code

section 328(a). Bankruptcy Code section 328(a) provides, in relevant part, that an official

committee "with the court's approval, may employ or authorize the employment of a professional

13

person under section 327 or 1103 of this title, as the case may be, on any reasonable terms and

conditions of employment, including on a retainer, on an hourly basis, on a fixed or percentage

fee basis, or on a contingent fee basis." 11 U.S.C. § 328(a). Bankruptcy Code section 328(a)

permits the retention and compensation of professionals, including financial advisors, on more

flexible terms that reflect the nature of their services and market conditions, including fee

structures other than the customary hourly rate.

29. The Equity Committee believes that the compensation structure and other

terms and conditions of the retention are reasonable and should be approved under Bankruptcy

Code section 328(a) with respect to UBS's fees, and requests that all fees and related costs and

expenses incurred by the Equity Committee on account of services rendered by UBS in the

Chapter 11 Cases be paid as administrative expenses of the estates.

30. The Equity Committee further requests that, because UBS will be retained

under Bankruptcy Code section 328(a), UBS's compensation should not be subject to any

additional standard of review under Bankruptcy Code section 330 and should not constitute a

"bonus" under applicable law.

31. UBS intends to apply to this Court for allowance of compensation for

professional services rendered and reimbursement of expenses incurred in the Chapter 11 Cases

in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the

Local Rules, the United States Trustee Fee Guidelines, and any orders entered in the Chapter 11

Cases governing professional compensation and reimbursement for services rendered and

charges and disbursements incurred.

Indemnification

32. In addition to the foregoing, and as a material part of the consideration for

UBS's agreement to furnish services to the Equity Committee pursuant to the terms of the

14

Engagement Agreement, UBS has requested that certain indemnification provisions set forth in

the indemnification agreement (the "Indemnification Agreement") attached to the Engagement

Agreement be approved. The Equity Committee submits that the proposed indemnification

provisions are standard in UBS's industry and such provisions are fair and reasonable

considering UBS's qualifications and the expected scope of services UBS will provide during

this engagement. Moreover, the terms of the Indemnification Agreement are similar to the

indemnification provisions already approved during these Chapter 11 Cases3 and routinely

approved by courts in this district.

Motion Practice

33. This Application includes citations to the applicable rules and statutory

authorities upon which the relief requested herein is predicated, and a discussion of their

application to this Application. Accordingly, the Equity Committee submits that this Application

satisfies Local Rule 9013-1(a).

Notice

34. Notice of this Application has been provided to (a) the U.S Trustee; (b) the

Debtors and counsel to the Debtors; (c) counsel to the Official Committee of Unsecured

Creditors appointed in the Chapter 11 Cases; (d) counsel to the agent for the Debtors' prepetition

and postpetition secured lenders; (e) the indenture trustee for each of the Debtors' outstanding

bond issuances; (f) the SEC; (g) the Internal Revenue Service; (h) the United States

Environmental Protection Agency; and (i) all those persons and entities that have formally

3 See Order Authorizing the Official Committee of Unsecured Creditors of Chemtura Corporation, et al. to RetainAnd Employ Houlihan Lokey Howard & Zukin Capital, Inc. as Financial Advisor to the Official Committee ofUnsecured Creditors, Nunc Pro Tunc to March 30, 2009, In re Chemtura Corp., Case No. 09-11233 (REG)(Bankr. S.D.N.Y. June 23, 2009) (Dkt. No. 638); Final Order Authorizing the Employment and Retention ofLazard Frères & Co. LLC as Investment Banker for the Debtors and Debtors In Possession Nunc Pro Tunc tothe Petition Date, Case No. 09-11233 (REG) (Bankr. S.D.N.Y. June 23, 2009) (Dkt. No. 641).

15

requested notice by filing a written request for notice, pursuant to Bankruptcy Rule 2002 and the

Local Rules. The Equity Committee submits that no other or further notice need be provided.

WHEREFORE, the Equity Committee respectfully requests that the Court enter

an order, substantially in the form annexed hereto, granting the relief requested in the

Application and such other and further relief as the Court deems just and proper.

Dated: New York, New YorkJune 16, 2010

THE OFFICIAL COMMITTEE OFEQUITY SECURITY HOLDERS

By: Strategic Value Master Fund, Ltd.solely in its capacity as Chairpersonof the Official Committee of EquitySecurity Holders and not in itsindividual capacity

By: /s/ Alan J. CarrName: Alan J. CarrTitle: Authorized Signatoryon behalf of Strategic ValueMaster Fund, Ltd. in itscapacity as Chairperson ofthe Official Committee ofEquity Security Holders andnot in its individual capacity

Exhibit A

Lane Affidavit





- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

In re:


Debtors.

