lgb Doc 16 Filed 04/13/21 Entered 04/13/21 23:34:40 Main Document Pg 1 of 46

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CLEARY GOTTLIEB STEEN & HAMILTON LLP One Liberty Plaza

New York, New York 10006 Telephone: (212) 225-2000 Facsimile: (212) 225-3999 Jane VanLare

Adam Brenneman

Proposed Counsel to the Debtors and Debtors-in-Possession

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

In re: Chapter 11

Automotores Gildemeister SpA, et al.,1 Case No. 21-10685 (LGB) Debtors. Joint Administration Pending

DEBTORS’ MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS (I) AUTHORIZING THE DEBTORS TO (A) PAY CERTAIN EMPLOYEE WAGES AND OTHER COMPENSATION AND RELATED OBLIGATIONS AND (B) MAINTAIN AND

CONTINUE EMPLOYEE BENEFITS AND PROGRAMS IN THE ORDINARY COURSE, AND (II) AUTHORIZING AND DIRECTING APPLICABLE BANKS TO

HONOR ALL CHECKS AND TRANSFERS RELATED TO SUCH OBLIGATIONS Automotores Gildemeister SpA (“Gildemeister”) and certain of its affiliates, as debtors and debtors in possession in the above-captioned cases (collectively, the “Debtors”), hereby file this motion (the “Motion”) seeking entry of interim and final orders, substantially in the form attached hereto as Exhibit A (the “Proposed Interim Order”) and Exhibit B (the “Proposed Final Order”

1 The Debtors, together with each of the Debtor’s Chilean, Brazilian, and/or Uruguayan tax identification

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and, together with the Proposed Interim Order, the “Proposed Orders”) (i) authorizing the Debtors to (a) pay certain employee wages and other compensation and related obligations and (b) maintain and continue employee benefits and programs in the ordinary course, (ii) authorizing and directing applicable banks to honor all checks and transfers related to such obligations, and (iii) granting them such other and further relief as the Court deems just and proper. In support of this Motion, the Debtors rely on Declaration of Eduardo Moyano in Support of First Day Motions and

Applications in Compliance with Local Rule 1007-2 (the “First Day Declaration”).2 In further support of this Motion, the Debtors respectfully present as follows:

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 Southern District of New York dated January 31, 2012. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2) and the Court may enter a final order consistent with Article III of the United States Constitution.

2. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

3. The statutory bases for the relief requested herein are sections 105(a), 363(b), 507(a), 541(b) and 1129(a)(9)(B) of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”), and Rules 6003 and 6004 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).

2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the First

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BACKGROUND3 A. The Chapter 11 Filings

4. On April 12, 2021, each of the Debtors filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code (the date and time of such filing, the “Petition Date”). The Debtors are operating their businesses as debtors in possession under sections 1107(a) and 1108 of the Bankruptcy Code. No trustee, examiner or official committee of unsecured creditors has been appointed in the Debtors’ Chapter 11 Cases.

B. The Debtors’ Businesses

5. The Debtors are a vehicle importer and distributor primarily operating in Chile and Peru, as well as in Uruguay, Costa Rica and Brazil. The Debtors consist of a network of 228 vehicle dealerships, of which 70 are operated by the Debtors and 158 are independent franchises appointed and supplied by the Debtors. The Debtors have been the sole distributer of passenger and light commercial vehicles produced by Hyundai Motor Company in Chile since 1986 and have been the sole distributor of Hyundai passenger and light commercial vehicles in Peru since 2002. The Debtors are the sole distributors of several other established global vehicle brands, such as Volvo, Jaguar and BMW. The Debtors also provide services authorized by their original equipment manufacturers (“OEMs”), provide OEM parts for the brands of the cars they distribute and offer insurance brokerage services to their customers.

6. As of the Petition Date, the Debtors have outstanding prepetition debt obligations of approximately $566,690,000, consisting primarily of approximately $509,806,002 in outstanding principal amount and $11,290,079 in accrued and unpaid interest under the 7.50%

3 A more complete description of the Debtors’ corporate structure and businesses, and the events leading to

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senior secured notes due 2025 that were issued by Gildemeister and guaranteed by the remaining Debtors (the “7.5% Notes due 2025”). The Debtors also have approximately $34,760,520 outstanding aggregate principal amount and $967,730 in accrued and unpaid interest under three series of outstanding unsecured notes issued by Gildemeister and guaranteed by certain of the Debtor entities (collectively, the “Unsecured Legacy Notes”), and $1,943,500 in debt obligations owed to Gildemeister’s shareholder (the “Related Party Claims”).

C. The Proposed Restructuring

7. Since the issuance of the 7.5% Notes due 2025 in 2019, the Debtors’ cash flows have not grown to a level sufficient to support the Debtors’ existing debt obligations on their current terms. Due to a number of factors, including the recent increase in competition, a decrease in demand for motor vehicles in Chile, Peru and the rest of the Latin American region, substantial depreciations in the Chilean Peso, and the government mandated lockdowns due to the COVID-19 pandemic, the Debtors determined that it would be necessary to restructure their outstanding debt in order to meet their financial obligations over the long term.

8. To that end, in the months prior to the Petition Date, the Debtors engaged in extensive negotiations and discussions with the holders of the 7.5% Notes due 2025. These discussions culminated in an agreement with certain of the holders of the 7.5% Notes due 2025 (the “Initial Consenting Noteholders”) and of Related Party Claims, who signed a restructuring support agreement with respect to a consensual restructuring on the terms set forth in the Debtors’

Joint Prepackaged Chapter 11 Plan, dated April 9, 2021 (including all exhibits and supplements

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Initial Consenting Noteholders, the “Consenting Noteholders”) prior to the Petition Date. Together, the Consenting Noteholders hold or will hold approximately 90.9% of the outstanding 7.5% Notes due 2025, including approximately 7% of the 7.5% Notes reflecting trades that have not yet settled.4 Pursuant to the terms of the RSA, 90.9% of those who hold or will hold Claims (as defined in the Plan) in Class 4 (the 7.5% Notes due 2025 Secured Claims (as defined in the Plan)), and 69.3% of those who hold or will hold Claims in Class 5 (consisting of the 7.5% Notes due 2025 Unsecured Deficiency Claims (as defined in the Plan), Unsecured Notes Legacy Claims (as defined in the Plan) and the Related Party Claims) have agreed to support the Plan.

9. Additional information regarding the Debtors’ business, capital structure and the circumstances leading to the commencement of these Chapter 11 Cases is set forth in the First Day Declaration, which is incorporated by reference herein.

RELIEF REQUESTED

10. By this Motion, the Debtors request the entry of an order pursuant to sections 105(a), 363, 507 and 541 of the Bankruptcy Code authorizing, but not directing, the Debtors to pay and honor certain prepetition employment-related claims, including (i) wages, salaries and other variable compensation, (ii) amounts owed to Independent Contractors and Students, (iii) foreign income tax and withholding taxes and other amounts withheld (including, garnishments, employees’ share of insurance premiums, taxes, and retirement contributions), (iv) reimbursable expenses, (v) health benefits, retirement and pension benefits, insurance benefits, and workers’ compensation benefits, (vi) select time, time-off, and other leave, and (vii) all other benefits that the Debtors have historically provided to Employees in the ordinary course of business

4 As of the Petition Date, certain of the existing Holders of the 7.5% Notes due 2025 have sold their ownership

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(collectively, as more fully described below and together with attendant costs and expenses, the “Wages and Benefits”). In addition, other than with respect to the Executive Contracts (as defined below), the Debtors intend to continue to exercise their rights to modify or discontinue any of the Wages and Benefits, or to implement new Wages and Benefits in the ordinary course of business and consistent with their past practices, during the Chapter 11 Cases without the need for further Court approval.

