Miyoshi America, Inc. entered Chapter 11 in the Southern District of Texas with the unusual posture of a case whose votes were already counted and whose central bargain was already struck. The petition was filed on April 27, 2026, the same day the voting deadline closed on a plan that had been solicited from creditors more than a month earlier. The combined hearing to approve the disclosure statement and confirm the plan is scheduled for June 3, 2026, with an outside confirmation deadline of June 15.

On the numbers, the path to confirmation looks clear. The class holding the talc personal injury claims voted to accept by more than 99 percent in both amount and number, the parent company that holds the only other voting claim accepted unanimously, and no party filed an objection of any kind by the May 19 deadline. Two contingencies remain. The Debtor has agreed to file a modified plan that addresses U.S. Trustee feedback on the release, exculpation, and injunction provisions before the combined hearing. And the channeling injunction that sits at the center of the plan cannot take effect on confirmation alone: it requires affirmance by the district court in addition to the bankruptcy court. If either court declines, the effective date does not occur.

Miyoshi America processes and sells specialized cosmetic ingredients, including pigments, composites, and substrates, to cosmetic manufacturers. It operates from an owned headquarters in Dayville, Connecticut and leases a laboratory and sales office in Valley Cottage, New York. The company is incorporated in Texas, where it began in 1985 as U.S. Cosmetics Corp., merged with Miki America, Inc. in 1997, and took its current name in 2016.

The corporate structure matters to how this case is built. Miyoshi America runs as a standalone business with its own board of directors and independent management, but it is wholly owned by Miyoshi Kasei, Inc., a non-debtor Japanese affiliate. That parent is the source of nearly every dollar in the restructuring. The company also entered distress without significant funded debt. It historically carried none and generally covered operations from cash flow. The debt that exists today is recent, arising from the intercompany financing the parent advanced as the litigation pressure mounted.

The company has been named as a defendant in talc personal injury lawsuits since 2018, but the filings tell a story of acceleration rather than a steady burden. Five cases were filed in 2022. By 2025 the figure had reached 167. More than 200 cases were pending as of the petition date, predominantly alleging mesothelioma or similar injuries from talc said to have been contaminated with asbestos.

The product at the heart of the litigation was never a large part of the business. Surface-treated talc-based ingredients accounted for roughly 5 percent of historical sales, and the Debtor discontinued the line in 2025, about a year before filing. The Debtor maintains that none of its products were ever contaminated with asbestos. That position does not resolve the economics. The volume of claims, the ad hoc settlements they generated, and the steadily rising cost of mounting a defense had become, in the company's description, unsustainable. Absent a plan, the Debtor indicates it would likely face liquidation under the weight of defending a growing docket of claims.

Section 524(g) of the Bankruptcy Code lets a company facing asbestos-related liabilities route present and future claims into a dedicated trust and obtain a channeling injunction that directs claimants to that trust as their sole recourse. The mechanism exists because asbestos claims surface over long latency periods, which makes future claimants impossible to identify and ordinary settlement impossible to finalize. The trust gives the debtor and a defined set of protected parties finality, and it gives future claimants a funded source of recovery that does not depend on a race to the courthouse.

What makes this case notable is the packaging. The Debtor describes this one as a first-of-its-kind prepackaged plan under Section 524(g), with creditor votes solicited before the petition was ever filed. That posture rests on more than six months of arm's-length negotiation conducted before filing among the Debtor, its parent, an ad hoc committee of plaintiffs' law firms representing the vast majority of claim holders, and a prepetition future claimants' representative tasked with protecting claimants who do not yet know they will have a claim.

The plan would establish a talc personal injury trust funded primarily by the parent company. The headline contribution is a $19 million cash payment on the effective date, drawn from a $20 million contribution that the parent would make to the reorganized company. A $1 million promissory note follows, non-interest-bearing and maturing six months after the effective date. The note is small in dollars but structurally important: it is secured by a first-priority lien on 50.1 percent of the reorganized company's equity, so a payment default would let the trust take majority ownership of the business, including its voting rights.

A trustee would manage the trust, overseen by an advisory committee of claim-holder representatives and a post-effective-date future claimants' representative. Distribution procedures would set medical and exposure criteria and a range of liquidated values that distinguish mesothelioma claims from other disease claims, with claims processed on a first-in, first-out basis and similar claims treated substantially the same. A payment percentage, the share of liquidated value a claimant actually receives, would be set by the trustee with the consent of the advisory committee and the post-effective-date future claimants' representative, and re-evaluated at least once every three years as the trust's assets and the claim population evolve.

The reason the parent dominates the capital structure is that nobody else would step in. In May and June of 2025, the Debtor's investment banker contacted roughly 17 third-party financial institutions about prepetition financing. None produced actionable interest, which the banker attributes to two factors: the uncertainty of the litigation and the absence of any framework for resolving the claims.

When the banker returned to the market in February 2026, the resolution framework existed, and interest improved, but only marginally. Of 11 prospects, two submitted term sheets. Both were deemed expensive and non-advantageous, neither offered to lend on an unsecured or junior basis or to engage in a priming fight, and neither provided enough financing to refinance the prepetition loan. The parent, for its part, would not consent to any financing that primed or sat alongside its existing collateral. That left the parent's own $20 million DIP facility at 7.50 percent as the only viable option. The exit financing carries that logic forward on better terms for the company.

The structure protects two things at once. The reduced rate, the 24-month paid-in-kind period, and the payment conditions tied to income and cash flow preserve the reorganized company's liquidity as it stabilizes without its talc litigation burden. The subordination protects the trust: the parent's own exit loan cannot be repaid until the trust note is satisfied in full, which keeps the parent's recovery behind the claimants the trust is built to pay.

Because the plan was solicited before filing, the vote is already complete. Solicitation began on March 13, 2026, with packages sent by overnight delivery to the attorneys representing every holder of a pending talc claim. The record date was March 27, the voting deadline was April 27, and the solicitation period ran roughly 45 days. No individual ballots were ultimately used, because every known holder was represented by counsel who submitted master ballots on their behalf.

The class holding the talc claims accepted by more than 99 percent in both amount and number, with a nominal $1 value assigned to each claim solely for voting. The parent, as the sole holder of the prepetition financing claim, accepted unanimously. The only class treated as a rejecting class is the existing equity, which is deemed to reject because it receives nothing on account of its old interests, but its sole holder is the parent, which proposed the plan and supports it. The Debtor seeks to confirm over that deemed rejection through cramdown.

The plan leaves most creditor classes untouched and concentrates impairment in the two classes tied directly to the restructuring. Trade and ordinary creditors are paid in full, the talc claims are channeled to the trust, and the parent absorbs both the financing claim and the equity.

The unimpaired classes, including priority, secured, general unsecured, and intercompany claims, are slated for full recovery. The recovery to talc claimants will depend on the trust's assets and the payment percentage its trustee sets over time, which is why the plan does not assign those claims a fixed percentage. The parent's recovery sits last, behind both the trust and the unimpaired creditors.

The legal architecture of the plan turns on a small number of questions, and the Debtor's confirmation brief is organized to answer each. The threshold issue is whether the trust satisfies Section 524(g) itself. The plan argues that it meets all four funding requirements, including the requirement that the trust hold the right to own a majority of the reorganized company's voting shares on specified contingencies, which the 50.1 percent equity pledge is designed to satisfy. It also argues that the factual predicates are met, among them the long latency of asbestos claims, the risk that pursuit outside the plan would impair equitable distribution, and the statutory requirement that the injunction be approved by a class vote of at least 75 percent. The 99 percent acceptance clears that bar comfortably.

A second question is who the injunction protects. The parent is not the debtor, so it must independently qualify for protection under the statute. The plan asserts three independent grounds: the parent's 100 percent ownership of the Debtor, its involvement in management and as a director, and its provision of financing. Any one of the three would suffice; the plan rests on all three.

The remaining issues are more routine for a plan with this level of support. Cramdown of the equity class rests on the absence of any class junior to it, which the plan argues satisfies the absolute priority rule. Exculpation is framed narrowly, covering only parties that participated in the restructuring and excluding fraud, willful misconduct, and gross negligence. And the market test described earlier does double duty as a legal argument: the banker's outreach to roughly 17 institutions for prepetition financing and 11 for the DIP, yielding no viable alternative, is offered as evidence that the parent's financing was the only realistic option and was negotiated at arm's length.

The near-term calendar is short and specific. A modified plan responding to the U.S. Trustee's feedback is expected before the combined hearing. The combined hearing on disclosure-statement adequacy and confirmation is set for June 3, with an outside confirmation deadline of June 15 that the parties built in as a condition for waiving the meeting of creditors and the schedules and statement of financial affairs.

If the plan is confirmed and affirmed as proposed, the reorganized company emerges intact: roughly 62 jobs preserved, the talc product line gone, and the talc liability routed away from the business and into a funded trust. The parent would hold 100 percent of the reorganized equity, but subject to the pledge that lets the trust take majority control on a payment default, and its own exit loan would sit behind the trust note in priority. Claimants would look to the trust rather than to the courthouse, with recoveries set by a payment percentage that the trustee adjusts over time.

Spirit Airlines has stopped flying. The Debtors filed for Chapter 11 in August 2025 and spent the following eight months pursuing a reorganization. By late April 2026, they had concluded that no viable path to continued operations remained, and the United States Bankruptcy Court for the Southern District of New York entered a Wind-Down Order on May 8, 2026.

What follows is a sale. On May 27, 2026, the Debtors filed a motion (Docket No. 1117) asking the Court to approve bidding procedures for the disposition of substantially all of their remaining valuable assets. The motion is set for hearing on June 10, 2026, with objections due June 3. If the procedures are approved as proposed, bidding will run on three separate tracks through late June and July, converging on two auctions: one on July 9 for the airline’s slots and operating assets, and one on July 22 for its corporate campus. Sale hearings would follow, subject to the Court’s availability.

Six affiliated entities filed jointly under the lead case In re Spirit Aviation Holdings, Inc. The group pairs a holding company and an operating airline with four Cayman Islands entities that carried the financing, intellectual property, and loyalty functions.

The asset list describes the business. A carrier that holds takeoff and landing slots at LaGuardia, owns a corporate campus and hangar, maintains flight simulators and spare engines, and runs the Free Spirit loyalty program is a commercial passenger airline. The Debtors list a mailing address in Dania Beach, Florida.

The Debtors are represented by Davis Polk & Wardwell, with PJT Partners as investment banker, engaged in early July 2025, and FTI Consulting as financial advisor. The principal creditor constituencies are an ad hoc committee of secured noteholders, advised by Akin Gump, the administrative agent under the revolving credit facility, advised by Milbank, and an official committee of unsecured creditors, advised by Willkie Farr & Gallagher and appointed on September 17, 2025.

The proximate cause was fuel. According to the motion, recent geopolitical events produced a massive and sustained increase in fuel prices, which in turn drove a rapid and unexpected decline in the Debtors’ liquidity.

By April 30, 2026, the conclusion was settled. The Debtors and their advisors had pursued every reasonably available path toward restructuring and continued operations, but sufficient incremental liquidity would not be found, and no viable path to a restructuring or continued operations remained. The Wind-Down Motion followed within days, and the Court entered the Wind-Down Order on May 8, 2026.

This case did not begin as a liquidation. When the Debtors filed in August 2025, the objective was a going-concern restructuring, and the early months of the case carried the familiar machinery of a reorganization: an investment banker evaluating alternatives, a creditors’ committee, and a search for a path to continued operations. The pivot to a wind-down reframes the case. The question is no longer how to keep the airline flying. It is how to realize the most value from what the airline owned.

The marketed assets fall into three groups, and the grouping drives the sale structure. The first is the LaGuardia slot portfolio, which the Debtors are marketing on its own track. The second is the corporate campus, which the motion describes as comprising a hangar, an office complex, a training center, and a multi-family residential building, and which carries its own ground-lease complication. The third is the operating estate: ground service equipment, spare engines, flight simulators, aircraft maintenance equipment, and the assets supporting the Free Spirit loyalty program, along with other intangibles made available in the data room.

The proposed procedures separate the estate into three bidding tracks, each with its own deadlines, and route them into two auction dates. Bidders for the LaGuardia slots and the other operating assets compete at a July 9 auction, while bidders for the corporate campus compete at a separate July 22 auction. The staggering gives each asset class its own schedule rather than a single shared deadline.

Stalking horse designations are authorized but not required. The Debtors may select a stalking horse only from qualified bidders proposing to purchase bid assets for at least $25 million, and any bid protections are capped: a break-up fee not to exceed three percent of the cash portion of the purchase price, plus expense reimbursement not to exceed $500,000. The minimum overbid is built off the approved stalking horse bid plus the approved bid protections plus an additional two percent of the stalking horse consideration. Every bid must carry a good-faith deposit equal to ten percent of the consideration, held in escrow and returned to non-prevailing bidders within four business days after entry of the sale order.

The clearest way to read the proposed process is track by track. The slots move first and fastest, with indications of interest and stalking horse bids both due June 10, the same day as the procedures hearing. The other operating assets follow on a slightly later cadence, and the campus runs last, with its auction two weeks after the others. The table below sets the three tracks side by side across the key milestones, with all deadlines at 4:00 p.m. unless noted.

The auctions, if needed, are to be held at the New York offices of Debtors’ counsel. Sale hearings are not yet calendared and will be scheduled subject to the Court’s availability. The cure objection deadline for the operating assets falls on July 7, and the Debtors target June 23 to file the schedule of potential assumed contracts.

The slots sit on their own track, carrying the earliest deadlines in the case: indications of interest and stalking horse bids are both due June 10, and final bids June 30, ahead of the July 9 auction. Separately, the procedures impose a requirement across all bid assets that any governmental, licensing, regulatory, or other approvals be obtainable no later than July 17, 2026, a date that falls after the July 9 auction and before the campus process concludes.

The corporate campus carries a notable legal question. If the campus is sold as individual properties, the ground lessor, Dania Live 1748 II LLC, holds a right of first refusal under a ground lease dated December 18, 2019. A right of first refusal can complicate a sale process, because a prospective buyer knows the holder may match its bid and take the asset after the buyer has done the diligence.

The Debtors do not leave it unaddressed. They take the position that the right of first refusal operates as a de facto anti-assignment provision and is therefore unenforceable under section 365(f) of the Bankruptcy Code, the provision that overrides restrictions on a debtor’s ability to assume and assign its contracts and leases. Resolving that question up front is what allows the campus to be marketed cleanly.

The procedures contain a set of conflict provisions that point to who may bid. They contemplate that a secured lender or noteholder group could itself become a buyer, and they build information walls for that scenario. A lender that intends to bid cannot also remain inside the consultation process and see how competing bids are evaluated.

Read together, these terms indicate that a lender constituency may itself bid, and that the Debtors have built the process to manage the conflicts that arise when a party advising the estate is also competing for its assets.

The motion rests on settled ground. A debtor’s business judgment is entitled to substantial deference in structuring a sale, and the paramount goal is to maximize value to the estate. Bid protections are tested against the familiar three-part standard from Genco Shipping, which asks whether the arrangement is free of self-dealing, whether the fee would chill rather than encourage bidding, and whether the amount is reasonable relative to the purchase price. The sale itself proceeds under section 363, which the Second Circuit has long held requires only a good business reason, a standard later described as minimal.

The motion also asks the Court to waive the stays under Bankruptcy Rules 6004(h) and 6006(d), which the Debtors describe as necessary to close on the timeline imposed by their DIP credit agreement. That request is the procedural counterpart to the compressed calendar, allowing closings to occur on the schedule the financing requires.

The near-term gates are simple to track. Objections to the procedures are due June 3, and the hearing is June 10. If the Court approves the procedures as proposed, the bid deadlines run through late June, the two auctions occur on July 9 and July 22, and sale hearings follow once calendared. Nothing here is final until the Court enters the bidding procedures order, and the procedures may be amended in response to objections.

The deeper questions are about value and process. For the secured creditors, the issue is how much the slots, the campus, and the loyalty program fetch in a compressed summer sale, and whether a lender bid ends up setting the floor. For the estate, the procedures are designed to draw competing bids while meeting a timeline dictated by the DIP facility. And for the campus specifically, the right-of-first-refusal question may determine whether the highest bid is the winning bid.

Trinseo PLC and twelve affiliated entities filed prepackaged Chapter 11 petitions in the United States Bankruptcy Court for the Southern District of Texas, Houston Division, on May 25 and 26, 2026. The cases are jointly captioned In re: Trinseo PLC, et al., Case No. 26-90545 (CML). The company entered court already holding the support it needed: holders of approximately 78% of its roughly $2.9 billion in total funded debt signed a Restructuring Support Agreement on May 13, 2026, and solicitation began before the petition was filed.

The plan does the work a balance sheet restructuring is supposed to do. It contemplates cutting roughly $2.0 billion of funded debt, backstops a $450 million equity rights offering, funds the cases with $142.5 million of new money, and leaves every general unsecured creditor unimpaired and paid in full. The first day relief is designed to keep the operating business running without interruption, with suppliers, wages, and employee obligations paid in the ordinary course.

One creditor stands apart. CastleKnight Management LP, which holds 2028 OpCo Term Loans and 2L 2029 Notes, did not sign the RSA and has advised that it will object to confirmation. The debtors say they will pursue a consensual resolution but are prepared to litigate. That posture, and the reasons behind it, run through the rest of this report.

The near-term calendar is compressed in the way prepackaged cases tend to be. The proposed voting deadline is June 29, 2026, which also serves as the deadline to object to the disclosure statement and the plan. A combined disclosure-statement-and-confirmation hearing is targeted for July 9, 2026, with a confirmation order milestone of July 25, 2026, sixty days after the petition date. The plan is not expected to go effective for some time after that. The outside date for effectiveness is November 21, 2026, which builds in room for regulatory approvals and an ancillary Irish proceeding addressed later in this report.

Trinseo is a global specialty chemical manufacturer. It makes plastics and latex binders that end up in building materials, automotive components, paper and packaging, appliances, textiles, and consumer electronics. The footprint is large and genuinely global: 32 manufacturing plants and one recycling facility across 28 sites in 14 countries, supported by 11 research and development facilities. The company employs roughly 2,800 people worldwide. Only about 718 of them work for the filing debtors, almost all in the United States. The remainder of the worldwide workforce sits outside the filing entities.

The business runs through three reporting segments. Engineered Materials covers rigid thermoplastic compounds and PMMA sheet and resin products. Latex Binders covers SB latex and styrene-acrylic latex used in paper, carpet, and coatings. Polymer Solutions covers ABS, polystyrene, and recycled materials. A non-debtor affiliate also holds a 50% interest in Americas Styrenics LLC, a styrenics joint venture with Chevron Phillips Chemical Company that sits outside the cases.

The corporate history matters because it explains the cross-border complexity. The business was carved out of The Dow Chemical Company in 2009 under the name Styron, acquired by Bain Capital in 2010, and taken public in 2014 on the New York Stock Exchange under the ticker TSE. The parent, Trinseo PLC, is incorporated in Ireland. On March 30, 2026, the parent was delisted from the NYSE for failing to meet continued listing standards, and its shares now trade on the OTC Pink market. The Irish incorporation and the equity cancellation it requires shape the timeline in ways a purely domestic filing would not.

The distress here is industry-wide before it is company-specific. The disclosure statement describes a chemicals market under sustained pressure from global overcapacity, particularly in Asia-Pacific, persistent pricing pressure, weakened demand, elevated energy costs, rising oil prices beginning in March 2026, geopolitical uncertainty, and tariffs. Demand recovery is not expected until 2027 at the earliest.

The revenue trend tells the first half of the story. Consolidated net sales fell from $3.675 billion in 2023 to $3.513 billion in 2024 to $2.975 billion in 2025, a decline of roughly $700 million over two years.

The second half of the story is the mismatch between earnings and debt. The revenue decline compressed margins to the point that 2025 adjusted EBITDA came in at $162.5 million. That earnings figure, set against roughly $2.9 billion of total indebtedness, is the imbalance the restructuring is designed to address. The NYSE delisting in March 2026 then fed back into the operating business, contributing to credit rating pressure and a contraction in trade terms, which tightened liquidity further just as oil prices were climbing.

To understand who recovers what under this plan, you have to start with where the debt sits. Trinseo’s funded debt is split across two separate collateral silos, identified in the filings as “OpCo” and “Super HoldCo,” each with its own borrowers, guarantors, and collateral packages, and each governed by its own intercreditor arrangements established in January 2025. That silo structure is the reason a revolving lender and a term lender in the same company can sit at opposite ends of the recovery spectrum.

Two features of this stack drive the rest of the case. First, the $1,508 million OpCo Intercompany Term Loan is the single largest piece of the structure, and it is an intercompany obligation rather than third-party debt, which is why it becomes the subject of an independent investigation and settlement discussed below. Second, the priority of the same lender group changes depending on which collateral pool is being tested, a complexity the disclosure statement maps across multiple collateral priority charts. The takeaway for a newsletter reader is simpler than the charts: position in the silo, not seniority in the abstract, determines recovery here.

The RSA assembles four moving parts: new financing for the cases, an equity raise, a large debt reduction, and exit financing to carry the reorganized company forward. The support behind it is concentrated at the top of the structure. As measured against the relevant claim pools, the agreement is backed by approximately 100% of RCF claims, approximately 99.9% of Super HoldCo 1L claims, and approximately 86% of OpCo term loan claims.

