FreshRealm - Chapter 11 Case Summary

Business Description

Headquartered in Linden, New Jersey, FreshRealm, Inc. ("FRI"), along with its Debtor affiliates (collectively, the "Debtors" or the "Company"), operates a sophisticated food development, manufacturing, and fulfillment business purpose-built for the full spectrum of fresh and better-for-you food.

• The Debtors have established themselves as a leader in the fresh food supply chain solutions industry through their innovative approach to meal delivery and meal programs, strategic milestones, and platform development.
• The Company's segment-agnostic business strategy is designed to accommodate the growth of innovative food businesses across multiple channels, including direct-to-consumer (DTC), grocery, performance, and a rapidly growing portfolio of lifestyle and medically-focused customers.

Rather than requiring each individual food business to construct its own single-use infrastructure, the Debtors built a shared services platform that allows fixed costs, expertise, and capacity to be leveraged across multiple customers and channels simultaneously.

• This shared platform encompasses physical infrastructure, supply chain intelligence, commercial development, and culinary expertise that are difficult for individual brands to justify executing on alone.
• The Debtors' omnichannel capabilities serve both brick-and-mortar retail locations and consumers' doorsteps from the same facilities where meals are developed and manufactured, eliminating the fragmentation that has historically limited the fresh and better-for-you food industry.
• Much of the Debtors' growth has been driven by the acquisition of previously dedicated operations and the rationalization of those assets into the shared platform.

The Debtors' largest customers are Blue Apron, LLC ("Blue Apron") and MMM Consumer Brands, Inc. ("Marley Spoon"), with the vast majority of the Company's business comprising the manufacturing and fulfillment of orders directly to the end-customers of these two clients. The Debtors recently packed and shipped approximately 70,000 boxes per week for these customers, of which approximately 60,000 boxes consisted of meal kits and prepared meals fulfilled to Blue Apron customers. Blue Apron sales account for approximately 70% of the Debtors' total revenue.

---

Corporate History

The Debtors were founded in 2013 as a subsidiary of Calavo Growers and ultimately completed their separation from Calavo as independent companies in 2021. Over the following years, the Company expanded its platform through a series of strategic transactions that significantly accelerated its growth trajectory.

2023 Blue Apron Transaction

• On June 9, 2023, the Debtors acquired the production and fulfillment operations of Blue Apron, including Blue Apron's leasehold interests at the Linden Facility and another location in Richmond, California (collectively, the "Blue Apron Facilities"), furnishings and equipment at the Blue Apron Facilities, certain transferred contracts, and intellectual property, including certain know-how and related personnel.
• In connection with the transaction, the Debtors and Blue Apron entered into:
  • A production and fulfillment agreement (the "PFA") with an initial term of 10 years, under which the Debtors serve as the exclusive supplier of Blue Apron's meal kits and other Exclusive Products;
  • Subleases for the Blue Apron Facilities; and
  • A transition services agreement.
• As part of the transaction, Blue Apron also entered into license agreements granting the Debtors certain rights to use the Blue Apron brand in potential future retail channels and to use certain Blue Apron software.
• In September 2023, Blue Apron was acquired by virtual food hall chain Wonder Group, Inc.

Marley Spoon Transaction

• On January 30, 2024, the Debtors acquired the U.S. operational assets of Marley Spoon, a global subscription-based meal kit provider, including all of Marley Spoon's U.S.-based operational and supply chain infrastructure (the "Marley Spoon Transaction").
• The transaction transferred to the Debtors the production and fulfillment assets at the Tracy Facility, along with additional locations in Hickory, Texas and Newark, New Jersey.
• Following closing, the Debtors fulfilled all orders for Marley Spoon's U.S.-based customers nationwide, including for its bistroMD, Martha & Marley Spoon, and Dinnerly brands.

UFC Ignite Joint Venture

• On January 9, 2026, the Debtors announced UFC Ignite, a first-of-its-kind, sports-affiliated meal plan created in collaboration with UFC®, the world's premier mixed martial arts organization (the "UFC Ignite Program").
• The program delivers chef-designed, performance-driven meals, engineered by the UFC Performance Institute, directly to consumers' doorsteps.
• Through UFC Ignite, the Debtors offer nearly 200 total meals, with a rotating weekly menu featuring more than 60 selections.