11. Given that the Debtors’ employees are integral to the Debtors’ ability to operate their businesses during the Chapter 11 Cases, the Debtors’ failure to satisfy certain Wages and Benefits within the first twenty-one (21) days of these Chapter 11 Cases would jeopardize employee loyalty and morale, potentially causing employees to seek alternative employment and significantly harming the Debtors’ operations. Accordingly, the Debtors seek authority, but not direction, in their sole discretion, to continue to honor, pay, satisfy, or remit all claims and prepetition obligations related to Wages and Benefits in the ordinary course and consistent with their past practices, subject to the limitations discussed herein.

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THE DEBTORS’ WORKFORCE5

13. The Debtors’ workforce consists of approximately 695 wage earners as of March 30, 2021 (the “Employees”),6 including executives, officers, managers, professionals, sales staff, technicians, administrative support staff, and other personnel working in business administration, sales and marketing, maintenance, finance, accounting, human resources, and other key functions. Approximately 693 (99.7%) of the Employees are based in two countries: Chile (98.1%) and Uruguay (1.6%). The remaining two Employees are employed by the Debtors’ entities in Brazil.

14. None of the Debtors’ Employees are members of a Union nor do they need to contribute dues or other amounts to any Union (“Union Contributions”).7

15. The Employees perform a variety of critical functions for the Debtors’ business as the Employees’ skills, their specialized knowledge of the Debtors’ business model, industry and operations, as well as their relationships with vendors, dealers, customers and other third parties, are essential to the value of the Debtors’ assets and businesses. Without the support and dedication of the Employees to ensure the continued operation of their businesses, the Debtors would be unable to effectively reorganize.

16. Most of the Debtors’ rank-and-file Employees and all of the Debtors’ employees who perform management functions (the “Executives and Officers”) have signed individual employment contracts (respectively, the “Non-Insider Contracts” and the “Executive Contracts”).

5 All amounts contained herein are listed in U.S. dollars unless otherwise indicated. Certain amounts have

been converted from Chilean pesos to U.S. dollars using the CLP currency exchange rate of 780 Chilean pesos per U.S. dollar. Certain amounts have been converted from Uruguayan pesos to U.S. dollars using the UYU currency exchange rate of 44 Uruguayan pesos per U.S. dollar.

6 Additional staff are employed by the Debtors’ international affiliates that have not sought relief under chapter

11.

7 Note that while the Debtors’ Employees in Uruguay benefit from any collective agreements that the

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Local law in Chile requires separate, individual employment contracts for each employee. The Chilean employment contracts stipulate each Employee’s relationship with the Debtors, describing, for example, the Employee’s base salary (which is expressed in Unidades de Fomento (“UF”)8 and is generally paid one day before the last working day of the month), variable compensation components and the rights and obligations of each Employee (such as adherence to the Debtors’ code of conduct).

17. To supplement their workforce, the Debtors also utilize the services of approximately 360 independent contractors (together with the Independent Contractor Vendors (as defined below), the “Independent Contractors”) based in Chile and Uruguay, who perform a variety of services for numerous departments such as parts management, security, cleaning, logistics, IT, administration, temporary replacements, employee training and recruiting, and temporary services. The Independent Contractors are employed by numerous vendors, such as Liderman Spa, Elite, Suministra S.A., Techpoint Consultoria S.A., Servicio Integrales Velasquez, Sebastian Lira Spa, Expro, Iss Servicios Generales Ltda, Inversiones Y Representaciones Rodriguez, Pentacrom S A, U.S. Urban Realty Chile S.A., Servelmec, Korcea, Cleannet Uruguay S.A, A.T. Srl, Organizaciones+Humanas Srl, Estudio Barboza Podesta Limitada, and Rica Esquina (the “Independent Contractor Vendors”). The Debtors pay approximately $600,000 per month on average as part of their agreements with the Independent Contractor Vendors and to certain Independent Contractors directly. The Debtors also allow a small number of students from local technical schools (the “Students”) to learn the trade and gain work experience on a co-op basis and these Students earn a small monthly stipend to cover transportation expenses.

8 UF is a unit of accounting that is adjusted for inflation. As of March 30, 1 UF was worth approximately

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18. The Employees, Independent Contractors, and Students perform a variety of critical functions on behalf of the Debtors and are essential to the effective reorganization of the Debtors’ businesses. Accordingly, with the commencement of the Chapter 11 Cases, it is critical for their morale and the continued operation of the businesses to ensure that there is no interruption to the payment of the Employees’ Wages and Benefits and payments to Independent Contractors and Students.

WAGES AND BENEFITS

19. On average, the Debtors pay their Employees approximately $1.4 million in base salaries (“Wages”) monthly. Debtors also maintain certain forms of variable compensation (such compensation, “Variable Compensation”). Variable Compensation includes, but is not limited to, sales commissions, overtime, performance bonuses, contractual bonuses, and other short-term cash incentives.9 On average, the Debtors pay approximately $765,000 in Variable Compensation on a monthly basis. Additionally, the Debtors make certain contributions to Employee Benefits (as defined below), in an average monthly amount of $330,000.

Employee Compensation

20. The majority of Employees receive Wages and Variable Compensation (the “Employee Compensation”) through direct deposit to their own checking accounts. The Employee Compensation is paid monthly, generally on the penultimate or the last working day of any given

9 The Executive Contracts also provide for the payment of bonuses; however, the Debtors do not anticipate

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month. All Variable Compensation (including commissions and overtime) earned during any given month is paid during the following month’s payroll cycle. In Chile, certain of the Debtors’ Employees may elect to receive up to a 20% payment advance of their monthly Employee Compensation on the fifteenth (15th) of the month. This payment advance is debited from the Employee’s month-end payroll.

21. In addition to the month-end payments, certain Employees can also receive a small subsequent payment during the first week of the following month to correct for any errors or omissions in Employee Compensation made in the prior pay period (the “Reprocesos”). On average, the Debtors have historically paid approximately $35,000 per month in Reprocesos. In the ordinary course of business, Employee Compensation and Reprocesos are paid at intervals and on dates and/or days that vary by jurisdiction, as set forth below:

Payroll Calendar Country Frequency of Payment Regular Pay Date Within Month10 Errors and Corrections (Reprocesos)

Date to Remit Employee Withholdings and Company Contributions Chile Monthly; advances made on 15th as requested Penultimate working day of month Usually corrected during first week

of following month

10th to 12th of following month

Uruguay Monthly Last working day of month

Usually corrected during first week

of following month 10th to 20th of the following month Brazil Monthly, advance of 50% made on 15th 15th and the last working day of the month Usually corrected during first week

of following month 7th (FGTS)11 to 20th (taxes) of following month

10 Includes variable wage payments earned in preceding month, except vacation bonuses, which are paid

concurrently with the Employee’s paid time off.

