Cumberland Coal Corporation - Chapter 11 DIP Terms

DIP Terms

DIP Commitments

• $1 million senior secured multiple-draw term loan facility, all new money, consisting of:
  • $475,000 available immediately on an interim basis
  • An additional $525,000 available once a final order reasonably satisfactory to CC Reclaim is entered, subject to the final order, the approved budget and definitive loan documentation
• The interim order upsized the facility to deal with an emergency at the Osaka mine. After the petition date, the debtors were told that a turbine pump at the mine needed immediate attention, including contractors to inspect the pump, its components and its system. The expected cost to investigate and repair the problem was $44,000 to $200,000. At the Oct. 27 hearing, the debtors told the court that CC Reclaim was willing to increase the facility by $200,000. The court found that no objections were made, and counsel for ACIN LLC, the counterparty to Cumberland Coal Corporation’s Coal Mining Lease 8224, indicated ACIN’s consent. Accordingly, the interim order increases the total commitment to $1 million and the initial funding to $475,000. The additional $200,000 is to be used under the approved budget, as amended to include the pump repair.
• There is no roll-up. The DIP liens and superpriority claim secure only principal actually advanced on or after the petition date, plus interest, fees and expenses. No prepetition obligation to CC Reclaim, a prepetition lienholder or any other person is refinanced, rolled up or secured by them, although a buyer in the section 363 sale may still assume prepetition obligations.

Borrowers / Lender

• Cumberland Coal Corporation and Cumberland Coal Investments, LLC, as borrowers, jointly and severally liable for the DIP obligations
• CC Reclaim, LLC, an Ohio limited liability company whose sole member is Barry Doyle, as DIP lender; CC Reclaim (or its designee) is also the designated stalking horse bidder

Interest Rate

• 8% per annum
• Default rate: 10% per annum while an event of default is continuing

Fees and Prepayment

• Lender fees and expenses: CC Reclaim’s reasonable fees and expenses, including attorney fees. CC Reclaim must give the debtors a report of fees incurred through the bid deadline two business days before that deadline. If the court approves a sale to anyone other than CC Reclaim or its designee, the fees are payable from cash proceeds at closing.
• Voluntary prepayment: permitted in whole or in part at any time without premium or penalty. Prepaid amounts may not be reborrowed without CC Reclaim’s consent and permanently reduce the total commitment.

Maturity and Repayment

• Dec. 31, 2026, unless extended by agreement of the debtors and CC Reclaim, or earlier on the first to occur of:
  • Consummation of a section 363 sale, whether to CC Reclaim or another buyer
  • Substantial consummation of a confirmed plan of reorganization
  • Acceleration following an event of default
• The DIP obligations must be repaid in full in cash when a sale to a buyer other than CC Reclaim or its designee closes, or on any refinancing of the facility. At CC Reclaim’s option and with court approval, the obligations may be repaid in cash at that closing or applied as a credit bid in a CC Reclaim-approved sale process for all or substantially all of the debtors’ assets. If there are multiple bids and CC Reclaim does not win the auction, it is paid in full at closing and no portion of the facility converts to equity.

Key Dates and Milestones

• Final DIP hearing: Nov. 4, 2026, at 2 p.m. Eastern Standard Time. Objections to the final order were due Oct. 30, 2026, at 5 p.m. (prevailing Eastern Time); if none are filed, the court may enter a final order the debtors present without holding the hearing.
• The debtors filed Chapter 11 on Oct. 20, 2026. The court signed and entered the interim order on Oct. 30, 2026, after hearings on Oct. 22, 27 and 30. The term sheet set filing of the bid/sale procedures motion for Oct. 20, the first-day hearing and interim DIP approval for Oct. 22, and entry of the bid/sale procedures order for Oct. 30.
• Final approval and sale milestones, each extendable with CC Reclaim’s consent:
  • Final DIP approval: Nov. 5, 2026
  • Auction: Dec. 10, 2026
  • Final sale approval: Dec. 16, 2026
  • Sale consummation: Dec. 18, 2026
• Missing a milestone without CC Reclaim’s consent to an extension is an event of default. So is failing to obtain the final DIP order within 30 days after the interim order is entered, or by a later date CC Reclaim agrees to.