Corporate Structure and Governance

• FRI is the Debtors' main operating entity and direct sole shareholder of the other Debtors (other than FreshRealm Holdings, Inc.).
• FRI maintains a two-member Board of Directors consisting of Jill Frizzley and Charlie Piper. Ms. Frizzley was appointed on October 16, 2025, and Mr. Piper was appointed on November 6, 2025. Both directors were previously unaffiliated with the Debtors and their key stakeholders.
• On March 19, 2026, the Board separately engaged Duane Morris LLP ("Duane Morris") to advise the Board on its investigation into certain claims and causes of action held by the Debtors' estates.

---

Operations Overview

The Debtors do not own any real property and operate through seven leased facilities in the United States, ranging in status from fully operational to closed. The Company's principal assets and place of business are located at its main facility in Linden, New Jersey.

Operating Facilities

• Linden Facility (Linden, New Jersey): A 495,000 square foot manufacturing facility built in 2017, employing approximately 700 individuals and serving as the Debtors' principal operating site.
• Tracy Facility (2900 N. MacArthur Dr., Tracy, California): A core operational location acquired in connection with the Marley Spoon Transaction.
• Lancaster Facility (3301 N. Dallas Ave., Lancaster, Texas): An additional core operational location.

Lease Rejections

• On the Petition Date, the Debtors intend to file a motion seeking authority to reject the leases for facilities in Indianapolis, Indiana; San Clemente, California; Montezuma, Georgia; and Newark, New Jersey, nunc pro tunc to the Petition Date.
• The Debtors have determined, in an exercise of their reasonable business judgment, that these locations are burdensome and no longer necessary to ongoing operations.
• Prior to the Petition Date, the Debtors took various steps to tender possession of the respective premises and relinquish the keys to the affected landlords.

Workforce

As of the Petition Date, the Debtors employ approximately 1,017 individuals, all based in the United States, with approximately 700 located at the Linden Facility.

• Approximately 1,015 employees are full-time and 2 are part-time.
• The Debtors pay approximately 80% of employees on an hourly basis and 20% on a salaried basis.
• At any given time, the Debtors retain approximately 220 outsourced staff, including approximately 15 independent contractors.

The Debtors are not a party to any collective bargaining agreements and provide certain medical, dental, and life insurance benefits to eligible retired, salaried, and hourly employees. The workforce performs a wide variety of functions critical to the delivery of fully integrated supply chain solutions, with the bulk of operations concentrated at the Linden, Tracy, and Lancaster Facilities. The Debtors view this workforce — comprising personnel intimately familiar with the Company's business, facilities, and systems — as central to preserving estate value during the Chapter 11 Cases.

---

Prepetition Obligations

As of the Petition Date, the Debtors reported approximately $168 million in long-term, secured funded debt obligations, comprised of approximately $117 million owed to the FaraNord Lender and approximately $51 million owed to BGC. The Company's prepetition capital structure is summarized below:

FaraNord Financing

• Approximately $117 million is outstanding under a Financing Agreement dated October 16, 2025 (as amended on December 4, 2025), among FRI, as borrower, the FaraNord Lender, and FaraNord (US) III Pte Ltd, as administrative agent and collateral agent.
  • The Initial FaraNord Credit Facility provided up to $50 million in financing for ongoing operations, working capital, and transaction expenses, consisting of a $20 million term loan and up to $30 million in delayed draw term loans.
  • Pursuant to the December 4, 2025 amendment, the FaraNord Lender extended incremental delayed draw term loans of up to $70 million, of which $60 million was funded at closing and remains drawn as of the Petition Date.
  • FRI's obligations are guaranteed by Debtors FreshRealm Holdings, Inc., FreshRealm HR, LLC, and IHEC LLC (the "FaraNord Guarantors").
  • The facility is secured by a second-priority lien on substantially all assets of FRI and the FaraNord Guarantors, except with respect to the FaraNord Priority Collateral—accounts, rights to payment, receivables, inventory, and all proceeds thereof—on which FaraNord holds a first-priority lien and BGC holds a second-priority lien.

