Braskem Idesa, S.a.p.i. - Chapter 11 Case Summary

Business Description

Braskem Idesa, S.A.P.I. ("BAKIDE," and collectively with its debtor affiliates, the "Debtors" or the "Company") is a leading global petrochemical producer and the primary supplier of polyethylene to the Mexican market. On August 17, 2026 (the "Petition Date"), the Debtors commenced voluntary chapter 11 cases in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (Case No. 26-90762 (CML)), and have requested joint administration. Originally formed in 2010 as a joint venture between Braskem S.A., a leading Brazilian petrochemicals company, and Grupo Idesa S.A. de C.V., a leading Mexican petrochemicals company, the Company operates an integrated petrochemical complex (the "Complex") in Nanchital de Lázaro Cárdenas del Río, Veracruz, in Mexico's Coatzacoalcos region, and is headquartered at Boulevard Manuel Ávila Camacho 36, Floor 2, Col. Lomas de Chapultepec, Miguel Hidalgo, CDMX.

• The Company processes ethane into ethylene and subsequently converts it into polyethylene, a plastic polymer used in a wide range of products, from thin grocery bags to water pipes.
• The Complex produces both high-density polyethylene ("HDPE") and low-density polyethylene ("LDPE") and, since completion, has produced more than 7.5 million tons of polyethylene and generated over $9 billion in revenue.
• The Company is today one of the lowest-cost polyethylene producers worldwide and holds a sizeable portion of the Mexican polyethylene market.

The Company maintains a diversified product portfolio of approximately fifteen grades of polyethylene, and its structure and strategic location allow it to shift between the Mexican market and international export markets depending on pricing dynamics. As of the Petition Date, the Company exports to a diverse customer base across numerous industries in Latin America, Europe, Asia and the United States.

As of December 31, 2025, BAKIDE reported total stockholders' equity of negative $414 million, consisting of $2 billion in total capital issued offset by negative $2.4 billion in total retained earnings and other items.

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Corporate History

The Company's origins trace to 2008, when, in response to a substantial deficit in Mexico's ethylene production chain, the Mexican government and Pemex Transformación Industrial (a subsidiary of state-owned Petróleos Mexicanos, together with its current and former subsidiaries, "Pemex") invited thirty-one Mexican and international petrochemical companies to bid for a long-term raw material contract (the "Pemex ESA") and the construction of a petrochemical complex. Braskem S.A. (together with its affiliates and subsidiaries other than the Debtors, "Braskem") and Grupo Idesa formed a consortium to participate in the bidding process.

• In 2009, the Braskem/Grupo Idesa consortium won the bidding process for the Pemex ESA and for the construction of the Complex, situated on approximately 200,000 acres in Nanchital de Lázaro Cárdenas del Río, Veracruz.
• The Pemex ESA became effective in February 2010 and, as subsequently amended, is currently scheduled to expire in 2035, subject to additional extensions under the Amended Pemex ESA.

The Etileno XXI Project

BAKIDE was incorporated under the laws of Mexico in April 2010 as a joint venture between Braskem and Grupo Idesa, with construction and implementation of the Complex (the "Etileno XXI Project") beginning shortly thereafter. The first phase was implemented over the following six years.

• On April 7, 2016, BAKIDE began producing polyethylene at one of the Complex's three thermoplastic resin plants, and by August 2017 had produced one million tons.
• The Etileno XXI Project represented a milestone for Mexico's petrochemical industry as the largest private industrial investment in the Mexican petrochemical sector in over thirty years and the largest investment made in Mexico by a Brazilian company.

Debtor Entities

• Braskem Idesa Servicios, S.A. de C.V. ("BI Servicios"): Incorporated under the laws of Mexico in December 2010, BI Servicios has historically provided ancillary operational functions and related services to BAKIDE. It is 99.99% owned by BAKIDE, with Etileno XXI S.A. de C.V. ("Etileno XXI") holding the remaining 0.01%.
• Braskem Idesa Ethane LLC ("BI Ethane"): Formed under the laws of Texas and wholly owned by BI Servicios, BI Ethane provides the Company with business optionality regarding its U.S. business relationships. The Company depends on ethane as the primary feedstock for its product and imports ethane from a facility in Texas.
  • Under the BNL Ethane Supply Agreement between BAKIDE and Braskem Netherlands B.V. ("Braskem Netherlands"), a Netherlands corporation, imported ethane is delivered to BAKIDE at either the Morgan's Point Facility (Port of Houston) or the Beaumont Export Facility in Texas, with title transferring to BAKIDE prior to export. Once loaded onto vessels, the ethane is shipped to the Ethane Import Terminal in Mexico and then on to the Complex for processing.

