F-Star Socorro - Chapter 11 APA Summary

Sale Order / Purchase Agreement Summary

Consideration

• Purchase price: a bulk credit bid of $90 million for all of the purchased assets under section 363(k), plus any cash component necessary to satisfy all valid title encumbrances senior to Madison's lien. Madison's bid was the successful bid under the bidding procedures, and the court found that no other party offered equal or greater value.
• Separately, and as a condition to closing, the buyer must pay the sellers $858,469.80 on account of prepetition expenses swept with respect to the purchased assets; that payment is in addition to and does not reduce the purchase price.
• The buyer also takes on full responsibility for ad valorem taxes assessed against the purchased assets, payable in the ordinary course when due.

Parties

• Sellers: 11751 Alameda Avenue Owner, LLC; JNY Building Owner, LLC; JNY II Building Owner, LLC; and 1340 Bob Hope Drive Owner, LLC, four of the F-Star Socorro, L.P. debtors.
• Buyer: RC PV Lender I LLC, referred to in the order as Madison, together with its nominee, assignee, acquisition vehicle, or designee for each property, to be designated prior to conveyance of title on notice from the buyer. Madison holds the prepetition secured claim being credit bid and is the mortgagee of record on the 1340 Bob Hope Drive parcel under a deed of trust dated May 11, 2023 and recorded May 15, 2023.
• The court found the buyer is not an insider or affiliate of the debtors and that there is no continuity or common identity between the buyer, its affiliates, and the debtors. No broker acted for the buyer and no brokers' commissions are due from the debtors.

Assets Being Sold

• Four real properties in El Paso County, Texas, identified by tax parcel number:
  • City of Socorro, PID 392798 and 48686
  • City of Socorro, PID 306689
  • City of Socorro, PID 190945 and 215275
  • City of El Paso, PID 412760
• The sale carries with it the executory contracts and unexpired leases related to the properties that the buyer designates for assumption, and the buyer takes title subject to permitted liens, including all easements, rights-of-way, and covenants running with the land.

Credit Bid

• The court held the $90 million credit bid valid under section 363(k), authorized under both the bidding procedures order and the Madison Term Sheet, the June 17, 2026 term sheet between the debtors and Madison that the court approved June 30, 2026, and found no cause to limit, reduce, modify, or impair it; the debtors' valuation of each credit-bid dollar as one dollar of cash was a reasonable exercise of business judgment.
• Upon closing the credit bid binds the buyer, the debtors, and the estates, and Madison's prepetition secured claim is reduced by $90 million.
• Also upon closing, and pursuant to the Madison Term Sheet, Madison waives any existing postpetition adequate protection claims or liens against the Corebridge Collateral other than as set forth in that term sheet, but preserves any claim or lien tied to the Second Advance, a term the order leaves to the term sheet's definition. The Corebridge Collateral is the collateral currently securing the replacement junior secured superpriority DIP facility of up to $32 million from B.H. Capital Ventures, LLC, approved Jan. 23, 2026.

Conditions to Closing

• Clawback guaranty: closing cannot occur until either the debtors and Madison agree on terms governing the guaranty, repayment, and return of all or a portion of the purchase price after closing, or the court enters an order addressing the clawback. Whatever is agreed is deemed incorporated into the sale order at closing, binding without further order.
• Shared access easement: closing cannot occur until the Shared Access and Maintenance Easement Agreement, substantially in the form attached to the order, is fully executed by 5 Star Tech II-1, LP, a debtor that owns the neighboring Building 1 parcel at 1321 Joe Battle Blvd. and is not a seller, and by seller 1340 Bob Hope Drive Owner, LLC, owner of the Building 2 parcel at 1340 Bob Hope Dr., and until the agreement's diagram and legal description conform to the court's description: the easement area must run the full length of the truck court between Building 1 and Building 2, with east-west boundaries no less than 140 feet from the face of each building, and with access to the truck alley through each parcel's driveways, off Joe Battle Boulevard for Building 1 and Bob Hope Drive for Building 2. The attached form is undated and unexecuted and leaves the truck alley depiction and legal description still to be inserted, so those exhibits must be completed to match the court's description before closing.
• Prepetition swept funds: payment of the $858,469.80 by wire to accounts the sellers designate. Payment is not an admission that the funds were improperly swept and is stated to be consideration for various agreements between the debtors and Madison; on payment, Madison releases all liens and claims in or against those funds and the debtors release all claims against Madison and its affiliates for their return.
• All other conditions precedent in the purchase agreement must be met, satisfied, or waived before either side is obliged to close.

