Hawthorne Race Course - Chapter 11 Bidding Procedures Summary

Bidding Procedures Summary

Parties Involved

• Sellers: Hawthorne Race Course, Inc.; Carey Heirs Properties, LLC; Suburban Downs, Inc.; and Post Time Catering, Inc. (collectively, the Debtors)
• Consultation Parties: (i) the Official Committee of Unsecured Creditors; (ii) Derby DIP LLC; (iii) Signature Bank; and (iv) Latto Capital LLC
  • Any party who submits a Qualified Bid is prohibited from being a Consultation Party, and any Consultation Party that submits a bid (or whose affiliate or insider submits a bid) automatically loses its consent and consultation rights.
  • Each member of the Consultation Parties includes its counsel and financial advisor in the Chapter 11 Cases.

Assets Being Sold

• Substantially all of the Debtors' assets, as defined in the form asset purchase agreements (the "Form APA").
• The Sale will be conducted free and clear of all liens, claims, encumbrances, and interests pursuant to section 363 of the Bankruptcy Code.

Stalking Horse Bid

• The Debtors are authorized, but not obligated, in consultation with the Consultation Parties, to designate a Stalking Horse and negotiate the terms of a Stalking Horse APA and, as necessary, an Operations Transfer Agreement ("OTA") with the Stalking Horse's designated operator(s) (collectively, the "Stalking Horse Definitive Agreement").
• If approved by the Court, the Stalking Horse will automatically be deemed a Qualified Bidder, and its bid will automatically be deemed a Qualified Bid.
• The Stalking Horse must comply with all other applicable Participation Requirements.
• If the Debtors do not receive any Qualified Bids other than the Stalking Horse Bid, or if no Qualified Bidder other than the Stalking Horse indicates an intent to participate in the Auction, the Debtors will not hold an Auction and the Stalking Horse will be named the Successful Bidder.

Bid Protections

• As a component of any Stalking Horse APA, the Debtors may provide the following Bid Protections, subject to Bankruptcy Court approval:
  • A break-up fee (the "Break-Up Fee"), calculated as a percentage of the cash purchase price plus reimbursement of actual incurred expenses;
  • A minimum bid increment for competing bidders; and
  • Other buyer protections requested by the Stalking Horse.

Credit Bid

• The Stalking Horse is entitled to credit bid the amount of its Break-Up Fee.
• Each of the Stalking Horse, the DIP Lender, and Signature Bank is deemed a Qualified Bidder, and any credit bids by the DIP Lender or Signature Bank will be deemed Qualified Bids in all respects, subject to the termination of consultation rights as set forth in the Bid Procedures.

Due Diligence and Confidentiality

• Any party interested in submitting a bid must first execute a confidentiality agreement in form and substance satisfactory to the Debtors, after which the Debtors will afford such "Potential Bidder" reasonable due diligence access and additional information as the Debtors, in their business judgment, determine appropriate.
• The Debtors reserve the right to request additional information from each party prior to providing access to diligence materials.
• Neither the Debtors nor their professionals are required to provide confidential, business-sensitive, or proprietary information to any Potential Bidder if the Debtors reasonably believe, in consultation with the Consultation Parties, that (i) such disclosure would be detrimental to the Estates, or (ii) such Potential Bidder does not intend in good faith, or lacks the capacity, to consummate its bid.

Bid Requirements

• To participate in the Auction, each Potential Bidder must deliver to the Debtors, their advisors, and the Committee's advisors an irrevocable, formal offer (in .pdf or similar format) on or prior to the Bid Deadline. Each Bid must satisfy the following Participation Requirements:
  • Clearly identify (a) the particular Assets to be purchased, (b) the liabilities and obligations to be assumed (including any debt and cure costs), and (c) whether the bidder intends to operate the Debtors' business as a going concern;
  • Set forth the Purchase Price (a single point value in U.S. Dollars on a cash-free, debt-free basis), separately identifying the cash and non-cash components and the allocation among the applicable Assets, with such allocation not prejudicing any party's right to contest;
  • For Bids on substantially all of the Assets, state whether the Bid is conditioned on purchasing all Assets or whether it should be viewed as separate Bids for one or more sets of Assets;
  • If the Debtors designate a Stalking Horse, offer a value greater than or equal to the value offered under the Form APA, plus at least (i) the amount of the Break-Up Fee and (ii) a Minimum Bid Increment to be determined by the Debtors prior to auction (collectively, the "Minimum Qualified Bid");
  • Include a redlined copy of the Form APA showing proposed amendments (the "Modified APA") and a clean executed Modified APA, and, to the extent applicable, redlined and clean copies of any Modified OTAs;
  • Include a statement that there are no conditions precedent to entering into the definitive agreements and closing, including no financing or due diligence contingencies, and that all necessary internal and shareholder/member approvals have been obtained;
  • State that the offer is binding and irrevocable until Court approval of the Successful Bid(s); if selected as a Successful Bid, until the earlier of (i) closing of the Sale and (ii) 45 days after the Sale Hearing (subject to further extensions); and if selected as a Back-Up Bid, until the Back-Up Bid Expiration Date;
  • Fully disclose the identity of each entity bidding or otherwise participating in connection with the bid, including any principals, representatives, and any of the Debtors' creditors or insiders associated with the Potential Bidder;
  • Include the names, contact information, and roles of the Potential Bidder's members available to answer questions, including advisors and related parties;
  • Include a good-faith deposit in immediately available funds of at least 5% of the Purchase Price (the "Earnest Money Deposit");
  • Provide written evidence of available funds or a firm financing commitment sufficient to consummate the Sale, in form and substance satisfactory to the Debtors' advisors and the Committee in their joint discretion;
  • Include a preliminary list of the Debtors' executory contracts and unexpired leases the bidder desires to have assumed and assigned, with information sufficient to demonstrate adequate assurance of future performance;
  • If represented by a broker, include the broker's retention agreement;
  • If applicable, provide information on the Potential Bidder's prior experience owning or operating comparable facilities;
  • Represent and warrant that the Potential Bidder has had the opportunity to conduct due diligence and relied solely on its own independent review;
  • Unless the Potential Bidder is the Stalking Horse, acknowledge that the bidder is not entitled to any of the Bid Protections;
  • Be reasonably likely to be consummated within a time frame acceptable to the Debtors, with a commitment to close as soon as practicable;
  • Consent to the jurisdiction of the Bankruptcy Court;
  • Include affirmative statements that the Potential Bidder (i) has acted in good faith consistent with section 363(m) and not in any manner prohibited by section 363(n) of the Bankruptcy Code, (ii) will continue to comply with the Bid Procedures and Bid Procedures Order, and (iii) waives any substantial contribution claims under section 503(b) of the Bankruptcy Code related to the bidding process;
  • Contain any other information reasonably requested by the Debtors.