Ownership and Corporate Structure

BAKIDE is privately held, with one class of common stock consisting of 1,862,606 fully subscribed and paid shares outstanding as of the Petition Date:

• Braskem Netherlands (74.99%): BAKIDE's largest shareholder, holding 1,396,953 shares. Braskem Netherlands is a wholly owned subsidiary of Braskem S.A.
• Etileno XXI (25.00%): A Mexican corporation holding 465,652 shares. Etileno XXI is a wholly owned subsidiary of Grupo Idesa, itself a subsidiary of Capital Inbursa S.A. de C.V., which is in turn a subsidiary of a diversified Mexican financial conglomerate ("Inbursa," and together with Inbursa's affiliates, the "Inbursa Group").
• Braskem S.A. (0.01%): Holds one share directly.

BAKIDE also holds a 50% interest in non-Debtor Terminal Química Puerto México, S.A.P.I. de C.V. ("TQPM"), a Mexican corporation. The remaining 50% is held by Advario B.V. ("Advario"), itself a subsidiary of Oiltanking GmbH ("Oiltanking").

Board and Management

BAKIDE's board of directors (the "Board") comprises eleven directors — seven regular members, three alternate members and one independent director — appointed collectively by Braskem S.A. and Braskem Netherlands as Class A shareholders and Etileno XXI as Class B shareholder.

• The seven regular Board members are Hélio Baptista Novaes (Chairman, Class A), Gerardo Kuri Kaufmann (Vice Chairman, Class B), Hélcio Tokeshi (Class A), Raphael Franco de Campos (Class A), Carlos Plachta (Class A), William França da Silva (Class A) and Francisco Javier Mondragón Alarcón (Class B). Elizabeth Anne LaPuma serves as the Independent Director, appointed jointly by the Class A and Class B shareholders.
• The alternate members, authorized to act only in the absence or incapacity of the regular members, are Carlos Augusto Machado Pereira de Almeida Brandão (Class A), Nir Lander (Class A) and Gerardo Camargo Robles (Class B).
• Prior to the Petition Date, the Company's shareholders authorized the appointment of Elizabeth LaPuma to the Board as independent director (the "Independent Director").

Senior management includes Gustavo Gindler Sergi (Chief Executive Officer), Alonso Gómez del Campo Estrada (Legal Director), Mónica Cervantes Amezquita (People and Communication Director), Alejandro Castellanos Santos (Commercial and Procurement Director) and Jorge Alfonso García Macareñas (Industrial Director).

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Operations Overview

The Complex has been the heart of the Company's business since operations began in April 2016. Ethane received from suppliers is first processed by the on-site ethane cracker into ethylene, which is then converted into polyethylene across three resin plants.

Complex Assets

• Ethane cracker: Six furnaces with annual production capacity of 1,050,000 tons of ethylene.
• HDPE plants: Two plants with combined annual capacity of 750,000 tons.
• LDPE plant: One plant with annual capacity of 300,000 tons.
• Power generation plant: A 150 megawatt facility comprising one gas turbine and two steam turbines, generating more than 100% of the Complex's energy demand and selling excess power to the grid.
  • On-site generation provides lower-cost electricity and reduces the risk that a sudden drop in, or lack of, power supply disrupts operations.
• Water infrastructure: An effluents treatment plant and a water treatment plant, which return water to the community in compliance with applicable regulations.

Product Slate

HDPE and LDPE differ primarily in molecular structure and density, which determines how tightly their molecules pack together, and demand and pricing for each can diverge based on market conditions.

• HDPE: A more linear molecular structure yields a denser, more rigid, higher-strength material used in products such as milk jugs, heavy-duty pipes and trash bins.
• LDPE: A more irregularly branched structure yields a lower-density, softer and more flexible material used in squeeze bottles, shrink wrap and resealable sandwich bags.

Logistics and Distribution

On-site logistics capabilities support efficient and reliable distribution of polyethylene to customers, and the Complex's proximity to key railroads, ports and roads allows the Company to distribute product through strategic relationships with third-party logistics operators — delivering anywhere in Mexico within an average of seventy-two hours.

• A railyard capable of holding more than 400 hopper cars and thirty tank cars for chemicals, connected to the major railroad concession in Mexico.
• Twenty-one silos, each with 500-ton capacity.
• A 215,000 sq. ft. warehouse and a 300,000 sq. ft. external yard capable of storing more than 36,000 tons of polyethylene.

Customer Base

The Company's customers are generally producers of third-generation petrochemicals — finished products rather than intermediates — that manufacture a wide variety of plastic-based consumer and industrial goods, including plastic films for food and industrial packaging, bottles, shopping bags and other consumer goods containers, and household appliances. The diversity of end-uses reduces dependency on any single industry or end-user.