:::::::

Chapter 11

Case No. 09-11233 (REG)


- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

AFFIDAVIT OF DOUGLAS P. LANE IN SUPPORT OF APPLICATIONFOR ENTRY OF AN ORDER UNDER 11 U.S.C. §§ 328(a) AND 1103(a),

FED. R. BANKR. P. 2014 AND LBR 2014-1 AUTHORIZINGTHE EMPLOYMENT AND RETENTION OF UBS SECURITIES LLC

AS FINANCIAL ADVISOR TO THE OFFICIAL COMMITTEE OFEQUITY SECURITY HOLDERS NUNC PRO TUNC TO JANUARY 7, 2010

STATE OF New York §§ ss:

COUNTY OF New York §

Douglas P. Lane, being duly sworn, upon his oath, deposes and says:

1. I am a Managing Director in the Financial Sponsors and Leveraged

Finance Group for UBS Securities LLC ("UBS"), with offices at 299 Park Avenue, New York,

New York 10171, and am duly authorized to execute this Affidavit on behalf of UBS. I submit

this Affidavit on behalf of UBS in support of the Application for Entry of an Order Under 11

U.S.C. §§ 328(a) and 1103(a), Fed. R. Bankr. P. 2014 and 2016 and LBR 2014-1 Authorizing the

2

Employment and Retention of UBS Securities LLC as Financial Advisor to the Official

Committee of Equity Holders Effective Nunc Pro Tunc to January 7, 2010 (the "Application"),1

filed contemporaneously herewith by the Official Committee of Equity Security Holders (the

"Equity Committee") appointed in the above captioned jointly administered chapter 11 cases

(the "Chapter 11 Cases"). Except as otherwise indicated herein, I have personal knowledge of

the matters set forth herein and, if called as a witness, would testify completely thereto.2

Qualifications of UBS

2. Pursuant to an engagement letter entered into by the Equity Committee

and UBS dated May 11, 2010 (the "Engagement Agreement"),3 a copy of which is attached

hereto as Exhibit 1, the Equity Committee retained UBS to provide such financial advisory

services as the Equity Committee may consider necessary to discharge the Equity Committee's

responsibilities and further the interests of the Equity Committee and equity security holders in

the Chapter 11 Cases.

3. Since January 7, 2010, the effective date of the Engagement Agreement,

UBS has explored restructuring alternatives and advised the Equity Committee with respect to a

variety of matters, including issues related to asset sales, the idling of certain assets, the

refinancing of the Debtors' DIP facility and other financing issues. In addition, UBS has advised

the Equity Committee regarding the Debtors' business plans and forecasts, restructuring

alternatives for the Debtors, industry-related analyses and various strategies to address material

1 Unless otherwise defined, capitalized terms used herein shall have the meanings ascribed to them in theApplication.

2 Certain of the disclosures herein relate to matters within the knowledge of other members of UBS and are basedon information provided by them.

3 While the Engagement Agreement is dated as of May 11, 2010, it is effective as of January 7, 2010.

3

issues raised by the Debtors. UBS has also advised and represented the Equity Committee at

various meetings with the Debtors' management.

4. UBS is an internationally recognized investment banking and financial

advisory firm. UBS's Leveraged Finance and Restructuring Group is one of the leading advisors

to parties in interest with respect to financially troubled companies both in and outside of

bankruptcy. UBS has been, and is, involved in many large restructuring cases in the United

States, including serving as financial advisor to the debtors in In re Protostar Ltd, In re Young

Broadcasting, In re Quebecor World (USA), Inc., In re Leap Wireless, Inc., In re Satelites

Mexicanos S.A. de C.V., and In re Redback Networks, and advising informal committees of

creditors in In re ION Media Networks, Inc., In re Charter Communications, Inc., and In re

DBSD North America, Inc. UBS is also the nonexclusive capital markets and M&A advisor to

the debtors in In re General Growth Properties, Inc.

5. UBS is one of the few firms able to provide a full range of investment

banking services and products, in addition to restructuring advice and services. UBS is a leading

investment bank in, among other areas, mergers and acquisitions, bank financings and public and

private securities offerings involving both debt and equity.

6. I have over 13 years of experience in leveraged finance and restructuring.

I joined the San Francisco office of UBS in April 2001 and work on a broad variety of leveraged

finance transactions, including cross-border merger and acquisition financings, leveraged

buyouts, high yield and bank financings, and restructurings. Prior to joining UBS, I worked in

the Restructuring Group at Donaldson, Lufkin & Jenrette. I am well-suited to provide the

services required by the Equity Committee and my advisory experience extends across many

industries, including the restructuring of satellite operator Satelites Mexicanos, S.A. de C.V. My

most notable past assignments include providing financial advisory services in the cases of $8

4

billion DIP financing for Lyondell Basell Industries, $6 billion acquisition financing for

Novelis/Hindalco, and $1 billion restructuring of Ainsworth Lumber.

7. Other professionals in UBS's Leveraged Finance and Restructuring group,

as well as professionals in other groups, including Chemicals Investment Banking, many of

whom also have extensive experience in corporate restructuring generally, will participate in the

representation of the Equity Committee in these Chapter 11 Cases.

8. Due to the UBS's experience and knowledge in the field of leveraged

finance and restructuring and chemicals investment banking, UBS believes that it is well

qualified and uniquely able to act on the Equity Committee's behalf during the Chapter 11 Cases.

