Brewster Heights Packing & Orchards - Chapter 11 Plan Terms

Plan / RSA Terms

Overview

• Brewster Heights Packing & Orchards, LP, a marketer and shipper of apples, cherries and pears headquartered in Brewster, Wash., and doing business as Gebbers Farms, filed a combined disclosure statement and Chapter 11 plan of liquidation on Sept. 29, 2026, proposing to sell substantially all assets to stalking horse Heritage Orchard Alliance LLC and distribute the proceeds to creditors, with the debtors' remaining estates wound down through non-reorganizing entities.
• The auction scheduled for Aug. 24, 2026 did not go forward: having received no bid other than Heritage Orchard's stalking horse bid, the debtors filed a notice of cancellation on Aug. 31, 2026, leaving that single transaction as the only bid. The sale hearing was scheduled for Sept. 23, 2026, and the plan, although filed Sept. 29, states only that the Court is anticipated to enter a sale order at that hearing.
• Consideration under the amended and restated asset purchase agreement is stated in the plan's liquidation analysis at $253 million: a $73.75 million cash purchase price, a $1.25 million deposit released at closing, and assumed debt of $155.6 million of re-tranched Prudential term loans, $17.5 million of BMO debt, the $701,000 North Cascades term loan and the contingent $4.26 million Homestead term loan. Before closing the buyer may make an equity designation as to any debtor, taking 100% of that debtor's equity so that it becomes a reorganizing debtor; absent a designation, that debtor's assets are sold and its existing equity remains intact.
• The debtors filed on June 4, 2026, and the U.S. Trustee appointed an official committee of unsecured creditors on June 16, 2026 consisting of HR Spinner Corp., Nutrien Ag Solutions, Wilbur-Ellis Company, LLC, Sierra Aeronautics, LLC, Chamberlin Agriculture, Whitley Fuel, Pacific Label, Northwest Wholesale, Inc. and WAFLA. Committee member Wilbur-Ellis also holds the asserted crop lien and UCC claims the plan classifies in Classes 3 and 6, and its adequate protection motion over the 2026 crop proceeds has been continued to Oct. 8, 2026; committee member Nutrien Ag Solutions holds the largest scheduled § 503(b)(9) claim, $543,952.

Key Dates

• Petition date: June 4, 2026.
• General bar date: Aug. 13, 2026; the Court set separate deadlines for PACA and Bankruptcy Code § 503(b)(9) claims by order entered Aug. 14, 2026.
• Sale hearing: Sept. 23, 2026, at which the plan anticipates entry of the sale order.
• BMO settlement: to be entered into in writing among BMO, the buyer and the debtors no later than Oct. 7, 2026.
• Continued hearing on the Wilbur-Ellis adequate protection motion: Oct. 8, 2026, after continuances from Sept. 1 and Sept. 14.
• Confirmation hearing: Oct. 27, 2026.
• Prudential settlement: to be approved by the Court on or before confirmation.
• Plan supplement: filed, to the extent reasonably practicable, no later than three days before the confirmation hearing, subject to the debtors' right to amend its documents and exhibits.
• Administrative claims bar date: 30 days after the effective date, excluding professional fees and ordinary course administrative expenses; professional fee applications are due on the same 30-day timeline.
• Claims objection deadline: 120 days after the effective date, subject to extension by the Court, and inapplicable to claims filed after confirmation.
• Effective date backstop: if the conditions precedent are neither satisfied nor waived within 60 calendar days after the confirmation date, or such later date as the debtors agree, the confirmation order is vacated, no distributions are made, all parties are restored to the status quo as of the day before the confirmation date and the plan is deemed withdrawn, with the debtors to file written notice of that occurrence.

Path Into Chapter 11 and Marketing Process

• The company, a sixth-generation family business with roots in Brewster dating back more than a century and fully integrated operations spanning cultivation, packing and storage facilities and a sales and marketing platform through non-debtor subsidiary Chelan Fresh, had been operating since approximately the fourth quarter of 2024 under an increasingly acute liquidity squeeze driven by over-levered debt, competing positions taken by its senior secured lenders and the working-capital demands of the 2025 crop cycle. Statewide conditions compounded the distress: Washington agricultural operators recorded an estimated cumulative take-home pay of negative $300 million in 2024, the lowest returns-to-operators figure in the nation; production expenses for Washington producers have nearly doubled since 2016, with the state eighth nationally in production expenses but 42nd in net farm income; labor alone accounted for 99% of the average apple producer's return per bin in 2023; and the state's concentration of apple and cherry production declined 7% and 52%, respectively, between 2017 and 2023.
• The debtors remained current on all scheduled debt service but tripped financial covenants under their Prudential and BMO loan documents in late 2024 and May 2025, respectively, after which the prepetition secured lenders required a prompt sale or refinancing to take them out in full. The debtors retained Capstone Capital Markets, LLC and launched a formal marketing process in June 2025, which included extensive and exclusive but unsuccessful negotiations with a single interested party.
• As a condition of forbearance extensions through Aug. 31, 2025, the debtors ran an expedited sale-or-restructuring process that yielded four indications of interest, two of which showed potential; the lenders extended forbearance through Nov. 15, 2025 to allow those proposals to be explored, but neither came to fruition by the end of 2025. In January 2026 the debtors held extensive discussions with the lenders over a range of alternatives.
• At the end of March 2026 BMO exercised its right to cut off the debtors' use of its cash collateral. To avoid an immediate Chapter 11 filing or receivership, the company obtained a bridge loan from Backstop Ag Capital for operating expenses, designed to delay a filing until May while alternative liquidity was explored and to fund cultivation of the 2026 crop; as conditions of that loan the debtors were required to prepare for a May 1, 2026 filing and to appoint an independent director.
• Capstone continued marketing through April and May 2026, contacting more than 80 potentially interested parties and entering into 49 nondisclosure agreements as of the petition date. The process produced seven letters of intent, and the board approved a letter of intent with a Heritage affiliate for a sale or restructuring of substantially all assets under Bankruptcy Code § 363.
• Postpetition, the Court entered an interim order on June 12, 2026 requiring exclusive negotiation with a Heritage affiliate toward a definitive stalking horse agreement through July 1, 2026, and on June 16, 2026 allowed that affiliate its reasonable and necessary legal and diligence expenses from the petition date through July 1, 2026. Bid procedures were approved July 9, 2026, Heritage Orchard was designated stalking horse bidder on Aug. 5, 2026, and the auction scheduled for Aug. 24, 2026 at 10:00 a.m. Pacific Time at the offices of Bush Kornfeld LLP was cancelled by notice filed Aug. 31, 2026 for want of competing bids.

