Avenger Flight Group - Chapter 11 Case Summary

Business Description

Headquartered in Fort Lauderdale, Florida, AFG LLC, along with its debtor and non-debtor affiliates (collectively, "Avenger" or the "Company"), operates as a global leader in commercial aviation simulation and flight training.

• Avenger provides a full suite of advanced flight simulator training solutions to customers that include blue-chip passenger airlines, low-cost carriers, regional airlines, charter operators, and training operators.
• As of the Petition Date, the Company operates across 11 training centers in four countries, specifically (a) 50 full-flight simulators, of which 23 are owned by the Company, 12 are leased, 11 are housed and maintained, and four are subject to servicing agreements; and (b) 15 flight training devices, of which six are owned and nine are serviced by the Company.

Avenger holds a critical and strategic position in the "pilot pipeline." After pilots reach their required minimum flight hours to join an airline, nearly all subsequent training is conducted in advanced simulators. Because it can cost as much as 25 times more to train in physical aircraft, commercial airlines use regulatory-approved advanced simulators to provide their crews with mandated initial courses, recurrent training, and upgrade training.

• Commercial airlines have increasingly used third-party simulator providers like Avenger to avoid the capital outlay associated with purchasing from a limited supply of simulators and to quickly add or reduce training capacity based on need.

With more than 250,000 estimated new pilots that will be needed worldwide by 2032 to account for pilot retirements and industry growth, Avenger is well-placed to serve an essential market need for years to come.

Mandatory Flight Training Requirements

Across the globe, regulators like the Federal Aviation Administration and the European Union Aviation Safety Agency mandate extensive flight training for all airline pilots. These training requirements generally fall into three types:

• Initial pilot training is designed for crewmembers operating a new type of aircraft for the first time. Initial training is a preliminary course that provides the essential skills and knowledge for a pilot, covering areas like aircraft systems and emergency procedures.
• Recurrent pilot training is ongoing mandatory training to maintain and update a pilot's skills and knowledge after their initial certification. Recurrent pilot training happens at regular intervals—typically every six to twelve months for commercial pilots and every 24 months for general aviation pilots—and includes both ground school and simulator sessions covering normal procedures, abnormal situations, and emergencies. The goal of recurrent pilot training is to reinforce safety, correct deviations in routine, and ensure pilots are well-prepared for a wide range of scenarios.
• Upgrade pilot training is the training required for a flight crew member who has served as a second in command on a specific type of aircraft to become a pilot in command of that same type of aircraft. Upgrade pilot training includes the knowledge and skills necessary for a pilot to serve as a pilot in command, including proper control of the aircraft and adherence to procedures.

In addition, many commercial airlines require their flight crews to undergo airline-specific training that focuses on company-specific operating procedures, proprietary safety protocols, customer service expectations, and coordination within the airline's unique operational environment. Ensuring pilots complete all mandatory flight training is essential to the airline industry; if a crew member does not timely complete mandatory flight training, they cannot fly.

The aviation industry faces many pilot retirements over the next decade, with approximately 4% of the pilot workforce retiring each year. At the same time, the airline industry continues to grow, with approximately 16,000 new business and commercial aircraft expected to join the active civil aviation fleet by 2032. As a result, industry experts project that over 250,000 new commercial airline pilots will be needed and will enter the "pilot pipeline" by 2032.

Airlines, particularly low-cost carriers, have increasingly turned to third-party simulator providers to avoid the high initial capital outlay associated with purchasing the limited supply of flight training devices and full-flight simulators necessary for mandatory flight training. Third-party simulator providers, however, are themselves highly regulated. The process for third-party providers to obtain an FAA certification in the United States under 14 CFR Part 142, for example, involves a large capital outlay and rigorous evaluations and inspections, with Part 142 setting high standards for flight training curriculum, facilities, equipment, instructor qualifications, and safety protocols.