Qualified Bids

• Bids that contain all required bid criteria, as determined by the Debtors in consultation with the Consultation Parties, will be deemed "Qualified Bids," and the bidders submitting such bids will be deemed "Qualified Bidders."
• The Debtors will advise each Potential Bidder of its status before the Auction and provide copies of all Qualified Bids to the Consultation Parties.
• The Debtors, in consultation with the Consultation Parties, may waive compliance with one or more Participation Requirements (other than the Stalking Horse's right to the Break-Up Fee) and deem an otherwise non-qualifying bid to be a Qualified Bid if consistent with their fiduciary duties.
• The Debtors may aggregate or combine separate bids from unaffiliated persons to create a Qualified Bid, including at the Auction, subject to section 363(n) of the Bankruptcy Code regarding collusive bidding.
• The highest or otherwise best Qualified Bid(s) will be valued based on factors including the purchase price, net value, claims likely to be created, counterparties, proposed revisions to transaction documents, specific Assets included, effect on overall estate value, regulatory approvals required, and the likelihood and timing of consummation.
• All Qualified Bidders, including the Stalking Horse, are deemed to have waived the right to pursue a substantial contribution claim under section 503 of the Bankruptcy Code related to the Sale process.

Earnest Money Deposit

• Each Bid must include an Earnest Money Deposit of at least 5% of the Purchase Price, in immediately available funds.
• The Earnest Money Deposit of the Back-Up Bidder will be retained by the Debtors until the Back-Up Bid Expiration Date and returned within five (5) business days thereafter, or applied to the Purchase Price if the Back-Up Bid becomes the Successful Bid.
• Deposits of Qualified Bidders not selected as the Successful Bidder or Back-Up Bidder will be returned within five (5) business days following such selection.
• The Earnest Money Deposit of the Successful Bidder will be dealt with in accordance with the terms of the Successful Bid.
• Any forfeited deposit shall become property of the Debtors' estates.

Auction Details

• If more than one Qualified Bid is received, the Debtors will conduct an Auction for the sale of substantially all the Assets. If no Qualified Bids are received, the Auction will be canceled, and the Debtors will file notice of same.
• The Auction, if required, will take place on July 7, 2026, at a location and/or via a virtual platform (such as Zoom or GoToMeeting) designated by the Debtors, with notice of location or virtual credentials provided no later than 48 hours in advance.
• Only the Debtors, Qualified Bidders, members of the Committee, secured creditors, the U.S. Trustee, and their respective legal or financial professionals are eligible to attend or participate at the Auction.
• At least two (2) days prior to the Auction, each Qualified Bidder must inform the Debtors whether it intends to participate; non-participating Qualified Bids nevertheless remain fully enforceable until Court approval of the Successful and Back-Up Bidder selections.
• Each Qualified Bidder participating must confirm on the record that it has not engaged in any collusion with respect to the bidding or the Sale.
• Bidding will begin with the highest or otherwise best Qualified Bid; only the Stalking Horse and other Qualified Bidders (the "Auction Participants") may increase or improve their bids.
• Minimum increments (the "Bid Increments") will be announced prior to commencement of the Auction; the Debtors, in consultation with the Consultation Parties, reserve the right to modify the Bid Increments at any time prior to or during the Auction.
• The Auction will continue in one or more rounds of bidding, conducted openly, until the Debtors determine, in consultation with the Consultation Parties and subject to Bankruptcy Court approval, the highest and best offer(s) (the "Successful Bid(s)").
• Immediately prior to the conclusion of the Auction, the Debtors will (1) review each bid based on financial and contractual terms and other relevant factors, (2) identify the Successful Bid(s), and (3) notify all Qualified Bidders at the Auction of the name(s) and material terms of the Successful Bid(s).

Back-Up Bid

• All Qualified Bidders attending the Auction must agree to remain ready, willing, and able to close the Sale under the terms of their last Qualified Bid as a back-up bidder.
• The Debtors, following consultation with the Committee and Signature Bank, will select a Back-Up Bid from among the Qualified Bidders.
• The Back-Up Bid shall remain open and irrevocable until the earlier of (i) the 45th calendar day following the conclusion of the Auction or (ii) consummation of the Sale to the Successful Bidder (the "Back-Up Bid Expiration Date"). Any provision conditioning the Back-Up Bid on a closing prior to the Back-Up Bid Expiration Date shall be void.
• If the Successful Bidder fails to consummate the transaction, the Debtors shall: (a) retain the Successful Bidder's Earnest Money Deposit (to the extent provided in the applicable purchase agreement); (b) maintain the right to pursue all available legal or equitable remedies (to the extent provided in the applicable purchase agreement); and (c) be free to consummate the proposed transaction with the Back-Up Bidder without the need for an additional hearing or order of the Bankruptcy Court.
• All Qualified Bids other than the Successful Bid and the Back-Up Bid shall be deemed rejected as of the date of Court approval of the Successful Bid and the Back-Up Bid.
• The Successful Bidder(s) and Back-Up Bidder(s) are deemed to have waived the right to pursue a substantial contribution claim under section 503 of the Bankruptcy Code related to the Sale process.