• Beyond domestic distribution, the Company has historically benefited from the global presence and distribution channels of Braskem, the beneficial owner of a majority of its shares, selling directly to related parties that in turn sell through to end customers in geographies where the Company lacks a market presence.
• Exports to the United States, one of the Company's largest export markets, are generally carried out in bulk by rail car, leveraging the Company's logistics integration to remain cost competitive.

Ethane Supply Arrangements

Ethane is the single largest cost and most critical input for the Debtors' polyethylene production. Since the Complex's inception, the Debtors held a strategic advantage in procuring inexpensive local ethane on a consistent basis from Pemex, but that supply has waned since 2021, requiring investment in alternative sources.

• Pemex deliveries declined from 49 thousand barrels per day ("kbpd") in 2019 to 29 kbpd in 2021, 17 kbpd in 2025 and 14 kbpd year-to-date through August 2026.
• Total ethane supply from all sources held between 44 and 50 kbpd from 2019 through 2024, as Fast-Track imports offset the Pemex decline, before falling to 41 kbpd in 2025 and 30 kbpd year-to-date through August 2026.
• The Company's all-in ethane cost per ton — inclusive of the molecule, transportation, importation and other procurement costs — rose from $124 in 2019 to a peak of $472 in 2022 and, after easing to $265 in 2024, climbed again to $372 in 2025 and $380 year-to-date through August 2026.

To address the shortfall, the Company has pursued several strategic initiatives, including an overland importation strategy, a supplemental supply agreement with its largest shareholder, and construction of a dedicated import terminal.

• Pemex ESA: Under the original agreement, the Company agreed to purchase, and Pemex agreed to deliver on a deliver-or-pay basis, 66,000 barrels (3,757 tons) of ethane per day for twenty years. A decline in Mexican natural gas production, among other factors, left Pemex unable to deliver the required average daily volume, limiting the Company's ability to operate at full capacity.
  • In 2021, the parties entered into an amendment (the "Amended Pemex ESA") reducing Pemex's supply obligations by more than 50%, releasing Pemex from liquidated damages for earlier shortfalls, and securing Pemex's support for construction of the Ethane Import Terminal.
  • The Amended Pemex ESA required Pemex to supply 30,000 barrels (1,708 tons) per day until completion of the Ethane Import Terminal, subject to extension. Upon completion, Pemex has no minimum delivery obligation, though the Company retains a right of first refusal on available supplies Pemex does not use.
  • Since the beginning of 2026, Pemex has provided approximately 14,000 barrels (794 tons) per day.
• Fast-Track Solution: On September 20, 2019, the Company executed an agreement with Smart Pass, a Mexico City-based port operator and transportation, storage and loading company, and Enestas, a Mexico City-based specialized cryogenic gas transportation company, to implement an alternative import and overland shipping strategy.
  • Imported ethane was received at Smart Pass docks in the port of Coatzacoalcos, offloaded into cryogenic tanks, transferred to trucks via filling stations and taken to the Complex for unloading into storage tanks. Fast-Track Solution operations have since concluded now that the Ethane Import Terminal is operational.
• BNL Ethane Supply Agreements: On February 25, 2020, BAKIDE entered into an open order quantity agreement with Braskem Netherlands (the "First BNL Ethane Supply Agreement"), under which Braskem Netherlands delivered additional liquid ethane, including leases for the supply vessels used to move ethane from Texas to Mexico, in connection with the Fast-Track Solution.
  • On December 18, 2023, the parties entered into a term agreement (the "Second BNL Ethane Supply Agreement") that expressly superseded the first and provides for Braskem Netherlands or an affiliate to continue supplying ethane through March 31, 2033.
  • As of the Petition Date, approximately $120 million of invoices were outstanding under the Second BNL Ethane Supply Agreement, covering both ethane and supply vessels.
• Ethane Import Terminal: In 2021, the Company approved development of an import terminal in Laguna de Pajaritos, near Coatzacoalcos, Veracruz, together with a pipeline connecting it directly to the Complex, as a long-term solution for storing and transporting imported ethane.
  • The terminal has storage capacity of approximately 54,000 tons and can transport approximately 80,000 barrels (4,554 tons) of ethane per day — more than enough to meet the Complex's current total ethane requirements.
  • The terminal is a project of TQPM, the BAKIDE/Advario joint venture, and its construction and implementation are governed by a September 27, 2021 agreement between the Company and Pemex, acknowledged by Corredor Interoceánico del Istmo de Tehuantepec ("CIIT") and Administración Portuaria Integral de Coatzacoalcos ("API"). Under that agreement, Pemex, Pemex Logística, CIIT and API agreed to support and collaborate on the activities and management required to obtain the permits and governmental authorizations for the terminal's development, construction and start-up.
  • Development was funded by a $408 million project financing facility.