BGC Financing

• Approximately $51 million is outstanding under a Financing Agreement dated March 11, 2025 (as amended on October 16, 2025 and December 4, 2025), among FRI, as borrower, the lenders party thereto, and BGC Lender Rep LLC, as administrative agent and collateral agent.
  • The facility initially provided for a $75 million loan, consisting of a $45 million initial term loan funded at closing and up to $30 million in delayed draw term loans.
  • FRI's obligations are guaranteed by Debtors IHEC LLC and FreshRealm HR, LLC (the "BGC Guarantors") pursuant to a Pledge and Security Agreement dated March 11, 2025.
  • The facility is secured by first-priority liens on substantially all assets of the Debtors and the BGC Guarantors, other than the FaraNord Priority Collateral.
• Concurrently with the closing of the BGC Financing Agreement, the Debtors received $15 million in cash proceeds from the issuance of Series B Preferred Stock to Gamstar (US) IX Pte Ltd, an affiliate of the FaraNord Lender ($10 million), and KRC Plus Investor FR, LLC, an affiliate of Kimco ($5 million). Gamstar held an option to purchase an additional $10 million of Series B Preferred Stock under the Series B Preferred Stock Purchase Agreement, which was exercised in August 2025.

Intercreditor Arrangement

• The relative priorities of the Prepetition Lenders are governed by an Amended and Restated Intercreditor Agreement dated December 4, 2025, which establishes BGC's first-priority position on substantially all assets and FaraNord's first-priority position on the FaraNord Priority Collateral.

---

Events Leading to Bankruptcy

Liquidity Pressures and Capital Raise Efforts

• Although the Blue Apron Transaction and Marley Spoon Transaction delivered scale, meaningful revenue, and long-term contracts, they also introduced substantial costs that weighed on the Debtors' profitability:
  • Throughout 2023 and 2024, the Debtors simultaneously pursued scaled revenue growth and cost rationalization, but the business continued to operate at a loss and required incremental capital to fund operations.
  • The Debtors began experiencing liquidity pressure in late 2024 while seeking to complete a capital raise, and during that period funded operations primarily through cash on hand, preferred stock sale proceeds, and a receivables factoring facility.
  • The BGC Financing Agreement, which closed on March 11, 2025, bolstered the Debtors' liquidity and runway as they sought to address late-2024 liquidity pressures.

Listeria-Related Recalls and Insurance Claims

• Shortly after closing the BGC Financing Transaction, the Debtors experienced five separate withdrawal, voluntary recall, or recall events tied to Listeria monocytogenes—each stemming from contaminated material received from suppliers:
  • Beginning March 19, 2025, the USDA collected samples at the Debtors' Indianapolis, Indiana facility, and presumptive positive results in late March 2025 were subsequently confirmed, revealing bacterial contamination in select food materials prepared at the facility; on June 17, 2025, following discussions with customers and regulators, the Debtors initiated a voluntary recall of specific Chicken Fettuccine Alfredo SKUs (produced at Indianapolis) sold under the Marketside and Home Chef brands.
  • In April 2025, a presumptive positive environmental swab was identified on a conveyor belt at the Montezuma, Georgia facility, prompting Walmart—the facility's main customer—to withdraw all products produced there in May 2025 as a precautionary measure.
  • The Debtors experienced three additional contamination events in 2025 involving linguine, cauliflower, and spinach products.
• While the Debtors took immediate corrective action, the recall events caused production and fulfillment disruptions, customer attrition, and a sustained drain on liquidity throughout the spring and summer of 2025.
• The Debtors have asserted significant business interruption insurance claims tied to these incidents:
  • Estimated total business interruption losses of approximately $27.9 million attributable to the 2024–2025 policy period and approximately $36.2 million attributable to the 2025–2026 policy period.
  • Losses encompass lost margin from multiple product incidents (fettuccine, linguine, cauliflower, spinach, and the Montezuma product removal), customer-related impacts including lost business from key legacy customers and a significant lost prospective customer opportunity, and out-of-pocket response and remediation costs.
  • The Debtors maintain recall and business interruption coverage with $20 million of annual limits and continue to actively pursue claims in excess of $40 million.

