UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) CHEMTURA CORPORATION, et al., 1 ) Case No. 09-11233 (REG) ) Debtors. ) Jointly Administered ) ORDER AUTHORIZING THE EMPLOYMENT AND RETENTION OF DELOITTE FINANCIAL ADVISORY SERVICES LLP TO PROVIDE BANKRUPTCY CLAIMS ADMINISTRATION AND EMERGENCE ACCOUNTING SERVICES FOR THE DEBTORS AND DEBTORS IN POSSESSION NUNC PRO TUNC TO SEPTEMBER 9, 2009 Upon the application (the Application ) 2 of the above-captioned debtors and debtors in possession (collectively, the Debtors ) for the entry of an order authorizing the Debtors to employ and retain Deloitte Financial Advisory Services LLP ( Deloitte FAS ) to provide Bankruptcy Claims Administration Services and Emergence Accounting Services nunc pro tunc September 9, 2009, pursuant to section 327(a) of title 11 of the United States Code (the Bankruptcy Code ), Rules 2014(a) and 6003 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 ); and the Court having jurisdiction to consider the 1 2 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal taxpayeridentification number, are: Chemtura Corporation (3153); A&M Cleaning Products, LLC (4712); Aqua Clear Industries, LLC (1394); ASCK, Inc. (4489); ASEPSIS, Inc. (6270); BioLab Company Store, LLC (0131); BioLab Franchise Company, LLC (6709); Bio-Lab, Inc. (8754); BioLab Textile Additives, LLC (4348); CNK Chemical Realty Corporation (5340); Crompton Colors Incorporated (3341); Crompton Holding Corporation (3342); Crompton Monochem, Inc. (3574); GLCC Laurel, LLC (5687); Great Lakes Chemical Corporation (5035); Great Lakes Chemical Global, Inc. (4486); GT Seed Treatment, Inc. (5292); HomeCare Labs, Inc. (5038); ISCI, Inc. (7696); Kem Manufacturing Corporation (0603); Laurel Industries Holdings, Inc. (3635); Monochem, Inc. (5612); Naugatuck Treatment Company (2035); Recreational Water Products, Inc. (8754); Uniroyal Chemical Company Limited (Delaware) (9910); Weber City Road LLC (4381); and WRL of Indiana, Inc. (9136). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Application. K&E 15885102.
Application and the relief requested therein pursuant to 28 U.S.C. 157 and 1334; and consideration of the Application and the relief requested therein being a core proceeding pursuant to 28 U.S.C. 157(b); and venue being proper before this Court pursuant to 28 U.S.C. 1408 and 1409; and the Court having reviewed the Application, the Declaration of Kirk Blair, a partner at Deloitte FAS (the Blair Declaration ); and it appearing that the relief requested is in the best interests of the Debtors estates, their creditors and other parties in interest; and the Court being satisfied based on the representations made in the Application and the Blair Declaration that Deloitte FAS does not represent or hold any interest adverse to the Debtors or the Debtors estates as required by section 327(a) of the Bankruptcy Code, Rule 2014 of the Bankruptcy Rules and Local Rule 2014-1 and is a disinterested person as that term is defined in section 101(14) of the Bankruptcy Code; and notice of the Application appearing to be adequate and appropriate under the circumstances; and the objection to the Application filed by Jon Eric Jacks (Docket No. 1362) and joined by Peter A. Pizzi (Docket No. 1384) having been overruled on the merits for the reasons set forth at the hearing before the Court; and after due deliberation and sufficient cause appearing therefor, it is ORDERED that: 1. The Application is granted to the extent set forth herein, nunc pro tunc to September 9, 2009. 2. The Debtors are authorized to employ and retain Deloitte FAS to provide Bankruptcy Claims Administration Services and Emergence Accounting Services in accordance with the terms and conditions set forth in the Application and in that certain engagement letter, dated September 24, 2009, annexed hereto as Exhibit 1 (the Engagement Letter ). K&E:15699227.4 2
3. Deloitte FAS is authorized to render professional services to the Debtors as described in the Application and the Engagement Letter. Specifically, Deloitte FAS s assistance will involve, the following specific Emergence Accounting Services: 3 (a) Initial Scope. Deloitte FAS will work with the Debtors management ( Management ) to develop a project plan and timetable to assist Management with its oversight of the work effort of various internal and external parties that are or will be participating in the overall effort to complete the implementation of Fresh-Start Accounting. In connection with this effort, Deloitte FAS will: Perform interviews with the Debtors personnel in various accounting, financial reporting, tax, systems and other operational areas, as necessary to