Finch Therapeutics Group - Chapter 11 Plan Terms

Plan Terms

Overview

• The Debtors jointly proposed a combined disclosure statement and Chapter 11 plan that provides for:
  • The sale of substantially all of the Debtors’ assets to Ferring Asset Holding LLC or a permitted designee (the “Ferring Purchaser”).
  • Payment in full or other unimpaired treatment of Allowed Administrative, Professional, Priority Tax, Other Secured, Other Priority and General Unsecured Claims.
  • Distribution of remaining Available Cash to holders of Allowed FTG Equity Interests.
  • Appointment of a Plan Administrator to administer the Plan, reconcile claims, make distributions and wind down the Debtors’ remaining affairs.
  • Rejection of executory contracts and unexpired leases that are neither assumed and assigned to the Ferring Purchaser nor otherwise designated for assumption and retention.
• The Plan constitutes a separate Chapter 11 plan for each Debtor and is proposed jointly for administrative purposes only. It is not premised on substantive consolidation.

Capital Structure and Case Funding

• In January 2023, the Debtors repaid an aggregate of $16.2 million of outstanding principal, accrued and unpaid interest, fees, costs and expenses under their loan and security agreement with Hercules Capital Inc.
• The Debtors had no other funded or secured indebtedness under any loan instrument as of the Petition Date.
• The Debtors commenced the cases with approximately $3.5 million of cash on hand, have funded the cases from that cash and have not entered into a debtor-in-possession financing facility.

Sale Process

• Rock Creek Advisors LLC contacted approximately 146 potential strategic and financial counterparties, 20 of which executed nondisclosure agreements and received access to a virtual data room.
• The Debtors did not receive a viable proposal by the stalking horse deadline and did not designate a stalking horse bidder.
• The Debtors received multiple qualified bids by the June 12, 2026, bid deadline, including:
  • An all-cash bid from the Ferring Purchaser for substantially all of the Debtors’ assets.
  • A fully backstopped rights offering proposed by Crestovo Investor LLC (“Crestovo”) under a Chapter 11 plan.
• The auction commenced on June 15, 2026, and was subsequently continued to June 18, June 22, June 23 and June 24, 2026.
• Before the auction concluded on June 24, the Debtors reached an agreement in principle with the Ferring Purchaser reflecting its $30 million cash bid. Crestovo did not submit a further bid after the Ferring Purchaser’s $30 million offer.
• The Debtors designated the Ferring Purchaser’s bid as the successful bid and Crestovo’s bid as the backup bid after determining that the Ferring transaction represented the highest or otherwise best offer for the Debtors’ assets.

Ferring Sale Transaction

• Under the Ferring asset purchase agreement, the Ferring Purchaser will acquire substantial assets of the Debtors, including:
  • Various patents and other intellectual property rights owned by or licensed to the Debtors.
  • The Debtors’ rights relating to the District Court Judgment and Patent Litigation — the Debtors’ patent-infringement action against Ferring, in which the District Court entered a final judgment on July 2, 2026 of $29,505,816.72, plus ongoing royalties and post-judgment interest, in favor of Finch/UMN and against Ferring.
• The transaction excludes certain assets identified in the Ferring asset purchase agreement.
• The consideration consists of:
  • A $30 million cash purchase price.
  • Payment by the Ferring Purchaser of all Cure Claims associated with assigned executory contracts and unexpired leases.
  • Assumption by the Ferring Purchaser of certain liabilities identified in the sale documents.
• The Debtors will assume and assign to the Ferring Purchaser the executory contracts and unexpired leases identified in the sale documents.
• Confirmation will constitute approval of the sale and authorization for the Debtors to execute the sale documents and take the actions necessary to consummate the transaction.
• Except for assumed liabilities and permitted liens under the Ferring asset purchase agreement, the Purchased Assets will be transferred free and clear of claims, interests, liens, encumbrances and liabilities, including successor or transferee liabilities.
• The sale is to close following entry of the Confirmation Order. If the Plan has not been confirmed by September 1, 2026, the Ferring Purchaser may elect to seek approval of the transaction under section 363 of the Bankruptcy Code outside the Plan.

Sources of Consideration

• Plan distributions, payments, reserves and escrows will be funded with:
  • Cash on hand as of the Effective Date.
  • Cash proceeds from the sale of the Purchased Assets to the Ferring Purchaser.
• “Available Cash” consists of net Sale Proceeds and additional cash on hand as of the Effective Date, less amounts required to:
  • Pay Allowed Administrative, Professional, Priority Tax, Restructuring Expense, Other Secured, Other Priority and General Unsecured Claims and quarterly fees.
  • Fund the projected costs of implementing the Plan and winding down the Debtors, Liquidating Debtors and their estates.
  • Fund and maintain the Professional Claims Escrow Account, any Disputed Claims Reserve and other Plan reserves or escrows.

