Case KG Doc 117 Filed 04/03/19 Page 1 of 3 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE. x : : : : : : : : x

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1 Case KG Doc 117 Filed 04/03/19 Page 1 of 3 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re HEXION HOLDINGS LLC, et al., 1 Debtors. x x Chapter 11 Case No (KG) Jointly Administered Re D.I. 8 & 97 Objection Deadline April 24, 2019 at 400 p.m. (ET) Hearing Date May 1, 2019 at 200 p.m. (ET) NOTICE OF (A) ENTRY OF INTERIM ORDER (I) AUTHORIZING THE DEBTORS TO MAINTAIN CUSTOMER PROGRAMS AND HONOR RELATED PREPETITION OBLIGATIONS AND (II) GRANTING RELATED RELIEF AND (B) FINAL HEARING THEREON PLEASE TAKE NOTICE that, on April 1, 2019, Hexion Holdings LLC and its affiliated debtors and debtors-in-possession in the above-captioned cases (collectively, the Debtors ) filed the Debtors Motion for Entry of Interim and Final Orders (I) Authorizing the Debtors to Maintain Customer Programs and Honor Related Prepetition Obligations and (II) Granting Related Relief [D.I. 8] (the Motion ) with the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court ). A copy of the Motion is attached hereto as Exhibit A. PLEASE TAKE FURTHER NOTICE that, following an initial hearing to consider the Motion on April 2, 2019, the Bankruptcy Court entered the Interim Order (I) Authorizing the Debtors to Maintain Customer Programs and Honor Related Prepetition 1 The Debtors in these cases, along with the last four digits of each Debtor s federal tax identification number, are Hexion Holdings LLC (6842); Hexion LLC (8090); Hexion Inc. (1250); Lawter International Inc. (0818); Hexion CI Holding Company (China) LLC (7441); Hexion Nimbus Inc. (4409); Hexion Nimbus Asset Holdings LLC (4409); Hexion Deer Park LLC (8302); Hexion VAD LLC (6340); Hexion 2 U.S. Finance Corp. (2643); Hexion HSM Holdings LLC (7131); Hexion Investments Inc. (0359); Hexion International Inc. (3048); North American Sugar Industries Incorporated (9735); Cuban-American Mercantile Corporation (9734); The West India Company (2288); NL Coop Holdings LLC (0696); and Hexion Nova Scotia Finance, ULC (N/A). The address of the Debtors corporate headquarters is 180 East Broad Street, Columbus, Ohio RLF v.1

2 Case KG Doc 117 Filed 04/03/19 Page 2 of 3 Obligations and (II) Granting Related Relief [Docket No. 97] (the Interim Order ). A copy of the Interim Order is attached hereto as Exhibit B. PLEASE TAKE FURTHER NOTICE that, pursuant to the Interim Order, objections or responses to the final relief requested in the Motion, if any, must be made in writing, filed with the Bankruptcy Court, and served so as to be received by (a) Latham & Watkins LLP, (i) 885 Third Avenue, New York, New York (Attn Andrew M. Parlen, Esq. ( andrew.parlen@lw.com)) and (ii) 330 North Wabash Avenue, Suite 2800, Chicago, Illinois (Attn Caroline A. Reckler, Esq. ( caroline.reckler@lw.com)); (b) Richards, Layton & Finger, P.A., One Rodney Square, 920 North King Street, Wilmington, Delaware (Attn Mark D. Collins, Esq. ( collins@rlf.com)); (c) counsel to any statutory committee appointed in these cases, if any; and (d) the United States Trustee for the District of Delaware, 844 King Street, Suite 2207, Wilmington, DE (Attn Linda Casey, Esq. ( linda.casey@usdoj.gov)), on or before April 24, 2019 at 400 p.m. (prevailing Eastern Time). PLEASE TAKE FURTHER NOTICE that, pursuant to the Interim Order, the final hearing with respect to the Motion, if required, will be held before The Honorable Kevin Gross at the Bankruptcy Court, 824 North Market Street, 6th Floor, Courtroom No. 3, Wilmington, Delaware on May 1, 2019 at 200 p.m. (prevailing Eastern Time). PLEASE TAKE FURTHER NOTICE THAT, IF NO OBJECTIONS TO THE MOTION ARE TIMELY FILED, SERVED AND RECEIVED IN ACCORDANCE WITH THIS NOTICE, THE BANKRUPTCY COURT MAY GRANT THE FINAL RELIEF REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR HEARING. RLF v.1 2

3 Case KG Doc 117 Filed 04/03/19 Page 3 of 3 Dated April 3, 2019 Wilmington, Delaware /s/ Brendan J. Schlauch Mark D. Collins (No. 2981) Michael J. Merchant (No. 3854) Amanda R. Steele (No. 5530) Brendan J. Schlauch (No. 6115) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 North King Street Wilmington, Delaware Telephone (302) Fax (302) collins@rlf.com merchant@rlf.com steele@rlf.com schlauch@rlf.com - and - George A. Davis (admitted pro hac vice) Andrew M. Parlen (admitted pro hac vice) Hugh Murtagh (admitted pro hac vice) LATHAM & WATKINS LLP 885 Third Avenue New York, New York Telephone (212) Facsimile (212) george.davis@lw.com andrew.parlen@lw.com hugh.murtagh@lw.com - and - Caroline A. Reckler (admitted pro hac vice) Jason B. Gott (admitted pro hac vice) LATHAM & WATKINS LLP 330 North Wabash Avenue, Suite 2800 Chicago, Illinois Telephone (312) Facsimile (312) caroline.reckler@lw.com jason.gott@lw.com Proposed Attorneys for the Debtors and Debtors in Possession RLF v.1 3