Prepetition Capital Structure

• Size: the debtors owed prepetition secured lenders Prudential Insurance Company of America and BMO Bank, N.A. (successor-in-interest to Bank of the West) no less than approximately $225.2 million in the aggregate as of the petition date, though the minimum Prudential and BMO obligations the plan recites from the final DIP order's findings total approximately $225.4 million.
• Prudential: under a May 28, 2020 loan agreement as amended, together with related notes, deeds of trust and security agreements, Prudential holds liens on most of the debtors' real property and certain personal property and their proceeds, rents and profits. Subject to a timely committee challenge, the final DIP order found the debtors liable for no less than $162.34 million plus interest, default interest, fees and costs; found the Prudential liens valid and properly perfected; and found them senior to all other liens on the Prudential collateral except permitted senior liens, the terms of the Sept. 10, 2025 amended and restated intercreditor agreement among Prudential, BMO and the debtors, and other liens senior as of the petition date.
• BMO: under a June 10, 2021 syndicated loan and security agreement and an Aug. 29, 2022 real estate loan and security agreement, each as amended, the final DIP order found, again subject to challenge, syndicated obligations of no less than $56.5 million and real estate obligations of no less than $6.6 million, in each case plus interest, fees, costs, protective advances and indemnification obligations; that BMO held valid, perfected liens on substantially all personal property of the BMO obligors; and that the debtors acknowledged those liens were senior to all other prepetition liens, claims and interests subject only to the intercreditor agreement and other liens senior as of the petition date.
• Backstop: the bridge loan was extended to BHPO under a term sheet and budget dated March 25, 2026 among BHPO, Prudential and Backstop in an original principal amount of $8 million, to fund initial 2026 orchard crop production expenses, administrative and professional fees, and the debtors' Chapter 11 preparation, secured by a lien on BHPO's 2026 crop perfected by a UCC-1 filed April 16, 2026. The final DIP order directed the debtors to escrow DIP proceeds sufficient to repay the Backstop obligations in full, including interest through the Backstop challenge deadline, with the final DIP budget reflecting a payoff of approximately $8.556 million; the challenge deadline expired with no challenge commenced and no extension, and the escrowed funds were released to Backstop in full and indefeasible satisfaction, terminating the Backstop liens.
• Wilbur-Ellis: asserts a total claim of approximately $6.0 million for chemicals provided and applied to the debtors and their crops, of which the asserted crop lien claim is $2.7 million as of the petition date, based on UCC-1 filings made April 30, 2026 with the Washington State Department of Licensing against 11 debtors under RCW 60.11.020 and 60.11.030. A separate UCC-1 filed against BHPO on April 16, 2026 asserting a lien in crop-related collateral underlies the asserted UCC secured claim, which the liquidation analysis carries at $3.3 million as the balance of the Wilbur-Ellis claims; the debtors state that filing came too late to attach a 2025-crop priority supplier lien, would be junior to previously filed liens if read as an Article 9 security interest, and, having been filed within 90 days of the petition date, would be subject to avoidance under § 547 to the extent it secures antecedent debt.
• Homestead: Happy Valley USA Credit III, LLC made a $4.2 million term loan to certain debtors on or about May 19, 2022 secured by a mortgage, assignment of rents and security agreement recorded in Okanogan County against nine parcels, and asserts a claim of not less than $4.26 million as of the petition date.
• North Cascades Bank: a $1.4 million loan to BHPO secured by six Douglas County parcels and a fixture filing, with the debtors' records reflecting approximately $701,000 owed as of the petition date.
• PACA: the debtors believe entities assert PACA trust claims, which attach to a floating trust over perishable agricultural commodities, derived inventories and the receivables and proceeds of their sale for the benefit of unpaid sellers until paid in full. Four PACA claims were filed by the Sept. 4, 2026 PACA bar date, and the liquidation analysis estimates allowed PACA claims at $1.2 million.
• Unsecured: the debtors estimate total unsecured claims of $19.0 million to $28.0 million based on the schedules and claims filed by the general bar date, of which nonaffiliated general unsecured claims are $11.3 million to $16.7 million. The debtors believe the only priority claims are the Chelan, Douglas and Okanogan county treasurers' property tax claims to the extent not secured by statutory liens; the liquidation analysis carries no priority tax claim, treating the IRS's $1.3 million asserted priority for 2026 FICA as paid at closing or within postpetition payables.