Unclassified Claims and Expenses

• Allowed Administrative Claims will receive cash, ordinary-course treatment or other agreed less favorable treatment in full satisfaction of such claims.
• Professional Claims will be paid in cash in amounts approved by the Bankruptcy Court after allowance by final order.
  • No later than the Effective Date, the Debtors, Liquidating Debtors or Plan Administrator will fund a Professional Claims Escrow Account with cash equal to the Professional Claims Escrow Amount, comprising each Professional’s incurred but unpaid fees and its good-faith estimate of fees to be incurred through the Effective Date.
  • Any funds remaining after all Allowed Professional Claims have been irrevocably paid in full will be returned to the Debtors, Liquidating Debtors or Plan Administrator, as applicable.
• Allowed Priority Tax Claims will receive, at the applicable distributing party’s option:
  • Cash equal to the Allowed Claim on the applicable payment date specified in the Plan.
  • Equal annual cash payments, with interest at the applicable rate under section 511 of the Bankruptcy Code, over a period not exceeding five years after the Petition Date.
• Crestovo’s reasonable and documented professional fees, expenses and disbursements incurred from the Petition Date through the Effective Date, capped at $400,000 in the aggregate, constitute Allowed Administrative Claims.
  • These Restructuring Expenses will be paid in full in cash on the Effective Date or as soon as reasonably practicable thereafter, to the extent not previously paid, without a fee application or further Bankruptcy Court order.
• Quarterly fees payable on or before the Effective Date will be paid in full in cash on the Effective Date or as soon as reasonably practicable thereafter.

Classification and Treatment of Claims and Interests

• Class 1 - Other Secured Claims:
  • Each holder will receive, at the applicable distributing party’s option, payment in full in cash with postpetition interest at the applicable nondefault contract rate or Federal Judgment Rate; the collateral securing its claim; reinstatement; or other treatment rendering the claim unimpaired.
  • Class 1 is Unimpaired, conclusively presumed to accept the Plan and not entitled to vote.
• Class 2 - Other Priority Claims:
  • Each holder will receive, at the applicable distributing party’s option, payment in full in cash with postpetition interest at the applicable nondefault contract rate or Federal Judgment Rate; reinstatement; or other treatment rendering the claim unimpaired.
  • Class 2 is Unimpaired, conclusively presumed to accept the Plan and not entitled to vote.
• Class 3 - General Unsecured Claims:
  • Each holder will receive, at the applicable distributing party’s option, payment in full in cash; reinstatement; or other treatment rendering the claim unimpaired.
  • Unless otherwise agreed in a settlement, the Allowed amount of a General Unsecured Claim includes interest accrued from the Petition Date through the Effective Date at the Federal Judgment Rate. To the extent postpetition interest is due on a Rejection Claim, interest will accrue at the applicable nondefault contract rate or Federal Judgment Rate.
  • Class 3 is Unimpaired, conclusively presumed to accept the Plan and not entitled to vote.
• Class 4 - Intercompany Claims:
  • Each holder will receive payment in full in cash or reinstatement, at the applicable distributing party’s option.
  • Class 4 is Unimpaired, conclusively presumed to accept the Plan and not entitled to vote.
• Class 5 - FTG Equity Interests:
  • All FTG Equity Interests will be canceled, released and extinguished on the Effective Date.
  • Notwithstanding cancellation, each holder of an Allowed FTG Equity Interest will receive its pro rata share of Available Cash based on its interest in FTG as of the Distribution Record Date, which is the Effective Date.
  • Class 5 is Impaired and entitled to vote on the Plan.
• Class 6 - Intercompany Interests:
  • Intercompany Interests may be canceled, released, extinguished, reinstated, transferred, set off, settled or otherwise addressed through the sale transaction in a tax-efficient manner, to the extent reasonably practicable.
  • Holders will not receive or retain any distribution, property or other value on account of their Intercompany Interests.
  • Class 6 is Impaired, conclusively deemed to reject the Plan and not entitled to vote.

FTG Equity Distributions

• Approximately 1,605,763 shares of FTG common stock are outstanding.
• The Debtors estimate that approximately $19 million, or approximately $11.83 per share, may be available for distribution to holders of FTG Equity Interests.
• Equity distributions are contingent on consummation of the sale and may be affected by:
  • The amount of Allowed Administrative, Professional, Priority Tax, Other Secured, Other Priority and General Unsecured Claims.
  • The aggregate amount of Allowed FTG Equity Interests.
  • Unexpected Plan administration costs and changes to the assumptions underlying the recovery estimates.
• After all Allowed Claims have been paid in full or sufficiently reserved for, the Plan Administrator will make one or more pro rata distributions from Available Cash to holders of Allowed FTG Equity Interests.
• No cash distribution will be made on account of an Allowed Claim or Interest if the distribution is valued, in the Plan Administrator’s reasonable discretion, at less than $50.

