Leslie's - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• Leslie's Poolmart, Inc., as borrower under the term loan facility, and Leslie's Poolmart, Inc. as parent borrower together with LPM Manufacturing, Inc. and Cortz, Inc. as subsidiary borrowers under the ABL facility
• Leslie's, Inc., RAM Chemical & Supply, Inc., Horizon Spa & Pool Parts, Inc., Stellar Manufacturing, LLC, Pool Parts, Inc., SPP Holding Corporation, and Hot Tub Works, LLC, as guarantors of both facilities; LPM Manufacturing, Inc. and Cortz, Inc. additionally guarantee the term loan facility

Agent / Lender(s)

• Alter Domus (US) LLC, as administrative and collateral agent under the term loan facility, which also serves as prepetition term loan agent
• Jefferies Capital Services, LLC, as fronting lender under the term loan facility, together with the financial institutions party thereto, as term loan lenders
• Bank of America, N.A., as administrative agent and co-collateral agent under the ABL facility, which also serves as prepetition ABL agent; U.S. Bank National Association, as co-collateral agent
• BofA Securities, Inc. and U.S. Bank National Association, as joint lead arrangers and joint bookrunners on the ABL facility

DIP Commitments

• $90 million senior secured superpriority term loan facility, all new money, available in two equal draws:
  • $45 million upon entry of the interim order, funded through Jefferies Capital Services, LLC as fronting lender
  • $45 million upon entry of the final order
• $225 million senior secured superpriority asset-based revolving credit facility, capped at the lesser of that amount and the amount authorized by the DIP orders, which refinances the prepetition ABL facility and sublimits $25 million for letters of credit and $12.5 million for swing line loans, each within rather than in addition to the revolving commitments
• The ABL facility rolls up the prepetition ABL obligations, which the debtors stipulate at not less than $30 million of revolving loans plus approximately $11.1 million of issued and undrawn letters of credit under the $250 million prepetition facility, in two stages: on entry of the interim order, all bank product obligations and issued and outstanding letters of credit under the prepetition ABL facility are deemed exchanged for and issued under the DIP ABL credit agreement, and all cash, collections and proceeds of ABL priority collateral are applied dollar-for-dollar against the prepetition ABL obligations and deemed reborrowed as DIP ABL obligations (the creeping roll-up); on entry of the final order, all remaining prepetition ABL obligations convert on a cashless basis into DIP ABL obligations (the final roll-up)
• The proposed interim order authorizes the roll-up as consideration solely for the prepetition ABL lenders' agreement to fund the DIP ABL facility and not as adequate protection for the prepetition ABL obligations, and subjects it to the reservation of rights in paragraph 26 of that order. In exchange, the DIP ABL lenders agreed to continued revolver access and removed a restructuring reserve, which the motion, citing the Kielty declaration, describes as a $25 million reserve instituted prepetition that reduced borrowing availability.
• Amounts paid or prepaid on either term loan draw may not be reborrowed. The term loan facility carries no roll-up component.
• Each prepetition term loan lender funding the term loan facility will also participate in a $60 million equity investment backstopped by certain lenders party to the restructuring support agreement.

Cash Collateral

• The debtors are authorized to use cash collateral on a consensual basis in accordance with the approved budget, subject to permitted variances; the prepetition secured parties have consented or are deemed to have consented.
• Cash collateral comprises all cash, securities, deposit accounts and other cash equivalents in which the estates held an interest as of the petition date, including cash proceeds of the prepetition collateral held at depository institutions, in each case subject to setoff rights or valid, perfected, enforceable and non-avoidable liens.
• Use continues until a DIP termination event, through the notice period following such an event, and resumes if the event is cured before the notice period ends. Upon a cash dominion event under the ABL credit agreement, the debtors must comply with Section 6.13 of that agreement; all collections and proceeds of DIP collateral and cash collateral must be deposited in accordance with the DIP documents and the cash management order.