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22. The Debtors estimate that approximately $630,000 in prepetition Employee Compensation remains unpaid by the Debtors as of the Petition Date (the “Unpaid Compensation”).12 The Unpaid Compensation represents both Employee Compensation earned during or related to prepetition periods which were scheduled to be paid in the ordinary course (as indicated in the above chart) on a date later than the Petition Date, as well as certain prepetition Wages and Benefits that must be paid after the Petition Date under applicable local law. For example, under Uruguayan law, an extra “13th” salary is owed to Employees in that country in respect of their prepetition work but that, in accordance with local law, must be paid twice a year, half in mid-June/July and half in mid-December. Likewise, the Debtors’ Employees in Chile receive a special compensation, or aguinaldo, in September and December of every calendar year. As of the Petition Date, the Debtors believe that all Employees would have a priority claim of less than $13,650 pursuant to section 507(a)(4) of the Bankruptcy Code with respect to their earned Unpaid Compensation. The Debtors seek authority, but not direction, in their sole discretion, to pay any Unpaid Compensation as it comes due in the ordinary course of business and consistent with past practices. The Debtors further request authority, but not direction, to continue to pay Employee Compensation on a post-petition basis in the ordinary course of business.

Deductions and Withholdings

23. During each applicable pay period, the Debtors directly, or through their payroll processors, routinely deduct certain amounts from the Employees’ paychecks, including, without limitation, certain deductions payable to the benefit plans discussed herein, such as an Employee’s share of mandatory health care benefits, insurance premiums, retirement contributions, voluntary benefit programs (such as the Debtors’ Wellness Program), legally ordered deductions and other

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miscellaneous deductions (collectively, the “Employee Deductions”). These amounts are then generally remitted to the appropriate private third-party or non-U.S. government authority.

24. Under the local laws in the jurisdictions where the Debtors operate, Employees are required to save for retirement (the “Pension Withholdings”). For example, in Chile, employees are statutorily required to contribute approximately ten percent (10%) of their monthly taxable income, subject to specific monthly caps, to the respective Administradoras de Fondo de

Pensiones (the pension fund that invests and manages funds on behalf of employees, or “AFPs”),

in addition to any voluntary monthly amounts that the Employee chooses. In Uruguay, approximately fifteen percent (15%) is required to be withheld from an Employee’s taxable salary for retirement pension contributions and remitted to the Banco de Prevision Social (the Uruguayan National Pension Bank, or “BPS”). In Brazil, the Debtors are required to withhold approximately 14% of monthly taxable income for retirement savings (up to a statutory cap), and remit those amounts to the Instituto de Seguridad Social (INSS).

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The Debtors are statutorily required to withhold and remit these amounts (the “Health Care Withholdings”) indirectly through payroll facilitators to the Health Care Plan provider.

26. In addition to the mandatory pension-related and health care-related requirements described above, the Debtors maintain their own Programa de Beneficios (the “Wellness Program”) for the benefit of their Employees in Chile. The Wellness Program provides a portfolio of benefits for the Employees and their respective families and is managed and administered by the Debtors; it is jointly funded through voluntary Employee payroll deductions (the “Wellness Program Deductions”) and matching Company contributions. The Debtors’ Wellness Program is optional for the Employees in Chile but approximately 98% of Employees contribute to it because of the program’s attractive features. The program provides for contributing Employee benefits such as incremental medical reimbursement for Employees and their families, bonuses in the case of family events such as weddings, births and children’s schooling, access to additional medical- and casualty-related loans and life insurance coverage for contributing Employees.

27. The Debtors’ Wellness Program investment balances are held in an account at

Banco de Crédito e Inversiones. The balances include (i) the Wellness Program Deductions, (ii)

the Debtors’ matching contributions to the same, (iii) less the monthly disbursements made for the benefit of the contributing Employees and for service of their corresponding Employee Loans. According to local law, the Wellness Program is not required to be structured as a separate legal entity.

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amounts to the appropriate lenders. Likewise, the Debtors act as the formal withholding agent in case of court-mandated sentences (such as corresponding Employee’s alimony obligations or child support).

29. On average, the Debtors have historically deducted a total of approximately $450,000 from Employee paychecks per pay period. The Debtors believe that as of the Petition Date, approximately $225,000 in prepetition Employee Deductions have been deducted from Employee Compensation but have not yet been remitted, directly or indirectly, to the applicable third-party or administrative13 recipients.

30. Furthermore, the Debtors are required by law to withhold from the Employee Compensation amounts related to non-U.S. income taxes (the “Payroll Taxes”) imposed by applicable law for remittance to the appropriate non-U.S. taxing authority such as the Chilean

Servicio de Impuestos Internos (the Internal Tax Agency, or “SII”) or the Uruguayan Dirección General Impositiva (or “DGI”). On average, the Debtors have historically withheld and remitted

a total of approximately $190,000 in Payroll Taxes per payroll period. The Debtors believe that approximately $95,000 in prepetition Payroll Taxes have been deducted from Employees’ compensation but have not yet been remitted to the appropriate taxing authorities.

31. Due to the commencement of the Chapter 11 Cases or other miscellaneous omissions, there may be Employee Deductions or Payroll Taxes that were not forwarded to the appropriate third-party recipients prior to the Petition Date. Accordingly, the Debtors seek entry of a final order authorizing, but not directing, them to continue to forward these prepetition Employee Deductions and Payroll Taxes, through payroll processors or directly to the applicable third-party recipients on a post-petition basis, as routinely done prior to the Petition Date. As

13 As previously described, the Wellness Program is not a separate legal entity, but balances are held in a bank

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discussed more fully herein, the Debtors believe that under section 541(d) the Employee Deductions and Payroll Taxes are held in trust and are not the property of the Debtors’ estates and, therefore, such funds are not available for general distribution to a debtor’s creditors.

Payment of Reimbursable Expenses

32. Prior to the Petition Date, and in the ordinary course of business, the Debtors reimbursed certain Employees for certain reasonable and customary expenses incurred on behalf of the Debtors in the scope of their employment in accordance with applicable foreign laws and regulations (the “Reimbursable Expenses”).

33. A Reimbursable Expense is an expense incurred by an Employee in the performance of his/her duties that is deemed to be necessary to the performance of his/her job and is reasonable. The Reimbursable Expenses are paid-for expenses such as travel, meals, accommodations, and other business-related expenses that are paid out of pocket by the Employees.

34. The Debtors generally prepay travel expenses directly on behalf of the Employees or in the form of a per diem cash advance. In addition, a small number of individuals use a company credit card for business-related expenses. Accordingly, the amount that the Debtors pay in Reimbursable Expenses is generally de minimis, especially with current limitations placed on travel due to the COVID-19 pandemic. The Debtors estimate that the total amount of unpaid prepetition Reimbursable Expenses is approximately $10,000.

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and (ii) continue, during the course of these Chapter 11 Cases, to pay the Reimbursable Expenses in accordance with prepetition practices.

