Anderson Hay Enterprise - Chapter 11 Plan Terms

Plan Terms

Overview

• The Debtors filed their Joint Disclosure Statement for Debtors' Joint Plan of Reorganization (the "Disclosure Statement") pursuant to 11 U.S.C. § 1125 and Bankruptcy Rule 3016(c), which the Bankruptcy Court has approved as satisfying the requirements of Bankruptcy Code § 1125(a) and (b).
• The Debtors are Anderson Hay Enterprise, Inc. ("Enterprise") (Case No. 25-02074); Anderson Hay & Grain Co., Inc. ("AHG") (Case No. 25-02075); Anderson Agri LLC ("Agri") (Case No. 25-02076); M T A Farms LLC ("MTA Farms") (Case No. 25-02077); Anderson Pet Holdings LLC ("Pet Holdings") (Case No. 25-02078); MTA Holdings, L.L.C. ("MTA Holdings") (Case No. 25-02079); and MTA Ranch, LLC ("MTA Ranch") (Case No. 25-02080).
• The Plan provides for full payment of all Allowed Claims not later than the Plan Deadline, from either the proceeds of a Refinancing or a Transaction (each, a "Financial Event"), in either case in an amount sufficient to satisfy all Allowed Claims in full.
  • The Debtors are in a position to provide such treatment due in large part to their voluntary pre-Confirmation asset sales, which have substantially reduced outstanding debt, and extensive internal restructuring efforts.
  • The Debtors anticipate, and the Plan provides for, a single distribution in full satisfaction of all Allowed Claims from a Financial Event, free and clear of any Liens, interests or encumbrances. The Reorganized Debtors shall act as the Disbursing Agent.
• Key dates:
  • Petition Date: November 26, 2025.
  • Effective Date: The fifth (5th) Business Day following Confirmation.
  • Plan Deadline: October 31, 2026.

Structural and Operational Changes

• Organizational Changes: As of the Petition Date, Enterprise (also referred to as 'AHE') owned (directly or indirectly) seven separate entities — the Debtor entities Agri, AHG, MTA Farms, and Pet Holdings, plus three non-Debtor entities. On or before the Effective Date, all but one of those seven entities (AHG) will be dissolved and eliminated, with the assets and liabilities of all such dissolved entities transferred to AHG.
• Termination of Oregon Operations:
  • The Debtors have historically operated a facility owned by MTA Holdings located in Aurora, Marion County, OR (the "Oregon Facility"), which MTA Holdings leases to AHG and which has primarily produced double-compressed Oregon Grass Straw. The facility has carried high fixed costs and produced inconsistent earnings with high volatility.
  • The Debtors entered into an agreement with Millicent Property Co., LLC for the purchase and sale of the Oregon Facility and related equipment for $10.75 million. On April 21, 2026, the Bankruptcy Court approved the Oregon Sale Motion (filed March 27, 2026), and the sale is expected to close prior to the end of May 2026.
  • All net proceeds will be paid to PGIM in connection with its security interests in the assets being sold. The exit will result in a reduction of 29 positions, reduced operating risk and volatility, with little long-term impact on operating margins.
• Exit from Online Small Pet Market:
  • Pet Holdings, a small pet direct-to-consumer supplier marketing hay-based products, bedding, and toys mainly through Amazon and other online channels, will exit the online small pet market. Pet Holdings has no employees (AHG and other Debtors provide production, packaging, and logistics services), few tangible assets, and value residing primarily in its brand, online marketplace presence, and customer relationships.
  • Benefits include discontinuing negative-margin operations totaling approximately $100,000 in FY25 and a projected loss of $300,000 for FY26; discontinuing Amazon sales in favor of retail; and discontinuing small volume custom packaging for small pet product producers.
• Reorganization of the Agri Business Model:
  • For crop year 2024, Agri lost approximately $3 million due to contracting issues under terms where Agri assumed all weather and grade risks. Going forward, the Debtors will predominantly enter into contracts with growers where weather, grade, and yield risks are shared with the grower, with a shift in acreage toward increased production of Timothy hay (especially first cutting), which is inherently less volatile.
  • The Debtors will shift away from most harvesting activities and contract that activity to third parties, allowing the liquidation of excess owned harvesting equipment (rakes, balers, stackers, pickups and other related equipment) by auction, anticipated to yield approximately $600,000. Various leases will be rejected and tractors and swathers returned, with short-term rentals as necessary.
  • The shift will allow for a reduction of year-round Agri staff from 22 to 5 for FY27.
  • Agri has modified payment terms with growers from a fixed schedule to either 10% of contract value per month starting 30 days after harvest or payments based on delivery of hay to the Ellensburg plant or loading of trucks for direct delivery from the field.
• Modified AHG Grower Payment Terms:
  • AHG's contracts historically required 30% down at contracting, 30% in the Fall, 30% between January and March, and the balance upon closeout, creating a cash-flow challenge of fixed outflows against variable inflows. AHG now makes payments to growers on the last Friday of the month for all activity in the prior month.
• Optimization of the Washington Plant (owned by MTA Holdings, leased to AHG):
  • Staff Reductions: Plant Staff reduction of 12 positions ($600,000) and Buyers Staff reduction of 1 position ($110,000).
  • Equipment Reduction: Sales or returns of excess equipment; Semi-trucks lease reduction from 35 to 12 (FY24 to FY26); Forklifts lease reduction of 7 in FY26 ($1,000–$3,000/unit/month), with estimated savings of $240,000 annually.
  • Facility Leasing: MTA Holdings entered into leases of underutilized facilities to Pape and WinCo, effectively reducing AHG's rent by $700,000 per year, with additional reductions in taxes and repair and maintenance expenses under triple net leases.
• Sales and Administrative Changes: Tasks and responsibilities are being reshuffled such that thirteen positions are being eliminated, yielding annual savings of approximately $2.5 million. The Debtors are also standardizing internal reporting requirements and eliminating intercompany transaction activity.
• Reduction in Working Capital Borrowing:
  • Working capital needs peaked in November 2018 at a line of credit balance of approximately $36 million, but were generally around $25 million in subsequent years.
  • AgWest, the Debtors' line of credit lender, has been actively seeking to exit this credit and has sequentially reduced availability from $35 million (October 2022) to $25 million (a year later), then to $22 million (March 2025) and to $15 million (May 2025).
  • The Debtors' strategic reorganization efforts target a much less volatile working capital requirement and a much-reduced line of credit availability need going forward.