address the critical elements of implementing Fresh-Start Accounting; Discuss financial reporting requirements and timeframes for issuance; Review financial information requirements (i.e., financial statements and chart of account detail) and discuss with Management; Discuss reporting units and legal entity structure; Consider existing efforts in process or completed in developing the project plan (such as valuation work to be performed by Duff & Phelps LLC, enterprise value by Lazard Frères & Co. LLC, tax claims work by KPMG LLP, or others); and Assist and advise Management in the drafting of a project plan to address emergence accounting requirements. (b) Second Phase Scope. Deloitte FAS will provide any or all of the following services, as may be requested by the Debtors and agreed to by Deloitte FAS, upon completion of the initial scope: Planning for, determination of and substantiation of the Fresh-Start Balance Sheet under Statement of Position 90-7 Assist Management in its development of an implementation approach for Fresh-Start Accounting, starting with any necessary training support; Advise and provide recommendations to Management in connection with its determination of POR adjustments necessary to 3 The description of the services set forth herein is a summary only and is qualified in its entirety by the actual terms and conditions of the Engagement Letter. K&E:15699227.4 3
record the impact of the POR to the books of entry of the appropriate legal entities; Advise Management as it determines the appropriate recoveries to allowed claimants and the allocation of resulting gains on extinguishment or other earnings impacts to separate legal entities within the Debtors corporate structure; Review the POR and other related documents to identify and advise Management and provide recommendations on necessary accounting adjustments resulting from POR provisions; and Advise Management in connection with its estimation of recoveries to claimants for accrual accounting purposes, including comparisons with the Debtors claims database to estimate liabilities related to contingent, unliquidated and disputed claims; Assist Management in its determination of re-valuation and other fresh-start adjustments necessary to comply with the accounting and reporting requirements of SOP 90-7; and Advise Management as it records and substantiates adjustments necessary to determine the Debtors opening fresh-start balance sheet, as applicable, including preparation of analyses and packaging of other necessary documentation to support adjustments, including internal control considerations. Other Related Advice and Assistance with Accounting and Financial Reporting Advise Management as it prepares accounting information and disclosures in support of public and/or private financial filings such as 10-K or 10-Q s or lender statements; Assist Management with other valuation matters as necessary for financial reporting disclosures; Advise Management as it evaluates existing internal controls and/or develops new controls for Fresh-Start Accounting implementation; and Assist Management with its responses to questions or other requests from the Debtors external auditors regarding bankruptcy accounting and reporting matters. Application Support Assist Management in its preparation and implementation of the accounting treatments and systems updates required for Fresh-Start Accounting implementation as of the fresh-start reporting date. Application support may include assistance to Management with the following items as agreed to with Management: definition of specific processing requirements; programming specifications; application configuration and set-up; interface development; data K&E:15699227.4 4
cleansing and reconciliation; and project management and administration. Other Related Services Assist Management with its post-emergence accounting, reporting, valuation or process and systems implications of POR and freshstart reporting; and Assist Management as requested and agreed to by Deloitte FAS in assessing whether valuation work performed by others meets the requirements for adopting Fresh-Start Accounting. 