DIP Financing and Cash Collateral

• Amount: the Court authorized a senior secured DIP facility from Sandton Capital Solutions Master Fund VI, LP in an amount not to exceed $50 million, through interim orders entered June 9 and June 10, 2026 and a final order entered July 9, 2026.
• The debtors filed a notice of further hearing on Aug. 5, 2026 seeking amendments to the DIP facility and the final DIP order that would, among other things, increase the facility to an amount not to exceed $60 million. The plan does not say whether the increase has been approved, but its liquidation analysis assumes the facility fully drawn, estimating the DIP claim at $70.3 million as of the assumed Oct. 31, 2026 measuring date, including a $60 million draw and $10.3 million of accrued interest and fees, and projecting $16.0 million of cash at that date, which is not an acquired asset and remains with the estates.
• Collateral and priority: the DIP lender holds liens on all of the debtors' property, senior to all other liens except the permitted senior liens, consisting of specified collateral in which BMO holds a prepetition security interest, prepetition purchase money security interest liens, the Happy Valley mortgage and the North Cascades mortgage.
• The Court also authorized use of Prudential's and BMO's cash collateral upon provision of the adequate protection identified in the final DIP order. Wilbur-Ellis filed its own adequate protection motion on Aug. 14, 2026 asserting a statutory lien on the debtors' 2026 crop proceeds under RCW 60.11.020(2); the hearing, first held Sept. 1, was continued to Sept. 14 and then to Oct. 8, 2026, and the debtors intend to confer with Wilbur-Ellis, the prepetition secured lenders and the committee on a resolution before then. The plan nonetheless defines the $2,705,545 Wilbur-Ellis reserve by reference to an agreed adequate protection order at ECF 460, without reconciling that order with the still-pending motion.
• The final DIP order establishes a carve-out and fixes the relative priorities of the DIP, BMO and Prudential superpriority claims, each of which the plan's administrative expense treatment expressly preserves. Per the liquidation analysis, the carve-out covers Clerk and U.S. Trustee fees, trustee fees under § 726(b) up to $50,000, and professional fees of the debtors and the committee up to $9.8 million and $1.9 million, respectively, with an accrued and unpaid balance of $1.1 million at the measuring date.

Means of Implementation

• The debtors will obtain the Prudential postpetition loan and close the approved sale under the asset purchase agreement and the sale order; the sale order's free-and-clear and no-successor-liability provisions apply to the approved sale, including to the issuance of any security interests in connection with an equity designation as to Classes 13B through 13M.
• Prudential postpetition loan: up to $15 million to BHPO and the Gebbers family, approved in connection with the Prudential settlement and made at closing to fund or backstop a working capital escrow of up to $10 million, which the buyer will not pay in cash but Prudential will fund as agreed with the buyer, and up to $5 million of cash necessary for closing, with documentation subject to Prudential's sole discretion.
• Gamble Sands properties sale: on or before the effective date the debtors will close the sale of the Gamble Sands properties to the Gebbers family for $9.6 million, free of liens, claims and encumbrances under § 363, with net proceeds shared 50-50 between the buyer and Prudential under the Prudential settlement and applied as provided in the plan's Class 11 treatment.
• Payment sources: allowed claims will be paid from net sale proceeds, proceeds of the Prudential postpetition loan, estate proceeds and cash on hand, after reserving amounts projected as necessary to complete the wind-down; distributions follow the sale order, which the debtors state complies with the Bankruptcy Code priority scheme, and the plan. The non-reorganizing debtors serve as disbursing agent.
• Vesting and corporate existence: all estate assets vest in the non-reorganizing debtors on the effective date, while assets of a reorganizing debtor that are to be sold to the buyer remain with that entity free and clear of liens, claims, causes of action, encumbrances and successor liability except as expressly set out in the sale order; the debtors continue to exist under their formation-state law and existing governing documents except as amended under the plan, and may operate, use, acquire and dispose of property after the effective date without Court supervision and free of Bankruptcy Code and Rules restrictions other than those the plan or confirmation order imposes.
• Cancellation of indebtedness: on the effective date all notes, instruments and documents evidencing indebtedness, obligations or interests are cancelled and terminated, except for the purpose of evidencing a right to distribution, assumed executory contracts, and instruments that are unimpaired, reinstated or amended and restated under the plan.
• Securities and transfer taxes: equity interests issued in connection with an equity designation, to the extent they are or could be securities under § 2(a)(1) of the Securities Act of 1933, are exempt from registration under § 1145. All real property sales under the plan are free and clear, with proceeds paid per the plan; the debtors will be exempt from Washington real estate excise tax under WAC 458-61A-207 as to any post-confirmation real property sale, and instruments of transfer delivered after confirmation may not be taxed under any stamp or similar tax pursuant to § 1146.
• All rights, claims and causes of action of the debtors against all persons, whether legal or equitable, are reserved for and assigned to the debtors, to be treated under the plan's terms.