4 Case KG Doc Filed 04/03/19 Page 1 of 27 EXHIBIT A

5 Case KG Doc Filed 04/03/19 Page 2 of 27 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re HEXION HOLDINGS LLC, et al., 1 Debtors. x x Chapter 11 Case No ( ) Joint Administration Requested DEBTORS MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS (I) AUTHORIZING THE DEBTORS TO MAINTAIN CUSTOMER PROGRAMS AND HONOR RELATED PREPETITION OBLIGATIONS AND (II) GRANTING RELATED RELIEF Hexion Holdings LLC ( Hexion ) and its affiliated debtors and debtors in possession (collectively, the Debtors ) respectfully submit this motion for the entry of interim and final orders, substantially in the forms attached as Exhibit A and Exhibit B (the Proposed Orders ), pursuant to sections 105(a) and 521(a)(1)(B) of title 11 of the United States Code (the Bankruptcy Code ), rule 1007 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ), and rule (b) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the Local Rules ), (i) authorizing the Debtors, in their discretion, to (a) maintain and administer customerrelated programs, practices, and policies (collectively, the Customer Programs ) and honor prepetition obligations to customers arising under the Customer Programs in the ordinary course of business and in a manner consistent with past practice (collectively, the Prepetition 1 The Debtors in these cases, along with the last four digits of each Debtor s federal tax identification number, are Hexion Holdings LLC (6842); Hexion LLC (8090); Hexion Inc. (1250); Lawter International Inc. (0818); Hexion CI Holding Company (China) LLC (7441); Hexion Nimbus Inc. (4409); Hexion Nimbus Asset Holdings LLC (4409); Hexion Deer Park LLC (8302); Hexion VAD LLC (6340); Hexion 2 U.S. Finance Corp. (2643); Hexion HSM Holdings LLC (7131); Hexion Investments Inc. (0359); Hexion International Inc. (3048); North American Sugar Industries Incorporated (9735); Cuban-American Mercantile Corporation (9734); The West India Company (2288); NL Coop Holdings LLC (0696); and Hexion Nova Scotia Finance, ULC (N/A). The address of the Debtors corporate headquarters is 180 East Broad Street, Columbus, Ohio Docket No. 8 Date Filed 4/1/19

6 Case KG Doc Filed 04/03/19 Page 3 of 27 Customer Obligations ) and (b) renew, replace, implement, modify, or terminate any of the Customer Programs, in each case, as the Debtors deem appropriate in their business judgment and in the ordinary course of business, without further application to the Court, and (ii) granting certain related relief. In support of this motion, the Debtors respectfully represent JURISDICTION AND VENUE 1. The Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334, and the Amended Standing Order of Reference from the United States District Court for the District of Delaware, dated as of February 29, This is a core proceeding pursuant to 28 U.S.C. 157(b) and, pursuant to Local Rule (f), the Debtors consent to the entry of a final order by the Court in connection with this motion to the extent that it is later determined that the Court, absent consent of the parties, cannot enter final orders or judgments in connection herewith consistent with Article III of the United States Constitution. Venue is proper before the Court pursuant to 28 U.S.C and Venue of these cases and this motion in this district is proper under 28 U.S.C and The statutory and legal predicates for the relief requested herein are sections 105(a), 363(b), 503(b)(9), 1107(a), and 1108 of the Bankruptcy Code. BACKGROUND 2. On April 1, 2019 (the Petition Date ), each of the Debtors commenced a voluntary case under chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware. The Debtors are authorized to operate their business and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No official committees have been appointed in these chapter 11 cases and no request has been made for the appointment of a trustee or examiner. 2

7 Case KG Doc Filed 04/03/19 Page 4 of Additional information about the Debtors business, capital structure, and the events leading up to the Petition Date are set forth in the Declaration of George F. Knight, Executive Vice President and Chief Financial Officer, in Support of the Debtors Chapter 11 Petitions and First Day Pleadings (the Knight Declaration), filed on the Petition Date. 2 RELIEF REQUESTED 4. By this motion, pursuant to sections 105(a), 363(b), 363(c), 1107(a), and 1108 of the Bankruptcy Code and Bankruptcy Rules 6003 and 6004, the Debtors respectfully request entry of interim and final orders authorizing, but not directing, the Debtors, in their discretion, to (i) maintain and administer the Customer Programs and honor the Prepetition Customer Obligations in the ordinary course of business and in a manner consistent with past practice, and (ii) renew, replace, implement, modify, or terminate any of the Customer Programs, in each case as the Debtors deem appropriate in their business judgment and in the ordinary course of business, without further application to the Court. 5. Further, the Debtors request that this Court authorize all applicable banks and other financial institutions to receive, process, honor, and pay all checks, drafts, electronic fund transfers, or other forms of payment drawn or issued on the Debtors bank accounts prior to the Petition Date for Prepetition Customer Obligations (or to reissue checks, drafts, electronic fund transfers, or other forms of payment drawn or issued on the Debtors bank accounts, as may be necessary), and authorize the banks and financial institutions to rely on the Debtors representations as to which checks, drafts, electronic fund transfers, or other forms of payment 2 Capitalized terms used but not defined in this motion have the meanings used in the Knight Declaration. 3

