Axip Energy Services - Chapter 11 Plan Terms

Plan / Global Settlement Terms

Overview

• On May 6, 2026, following arms'-length good faith negotiations, the Global Settlement Parties — comprising the Committee, the Debtors, the DIP Agent, the Prepetition Superpriority Agent, and the Prepetition ABL Agent — agreed to the Global Settlement and entered into the Global Settlement Term Sheet.
  • The terms of the Global Settlement are incorporated into the Combined Disclosure Statement and Plan and include, among other things, the treatment of Class 5 General Unsecured Claims and the Committee's agreement to support the Combined Disclosure Statement and Plan.
• Prior to the commencement of the Chapter 11 Cases, the Debtors and their Advisors engaged in extensive arm's-length, good-faith negotiations with the Prepetition ABL Lenders and the Consenting Creditor Representatives to address the Debtors' funded debt and liquidity constraints, resulting in the following series of forbearance arrangements:
  • The Forbearance Agreement, dated September 23, 2025, by and among the Borrower, the Guarantors, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, with respect to outstanding defaults.
  • The Second Forbearance Agreement, dated November 25, 2025, and the Third Forbearance Agreement, dated December 17, 2025, each among the Borrower, the Guarantors party thereto, lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, providing additional time for the Debtors to continue the Sales Process and prepare for the filing of these Chapter 11 Cases.
• While the parties worked to reach agreement, Energy Spectrum provided additional equity to fund certain interim obligations in August 2025 as the Debtors lacked other capital.
• By early September 2025, when the Refinancing Process proved unsuccessful, the parties pivoted to negotiate the Prepetition Superpriority Credit Agreement to provide the Debtors both time and liquidity necessary to pursue the Sales Process and engage in contingency planning, including preparing for the filing of these Chapter 11 Cases.
  • The liquidity provided under the Prepetition Superpriority Facility allowed the Debtors to prepare for smooth and expeditious chapter 11 cases, rather than be forced into an emergency, value-destructive filing.

Sale Transaction

• After evaluating all bids received during the prepetition Sales Process, the Debtors, together with their Advisors and the Prepetition Senior Secured Parties, determined that Service Compression, LLC ("SC") had the highest, most actionable, and therefore best bid.
  • It was clear, however, that SC's bid could not be implemented out-of-court and would require a process within a chapter 11 case. As a result, the Debtors selected SC as a stalking-horse bidder for a sale process to be implemented through the Chapter 11 Cases to "market check" the SC bid.
• On March 5, 2026, the Bankruptcy Court entered the Bidding Procedures Order, approving the Debtors' Bidding Procedures to continue the Sales Process after the Petition Date and approving the designation of SC as the Stalking Horse Bidder.
• On April 1, 2026, after receiving no other Qualified Bid, the Debtors selected the Stalking Horse Bidder as the Winning Bidder.
• On April 7, 2026, the Bankruptcy Court entered the Sale Order, approving the Debtors' entry into the 363 Sale Documents and consummation of the 363 Asset Sale, which closed on April 15, 2026.

DIP Financing

• Prior to the Petition Date, the Debtors and their Advisors engaged in extensive arm's-length, good-faith negotiations with the Prepetition Senior Secured Parties and the Consenting Creditor Representatives to negotiate the DIP Facility, with JPMorgan Chase Bank, N.A. serving as DIP Agent.
• The DIP Facility, which was approved by the Bankruptcy Court on a final basis on March 18, 2026, consisted of:
  • $25,514,587 in new money commitments; and
  • Loans representing a "roll up" of (i) the full principal amount of the Prepetition Superpriority Loans (including accrued and unpaid interest thereon) and (ii) $66,852,865.34 of Prepetition ABL Loans outstanding under the Prepetition ABL Facility.
• The proceeds available under the DIP Facility and access to Cash Collateral enabled the Debtors to, among other things, honor employee benefits and wages, procure goods and services, and fund general and corporate operating needs and the administration of the Chapter 11 Cases.
• Upon the closing of the 363 Asset Sale on April 15, 2026, in accordance with the DIP Orders and Sale Order, the DIP Claims were repaid in full by the Debtors in full and final satisfaction, settlement, release, and discharge of any DIP Claims.