Prudential Settlement

• The settlement, among Prudential, the buyer, the Gebbers family and others, is to be approved by the Court on or before confirmation; under the plan it designates the Gamble Sands properties and governs the 50-50 split of their net sale proceeds, sets the contribution margin payable to Prudential, underpins the Prudential postpetition loan, can expand Prudential's recovery on assigned D&O claims beyond policy proceeds, and allocates any excess Class 11 repayment sources.
• Prudential assumed claims: all claims held by any debtor against the included directors and officers, meaning Mac Gebbers, John "Cass" Gebbers and any pre-petition director or officer other than the excluded directors and officers, including D&O claims covered by the D&O policy, on which Prudential's recovery is limited to policy proceeds except as the settlement otherwise provides, and avoidance actions.
• Prudential is paid a contribution margin under the settlement generated from packing fruit grown on land the buyer leases back to the Gebbers family, at least 500 acres of specified real property as further described in the sale order.
• The plan's release does not release the Prudential assumed claims.

BMO Settlement

• BMO, the buyer and the debtors are to enter into a written settlement no later than Oct. 7, 2026 fixing the BMO allocated amount, the portion of the purchase price allocated to the BMO released collateral, payable as agreed in that settlement or as otherwise agreed between the parties.
• BMO released collateral: the rolling stock and equipment described on Schedule BMO-1 to the asset purchase agreement, the real property described on Schedule BMO-2 together with all improvements and appurtenances, and the equity interests in Chelan Fresh held by any debtor, in each case excluding any BMO retained collateral.
• BMO retained collateral: the 2025 crop, 2025 crop inventory, 2025 crop receivables, 2025 crop insurance proceeds and 2025 crop government payments, together with all proceeds, products, substitutions, replacements, accessions and rights to payment, all deposit accounts holding any of the foregoing and the funds therein, and the books and records reasonably necessary to administer and collect them, excluding BMO's and any lender's internal credit files, whether arising before or after closing. The liquidation analysis carries the 2025 crop receivable at $11.7 million, 90% of a $13.0 million face, in both columns.
  • Turnover: any debtor, post-confirmation debtor, reorganized debtor, disbursing agent or buyer receiving proceeds of BMO retained collateral at any time must hold them in trust for BMO, segregated from other funds, and promptly remit them without setoff, recoupment, deduction or counterclaim.
  • No surcharge, marshaling or additional liens: the debtors, the estates and the post-confirmation debtors waive any right to surcharge the BMO retained collateral under Bankruptcy Code § 506(c), any right to require BMO to marshal collateral, and any right to encumber that collateral with additional liens or security interests.
  • The plan's injunction expressly does not affect BMO's rights with respect to the BMO retained collateral.

