Museion Services - Chapter 11 DIP Terms

DIP Terms

DIP Commitments

• $3 million senior secured priming, non-revolving, multiple-draw delayed-draw term loan from GrayStreet Credit LLC. The commitment fee and the DIP lender's expense reimbursements sit on top of the $3 million.
• Up to $625,000 is available in one or more draws once the interim order is entered and the initial budget is approved. Any advance above that amount requires entry of the final order.
• The facility has no roll-up and no lockup, and repaid amounts may not be reborrowed.

Interest Rate

• 15% per annum, payable in cash (if available) or in kind at the DIP lender's election, computed on a 360-day year
• Default Rate: the lesser of 18% per annum or the maximum rate permitted by law, during an event of default

Fees

• Commitment Fee: 5% of the full $3 million commitment ($150,000), fully earned and nonrefundable on entry of the interim order. The fee is paid in kind by capitalization into principal; it accrues interest, is payable in cash at maturity, does not reduce the $3 million available for advances, and is earned whether or not the commitment is fully drawn or a final order is entered.
• Expense Reimbursement: the DIP lender's reasonable costs and expenses, including fees of Fishel Law Group PLLC, are reimbursed monthly on demand and from the initial advance, without fee applications. They are DIP obligations secured by the DIP liens. Invoices go to the debtors' counsel, the U.S. Trustee and counsel to any committee, which have 10 calendar days to object. Amounts not timely disputed may be paid without further order; timely disputed amounts require a court order.

Maturity

• The earliest of:
  • The effective date of a plan of reorganization
  • 12 months after the closing date, which is the first date on which the final order has been entered and closing conditions are satisfied or waived
  • Acceleration of the DIP loans
  • Payment in full of the DIP obligations and termination of all commitments

Status and Milestones

• Interim Hearing: Oct. 23, 2026, at 3:00 p.m. (prevailing Central Time), on the debtors' emergency request. The final hearing date has not yet been set.
• The debtors filed the DIP motion on Oct. 20, 2026. The terms summarized here come from the term chart in the motion, which summarizes the DIP term sheet (Exhibit B) and the proposed interim order (Exhibit A); neither the interim nor the final order has been entered.
• The term sheet sets the following milestones:
  • Final order entered within 45 days after the DIP motion is filed
  • Plan filed within 180 days after entry of the final order
  • Plan confirmed within 90 days after the plan is filed
• Missing a milestone is an event of default. The DIP lender may extend milestones or waive conditions in writing, and the debtors may move on notice to extend a milestone for cause.

Borrowers / Lender

• Borrowers: the debtors, Museion Services LLC, Calistoga Vintner Services LLC (CVS), which does business as Museion, and Knights Valley California LLC (KVC)
• DIP Lender: GrayStreet Credit LLC

Background

• The debtors are a family-owned enterprise. Through CVS they operate a grape-to-bottle production winery and a custom crush, barrel storage and bottling facility in Calistoga, Napa County, California. The facility includes a 125,000-square-foot production winery, a barrel storage room of about 15,000 square feet, tasting rooms and direct-to-consumer retail space. Custom crush is the core business; several of the facility's first clients were winemakers whose own facilities were damaged in the 2020 Glass and LNU Complex wildfires, which the debtors cite as one of the main reasons they invested in the facility. As of the petition date, CVS served about 20 winery clients for the 2026 harvest: nine under custom crush agreements and 11 under alternating proprietor agreements, with some clients party to both.
• The real estate has two parts:
  • The Silverado Trail property: two adjacent parcels at 865 and 963–965 Silverado Trail in Calistoga, which house the winery
  • The Knights Valley property: about 2,099 acres across 17 assessor's parcels in the Knights Valley American Viticultural Area of Sonoma County. KVC supplies irrigation water from three licensed reservoirs there, including to an on-site vineyard leased to Beringer and to Beringer's neighboring Knights Valley vineyards.
• Both properties were acquired with an aggregate $40.5 million of financing from First Republic Bank. The business model behind that financing provided that once the debtors reached $3 million in annual revenue, additional funding would follow for a mixed-use hospitality development, which made up about 75% of projected future revenue in the debtors' original model. The debtors reached that milestone in April 2023, nine days before First Republic collapsed and the FDIC sold it to JPMorgan Chase Bank, N.A.
• CVS remains in default under the loan. After the debtors were unable to cure the default because of insufficient revenue, Chase Bank recorded a notice of trustee's sale on Sept. 16, 2026, posting each of the properties for foreclosure on Oct. 16, 2026. The debtors filed Chapter 11 on Oct. 14, 2026, in the Southern District of Texas.
• The debtors state they are completely out of cash. Their interim budget (Exhibit C) shows negative net cash flow of about $227,594 from operating expenses alone within four weeks of the petition date, deepening to about $593,674 once about $366,080 of postpetition non-operating expenses over the same period are included. The motion describes the operating costs as payroll, third-party wine production, storage, sales and custom crush services, and equipment financing payments, and the non-operating costs as Chapter 11 professional fees, adequate-assurance reserves for utilities and about $106,694 of postpetition critical-vendor payments.
• The debtors say that without financing they would lose their workforce, vendors and third-party servicers. Clients would ultimately be forced to cancel contracts, and operations would cease. Other wineries rely heavily on the custom crush facility.