4. Additionally, Deloitte FAS s assistance will involve, the following specific Bankruptcy Administration Services: (a) (b) (c) (d) (e) (f) (g) Assist Management in creating, populating, and administering a claims database populated with scheduled liabilities, which will serve as a management tool to help coordinate the claim reconciliation process; 4 Assist Management in merging the official claims agent s filed claim information into Management claims database; Assist in formatting the scheduled and the official filed claim information for ease in comparison and evaluation of the two sets of claim values; Assist Management in comparing the Debtors scheduled claim information to the official filed claim information, including the preparation of preliminary notes of observations on the comparison for further review and completion by Management; Assist Management in completing the individual claim packets, including initialing and dating, with instructions regarding claim status; Assist Management to update the Debtors claims database to incorporate Management s evaluations of individual claims; Assist Management to transfer the updated claim information from Management claims database to formats prescribed by the Bankruptcy Code, Bankruptcy Rules, or the Court as a basis for the preparation of draft amendments to the Schedules of Assets and Liabilities and/or draft 4 The official claims database will be maintained by Kurtzman Carson Consultants, the Debtors courtappointed Claims Agent. K&E:15699227.4 5
claim objection exhibits for review by Management and the Debtors attorneys; (h) (i) Upon completion of review, Deloitte FAS will forward copies of the amended Schedules of Assets and Liability and/or claim objection exhibits to the Debtors for certification and transmission by the Debtors and their attorneys in connection with their bankruptcy court filings on their behalf; and Assist as the Debtors periodically request and provide copies of status reports produced from the claims database that summarize the Debtors evaluations of the claim liabilities, by type and by class. 5. To the extent the Debtors request additional services not covered under the Engagement Letter, Deloitte FAS may enter into additional engagement letters, as necessary, and shall file a notice of presentment with the Court for approval of any such engagement letters. 6. Deloitte FAS shall apply for compensation for professional services rendered and reimbursement of expenses incurred in connection with the Debtors chapter 11 cases in compliance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, guidelines established by the Office of the United States Trustee for the Southern District of New York and any other applicable procedures and orders of the Court. 7. Notwithstanding anything to the contrary set forth above, the United States Trustee retains all rights to object to Deloitte FAS s interim and final fee applications (including expense reimbursement) on all grounds including the reasonableness standard provided for in section 330 of the Bankruptcy Code. 8. If at any time Deloitte FAS increases the rates for services, Deloitte FAS shall file a declaration with the Court and provide notice of such increases to the applicable notice parties referenced in the Application. K&E:15699227.4 6
9. Consistent with paragraph 10 of the General Business Terms of the Engagement Letter, nothing in the Engagement Letter shall alter in any way the duties imposed by law on Deloitte FAS in respect of the services described herein. 10. The Court will hold a hearing on appropriate notice as may be requested by the U.S. Trustee or Deloitte FAS to consider Deloitte FAS s contractual right to indemnity under the Engagement Letter. 11. In the event the Court finds Deloitte FAS has a contractual right to indemnity, all requests of Deloitte FAS for payment of indemnity pursuant to the Engagement Letter shall be made by means of an application (interim or final as the case may be) and shall be subject to review by the Court to ensure that payment of such indemnity conforms to the terms of the Engagement Letter and is reasonable based upon the circumstances of the litigation or settlement in respect of which indemnity is sought, provided, however, that in no event shall Deloitte FAS be indemnified in the case of its own bad-faith, self-dealing, breach of fiduciary duty (if any), gross negligence or willful misconduct. 12. In no event shall Deloitte FAS be indemnified if the Debtor or a representative of the estate asserts a claim for, and a court determines by final order that such claim arose out of, Deloitte FAS s own bad-faith, self-dealing, breach of fiduciary duty (if any), gross negligence, or willful misconduct. 13. The Debtors are authorized to take all actions necessary to effectuate the relief granted pursuant to this order in accordance with the Application. K&E:15699227.4 7
14. The Court retains jurisdiction with respect to all matters arising from or related to the implementation of this order. New York, New York Date: November 23, 2009 s/ Robert E. Gerber Honorable Robert E. Gerber United States Bankruptcy Judge K&E:15699227.4 8
Exhibit 1 Engagement Letter