Interest Rate

• Term loan facility: Adjusted Term SOFR + 6.50%, subject to a 0.00% floor, payable in kind, capitalized and added to principal on each interest payment date; ABR loans accrue at the alternate base rate + 5.50%
  • Up to $15 million of original term loan principal, all capitalized and accrued but unpaid interest, and the term loans issued as backstop and upfront premiums may be converted or exchanged into new common equity on the restructuring effective date, as described in the restructuring term sheet
• ABL facility: Term SOFR + 3.25%; base rate loans at base rate + 2.25%
• Default Rate Increase: 2.00% on both facilities

Fees

• Term loan facility:
  • Upfront Premium: 9.50% of the term loan commitments, earned, due and payable in full in the form of additional term loans; the credit agreement measures the premium against the term loans funded by the fronting lender on each of the closing date and the final funding date
  • Backstop Premium: 7.00% of the term loan commitments held by the DIP backstop parties, members of the ad hoc group backstopping the full commitment, paid in the form of term loans on the closing date
  • Agent Fee: $40,000, payable annually in advance to the administrative and collateral agent commencing on the closing date, plus the reasonable and documented fees of Seward & Kissel LLP as agent's counsel, payable on the closing date
  • The term loans issued as upfront and backstop premiums convert into new equity of Leslie's, Inc. upon consummation of the restructuring transactions
• ABL facility:
  • Upfront Fee: 0.50% of the aggregate commitments, payable in cash to Bank of America on the closing date
  • Arrangement Fee: $250,000 to the administrative agent for its own account on the closing date
  • Administration Fee: $100,000 annually, payable quarterly in advance
  • Commitment Fee: 0.30% per annum on the daily unused revolving commitment, payable monthly in arrears
  • Letter of Credit Fee: the applicable margin for Term SOFR loans on standby letters of credit, and 50% of that margin on commercial letters of credit, in each case on the daily maximum amount available to be drawn
  • Fronting Fee: 0.125% per annum on each standby and commercial letter of credit

Maturity

• Term loan facility, the earliest to occur of:
  • Six months after the closing date, subject to extension as provided in the credit agreement (the credit agreement leaves the date blank, with a drafting note confirming the six-month term)
  • Substantial consummation of the plan or any other confirmed plan of reorganization in the Chapter 11 cases
  • Acceleration of the obligations
  • Dismissal of the Chapter 11 cases or conversion of any case to Chapter 7
• ABL facility, the earliest to occur of:
  • The six-month anniversary of the closing date, extendable by one month on up to three separate occasions with the consent of the required lenders
  • The latest stated maturity date of the term loan facility, including any extension
  • The date the obligations become due and payable, whether by acceleration or otherwise
  • The effective date of a plan of reorganization
  • The date of a sale of all or substantially all of the debtors' assets under sections 363 and/or 365
  • The date of acceleration or termination of the agreement
• The borrower may not voluntarily prepay the term loans in whole or in part prior to maturity. Mandatory prepayment of the term loans is required from 100% of net proceeds of a section 363 sale of all or substantially all assets after funding the Carve Out; from 100% of net proceeds of other non-ordinary course dispositions, insurance and condemnation proceeds and extraordinary receipts above a $500,000 annual threshold, subject to a 20-day reinvestment right in term priority collateral; and from 100% of net proceeds of non-permitted debt within two business days. Any lender may decline its share of a mandatory prepayment, which the borrower then retains.
• The ABL facility caps unrestricted cash at $32.5 million: each credit extension is conditioned on aggregate cash, pro forma for the borrowing and its anticipated use, not exceeding that level, and any cash above it (excluding cash escrowed for professional fees) must be applied to prepay revolving and swing line loans or cash-collateralize letters of credit by the end of the following business day. ABL effectiveness is also conditioned on the term loan facility being in effect with at least $45 million drawn.

