Leslie's - Chapter 11 Plan Terms

Plan / RSA Terms

Overview

• Leslie's, Inc. and its debtor affiliates filed a joint plan of reorganization on Oct. 20, 2026. The plan implements a restructuring support agreement, or RSA, dated Sept. 30, 2026, between the debtors and a group of consenting term loan lenders. Most lender consent rights under the plan are held by the Required Consenting Term Loan Lenders, a group whose definition the plan takes from the RSA.
• The plan provides for:
  • Conversion of the $90 million DIP term loan into a $75 million exit term loan and 30% of the new equity
  • Refinancing of the $225 million DIP ABL facility with a new ABL facility
  • A $60 million private placement of new equity for 55.8% of the new equity, open to the consenting term loan lenders and backstopped for a premium of 4.20% of the new equity
  • Distribution of 10% of the new equity to prepetition term lenders, whose claims are allowed at $756.6 million of principal
  • A $500,000 cash pool for general unsecured creditors
  • Cancellation of existing equity with no recovery
• Every equity percentage is subject to dilution by a management incentive plan, or MIP, that reserves 10% of the new equity for awards.

Treatment of Claims and Interests

• Class 1, other secured claims (unimpaired, presumed to accept): at the debtors' option, with the consent of the Required Consenting Term Loan Lenders (not to be unreasonably withheld), the claim is paid in full in cash in the ordinary course, satisfied with its collateral, reinstated or otherwise left unimpaired.
• Class 2, other priority claims (unimpaired, presumed to accept): treatment consistent with section 1129(a)(9).
• Class 3A, prepetition ABL claims (unimpaired, presumed to accept): to the extent not rolled up into the DIP ABL facility before the effective date, the claims are allowed in full with accrued interest, fees, expenses and premiums, and are free from any challenge. They are either converted dollar-for-dollar into new ABL obligations, with the consent of the prepetition ABL agents and lenders, or repaid in full in cash from new ABL proceeds. The claims arise under the Oct. 16, 2012, ABL credit agreement, under which Leslie's Poolmart, Inc. is parent borrower, Bank of America, N.A. is administrative and collateral agent, and U.S. Bank National Association is co-collateral agent.
• Class 3B, prepetition term loan claims (impaired, entitled to vote): the claims are allowed in full at $756.6 million of principal plus accrued interest, fees, expenses and premiums, and are free from any challenge. Holders receive their pro rata share of 10% of the new equity, subject to MIP dilution. The claims arise under the March 9, 2021, amended and restated term loan credit agreement, under which Leslie's Poolmart, Inc. is borrower and Alter Domus (US) LLC, successor to Nomura Corporate Funding Americas, LLC, is administrative and collateral agent.
• Class 4, general unsecured claims (impaired, entitled to vote): holders receive their pro rata share of the $500,000 cash pool. Beyond administrative, priority, other secured and professional fee claims, the class excludes prepetition ABL and term loan claims, intercompany claims and section 510(b) claims, but it includes contract and lease rejection damages claims. The debtors may set reserves for disputed claims. Disputes over general unsecured claims are decided as if the cases had not been filed, unless the debtors or the holder choose to have the bankruptcy court decide them.
• Class 5, intercompany claims (unimpaired or impaired depending on treatment; presumed to accept or deemed to reject; not entitled to vote): the claims are either reinstated or cancelled without distribution, as the debtors reasonably determine with the consent of the Required Consenting Term Loan Lenders (not to be unreasonably withheld, delayed or conditioned).
• Class 6, intercompany interests (unimpaired or impaired depending on treatment; presumed to accept or deemed to reject; not entitled to vote): the interests are reinstated, or set off, settled, cancelled or released without distribution, or otherwise treated as the debtors reasonably determine with the consent of the Required Consenting Term Loan Lenders (not to be unreasonably withheld, delayed or conditioned). Any reinstatement serves administrative convenience and keeps the corporate structure in place for new equity holders; it is not a recovery on the interests.
• Class 7, existing equity interests (impaired, deemed to reject): cancelled with no distribution.
• Class 8, section 510(b) claims (impaired, deemed to reject): discharged with no distribution.
• The debtors will seek confirmation under section 1129(b) for any rejecting class. They reserve the right to change a class's treatment if that is needed for cramdown.

