IPIC Theaters - Chapter 11 Subchapter V Plan Terms

Plan Terms

Overview

• iPic Theaters, LLC (the "Debtor" or "iPic") proposes the Plan of Liquidation (the "Plan") pursuant to Bankruptcy Code Section 1121(a), filed under Subchapter V of Chapter 11 of the Bankruptcy Code.
• The Plan provides for the orderly payment of Allowed Claims from the liquidation of the Debtor's Estate, with all Assets of the Debtor having been sold, or to be sold, pursuant to the Bid Procedures Order and Sale Order or other orders of the Bankruptcy Court.
• The Retirement Systems of Alabama ("RSA") currently owns 100% of the equity interests of the Debtor. An affiliate of RSA—at the time a minority equity holder and lender to the Debtor—acquired the assets of the Debtor's predecessor out of a 2019 Chapter 11 proceeding in the District of Delaware.
• Less than six months after that acquisition, the Covid pandemic disrupted the movie theater industry, and audience levels and box office receipts have not recovered to pre-pandemic levels due to factors including a significant drop in theatrical releases and increased competition from streaming services.
  • The Debtor currently operates 12 leased locations across Florida, California, Georgia, New York, New Jersey, Texas, Washington and Maryland, with most situated in mixed-use retail, entertainment, and lifestyle developments and one in a standalone building.
  • As of the Petition Date, the Debtor employed approximately 1,300 full and part-time employees.
  • The Debtor had approximate gross income of $112,500,000 in 2025 and $12,900,000 through January 31, 2026, with a net loss of approximately $19,433,669 for the year ended December 31, 2025.
• On February 23, 2026, immediately before the Petition Date, the Debtor mailed Worker Adjustment and Retaining Notification Act ("WARN") notices to its employees providing 60 or 90 days advance notice of the Debtor's intention to close each of its theater locations permanently, with April 28, 2026 identified as the separation date under the 60-day notices (subsequently extended in certain instances).
• On February 25, 2026 (the "Petition Date"), the Debtor filed a voluntary petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code and is operating as a debtor-in-possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code.

Sale Process and Transactions

• Following the Petition Date, the Debtor and its financial advisor, Development Specialists, Inc. ("DSI"), conducted a marketing process that included identifying and communicating with nine prospective purchasers, six of whom executed NDAs and accessed a data room, resulting in multiple offers or letters of interest.
• On April 21, 2026, the Debtor filed the Bid Procedures Motion, and on April 28, 2026, the Court entered the Bid Procedures Order. The Notice of Sale, Bidding Procedures, Potential Auction, and Sale Hearing was filed on April 29, 2026.
• On May 8, 2026, the Debtor held an auction (the "Auction") at the office of Burr & Forman, LLP in Fort Lauderdale, Florida, and by Zoom video conference, commencing at approximately 10:30 a.m. EST and concluding at approximately 3:45 p.m. EST.
  • The Debtor determined that the highest or otherwise best offer for the Cinemex Assets was a bid by Cinemex Holdings USA, Inc. ("Cinemex") for a purchase price of $7,500,000.
  • The Debtor determined that the highest or otherwise best offer for the Blue Fox Assets was a bid by Blue Fox Theater, LLC ("Blue Fox") for a purchase price of $500,000.
• On May 12, 2026, the Court held the Sale Hearing, and on May 13, 2026, the Court entered the Cinemex Sale Order. The Bankruptcy Court also approved the sale of six locations to Blue Fox, subject only to certain landlord objections to the assumption and assignment of leases, which were set for hearing on May 26, 2026 (the "Objection Hearing").
• Subsequent to the Sale Hearing but prior to the Objection Hearing, the Debtor, relevant landlords, Blue Fox, and Cinemex (the backup bidders on the locations subject to Blue Fox's bid) reached several interrelated agreements:
  • Blue Fox agreed to purchase the Debtor's Westwood, California and New York City locations with landlord consent.
  • Cinemex agreed to purchase the Debtor's locations in Delray Beach, Florida; Boca Raton, Florida; and Bethesda, Maryland.
  • The Debtor and the Pasadena, California landlord agreed to a lease termination agreement.
• The net proceeds of these agreements and transactions exceed the benefit the Debtor would have received from the original standalone purchase by Blue Fox.

Means of Implementation

• The Plan will be funded by the net proceeds of the sale of the Debtor's Assets pursuant to the Cinemex APA, the Blue Fox APA, and any other order of the Bankruptcy Court authorizing the sale of the Debtor's assets.
• Following the Effective Date, the Debtor shall pay Holders of Allowed Claims all payments due under the Plan.
• The Debtor represents that Holders of Allowed Claims will receive more value and retain more rights under the Plan than in a Chapter 7 liquidation (satisfying Section 1129(a)(7)), and that a sale of substantially all assets occurring prior to the Effective Date will enable all Plan distributions (satisfying Section 1190(1)(C)).
• The Debtor shall be obligated to take affirmative action to manage and distribute the Assets in a way that maximizes value, including determining the optimal time and method for operating or selling any assets.
• Unless released by the Plan, the Debtor shall retain the ability to pursue any Claims of the Estate and any Avoidance Actions.
• A liquidation analysis is attached to the Plan as Exhibit A (to be supplemented).