Assumption and Assignment

• The Form APA and Modified APA must designate which executory contracts and unexpired leases are to be assumed and assigned (the "Assigned Contracts").
• In all circumstances, the Successful Bidder(s) shall be responsible for all cure amounts relating to the Assigned Contracts under section 365 of the Bankruptcy Code.

Sale Objection Procedures

• Sale approval shall be considered at the Sale Hearing on July 13, 2026, at 10:00 a.m. (prevailing Central Time). The Sale Hearing may be adjourned or rescheduled without further notice by an announcement of the adjourned date at the Sale Hearing.
• Sale Objections must be served on the Notice Parties: (i) Debtors' counsel, Saul Ewing LLP (Attn. Barry A. Chatz and David A. Golin); (ii) Counsel to the Committee, Husch Blackwell LLP (Attn. Michael A. Brandess and Thomas Zavala); and (iii) the Office of the United States Trustee for Region 11 (Attn. Jeffrey L. Gansberg and Joshua D. Greene).
• Failure to object to the relief requested in the Motion shall be deemed "consent" for purposes of Bankruptcy Code section 363(f). If a Sale Objection is not filed and served on or before the Sale Objection Deadline, the objecting party shall be barred from objecting to the Sale and may not be heard at the Sale Hearing.

Reservation of Rights

• The Debtors reserve the right to (i) modify these Bid Procedures, in consultation with the Consultation Parties, in any manner that will best promote the goals of the bidding process and to impose additional or different customary terms and conditions on the Sale, including modifying the Qualified Bid requirements (except as to the Stalking Horse Break-Up Fee); (ii) extend the deadlines set forth in the Bid Procedures; (iii) adjourn the Auction or the Sale Hearing without further notice; and (iv) reject any or all Qualified Bids that are inadequate, insufficient, non-conforming, or contrary to the best interests of the Debtors.
• The Debtors reserve the right, at any time and in their reasonable, good-faith business judgment in consultation with the Consultation Parties, to decline to pursue the Sale and to withdraw any motion seeking Sale approval.

Contact Information

• Inquiries regarding the Sale should be directed to:
  • Hilco Global LLC, Attn: Jeff Azuse, 5 Revere Drive, Suite 410, Northbrook, Illinois 60062, (847) 418-2703, jazuse@hilcoglobal.com
  • Province LLC, Attn: Adam Rosen, 445 Park Ave., Ste. 3D, New York, New York 10022, (702) 685-5555, arosen@province.com
  • Province LLC, Attn: Richard Darnold, 445 Park Ave., Ste. 3D, New York, New York 10022, (702) 685-5555, rdarnold@provincefirm.com
• No other party may respond to Sale inquiries.

Key Dates

• Bid Deadline: June 26, 2026, at 5:00 p.m. (prevailing Central Time)
• Qualified Bid Designation Deadline: June 29, 2026
• Notice to Qualified Bidders: June 30, 2026
• Auction (if required): July 7, 2026
• Notice of Auction Results: July 8, 2026
• Sale Objection Deadline: July 10, 2026, at 5:00 p.m.
• Sale Hearing: July 13, 2026, at 10:00 a.m. (prevailing Central Time)

Hawthorne Race Course Cicero and Stickney, Ill., Real Property Sale Summary

Parties Involved

• Sellers: Carey Heirs Properties LLC, an Illinois limited liability company ("CHP"), and Hawthorne Race Course, Inc., an Illinois corporation
• Purchaser: ALLIMAC 2023, LLC, a Delaware limited liability company, as Stalking Horse Bidder and Successful Bidder
• Back-Up Bidder: 180 Hawthorne Holdings, LLC
• Immediately prior to the Closing, the Purchaser was not an "insider" or "affiliate" of the Debtors, and no common identity of incorporators, directors, or controlling stockholders existed between the Purchaser and the Debtors.
• Seller's Broker: Hilco Real Estate, LLC; Buyer's Broker: NAI Hiffman / Hiffman National. Seller shall cause a commission to be paid to Seller's Broker in accordance with its Real Estate Consulting, Advisory & Sales Services Agreement; any fees owing to Buyer's Broker shall be paid by Buyer.

Case Background

• On Feb. 27, 2026, the Sellers and two affiliates filed voluntary chapter 11 petitions in the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, jointly administered as case no. 26-03505.
• On May 1, 2026, the Court entered the Bid Procedures Order [Docket No. 262], which permitted the Sellers to enter into a stalking horse asset purchase agreement providing for a break-up fee and other bidder protections, subject to Court approval.
• The Court subsequently entered an order approving the designation of the stalking horse purchaser of the real estate assets and the Bid Protections [Docket No. 387], and an order rescheduling the Sale Hearing and modifying related bid procedure dates [Docket No. 400].
• The Court also authorized the retention of Hilco Real Estate, LLC as real estate broker [Docket No. 255] and the supplemental retention of Province, LLC as sale process advisor to the Official Committee of Unsecured Creditors [Docket No. 250].
• The Real Estate Agreement of Sale was executed on June 29, 2026 (the "Effective Date"). The Court held the Sale Hearing on July 20, 2026, and entered the Sale Order on July 27, 2026.
• All objections and reservations of rights that were not withdrawn or resolved are overruled with prejudice; parties that did not object are deemed to have consented under section 363(f)(2).