Services to be Rendered

9. The Equity Committee has requested that UBS render (and UBS has

rendered) various services, including, without limitation, the following services:

(a) Analyze, evaluate, and assess the business plans, historical performance, andforecasts of the Debtors;

(b) Analyze, evaluate, assess, and assist in the determination of an appropriate capitalstructure for the Debtors;

(c) Analyze, evaluate, and assess strategic alternatives for the Debtors;

(d) Analyze, evaluate, and assess the Debtors' debt capacity in light of their projectedcash flows;

(e) Advise and assist the Equity Committee in analyzing, structuring and negotiatingthe financial aspects of any Transaction (as defined in the EngagementAgreement), including without limitation: (i) advising and assisting the EquityCommittee in reviewing, analyzing, structuring and negotiating the financialaspects of potential Transactions, including but not limited to, debt to equityconversions, debt maturity extensions, modifications to interest rates and financialcovenants of debt obligations and (ii) advising and assisting the EquityCommittee in reviewing, analyzing, structuring and negotiating any plan ofreorganization and the confirmation process (including preparing an analysis ofthe estimated range of going-concern enterprise value of the reorganized Debtors)and in formulating a plan of reorganization (if exclusivity terminates underBankruptcy Code section 1121);

5

(f) Represent the Equity Committee in negotiations with the Debtors and third partieswith respect to any of the foregoing;

(g) Provide testimony in depositions or court on behalf of the Equity Committee withrespect to any of the foregoing, if necessary; and

(h) Render other financial advisory services, financing services, or other investmentbanking services as may from time to time be agreed upon by the applicableparties; it being understood and agreed that UBS shall not be obligated to provideany such additional services except as may be agreed by UBS in its solediscretion, including with respect to such additional fee arrangements as may beagreed upon by the applicable parties and approved by the Bankruptcy Court.

10. Subject to this Court's approval of the Application, UBS is willing to serve

as the Equity Committee's financial advisor in the Chapter 11 Cases and to perform the services

described above.

Connections of UBS

11. To the best of my knowledge, information and belief, and except as

otherwise set forth herein, the members and employees of UBS (a) do not have any connection

with any of the Debtors, their affiliates, their creditors, equity security holders, or any other party

in interest, or their respective attorneys and accountants, the United States Trustee for the

Southern District of New York or any person employed in the office of the same, or any judge in

the Bankruptcy Court for the Southern District of New York or any person employed in the

offices of the same, (b) do not represent any entity having an adverse interest to the Equity

Committee in connection with the Chapter 11 Cases, (c) do not hold or represent any interest in

the Chapter 11 Cases that is adverse to the Debtors' estates or the Equity Committee on the

matters for which UBS is proposed to be retained; and (d) are "disinterested persons" as that term

is defined in Bankruptcy Code section 101(14).

12. Prior to the Equity Committee's selection of UBS to serve as its financial

advisor, UBS served as financial advisor to the following entities as an ad hoc committee of

6

independent shareholders, on matters relating to their (or affiliated entities') ownership of stock

in Chemtura and analyzing potential restructurings of Chemtura and the Chapter 11 Cases

(including requesting that the U.S. Trustee appoint an official committee of equity security

holders): (a) Canyon Capital Advisors LLC (now a member of the Equity Committee); (b)

Drawbridge DSO Securities LLC; (c) Drawbridge OSO Securities LLC; (d) JMB Capital

Masters Fund LP; (e) Latigo Partners, L.P.; (f) Longacre Fund Management, LLC; (g) Strategic

Value Special Situations Master Fund, L.P. (an affiliate of Strategic Value Master Fund, Ltd., a

current Equity Committee member); and (h) Strategic Value Master Fund, Ltd. (now a member

and chairperson of the Equity Committee) (the "Other Entity Representation"). Since being

selected as the Equity Committee's proposed financial advisor, UBS has ceased the Other Entity

Representation and will not represent any entity other than the Equity Committee in connection

with such matters for so long as UBS represents the Equity Committee.

13. Prior to filing the Application, UBS conducted a disclosure review with

respect to the Debtors and the most significant parties in interest in the Chapter 11 Cases based

upon a list of interested parties supplied by counsel to the Debtors. In addition, UBS's disclosure

review includes certain parties independently identified by UBS as parties in interest in these

Chapter 11 Cases (together with certain material parties on the list supplied by the Debtors, the

"Interested Parties"). UBS continues to supplement its disclosure review with respect to these

Chapter 11 Cases and will file supplemental disclosures with the Court as necessary. To check

and clear potential conflicts of interest, UBS researched its client database for the past two years

to determine whether it had any relationships with the Interested Parties.4

4 UBS conducted a disclosure review of certain material parties listed on the initial list of interested partiessupplied by counsel to Debtors, which disclosure review did not include trade creditors, parties that filed tradeclaims, unliquidated creditors or scheduled litigation claims. In addition, because UBS does not provideservices to individuals, UBS's client database does not include individuals.

8

(a) UBS is not employed by, and has not been employed by, any entity otherthan the Equity Committee in matters related to the Chapter 11 Cases.

(b) From time to time, UBS has provided services, and will continue toprovide services, to certain creditors of the Debtors and various otherparties adverse to the Debtors in matters unrelated to the Chapter 11Cases. UBS does not and will not provide services to the InterestedParties in any matters related to the Chapter 11 Cases, other than theEquity Committee.

(c) UBS provides services in numerous cases, proceedings and transactionsunrelated to the Chapter 11 Cases. These unrelated matters involvenumerous parties, some of which may be claimants or parties with actualor potential interests in the Chapter 11 Cases or may represent suchparties. UBS does not and will not provide services to such parties in anymatters related to the Chapter 11 Cases.

(d) UBS is a financial advisor providing services and advice specifically inthe areas of restructuring and distressed debt. As a result, UBS hasrepresented, and may in the future represent, certain interested parties inthe Chapter 11 Cases in matters unrelated to the Chapter 11 Cases, eitherindividually or as part of UBS's representation of a committee of creditorsor equity security holders.