Prepetition Capital Structure

• Senior Secured Loan: an approximately $40.5 million facility, lent to CVS by First Republic Bank and now held by Chase Bank. It is secured by deeds of trust and lease assignments on the Silverado Trail and Knights Valley properties, and was documented through three notes:
  • Note 1: $20.5 million at 3.85%, dated May 5, 2021
  • Note 2: $10 million, dated Dec. 1, 2021, and retired in connection with Note 3
  • Note 3: $20 million, dated April 25, 2022. After closing costs and the retirement of Note 2, CVS received net funding of about $9.8 million.
• Chase Bank's notices of trustee's sale allege outstanding balances of about $22.9 million on Note 1 and $23.4 million on Note 3.
• Equipment Financing: CVS's winery and custom crush equipment is financed by four equipment lenders: VFS, LLC; Loeb Term Solutions, LLC; North Star Leasing, a division of Peoples Bank; and Byline Bank.

Securities and Priorities

• First-priority senior priming liens on all DIP collateral under sections 364(c)(2), 364(c)(3) and 364(d)(1), subject only to the Carve-Out:
  • The liens prime Chase Bank's liens securing Note 1 and Note 3.
  • They also prime all other liens, including statutory and tax liens.
  • They reach the Silverado Trail and Knights Valley properties, accounts receivable, cash and deposit accounts.
• On equipment subject to the equipment lenders' liens, the DIP lender takes junior liens under section 364(c)(3). These are junior only to those liens and the Carve-Out, and senior to all other liens on that equipment. The DIP lender reserves the right to seek different treatment at the final hearing, but the proposed interim order approves no change.
• The DIP obligations carry superpriority administrative expense claims under section 364(c)(1), subject only to the Carve-Out. They rank ahead of all administrative expense and unsecured claims, including Chase Bank's section 507(b) claims.
• The priming liens also rank first ahead of any interests in the DIP collateral asserted by Telecom Business Solution, LLC and Latam Towers, LLC. Both are plaintiffs in ongoing litigation before the Superior Court of the State of California against the debtors and other defendants, alleging violations of the California Uniform Voidable Transactions Act, among other causes of action. The debtors reserve all rights and defenses as to the validity, priority or extent of any interest the plaintiffs claim.
• The DIP liens are perfected automatically when the interim order is entered.