Classification and Treatment of Claims

• In accordance with Section 1123(a)(1) of the Bankruptcy Code, Administrative Claims and Priority Tax Claims are not classified.
  • Administrative Claims: Each Holder of an Allowed Administrative Claim (other than Fee Claims and Ordinary Course Administrative Claims) shall receive Cash equal to the Allowed amount on the later of the Effective Date or upon entry of a Final Order allowing the Claim. Requests for allowance must be filed no later than 14 days following the Confirmation Hearing, and Fee Applications must be filed no later than 15 Business Days after the Confirmation Date. Quarterly fees owed to the US Trustee will be paid on the Effective Date.
  • Priority Tax Claims: Each Holder of an Allowed Priority Tax Claim shall receive Cash equal to the Allowed amount, without interest, on or as soon as practicable after (but no more than 90 days after, unless extended) the later of the Effective Date or the first Business Day 90 Business Days after the Claim becomes Allowed. Each Holder shall retain its Lien until full and final payment.
• All other Claims are placed in the following Classes:
  • Class 1 — Non-Tax Priority Claims (Unimpaired): Pursuant to 11 U.S.C. 1129(a)(9)(B), each Holder will receive (i) if the Class accepts the Plan, deferred cash payments of a value, as of the Effective Date, equal to the Allowed amount; or (ii) if the Class does not accept the Plan, cash on the Effective Date equal to the Allowed amount.
  • Class 2 — General Unsecured Claims (Impaired): Each Holder shall receive its Pro Rata Share of the remaining proceeds of the Sale after payment of any higher-priority Claims and net of distribution expenses. If a Class 2 Claim is Disallowed pursuant to a Final Order, the Holder shall immediately forfeit any right to a distribution.
  • Class 3 — Equity Interests of the Debtor (Impaired): Consists of all interests of the Debtor that are property of the Estate under Sections 541 and 1115 of the Bankruptcy Code, owned by RSA. If any funds or property remain after Class 2 Allowed Claims are paid in full, those remaining funds or property shall be distributed to Class 3.
• Classes 2 and 3 are Impaired Classes entitled to vote to accept or reject the Plan.

Distributions

• The Debtor shall liquidate all Assets in accordance with the Plan and make Distributions to Holders of Allowed Administrative Claims and Allowed Fee Claims payable after the Effective Date.
• Cash payments shall be in U.S. dollars and may be made by checks drawn on or wire transfers from a domestic bank, at the Debtor's sole discretion.
• If an interim Distribution is made, the Debtor shall withhold a reserve for potential administrative expenses and a disputed claims reserve sufficient to pay the potential Pro Rata Share to any Class 2 Claims that have neither been Allowed nor Disallowed.
• If a Holder's Distribution is returned as undeliverable, no further Distributions shall be made unless the Debtor is timely notified in writing of the current address; the Holder must demand the Distribution within 30 days of the initial undeliverable Distribution, after which any claim with respect to such undeliverable Distribution shall be discharged and forever barred.
• No payment of less than $100 shall be made with respect to any Allowed Claim; such amounts shall be retained and pooled for redistribution to other Holders of Allowed Claims in the same Class. Payments of fractions of dollars will not be made.
• Any Holder receiving more than what is permitted under the Plan shall immediately return the excess payment(s) to the Debtor, failing which the Debtor may sue for the return of the overpayment.
• Post-petition interest shall not accrue or be paid on Claims unless otherwise specifically provided for in the Plan or the Confirmation Order.

Executory Contracts

• The Plan constitutes a motion under Bankruptcy Code Sections 365 and 1123(b)(2) to (a) reject, as of the Effective Date, all Executory Contracts to which the Debtor is a party (except those previously terminated, assumed, or rejected by Bankruptcy Court order), and (b) assume all Executory Contracts identified in any schedule of assumed contracts included in the Plan Supplement.
• All Cure Claims that may require payment under Section 365(b)(1) for assumed contracts shall be paid by the Debtor as an Administrative Claim (i) on or before the Effective Date for Cure Claims that are not Disputed, or (ii) within 30 Business Days after a Disputed Cure Claim is Allowed by agreement or Final Order.
  • Any party to an assumed Executory Contract that receives full payment of a Cure Claim shall waive the right to receive any payment on a Class 2 General Unsecured Claim related to that contract.
• Any Claim arising from rejection of an Executory Contract shall be forever barred unless a proof of Claim is filed and served on or before the Rejection Bar Date (30 days after the Confirmation Date).
• Any Rejection Damage Claim shall be treated as a General Unsecured Claim in Class 2, and the Holder must file a motion for estimation under Section 10.5(b) of the Plan to participate in Class 2 treatment.