8 Case KG Doc Filed 04/03/19 Page 5 of 27 drawn or issued on the Debtors bank accounts are subject to this motion; provided that sufficient funds are on deposit in the applicable bank accounts to cover such payments. 3 BASIS FOR RELIEF REQUESTED I. FACTS SPECIFIC TO RELIEF REQUESTED A. Overview of the Debtors Customer Programs 6. In the ordinary course of business, the Debtors maintain several Customer Programs designed to drive sales, meet competitive pressures, build key relationships, and develop and sustain customer loyalty, including the Rebate Programs, the Offset Agreements, and Product Claims (each as defined below). The viability and success of the Debtors business depends on the patronage and loyalty of their customers, including nearly 1,300 unique customers in the last eighteen (18) months. 1. Rebate Programs 7. In the ordinary course of business, the Debtors offer rebate programs (the Rebate Programs ) in an effort to, among other things, attract new customers, incentivize customers to purchase more products, and support the development, promotion, and marketing of their products. Discontinuing the Rebate Programs would put the Debtors at a competitive disadvantage in the various markets they serve, as it is standard customary practice to offer such rebate programs. As a result, the Debtors revenues would be significantly diminished if the Rebate Programs were discontinued. 8. The Debtors offer several types of rebate programs. Some customers who hit certain volume thresholds are offered rebates in the form of credits. The amount of the credit 3 Contemporaneously with the filing of this motion, the Debtors have filed the Debtors Motion for Entry of Interim and Final Orders (I) Authorizing Continued Use of the Debtors Existing Cash Management System and Bank Accounts, (II) Waiving Certain United States Trustee Requirements, (III) Authorizing Continued Performance of Intercompany Transactions, and (IV) Granting Related Relief, which seeks, among other things, authority to continue using the Debtors cash management system, including their bank accounts. 4

9 Case KG Doc Filed 04/03/19 Page 6 of 27 varies, depending on the terms agreed with each customer. Some customers receive their rebate credits when they hit their volume, while others are credited on a quarterly basis. Customers who do not specifically request early payment receive their rebate credits in the calendar year following the year in which the applicable contract is completed. The amount of credits previously issued or to be issued based on prepetition sales activity is $2.1 million, all of which the Debtors seek authority to honor in the ordinary course of business postpetition. Rebates serve as price deductions for customers who hit certain volume thresholds and are offered to customers in the form of credits. The amount of the rebate increases in some contracts from zero percent (0%) to five percent (5%) as the volume of product, purchased by the ton, increases. The Debtors pay rebates pro-rata to annual consumption by issuing a credit note on a specified date in the year following the contract s completion, and customers may report failures in the calculation of the rebate greater than 5% in order to receive the proper rebate. There are also contracts under which the Debtors offer customers maximum unsecured trade credits to capture overdue amounts. Customers who do not specifically request early payment receive their rebate payments the next year. 9. A volume incentive cash rebate program is provided to a limited number of customers who act as distributors or direct sellers of the Debtors products, which offers a percent revenue rebate (usually between 5-10%) if certain revenue targets are met (the Volume Incentive Rebates ). The Volume Incentive Rebates are offered in an effort to build and maintain relationships with key customers or distributors of the Debtors products. This program bolsters key revenue streams for the Debtors whether directly, through increased sales, or indirectly through relationship building. For the 2018 fiscal year, the Debtors made payments of approximately $1.5 million to various customers on account of the Volume Incentive Rebates, 5

10 Case KG Doc Filed 04/03/19 Page 7 of 27 and the Debtors estimate that approximately $2.5 million in unpaid Volume Incentive Rebates have accrued as of the Petition Date. 2. Offset Arrangements 10. The Debtors have relationships with parties who serve as both customers and vendors to the Debtors. Some customers contracts include express offset agreements by which the Debtors and their customers agree that to the extent one party fails to pay for products, the non-defaulting party is entitled to offset any and all outstanding payment obligations or other indebtedness owed to it by the defaulting party against any payment obligations or other indebtedness that the non-defaulting party may owe to the defaulting party (the Offset Agreements ). The Debtors also have customers with whom they do not have express contracts, yet the ordinary course business arrangement between the parties allows for such similar offset arrangements. By this motion, the Debtors seek permission to honor any exercise by their customers under the Offset Agreements and to continue to honor such obligations in the future. The Debtors also seek authority to maintain their ordinary course offset arrangements with parties, even in the absence of express Offset Agreements. 3. Product Claims 11. The Debtors incur costs each year replacing products or providing credits to customers when it ships products that do not meet the customers specifications (the Product Claims ). The Debtors costs for the Product Claims were $23,000 in 2017 and $1.9 million in It is critical that they continue to make these expenditures on account of all Product Claims. Many of the customers and distributors that have purchased products and are entitled to replacement products or credits continue to purchase other products from the Debtors. Failing to honor their expectations may cause these customers to lose confidence in the Debtors and their products, potentially resulting in significant deterioration in sales and challenging hurdles to any 6

11 Case KG Doc Filed 04/03/19 Page 8 of 27 reorganization efforts. By this motion, the Debtors seek to honor all prepetition accrued obligations in connection with the Product Claims in the ordinary course of business. II. LEGAL BASIS FOR RELIEF REQUESTED A. Honoring the Prepetition Customer Obligations and Continuing the Customer Programs Is Appropriate under Sections 363(b) and 105(a) of the Bankruptcy Code and the Doctrine of Necessity 12. The relief requested in this motion is appropriate under sections 363(b) and 105(a) of the Bankruptcy Code and the doctrine of necessity. Under section 363(b)(1) of the Bankruptcy Code, a debtor may, in the exercise of its sound business judgment and after notice and a hearing, use, sell or lease, other than in the ordinary course of business, property of the estate. 11 U.S.C. 363(b)(1). Generally, the debtor is only required to show that a sound business purpose justifies the proposed use of property. In re Montgomery Ward Holding Corp., 242 B.R. 147, 153 (D. Del. 1999); see also In re Phx. Steel Corp., 82 B.R. 334, (Bankr. D. Del. 1987) (requiring good business reason for use under section 363(b) of the Bankruptcy Code). This standard prohibits other parties from second-guessing the debtor s business judgment if the debtor has shown that the proposed use will benefit the debtor s estate. See In re Johns-Manville Corp., 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986) ( Where the debtor articulates a reasonable basis for its business decisions (as distinct from a decision made arbitrarily or capriciously), courts will generally not entertain objections to the debtor s conduct. ); see also In re Tower Air, Inc., 416 F.3d 229, 238 (3d Cir. 2005) ( Overcoming the presumptions of the business judgment rule on the merits is a near-herculean task. ). 13. Likewise, section 105(a) of the Bankruptcy Code empowers the Court to issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code]. 11 U.S.C. 105(a). Courts have interpreted this provision to authorize payments on prepetition claims where the payments are essential to the success of the 7