Treatment of Claims and Interests

• Where the plan's treatment of a claim or interest is inconsistent with the sale order, the sale order supersedes and governs. No distribution will be made on account of any disallowed claim.
• Administrative expense claims (unclassified, unimpaired, not entitled to vote): paid in cash from estate assets in the unpaid amount on the later of the effective date and the date the claim becomes allowed, or as soon as reasonably practicable thereafter. Treatment is subject to and does not alter the carve-out or the relative priorities of the DIP, BMO and Prudential superpriority claims under the final DIP order, and distributions on all other administrative expense claims come only after satisfaction of or reservation for those items. The claims consist primarily of § 503(b)(9) claims, professional claims and U.S. Trustee fees; requests for payment, professional fee claims and U.S. Trustee fees must be filed and served within 30 days after the effective date or be forever barred, and the debtors reserve all objection rights.
• Priority tax claims (unclassified, unimpaired, not entitled to vote): paid in full in cash from estate assets out of net sale proceeds, on the later of the effective date, the first business day at least 10 business days after allowance, and the date the debtor receives sufficient net sale proceeds, or as soon as reasonably practicable thereafter, absent agreement to less favorable treatment.
• Class 1, PACA trust claims (unimpaired, not entitled to vote): paid from net sale proceeds ahead of every other class.
  • Claims allowed as of closing are paid from net sale proceeds at closing.
  • A PACA trust claim reserve equal to the total of claims not yet allowed or disallowed is held back from net sale proceeds.
  • On resolution by agreement or Court determination, the allowed portion is paid within 10 days of allowance; any disallowed portion is reallocated to net sale proceeds and distributed under the plan.
• Class 2, DIP lender claim (unimpaired, not entitled to vote): at closing, after payment of or reservation for Class 1 claims and payment of the BMO allocated amount to the Class 5 holder, net sale proceeds are paid to the DIP lender in satisfaction of the claim.
• Class 3, Wilbur-Ellis asserted crop lien claim (impaired, entitled to vote): at closing, after the Class 2 claim is paid in full, paid from the Wilbur-Ellis reserve of $2,705,545 held back from sale proceeds under the agreed adequate protection order at ECF 460. If the crop lien is unresolved at the effective date the reserve continues to be held pending allowance or disallowance, and the allowed portion is paid from the reserve within 10 days of resolution. Any shortfall becomes a Class 9 claim; any excess in the reserve is released and becomes net sale proceeds.
• Class 4, Prudential prepetition obligations less the buyer assumed Prudential prepetition obligations (impaired, entitled to vote): treated and paid from two sources.
  • Any non-buyer assumed 2026 crop-related proceeds are paid to Prudential as a dollar-for-dollar reduction of the claim.
  • At closing, after payment in full of Class 2 and payment of Class 3 or funding of the Wilbur-Ellis reserve as applicable, net sale proceeds attributable to the Prudential prepetition collateral are paid to Prudential, except that proceeds attributable to collateral in which Prudential's lien is subordinate to BMO's under the intercreditor agreement go first to BMO to reduce its Class 5 claim.
  • Any unsatisfied remainder is the Prudential deficiency claim and becomes a Class 12 claim.
• Class 5, BMO prepetition obligations secured by the BMO prepetition liens (impaired, entitled to vote): BMO receives the BMO allocated amount at closing, reducing the claim dollar-for-dollar, and retains its liens, security interests and rights in the BMO retained collateral, which remains subject to administration and collection by BMO under the BMO settlement, the sale order and applicable nonbankruptcy law. After applying the allocated amount and all recoveries from the retained collateral, any remaining unpaid portion is the BMO deficiency claim and becomes a Class 12 claim.
• Class 6, Wilbur-Ellis asserted UCC secured claim (impaired, entitled to vote): on the effective date the Wilbur-Ellis UCC filing is deemed void and of no further effect against any debtor and against BMO and the BMO retained collateral, and Wilbur-Ellis may not assert any lien, claim, trust or interest in that collateral or its proceeds; subject to being allowed as a nonaffiliated general unsecured claim, the Class 6 claim is included in Class 9 and treated in all respects as a Class 9 claim. The plan does not affect the UCC filing's effect against any non-debtor.
• Class 7, allowed secured claim of Homestead (impaired, entitled to vote): treated in accordance with the sale order upon closing.
• Class 8, allowed secured claim of North Cascades Bank (impaired, entitled to vote): treated in accordance with the sale order upon closing.
• Class 9, allowed nonaffiliated general unsecured claims (impaired, entitled to vote): each holder is paid its pro rata share of the nonaffiliated unsecured pool and holds a Class 12 claim for the unsatisfied balance once the pool has been fully distributed.
• Class 10, allowed affiliate claims (impaired, entitled to vote): excluded from the nonaffiliated unsecured pool; each holder is instead included in Class 12 and treated as a Class 12 holder.
• Class 11, Prudential postpetition loan (unimpaired, not entitled to vote): accrues interest at 12% per annum and is repaid in full on or before 60 months after the closing date, from sources including:
  • the Prudential assumed claims, assigned to Prudential or its designee as of the closing date, with net recoveries reducing the loan balance dollar for dollar;
  • a security interest granted as of the closing date in the proceeds of the Prudential assumed D&O claims, up to the maximum applicable policy limits;
  • the Prudential Gamble Sands proceeds, reducing the loan balance dollar for dollar;
  • the Prudential contribution margin, reducing the loan balance dollar for dollar; and
  • after the Class 11 claim is paid in full, any remaining proceeds from those sources are allocated among the buyer or repayment of the buyer assumed Prudential prepetition obligations as provided in the Prudential settlement.
• Class 12, deficiency claims (impaired, entitled to vote): consists of the Prudential deficiency claim, the BMO deficiency claims, the Class 9 deficiency claims and the Class 10 claims; each holder is entitled to a pro rata distribution of estate asset proceeds, if any, after Classes 1 through 6 are paid in full, and holders have no interest in and may not recover from the nonaffiliated unsecured pool.
• Class 13, equity interests in the debtors (insiders, not entitled to vote): interests remain intact following confirmation, subject to treatment at closing by sub-class.
  • Class 13A, the equity interests in BHPO, remain intact following closing.
  • Classes 13B through 13M, covering GFI, Gebbers Orchards, C&M, D&E Storage, Eastco, GFSA, Northco, P&G Orchards, REPO, TJF Properties, Westco Orchards and Westco Sales: if the buyer makes the equity designation, the existing interests are deemed cancelled at closing and new interests deemed simultaneously issued so that the buyer or its designee holds 100% of the equity in that reorganizing debtor; if the buyer does not, the interests remain intact. In either case holders receive no distribution on account of their equity interests.
• Deemed deletion: any class that, as of the commencement of the confirmation hearing, contains no holder of an allowed claim or interest or of a claim or interest temporarily allowed under Bankruptcy Rule 3018 is deemed deleted from the plan for all purposes, including for determining acceptance under § 1129(a)(8).
• The plan's classification summary lists "Classes 13A-13H: Equity Interests," while the treatment provisions and the free-and-clear provision run through Class 13M, covering all 13 debtors.