Use of Proceeds

• Costs and fees of the section 363 sale process and the debtors’ going-concern operating costs through the sale closing. Proceeds are drawn weekly up to the approved budget amounts and include:
  • Maintenance of the debtors’ mining permits and reclamation bonds
  • Environmental and reclamation compliance
  • Site security and insurance
• Under the interim order, the additional $200,000 funds the repair of the Osaka mine turbine pump under the budget as amended.

Approved Budget

• The budget is dated Oct. 28, 2026, and covers the weeks ending Nov. 1 through Dec. 20. It opens with $2,163 of cash and projects $980,141 of total outflows, funded by $1 million of DIP draws, leaving ending cash of $22,022.
• Draw schedule: $475,000 in the week ending Nov. 1, $150,000 in the week ending Nov. 15, $175,000 in the week ending Nov. 29 and $200,000 in the week ending Dec. 20
• Projected ending cash bottoms at $8,151 in the week ending Dec. 13.
• Principal disbursement lines over the budget period: other, $201,000; legal/professional, $200,000; payroll, $144,395; AFCO and other insurances, $105,450; security, $85,698; workers’ comp/KEMI, $65,969; and lab and water testing, $62,306
• Each week the debtors must deliver an updated rolling 30-day cash flow projection for CC Reclaim’s approval. CC Reclaim may not unreasonably withhold approval after discussing it with the debtors, and once approved, the projection replaces the approved budget.

Permitted Variance and Reporting

• Weekly expenditures may run no more than 10% over budget for any line item and no more than 15% over budget in the aggregate, as shown in a weekly actual-to-budget variance report.
• By 12 p.m. (ET) each Wednesday, the debtors must deliver the variance report and a weekly payment report. The payment report itemizes each prior-week disbursement by budget line, payee, amount and nature of the expense. Both reports are certified by an authorized representative, and reporting goes to committee counsel and the U.S. Trustee on request.
• Budget noncompliance that cannot be cured, or curable noncompliance not cured within two business days, is an event of default.

Securities and Priorities

• First-priority senior priming liens on the DIP collateral under sections 364(c)(2), 364(c)(3) and 364(d)(1). The liens are senior to all other liens on that collateral, subject only to the Carve Out and to liens CC Reclaim approves in writing.
• Superpriority administrative expense claim under section 364(c)(1), subject only to the Carve Out. While the obligations remain outstanding, no claim ranks senior to or pari passu with it, including claims under sections 506(c) or 507(b) or claims arising from conversion to Chapter 7.
• Consensual priming: Range Cumberland, LLC and Continental Heritage Insurance Company, the consenting prepetition lienholders, consented to the DIP lien and superpriority claims priming all liens they hold or assert on any of the debtors’ assets. Apart from that priming, they keep those liens with the same validity, extent and priority they had on the petition date. Their acknowledgment of the term sheet covers only its priming and cash collateral provisions.
• Other primed liens: under section 364(d)(1), the DIP lien also primes every other lien and interest in the DIP collateral, to the extent valid, perfected, enforceable and unavoidable as of the petition date. This includes any lien asserted by ACIN, Natural Resource Partners L.P. or their affiliates, whether under Coal Mining Lease 8224 or otherwise, and, under the interim order, by Penn Virginia Operating Co., LLC. The term sheet frames this as nonconsensual priming; the interim order records ACIN’s consent.
• Neither the interim order nor the term sheet makes any finding or stipulation on the validity, perfection, priority, extent or avoidability of those primed liens. The estates’ rights are expressly preserved, including under sections 502(b), 506, 544, 545, 547, 548 and 549.