Assets Being Sold

• The Acquired Property is the property described in Section 1 of the Purchase Agreement — the Real Property and the Personal Property at the CHP Premises and the Hawthorne Premises:
  • CHP Premises: real estate and related improvements located in the Town of Cicero and the Town of Stickney, Cook County, Ill. (Parcel IDs 16-33-322-010-0000, 16-33-400-001-0000, 16-33-400-005-0000 and 16-33-400-040-0000)
  • Hawthorne Premises: real estate and related improvements located in the Town of Cicero, Cook County, Ill. (Parcel ID 16-33-314-046-0000)
• The Property includes the Premises, all buildings and improvements thereon, together with Seller's right, title, and interest in any land lying in the bed of adjoining streets, roads, or alleys; easements, privileges, licenses, and rights-of-way; appurtenances and hereditaments; and all fixtures (collectively, the "Real Property"), plus all tangible personal property owned by Seller and located at or used in connection with the Premises (the "Personal Property").
• The Acquired Property constitutes property of the Debtors' estates within the meaning of section 541(a), with title presently vested in the estates.
• The sale is on an "as is, where is" basis. The Buyer acknowledges it is purchasing the Property in "as is," "where is" and "with all faults" condition, including latent or non-discoverable defects, without warranties of any kind, and that it is relying solely on its own independent expert evaluations and investigation rather than on any information from Seller or its agents other than Seller's express representations.

Purchase Price

• Total Purchase Price: $90 million, subject to adjustments and prorations, comprised of:
  • A $4.5 million Deposit, representing 5% of the Purchase Price, payable within two business days after the Effective Date; and
  • A closing payment of $85.5 million, plus or minus net cash adjustments, payable in immediately available federal funds.
• The Buyer has and will have at Closing immediately available funds sufficient to satisfy all of its obligations, including payment of the Purchase Price and all related fees and expenses. The Buyer's obligations are not contingent upon procuring financing.
• The Purchaser/ITHA Funds described below are in addition to the Purchase Price.

Good Faith Deposit

• The $4.5 million Deposit is held in trust by Commonwealth Land Title Insurance Company, as Escrow Agent, in an interest-bearing account, with interest accruing to the Buyer's benefit and credited against the Purchase Price at Closing.
• The Deposit is fully refundable to the Buyer if any of the Buyer's conditions precedent to Closing are not satisfied.
• Separately, if the Buyer is not the Successful Bidder or the Backup Bidder, the Agreement terminates automatically and the Escrow Agent must return the Deposit to the Buyer promptly, without further consent or instruction from the Seller.
• Under the Sale Order, the Escrow Agent is directed to return the Deposit to the Purchaser no later than one business day following: (i) the Debtors' termination of the Purchase Agreement because Closing did not occur solely due to individuals or horses, including the Backstretch Community, remaining on the Acquired Property; (ii) entry of an order converting the cases to chapter 7 or appointing a trustee, examiner, or receiver; (iii) consummation of a sale of the Acquired Property to a party other than the Purchaser; or (iv) the Closing failing to occur by Oct. 31, 2026, unless waived by the Purchaser. Such return does not prejudice the Purchaser's entitlement to the Deposit or Bid Protections.

Bid Protections

• Break-Up Fee: 2% of the Purchase Price, payable if the Buyer is not the prevailing purchaser of the Property
• Expense Reimbursement: the Buyer's actual, reasonable, and documented out-of-pocket costs and expenses, including legal and advisor fees, up to $250,000
• The Bid Protections (a) constitute allowed super-priority administrative expense claims against the Seller and its debtor affiliates under sections 503(b) and 507, (b) are not subordinate to any other administrative claims against the Seller or its debtor affiliates, and (c) survive termination of the Purchase Agreement.
• At any auction, the Buyer is entitled to credit bid the full amount of the Bid Protections, with such credit applying to the Initial Overbid and to each subsequent bid by the Buyer.
• If Closing does not occur due to a Seller breach or failure of a closing condition, the Buyer is entitled to the Break-Up Fee and Expense Reimbursement on a priority basis, payable within five business days of the Buyer becoming entitled thereto.
• The Seller was required to seek approval of the Bid Protections within two business days following entry into the Agreement, with entry of the Bid Protections Order — in form acceptable to the Buyer — required no later than seven business days following entry into the Agreement; failure to obtain entry within that period gave the Buyer a termination right, with the Deposit refunded.
• Approval of any sale of the Acquired Property to a party other than the Purchaser, including to the Back-Up Bidder, requires a further order of the Bankruptcy Court, which must include an adjudication as to whether any Bid Protections are due and owing to the Purchaser in connection with such sale.

Overbid

• Initial Overbid: must equal or exceed the sum of (a) the Purchase Price, plus (b) the Break-Up Fee and Expense Reimbursement, plus (c) $500,000
• Minimum Overbid Increment: $500,000 above the prior bid for any subsequent bids
• Following the closing of the Auction, the Seller is not permitted to solicit, encourage, or accept any bid from any party other than the Buyer.

Sale Process and Highest and Best Offer

• The Debtors and their advisors engaged in a marketing and sale process both prior to and after the petition date in accordance with the Bid Procedures Order, which the Court found was fair, open, duly noticed, and non-collusive, and which afforded any interested party a full, fair, and reasonable opportunity to submit a higher or otherwise better offer.
• The Court found that the sale process resulted in the highest or otherwise best value for the Acquired Property, that no other entity presented a higher or otherwise better offer than the Purchaser, and that any other transaction would not have yielded as favorable a result.
• The consummation of the Sale outside a plan neither impermissibly restructures creditors' rights nor dictates the terms of a plan, and does not constitute a sub rosa chapter 11 plan.
• The Purchase Agreement and the other transaction documents are approved in all respects, and the Debtors are authorized and directed to take all actions necessary to perform, consummate, implement, and close the Sale without further order of the Court.