(e) Certain UBS personnel currently may have business associations withcertain creditors of the Debtors and other parties with actual or potentialinterests in the Chapter 11 Cases with respect to business activitiesunrelated to the Chapter 11 Cases.

(f) In addition, in the ordinary course of its business, UBS has in the pastengaged, is currently engaging and may in the future engage counsel orother professionals in unrelated matters who now represent, or who may inthe future represent, the Debtors, creditors or other interested parties in theChapter 11 Cases. UBS frequently acts as advisor, manager or arrangerwith certain interested parties in the Chapter 11 Cases that are investmentbanks in various engagements unrelated to the Chapter 11 Cases.

(g) UBS has thousands of employees. It is possible that certain UBSemployees hold securities of the Debtors or interests in mutual funds orother investment vehicles that may own the Debtors' securities.

18. In the ordinary course of its business as a global securities trading firm,

UBS may be involved in transactions with Interested Parties. For the reasons described below,

none of these relationships constitutes an interest materially adverse to the estates in matters

9

upon which UBS is to be employed.

(a) UBS and its affiliates regularly engage in trading securities (for purposeshereof, including loans). These trades may include trades of securities ofInterested Parties and/or trades with Interested Parties for the account ofUBS or its customers (including Interested Parties). Certain securities,held solely to facilitate customer orders, or customer facilitation shares,are continually purchased and sold, solely to facilitate the execution ofpurchase and sale orders from customers where the lot of shares availablefor purchase or sale differs in size from the number of shares set forth inthe customer order. For example, to satisfy a customer purchase order for120 shares where only a lot of 150 shares is available for purchase, the150-share lot would be purchased. The differential of 30 shares iscommonly referred to as customer facilitation shares. The 30 customerfacilitation shares would then be available to facilitate subsequentcustomer orders. For example, to satisfy a customer sale order for 100shares where only a bid to purchase a lot of 130 shares is available, the100 shares of the customer and the 30 customer facilitation shares wouldbe aggregated to facilitate the customer sale order relating to 100 shares.Thus, the number of customer facilitation shares held at any particulartime continually changes depending on the number and nature of customerbuy and sell orders. In general, UBS holds securities purchased onaccount of customer facilitation orders for customer facilitation purposesonly.

(b) UBS and its affiliates may also enter into derivative transactions withrespect to securities of the Debtors for the account of its customers,including total return swaps pursuant to which UBS may sell to or buyfrom customers the return on a specified security and then buy or sell shortthe specified security such that UBS will not have economic exposure to(risk of loss or gain on) the specified security. UBS would earn a fee forsuch transactions. UBS would waive any voting rights, to the extent UBShad any such rights, with respect to the specified security under the swapagreements. UBS and its affiliates may also enter into similar transactionswith respect to securities of the Debtors for the account of customerswhere UBS does not have any net economic exposure to securities of theDebtors.

(c) UBS and its affiliates may also purchase indexes, portfolios or baskets ofsecurities which may include securities of the Debtor (not to exceed 10%of such index, portfolio or basket) for the account of UBS or its customers.

19. The business units engaging in the trading activities referred to in the

paragraph above are separate from the business unit that will be providing services to the Equity

Committee in these Chapter 11 Cases. None of the UBS professionals who will be providing

10

services to the Equity Committee in these Chapter 11 Cases will be involved in any such trading

activities. Pursuant to UBS's Information Barrier Policy and Procedures (the "Information

Barrier Procedures"), UBS has established and will maintain the following internal information

barrier procedures (subject to the next paragraph of this Affidavit): (i) each UBS professional

advising the Equity Committee has received training with respect to the Information Barrier

Procedures and will be required to certify annually that they are aware of and will comply with

such procedures; (ii) the UBS professionals advising the Equity Committee in these Chapter 11

Cases will not directly or indirectly share any non-public information generated by, received

from or relating to the Debtors or the Chapter 11 Cases ("Information") with any other

employees, representatives or agents of UBS, except on a strictly confidential basis with other

UBS employees, representatives or agents who need to know such information for purposes of

advising the Equity Committee; (iii) UBS professionals advising the Equity Committee in these

Chapter 11 Cases work in offices that are physically separated from the UBS business units

engaged in trading activities; (iv) UBS professionals advising the Equity Committee in these

Chapter 11 Cases will not receive any information regarding UBS's trading in securities in

advance of the execution of such trades; (v) the UBS Compliance Department reviews UBS's

trades to determine if there is any reason to believe that such trades were not made in compliance

with the Information Barrier Procedures and maintains records of such reviews; (vi) the

management team of UBS's Investment Banking Department monitors (in consultation with

UBS's Compliance Department) a sampling of e-mails of professionals in the department

(including the professionals advising the Equity Committee in these Chapter 11 Cases) to

prevent the unauthorized disclosure of information through electronic means from professionals

in the Investment Banking Department to professionals in the UBS business units engaged in

trading activities; and (vii) UBS will immediately inform counsel for the Equity Committee and

11

the U.S. Trustee in writing if such procedures are breached in connection with these Chapter 11

Cases.