Unsecured Creditor Recoveries

• Nonaffiliated unsecured pool: $1.1 million to be deposited into escrow by the debtors prior to or at closing, plus any amounts remaining in the committee fee escrow after payment of committee professional fees incurred after the sale order date and approved by the Court. The pool is reserved exclusively for distributions on allowed nonaffiliated general unsecured claims and may not be reduced by setoff, deduction or use for any other purpose.
• Committee fee escrow: $400,000 funded by the debtors prior to or at closing, disbursed first to pay committee professional fees incurred after the sale order date and approved by the Court, with any unused funds added to the nonaffiliated unsecured pool.
• Nonaffiliated general unsecured claims are general unsecured nonpriority claims other than affiliate claims, the BMO deficiency claim, the Prudential deficiency claim and satisfied claims. Claims entitled to priority under the Code, including § 503(b)(9) claims, are excluded and will be satisfied from assets other than the pool.
• Affiliate claims are general unsecured claims asserted by a member of the Gebbers family or by any holder that is or was an affiliate of the debtors or of the Gebbers family, including the individuals and entities listed on Schedule 2.A.14, any former employee, officer, director, owner, affiliate or agent of any debtor, and any indemnity claims including D&O insurance indemnity claims. The schedule lists roughly 25 creditors, among them Apple House Warehouse & Storage, Inc., Cascade Holdings Group, LP, Gebbers Farm Services LLC, Snyder Flat, LLC, Gamble Sands Resort, Gamble Lumber Company, Cass Gebbers and Mac Gebbers.
• The O'Connell Drilling claim is split: 50% of the allowed claim is an affiliate claim, and 50% is included in nonaffiliated general unsecured claims.
• Per the liquidation analysis, the plan's estimated recoveries are 9.2% for Class 9 ($799,000 on $8.7 million of claims) and for the Class 6 claim ($301,000 on $3.3 million), 0% for Class 10 ($11.2 million) and Class 12 ($78.0 million of deficiency claims), 77.5% for the secured and asserted secured claims grouped as Classes 3 through 5, 7 and 8 ($248.5 million of claims), and 100% for the property tax liens, carve-out, administrative expense claims, Class 1 and Class 2. On a Chapter 7 conversion the secured group would recover 23.4%, and administrative expense claims, Class 6, Class 9, Class 10 and Class 12 would recover nothing. The analysis states that carrying every general unsecured claim in Class 9 would lower the recovery from 9.2% to 4.8%.

Wind-Down

• Administrative reserve: $500,000 reserved and used to fund administrative expense claims associated with the wind-down of the non-reorganizing debtors and the administration of estate assets, funded from the debtors' cash on hand at closing; any amount remaining after the wind-down and administration are complete is the administrative reserve excess.
• Estate assets are the net sale proceeds and the debtors' remaining assets after closing, excluding the administrative reserve and the committee fee escrow but including the administrative reserve excess; the BMO retained collateral and its proceeds are not estate assets.
• Katten Muchin Rosenman LLP and Bush Kornfeld LLP continue as counsel to the non-reorganizing debtors, which may employ and pay professionals post-confirmation from the administrative reserve without further Court order.
• The committee will be dissolved as soon as practicable after the parties agree its professionals' responsibilities are substantially complete, including any appropriate post-confirmation work; committee professionals will then file final fee applications distinguishing services rendered on or before the sale order date from those rendered after it.
• The non-reorganizing debtors and the reorganized debtors are responsible for quarterly U.S. Trustee fees on their respective post-confirmation disbursements until the affected cases close, with the reorganizing debtors' obligation limited to fees attributable to their continued operations.
• Performance of all obligations due on the effective date constitutes full administration of the estates for purposes of § 350 and Bankruptcy Rule 3022 and is deemed substantial consummation under § 1101(2); the Court will enter an order concluding and terminating the cases on appropriate application by the non-reorganizing debtors.

Claims Administration

• The debtors will commence a claims reconciliation and distribution process for nonaffiliated general unsecured claims before or as soon as practicable after the effective date, to facilitate Class 9 distributions promptly. Costs of that process, including professional fees, are borne by the estates and may not be paid directly or indirectly from the nonaffiliated unsecured pool, are not the responsibility of committee professionals and are not payable from the committee fee escrow, provided that the debtors may request assistance from committee professionals with the associated fees separately budgeted, and that no additional buyer funding is required.
• After the effective date the non-reorganizing debtors may, on behalf of themselves and the reorganizing debtors, file, withdraw or litigate objections to claims, settle or allow claims and disputed claims without further Court approval, amend the schedules, and adjust the claims register accordingly. Each debtor is deemed to assign to the non-reorganizing debtors all defenses, counterclaims and setoffs against claims and all claims for relief against any other party.
• No payment or distribution is made to the holder of a disputed claim until it is determined to be allowed, though distributions to other creditors in the same class are unaffected by delay in resolving it; upon allowance, the holder is paid the amount it would have received had the claim been allowed on the effective date.

Releases

• As of the closing date the debtors and their estates release all retained estate claims, as defined in the asset purchase agreement, against the released parties: the excluded directors and officers; any member of the Gebbers family and their immediate family members; Cascade Holdings Group, LP and its affiliates and insiders; Apple House Warehouse and Storage, Inc. and its affiliates and insiders; and AltaFresh dba Chelan Fresh Marketing and its affiliates and insiders, with the non-released parties carved out of each of the latter four categories.
• Non-released parties: Mac Gebbers and John "Cass" Gebbers, who are also named among the included directors and officers against whom the estates' claims are assigned to Prudential.
• Excluded directors and officers, who are released: Daniel Gebbers, Brooke McGuire, Chris McCarthy, Thomas Riggan, Clay Gebbers, Johnny Gebbers, Peter Richter, Craig Barbarosh and Robert Warshauer.
• The release does not extend to the Prudential assumed claims, and nothing in the plan affects any release granted to any party in the final DIP order.