Prior to the Petition Date, BAKIDE entered into two services agreements with TQPM, each with an initial term of twenty years commencing on the Commercial Operation Date: the Ethane Storage Service Agreement (the "TQPM Storage Agreement") and the Ethane Transportation Service Agreement (the "TQPM Transportation Agreement," together, the "TQPM Services Agreements"), both dated October 31, 2023.

• The TQPM Services Agreements provide for the establishment, use and maintenance of a storage system at the Ethane Import Terminal, a twelve-kilometer ethane pipeline, and other critical infrastructure needed to safely supply imported ethane to the Complex.
• TQPM issues monthly invoices to BAKIDE on sixty-day payment terms. On average, BAKIDE pays TQPM approximately $7.4 million per month under the TQPM Storage Agreement and approximately $630,000 under the TQPM Transportation Agreement, inclusive of applicable value-added taxes.
• Beyond the TQPM fees, importing ethane is significantly more expensive than sourcing domestically from Pemex, as the Company incurs fixed costs for vessels leased from related parties and variable per-ton costs subject to additional fees, premiums and customs charges. In 2026, the Company has primarily sourced feedstock from imported markets via TQPM.

Workforce and Regional Footprint

The Company's workforce consists of approximately 800 employees, all employed by BAKIDE and based in Mexico, working in both Mexico City and Nanchital, Veracruz.

• The Complex is a significant component of the regional industrial economy, supporting numerous contractors, suppliers, logistics providers and other businesses.
• Together with the recently developed Ethane Import Terminal, the Complex represents substantial industrial infrastructure on Mexico's Gulf Coast.
• According to the Company, maintaining uninterrupted operations and successfully completing the restructuring is important not only to the Debtors and their creditors, but also to their employees, business partners and the communities in which they operate.

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Prepetition Obligations

As of the Petition Date, the Debtors’ prepetition capital structure consists of a first lien secured term loan facility and two series of pari passu senior secured notes issued by BAKIDE, affiliate-provided working capital and product-linked financing, project-level financing for the Ethane Import Terminal (at non-Debtor TQPM), and subordinated shareholder loans. The Company estimates approximately $17 million in cash and cash equivalents on hand as of the Petition Date. The principal components are summarized below:

Senior Secured Term Loans

• Approximately $129 million in principal is outstanding under an April 23, 2025 credit agreement among BAKIDE, as borrower, BI Servicios, as guarantor, and Banco Inbursa S.A., Institución de Banca Múltiple, Grupo Financiero Inbursa, as administrative agent and lender, alongside the other lenders party thereto.
  • The facility was originally sized at $95 million. An October 22, 2025 amendment increased the maximum commitment to $180 million, under which BAKIDE drew approximately $34 million in additional term loans.
  • Borrowings bear interest at variable rates depending on whether the loan is a Term SOFR Loan or a Base Rate Loan, yielding an average effective rate of 11.1% as of the Petition Date.
  • The obligations are secured by a first lien on the Prepetition Shared Collateral and rank pari passu with the 2029 and 2032 Senior Secured Notes.

Senior Secured Notes

• 2029 Senior Secured Notes: $900 million in aggregate principal amount remains outstanding under a December 2, 2019 indenture between BAKIDE, as issuer, and Deutsche Bank Trust Company Americas, as trustee, paying agent and transfer agent.
  • The notes carry a 7.450% coupon, payable semiannually in arrears on May 15 and November 15, and mature November 15, 2029.
• 2032 Senior Secured Notes: $1.2 billion in aggregate principal amount remains outstanding under an October 20, 2021 indenture between BAKIDE, as issuer, and The Bank of New York Mellon, as trustee, paying agent and transfer agent.
  • The notes carry a 6.990% coupon, payable semiannually in arrears on February 20 and August 20, and mature February 20, 2032.
• Both series are secured by a first lien on the Prepetition Shared Collateral and rank pari passu with each other and with the Senior Secured Term Loans.

Intercreditor Agreement

• Relative lien priorities among the Senior Secured Term Loan Lenders and the holders of the Senior Secured Notes are governed by a Second Amended and Restated Intercreditor Agreement dated October 20, 2021, among BAKIDE, as borrower, BI Servicios, as initial guarantor, Deutsche Bank Trust Company Americas, as 2029 notes trustee, intercreditor agent and collateral agent, the 2032 notes trustee and the Senior Secured Term Loan Agent.
• The agreement provides that obligations under the term loans and the Senior Secured Notes rank pari passu in the Prepetition Shared Collateral and all proceeds thereof.