EMPLOYEE BENEFITS

36. In the ordinary course of business, the Debtors provide Employees with a number of benefits, including: (i) health, insurance and disability coverage; (ii) retirement and pension plans; (iii) unemployment insurance; (iv) workers’ compensation; (v) other Employee benefits; (vi) paid time-off and leave; (vii) severance benefits; and (viii) other Employee benefits (collectively, the “Employee Benefits”). These Employee Benefits are provided through employer and third-party sponsored contributory and non-contributory benefit plans and voluntary insurance coverage. On average, the Debtors make a collective monthly contribution of $330,000 to Employee Benefits. Failure to maintain the Employee Benefits in certain of the various jurisdictions in which the Debtors conduct business could result in the institution of administrative or legal proceedings and material fines against the Debtors and their officers and directors. The Debtors believe that approximately $190,000 in prepetition contributions to Employee Benefits remain unpaid by the Debtors as of the Petition Date.

Health, Insurance and Disability Benefits

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prepetition contributions to the Health Care, Insurance and Disability Plans is approximately $55,000.

38. By this Motion, the Debtors seek authority, but not direction, in their sole discretion, to continue the Health Care, Insurance and Disability Plans in the ordinary course of business and pay any prepetition expenses or other amounts related thereto, including any claims incurred before the Petition Date but reported after the Petition Date.

Retirement and Pension Plans

39. As already described, Employees contribute both mandatory and voluntary amounts from their monthly compensation, through payroll deductions to the corresponding public retirement and pension funds, including the AFPs in Chile and BPS in Uruguay. In addition, the Debtors in Uruguay make monthly contributions to the BPS public retirement and pension funds, where the Debtors are required to contribute 7.5% of an Employee’s monthly gross salary (the “Uruguay Retirement Contributions”). The Debtors estimate that the average monthly sum of the Uruguay Retirement Contributions is approximately $5,000. The Debtors estimate that the total amount of unpaid prepetition Uruguay Retirement Contributions is approximately $2,500.

40. By this Motion, the Debtors seek authority, but not direction, in their sole discretion, to continue making the Uruguay Retirement Contributions and any other related payments mandated by local law, including any that accrued prepetition in the ordinary course of business.

Unemployment

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Employees under the Fondo Reconversión Laboral (or “FRL”), and contributions to the Chilean Government under the Administradora de Fondo de Censantia (“AFC”). The Debtors estimate that the average monthly sum paid in respect of Unemployment Contributions is $93,000. The Debtors estimate that the total amount of unpaid prepetition Unemployment Contributions is approximately $46,500.

42. By this Motion, the Debtors seek authority, but not direction, in their sole discretion, to continue the Unemployment Contributions and make any payments attributable to the Unemployment Contributions, including any accrued prepetition in the ordinary course of business.

Workers’ Compensation

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44. By this Motion, the Debtors seek authority, but not direction, in their sole discretion, to continue the Workers’ Compensation Contributions, including any that accrued prepetition in the ordinary course of business.

Other Employee Benefits

45. In addition to amounts contributed for the direct benefit of the Employees, the Debtors contribute additional employment benefits (“Other Employee Benefits”) such as daily meals (either through Company-operated cafeterias or by providing remote employees luncheon tickets), and commuting stipends. The Debtors also provide uniforms for some administrative, auxiliary personnel, technicians and maintenance Employees. The level of support varies according to the Employee role and seniority.

46. The Debtors estimate that the average monthly sum paid to Other Employee Benefits is approximately $120,000. The Debtors estimate that the total amount of unpaid prepetition contributions on Other Employee Benefits is approximately $60,000.

47. By this Motion, the Debtors seek authority, but not direction, in their sole discretion, to continue the Other Employee Benefits and make any payments attributable to these Other Programs, including any that accrued prepetition in the ordinary course of business.

Paid Time-Off and Leave

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49. The Debtors estimate they have approximately $2.2 million in prepetition accrued Vacation Obligations. The Vacation Obligations will continue to accrue for use by Employees in the ordinary course of business.

50. By this Motion, the Debtors seek authority, but not direction, in their sole discretion, to continue the Vacation Obligations and make any payments attributable to the Vacation Obligations, including obligations that accrued prepetition in the ordinary course of business.

51. Certain of the Debtors also offer paid sick leave for their Employees (“Paid Sick Leave”). For example, in Chile the Debtors offer up to three days of Paid Sick Leave, after which Employees are eligible for compensation pursuant to their Health Care Plan, although the Debtors will advance payment to the Employees and subsequently seek reimbursement from the applicable Health Care Plan provider. In the event that a Health Care Plan provider does not pay the full amount of an Employee’s wages, the Debtors will also pay the difference.

52. By this Motion, the Debtors seek authority, but not direction, in their sole discretion, to continue Paid Sick Leave and make any payments attributable to Paid Sick Leave, including any that accrued prepetition in the ordinary course of business.

Severance Programs

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of eleven years of seniority, plus a notice period equivalent to one month of employment wages and plus the salary amount corresponding to their accrued, unused vacation days.

54. Furthermore, approximately two of the Debtors’ Employees have been seconded to work in other countries. In the event that these Employees were to be terminated, they would have to return to their home country after being discharged, and the Debtors would pay for a certain amount of relocation expenses, depending on the terms of the employment contract, as part of the Severance Programs.

55. By this Motion, the Debtors seek authority, but not direction, in their sole discretion, to maintain the Severance Programs for non-insiders in the ordinary course of business, including payments under the Severance Programs that relate in part to an Employee’s prepetition years of service.14

Other Non-U.S. Employee Benefits

56. Under the laws of the various foreign jurisdictions in which the Debtors operate, Employees in such jurisdictions may be entitled to various forms of compensation and benefits, certain payroll or similar taxes may be required to be paid or withheld (the “Other Non-U.S. Benefits”). It is difficult for the Debtors to quantify the exact value of these benefits or the taxes paid or withheld in connection with any such benefits but believe them to be de minimis.

57. By this Motion, the Debtors seek authority, but not direction, in their sole discretion, to continue providing the Other Non-U.S. Benefits in the ordinary course of their business.

14 The Debtors seek authority only to make postpetition payments under the Severance Program, and only for

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Payroll Administrator and Other Benefit Providers

58. The Debtors typically process their own payroll, while in certain circumstances rely on the services of a number of third-party service providers to facilitate administration of the Wages and Benefits. For example, in Chile, the Debtors utilize PREVIRED, and in Uruguay, the Debtors utilize Estudio Barboza Podesta Ltda. In connection with these services, the Debtors pay a total of approximately $2,000 per month (the “Payroll Fees”). Services provided by these third-party service providers are crucial to the functioning of the Debtors’ payroll system, and the Debtors request authorization, but not direction, in their sole discretion, to pay any unpaid prepetition Payroll Fees.15

59. The Debtors also utilize the services of various other benefit providers to administer benefits for their Employees. In connection with these services, the Debtors pay such benefit providers certain fees. As the services provided by such benefit providers are crucial to the functioning of the Debtors’ benefit programs, the Debtors request authorization, but not direction, in their sole discretion, to pay any prepetition related fees or expenses owed to such benefit providers.