Exculpation

• Exculpated parties are released and exculpated, to the maximum extent permitted by applicable law, from any claim, obligation, suit, judgment, damage, demand, debt, right, cause of action, remedy, loss and liability for conduct occurring on or after the petition date through the effective date in connection with or arising out of the filing and administration of the cases, including the negotiation, preparation, filing and efforts to seek approval of the final DIP order and its amendments, the sale order and the disclosure statement; confirmation and consummation of the plan and solicitation of votes; the funding of the plan; the occurrence of the effective date; administration of the plan and the property to be distributed; and the transactions in furtherance of any of the foregoing. Acts or omissions constituting gross negligence, fraud or willful misconduct as determined by a final order are carved out, and the exculpation is in addition to, not in limitation of, other releases, indemnities and protections.
• The exculpated parties are the debtors, Prudential, BMO, the committee, the DIP lender, Backstop, Homestead, the buyer, North Cascades Bank, Cascade Holdings Group, L.P. and Apple House Warehouse & Storage, Inc., both of which appear on the plan's affiliate-claims schedule and the latter of which is 31% owned by BHPO, and each of their respective members, attorneys, consultants, financial advisors, accountants and other advisors and agents acting in that capacity.

Non-Discharge, Injunction and Subordination

• The plan does not discharge the debtors, per Bankruptcy Code § 1141(d)(3), but § 1141(c) leaves the property dealt with by the plan free and clear of claims and interests; accordingly no entity holding a claim may receive payment from or seek recourse against any debtor, the buyer or any assets to be distributed other than the assets the plan requires be distributed to it, and all parties are precluded from asserting against distributed or retained property any claims, rights, causes of action, liabilities or interests based on pre-effective-date acts except as the plan or confirmation order expressly provides.
• Except as expressly provided in the plan or in obligations issued under it, including the Prudential postpetition loan, all entities are permanently enjoined from and after the effective date from commencing or continuing any action against the estates, the debtors, the buyer or their successors, assigns, assets and properties; enforcing, attaching, collecting or recovering any judgment, award, decree or order against them; creating, perfecting or enforcing any encumbrance against them; asserting any right of setoff or subrogation against any obligation due from them, except where asserted with respect to a timely filed proof of claim; or pursuing any claim, interest or cause of action released under the plan. Any entity injured by a willful violation may seek actual and, in appropriate circumstances, punitive damages. BMO's rights in the BMO retained collateral are unaffected.
• Existing injunctions and stays under §§ 105 and 362 in effect on the confirmation date remain in force until the cases close. The plan binds the debtors and all parties in interest, including every creditor, whether or not impaired and whether or not it accepted the plan, and inures to the benefit of executors, successors, heirs, assigns and persons claiming an interest in property in which a debtor holds a § 541 interest.
• The stay of enforceability of the confirmation order under Bankruptcy Rule 3020(e) will not apply, and the order will be enforceable immediately upon entry absent further Court order.
• Subordination: classification, distributions and treatment under the plan account for and conform to the relative priority and rights of claims in each class in connection with contractual, legal and equitable subordination rights, whether arising by contract, equitable subordination principles, § 510(b) or otherwise. All subordination rights are implemented through the plan and enforcement actions by holders are permanently enjoined, while contractual and structural subordination — including the subordination effected by the plan's treatment provisions — remains enforceable after the effective date by the non-reorganizing debtors on behalf of the estates and by the beneficiaries of that subordination. Negotiable instruments held by holders of allowed claims are deemed exchanged, cancelled or satisfied on the effective date.

Executory Contracts and Unexpired Leases

• The asset purchase agreement provides for assumption by the debtors and assignment to the buyer of those executory contracts and unexpired leases the buyer designates no later than two days before closing; the debtors will file a buyer assumed contracts notice on or before the closing date and serve it on the counterparties identified on Exhibit 4, which sets forth the debtors' executory contracts and is to be provided in the plan supplement.
• The plan constitutes a motion to reject every executory contract and unexpired lease that is not a buyer assumed contract, effective as of the closing date.
• Assumption under the sale order fully releases and satisfies any claims or defaults under the buyer assumed contracts arising at any time before assumption, whether monetary or nonmonetary, including defaults under provisions restricting change in control or ownership composition and other bankruptcy-related defaults; proofs of claim filed with respect to a buyer assumed contract are deemed disallowed and expunged without further Court action.

Conditions Precedent to the Effective Date

• The effective date is the closing date, provided all conditions precedent are satisfied or waived and no stay of the confirmation order is in effect; actions to be taken on the effective date may be taken as soon as reasonably practicable thereafter.
• The conditions are entry of the confirmation order; the confirmation order becoming a final order or the Bankruptcy Rule 3020(e) stay being addressed consistent with the plan's provision that it not apply; entry of the sale order; and the occurrence of closing. The plan does not limit or amend any condition to the buyer's obligations under the asset purchase agreement.
• The debtors may, with the buyer's consent and without notice or further Court authorization, waive any or all conditions in writing, subject to any consent requirements imposed by the confirmation order or applicable law, whereupon the effective date occurs without further action; the debtors reserve the right to assert that any appeal from the confirmation order is moot after the effective date.

Voting and Confirmation

The Court has conditionally approved the disclosure statement, with final approval to be considered at the Oct. 27, 2026 confirmation hearing.

