FlexShopper - Chapter 11 Plan Terms

Plan Terms

Overview

• The Debtors propose the Combined Disclosure Statement and Chapter 11 Plan of Liquidation of FlexShopper, Inc., and its Debtor Affiliates pursuant to sections 1121(a) and 1125 of the Bankruptcy Code.
  • Following the Sale of substantially all of the Debtors' Assets to ReadySett, LLC (the "Purchaser"), the Debtors are focused principally on winding down their Estates.
  • The Plan provides for an equitable Distribution to Holders of Claims and the compromise and settlement of certain Claims and controversies among the Debtors and their key stakeholders.
• The Debtors are soliciting votes on the Plan from Holders of Claims in Classes 3A, 3B, 3C, 4A, 4B, and 4C.

Sale Transaction

• On January 2, 2026, the Debtors entered into the Asset Purchase Agreement with ReadySett, LLC, as Purchaser, and FlexShopper, Inc., FlexShopper, LLC, and FlexLending, LLC, as Sellers, pursuant to which the Purchaser committed, subject to Bankruptcy Court approval, to acquire substantially all of the Debtors' assets in exchange for the following consideration:
  • A payment to the Debtors in the amount of $8,000,000, subject to the Katapult Reduction (as defined in the Asset Purchase Agreement);
  • A cash payment to the Warehouse Agent in the amount of $7.5 million, subject to adjustment pursuant to Section 2.5(a)(ii) of the Asset Purchase Agreement; and
  • The assumption of certain assumed liabilities by the Purchaser.
• The Asset Purchase Agreement served the critical function of setting a "floor" for recoveries to creditors and a structure for further competitive bidding.
  • The asset purchase agreement previously provided for a $15.5 million purchase price, consisting of a credit bid of the DIP Facility up to $8 million, plus $7.5 million cash to be paid directly to the Warehouse Agent.
  • The revised transaction structure redirected the cash portion of the purchase price from the Warehouse Agent to the Debtors, providing a critical liquidity infusion to the Estates.
• On January 21, 2026, the Bankruptcy Court entered the Bidding Procedures Order, which, among other things, (a) approved the bidding procedures establishing the key dates and times related to the Sale and auction, (b) approved assumption procedures, (c) authorized the Debtors' entry into and performance under the Asset Purchase Agreement, and (d) established a bid deadline of February 6, 2026.
• Two Roads ultimately identified and contacted 129 potential bidders, including both financial and strategic parties.
  • Eleven potential bidders executed non-disclosure agreements, received detailed confidential presentations regarding the Debtors and their business, and were offered access to a virtual data room containing detailed due diligence information.
  • Seven potential bidders requested and received access to the virtual data room.
  • The Debtors did not receive any bids for their Assets other than the Purchaser's form of asset purchase agreement prior to the bid deadline, and no party requested additional time or indicated that it would consider submitting a bid if granted an extension. As a result, the Debtors cancelled the auction.
• On February 12, 2026, the Bankruptcy Court entered the Sale Order. Following entry of the Sale Order, the Debtors and Purchaser entered into the TSA, pursuant to which the Debtors agreed to maintain and provide for the Purchaser's benefit, solely at the Purchaser's cost and expense, the benefits of the rights and services provided to the Debtors under such contracts during the transition period.
• The Sale to the Purchaser closed on March 3, 2026, with the Sale Proceeds providing $8,563,700 in cash to the Estates.

DIP Financing and Securitization Program

• As initially proposed, the DIP Motion sought approval of the DIP Facility, provided by ReadySett, LLC, as DIP Lender, to provide the Debtors with funding of up to $8,000,000 to cover general operating expenses and professional fees.
  • The Securitization Motion sought approval to obtain financing to support the Debtors' customer lease originations and related merchant payments, which formed the foundation of the Debtors' business.
  • These motions sought authorization for the Debtors to obtain postpetition funding from two sources to preserve the Debtors' going-concern value and maintain ordinary-course operations through the closing of a value-maximizing transaction.
• In response to the Bankruptcy Court's concerns raised at the first day hearing, between December 23, 2025, and December 30, 2025, the Debtors engaged in further negotiations with the Purchaser and the Warehouse Agent to significantly improve the terms of the DIP Facility, the Securitization Program, and the proposed asset purchase agreement.
  • The Debtors and the Warehouse Agent reached revised terms under the Securitization Program pursuant to which the Warehouse Agent agreed to (i) pay a 5% annual servicing fee and a 15% premium on the Warehouse Lenders' purchase of leases and (ii) grant the Debtors the standard margins from the purchase of inventory subject to the leases.
  • The revised Securitization Order also eliminated provisions that would have granted the Warehouse Parties adequate protection and payment of certain fees.
  • In total, the revisions provided approximately $10 million of additional value to the Estates.
• On December 30, 2025, the Bankruptcy Court held a hearing to consider the revised transaction structure and approved proposed interim orders facilitating the DIP Facility and the Securitization Program. The Interim DIP Order was entered on December 31, 2025, and the Final DIP Order was entered on January 21, 2026.

