Republic National Distributing Company - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• Republic National Distributing Company, LLC and each of its affiliated debtors, in their capacities as borrowers and as guarantors of the facility

Agent / Lender(s)

• Wells Fargo Bank, National Association, as DIP administrative agent, which also serves as administrative and collateral agent under the prepetition credit facility
• The lenders party to the DIP credit agreement, as DIP lenders

DIP Commitments

• $250 million senior secured super-priority priming facility consisting of:
  • $75 million of new-money revolving commitments, of which up to $50 million was made available on entry of the interim order
  • $66,313,172.05 of roll-up term loans, effected on entry of the interim order by automatic exchange and conversion of the outstanding fourteenth amendment priority delayed draw term loans under the prepetition credit agreement
  • $108,686,827.95 of roll-up term loans, effected on entry of the final order by pro rata exchange and conversion of prepetition revolving loans
• The final order authorizes borrowing of up to $75 million of revolving commitments on a final basis; the roll-up loans are repaid only after the new-money loans, following the repayment priority in the prepetition credit agreement.
• The two roll-up tranches total exactly $175 million against a prepetition balance the debtors stipulate at $224,947,167.12 of principal and payment-in-kind interest, plus $1,010,719 of issued letters of credit, with accrued and unpaid interest running at the default rate.
• The court found that both roll-ups were a condition to the DIP lenders extending credit and to the prepetition lenders consenting to use of cash collateral; the roll-up is final and irrevocable as to the debtors but remains subject to challenge, and on a successful challenge the court may unwind or disallow all or part of the roll-up loans.

Interest Rate

• The final order sets no rate: interest accrues at the rates set forth in the DIP credit agreement and is payable at the times specified there, subject and subordinate to the Carve Out.
• On a termination event, and after the notice period, the prepetition secured parties may charge interest at the default rate under the DIP credit agreement.

Fees

• The final order authorizes payment of an arranger fee, a closing fee, and an exit fee, together with agency, audit, appraisal, valuation, and administrative and collateral agent fees, in each case in the amounts set forth in the DIP credit agreement, which the order does not restate.
• The debtors also pay the reasonable, documented out-of-pocket fees and expenses of the DIP agent's and lenders' professionals, including Paul Hastings LLP as counsel and Carl Marks Advisors as financial advisor, and indemnify the DIP secured parties except for losses primarily attributable to actual fraud, gross negligence, criminal acts, or willful misconduct. The prepetition secured parties get no indemnity.
• Lender and prepetition agent professionals file no fee applications, and their fees require no court approval and are not subject to U.S. Trustee fee guidelines; summary invoices go to the debtors, the U.S. Trustee, both agents, and committee counsel, who have a 10-business-day review period to object on reasonableness, after which undisputed amounts are paid.

Maturity and Termination

• Commitments terminate and the DIP obligations accelerate automatically, without further court action, unless waived or extended in writing by the DIP agent at the required lenders' direction, on the earlier of:
  • The occurrence and continuation of an event of default, subject to cure and grace periods and the notice period below
  • The maturity date, which the order leaves to the DIP credit agreement
• Enforcement requires five business days' advance written notice to the debtors, the U.S. Trustee, lender counsel, and committee counsel, and, before exercising any remedy, the filing of a stay-relief motion on not less than five business days' notice, which may run concurrently with the notice period; the automatic stay remains in effect until the court rules.
• During the notice period neither the DIP nor the prepetition secured parties may exercise default remedies; the debtors may continue using DIP proceeds and cash collateral for payroll, taxes, statutory obligations, and other critically necessary operating expenses and to fund the Carve Out, though the lenders need not fund new-money loans. The debtors and the committee may seek an emergency hearing to contest whether a termination event occurred and to seek non-consensual use of cash collateral, and a hearing request made before the period expires continues the notice period until the court rules. At the end of the period, absent a contrary order, the debtors' right to use proceeds and cash collateral ceases and remedies become available without further stay relief.

Milestones

• Measured from the July 26, 2026 petition date, and each extendable by up to five business days at the DIP agent's discretion:
  • Within 30 days: delivery to the DIP agent of fully executed binding purchase agreements, satisfactory in form, substance, and price to the agent and required lenders, for Section 363 sales of all or substantially all of the debtors' assets, or such lesser amount as the agent and required lenders accept, contemplated to be sold as a going concern or by region, including the equity or substantially all assets of every joint venture the debtors owned on the petition date
  • Within 35 days: entry of the final order
  • Within 90 days: entry of an order, reasonably satisfactory in form and substance to the agent and required lenders, confirming the plan or approving the sales
  • Within 95 days: plan effectiveness, or closing of the sales and application of net proceeds
• The final order was entered Aug. 31, 2026, following the July 27, 2026 interim hearing; the U.S. Trustee appointed the creditors' committee on Aug. 6, 2026, and all objections to the final relief were withdrawn, resolved, or overruled.