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Corporate History

Avenger was founded in 2012 with the aim of delivering cost-effective training solutions to rapidly expanding airlines like Spirit. Avenger began with a single location and two full-flight simulators in Fort Lauderdale, expanding to a second location (and two more full-flight simulators) in Las Vegas by 2015.

To meet the needs of its growing customer base, over the next decade, Avenger established additional domestic facilities (some in an airline customer's existing facilities) in Fort Worth, Irving, Orlando, and Minneapolis, and overseas facilities in Monterrey, Madrid, Cancun (closed in 2024), Mexico City (at the AeroMexico Training Center), Medellin, Rome (closed in 2022), Warsaw (sold in 2025), Frankfurt, and Tel Aviv (sold in 2025).

2024 Restructuring and Management Changes

Beginning in 2023, Avenger began exploring opportunities to streamline its balance sheet through a recapitalization or other financing transaction. Through 2023 and 2024, the Company received interest in such a transaction from new financing sources, though none of the proposals were actionable, as none of the proposals were close to providing sufficient financing to address the Company's existing Prepetition Term Loan Obligations.

• Through this process, however, Avenger reached agreement with its existing stakeholders on the terms of restructuring transactions, which were consummated in July 2024 (the "2024 Restructuring").
• Through the 2024 Restructuring, among other things, Avenger refinanced its secured term loan facility with its existing lenders (i.e. the Prepetition Term Loan Secured Parties) and obtained equity financing from funds associated with Seacoast Capital Partners and Patriot Capital, who previously owned approximately 45% of the equity in the Company and, after the 2024 Restructuring, owned 96.69% of the Company's equity.
• Following the 2024 Restructuring, Topco's board of managers consisted of six individuals: two appointed by Seacoast, two appointed by Patriot, and two appointed by the Prepetition Term Loan Lenders.

Following the 2024 Restructuring, several members of senior management were relieved of their positions by the Company, including its former CEO, CFO, and Vice President of Finance.

• In March 2025, Marc Sullivan, an experienced financial professional with a substantial background in turnaround situations, was appointed as the Company's Chief Financial Officer.
• In April 2025, Hooman Yazhari was retained by the Company as an advisor to the Board and Board observer, and was given the title of Chairman.
• In May 2025, the Company retained SierraConstellation Partners as a consultant to assist with the preparation of cash flow models.

Prepetition Governance Changes

In August 2025, after the occurrence of certain undisputed events of default, the Prepetition Term Loan Agent exercised post-default rights under the Pledge and Security Agreement, dated as of June 25, 2021, and appointed Lawrence Perkins as independent manager of AFG LLC and each of its subsidiaries. After his appointment, Mr. Perkins member-managed AFG LLC and each of its subsidiaries, while the Board continued to manage Topco.

On November 14, 2025, Seacoast and Patriot abruptly informed the Company that they were exercising their put options and abandoning the equity they had received in the 2024 Restructuring and that the four Seacoast and Patriot managers were resigning from the Board. Thereafter, on November 21, 2025, the two Creditor Managers resigned and the Prepetition Term Loan Lenders appointed Mr. Perkins as the sole independent manager of the Board.

• On January 12, 2026, Mr. Perkins resigned as the manager of the Board and was named Chief Restructuring Officer of the Company as of January 20, 2026.
• As of January 13, 2026, Mr. Yazhari was named the sole independent manager of the Board and, in connection therewith, Mr. Yazhari resigned from all existing positions he held with the Company, including his role as Chairman, and waived all rights and claims he may have had against the Company arising prior to his appointment as Independent Manager.

Divestitures

In June 2025, Avenger's joint venture partner in Poland, Enter Air, purchased Avenger's interest in the joint venture. In December 2025, Avenger sold its Israeli assets to El Al, its customer in Tel Aviv.

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Operations Overview

Although the Company has an international footprint (and opportunities for additional growth in emerging markets), it remains headquartered in Fort Lauderdale, Florida, where it was founded.