DIP financing

The cases are funded by two debtor-in-possession facilities totaling $427.5 million. The new money portion is $142.5 million; the remainder is a roll-up of prepetition claims at a 2:1 ratio. The Super HoldCo DIP facility is $157.5 million ($52.5 million new money plus $105 million of rolled-up Super HoldCo 1L claims). The OpCo DIP facility is $270 million ($90 million new money plus $180 million of rolled-up RCF claims). New money under both facilities prices at SOFR plus 9.00%, subject to a 3% floor.

From the old stack to the new one

The combined effect of the deleveraging, the equity raise, and the exit financing is to replace roughly $2.9 billion of prepetition funded debt with a far lighter post-emergence structure. The reorganized company is contemplated to be a privately held Delaware entity, not subject to SEC reporting and not listed on any exchange, with the debtors using commercially reasonable efforts to stay below 300 record holders.

The equity rights offering is the mechanism that converts creditor support into post-emergence ownership. The $450 million offering is allocated mainly to eligible holders of Super HoldCo 1L claims and OpCo term loan claims, with commitment parties receiving premium interests for backstopping the raise. Proceeds follow a defined waterfall that repays the OpCo DIP and the Super HoldCo new money DIP before reaching other distributions.

Every prepackaged case with overwhelming support still has to account for the creditors who did not sign. Here, that creditor is CastleKnight Management LP. It holds 2028 OpCo Term Loans and 2L 2029 Notes, and it was once a member of the 2028 OpCo Ad Hoc Group before stepping away. It has not executed the RSA and has stated that it will object to confirmation.

The reason the dispute matters becomes clear when you look at where CastleKnight’s claims sit. The OpCo term loan class is projected to recover 2% to 9% under the plan. That is the thinnest recovery of any class entitled to vote, and it reflects the silo structure: after the intercompany settlement and the priority arrangements, the OpCo collateral package leaves little value flowing to that tranche. The plan’s allocations, releases, and intercompany settlement bear directly on what this class receives.

The plan treats CastleKnight accordingly. It is carved out of the defined Released Parties under the third-party release provisions, alongside the Minority Ad Hoc Group members and any party that breaches the intercreditor agreements. The third-party release itself runs on an opt-out basis for voting and presumed-accepting classes and an opt-in basis for classes deemed to reject. None of this is resolved. The objection deadline has not passed, and confirmation is contested rather than assured.

The plan sorts claims into twelve classes. Three are entitled to vote, and their projected recoveries map the silo structure almost perfectly: the higher in the priority waterfall, the larger the recovery. General unsecured creditors, notably, ride above the dispute entirely. They are unimpaired and paid in full in the ordinary course, which keeps trade partners and ordinary vendors whole and the operating business stable.

The case for confirming over an objection rests on the best interests test. The plan compares its projected recoveries to what each class would receive in a hypothetical Chapter 7 liquidation, and for every impaired class the plan does at least as well, usually far better. A liquidation of a chemicals business spread across 14 countries would destroy the going-concern value the plan preserves.

The comparison is most pointed in the OpCo term loan class. Its projected plan recovery of 2% to 9% is low, but the liquidation alternative the analysis assigns to that class is zero. That is the response the disclosure statement frames to a best interests challenge, and it is the same class from which the objection originates.

Centerview Partners prepared the valuation that underpins the recovery estimates, working as of May 19, 2026, and drawing on a discounted cash flow analysis, a comparable company analysis, and a precedent transactions analysis. The result places enterprise value in a range of $1,450 million to $1,950 million, with a midpoint of $1,700 million, and total equity value at $580 million to $1,080 million, midpoint $830 million. With roughly $2.9 billion of funded debt sitting above that equity value, there is not enough value to reach far down the capital structure, which is what the class-by-class recovery estimates reflect.

The forward case rests on a recovery that the projections push out across the rest of the decade. Projected adjusted EBITDA climbs from $89 million in the second half of 2026 to $343 million by 2030, with projected net sales returning to the $3.5 billion to $3.9 billion range. These are projections, not results, and they assume the demand recovery the company expects beginning in 2027.

The projections also support the feasibility case under the Bankruptcy Code. A reorganized company carrying $850 million of exit term debt against EBITDA building toward $343 million is a far more serviceable structure than the one it replaces. The projected cash balance stays positive throughout, ranging from $170 million to $589 million across the projection period.

The wrinkle that separates this case from an otherwise routine domestic prepackaged plan is the parent company’s Irish incorporation. Cancelling the existing equity in an Irish PLC cannot be accomplished by a United States confirmation order alone. The plan therefore contemplates an ancillary Irish proceeding, an examinership and scheme of arrangement, to give effect to the equity cancellation under Irish law.

That proceeding carries its own timetable. Irish examinership provides a protection period of up to 100 calendar days, extendable up to a year, and an Irish confirmation order is a condition precedent to the plan going effective in the United States. The scheme of arrangement must clear one of several approval thresholds, including approval by a majority of impaired creditors or by a majority of voting classes. This is why the outside date for effectiveness sits at November 21, 2026, well after the targeted July confirmation, with a further 90-day extension available for regulatory approvals. Confirmation and effectiveness are not the same finish line here. The disclosure statement attributes the gap between them to both the necessary regulatory approvals and the ancillary Irish proceeding.

The path from petition to emergence is mapped by a series of milestones in the RSA and the proposed scheduling. The prepetition steps assembled the deal; the postpetition steps execute it on a compressed schedule, subject to the Irish proceeding running in parallel.

These dates are targets, not certainties. The combined hearing date is subject to the court’s calendar, the objection deadline has not run, and the effective date depends on the Irish proceeding and any required regulatory clearances. A contested confirmation could move the schedule.

Read across the structure, the plan produces a clear hierarchy of outcomes. The top of the stack is made nearly whole, the middle recovers a majority of its claims, the bottom of the OpCo silo recovers almost nothing, and existing equity is cancelled. Trade creditors and the operating business are unaffected.

What happens next turns on two open questions. The first is whether the debtors reach a consensual resolution with the holdout or confirm over its objection, which will test the plan’s release framework, intercompany settlement, and best interests showing. The second is whether the Irish proceeding stays on its parallel track so that confirmation in July can convert into an effective plan before the November outside date. Neither is resolved as of the filings analyzed here.

Bitcoin Depot Inc. operated the largest network of Bitcoin ATMs in North America. As of the petition date, not one of its roughly 9,700 kiosks was running. The company and 17 affiliated entities filed voluntary chapter 11 petitions in the United States Bankruptcy Court for the Southern District of Texas, Houston Division, on May 17, 2026. A first-day declaration from the company's chief restructuring officer, filed the following day, sets out a plan to wind down operations and sell substantially all of the assets rather than reorganize and continue as a going concern.

The declaration ties the filing to one operational decision and its aftermath. In October 2025 the company began requiring identity verification on every transaction. A revenue decline of nearly half year over year followed, alongside mounting litigation exposure and a going concern warning filed days before the petition.

The business was concentrated in a single product line. The company owned and operated a network of Bitcoin ATMs, referred to in the filing as kiosks, that let customers buy Bitcoin with cash through one-way, cash-to-Bitcoin transactions. As of December 31, 2025, that network spanned approximately 9,700 owned and leased kiosks across 48 U.S. states, 10 Canadian provinces, and 6 Australian states, placed in convenience stores, gas stations, pharmacies, grocery chains, and shopping malls in zip codes containing roughly 69 percent of the U.S. population. The kiosks generated $613.6 million in revenue for the year ended December 31, 2025, which the declaration puts at approximately 99.8 percent of total company revenue.

The model carried little inventory risk. The company held a relatively small Bitcoin balance at any given time, typically between $1.0 million and $2.0 million, and purchased Bitcoin on a just-in-time basis to fill customer orders. To secure placement in high-traffic retail locations, it was party to approximately 7,700 floorspace agreements. A second program, BDCheckout, let customers buy Bitcoin at retail checkout counters through a transaction started on the company's mobile application, and it was available at approximately 16,300 retail locations at year-end 2025 with a historical average markup of 15 percent.

The corporate group consists of 24 entities, with Bitcoin Depot Inc. as the publicly owned ultimate parent. The company traces to a limited liability company formed by its founder on June 7, 2016, which acquired a controlling interest in a Canadian kiosk software business in July 2021. Bitcoin Depot Inc. itself was formed on June 30, 2023, when a de-SPAC transaction with a Delaware special purpose acquisition corporation closed. The founder remains the controlling shareholder. Seventeen of the company's 23 subsidiaries are debtors in these cases, for 18 debtor entities in total. The remaining subsidiaries sit outside the U.S. filing: a non-debtor Australian entity that owns approximately 140 kiosks is winding down through an Australian insolvency proceeding, and the Canadian subsidiaries intend to commence recognition proceedings in Canada.

The declaration describes pressure that built from three directions and then converged. Beginning in approximately 2024, the company faced lawsuits and investigations from 11 state agencies alleging that its platforms were used by third parties to perpetrate fraud. It also became subject to a voluntary information request from the Securities and Exchange Commission and an investigation by the Federal Trade Commission. Separately, a subsidiary, BitAccess, Inc., was subject to an arbitration award of approximately $18.5 million.

In October 2025, the company implemented Know Your Customer verification requiring identification for every transaction. Two effects followed. User bans associated with the enhanced compliance measures accounted for approximately 4 percent of monthly transaction volumes, and reported revenue declined sharply. The swing in operating results across consecutive quarters shows the speed of the change.

The losses arrived as liabilities grew. The company accrued more than $20 million in legal judgments during the fourth quarter of 2025. On May 11, 2026, it missed the filing deadline for its quarterly report, and on May 12, 2026, it filed a notification with securities regulators disclosing its inability to file the report on time and substantial doubt about its ability to continue as a going concern.

The same period brought repeated turnover in senior leadership. A leadership transition announced in November 2025 took effect on January 1, 2026, installing a new chief executive officer and chief operating officer as the founder stepped down from the chief executive role. In February 2026, the chief legal officer and chief compliance officer resigned, citing compliance concerns. In March 2026, the recently installed chief executive officer and chief operating officer resigned, the founder stepped down as executive chairman while remaining a board member, and an independent director who had joined the board in August 2025 was appointed chief executive officer and chairman. A chief restructuring officer was appointed and a restructuring committee formed on May 14, 2026, three days before the filing.

Sequence of Events

The declaration states that the debtors intend to conduct an orderly wind-down and sale of substantially all of their assets through the chapter 11 process and to establish a liquidation trust for the benefit of their stakeholders, with the aim of monetizing the estate. This is a stated intention rather than an approved plan. No sale has been authorized, no liquidation trust has been established, and the relief described below remains subject to court approval and to objection deadlines that have not passed.

The debtors propose to fund the cases through the use of cash collateral, which the declaration describes as approximately $22.4 million held across the company's bank accounts. The wind-down extends across borders. The debtors seek authority for Bitcoin Depot Inc. to act as foreign representative in Canadian recognition proceedings, the Canadian subsidiaries intend to commence those proceedings, and the non-debtor Australian entity is pursuing a separate insolvency proceeding for its roughly 140 kiosks. The objective stated throughout is to preserve the value of the kiosk fleet, much of which sits idle or in storage, long enough to sell it.

Funded debt is modest relative to the size of the network. The declaration places total funded debt liabilities at approximately $15.77 million as of the petition date. A secured term loan facility provided by the prepetition lender accounts for the large majority of that figure, with the balance in equipment financing.

The term loan facility had been substantially paid down before the filing. It was established at an initial principal amount of $36,450,000 and stood at roughly $13,338,000 at the petition date, with an additional $3,100,000 exit fee and approximately $198,784 in accrued interest.

The workforce was small for a network of this scale. As of the petition date, the company employed approximately 116 people, with roughly 107 at its U.S. operating subsidiary, 7 at its Canadian subsidiary, and 2 at the recently acquired betting platform, supplemented by 13 independent contractors. Approximately 103 employees received a salary and approximately 13 were paid hourly. The company issued termination notices to all U.S.-based employees with a 60-day notice period under the Worker Adjustment and Retraining Notification Act, and the declaration takes the position that any resulting WARN claims would be entitled to administrative priority if termination occurs before the notice period expires.

The declaration notes that no prepetition amount owed to any individual on account of wages exceeds the $17,150 priority cap under section 507(a)(4) of the Bankruptcy Code.

The debtors operate a centralized cash management system of 21 bank accounts at 9 banks, carrying average monthly bank fees of approximately $179,000. They seek to keep the existing accounts open rather than close them and open new debtor-in-possession accounts, and to continue intercompany transfers with administrative expense priority. Because the business is winding down rather than continuing, the debtors also intend to close their seven cryptocurrency wallets and convert the holdings to cash, and they seek a deposit account dedicated to cash collateral and another dedicated to taxes.

Cash is concentrated in a handful of accounts, including a main operating account holding approximately $11.7 million and a treasury account holding approximately $6.9 million. Together with the smaller balances, these accounts make up the roughly $22.4 million of cash collateral the debtors propose to use to fund the cases.

Through the first-day motions, the debtors seek the customary slate of relief to support an orderly transition into chapter 11. On the administrative side, they request joint administration of all 18 cases under the lead case, authority to file a consolidated creditor matrix and a consolidated list of the top 30 unsecured creditors, employment of a claims and noticing agent, a 30-day extension to file their schedules and statements through June 30, 2026, and authority for the parent to serve as foreign representative in Canada.

On the operational side, the debtors seek authority to pay prepetition wages and benefits of approximately $849,000 and to continue compensation programs in the ordinary course; to maintain the cash management system, pay prepetition bank fees of approximately $179,000, and close the cryptocurrency wallets; and to pay approximately $2.36 million in accrued prepetition taxes and fees. The accrued taxes include approximately $1.4 million in franchise and income taxes, approximately $596,000 in sales and use taxes, and approximately $364,000 in property taxes, and the declaration notes an ongoing Texas Comptroller franchise tax audit covering tax years 2022 through 2025.

The debtors further seek to provide adequate assurance to utility providers through a $1,550 deposit and to pay critical vendors, lien claimants, and foreign vendors up to $448,000 on an interim basis and up to $888,000 on a final basis, subject to customary trade terms and claw-back provisions. The declaration explains that the debtors depend on a limited group of vendors to maintain and store the kiosk fleet, including approximately 438 kiosks currently held with third-party warehousers, to preserve value through the sale process. Finally, the debtors seek authority to retain and pay ordinary course professionals subject to tiered monthly fee caps of $50,000, $25,000, and $8,500.

West Marine, Inc. and seven affiliated debtors filed for Chapter 11 protection on May 17, 2026 in the United States Bankruptcy Court for the District of Delaware, carrying approximately $549.2 million in secured and unsecured obligations and a plan that can resolve in one of two ways. The company will either equitize its term loan debt and emerge as a recapitalized going concern, or sell substantially all of its assets to a third party, depending on which path a concurrent marketing process shows will deliver more value. The debtors have given themselves 95 days to find out.

The plan and the machinery to test it arrive across two filings made the following day. The Disclosure Statement, filed as Docket No. 47, sets out the company's finances, the causes of its distress, and the treatment each class of creditors would receive. The Bidding Procedures Motion, filed as Docket No. 49, establishes the rules for the sale process that runs in parallel with the recapitalization. Both are pending. Objection deadlines have not passed, the plan may be amended, and confirmation is not assured.

West Marine was founded in 1968 in Sunnyvale, California, and the disclosure statement describes it as the nation's leading omni-channel provider of aftermarket products to the boating, fishing, sailing, and watersports markets. It was taken private on September 12, 2017. As of the petition date, it operated approximately 200 retail stores across more than 34 states and Puerto Rico, two distribution centers in California and South Carolina, two eCommerce websites, and a workforce of roughly 2,600.

Revenue runs through three channels, and the disclosure statement reports each as a share of 2025 sales rather than as a clean split: retail stores accounted for just over 60 percent, West Marine Pro, the company's wholesale channel, for just over 40 percent, and eCommerce for approximately 8 percent. The figures overlap because the channels are not mutually exclusive, but the shape is clear enough. This is a store-led business with a substantial wholesale arm and a comparatively small direct-to-consumer footprint online.

The disclosure statement traces the company's distress to a combination of weather, demand, and cost pressure that arrived faster than the balance sheet could absorb. Extreme weather during the peak boating seasons of 2024 and 2025 weighed on both in-store and online sales. Consumer discretionary spending fell broadly after the pandemic, and in 2025 industry-wide retail sales of new powerboat units were down roughly 8 to 10 percent on average. Into 2026, the marine and outdoor recreation sector continued to face elevated diesel prices, inflation, supply chain disruption, and a volatile tariff environment.

Two self-inflicted problems compounded the external ones. The company was carrying elevated inventory from pandemic-era over-buying in discretionary categories, the residue of stocking decisions made when in-stock levels in 2022 sat in the high 80 percent range, a level the filing characterizes as suboptimal for retail. It was also operating an overexpanded store footprint, with many locations tied to onerous leases that offered limited flexibility for early termination.

None of this was for lack of prior effort. The company completed two out-of-court recapitalizations in 2023. The March transaction brought in approximately $150 million of new money. The September transaction equitized approximately $660 million of then-existing funded debt and added approximately $125 million of new capital. Together the two deals provided roughly $275 million in new capital and removed about $660 million of debt from the balance sheet. The disclosure statement states that the benefits of the September 2023 transaction were not enough to offset the operational and macroeconomic pressure that followed.

The roughly $549.2 million in obligations breaks down across three secured facilities and a layer of unsecured trade and lease debt. The term loan, at $251.2 million, is the largest single piece and the fulcrum of the restructuring. It sits across three tranches at fixed and floating rates, with Tranches A and B maturing on June 13, 2028 and Tranche C on September 12, 2028.

The lease obligations sit alongside the funded debt rather than inside it. The company reports approximately $166.7 million in future lease payments owed under roughly 200 unexpired leases, with annual lease expense running above $50 million. That fixed cost, attached to a footprint the company already considers too large, is part of what a court-supervised process is meant to address through the assumption and rejection of leases.

The plan does not arrive unsupported. On the petition date, the debtors and their Consenting Stakeholders executed a Restructuring Support Agreement after arm's-length negotiations. The signatories hold a commanding share of the capital structure: lenders holding 100 percent of FILO claims, lenders holding 96.2 percent of term loan claims, and equity holders representing 93.9 percent of outstanding interests.

What the agreement does not come with is fresh borrowing. The cases are funded entirely through the consensual use of cash collateral, with no debtor-in-possession financing. At the petition date the company held approximately $21.5 million in cash. That combination, a limited runway and no new facility to extend it, is the reason the timeline is short. The disclosure statement and the bidding procedures motion both state that a protracted process would likely destroy value, and the cash collateral orders carry milestones that enforce the pace.

The plan is built around what the disclosure statement calls a toggle structure. The recapitalization is the primary path. The sale is the alternative the company can switch to, but only if the numbers justify it. A vote to accept the plan is a vote to approve either outcome, which is what allows the whole process to compress into a single confirmation timeline rather than two sequential ones.

The consent standard is the hinge. Under the recapitalization, approximately $251.2 million of term loan claims would convert into all of the new equity in Reorganized West Marine, subject to dilution from a management incentive plan, and the ABL and FILO claims would be paid in full or rolled into exit facilities. The term loan lenders control whether the company instead toggles to a sale, but their consent may not be unreasonably withheld if the net proceeds of a winning bid exceed the combined total of the ABL claims, the FILO claims, the term loan claims, projected distributions, and the wind-down amount. In other words, a sale wins only if it pays the secured stack in full and leaves something over.

The sale track was already in motion before the filing. Through its proposed investment banker, Triple P Securities, LLC, operating as Portage Point, the company identified and contacted five potential purchasers prepetition. The bidding procedures motion asks the court for authority to carry that marketing process forward under a defined set of rules designed, the motion states, to draw out the highest or best bid while keeping the auction orderly. The key terms:

The 3 percent cap on bid protections is the figure most likely to draw scrutiny, and the motion situates it within recent Delaware practice rather than asserting it in isolation. The comparable cases the motion cites cluster tightly around that level.

The motion grounds the whole package in the business judgment standard, the deferential test courts apply when a debtor articulates a sound business reason for its sale procedures, and argues that procedures built to encourage competitive bidding serve the paramount goal of maximizing value for the estate.

The plan sorts claims and interests into ten classes. The secured classes are slated for full recovery, the unsecured class is contingent on its own vote, and the existing equity is wiped out. The recovery on the term loan, the class doing the heavy lifting in the recapitalization, is deliberately left blank in the disclosure statement so as not to prejudice the sale process while bids are still coming in.

The general unsecured class faces the only genuinely conditional recovery, and the condition is its own vote. Accept, and the class shares in a defined pool of cash, or in sale proceeds left after the secured claims are satisfied. Reject, and the recovery falls to zero. The debtors have reserved the right to seek nonconsensual confirmation under section 1129(b) if an impaired class rejects.

Roughly a month before the filing, the boards built a guardrail into the process. On April 13, 2026, they established Special Committees of two existing disinterested directors and gave them binding authority to investigate potential claims against insiders and affiliates, the matters the filing refers to as Conflict Matters. That investigation was ongoing at the petition date, with a targeted completion of June 21, 2026, the same day the final cash collateral order is due.

The investigation is not a formality bolted onto the timeline. The disclosure statement states that the debtor releases contemplated by the plan remain subject to its outcome, which means the scope of who gets released, and from what, is not yet fixed. On the petition date the boards also appointed an interim vice president through the company's restructuring advisor, adding independent operational oversight for the duration of the cases.

Every milestone in these cases ties back to cash collateral. Because the company is funding itself on existing cash rather than new financing, the orders that permit that use carry deadlines, and missing them risks the access that keeps the lights on. The schedule below combines the plan milestones from the disclosure statement with the sale dates from the bidding procedures motion. The two run on the same calendar by design, so that whichever track prevails, the company reaches an effective date around August 20, 2026.