Liquidating Trust

• The Liquidating Trust shall be established and become effective on the Effective Date for the benefit of the Holders of Allowed Claims.
  • Upon the occurrence of the Effective Date, (a) the members of each Debtor's Board of Directors or managers shall be deemed to have resigned, and (b) the Liquidating Trust Assets shall be transferred to the Liquidating Trust free and clear of all Liens, claims, and interests.
  • The Liquidating Trust shall have an initial term of two years; provided, however, that the Liquidating Trustee shall be authorized to extend the Liquidating Trust.
  • The initial Liquidating Trustee will be disclosed in the Plan Supplement, and the appointment shall be approved in the Confirmation Order and effective as of the Effective Date.
• The Liquidating Trust Assets consist of:
  • All remaining assets of the Debtors not sold or abandoned prior to the Effective Date;
  • All assets recovered by the Liquidating Trustee on behalf of the Liquidating Trust after the Effective Date;
  • All Cash held by the Debtors as of the Effective Date, excluding amounts held in trust with respect to the Professional Fee Account; and
  • The Retained Causes of Action and any defenses of the Debtors.
• For the avoidance of doubt, the Liquidating Trust Assets include the FlexShopper, Inc. Assets, the FlexShopper, LLC Assets, and the Other Debtors' Assets.
• Distributions under the Plan shall be funded from Cash on hand, including the proceeds of liquidating any Liquidating Trust Assets.

Wind-Down

• On the Effective Date, the Debtors shall be automatically and immediately deemed dissolved in accordance with section 303 of the Delaware General Corporation Law, without the necessity for any further actions or payments.
  • Notwithstanding such dissolution, the Liquidating Trustee shall retain the authority to file all applicable or necessary federal, state, or local filings (including tax filings) required to maximize the value of the Liquidating Trust Assets for Distribution to Allowed Claims.
  • The Liquidating Trustee shall take all actions necessary to wind down the affairs of the Debtors consistent with the Plan and applicable non-bankruptcy law.
• On and after the Effective Date, the chapter 11 cases of each of the Debtors will be administered by the Liquidating Trust, and the Liquidating Trustee shall be authorized to file a motion requesting entry of an order closing the chapter 11 cases of In re FlexShopper, LLC; In re FlexLending, LLC; In re FlexRevolution, LLC; In re FlexRetail, LLC; In re Flex TX, LLC; In re Flex TX Funding, LLC; and In re Flex TX CAB, LLC. After full administration of the chapter 11 cases, the Liquidating Trustee shall file a separate motion under Local Rule 3022-1(a) to close the chapter 11 case of In re FlexShopper, Inc., together with a final report covering all of the chapter 11 cases pursuant to Local Rule 3022-1(c).

Classification and Treatment of Claims and Interests

• Class 1 (Priority Claims): Unimpaired; Holders are deemed to accept the Plan and are not entitled to vote.
• Class 2 (Secured Claims): Unimpaired; Holders are deemed to accept the Plan and are not entitled to vote.
• Class 3A (FlexShopper, Inc. Warehouse Claims): Impaired and entitled to vote.
  • Each Holder of an Allowed Class 3A Claim shall receive its Pro Rata share of the Cash proceeds of the FlexShopper, Inc. Assets.
  • On April 16, 2026, the Warehouse Agent submitted Proof of Claim No. 10118 asserting a claim against FlexShopper, Inc. in the amount of $161,719,713.38. The Debtors believe the Claim is without merit, and the rights of the Debtors, the Liquidating Trust, and any other party in interest to object to Proof of Claim No. 10118 (and any other Claims asserted against the Debtors) are preserved.
• Class 3B (FlexShopper, LLC Warehouse Claims): Impaired and entitled to vote.
  • Each Holder of an Allowed Class 3B FlexShopper, LLC Warehouse Secured Claim shall receive the Pledged Interests, which the Debtors shall abandon to the Warehouse Parties.
  • Each Holder of an Allowed Class 3B FlexShopper, LLC Warehouse General Unsecured Claim shall receive its Pro Rata share of Cash proceeds of the FlexShopper, LLC Assets.
• Class 3C (Other Debtor Warehouse Claims): Impaired and entitled to vote.
  • Each Holder of an Allowed Class 3C Claim shall receive its Pro Rata share of Cash proceeds of the Other Debtor Assets.
• Class 4A (FlexShopper, Inc. General Unsecured Claims): Impaired and entitled to vote.
  • Each Holder of an Allowed Class 4A Claim shall receive its Pro Rata share of Cash proceeds of the FlexShopper, Inc. Assets.
• Class 4B (FlexShopper, LLC General Unsecured Claims): Impaired and entitled to vote.
  • Each Holder of an Allowed Class 4B Claim shall receive its Pro Rata share of Cash proceeds of the FlexShopper, LLC Assets.
• Class 4C (Other Debtor General Unsecured Claims): Impaired and entitled to vote.
  • Each Holder of an Allowed Class 4C Claim shall receive its Pro Rata share of Cash proceeds of the Other Debtor Assets.
• Class 5 (Subordinated Claims): Impaired; Holders shall receive no Distribution and are deemed to reject the Plan.
• Class 6 (Equity Interests): Impaired; on the Effective Date, all Equity Interests shall be cancelled, and Holders shall receive no Distribution. Holders are deemed to reject the Plan.

