Republic National Distributing Company - Chapter 11 Case Summary

Business Description

Republic National Distributing Company, LLC ("RNDC LLC"), together with its Debtor and non-Debtor affiliates (collectively, "RNDC" or the "Company"), is the nation's second largest alcohol beverage distributor. The Company is the product of four family businesses, the oldest founded more than 125 years ago, that were combined over time into a single nationwide platform.

RNDC operates as the "middleman" in the alcohol supply chain, purchasing product from suppliers—distilleries, wineries, and breweries—and transporting and selling it to the bars, restaurants, and retail stores that sell alcohol to consumers.

• The Company has historically differentiated itself beyond order fulfillment and delivery, offering suppliers and customers comprehensive support spanning regulatory compliance through route-to-market strategy.
• Because alcohol distribution is regulated on a state-by-state basis, RNDC was historically either the dominant distributor—or the only distributor—capable of serving suppliers at scale in many states.

At its height, the Company's platform included:

• Operations in 40 states, supported by 45 warehouses and distribution centers and a fleet of approximately 1,800 vehicles.
• More than 10,000 associates and annual revenue of approximately $12 billion.
• Distribution partnerships with approximately 2,000 suppliers and more than 170,000 customers, moving roughly 390,000 cases of alcohol per day.

RNDC has remained under the stewardship of the Block, Goldring, Davis, and Carlos families, with several descendants of the original founders working for the Company and serving on its board. Many of the Company's former associates began their careers at the predecessor family businesses years or decades before the 2007 merger that created RNDC.

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Corporate History

The Founding Businesses

RNDC's history begins in 1898, when Newman Goldring, an immigrant from Eastern Europe, founded N. Goldring Corporation ("NGC") in Pensacola, Florida. NGC became the first licensed beer distributor in Florida and expanded over the following decades.

• Prohibition halted operations in 1919. Following its repeal in 1933, Goldring reopened the business with the help of his son in 1939.

The repeal of Prohibition drew others into the industry during the Great Depression:

• Dixie Wine Company / National Distributing Company: Two years after repeal, Chris Carlos—a Greek immigrant with limited English, no money, and no background in the alcohol industry—founded the Dixie Wine Company in Atlanta, Georgia. Al Davis, a young alcohol salesman from New York who had built a reputation working for distributors across the southeast and in Chicago, approached Carlos, and the two grew the business together. In 1942, they formed a jointly-owned distribution company, National Distributing Company, Inc. ("NDC"), with Carlos running finances and Davis leading sales.
• Block Distributing Company: In San Antonio, Texas, Edward Block—a former route-salesman for a liquor distributor—formed Block Distributing Company ("BDC") in 1939 with a single delivery truck and a small warehouse.

A Relationship-Driven Model

Over the following decades, the Goldring, Block, Carlos, and Davis families built their businesses around personal relationships with suppliers and customers—relationships first established by the founders and later carried forward by their children. Al Davis, for example, continued traveling to meet suppliers and customers personally into the 1980s, nearly 50 years after entering the industry, reflecting a view that face-to-face contact and owner-level attention were central to how the business operated and how trust was maintained.

• The same philosophy extended to employees, referred to as "associates"—a term reflecting the founders' view of employees as partners in building the business rather than hired labor. Associates commonly remained with the companies for decades.
• By the early 1990s, NGC operated in approximately ten states, NDC in approximately eight states, and BDC throughout much of Texas.

Consolidation and the Formation of RNDC

• 1997: The Block and Goldring families, longtime friends, formally combined their businesses to create Republic Beverage Company ("RBC").
• 2007: Amid broader industry consolidation, RBC and NDC merged nearly all of their businesses to form RNDC.