Working Capital Facility

• $101 million in principal is outstanding under a March 25, 2026 working capital credit agreement among BAKIDE, as borrower, BI Servicios, as initial guarantor, and Braskem Netherlands, as lender.
  • The commitment was upsized twice as the restructuring negotiations progressed — from $51 million to $101 million on May 27, 2026, and from $101 million to $150 million on August 15, 2026 — supplying critical liquidity in the run-up to these chapter 11 cases.
  • Loans bear interest at variable Term SOFR or Base Rate pricing, for an average effective rate of approximately 10.5% as of the Petition Date, and are secured by first priority liens in favor of the lender on the collateral specified in the agreement.

Secured PE Facility

• $67 million is outstanding, excluding accrued interest, under a January 1, 2023 manufacturing and distribution agreement between BAKIDE, as borrower, and Braskem Netherlands, as distributor and lender, through which Braskem Netherlands financed BAKIDE’s manufacture of additional products.
  • An August 15, 2025 amendment provided a $42 million advance payment priced at SOFR plus 4.50% per annum and due December 31, 2027.
  • A March 3, 2026 amendment provided a further $25 million advance payment priced at SOFR plus 6.90% per annum and due December 31, 2028, likewise bridging the Company’s liquidity needs during restructuring negotiations.
  • The balance may be satisfied either by delivery of products or by repayment, and the obligations are secured by a lien on the products BAKIDE agreed to manufacture and deliver to Braskem Netherlands.

Ethane Import Terminal Financing

• Development of the Ethane Import Terminal is funded at the project level under an October 31, 2023 credit agreement with TQPM as borrower, comprising a term loan facility of up to $408 million and a debt service reserve letter of credit facility of up to $32 million.
  • Crédit Agricole Corporate and Investment Bank serves as administrative agent and joint lead arranger, with Citibank, N.A. as offshore collateral agent, Banco Nacional de México, S.A. (División Fiduciaria) as onshore collateral agent, ING Capital LLC and KfW IPEX-Bank GmbH as coordinating lead arrangers, Mizuho Bank, Ltd. as joint lead arranger, and DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH as mandated lead arranger.
  • The facility is secured by liens on the collateral specified in the credit agreement, including the Ethane Import Terminal itself and BAKIDE’s and Advario’s respective equity interests in TQPM.
  • Under a related Sponsor Support and Share Retention Agreement, also dated October 31, 2023, BAKIDE and Advario act as sponsors and Braskem S.A. as equity support provider, with BAKIDE agreeing to furnish equity contributions and credit support to TQPM.

Subordinated Shareholder Loans

• BAKIDE is the borrower under unsecured, subordinated loan facilities extended by its shareholders to fund equity contributions under an equity support agreement. Initial aggregate commitments were:
  • Braskem S.A.: up to $831.25 million
  • Braskem Netherlands: up to $368.66 million
  • Etileno XXI: up to $277.74 million
• The loans accrued interest at 7% per annum, payable on the same date as principal. Following an October 2024 conversion of all outstanding principal to equity, approximately $1.2 billion remained outstanding as of the Petition Date.
• All unpaid principal and interest is contractually subordinated to the Senior Obligations under the governing loan agreements.

Receivables Purchase Agreement

• BAKIDE, as seller and servicer, is party to a June 20, 2022 receivables purchase agreement with Crédit Agricole Corporate and Investment Bank as purchaser, under which CACIB may elect, in its absolute discretion, to purchase up to $60 million of outstanding receivables owed to BAKIDE.
  • The factoring fee accrues at daily SOFR plus 1.60% per annum and is payable monthly in arrears on the 10th of each month.
  • No amounts were due and owing under the facility as of the Petition Date.

Letters of Credit

• Approximately $30.7 million in letters of credit were outstanding as of the Petition Date, issued by CACIB as the Company’s relationship bank to support performance under materials import, export, and supply contracts in the ordinary course.
• The average effective interest rate on the outstanding letters of credit was 2.7% as of the Petition Date.

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Events Leading to Bankruptcy

Prolonged Petrochemical Downcycle and Feedstock Disruption

• In recent years, the Company’s business has struggled to generate the cash flows necessary to support its existing capital structure. Since the second half of 2022, the Debtors have operated in an exceptionally challenging environment:
  • A prolonged petrochemical downcycle and compressed industry spreads eroded margins across the Company’s product slate.
  • Constrained ethane supply in Mexico drove up feedstock costs and limited plant utilization at the Complex.
  • The Debtors were forced to completely overhaul their feedstock procurement process, shifting from an inexpensive, integrated source to one requiring significant fixed costs and materially higher variable costs.
• Together, these factors materially weakened operating cash flow generation, leaving the Debtors with a highly constrained liquidity position and an unsustainable leverage profile.