A federal bankruptcy court in Houston resolved cross-motions for summary judgment in an adversary proceeding inside the Barrow Shaver Resources Company, LLC Chapter 11 case. The May 18, 2026 memorandum opinion grants partial summary judgment to each side and reserves two questions for supplemental briefing.

The dispute is narrow in its facts and broad in its stakes. It asks whether overriding royalty interests (ORRIs) in the debtor’s Hidden Rock Field were validly conveyed to two former geologist-consultants under identical June 13, 2019 consulting agreements, and if so, whether those interests belong to the estate or can be clawed back. Roughly $1.6 million in production revenues paid to the consultants within two years of the petition date turns on the answer.

The opinion reads as a methodical chain. Each ruling assumes the answer to the one before it and carries the analysis to the next. The court first asks whether the consultants own the ORRIs, then whether any ORRIs are property of the estate, and finally whether the trustee can avoid them. The scorecard below tracks where each link landed.

Barrow Shaver Resources Company, LLC is an independent oil and natural gas company engaged in the exploration, development, production, and acquisition of crude oil and natural gas across Southeast, East, and West Texas. It was formed in mid-1989 and is headquartered in Tyler, Texas. In the Hidden Rock Field, which spans Morris, Cass, Upshur, and Camp Counties, the debtor served as lessee and operator. Its model was consistent: identify a hydrocarbon prospect, initiate a leasing program to acquire the acreage, and form a joint venture with investors before development.

That model produced the instrument at the center of this dispute. In December 2017, the debtor entered into an Exploration Agreement governing the Hidden Rock Field. The agreement required the debtor to deliver an average 77% net revenue interest (NRI) to investors while reserving the potential for its own overriding royalty interest, referred to throughout the proceedings as the BSR ORRI. That reserved interest was contingent by design. It existed only when the overall average NRI on the prospect left room above the 77% floor after accounting for lessor royalties, working interests, and other burdens.

The debtor continued to acquire and extend leases from 2017 until July 23, 2024, when an involuntary petition for Chapter 7 was filed against it. The debtor later consented to conversion to a voluntary Chapter 11 proceeding. While seeking financing for the field, it solicited term sheets that offered ORRIs to counterparties, but it executed none of them before the petition date. That fact recurs at several decisive points later in the opinion.

In June 2019, the debtor entered into identical consulting agreements with two geologists who had worked on drilling, reworking, testing, and similar operations for the company. Each agreed to identify, generate, and evaluate prospects for the exploration and development of oil and gas reserves. Compensation ran through a Consultant Participation Program with two tiers. The first was a maximum ORRI not to exceed 1% of 8/8ths out of the BSR ORRI the debtor earned or retained on a given prospect, provided the lease burdens and deal terms allowed. The second, where a full 1% was not available, was 50% of whatever ORRI the debtor earned or retained. A discretionary cash bonus at the time of a sale rounded out the package.

Two further terms shape the entire dispute. The agreements provide that record title to the underlying oil and gas properties remains in the debtor’s name so long as the debtor operates the property. And the debtor’s internal records suggest the consultants were orally conveyed a number of ORRIs and working interests over their tenure, with pay decks showing production revenues flowing to them before the petition date. In July 2024, the debtor stopped paying.

One of the two consultants died on March 31, 2024. His estate, represented by his surviving spouse, continued the claims.

One year into the bankruptcy, the plaintiffs filed the adversary proceeding, seeking a declaratory judgment as to ownership of their alleged ORRIs and working interests and asking that the suspended production revenues be escrowed. The debtor answered with counterclaims for declaratory judgment as to ownership, unjust enrichment, constructive fraudulent transfer, avoidance of the alleged ORRI transfers as a bona fide purchaser, objection to the plaintiffs’ proofs of claim, recovery of any avoided ORRIs, and attorney’s fees. The debtor moved for summary judgment in October 2025; the plaintiffs cross-moved in January 2026. After full briefing and a March 2026 hearing, the court took both motions under advisement.

Ruling for the debtor.

A valid conveyance of a Texas oil and gas interest must satisfy both the statute of conveyances and the statute of frauds. On the statute of frauds, the court ruled for the debtor. The standard is settled. The instrument must furnish within itself, or by reference to some other existing writing, the means or data by which the property to be conveyed can be identified with reasonable certainty.

The consulting agreements fail that test. They reference oil and gas properties and prospects, but they contain no location, no legal description, and no identification of any lease from which an ORRI derives. The plaintiffs did not brief the statute of frauds at all, resting instead on the proposition that a conveyance can be effective without the formalities of a deed. The court found that proposition does not dispense with the statute of frauds, which governs regardless of the parties’ intent.

That left the extrinsic documents. Certain ORRIs carried locations or legal descriptions in division orders, signed only by the purported owner, or in the debtor’s internal division of interest listings. Under Texas law, extrinsic evidence may identify property from data already in the writing, but it cannot supply the location or description that the writing itself omits. Because the agreements supplied none, neither the division orders nor the listings could rescue them, and summary judgment on those ORRIs went to the debtor.

Ruling for the plaintiffs.

On present intent to convey, required by the statute of conveyances, the court ruled for the plaintiffs. An instrument conveys real property only if it shows a present intent to do so. The agreements provide that the debtor “set aside” an ORRI for each consultant, effective when earned. To the extent an ORRI had already been conveyed by oral agreement at or before execution, that “set aside” language reads as a present intent to convey.

The harder question was the contract’s forward-looking language, which contemplates future work and additional ORRIs earned after execution. The court found the same language reasonably susceptible to both a present and a future reading, which makes it ambiguous, and extrinsic evidence of the division orders and listings supports a present intent for both the pre- and post-execution interests.

The court also rejected the debtor’s illusory-contract theory. The debtor argued that because it retained the authority to adjust the overall NRI and extinguish room for the BSR ORRI, its promise to convey was terminable at will and therefore unenforceable. The court declined to read the contract that way. The debtor never entered into a financing arrangement that would have eliminated the BSR ORRI. It instead set aside ORRIs where room existed and paid production revenues on producing wells for months, if not years. Texas courts construe contracts to promote mutuality and to avoid illusory constructions, and the court would not unwind conveyances that the payment history shows actually occurred.

Ruling for the debtor.

With a possible conveyance established, the analysis turned to whether any ORRIs are even part of the estate. The plaintiffs first argued that the consulting agreements are farmout agreements, which would exclude the interests under Section 541(b)(4)(A) of the Bankruptcy Code. The court disagreed.

A farmout, as defined in Section 101(21A), turns on drilling. The owner of a right to drill, produce, or operate transfers that right to another party, and that party, as consideration, agrees to perform the drilling or related operations. Neither consultant received the right to drill, operate, or produce anything in the Hidden Rock Field, and neither bore the operational risk that defines a farmee. Their work was identification, generation, and evaluation of prospects. One described his role as an “idea” job. The debtor paid the costs and carried the risk of leasing, drilling, and development. The court added that the legislative history of the provision aims at farmees who drill and assume drilling responsibilities, not at those who are compensated by the party bearing those burdens.

Ruling for the plaintiffs.

The closer estate question was Section 541(d), which excludes from the estate property in which the debtor holds only legal title and not an equitable interest. Here the court ruled for the plaintiffs.

The agreements’ use of “record title,” retained by the debtor, has to mean something. The court read it to separate legal title, which stayed with the debtor while it operated, from the equitable interest that passed to a consultant once an ORRI was earned. The plaintiffs’ resulting-trust theory failed, because a resulting trust requires legal title to shift at the moment of conveyance, and legal title here never moved from the debtor. But Section 541(d) is broader than that. It speaks of “equitable interest,” not “equitable title,” and the relevant question is not whether the plaintiffs could compel legal title but whether they held any equitable interest at all.

To the extent an ORRI was conveyed, the plaintiffs held a bundle of equitable rights: the right to receive royalty payments, the right to take legal title on a sale of the underlying property, and the right to assign the interest to a third party. The debtor’s retained interest was minimal, amounting to bare legal title. The debtor’s payment of property taxes on the BSR ORRI in many of the relevant wells did not change that, because the plaintiffs’ ORRIs were carved out of the BSR ORRI, and the debtor never adjusted the NRI or executed a financing deal that would have eliminated them before the petition date. The equitable interests therefore sit outside the estate.

Ruling for the plaintiffs.

Even property outside the estate can be reached if the trustee can avoid the transfer. Under Sections 544(a)(1) and (a)(3), the trustee takes the position of a hypothetical lien creditor or bona fide purchaser without notice. The parties agreed that the plaintiffs’ ORRIs were never recorded in the county real property records and that no chain of title exists. The case turned on inquiry notice, and the court ruled for the plaintiffs.

Texas charges a purchaser with the knowledge a reasonably diligent inquiry would uncover. The court found that a hypothetical purchaser of commercial oil and gas properties spanning several counties, with open and observable wells, would have examined the local county tax records and found the plaintiffs’ production-revenue income and ad valorem tax payments. Texas title examination standards point the same way, advising examiners to determine the status of ad valorem taxes. The conclusion did not rest on theory alone. Third-party purchasers had in fact discovered the plaintiffs’ interests through the same county appraisal records and used them to send unsolicited purchase offers.

The court then extended the inquiry one step further. A purchaser who found the tax records would follow the trail to the debtor’s internal pay decks, division orders, and division of interest listings, which would confirm the ORRIs. The debtor’s argument that its principal would have refused to disclose ownership information did not help it. The debtor itself had filed the plaintiffs’ information in publicly accessible tax records.

Ruling for the plaintiffs.

The last claim was constructive fraudulent transfer under Section 548(a)(1)(B) and the Texas Uniform Fraudulent Transfer Act, aimed at roughly $1.6 million in production revenues paid within the two-year lookback period. The court ruled for the plaintiffs on their affirmative defense.

The framing matters more than the arithmetic. The court declined to test each royalty payment against the services rendered the moment before it was paid. The right question is whether the present value of an ORRI’s future earning potential, measured when the services were performed, was reasonably equivalent to the value of those services. The consulting agreements answer it. Both consultants carried market rates above $250,000 a year and accepted reduced salaries in exchange for contingent royalty upside, much like compensation in company stock. No party contended the consultants failed to render valuable services, and conferring ORRIs on employees is ordinary practice in the industry. The value of the work was therefore commensurate with the value of the ORRIs, including their future production revenues.

The opinion does not end the dispute. The court reserved two sets of questions and ordered supplemental briefing within 21 days, with responses due seven days after.

The first set concerns the statute of frauds. Some ORRIs are supported by county tax records showing the debtor paid the plaintiffs on account of those interests, which may bring them within the part-performance doctrine or another exception such as judicial admission or estoppel. Neither party briefed those exceptions, so the court reserved whether any apply and, if so, whether any genuine issues of material fact remain.

The second set concerns the deceased consultant. The agreements contain both a death provision, which limits post-death ORRIs to those already assigned of record, and a broader disassociation provision, which assigns earned producing ORRIs on retirement or other disassociation. The court found the two provisions arguably ambiguous as applied to a consultant’s death and reserved the effect of the parties’ course of conduct, including the continued payment of production revenues to the estate after the death.

The stakes reach past the briefing schedule. The debtor has sold the substantial majority of its assets, and any ORRIs the court ultimately finds valid and enforceable are carved out of that sale as Excluded Assets. The court took no position on whether the consultants are entitled to a cash bonus arising from the sale.

North Star Health Alliance, Inc. and three affiliated debtors asked the United States Bankruptcy Court for the Northern District of New York to approve up to $60 million in debtor-in-possession financing from the Dormitory Authority of the State of New York. The motion, filed May 18, 2026 as Docket No. 308, was set for an interim hearing on May 20, 2026.

The Debtors operate a rural not-for-profit health system in the North Country: two critical access hospital campuses, a standalone inpatient psychiatric hospital, and a 60-bed assisted living facility, together employing roughly 1,200 people. The proposed facility does two things at once. It refinances a $15 million state bridge loan that has kept the system solvent since the petition date, and it funds operations through the end of 2026 while the Debtors pursue a partnership under New York's Safety Net Transformation Program. The motion is direct about the alternative: absent the financing, the Debtors represent that they would exhaust their cash and close, leaving two large counties without local essential care.

North Star Health Alliance was established in September 1993 as a New York not-for-profit corporation. It functions as a passive umbrella organization rather than an operating company, coordinating governance, strategy, and shared services across its members. Those functions include finance, human resources, information technology, compliance, revenue cycle coordination, and cash planning. The motion describes North Star as a platform for alignment that does not itself exercise financial control over each member.

The system's three operating members each carry a distinct license and patient population.

Carthage holds a single Department of Health operating certificate covering both 25-bed campuses. The Ogdensburg location, referred to in the filing as the Claxton Campus, is the area's designated "9.39" hospital. The motion notes that while the Department of Health issued the operating certificate reflecting this configuration, the Centers for Medicare and Medicaid Services processes to recognize and operationalize the Claxton Campus as a critical access hospital remained underway as of the filing date.

Claxton-Hepburn Medical Center now operates exclusively as a standalone Article 31 inpatient psychiatric hospital licensed by the New York State Office of Mental Health. The filing identifies its child and adolescent unit as the region's only acute inpatient behavioral health unit dedicated to that population. Meadowbrook Terrace rounds out the care continuum, supporting safe discharge planning and community-based care for seniors and medically fragile patients.

Beginning in or about August 2022, North Star pursued a coordinated transition the filing calls the Transformation Plan. The stated goal was to preserve access to acute care and behavioral health services in the North Country while addressing what the motion describes as Claxton's unsustainable legacy cost and reimbursement structure as a Sole Community Hospital. The plan ran through the Department of Health and the Office of Mental Health and proceeded in regulatory steps, culminating in the October 2024 reorganization of Claxton into two distinct operations.

As of the petition date, the motion represents, the system was operating on revenue from governmental payers and Department of Health funding tied to the Transformation Plan. After the filing, the Department pre-funded certain Medicaid and Medicare receivables under a Vital Access Provider Assurance Program agreement dated March 27, 2026, providing the $15 million bridge across thirteen weeks. The filing states that without those advances the Debtors would have run out of cash. Because the Department retains recoupment rights against all future Medicare and Medicaid reimbursements payable to the Debtors, the motion characterizes the Department as effectively fully secured on that advance.

The Debtors seek authority to enter into a Senior Secured Priming and Superpriority Debtor-In-Possession Credit Agreement with DASNY, acting as administrator of funds available through the Health Facility Restructuring Pool established under Section 2815 of the New York Public Health Law. Carthage Area Hospital would serve as borrower, with North Star, Claxton, and Meadowbrook as guarantors.

The first dollars advanced would repay the $15 million state bridge loan in full through the interest-free tranche. Repaying that advance is a condition of the DIP Loan, and the motion explains the logic: absent repayment, the Department of Health could recoup against incoming Medicare and Medicaid reimbursements, draining the new facility as quickly as it funded operations. Converting the advance into an interest-free DIP tranche, the filing argues, removes that pressure on cash flow. Remaining proceeds would fund working capital, operating expenses, capital expenditures, retained professional fees, and the Authority's own fees and advisor costs, all in accordance with the budget. The agreement provides that proceeds may not be transferred to or used by any entity other than the borrowing hospital.

Both before and after the petition date, the Debtors contacted fifteen potential lenders and shared diligence materials, including proposed budgets and projections. The motion represents that every lender would have required priming liens under Section 364(d) as a condition of any financing, and that DASNY was the only party with which the Debtors could reach agreement within the time the circumstances allowed.

The filing anticipates the obvious objection. Section 364(d) does not require a debtor to seek financing from every possible lender before concluding that better terms are unavailable; it requires a reasonable effort. Citing decisions from the Southern District of New York and elsewhere, the Debtors contend that approaching fifteen parties clears that bar, particularly where few lenders can realistically extend credit to a distressed rural hospital system on a priming basis.

Under the proposed interim order, DASNY would receive first-priority priming liens under Section 364(d) on substantially all of the Debtors' encumbered real and personal property, and liens under Section 364(c)(2) on any unencumbered property. The DIP obligations would also carry superpriority administrative expense status under Section 364(c)(1), ranking ahead of other administrative claims in the cases, subject only to the carve-out. The proposed order excludes avoidance actions from the DIP collateral.

The order builds in several lender protections that are common in priming facilities but worth noting in combination. The liens would be deemed valid, binding, enforceable, and perfected on entry of the interim order, without UCC-1 filings or other perfection steps. The Debtors and their affiliates would irrevocably waive any right to seek or grant liens of equal or greater priority on the collateral while the DIP obligations remain outstanding. No costs of administration could be charged against the lender or its collateral under Sections 105, 506(c), or 552(b) without consent. DASNY would retain unimpaired credit-bid rights and qualified-bidder status in any sale under Section 363, 1129, or 725. And the DIP obligations would survive plan confirmation rather than being discharged, with the Debtors waiving discharge under Section 1141(d)(4).

The Carve-Out

The carve-out preserves a defined pool ahead of the DIP claims. It covers all fees owed to the Clerk of the Court, up to $50,000 for fees and disbursements of a Chapter 7 trustee, and unpaid accrued professional fees up to the lesser of $500,000 or the amount budgeted for that purpose. A trigger mechanism tied to a declared event of default governs how much of the professional-fee allowance survives once the lender begins to exercise remedies, capping post-trigger professional expenses at the lesser of $500,000 or the sum of pre-trigger unpaid amounts plus $50,000 of post-trigger amounts.

The Debtors' budget, filed as Exhibit 3 and built on actual cash flow through May 8, 2026, quantifies the need. On a baseline basis, with no DIP financing, the system's ending cash position falls from a deficit of roughly $1.8 million in May 2026 to a deficit of approximately $53.6 million by December 2026. The decline is steady through the summer and steepens into the fall.

The projection then layers in the moving pieces that drive the actual financing requirement. Projected revenue cycle enhancements add $10.7 million and restructuring initiatives add $15.6 million. Those gains are more than offset by the $15 million bridge-loan repayment scheduled for June, $10.7 million in bankruptcy costs, $5.5 million in post-petition accounts payable, and $0.6 million in capital spending. Netted against the baseline, the adjustments deepen the position by $5.5 million, producing a revised DIP cash need of approximately $59.1 million through December 2026.

The Debtors' prepetition secured creditors are Northern Credit Union and M&T Bank. The motion represents that ample equity supports priming both. It estimates real estate value at approximately $50 million and accounts receivable in excess of $100 million, and argues that the resulting equity cushion, more robust still when enterprise value is considered, provides adequate protection for the existing lienholders even as DASNY primes them.

Subject to DASNY's approval of how loan proceeds are used, the Debtors state they are prepared to consider additional adequate protection for Northern Credit Union and M&T Bank, including increases to existing payments and junior liens on other property.

The financing is tied to forward progress on a restructuring partnership. The DIP agreement conditions continued access on a set of case milestones keyed to New York's Safety Net Transformation Program, which the Department of Health operates. Missing any of these milestones is an event of default.

The motion states that the Debtors are already implementing an arrangement with a healthcare partner under the program as part of the Chapter 11 process. The structure ties the lender's continued funding to the same regulatory pathway the state is using to keep care in the North Country, aligning the financing with the program that the Debtors expect will carry the system out of bankruptcy.

Beyond the milestones, the agreement imposes a reporting regime designed to give the Department of Health and DASNY close visibility into the system's finances. The Debtors would deliver weekly cash flow forecasts and weekly updates from their financial advisor, quarterly reports within 45 days of each quarter's end, monthly utilization statistics and interim financial statements within 30 days of month end, and audited annual financial statements within 180 days of fiscal year end. Each report must tie expenditures to the approved budget and describe progress toward the restructuring goals.

Advances after the initial funding require irrevocable written notice at least ten business days ahead, and no advance is available while an event of default exists or a representation is materially untrue. Events of default include failure to make payments when due, failure to maintain enforceable collateral and guaranties, material breach of covenants or representations, dismissal or conversion of the cases, appointment of a Chapter 11 trustee, and failure to comply with the final order. On a default and the expiration of any cure period, the automatic stay terminates and DASNY may exercise its rights and remedies without further order of the court. The proposed order also asks the court to find that the lender extended the financing in good faith and is entitled to the protections of Section 364(e).

Nied Ownership LLC, a Central Florida real estate holding company with no employees and no operations of its own, faces a motion to dismiss its Chapter 11 case filed by ACRE CFPortfolio LLC, the debtor's sole secured creditor. The motion contends that the May 1, 2026 bankruptcy petition was filed in bad faith to obstruct a scheduled UCC Article 9 foreclosure sale of the debtor's principal asset. ACRE filed the motion on May 12, 2026 in the United States Bankruptcy Court for the Middle District of Florida, Orlando Division, Case No. 6:26-bk-03232-TPG (Docket No. 23).

The motion seeks three forms of relief. ACRE first asks the court to dismiss the case for cause under Section 1112(b)(1) on grounds of bad faith. In the alternative, it asks for dismissal under Section 1112(b)(4)(A) based on substantial or continuing loss to the estate and the absence of any reasonable likelihood of rehabilitation. As a further alternative, ACRE seeks relief from the automatic stay under Sections 362(d)(1) and 362(d)(2) to resume the foreclosure sale of the debtor's pledged equity interests in non-debtor affiliate Nied Member, LLC.