20. Notwithstanding the foregoing, the UBS professionals advising the Equity

Committee in these Chapter 11 Cases may share information with (i) senior management of UBS

who, due to their duties and responsibilities, have a legitimate need to know such information,

provided that such individuals (1) otherwise comply with the procedures described in the

previous paragraph of this Affidavit and (2) use such information only in connection with their

senior managerial responsibilities; (ii) regulatory authorities; and (iii) Legal, Compliance,

Internal Audit and other internal control functions within UBS that need to know such

information for purposes of carrying out their control functions.

21. Despite the efforts described above to identify and disclose UBS's

connections with parties in interest in the Chapter 11 Cases, because UBS is a large firm with

thousands of employees and clients and the Debtors are a large enterprise with numerous

creditors and other relationships, UBS is unable to state with certainty that every client

relationship or other connection has been disclosed. In this regard, if UBS discovers additional

information that requires disclosure, UBS will file a supplemental disclosure with the Court.

UBS is an international banking conglomerate with extensive worldwide operations. It is

possible that other members or affiliates of UBS may have connections with the Interested

Parties.

12

22. In addition, UBS is a subsidiary of UBS AG, an international banking

conglomerate with extensive worldwide operations. As such, it is possible that other members or

affiliates of UBS AG may have connections with Interested Parties unrelated to the business

operations of UBS. None of these affiliated parties will participate in the engagement by UBS

and UBS has not undertaken to determine the existence, nature and scope of any such affiliate's

business relationship or activities with the Interested Parties.

23. To the best of my knowledge, except as otherwise set forth above, and

subject to the waiver of UBS's interest in the UBS Holdings on the terms set forth herein:

a) Neither UBS nor any employee of UBS holds or represents an interest adverse tothe Debtors' estates.

b) Except as noted above, neither UBS nor any employee of UBS is or was acreditor, equity security holder, or an insider of the Debtors.

c) Neither UBS nor any employee of UBS is or was, within two years before thePetition Date, a director, officer or employee of the Debtors.

d) UBS does not have an interest materially adverse to the interest of the estates orof any class of creditors or equity security holders, by reason of any direct orindirect relationship to, connection with or interest in the Debtors specified in theforegoing paragraphs, or for any other reason.

24. In view of the foregoing, and subject to the waiver of the UBS Holdings

on the terms set forth herein, I believe that UBS is a "disinterested person" within the meaning of

Bankruptcy Code section 101(14).

25. To the best of my knowledge, the proposed employment of UBS is not

prohibited by or improper under any Bankruptcy Rule, including Bankruptcy Rule 5002. UBS

and the professionals it employs are qualified to represent the Equity Committee in the matters

for which UBS is proposed to be employed.

Professional Compensation

26. Under Bankruptcy Code section 328(a), subject to the Court's approval,

13

UBS intends to charge the Debtors for services rendered to the Equity Committee in these

Chapter 11 Cases pursuant to the terms and conditions of the Engagement Agreement. The

Engagement Agreement sets forth various terms for the payment of UBS, which include the

following fees:

(a) The aggregate of:

(i) a nonrefundable monthly cash advisory fee (each, a "Monthly AdvisoryFee") of $150,000 per month, in advance on the first business day of eachmonth, beginning on January 7, 2010, provided, however, that (x)following the payment of the first six Monthly Advisory Fees, alladditional Monthly Advisory Fee payments shall be credited against the"Transaction Fee" (as defined below); and (y) the Monthly Advisory Feeshall be prorated for the month of January 2010; provided, further, thatUBS shall not be required to rebate any portion of the creditable MonthlyAdvisory Fees paid in excess of the Transaction Fee; and

(ii) a transaction fee (the "Transaction Fee"), payable on the date aTransaction is consummated that results in any Common Equity SecurityRecovery, determined according to the following schedule:

(x) If the Common Equity Security Recovery is greater than$225,000,000 but less than $450,000,000, UBS shall be entitled toa Transaction Fee equal to 1.25% of the amount by which theCommon Equity Security Recovery exceeds $225,000,000(determined as set forth below), payable on the date a Transactionis consummated.

(y) If the Common Equity Security Recovery is greater than$450,000,000, UBS shall be entitled to a Transaction Fee equal to(A) 1.25% of the amount by which the Common Equity SecurityRecovery exceeds $225,000,000 up to a maximum CommonEquity Security Recovery of $450,000,000 (determined as set forthbelow), plus (B) 2.00% of the amount by which the CommonEquity Security Recovery exceeds $450,000,000 (determined asset forth below), payable on the date a Transaction isconsummated.

(b) The Transaction Fee shall be calculated as follows:

(i) "Common Equity Securities" means the issued and outstanding commonstock, par value $0.01 per share, of Chemtura as of the date Chemturafiled the Chapter 11 Cases with the Bankruptcy Court (the "CommonStock"), including without limitation, any exchange, conversion,

14

repurchase, repayment or distribution (including any repayment inliquidation using proceeds from the sale of the Debtors' assets) of or onaccount of any such common stock.

(ii) "Common Equity Security Recovery" means all consideration received,distributed or otherwise provided in the aggregate on account of any andall Common Equity Securities, including, without limitation, cash(whether immediately payable or payable in installments), securities (debtor equity), property or other interests in property, instruments, contractrights, contingent payments or obligations, or any other form ofconsideration, and including, without limitation, the Common EquitySecurities if unimpaired or otherwise retained or distributed. The value ofany equity security (including any Common Equity Securities) shall beequal to the price implied by the plan value determined by the Court or, ifno such determination is made, then the value shall equal the valueproffered by the chapter 11 plan proponent, except that the value of anyequity security listed, quoted, or traded on any securities exchange shall beequal to the greater of the price implied by such plan value and the meanof the prices at the close of business on each of the five business daysfollowing the consummation of a Transaction.