Recapitalization, A&M-Led Transformation, and Loss of Walmart

• To stabilize the business in the wake of the recall events, the Debtors executed a series of capital raises and a comprehensive transformation plan:
  • In August 2025, the Debtors exercised their remaining option to sell $10 million of Series B preferred shares to Gamstar (US) IX Pte Ltd.
  • In October 2025, the Debtors and the Prepetition Lenders agreed on a comprehensive recapitalization, raising $110 million in additional capital through the FaraNord Financing Agreement, predicated on right-sizing the Debtors’ cost structure to the then-existing revenue base.
  • The turnaround plan emphasized SG&A organizational changes, facilities consolidation and plant closures, reductions in facility-level fixed costs, and material optimization across procurement, distribution, logistics, labor, freight, and overhead.
• While implementing the turnaround, the Debtors absorbed a significant customer loss when Walmart—previously a growing customer accounting for more than 20% of revenue—informed the Debtors that it would terminate the relationship in January 2026:
  • Because the Walmart business represented approximately 80% of production volume at the San Clemente, California and Indianapolis, Indiana facilities—both already unprofitable and underutilized—the Debtors elected to close both sites and transition residual volume to other facilities in the network.
  • The two facilities wound down at the end of January 2026.
• Despite these headwinds, the turnaround tracked well, with strong operational performance, elevated service levels, improved labor productivity, and financial results turning the corner.

Blue Apron Dispute and Termination of the PFA

• Against the backdrop of stabilizing performance, the Debtors’ relationship with Blue Apron deteriorated:
  • On April 9, 2025, Blue Apron asserted that the Debtors had breached certain obligations under the PFA.
  • In November 2025, Blue Apron alleged that the Debtors failed to timely deliver approximately 1,400 meal kits from the Tracy Facility, purportedly damaging Blue Apron’s brand.
  • By letter dated December 18, 2025 (the “Termination Notice”), Blue Apron terminated the PFA effective immediately, citing prior alleged breaches together with food safety and quality issues associated with the recalls and related operational matters.
• The Debtors disputed the Termination Notice, arguing that it failed to comply with the PFA’s notice and cure requirements, that the alleged conduct did not constitute a “material breach,” and that they had taken sufficient cure actions:
  • The parties entered settlement discussions and a series of tolling agreements preserving all rights, claims, and defenses—including the validity of the Termination Notice—with the most recent tolling period set to expire on May 4, 2026.
  • Notwithstanding the tolling arrangement, the ongoing dispute negatively affected financial support for and investment in the Debtors’ business.
• While negotiating with Blue Apron, the Debtors simultaneously sought to raise additional capital to bridge the business to forecasted positive cash flow in the third quarter of 2026:
  • Through January and February 2026, the Debtors met with at least 15 working capital lenders and engaged multiple parties to monetize their insurance claims; none of these efforts proved successful.
  • With liquidity diminishing despite materially improved operations, the Debtors pivoted to contingency planning.

Advisor Engagements

• The Debtors retained a slate of restructuring professionals to guide their transformation and contingency planning:
  • On October 16, 2025, A&M was engaged to provide Chief Financial Officer and Chief Transformational Officer services and to implement operational and financial performance improvements; the engagement was expanded to include Chief Operating Officer services on December 16, 2025.
  • On February 21, 2026, Rothschild & Co. was engaged to facilitate contingency planning and provide investment banking services in connection with a potential sale of the Debtors.
  • On March 10, 2026, Cole Schotz P.C. was engaged to support restructuring efforts, including contingency planning and ultimate Chapter 11 planning and execution.

Stakeholder Engagement and Path to Chapter 11

• In December 2025, the Board, in conjunction with its advisors, determined that additional liquidity would be required to fund operations into the first quarter of 2026 and beyond. The Debtors explored multiple value-maximizing alternatives outside of chapter 11—including asset sales, financing alternatives with new and existing lenders, and holistic restructuring transactions—but were ultimately unable to reach agreement on terms.
• The Debtors then engaged their key creditor constituents—FaraNord (US) IV Pte Ltd as the FaraNord Lender, BGC Lender Rep LLC as the BGC Lender (collectively, the Prepetition Lenders), Blue Apron, and certain third parties—on a holistic restructuring solution. Those discussions revealed that an out-of-court restructuring was not viable and that a Chapter 11 filing represented the most value-maximizing path forward.
• Each constituency brought distinct objectives to the negotiating table:
  • The Debtors required additional liquidity to prosecute a Chapter 11 case, fund administrative costs, and repair trade relationships.
  • The Prepetition Lenders sought clarity on an orderly Chapter 11 case with a viable exit strategy before agreeing to provide additional funding.
  • Blue Apron conditioned any financial accommodations on resolution of the PFA disputes and a seamless transition of fulfillment services to a successor of its choosing.