BASIS FOR RELIEF

A. Cause Exists to Authorize Payment of the Debtors’ Wages and Benefits

i. The Court May Authorize Payment of Wages and Benefits Pursuant to Section 363 of the Bankruptcy Code

60. Section 363 of the Bankruptcy Code provides, in relevant part, that “[t]he [debtor], after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate.” 11 U.S.C. § 363(b)(1). Under section 363(b), courts require only that the

15 The Debtors are seeking authorization to continue these agreements for the time being in the ordinary course

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debtor articulate a sound business justification for its actions. See Comm. of Equity Sec. Holders

v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063, 1070 (2d Cir. 1983); In re Adelphia Commc’ns Corp., No. 02-41729, 2003 WL 22316543, at *30 (Bankr. S.D.N.Y. Mar. 4, 2003). Moreover,

“[w]here 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.” Comm. of Asbestos-Related Litigants v. Manville Corp. (In re

Johns-Manville Corp.), 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986) (citation omitted).

61. Courts have authorized payment of prepetition employee compensation and related obligations under section 363(b) of the Bankruptcy Code where a sound business purpose exists to do so. See, e.g., In re Ionosphere Clubs, Inc., 98 B.R. 174, 175 (Bankr. S.D.N.Y. 1989) (stating that relief regarding payment of prepetition wage claims was appropriate to “preserve and protect [the debtor’s] business and ultimately reorganize, retain its currently working employees and maintain positive employee morale”). In addition, to the extent a debtor in possession enters into transactions involving property of the estate in the ordinary course of business, section 363(c) of the Bankruptcy Code authorizes such transactions without an order of the court. See, e.g.,

Armstrong World Indus., Inc., v. James A. Phillips, Inc. (In re James A. Phillips, Inc.), 29 B.R.

391, 395 n.2 (Bankr. S.D.N.Y. 1983) (“Insofar as transactions are actually in the ordinary course, they are authorized automatically by § 363(c)(1) and § 1107(a), and do not require Bankruptcy Court approval.”).

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regarding the receipt of healthcare coverage and insurance, and likely will seek alternative employment opportunities or will be demoralized and less productive. Additionally, the deterioration of the Debtors’ workforce may require significant, likely resource- and cost-intensive, employee recruitment efforts at a time when the Debtors’ management needs to focus on restructuring-related activities. Moreover, many of the Wages and Benefits are required under foreign law, and it is therefore critical that the Debtors be authorized to continue fulfilling these Wages and Benefits and maintain necessary payments in connection therewith to avoid incurring fines and penalties. Paying the Wages and Benefits also is necessary for the Debtors to avoid unnecessary recruitment, severance, and related costs, to avoid certain operating risks to completing the Debtors’ reorganization and to minimize the disruption of the Debtors’ operations during these Chapter 11 Cases.

63. In addition, because the Debtors pay the Wages and Benefits in the ordinary course of business, the Debtors submit that Court approval to continue their existing policies, programs, and related payments post-petition is not necessary because of the authority granted under section 363(c) of the Bankruptcy Code. Nonetheless, for the avoidance of doubt, the Debtors request that the Court grant the relief requested herein, enter interim and final orders permitting them to pay the Wages and Benefits and to authorize, but not require, the Debtors, in their discretion, to continue and maintain their employee benefit contributions, programs, policies and practices as those plans, programs, policies and practices were in effect as of the Petition Date, as they may be modified, terminated, amended, or supplemented from time to time.

ii. Certain Wages and Benefits Are Entitled to Priority Treatment

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11 plan, the Debtors must pay priority claims in full. See 11 U.S.C. § 1129(a)(9)(B) (requiring payment of certain allowed unsecured claims given priority under sections 507(a)(4) and 507(a)(5) of the Bankruptcy Code for wages, salaries, commissions, vacation, severance, and sick leave pay earned by an individual, and contributions to an employee benefit plan, earned in the 180 days before filing of the petition). Because most of the Wages and Benefits are priority claims, the Debtors are required to pay these claims in full to confirm the Plan. Moreover, the Debtors intend to pay in full all Wages and Benefits in accordance with Section 3.3 of the Plan. Accordingly, granting the relief sought herein only affects the timing of such payments to Employees, and the Debtors seek to emerge from chapter 11 within forty-five to sixty days from the Petition Date, subject to the Court’s schedule. Again, the Debtors believe that payment of the Wages and Benefits at this time preserves the value of the estates for all interested parties.

iii. Payment of Wages and Benefits Is Warranted Under Section 105(a) of the Bankruptcy Code and Doctrine of Necessity

65. The Debtors’ proposed payment of the Wages and Benefits also should be authorized pursuant to section 105(a) of the Bankruptcy Code and the “doctrine of necessity.” Section 105(a) of the Bankruptcy Code, which codifies the inherent equitable powers of the bankruptcy court, empowers the bankruptcy court to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.” 11 U.S.C. § 105(a). Specifically, this Court may use its power under section 105(a) to authorize payment of prepetition obligations pursuant to the “doctrine of necessity” (also referred to as the “necessity of payment” doctrine). A bankruptcy court’s use of its equitable powers to “authorize the payment of pre-petition debt when such payment is needed to facilitate the rehabilitation of the debtor is not a novel concept.”

In re Ionosphere Clubs, Inc., 98 B.R. at 175. “Under [section] 105, the court can permit pre-plan

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re NVR L.P., 147 B.R. 126, 127 (Bankr. E.D. Va. 1992) (citing In re Ionosphere Clubs, Inc., 98

B.R. at 177); accord In re Just for Feet, Inc., 242 B.R. 821, 826 (D. Del. 1999) (“To invoke the necessity of payment doctrine, a debtor must show that payment of the pre-petition claims is ‘critical to the debtor’s reorganization.’”) (quoting In re Fin. News Network, Inc., 134 B.R. 732, 736 (Bankr. S.D.N.Y. 1991); see also In re Eagle-Picher Indus., Inc., 124 B.R. 1021, 1023 (Bankr. S.D.N.Y. 1991) (“[T]o justify payment of a pre-petition unsecured creditor, a debtor must show that the payment is necessary to avert a serious threat to the Chapter 11 process.”).

66. Courts have consistently permitted post-petition payment of prepetition obligations where necessary to preserve or enhance the value of a debtor’s estate for the benefit of all creditors.

See, e.g., Miltenberger v. Logansport C. & S.W.R. Co., 106 U.S. 286, 311-12 (1882) (payment of

pre-receivership claim prior to reorganization permitted to prevent “stoppage of [crucial] business relations”); In re Lehigh & New Eng. Ry. Co., 657 F.2d 570, 581 (3d Cir. 1981) (holding that “if payment of a claim which arose prior to reorganization is essential to the continued operation of the [business] during reorganization, payment may be authorized even if it is made out of [the] corpus”); Dudley v. Mealey, 147 F.2d 268 (2d Cir. 1945), cert. denied 325 U.S. 873 (1945) (extending doctrine for payment of prepetition claims beyond railroad reorganization cases); Mich.

Bureau of Workers’ Disability Comp. v. Chateaugay Corp. (In re Chateaugay Corp.), 80 B.R. 279

(Bankr. S.D.N.Y. 1987), appeal dismissed, 838 F.2d 59 (2d Cir. 1988) (approving lower court order authorizing payment of prepetition wages, salaries, expenses, and benefits).