As of the Petition Date, AFG LLC employs approximately 97 employees across the United States as follows: Dallas-Fort Worth 49, Fort Lauderdale 26, Las Vegas 9, Orlando 7, and Minneapolis-St. Paul 6.

Contract Structures

Avenger offers its customers several optimized contract structures that not only suit individual customers' needs, but maximize the use (and therefore revenue generated from) the Company's simulators:

• Dedicated Provider contracts are those in which Avenger's airline customer commits to exclusivity with the Company for advanced flight simulator training purposes. Among Avenger's customers with such contracts are Spirit Airlines, Viva Aerobus, Aeromexico, and El Al.
• Take-or-Pay contracts are those in which Avenger's customers, often legacy airlines or airlines with some in-house flight training, pay a fixed monthly rate for the ability to use the Company's advanced flight simulators. Among Avenger's customers with such contracts are Viva Aerobus.
• Minimum Guarantee contracts are those in which an airline partners with Avenger to utilize the Company's advanced flight simulators for a minimum number of hours per year. Among Avenger's customers with such contracts are Frontier Airlines.
• Power by the Hour Contracts are those in which airlines and other training providers can utilize Avenger's excess hourly capacity. Among Avenger's customers with such contracts are Avelo, Iberia Express, Air Europa, and DHL Europe.

In addition to providing its customers with access to state-of-the-art full-flight simulators and flight training devices, Avenger offers its customers other related services, including cabin crew training.

Corporate Structure and Management

As of the Petition Date, Hooman Yazhari serves as the sole Independent Manager of Topco and AFG LLC. AFG LLC's senior management is, as of the Petition Date, as follows: Chief Restructuring Officer Lawrence Perkins, Deputy Chief Restructuring Officer Ben Smith, Chief Executive Officer Eduardo Carrasco, Chief Financial Officer Marc Sullivan, and Senior Vice President and General Counsel Elsa Gagnon.

Topco is the direct or indirect parent of each of the Debtors and Foreign Non-Debtor Subsidiaries. The Company's principal operating entity is AFG LLC, although certain of the Company's domestic and foreign operations, assets, and liabilities lie with other Debtors and Foreign Non-Debtor Subsidiaries.

• Certain of the Debtors (the "U.S. SPV Debtors") were created to hold the Company's interests in specific full-flight simulators in accordance with the Company's lending or lease facilities. None of the U.S. SPV Debtors have any employees.
• In addition to the U.S. SPV Debtors, Debtor Avenger Flight Training, LLC holds the Debtors' FAA Part 142 certifications and qualifications. As of the Petition Date, Avenger Flight Training, LLC has four employees.

To facilitate Avenger's operations in Europe and Asia, the Company formed subsidiaries in, among other countries, Germany, Spain, and Israel (collectively, the "EMEA Non-Debtor Subsidiaries"), each of which is directly or indirectly wholly-owned by Debtor Avenger Flight Group Europe Corp., which is, in turn, wholly-owned by Debtor AFG SIM Holding Corp.

• As of the Petition Date, Avenger India and Avenger Italy have no assets, liabilities, or operations.
• Similarly, as of the Petition Date, Avenger Israel 737 has no assets, liabilities, or operations, except certain limited liabilities with respect to SIM International in connection with the purchase of an undelivered full-flight simulator that is no longer required for the Company's business.
• In addition to SIM Holding, AFG Europe, and the EMEA Non-Debtor Subsidiaries, Debtor AFG EU Operations Corp. was formerly used as part of the Company's European operations but, as of the Petition Date, has no assets, liabilities, or operations.

Certain of the Debtors (the "SCA SPV Debtors") were created to hold the Company's interests in specific full-flight simulators located in Mexico and Colombia in accordance with the Company's lending or lease facilities. Certain of the SCA SPV Debtors lease full-flight simulators to Debtor AFG LATAM Holding Corp., which, in turn, subleases the full-flight simulators to either non-Debtor Avenger Mexico or non-Debtor Avenger Colombia.

