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)