Plan Administrator and Wind-Down

• The Debtors will appoint the Plan Administrator on the Effective Date and disclose the initial Plan Administrator’s identity before that date.
• The Plan Administrator will be authorized to:
  • Administer the Plan and reconcile, object to, subordinate, compromise or settle claims.
  • Make distributions to holders of Allowed Claims and Interests.
  • Direct the wind-down, liquidation, marketing, sale or abandonment of assets not sold to the Ferring Purchaser.
  • Administer retained Causes of Action and determine whether to prosecute, settle, abandon or otherwise dispose of them.
  • Establish and administer Plan reserves and escrows.
  • Retain and compensate professionals and administer the Debtors’ tax obligations.
• The Plan Administrator will receive reasonable compensation and may pay its reasonable expenses, including professional fees, from the Debtors’ assets without further Bankruptcy Court approval.
• On the Effective Date:
  • The Debtors’ existing boards of directors or managers will be dissolved, and remaining officers, managers or managing members will be dismissed.
  • The Plan Administrator will assume the powers of an officer, director and manager of each Debtor and Liquidating Debtor.
  • The Debtors will transfer their remaining assets to the Plan Administrator after accounting for Plan distributions.
• After the Effective Date and the required distributions, the Liquidating Debtors or Plan Administrator may file the documents necessary to dissolve or terminate the Liquidating Debtors and may seek authority to close one or more Chapter 11 cases.

Executory Contracts and Unexpired Leases

• Entry of the Confirmation Order will approve:
  • Assumption and assignment to the Ferring Purchaser of the executory contracts and unexpired leases identified in the sale documents.
  • Assumption of contracts and leases listed on the Schedule of Assumed and Retained Contracts and Leases.
  • Rejection of all other executory contracts and unexpired leases, subject to the exceptions specified in the Plan.
• The Ferring Purchaser will pay Cure Claims for assigned contracts and leases at the closing of the sale or as soon as reasonably practicable thereafter, unless otherwise agreed with the applicable counterparty.
• The Debtors, Liquidating Debtors or Plan Administrator will pay undisputed Cure Claims for other assumed and retained contracts and leases in accordance with the Plan.
• Rejection Claims must be filed by the later of 25 days after entry of the order approving rejection or 25 days after the effective date of rejection.
  • Untimely Rejection Claims will be disallowed and barred.
  • Allowed Rejection Claims will be classified and treated as General Unsecured Claims.

Retained Causes of Action

• Causes of Action identified on the Schedule of Retained Causes of Action that are not Purchased Assets will transfer to the Liquidating Debtors as of the Effective Date.
• Retained Causes of Action include all Avoidance Actions that have not been settled, waived or released as of the Effective Date, to the extent they are not Purchased Assets.
• The Liquidating Debtors and Plan Administrator may initiate, prosecute, enforce, abandon, settle, compromise, release, withdraw or litigate Retained Causes of Action without further Bankruptcy Court approval.

Releases and Exculpation

• Released Parties include:
  • Each Debtor and Liquidating Debtor.
  • The respective Related Parties of each Debtor and Liquidating Debtor.
  • Each holder of an FTG Equity Interest, solely in that capacity, that affirmatively opts in to the third-party releases.
• Releasing Parties include:
  • Each Debtor and Liquidating Debtor.
  • Class 5 holders that opt in through their ballots.
  • Holders of Claims in Classes 1, 2 and 3 that timely submit an Opt-In Election Form.
  • The respective Related Parties of the foregoing parties.
• On and after the Effective Date, the Debtors and their estates will release the Released Parties from claims and Causes of Action based on or relating to the Debtors, the Chapter 11 cases, the bidding process, the Plan, the sale and the other Restructuring Transactions through the Effective Date.
• The debtor releases exclude:
  • Claims arising from actual fraud, willful misconduct or gross negligence, solely to the extent determined by final order.
  • Post-Effective Date claims and obligations under the Plan, Confirmation Order, Restructuring Transactions, Definitive Documents or implementing documents.
  • Claims and obligations under the sale documents.
  • Rights of objection, defense, mandatory counterclaim or setoff relating to claims against or interests in the Debtors.
• On and after the Effective Date, each Releasing Party will provide the Released Parties with substantially similar releases relating to the Debtors, the Chapter 11 cases, the bidding process, the Plan, the sale and the other Restructuring Transactions.
• The third-party releases do not release:
  • Claims arising from actual fraud, willful misconduct or gross negligence, as determined by final order.
  • Post-Effective Date obligations under the Plan, assumed contracts and leases or Plan implementation documents.
  • Obligations under the sale documents or rights to distributions under the Plan or Confirmation Order.
  • A properly pleaded direct claim, other than a claim against the Debtors, held by a creditor that is not a Releasing Party.
• The Exculpated Parties consist of the Debtors, the Debtors’ professionals and each Debtor’s officers, directors, managers and members, in each case solely to the extent they served in that capacity between the Petition Date and Effective Date.
• The Exculpated Parties will be exculpated from Causes of Action arising from acts or omissions between the Petition Date and Effective Date relating to the Chapter 11 cases, bidding process, Plan, sale, claims reconciliation and Plan implementation, except for actual fraud, willful misconduct or gross negligence determined by final order.