DIP Collateral

• All present and after-acquired real and personal property of the debtors, including:
  • CVS's entire fee interest in the Silverado Trail property and KVC's entire interest in the Knights Valley property. This covers every parcel of both properties and every parcel encumbered by the deeds of trust securing Chase Bank's notes, not just the improvements at the listed street addresses.
  • Buildings, fixtures, easements, undeveloped acreage, leases and other occupancy agreements, plus rents, revenues, water-supply income and other income arising on and after the petition date
  • Accounts receivable arising on or after the petition date, including from custom crush, bottling, barrel storage, winery services, rent and water supply
  • Cash, deposit and securities accounts; customer and other deposits to the extent they are estate property; and refundable, security, utility and insurance deposits
  • Inventory, equipment, equity interests, contract rights, general intangibles, intellectual property, tax refunds, insurance proceeds and condemnation awards
  • Commercial tort claims and other estate causes of action, prepetition or postpetition, including lender-liability, fiduciary-duty and fraud claims, but not avoidance actions or their proceeds
  • Proceeds and products of the foregoing
• Cash and deposit, bank and securities accounts, together with inventory, equipment, equity interests, contract rights, general intangibles and the other assets in that category, are excluded to the extent they constituted Chase Bank's cash collateral as of the petition date. The term sheet attaches no such exclusion to postpetition receivables or estate causes of action.
• Only the debtors' interests in customer wine, grapes, barrels, deposits and other property are included. Property owned solely by third parties is excluded, and the proposed interim order does not transfer ownership of that property or impair a nondebtor owner's rights in it merely by describing it as collateral.

Cash Collateral

• The debtors do not seek to use Chase Bank's cash collateral. They describe the purpose of the interim order as funding pre- and postpetition obligations without it. If postpetition operations generate Chase Bank cash collateral as proceeds of its prepetition security interests, the debtors say they will account for and preserve it rather than use it in the ordinary course. Ordinary-course operating receipts may be used under the initial budget.
• The debtors argue that postpetition receivables generated without Chase Bank's prepetition cash collateral, including through custom crush operations, are unencumbered under section 552(a). They acknowledge that receivables that are postpetition proceeds of Chase Bank's prepetition security interest, such as receivables generated using its cash collateral in the winery operations, would likely remain subject to its lien. They contend, however, that where the debtors' own resources (employees, winemakers, fermentation processes and the custom crush facility) make a product marketable, the resulting receivable is not Chase Bank's cash collateral, at least not in full, and that Chase Bank bears the burden of proving otherwise, including any allocation between the underlying goods and the value the debtors' services add.
• The debtors also ask the court to limit Chase Bank's prepetition lien on the DIP collateral and related receivables under the section 552(b) equities-of-the-case exception. They argue that:
  • Chase Bank is heavily oversecured.
  • Non-Chase Bank funds will be used to process grapes in the postpetition custom crush.
  • Continued custom crush and wine storage operations will preserve and enhance the value of Chase Bank's other collateral.

Adequate Protection

Chase Bank

• Only to the extent of any diminution in value, Chase Bank receives:
  • Replacement liens on the DIP collateral, junior to the DIP liens and the Carve-Out
  • A section 507(b) claim, junior to the DIP superpriority claims
• Chase Bank receives no current cash payments of interest, fees or principal.
• The debtors argue that Chase Bank is substantially oversecured, citing these valuations from the first-day declaration:
  • The 865 parcel of the Silverado Trail property: $76.35 million "as is" and $99 million on a stabilized basis
  • The Knights Valley property: $42.3 million "as is" and $61.4 million on a prospective basis, after the proposed lot line adjustments and further development of the vineyard and related infrastructure
• The debtors reserve all rights as to the validity of Chase Bank's debts and liens.

Equipment Lenders

• The equipment lenders are not primed. The DIP liens on their equipment collateral are junior to their liens, and no mandatory repayment may defeat a qualifying equipment lien's priority in its collateral.

Carve-Out

• Post-Trigger Cap: $100,000 in aggregate for the debtors' professionals. The cap applies after a carve-out trigger notice, which is written notice (email permitted) of a continuing event of default sent to the debtors, their counsel and the U.S. Trustee.
• Chapter 7 Trustee Fees: reasonable fees and expenses of a trustee under section 726(b), up to $25,000
• The Carve-Out also covers:
  • Clerk and U.S. Trustee fees under 28 U.S.C. § 1930(a), plus statutory interest
  • For periods before a trigger notice, allowed and unpaid fees, success fees and expenses of the debtors' court-approved professionals, subject to the approved budget and the DIP orders
• Each professional is entitled to its own budgeted carve-out amount, without sharing with other professionals or administrative creditors, to the extent the amount is earned and approved by separate order. Budgeted amounts accumulate until a trigger notice. They may be transferred to a professional as a postpetition retainer without further order, to be held in trust and applied only with court approval.
• Conversion or dismissal does not increase the Carve-Out, and the DIP lender's expense reimbursements do not reduce the professional fee cap.