Chapter 11 Plan of Liquidation

• Unless otherwise specified in the Combined Disclosure Statement and Plan, all Assets (other than the Non-Vesting Assets) not sold pursuant to the 363 Asset Sale or otherwise prior to the Effective Date will vest in the Post-Sale Estates for the purpose of winding down the Estates.
• On the Effective Date, the Debtors or the Plan Administrator on behalf of the Post-Sale Estates will (a) fund the Claims Reserve in the Claims Reserve Amount and (b) fund the Professional Fee Escrow Account in the Professional Fee Reserve Amount to satisfy certain estimated Claims.
• Estimated recoveries under the Combined Disclosure Statement and Plan are as follows:
  • The Debtors expect to be able to pay all Administrative Claims and Priority Claims in full from proceeds of the 363 Asset Sale.
  • Holders of Prepetition ABL Claims received approximately $102.08 million in Cash upon the closing of the 363 Asset Sale on account of (a) Prepetition ABL Claims that were converted into DIP Claims pursuant to the DIP Orders and (b) remaining Prepetition ABL Claims. After accounting for these sale proceeds and the distributions under the Combined Disclosure Statement and Plan, the estimated aggregate recovery for Holders of Prepetition ABL Claims is 49%.
  • The estimated recovery throughout the Chapter 11 Cases for Holders of Prepetition 2L Claims on account of the 2L Payments is 4.87%.
  • The estimated recovery under the Combined Disclosure Statement and Plan for Holders of General Unsecured Claims on account of the GUC Recovery is 40%.

Wind Down

• The Wind Down means the process following the Effective Date for making distributions pursuant to the Combined Disclosure Statement and Plan; liquidating or abandoning any Non-Vesting Assets; pursuing, settling, or abandoning Causes of Action; implementing the Dissolution Transactions; and winding-down, dissolving, and liquidating the Estates.
• The Wind Down Budget, agreed to by the Prepetition ABL Agent, will govern the Plan Administrator's actions to:
  • Resolve all Disputed Claims;
  • Make all distributions to Holders of Allowed Claims in accordance with the Combined Disclosure Statement and Plan;
  • Otherwise implement the Wind Down; and
  • Otherwise implement the Combined Disclosure Statement and Plan and carry out its duties thereunder.
• In no event shall the amounts included in the Wind Down Budget be less than the Wind Down Budget Amount, which is the amount required for the Plan Administrator to implement the Wind Down and perform the duties and responsibilities described in section V(F)(1) of the Combined Disclosure Statement and Plan, as agreed to by the Prepetition ABL Agent.

Settlement Terms

• Pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, and in consideration for the classification, distributions, releases, and other benefits provided under the Combined Disclosure Statement and Plan, upon the Effective Date, the provisions of the Combined Disclosure Statement and Plan shall constitute a good faith compromise and settlement of all Claims, Interests, issues, disputes and controversies that were, or could have been asserted in connection with the Debtors and the Chapter 11 Cases, except for those expressly preserved by the Combined Disclosure Statement and Plan.
• Pursuant to the DIP Orders, the Prepetition 2L Lenders received the 2L Payments in exchange for agreeing to cooperate with the Debtors to support the Sales Process and the Combined Disclosure Statement and Plan.
  • The 2L Payments consist of cash payments totaling $950,000, comprised of $300,000 payable upon entry of the Interim DIP Order, $300,000 payable upon entry of the Final DIP Order, and $350,000 payable upon the closing of the 363 Asset Sale.
• Treatment of General Unsecured Claims includes:
  • The GUC Recovery, defined as Cash in an amount equal to the lesser of (i) $500,000 and (ii) fifty percent (50%) of the quantum of all Allowed General Unsecured Claims, excluding (a) all Allowed General Unsecured Claims assumed by the Purchaser pursuant to the 363 Asset Sale and (b) all Allowed Deficiency Claims.
    • The GUC Recovery shall be placed in a separate escrow account and shall not be reduced by any fees or expenses payable to, by, or on behalf of the Plan Administrator.
  • The Agreed Prepetition Sponsor Claim Reduction, pursuant to which any Allowed Prepetition Sponsor Claim shall be reduced by seventy-five percent (75%) for the purposes of calculating the applicable Pro Rata share of the GUC Recovery attributable to any such Allowed Prepetition Sponsor Claim.
• The Prepetition ABL Cash Distribution consists of Cash in the amount of $100,000.00.