Stretched Trade Base and Missed Market Upside

• Liquidity constraints left the Debtors’ trade base—comprising more than 400 vendors—severely stretched, with average days past due of 150 and certain vendors unpaid for more than a year.
  • The strain compounded the Debtors’ inability to return to optimal operating levels and to fund the logistics providers needed to deliver finished products to customers.
• Geopolitical dislocation, including conflict in the Middle East, injected significant volatility into petrochemical supply and demand, with polyethylene prices doubling in the first half of 2026.
  • Because liquidity constraints forced the Complex to run at subdued rates—averaging less than 50%—the Debtors could not fully capitalize on the price spike, and prices have since fallen back toward historically normalized levels.
  • The Debtors do not expect this transitory supply shock to persist for multiple years, and anticipate continued reversion to normalized supply and demand dynamics, with additional global petrochemical production potentially accelerating that reversion.
• The capital required to return the Complex to profitable production levels, coupled with the need for a leverage profile sustainable in a commodity-driven business, underscored the necessity of a long-term balance sheet solution.

Mounting Debt Service Obligations and Payment Defaults

• As of the Petition Date, the Debtors carried approximately $3.6 billion in total principal outstanding, together with more than $180 million in accrued and unpaid interest.
  • Amounts denominated in Mexican Pesos were converted at the approximate average exchange rate of 17.47 Mexican Pesos per U.S. Dollar over the 30-day period ending July 31, 2026.
• To conserve liquidity while restructuring negotiations progressed, BAKIDE elected not to make interest payments when due across its funded debt stack:
  • 2029 Senior Secured Notes—November 15, 2025 and May 15, 2026.
  • 2032 Senior Secured Notes—February 20, 2026.
  • Senior Secured Term Loans—January 29, 2026, April 29, 2026 and July 29, 2026.
  • WC Facility Loans—June 25, 2025, July 7, 2026 and July 29, 2026. (The Declaration lists June 25, 2025, which precedes the March 25, 2026 WC Credit Agreement; this appears to be a typographical error.)
• Creditors largely held their fire. As of the Petition Date, holders of the 2029 and 2032 Senior Secured Notes and the Senior Secured Term Lenders had not called a default, accelerated their obligations or pursued remedies against BAKIDE.
  • The WC Facility Lender agreed to forbear from exercising rights and remedies through August 17, 2026, after which accrued and unpaid interest was capitalized and added to the outstanding principal amount of the WC Facility Loans.
• Alongside its funded debt, the Company aggressively managed accounts payable to preserve liquidity, prioritizing payments that most quickly converted inventory into sales or that were essential to reduce operational and legal disruption, and negotiating prepayment arrangements with select third-party customers to accelerate cash receipts.
  • Despite these measures, payables remained aged in excess of 150 days, with continued pressure and instability threatening ongoing operations.

Ethane Import Terminal Defaults and Forbearance

• Although the Ethane Import Terminal is critical to the Debtors’ operations, the project faced delays in achieving certain milestones, and missed completion milestones and other defaults triggered a default under the Ethane Import Terminal Credit Agreement.
  • On December 30, 2025, TQPM and the EIT Financing Parties entered into the First Forbearance Agreement, under which the EIT Financing Parties agreed not to exercise remedies in respect of specified defaults.
  • Following that agreement’s expiration on April 30, 2026, the parties executed a Second Forbearance Agreement on July 22, 2026, extending relief to the existing specified defaults and to any defaults arising from BAKIDE’s Chapter 11 filing.
• The Forbearance Agreements afforded TQPM additional runway to reach project completion milestones and gave the Debtors room to restructure their balance sheet in Chapter 11.
  • Absent that forbearance, the EIT Financing Parties would have had the right to exercise remedies against Collateral including the Ethane Import Terminal itself, as well as BAKIDE’s and Advario’s respective equity interests in TQPM.

Emergency Bridge Financing from Inbursa and Braskem

• As a critical liquidity shortfall collided with looming debt service obligations, the Debtors entered into extensive arm’s-length negotiations with their shareholders, affiliate stakeholders and existing lenders, including Braskem and Inbursa.
  • Those discussions produced the Senior Secured Term Loan Amendment on October 22, 2025, pursuant to which Inbursa extended $34 million in additional financing (the Emergency Inbursa Term Loan), delivering short-term stability while negotiations and strategic evaluation continued.
• By early 2026, liquidity had tightened further, threatening the Debtors’ ability to secure adequate time and resources to prepare for a restructuring. Working with their advisors, the Debtors sought financing from all available sources to create runway for an orderly negotiation with creditors:
  • On March 3, 2026, an amendment to the Secured PE Facility provided $25 million in emergency funding from Braskem Netherlands.
  • On March 25, 2026, the WC Credit Agreement provided an additional $101 million from Braskem Netherlands.
• The $126 million funded under the Emergency Braskem Bridge Facilities proved a critical component of the Debtors’ prepetition efforts, creating space for an orderly balance sheet reorganization rather than a value-destructive liquidation.
  • Without that support, the Debtors would have lacked sufficient liquidity to pay employees and suppliers, maintain their facilities, continue operations or conduct the negotiations that ultimately produced the RSA and Plan.