DIP Claims

• The $90 million superpriority secured DIP term loan splits on the effective date. $75 million of the allowed claims converts dollar-for-dollar into exit term loan obligations. The balance, including the DIP premium loans and any accrued or capitalized interest, converts ratably into 30% of the new equity, subject to MIP dilution. The DIP premium loans consist of the DIP backstop loans and DIP upfront loans, both defined in the RSA's restructuring term sheet.
• Allowed claims under the $225 million senior secured superpriority DIP ABL revolving facility are taken out by the new ABL facility. The takeout is either a full cash repayment from new ABL proceeds, including cancellation, replacement or cash collateralization of issued letters of credit, or, with the consent of the DIP ABL agent and lenders, a cashless settlement in which:
  • DIP ABL principal converts dollar-for-dollar into new ABL obligations
  • Outstanding letters of credit are deemed issued under the new ABL documents
  • DIP ABL collateral is reaffirmed as security for the new ABL, subject to the new ABL's lien priorities
  • Holders receive their pro rata share of cash for outstanding interest, fees and expenses
• Fees and expenses of the DIP ABL agent's professionals incurred through the effective date, including reasonable estimates, are paid in full in cash without court review.

Exit Financing

• Exit term loan: $75 million of new term loans. The new term loans partly refinance the DIP term loans and are issued to DIP term loan holders through the dollar-for-dollar conversion. Once the agent signs the credit agreement, all DIP term loan holders are bound as lenders.
• Exit ABL: one of two forms. With the consent of the DIP ABL agent and lenders, the DIP ABL facility can be converted or amended and restated into a new $225 million senior secured asset-based revolving exit facility. Otherwise, a new senior secured asset-based revolver refinances the DIP ABL. The same facility takes out any prepetition ABL claims that were not rolled up.
• Liens securing both exit facilities are deemed automatically perfected on the effective date and are protected from avoidance, recharacterization and subordination. The bankruptcy court will not retain jurisdiction over the exit financing documents or the new organizational documents, which follow their own jurisdictional provisions.
• The other sources of plan consideration are the new equity, including the equity financing, and cash on hand at the effective date.

Equity Financing and Backstop

• Size: $60 million direct private placement of new equity, representing 55.8% of the new equity, subject to MIP dilution.
• Participants: consenting term loan lenders that elect to fund their pro rata share. Purchase obligations are several, not joint.
• Price per unit: $60 million divided by the number of units equal to 55.8% of the new equity, excluding units reserved for the MIP. The price is payable in cash.
• Funding: on or before the effective date, participants fund their allocable shares into escrow with an agent approved by the debtors and the Required Consenting Term Loan Lenders. The cash is released to the reorganized debtors on consummation.
• Backstop: the backstop parties listed on Schedule 2 to the RSA backstop the placement. Their commitments are several, not joint.
• Backstop premium: 4.20% of the new equity, subject to MIP dilution. The premium is fully earned and nonrefundable when the disclosure statement order is entered, and it is payable on the effective date.
• Transfer restrictions: after the RSA's subscription deadline, backstop parties may not transfer their "stapled obligations and interests," as the RSA defines that term, without the debtors' consent (not to be unreasonably withheld, conditioned or delayed). No consent is needed for transfers to other backstop parties, affiliates or affiliate funds. Any transfer must include a ratable transfer of the transferor's stapled obligations and interests.
• Use of proceeds: working capital and general corporate purposes.