• Non-Debtor Mexico Management (together with Avenger Mexico and Avenger Colombia, the "SCA Non-Debtors") employs the Company's twelve employees that are located in Mexico.
• Each of the SCA Non-Debtors is wholly-owned by Debtor AFG LATAM, LLC.

Real Property Leases

As of the Petition Date, the Debtors are party to eleven real property leases with nine different landlords. The Real Property Leases relate to the Company's locations in Fort Lauderdale, Fort Worth, Irving, Las Vegas, Madrid, Orlando, Minneapolis, Monterrey, and Medellin.

• The Company subleases portions of nine of the Leased Premises to certain of its customers.
• The Debtors pay approximately $370,000 per month in rent on account of the Real Property Leases and receive approximately $140,000 per month in rent from sublessors of the Leased Premises.
• As of the Petition Date, the Debtors owe approximately $255,000 to certain of the Lessors on account of the Debtors' obligations under the Real Property Leases.

Operational Rightsizing

Avenger worked to right-size its operations. Between 2022 and the Petition Date, the Company's nascent and planned operations in Italy, Saudi Arabia, India, and Portugal were wound down. And in 2025, the Company sold its operations in Warsaw, Poland and Tel Aviv, Israel to its partners in each country.

Shortly after their appointment, the Company's new management team discovered significant accounting irregularities that affected all financial statements, insufficient financial controls, and inadequate processes. Since making these discoveries, the Company's management has been working to accurately restate the Company's financials and to put proper processes and controls in place.

• As of the Petition Date, the Company's new management team has successfully implemented strong and proper processes and controls at all of the Debtors and continue to implement such processes and controls at certain Foreign Non-Debtor Subsidiaries.
• None of the finance or accounting personnel who were responsible for the prior irregularities and lack of controls remain employed by the Company.

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Prepetition Obligations

Prepetition Term Loan Facility

Pursuant to that certain Credit Agreement, dated as of June 25, 2021 (as amended, amended and restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof, the "Prepetition Credit Agreement"), among (a) Avenger Flight Group, LLC, as the borrower, (b) Topco, (c) the other guarantors party thereto from time to time, (d) Wilmington Trust, National Association, as administrative and collateral agent, and (e) the lenders party thereto from time to time, the Prepetition Term Loan Lenders provided a secured term loan facility to certain of the Debtors.

• As of the Petition Date, the Credit Parties were indebted and jointly and severally liable to the Prepetition Term Loan Secured Parties in the aggregate principal amount outstanding under the Prepetition Term Loan Facility of not less than $273,051,488.11 (together with accrued and unpaid interest, any fees, expenses and disbursements, indemnification obligations, and other charges, amounts and costs of whatever nature owing).
• The Prepetition Term Loan Obligations include rescue financing advanced to the Debtors by the Prepetition Term Loan Secured Parties in September and December 2025. The Rescue Financing provided critical liquidity to support the Debtors' operations, meet the Debtors' payroll and vendor obligations, and provide the Company with the necessary runway to negotiate with their key stakeholders in the months leading up to the filing of the Chapter 11 Cases.
• As a result of the Rescue Financing, the Debtors were afforded a more orderly transition into bankruptcy, including negotiated resolutions with key stakeholders. The Rescue Financing reduced the need for a debtor-in-possession financing facility on a dollar-for-dollar basis.

In connection with the Prepetition Term Loan Facility, the Credit Parties granted to the Prepetition Term Loan Agent for the benefit of the Prepetition Term Loan Secured Parties, a security interest in and continuing lien on all Collateral (including Cash Collateral) and all proceeds, products, accessions, rents, and profits thereof, in each case whether then owned or existing or thereafter acquired or arising.

SIM International Agreements

Certain of the Debtors are party to agreements with SIM International B.V. and its affiliates (collectively, "SIM International") related to the construction (by SIM International) and lease (from SIM International to the Debtors) of full-flight simulators.