Injunction

• Upon entry of the Confirmation Order, holders of Claims and Interests and other parties in interest will be enjoined from interfering with:
  • Implementation or consummation of the Plan.
  • Administration of the Retained Causes of Action.
  • The sale and other Restructuring Transactions.
• With respect to Claims, Interests and Causes of Action extinguished or released under the Plan, the injunction will prohibit, among other actions, commencing or continuing proceedings, enforcing judgments, creating or enforcing encumbrances, asserting certain setoff rights or otherwise acting inconsistently with the Plan.

Insurance and Indemnification

• On the Effective Date, the Debtors will be deemed to assume all D&O policies covering directors, managers, officers and employees who served in those capacities on or before the Effective Date.
• Coverage under D&O policies in effect on the Effective Date may not be terminated or reduced with respect to pre-Effective Date conduct, subject to the terms of the applicable policies and reductions resulting from payment of covered claims.
• The Debtors’ Indemnification Obligations will be assumed, irrevocable and will survive confirmation and the Effective Date, except for obligations previously rejected by final order or subject to a pending rejection motion.

Voting and Cramdown

• Only holders of Allowed Class 5 FTG Equity Interests, or interests temporarily allowed for voting purposes, are entitled to vote on the Plan.
• The Voting Record Date is July 15, 2026, and ballots must be submitted electronically or received by the Voting Agent by August 24, 2026, at 4:00 p.m. prevailing Eastern Time.
• Classes 1 through 4 are Unimpaired and deemed to accept the Plan, while Class 6 is Impaired and deemed to reject the Plan.
• The Debtors will seek confirmation under section 1129(b) of the Bankruptcy Code with respect to any rejecting Class.
• If Class 5 rejects the Plan, the Debtors submit that the Plan may be confirmed over that rejection because no junior Class of Interests will receive or retain property. Class 5 holders would nevertheless remain entitled to their pro rata share of Available Cash.

Effective Date and Conditions Precedent

• The Effective Date will be the first Business Day after the Confirmation Date on which:
  • The sale has been consummated in accordance with the sale documents.
  • All other Plan conditions precedent have been satisfied or waived.
  • The other Restructuring Transactions have been consummated.
• Conditions precedent include:
  • Entry of a final Confirmation Order in form and substance reasonably acceptable to the Debtors.
  • The Ferring asset purchase agreement remaining in full force and effect and not having been terminated.
  • Receipt, waiver or resolution of the authorizations, consents, regulatory approvals, rulings and documents necessary to implement the Plan.
  • Payment in full of Professional Claims due and payable under a Bankruptcy Court order as of the Effective Date, other than claims subject to post-Effective Date approval.
  • Funding of the Professional Claims Escrow Account.
  • Execution or effectuation of the documents and agreements necessary to implement the Plan and sale and satisfaction or waiver of their conditions precedent.
• The Debtors may waive the conditions precedent at any time without notice, Bankruptcy Court approval or other formal action.

Tax Treatment

• The sale is expected to generate taxable income for the Debtors, and any resulting federal income tax liability would reduce recoveries to holders of Allowed FTG Equity Interests.
• The Debtors do not expect to recognize material cancellation-of-debt income because all Allowed Claims will be paid in full.
• Cash received by a holder of an Allowed FTG Equity Interest in exchange for cancellation of that interest is expected to constitute a taxable exchange for U.S. federal income tax purposes.
  • A U.S. holder generally will recognize gain or loss equal to the difference between the cash received and the holder’s adjusted tax basis in the interest.
  • Backup withholding, currently at a rate of 24%, may apply unless the holder provides the required taxpayer identification information or establishes an exemption.