Use of Proceeds

• Solely in accordance with the initial budget, to:
  • Fund working capital and general corporate purposes
  • Pay the DIP lender's expense reimbursements
  • Pay allowed professional fees
  • Pay costs of administration
  • Pay prepetition expenses consented to by the DIP lender or approved by the court, which the motion describes as ordinary-course operating expenses
• No proceeds may be used to challenge the DIP lender's claims or liens.

Budget, Reporting and Permitted Variance

• Permitted Variance: a negative variance greater than 10% is noncompliance. Testing is weekly on a cumulative basis and begins two weeks after entry of the final order.
• The approved budget is the initial budget, as approved by the DIP lender and the court, together with each replacement the DIP lender approves in writing. An updated budget is due every fourth Wednesday after entry of the final order.
• From entry of the interim order, the debtors must deliver weekly reports of cash balances, receipts and disbursements, with explanations of material departures from the approved budget. Once testing begins, the reports must add cumulative actual-to-budget variance calculations.
• The debtors must also provide reasonable updates on operations and the cases, make their professionals reasonably available (subject to privilege), and allow reasonable access to books, records and collateral, including site visits.

Conditions to Funding

• Each draw, including the interim advance, requires:
  • A borrowing notice at least two business days in advance, or a shorter period the DIP lender accepts, identifying the amount, date, uses, budget lines, cash on hand and anticipated receipts, and certifying compliance with borrowing conditions
  • No continuing default or event of default
  • Materially accurate representations and warranties
  • Compliance with the approved budget, subject to permitted variances
  • No material adverse effect since the petition date. This condition does not apply to the initial advance, and the definition excludes the effects of the bankruptcy filing.

Avoidance Actions

• The proposed interim order grants no lien, claim, payment right or other recourse against Chapter 5 avoidance actions or their proceeds.
• Adding avoidance action proceeds to the DIP collateral, and as a source of payment for the DIP superpriority claims, is left for express approval in the final order. If approved, the DIP lender would look to those proceeds only after other DIP collateral, and that order of recourse would not itself subordinate the lien or claim.

Credit Bid

• Subject to the final order, the DIP lender may credit bid up to the full amount of the DIP obligations.

Waivers

• Subject to entry of the final order:
  • Section 506(c): waived
  • Marshaling: waived
  • Section 552(b): the equities-of-the-case exception will not apply to the DIP lender or the DIP liens. Separately, the debtors invoke the same exception against Chase Bank's prepetition lien.

Releases

• Once the interim order is entered, the debtors and their estates release a defined group of parties from all claims arising on or before entry of the interim order that relate to the DIP facility. The release covers the facility's negotiation, documentation and approval, the DIP loan documents and orders, and the contemplated transactions, including related lender-liability, equitable subordination, recharacterization and avoidance claims. The released parties are:
  • GrayStreet Credit LLC
  • Its affiliates and participating lenders
  • Their current and former officers, directors, managers, members, partners, employees, agents, representatives, advisors and attorneys
• The release has these limits:
  • It excludes gross negligence, willful misconduct and actual fraud, as determined by a final, non-appealable order.
  • It does not excuse performance of express DIP loan document obligations.
  • It does not release third parties' independent claims.
  • It does not release Chase Bank or any other prepetition creditor merely because that party is a creditor in the cases.
• Any extension of the release through entry of the final order is left to that order.