DIP Collateral and Exclusions

• The DIP collateral consists of the debtors’ interests, whenever acquired, in:
  • All equipment, including mining machinery, mobile equipment, vehicles, rolling stock and tools, with their parts, accessions and replacements
  • All prepaid expenses
  • All claims and causes of action, including Chapter 5 and similar state-law claims and section 550 recoveries. This excludes any claim seeking to avoid or challenge Range Cumberland’s or Continental Heritage’s liens, including preservation of an avoided lien under section 551, and is subject to the interim deferral described under Avoidance Actions.
  • Products and proceeds of the foregoing, including insurance proceeds
• The following are excluded from the DIP collateral, the DIP lien and the superpriority claims, along with their proceeds:
  • Continental funds: approximately $2.5 million of cash collateral held by Continental Heritage under a general indemnity agreement and collateral agreement, each effective Aug. 21, 2025. The term sheet notes these funds are addressed in a July 16, 2025, order in the Coking Coal, LLC bankruptcy case in the Eastern District of Kentucky.
  • INIC funds, excluded by the interim order: approximately $804,000 of cash collateral held by Indemnity National Insurance Company under a general indemnity agreement executed Aug. 18, 2025, and a rider dated Aug. 15, 2025
  • The Pardee Preparation Plant, with its fixtures, conveyor systems, pipelines and improvements, excluded by the interim order. The debtors claim no interest in the plant, the interim order provides that it is not estate property, and neither the debtors nor CC Reclaim will challenge its reversion to ACIN under Section 13 of Coal Mining Lease 8224, ACIN's lease with Cumberland Coal Corporation effective July 1, 2025, as amended.
• For each surety fund, the surety’s rights in the fund, including setoff and recoupment, are unimpaired. The debtors’ residual interest, which arises when all of that surety’s bonds are replaced, released or returned, is DIP collateral junior in all respects to the surety’s rights. Nothing determines that either fund is estate property.
• The plant exclusion does not reach the equipment listed on Schedule 1.1(a) to the asset purchase agreement filed at ECF No. 10-1. ACIN, Natural Resource Partners and their affiliates acknowledge, and the interim order orders, that this equipment is debtor-owned underground or surface mining equipment, is not part of the plant and is not fixtures, notwithstanding the lease. It is DIP collateral, and the DIP lien primes any lien or interest ACIN, Natural Resource Partners or their affiliates assert in it.

Avoidance Actions

• Excluded from the DIP lien under the interim order, pending the final hearing. Overriding the term sheet, the interim order removes estate claims and causes of action from the DIP collateral, including Chapter 5 and similar state-law claims, section 550 recoveries and their proceeds. The exception is claims that are themselves proceeds of DIP collateral, such as insurance and loss or damage claims relating to the scheduled equipment or other DIP collateral.
• CC Reclaim’s request for a lien on those estate claims is reserved for the final hearing. The term sheet would include all such claims in the DIP collateral, except challenges to Range Cumberland’s and Continental Heritage’s liens.

Adequate Protection

• Replacement liens on the DIP collateral, limited to any diminution in value from the petition date and junior to the DIP lien and the Carve Out. Among the lienholders, the replacement liens keep the relative priority their prepetition liens had on the petition date.

Range Cumberland and Continental Heritage

• Replacement liens are subject to the challenge period and are voided or reduced to the extent a challenge to the corresponding prepetition lien succeeds.

Holders of Primed Liens (ACIN, Natural Resource Partners, Penn Virginia)

• Replacement liens plus allowed section 507(b) claims junior to the DIP superpriority claims, in each case only to the extent the primed lien is ultimately determined to be valid, perfected, enforceable and unavoidable