Nationwide Expansion

Beginning in 2007, RNDC expanded across much of the United States through more than a dozen strategic acquisitions and joint-venture partnerships with established alcohol distributorships. Transactions between 2007 and 2023 included:

• 2007: Entered South Carolina through a joint venture with the Capital Group of South Carolina.
• 2008: Entered Nebraska through the acquisition of Nebraska Wine & Spirits.
• 2010: Entered Indiana through a joint venture with National Wine and Spirits, Inc. ("NWS").
• 2011: Acquired Sparrow and Associates, the leading spirits broker in Virginia and North Carolina, and entered Arizona through a joint venture with Young's Market Company, LLC ("YMC").
• 2014: Entered Michigan through a joint venture with NWS.
• 2017: Solidified its Oklahoma presence through a joint venture with Central Liquor Company, a third-generation family-owned business founded in 1959.
• 2019: Expanded its YMC partnership by acquiring a 50% interest in YMC and YMC-Arizona from Young's Holdings, Inc. and its affiliates, opening access to California and other west coast states. The Company also partnered with Liberation Distribution, Inc. to launch eRNDC, a business-to-business eCommerce platform.
• 2021: Expanded in Florida through the acquisition of Opici Family Distributing, a fourth-generation family-owned wine and spirits wholesaler founded in 1913, and entered Illinois through a joint venture with Heritage Wine Cellars, Ltd.
• 2022: Entered Alaska by acquiring White Mountain Beverage, an independent Anheuser-Busch wholesaler; expanded in several key control states through the acquisition of Ultra, a division of Horizon Beverage; and entered New York through a joint venture with Opici Family Distributing.
• 2023: Expanded in Virginia, Maryland, Washington, D.C., Pennsylvania, and North Carolina through the acquisition of Young Won Trading Distribution, which also added sake, soju, Korean wine, baiju, and Asian beer to the Company's product offering for the first time. RNDC also expanded in Arkansas by acquiring Natural State Distributing.

Organizational Structure

RNDC's organizational structure comprises 39 entities, 18 of which are Debtors in these chapter 11 cases. The Company's non-U.S. entities, along with certain joint-venture partnerships and their subsidiaries, are not part of the cases.

• Debtor RNDC Texas, LLC, a direct subsidiary of Debtor RNDC LLC, was formed under Texas law in 2006.

Equity Ownership

The outstanding equity interests of RNDC LLC are indirectly held by the Carlos, Davis, and Block families through two intermediate non-Debtor entities:

• NDC Partners, LLC (66.67%): An affiliate of NDC, owned by members of the Carlos and Davis families.
• New BG Distribution Partners, LLC (33.33%): Owned by members of the Block family.

Relationship with NDC

Since 2007, NDC has operated as a legal entity distinct from RNDC, servicing the Georgia and New Mexico markets, though the two have historically cooperated on inventory and supplier matters. The Debtors have also historically provided NDC with accounting, treasury, information technology, and general back-office and support services.

• RNDC and NDC have agreed to go-forward terms for the continued provision of these services, together with additional transition services and technology transfer services, during the course of the case, as set forth in a term sheet attached to the declaration as Exhibit E.
• NDC has agreed to pay $1.6 million per month in cash for these postpetition support and additional transition services, an amount AlixPartners calculated as the fair value of RNDC's provision of the services.
• The Debtors have also recorded various liabilities related to owner notes since 2007.

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Operations Overview

The Three-Tier System

Distributors such as RNDC occupy an essential position within the "three-tier system," the regulatory framework that emerged following Prohibition. When the 21st Amendment repealed Prohibition, states were given authority to regulate alcohol distribution within their borders, and most adopted a version of the system, with regulations varying state to state. The three tiers are:

• Suppliers: Distilleries, wineries, and breweries that manufacture or import alcohol.
• Distributors: The middleman that purchases product from suppliers and transports and sells it to those who sell or serve alcohol.
• Customers: Bars, restaurants, and retail stores that purchase from distributors and sell for consumption.

Each tier must be licensed by a state and/or local regulatory body to operate within a given state, and each state maintains its own regulatory scheme. States generally fall into three categories:

• Open states: Private distributors such as RNDC may freely purchase alcohol at wholesale prices and distribute it at a markup.
• Control states: State government agencies oversee and handle the distribution and sale of alcohol.
• Franchise states: Franchise laws protect distributors against unfair termination of distribution agreements.