Carve Out

• Post-Carve Out Trigger Notice Cap: $2.5 million, funded into a segregated reserve account from proceeds of the interim draw
• Chapter 7 Trustee Fee: $75,000
• The Carve Out also covers statutory clerk and U.S. Trustee fees plus statutory interest, and all allowed fees of debtor and committee professionals, including any restructuring, sale, financing, or other success fee not yet due under an engagement letter, incurred through the first business day after a Carve Out trigger notice.
• Weekly funding mechanics run ahead of any default: professionals deliver weekly fee estimates by 7:00 p.m. New York time on the third business day of each week, and from the week ended Aug. 1, 2026 the debtors fund a reserve each Thursday equal to the greater of estimated or budgeted unpaid fees for the week, plus the $2.5 million post-trigger cap, plus budgeted fees for the following two weeks. A professional that delivers a weekly or final statement more than three calendar days late has its claim on the pre-trigger reserve limited to its budgeted amount for that period, though its allowed fees are not themselves reduced.
• On the trigger date the debtors must fund the pre-trigger reserve for unpaid allowed fees and then the post-trigger reserve; neither the DIP agent nor the prepetition secured parties may sweep or foreclose on cash until both reserves are fully funded, excess in one reserve funds the other before any lender distribution, and residual amounts flow to the DIP agent and then to the prepetition secured parties, who hold a first and automatically perfected lien on any residual interest in the reserves.
• The Carve Out is senior to the DIP liens and superpriority claims, the adequate protection liens and claims, and the prepetition secured obligations; payments made before the trigger date do not reduce it, payments after do so dollar-for-dollar, and neither the budget nor the cap operates as a cap on allowed professional fees.
• Funding the Carve Out itself constitutes DIP obligations secured by the DIP collateral, while disbursements out of the reserves are neither DIP loans nor an increase or reduction of the DIP obligations.

Use of Proceeds

• Fund the Carve Out and pay related obligations
• Pay transaction and postpetition administrative costs of the Chapter 11 cases
• Pay the approved fees and expenses of professionals retained in the cases
• Pay interest, charges, fees, and documented out-of-pocket expenses under the DIP loan documents
• Provide working capital and fund general corporate purposes
• Repay and refinance the fourteenth amendment priority delayed draw term loans and the revolving loans through the roll-up
• Other purposes with the DIP agent's reasonable consent, in each case subject to the budget and permitted variance
• Absent the DIP agent's written consent, no proceeds, collateral, or Carve Out amounts may fund challenges to the DIP or prepetition liens, claims, or orders, or litigation against the agents and lenders, subject to two exceptions: an investigation fund of up to $200,000, available only before the challenge deadline, for the committee to investigate the prepetition secured parties' claims and liens but not to prepare, initiate, or prosecute a challenge, and the committee's allowed fees for objecting to the final order. Nothing in the restriction stops the debtors, their professionals, or any other party in interest from being heard on whether an event of default has occurred.

Credit Bid

• Subject to permitted prior senior liens, the challenge provisions, the Carve Out, and any later-approved bidding procedures, the DIP agent at the direction of the required DIP lenders may credit bid under section 363(k) up to the full amount of the outstanding DIP facility loans, including the roll-up loans, in any sale of DIP collateral under section 363, under a plan of reorganization or liquidation, or in a Chapter 7 disposition; such a bid binds all DIP lenders.
• The prepetition agent, at the direction of the required prepetition lenders, has the same right up to the full amount of the prepetition loans in any sale of prepetition collateral, subject to satisfaction of all DIP obligations and all obligations secured by permitted prior senior liens.
• Both the DIP and prepetition secured parties may assign or sell their credit-bid rights to an acquisition entity or joint venture formed for the bid, on reasonable advance notice to the debtors.

Avoidance Actions

• The DIP liens attach to avoidance proceeds, and the DIP superpriority claims have recourse to them, but not to the avoidance actions themselves; the proceeds of Chapter 5 and other avoidance causes of action likewise fall within the unencumbered property on which the DIP lenders hold first-priority liens under section 364(c)(2).
• The DIP secured parties agree to use good-faith, commercially reasonable best efforts to recover first from other estate assets before reaching avoidance proceeds or the proceeds of the NBG and NDC covered claims, and the debtors need not turn over avoidance proceeds, the cash component of the equityholder settlement, or proceeds of unencumbered property to the DIP agent.