Carve Out

• Post-trigger cap: $25,000 for debtor professionals and $25,000 for committee professionals, covering allowed fees incurred after a carve-out trigger notice is delivered
• Pre-trigger: allowed unpaid fees and expenses of debtor and committee professionals, up to the respective budget line-item amounts, incurred through one business day after a trigger notice is delivered, whether allowed before or after the notice. The approved budget carries $200,000 on its legal/professional line.
• Chapter 7 trustee costs and expenses after any conversion: up to $25,000
• U.S. Trustee fees under 28 U.S.C. § 1930
• Trigger notice: a written notice CC Reclaim emails to debtors’ counsel, the U.S. Trustee and any committee’s counsel, which may be delivered while an event of default is continuing
• Under the interim order, the Carve Out is senior to all claims against and liens on the DIP collateral, but only with respect to the DIP collateral. That covers the DIP lien, Range Cumberland’s and Continental Heritage’s liens, the other primed liens, the adequate protection liens, the 507(b) claims and the superpriority claims. The Carve Out is not payable from the Continental funds, the INIC funds or any other property that is not DIP collateral.
• Professional fee escrow:
  • Before a trigger notice, the debtors fund an escrow each week with up to that week’s budgeted professional fees, and the escrow agent releases amounts payable under court fee orders.
  • Pre-trigger payments reduce the pre-trigger carve-out amounts, and the escrow does not increase the Carve Out.
  • Professional fees are paid first from the escrow and then from the Carve Out.
  • The DIP liens attach to any escrow surplus left after allowed professional fees are paid, and that surplus goes to repaying the facility.

Challenge Period

• Commencement of the sale hearing, as defined in the bidding procedures. By then, any committee or other party in interest with standing, other than the debtors, must challenge the validity, perfection, priority, extent or enforceability of Range Cumberland’s and Continental Heritage’s prepetition liens.
• The period may be extended by agreement of the affected lienholder or by court order for cause shown before it expires.
• If no challenge is filed in time, those liens are deemed valid, perfected, enforceable and unavoidable as to all parties in interest, including any successor trustee.
• The challenge period does not apply to, or limit challenges to, the primed liens of ACIN, Natural Resource Partners and Penn Virginia.
• No DIP loan proceeds or Carve Out may be used to investigate, initiate or prosecute claims against CC Reclaim or its officers, directors, agents, employees, successors and assigns.

Cash Collateral

• The interim order authorizes use of cash collateral under the approved budget, subject to the permitted variances, with Range Cumberland’s consent. Any other party with a valid interest in cash collateral is adequately protected as the interim order provides.
• Range Cumberland’s consent is without prejudice to the position that the debtors’ cash on hand, which consists principally of proceeds of prepetition advances by Range Cumberland, is not cash collateral.
• The authority does not extend to the Continental funds or, under the interim order, to the INIC funds.

Credit Bid and Sale Process

• CC Reclaim may credit bid all or any portion of the DIP obligations under section 363(k) in any sale of DIP collateral.
• CC Reclaim, or its designee, is to serve as stalking horse bidder for substantially all of the debtors’ assets under an asset purchase agreement acceptable to it, and its consideration may include a credit bid of all or part of the DIP obligations. While CC Reclaim is a prospective or actual bidder, it is not a consultation party and receives no information on competing bids beyond what all qualified bidders receive.
• If CC Reclaim elects not to serve as stalking horse, the debtors may accept another stalking horse bid, and CC Reclaim keeps its right to credit bid the facility at any auction. Any replacement stalking horse bid must be a reasonable offer representing the highest and best bid received at the time. It must also acquire all of the debtors’ coal mining permits, assume all associated reclamation liability, replace all relevant surety bonds, and fund repayment of the facility and allowed closing costs, subject to court approval and approved bid procedures.
• Any bid other than CC Reclaim’s, alone or combined with other bids, qualifies only if it:
  • Acquires all of the debtors’ coal mining permits, assumes all associated reclamation liabilities and replaces all associated surety bonds, backed by written commitments from sureties to issue the replacement bonds at closing
  • Pays the DIP obligations in full in cash at closing
• The debtors may not seek approval of, or consummate, any sale that fails these requirements.