Good Faith of Purchaser

• The consideration was negotiated at arm's length, in good faith, and without collusion pursuant to section 363(m), and constitutes reasonably equivalent value and fair and adequate consideration for the Acquired Property, including under the Uniform Fraudulent Conveyance Act and the Uniform Fraudulent Transfer Act.
• In support, the Court found, among other things, that: the Purchaser recognized the Debtors were free to deal with any other interested party; the Purchaser complied with the Bid Procedures Order and agreed to subject any bid to the competitive bid procedures; all payments made by the Purchaser were disclosed in the Purchase Agreement; no common identity of directors, officers, or controlling stockholders exists; both parties were represented by competent counsel of their choosing; the Purchaser did not induce or cause the chapter 11 filing; and the Purchaser did not act in a collusive manner.
• The Purchaser Parties are "good faith purchasers" within the meaning of section 363(m) and entitled to all protections afforded thereby, such that reversal or modification on appeal will not affect the validity of the Sale absent a stay. Neither the Debtors nor the Purchaser Parties engaged in conduct that would permit avoidance or the imposition of costs or damages under section 363(n).
• The findings concerning the Purchaser Parties, including the good faith findings under section 363(m), do not inure to the benefit of any third party.

Sale Free and Clear & Successor Liability

• The Sale satisfies section 363(f), and the Acquired Property will be transferred free and clear of all liens, claims, interests, and encumbrances, including any implied or express licenses or leases, reclamation rights, and the presence or habitation of any persons or horses, including the Backstretch Community. All holders of liens, claims, interests, and encumbrances are adequately protected — satisfying section 363(e) — by the attachment of those interests to the Sale Proceeds ultimately attributable to the property against which they applied, or to other specifically dedicated funds, in the same order of priority and with the same validity, force, and effect as existed prior to the Sale, subject to any rights, claims, and defenses of the Debtors or their estates.
• Derby DIP LLC, as DIP Lender, consented to the Sale. Subject to receipt of the applicable Sale Proceeds and full satisfaction of the DIP Obligations, the Sale is deemed free and clear of the DIP Liens.
• At Closing, all of the Debtors' right, title, interest, and possession in the Acquired Property vest immediately in the Purchaser (or its designee) pursuant to sections 105(a), 363(b), and 363(f). All persons in possession are directed to surrender possession, and any licenses, tenancy rights, or related agreements (express or implied, written or oral) with respect to any person then on or living on the Acquired Property are deemed rejected as of Closing.
• No Purchaser Stakeholder shall be deemed a successor to the Debtors, to have merged de facto or otherwise with the Debtors, or to be an alter ego or mere continuation of the Debtors, and none shall bear any Successor or Transferee Liability, including under any revenue, pension, ERISA, tax, labor, products liability, employment, or environmental law; the WARN Act; CERCLA; the ADEA; the Federal Rehabilitation Act of 1973; or the NLRA.
• All persons and entities are forever barred, estopped, and permanently enjoined from asserting claims against any Purchaser Party or its property, and from commencing or continuing any action with respect to any claim in these cases or any Successor or Transferee Liability.
• The free and clear provisions are self-executing; the Sale Order is deemed in recordable form, constitutes conclusive evidence of the release of liens upon recording, and the Debtors are authorized to execute and file termination statements, instruments of satisfaction, and releases on behalf of non-delivering lienholders.
• The Purchase Agreement and Sale are not subject to any bulk sales laws.

Asserted Secured Claims Against the Acquired Property

• Cook County Treasurer — $4,434,444, secured by the CHP Premises and the Hawthorne Premises
• Derby DIP LLC — $21,651,194.44, secured by DIP Collateral including the Acquired Property
• 180 Hawthorne Holdings, LLC, as successor-in-interest to Signature Bank — $53,163,940, secured by the Acquired Property
• Aria Group Architects, Inc. — $7,082,509, inclusive of 10% statutory interest per annum and legal fees recoverable under the Illinois Mechanics' Lien Act, against the CHP Premises
• W.E. O'Neil Construction Company and all related claims of its subcontractors (including, but not limited to, Milburn, LLC, Gurtz Electric Co., Waukegan Steel, SG Metal & Glass, Prime Scaffolding, Helm Mechanical, and National Rent-a-Fence) — $7,771,211, inclusive of 10% statutory interest per annum and legal fees recoverable under the Illinois Mechanics' Lien Act, against the CHP Premises
• Latto Capital LLC — $851,443.78, against the CHP Premises
• Churchill Downs, Inc. — $7,500,000, subject to committee challenge
• Monarch Content Management, LLC — $7,565,167.27, against the Hawthorne Premises
• Amounts are as estimated as of Aug. 31, 2026, based on the Final DIP Order, the Debtors' business records and schedules, and filed claims.