Objections Resolved

• Hanon Systems USA, LLC, tenant at 1340 Bob Hope Drive, filed an emergency motion seeking to deny a sale free and clear of its leasehold interest or, alternatively, to condition any section 363 sale on continued possession as adequate protection. That objection is resolved by the easement condition and by the treatment of its lease: upon closing, the Standard Industrial Lease dated Sept. 12, 2012 between 5-Star Tech II-2, L.P. as landlord and Visteon Corporation, Hanon's predecessor in interest, is deemed assumed and assigned to the buyer under section 365 without further action by any party or the court, and is an assumed lease for all purposes. The cure amount for the Hanon lease is $0, with no cure payment required. Remaining objections and reservations of rights in the Hanon objection are overruled with prejudice, though Hanon reserves all rights as to any subsequent sale motion should this sale fail to close.
• The City of El Paso's limited objection and reservation of rights is resolved by the buyer's assumption of the ad valorem taxes: any dispute over proration between the debtors and the buyer has no effect on the buyer's obligation to pay, and the city retains its tax liens against the purchased assets until paid in full, including any applicable postpetition penalties or interest.
• All other objections not withdrawn, waived, settled, or resolved are overruled on the merits and with prejudice.

Assumption, Assignment and Cure

• The buyer designates which contracts and leases are assumed and assigned at closing under Section 3 of the purchase agreement; anything the buyer does not expressly designate is deemed rejected effective at closing without further order, except the Hanon lease, which the order deems assumed and assigned at closing notwithstanding anything to the contrary. The debtors must then file and serve a closing notice identifying what was assumed and assigned, identifying what was rejected, and specifying the deadline for rejection-damage proofs of claim.
• Cure amounts are the buyer's responsibility under the purchase agreement. For each assumed contract or lease, the buyer may pay, in its sole discretion, either the amount listed in the cure notice served at Dkt. No. 858 or an amount mutually agreed with the counterparty or judicially resolved; where a cure amount is adjudicated, payment of the adjudicated amount is a condition to assumption and assignment absent a separate agreement.
• Counterparties that did not timely object to a proposed cure amount are barred from later challenging it, and all counterparties are barred from asserting any default existing as of the sale hearing that was not raised at or before the hearing or in a timely objection.
• All counterparties are deemed to have consented to assignment under sections 365(c)(1)(B) and 365(e)(2)(A)(ii), including counterparties to personal services contracts that did not object; anti-assignment, termination, recapture, penalty, and assignment-fee provisions are void as against the transfer, and no counterparty may declare a default based on the debtors' financial condition or bankruptcy. A counterparty that fails to deliver a requested instrument within 10 business days may have it executed on its behalf by the buyer, with the sale order serving as authority.
• Non-debtor guaranties running to counterparties are unaffected, the debtors' section 365(d)(3) obligations remain in place through the effective date of assumption, and if the closing does not occur no contract or lease is assumed or rejected by virtue of the order.
• On assumption, assignment, and payment of cure, the buyer succeeds to all of the debtors' rights and obligations under each assumed contract and lease and the debtors are relieved of further liability to the extent provided by section 365(k); the buyer has no liability under any contract or lease unless and until it becomes an assumed contract or lease.

Shared Access and Maintenance Easement Agreement

• The agreement grants reciprocal perpetual non-exclusive alley easements over each owner's portion of the truck alley parcel for pedestrian and vehicular use, ingress, egress, passage, circulation, loading, access, maintenance, repair, and inspection. Vehicular parking is excluded, and neither owner nor its permittees may park on the other's parcel.
• Neither owner may block, obstruct, narrow, relocate, or alter the open configuration and two-way cross-access function of the truck alley without the other owner's written consent and, where the action would materially impair the benefited easement, that owner's mortgagee's consent.
• Each owner maintains its own portion in good condition and repair; on a 30-day cure failure the non-defaulting owner may perform the work, recover its reasonable out-of-pocket costs, and, if unpaid 30 days after demand, file a lien against the defaulting owner's parcel that is automatically subordinate to any mortgage lien. Emergency conditions or conditions materially impairing ingress or egress may be addressed without prior notice or expiration of the cure period, with the same reimbursement rights.
• Insurance: commercial general liability coverage of not less than $2 million for bodily and personal injury and death and $2 million for property damage, from Texas-licensed insurers, naming the other owner and its mortgagee as additional insureds and including a waiver of subrogation.
• To the extent not covered by the indemnified owner's insurance, each owner indemnifies the other, its mortgagees, and their successors and assigns against claims, losses, and costs, including reasonable attorneys' fees, resulting from the indemnifying owner's or its permittees' gross negligence or willful misconduct in using the truck alley; otherwise neither owner is liable to the other for consequential, incidental, special, exemplary, or punitive damages, and the prevailing owner in any dispute recovers its reasonable attorneys' fees and costs. Any amendment, termination, release, or relocation that would materially impair an alley easement requires the written consent of the affected parcel's mortgagee and must be recorded in El Paso County.
• The easements are appurtenant, run with the land, bind successors including any purchaser at foreclosure, trustee's sale, or by deed in lieu, and survive common ownership of both parcels under an express no-merger provision. Texas law governs. Mortgagees get an additional 30 days beyond the owner's cure period, extended where possession or control of the parcel is required, and no owner may exercise remedies other than emergency self-help until that period runs.
• The attached lien-holder consent forms, which are unsigned, provide that each of the three mortgagees consents to the easements, subordinates its lien to them solely to the extent necessary to preserve them, and agrees that no foreclosure or other enforcement will extinguish or impair them: Corebridge Institutional Investments (U.S.), LLC, formerly AIG Asset Management (U.S.), LLC, as administrative agent under a Dec. 27, 2023 loan agreement, and B.H. Capital Ventures, LLC, under a deed of trust dated and recorded Feb. 20, 2026, as mortgagees of the Building 1 parcel; and Madison as mortgagee of the Building 2 parcel.