Voting and Confirmation

• Only the Holder of an Allowed Claim in an Impaired Class may vote to accept or reject the Plan, except that a Holder of a Disputed Claim that has been estimated and allowed for voting purposes under Section 502(c) and Section 10.5(b) may also vote.
• The Debtor seeks to confirm the Plan by obtaining the consent of all Impaired Classes by a majority in number and two-thirds in amount of Allowed Claims actually voting.
  • If the Debtor obtains the consent of all Impaired Classes, the provisions referencing Section 1191(a) of the Bankruptcy Code will apply.
  • If the Debtor is unable to obtain such consent, the Debtor will request confirmation under Section 1191(b), and the provisions referencing Section 1191(b) will apply.

Conditions Precedent to the Effective Date

• The Confirmation Order shall have been entered by the Bankruptcy Court in a form acceptable to the Debtor, shall be in full force and effect, and shall be a Final Order.
• The sales of substantially all of the Debtor's Assets contemplated by the Plan shall have been effectuated.
• Upon satisfaction or waiver, the Debtor may file a notice in the Bankruptcy Court of the date of such satisfaction or waiver.

Discharge

• Discharge if Confirmed Under Section 1191(a): The Debtor shall receive a discharge as provided under Section 1141(d) upon the Confirmation Date. The Distributions and rights provided in the Plan shall be in complete satisfaction, discharge, and release of all Claims and Causes of Action against the Debtor that arose prior to the Effective Date, regardless of whether a claimant accepted or rejected the Plan.
• Discharge if Confirmed Under Section 1191(b): As soon as practicable after the Debtor completes all payments expressly provided for under the Plan due within five years of the Effective Date, the Court shall grant the Debtor a discharge on the same terms.

Causes of Action

• Effective as of the Effective Date, all Causes of Action—including Avoidance Actions related to transfers identified in the Debtor's Statement of Financial Affairs—and Claim Objections, except for those released or exculpated by the Plan, shall be managed, controlled, and overseen by the Debtor.
• From and after the Effective Date, the Debtor shall have the exclusive and absolute right to preserve, prosecute, or maintain all Causes of Action and Claim Objections, and the sole discretion to determine whether to pursue them. The Debtor may settle or compromise Causes of Action and Claim Objections subject to Bankruptcy Court approval.
• No claim, right, cause of action, or other asset shall be deemed waived or forfeited by virtue of the Debtor's failure to identify such property unless otherwise ordered by the Bankruptcy Court.
• Except as provided or released by the Plan, the Debtor retains all rights and causes of action, including (i) Claims against any Person asserting a crossclaim, counterclaim, or setoff seeking affirmative relief, and (ii) turnover of any property of the Estate, as well as all rights of setoff and legal or equitable defenses held immediately prior to the Petition Date.

Exculpation and Injunction

• Neither the Debtor, nor any of its respective employees, equity holders, partners, affiliates, officers, advisors, professionals, attorneys, or agents shall have or incur any liability to the Debtor or any Holder of a Claim for any act or omission in connection with, related to, or arising out of the Bankruptcy Case, negotiations regarding the Plan or any Plan Supplement, the pursuit of confirmation, the consummation of the Plan, the administration of the Plan, or the Distributions under the Plan, except for willful misconduct, actual fraud, or gross negligence.
  • The Plan exculpation shall be effective upon entry of the Confirmation Order.
• The Confirmation Order shall act as a permanent injunction against any Person: (A) commencing or continuing any action, (B) employing any process, or (C) acting to collect, offset, or recover any Claim except as provided for in the Plan against: (1) the Debtor, or (2) any property of the Debtor. The injunction shall survive the closure of the Bankruptcy Case, and the Court shall retain jurisdiction to enforce it.

Miscellaneous

• Pursuant to Bankruptcy Code Section 1146(a), the issuance, transfer, or exchange of securities or other property under the Plan, and the making, delivery, filing, or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with the Plan, shall not be subject to any stamp tax, real estate tax, conveyance, filing, or transfer fees, mortgage, recording, or other similar tax or governmental assessment.
• The Debtor reserves the right to revoke and/or withdraw the Plan at any time before the Confirmation Date, and to amend and modify the Plan in writing before the Confirmation Date (provided the modified Plan meets Bankruptcy Code Sections 1122 and 1123 and the Debtor has complied with Section 1125). The Debtor further reserves the right to modify the Plan after the Confirmation Date and before substantial consummation, subject to Sections 1122 and 1123, compliance with Section 1125, and Bankruptcy Court confirmation of the modified Plan under Section 1129.
• Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules), the laws of the State of Florida shall govern the construction and implementation of the Plan, provided that federal law will govern the construction and implementation of any agreement executed by the United States in connection with the Plan.