#1KPMG Tax and Legal Restructuring Services KPMG International home.kpmg#2In the wake of COVID-19, most organizations will face ongoing challenges in terms of managing cash and liquidity, stabilizing the business to weather lingering economic uncertainty, and planning for long-term revival of the business. Organizations facing performance issues often find it difficult to differentiate the symptoms from the cause, and this will be exacerbated by the unknown of the post-COVID environment. For many organizations, reestablishing an optimal capital structure will require new restructuring solutions. Together, KPMG Global Legal Services and Deal Advisory, M&A Tax professionals provide integrated restructuring services to companies, creditors, investors and other stakeholders to preserve and help optimize value for those who are experiencing operational and liquidity challenges across all sectors and market segments. Our services include a prompt and strategic assessment of your situation, followed by the development of tailor-made solutions and relevant recommendations as to your tax and legal considerations and approach in line with long-term business goals. Content 03. A typical restructuring cycle 04. Stakeholder considerations 05. Key considerations under restructuring 07. Our service offerings 09. How KPMG can help ill 良 Throughout this document, "we", "KPMG", "us" and "our" refers to the global organization or to one or more of the member firms of KPMG International Limited ("KPMG International"), each of which is a separate legal entity. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. Certain member firms of the KPMG global organization, including the US firm, KPMG LLP, do not provide legal services or have KPMG Law service entities. Some or all the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. <#3Insolvency Distress Underperformance ull A typical restructuring cycle Economic health 0 Dissolve business Immediate liquidity improvement Cash stabilization in COVID-19 crisis Turnaround advice Performance improvement ill 良 2 Financial restructuring Solvent restructure 3 Distressed M&A Restructuring by transfer 4 島 Time 3 | Tax and Legal Restructuring Services >>>> © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.#4Stakeholder considerations Restructuring is a broader engagement, focusing primarily on the strategic, financial and operational management of a struggling, but viable, business with the objective of returning it to profitability. Every stakeholder's tax and legal considerations are required to be considered while planning restructuring. ----- Company | | | | ☐ ☐ Accelerate tax refunds, defer payments. Unlock trapped cash. Restructure, cancel, swap debt tax neutrally. Preserve tax attributes (e.g. tax losses in operative/corporate reorganization). Maintain interest deductions. Increase general tax efficiency. Ensure compliance with directors duties. Understand contractual rights and obligations and minimize risks. Understand employee obligations. Minimize litigation risk. Shareholder Utilize losses in case of a sale/squeeze out. Preserve a high tax base in company reorganization. Minimize de-grouping charges/claw backs. Minimize liability risk in a sale/purchase. Current lenders Utilize losses on loan when default, sale or swap occurs. Minimize taxes on value increase after debt to equity swap. Understand contractual rights and obligations. New lenders Minimize taxes on a value increase after loan acquisition. Minimize taxes on debt to equity swap of a loan acquired below nominal value. Minimize withholding taxes on future interest income. Understand contractual rights and obligations. K 4 | Tax and Legal Restructuring Services © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 品 良 島#5Key considerations under restructuring Tax considerations while planning a restructuring include: Interest deductibility Optimizing tax deductibility of interest expenses in light of limitations on such deductions introduced in response to base erosion and profit shifting (BEPS). Taxes on disposals of assets Determination of capital gains taxes, income taxes and transfer taxes arising when assets are disposed of or transferred. Determining the unexpected or unnecessary tax liabilities arising out of restructuring. 品 良 Oll Debt forgiveness/amendment Analyzing the relevant exemptions that may be available across a number of jurisdictions. Taxable credits can arise where debt is forgiven or amended. Withholding taxes Cash repatriation across various countries/jurisdictions, require withholding taxes to be considered subject to treaty analysis. Withholding taxes may also be due on deemed payments. Tax attributes - Tax attributes such as losses and accumulated tax depreciation may be lost or restricted on a change of ownership. Analyzing the restricting use of broughtforward losses. Secondary liabilities Understanding the secondary liabilities when acquiring distressed companies. Evaluating outstanding debts against associated parties. 島 Country/jurisdiction specific considerations Due to the changes in tax legislation across countries/ jurisdictions, local advice should always be sought to ensure the key provisions relevant to each location are analyzed and managed appropriately. 