Settlements

• W.E. O'Neil Settlement — embodied in the Debtors' and WEO's joint Rule 9019 settlement motion [Docket No. 435] and approved by the Court on July 20, 2026, in resolution of the WEO Sale Objection [Docket No. 432] and all disputes concerning W.E. O'Neil's asserted secured claim and mechanics' lien against the Acquired Property:
  • W.E. O'Neil's proofs of claim (Claim No. 56 against Hawthorne Race Course, Inc., Claim No. 6 against Carey Heirs Properties, LLC, Claim No. 8 against Suburban Downs, Inc., and Claim No. 3 against Post Time Catering, Inc.) are allowed as a single allowed secured claim in the reduced amount of $4,950,000, with the remaining unpaid portion of its claims — and the remainder of the related claims of its Subcontractors — allowed as general unsecured claims, subject to future liquidation and allocation among the Debtors' estates based on the ongoing accrual of interest, fees, and other costs.
  • In full and final satisfaction of that claim and any secured claims of its Subcontractors, W.E. O'Neil receives $4.5 million in cash at Closing, paid on a dollar-for-dollar basis from the Sale Proceeds, and, as a condition to payment, permits payment at Closing of $450,000 as a gift on account of the allowed secured claim to the Illinois Thoroughbred Horsemen's Association and its charitable foundations, the Illinois Backstretch Charitable Foundation, Inc. and Galloping Out, Inc., both Illinois 501(c)(3) corporations — not for lobbying fees or in relation to political gain, but expressly to assist the Backstretch Community and horses — in partial resolution of the ITHA's objection to the Sale and in satisfaction of the ITHA's claim against the Sale Proceeds. The $4.5 million payment and the $450,000 gift together equal the $4,950,000 allowed secured claim.
  • The Debtors and W.E. O'Neil will work cooperatively to dismiss the Appeal and all related litigation following receipt of the WEO Claim Payment.
• Aria Settlement — in resolution of the Aria Objection:
  • Aria receives an allowed secured claim of $4,950,000, with the remaining unpaid portion of its claims allowed as general unsecured claims, subject to future liquidation and allocation among the Debtors' estates based on the ongoing accrual of interest, fees, and other costs.
  • In full and final satisfaction of its secured claims and those of its subcontractors, Aria receives $4.5 million in cash at Closing, paid on a dollar-for-dollar basis from the Sale Proceeds, and, as a condition to payment, permits payment at Closing of $450,000 as a gift to the ITHA's charitable foundations — the Illinois Backstretch Charitable Foundation, Inc. ($350,000) and Galloping Out, Inc. ($100,000), both Illinois 501(c)(3) corporations — not for lobbying fees or in relation to political gain, but expressly to assist the Backstretch Community and horses. The $4.5 million payment and the $450,000 gift together equal the $4,950,000 allowed secured claim.
  • Subject to receipt of payment, Aria will cause its Adversary Complaint to be dismissed with prejudice.
• If Closing does not occur and/or the WEO Claim Payment is not paid in full, the WEO Settlement is void, and W.E. O'Neil's asserted secured claim, its mechanics' lien against the Acquired Property, the WEO Sale Objection, Milburn LLC's asserted secured claim, the pending motion for relief from the automatic stay, and the Appeal are automatically reinstated and preserved in full, without prejudice and with the same validity, extent, and priority as existed immediately prior to entry of the Sale Order.
• If Closing does not occur and/or the Aria Claim Payment is not paid in full, the Aria Settlement is void, and Aria's asserted secured claim, its mechanics' lien against the Acquired Property, Aria's objection, and the Adversary Complaint are automatically reinstated and preserved in full, without prejudice and with the same validity, extent, and priority as existed immediately prior to entry of the Sale Order.
• In neither case does the Sale Order waive, release, satisfy, or impair any claims, liens, rights, defenses, or remedies of W.E. O'Neil, Aria, or their subcontractors, or any other party in interest's rights, objections, or defenses thereto.

Distribution of Proceeds

• At Closing, the Debtors are authorized and directed to distribute the Sale Proceeds and the ITHA Debtors Payment as follows:
  • All amounts due the Cook County Treasurer secured by the CHP Premises and the Hawthorne Premises;
  • All amounts due Derby DIP LLC under the Final DIP Order and the Supplemental DIP Order, estimated at $21,651,194.44 as of Aug. 31, 2026;
  • $787,500 to Province, LLC on account of its success fee, representing 0.875% of the purchase price;
  • $787,500 to Hilco Real Estate, LLC on account of its success fee, representing 0.875% of the purchase price;
  • $4.5 million to Aria, plus a directed $450,000 gift payment to the ITHA's charitable foundations ($350,000 to the Illinois Backstretch Charitable Foundation, Inc. and $100,000 to Galloping Out, Inc.);
  • $4.5 million to W.E. O'Neil, to be allocated pro rata between W.E. O'Neil and the Subcontractors, plus a directed $450,000 gift payment to the ITHA and its charitable foundations; and
  • The remainder of any Sale Proceeds, if any, to Latto in full satisfaction of its secured claims, with the balance of Latto's claims deemed general unsecured claims.
• The distribution of Sale Proceeds is not subject to challenge, objection, reduction, counterclaim, disallowance, recoupment, recharacterization, subordination, or offset, nor to any objection, avoidance, or recovery action under the Bankruptcy Code or applicable law, including sections 502(d), 542, 544, 545, 547, 548, 549, 550, 551, or 553, or any provision of the Uniform Voidable Transactions Act, the Uniform Fraudulent Transfer Act, the Uniform Fraudulent Conveyance Act, or similar state or common law.

