Compass Coffee - Chapter 11 DIP Terms

Compass Coffee obtained final approval for a $450,000 junior secured DIP facility from National Investment Group to fund an asset sale process, making the full commitment available following a $100,000 interim authorization while providing prepetition secured creditors with replacement liens and continued debt service payments as adequate protection.

DIP Terms

Borrower(s) / Guarantor(s)

  • Compass Coffee, LLC, as Debtor

Agent / Lender(s)

  • National Investment Group, Inc., as DIP Lender

DIP Commitments

  • $450,000 junior secured, superpriority financing facility (the "Borrowing Limit"), of which:
    • $100,000 was previously authorized on an interim basis
    • The full $450,000 is now authorized on a final basis

Cash Collateral

  • The Debtor is authorized to use cash collateral in accordance with the approved budget to address working capital needs, preserve the value of the estate, and complete the asset sale process.

Interest Rate (per Doc 5)

  • 10.0% per annum, payable on the maturity date

Maturity (per Doc 5)

  • The earliest to occur of:
    • April 30, 2026
    • The effective date of a confirmed plan of reorganization or liquidation
    • Consummation of a sale of substantially all assets
    • Dismissal or conversion of the chapter 11 case
    • Termination of the DIP Lender's obligations following an event of default

Carve-Out

  • Post-Carve-Out Trigger Notice Cap: $150,000 for allowed professional fees incurred after the first calendar day following delivery of a trigger notice.
  • Chapter 7 Trustee Fee: $10,000
  • Statutory fees payable to the Clerk of the Court and the U.S. Trustee, plus interest.
  • All allowed professional fees incurred prior to the delivery of a Carve-Out Trigger Notice.

Use of Proceeds

  • Address working capital needs
  • Preserve the value of the estate
  • Complete the process of selling all assets or otherwise effectuating a value-maximizing transaction

Securities and Priorities

  • DIP obligations constitute superpriority senior administrative expense claims against the Debtor, with priority over all other administrative expense claims, subject only to the Carve-Out.
  • The DIP Lender is granted liens on all property of the Debtor, junior to any liens held by the Secured Creditors, subject to the following exclusions:
    • Liens shall not attach to the Debtor’s causes of action (including Chapter 5 claims, claims against directors and officers, and turnover claims).
    • Liens shall not attach to non-residential real property leases, but shall attach solely to the proceeds of those leases.

Adequate Protection

Prepetition Secured Creditors

  • Applicable to EagleBank, the Small Business Administration, Square Financial Services, Inc., and inKind Card, Inc. (collectively, the "Secured Creditors").
  • Replacement liens on postpetition cash collateral to the extent of any diminution in value, with the same validity and priority as held on the petition date.
  • Continued payment of debt service obligations during the sale process.

Waivers

  • The Final Order is effective immediately upon entry, waiving any applicable stay under the Bankruptcy Code or Bankruptcy Rules (including Bankruptcy Rule 6004).

Permitted Variance

  • The Debtor is authorized to use cash collateral in accordance with the budget, subject to a 10% variance for each line item.