• Some states further differentiate by beverage type. Oregon, for example, is a control state for spirits and an open state for wine and beer.

Supplier Partnerships

RNDC has historically supported thousands of suppliers with a full suite of capabilities, including transportation, warehousing and storage, supply chain logistics, marketing and brand management, sales forecasting and analytics, and regulatory compliance.

• The Company primarily operates under distribution rights agreements granting it the right to distribute specified supplier products within a defined region, typically paired with a commitment to purchase a set volume over a term of three to ten years.
• Certain suppliers operate without formal agreements and instead designate RNDC as their "distributor of record," making the Company the sole authorized middleman between the supplier and customers of the applicable brand.
• Many of these relationships trace back to the founders' personal connections with individual winemakers and distillers. As the supplier market consolidated, those connections evolved into decades-long partnerships with larger platforms and their expanded product portfolios.

Warehouse Facilities and Distribution Network

RNDC has historically maintained an expansive supply chain fulfillment network with facilities in most major states.

• Warehouses operate around the clock and use automated systems to locate products, package them together, and load them onto delivery trucks, enabling 24-hour turnaround on deliveries.
• The Company plans delivery routes strategically, using artificial intelligence to optimize route planning and delivery timing.
• At its height, RNDC operated a fleet of approximately 1,800 vehicles, delivering more than 390,000 cases of alcohol products daily.

Customer Sales

The Company's customer base spans both channels of the retail tier:

• On-premise: Establishments licensed to sell alcohol for consumption at the location where the product was received, such as restaurants, bars, and hotels.
• Off-premise: Retail locations licensed to sell alcohol, such as grocery stores, convenience stores, and liquor stores.

Within these categories, RNDC has served customers ranging from mom-and-pop liquor stores to national retail chains, including Walmart, Costco, and Kroger. Off-premise customers historically accounted for the vast majority of total sales, most of it driven by partnerships with well-known national chains.

eRNDC

In 2019, RNDC launched eRNDC, a collaborative business-to-business eCommerce platform connecting customers, sales teams, and suppliers online.

• The platform allowed customers to browse more than 11,500 brands, place orders, communicate with sales representatives, track delivery updates, and pay bills online.
• eRNDC complements the Company's wholesale business, functioning as both a marketing vehicle and an additional ordering channel.
• Under the terms of the Reyes Sale Transactions, RNDC has agreed to support the eRNDC platform until it is migrated to the eCommerce platform operated by Reyes.

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Prepetition Obligations

As of the Petition Date, the Debtors report approximately $540 million in total funded debt, consisting of approximately $492.4 million in secured funded debt and approximately $47.7 million in unsecured funded debt. Notably, approximately $225 million in aggregate principal and accrued interest remains outstanding under the Credit Facilities, reflecting a paydown of more than $1.1 billion achieved through the prepetition Going-Concern Sale Transactions—including over $1 billion generated by the Reyes Sale Transactions alone. The Company's prepetition capital structure is summarized below:

Credit Facilities

• The Debtors are party to a Third Amended and Restated Credit Agreement dated Nov. 1, 2022, with Wells Fargo Bank, National Association serving as administrative agent. The facility is composed of three tranches, each bearing interest at SOFR plus 6% per annum:
  • ABL Facility: Approximately $150 million outstanding.
  • Delayed Draw Term Loan Facility: Approximately $66 million outstanding.
  • FILO Revolver Facility: Approximately $9 million outstanding under a first-in, last-out revolving loan.
• The Credit Facilities mature on Nov. 1, 2026, and are secured by a first-priority lien on substantially all of the Debtors' assets, including commercial litigation claims, subject to certain limitations and exclusions.
• The scale of the deleveraging is significant: approximately $1.5 billion in unpaid principal was outstanding under the Credit Facilities as recently as the fall of 2025.
• The Debtors and the lenders have executed 13 amendments to the Credit Agreement since late November 2025.