Backstretch Community and Eviction Procedures

• For the Debtors to deliver the Acquired Property free and clear under section 363(f), no persons or horses, including the Backstretch Community, may be on, living on, or stabled or housed on the Acquired Property as of Closing. The Purchaser is not required to proceed to Closing if individuals or horses continue to live on or be housed or stabled on the Acquired Property.
• On or before Aug. 1, 2026, the ITHA must give notice that all persons on or living on the Acquired Property must vacate as soon as possible and no later than 4 p.m. CDT on Aug. 31, 2026 (the "Eviction Deadline"), by posting the signed Sale Order and a summary of its terms in multiple high-traffic locations in the Backstretch. All occupants must surrender exclusive possession and remove all personal property, including horses, by the Eviction Deadline.
• On Aug. 7, 14, and 21, 2026, the ITHA must provide to the Debtors, the Purchaser, and 180 Hawthorne Holdings, and file with the Court, reports on the move-out status of the Backstretch Community, including a contemporaneous report of the total persons and horses then on the Acquired Property.
• The ITHA must use best efforts to cause the Backstretch Community to vacate by Aug. 31, 2026, and must communicate to its membership that no persons or horses may be on the Acquired Property at Closing.
• Solely if no persons or horses remain on the Acquired Property by 4 p.m. CT on Aug. 31, 2026, as determined by the Debtors and the Purchaser, and solely to the extent Closing has occurred, the Purchaser will contribute $1 million at Closing to the ITHA (the "Purchaser/ITHA Funds") for the sole purpose of assisting the transition and vacating of the horsemen, the Backstretch Community, and horses.
• The Debtors have moved for authority to obtain up to $1 million in additional DIP financing from Derby DIP LLC to cover the costs of the continued use of the Acquired Property by the horsemen and the Backstretch Community through Aug. 31, 2026; the Court entered a final order approving that financing contemporaneously with the Sale Order. At Closing, the ITHA must cause a portion of the Purchaser/ITHA Funds to be paid to the Debtors in an amount equal to the Additional DIP Financing and not exceeding the Purchaser/ITHA Funds.
• Upon Closing and payment of the $1 million to the ITHA, the ITHA, on behalf of itself and each of its members, including each individual of the Backstretch Community, fully and forever releases the Purchaser Stakeholders from all claims of any kind and consents to vacating the Acquired Property no later than Aug. 31, 2026, notwithstanding any rights arising under applicable state or local law.
• At the continued status hearings, the Court will consider arguments for additional relief, including directing the Clerk to issue a writ of assistance under Bankruptcy Rule 7070 and section 105(a) as to any occupant, licensee, or other person that fails to vacate or surrender possession by the Eviction Deadline.

Conditions Precedent

• The parties' obligations to close are subject to satisfaction of the Conditions Precedent, any of which — other than the Section 8.A(iii) conditions (entry of the Sale Order, waiver or expiration of the Bankruptcy Rule 6004(h) stay, and the absence of any restraining injunction) — may be waived in whole or in part by the applicable party on or prior to Closing:
  • Representations and warranties true and correct in all material respects as of the Closing Date, evidenced by each party's delivery of a Closing Date Certificate. Untrue representations, other than as a result of a Permitted Change, constitute an event of default.
  • Performance and compliance in all material respects with all material terms, conditions, and covenants required to be performed prior to or on the Closing Date.
  • Entry of the Sale Order authorizing the Transactions and approving the Agreement under sections 105(a), 363(b), 363(f), and 363(m), in form and substance acceptable to Seller and Buyer, providing that the Property is sold free and clear of all liens, claims, encumbrances, and interests under section 363(f), containing findings that the Buyer acquired the Property in good faith, for fair value, and in an arm's-length transaction, and in full force and effect, not stayed, vacated, or reversed as of the Closing Date. The Buyer may, in its sole discretion, waive the requirements that the Sale Order not be stayed and that it be a final order.
  • Waiver or expiration of the Bankruptcy Rule 6004(h) stay as to the Sale Order.
  • No injunction or similar governmental order restraining, enjoining, staying, or prohibiting consummation of the Transactions.
  • Buyer's receipt, at standard rates, of an ALTA owner's title policy (or an irrevocable, unconditional commitment) with extended coverage in the amount of the Purchase Price, insuring good, clear, record, and marketable fee simple title free and clear of all liens, claims, and encumbrances pursuant to the Sale Order, supported by Seller's existing surveys, a customary owner's affidavit, and a gap undertaking sufficient to issue the policy without standard, "gap," monetary, or mechanics' lien exceptions.
• If Conditions Precedent are unsatisfied on the Closing Date (other than the Section 8.A(iii) conditions), the non-defaulting party may either waive the unsatisfied conditions and proceed to Closing without abatement of the Purchase Price, or terminate the Agreement, in which case the Deposit is refunded to the Buyer. If the Section 8.A(iii) conditions are not satisfied, the Deposit is refunded to the Buyer.

Closing

• Closing occurs on the later of (a) July 30, 2026 and (b) the first business day following entry of the Sale Order or, at the Buyer's election, the first business day following the date the Sale Order becomes a final order. Entry of the Sale Order is an express condition precedent to both parties' Closing obligations.
• Closing is held via escrow through Commonwealth Land Title Insurance Company, as Title Company.
• Seller's Closing deliveries include special warranty deeds conveying title to the Premises, bills of sale conveying the Personal Property, a FIRPTA non-foreign person affidavit, the Closing Date Certificate, any required real property transfer declarations and transfer stamps, such other title affidavits and documents as reasonably required, and a signed settlement statement.
• Buyer's Closing deliveries include the balance of the Purchase Price, a signed counterpart of the Assignment, such affidavits and documents as reasonably required by its title insurance company, and a signed settlement statement.
• Notwithstanding Bankruptcy Rules 6004(h), 7062, and 9014, the Sale Order is effective immediately upon entry, and the Debtors and the Purchaser are authorized to close the Sale immediately upon entry.

Apportionments and Closing Costs

• Water, sewer, and other utility charges assessed against or incurred with respect to the Premises are apportioned at Closing, with the Closing date belonging to the Buyer.
• All real estate transfer taxes imposed by any governmental body are split equally between Buyer and Seller.
• Buyer bears the cost of issuance of the Title Policy and any lender's title policy, the cost of recording any mortgage granted by Buyer, and all escrow fees charged by the Title Company. Seller bears the costs of recordation of the Deeds. Each party pays its own expenses, including accounting and legal fees.