Conditions Precedent

• Conditions to initial funding include:
  • Filing of the Chapter 11 petitions
  • An interim order acceptable to CC Reclaim that grants the superpriority claim and priming lien and authorizes cash collateral use under the budget
  • Execution of the term sheet
• Funding beyond the initial draw requires definitive loan documents and a final order acceptable to CC Reclaim.
• All funding is conditioned on the debtors signing the stalking horse purchase agreement and filing a bidding procedures motion that designates CC Reclaim or its designee as stalking horse, consistent with the milestones.

Covenants

• Affirmative: weekly financial reporting under the budget procedures, other financial information CC Reclaim reasonably requests, and weekly calls on request. The debtors must also deliver material pleadings when filed. Section 363 or 365 motions, and filings on the DIP, the bidding procedures or any plan or disclosure statement, must be delivered at least two business days in advance where reasonably practicable.
• Negative: the debtors may not make payments outside the budget or enter into material contracts without CC Reclaim’s consent. They also may not support or file a plan or transaction CC Reclaim has not approved, or pursue a sale outside the stalking horse requirements. The debtors keep the right to solicit, pursue and accept a higher or otherwise better bid under court-approved bidding procedures, subject to payment in full of the DIP obligations at closing.

Events of Default

• Events of default include:
  • Any DIP lien ceasing to be, or being asserted by a debtor not to be, valid and perfected with the required priority, or any other lien or interest receiving superpriority status without CC Reclaim’s consent
  • Dismissal or conversion to Chapter 7, or a debtor motion seeking dismissal or appointment of a Chapter 7 or Chapter 11 trustee that is not dismissed or overruled within 30 days, absent CC Reclaim’s consent
  • No final DIP order within 30 days after the interim order is entered, or by a later date CC Reclaim agrees to
  • Without CC Reclaim’s consent, withdrawal of the sale motion, or a proposal for an alternative restructuring, plan or other transaction other than the sale of substantially all assets under that motion
  • A missed milestone without CC Reclaim’s consent to an extension
  • Budget noncompliance that cannot be cured or, if curable, is not cured within two business days
  • Stay relief, other than for CC Reclaim, a consenting prepetition lienholder or with CC Reclaim’s consent, that allows any person to proceed against DIP collateral; to terminate, suspend or impair the debtors’ coal mining permits or their right to enter and use lands for reclamation and permit compliance; or to proceed against other assets worth more than $25,000 in the aggregate
  • A debtor motion, filed without CC Reclaim’s written consent, to incur debt with section 364(c) superpriority status secured by a lien equal or senior to the DIP liens, unless the proceeds would repay the facility indefeasibly in full in cash
  • Any other covenant breach that, if curable, remains unremedied three business days after written notice from CC Reclaim
  • Other customary events of default to be set forth in the definitive loan documents
  • Under the interim order, a stay, vacatur, reversal or modification of the interim order on appeal, after which CC Reclaim’s obligations cease at its sole discretion

Remedies

• Upon a continuing, unwaived event of default, CC Reclaim may terminate its commitment and accelerate the DIP obligations without further court order. Under the term sheet, it may also impose the default rate and exercise other remedies under the loan documents and applicable law.
• On five business days’ written notice to the debtors, any committee’s counsel and the U.S. Trustee, the stay is modified to let CC Reclaim exercise customary remedies, including realizing on the DIP collateral, unless the court orders otherwise within that period.
• The debtors, any committee and other parties in interest are entitled to an emergency hearing within five calendar days after the termination notice is sent. If a hearing is requested before that period expires, the period extends until the court rules.

Waivers

• Section 1141(d)(4): the DIP obligations are not discharged by plan confirmation, and the debtors have irrevocably waived that discharge.

Other Protections

• CC Reclaim receives section 364(e) good-faith protection, so a later stay, modification or vacatur of the interim order does not affect obligations incurred, or the DIP lien and superpriority claims granted, before CC Reclaim receives written notice of it.
• The DIP lien is perfected when the interim order is entered, without any filing. The interim order and term sheet survive conversion or dismissal and bind successors, including any later trustee to the extent applicable law allows. Where the interim order conflicts with the term sheet or the motion, the interim order controls.