Nied Ownership LLC is a Delaware limited liability company with its principal address in Apopka, Florida. The debtor has no employees and conducts no independent business operations. Its principal asset is a 100% ownership interest in the common equity of Nied Member, LLC, which in turn indirectly owns a portfolio of twelve residential properties located throughout Central Florida. The portfolio comprises vacant land, a senior and independent living facility, student housing, and Class A multifamily apartment properties. The debtor also holds majority and minority ownership interests in several affiliated entities, including 60.12% of NDALD, LLC, 100% of NJALD, LLC, and 100% of MRAD Phase III, LLC, each holding additional real estate assets in the Central Florida region.

ACRE CFPortfolio LLC holds 100% of the preferred equity interests in Nied Member. Pursuant to a Pledge and Security Agreement dated March 1, 2023, the debtor pledged its common membership interests in Nied Member to ACRE as collateral securing its obligations as common member under the related operating agreement. The pledge agreement was originally entered into with ACRE's predecessor-in-interest, PCRED II Holding XVIII LLC. As of the May 1, 2026 petition date, the secured obligations owed to ACRE total no less than $89 million, comprising the $50 million original preferred equity investment, unpaid mandatory distributions, and $30 million in protective advances recently made by ACRE directly to a mortgage lender on behalf of the portfolio.

Composition of the ACRE Secured Claim

The twelve Central Florida properties indirectly held through Nied Member carry more than $457 million in mortgage debt across ten active loans held by multiple lenders. As of the petition date, seven of those ten loans were in default, including three on which mortgage lenders had already commenced formal foreclosure proceedings. The remaining three loans, currently listed as "Current," carry May 31, 2026 maturity dates and were expected to fall into default by month-end. The portfolio's exhibit-level disclosures report a weighted-average occupancy rate of approximately 74%, well below the market level of approximately 90% cited in the motion.

The motion further asserts that material accounts payable, taxes, liens, and other vendor obligations remain unpaid across the portfolio. The debtor and Nied Member failed to redeem ACRE's preferred equity interests when that obligation first became due on July 29, 2025, and have remained in default since. ACRE estimates the portfolio requires approximately $43 million in additional capital to meet capital expenditure needs and support ongoing operations, on top of the $457 million required to address existing and imminent mortgage loan defaults. Combined, ACRE estimates approximately $500 million in total fresh capital is needed to address all defaults and operational needs.

Property and Loan Schedule (Exhibit 2 to the Motion)

In the months preceding the bankruptcy filing, ACRE undertook efforts to stabilize the portfolio and engage the debtor in restructuring discussions. In March 2026, ACRE circulated a pre-negotiation letter, which the debtor's principals declined to sign or comment upon. In April 2026, ACRE provided a restructuring term sheet outlining a potential path forward, which the motion states produced no engagement from the debtor or its principals.

On April 24, 2026, ACRE made approximately $30 million in protective advances to prevent immediate enforcement actions by structurally senior mortgage lenders. The advances were made through forbearance arrangements covering loans on three portfolio properties: Aston Park, The Nolen at 949 Cleveland Street, and The Tiffany at Maitland West. The advances extended the maturity dates on those loans through July 31, 2026 and secured a waiver of default interest and late charges. According to the motion, the underlying loans remained in default notwithstanding the forbearance.

Concurrent with its stabilization efforts, ACRE moved to exercise its contractual and state-law remedies. On March 5, 2026, ACRE noticed a UCC Article 9 foreclosure sale of its collateral, the debtor's pledged equity interests in Nied Member, and engaged a subsidiary of Jones Lang LaSalle Americas, Inc. to conduct a commercially reasonable marketing process. The public auction was scheduled for May 8, 2026, providing more than two months for market exposure, due diligence access, and an opportunity for the debtor to raise objections or propose a consensual alternative. JLL conducted outreach to more than 8,000 potential bidders, made diligence materials available through an online data room, and placed advertisements in The Wall Street Journal, Commercial Mortgage Alert, and the Orlando Sentinel.

The Marketing Funnel

The motion states that as of the petition date, no third party had submitted a deposit, executed a purchase agreement or accredited investor certificate, registered to attend the auction, or inquired about the form of purchase agreement. ACRE was the sole qualified bidder, in its capacity as the secured party entitled to credit bid. Supporting these facts is the Declaration of Brett Rosenberg, filed alongside the motion, which provides detailed disclosure of the marketing process and bidder engagement.

On May 1, 2026, two business days before the deadline for third parties to qualify as bidders and one week before the scheduled May 8 public auction, the debtor filed its Chapter 11 petition. On that same day, without notifying ACRE of the bankruptcy filing itself, the debtor sent ACRE a letter objecting to the foreclosure sale and demanding its cancellation, requiring a response within three calendar days over a weekend. ACRE responded by the stated deadline but received no further reply from the debtor. The debtor's own case management summary, filed as Docket No. 14, states that the Chapter 11 case was commenced to "maintain the possibility of a consensual resolution."

ACRE's bad-faith argument is grounded in the six-factor framework established by the Eleventh Circuit in Phoenix Piccadilly, Ltd. v. Life Ins. Co. of Va. (In re Phoenix Piccadilly, Ltd.), 849 F.2d 1393 (11th Cir. 1988) and reaffirmed in In re State St. Houses, Inc., 356 F.3d 1345 (11th Cir. 2004). The Eleventh Circuit has separately confirmed in Piazza v. Nueterra Healthcare Physical Therapy, LLC (In re Piazza), 719 F.3d 1253 (11th Cir. 2014) that bad faith constitutes "cause" for dismissal under Section 1112(b)(1). Not all factors must be present for a finding of bad faith, but ACRE argues all six are present here.

ACRE relies on additional case law supporting application of the factors here, including In re Serfass, 325 B.R. 901 (Bankr. M.D. Fla. 2005), In re Brandywine Assocs., 85 B.R. 626 (Bankr. M.D. Fla. 1988), and In re PM Cross, LLC, 494 B.R. 607 (Bankr. D.N.H. 2013).

If the court declines to dismiss the case, ACRE seeks relief from the automatic stay on three independent grounds. Each goes to a separate aspect of the secured creditor's position.

Section 362(d)(1): Cause Based on Bad Faith

The Eleventh Circuit recognizes that the same conduct that supports dismissal for bad faith under Section 1112(b)(1) also supports stay relief for cause under Section 362(d)(1). See In re Phoenix Piccadilly, Ltd., 849 F.2d at 1394; Barclays-American/Bus. Credit, Inc. v. Radio WBHP, Inc. (In re Dixie Broadcasting), 871 F.2d 1023 (11th Cir. 1989).

Section 362(d)(1): Lack of Adequate Protection

ACRE argues its collateral is not adequately protected because the portfolio's value continues to decline through ongoing property-level foreclosures, deteriorating occupancy, and operational mismanagement. The non-debtor Property Owners did not seek bankruptcy protection, and their mortgage lenders remain free to exercise remedies unaffected by the debtor's automatic stay. ACRE cites United Sav. Ass'n of Texas v. Timbers of Inwood Forest Assocs., 484 U.S. 365 (1988), and analogizes to In re JER/Jameson Mezz Borrower II, LLC, 461 B.R. 293 (Bankr. D. Del. 2011), where a mezzanine lender was found not adequately protected when senior lenders at the operating-company level were exercising remedies.

Section 362(d)(2): No Equity and Not Necessary to Reorganization

ACRE argues the debtor holds no equity in its pledged interests given the $89 million lien, and that the collateral is not necessary to any effective reorganization. The JLL marketing process, ACRE contends, supplies market evidence that the collateral value does not exceed the secured claim, citing the Supreme Court's recognition that exposure to a market is the best evidence of value in Bank of Am. Nat'l Tr. & Sav. Ass'n v. 203 N. LaSalle St. P'ship, 526 U.S. 434 (1999), along with In re Virgin Orbit, LLC, 659 B.R. 36 (Bankr. D. Del. 2024) and In re Airwalk Int'l, LLC, 305 B.R. 34 (Bankr. D. Colo. 2003).

ACRE further argues the debtor cannot satisfy the cramdown requirements of Section 1129(a)(10) because no legitimate non-insider impaired accepting class of unsecured creditors exists. At most, the Chapter 11 case would result in a sale, which the motion characterizes as the same outcome the foreclosure process was already pursuing without the delay and expense of bankruptcy.

The motion identifies a prepetition transfer of real property that ACRE characterizes as fraudulent. In December 2025, a parcel within the portfolio was transferred by Special Warranty Deed to affiliated entity MRAD Phase III, LLC for consideration of $10.00. The deed was executed December 28, 2025 and recorded in Orange County, Florida on March 5, 2026. The transferred parcel was part of a property supporting a $44 million mortgage loan (the Vale East property, held by RRAD Phase I, LLC). ACRE asserts the transfer was made in willful violation of the operating agreement, which prohibits property sales or transfers to affiliates without the prior written approval of the preferred investor.

Separately, certain principals affiliated with the debtor are named as defendants in litigation pending in the Court of Common Pleas, Cuyahoga County, Ohio (Lance Polen v. David Niederst, et al., Case No. CV-24-100462). That lawsuit, filed in 2024 and amended in December 2025, alleges fraud, breach of fiduciary duty, civil conspiracy, and related claims arising from unrelated Ohio business ventures, with damages sought in excess of $25 million. The amended complaint also names several of the same Central Florida apartment development entities as defendants and asserts lis pendens claims against certain Florida properties in the portfolio. The Ohio pleadings are attached to ACRE's motion as Exhibit 12.

TRM NRE Holding LLC and its affiliated debtor, TRM NRE Acquisition LLC, filed a motion on May 12, 2026 in the United States Bankruptcy Court for the District of Delaware seeking authority to obtain a $3 million junior debtor-in-possession revolving loan facility from TRM Equity Fund II LP. The Debtors assert they will run out of cash within two weeks without postpetition financing. The motion, docketed as Document 79 in Case No. 26-10568 (KBO), also requests authority to continue using the Prepetition Secured Parties' Cash Collateral on an interim basis.

The DIP Lender, TRM Equity Fund II LP, is not a third party. It is the equity sponsor and the holder of an existing $13.1 million subordinated note against the same borrower. This filing reflects a financing structure in which the party already deepest in the capital stack agrees to put $3 million of new money behind $20.2 million of senior debt, without rolling up its own subordinated position.

The Debtors are headquartered at 908 Shawnee Street, Mount Vernon, Illinois. TRM NRE Acquisition LLC operates the business identified in the Approved Budget caption as National Railway Equipment Company. The business includes locomotive and railway equipment assets together with a marine business and inventory, machinery, and equipment held at the Debtors' Paducah, Kentucky facility. The Approved Budget contemplates that the marine business and a portion of the inventory and equipment would be marketed as non-core assets if the Junior DIP Facility is repaid through asset sales rather than plan exit financing.

The Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on April 21, 2026 and are operating as debtors in possession under Sections 1107(a) and 1108. No trustee, examiner, or official committee of unsecured creditors had been appointed as of the May 12, 2026 motion filing.

The prepetition capital structure has three distinct layers. The senior layer is a three-tranche secured credit facility from Great Rock Capital Partners. The middle layer is a subordinated note in favor of the equity sponsor. The bottom layer is a small unsecured note in favor of the original sellers plus general trade obligations.

The senior layer was entered into on March 3, 2025 with TRM NRE Acquisition LLC as borrower, TRM NRE Holding LLC as guarantor, Great Rock Capital Partners Management, LLC as administrative agent, and GRC SPV Investments, LLC as sole lender. The facility consists of a $15 million revolving credit facility with availability tied to eligible accounts receivable and inventory, a term loan with an original principal of approximately $11.7 million backed by eligible machinery, equipment, and locomotives, and an uncommitted delayed draw term loan of up to $3 million that has never been drawn. As additional credit support, the Sponsor funded $1.5 million into an escrow account pursuant to an Escrow Agreement dated April 7, 2025 among the Sponsor, the prepetition agent, and Wilmington Trust. The Debtors contributed an additional $500,000. Approximately $2.0 million was held in escrow as of the petition date.

The middle layer is an Amended and Restated Subordinated Note dated March 3, 2025 in favor of TRM Equity Fund II LP, the equity sponsor. The note is fully subordinated to the Prepetition Secured Obligations under a Subordination Agreement of the same date, and the Sponsor is barred from taking any enforcement action until the senior obligations are paid in full.

The unsecured layer is small. It consists of approximately $3 million in general trade obligations and an Unsecured Promissory Note dated May 2, 2023 originally issued to the sellers of the business in the original principal amount of $360,000, bearing interest at 5.0 percent compounded annually. As of the petition date, the outstanding balance was $120,000 with a balloon payment due May 2, 2026, which coincided almost exactly with the timing of the DIP financing motion.

The Debtors entered Chapter 11 with $86,570 of cash on hand. The Approved Budget projects gross weekly receipts averaging $1.2 million, but operating disbursements alone consume most of that, before professional fees and other bankruptcy-related costs. The first Interim Cash Collateral Order, entered April 29, 2026, authorized consensual use of Cash Collateral through May 8. The Prepetition Agent consented to two short-term extensions, first to May 13 and then to May 14, while negotiations on a longer-term framework continued.

The Debtors assert that without immediate access to postpetition financing, they will run out of cash within two weeks. Cash Collateral alone is insufficient to fund both administration of the Chapter 11 cases and ongoing operational needs, including payroll, insurance, taxes, and timely completion of key customer projects and the associated receivables. The Junior DIP Facility, together with continued Cash Collateral use, is presented as the only path that preserves the going-concern value of the business while administering the case.

The Junior DIP Facility is structured as a $3 million junior delayed draw revolving loan with $2 million available on entry of the interim order and the remaining $1 million unlocked on entry of the final order. The facility is 100 percent new money. There is no roll-up, refinance, or other satisfaction of the existing Sponsor Subordinated Note. The DIP liens sit at 1.5 priority, junior to the prepetition liens and the adequate protection liens but senior to the Sponsor's existing subordinated lien on Acquisition LLC's assets, which the Sponsor (in its DIP Lender capacity) has agreed to subordinate.

The repayment structure is the part of the term sheet that does the most strategic work. After the prepetition credit facility is repaid in full, the DIP facility is repaid through weekly cash sweeps of all cash on hand in excess of $1.00 million, together with proceeds from sales of non-core assets, including the marine business, inventory, machinery and equipment, and assets located at the Paducah, Kentucky facility. Repaid amounts may be reborrowed during the Chapter 11 cases. The structure preserves operating flexibility while ensuring that any liquidity generated above a thin working capital cushion flows to the DIP first.

The proposed priority structure varies by the type of collateral or claim involved. On DIP Collateral, the carve-out leads, followed by permitted prior liens, prepetition liens, adequate protection liens, and then DIP liens. On unencumbered property, the carve-out leads, followed by adequate protection liens and then DIP liens. On administrative claims, the carve-out leads, followed by adequate protection claims and then DIP superpriority claims under Section 364(c)(1).

Subject to entry of a final order, the DIP Lender and Prepetition Secured Parties would receive waivers of the estate's rights to surcharge collateral under Section 506(c), to invoke the equities-of-the-case exception under Section 552(b), and to seek marshaling of assets. Subject to entry of a final order, the DIP Liens would also reach the proceeds of avoidance actions under Sections 502(d), 544, 545, 547, 548, 549, and 550.

Following the April 29, 2026 First Day Hearing, the Debtors' independent director and chief restructuring officer solicited postpetition financing proposals from both the Sponsor and the Prepetition Secured Parties, and separately from third-party lenders outside the capital structure. The motion states that no third-party lender was willing to fund the Debtors on a junior basis on the timeline required. The Sponsor's proposal was selected as the best available alternative based on the combination of runway, economics, covenants, operational viability, and strategic alignment, with all interest and fees paid in kind and certain fees waivable depending on the ultimate restructuring outcome.

The Debtors invoke the business judgment standard under Section 364, citing the line of Delaware decisions including In re L.A. Dodgers LLC, In re Trans World Airlines, In re Exide Technologies, and In re ION Media Networks, which collectively give debtors substantial deference in selecting a postpetition lender and weighing non-economic factors such as timing, certainty, and likelihood of successful reorganization. The Debtors then argue that the facility satisfies the three-part test for secured credit under Section 364(c): the inability to obtain unsecured credit, the necessity of the credit to preserve estate assets, and the fairness and reasonableness of the terms.

The Approved Budget covers the 13-week period from May 15, 2026 through August 7, 2026. Receipts are forecast to substantially exceed disbursements over the period, with the ending cash balance growing from $86,570 to roughly $4.1 million. The DIP draws are concentrated at the front of the budget: $2 million in week one and $1 million in week two, with no further draws contemplated thereafter.

Permitted variances under the Term Sheet allow up to 20 percent unfavorable deviation on both total operating receipts and total operating disbursements on a rolling four-week testing basis. The variance test is one of the principal covenants that determines whether the Debtors remain in compliance during the case.

The Junior DIP Facility imposes a series of binding case milestones. The path is calibrated to either a confirmable plan that repays the Prepetition Secured Obligations in full or, if that path fails to materialize, a Section 363/1123(b)(4) sale process. The first divergence point is September 3, 2026: if the disclosure statement order is not entered by that date, the Debtors must promptly commence the sale process.

At the time of the motion's filing, the Prepetition Secured Parties had not yet confirmed their consent to continued Cash Collateral use. The parties were described in the filing as engaged in active, good faith negotiations. The Prepetition Agent had consented to successive short-term extensions of the interim Cash Collateral period, most recently through May 14, 2026. The Debtors indicated they would present evidence for nonconsensual Cash Collateral use under Section 363(c)(2)(B) if consent was not obtained before the hearing.

As adequate protection for any diminution in value of the prepetition collateral, the proposed order would grant the Prepetition Secured Parties replacement liens on the DIP Collateral, super-priority administrative expense claims under Section 507(b), and payment of reasonable documented fees of their advisors. The carve-out structure has two tiers: pre-default, all statutory fees plus all professional fees included in the Approved Budget are protected; post-default, professional fees are capped at $250,000.

Any challenge to the validity, perfection, priority, or enforceability of the prepetition liens or obligations must be brought by the earlier of (a) plan confirmation, (b) entry of a Section 363 sale order, or (c) 75 calendar days from the entry of the Interim Order. Up to $25,000 in total funding, split evenly between the DIP facility and the Prepetition Secured Parties' Cash Collateral, is available for a creditors' committee, if appointed, to investigate the prepetition obligations and liens prior to the expiration of the Challenge Period.

The court is scheduled to hold a final hearing on the DIP motion on June 5, 2026, at 9:00 a.m. prevailing Eastern Time. Objections must be filed and received by counsel no later than May 29, 2026, at 4:00 p.m. prevailing Eastern Time. Notice of the motion was provided to the Office of the United States Trustee for Region 3, the United States Attorney for the District of Delaware, the holders of the thirty largest unsecured claims against the Debtors, counsel to the Prepetition Secured Parties, counsel to the DIP Lender, the Internal Revenue Service, the Attorney General for the State of Delaware, any official committee of unsecured creditors appointed in the cases, and any party that requested notice under Bankruptcy Rule 2002.

The matter is pending before the United States Bankruptcy Court for the District of Delaware as In re: TRM NRE Holding LLC, et al., Case No. 26-10568 (KBO), jointly administered. The Junior DIP Financing Motion was filed as Docket No. 79 on May 12, 2026, with the Proposed Interim Order, DIP Term Sheet, and 13-week Approved Budget attached as Exhibits A, 1, and 2 respectively, spanning 104 pages in total.

CHS FL, LLC, together with CHS TX, Inc., CHS AL, LLC, and corporate parent YesCare Corp., filed voluntary Chapter 11 petitions on May 8, 2026, in the United States Bankruptcy Court for the Middle District of Florida, Fort Myers Division. The cases are being jointly administered under Case No. 26-bk-01087 (LMR).

The First Day Declaration of the Chief Restructuring Officer, filed May 10, 2026, identifies a single April 2, 2026 Michigan jury verdict as the primary precipitating event. The verdict, in excess of $307 million, triggered a sequence of contract terminations and non-renewals that, by the petition date, had eliminated revenue streams representing nearly 80% of the company's annual top line. The Debtors entered Chapter 11 without sufficient liquidity to fund the payroll that came due on the petition date itself.

The company provides physical and mental health services to inmate patient populations under contracts with governmental counterparties. On-site care is delivered by nurses, physicians, mid-level clinicians, behavioral health staff, and support personnel, engaged either as direct employees, independent contractors, or subcontractors. A central services group provides clinical and operational guidance, recruiting and retention, clinical IT systems, and other shared services to field teams. Medications are supplied through contracted pharmacies and shipped to facilities for on-site administration, and a network of off-site providers covers care that cannot be delivered in the facility.

At the petition date, the company operated approximately 19 facilities across 9 states and served nearly 20,000 patients daily. Florida is by a wide margin the largest state of operations, accounting for 9 of the 19 facilities.

The Debtor entities and their respective taxpayer identification number endings are set out below. CHS FL, LLC is the lead Debtor.

The current organizational structure traces to a 2022 divisional merger that predecessor entities executed under the Texas Business Organizations Code. The merger reallocated assets and liabilities into two successor entities, Tehum Care Services and CHS TX, Inc., and that reallocation was binding on creditors as a matter of state corporate law. CHS TX was subsequently acquired by YesCare Corp.

Tehum filed for Chapter 11 in the United States Bankruptcy Court for the Southern District of Texas, Case No. 23-90086 (CML). It was not an operating company at the time of filing, and the case turned on a multi-year negotiation that proceeded through several mediation rounds before two mediators. The Joint Chapter 11 Plan of the Tort Claimants' Committee, Official Committee of Unsecured Creditors, and Debtor was confirmed on March 3, 2025.