New Equity and Governance

• The new equity will be issued by either reorganized Leslie's, Inc. or a newly formed entity that will own, directly or indirectly, 100% of the reorganized debtors. Before MIP dilution, the new equity is allocated as follows:
  • 55.8% to equity financing participants
  • 30% to holders of DIP term loan claims
  • 10% to holders of prepetition term loan claims
  • 4.20% to backstop parties as the backstop premium
• At emergence, the new equity will not be registered, will not be listed on any exchange and will not be DTC-eligible. Equity distributed to DIP and prepetition term lenders on account of their claims is issued under section 1145 and is freely tradable, subject to underwriter restrictions and any limits in the new organizational documents. The placement shares and the backstop premium are issued under Section 4(a)(2) and are restricted securities.
• MIP: 10% of the new equity is reserved for equity and equity-based awards. The new board adopts the MIP after the effective date and decides award form, participants, allocations, timing, vesting and other terms in consultation with senior management.
• Board: the current Leslie's, Inc. directors' terms end on the effective date. Directors and officers will be selected in accordance with the RSA, and the initial new board, to be named in the plan supplement, is appointed under the new organizational documents. Management structure, compensation arrangements and affiliate transactions are subject to the approvals required by the new organizational documents.
• Employees: the reorganized debtors may continue existing wage and benefit programs. On the effective date the debtors will either assume existing employment and indemnification agreements or enter into new ones, which requires the consent of the Required Consenting Term Loan Lenders (not to be unreasonably withheld or delayed). Existing equity-based incentive plans and equity-linked agreements are not assumed and terminate on the effective date, and the restructuring does not trigger change-of-control, immediate vesting or termination provisions in them or a "good reason" event.

Restructuring Expenses

• The consenting term loan lenders' expenses, as defined in the RSA, are paid in full in cash on or as soon as practicable after the effective date, to the extent not paid during the cases. Payment requires no fee application, itemized time records or court review, and payment in full is a condition to effectiveness. Estimates are due at least three business days before the expected effective date. The reorganized debtors also keep paying, as they come due, these expenses for implementing, consummating and defending the plan, whether incurred before, on or after the effective date.
• The consenting term loan lenders' advisors and the DIP ABL agent's advisors are excluded from the plan's definition of professionals; their fees are instead paid without court review under the restructuring expense and DIP ABL provisions.

Administrative, Priority Tax and Professional Fee Claims

• Allowed administrative claims are paid in full in cash, unless the holder agrees to other treatment with the debtors and the Required Consenting Term Loan Lenders consent (not to be unreasonably withheld). Payment requests are due 30 days after the effective date, and objections to them are due 60 days after the effective date; the request deadline does not apply to professional fees, adequate protection claims or restructuring expenses.
• Priority tax claims receive treatment under section 1129(a)(9)(C).
• Professional fee claims are paid from an escrow funded on the effective date with the professionals' estimates of unpaid fees. Payment is not limited to the escrowed amount, and any surplus reverts to the reorganized debtors. Final fee applications are due 45 days after the effective date.
• After the confirmation date, the debtors pay professionals' reasonable implementation and consummation fees in the ordinary course without court approval, within 10 business days of a detailed invoice, subject to objection by the debtors, the consenting term loan lenders' advisors, the committee or the U.S. Trustee; no monthly, transaction, restructuring, financing, success or similar fee is paid unless the court has approved the professional's retention and the fee is approved by the court or under the plan.

Conditions to Effectiveness

• The effective date is the first business day on which no stay of the confirmation order is in effect and the following conditions are satisfied or waived:
  • Entry of the confirmation order and the final DIP order. Each must be a final order, consistent with the RSA and reasonably acceptable to the debtors, the Required Consenting Term Loan Lenders and the DIP ABL agent. The DIP ABL agent's approval of the confirmation order is limited to matters that adversely affect treatment of prepetition ABL or DIP ABL claims.
  • The RSA remaining in full force and effect
  • Execution and funding of the exit term loan and new ABL documents. These must be reasonably acceptable to the debtors and the Required Consenting Term Loan Lenders and, if the new ABL is a cashless settlement of the DIP ABL, to the DIP ABL agent and lenders.
  • Execution of all definitive documents in form reasonably acceptable to the debtors and the Required Consenting Term Loan Lenders, and filing of a final plan supplement consistent in all material respects with the RSA and the restructuring term sheet
  • Establishment of an agreed plan equity value, subject to RSA consent rights
  • Payment in full of restructuring expenses, and either payment of professional fee claims or funding of the professional fee escrow
  • Issuance of the new equity and effectiveness of the new organizational documents
  • Receipt of required regulatory approvals and expiration of waiting periods
  • No order, injunction or law blocking the restructuring transactions, and no such proceeding pending or threatened by a governmental body
  • Completion of the restructuring transactions consistent with the RSA and the restructuring term sheet
• The debtors and the Required Consenting Term Loan Lenders may waive conditions by written consent, and email is sufficient. Waivers affecting DIP ABL or prepetition ABL claims also need the consent of the DIP ABL agent and lenders.