Sales of Non-Operating Assets

• The Debtors are aggressively selling assets that are not necessary to their core business operations:
  • On February 18, 2026, non-debtor MTA Chelan LLC sold valuable property on Lake Chelan for $10,075,000, which resulted in a reduction in the amount of AgWest's Claim of more than $9.3 million.
  • MTA Holdings' pending sale of the Oregon Facility for $10,750,000.
  • MTA Holdings is marketing two other real properties for sale, expected to yield approximately $8 million in proceeds (both subject to liens in favor of PGIM).
  • AHG will be selling various equipment after it ceases operations at the Oregon Facility, and the Debtors will be selling excess and underutilized equipment maintained at their main facility in Ellensburg, Washington.
  • Agri will be selling surplus equipment by auction as the Debtors reduce harvesting activities, with anticipated total proceeds from equipment sales of approximately $600,000, the net proceeds of which will be applied to further debt reduction.
• In total, the Debtors anticipate paying down more than $26.5 million in pre-petition secured debt with these asset sales.

Classification and Treatment of Claims and Interests

• The Plan establishes twenty-two Classes of Claims and seven Classes of Equity Interests, with certain other Claims as Unclassified Claims. Each Class of Claims and Interests is impaired under the Plan.
• Unclassified Claims:
  • Administrative Expense Claims: Claims incurred in the ordinary course following the Petition Date will be paid in the ordinary course; Professional Persons' Claims will be paid on the latest of (i) the Effective Date, (ii) the date each becomes Allowed, or (iii) three Business Days after unencumbered funds become available; all other Allowed Administrative Expense Claims incurred prior to Confirmation shall be paid on or before the Effective Date.
  • Priority Tax Claims: The IRS filed claims against Enterprise, Pet Holdings, AHG, and Agri totaling $212,721.51 for estimated tax obligations for returns not yet due or claimed unfiled. The Debtors have filed all required returns through FY25 for AHE and through year-end 2025 for Mark Anderson (which includes MTA Holdings and MTA Ranch), and no taxes are due. The Debtors will work with the IRS to amend or object to the claims as necessary. The Plan makes no provision for any payment on Priority Tax Claims.
  • Other Priority Unsecured Claims: The Debtors did not schedule any non-governmental priority unsecured claims. The Washington Employment Security Department and the Massachusetts Department of Revenue filed claims totaling $2,001.78, which will be paid in full on the Effective Date.
  • MTA Holdings Obligation: Enterprise is obligor on a Promissory Note and Security Agreement dated October 10, 2023, in favor of MTA Holdings in the amount of $4,554,000.00 as of the Petition Date, secured by Enterprise's fixtures, inventory, equipment, instruments, documents, accounts, chattel paper, deposit accounts, and letter of credit rights. MTA Holdings agrees to subordinate its Lien and Claim to all other Allowed Claims, with no payment until all other Allowed Claims have been paid in full.