Carve Out

• Post-Carve Out Trigger Notice Cap: $1.75 million in allowed professional fees incurred after the first business day following delivery of a carve out trigger notice
• Chapter 7 Trustee Fee: $100,000
• The Carve Out also covers clerk and U.S. Trustee fees under 28 U.S.C. section 1930(a) plus statutory interest, and all allowed professional fees of debtor and committee professionals incurred through the first business day following delivery of a trigger notice. Any investment banker or financial advisor transaction fee payable on a transaction consummated by that date is included only to the extent funded into the funded reserves or carve out reserves from the transaction proceeds, and, where the transaction includes ABL priority collateral, only after the DIP ABL and prepetition ABL obligations are paid in full.
• A carve out trigger notice may be delivered by either DIP agent following an event of default, acceleration, or termination of cash collateral use; any payment to a professional person on or after delivery permanently reduces the Carve Out dollar-for-dollar.
• The debtors must fund a segregated funded reserve account weekly, and the DIP ABL agent may maintain a borrowing base reserve equal to estimated and budgeted professional fees plus the post-trigger cap plus two weeks of budgeted fees, less the funded reserves. As against the ABL priority collateral, the Carve Out is limited to the funded reserves and that borrowing base reserve amount until the DIP ABL obligations are paid in full.
• Following delivery of a trigger notice, the agents may not sweep or foreclose on cash until the carve out reserves are fully funded, except that the ABL agents may sweep proceeds of ABL loans or ABL priority collateral exceeding the funded reserves and borrowing base reserve while ABL obligations remain outstanding.
• The Carve Out is senior to all liens and claims securing the DIP obligations, the adequate protection liens, the prepetition secured obligations and the DIP superpriority claims.

Use of Proceeds

• Term loan proceeds fund working capital and general corporate purposes, the fees, costs and expenses of administering the Chapter 11 cases, obligations arising from or related to the Carve Out, agency fees and the documented fees and expenses of the agents and lenders, adequate protection obligations, and allowed professional fees, in each case in accordance with the approved budget and the DIP orders.
• Revolving loan, swing line and letter of credit proceeds fund the Chapter 11 cases in accordance with the approved budget and the borrowers' ordinary working capital, letters of credit and general corporate needs, including professional fees of loan party professionals, and certain prepetition and pre-filing expenses approved by the court.
• Prepetition claims may be paid only as permitted by the approved budget or otherwise approved by the court; the limitation does not apply to obligations benefiting from the Carve Out.
• No DIP loans, DIP collateral, prepetition collateral or Carve Out proceeds (other than the $75,000 investigation budget cap) may fund prohibited actions, which include investigating, prosecuting or contesting the validity, perfection, priority or enforceability of the DIP or prepetition obligations and liens; asserting claims, counterclaims or avoidance actions against the DIP or prepetition secured parties; hindering enforcement against the collateral; seeking to subordinate or recharacterize the obligations; modifying the agents' or lenders' rights without consent; or paying prepetition claims absent court approval. Defending against a prohibited action is excluded from the prohibition.

Credit Bid

• Upon entry of the interim order, and subject to section 363(k), the DIP documents, the prepetition intercreditor agreement and the lien priorities on Exhibit 3, each of the DIP ABL agent, the DIP term agent (at the direction of the required term lenders), the prepetition term loan agent (at the direction of its required lenders) and the prepetition ABL agent has the unconditional right to credit bid its respective obligations, including accrued interest, fees and expenses and, for the prepetition agents, adequate protection claims, on a dollar-for-dollar basis in any sale under section 363 or any plan confirmed under section 1129(b)(2)(A)(ii)-(iii).
• Each agent may credit bid against its own priority collateral, and against the other facility's priority collateral only where the other facility's DIP and prepetition obligations are paid in full concurrently with or immediately after the bid.
• Where a sale spans both ABL priority and term priority collateral and the parties cannot agree on allocation of the purchase price after good faith negotiation, any agent may apply to the court for a determination, and the DIP secured parties have agreed to an emergency hearing on allocation.
• Each agent may assign, sell or otherwise dispose of its credit bid rights to any acquisition entity or joint venture formed for the bid, is deemed a qualified bidder in any sale, and the debtors will not object to any such credit bid.