Challenge Period

• The committee has until confirmation of the plan; all other non-debtor parties in interest, including a trustee appointed or elected before that date, have 60 calendar days following entry of the interim order.
• A trustee appointed or elected on conversion to Chapter 7 or in the Chapter 11 cases before expiry gets a further 60 calendar days from appointment, and is not bound by the debtors' stipulations for purposes of any challenge proceeding.
• A challenge requires five days' written notice to the debtors and prepetition secured parties, and standing must be obtained separately; if the committee files a standing motion with a proposed complaint before the deadline, its deadline for those claims extends to the plan confirmation hearing, at which the standing motion is heard on an emergency basis. The prepetition secured parties reserve all rights to contest any challenge on any grounds.
• Absent a timely challenge, the debtors' stipulations bind all parties, the prepetition liens are deemed valid and unavoidable, and the prepetition secured obligations become finally allowed claims in the stipulated amounts. A timely challenge does not reopen those stipulations generally: they remain binding and preclusive on every other party in interest, and fall away only as to the challenging party and only to the extent the challenge succeeds. On a successful challenge the court may fashion an appropriate remedy, including unwinding or disallowing all or part of the roll-up loans.
• The prepetition agent and lenders must cooperate with reasonable information requests supporting the committee's investigation.

Budget

• The initial budget is attached to the interim order. Beginning the fourth full calendar week after closing, and by 5:00 p.m. prevailing Eastern Time on the Friday of every fourth calendar week thereafter, the borrowers deliver an updated 13-week budget and cash flow forecast for approval by the DIP agent and required lenders, in consultation with the committee, with approval not to be unreasonably withheld, conditioned, or delayed; a proposed budget not objected to in writing within four business days is deemed approved, the existing budget governs until replaced, and the borrowers may submit supplemental proposed budgets on the same approval terms.
• The committee receives notice of any budget update before it is implemented on a final basis, and receives all reporting and deliverables provided to the DIP secured parties at the same time and in substantially the same form; the committee also holds the same consent rights as the DIP secured parties under sections 6.23(b) through (d) of the DIP credit agreement, and the debtors must consult with committee counsel on the plan and disclosure statement, any out-of-ordinary-course asset sale and its documentation, and any material amendment or waiver of either.
• The debtors may sell, liquidate, and discount inventory in the ordinary course consistent with the budget.

Permitted Variance

• The DIP credit agreement, as the order recites it, requires weekly variance reporting on a line-item and cumulative basis for each one-week test period beginning with the second full calendar week after closing; the unfavorable variance of cumulative operating disbursements may not exceed 20%.
• Operating disbursements exclude professional fees and expenses, and favorable variances carry forward to offset unfavorable variances in later test periods. The budget never caps professional fees.

Securities and Priorities

• The DIP obligations constitute section 364(c)(1) superpriority administrative expense claims against each debtor on a joint and several basis, with recourse to all prepetition and postpetition property including avoidance proceeds, senior to all other administrative and adequate protection claims but subject to the Carve Out and permitted prior senior liens, and are deemed section 503(b) administrative expenses for section 1129(a)(9)(A) purposes. Under the plan they are to be treated junior to allowed administrative claims other than DIP superpriority claims, as set forth in the then-effective budget and solely to the extent necessary to pay those claims in full, in form and substance acceptable to the DIP lenders, and the DIP obligations, liens, and superpriority claims carry section 364(e) protection against reversal or modification on appeal.
• The DIP agent holds automatically perfected liens on all present and after-acquired property of the debtors, including regulatory licenses, leasehold and other real property interests, commercial tort claims, all cash and cash equivalents, and avoidance proceeds, subject only to the Carve Out and permitted prior senior liens, consisting of:
  • First-priority priming liens under section 364(d)(1) on all encumbered property, senior to existing liens and subordinate only to valid, perfected, non-avoidable permitted prior senior liens
  • First-priority liens under section 364(c)(2) on all unencumbered property, which expressly includes Chapter 5 and other avoidance action proceeds
  • Junior liens under section 364(c)(3) on property subject to unavoidable permitted prior senior liens
• The DIP liens are not subordinate to any lien avoided and preserved under section 551 or to intercompany or affiliate liens; the debtors may not grant liens on the DIP collateral senior to the DIP or adequate protection liens except as the DIP orders or loan documents permit, and no other superpriority claims may be granted without the DIP agent's consent.
• Perfection is automatic without filings, control agreements, or possession, and the DIP agent enjoys the benefit of all existing deposit account control agreements, while the DIP secured parties are deemed additional insureds and loss payees on every policy relating to the DIP collateral, with the agent distributing any insurance proceeds subject to the Carve Out. The DIP agent may not, however, exercise control-agreement remedies inconsistent with the order, including the debtors' right to retain and use deposited funds during a notice period and to fund the Carve Out.
• Cash sweep: subject to the Carve Out, all cash receipts, cash collateral, and disposition proceeds related to prepetition collateral are delivered promptly to the DIP agent as repayment of the new-money loans, or held in a blocked account under the agent's sole dominion and control against future draws; the equityholder settlement cash, avoidance proceeds, and unencumbered property sale proceeds are excluded.
• Cash in the existing letter of credit cash collateral account, or delivered directly to an issuer, may be applied against the existing letter of credit obligations at the prepetition agent's or the issuer's discretion without further court order, with any surplus after the letters of credit expire or terminate applied under the DIP credit agreement.
• The DIP liens and superpriority claims survive confirmation, conversion, and dismissal until the obligations are paid in full, and the adequate protection liens and superpriority claims survive on conversion or dismissal on the same footing; neither the DIP obligations nor the prepetition agent's fees and expenses are discharged under section 1141(d), including the section 1141(d)(4) discharge the debtors waived, unless paid in full in cash by the plan's effective date.