Covenants

• Affirmative: the debtors must:
  • Maintain insurance consistent with court orders
  • Preserve their properties, assets and financial records
  • Maintain and protect the DIP collateral
  • Comply with reporting requirements
  • Promptly notify the DIP lender of material events, including actual or threatened title or lease disputes
• Negative: the debtors may not:
  • Incur liens, debt or claims senior to or pari passu with the DIP liens or superpriority claims, other than the Carve-Out and equipment-lien exceptions
  • Dispose of property outside the ordinary course without the DIP lender's consent (not to be unreasonably withheld) or court approval
  • Make distributions on, redeem or acquire equity interests
  • Consolidate, merge or lease all or substantially all assets without the DIP lender's written consent or court approval
  • Obtain section 364 financing or other debt, except as the DIP orders permit and except for insurance premium financing
  • Seek to amend a DIP order without the DIP lender's written consent
  • Make payments outside the approved budget without the DIP lender's written consent

Events of Default and Remedies

• Events of default include:
  • Failure to pay principal, interest, the commitment fee or the DIP lender's expense reimbursements when due
  • A representation or warranty that was materially inaccurate when made, including one about title to the real property, or failure of an operating metric expressly agreed in an executed DIP loan document
  • A covenant breach. Curable breaches of affirmative reporting, access, notice, maintenance or recordkeeping covenants have a 10-business-day cure period, running from the earlier of an officer learning of the breach and receipt of notice from the DIP lender. No grace period applies to payment, borrowing limits, budget compliance, milestones, negative covenants, or loss of lien validity, perfection or priority.
  • Failure to comply with the approved budget, after allowing for permitted variances
  • An actual dispute, or an actual or threatened proceeding, over title to DIP collateral or over a lease's validity or existence. Disputes disclosed in writing to and acknowledged by the DIP lender before the closing date are excepted, but a final adverse order in one of those disputes is a default.
  • Any DIP lien ceasing to be valid and perfected, other than a release in a permitted transaction
  • A challenge by a debtor to the validity or enforceability of the DIP loan documents or DIP liens, other than seeking to enforce the interim order's express terms or to obtain review the order permits
  • Entry, without the DIP lender's written consent, of an order amending, staying or reversing a DIP order, or surcharging DIP collateral under section 506(c)
  • Conversion to Chapter 7 or dismissal of any of the cases
  • A missed milestone, after any written extension or waiver or any court-granted extension
  • An order granting a lienholder stay relief to foreclose on material DIP collateral, or granting a superpriority claim pari passu with or senior to the DIP superpriority claims, other than the Carve-Out
• Remedies: the DIP lender must move for relief on notice before it sweeps or sets off accounts, forecloses on, takes possession of or disposes of DIP collateral, or exercises any other remedy that requires stay relief.
  • The court may hear the motion on an expedited basis, during or after any default notice period.
  • The automatic stay remains in place until a further order after notice and a hearing; expiration of a default notice period alone does not lift it.
  • The debtors and other parties with standing may contest whether a default exists or continues, the adequacy of notice, and the remedies sought.

Mandatory Repayments

• Subject to court orders and the lien priorities, the following must be applied to the DIP obligations as the DIP loan documents require:
  • Net proceeds of sales or other dispositions of DIP collateral
  • Net proceeds of casualty, insurance or condemnation events
  • Net proceeds of debt that is not otherwise permitted
• No mandatory payment may divert property owned solely by third parties, impair the Carve-Out or defeat a qualifying equipment lien's priority.

Other Terms

• Amendments: the debtors and the DIP lender may agree to nonmaterial amendments without further order. Any of the following requires notice and court approval: increasing principal, interest or fees; shortening maturity; adding materially more restrictive covenants or defaults; changing lien priorities, the Carve-Out, releases or remedies; or otherwise materially harming the estates or another party. All amendments must be provided to the U.S. Trustee and any committee and filed before they take effect.
• Assignments: the debtors may not assign DIP obligations. The DIP lender may assign its interests or grant participations without the debtors' consent, but no assignment or participation may enlarge the debtors' obligations or change priorities.
• Survival: the DIP obligations, liens and superpriority claims bind the debtors' successors and any later-appointed Chapter 7 or Chapter 11 trustee, examiner or other estate representative. They survive conversion, dismissal and plan confirmation with their priorities intact until indefeasible payment in full and termination of commitments, unless the DIP lender agrees otherwise in writing or the court orders otherwise.
• Governing Law: Texas