Avoidance Actions

• The DIP collateral excludes avoidance actions themselves. Subject to and effective upon entry of the final order, the collateral includes proceeds or property recovered from successful avoidance actions, whether by judgment, settlement or otherwise.

Challenge Period and Budget

• The challenge deadline is the earlier of 75 calendar days from entry of the interim order and the date objections to confirmation of the debtors' Chapter 11 plan are due. A trustee appointed before the challenge period expires has the longer of the remaining period and 30 days from appointment.
• Subject to entry of the final order, a timely standing motion attaching a complaint tolls the deadline, but only as to the moving party and only as to the specific challenges pleaded. Challenges must be pleaded with specificity or are deemed forever waived; the court may fashion any appropriate remedy following a successful challenge.
• Investigation Budget Cap: $75,000 of allowed professional fees for a creditors' committee, if appointed, to investigate but not prosecute a potential challenge
• The debtors' stipulations in paragraphs G and 25 of the interim order, which include a waiver and release of any right to challenge the prepetition secured obligations and the validity, extent and priority of the prepetition liens, bind the debtors and the estates in all circumstances and bind all other parties in interest absent a timely challenge.
• The initial 13-week budget, developed with BRG as financial advisor and attached as Exhibit 5 to the proposed interim order, would be approved on entry of that order and reflects anticipated operating receipts, operating and non-operating disbursements, net operating cash flow, borrowing base details and weekly liquidity. It may be modified with the approval of the DIP ABL agent and the required consenting term loan lenders, with copies of each approved budget delivered to committee counsel and the U.S. Trustee. Failure to comply with the approved budget, subject to permitted variances, or to deliver required reporting constitutes an event of default after any applicable cure period.
• Before financing, the initial budget projects 13-week total receipts of $156.9 million against operating disbursements of $166.6 million and non-operating disbursements of $88.1 million, with weekly receipts declining from $19.3 million in week one to $7.8 million in week 13.

Securities and Priorities

• The DIP obligations constitute allowed superpriority administrative expense claims under section 364(c)(1) against each loan party, with priority over all other administrative expenses, including those under sections 503(b) and 507(b) and claims arising under sections 105, 326, 328, 330, 331, 365, 503(b), 506(c), 507(a), 507(b), 726, 1113 and 1114, payable from and with recourse to all pre- and postpetition property and proceeds, excluding avoidance actions but including avoidance proceeds upon entry of the final order. The claims are subject only to the Carve Out and the relative priorities on Exhibit 3 to the interim order.
• Each DIP agent receives automatically perfected liens on all DIP collateral, subject only to the Carve Out and permitted liens, with the following priorities:
  • Section 364(c)(2) first-priority liens on DIP collateral not subject to valid, perfected and non-avoidable liens as of the petition date
  • Section 364(c)(3) junior liens on DIP collateral subject to permitted liens
  • Section 364(d)(1) priming senior liens on the prepetition collateral, priming the prepetition liens as set out on Exhibit 3
• DIP collateral spans substantially all of the debtors' pre- and postpetition assets, including an equity pledge of all direct U.S. subsidiaries, unencumbered cash, accounts, inventory, deposit and securities accounts, insurance policies and proceeds, intercompany claims, intellectual property, owned real estate and real property leaseholds, commercial tort claims, and proceeds of section 506(c) rights enforceable against parties other than the DIP and prepetition secured parties. Real property leases are excluded where granting a security interest would breach or trigger a default under the lease, though lease proceeds remain collateral. Where a DIP lien cannot attach by law or contract, it attaches to the debtors' economic rights in that collateral and its proceeds.
• Collateral is allocated between DIP ABL priority collateral and DIP term priority collateral by reference to the categories under the prepetition intercreditor agreement, with previously unencumbered property assigned to the pool it would have fallen within under that agreement. On avoidance proceeds, the DIP term loan liens and DIP ABL liens rank pro rata, as do the two sets of adequate protection liens behind them.
• Under Exhibit 3 to the proposed interim order, each collateral pool ranks as follows behind the Carve Out:
  • Term priority collateral and similar previously unencumbered property: DIP term loan liens, term loan adequate protection liens, prepetition term loan liens, then DIP ABL liens, ABL adequate protection liens and prepetition ABL liens
  • ABL priority collateral and similar previously unencumbered property: DIP ABL liens, ABL adequate protection liens, prepetition ABL liens, then DIP term loan liens, term loan adequate protection liens and prepetition term loan liens
  • Avoidance proceeds: DIP term loan and DIP ABL liens pro rata, then term loan and ABL adequate protection liens pro rata
• Once entered, the interim order would be conclusive evidence of the creation, validity, automatic perfection and priority of the DIP liens and adequate protection liens without any filing, recordation or control agreement, and the DIP superpriority claims would carry section 364(e) protection if the order is reversed or modified on appeal.
• The motion states that the interim order and DIP documents do not contemplate cross-collateralization, non-consensual priming liens, or provisions limiting estate fiduciaries from fulfilling their duties.