• As of the Petition Date, the Lessees under the SIM International Agreements are Avenger Spain, Avenger Germany, AFG Dallas IV, AFG Orlando, AFG Sanford, and AFG FLL.
• The Debtors' obligations under each of the SIM International Agreements are guaranteed by AFG LLC and secured by, among other things, each Lessee's rights in the applicable full-flight simulators.
• As of the Petition Date, the Debtors are party to SIM International Agreements related to eleven full-flight simulators.

The Company, SIM International, and the Prepetition Term Loan Lenders have engaged in good faith negotiations in an effort to settle the Company's obligations under the SIM International Agreements and provide a clear path forward for the critical ongoing relationship between SIM International and the Company (and the proposed Stalking Horse Bidder or other purchaser of its assets). The Company believes it has reached a settlement in principle with SIM International that will be finalized over the coming days.

EDC Facilities

Without acknowledging the validity, priority, enforceability, extent, or allowance of such claims and liens, the Debtors make reference to (i) that certain Loan Agreement, dated as of November 1, 2018, among LATAM Sim Holdings, a Florida limited liability company, Export Development Canada, as loan agent for the lenders, as a lender, and as security trustee (together, the "EDC Secured Parties"), and (ii) that certain Loan Agreement, dated as of July 11, 2019, among LATAM Sim Holdings IV, a Florida limited liability company, and the EDC Secured Parties.

• Pursuant to the EDC LATAM Loan Documents, the EDC Secured Parties provided loans to certain of the Debtors for the purchase of one TRU Simulation + Training Canada Inc. A320 flight simulator unit bearing manufacturer's serial number SN-00002635 and certain related assets, and the EDC LATAM Facility is purportedly secured by such assets and certain other related assets, including the equity interests of LATAM SIM Holdings, substantially all assets of LATAM SIM Holdings, and the rights and interests of LATAM SIM Holdings and certain of its subsidiaries in certain leases and subleases related to such assets.
• Pursuant to the EDC LATAM IV Loan Documents, the EDC Secured Parties provided loans to the Debtors for the purchase of one TRU Simulation + Training Canada Inc. A320 flight simulator unit bearing manufacturer's serial number SN-00002659 and certain related assets, and the EDC LATAM IV Facility is purportedly secured by such assets and certain other related assets, including the equity interests of LATAM SIM Holdings IV, substantially all assets of LATAM SIM Holdings IV, and the rights and interests of LATAM SIM Holdings IV and certain of its subsidiaries in certain leases and subleases related to such assets.

Unsecured Shareholder Notes

AFG LLC is the borrower under a series of interest-bearing unsecured promissory notes issued to certain parties. Pursuant to that certain Subordination Agreement dated as of June 25, 2021, as amended and restated on July 15, 2024, each of the Unsecured Noteholders (except for Bardoli Holdings Corp.) subordinated the debt payable to them under the Shareholder Notes to the Prepetition Term Loan Secured Parties.

Revolving Facility

In January 2025, pursuant to that certain Loan Agreement between AFG LLC, as Borrower, and Oxford Commercial Finance, as Lender, AFG LLC obtained access to a revolving credit facility of up to $5 million in principal, secured by the Collateral. However, on December 29, 2025, the Revolving Lender terminated the Revolving Loan Agreement pursuant to its terms, and, as of the Petition Date, the Debtors do not owe any amounts on the Revolving Facility.

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Events Leading to Bankruptcy

Operational Growth and Debt Accumulation

From its formation, Avenger sought to capitalize on an underserved opportunity in the aviation industry—providing outsourced aviation simulation to commercial airlines, in particular the growing "low cost carrier" market, and flight training schools, becoming the sole provider for the largest flight training school in the United States. Indeed, Avenger's rapid growth largely tracked the explosive growth of Spirit Airlines though, at the same time, the Company established strong relationships with other domestic low-cost carriers like Allegiant, Avelo, and Sun Country. As Avenger began to grow, it also established relationships with international low-cost carriers like Viva Aerobus, Wizz Air, Iberia Express, and Condor, necessitating the Company to establish foreign footprints.