27. I respectfully submit that, given the nature of the services to be provided,

the above described fee structure is both fair and reasonable.

28. In addition to the compensation structure described above, and as a

material part of the consideration for UBS's agreement to furnish services to the Equity

Committee pursuant to the terms of the Engagement Agreement, UBS has requested that certain

indemnification provisions set forth in the Indemnification Agreement be approved. The

Indemnification Agreement annexed to the Engagement Agreement provides that the Debtors

will indemnify UBS and certain related persons under certain circumstances, provided that the

loss or damage for which UBS or such related person is seeking indemnification is not finally

determined to have resulted from UBS's or such related person's bad faith, gross negligence or

willful misconduct, except with respect to loss or damage based upon certain untrue, or alleged

untrue, statements of material fact or omissions, or alleged omissions, of fact. The proposed

indemnification provisions are standard in the investment banking industry and such provisions

15

are fair and reasonable considering UBS's qualifications and the expected scope of the services

that UBS will provide during this engagement.

29. UBS intends to apply to the Court for interim and final payment of

compensation reimbursement of expenses in accordance with the terms and conditions of the

Engagement Agreement, the applicable provisions of the Bankruptcy Code, the Bankruptcy

Rules and the Local Rules of this Court. UBS intends to seek compensation for all time and

expenses associated with its retention as a Bankruptcy Code section 328(a) professional,

including the preparation of the Application, this Affidavit and related documents, as well as any

monthly fee statements and/or interim and final fee applications.

30. UBS generally does not charge for its services on an hourly basis. UBS's

compensation will be calculated and paid based on either the Monthly Advisory Fee or if

eligible, certain transaction fees as set forth in the Engagement Agreement. It is not the general

practice of investment banking firms to keep detailed time records similar to those customarily

kept by attorneys. Notwithstanding the foregoing, UBS will nonetheless maintain records (in

summary format) of its services rendered for the Equity Committee by financial restructuring

personnel employed by UBS, including reasonable descriptions of those services and the

approximate time expended in half-hour increments in providing those services, and will present

such records to the Court. I will advise the UBS engagement team of the need to maintain such

records and will use my commercially reasonable efforts to ensure that such records are kept in

an accurate manner. UBS will provide a general narrative describing its general tasks and

activities performed on behalf of the Equity Committee, the identity of the professionals

performing such tasks and activities and the aggregate hours expended by each professional.

31. Based on its experience and independent analysis, UBS believes the

Monthly Advisory Fee and the Transaction Fee are both fair and reasonable in light of (a)

Exhibit 1

Engagement Agreement

LEGAL_US_E # 85705217.22

UBS SECURITIES LLC INDEMNIFICATION AGREEMENT

May 11, 2010 Private and Confidential UBS Securities LLC 299 Park Avenue New York, New York 10171 Ladies and Gentlemen: In connection with the engagement of UBS Securities LLC (“UBS”) to advise and assist the Official Committee of Equity Security Holders (the “Committee”) appointed in the jointly-administered chapter 11 cases of Chemtura Corporation (“Chemtura”) and certain of its subsidiaries and affiliates (collectively with Chemtura, the “Debtors”) that are being jointly administered as In re Chemtura Corporation, et al., Case No. 09-11233 (REG) (Bankr. S.D.N.Y.) (the “Cases”) with the matters set forth in the Agreement, dated as of May 11, 2010 between the Committee and UBS (the “Agreement”), in the event that UBS becomes involved in any capacity in any claim, suit, action, proceeding, investigation or inquiry (including, without limitation, any shareholder or derivative action or arbitration proceeding) (collectively, a “Proceeding”) (i) in connection with or arising out of any untrue statement or alleged untrue statement of a material fact contained in any information provided to any prospective party in connection with any transaction by or on behalf of the Committee or the Debtors (which shall be deemed to include the Debtors’ public filings) or any omission or alleged omission by the Debtors or the Committee to state therein a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (ii) otherwise in connection with any matter in any way relating to or referred to in the Agreement or arising out of the matters contemplated by the Agreement, including, without limitation, related services and activities, the Debtors shall indemnify, defend and hold UBS harmless to the fullest extent permitted by law, from and against any losses, claims, damages, liabilities and expenses in connection with any matter in any way relating to or referred to in the Agreement or arising out of the matters contemplated by the Agreement, including, without limitation, related services and activities, except, in the case of clause (ii) above only, to the extent that it shall be determined by a court of competent jurisdiction in a judgment that has become final in that it is no longer subject to appeal or other review that such losses, claims, damages, liabilities and expenses resulted solely from the bad-faith, gross negligence or willful misconduct of UBS. In addition, in the event that UBS becomes involved in any capacity in any such Proceeding, the Debtors will reimburse UBS for its legal and other expenses (including the cost of any investigation and preparation) as such expenses are incurred by UBS in connection therewith except to the extent that such it shall be determined by a court of competent jurisdiction in a judgment that has become final in that it is no longer subject to appeal or other review that UBS engaged in bad-faith, gross negligence, or willful misconduct. If such indemnification were not to be available for any reason, the Debtors shall contribute to the losses, claims, damages, liabilities and expenses involved (a) in the proportion appropriate to reflect the relative benefits received or sought to be received by the Debtors and their securityholders (including the holders of the common stock of Chemtura (the “Holders”)) and affiliates and other constituencies, on the one hand, and UBS, on the other hand, in connection with the matters contemplated by the