Adequate Protection

Prepetition ABL Secured Parties

• Replacement and additional postpetition liens on the DIP collateral, including avoidance proceeds upon entry of the final order, subject and subordinate to the Carve Out, permitted liens and the Exhibit 3 priorities
• Allowed superpriority administrative expense claims under section 507(b) to the extent of any diminution in value, with recourse to the DIP collateral including, upon entry of the final order, avoidance proceeds, subject and subordinate to the Carve Out
• Current cash payments of interest at the applicable non-default rate, accrued to the date the prepetition ABL obligations are rolled up, refinanced or converted into DIP ABL obligations, for so long as any prepetition ABL obligations remain outstanding
• Payment of reasonable and documented prepetition and postpetition agency fees and professional fees, including those of Morgan, Lewis & Bockius LLP, Bracewell LLP and FTI, Inc.

Prepetition Term Loan Secured Parties

• Replacement and additional postpetition liens on the DIP collateral, including avoidance proceeds upon entry of the final order, subject and subordinate to the Carve Out and the Exhibit 3 priorities
• Allowed superpriority administrative expense claims under section 507(b) to the extent of any diminution in value, with recourse to the DIP collateral including, upon entry of the final order, avoidance proceeds, subject and subordinate to the Carve Out
• Payment of reasonable and documented agency and professional fees of the prepetition term loan agent, including Seward & Kissel LLP, and of the term lender group, including Akin Gump Strauss Hauer & Feld LLP, Houlihan Lokey Capital, Inc., one specified consultant, one local counsel in each applicable jurisdiction, and one additional counsel in the event of an actual conflict
• Adequate protection fees and expenses exclude any fees incurred contesting the relief sought in the motion or in connection with any prohibited action, other than defending against one