• Secured Claims (Classes 1–15): Each shall be allowed in an amount agreed by the Debtors and the Holder (or fixed by the Court following Notice and Hearing if no agreement is reached). If not sooner satisfied, each shall be paid in full in Cash on the earlier of (i) a Financial Event, or (ii) the Plan Deadline (except Classes 11 and 13, which shall be paid in Cash pursuant to the existing terms of the documents evidencing such Claims). Each Holder retains its Liens, rights and privileges until paid in full, and interest accrues on the unpaid balance at the contract (non-default) rate.
  • Class 1: Secured Claim of PGIM (PGIM-200 Loan) — amount to be agreed (approximate principal balance of $7,499,999.95 as of March 31, 2026).
  • Class 2: Secured Claim of PGIM (PGIM-201 Loan) — amount to be agreed (approximate principal balance of $2,999,999.95 as of March 31, 2026).
  • Class 3: Secured Claim of PGIM (PGIM Note 3 Loan) — amount to be agreed (approximate principal balance of $4,500,000.00 as of the Plan Date.
  • Class 4: Secured Claim of AgWest (AgWest LOC Loan) — amount to be agreed (approximate principal balance of $12,167,376.19 as of March 5, 2026).
  • Class 5: Secured Claim of Ally (AHG) — $394,113.61.
  • Class 6: Secured Claim of Ally (Agri) — $446,651.19.
  • Class 7: Secured Claim of Ally (MTA Ranch) — $36,667.75.
  • Class 8: Intentionally deleted.
  • Class 9: Secured Claim of Agco (Agri) — $541,912.60.
  • Class 10: Secured Claim of CNH (Agri) — $120,343.32.
  • Class 11: Secured Claim of Smith (MTA Holdings) — $34,304.57.
  • Class 12: Secured Claims of DFS (MTA Ranch) — principal amounts of $140,391.49 and $154,660.68.
  • Class 13: Secured Claim of DeWitte (MTA Ranch) — $548,240.24.
  • Class 14: Secured Claim of AgDirect (AHG) — $22,134.73.
  • Class 15: Secured Claim of Lincoln Financial (AHG) — $50,641.79.
• General Unsecured Claims (Classes 16–22): Each Class consists of all Unsecured Claims against the applicable Debtor, allowed in the amounts set forth in the corresponding Exhibit (or fixed by the Court following Notice and Hearing if no agreement is reached), and shall, if not sooner satisfied, be paid in full in Cash on the earlier of (i) a Financial Event, or (ii) the Plan Deadline.
  • Class 16: GUCs against AHG (Exhibit A).
  • Class 17: GUCs against Agri (Exhibit B).
  • Class 18: GUCs against AHE (Exhibit C).
  • Class 19: GUCs against Pet Holdings (Exhibit D).
  • Class 20: GUCs against MTA Farms (Exhibit E).
  • Class 21: GUCs against MTA Holdings (Exhibit F).
  • Class 22: GUCs against MTA Ranch (Exhibit G).
• Equity Interests (Classes 23–29): Existing Holders shall continue to hold their Equity Interests on and following the Petition Date, provided that no distributions on account of such Equity Interests will be made until all Allowed Claims are paid in full. For Classes 26–29, ownership may be altered by the Debtors' internal restructuring.
  • Class 23: Equity Interests in AHE (Mark T. Anderson).
  • Class 24: Equity Interests in MTA Holdings (Mark T. Anderson).
  • Class 25: Equity Interests in MTA Ranch (Mark T. Anderson).
  • Class 26: Equity Interests in Agri (held by AHE).
  • Class 27: Equity Interests in AHG (held by AHE).
  • Class 28: Equity Interests in MTA Farms (held by AHE).
  • Class 29: Equity Interests in Pet Holdings (held by AHE).

Voting

• Pursuant to §§ 1126(a) and 1129(a)(8) of the Bankruptcy Code, each Holder of a Claim or Interest is entitled to return a Ballot accepting or rejecting the Plan.
• Pursuant to § 1129(b), in the event a Class does not accept the Plan, the Debtors request that the Court confirm the Plan without the consent of such non-accepting Class.