Second Lien Facility

• Approximately $260 million in unpaid principal and accrued interest is outstanding under a Subordinated Credit Agreement dated Dec. 19, 2024, among Republic National Distributing Company, LLC and certain subsidiaries as borrowers and NDC as subordinated creditor.
  • The facility was sized at $235 million in aggregate principal, with interest accruing at 14% per annum and paid in kind.
  • The obligations mature on Jan. 31, 2028, and are secured by a second-lien security interest in certain inventory, distribution rights, and real property located in New Mexico.
  • The Second Lien Facility is subordinate and junior in right of payment to the Credit Facilities.

Equipment Loans

• Approximately $7 million in unpaid principal and accrued interest is outstanding under various equipment loans with an assortment of banks and financing counterparties, under which certain Debtors are either borrower or lessee.
  • The financed equipment includes forklifts, trucks, racking, and other miscellaneous warehousing equipment used to transport and organize inventory.

Owner Notes

• Approximately $48 million in unpaid principal and accrued interest is outstanding under 12 subordinated promissory notes formally issued by Republic National Distributing Company, LLC on Aug. 1, 2019, to certain members of the Block family.
  • The notes carry an aggregate principal amount of $61 million and accrue interest at the prime rate minus 1% per annum.
  • The obligations are payable on demand, subject to the terms of the Credit Agreement. Since at least Jan. 1, 2020, interest has not been paid in cash and has instead been added to principal.
  • The Owner Notes are subordinate and junior in right of payment to the Credit Facilities and to all other indebtedness of the Company.

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Events Leading to Bankruptcy

• Since 2022, RNDC has confronted a convergence of post-pandemic operational difficulties and adverse macroeconomic conditions that eroded margins and sharply tightened liquidity—pressures compounded by a substantial debt burden accumulated through years of acquisition-driven growth and rising interest costs.

Post-COVID-19 Macroeconomic and Industry Headwinds

• The pandemic initially produced a windfall for the industry before reversing course:
  • Government-mandated closures of bars and restaurants in April 2020 pushed consumers toward retail and online channels for in-home consumption, driving an approximate 35% increase in retail alcohol sales in the spring of 2020. Distributors including RNDC stockpiled unprecedented inventory to meet the surge, and RNDC—one of the only distributors with an eCommerce sales channel and historically dependent on retail customers for the vast majority of revenue—fully capitalized on the moment.
  • As pandemic effects waned in late 2022, off-premise demand receded to pre-pandemic levels, leaving RNDC and its peers holding significant excess inventory. Inventory levels have yet to normalize.
• Efforts to close the destocking gap were frustrated by a sustained period of elevated interest rates, persistent inflation, and prolonged supply chain disruption that drove up labor and other operating costs, further compressing margins. With all rates floating and tied to USD SOFR, cash interest expense rose materially, placing severe pressure on margins, cash flow, and liquidity.
• The most consequential development was a rapid shift in consumer preferences:
  • Americans are drinking less, and many have stopped altogether—the share of U.S. adults reporting themselves as regular alcohol consumers is the lowest in nearly 90 years. 2023 marked the first year in nearly three decades in which overall alcohol sales volumes declined.
  • Younger, more health-conscious consumers have migrated toward alternatives such as CBD-infused and "better-for-you" beverages, while the rise of GLP-1 drugs including Ozempic and Wegovy—which curb alcohol cravings—accelerated the decline.
  • Consumers who do drink increasingly favor premium, high-end wine and spirits. While premiumization lifted per-unit sales in some instances, fewer total units purchased contributed to declining industry-wide sales.