12 Case KG Doc Filed 04/03/19 Page 9 of 27 debtor s reorganization under what is known as the necessity of payment doctrine. See In re Lehigh & New Eng. Ry., 657 F.2d 570, 581 (3d Cir. 1981) ( Thus, the necessity of payment doctrine teaches no more than, if a payment of a claim which arose prior to reorganization is essential to the continued operation of the [debtor s business] during reorganization, payment may be authorized ); see also In re Just for Feet, Inc., 242 B.R. 821, (D. Del. 1999) (holding that section 105(a) provides a statutory basis for payment of pre-petition claims under necessity of payment doctrine); In re Columbia Gas Sys., Inc., 171 B.R. 189, (Bankr. D. Del. 1994) ( The appropriate standard... is commonly referred to as the necessity of payment doctrine. ). 14. Continuing the Customer Programs without interruption and timely paying Prepetition Customer Obligations are vital to the Debtors business and will facilitate a smooth transition into chapter 11, enhancing the prospect of success of these cases. On the other hand, failing to honor the Customer Programs likely would erode the Debtors reputation and harm the Debtors customer relations, in turn, decreasing the Debtors chance for a successful reorganization. The Debtors believe that the requested relief will advance the restructuring of their business, both in terms of profitability and the engendering of goodwill with essential customers, especially at this critical time early in these cases. The cost of maintaining the Customer Programs and honoring the Prepetition Customer Obligations will be more than offset by the revenue generated by virtue that the Customer Programs remain in place. The Debtors therefore believe it is in the best interests of their estates and stakeholders to continue the Customer Programs and honor the Prepetition Customer Obligations as the Debtors see fit in the ordinary course of business. 8

13 Case KG Doc Filed 04/03/19 Page 10 of The Debtors Customer Programs are standard practice in the chemicals industry, and customers expect to benefit from these types of programs. The Debtors inability to honor their Customer Programs would place them at a sharp disadvantage to their competitors, at a time when they can least afford it. At this critical juncture, the Debtors cannot risk any loss of customer support, confidence, or development as a result of the Debtors failure to honor obligations to customers. Nor are the Debtors unique in this regard where retaining customer loyalty and patronage of customers is critical to a debtor s operations, courts in this District have granted relief similar to the relief requested Accordingly, for these reasons, the Debtors submit that payment of the Prepetition Customer Obligations is an appropriate exercise of the Debtors business judgment and the requested relief should be approved under sections 363(b) and 105(a) of the Bankruptcy Code. B. The Debtors Should Be Authorized to Pay Prepetition Customer Obligations Under Sections 1107(a) and 1108 of the Bankruptcy Code 17. The Debtors are operating their business as debtors in possession under sections 1107(a) and 1108 of the Bankruptcy Code, and they are therefore fiduciaries holding the bankruptcy estate[s] and operating the business[es] for the benefit of [their] creditors and (if the value justifies) [their] equity owners. In re CoServ, L.L.C., 273 B.R. 487, 497 (Bankr. N.D. Tex. 2002). A chapter 11 debtor in possession has the implicit duty to protect and preserve the estate, including an operating business s going-concern value. Id. 4 See, e.g., In re Things Remembered, Inc., Case No (KG) (Bankr. D. Del. Feb. 7, 2019) (D.I. 67); In re Checkout Holding Corp., Case No (KG) (Bankr. D. Del. Dec. 13, 2018) (D.I. 105); In re David s Bridal, Inc., Case No (LSS) (Bankr. D. Del. Nov. 20, 2018) (D.I. 92). 9

14 Case KG Doc Filed 04/03/19 Page 11 of Courts have noted that a debtor in possession can, in certain instances, fulfill its fiduciary duty only... by the preplan satisfaction of a prepetition claim. Id. The CoServ court specifically noted that preplan satisfaction of prepetition claims would be a valid exercise of a debtor s fiduciary duty when the payment is the only means to effect a substantial enhancement of the estate. Id. The court provided a three-prong test for determining whether a preplan payment on account of a prepetition claim was a valid exercise of a debtor s fiduciary duty Id. at 498. First, it must be critical that the debtor deal with the claimant. Second, unless it deals with the claimant, the debtor risks the probability of harm, or, alternatively, loss of economic advantage to the estate or the debtor s going concern value, which is disproportionate to the amount of the claimant s prepetition claim. Third, there is no practical or legal alternative by which the debtor can deal with the claimant other than by payment of the claim. 19. Payment of the Prepetition Customer Obligations meets each CoServ element. First, it is imperative that the Debtors preserve their relationships with their customers during these chapter 11 cases. In the Debtors business judgment, the uninterrupted maintenance of their Customer Programs is essential to maintaining customer loyalty. 20. Second, any delay in satisfying Prepetition Customer Obligations could damage the Debtors ability to retain existing customers and attract new ones, to the detriment of all stakeholders. In short, the potential harm and economic disadvantage that would stem from failing to honor the Prepetition Customer Obligations is grossly disproportionate to the amount of any prepetition claim that may be paid. 21. Third, the Debtors have carefully considered options other than the payment of the Prepetition Customer Obligations and have determined that there are no practical or legal alternatives to the payment of such obligations in the ordinary course of business. 10