Exhibit 2

Interested Parties

50 West Street LLC9056-0921 Quebec Inc.A&M Cleaning Products LLCA&M Cleaning Products, Inc.A&M Industrial SupplyA.M. Todd CompanyAbdulla Al-Zamil & Brothers CompanyABN Amro Bank NVABN Amro Bank NV, Canada BranchAccess Litigation Support Services LLCAchille Construction, Inc.Acidchem Usa Inc.Adt Security ServicesAdvanced BiotechAdvantage Document Services Inc.Ag Processing, Inc.Agrico Chemical CompanyAgro St IncAir Products & ChemicalsAiu Insurance CompanyAjonna ChurchAkzo NobelAkzo Nobel Chemicals Inc.Akzo Nobel Functional Chemicals LLCAkzo Nobel Surface Chemistry LLCAlabama Power CompanyAlbemarle Corp.Albina Holdings IncAldine Independent School District Tax OfficeAlexander FerrariAll Con World Systems Inc.Allegheny PowerAllen & Overy LLPAlliance ShippersAllied Waste ServicesAllied WorldAlston & Bird LLPAlvarez & Marsal Inc.Amec Geomatrix Inc.AmerencilcoAmerican Chemistry Council Inc.American Electric PowerAmerican Home Assurance Company

2

American International Chemical Inc.American International GroupAmerican International Specialty Lines Insurance Company Et AlAmerican Refining Group, IncAmerican Tower CorporationAmerican Warehousing SystemsAna Lab CorpAnderol Italia SrlAnderol. Inc.Antimony Products Pty LtdAon Insurance Managers (Usa) Inc.Aon Risk Services Of New YorkApollo Management International LLPAppatek Industries Inc.Aqua Clear Industries LLCAquaterra Engineering, IncArch Chemicals Inc.Arch Specialty Insurance CompanyArgo PartnersArkansas Public Service CommissionArkema Canada Inc Raw MaterialsArkema Inc.Arlington Independent School DistrictArtek Aterian Holding Company, LccArtek Surfin Chemicals Ltd.Artistech Chemical CorporationAsbury, Dixie, Estate OfAscend Performance MaterialsAsck Inc.Asepsis Inc.Asepsis U.K. LtdAshley Conyers LLCAsia Stabilizer Co., Ltd.Asia Stabilizers Co. Ltd.Assured Insurance CompanyAT&TAterian Investment Partners Distressed Opportunities, LPAtochem PolyrezAts Staffing Of Atlanta Inc.Automotive Rentals Inc.Av MagramBabst Calland Clements & Zomnir PCBadger Express LLCBaker & Daniels LLPBaker & Mckenzie LLPBallard SpahrBanca Intesa Spa, New York Branch

3

Banca Nazionale Del Lavoro Spa, New York BranchBandag Incorporated K/N/A Bridgestone Bandag LLCBank Of AmericaBank Of America NaBank Of America Na, Canada BranchBank Of Manufacturers And Traders Trust CompanyBank Of Tokyo-Mitsubishi Trust Co., TheBank Of Tokyo-Mitsubishi Ufj Ltd.Bankers Trust Co.Barclays Bank PlcBarclays Global Investors NaBarex World Trade Corp.Barrett Twomey Broom Hughes & Haoke LLPBasf CorporationBasf Sparks LLCBass Berry Sims PlcBaxenden Chemicals Ltd.Baxenden Scandinavia AsBaxter Harris CarolinaBayer CropscienceBayer Material ScienceBayou Sorrel Superfund Site Potentially Responsible Parties GroupBayrol Deutschland GmbhBayrol France SASBayrol Iberica SABayrol Scandinavia AsBdp International Inc.Beacon SystemsBerenfield ContainersBerje Inc.Berry Plastics CorporationBest & Best Krieger LLPBeveridge & Diamond PCBiolab Australia Pty. Ltd.Bio-Lab Canada Inc.Biolab Company Store LLCBiolab Franchise Co. LLCBiolab IncBio-Lab Inc.Biolab Textile Additives LLCBiolab Uk Ltd.Biotech/Advanced BiotechnologiesBirds Eye Foods, Inc.Blanton Rice Sidwell Nickell Cozean & Collins LLCBlsa Industries (Pty) Ltd.Blue Systemes SasBlum, Shapiro & Company, PC

4

Bmr Landmark At Eastview LLCBnp ParibasBp Energy CompanyBrach's Confections, Inc.Bradley Arant Boult Cummings LLPBrandenburg Industrial Service CompanyBrunos SupermarketBurson Marsteller SprlBush Boake Allen, Inc.C & C Industrial SupplyC & K Of Canada Ltd.C & K Receivables Corp.C G JohnsonC H RobinsonC S LeasingCa 008 038 266 Pty LtdCabb GmbhCadbury Beverages Inc Fka Cadbury SchweppsCadbury Beverages Inc. Fka Cadbury SchweppsCalyon, New York BranchCanadian GovernmentCanyon Capital AdvisorsCarbone Of America Corp.Carella Byrne Bain Gilfillan Cecchi Stewart & Olstein PaCaremark Inc.Cargill Flavor Systems Us, LLCCarl Zeiss Vision VenezuelaCarmody & Torrance LLPCarrier Rental SystemsCcpit Patent & Trademark Law Office, BeijingCefic AisblCeladon LogisticsCeladon Trucking Services IncCenter Point Terminal CompanyCenter Point Terminal CompanyCenterpoint 300 LLCCenterpoint Energy Gas Transmission CompanyCentral Freight LineCentriliftCentrome, Inc., D/B/A Advanced Biotech, Inc.Certain Underwriters At Lloyd’s, LondonCertis Europe BvCharleston Orwig Inc.Chartis Claims, Inc.Chartis Specialty Insurance CompanyChartis, Inc.Chase Manhattan Bank