Adequate Protection

• The package runs to liens, claims, and agent fees only: replacement liens, section 507(b) claims, and payment of the prepetition agent's fees and expenses, with no adequate protection interest or paydown to the prepetition lenders.
• Adequate protection runs solely to the extent of any diminution in the value of the prepetition collateral resulting from the priming liens, the use of cash collateral and other prepetition collateral, the automatic stay, or otherwise.
• Replacement liens on the DIP collateral, junior only to the DIP liens and permitted prior senior liens and subject to the Carve Out, ranking among the prepetition secured parties in the same relative priority as their prepetition liens; the prepetition secured parties also enjoy the benefit of the debtors' deposit account control and escrow agreements, subject to the DIP secured parties' rights, and the prepetition agent may elect in its sole discretion to file perfection instruments, with the debtors obliged to cooperate and the automatic stay modified for that purpose.
• Section 507(b) superpriority claims against the estates, including avoidance proceeds, junior in all respects to the Carve Out and the DIP superpriority claims.
• Payment of the prepetition agent's reasonable, documented, invoiced fees and expenses, including one legal firm per jurisdiction, whether arising before, on, or after the petition date, subject to the same invoice review procedures.
• Section 507(b) rights are otherwise reserved should the protection prove insufficient, and the court reserves the right to reallocate payments made to the prepetition secured parties if their liens are later determined invalid.
• While DIP obligations or commitments remain outstanding, the prepetition secured parties may not foreclose or exercise remedies against DIP collateral, file further perfection instruments, or seek to terminate or modify use of cash collateral, and are deemed to consent to any collateral release permitted under the DIP loan documents.

Cash Collateral

• The debtors stipulate that all of their cash, including cash in deposit and collection accounts wherever located, constituting proceeds of or arising from the prepetition collateral is cash collateral of the prepetition secured parties, with all parties' challenge rights reserved; the court authorizes use of that cash on a final basis solely in accordance with the DIP loan documents and the budget, subject to permitted variance.
• Cash collateral subject to permitted prior senior liens is excluded from the authorization.
• The debtors' stipulations do not establish that any prepetition lien attaches to the equityholder covered claims, other claims against the equityholder settlement parties, the equityholder settlement itself, or their proceeds, including the NBG and NDC settlement consideration payable in respect of those claims; all parties' rights on whether any of it constitutes prepetition collateral, proceeds, or cash collateral are reserved for further order, after notice and a hearing.

Waivers

• Section 506(c): no costs or expenses of preserving or realizing on the DIP or prepetition collateral may be surcharged against that collateral, except to the extent of the Carve Out, absent the applicable agent's prior written consent.
• Section 552(b): the "equities of the case" exception does not apply to the DIP or prepetition secured parties, and the debtors waive any section 552 claim seeking to avoid imposition of the DIP, prepetition, or adequate protection liens on after-acquired property.
• Marshaling and similar equitable doctrines do not apply, subject to the agreement to seek recoveries first from DIP collateral other than avoidance proceeds and the proceeds of the NBG and NDC covered claims.
• Each waiver, and the release below, remains subject to the challenge provisions.
• Release: the debtors release the DIP agent, the DIP lenders, and their affiliates, agents, attorneys, officers, directors, and employees from all prepetition claims relating to the DIP loan documents, the DIP loans, and the parties' related prepetition relationship, including Chapter 5 claims, carving out liabilities a court of competent jurisdiction determines result from bad faith, fraud, gross negligence, willful misconduct, or criminal acts, and preserving the lenders' post-closing funding obligations. The release runs only to the DIP secured parties; the prepetition secured parties hold the debtors' stipulations rather than a release, and those stay open to challenge.

Amendments

• The debtors may amend the DIP loan documents without further court order on written agreement with the agent and lenders, subject to five business days' notice to the U.S. Trustee, prepetition agent counsel, and committee counsel; a timely written objection routes the amendment to the court, and any material modification requires court approval regardless. Milestone extensions, budget modifications, and covenant waivers made in accordance with the DIP orders or loan documents are not material amendments.