Plan Support

• Pursuant to the Global Settlement, the Committee has agreed to support the Combined Disclosure Statement and Plan.
• Holders of Prepetition 2L Claims received the 2L Payments during the Chapter 11 Cases pursuant to the settlement agreement under the DIP Orders, in exchange for, among other things, such Holders' agreement to support the Combined Disclosure Statement and Plan and to cooperate with the Debtors to support the Sales Process.

Releases

• The Combined Disclosure Statement and Plan contains Debtor Releases, releases of the Released Parties by the Releasing Parties, and an exculpation of the Exculpated Parties.
• Pursuant to section 1123(b) of the Bankruptcy Code, on the Effective Date, each Released Party is deemed released by the Debtors and their Estates from any and all claims and Causes of Action, whether known or unknown, including any derivative claims, based on or relating to, or arising from, in whole or in part, the Debtors, any securities issued by the Debtors, the DIP Facility, the Prepetition Superpriority Facility, the Prepetition ABL Facility, the Prepetition 2L Facility, the Debtors' in- or out-of-court restructuring efforts, any Avoidance Actions (excluding those brought as counterclaims or defenses to Claims asserted against the Debtors), intercompany transactions, the Chapter 11 Cases, the Combined Disclosure Statement and Plan, the 363 Asset Sale, the Sales Process, and the Global Settlement, among other matters.
• Upon the Effective Date, each Releasing Party (other than the Debtors and the Estates) releases each Debtor, the Estates, and each other Released Party from substantially the same scope of claims and Causes of Action.
• Notwithstanding the foregoing, the releases do not release:
  • Any post-Effective Date obligations of any party or Entity under the Combined Disclosure Statement and Plan, any 363 Asset Sale Documents, or any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Combined Disclosure Statement and Plan or the 363 Asset Sale; or
  • Any Entity from any claim or Causes of Action related to an act or omission that is determined in a Final Order by a court of competent jurisdiction to have constituted actual fraud, willful misconduct, or gross negligence.
• "Released Parties" include, solely in their capacities as such:
  • The Debtors, the Estates, and, with respect to each Debtor, each Debtor's directors, managers, members, officers, principals, Independent Member, committees (including executive committees or any special committees) and their respective members, employees, predecessors, successors, assigns, subsidiaries, agents, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals;
  • The DIP Agent, the DIP Lenders, the Prepetition ABL Agent, the Prepetition ABL Lenders, the Prepetition Superpriority Agent, the Prepetition Superpriority Lenders, the Prepetition 2L Lenders, the Prepetition 2L Agent, the Supporting Sponsor Parties, each Holder of a Claim or Interest who votes in favor of the Combined Disclosure Statement and Plan, and each Related Party of the foregoing; and
  • The Committee and its members, and the Committee's retained Professionals, including its attorneys and financial advisors.
• An Entity shall not be a Released Party if it (x) elects to opt out of the releases set forth in Article IX of the Combined Disclosure Statement and Plan or (y) timely objects to such releases and such objection is not resolved before Confirmation.
• "Releasing Parties" include, solely in their capacities as such, the Debtors, the Estates, the DIP Agent, the DIP Lenders, the Prepetition ABL Agent, the Prepetition ABL Lenders, the Prepetition Superpriority Agent, the Prepetition Superpriority Lenders, the Prepetition 2L Lenders, the Prepetition 2L Agent, the Supporting Sponsor Parties, all Holders of Claims and Interests that vote to accept the Combined Disclosure Statement and Plan but do not opt out of granting the releases, all Holders of Claims or Interests whose vote is solicited but who do not vote and do not opt out, all Holders of Claims or Interests presumed to accept the Plan that do not opt out, the current and former Affiliates of the foregoing, certain Related Parties, and the members of any statutory committee, including the Committee, and such committee's Professionals.
• "Exculpated Parties" means, in their respective capacities as such, (a) the Debtors; (b) the Independent Member; (c) the Committee; and (d) the members of the Committee and any other statutory committee appointed in the Chapter 11 Cases.