Operational Challenges and Supplier Attrition

• The abrupt drop in demand created a mismatch between RNDC's supplier distribution obligations and market reality. Volume and pricing commitments negotiated during the pandemic on favorable unit economics became burdensome once demand softened, obligating the Company to purchase more inventory at unfavorable terms than it could sell. As the middleman in the three-tier distribution system, RNDC's inventory stockpile was entirely inconsistent with demand.
• Between late 2022 and 2025, RNDC lost several key suppliers collectively representing more than $3 billion in annual revenue, substantially impairing the Company's ability to generate positive free cash flow. RNDC secured approximately ten new or expanded supplier relationships since 2023, but broader industry dynamics proved insurmountable.
• Suppliers that remained extracted materially more onerous terms as they focused on their own margins:
  • The renewal of one key contract alone reduced gross profit by approximately $50 million simply to re-sign.
  • Competing distributors, sensing vulnerability, courted RNDC's suppliers with aggressive terms, intensifying margin compression across the industry.

Entry Into and Exit From the California Market

• California—the largest alcohol market in the United States—had long been a strategic target. After unsuccessful 2016 discussions with YMC and its indirect owner YHI, and the 2019 termination of merger talks with Breakthru Beverage Group following a costly two-year FTC review, RNDC re-engaged with YMC and acquired a 50% interest for $297 million in August 2019, with a new operating agreement granting YHI a put option on the remaining 50%.
• The joint venture unwound contentiously:
  • YHI exercised the Put Option on August 5, 2022, triggering a significant dispute over the put price calculation that was resolved through a negotiated final price of approximately $422 million, paid November 1, 2022.
  • A parallel dispute arose after Sazerac—supplier of Buffalo Trace, Pappy Van Winkle, Southern Comfort, and Blanton's—terminated YMC's Washington distribution rights and paid a termination fee. YHI's claim to a portion of that fee proceeded to arbitration and was resolved in June 2024 with RNDC paying $7.5 million.
• Operating in California proved structurally unprofitable: extreme competition, labor and occupancy costs nearly triple the national average, and heavily discounted customer orders driven by state regulation produced persistent margin pressure and diminished cash generation year after year.
• In early 2025, key suppliers Tito's, Brown-Forman, and Gallo's High Noon defected to Reyes, adding further strain. RNDC announced in June 2025 that it would withdraw from California by September 2, 2025, prompting the loss of additional suppliers including Gallo and Proximo.
• While the exit spared RNDC greater operating losses and simplified long-term operations, it reduced the collateral base and produced substantial near-term volume and revenue losses, alongside inventory and national supplier complications—directly straining the Company's financial health.

Debt Burden

• RNDC relied on debt-financed mergers and acquisitions to expand its nationwide footprint and market share, including its entry into California, on the expectation that an expanded distribution network and increased volume would generate sufficient cash flow to service the incremental debt.
• That leverage profile was manageable under favorable conditions but became unsustainable post-pandemic as interest rates rose substantially and consumer preferences shifted—creating, in the Company's words, a perfect storm.

Advisor Retention and Leadership Transition

• Facing significant liquidity concerns, the Debtors engaged AlixPartners in September 2025 and Kirkland & Ellis LLP and Lazard Frères & Co. LLC in October 2025 to evaluate value-maximizing alternatives. The Company also retained Joele Frank, Wilkinson Brimmer Katcher; Porter Hedges LLP as co-counsel and conflicts counsel; and, after soliciting proposals from three qualified firms, Omni Agent Solutions, Inc. as claims and noticing agent.
• Following the unexpected passing of the Company's then-CEO in mid-October 2025, Marc Sachs—a longtime board member and the son-in-law of Alan Dreeben—stepped into the role amid significant uncertainty, assuming responsibilities neither he nor the Company could have anticipated.