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claims where such payment is necessary to ‘permit the greatest likelihood of survival of the debtor and payment of creditors in full or at least proportionately.’” 86 B.R. 922, 931 (Bankr. S.D. Ohio 1988) (quoting In re Chateaugay Corp., 80 B.R. at 287). The court explained that “a per se rule proscribing the payment of pre-petition indebtedness may well be too inflexible to permit the effectuation of the rehabilitative purposes of the Code.” Id. at 932 (emphasis omitted). The rationale for the doctrine of necessity rule is consistent with the paramount goal of Chapter 11 – “facilitating the continued operation and rehabilitation of the debtor . . .” In re Ionosphere Clubs, 98 B.R. at 176. Indeed, as noted above, this Court and others have routinely authorized debtors to pay the prepetition claims of employees for wages, salaries, expenses and benefits on the grounds that the payment of such claims was necessary to effectuate a successful reorganization of a debtor’s business.

68. Payment of the Wages and Benefits is warranted under the doctrine of necessity. The Employees provide the Debtors with essential services necessary to conduct their businesses. Payment of the prepetition claims of the Employees is essential to avoid large-scale attrition, service disruption and associated costs. Certainly, payment of the Wages and Benefits will permit the Debtors the greatest likelihood of post-emergence success. As discussed previously, absent payment of the Wages and Benefits, the Debtors’ post-emergence prospects may be put in serious peril.

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2019), ECF No. 94 (same); Final Order, In re Barneys N.Y., Inc., No. 19-36300 (CGM) (Bankr. S.D.N.Y. Sept. 4, 2019), ECF No. 208 (same); Final Order, In re Hollander Sleep Prods., LLC, No. 19-11608 (MEW) (Bankr. S.D.N.Y. July 2, 2019), ECF No. 166 (same).16

Payment of Certain of the Wages and Benefits is Required by Law

70. Section 541(d) of the Bankruptcy Code provides, in relevant part, that “[p]roperty in which the debtor holds, as of the commencement of the case, only legal title and not an equitable interest . . . becomes property of the estate under subsection (a)(1) or (2) of [section 541] only to the extent of the debtor’s legal title to such property, but not to the extent of any equitable interest in such property that the debtor does not hold.” 11 U.S.C. § 541(d).

71. Courts have held that certain withholdings required by law that debtors collect and remit to the applicable authorities are “trust fund” taxes that are not part of the debtors’ estate under section 541(d). See, e.g., Begier v. Internal Revenue Serv., 496 U.S. 53, 57-60 (1990) (holding that any prepetition payment of trust fund taxes, in particular excise taxes and withholding taxes, is not a transfer subject to avoidance because such funds are not the debtor’s property); In

re Al Copeland Enters., Inc., 133 B.R. 837, 842 (Bankr. W.D. Tex. 1991) (debtor was obligated to

pay sales taxes plus interest, because such taxes were “trust fund” taxes), aff’d, 991 F.2d 233 (5th Cir. 1993); Shank v. Wash. State Dep’t of Revenue (In re Shank), 792 F.2d 829, 833 (8th Cir. 1986) (sales tax required by state law to be collected by sellers from their customers is a “trust fund” tax and not released by bankruptcy discharge); In re Am. Int’l Airways, Inc., 70 B.R. 102, 103 (Bankr. E.D. Pa. 1987) (funds held in trust for federal excise and withholding taxes are not property of debtor’s estate and, therefore not available for distribution to creditors); see also 5 Collier on

16 Because of the voluminous nature of the orders cited herein, such orders have not been attached to this

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Bankruptcy ¶ 541.28[5] (16th ed. 2014) (noting that “trusts created under federal and state statutes requiring employers to withhold income taxes” and “trusts created for sales tax monies collected under state statutes” have been repeatedly held not to be property of the estate). The Debtors generally do not have an equitable interest in certain of the Wages and Benefits that are “trust fund” taxes and thus are not property of the Debtors’ estates. Accordingly, the Debtors request that the Court authorize them to transmit such amounts to the proper parties in the ordinary course of business.

The Court Should Authorize and Direct Applicable Banks to Honor and Pay Checks Used and Make Other Transfers to Pay the Wages and Benefits

72. The Debtors have sufficient funds to pay or remit the Wages and Benefits in the ordinary course of business using expected cash flows from ongoing business operations. The Debtors believe there is minimal risk that check or wire transfer requests that this Court has not authorized will be inadvertently made. Thus, the Debtors request that this Court authorize all applicable financial institutions to receive, process, honor and pay any and all checks or wire transfer requests in respect of the Wages and Benefits.

The Requirements of Bankruptcy Rule 6003 Are Satisfied

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74. Bankruptcy Rule 6003 does not condition relief on imminent or threatened harm to the estate alone. Rather, Bankruptcy Rule 6003 speaks of “immediate and irreparable harm” generally. Cf. Fed. R. Bankr. P. 4001(b)(2), (c)(2) (referring to “irreparable harm to the estate”) (emphasis added). Indeed, the “irreparable harm” standard is analogous to the traditional standards governing the issuance of preliminary injunctions. See 9 Collier on Bankruptcy ¶ 4001.07[3] (16th ed. 2014) (discussing source of “irreparable harm” standard under Rule 4001(c)(2)). And courts will routinely consider third-party interests when granting such relief. See, e.g., Cap. Ventures

Int’l v. Repub. of Arg., 443 F.3d 214, 223 n.7 (2d Cir. 2006) (stating that potential effect on the

public interest is a factor in considering whether to grant preliminary injunction).

75. This Court and others have recognized that the potential loss of critical employees, the lapse in benefit coverage and the financial hardship imposed on employees that would certainly result if relief requested by this Motion were not granted poses a threat of immediate and irreparable harm to the debtor’s business. See, e.g., Nev. Power Co. v. Calpine Corp. (In re Calpine

Corp.), 365 B.R. 401, 410 (Bankr. S.D.N.Y. 2007) (holding that potential distractions to

employees constitute “imminent irreparable harm” if they would impact the restructuring process);

Lomas Fin. Corp. v. The N. Trust Co. (In re Lomas Fin. Corp.),117 B.R. 64, 67 (Bankr. S.D.N.Y.

1990) (imminent and irreparable harm found where “key personnel would be distracted from participating in the reorganization process”).

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lowered employee morale. The Debtors’ operations would be severely disrupted at a critical juncture in their restructuring. Additionally, the Employees rely on their compensation, benefits, and reimbursement of expenses to pay their living expenses and the effect could be financially ruinous if the Debtors cannot pay them in the ordinary course of business. Accordingly, the requirements of Bankruptcy Rule 6003 are satisfied.

Waiver of Bankruptcy Rules 6004(a) and 6004(h)

77. To implement the foregoing successfully, the Debtors request that the Court enter the Proposed Orders providing that the notice of the relief requested herein satisfies Bankruptcy Rule 6004(a) and that the Debtors have established cause to exclude such relief from the fourteen-day stay period under Bankruptcy Rule 6004(h).