Waivers

• Subject to entry of the final order granting such relief:
  • Section 506(c): the debtors and their estates waive the ability to surcharge the DIP collateral or the prepetition collateral; no administration costs may be charged against or recovered from that collateral absent the applicable agents' prior written consent
  • Section 552(b): the "equities of the case" exception will not apply to the prepetition secured parties with respect to proceeds, products, offspring or profits of the prepetition collateral
  • The equitable doctrine of "marshaling" and any similar doctrine will not apply to the DIP collateral, the prepetition collateral or the adequate protection liens
• Effective upon entry of the interim order, the debtors and their estates release the DIP lenders and DIP agents, and, subject to entry of the final order, the prepetition secured parties, together with their respective officers, employees, directors, agents, representatives, owners, members, partners, advisors, shareholders, managers, consultants, accountants, attorneys, affiliates and predecessors in their capacities as such, from all claims arising out of the prepetition secured facilities documents and the DIP documents, including lender liability and equitable subordination claims, claims under the Bankruptcy Code, and claims regarding the validity, priority, perfection or availability of the prepetition liens, including avoidance actions subject to entry of the final order. Claims arising from gross negligence, fraud, bad faith or willful misconduct are carved out, and the release is subject to the reservation of rights and challenge period in paragraph 26 of the interim order.
• The automatic stay is modified to permit implementation of the DIP orders and DIP documents and to allow the DIP secured parties to exercise rights and remedies in the circumstances described below.
• Under the proposed interim order, the debtors waive any discharge under section 1141(d)(4) as to remaining DIP obligations or adequate protection obligations, and the Carve Out, DIP liens, DIP superpriority claims and adequate protection survive conversion, dismissal, any section 363(b) sale order not permitted by the DIP documents, and plan confirmation until paid in full; the order would also extend section 363(m) protection to the prepetition secured parties.

Events of Default and Remedies

• A DIP termination event occurs on the earliest of:
  • An event of default under either DIP credit agreement, which are expressly incorporated into the interim order and include nonpayment, breach of representations or covenants, cross-defaults, ERISA events, judgments, invalidity of loan documents, failure to comply with milestones, and certain bankruptcy events
  • The debtors' failure to comply with any provision of the interim order
  • Occurrence of the termination date or maturity date under either credit agreement
  • Entry of an order authorizing, or the debtors' filing of a motion seeking, use of DIP collateral or cash collateral or section 364 financing without the consent of the DIP ABL agent and the required consenting term loan lenders
  • Dismissal or conversion of any of the Chapter 11 cases to Chapter 7
  • Termination of the interim order without entry of the final order
  • Filing of a plan or disclosure statement not approved by the required consenting term loan lenders and the DIP ABL agent, whose approval may not be unreasonably withheld
• No default provision terminates the automatic stay without further order. Upon a termination event, the debtors must notify the agents, lenders, committee counsel, the U.S. Trustee and term lender group counsel, and the DIP agents may exercise remedies only after filing a stay relief motion on not less than five business days' notice, which may be given by email. During that notice period neither the DIP secured parties nor the prepetition secured parties may exercise remedies, the debtors or a committee may seek an emergency hearing, and the debtors may continue using DIP proceeds drawn before the default and cash collateral in accordance with the approved budget.
• At any stay relief hearing the burden rests on the party opposing the exercise of remedies, and the DIP secured parties are not required to satisfy the standard for relief from the automatic stay. After the notice period, absent a contrary order, the debtors' right to use cash collateral ceases and the agents, lenders and prepetition secured parties may enforce all rights and remedies against the debtors and the DIP collateral without further relief from the stay, including freezing account balances, setting off amounts in debtor accounts, and foreclosing on, occupying premises to reach, or disposing of the DIP collateral.
• The DIP secured parties may enter leased premises after an event of default only under a separate written agreement with the landlord, pre-existing rights under non-bankruptcy law, the landlord's written consent, or a further court order entered after notice and an opportunity for the landlord to be heard.

Case Milestones

• The emergency hearing on interim relief is set for Oct. 1, 2026 at 1:00 p.m. (prevailing Central Time); the proposed interim order leaves the final hearing date blank.