Enhanced Corporate Governance and Special Committee Investigations

• An Advisor-led review of corporate governance in late 2025 produced a series of appointments:
  • On November 11, 2025, the Board appointed Scott D. Vogel and Charles T. Piper as disinterested managers, delegating binding decision-making authority over matters presenting actual or likely conflicts between the Company and Related Parties, along with authority to investigate all historical Related Party transactions.
  • In connection with the twelfth amendment to the Credit Agreement, John T. Young, Jr. joined the Board and Special Committee on December 21, 2025.
  • On June 25, 2026, the Debtors appointed Jill Frizzley as a fourth Disinterested Manager and sole member of a newly created Additional Special Committee, empowered to review decisions and transactions approved since the original Special Committee's formation—including the Reyes Sale Transactions. Porter Hedges represents Ms. Frizzley in that capacity.
• With assistance from Kirkland and AlixPartners, the Special Committee investigated potential claims against Related Parties—including current and former officers, directors, and equityholders—across several categories:
  • Insider Debt Payments: The Debtors owe approximately $260 million on the Second Lien Facility with indirect equityholder NDC and approximately $48 million on the Owner Notes. The investigation examined the circumstances of issuance, consideration received, interest rates, term modifications, and payment timing and amounts.
  • Tax Distributions: RNDC LLC, a flow-through partnership for federal income tax purposes, has made more than $700 million in tax distributions to New BG Partners and NDC Partners since 2018, calculated by estimating annual taxable income at the prior year's figure plus 10% and applying an assumed 50% tax rate, with year-end true-ups. Distributions ceased after April 2023 once projections showed negative taxable income for the year, and certain equityholders repaid amounts approximately equivalent to the 2023 distributions in April and September 2024. The Committee reviewed how the distributions were calculated, paid, reconciled, and returned.
  • Provision of Services to NDC: Under a May 1, 2007 Services Agreement stemming from the NDC–RBC merger, RNDC provides NDC with finance, accounting, IT, benefits, management, sales, operations, and HR support for an annual fee of $5.5 million that has never been adjusted, despite the agreement never having been formally extended. The Committee assessed whether that figure reflects fair market value.
  • New Mexico Property: A related May 1, 2007 lease of property in Albuquerque generated $125,000 per month in rent from NDC, extended in 2017, 2022, and 2024 without increase, before RNDC sold the property to NDC for $23 million in September 2025. The Committee reviewed whether both the lease rate and sale price were at fair market value.
  • Payments to Insiders: As a family-owned and -operated business, many equityholder family members served as officers, directors, or employees receiving salaries, bonuses, and expense reimbursements—the amounts, timing, nature, and consideration for which were examined.
  • Financial Condition: Advisors assessed the Debtors' solvency across recent years to identify potential periods of insolvency relevant to estate causes of action.
  • Young's Holdings Transactions: The Committee investigated all payments related to YHI in connection with the California and west coast expansion, totaling more than $700 million between 2019 and 2024.
• The Special Committee requested broad document productions from management and from the direct and indirect equityholders—separately represented by Katten Muchin Rosenman LLP for New BG Partners-associated parties and Seward & Kissel LLP for NDC Partners-associated parties—collecting over 600,000 documents from the Debtors alone.

Exhaustive Pursuit of Strategic Alternatives

• Alongside cost rationalization measures—headcount reductions, consolidation of core operations, deferred warehouse maintenance, and stretched supplier payment terms—the Company worked with its Advisors to develop a long-term business plan and pursue every available alternative: a sale-leaseback of substantially all owned real estate, a refinancing of funded indebtedness, one or more going-concern sales, or a combination thereof.
• Sale-Leaseback: On May 14, 2025, the Board approved the engagement of Eastdil Secured LLC to explore a sale-leaseback of substantially all owned real estate. The transaction did not present a comprehensive solution to the capital structure.
• Third-Party Financing: Beginning November 3, 2025, Lazard engaged over 15 prospective capital providers regarding a potential refinancing; many executed NDAs and received a confidential information memorandum, yielding seven non-binding proposals contemplating new term loans and/or a refinancing of the securitization facility. In December 2025, the Debtors engaged the Lenders regarding debtor-in-possession financing while Lazard approached 12 additional parties, generating one Lender proposal and four third-party proposals between late December 2025 and early January 2026.
• The Company's first-lien Credit Agreement materially constrained these efforts. Amended 11 times by the end of November 2025, the agreement carried numerous lender consent rights—including, in many instances, unanimous approval from each of the then-existing 16 first-lien Lenders. Beyond typical "sacred rights," the Lenders held atypical 100% consent rights over the incurrence of additional indebtedness and other financing. Notwithstanding comprehensive outreach, no third-party proposal was actionable, as no party would provide financing on a junior basis or on terms the Lenders would support.

