Food52 - Chapter 11 DIP Terms

Food52 obtained final approval for a $3.42 million new-money DIP facility from F52, LLC that unlocks the remaining $1.5 million of commitments following an initial $1.92 million draw, carrying 15% PIK interest and secured by priming liens on all assets including avoidance action proceeds, with a 6% exit fee forgiven in connection with the lender's designation as stalking horse purchaser.

DIP Terms

Borrower(s) / Guarantor(s)

  • Food52, Inc., as Debtor and Borrower

Agent / Lender(s)

  • F52, LLC, as DIP Lender

DIP Commitments

  • $3.42 million senior secured superpriority non-amortizing term loan facility (new money) comprised of:
    • $1.92 million made available upon entry of the interim order
    • $1.5 million to be made available in a single draw upon entry of the final order
  • Amounts repaid or prepaid may not be reborrowed

Cash Collateral

  • The Debtor is authorized to use cash collateral in accordance with the approved budget, subject to permitted variances

Interest Rate

  • 15.0% per annum, payable in kind
  • Default Rate Increase: 5.0% per annum, payable in kind

Fees

  • Exit Fee: 6.0% of DIP commitments, fully earned and payable upon payment in full of DIP obligations
    • The fee is payable only if the DIP Lender is not approved as the stalking horse purchaser
    • The fee was forgiven by the DIP Lender as set forth in the Bidding Procedures Order, in connection with the DIP Lender's designation as stalking horse

Maturity

  • The earliest to occur of:
    • February 28, 2026
    • The effective date of a Chapter 11 plan
    • Consummation of a sale of all or substantially all assets
    • Acceleration of the loans following an event of default
    • Dismissal or conversion of the Chapter 11 case
    • 25 days after the petition date, if the final order has not been entered

Carve Out

  • Post-Carve Out Trigger Notice Cap: $125,000
  • Chapter 7 Trustee Fee: $25,000
  • Pre-Trigger Fees: All unpaid allowed professional fees incurred prior to the delivery of a trigger notice, subject to the approved budget
  • Budgeted professional fees are to be funded weekly into an escrow account

Use of Proceeds

  • Fund postpetition working capital and general corporate purposes
  • Pay fees, costs, and expenses associated with the DIP Facility
  • Pay allowed administrative costs of the Chapter 11 case

Credit Bid

  • The DIP Lender has the absolute right to credit bid all or any portion of the DIP obligations in connection with any sale of the Debtor's assets, whether pursuant to section 363 of the Bankruptcy Code or as part of a chapter 11 plan

Avoidance Actions

  • Upon entry of the final order, the DIP collateral includes the proceeds of avoidance actions

Challenge Period and Budget

  • The deadline to bring a challenge against prepetition liens is 75 days following entry of the interim order
  • Investigation Budget: Up to $75,000 available for the Creditors' Committee or a trustee to investigate (but not prosecute or challenge) the validity, enforceability, perfection, priority, or extent of the prepetition liens

Securities and Priorities

  • The DIP obligations are granted superpriority administrative expense claims against the Debtor, subject to the carve-out
  • The DIP Lender is granted valid, perfected liens on all pre- and postpetition assets (the "DIP Collateral"), subject to the carve-out, with the following priorities:
    • First priority senior priming liens on all DIP Collateral, senior to the Prepetition Liens
    • First priority liens on all unencumbered DIP Collateral, including (upon entry of the final order) avoidance action proceeds
    • Junior liens on DIP Collateral subject to valid "Permitted Prior Liens" (excluding liens of Avidbank or the Prepetition Liens)
  • Valid reclamation claims regarding goods delivered by Bradshaw International Holdings Hong Kong Limited within 45 days of the petition date are senior to the DIP liens but not the prepetition liens

Adequate Protection

Prepetition Secured Noteholder (TCG 2.0 Food52, LLC)

  • Replacement liens on the DIP Collateral, junior to the DIP liens, the carve-out, and permitted prior liens
  • Superpriority administrative expense claims, junior to the DIP superpriority claims and the carve-out
  • Adequate protection is granted solely to the extent of any diminution in the value of the prepetition collateral

Waivers

  • Subject to entry of the final order:
    • Section 506(c): Waiver of the right to surcharge DIP or prepetition collateral
    • Section 552(b): The "equities of the case" exception shall not apply
    • The equitable doctrine of "marshaling" shall not apply

Permitted Variance

  • Total operating disbursements shall not exceed the approved budget by more than 15%, measured in total rather than by line item