The economic terms of the Tehum Plan included a settlement under which certain parties agreed to pay $50,000,000 in monthly installments over 30 months. The plan also included a participation mechanic that required at least 95% of holders of certain alleged claims to opt in, while permitting up to 5% to opt out and pursue claims against various settlement parties including YesCare and CHS TX. That opt-out architecture is directly relevant to the current cases. As discussed in the next section, the plaintiff who obtained the April 2, 2026 verdict in Michigan is among the claimants who proceeded outside the Tehum settlement.

The First Day Declaration identifies the principal driver of the Chapter 11 filing as the extraordinary financial and operational burden of pending litigation, with one verdict standing apart from the rest. At the petition date, the Debtors were parties to over 100 pending litigation matters spanning commercial disputes, professional negligence claims, civil rights allegations, and personal injury actions. A substantial majority of those proceedings were initiated by inmates at correctional facilities located in more than 15 states.

On April 2, 2026, in a matter pending in Michigan, the plaintiff obtained a jury verdict in excess of $307 million on civil rights and medical malpractice claims. The Declaration describes the verdict as believed to be among the largest ever rendered against a correctional healthcare provider. The Debtors dispute both liability and damages and intend to pursue post-trial motions and appellate remedies.

The operational consequences moved faster than any appellate calendar. Following entry of the verdict, governmental agencies and other contract counterparties began terminating, suspending, declining to renew, or otherwise canceling contracts. The Declaration reports that contracts representing more than $350 million in annual revenue had been lost by the petition date, a figure that the Debtors characterize as nearly 80% of the company's annual revenue base. The Debtors also report additional lost opportunities for new contracts and renewals, along with adverse effects on vendor relationships, insurance arrangements, and employee retention.

The Declaration states that absent the protections of Chapter 11, the continued effects of the verdict would likely produce further contract attrition, diminished enterprise value, disruption to continuity of patient care, and piecemeal enforcement actions by creditors and claimants. The filing is therefore framed as a defensive measure to preserve going-concern value while the company evaluates restructuring alternatives.

On April 27, 2026, twenty-five days after the Michigan verdict and eleven days before the petition date, the liquidating trusts established under the Tehum Plan commenced an action against CHS TX, Inc. and other parties captioned Matt Dundon, GUC Trustee, et al. v. CHS TX, Inc., et al., Case No. 26-03138. The complaint asserts alleged breaches of the settlement agreement entered in the Tehum Plan and causes of action arising from historical organizational restructuring transactions, which on the face of the pleadings reaches back to the 2022 divisional merger described in Section III.

The Debtors believe the allegations are without merit and intend to defend. For purposes of the Chapter 11 filing, however, the immediate effect of the trust action was to add a second large-scale, factually complex proceeding to a litigation docket already shaped by the Jackson verdict, further increasing uncertainty around the Debtors' financial condition and reinforcing the case for a comprehensive restructuring process.

YesCare Corp. is the corporate parent and 100% owner of each Debtor and certain non-operating affiliates. The prepetition secured lender is M2 LoanCo, LLC, an affiliate of the Debtors, under a Third Amended and Restated Credit Agreement. As of the petition date, the Debtors owe approximately $21 million to M2. The Declaration notes that the Debtors are continuing to investigate the nature of the M2 indebtedness and reserve all rights with respect to it, language that signals possible challenges to the validity, priority, or extent of the affiliate lender's claim.

Unsecured exposure is materially larger and far less defined. Trade debt together with litigation liabilities is estimated at up to $400 million, the majority of which is contingent, unliquidated, and disputed. The Declaration does not break out the share attributable to the Jackson verdict, which itself remains subject to post-trial motions and appellate review.

One additional cash management feature worth flagging at the outset is that client invoice payments are routed through a centralized operating account maintained by a non-Debtor management entity that historically administers payment processing and cash management for the Debtors and affiliated entities. The Declaration calls this the Management Account. Cash management motions in subsequent filings will likely address how that arrangement continues during the cases.

The Debtors do not directly employ any workers. The workforce of approximately 1,551 individuals is leased from a non-Debtor affiliate, CHS Employee Group, LLC. The composition skews toward part-time and hourly classifications.

Payroll runs on a bi-weekly cycle through UKG, funded each Thursday and paid each Friday, one week in arrears. Average weekly gross payroll obligation is approximately $2,634,858. As of the petition date, the Debtors owe approximately $9.7 million in accrued and unpaid prepetition salaries and wages, and roughly $120,000 of that total sits above the $17,150 statutory priority cap per employee.

The liquidity picture at filing is captured by a single fact: the payroll that came due on May 8, 2026, the petition date itself, could not be funded out of existing resources. A second payroll group covering work performed between April 26 and the petition date was scheduled to be funded on May 14, 2026, with payment to employees on May 15, 2026. The Wages Motion (Docket No. 10) is the operational response to this gap and seeks both interim and final authority to pay the prepetition obligations.

The Debtors have filed six First Day Pleadings and identified a seventh that will follow once financing terms are finalized. The Declaration frames each request through the Bankruptcy Rule 6003 standard of immediate and irreparable harm, since the rule generally bars consideration of motions to pay prepetition claims during the first 21 days of a case absent that showing.

The HIPAA component of the Patient Confidentiality Motion is unusually load-bearing for a first day request. The Debtors hold identifiable health information for a large population of current and former patients, many of whom are no longer incarcerated and whose current addresses the Debtors do not maintain. Unauthorized disclosure exposes the company to monetary penalties under the Health Insurance Portability and Accountability Act of 1996 and the Health Information Technology for Economic and Clinical Health Act. The relief sought balances bankruptcy transparency requirements against the non-disclosure obligations of the underlying statutory regime.

The Debtors describe themselves as having only recently engaged restructuring professionals, with the Chief Restructuring Officer formally retained on May 6, 2026 from FIA Capital Partners, LLC, though the same advisor had been working with the company in an advisory capacity since the summer of 2025. The articulated objectives of the cases are to preserve going-concern value, maintain continuity of patient care, protect relationships with governmental counterparties, and maximize recoveries for stakeholders.

The Declaration is explicit that all options remain on the table. The Debtors are actively assessing a potential sale transaction, a balance-sheet restructuring, operational rationalization, recapitalization, or any other restructuring transaction involving all or substantially all of the Debtors' assets or operations. The DIP financing process, still in negotiation at filing, will materially shape which of those paths becomes available.

The cases also sit at the intersection of three open litigation fronts that will likely shape the restructuring's economics: the Jackson verdict and any post-trial or appellate developments, the Dundon trust action arising from the Tehum Plan, and the larger population of more than 100 pending matters that predate the Chapter 11 filing. The interplay among those proceedings, the automatic stay, and any plan or sale process will be a central feature of the case as it develops.

Spanish Broadcasting System, Inc., a Spanish-language media company operating radio stations, television programming, and digital properties across the largest U.S. Hispanic markets, filed a Joint Pre-Packaged Chapter 11 Plan of Reorganization on May 11, 2026, in the United States Bankruptcy Court for the District of Delaware (Case No. 26-10708 (BLS)). The plan would exchange approximately $310 million in existing 9.750% senior secured notes for $70 million in new senior secured notes due 2030 and 100% of the new common stock of the reorganized entity. The first-day declaration filed in support of the petitions states that holders of more than 90% of the company’s funded indebtedness have signed the Restructuring Support Agreement underpinning the plan.

Founded in 1983 and headquartered in Miami, Spanish Broadcasting System serves as the parent of more than 50 affiliated debtor entities and describes itself as a cross-platform media company connecting U.S. Hispanic audiences across radio, television, and digital channels. The company reincorporated in Delaware in 1994 and completed an initial public offering in 1999. SBS terminated the registration of its securities and suspended its SEC reporting obligations in 2020.

The debtors operate 17 radio stations in the largest U.S. Hispanic markets, including New York City, Los Angeles, Miami, Houston, Chicago, San Francisco, Orlando, Tampa, and Puerto Rico. The first-day declaration identifies WSKQ in New York City as the number-one ranked station in that market by average quarter-hour listenership. SBS also operates AIRE Radio Networks, a national platform with more than 250 Spanish-language affiliate stations serving 79 U.S. Hispanic markets.

The television business operates under the MegaTV brand, with owned and operated stations in South Florida and additional distribution through programming and carriage agreements, including national distribution on a subscriber basis. MegaTV launched in 2006 and expanded to Puerto Rico in 2008. Digital operations include the LaMusica mobile application, which provides Spanish-language audio and video streaming, and HitzMaker, a platform for aspiring artists. The company also operates DigIdea, a digital marketing department. SBS Entertainment produces more than 40 live concerts and events each year in the United States and Puerto Rico, including recurring marquee productions such as CaliBash, Cubatonazo, MegaBash, MiamiBash, and Mega Mezcla.

As of the petition date, the debtors’ funded debt consisted of $310 million in aggregate principal amount of 9.750% Senior Secured Notes due 2026, issued on February 17, 2021, under an indenture with Wilmington Trust, National Association as trustee and collateral agent. Interest on the existing notes accrued at 9.75% per annum and was payable semi-annually. SBS also entered into a $15 million senior secured asset-based revolving credit facility on the same date as the original notes issuance. The debtors prepaid and terminated the revolver on October 20, 2025, in advance of its October 27, 2025 scheduled maturity. The first-day declaration estimates approximately $15 million in unpaid trade payables outstanding as of the petition date.

The equity capital structure consists of Series C convertible preferred stock, Class A common stock, and Class B common stock, with the Class B common stock carrying ten votes per share. All existing preferred and common equity interests would be cancelled under the plan, and existing equity holders would receive no distribution.

The first-day declaration attributes the company’s liquidity position to a combination of macroeconomic and market-specific pressures that compressed advertising revenue ahead of the existing notes’ maturity. The shift in audio consumption toward on-demand streaming and podcasting has drawn listenership and advertiser dollars away from linear radio. Operational costs across radio, television, and digital media have risen with expanding technology requirements and rising costs for music licensing and entertainment talent. Constrained access to capital limited the company’s ability to invest in growth channels while servicing its existing debt load.

Political advertising revenue, historically a meaningful contributor during election cycles, has declined because SBS’s largest markets (New York, Florida, California, and Illinois) have not been competitive in recent federal elections. The Los Angeles market was further affected in 2025 by reduced overall broadcast advertising demand and impairment charges tied to the January 2025 wildfires in the region.

The plan was solicited prepetition in accordance with Sections 1125 and 1126 of the Bankruptcy Code and would constitute a separate plan for each of the more than 50 debtor entities, though it is proposed jointly for administrative purposes. Solicitation began on the morning of May 11, 2026, prior to the filing of the voluntary petitions, and the first-day declaration states that more than 90% of holders of the existing notes have agreed to support the plan.

Plan Mechanics

New Secured Notes. Holders of existing notes would receive their pro rata share of $70 million in new 9.750% Senior Secured Notes due 2030 issued by Reorganized SBS. Interest on the new notes may, at the option of the Required Consenting Creditors, be paid in kind in whole or in part.

New Equity. Existing noteholders would also receive 100% of the new common stock of the reorganized entity, subject to dilution solely by a management incentive plan reserving up to 10% of fully diluted new common stock for management employees and non-employee directors.

DIP Financing. The debtors arranged a $30 million debtor-in-possession term loan facility with Brigade Agency Services LLC serving as DIP agent. The facility is backstopped by certain holders of the existing notes, with all noteholders given an opportunity to participate on a pro rata basis subject to compliance with the Restructuring Support Agreement. At the election of the Required DIP Lenders, the DIP claims may be either repaid in full in cash (with a 2.00% exit premium payable on funded loans and unfunded commitments) or converted into new 9.750% Superpriority Senior Secured Notes due 2030. If the DIP Conversion Election is made, the $70 million new secured notes amount would be reduced on a dollar-for-dollar basis by the amount of superpriority notes issued.

Corporate Governance. The initial members of the new board of directors of the reorganized company would be selected in accordance with a Governance Term Sheet attached to the Restructuring Support Agreement. Executive employment agreements for key leadership are to be executed on or prior to the effective date.

The plan classifies claims and interests into nine classes. The debtors seek non-consensual confirmation (cramdown) pursuant to Section 1129(b) of the Bankruptcy Code with respect to Classes 7, 8, and 9, each of which is deemed to have rejected the plan. General unsecured claims would be paid in full in cash, consistent with the “full pay” structure described in the first-day declaration. The plan expressly excludes any deficiency claims arising from the existing notes from the general unsecured class.

The plan would direct 100% of the new common stock of Reorganized SBS to holders of the existing notes, subject to dilution by the Management Incentive Plan pool reserved for management employees and non-employee directors. The Management Incentive Plan reserves up to 10% of fully diluted new common stock, with the actual amount to be determined by the new board. Separately, the first-day declaration reports that more than 90% of holders of the existing notes have signed the Restructuring Support Agreement and support the plan.

A condition precedent to the plan’s effective date is the receipt of approval from the Federal Communications Commission. Because the reorganized company’s subsidiaries hold FCC broadcast licenses, the issuance of new common stock to the existing noteholders constitutes a transfer of control of those licenses and triggers FCC consent requirements under applicable law.

The debtors would file an FCC Long Form Application and a Petition for Declaratory Ruling with the FCC as promptly as practicable prior to the effective date. The Petition for Declaratory Ruling is necessary because the reorganized entity may need to exceed the indirect foreign ownership limitations applicable to broadcast licensees under 47 U.S.C. § 310(b)(4), depending on the composition of the noteholder group receiving equity.

The Restructuring Support Agreement establishes an accelerated schedule on the confirmation track, with FCC approval pushing the outside effective date considerably further out than in a typical prepackaged case. The table below summarizes the milestones disclosed in the first-day declaration.

The plan includes comprehensive third-party releases, debtor releases, and exculpation provisions. Released parties would include the debtors, the reorganized debtors, the consenting creditors, the ad hoc committee, the DIP secured parties, the existing trustee, and the new trustees, along with their respective current and former directors, officers, employees, and advisors. A holder of a claim or interest that objects to the plan is deemed to have opted out of the releases and would not be a released party. Exculpated parties, including the debtors’ estates, retained professionals, and fiduciaries who serve between the petition date and the effective date, would be shielded from liability except for acts constituting actual fraud, willful misconduct, or gross negligence.

All transfers of property under the plan would be exempt from stamp taxes, recording taxes, sales and use taxes, and similar governmental assessments pursuant to Section 1146 of the Bankruptcy Code. Prepetition solicitation of the new securities relied on exemptions under Section 4(a)(2) of the Securities Act of 1933, Regulation D, Rule 144A, and Regulation S. Post-confirmation distributions would rely on Section 1145 of the Bankruptcy Code, with securities issued under Section 4(a)(2) and Regulation D bearing customary legends and transfer restrictions.

All executory contracts and unexpired leases would be assumed by the reorganized debtors as of the effective date, unless specifically listed on a schedule of rejected contracts to be included in the plan supplement. Change-of-control provisions in assumed contracts would be deemed modified to permit assumption without triggering default rights.

FreshRealm, Inc. and four affiliated debtors filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of New Jersey on April 27, 2026. The cases are jointly administered before the Honorable Mark E. Hall under Case No. 26-14656-MEH. Two days after filing, on April 29, 2026, the Court entered interim orders on the entire first-day package, including a $43 million interim authorization under a $63 million superpriority senior secured priming DIP facility provided by the Debtors’ existing secured lenders, BGC and FaraNord.

The case is structured as a controlled, time-compressed process. The Debtors are pursuing a comprehensive Settlement Agreement with Blue Apron, their largest customer, alongside a Transition Services Agreement and Asset Purchase Agreement with Misfits Market, Inc. for the transfer of the Blue Apron fulfillment business. The DIP facility imposes milestones that require filing a sale motion within 10 days of the Petition Date, entry of a sale approval order within 75 days, and consummation of the sale within 90 days, with a liquidating Chapter 11 plan to follow within approximately 30 days of sale consummation or transition services completion.

Key Upcoming Dates

FreshRealm operates a shared services platform for fresh food development, manufacturing, and fulfillment. Its products reach end consumers through multiple channels — direct-to-consumer (DTC) meal kits, grocery, performance nutrition, medical, and food service — under the operating tagline “Fresh Food to Everyone, Every Day, Everywhere.” The company positions itself as a fresh food infrastructure provider rather than a consumer-facing brand, supplying customers that include Blue Apron, Marley Spoon, and, until early 2026, Walmart.

Corporate Structure

The Debtors comprise five entities: parent FreshRealm Holdings, Inc.; principal operating entity FreshRealm, Inc.; and three direct subsidiaries IHEC, LLC, FreshRealm HR, LLC, and FreshRealm Texas, LLC. FreshRealm Holdings holds 50.01% of FreshRealm, Inc., with “Other Investors” holding the remaining 49.99%. FreshRealm, Inc. is the DIP Borrower under the proposed financing. FreshRealm Texas, LLC is the only Debtor expressly excluded from the DIP Guarantor definition, which the AI Dossier observes may reflect either the wind-down status of the Lancaster, TX facility or jurisdictional considerations regarding that entity’s obligations.

Facilities and Workforce

The Debtors employ approximately 1,017 individuals (approximately 1,015 full-time and 2 part-time), all U.S.-based, with approximately 80% hourly and 20% salaried. An additional approximately 220 outsourced staff, including approximately 15 independent contractors, supplement the workforce. There are no collective bargaining agreements. WARN Act notices were issued to all approximately 1,017 employees on the Petition Date in connection with a planned mass layoff.

Governance

The Board of Directors consists of two members, both appointed in late 2025 in anticipation of the restructuring: Jill Frizzley (October 16, 2025) and Charlie Piper (November 6, 2025). The First Day Declaration states that both directors were previously unaffiliated with the Debtors and key stakeholders. The Board separately engaged Duane Morris LLP on March 19, 2026 to investigate claims and causes of action held by the estates.

The First Day Declaration of CFO Bryan Fleming describes a convergence of food safety incidents, customer losses, and unsuccessful financing efforts that drove the Debtors into Chapter 11. Three discrete pressures combined to make continued operations outside of bankruptcy infeasible.

Listeria Contamination Events

The most proximate cause was a series of five Listeria monocytogenes recall and withdrawal incidents in 2025 affecting the Indianapolis, Montezuma, and other facilities. The contamination involved ingredients including linguine, cauliflower, and spinach products. The USDA began sampling at the Indianapolis facility on March 19, 2025, with contamination confirmed thereafter, and the Debtors conducted a voluntary recall of Chicken Fettuccine Alfredo SKUs on June 17, 2025.

The Debtors are pursuing insurance claims exceeding $40 million; however, the $20 million annual coverage limit creates a significant gap. The First Day Declaration identifies six layers of excess products recall coverage from Berkley Assurance, Crum & Forster, Great American, Swiss Re, Upland Specialty, and Westchester, in addition to a primary policy from Dual Insurance.

Loss of Key Customer Relationships

The Listeria incidents triggered a cascading loss of customer relationships that, in combination, eliminated approximately 90% of revenue within a period of weeks.

Blue Apron first asserted breaches of the Production and Fulfillment Agreement (PFA) on April 9, 2025, and issued a Termination Notice on December 18, 2025, effective immediately. The Debtors disputed the notice as non-compliant with cure provisions, and tolling agreements were in place with the latest expiring May 4, 2026. Walmart, which previously represented over 20% of revenue, ceased its customer relationship effective January 2026.

Failed Efforts to Obtain Financing

Between January and February 2026, the Debtors met with at least 15 working capital lenders and multiple parties to monetize insurance claims; all efforts were unsuccessful. The Debtors engaged Rothschild & Co on February 21, 2026, which contacted ten potential third-party DIP lenders. Four executed NDAs, but no alternative term sheets were received. The First Day Declaration relies on this market testing to support the determination that unsecured credit was unavailable and that the terms offered by BGC and FaraNord represent the best available financing.

The Debtors entered bankruptcy with approximately $168 million in funded secured debt distributed across two facilities held by BGC (first lien) and FaraNord (second lien on most assets, first lien on working capital collateral). An Amended and Restated Intercreditor Agreement dated December 4, 2025 bifurcates lien priorities between the two lenders.

The split-collateral arrangement — FaraNord first on working capital assets and BGC first on cash, PP&E, intellectual property, and other non-working-capital assets — is described in the DIP motion and Interim DIP Order. The First Day Declaration notes that prior to the BGC financing, FreshRealm funded operating losses through cash on hand, preferred stock proceeds, and receivables factoring, indicating losses preceded the food safety events.

Initial Facility Sizing and Drawdowns

The BGC facility launched at $75 million in March 2025. FaraNord’s initial facility of $50 million was extended in October 2025, followed by a $70 million incremental commitment in December 2025, of which $60 million had been drawn as of the Petition Date.

The centerpiece of the first-day filings is a $63 million superpriority senior secured priming multiple-draw term loan provided by BGC and FaraNord. The Court approved $43 million of that facility on an interim basis on April 29, 2026, with the remaining $20 million conditioned on entry of the Final Order.

Structure and Composition

New money totals $18 million, comprising $15 million in post-petition new money loans and $3 million in rolled-up protective advances ($1.8 million from BGC, advanced April 14, 2026, and $1.2 million from FaraNord, advanced April 15, 2026). Roll-up loans total $45 million, allocated $27 million to BGC’s first lien and $18 million to FaraNord’s second lien. The aggregate roll-up ratio is 2.5:1 ($2.50 of prepetition debt converted to DIP status for every $1 of new money). The DIP motion cites the District of New Jersey’s Bed Bath & Beyond case as precedent for a more aggressive 5:1 interim roll-up.

Economic Terms

The Rothschild declaration highlights that the DIP facility includes no exit fee, no unused commitment fee, no agent fees, and no requirement to reimburse prepetition professional costs. Interest accrues PIK, preserving operating cash during the transition period.

Carve-Out and Challenge Rights

The Carve-Out provides uncapped funding for U.S. Trustee and Clerk fees, up to $50,000 for Chapter 7 trustee fees, allowed professional fees per budget through any Carve Out Notice date, and a $300,000 post-Carve Out Notice cap. A separate $3,000,000 Contingent Amount Cap is reserved for New Jersey statutory employee severance obligations — an unusual structural feature reflecting New Jersey’s Millville Dallas Airmotive Plant Job Loss Notification Act.

The Challenge Period expires at the earlier of plan confirmation or 60 calendar days after entry of the Interim Order (approximately June 28, 2026). Any Official Committee of Unsecured Creditors, if appointed, is limited to $50,000 for investigation of the prepetition lenders’ liens and claims.

Milestones

The DIP Term Sheet imposes the following milestones, measured from the Petition Date:

The restructuring is anchored on a three-part transaction architecture: a Settlement Agreement with Blue Apron resolving the PFA termination dispute, a Transition Services Agreement (TSA) under which the Debtors will continue producing Blue Apron meal kits during a handoff period, and an Asset Purchase Agreement (APA) under which Misfits Market, Inc. will acquire certain working capital to enable the TSA objectives.

Settlement Agreement Components

The Settlement Agreement resolves the PFA termination dispute without admission of liability. The First Day Declaration notes that the Board originally considered a full Section 363 sale process with Misfits Market as stalking horse, but rejected that approach because Blue Apron was unwilling to provide incremental financing absent certainty, and the litigation risks associated with the PFA dispute made a traditional auction process impractical.

Transition Services and Asset Sale

The TSA contemplates that the Debtors will perform transition services for Misfits Market on behalf of Blue Apron from the finality of the Settlement Agreement order through August 31, 2026, ensuring continuity of Blue Apron meal kit production and fulfillment during the handoff period. The APA provides for the Debtors’ sale and Misfits Market’s acquisition of certain working capital to enable the TSA objectives, which the AI Dossier characterizes as a relatively limited asset transfer focused on inventory and receivables rather than hard assets or real property.

The 13-week DIP budget assumes $10 million in “Cash Consideration (Blue Apron Settlement)” as a receipt during the budget period, indicating that an initial tranche of the $47 million cash consideration is expected to be received in the early weeks of the case.

The first-day motions collectively seek authority to pay between approximately $34 million and $49 million in prepetition obligations across employee compensation, critical vendors, PACA/PASA vendors and lien claimants, taxes, insurance, and utilities. The aggregate amounts reflect the Debtors’ position in a capital-intensive, perishable-goods industry with significant statutory trust and priority obligations. All interim orders entered April 29, 2026 expressly subordinate disbursements to the DIP-approved budget and variance mechanism.

PACA/PASA and Lien Claimants

The largest payment category seeks authority to pay $13.8 million on an interim basis (rising to $23.6 million on a final basis) to vendors protected by the statutory trusts established under the Perishable Agricultural Commodities Act and the Packers and Stockyards Act, and to carriers, warehousemen, and other parties asserting possessory liens. The motion relies on the doctrine that PACA/PASA trust assets are not property of the estate, citing In re CFP Liquidating Estate and In re Long John Silver’s Restaurants.

Critical Vendors and 503(b)(9)

The Debtors rely on nearly 1,000 vendors. A critical operational constraint is that key customers Blue Apron and Marley Spoon must pre-approve suppliers, and new vendor onboarding takes 3 to 5 months — effectively locking in existing suppliers. The proposed order conditions discretionary critical vendor payments on agreement to “Customary Trade Terms.”

Employee Programs and WARN

Interim relief totals approximately $9.3 million for employee compensation and benefits, with the largest line item being approximately $3.8 million in unpaid outsourced staff compensation. The motion notes that WARN Act notices were issued to all approximately 1,017 employees on the Petition Date, signaling significant workforce reductions as the Blue Apron transition to Misfits Market proceeds. The $3 million Contingent Amount Cap in the DIP Carve-Out is designated for New Jersey statutory severance exposure.

Insurance, Utilities, and Taxes

The Debtors maintain approximately 22 insurance policies with aggregate annual premiums of approximately $6.89 million, of which approximately $5.9 million is financed through First Insurance Funding at monthly installments of $467,501.58. Utility relief includes a $234,502 adequate assurance deposit (approximately two weeks of one month’s utility cost) and recognizes that any electrical interruption could destroy refrigerated and frozen inventory. Tax relief covers approximately $438,000 in accrued obligations and seeks forward-looking authority for entity conversions and tax elections in the Final Order.

The DIP budget projects extreme liquidity stress over the 13-week period that ends in late July 2026. The Debtors begin the period with approximately $19.485 million in cash. Among the principal line items disclosed in the AI Dossier’s summary of the budget, the Debtors project approximately $35.456 million in operating receipts, $15 million in DIP financing inflows, and $10 million in Blue Apron settlement cash consideration, alongside approximately $60.108 million in operating disbursements and a $3 million statutory contingency reserve. The projected ending cash balance is $646,000 against a $500,000 minimum liquidity covenant.

The budget assumes that approximately 71% of operating receipts come from Blue Apron and approximately 20% from Marley Spoon, underscoring the continued concentration in the Blue Apron channel during the transition period. The permitted variance test allows disbursements up to 115% of budgeted amounts and requires receipts of at least 85% of budgeted amounts.

The case follows a roughly 14-month deterioration arc that began with initial Listeria testing in March 2025 and culminated in the April 2026 filing, followed by an aggressively compressed post-petition path to sale and liquidating plan.

Pre-Filing Chronology

Post-Filing Critical Path

The case structure produces materially different outcomes across the major stakeholder constituencies. The following summary, drawn from the AI Dossier’s stakeholder analysis, identifies the principal treatment under the proposed transaction architecture. All references to plan treatment are subject to confirmation and the entry of final orders.

Impac Mortgage Holdings, Inc. and eleven affiliated debtor entities filed prepackaged Chapter 11 cases in the United States Bankruptcy Court for the District of Delaware on April 26, 2026. The cases are pending before the Honorable Craig T. Goldblatt under the lead case caption In re Impac Mortgage Holdings, Inc., et al., Case No. 26-10593 (CTG). Within 72 hours of the petition date, the Court entered an emergency NOL trading restriction order, all interim first-day orders, and a Confirmation Procedures Order scheduling a combined Disclosure Statement and Plan Confirmation Hearing for May 28, 2026 — 32 days after the petition date.

The case is structured around the preservation of an extraordinary quantum of tax attributes. The Debtors estimate a minimum of $850 million in federal net operating loss carryforwards and $600 million in California NOL carryforwards as of December 31, 2025. The Plan provides for the conversion of approximately $24 million of Senior Indebtedness held by Hildene re SPC, Ltd. into 100% of the New Common Stock of Reorganized Impac, transforming the company from a publicly traded entity into a privately held one. The Restructuring Support Agreement requires plan confirmation within 45 days of the petition date and an effective date within 60 days.

Impac Mortgage Holdings, Inc. was formed in 1995 as a Real Estate Investment Trust. According to the First-Day Declaration, the company maintained REIT status until the subprime mortgage crisis of 2007–2008 compelled revocation and a strategic pivot to a mortgage broker model. The lead Debtor and its eleven subsidiary debtors share a common address at 19800 MacArthur Blvd., Suite 500, Irvine, California 92612.

Corporate Family

The twelve debtor entities are all affiliated mortgage-related enterprises. The lead Debtor is Impac Mortgage Holdings, Inc.; the eleven subsidiary debtors are Copperfield Financial, LLC; Copperfield Capital Corporation; Impac Funding Corporation; Impac Commercial Capital Corporation; Impac Secured Assets Corp.; IMH Assets Corp.; Integrated Real Estate Service Corp.; Impac Mortgage Corp. (“IMC”); Impac Warehouse Lending, Inc.; Synergy Capital Mortgage Corp.; and Impac Warehouse Lending Group, Inc.

Workforce and Public Status

At the time of filing, the Debtors’ workforce consisted of 18 full-time employees — 10 employed by Impac and 8 by IMC — none subject to collective bargaining. The Debtors’ common stock trades on the OTC market under the ticker symbol “IMPM” with a market capitalization of approximately $2.9 million as of the petition date.

Technology Posture

On March 17, 2026, Impac and IMC entered into a Secondment Agreement with Dagdafi, Inc. d/b/a First Agentic for the development of AI-powered mortgage loan origination software. The Plan designates this agreement for assumption, and the Disclosure Statement’s financial projections contemplate a ramp-up in mortgage origination activity post-emergence that the Debtors associate with this technology platform.

The events leading to the Chapter 11 filing trace back nearly two decades. The First-Day Declaration identifies the 2007–2008 subprime mortgage crisis as the inflection point that compelled revocation of REIT status and the transition to a mortgage broker model. The Debtors generated significant operating losses during the crisis and in subsequent years — the source of the NOLs that now anchor the restructuring — and never returned to a sustained profitability profile sufficient to service their funded debt stack.

By the petition date, several distress indicators had crystallized:

The book balance sheet does not capture the off–balance-sheet value of the NOLs — estimated by the Debtors at a minimum of $850 million federal and $600 million California as of December 31, 2025. The First-Day Declaration frames the case as a transaction to preserve and monetize that off–balance-sheet value through a debt-to-equity conversion, rather than a traditional operating reorganization.

The First-Day Declaration and Emergency NOL Motion identify the tax attributes as the most valuable asset of the Debtors’ estates and the primary motivation for the restructuring. The Plan is designed to qualify for the bankruptcy exception under Internal Revenue Code § 382(l)(5) (the “L5 Exception”), which permits a debtor emerging from bankruptcy to avoid the general § 382 annual limitation on NOL usage if the debtor’s historic shareholders and qualified creditors own at least 50% of the reorganized entity’s stock.

Why the L5 Exception Matters

The Emergency Motion explains that a standard § 382 ownership change triggered in bankruptcy would reduce the annual NOL usage to the product of the fair market value of the debtor’s equity (here, approximately $2.9 million) multiplied by the applicable long-term tax-exempt rate — a small annual cap relative to the underlying carryforwards. Qualifying for the L5 Exception, by contrast, allows the reorganized entity to preserve the economic value of the carryforwards subject to the exception’s post-emergence restrictions.

Defined Terms in the Trading Restriction Regime

The Emergency Motion and Interim NOL Order use two defined terms to identify the categories of holders subject to notification and approval requirements. A “Substantial Stockholder” is any person or entity beneficially owning, or having options to acquire, common stock totaling at least 1,645,000 shares — approximately 4.5% of outstanding shares as of December 31, 2025. A “50-Percent Shareholder” is any person or entity that, at any time since December 31, 2025, has owned beneficial ownership of 50% or more of the common stock, as determined under § 382(g)(4)(D).

Legal Authority

The Emergency Motion grounds the trading restrictions in a line of cases holding that NOLs constitute property of the estate under §§ 362 and 541, citing Gibson v. United States (In re Russell), 927 F.2d 413 (8th Cir. 1991), and In re Prudential Lines Inc., 928 F.2d 565 (2d Cir. 1991). The motion also relies on the Court’s equitable powers under § 105(a) per In re Phar-Mor, Inc., 152 B.R. 924 (Bankr. N.D. Ohio 1993), and cites Delaware and S.D.N.Y. precedent including In re Carestream Health, In re Riverbed Tech., In re AMR Corp., and In re Delta Air Lines.

Aggregate funded indebtedness exceeded $100 million as of the petition date. The capital structure features a layered set of secured and subordinated obligations, with Hildene re SPC, Ltd. occupying the senior-most position through the Prepetition Loan and an assigned Bridge Note.

Equity interests include common stock, 8.25% Series D Cumulative Redeemable Preferred Stock, warrants, and outstanding equity awards. The First-Day Declaration confirms that no “ownership change” under IRC § 382 had occurred as of the petition date.

The Restructuring Support Agreement was executed effective April 22, 2026, four days before the petition date. The RSA binds three categories of parties: the Debtors; Hildene, in its capacities as Plan Sponsor and DIP Lender; and the Consenting Subordinated Noteholders — Taberna Preferred Funding 1 LTD and Taberna Preferred Funding 2 LTD. Hildene and the Taberna entities executed signature pages on April 21, 2026, one day before the RSA Effective Date.

Hildene’s Multi-Capacity Role

The RSA, the DIP Agreement, and the Plan together describe five capacities in which Hildene participates in the transaction:

Plan Sponsor Protections

The RSA includes a Breakup Fee/Reimbursement Amount payable in the event an Alternative Transaction is consummated. The amount comprises (i) full reimbursement of all reasonable and documented Plan Sponsor fees and expenses, (ii) 3% of the Alternative Transaction value, and (iii) all amounts outstanding under the DIP Loan and Senior Indebtedness. The RSA also grants Hildene a right of first refusal with respect to any Alternative Proposal. The Debtors retain a fiduciary out provision permitting them to pursue a superior alternative if their boards determine that failure to do so would be inconsistent with fiduciary duties.

Milestones

The RSA imposes a sequenced set of milestones that, if missed, constitute termination events. The DIP Agreement mirrors these milestones as Events of Default, creating a dual enforcement mechanism.

The DIP Facility is a $5,000,000 senior secured superpriority term loan provided by Hildene, structured in two components: a cashless, dollar-for-dollar roll-up of the $2,000,000 Bridge Note Obligations (effective upon entry of the Interim DIP Order); and up to $3,000,000 in new money term loans, with $1,500,000 available on an interim basis and the remaining $1,500,000 available upon entry of a Final Order.

Economic Terms

Carve-Out, Challenge Period, and Market Check

The Carve-Out is structured in three tiers: U.S. Trustee fees (unlimited); pre-trigger professional fees (per the approved Budget, excluding success fees); and post-trigger professional fees (capped at $125,000 in the aggregate). The Interim DIP Order establishes a 75-day Challenge Period during which any party in interest may investigate the validity, perfection, priority, and extent of the Prepetition Secured Parties’ liens and claims, with the investigation budget capped at $25,000.

The DIP Motion documents a prepetition market check by the Debtors’ financial advisor, DSI, in which capital providers were contacted on a no-names basis. According to the supporting declaration, no party was willing to enter into a confidentiality agreement or offer more favorable terms; the only actionable proposal was from Hildene.

Seven-Week DIP Budget

The seven-week DIP budget reveals the cash flow profile of an essentially non-operational enterprise from a revenue perspective:

The DIP Facility is projected to be fully drawn by Week 6, with ending unrestricted cash of approximately $328,000. The DIP Motion frames the facility as funding professional fees and case administration costs rather than ongoing business operations, consistent with the minimal operational footprint described in the First-Day Declaration.

The Plan classifies claims and interests into eight numbered classes (with several subclasses) plus four categories of unclassified claims. The two voting classes — Class 3 (held by Hildene) and Class 4 (held by the Taberna entities) — have voted to accept with 100% in amount and number, consistent with the prepackaged structure. Classes 5, 6, 7, and 8(a) are deemed to reject, and the Debtors intend to seek cramdown under § 1129(b).

The Contingent Payment Certificate

The Contingent Payment Certificate is the sole consideration for holders of approximately $76.4 million in Subordinated Notes. The Plan and RSA specify the calculation as 10% of consolidated positive earnings of Impac and its subsidiaries for the three taxable years following the Plan Effective Date, due no later than 120 days following the end of the third taxable year, capped at $5,000,000 and floored at $250,000. The Disclosure Statement’s estimated recovery range of 0.33% to 6.55% maps to the floor and cap, respectively.

Best Interests Test — Liquidation vs. Plan

The Disclosure Statement’s liquidation analysis indicates that the NOLs — the estate’s most valuable asset — would be entirely worthless in liquidation because there would be no continuing entity to utilize them.

Release Architecture

The Plan’s third-party release is structured as an opt-in mechanism: parties must affirmatively elect to grant releases by submitting a Third-Party Release Opt-In Form. The Confirmation Procedures Motion describes this structure as designed to comply with the Supreme Court’s 2024 decision in Harrington v. Purdue Pharma L.P., 603 U.S. 204 (2024), which held that non-consensual third-party releases exceeding the scope of § 524(g) are not authorized by the Bankruptcy Code. The Debtor/Estate Release, exculpation, and discharge provisions follow standard formulations with carve-outs for actual fraud, gross negligence, and willful misconduct.

The Court entered NOL trading restrictions in a three-stage sequence designed to provide immediate protection while preserving due process for affected stakeholders.

The Emergency Motion characterizes the NOL protection orders as the “first line of defense” for the restructuring. The motion explains that, without them, even a single unauthorized stock trade could theoretically trigger an ownership change that would vitiate the § 382(l)(5) exception and undermine the economic rationale of the Plan Sponsor’s investment.

The Confirmation Procedures Order, entered by Judge Goldblatt on April 29, 2026, establishes the procedural framework for a combined Disclosure Statement and Plan Confirmation Hearing as authorized under § 105(d)(2)(B)(vi). The order schedules the combined hearing for May 28, 2026 and sets the deadlines below.

The Confirmation Procedures Order also addresses administrative matters: the Debtors are conditionally excused from filing Schedules of Assets and Liabilities, Statements of Financial Affairs, and Rule 2015.3 reports, with the waiver expiring approximately 75 days post-petition (approximately July 10, 2026) if the Plan is not confirmed. The § 341 meeting of creditors is similarly waived on the same conditional basis.

Wiser Solutions, Inc. and four affiliates filed voluntary Chapter 11 petitions on April 26, 2026 in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, before the Honorable Scott W. Everett. The cases are jointly administered under lead Case No. 26-80002-swe11. The Debtors have entered Chapter 11 with a fully negotiated stalking horse asset purchase agreement and a debtor-in-possession financing facility, both with the Debtors’ prepetition senior secured lender, Crestline Direct Finance, L.P. The contemplated transaction is structured as a Section 363 sale to an affiliate of Crestline, CL Mateo-A, LLC, via credit bid, with sale consummation targeted for June 30, 2026.

On April 28, 2026, the Court held an emergency first-day hearing and entered ten orders — five final orders and five interim orders. The Interim DIP Order authorized $7.6 million in interim borrowing, comprising $4.2 million in new money and $3.4 million in interim roll-up of prepetition debt. Final hearings on the interim orders are scheduled for May 20, 2026, with an objection deadline of May 13, 2026.

Upcoming milestones

The DIP Credit Agreement establishes a sequenced set of deadlines that govern the case schedule:

Wiser Solutions, Inc. operates a software-as-a-service platform that provides commercial intelligence, data management, analytics, and brand-protection services to over 750 brands and retailers globally. The platform delivers five core product lines: Minimum Advertised Price (MAP) monitoring, Pricing Intelligence (PI), Market Intelligence (MI), Retail Execution Management (REM), and Retail Intelligence (RI). According to the Declaration of the Co-CRO filed in support of the petitions, the platform has historically tracked more than 10 billion products, recommended more than 4 million prices, and monitored more than 600,000 stores. Customers access the services through subscriptions ranging from month-to-month to multi-year terms.

Corporate structure

The five jointly administered debtors share a common headquarters at 1875 Mission Street, Suite 103, San Francisco, California. Wiser Solutions, Inc. is the sole operating entity, employing all U.S. full-time employees and engaging all U.S. independent contractors. The four debtor subsidiaries — Brand Protection Agency, LLC; Blosm, LLC; RW3 Technologies, Inc.; and Shelvspace, Inc. — were acquired between 2019 and 2021 and have no employees or independent operations as of the Petition Date.

Wiser Solutions, Inc. directly or indirectly owns non-debtor foreign subsidiaries in India, Israel, Canada, France, Germany, England and Wales, Mexico, and Australia (with two Australian sub-subsidiaries). These foreign entities employ approximately 250 of the Debtors’ total global workforce. The cash management motion identifies international intercompany transfers averaging approximately $1.3 million per month from the Lead Debtor to these non-debtor subsidiaries.

Equity structure

The Lead Debtor has 55,008,972 total shares outstanding across six classes (one common and five preferred). Figtree Partners LLC holds 31.75% of common and preferred stock (27.21% on a fully diluted basis), making it the largest single equity holder. For purposes of the Section 382 NOL protection procedures, the relevant Common Stock outstanding is approximately 3,802,883 shares.

The Co-CRO Declaration identifies an aggressive acquisition strategy as the principal driver of the Debtors’ financial distress. Originally founded in 2012 as Quad Analytix Inc., the company completed eleven acquisitions between 2013 and August 2022, financed by approximately $540 million in equity and debt. According to the Declaration, the acquisitions were intended to expand product capabilities and geographic footprint, but integration efforts did not achieve their objectives, leaving the Debtors operating parallel SaaS platforms with multiple hosting environments, separate data pipelines, duplicate vendor contracts, and redundant tooling. Annual recurring revenue grew during this period, but operating costs grew faster.

Liquidity deterioration and lender intervention

The Co-CRO Declaration describes a sequence of events in 2023 through early 2026 that culminated in the Chapter 11 filing:

The Bridge Loans referenced above — an aggregate of approximately $34.8 million from private lenders — were, according to the Co-CRO Declaration, “likely in violation of” covenants under the Crestline facility. The Seybold Judgment arose from one such bridge loan.

As of the Petition Date, the Debtors’ total funded debt obligations were approximately $563 million, distributed across six categories of secured, unsecured, and equity-linked instruments. The Crestline senior secured facility represents the only secured tranche; the Figtree Global Note is expressly subordinated to it; the bridge loans, Shelvspace convertible notes, and other founder obligations are unsecured; and the preferred share obligations reflect aggregate liquidation preferences on the preferred stock.

Crestline secured facility

The Crestline facility originated as a $100 million revolving credit facility under a Credit and Guaranty Agreement dated April 29, 2022. In December 2024, the facility was amended to permit discretionary additional borrowings, after which Crestline funded approximately $62 million in additional loans. The facility is secured by substantially all of the Debtors’ assets, including Deposit Account Control Agreements executed on August 5, 2022 covering the Operating and Funding Accounts at Northern Bank & Trust.

Figtree dual position

Figtree Partners LLC holds two distinct positions in the capital structure: as the largest equity holder (31.75% of common and preferred stock) and as the holder of the $108.6 million Figtree Global Note (an Amended and Restated Global Note dated April 29, 2022, bearing 5% per annum compounded interest, maturing December 31, 2028, and expressly subordinated to the Crestline facility).

The DIP Credit, Guaranty and Security Agreement provides a total commitment of $34.2 million, comprising $11.4 million in new money loans and $22.8 million in roll-up loans that convert prepetition Crestline obligations into postpetition DIP obligations. All eleven DIP Lenders are funds managed by Crestline; Crestline serves as both DIP Agent and Prepetition Agent. The Interim DIP Order, entered April 28, 2026, authorized $7.6 million in interim borrowing ($4.2 million new money plus $3.4 million interim roll-up).

Solicitation of alternative financing

The Declaration of Paladin Management Group submitted in support of the DIP Motion states that Paladin contacted five potential alternative DIP lenders — BlackRock/HPS Investment Partners, Sigueler Guff, Mountain Ridge Capital Partners, Rosenthal Capital, and JPMorgan Chase — each of whom declined to provide any proposal on any terms. The Court’s findings under Sections 364(c) and 364(d) rely on this declaration.

Lien, priority, and adequate protection structure

The Interim DIP Order grants the DIP Lenders first-priority priming liens on substantially all estate assets under Sections 364(c)(2), 364(c)(3), and 364(d), together with superpriority administrative expense claims under Section 364(c)(1) (junior only to the Carve-Out). The Prepetition Secured Parties receive replacement adequate protection liens and Section 507(b) claims, junior to the DIP Liens and the Carve-Out.

Carve-Out and Investigation Budget

The Carve-Out for professional fees has two tiers: (i) prior to a Carve-Out Trigger Notice, all unpaid Allowed Professional Fees per the Approved Budget; and (ii) after a trigger, $50,000 for estate professional fees plus up to $50,000 in Chapter 7 trustee fees. The Investigation Budget for any future creditors’ committee to investigate the Debtors’ stipulations regarding the prepetition obligations is set at $25,000, with no authority to litigate.

Challenge Period

For non-committee parties, the Challenge Period runs through the earlier of one business day prior to the sale hearing or 75 days after entry of the Interim Order. For any committee, the Challenge Period runs through the earliest of 60 days after appointment, 75 days after entry of the Interim Order, or one business day prior to the sale hearing.

Waivers and releases

The Interim DIP Order, upon becoming final, will include the Debtors’ waivers of Section 506(c) surcharge rights, the Section 552(b) equities-of-the-case exception, and the equitable doctrine of marshaling, together with broad releases of claims against the DIP Secured Parties and Prepetition Secured Parties.

Initial DIP Budget

The Initial DIP Budget projects the following nine-week cash flow:

The DIP Facility imposes a rolling 13-week cash flow forecast requirement and a permitted variance of 15% on positive disbursements (i.e., actual disbursements may not exceed 115% of budgeted disbursements).

The Debtors entered Chapter 11 with a Stalking Horse Asset Purchase Agreement dated April 26, 2026 between the Debtors and CL Mateo-A, LLC, an affiliate of Crestline. The contemplated transaction is a credit bid under Section 363(k). The DIP Credit Agreement establishes the milestones described in Section I above and imposes specific economic requirements on any competing bid.

Alternate Transaction economics

If the Debtors’ assets are sold to a bidder other than CL Mateo-A, LLC, the DIP Credit Agreement requires that the alternative bidder pay cash consideration exceeding the “Release Price,” defined as all outstanding DIP Obligations plus approximately $250.6 million in Prepetition Obligations, plus accrued interest and fees. Both the DIP Agent and the Prepetition Agent retain the right to credit bid all or any portion of their respective obligations under Section 363(k).

Sale proceeds waterfall

If a non-Crestline buyer were to acquire the assets, sale proceeds would be distributed in the following order:

1. $150,000 in Excluded Cash for post-sale wind-down costs;
2. Payment of all DIP Obligations;
3. Payment of all Prepetition Obligations (~$250.6 million); and
4. Surplus, if any, to the Debtors’ estates.

NOL preservation

The Debtors filed a motion seeking procedures to protect approximately $356,811,704.39 in net operating losses and other tax attributes as of December 31, 2025. The Court entered an interim order approving the procedures, which target holders of 4.5% or more of Beneficial Ownership (171,130 or more shares of the 3,802,883 Common Stock outstanding) and 50 Percent Shareholders seeking worthless stock deductions under IRC § 382(g)(4)(D). The interim NOL order is set for final hearing on May 20, 2026.

The Debtors filed twelve first-day motions and supporting declarations. At the emergency hearing on April 28, 2026, the Court entered five final orders and five interim orders, including the Interim DIP Order. The table below summarizes each motion and the relief granted to date.

Items deferred to final hearing

Three categories of relief were specifically excluded from the interim wages and benefits order: Workforce Incentive Programs, the Severance Program, and the 401(k) employer match. These items, along with the additional $600,000 in IT vendor payments and the full $34.2 million DIP Facility, are scheduled for final consideration at the May 20, 2026 hearing. The objection deadline for these matters is May 13, 2026.

Cash management and international transfers

The Debtors’ cash management system includes six bank accounts at three institutions (Northern Bank & Trust, Bank of America, Royal Bank of Canada) along with Monex USA custodial foreign exchange accounts and a Stripe customer payment processing account. The Cash Management Motion identifies international intercompany transfers averaging approximately $1.3 million per month from the Lead Debtor to the non-debtor foreign subsidiaries; the Interim Order authorizes continuation of those transfers. Compliance with Section 345(b) is required within 30 days of the Interim Order (approximately May 28, 2026).

Workforce considerations

The Wages Motion identifies approximately nine salaried employees sponsored for H-1B visas. The Debtors retain payroll services through UKG and engage variable agency contractors through TekSystems, Upwork Global LLC, and Roamler B.V. The Interim Wages Order authorizes payment of priority wages, payroll taxes, health benefits, expense reimbursements, and certain other categories.

The case structure as presented in the first-day filings positions Crestline Direct Finance, L.P. and its affiliated funds in multiple roles: prepetition senior secured lender, DIP Lender (through eleven managed funds), DIP Agent, Prepetition Agent, and stalking horse bidder (through CL Mateo-A, LLC). Whether competing bids materialize in light of the Release Price mechanism and the credit bid rights of the DIP Agent and Prepetition Agent remains to be seen.

Open issues to watch

Several matters remain unresolved as of this report’s preparation:

The general claims bar date proposed in the Notice of Commencement is July 25, 2026 — after the targeted June 30, 2026 sale consummation date — meaning the claims process will not be complete before the contemplated sale closes. The governmental bar date is proposed for October 23, 2026.

Office Properties Income Trust and 72 affiliated debtors are approaching the final stretch of a Chapter 11 reorganization that has been marked by aggressive intercreditor litigation, three rounds of mediation, and a series of global settlements that have reshaped the case. The confirmation hearing is currently scheduled for April 22, 2026, with the voting and objection deadline set for April 15, 2026.

The past several weeks have seen a burst of activity positioning the case for confirmation. On April 5, 2026, the Debtors filed their Notice of Intent to Equitize the DIP Facility, electing to convert the $125 million DIP into reorganized equity rather than requiring cash repayment. On April 8, the Third Amended Plan and First Plan Supplement were filed, incorporating all settlement terms and the equitization election. A day later, the Debtors filed a Second Election Notice identifying nine additional properties for sale.

OPI is a Maryland real estate investment trust formed in 2009 that grew principally through two major acquisitions: the October 2017 acquisition of First Potomac Realty Trust for approximately $1.4 billion and the December 2018 acquisition of Select Income REIT for approximately $2.4 billion. These transactions significantly expanded the property portfolio but also substantially increased the company’s debt burden.

A critical structural feature of OPI is that it has no employees. All management and operational functions are provided by The RMR Group LLC pursuant to management agreements originally dated June 5, 2015. Combined annual management fees totaled approximately $29.6 million in 2024. The RMR relationship raises significant governance concerns: the chair of OPI’s Board is also a director and controlling shareholder of RMR Inc. and Sonesta International Hotels Corporation. These overlapping roles were cited by the Official Committee of Unsecured Creditors as evidence that the “entire fairness” standard should govern scrutiny of the DIP Facility and other transactions.

To address governance concerns, OPI established a Special Committee on June 12, 2025, comprising an Independent Trustee as its sole member, tasked with investigating potential claims arising from prepetition capital structure transactions and RMR-related payments. That investigation remains ongoing.

The CRO Declaration identifies multiple intersecting causes of OPI’s financial distress, all compounding in a way that made the existing capital structure unsustainable.

Structural shifts in office space utilization driven by the proliferation of remote and hybrid work fundamentally reduced demand for traditional office space. Challenging financing markets made refinancing or extending maturing debt increasingly difficult and expensive. Reduced government spending created additional headwinds given OPI’s significant government tenant base. The company’s common shares were delisted from Nasdaq on October 6, 2025, effectively eliminating access to public equity markets.

The Debtors’ prepetition capital structure — aggregating approximately $2,421.3 million in total company funded debt — is organized into multiple secured silos with distinct collateral packages, maturity dates, and lien priorities. This complexity lies at the heart of the intercreditor disputes that have defined the case.

Ninety-seven properties secure approximately $1.9 billion of aggregate debt. The complexity of this multi-silo structure — with separate collateral pools, intercreditor agreements, and lien priorities — is a defining feature of the case.

The restructuring is anchored by a Restructuring Support Agreement executed on the Petition Date with holders of approximately 80–90% of the September 2029 Senior Secured Notes and RMR. The RSA contemplated the provision of a $125 million DIP Facility by the September 2029 Ad Hoc Group, the conversion of September 2029 Notes into reorganized equity, and continued management by RMR on renegotiated terms.

The DIP Facility

The DIP Facility was the most contested element of the case, drawing objections from four distinct parties. The 2027 Ad Hoc Group advanced four principal arguments: that the DIP constituted a value-transfer scheme benefiting the September 2029 Ad Hoc Group at the expense of the 2027 noteholders; that it violated the Intercreditor Agreement; that it operated as an impermissible sub rosa plan; and that it was approved through a flawed governance process lacking independent fiduciaries.

The UCC argued that the DIP should be evaluated under the heightened “entire fairness” standard because RMR is a statutory insider, and that the DIP constituted a sub rosa plan locking in approximately 79.5% of reorganized equity for the September 2029 Ad Hoc Group. BOKF, as trustee for the Subsequent September 2029 Notes, warned that excluding its noteholders from DIP participation constituted discriminatory treatment.

The Debtors countered that business judgment deference was appropriate, that no debtor-by-debtor necessity requirement existed in multi-debtor cases, that equitization merely preserved optionality subject to full confirmation protections, and that the 11-party marketing process validated the pricing. The Final DIP Order was entered on February 3–4, 2026, after a two-day hearing.

The treatment of the approximately $418 million in 3.250% Senior Secured Notes due March 2027 has been the most heavily litigated issue in the case, spawning two adversary proceedings.

OID Adversary (Adv. Proc. No. 25-03802)

Filed November 2, 2025, the Debtors sought to disallow approximately $76.4 million of unamortized original issue discount on the 2027 Notes under §502(b)(2), which disallows claims for “unmatured interest.” The 2027 Notes were issued in December 2024 as part of an exchange transaction at a significant discount to face value, creating substantial OID.

Intercreditor Adversary (Adv. Proc. No. 26-03016)

Filed January 24, 2026, by UMB Bank as 2027 Notes indenture trustee, this proceeding alleged that the DIP Facility and related transactions violated the Intercreditor Agreement executed in connection with the December 2024 Exchange.

The 2027 Ad Hoc Group’s Defenses

The 2027 Ad Hoc Group raised three principal defenses: that the 2027 Notes were validly accelerated approximately seven hours before the Chapter 11 petitions were filed, fully amortizing all remaining OID; that the “solvent debtor” exception under In re Ultra Petroleum Corp. permits recovery regardless; and that as oversecured creditors under §506(b), the 2027 noteholders are entitled to recover post-petition interest including OID accretion.

After three rounds of court-ordered mediation before Judge Marvin Isgur, the parties reached a framework of interlocking settlements that resolved the principal disputes and positioned the case for confirmation.

The 2027 Settlement

The settlement represents a pragmatic resolution. The allowed claim of $385 million falls between the full face amount and the OID-adjusted amount, suggesting each side conceded ground. The 2027 noteholders obtained new secured notes bearing a much higher coupon, near-term cash, and robust collateral protections. Both adversary proceedings are to be dismissed with prejudice on the Effective Date.

The Committee Settlement

Reached February 23, 2026, the Committee Settlement enhanced recoveries for unsecured creditors by increasing the Plan enterprise value to $1.75 billion, upsizing the equity rights offering to $35 million at $17 per share, granting 7-year warrants for 5% of reorganized equity at a $25 strike price, and providing an estimated approximately 9.3% recovery for unsecured noteholders. Trade and vendor claims are to be paid in full in cash.

The Plan has evolved through four iterations, each incorporating progressive settlements and responding to objections raised by the various stakeholder groups.

Classification and Estimated Recoveries

Post-Emergence Releases

The release provisions have been a significant point of contention. The U.S. Trustee objected that nonconsensual third-party releases violate the Supreme Court’s decision in Harrington v. Purdue Pharma. The Debtors responded by implementing an opt-out release mechanism for voting classes and an opt-in mechanism for deemed-to-reject classes (Classes 15 and 16), citing recent authorities upholding opt-out releases post-Purdue Pharma in the Southern District of Texas.

The Revised Valuation Analysis establishes an enterprise value range of $2,050 million to $2,250 million and an implied equity value range of $343 million to $543 million, with a valuation date of May 1, 2026.

Post-Emergence Debt Structure

The Revised Financial Projections project Cash Basis NOI growing from $145.5 million (May–December 2026) to $231.4 million (2030), with Net Debt/EBITDA leverage declining from 7.4x (2027) to 6.3x (2030) and a Debt Service Coverage Ratio improving from 1.5x (2027) to 1.7x (2028–2030). Projected dispositions of $272.9 million in the May–December 2026 period represent a significant portfolio rationalization.

The first property sale involved the Regents Center in Tempe, Arizona, sold to Opus Development Company for $11,037,975. The Motion was filed November 10, 2025, approved December 3, and closed December 19, 2025, establishing both the legal framework and precedent for subsequent sales.

More broadly, the Motion for Global Sale Procedures was filed February 3, 2026, and approved February 25, 2026, establishing a framework for ongoing property dispositions without requiring individual court approval for each transaction. On April 9, 2026, the Debtors filed a Second Election Notice identifying nine additional properties for the broker-marketed sale process — consistent with the $272.9 million in projected dispositions for the May–December 2026 period.

Beyond the intercreditor disputes that dominated the first several months, the case has raised several important doctrinal issues that reflect the evolving landscape of complex Chapter 11 practice.

Business Judgment vs. Entire Fairness

The applicable standard of review for the DIP Facility was a threshold legal issue. The Committee’s argument for entire fairness rested on RMR’s insider status and its benefits under the RSA. The Debtors distinguished the precedent by arguing that the DIP Lenders themselves are arm’s-length parties — the insider (RMR) is not providing the financing. The Court’s entry of the Final DIP Order suggests it found the business judgment standard appropriate.

Sub Rosa Plan Doctrine

The argument that the DIP Facility’s equitization feature and RSA integration impermissibly predetermined the reorganization outcome represents one of the most important doctrinal issues in the case. The Fifth Circuit’s decision in Braniff Airways prohibits transactions that effectively determine the outcome of a reorganization without the procedural safeguards of the plan confirmation process. The Debtors’ counter-argument that equitization is implemented through and subject to the Plan, including Court review under §1129, provides a plausible distinction.

Post-Purdue Pharma Release Framework

The Debtors’ adoption of an opt-out mechanism for voting classes and an opt-in mechanism for deemed-to-reject classes represents a sophisticated attempt to thread the needle between the Supreme Court’s prohibition on nonconsensual third-party releases and the practical necessity of broad releases to effectuate complex restructurings. The citation to In re Container Store Group suggests the Southern District of Texas is developing a post-Purdue Pharma framework that permits opt-out/opt-in releases as “consensual.”

With the confirmation hearing approaching, the positions of the principal stakeholder groups are largely defined by the settlement framework.

As of April 9, 2026, the Chapter 11 cases of FAT Brands Inc., Twin Hospitality Group Inc., and their debtor subsidiaries have moved from crisis to transaction. A governance showdown between the company’s controlling CEO and the securitization noteholders who hold 85% of the outstanding securitization notes has been resolved through mediation. A dual-tranche DIP facility totaling up to $307.6 million has been approved on a second interim basis. And court-approved bidding procedures now set an April 24 bid deadline, an April 27 auction, and a May 8 sale hearing — a 17-day sprint from bids to closing that is being driven by a DIP maturity date that functions as an effective drop-dead date for the entire process.

The path from petition to this point has involved four distinct but interrelated tracks: a governance crisis that dominated the first two months; a complex, three-way dispute over whether postpetition cash constitutes cash collateral; the negotiation and approval of DIP financing that is inextricably linked to the governance resolution; and the launch of a Section 363 sale process that landlord constituencies have challenged on due process and adequate assurance grounds.

FAT Brands and Twin Hospitality collectively operate eighteen restaurant brands — including Fatburger, Johnny Rockets, Twin Peaks, Smokey Bones, Fazoli’s, Round Table Pizza, and Great American Cookies — across approximately 2,200 locations. The business model rests on three revenue pillars: franchising (approximately $92 million in 2025 royalties and fees), company-owned restaurant operations (over 150 locations generating approximately $389.4 million in 2025 revenue), and manufacturing operations including the Atlanta Factory and the Twin Brewery (approximately $39.4 million in 2025 revenue). The enterprise employs approximately 7,500 direct employees and supports approximately 45,000 additional franchisee-level employees.

The Debtors’ capital structure is dominated by approximately $1.46 billion in total funded debt, the vast majority of which consists of whole business securitization (“WBS”) notes issued across four securitization silos — Royalty, GFG, Fazoli’s, and Twin — plus Resid Notes. All five series are administered by UMB Bank, N.A. as trustee. The Ad Hoc Group of Securitization Noteholders (the “WBS Ad Hoc Group”) holds approximately $990 million, or 85%, of the outstanding securitization notes, making it the dominant secured creditor constituency in the cases.

Sources of Financial Distress

The filings identify multiple compounding sources of distress. Management fees paid by the securitization entities to the Debtor-Managers covered only approximately 18% of SG&A expenses, creating a chronic cash shortfall. Over $72 million in penalty interest and amortization charges accumulated since 2022 due to admitted events of default under the securitization indentures. Approximately $85.5 million in legal costs since 2021 arose from DOJ and SEC investigations related to the CEO’s conduct. By the petition date, all alternative liquidity sources had been exhausted, leaving the Debtors with only approximately $2.1 million in unrestricted cash.

The company’s CEO serves as its controlling shareholder through Fog Cutter Holdings LLC, which holds approximately 42.1% of Class A and approximately 55.7% of Class B common stock (with 2,000 votes per Class B share), making FAT Brands a “controlled company” under Nasdaq rules. Six of fifteen board members are the CEO’s immediate or extended family members. The CEO has a criminal history including a 2004 guilty plea to two federal felonies, a 2024 federal indictment on 20 felony counts (later dismissed), and a pending SEC civil complaint alleging fraud.

The WBS Ad Hoc Group filed its Motion for Appointment of a Chapter 11 Trustee on January 27, 2026 — the day after the petition date — signaling immediate and aggressive engagement. The motion argued that both independent prongs of Section 1104(a) were satisfied, cataloguing over $200 million in alleged improper insider payments.

The Unauthorized Equity Issuance

On January 30, 2026 — four days post-petition — the CEO unilaterally directed the sale of 9,000,000 shares of Twin Hospitality Class A common stock to White Lion Capital, LLC for $3,104,200 without prior court approval, without consulting the Special Committee or the Debtors’ professionals, and in apparent violation of Section 363(b). This episode served as a significant inflection point, providing a concrete postpetition example of unilateral management action. The WBS Ad Hoc Group escalated by filing an Emergency Motion to Suspend the CEO on February 5, 2026.

The CEO Suspension Motion and Opposing Positions

The suspension motion relied on Sections 105(a), 1107, and 1108 rather than the Section 1104 trustee appointment mechanism, seeking a more targeted remedy. Two distinct oppositions were filed: the Debtors argued that no provision of the Bankruptcy Code authorizes unilateral judicial replacement of management absent shareholder consent (citing In re Adelphia Commc’ns Corp.); and the U.S. Trustee objected on structural grounds, arguing that Section 1104 is the exclusive remedy for management misconduct and that Section 105(a) cannot circumvent the specific statutory framework (citing Law v. Siegel, 571 U.S. 415). The U.S. Trustee’s position created an unusual alignment where the government agreed with the Debtors on the legal remedy while disagreeing on the underlying facts.

Resolution Through Mediation

The governance crisis was resolved through mediation led by Judge Marvin Isgur, which produced a Governance Agreement with several key terms: the CEO was required to take a temporary leave of absence; all family member employees were to be terminated; the board was to be reconstituted with reduced membership; and sole restructuring authority was vested in Special Committees composed of independent directors. Additionally, DIP Lenders were required to pay $5 million to the FBG Manager in installments to be paid to the CEO — effectively compensating him for stepping aside and transforming what could have been protracted governance litigation into a negotiated transition.

On March 20, 2026, the WBS Ad Hoc Group filed a Notice of Withdrawal of both the Trustee Motion and CEO Suspension Motion without prejudice, preserving the ability to refile if the Governance Agreement were breached.

On the petition date and the following day, the Debtors filed a suite of emergency motions seeking authority to continue business operations. The first-day relief was grounded in a coordinated statutory framework: Sections 363(b), 363(c), 105(a), 1107(a), and 1108 of the Bankruptcy Code; the business judgment standard requiring an “articulated business justification” (per Continental Air Lines and ASARCO); and the doctrine of necessity subject to the three-prong CoServ test.

The Debtors also sought authority to honor approximately $15.7 million in prepetition customer and franchisee program obligations, the largest components of which were the Gift Card Program ($8,978,000) and Rebate Program ($4,614,000). The employee obligations motion progressed from interim order on the date of filing to full order the next day, reflecting the priority the Court placed on wage claims consistent with Section 507(a)(4).

The central legal controversy underlying the first several weeks of the cases concerns the characterization of the Debtors’ postpetition cash receipts — specifically, whether postpetition restaurant revenues and securitization receivables constitute “Cash Collateral” subject to the WBS Ad Hoc Group’s liens or “Unencumbered Cash” under Section 552(a). Three competing positions define this dispute:

This triangulated dispute — where the Debtors argue the cash is unencumbered estate property, the WBS Ad Hoc Group argues it is encumbered estate property, and 352 Capital argues certain portions are not estate property at all — has significant implications for the value available to each creditor constituency.

Five Interim Cash Collateral Orders

The Debtors operated through five successive interim cash collateral orders in approximately seven weeks before obtaining DIP financing. The frequency and short duration of these orders reflects the intensity of the dispute and the absence of a consensual resolution until the Governance Agreement was reached in mid-March.

Each successive order authorized use of Cash Collateral subject to four-week or shorter budgets, a 110% permitted variance on aggregate disbursements, replacement liens, superpriority administrative claims, and a professional fee Carve-Out. The four-week budget periods functioned as de facto “check-in” mechanisms, requiring the Debtors to return to court regularly and providing the WBS Ad Hoc Group with recurring leverage points.

The 352 Capital Adversary Proceeding

352 Capital GP LLC filed a limited objection to the cash collateral motion on January 28, 2026, and subsequently commenced adversary proceeding No. 26-03053 on February 13, 2026. The adversary complaint seeks a declaratory judgment that the Resid Issuer owns the Management Fees and the Resid Secured Parties hold properly perfected security interests therein. This proceeding remains pending and presents a significant unresolved legal question that could materially affect the value available for both DIP repayment and creditor distributions.

The Debtors obtained a dual-tranche DIP financing facility funded by the WBS Ad Hoc Group and administered by UMB Bank, N.A., authorized under Sections 364(c) and 364(d). The dual-tranche structure maintains the distinct securitization silo architecture — the FBG DIP Facility relates to the FAT Brands Group securitization entities, while the Twin DIP Facility relates to the Twin Hospitality securitization entities.

Lien Priority Waterfall

The DIP Orders established an elaborate lien priority waterfall that reflects the resolution of competing secured claims. Several features merit attention. The Carve-Out for professional fees holds first priority in both tranches, protecting estate professionals’ ability to be compensated. The “Manager Advances (if validly perfected)” at fourth priority reflects ongoing uncertainty about whether prepetition advances by the Managers were properly secured. The Twin DIP Collateral waterfall is more complex, with eleven priority levels compared to eight for FBG, reflecting a split between A-2-I and A-2-II classes of Twin securitization notes.

Challenge Period and Professional Fee Controversy

The DIP Orders established a Challenge Period — the earlier of 75 calendar days following entry of the DIP Interim Order or the sale objection deadline — during which parties in interest may challenge the validity, priority, or perfection of prepetition liens. The Committee of Unsecured Creditors was granted sole and exclusive standing to investigate, prosecute, and settle Manager Advance Claims during this window. Given the compressed sale timeline, the effective Challenge Period may be substantially shorter than 75 days if the April 27 sale objection deadline controls.

Two law firms — Pachulski Stang Ziehl & Jones LLP and Steptoe LLP — objected to their deliberate exclusion from the DIP Budget and Carve-Out, characterizing it as punitive retaliation. The entered Interim DIP Order resolved this dispute by including both firms as Debtor Professionals in the Carve-Out — a resolution critical to the integrity of the Governance Agreement, since excluding independent directors’ counsel would have effectively nullified the governance protections the WBS Ad Hoc Group itself had demanded through mediation.

GLC Advisors launched an asset marketing process on February 17, 2026, contacting 160 prospective buyers. As of March 23, 2026, 44 NDAs had been executed, 16 additional were in process, and five indications of interest had been received from serious bidders. The 27.5% NDA execution rate and 3.1% serious IOI rate are consistent with typical large Chapter 11 sale processes for a company of this complexity.

Approved Sale Timeline

This timeline is aggressive: the entire process from bid deadline to closing spans only 17 days. The compression is driven by the DIP milestone framework, with the DIP Maturity Date of May 8 creating an effective drop-dead date. If no satisfactory third-party bid emerges, the WBS Ad Hoc Group is positioned to credit bid its secured claims — approximately $990 million in prepetition notes plus up to $230.7 million in rolled-up DIP claims — at the auction.

Landlord Objections to Bidding Procedures

Multiple landlord groups — KRG, ACF Property Management, Simon Property Group, GGP, and GMRI/Darden — filed objections to the bidding procedures on or about April 3–6, 2026. These objections raised several categories of concerns: due process challenges to the compressed post-auction timeline (citing Mullane v. Central Hanover Bank & Trust Co.); the heightened adequate assurance standard applicable to shopping center leases under Section 365(b)(3); the absence of a separate hearing for backup bidder transactions (citing In re Joshua Slocum, Ltd.); and landlords’ exclusion from observing the auction. The landlord objections represent a continuation and intensification of positions first articulated during the February cash collateral proceedings, demonstrating coordinated and sustained advocacy across both the operational and disposition phases of the case.

The chronological record reveals deep interdependencies among the four principal tracks of these cases. The Governance Agreement was a necessary precondition for DIP financing: the WBS Ad Hoc Group conditioned its willingness to provide financing on the resolution of governance concerns. The mediation proposal was delivered on March 11; the DIP Financing Motion was filed one week later on March 18; and the governance motions were withdrawn the day after the Interim DIP Order was entered on March 19. The WBS Ad Hoc Group used its governance litigation as leverage to obtain the management changes it required before committing to finance the cases, while simultaneously using its status as the sole viable DIP lender to obtain favorable roll-up terms and sale process milestones.

The DIP facility’s milestone framework now creates the governing timeline for the remainder of the cases. The DIP Maturity Date of May 8 coincides with the Sale Hearing date, and the Closing Deadline of May 11 follows three days later. This alignment means that a failure to complete the sale process on schedule would trigger a default under the DIP facility, potentially accelerating the DIP obligations and leaving the estates without financing. The WBS Ad Hoc Group — as both DIP lender and majority secured creditor — holds significant influence over the pace and outcome of the sale process.

The Official Committee of Unsecured Creditors was appointed on February 6, 2026, with proposed counsel Paul Hastings LLP and financial advisor M3 Partners, LP. The Committee’s role has been shaped by two significant grants of authority: sole and exclusive standing to investigate, prosecute, and settle Manager Advance Claims; and the ability to challenge the validity, priority, and perfection of prepetition liens during the Challenge Period.

The Committee’s position is particularly complex because the 352 Capital adversary proceeding challenges the fundamental characterization of certain assets as estate property. If 352 Capital prevails, certain receivables would not be available for distribution to any estate creditor — secured or unsecured — reducing the overall pool of assets. Conversely, if the Debtors prevail in characterizing those receivables as unencumbered estate property, the unsecured creditor constituency would benefit most directly. The Committee faces an estimated pool of approximately $104 million in general unsecured claims.

Several significant proceedings remain unresolved as the cases enter the sale phase:

The sale process faces several identified risks. The 17-day bid-to-closing schedule leaves minimal time for due diligence complications, regulatory approvals, or post-auction dispute resolution. The extensive landlord objections to the bidding procedures could result in modifications to the sale process or complications at the sale hearing, particularly regarding shopping center leases under Section 365(b)(3). If no third-party bid satisfying the WBS Ad Hoc Group’s expectations emerges, the auction may result in a credit bid that leaves no sale proceeds for junior creditors. And the alignment of the DIP Maturity Date with the Sale Hearing creates significant execution pressure — any delay in the sale process could trigger a DIP default.

As of April 10, 2026, the Chapter 11 cases of Axip Energy Services, LP and six affiliated debtor entities have reached a pivotal juncture. The Court entered the Sale Order on April 6–7, 2026, approving the transfer of substantially all of the Debtors’ assets to stalking horse bidder Service Compression, LLC for a base purchase price of $161 million. The auction was cancelled after no qualified competing bids materialized, and the sale closing was targeted for approximately April 8, 2026, though confirmation of closing had not yet appeared in the record as of the date of this report.

Several matters remain pending. The IP sale objection deadline passed on April 10, 2026. The Castex compressor sale objection resolution deadline is April 15, 2026. The Committee’s general Challenge Period extends through May 4, 2026, and the stalking horse APA’s Outside Date is approximately May 8, 2026. No Chapter 11 plan has been filed; a Holdback Amount of not less than $8.5 million has been reserved from sale proceeds to fund estate administrative costs, professional fees, and limited distributions.

Axip Energy Services, LP is a privately held natural gas contract compression services provider headquartered in Houston, Texas. Founded in 2002 as Valerus Compression Services LP and renamed in 2014, the company was acquired by Energy Spectrum Capital LP through an affiliated fund in September 2022. Axip is the primary operating entity within a corporate family of twelve entities, seven of which are debtors in the Chapter 11 cases.

The Debtors serve an active customer base of more than 55 companies, including super majors, investment-grade upstream producers, and midstream companies. The contracted fleet consists of approximately 940 compression units with approximately 326,070 total horsepower, distributed across seven facilities in Texas, New Mexico, and North Dakota. More than 25% of the fleet is electric-motor driven, and the Debtors maintain a fleet of more than 120 skid-mounted auxiliary natural-gas coolers. The company operates two primary service lines: gas lift (comprising more than 70% of assets) and gathering compression (approximately 30%).

The workforce at the time of filing consisted of approximately 149 employees (108 hourly and 41 salaried), one independent contractor, and one temporary worker. There were no union representation or collective bargaining agreements.

The CRO’s first day declaration identified four principal causes of the Debtors’ financial distress, each compounding the others to create a structural revenue shortfall that cost-cutting measures could not resolve.

In response, the Debtors undertook significant operational cost reductions: minimizing capital expenditures, deferring maintenance, limiting operating expenses, ceasing zero-hour projects, closing the offshore office, and restricting overtime. These measures proved insufficient to address the structural revenue shortfall.

As of the Petition Date, the Debtors carried approximately $240.5 million in total funded debt across three facilities, all of which had matured or were about to mature. This total significantly exceeded the stalking horse purchase price of $161 million, establishing from the outset that unsecured creditors—and likely even the Second Lien creditors—would receive minimal or no recovery absent extraordinary circumstances.

The Superpriority and ABL obligations were secured by first-priority liens on substantially all assets (pari passu, subject to payment priorities under a Collateral Agency Agreement), while the Second Lien obligations were secured by second-priority liens on the same collateral. Outstanding trade claims totaled approximately $17–$20 million. The Debtors maintained seven bank accounts at JPMorgan Chase with a combined balance of only approximately $700 as of the Petition Date, underscoring the extreme liquidity constraints.

The Debtors engaged Evercore Group L.L.C. as investment banker in March 2025 and initially pursued a refinancing process. That effort was extensive: 85 parties were contacted, 55 executed non-disclosure agreements, 13 indications of interest were received, and 9 second-round participants advanced. No party, however, was willing to refinance at a level sufficient to satisfy existing obligations.

When refinancing proved unattainable, the Debtors pivoted in September 2025 to a sale process. Key governance changes accompanied this pivot: an Ankura Consulting professional was appointed Chief Restructuring Officer, an independent member was added to the executive committee, and Vinson & Elkins LLP was engaged as restructuring counsel.

Service Compression, LLC was identified as the highest and best bidder, and the stalking horse APA was executed on February 16, 2026—six days before the Petition Date of February 22, 2026.

Forbearance Chain

Between September 2025 and the Petition Date, the Debtors and their secured lenders executed a complex series of forbearance agreements and amendments to maintain the status quo during the sale process. The incremental tranches provided to the Superpriority Facility ($850,000 in October 2025 and $1,922,591 in February 2026) reflected emergency liquidity injections that kept the company operational. An insurance advance of approximately $873,000 on the eve of filing ensured continuity of insurance coverage through the Chapter 11 period.

The DIP Financing Motion was filed on February 23, 2026, seeking authorization for a senior secured superpriority, priming debtor-in-possession multi-draw term loan credit facility in the aggregate principal amount of approximately $104.83 million. The DIP comprised only approximately $25.51 million in new money, with the remaining approximately $79.32 million consisting of cashless roll-up conversions of prepetition obligations.

The roll-up mechanism operated in three distinct phases. First, the full Superpriority Facility ($13.16 million) was rolled up on a cashless basis upon entry of the Interim Order. Second, between the Interim and Final Orders, a daily “creeping” roll-up applied the Debtors’ collections to reduce ABL obligations and readvance those amounts as DIP Loans, totaling approximately $6.3 million. Third, upon entry of the Final Order, a single bulk cashless exchange converted approximately $59.9 million of remaining ABL obligations into DIP Loans.

Key Financial Terms

The DIP carried an interest rate of 6.50% per annum plus the Alternate Base Rate. The Maturity Date was the earlier of 90 days from the Petition Date (approximately May 23, 2026), consummation of an Approved Sale, the effective date of an Acceptable Plan, or acceleration following an Event of Default. The 13-week budget permitted an aggregate unfavorable disbursement variance of no more than 15%, excluding professional expenses and adequate protection payments.

Carve-Out Structure

Waivers

The DIP Orders included three significant waivers: (1) Section 506(c) surcharge waiver, precluding surcharge of DIP or prepetition secured parties’ collateral; (2) Section 552(b) “equities of the case” waiver, limiting the court’s ability to restrict secured creditors’ interest in postpetition proceeds; and (3) a marshaling waiver. These waivers are standard features of DIP orders in the Southern District of Texas, though they remain controversial from the perspective of unsecured creditors.

The Official Committee of Unsecured Creditors, appointed on March 5, 2026, filed its objection to the DIP Motion on March 16, 2026. The objection raised six principal challenges: (1) the DIP structure constituted a sub rosa plan; (2) the 3.11:1 roll-up ratio was excessive; (3) the adequate protection package was overbroad, particularly the $950,000 in cash payments to Second Lien parties likely “out of the money”; (4) the Section 506(c), 552(b), and marshaling waivers stripped the estate of valuable rights; (5) the $50,000 investigation budget was insufficient; and (6) the challenge period was too compressed.

All objections were ultimately withdrawn, resolved, or overruled prior to entry of the Final DIP Order on March 18, 2026. The Final Order incorporated several negotiated modifications reflecting the Committee’s advocacy.

The resolution reflects a negotiated outcome common in the Southern District of Texas: the Committee achieved incremental improvements to investigation rights and challenge periods but did not fundamentally alter the DIP structure or the roll-up mechanism. Notably, the Committee’s request to carve out avoidance proceeds from DIP liens was not granted.

The Emergency Bidding Procedures Motion was filed on February 23, 2026, and the Bidding Procedures Order was entered on March 5, 2026—eleven days after the Petition Date. Service Compression, LLC was designated as the stalking horse bidder.

Bidding Results

Five bids were received by the March 30, 2026 Bid Deadline. Three were “Partial Bids,” each seeking to purchase individual compressor units comprising less than 2% of the Debtors’ total units; the assets overlapped, the bids could not be combined, and Service Compression was unwilling to carve out the relevant units. One bid was for IP assets (from the CEO’s affiliated entity), and one was for a single offshore compressor (from Castex Energy). None constituted a Qualified Bid for the primary assets. The independent member of the executive committee cancelled the auction and declared Service Compression the Winning Bidder at the stalking horse price.

The Sale Order, entered April 6–7, 2026, approved the sale of substantially all assets to Service Compression, LLC free and clear of all liens, claims, interests, and encumbrances under Sections 105, 363, and 365 of the Bankruptcy Code. The Court found Service Compression to be a good faith purchaser entitled to protections under Section 363(m), determined that no successor liability attached, and concluded that the sale did not constitute a sub rosa plan.

Proceeds Allocation Waterfall

Cure Costs

Delinquent ad valorem taxes are payable within 10 business days of closing from sale proceeds set aside before other disbursements, and 2026 taxes become the Purchaser’s responsibility.

Northbase Finance Inc.

Northbase filed a Limited Objection on March 20, 2026, challenging the assumption and assignment of a Master Equipment Lease Agreement free and clear of Northbase’s perfected security interest. Northbase argued that an assumption and assignment under Section 365 cannot extinguish a contractually granted security interest integral to the lease instrument. The objection was resolved through negotiation: a $37,000 cure cost was agreed upon, and the Master Lease was specifically exempted from the “free and clear” provisions—Northbase’s security interest was preserved.

Texas Taxing Authorities

A Joint Limited Objection was filed on March 27, 2026, raising concerns about extinguishment of ad valorem tax liens without payment at closing, extinguishment of 2026 tax liens for taxes not yet due, and credit bids that did not include assumption of tax lien obligations. The Sale Order resolved these concerns by requiring delinquent ad valorem taxes to be paid within 10 business days of closing from sale proceeds set aside before other disbursements, with 2026 taxes becoming the Purchaser’s responsibility. This pre-disbursement set-aside effectively gives the tax authorities payment priority ahead of the secured creditor waterfall.

Castex Compressor Sale

The Debtors sought approval to sell a single compressor unit (Axip Unit #A7252) located on the Oyster Bayou Production Barge in Terrebonne Parish, Louisiana, to Castex Energy, Inc., the existing customer at whose facility the unit was located. The purchase price was $160,089, consisting of $136,000 for the compressor unit plus $24,089 in outstanding invoices owed by the Debtors to Castex. The existing services contract was terminated in connection with the sale. The objection resolution deadline was set for April 15, 2026.

Intellectual Property Sale

The Debtors noticed the sale of a portfolio of intellectual property assets—the “Sustainable Products Group,” including two issued U.S. patents, one pending application, multiple international filings, license agreements, proprietary designs, prototypes, and test equipment—to E4 Energy Services, LLC, an entity controlled by the CEO, for $1.00 cash plus assumption of post-closing liabilities. The assets related to sustainable compression technology, methane-free seals, and carbon capture, and had never been used in the Debtors’ operations or generated revenue.

Employee Wages & Benefits

The Court authorized prepetition employee compensation and benefits obligations on February 24, 2026, subject to an aggregate cap of $858,000. This encompassed employee wages ($438,700), withholding obligations ($111,000), health and welfare programs ($213,200), 401(k) obligations ($46,100), and various other items. PTO cash-out obligations of approximately $375,700 were identified as contingent obligations triggered only upon termination.

Critical Vendors, Lien Claimants & 503(b)(9) Claimants

The Interim Order authorized $4.1 million in aggregate payments (Critical Vendors: $500,000; Lien Claimants: $3.6 million). The Final Order, entered March 18, 2026, increased the aggregate authorization to $6,948,000, adding the 503(b)(9) claimant category ($1,048,000) and introducing a Vendor Agreement form requiring vendors to agree to Customary Trade Terms, with a Section 549(a) clawback mechanism preserved for non-compliant vendors.

Adequate Protection for Second Lien Parties

The Second Lien Settlement embedded in the DIP Orders required the 2L Agent and Lenders to covenant to cooperate with and support the sale process, eliminating a potential source of delay or litigation that could have jeopardized the compressed sale timeline.

The Axip case proceeded on one of the most compressed timelines observed in the Southern District of Texas. All DIP milestones were satisfied on or before their respective deadlines.

Sale closing was targeted for approximately April 8, 2026, though confirmation of closing had not yet appeared in the record as of the documents reviewed. The IP sale and Castex compressor sale proposed orders remain pending. No Chapter 11 plan has been filed; the Holdback Amount of $8.5 million is intended to fund winddown and plan distributions.

On March 15, 2026, Reliz Technology Group Holdings Inc. and three affiliated debtor entities—collectively operating under the trade name “BlockFills”—filed Chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware before the Honorable Thomas M. Horan. The filings followed years of cascading financial losses, two prepetition customer lawsuits with temporary restraining orders, and the collapse of multiple recapitalization attempts.

Less than four weeks after the Petition Date, the Debtors filed a Joint Chapter 11 Plan, a Disclosure Statement, and a Solicitation Procedures Motion on April 7, 2026, establishing a compressed timeline targeting a June 22, 2026 Confirmation Hearing. The Plan features a dual-track “toggle” mechanism allowing the Debtors to elect between a customer-led NewCo Transaction and an Alternative Transaction through a Section 363 competitive sale process.