• Term loan facility milestones, measured from the petition date unless otherwise noted:
  • Commencement of the Chapter 11 cases no later than Sept. 30, 2026, met by the Sept. 30, 2026 filing
  • Delivery of subscription procedures and subscription forms to all prepetition term loan lenders within three days
  • Entry of the interim DIP order within three days
  • Establishment of the transformation committee and its initial organizational meeting within five business days of the agreement effective date
  • Filing of the omnibus lease rejection motion within seven business days
  • Filing of the plan and disclosure statement within 20 days
  • Entry of the final DIP order within 35 days
  • Entry of the disclosure statement order within 55 days
  • Entry of the confirmation order within 100 days
  • Occurrence of the restructuring effective date within 110 days
• ABL facility milestones, which the DIP ABL agent may extend in its sole discretion for up to five days or longer, add funding and lease-period requirements: filing of the DIP motion on the petition date; funding of the $45 million interim term loan draw into the debtors' operating account within two days of entry of the interim order; filing of the omnibus lease rejection motion within seven days; filing within 10 days, and obtaining within 35 days, an order extending the lease assumption/rejection period to 210 days; funding of the additional $45 million term loan draw within two days of entry of the final order; and the same 20-, 55-, 100- and 110-day plan, disclosure statement, confirmation and effective date deadlines.
• The ABL milestones require that the plan filed within 20 days be an "Acceptable Plan," meaning a plan supported by committed financing and the restructuring support agreement that provides for payment in full in cash of the DIP ABL obligations and the prepetition ABL obligations on the effective date, and that the DIP ABL agent is satisfied is reasonably anticipated to go effective on or before the 110th day after the petition date.

Financial Covenants

• Term loan facility: minimum liquidity of $25 million as of the last day of any calendar week; the facility also requires establishment of a transformation committee
• ABL facility: minimum excess availability of $10 million and minimum liquidity of $25 million

Permitted Variance

• Term loan facility, tested as of the last day of each variance testing period on a cumulative basis:
  • Unfavorable variance in actual aggregate receipts against budgeted receipts not in excess of 20%
  • Unfavorable variance in actual aggregate disbursements, excluding professional fees, against budgeted disbursements not in excess of 15%
  • The variance testing period is the first four-week period of the initial approved budget, reported on the fifth Friday following the petition date, and each subsequent rolling four-week period
• ABL facility, tested on a cumulative rolling four-week basis as of each test date, beginning Oct. 24, 2026 and each weekly anniversary thereafter:
  • Actual total collections may not be less than 80% of budgeted total collections
  • Actual total disbursements, other than professional fees, may not exceed 115% of budgeted total disbursements

Background and Prepetition Capital Structure

• Leslie's describes itself as the largest direct-to-consumer brand in the U.S. pool and spa care industry, with more than 900 retail locations, a digital platform, an in-field service network of over 200 pool and spa care professionals and more than 3,500 employees, headquartered in Phoenix.
• An industry contraction beginning in 2023, inflationary input costs, weaker discretionary spending, unfavorable weather and big-box and online competition produced significant net losses in fiscal 2024 and 2025. The debtors filed Chapter 11 on Sept. 30, 2026 with a restructuring support agreement signed by holders of approximately 81.1% of their first lien funded debt, which supports a plan reducing funded debt by more than $685 million alongside the $90 million new-money DIP and a new $60 million equity investment.
• Funded debt totals approximately $787 million: approximately $30 million drawn under the $250 million prepetition ABL facility agented by Bank of America, plus approximately $11.1 million of undrawn letters of credit, maturing April 3, 2029 subject to a Dec. 9, 2027 springing maturity if the term loan is not refinanced or repaid; and approximately $757 million outstanding under the $810 million prepetition term loan agented by Alter Domus, which accrues at Adjusted Term SOFR + 2.75% and matures March 9, 2028.
• Under the 2016 intercreditor agreement, the ABL lenders hold first priority on inventory, receivables, deposit and securities accounts, cash and related proceeds, and the term lenders hold first priority on equipment, fixtures, certain accounts and remaining assets.
• Over several months before filing, the debtors and Centerview Partners approached 29 prospective third-party lenders and investors without obtaining actionable out-of-court financing, and a parallel DIP marketing process drew no alternative proposals because, according to the motion, any third-party facility would have been junior in an under-secured structure and the debtors lack material unencumbered assets. During that period the prepetition ABL lenders imposed a $25 million restructuring reserve that reduced borrowing availability.