The Going-Concern Sale Process and the January 2026 Inflection Point

• It became clear that a sale of some or all of the Company's markets was the most value-maximizing path. Beginning in December 2025, Lazard commenced a marketing process for select markets that expanded to encompass substantially all of the Company's footprint, engaging over 50 potential financial and strategic acquirers. Over 25 parties executed NDAs and received diligence materials, and over 20 submitted non-binding indications of interest for operations in one or more states.
• The Lenders firmly believed the sale process should occur in chapter 11. With only indications of interest in hand, however, the Company concluded that a chapter 11 sale would likely collapse into liquidation—an outcome that would have severely depressed recoveries on approximately $1.3 billion of inventory and other assets, cost significant jobs, and thrown suppliers into disarray. Several factors informed that view:
  • State-specific regulatory regimes narrowly restrict how collateral such as inventory and licenses may be sold or transferred, leaving a limited universe of potential purchasers in any given state—and in some states, a single viable purchaser—most of whom were unfamiliar with and wary of chapter 11.
  • Many suppliers operate on a purchase order basis without formal agreements. Because no alcohol distributor of RNDC's size had ever filed for chapter 11, there was real risk that such suppliers could not be compelled to perform post-petition, jeopardizing the supplier relationships central to any going-concern sale.
  • Absent the time and liquidity to prepare a negotiated filing, a disorderly chapter 11 would have further frustrated the supplier base and eroded decades of goodwill—particularly given that viable out-of-court interest had already materialized.
• Facing dire liquidity constraints and weeks of unsuccessful negotiations, the Company sent a letter to the Bank Agent and each of the 16 Lenders on January 5, 2026, emphasizing the need for immediate liquidity to fund an out-of-court sale process and avoid a value-destructive liquidation. The Lenders ultimately agreed to provide $250 million of incremental financing to facilitate the sale process, solidify the balance sheet, and fund ordinary course operations—funding that preserved thousands of jobs, many held by associates who built careers at RNDC and its predecessors over decades, and enabled approximately 700 suppliers to transition to new distributors.

The Reyes Sale Transactions

• In January 2026, beer distributor Reyes Holdings, L.L.C. indicated interest in seven of the Company's markets. On January 13, 2026, the Company publicly announced Reyes' proposal covering Arizona, Florida, Hawaii, Illinois, Maryland, South Carolina, Virginia, and Washington, D.C. The offer ultimately expanded to 11 states—adding Colorado, Louisiana, Oklahoma, and Texas—and was expected to generate more than $1 billion in net proceeds. Reyes did not acquire the Company's "control state" business in Virginia, and Illinois was later removed from the proposal. Reyes committed to an expedited closing to mitigate accelerating supplier attrition.
• In connection with the $250 million financing, the Lenders imposed sale milestones and other requirements, including closing the Reyes transactions by May 31, 2026, repaying outstanding funded debt with sale proceeds, and continuing to explore sales of additional markets.
• The Reyes Sale Transactions closed on May 29, 2026, accompanied by a transition services agreement running through September 30, 2026 with optional extensions through December 31, 2026. Reyes agreed to pay $11 million per month through October 2026 and $12 million per month in November and December 2026 for transition services, and $50 million of proceeds was placed in third-party escrow for indemnification obligations.
  • Certain variable components of the purchase price remain subject to a post-closing true-up dependent on review of inventory levels, supplier payables, prepaid expenses, equipment value, and trade receivables. Contemporaneously with these cases, the Debtors filed a motion seeking approval of procedures for, and consummation of, a comprehensive settlement with Reyes resolving the ongoing true-up dispute.