5

Chemical ServicesChemical Waste ManagementChemical Workers Counsel Of The United Food And Commercial Workers Local 689cChemol Reszvenytarsasag InternationalChemrisk Inc.Chemtrura Specialties Ecuador SAChemtura Manufacturing Germany GmbhChemtura (Hk) Holding Co. Ltd.Chemtura (Pty) Ltd.Chemtura (Thailand) Ltd.Chemtura Australia Pty. Ltd.Chemtura Canada Co. /CieChemtura Chemicals (Nanjing) Co. Ltd.Chemtura Chemicals IndiaChemtura Chemicals India Pte. Ltd.Chemtura Colombia Ltda.Chemtura Corp. Mexico S De Rl De CvChemtura CorporationChemtura Corporation Employee Savings PlanChemtura Europe D.O.O.Chemtura Europe GmbhChemtura Europe Ltd.Chemtura Hldg MexicoChemtura Holding Co. Inc.Chemtura Hong Kong Ltd.Chemtura Industria Quimica Da Brasil Ltda.Chemtura Italy SrlChemtura Japan Ltd.Chemtura Korea Inc.Chemtura LLCChemtura Management GmbhChemtura Mfg Uk LimitedChemtura NvChemtura Quimica Argentina SaciChemtura Sales MexicoChemtura Sales Mexico S De Rl De CvChemtura Sales Uk Ltd.Chemtura Shanghai Co. Ltd.Chemtura Singapore Pte. Ltd.Chemtura Specialties Ecuador SaChemtura Spv LLCChemtura Taiwan Ltd.Chemtura Technology B VChemtura Technology Belgium NvChemtura Vermögensverwaltungs Gmbh & Co. KgChemtura Verwaltungs GmbhChevron Environmental Management Company Chevron Environmental Services Company And

6

Texaco IncChisenhall Nestrud & Julian PaChoctaw TransportCiba CorporationCitibank DelawareCitibank Europe PlcCitibank N ACitibank NA, Canada BranchCitibank NevadaCitigroup Global Markets Inc.Citizens For Fire Safety InstituteCitrus & Allied Essences Ltd.Ck Holding CorporationCk Witco CorporationCks Packaging Inc.Clearon Corp.Cnk Chemical Realty Corp.Cnk Disposition CorpCobalt Industrial Reit UsaCocochem Usa, LLCCoface North America Inc.Cohen & Grigsby PCCohen & Grigsby, PCColorado Dept Of RevenueCommerzbank Ag, Grand Cayman BranchCommerzbank Ag, New York BranchCommonwealth Of Massachusettes Department Of RevenueCompass LexeconComptroller Of MarylandComsup Ltd.ConagraConestoga Rovers & AssociatesConestoga-Rovers & Associates Inc.Connecticut Commissioner Of Environmental ProtectionConnecticut Department Of Revenue ServicesConnecticut Water CoConsumers Energy CompanyConsumers Flavoring Extract Co., Inc.CoresourceCorre Opportunities Fund LPCounsel For Education And Research On ToxicsCovalence Specialty CoatingsCpc Bayrol Ltd.Cra International, Inc.Credit Suisse, Cayman Islands BranchCredit Suisse, Toronto BranchCrompton & Knowles Corporation

7

Crompton & Knowles Of Canada Ltd.Crompton & Knowles Receivables Corp.Crompton (Uniroyal Chemical) Registrations Ltd.Crompton Chemicals BvCrompton Colors Inc.Crompton Corp. Ltda.Crompton CorporationCrompton Corporation, Sa De CvCrompton Europe FinancialCrompton Europe Financial Services Co.Crompton Financial HoldingsCrompton Holding Corp.Crompton Inc.Crompton Ireland Investment Co. Ltd.Crompton Kazakhstan LLPCrompton Monochem Inc.Crompton Overseas BvCrompton SaCrompton Servicios Sa De CvCrompton Specialties Asia Pacific Pte. Ltd.Crompton Specialties Ltd.Crompton Specialties Sdn. Bhd.Crompton Specialties Shanghai Co. Ltd.Crossmark Inc.Crystal Motor ExprCsc Consulting, Inc.Curney Garcia Farmer Pickering & House PCCvrl, Inc.D & BDah Chung Trading Co. Ltd.Dauby O'connor & ZaleskiDavis Brown Koehn Shors & Roberts PCDay Pitney LLPDe Lage Landen Financial Services IncDe Lage Landen Financial Services Inc.De Pardieu

Date post:	13-Feb-2021
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

George A. Zimmerman SKADDEN, ARPS, SLATE, MEAGHER & … · Hearing Date: July 13, 2010 at 9:45 a.m....

Documents