15 Case KG Doc Filed 04/03/19 Page 12 of 27 Therefore, the Debtors can only meet their fiduciary duties as debtors in possession under sections 1107(a) and 1108 of the Bankruptcy Code by honoring the Prepetition Customer Obligations. 22. The Debtors believe that granting the relief requested furthers the Debtors ability to meet their obligations as debtors in possession to maximize the value of their estates for all constituents. Accordingly, honoring the Prepetition Customer Obligations is justified under sections 1107(a) and 1108 of the Bankruptcy Code. C. The Debtors Should Be Authorized to Maintain the Customer Programs and to Renew, Replace, Implement, Modify, or Terminate Such Programs in the Ordinary Course of Business Under Section 363(c)(1) of the Bankruptcy Code 23. Under section 363(c)(1) of the Bankruptcy Code, a debtor in possession may enter into transactions, including the sale or lease of property of the estate, in the ordinary course of business, without notice or a hearing, and may use property of the estate in the ordinary course of business without notice or a hearing. 11 U.S.C. 363(c)(1). Accordingly, section 363(c)(1) authorizes the Debtors to continue to maintain their Customer Programs in the ordinary course of business and to renew, replace, implement, modify, or terminate such programs postpetition, as necessary. 24. As described above, customer support and loyalty is crucial for the Debtors business. To maintain customer confidence, the Debtors require the flexibility to customize their Customer Programs to meet the needs of their customers. For the foregoing reasons, the Court should authorize the Debtors to maintain, renew, replace, implement, modify, or terminate their Customer Programs without further Court approval. 11

16 Case KG Doc Filed 04/03/19 Page 13 of 27 D. The Court Should Authorize Banks to Honor and Pay Checks Issued and Electronic Funds Transferred to Pay the Prepetition Customer Obligations 25. The Debtors further request that the Court authorize their banking institutions and all other applicable banks and other financial institutions to receive, process, honor, and pay any and all checks drawn or electronic funds relating to the Prepetition Customer Obligations, whether such checks were presented before or after the Petition Date, provided that the Debtors have sufficient funds on deposit in the applicable bank accounts to cover such payments. The Debtors have sufficient liquidity to pay such amounts as they become due in the ordinary course of business, and under the Debtors existing cash management system, checks or wire transfer requests can be readily identified as relating to an authorized payment of the Prepetition Customer Obligations. As such, the Debtors believe that checks or wire transfer requests, other than those relating to authorized payments, will not be honored inadvertently. The Debtors also seek authority to issue new postpetition checks or effect new electronic fund transfers, on account of the Prepetition Customer Obligations or to replace any prepetition checks or electronic fund transfer requests that may be dishonored or rejected as a result of the commencement of the Debtors chapter 11 cases. E. Interim Relief Is Necessary to Avoid Immediate and Irreparable Harm 26. Under Bankruptcy Rule 6003, the Court may grant a motion to use... property of the estate, including a motion to pay all or part of a claim that arose before the filing of the petition within 21 days after the chapter 11 case s commencement to the extent relief is necessary to avoid immediate and irreparable harm. Fed. R. Bankr. P Here, the relief requested is necessary to avoid immediate and irreparable harm to the Debtors and their estates, 12

17 Case KG Doc Filed 04/03/19 Page 14 of 27 as set forth in the Knight Declaration, and relief on an interim basis is therefore appropriate under Bankruptcy Rule 6003, if applicable The urgency of the relief requested justifies immediate relief. To ensure the relief requested is implemented immediately, the Debtors request that the Court waive the notice requirements under Bankruptcy Rule 6004(a), if applicable, and the 14-day stay of an order authorizing the use, sale, or lease of property under Bankruptcy Rule 6004(h). NOTICE 28. The Debtors will provide notice of this motion by facsimile, , overnight delivery, or hand delivery to (i) Linda J. Casey of the Office of the United States Trustee for the District of Delaware; (ii) the holders of the 30 largest unsecured claims against the Debtors on a consolidated basis; (iii) the United States Attorney s Office for the District of Delaware; (iv) the attorneys general for the states in which the Debtors conduct business; (v) Akin Gump Strauss Hauer & Feld LLP as counsel to the ad hoc group of first lien noteholders; (vi) Milbank LLP as counsel to the ad hoc group of crossover noteholders; (vii) Jones Day as counsel to the ad hoc group of 1.5 lien noteholders; (viii) Simpson Thacher & Bartlett LLP as counsel to JPMorgan Chase Bank, N.A. as administrative agent and collateral agent under the Debtors prepetition asset-based revolving credit facility; (ix) Wilmington Trust, National Association, as trustee under the First Lien Notes and the Second Lien Notes; (x) Arnold & Porter Kaye Scholer LLP as counsel to Wilmington Savings Fund Society, FSB, as trustee under the 1.5 Lien Notes; (xi) The Bank of New York Mellon, as trustee under the Borden Debentures; (xii) Simpson Thacher & Bartlett LLP and Landis Rath & Cobb LLP as counsel to the administrative agent and collateral agent under the Debtors postpetition financing facility; (xiii) 5 See the Knight Declaration filed concurrently with this motion. 13

18 Case KG Doc Filed 04/03/19 Page 15 of 27 the Internal Revenue Service; (xiv) the Securities and Exchange Commission; (xv) the Pension Benefit Guaranty Corporation; and (xvi) the Environmental Protection Agency. Following the hearing, a copy of this motion and any order entered with respect to it will be served on the foregoing parties and all parties having filed requests for notice in these chapter 11 cases. A copy of the motion is also available on the Debtors case website at http// 29. As this motion is seeking first day relief, notice of this motion and any order entered hereon will be served on all parties required by Local Rule (m). Due to the urgency of the relief requested, the Debtors submit that no other or further notice is necessary. NO PRIOR MOTION 30. The Debtors have not made any prior motion for the relief sought in this motion to this Court or any other. The Debtors respectfully request entry of an interim and final order, substantially in the forms attached as Exhibit A and Exhibit B granting the relief requested in its entirety and any other relief as is just and proper. 14