Key Dates

• BH DIP facility approved: Jan. 23, 2026
• Madison Term Sheet dated June 17, 2026; approved June 30, 2026
• Declaration of Lance Miller, who signs the easement agreement as chief restructuring officer of both owners, in support of the sale: Sept. 16, 2026
• Sale hearing: Sept. 18, 2026
• Sale order entered: Sept. 25, 2026, effective and enforceable immediately
• Closing: as soon as practicable following satisfaction of the closing conditions, with the order reciting that time is of the essence to comply with the sale milestones in the Madison Term Sheet

Sale Free and Clear; Permitted Liens

• The properties transfer under section 363(f) free and clear of all liens, claims, encumbrances, and interests other than permitted liens, with non-objecting holders deemed to have consented; rights of recoupment are preserved.
• Valid and perfected interests attach solely to the sale proceeds attributable to the property against which they exist, with the same validity, force, priority, and effect they had immediately before closing, subject to the estates' rights and defenses.
• Easements, rights-of-way, covenants, and similar interests running with the land are expressly not extinguished and are deemed permitted liens for all purposes under the purchase agreement.
• The order is self-executing as to released liens: no release, termination statement, UCC filing, or other instrument is required, and the order alone suffices as evidence of clear title and as a general assignment binding on recorders, title companies, and governmental filing offices.
• Holders of liens, claims, encumbrances, and interests, including debt and equity holders, tax and regulatory authorities, lenders, and trade creditors, are permanently barred from pursuing them against the buyer, its affiliates, successors, assigns, or the assets, including by commencing actions, enforcing judgments, creating or perfecting claims, or asserting setoff except setoffs exercised prepetition. The injunction does not release the buyer's own performance and post-closing obligations.

Buyer Protections

• The court found the purchase agreement negotiated at arm's length, without collusion, and in good faith, and granted the buyer the full benefit of section 363(m) protection, including as to the transfer of the assumed contracts and leases, with no conduct warranting relief under section 363(n).
• The buyer is not a successor in interest to the debtors, has not merged or consolidated with them de facto or otherwise, is not a continuation or substantial continuation of the debtors, and bears no liability on any successor or transferee theory, including antitrust, environmental (CERCLA included), product liability, labor and employment, de facto merger, and substantial continuity. The court recorded that the buyer would not have acquired the assets absent these protections.
• Reversal or modification of the order on appeal does not affect the validity of any transfer, obligation, or right granted under it unless stayed pending appeal.
• The automatic stay is modified so the buyer need not seek relief to exercise its rights or remedies under the purchase agreement or related documents, including giving notice or terminating the agreement.

Post-Closing and Administrative Mechanics

• The buyer may operate under the debtors' licenses, permits, registrations, and governmental approvals relating to the assets as of closing, which are deemed transferred to the maximum extent available under applicable law, subject to compliance with non-bankruptcy transfer requirements; existing licenses and permits remain in place for the buyer's benefit until replaced or transferred, and, to the maximum extent permitted by section 525, no governmental unit may revoke or suspend a permit or license on account of the filing or the sale. No tribunal is divested of police or regulatory jurisdiction.
• The buyer may allocate, assign, lease, sublease, license, sublicense, transfer, or otherwise dispose of the purchased assets and the assumed contracts and leases, in whole or in part, to any one or more affiliated or unaffiliated parties, provided no such party is an insider absent further court order; references to the buyer then extend to the assignee.
• Parties in possession of the purchased assets must surrender possession to the buyer or its designee at closing or when the buyer requests.
• No bulk sales or bulk transfer law applies, and the debtors and buyer waive compliance and any related claims.
• The purchase agreement may be modified, amended, or supplemented in writing without further order, subject to filing the final version on the docket, except that any change materially altering its terms requires further court approval. Where the order and the purchase agreement conflict, the order controls.
• The order binds the buyer and its successors, the debtors and their affiliates, any Chapter 7 or Chapter 11 trustee or examiner, all known and unknown creditors and equity holders, all contract counterparties, and all other parties in interest, together with governmental units and recording and licensing authorities; it survives dismissal of the cases as well as confirmation of any plan or conversion to Chapter 7. The court retains exclusive jurisdiction to interpret and enforce the order and the purchase agreement and to adjudicate related disputes.