Additional Asset Sales and Continued Liquidity Strain

• The Debtors also consummated going-concern sales of the wine-searcher.com entity and business on April 30, 2026 and their equity interests in an Idaho market joint venture on May 8, 2026.
• Following the Reyes closing, the Company was again out of liquidity. With additional sales pending, the Lenders provided incremental funding draws of $74 million, enabling sales of assets in Washington, Oregon, Nebraska, North Dakota, South Dakota, and Arkansas. Quality Brands Distribution, LLC purchased the Nebraska, North Dakota, and South Dakota assets under an agreement that includes a transition services agreement requiring RNDC and certain Debtors to provide services through July 31, 2026 for most services and September 30, 2026 for certain IT services.
• The Debtors executed non-binding letters of intent for assets in Alabama, Alaska, Iowa, Maine, Mississippi, Montana, New Hampshire, North Carolina, Ohio, Pennsylvania, Utah, Vermont, West Virginia, and Wyoming, as well as for their "control state" businesses in Michigan, Idaho, Oregon, and Virginia.
• Across this period, the Credit Agreement was amended 23 times before the Petition Date. Successive amendments imposed tightening milestones, an availability block against the borrowing base, interest rate adjustments (the sixteenth amendment set all tranches at SOFR plus 5.90%), waivers of existing defaults, expanded reporting obligations, mandated governance appointments, and—beginning in June 2026—a series of forbearances tied to incremental draws of $40 million, $34 million, and $5.5 million, as the Lenders agreed to withhold remedies for missed interest payments and mandatory prepayments on the ABL Facility.

DIP Facility and Path Forward

• With liabilities mounting and additional sales substantially negotiated, chapter 11 became the only path to maximize value.
• Lazard contacted six third parties from its original outreach regarding chapter 11 funding. Despite the Debtors' and Lazard's best efforts, no third party delivered an actionable proposal, citing the Debtors' limited unencumbered assets, lack of interest in funding a wind-down, and uncertainty around remaining asset sales.
• The Debtors instead secured a $250 million DIP Facility from the Lenders, comprising:
  • $75 million of new money senior secured superpriority revolving loans, $50 million of which is available on an interim basis;
  • a roll-up of approximately $66.3 million of delayed draw term loans extended under the fourteenth amendment, upon entry of the interim order; and
  • a roll-up of approximately $108.7 million of revolving loans under the Credit Agreement, upon entry of the final order.
• The DIP Credit Agreement establishes an expedited timeline: filing a plan and disclosure statement within five business days; execution of binding purchase agreements for a majority of the remaining going-concern sales within 30 days; entry of a final DIP order within 35 days; confirmation of the plan and approval of asset sales within 70 days; and an effective date within 75 days.
• In parallel, the Special Committee reached the Equity Holder Settlement with certain Related Parties. Combined with the DIP milestones, the settlement is designed to move the Debtors through chapter 11 efficiently, maximizing distributions to creditors while minimizing administrative expense.
• The Debtors commenced these cases to (a) consummate potential private sales of remaining assets, (b) effectuate an orderly, value-maximizing wind-down of remaining operations, (c) satisfy their obligations under the TSAs, and (d) obtain approval of the Equity Holder Settlement through plan confirmation. The Debtors and Lenders intend to engage with the official committee of unsecured creditors immediately upon its appointment, with over $400 million of general unsecured claims outstanding.
• For more than a year, the Company has worked to preserve a business the Goldring, Block, Davis, and Carlos families spent generations building—an outcome none of those families desired. Under Mr. Sachs' leadership, the parties collaborated under the most challenging circumstances to protect the livelihoods of thousands of associates, hundreds of suppliers, and potentially hundreds of wineries. After evaluating all available alternatives, the Debtors, at the direction of the Special Committee, believe a streamlined chapter 11 proceeding represents the best available path to complete the remaining Going-Concern Sale Transactions and bring these cases to an orderly conclusion.