Consent Rights and Plan Modification

• The RSA's consultation, information, notice and consent rights over the plan, its exhibits, the plan supplement and all definitive documents are incorporated into the plan and enforceable as if written into it. Where the plan and the RSA conflict on information, notice or consent rights, the RSA controls.
• The plan's precedence clauses conflict: Article II provides that the plan supplement controls over an inconsistent plan provision, while Article XIII provides that the plan's own text controls over an inconsistent plan supplement exhibit or document unless the court orders otherwise. The confirmation order controls over the plan.
• The debtors may modify the plan, whether materially or not, subject to RSA consent rights. They may not amend it in a way that is inconsistent with the RSA or with any consent rights in the DIP documents. Post-confirmation modifications, and revocation or withdrawal before confirmation, require consultation with the consenting term loan lenders.
• Beyond the class elections above, the Required Consenting Term Loan Lenders must agree to:
  • The tax structure, which is to be designed to maximize tax efficiencies for the debtors and the consenting term loan lenders
  • Amendments to the schedule of retained causes of action
  • Reinstatement of unimpaired claims that lack a timely proof of claim
  • The escrow agent for the equity financing
• The consenting term loan lenders are consulted on the choice of disbursing agent and the distribution record date.

Releases and Exculpation

• The plan contains a debtor release and a third-party release in favor of the released parties, which consist of:
  • The debtors and reorganized debtors
  • The consenting term loan lenders and the DIP term loan lenders
  • The prepetition ABL lenders and the DIP ABL lenders
  • The agents under the prepetition, DIP and exit facilities, including Bank of America, N.A. and U.S. Bank National Association under the prepetition ABL and Alter Domus (US) LLC under the prepetition term loan
  • Current and former affiliates and related parties of each of the above, including their funds, advisors, directors, officers, employees and professionals
• The releasing parties are the same lender and agent groups, plus their current and former affiliates and, to the extent each can legally bind them, their related parties. Claim and interest holders are also releasing parties as follows:
  • Holders that vote to accept, are presumed to accept, abstain or vote to reject, unless they opt out
  • Holders deemed to reject, only if they affirmatively opt in
• An entity that opts out, or timely objects to the releases without the objection being resolved before confirmation, is neither a releasing party nor a released party.
• Neither release covers post-effective date obligations, rights to plan distributions, causes of action on the schedule of retained causes of action, or claims for actual fraud, willful misconduct or gross negligence as determined by a final order.
• Exculpation is narrower and covers only the debtors and the official committee of unsecured creditors and its members, in those capacities. It reaches conduct relating to the cases, the RSA and related prepetition transactions, the disclosure statement, and the plan and its implementation, with the same carve-out for fraud, willful misconduct and gross negligence.
• A permanent injunction bars pursuit of released, discharged or exculpated claims against the debtors, the reorganized debtors, the released parties and the exculpated parties. Setoff rights survive only if the holder files a motion asserting them on or before the effective date.

Other Provisions

• Contracts and leases: all executory contracts and unexpired leases are deemed assumed except those previously assumed or rejected, those on the rejection schedule in the plan supplement, and those subject to a pending rejection motion. The debtors may amend the rejection schedule through 30 days after the effective date. Rejection damages claims are due by the later of the claims bar date and 30 days after the order approving rejection. Cure disputes and assumption objections are due 30 days after the effective date. Change-of-control and similar provisions are deemed modified so that the restructuring does not give counterparties termination or default rights.
• Insurance and indemnification: all insurance policies, including D&O policies, are assumed. The reorganized debtors may not reduce D&O coverage, including tail coverage, in effect or purchased as of the petition date. Indemnification provisions for current and former directors, officers, employees and professionals are reinstated on terms no less favorable than before.
• Causes of action: the reorganized debtors keep all causes of action that are not released or exculpated, including those listed on the schedule of retained causes of action.
• Claims objections are due 180 days after the effective date, and the deadline can be extended.
• The official committee of unsecured creditors dissolves on the effective date, and the reorganized debtors stop paying committee fees and expenses after that date.