19 Case KG Doc Filed 04/03/19 Page 16 of 27 Dated April 1, 2019 Wilmington, Delaware /s/ Michael J. Merchant Mark D. Collins (No. 2981) Michael J. Merchant (No. 3854) Amanda R. Steele (No. 5530) Brendan J. Schlauch (No. 6115) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 North King Street Wilmington, Delaware Telephone Fax and - George A. Davis (pro hac vice pending) Andrew M. Parlen (pro hac vice pending) Hugh Murtagh (pro hac vice pending) LATHAM & WATKINS LLP 885 Third Avenue New York, New York Telephone (212) Facsimile (212) george.davis@lw.com andrew.parlen@lw.com hugh.murtagh@lw.com - and - Caroline A. Reckler (pro hac vice pending) Jason B. Gott (pro hac vice pending) LATHAM & WATKINS LLP 330 North Wabash Avenue, Suite 2800 Chicago, Illinois Telephone (312) Facsimile (312) caroline.reckler@lw.com jason.gott@lw.com Proposed Attorneys for the Debtors and Debtors in Possession 15

20 Case KG Doc Filed 04/03/19 Page 17 of 27 Exhibit A Proposed Interim Order

21 Case KG Doc Filed 04/03/19 Page 18 of 27 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re HEXION HOLDINGS LLC, et al., 1 Debtors. x x Chapter 11 Case No ( ) Joint Administration Requested INTERIM ORDER (I) AUTHORIZING THE DEBTORS TO MAINTAIN CUSTOMER PROGRAMS AND HONOR RELATED PREPETITION OBLIGATIONS AND (II) GRANTING RELATED RELIEF Upon the Debtors motion (the Motion ) 2 for entry of an interim order (this Interim Order ) (i) authorizing the Debtors, in their discretion, to (a) maintain and administer customer-related programs, practices, and policies (collectively, the Customer Programs ) and honor prepetition obligations to customers arising under the Customer Programs in the ordinary course of business and in a manner consistent with past practice (collectively, the Prepetition Customer Obligations ) and (b) renew, replace, implement, modify, or terminate any of the Customer Programs, in each case, as the Debtors deem appropriate in their business judgment and in the ordinary course of business, without further application to the Court and (ii) granting certain related relief, all as more fully set forth in the Motion; and due and sufficient notice of the Motion having been provided under the particular circumstances, and it appearing that no other or further notice need be provided; and the Court having jurisdiction to consider the Motion and 1 The Debtors in these cases, along with the last four digits of each Debtor s federal tax identification number, are Hexion Holdings LLC (6842); Hexion LLC (8090); Hexion Inc. (1250); Lawter International Inc. (0818); Hexion CI Holding Company (China) LLC (7441); Hexion Nimbus Inc. (4409); Hexion Nimbus Asset Holdings LLC (4409); Hexion Deer Park LLC (8302); Hexion VAD LLC (6340); Hexion 2 U.S. Finance Corp. (2643); Hexion HSM Holdings LLC (7131); Hexion Investments Inc. (0359); Hexion International Inc. (3048); North American Sugar Industries Incorporated (9735); Cuban-American Mercantile Corporation (9734); The West India Company (2288); NL Coop Holdings LLC (0696); and Hexion Nova Scotia Finance, ULC (N/A). The address of the Debtors corporate headquarters is 180 East Broad Street, Columbus, Ohio Capitalized terms used but not defined in this Interim Order have the meanings used in the Motion.

22 Case KG Doc Filed 04/03/19 Page 19 of 27 the relief requested therein in accordance with and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated as of February 29, 2012; and consideration of the Motion and the relief requested therein being a core proceeding under 28 U.S.C. 157(b)(2); and the Court having authority to enter a final order consistent with Article III of the United States Constitution; and venue being proper before this Court under 28 U.S.C and 1409; and a hearing having been held to consider the relief requested in the Motion (the Hearing ); and upon the Knight Declaration and the record of the Hearing and all the proceedings before the Court; and the Court having found and determined the relief requested in the Motion is necessary to avoid immediate and irreparable harm to the Debtors and their estates, as contemplated by Bankruptcy Rule 6003, and such relief to be in the best interests of the Debtors, their estates and creditors, and any parties in interest; and the legal and factual bases set forth in the Motion and at the Hearing having established just cause for the relief granted herein; and after due deliberation thereon and sufficient cause appearing therefor, it is HEREBY ORDERED THAT 1. The Motion is granted on an interim basis as set forth herein. 2. The Debtors are authorized, but not directed, in their discretion and business judgment, to maintain, renew, replace, implement, modify, or terminate the Customer Programs as needed, without obtaining an order of the Court. 3. The Debtors are authorized, but not directed, in their discretion and businesses judgment, to satisfy the Prepetition Customer Obligations as they come due in the ordinary course of business. 4. The Debtors banks and financial institutions are authorized to receive, process, honor, and pay all checks, drafts, electronic fund transfers, or other forms of payment 2