Prepetition Settlement Framework and DIP Financing

• Through extensive good-faith, arms’-length negotiations over recent months, the Debtors secured a comprehensive package of stakeholder support to enter Chapter 11:
  • DIP Facility: The Debtors and BGC Lender Rep LLC, as DIP Agent for Birch Grove Investments LLC (and affiliates) and FaraNord (collectively, the DIP Lenders), entered into a Superpriority Senior Secured Priming DIP Credit Facility Term Sheet providing $3 million in Protective Advances and $15 million in post-petition new money loans, subject to case milestones designed to ensure an efficient process. The Protective Advances were funded on April 14 and 15, 2026 to support payroll, critical vendor payments, and continued operations.
  • Settlement with Blue Apron: Subject to Court approval, the Debtors and Blue Apron entered into a settlement agreement and mutual release providing the estates with approximately $47 million in cash (a portion paid on the Effective Date and the remainder over a 15-month period), waivers of claims in excess of $8 million, and additional financial accommodations of approximately $7 to $10 million in exchange for terminating the PFA and transitioning Blue Apron’s exclusive fulfillment business to Misfits Market, Inc.
  • Transition Services Agreement: A TSA between the Debtors and Misfits Market governs transition services to Misfits Market, on behalf of Blue Apron, from finality of the settlement order through August 31, 2026.
  • Asset Purchase Agreement: An APA between the Debtors and Misfits Market provides for the sale and assumption of certain working capital to enable Misfits Market to satisfy its TSA objectives.
  • Plan/Wind-Down: The Debtors intend to conclude the Chapter 11 Cases through an orderly wind-down and confirmation of a plan of liquidation that includes customary terms, funds wind-down costs subject to a budget, and provides for an orderly liquidation of the estates.

Rationale for Settlement Over Section 363 Sale

• The Board originally contemplated a section 363 sale process under which the Blue Apron-related assets would be marketed in a competitive auction with Misfits Market as stalking horse bidder. However, that path presented significant obstacles:
  • Incremental liquidity beyond the projected DIP financing would have been required to bridge to a Misfits Market transaction, but Blue Apron—having negotiated a long-term fulfillment arrangement with Misfits Market—was unwilling to provide such support if the Debtors pursued a sale to a competing party.
  • The Debtors anticipated that Blue Apron would litigate the 363 sale and the PFA termination, further eroding liquidity, and could withdraw material accommodations such as net-zero payment terms that are critical to the Debtors’ bridge liquidity.
  • Ongoing PFA receivables and payables disputes raised the prospect of recoupment or setoff claims that could have impeded collections from Blue Apron, materially increasing DIP financing needs in any contested scenario.
• Given these obstacles, the Debtors elected to pursue a pre-petition settlement with Blue Apron and a parallel sale process for non-Blue Apron assets—including inventory, accounts receivable, contracts, leases, intellectual property, and residual assets—shortly after the Petition Date.

Path Forward and Case Timeline

• The Debtors have obtained stakeholder support for an approximately 120-day Chapter 11 process anchored to the following milestones:
  • Petition Date: file the Settlement Motion to compromise certain claims with Blue Apron in form and substance reasonably acceptable to the DIP Lenders.
  • Within 10 days: file the Sale Motion to sell all assets not subject to the Settlement Motion under section 363 of the Bankruptcy Code.
  • Within 31 days: obtain a final order approving the DIP Facility, an order approving sale bidding procedures, and an order approving the Settlement Motion.
  • Within 75 days: obtain entry of an order approving the Sale.
  • Within 90 days: consummate the Sale.
  • Within the later of 30 days following Sale consummation or the completion of transition services: confirm a liquidating chapter 11 plan satisfying the requirements of an Acceptable Plan.
• The DIP Facility and the Blue Apron/Misfits Transaction are mutually reinforcing—the DIP financing provides Blue Apron and Misfits Market confidence in the Debtors’ ability to consummate the transaction, while the transaction gives the DIP Lenders confidence that the Debtors will maximize estate value through an orderly Chapter 11. Together, these arrangements are designed to stabilize operations, fund working capital, payroll, vendor obligations, and case administration costs, and enable a value-maximizing Chapter 11 process with the support of the Prepetition Lenders and Blue Apron.