Advisor Retention and Governance Enhancements

• In connection with their review of the capital structure and potential restructuring alternatives, the Debtors retained a full slate of Restructuring Advisors: Cleary Gottlieb Steen & Hamilton LLP as legal counsel, Sainz Abogados, S.C. as Mexican legal counsel, Alvarez & Marsal North America, LLC ("A&M") as financial advisor, Lazard Frères & Co. LLC and Lazard Assessoria Financeira Ltda. (collectively, "Lazard") as investment banker, and Hunton Andrews Kurth LLP as co-counsel. A&M was engaged in February 2026 to help manage the Company's liquidity, negotiate with and manage vendors, assist with development of a business plan and direct contingency planning.
  • The Restructuring Advisors worked closely with the Debtors to engage key stakeholders, evaluate strategic alternatives and negotiate the RSA and Plan.
• On March 9, 2026, BAKIDE’s shareholders approved the appointment of Elizabeth LaPuma to the Board as Independent Director.

Restructuring Negotiations and the Restructuring Support Agreement

• Given their debt service and other financial obligations, the Debtors proactively explored a range of deleveraging and liquidity-enhancing alternatives, including additional debt and equity financing and good-faith, arm’s-length negotiations with key stakeholders regarding a potential out-of-court solution.
  • Ultimately, the Debtors—including the Independent Director—concluded that entering into the RSA and pursuing an in-court restructuring was necessary to address the Company’s liabilities and represented the best path to preserve and maximize value for all stakeholders.
• Funding under the Emergency Braskem Bridge Facilities, extended at a time when a clear path to restructuring was far from certain, enabled deep engagement with key stakeholders on restructuring terms.
  • The Debtors and their advisors weighed a series of proposals from Inbursa, Braskem and an ad hoc group of holders of Senior Secured Notes (the Ad Hoc Group). Negotiations initially centered on a complex transaction under which those parties would have extended new money DIP financing, obtained a much larger multi-tranche roll-up of prepetition debt, equitized a significant portion of remaining prepetition debt and held a majority of BAKIDE’s post-emergence equity.
  • The parties ultimately coalesced around the transaction structure embodied in the RSA.
• On August 17, 2026, following months of intensive negotiations, the Debtors entered into the RSA with the RSA Parties, which collectively hold approximately 79% of the aggregate outstanding value of the Debtors’ prepetition secured debt obligations. The RSA sets forth the proposed terms of the financial restructuring to be implemented through these prepackaged Chapter 11 Cases.

Key Terms of the RSA and Plan

• The Plan, filed concurrently with the petitions, is designed to reduce prepetition funded debt by more than $920 million through the equitization of certain existing claims and the streamlining of the Company’s capital structure:
  • Emergency Funding and New Money Contributions: Braskem S.A. will receive 33.3% of the fully diluted reorganized equity in exchange for approximately $486 million in new money financing and claims equitization, consisting of a $131 million roll-up of prepetition support financing (inclusive of accrued interest through the Effective Date), approximately $283 million in respect of the New Money Loans (inclusive of accrued interest through the Effective Date and the DIP commitment fee), and a $71 million new money equity contribution funded on the Effective Date.
  • Secured Claims: Holders of Senior Secured Notes will receive their pro rata share of 33.3% of the fully diluted reorganized equity through the equitization of $825 million of Senior Secured Notes Claims, with the balance of such claims and the Senior Secured Term Loan Claims receiving Exit Notes.
  • Exit Notes: On the Effective Date, the Reorganized Debtors will issue approximately $1.6 billion in aggregate principal amount of first lien Exit Notes, distributed pro rata to holders of remaining Senior Secured Notes Claims and to the holder of Senior Secured Term Loan Claims, secured by priming liens on all assets of the Borrower and Guarantors, subject to certain exceptions set forth in the Exit Notes Documents.
  • Equity Interests: Existing holders of BAKIDE equity will receive their pro rata share of 33.3% of the fully diluted reorganized equity in exchange for their existing interests and post-reorganization support for the Reorganized Debtors.
  • General Unsecured Claims: Third-party general unsecured claims will be Reinstated and rendered unimpaired, with each holder of an Allowed General Unsecured Claim receiving payment in full in cash on the later of the date due in the ordinary course of business and the Effective Date, or such other treatment as renders the claim unimpaired under section 1124 of the Bankruptcy Code. No distribution will be made on account of any such claim satisfied prior to the Effective Date pursuant to a Final Order of the Bankruptcy Court.
• The RSA imposes an accelerated milestone schedule:
  • Entry of the Interim DIP Order and execution of the Mexican Security Trust Agreement, Share Pledge and Non-Possessory Pledge Amendments within two business days of the Petition Date, with perfection steps — including notarization and registration under applicable Mexican law — to be completed within the timeframes set forth in those agreements.
  • Entry of the Final DIP Order, approval of the Disclosure Statement and entry of the Confirmation Order within 40 calendar days of the Petition Date.
  • Occurrence of the Effective Date within 55 calendar days of the Petition Date, subject to extension.