Termination and Default

• The Agreement terminates automatically if the Buyer is not the Successful Bidder or Backup Bidder, with the Deposit returned to the Buyer.
• The Purchaser may terminate upon written notice if (a) the Seller materially breaches its covenants related to the Bid Procedures Order, the Bid Protections Order, or the Sale Order; (b) the case is dismissed or converted to chapter 7, a chapter 11 trustee is appointed, or an examiner with expanded powers beyond sections 1106(a)(3) and (4) is appointed; or (c) the Sale Order has not been entered within 30 days following the Effective Date. Termination under clause (c) does not entitle the Purchaser to payment of the Bid Protections.
• If the Sale Order is not entered by Aug. 31, 2026, the Agreement automatically terminates and the Deposit is returned to the Buyer.
• Buyer default: following a 10-day cure period after written notice, the Seller's sole and exclusive remedy is to retain the Deposit as liquidated damages and not a penalty.
• Seller default: following a 10-day cure period after written demand, or if the Buyer determines any Seller representation was untrue in any material respect as of the Effective Date, the Buyer's sole and exclusive remedy is to either compel specific performance — with any such action filed no later than 30 days after the default — or terminate and receive the Deposit back.
• In any legal action involving the Agreement, the prevailing party is entitled to reimbursement of all reasonable attorneys' fees and court costs.
• Upon entry of any order converting the cases to chapter 7 or appointing a trustee, examiner, or receiver, the Purchaser may seek immediate termination of the Purchase Agreement and pursue all rights and remedies, including a refund of the Deposit.

Back-Up Bidder

• 180 Hawthorne Holdings, LLC is designated as the Back-Up Bidder, and its bid is selected as the Back-Up Bid for the Acquired Property.
• If a sale to the Back-Up Bidder closes, the Back-Up Bidder must release any liens it holds against the Debtors' real and personal property interests at 13148 Rivercrest Drive, Crestwood, Ill.
• Under the Purchase Agreement, if the Buyer is determined to be the Backup Bidder, it remains bound until the earlier of the closing of the sale to the Successful Bidder or 45 days after the conclusion of the Auction.
• If Closing does not occur by Sept. 2, 2026, 180 Hawthorne's conditional consent to the Sale and any conditional forbearance related to the Debtors' alleged default under the Final DIP Order (including the Milestones and adequate protection payments) immediately terminate and are deemed void, subject to 180 Hawthorne's right to extend either in its sole and absolute discretion in writing; 180 Hawthorne retains all rights and remedies under the Final DIP Order, including under Paragraph 47 thereof.

Condemnation or Casualty

• The Seller must immediately give notice of any pre-Closing casualty or eminent domain proceeding. For a casualty or taking affecting less than a material part of the Premises, the Buyer remains obligated to close without abatement or reduction of the Purchase Price, and the Seller assigns, transfers, and pays over any insurance proceeds or condemnation awards actually received at Closing.
• For casualty or eminent domain affecting a material part, the Buyer may terminate in its sole discretion by written notice within five business days after the Seller's notice, in which case the Deposit is refunded.
• A "material part" means damage by casualty or condemnation of any portion of the Premises in an amount or having a value equal to or greater than $250,000.

Other Provisions

• Amounts payable by the Debtors to the Purchaser under the Purchase Agreement constitute allowed superpriority administrative expense claims under sections 503(b)(1) and 507(a)(2), are not subordinate to any other administrative expense claim except for the DIP Obligations and the Carve Out, may not be altered, amended, discharged, or affected without the Purchaser's prior written consent, and are payable without further order of the Court.
• The automatic stay is lifted to the extent necessary to permit the Purchaser to give notices, take actions permitted under the Purchase Agreement, and otherwise implement the Sale Order.
• The Purchase Agreement and Sale Order are binding on the Debtors, their affiliates and estates, all creditors and equity holders, and any subsequent trustee, examiner, or receiver, including upon conversion to chapter 7, and the Purchase Agreement is not subject to rejection or avoidance. The Sale Order's terms survive confirmation of any chapter 11 plan, conversion, dismissal, or abstention.
• The Purchase Agreement may be modified, amended, or supplemented without further order of the Court, provided the change does not have a material adverse effect on the Debtors' estates or creditors; all other modifications require Court approval. To the extent of any conflict, the Sale Order controls over the Purchase Agreement, and no chapter 11 plan confirmed in these cases, order confirming such a plan, or other order of the Court may conflict with or derogate from the Purchase Agreement, the other transaction documents, or the Sale Order, unless otherwise agreed by the Debtors and the Purchaser (or, as to applicable Sale Proceeds, the affected creditors).
• The Buyer may assign the Agreement, in whole or in part, to one or more entities that control, are controlled by, or are under common control with the Buyer, and may direct that title to all or any portion of the Property be conveyed to any such affiliate or designee, provided the Buyer is not released from any obligation and no assignment delays the Closing.
• The Agreement is governed by Illinois law, time is of the essence, and the confidentiality covenants survive termination or Closing.
• The Court retains exclusive jurisdiction with respect to the terms and provisions of the Sale Order and the Purchase Agreement.

Key Dates

• Petition Date: Feb. 27, 2026
• Bid Procedures Order Entry: May 1, 2026
• Purchase Agreement Effective Date: June 29, 2026
• Sale Hearing: July 20, 2026
• Sale Order Entry: July 27, 2026
• Sale Order Entry Deadline (per Purchase Agreement): 30 days following the Effective Date; outside date of Aug. 31, 2026, after which the Agreement automatically terminates
• Closing Date: the later of July 30, 2026 and the first business day following entry of the Sale Order (or, at Buyer's election, the first business day after it becomes a final order)
• ITHA Vacate Notice Deadline: on or before Aug. 1, 2026
• ITHA Move-Out Status Reports: Aug. 7, 14, and 21, 2026
• Continued Status Hearings: July 29, Aug. 5, Aug. 12, Aug. 19, and Aug. 26, 2026, each at 2 p.m. CT
• Eviction Deadline: Aug. 31, 2026, at 4 p.m. CDT
• 180 Hawthorne Consent/Forbearance Termination: if Closing does not occur by Sept. 2, 2026
• Deposit Return Trigger / Outside Closing Date: Oct. 31, 2026, unless waived by the Purchaser