5 Tax and Legal Restructuring Services Tax status in insolvency Income received by companies in insolvency is often taxed differently and relief for expenses may be limited. Under insolvency, it can trigger tax charges. $ - < >>> © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.#6Key considerations under restructuring Legal considerations while planning a restructuring include: Existing contractual rights and obligations Understand termination rights of both parties. Understand indemnity and liability provisions. Understand any assignment restrictions. Regulatory considerations Directors duties that must be satisfied. Regulatory approvals required in relation to any restructuring. Understand laws both locally and internationally that impact the restructuring including insolvency laws. - Employee considerations Understand rights of, and obligations owed to, employees in connection with the restructuring. Due diligence Determine any due diligence required to support the restructure. Documentation Identify all legal documentation required to properly implement the restructure. 6 | Tax and Legal Restructuring Services >>>> © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 品 良 島#7戛 Our service offerings Liquidity management - - Help maximize tax refund, taxdeferral and tax- holiday opportunities. Allow for tax efficient transfer of cash within the group. Help maximize loss carry-back (e.g. by provisioning). Reclaim value-added tax (VAT) on bad debts. Sale and lease back transactions. 2 Operational restructuring/turnaround advisory Adjust transfer pricing to the modified business model. Debt capacity analysis following operational reorganization. Utilization of tax losses and tax attributes. Secure availability of tax and customs permits and licenses required for continuation of business. Employee tax consequences of workforce reorganization. 3° Financial restructuring - - Utilization of loss on cancellation of debt at the creditor level and minimize taxation on release of debt at the debtor level. Tax consequences of conversion of debt into equity. Secure deductibility of interest on remaining debt. Tax treatment of increase in value of equity or debt instrument following distress situation. Help avoid adverse tax consequences of (required) legal reorganizations. 4° Pre- and post-insolvency advisory Quantifying the corporation potential tax attributes and identifying and planning for the potential tax consequences arising in debt modifications/debt cancellations. Determining the potential limitations on the deductibility of expenses incurred in the insolvency/bankruptcy proceeding. Determining potential tax consequences of the reorganization plan. Quantifying and planning for the potential tax impacts of asset sales and determining the tax cost of asset sales. Evaluating and analyzing the potential tax effects of intercompany transactions and intercompany reorganizations. 7 Tax and Legal Restructuring Services © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. >>>> 品 良 島#8戛 Our service offerings > Legal advisory 5° Advising on legal considerations relevant to implementing a restructuring including: - - - directors duties contractual obligations and counterparty risk employee obligations regulatory approvals due diligence to support the restructure; and optimum legal structure for the restructure and identification of any associated risks. 6' Legal documentation Drafting and advising on legal documentation required to implement a restructure, including: sale documentation and ancillary documents directors and shareholders minutes third party consent documents regulatory approval applications; and employee related documentation. 8 | Tax and Legal Restructuring Services >>>> © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 品 L 島#9How KPMG can help KPMG Restructuring capabilities bring together professionals from Global Legal Services and Deal Advisory, M&A Tax to help companies avoid fiscal pitfalls and unpleasant, post-transaction surprises. In addition to identifying potential tax costs and risks and legal considerations of restructuring, and proposing related actions and methodologies to help minimize risks and negative effects on deal value, we help identify potential saving opportunities to enhance the deal value and propose approaches to capture those opportunities. Our teams are commercially minded, experienced professionals who help clients identify and manage material tax exposures and legal considerations, and look beyond the immediate impact to design deal structures that help enhance returns for the long term. Potential benefits Global reach Broad expertise Integrated approach Internationally-connected teams ready on short notice. Close collaboration between you, your local contacts and colleagues around the world. Customized approaches developed with a global lens in mind. Detailed knowledge in all restructuring phases including legal risks. Experience in dealing with the various stakeholders in restructurings. Strong track record of restructuring and M&A tax and legal. Ongoing interaction between you, your advisors and our professionals across tax, restructuring and legal services. ill 良 良 < >>> 9 Tax and Legal Restructuring Services © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.