23 Case KG Doc Filed 04/03/19 Page 20 of 27 drawn or issued on the Debtors bank accounts before the Petition Date for Prepetition Customer Obligations that have not been honored and paid as of the Petition Date (or to reissue checks, drafts, electronic fund transfers, or other forms of payment drawn or issued on the Debtors bank accounts, as may be necessary), and are authorized to rely on the Debtors representations as to which checks, drafts, transfers, or other forms of payment drawn or issued on the Debtors bank accounts are subject to this Interim Order; provided that sufficient funds are on deposit in the applicable bank accounts to cover such payments. 5. Notwithstanding anything in the Motion or this Interim Order to the contrary, any payment made or action taken by any of the Debtors pursuant to the authority granted herein, as well as the exercise of any and all other rights and authorizations granted or approved hereunder, shall be subject in all respects to, as applicable, the orders approving the Debtors use of cash collateral and/or post-petition debtor-in-possession financing facilities (collectively, the DIP Orders ). 6. Nothing in the Motion or this Interim Order or the relief granted herein (including any actions taken or payments made by the Debtors) is to be construed as (i) an admission of the validity of any claim against the Debtors; (ii) an admission with respect to the validity, extent, or perfection of any lien; (iii) a waiver of the Debtors rights or those of any party in interest to dispute, contest, setoff, or recoup any claim, or assert any related rights, claims, or defenses; (iv) a waiver of the Debtors rights or those of any party in interest over the validity, extent, perfection, or possible avoidance of any lien; or (v) an approval or assumption of any agreement, contract, program, policy, or lease under section 365 of the Bankruptcy Code. 7. The final hearing (the Final Hearing ) on the Motion will be held on, 2019, at.m. (Eastern Time). Any objections or responses 3

24 Case KG Doc Filed 04/03/19 Page 21 of 27 to entry of a final order on the Motion must be filed on or before 400 p.m. (Eastern Time) on, 2019, and served on the following parties (i) the Office of the United States Trustee for the District of Delaware, J. Caleb Boggs Federal Building, 844 North King Street, Suite 2207, Wilmington, Delaware (Attn Linda J. Casey, Esq. (Linda.Casey@usdoj.gov)); (ii) Latham & Watkins LLP, 885 Third Avenue, New York, New York (Attn George Davis (George.Davis@lw.com), Andrew Parlen (Andrew.Parlen@lw.com), and Hugh Murtagh (Hugh.Murtagh@lw.com)) and 330 North Wabash Avenue, Suite 2800, Chicago, Illinois (Attn Caroline Reckler (Caroline.Reckler@lw.com) and Jason Gott (Jason.Gott@lw.com)), proposed co-counsel for the Debtors; and (iii) Richards, Layton & Finger, P.A., One Rodney Square, 920 North King Street, Wilmington, Delaware (Attn Mark D. Collins (Collins@RLF.com), Michael J. Merchant (Merchant@RLF.com), Amanda R. Steele (Steele@RLF.com), and Brendan J. Schlauch (Schlauch@RLF.com)), proposed co-counsel for the Debtors. In the event no objections to entry of a final order on the Motion are timely received, this Court may enter such final order without need for the Final Hearing. 8. The requirements set forth in Bankruptcy Rule 6004(a) are hereby waived. 9. Notwithstanding the applicability of Bankruptcy Rule 6004(h), the terms and conditions of this Interim Order are immediately effective and enforceable upon its entry. 10. The Debtors are authorized and empowered to take all actions necessary or appropriate to implement the relief granted in this Interim Order. 4

25 Case KG Doc Filed 04/03/19 Page 22 of This Court retains jurisdiction over all matters arising from or related to the implementation or interpretation of this Interim Order. Dated, 2019 Wilmington, Delaware UNITED STATES BANKRUPTCY JUDGE 5

26 Case KG Doc Filed 04/03/19 Page 23 of 27 Exhibit B Proposed Final Order

27 Case KG Doc Filed 04/03/19 Page 24 of 27 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re HEXION HOLDINGS LLC, et al., 1 Debtors. x x Chapter 11 Case No ( ) Joint Administration Requested FINAL ORDER (I) AUTHORIZING THE DEBTORS TO MAINTAIN CUSTOMER PROGRAMS AND HONOR RELATED PREPETITION OBLIGATIONS AND (II) GRANTING RELATED RELIEF Upon the Debtors motion (the Motion ) 2 for entry of a final order (this Final Order ) (i) authorizing the Debtors, in their discretion, to (a) maintain and administer customerrelated programs, practices, and policies (collectively, the Customer Programs ) and honor prepetition obligations to customers arising under the Customer Programs in the ordinary course of business and in a manner consistent with past practice (collectively, the Prepetition Customer Obligations ) and (b) renew, replace, implement, modify, or terminate any of the Customer Programs, in each case, as the Debtors deem appropriate in their business judgment and in the ordinary course of business, without further application to the Court and (ii) granting certain related relief, all as more fully set forth in the Motion; and due and sufficient notice of the Motion having been provided under the particular circumstances, and it appearing that no other or further notice need be provided; and the Court having jurisdiction to consider the Motion and 1 The Debtors in these cases, along with the last four digits of each Debtor s federal tax identification number, are Hexion Holdings LLC (6842); Hexion LLC (8090); Hexion Inc. (1250); Lawter International Inc. (0818); Hexion CI Holding Company (China) LLC (7441); Hexion Nimbus Inc. (4409); Hexion Nimbus Asset Holdings LLC (4409); Hexion Deer Park LLC (8302); Hexion VAD LLC (6340); Hexion 2 U.S. Finance Corp. (2643); Hexion HSM Holdings LLC (7131); Hexion Investments Inc. (0359); Hexion International Inc. (3048); North American Sugar Industries Incorporated (9735); Cuban-American Mercantile Corporation (9734); The West India Company (2288); NL Coop Holdings LLC (0696); and Hexion Nova Scotia Finance, ULC (N/A). The address of the Debtors corporate headquarters is 180 East Broad Street, Columbus, Ohio Capitalized terms used but not defined in this Final Order have the meanings used in the Motion.