Debtors’ Reservation of Rights

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NOTICE

79. No creditors’ committee, trustee or examiner has been appointed in these Chapter 11 Cases. Notice of this Motion has been provided to the following parties, or, in lieu thereof, their counsel: (a) the Office of the United States Trustee for the Southern District of New York; (b) the holders of the thirty largest unsecured claims against the Debtors (on a consolidated basis); (c) the holders of the five largest secured claims against the Debtors (on a consolidated basis); (d) the Internal Revenue Service; (e) the Securities and Exchange Commission; and (f) all others that are required to be noticed in accordance with Bankruptcy Rule 2002 and Local Rule 2002-1. The Debtors submit that, in light of the nature of the relief requested, no other or further notice need be provided.

NO PRIOR REQUEST

80. No prior motion for the relief requested herein has been made to this or any other court.

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CONCLUSION

WHEREFORE, for the reasons set forth herein, the Debtors respectfully request that this Court (a) enter the orders, substantially in the form attached hereto as Exhibits A and B and (b) grant such other and further relief as is just and proper.

Dated: April 13, 2021

New York, New York

CLEARY GOTTLIEB STEEN & HAMILTON LLP

/s/ Jane VanLare

Jane VanLare Adam Brenneman One Liberty Plaza

New York, New York 10006 Telephone: (212) 225-2000 Facsimile: (212) 225-3999

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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

In re: Chapter 11

Automotores Gildemeister SpA, et al.,17 Case No. 21-10685 (LGB) Debtors. Joint Administration Pending

INTERIM ORDER (I) AUTHORIZING THE DEBTORS TO (A) PAY CERTAIN EMPLOYEE WAGES AND OTHER COMPENSATION AND RELATED

OBLIGATIONS AND (B) MAINTAIN AND CONTINUE EMPLOYEE BENEFITS AND PROGRAMS IN THE ORDINARY COURSE, AND (II) AUTHORIZING AND DIRECTING APPLICABLE BANKS TO HONOR

ALL CHECKS AND TRANSFERS RELATED TO SUCH OBLIGATIONS (“INTERIM WAGES AND BENEFITS ORDER”)

Upon the motion (the “Motion”)18 of Automotores Gildemeister SpA (“Gildemeister”) and certain of its affiliates, as debtors and debtors in possession in the above-captioned cases (collectively, the “Debtors”), for entry of interim and final orders, as more fully described in the Motion, authorizing the Debtors to pay certain Wages and Benefits, and for certain related relief; and upon the Declaration of Eduardo Moyano in Support of First Day Motions and Applications

in Compliance with Local Rule 1007-2 (the “First Day Declaration”); and the Court having

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 of New York dated January 31, 2012;

and the Court having found that this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2), and

17 The Debtors, together with each of the Debtor’s Chilean, Brazilian, and/or Uruguayan tax identification

number, as applicable, are: Automotores Gildemeister SpA (79.649.140-K), AG Créditos SpA (76.547.689-5), Marc Leasing, S.A. (96.658.270-7), Fonedar S.A. (216288040014), Camur S.A. (216589740015), Lodinem S.A. (217115010014), Carmeister S.A. (96.630.690-7), Maquinaria Nacional S.A. (Chile) (96.812.980-5), RTC S.A. (89.414.100-K), Fortaleza S.A. (76.856.380-2), Maquinarias Gildemeister S.A. (78.862.000-8), Comercial Gildemeister S.A. (76.856.310-1), and Bramont Montadora Industrial e Comercial de Vehiculos S.A. (04.926.142/0002-16). The location of the corporate headquarters and the service address for Automotores Gildemeister SpA is: 11000 Avenida Las Condes Vitacura, Santiago, Chile.

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that the Court may enter a final order consistent with Article III of the United States Constitution, and the Court having found that venue of this proceeding and the Motion in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409; and the Court having found that the relief requested in the Motion is in the best interests of the Debtors, their estates, their creditors and the other parties in interest; and the Court having found that the Debtors’ notice of the Motion and opportunity for a hearing on the Motion was appropriate and no other notice need be provided; and the Court having reviewed the Motion and having heard the statements in support of the relief requested therein at a hearing before the Court (the “Hearing”); and the Court having determined that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and upon all of the proceedings had before the Court; and after due deliberation and sufficient cause appearing therefor,

IT IS HEREBY ORDERED THAT:

1. The Motion is GRANTED on an interim basis to the extent set forth herein. 2. Objections to entry of the Final Order must be filed by

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3. The Debtors are authorized to pay pre-petition Wages and Benefits, as payments come due in the ordinary course, in an amount not to exceed $1,200,000 and/or honor their wage and benefit obligations in accordance with their stated policies and in the ordinary course of their businesses and consistent with their past practices, including amounts owing as of the Petition Date on account of (i) Employee Compensation, (ii) Reprocesos, (iii) Unpaid Compensation, (iv) Employee Deductions, (v) Payroll Taxes, (vi) Reimbursable Expenses and (vii) the Employee Benefits, provided however, the Debtors shall not be authorized to pay Reimbursable Expenses to any single individual in an amount exceeding $1,000.

4. The Debtors are authorized, but not directed, to continue to honor the Wages and Benefits, make necessary contributions, pay any unpaid premium, claim, or amount owed in connection therewith as of the Petition Date, in accordance with the Debtors’ ordinary course of business, stated policies, and consistent with their past practices, as set forth in the Motion.

5. Other than with respect to the Executive Contracts, the Debtors are authorized to modify, change or discontinue any of their Wages and Benefits and to implement new programs, policies, and benefits in the ordinary course of business during these Chapter 11 Cases in the Debtors’ discretion and without the need for further approval by this Court, subject to applicable law.

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7. Nothing in this order should be construed as approving payment to an Employee on account of pre-petition wages, salaries, or commissions, including vacation, severance, and sick leave pay, in an amount exceeding the priority claim cap set forth in 507(a)(4) of the Bankruptcy Code.

8. The Debtors are authorized to make payments to applicable third parties from the Employee Deductions, Employee Benefits and the Payroll Taxes, in accordance with the Debtors’ ordinary course of business and stated policies, as set forth in the Motion in an amount not to exceed $1,200,000 in aggregate pursuant to this Interim Order.

9. The banks and financial institutions on which checks were drawn or electronic payment requests made in payment of the prepetition obligations approved herein are authorized to receive, process, honor and pay all such checks and electronic payment requests when presented for payment, including all checks issued prepetition and presented for payment postpetition, and all such banks and financial institutions are authorized to rely on the Debtors’ designation of any particular check or electronic payment request as approved by this Order.

10. The Debtors are authorized to reissue any check or electronic payment that originally was given in payment of any prepetition amount authorized to be paid under this Order that is not cleared by the applicable bank or financial institution.

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to section 365 of the Bankruptcy Code or (vi) a waiver of the Debtors’ or any party-in- interest’s rights under the Bankruptcy Code or any other applicable law.

12. The authorization granted to the Debtors in this order are subject to the terms of any interim or final orders entered by the Court (in either case, the “DIP Orders”) approving the Debtors’ use of cash collateral and entry into that certain debtor in possession financing facility dated as of the closing thereof, among, inter alia, Acquiom Agency Services LLC as administrative agent, TMF Group New York, LLC as collateral agent, the lenders from time to time party thereto, and the Debtors as borrowers and guarantors thereof (the “DIP Credit Agreement”). In the event the relief granted herein or any action taken or proposed to be taken hereunder is inconsistent with the terms of the DIP Orders or the amounts detailed in the DIP Credit Agreement, the terms of the DIP Orders and DIP Credit Agreement shall control. The Debtors shall not be authorized to make any payments to the extent inconsistent with the DIP Orders or the DIP Credit Agreement and the Debtors’ payment of all Claims pursuant to this Order shall be subject to the Budget (as such term is defined in the DIP Orders) and any limitations or variances thereto contained in the DIP Documents (as defined in the DIP Orders).