Executory Contracts and Unexpired Leases

• The Plan constitutes a motion to assume each of the Executory Contracts and Unexpired Leases set forth in Exhibit H pursuant to Bankruptcy Code § 365(a) and (f). Any Cure owing in connection with an Assumed Contract or Assumed Lease shall be paid in full in a single payment due not later than thirty (30) days following the Effective Date.
  • Counterparties asserting Cure must file a timely objection to Confirmation setting forth an itemized amount; failure to do so constitutes consent to assumption without payment of any Cure, and any Claim for Cure shall be deemed waived and released.
• The Plan also constitutes a motion to reject all other Executory Contracts and Unexpired Leases as of the Effective Date.
  • Any rejection damages Claim is a Class 16, 17, 18, 19, 20, 21 or 22 Claim depending on the counterparty Debtor, but only to the extent it is an Allowed Claim.
  • A Proof of Claim must be filed within thirty (30) days after the Effective Date; failure to do so will result in disallowance.

Claims Objections and Disputed Claims

• The deadline to object to Claims shall be sixty (60) days after the Effective Date (the "Claim Objection Deadline"). After the Effective Date, the Reorganized Debtors may settle or compromise any Claim controversy without notice or further order of the Court.
• On the Effective Date, the Debtors shall be deemed to have assigned to the Reorganized Debtors all defenses, counterclaims, and setoffs.
• No distribution shall be made to a Holder of a Disputed Claim until allowance; distributions to other Holders in the Class are not affected by the existence or delay of resolution of a Disputed Claim. Upon allowance, the Holder shall be paid the amount it would have received had the Claim been Allowed on the Effective Date.

Causes of Action

• On the Effective Date, the Debtors shall be deemed to have assigned to the Reorganized Debtors all claims and causes of action against any other party, including Avoidance Actions (the "Causes of Action"). Pursuant to § 546(a), the deadline to pursue Causes of Action is two years following the Petition Date.
• Because the Plan provides for full payment of all Allowed Claims, the Reorganized Debtors do not intend to pursue any Causes of Action unless they are unable to pay all Allowed Claims in full by the Plan Deadline. In that event, after evaluating the risks and expense, the Reorganized Debtors may investigate, pursue, prosecute and/or settle such Causes of Action without further notice or order of the Court, with all Net Proceeds distributed Pro Rata to Holders of unsatisfied Allowed Claims.

Reorganized Debtors and Cancellation of Indebtedness

• On the Effective Date, each Debtor, as Reorganized Debtor, shall continue to exist in accordance with applicable law and its corporate governance documents (as amended under the Plan), with all property vesting in the relevant Reorganized Debtor free and clear of all Claims, Liens, charges, other encumbrances and interests, except those required to be granted or continued under Article IV.
• The Reorganized Debtors may operate, use, acquire, and dispose of property without Bankruptcy Court supervision in the exercise of ordinary business judgment, and shall be authorized to employ and compensate Professional Persons following Confirmation upon such terms as they deem reasonable without further Court order.
• On the Effective Date, except for evidencing rights to distribution and preservation of Liens and security interests under Article IV.B, all notes and instruments evidencing indebtedness or interests in the Debtors (other than assumed executory contracts or unimpaired/reinstated/amended-and-restated obligations) shall be cancelled and terminated. Any negotiable instrument held by a Claim Holder shall be deemed exchanged, canceled or satisfied on the Effective Date.
• The Committee shall be deemed dissolved as of the Effective Date. Committee professionals must file final fee applications within thirty (30) days following the Effective Date or amounts owed may be disallowed.

Exculpation

• To the maximum extent permitted by applicable law, no Exculpated Party shall have or incur any liability for conduct occurring on or after the Petition Date through and including the Effective Date in connection with the filing and administration of the Chapter 11 Cases; the Cash Collateral Orders, Disclosure Statement, and Plan; the funding or consummation of the Plan; or the transactions in furtherance thereof, except for acts or omissions constituting gross negligence, fraud, or willful misconduct as determined by a Final Order.
• Exculpated Parties: The Debtors and each of their members, attorneys, consultants, financial advisors, accountants, and other advisors and agents (acting in such capacity).

Default Provisions

• An event of default occurs if the Reorganized Debtors fail to fulfill any material term of the Plan, including any payment due, following expiration of any applicable cure period.
• The asserting party must provide a written Default Notice to the Reorganized Debtors and their counsel. If, after thirty (30) days, the default is unresolved or uncured, the asserting party may proceed with any remedies available under applicable law, without limiting the Reorganized Debtors' right to seek relief from any court of competent jurisdiction.

Tax Provisions

• Pursuant to Bankruptcy Code section 1146(a) and WAC 458-61A-207, any sale of real property located in Washington State following Confirmation shall not be subject to any real estate excise tax or any other tax within the scope of section 1146(a).