28 Case KG Doc Filed 04/03/19 Page 25 of 27 the relief requested therein in accordance with 28 U.S.C. 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated as of February 29, 2012; and consideration of the Motion and the relief requested therein being a core proceeding under 28 U.S.C. 157(b)(2); and this Court may enter a final order consistent with Article III of the United States Constitution; and venue being proper before this Court under 28 U.S.C and 1409; and a hearing having been scheduled and, to the extent necessary, held to consider the relief requested in the Motion (the Hearing ); and upon the Knight Declaration and the record of the Hearing and all the proceedings before the Court; and the Court having found and determined the relief requested in the Motion to be in the best interests of the Debtors, their estates and creditors, and any parties in interest; and that the legal and factual bases set forth in the Motion and at the Hearing having established just cause for the relief granted herein; and after due deliberation thereon and sufficient cause appearing therefor, it is HEREBY ORDERED THAT 1. The Motion is granted on a final basis as set forth herein. 2. The Debtors are authorized, but not directed, in their discretion and business judgment, to maintain, renew, replace, implement, modify, or terminate the Customer Programs as needed, without obtaining an order of the Court. 3. The Debtors are authorized, but not directed, in their discretion and businesses judgment, to satisfy the Prepetition Customer Obligations as they come due in the ordinary course of business. 4. The Debtors banks and financial institutions are authorized to receive, process, honor, and pay all checks, drafts, electronic fund transfers, or other forms of payment drawn or issued on the Debtors bank accounts before the Petition Date for Prepetition Customer 2

29 Case KG Doc Filed 04/03/19 Page 26 of 27 Obligations that have not been honored and paid as of the Petition Date (or to reissue checks, drafts, electronic fund transfers, or other forms of payment drawn or issued on the Debtors bank accounts, as may be necessary), and are authorized to rely on the Debtors representations as to which checks, drafts, transfers, or other forms of payment drawn or issued on the Debtors bank accounts are subject to this Final Order; provided that sufficient funds are on deposit in the applicable bank accounts to cover such payments. 5. Notwithstanding anything in the Motion or this Final Order to the contrary, any payment made or action taken by any of the Debtors pursuant to the authority granted herein, as well as the exercise of any and all other rights and authorizations granted or approved hereunder, shall be subject in all respects to, as applicable, the orders approving the Debtors use of cash collateral and/or post-petition debtor-in-possession financing facilities (collectively, the DIP Orders ). 6. Nothing in the Motion or this Final Order or the relief granted herein (including any actions taken or payments made by the Debtors) is to be construed as (i) an admission of the validity of any claim against the Debtors; (ii) an admission with respect to the validity, extent, or perfection of any lien; (iii) a waiver of the Debtors rights or those of any party in interest to dispute, contest, setoff, or recoup any claim, or assert any related rights, claims, or defenses; (iv) a waiver of the Debtors rights or those of any party in interest over the validity, extent, perfection, or possible avoidance of any lien; or (v) an approval or assumption of any agreement, contract, program, policy, or lease under section 365 of the Bankruptcy Code. 7. The requirements set forth in Bankruptcy Rule 6004(a) are hereby waived. 8. Notwithstanding the applicability of Bankruptcy Rule 6004(h), the terms and conditions of this Final Order are immediately effective and enforceable upon its entry. 3

30 Case KG Doc Filed 04/03/19 Page 27 of The Debtors are authorized and empowered to take all actions necessary or appropriate to implement the relief granted in this Final Order. 10. This Court retains jurisdiction over all matters arising from or related to the implementation or interpretation of this Final Order. Dated, 2019 Wilmington, Delaware UNITED STATES BANKRUPTCY JUDGE 4

31 Case KG Doc Filed 04/03/19 Page 1 of 6 EXHIBIT B

32 Case KG Doc Filed 04/03/19 Page 2 of 6 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re HEXION HOLDINGS LLC, et al., 1 Debtors. x x Chapter 11 Case No (KG) Jointly Administered Re Docket No. 8 INTERIM ORDER (I) AUTHORIZING THE DEBTORS TO MAINTAIN CUSTOMER PROGRAMS AND HONOR RELATED PREPETITION OBLIGATIONS AND (II) GRANTING RELATED RELIEF Upon the Debtors motion (the Motion ) 2 for entry of an interim order (this Interim Order ) (i) authorizing the Debtors, in their discretion, to (a) maintain and administer customer-related programs, practices, and policies (collectively, the Customer Programs ) and honor prepetition obligations to customers arising under the Customer Programs in the ordinary course of business and in a manner consistent with past practice (collectively, the Prepetition Customer Obligations ) and (b) renew, replace, implement, modify, or terminate any of the Customer Programs, in each case, as the Debtors deem appropriate in their business judgment and in the ordinary course of business, without further application to the Court and (ii) granting certain related relief, all as more fully set forth in the Motion; and due and sufficient notice of the Motion having been provided under the particular circumstances, and it appearing that no other 1 The Debtors in these cases, along with the last four digits of each Debtor s federal tax identification number, are Hexion Holdings LLC (6842); Hexion LLC (8090); Hexion Inc. (1250); Lawter International Inc. (0818); Hexion CI Holding Company (China) LLC (7441); Hexion Nimbus Inc. (4409); Hexion Nimbus Asset Holdings LLC (4409); Hexion Deer Park LLC (8302); Hexion VAD LLC (6340); Hexion 2 U.S. Finance Corp. (2643); Hexion HSM Holdings LLC (7131); Hexion Investments Inc. (0359); Hexion International Inc. (3048); North American Sugar Industries Incorporated (9735); Cuban-American Mercantile Corporation (9734); The West India Company (2288); NL Coop Holdings LLC (0696); and Hexion Nova Scotia Finance, ULC (N/A). The address of the Debtors corporate headquarters is 180 East Broad Street, Columbus, Ohio Capitalized terms used but not defined in this Interim Order have the meanings used in the Motion. RLF v.1 Docket No. 97 Filed 4/2/19