13. The Debtors are authorized to take all actions necessary to effectuate the relief granted pursuant to this Order in accordance with the Motion.

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15. This Court shall retain exclusive jurisdiction with respect to all matters arising from or related to the implementation, interpretation, or enforcement of this Order.

Dated: _________________, 2021 New York, New York

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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

In re: Chapter 11

Automotores Gildemeister SpA, et al.,1 Case No. 21-10685 (LGB) Debtors. Joint Administration Pending

FINAL ORDER (I) AUTHORIZING THE DEBTORS TO (A) PAY CERTAIN EMPLOYEE WAGES AND OTHER COMPENSATION AND RELATED

OBLIGATIONS AND (B) MAINTAIN AND CONTINUE EMPLOYEE BENEFITS AND PROGRAMS IN THE ORDINARY COURSE, AND

(II) AUTHORIZING AND DIRECTING APPLICABLE BANKS TO

HONOR ALL CHECKS AND TRANSFERS RELATED TO SUCH OBLIGATIONS (“FINAL WAGES AND BENEFITS ORDER”)

Upon the motion (the “Motion”)2 of Automotores Gildemeister SpA (“Gildemeister”) and certain of its affiliates, as debtors and debtors in possession in the above-captioned cases (collectively, the “Debtors”), for entry of interim and final orders, as more fully described in the Motion, authorizing the Debtors to pay certain Wages and Benefits, and for certain related relief; and upon the Declaration of Eduardo Moyano in Support of First Day Motions and Applications

in Compliance with Local Rule 1007-2 (the “First Day Declaration”); and the Court having

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 of New York dated January 31, 2012;

and the Court having found that this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2), and

1 The Debtors, together with each of the Debtor’s Chilean, Brazilian, and/or Uruguayan tax identification

number, as applicable, are: Automotores Gildemeister SpA (79.649.140-K), AG Créditos SpA (76.547.689-5), Marc Leasing, S.A. (96.658.270-7), Fonedar S.A. (216288040014), Camur S.A. (216589740015), Lodinem S.A. (217115010014), Carmeister S.A. (96.630.690-7), Maquinaria Nacional S.A. (Chile) (96.812.980-5), RTC S.A. (89.414.100-K), Fortaleza S.A. (76.856.380-2), Maquinarias Gildemeister S.A. (78.862.000-8), Comercial Gildemeister S.A. (76.856.310-1), and Bramont Montadora Industrial e Comercial de Vehiculos S.A. (04.926.142/0002-16). The location of the corporate headquarters and the service address for Automotores Gildemeister SpA is: 11000 Avenida Las Condes Vitacura, Santiago, Chile.

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that the Court may enter a final order consistent with Article III of the United States Constitution, and the Court having found that venue of this proceeding and the Motion in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409; and the Court having found that the relief requested in the Motion is in the best interests of the Debtors, their estates, their creditors and the other parties in interest; and the Court having found that the Debtors’ notice of the Motion and opportunity for a hearing on the Motion was appropriate and no other notice need be provided; and the Court having reviewed the Motion and having heard the statements in support of the relief requested therein at a hearing before the Court (the “Hearing”); and the Court having determined that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and upon all of the proceedings had before the Court; and after due deliberation and sufficient cause appearing therefor,

IT IS HEREBY ORDERED THAT:

1. The Motion is GRANTED to the extent set forth herein.

2. The Debtors are authorized to pay the Wages and Benefits and/or honor their wage and benefit obligations, as payments come due in the ordinary course, in accordance with their stated policies, in the ordinary course of their businesses, and consistent with their past practices,, including amounts owing as of the Petition Date on account of (i) Employee Compensation, (ii) Reprocesos, (iii) Unpaid Compensation, (iv) Employee Deductions, (v) Payroll Taxes, (vi) Reimbursable Expenses and (vii) the Employee Benefits, provided however, the Debtors shall not be authorized to pay Reimbursable Expenses to any single individual in an amount exceeding $1,000.

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connection therewith as of the Petition Date, in accordance with the Debtors’ ordinary course of business and stated policies, as set forth in the Motion.

4. Other than with respect to the Executive Contracts, the Debtors are authorized to modify, change or discontinue any of the Wages and Benefits and to implement new programs, policies, and benefits in the ordinary course of business during these Chapter 11 Cases in the Debtors’ discretion and without the need for further approval by this Court, subject to applicable law.

5. Nothing in this order should be construed as approving any transfer pursuant to 11 U.S.C. § 503(c), and a separate motion will be filed for any request that could fall within Section 503(c). No payment to any employee may be made to the extent that it is a transfer in derogation of section 503(c) of the Bankruptcy Code. This Order does not implicitly or explicitly approve any bonus plan, incentive plan, severance plan or other plan covered by Section 503(c) of the Bankruptcy Code.

6. The Debtors are authorized to make payments to applicable third parties from the Employee Deductions, Employee Benefits and the Payroll Taxes, in accordance with the Debtors’ ordinary course of business and stated policies, as set forth in the Motion.

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8. The Debtors are authorized to reissue any check or electronic payment that originally was given in payment of any prepetition amount authorized to be paid under this Order that is not cleared by the applicable bank or financial institution.

9. Nothing in the Motion or this Order, nor the Debtors’ payment of any claims pursuant to this Order, shall be deemed or construed as an admission as to the validity or priority of any claim against the Debtors or an approval or assumption of any agreement, contract or lease pursuant to section 365 of the Bankruptcy Code.

10. The authorization granted to the Debtors in this order are subject to the terms of any interim or final orders entered by the Court (in either case, the “DIP Orders”) approving the Debtors’ use of cash collateral and entry into that certain debtor in possession financing facility dated as of the closing thereof, among, inter alia, Acquiom Agency Services LLC as administrative agent, TMF Group New York, LLC as collateral agent, the lenders from time to time party thereto, and the Debtors as borrowers and guarantors thereof (the “DIP Credit Agreement”). In the event the relief granted herein or any action taken or proposed to be taken hereunder is inconsistent with the terms of the DIP Orders or the amounts detailed in the DIP Credit Agreement, the terms of the DIP Orders and DIP Credit Agreement shall control. The Debtors shall not be authorized to make any payments to the extent inconsistent with the DIP Orders or the DIP Credit Agreement and the Debtors’ payment of all Claims pursuant to this Order shall be subject to the Budget (as such term is defined in the DIP Orders) and any limitations or variances thereto contained in the DIP Documents (as defined in the DIP Orders).

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12. The requirements of Bankruptcy Rule 6003(b) are satisfied by the contents of the Motion or otherwise deemed waived. Notwithstanding Bankruptcy Rule 6004, the terms and conditions of this Order shall be immediately effective and enforceable upon its entry.

13. This Court shall retain exclusive jurisdiction with respect to all matters arising from or related to the implementation, interpretation, or enforcement of this Order.

Dated: _________________, 2021 New York, New York

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