• Classes 3 through 10 and Class 12 are impaired and entitled to vote, though the risk-factor discussion names only Classes 4 through 10; Classes 1, 2 and 11 and the unclassified administrative expense and priority tax claims are unimpaired and not entitled to vote, and Class 13, held by insiders, is not entitled to vote.
• Ballots must be received at the indicated address no later than the voting deadline established by the Court to be counted; failure to vote or a vote to reject does not affect the treatment accorded a claim or interest if the plan is confirmed. A class of claims is deemed to accept if more than one-half in number of voting claimants and at least two-thirds in amount of their allowed claims vote to accept; a class of interests is deemed to accept if at least two-thirds in amount of the shares voted accept.
• The debtors have asked the Court to confirm the plan even if impaired classes reject it, on the basis that the alternatives — dismissal or conversion to Chapter 7 — would only add administrative expense and reduce distributions on allowed claims; if one or more impaired classes reject, the debtors may need to seek confirmation through cramdown under § 1129(b). If the Court declines to confirm, the cases may be dismissed or converted to Chapter 7.

Liquidation Analysis and Best Interests

• The liquidation analysis at Exhibit 3 tests a hypothetical conversion to Chapter 7 on Oct. 31, 2026, assuming the approved sale does not occur and that none of the terms available only under the plan is available to a trustee: assumption of the Prudential, BMO, North Cascades and Homestead debt; the nonaffiliated unsecured pool and committee fee escrow; the Prudential postpetition loan; the Gamble Sands sale; the plan releases; and the assignment of the Prudential assumed claims.
• Net value available for distribution is stated at $132.0 million in the Chapter 7 case against $257.9 million under the plan, against total claims of $353.2 million; the analysis states plan-column distributions of $275.2 million, more than the plan's stated net value, without explaining the difference. Administrative expense claims of $7.66 million recover nothing on conversion, where § 726(b) ranks them behind Chapter 7 expenses and the secured and trust claims exhaust the proceeds.
• Plan-column costs of realization total $22.9 million, including a $10.0 million adjustment escrow funded at closing, a $5.0 million Capstone success fee, $3.2 million of personal property sales tax, $3.0 million of cure costs and post-petition orchard lease crop share, a $1.25 million buyer professional fee reimbursement, the $500,000 administrative reserve, the $400,000 committee fee escrow and $75,000 of committee professional fees over budget. In Chapter 7 the analysis realizes $163.1 million of assets, including $46.8 million of farmland and orchard ground, $17.8 million of machinery and equipment at orderly liquidation value, $17.6 million for the 2026 crop and $11.7 million for the 2025 crop receivable, before $31.1 million of liquidation costs.
• The analysis notes that § 1146(a) and WAC 458-61A-207 each reach only transfers under or following confirmation of a plan, so a trustee's sale would bear Washington real estate excise tax, while Washington retail sales tax on personal property is payable in either case.
• Grounding the estimate, the analysis reports that 10,056 of the debtors' 14,769 scheduled acres are planted in apples and cherries, including 1,659 pre-productive acres, and that the workforce stood at approximately 3,700 as of June 2026, much of it seasonal or employed under the H-2A program. The debtors state that an orchard left neglected is worth the land value less the cost of removing the trees.
• The debtors contend that Chapter 7 would add trustee and professional costs and delay distributions, so that holders of allowed claims would receive less on conversion, satisfying § 1129(a)(7), and state that they will have sufficient assets to carry out the plan, meeting the feasibility requirement.

Risk Factors

• Approval and closing of the sale: Heritage Orchard was approved as stalking horse bidder under the stalking horse designation order, but the proposed sale remains subject to entry of the sale order and closing, and with the auction cancelled for want of competing bids the recovery scenario under the plan depends in significant part on this single transaction; recoveries may be affected if it is not approved, does not close, or does not generate the net sale proceeds the plan contemplates.
• Asserted liens, claims and reserves: the amount, validity, perfection, priority and enforceability of certain asserted liens and claims may affect the funds available for distribution.
• Rejection by impaired classes and the cramdown route, with no assurance the § 1129(b) requirements will be satisfied; the effective date conditions, with no assurance they will be satisfied or waived within the 60-day window; and forward-looking statements concerning the sale, recoveries, claims, distributions and the effective date, which rest on estimates and assumptions that may not reflect actual outcomes.

Other Provisions

• Governing law: Washington law governs construction, implementation and enforcement of the plan and all rights and obligations arising under it, without regard to conflicts principles, except where the Bankruptcy Code, Bankruptcy Rules or other federal law applies and subject to any contract, instrument, release or other document entered into in connection with the plan.
• Event of default: a default occurs if the debtors fail to comply with a material plan provision. The alleging party must give written notice to the debtors and counsel for the non-reorganizing debtors, and if the matter is not resolved or cured within 30 days after receipt of that notice by the non-reorganizing debtors, the reorganizing debtors and their respective counsel, the party may pursue any remedies available under applicable law, without limiting the debtors' right to seek relief from any court of competent jurisdiction.
• Exhibits and schedules annexed to the plan are incorporated into it and are to be approved by the confirmation order; where any exhibit or schedule is inconsistent with the plan, the plan controls.
• The debtors reserve the right under § 1127 and Bankruptcy Rule 3019 to modify or alter the plan at any time before or after confirmation, and state that filing the combined disclosure statement and plan, any statement in it, or any action taken with respect to the plan is not an admission or waiver of any rights against holders of claims and interests. The Court retains jurisdiction until entry of a final decree to ensure the plan's purposes and intent are carried out.