#10Global contacts Arco Verhulst Global Head of Deal Advisory, M&A Tax KPMG International Services Limited T: +31 8890 92564 E: [email protected] Stuart Fuller Global Head of Legal Services KPMG International Services Limited T: +61 2 9458 1590 E: [email protected] Australia: Hannah Hesse Partner (Tax) T: +61 2 9335 8059 E: [email protected] Stuart Fuller Partner (Legal) T: +61 2 9458 1590 E: [email protected] David Morris Partner (Legal) T: +61 2 9455 9999 E: [email protected] Austria: Eugen Strimitzer Partner (Tax) T: +43 1 31 332 4250 E: [email protected] Wendelin Ettmayer Partner (Legal) T: +43 1 3103256 4820 E: [email protected] Belgium: Wouter Caers Partner (Tax) T: +3238211973 E: [email protected] Patrick Geeraert Partner (Legal) T: +32 2 708 43 79 E: [email protected] Wouter Lauwers Partner (Legal) T: +32 2 708 38 68 E: [email protected] Brazil: Ericson Amaral Partner (Tax) T: +55 11 3940 3375 E: [email protected] Canada: Jocelyn Blanchet Partner (Tax) T: +1 416 777 3016 E: [email protected] Anna Balinsky Partner (Legal) T: +86 (21) 5203 1573 E: [email protected] China: Michael Wong Partner (Tax) T: +861085087085 E: [email protected] Paula Yu Senior Partner (Legal) T: +86 21 5203 1573 E: [email protected] Hong Kong (SAR), China: Shirley Fu Partner (Legal) T: +852 2685 7828 E: [email protected] Finland: Ari Engblom Partner (Legal) T: +358 20 760 3614 E: [email protected] Tero Piisi Senior Manager (Legal) T: +358 20 760 3475 E: [email protected] France: Jerome Talleux Partner (Tax) T: +33 1 55 68 49 59 E: [email protected] Franck Bernauer Partner (Legal) T: +33 1 55 68 48 13 E: [email protected] Germany: Lars Christian Mahler Partner (Tax) T: +49 69 9587 3142 E: [email protected] Ayk Tobias Meretzki Partner (Tax) T: +49 40 320 15 5783 E: [email protected] Daniel Kaut Partner (Legal) T: +49 911 8009299-44 E: [email protected] India: Vivek Gupta Partner (Tax) T: +91 12 4307 4025 E: [email protected] Nandita Tripathi Partner (Tax) T: +91 12 4307 4036 E: [email protected] Indonesia: Jacob Zwaan Partner (Tax) T: +62 21570 4877 E: [email protected] Ireland: Donal Thomas Partner (Tax) T: +353 1 700 4306 E: [email protected] Francis Hackett Partner (Legal) T: +353 1 700 4462 E: [email protected] 10 Tax and Legal Restructuring Services © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. >>>> 品 良 島#11Global contacts 品 Italy: Stefano Cervo Partner (Tax) T: +39 02 67 64 41 E: [email protected] Alberto Cirillo Partner (Legal) T: +39 011 883166 E: [email protected] Japan: Yuichi Komakine Partner (Tax) T: +81362298190 E: [email protected] Luxembourg: Christophe Diricks Partner (Tax) T: +352 22 51 51 5111 E: [email protected] Mexico: Alfredo Cobix Carbajal Partner (Tax) T: +52 55 5246 8727 E: [email protected] Netherlands: Arco Verhulst Partner (Tax) T: +31 88 909 2564 E: [email protected] Jeroen van Gool Partner (Tax) T: +31 88 909 1597 E: [email protected] Freerk Volders Partner (Legal) T: +31 88 909 1600 E: [email protected] Marieke Enneman Partner (Legal) T: +31 88 909 1500 E: [email protected] Oman: Ashok Hariharan Partner (Tax) T: +968 2474 9231 E: [email protected] Poland: Honorata Green Partner (Tax) T: +48 22 528 1153 E: [email protected] Dariusz Dobkowski Partner (Legal) T: +48 22 528 1301 E: [email protected] Romania: René Schöb Partner (Tax) T: +40 372 377 800 E: [email protected] Russia: Dmitry Garaev Partner (Tax) T: +7 495 937 4444-12825 E: [email protected] South Korea: Sang Bum Oh Partner (Tax) T: +82 2 2112 0721 E: [email protected] Spain: Carlos Marin Pizarro Partner (Tax) T: +34914565962 E: [email protected] Rafael Aguilar Mateo Partner (Legal) T: +34 91 456 35 59 E: [email protected] Sweden: Tomas Johansson Director (Tax) T: +46 709 81 48 91 E: [email protected] Switzerland: Simon Juon Partner (Tax) T: +41 58 249 53 66 E: [email protected] Joerg Kilchmann Partner (Legal) T: +41 58 249 35 73 E: [email protected] Thailand: Auaychai Sukawong Partner (Tax) T: +66 2 677 2644 E: [email protected] Benjamas Kullakattimas Partner (Legal) T: +66 2 677 2426 E: [email protected] United Arab Emirates: Stuart Cioccarelli Partner (Tax) T: +97124014881 E: [email protected] United Kingdom: Gavin Little Partner (Tax) T: +44 20 7311 6047 E: [email protected] Richard Lewis Partner (Legal) T: +44 203 078 4036 E: [email protected] Peter Workman Partner (Legal) T: +44 121 335 373 E: [email protected] United States: Howard Steinberg Partner (Tax) T: +1 212 872 6562 E: [email protected] Ryan J Kelly Principal (Tax) T: +1 267 256 1602 E: [email protected] Vietnam: Ninh Van Hien Partner (Tax) T: +84 28 3821 9266 ext: 8202 E: [email protected] 島 11 Tax and Legal Restructuring Services © 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. >>>>#12home.kpmg/socialmedia in f▸ flo Throughout this document, "we", "KPMG", "us" and "our" refers to the global organization or to one or more of the member firms of KPMG International Limited ("KPMG International"), each of which is a separate legal entity. 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited ("KPMG International"), each of which is a separate legal entity. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. For more detail about our structure please visit home.kpmg/governance. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Designed by Evalueserve.. Publication name: Tax Restructuring Services Publication number: 137010B-G Publication date: March 2021 <