Avenger's rapid growth, however, was accompanied by a burgeoning debt load. With a limited supply of new full-flight simulators (by some estimates, only approximately 50 new full-flight simulators are made yearly) and high initial capital costs—potentially in excess of $10 million for a new full-flight simulator—the Company's debt load associated with its growth has become unsustainable.

• With a rationalized balance sheet and focused geographic footprint, Avenger's long-term prospects are strong; for example, new full-flight simulators can hold value in excess of 60% of initial cost over a decade after acquisition and, with proper maintenance and certification renewals, may have a service life in excess of a quarter century.

Industry Headwinds

However, the Company has faced both internal and external challenges, including a high debt load, general industry headwinds, and the bankruptcies of some of its major customers.

Avenger focused on operating full-flight simulators for the Airbus A320, the most popular aircraft type ever and the one used most commonly by the Company's low-cost carrier customer base; indeed, as of the Petition Date, over 55% of the Company's owned and operated full-flight simulators are A320s. Unfortunately, on July 25, 2023, RTX Corporation, the parent company of Pratt & Whitney, announced that it had determined that a condition in the manufacturing of certain engine parts used in the PW1100G-JM geared turbofan engines—the engines used to power A320neo aircraft—required accelerated inspection and repair.

• As a result, hundreds of A320neo aircraft have been (and are expected to be) grounded for inspection and repair.
• And, in turn, the airline industry has temporarily decreased hiring new crews to fly the A320, causing decreased demand for commercial aviation training for that make and model of aircraft.

In addition, headwinds in the low-cost carrier airline industry have put strain on the Debtors' operations. Of particular importance were the two chapter 11 filings of Avenger's once-largest customer, Spirit Airlines, in 2024 and 2025.

• The Company also exited Cancun in 2024, as its main customer at that location, Interjet, was adjudicated bankrupt in Mexico in 2022.
• Further, in early 2023, Viva Air Colombia, the Company's partner in Colombia, suddenly commenced bankruptcy proceedings and liquidated. As a result, Avenger has had no operations in Medellin for nearly three years, although it continues to accrue liabilities related to the Leased Premises and two full-flight simulators subject to the EDC Secured Facilities.

German Operations Default

When Avenger Germany entered into the applicable SIM International Agreements for the operational lease of full-flight simulators to be located in Frankfurt, the Company lacked the liquidity to pay large down payments to SIM International for the three new full-flight simulators. To facilitate the transactions, the Company and SIM International entered into agreements pursuant to which the Company assigned its revenues generated from its Frankfurt operations to SIM International to secure the repayment of those down payments, among other things.

• Avenger defaulted under the SIM International Germany Agreements, both as a result of a payment default to SIM International and due to the Company's failure to pay rent to its third-party landlord (which, under German law, gave such landlord the right to cancel the lease).
• As a result, on or about August 12, 2025, SIM International notified Avenger that it was exercising its rights under the SIM International Germany Agreements to, among other things, take over the Company's German customer agreements and assets.
• As of the Petition Date, the Company effectively has no German operations. Non-Debtor Avenger Germany's continuing obligations, including to its employees, are offset by SIM International on a monthly basis against the amounts owed by Avenger Germany to SIM International.

Prepetition Negotiations and Rescue Financing

Starting around mid-October 2025, as its liquidity situation became more acute, the Company began to engage with the Prepetition Term Loan Secured Parties to discuss a comprehensive restructuring of Avenger. To ensure the Company's operations continued without interruption, in connection with the fifteenth and sixteenth amendments to the Prepetition Credit Agreement, the Prepetition Term Loan Secured Parties provided the Debtors with $11 million in new liquidity in the form of bridge financing—$5 million in September 2025 and $6 million in December 2025.

