iesy Repository GmbH - Irish Stock Exchange

• Claims against the Issuer and such Subsidiary Guarantor may only be pursued in accordance with the rules set
forth in the German Insolvency Code (Insolvenzordnung).
In an insolvency proceeding over the assets of the Issuer or any Subsidiary Guarantor, the claims arising from the
Notes or the applicable Subsidiary Guarantee would rank as (non-preferred) insolvency claims (Insolvenzforderungen) that
have to be filed with the insolvency administrator. If the insolvency administrator is convinced that the lodged claims
constitute a valid and enforceable payment obligation of the debtor, he would acknowledge such claim which is then entitled
to receive a dividend quota (if any) at a later stage. Insolvency claims only receive a dividend quota after all claims for
preferential satisfaction based on security interests (Absonderungsrechte) and preferred claims (Masseforderungen) against
the insolvency estate have been settled and satisfied in full. In addition, the effective distribution of monies among the
holders of insolvency claims, if any, regularly only occurs when the insolvency process is terminated which may, depending
on the size and complexity of the case, take up to several years.
As a general principle, the claims arising from a Subsidiary Guarantee may be enforced against a Subsidiary Guarantor
outside of the insolvency proceedings over the assets of the Issuer. However, any insolvency proceeding over the assets of
the Issuer would be a rather strong indication that the overall financial situation of the entire group of affiliated companies
has significantly deteriorated, which may cause a Subsidiary Guarantor to subsequently file for insolvency.
In an insolvency proceeding over the assets of a Subsidiary Guarantor, the claims arising from a Subsidiary Guarantee
are very likely to be treated as a subordinated insolvency claim (nachrangige Insolvenzforderungen). Subordinated
insolvency claims are not eligible to participate in the insolvency proceedings over the assets of a Subsidiary Guarantor
unless the insolvency court handling the case has granted special permission allowing these subordinated insolvency claims
to be filed. Such permission will only be granted if assets in the insolvency estate remain after all claims for preferential
satisfaction based on security interests (Absonderungsrechte), preferred claims against the estate (Masseforderungen), and all
(non-subordinated) insolvency claims (Insolvenzforderungen) have been settled and satisfied in full. This scenario almost
never occurs in insolvency proceedings based on and governed by German insolvency law.
The position of secured creditors depends on the type of collateral granted to them. Creditors secured by pledges over
partnership interests and shares in subsidiaries of the debtor are entitled to preferential satisfaction with regard to the
proceeds realized in an enforcement process which has to be effected by means of a public auction outside the insolvency
process. However, in the absence of authoritative case law, it is uncertain whether the secured creditors are entitled to initiate
the enforcement process in respect of the pledged partnership interests/shares on their own or, as far as the pledged assets are
part of any insolvent estate, whether the insolvency administrator has standing to realize the pledges on behalf of and for the
benefit of the secured creditors. In the latter case, the administrator would be entitled to a handling fee of generally 9% of the
enforcement proceeds (plus VAT, if any) for the benefit of the insolvent estate which would be deducted from the
enforcement proceeds.
In addition, the value of the security granted would be significantly impaired or even entirely eliminated in the event
that insolvency proceedings are also opened for iesy Hessen or its general partner. In such scenario, the security granted by
means of the pledges over the partnership interests or shares would be structurally subordinated and would therefore only be
entitled to proceeds from the liquidation of the(se) insolvency estate(s) if there is a remainder after all preferred claims
against the insolvency estate, insolvency claims, and security rights granted over the assets of New iesy, iesy Hessen or iesy
GP are satisfied in full.
Furthermore, in German insolvency proceedings, an insolvency administrator may challenge transactions that are
deemed detrimental to insolvency creditors and were effected prior to the commencement of insolvency proceedings. Such
transactions can include the payment of any amounts to the holders of the Notes as well as providing credit support for their
benefit. The administrator’s right to challenge transactions can, depending on the circumstances, extend to transactions
during the ten-year period prior to the filing of the petition for commencement of insolvency proceedings. In the event such a
transaction is successfully avoided, the holders of the Notes would be under an obligation to repay the amounts received or to
waive the Subsidiary Guarantees or Security. In particular, an act (Rechtshandlung) or a transaction (Rechtsgeschäft) (which
term includes the provision of security or the payment of debt) may be avoided in the following cases:
• any act granting an insolvency creditor, or enabling an insolvency creditor to obtain, security or satisfaction (i) if
such act was taken during the last three months prior to the filing of the petition for the commencement of the
insolvency proceedings, provided that the insolvent was illiquid at the time when such act was taken and the
creditor knew of such illiquidity at such time, or (ii) if such act was taken after the filing of the petition for the
commencement of the insolvency proceedings, provided that the creditor knew of the illiquidity of the insolvent or
the filing of such petition;
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