Proposed DIP Financing

• The Debtors commenced these cases with commitments from the DIP Lenders for a $409 million superpriority debtor-in-possession facility, of which $279 million represents incremental capital to right-size operations and normalize working capital.
  • In the months before filing, the Debtors struggled to make necessary payments to vendors and suppliers, and stopgap measures to extend payment terms proved unsustainable, placing key counterparty relationships at risk.
  • The Debtors’ most pressing liquidity need is to normalize working capital and increase production at the Complex, which extreme liquidity constraints had reduced to a fraction of maximum capacity at a cost of hundreds of millions of dollars in lost opportunity.
• Upon entry of the Interim Order, the Debtors expect to promptly deploy an initial $230 million draw to lift production toward design levels—nearly tripling utilization from recent lows—supporting the restructuring transactions and maximizing the value of the Complex for all stakeholders.
  • Absent this liquidity injection, the Debtors would continue operating at suboptimal levels, incur additional opportunity costs, destroy value, face operational disruption and likely confront a liquidation scenario.
• Management, with the assistance of A&M, developed 13-week and long-term cash flow forecasts reflecting anticipated receipts and disbursements, the effect of the Chapter 11 Cases, professional fees and payments tied to the anticipated operational ramp-up.
  • Based on that analysis and in consultation with the Debtors’ other advisors, the Independent Director and management, A&M assessed that the Debtors require $350 million in incremental capital, in the form of both the DIP Facility and the new money equity contribution, to administer the cases, sustain ordinary course operations and stabilize liquidity post-emergence in a volatile, commodity-driven business, with the majority of the funding directed toward rebuilding operations as expeditiously as possible.
  • The DIP Facility was approved by unanimous shareholder resolution, including with the support of Etileno XXI, prior to the commencement of the Chapter 11 Cases.

Prepetition Solicitation and Path Forward

• On August 17, 2026, the Debtors commenced prepetition solicitation of votes to accept the Plan, distributing the Plan, Disclosure Statement and applicable Ballot to each holder of an Impaired Claim, with a voting deadline of September 17, 2026 — making these prepackaged Chapter 11 Cases.
• Entry into the RSA allowed the Debtors to file with the support of a substantial majority of their secured creditors and other key stakeholders, positioning the cases for an efficient, comprehensive financial restructuring.
• Although the Debtors believe the fundamentals of the business remain strong and that the Company is poised to continue its success as a leading petrochemical enterprise, the Chapter 11 Cases are necessary to right-size the balance sheet and manage existing obligations, relieving strained working capital and improving operating performance for the benefit of all stakeholders.

First Day Relief

To minimize disruption to the business, customers and employees and to ensure continued ordinary course operations postpetition, the Debtors have filed a series of customary First Day Motions.

• Administrative and procedural: joint administration of the Chapter 11 Cases; authority to file a consolidated creditor matrix and consolidated list of the 30 largest unsecured creditors, redact certain personally identifiable, confidential and commercially sensitive information, and serve certain parties in interest by email; and retention of Kroll Restructuring Administration LLC as claims, noticing and solicitation agent.
• Business operations: authority to operate in the ordinary course and implement the automatic stay; pay employee wages and related obligations and maintain employee benefit programs; pay certain taxes and fees; continue prepetition insurance policies and pay related obligations; pay prepetition trade claims in the ordinary course and honor prepayment arrangements, with administrative expense priority confirmed for prepetition purchase orders; and continue the existing cash management system, prepetition bank accounts, payment methods and business forms, with a waiver of the restrictions imposed by section 345 of the Bankruptcy Code.
• Solicitation procedures: scheduling of a combined hearing on the adequacy of the Disclosure Statement and confirmation of the Plan, together with objection deadlines and procedures, approval of the solicitation procedures and the form and manner of notice, a waiver of the requirement to mail solicitation packages to non-voting classes, and conditional relief directing that no meeting of creditors be convened and waiving the requirement to file schedules of assets and liabilities and statements of financial affairs.
• DIP Motion: interim and final orders authorizing postpetition financing and the use of cash collateral, granting liens and superpriority administrative expense claims, granting adequate protection to the Prepetition Secured Parties and modifying the automatic stay. The key terms of the DIP Facility and the Debtors' financing negotiations are addressed in the separately filed Declaration of Christian Tempke.