• Absent this bridge financing, the Debtors would have been required to seek a larger DIP facility and commence chapter 11 cases earlier, without the benefit of consensual resolutions with key stakeholders and in a rushed and less organized fashion.

The Debtors and the Prepetition Term Loan Secured Parties also engaged in a series of negotiations over the course of several months regarding the contours of a comprehensive restructuring of the Company involving the commencement of these Chapter 11 Cases to execute a value-maximizing sale of the Debtors' assets free and clear of all encumbrances.

Concurrently, the Company engaged in arms'-length discussions with SIM International, which had noticed alleged defaults under the SIM International Agreements in February 2024 and August 2025 and, as noted above, had taken action with respect to the Company's German operations. As a result of the Company's discussions with SIM International, the Company believes it has reached a settlement in principle with SIM International and the Prepetition Term Loan Lenders. The Company expects to finalize the settlement with SIM International and the Prepetition Term Loan Lenders over the coming days.

Chapter 11 Filing and Go-Forward Strategy

To help address these challenges, in the months leading up to the Petition Date, the Debtors engaged with many of their major stakeholders—including the Prepetition Term Loan Secured Parties, SIM International, and key equipment lessors—regarding a holistic restructuring to be effectuated through the chapter 11 process.

To that end, as of the Petition Date, the Debtors secured a commitment for a $43.5 million senior secured superiority debtor in possession financing facility, which includes $14.5 million in new money to be provided by the Prepetition Term Loan Secured Parties and secured by liens on substantially all of the Debtors' assets.

• The DIP Facility is designed to bridge the Debtors to the closing of a value-maximizing sale.
• The Debtors require immediate access to debtor in possession financing and the authority to use cash collateral to ensure that they have sufficient liquidity to continue to operate their business in the ordinary course, satisfy administrative expenses, and consummate a going-concern sale transaction.
• The Debtors require debtor-in-possession financing and use of Cash Collateral to fund the proposed Sale Process and ensure the administrative solvency of their estates. Absent the funding available under the DIP Facility and immediate access to Cash Collateral, the Debtors would be unable to sustain operations, pay their employees or vendors, or achieve a successful restructuring through the chapter 11 process.

In addition, the Debtors have filed the Bid Procedures Motion seeking, among other things, approval of procedures for the marketing and ultimate sale of their assets and for a designee(s) of the Prepetition Term Loan Secured Parties (the "Stalking Horse Bidder") to serve as stalking horse bidder, pursuant to a credit bid, for the purchase of substantially all of the Debtors' assets, subject to a court-approved overbidding process designed to maximize the realizable value for the Debtors' assets for the benefit of all stakeholders.

• The Debtors negotiated with the DIP Lenders and Prepetition Term Loan Lenders to develop a 13-week budget approved by the Required DIP Lenders, which sets forth, among other things, projected cash receipts and cash disbursements, as well as a sale timeline that would induce the DIP Lenders to commit to the DIP Facility and the Prepetition Term Loan Lenders to consent to the use of Cash Collateral in light of the Debtors' circumstances.
• Prior to the Petition Date, the Debtors' advisors prepared a teaser describing the DIP loan opportunity and approached various alternative funding sources. None of these potential third party lenders were prepared to offer debtor in possession financing to the Debtors, particularly on a junior basis to the existing Prepetition Term Loan Obligations.
• The proposed DIP Facility and the authorization to use Cash Collateral as offered by the DIP Lenders and Prepetition Term Loan Lenders are the best financing options that the Debtors could obtain under the circumstances.

In sum, the Debtors' decision to file these Chapter 11 Cases and pursue the sale process has been informed by the challenges they face and several months of exploration and deliberation by the Company's board of directors and management, with the assistance of their advisors, and only after all other alternatives were first considered. The Debtors believe that their significant efforts to reach consensus prior to the Petition Date provide a clear path to realizing a value-maximizing going concern transaction through these Chapter 11 Cases for the benefit of all of their stakeholders.