Executory Contracts and Unexpired Leases

• On the Effective Date, except as otherwise provided in the Plan, each Executory Contract and Unexpired Lease not previously rejected, assumed, or assumed and assigned (including any assumed and assigned in connection with the Sale) shall be deemed automatically rejected pursuant to sections 365 and 1123 of the Bankruptcy Code, unless such Executory Contract or Unexpired Lease:
  • Is, as of the Effective Date, subject to a pending motion to assume;
  • Is an Insurance Policy, including any D&O Insurance Policy; or
  • Is identified for assumption on the Assumption Schedule, if any, included in the Plan Supplement.
• Any Proofs of Claim based on the rejection of the Debtors' Executory Contracts or Unexpired Leases pursuant to the Plan must be filed with the Bankruptcy Court and served on the Liquidating Trustee no later than thirty (30) days after the notice of occurrence of the Effective Date.

Releases

• The "Released Parties" include, in their capacities as such: (i) the current employees, agents, representatives, advisors, attorneys, investment bankers, and financial advisors of the Debtors; (ii) Matthew A. Doheny, as CRO; (iii) Morris Nichols, as counsel to the Debtors; (iv) Michael Shenk, as CFO, and GlassRatner; (v) Two Roads, as investment banker to the Debtors; (vi) Williams Simons & Landis PC, as litigation counsel to the Debtors; (vii) Potter Anderson, as counsel to the Committee; (viii) members of the Committee; (ix) Sonoran, as financial advisor to the Committee; and (x) the respective Related Parties of each of the foregoing.
• The "Releasing Parties" include (a) all Holders of Claims or Interests who are sent a Ballot or Non-Voting Opt-Out Form and do not timely elect to opt-out of, or object to, the releases provided by the Plan, (b) each Released Party, and (c) the Related Party of any Person or Entity in the foregoing clauses, solely in their capacity as such.
• The "Exculpated Parties" include: (a) the Debtors; (b) the current and former directors and officers of the Debtors who served at any time between the Petition Date and the Effective Date; (c) Morris Nichols; (d) Matthew A. Doheny; (e) Michael Shenk and GlassRatner; (f) Two Roads; (g) Epiq; (h) Williams Simons & Landis PC; (i) Potter Anderson; (j) Sonoran; (k) the Committee and its members; and (l) the Related Parties for each Entity in clauses (c) through (k) to the extent they are estate fiduciaries.
• The Plan provides for releases by the Debtors and their Estates of the Released Parties from any and all claims, Causes of Action, obligations, suits, judgments, damages, debts, rights, remedies, and liabilities of any nature, based on or relating to, in whole or in part, any act, omission, transaction, event, or other circumstance taking place or existing on or prior to the Effective Date in connection with or related to the Debtors, including:
  • The chapter 11 cases;
  • The Combined Disclosure Statement and Plan;
  • The DIP Credit Agreement;
  • The Securitization Program;
  • The subject matter of, or transaction or events giving rise to, any Claim or Interest treated under the Plan;
  • The business or contractual arrangements between any Debtor and any Released Party;
  • The negotiation, formulation, or preparation of the Combined Disclosure Statement and Plan, the Plan Supplement, or related agreements, instruments, or other documents;
  • The sale process, Sale, or related transaction documents; and
  • The confirmation or Consummation of the Plan or the solicitation of votes on the Plan.
• The Plan also provides for third-party releases by the Releasing Parties of the Released Parties on substantially the same scope, including with respect to the pre- and post-petition marketing and sale process, the Sale, the Securitization Program, the DIP Facility, the purchase, sale, or rescission of the purchase or sale of any securities issued by the Debtors, and the creation of the Liquidating Trust.
• Notwithstanding the foregoing, the releases do not release:
  • Any Released Party from any Causes of Action arising from or related to any act or omission determined in a Final Order to have constituted intentional fraud, willful misconduct, bad faith, or gross negligence; and
  • Any post-Effective Date obligations of any party or Entity under the Plan or any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan.