Republic National Distributing Company - Chapter 11 Plan Terms

Plan / RSA Terms

Overview

• Republic National Distributing Company, LLC and its debtor subsidiaries filed a first amended joint Chapter 11 plan on Sept. 10, 2026, built around and implementing a two-part equityholder settlement that delivers $50.25 million of cash to the estates and eliminates the equityholders' second lien, deferred compensation, and owner note claims. The debtors filed the disclosure statement contemporaneously and will seek final approval of it and confirmation of the plan at a single combined hearing; John Castellano serves as chief restructuring officer and signed the plan for all debtors.
• The settlement has two halves, each documented in a term sheet dated July 26, 2026 (the petition date) and annexed to the plan:
  • The NDC settlement, with National Distributing Company, Inc., NDC Leasing Company, LLC, Atlanta Wines International, Inc., and NDC Partners, LLC, together with the Davis, Rosenberg, Musa, and Carlos family individuals, trusts, and entities identified in the plan.
  • The NBG settlement, with New BG Distribution Partners, LLC, together with the Block, Dreeben, Boeck, Zeller, Sechler, and Sachs family individuals, trusts, and entities identified in the plan, including BG Spirits, LLC and Block Distributing Company, Ltd.
• The plan is a liquidating construct: the wind-down transactions will be consummated through section 363 sales, if any, and a wind-down, with a plan administrator liquidating remaining assets and a litigation trust holding preserved claims and the directors' and officers' insurance for the benefit of the lender claimholders and general unsecured creditors. The plan does not substantively consolidate the debtors; it operates as a separate plan for each, and a claim allowed against more than one estate recovers only once.
• The plan itself serves as the Bankruptcy Rule 9019 motion to approve the settlement, and entry of the confirmation order constitutes approval; the debtors state the compromises are necessary and integral to the plan and to the cases. A plan incorporating the settlement terms is defined in each term sheet as a "Conforming Plan."
• Separately, RNDC and National Distributing Company, Inc. entered into a term sheet regarding specified services and transferred technology services concurrently with the NDC settlement term sheet.
• The creditors' committee was appointed Aug. 6, 2026 [Docket No. 137].

Settlement Consideration

• NDC: $40 million in cash to the debtors on the plan effective date, plus waivers of any right to recover from any debtor on account of second lien claims and, as to Richard J. Davis, Elizabeth A. Davis, Kenneth Rosenberg, and H. Alan Rosenberg, deferred compensation plan claims; the NDC released parties also agree to the litigation trust construct with respect to the NDC covered claims.
  • None of the NDC released parties may seek reimbursement of any portion of the $40 million, or of the professional fees incurred negotiating the settlement, from the D&O policies or indemnification from any debtor or wind-down debtor.
  • The second lien waiver is subject to confirmation from the RNDC credit facility agent and from the New BG participants as to their participation in the facility, and to resolution of tax or other issues governing form; the deferred compensation waiver is subject to confirmation of tax, penalty, or similar issues governing form.
• NBG: $10.25 million in cash to the debtors on the plan effective date, plus waivers of any right to recover on account of second lien claims and owner notes claims and, as to Marc Sachs, Grant Sechler, and Josh Zeller, deferred compensation plan claims; the NBG released parties also agree to the litigation trust construct with respect to the NBG covered claims.
  • The same bar on seeking reimbursement from the D&O policies or indemnification from the debtors applies to the $10.25 million and the associated professional fees.
  • The second lien waiver is subject to confirmation from the RNDC credit facility agent and to tax or other form issues; the deferred compensation waiver is subject to confirmation of tax, penalty, or similar issues.
• The waived claims arise under the subordinated credit agreement dated Dec. 19, 2024, under which NDC is the subordinated creditor; the unsecured owner promissory notes each dated Aug. 1, 2019; and the Second Amended and Restated Republic National Distributing Company, LLC Deferred Compensation Plan III.
• Allocation of the cash: $5 million of the settlement cash is earmarked as GUC cash consideration and funds the litigation trust; the balance flows into distributable proceeds. Any increase above the $50.25 million agreed on July 26, 2026 is excess settlement cash, allocated 60% to allowed general unsecured claims and 40% collectively to holders of allowed DIP, prepetition ABL/FILO, and ABL/FILO deficiency claims.
• Tax treatment: the parties agree to treat each payment as a two-step contribution, first a cash contribution to NBG by the NBG released parties that are its equityholders, or to NDC Partners, LLC by the NDC released parties that are its direct and indirect equityholders, and second a capital contribution to RNDC governed by IRC section 721(a), and to file all returns consistently absent a determination under IRC section 1313(a).

Litigation Trust and the Insurance-Only Recovery Construct

• The central trade is that the equityholders are not released from the claims their D&O insurance would cover; instead, those claims are conveyed to a litigation trust and recovery on them is capped at the insurance. Each term sheet calls this the fiduciary trust construct, subject to fiduciary trust limitations, and the plan implements it through the litigation trust.
• The term sheets describe the construct as conveying the covered claims and the D&O policies to a liquidating trust for the benefit of the debtors' general unsecured creditors, while the plan makes the lender claimholders co-beneficiaries alongside general unsecured creditors and routes 60% of trust distributions to the lenders until the $5 million trust funding is repaid.
• Covered vs. non-covered claims: covered claims are estate causes of action against an equityholder released party that is an insured under a D&O policy and that assert a theory of recovery or damages ultimately covered by that policy; every other estate claim against a released party is a non-covered claim. Non-covered claims are settled and released in full under the plan and are not permitted litigation claims; covered claims survive and vest in the trust.
• Limitations on covered claims: any recovery, by settlement or judgment, is satisfied solely from D&O policy proceeds and only after the policies pay the released parties' covered defense costs; execution, garnishment, and collection may proceed only against available coverage; and no party may record a judgment against a released party or otherwise reach the individual, personal, marital, or joint assets of any released party, however held. The term sheets state the construct does not release any released party from liability on a covered claim or absolve any legal obligation to pay, but only identifies the assets available to satisfy it.
• Trust assets: the permitted litigation claims, the $5 million GUC cash consideration, any GUC share of excess settlement cash, the $5 million litigation trust funding, and such other property as the debtors, the committee, and the lender claimholders agree.
  • Permitted litigation claims comprise the NBG and NDC covered claims, subject to the recovery limitations; all estate avoidance actions other than the non-covered claims; and all preserved challenge claims, effective on the granting of the applicable standing motion or as otherwise ordered.
  • Preserved challenge claims are those subject to a challenge or standing motion timely asserted by the investigation termination date under paragraph 16 of the final DIP order [Docket No. 275], with all rights and remedies available thereunder. The debtor release and the injunction preserve them by name, and the third-party release and exculpation reach them through their carve-out for permitted litigation claims; the injunction does not enjoin their prosecution by the committee, the litigation trustee, or any other party the court grants standing.
• Funding: the debtors or wind-down debtors fund $5 million in cash to the trust on the effective date, free and clear of liens under section 1141, for the trustee's use in administering the trust and pursuing the permitted litigation claims; that funding is repaid to the lender claimholders collectively solely from trust asset proceeds.
• Distribution waterfall within the trust: until the lender claimholders are repaid the trust funding in full, distributions run 60% to the lenders and 40% to allowed general unsecured claims; after repayment, the split inverts to 60% general unsecured and 40% lenders, with the lender share available only to the extent DIP obligations and prepetition secured obligations remain unpaid after application of all other collateral proceeds; once those obligations are paid in full, 100% of trust assets and proceeds go pro rata to general unsecured claims. No holder receives a distribution on recoveries from a permitted litigation claim in which it is the defendant.
• The trustee may, in its sole discretion, either distribute the $5 million GUC cash consideration pro rata to general unsecured holders or retain and use all or part of it to fund pursuit of the permitted litigation claims.
• Governance: the committee selects the litigation trustee in consultation with the DIP agent. A three-member litigation trust advisory board oversees the trustee, initially two members selected by the committee and one by the DIP agent, with the DIP agent's governance, voting, and consent rights terminating on payment in full of the DIP and prepetition secured obligations. Each board member owes a fiduciary duty to the trust's beneficiaries, and the trustee owes a duty of care and loyalty to them but none to the debtors or wind-down debtors. Subject to majority board vote, the trustee may prosecute, settle, release, or abandon permitted litigation claims without further court approval; governance over covered claims specifically is set in the trust agreement.
• Beneficiaries are holders of allowed DIP, prepetition ABL/FILO, ABL/FILO deficiency, and general unsecured claims. On transfer, the debtors and wind-down debtors retain no reversionary or further interest in the trust assets, and any insurance proceeds on a claim asserted by or for the trust must be paid into the trust.
• Term: the trust dissolves no later than five years after creation unless, on motion filed in the six months before the fifth anniversary or before the end of an extension, the court finds a fixed extension of up to five years necessary, supported by an IRS private letter ruling or an opinion of counsel satisfactory to the trustee that any further extension will not adversely affect the trust's liquidating trust status.
• Litigation mechanics: the debtors, wind-down debtors, or plan administrator must cooperate in good faith to transfer, preserve, and protect the books, records, and privileges relating to the trust assets, including attorney-client and work-product privilege, while NDC's and NBG's own privileges are not waived merely because privileged documents sat in the debtors' possession before the petition date; defendants keep their counterclaims to the extent asserted to offset, recoup, or reduce liability on a permitted litigation claim, along with their defenses and setoff and recoupment rights; and the trustee is deemed a judicial substitute for the wind-down debtors or plan administrator as party in interest under section 1123(b)(3)(B).
• Tax: the debtors intend to treat the trust as a liquidating trust under Treasury Regulation section 301.7701-4(d), which would make the beneficiaries the grantors and deemed owners of the trust assets, with the transfer deemed to occur first to the beneficiaries and then by them to the trust. No IRS ruling will be sought and the plan states there can be no assurance the IRS will not take a contrary position.

D&O Insurance and Indemnification

• Because the settlement channels all equityholder recoveries to insurance, the plan locks the coverage down: after the effective date, neither the wind-down debtors, the plan administrator, nor the litigation trustee may terminate or reduce coverage under any D&O policy in effect on or after the petition date for pre-effective-date conduct, and every director, officer, manager, and member who served before the effective date retains the full benefit of the policies for their full term.
• To the extent executory, the D&O policies are deemed assumed by the wind-down debtors under sections 105 and 365 and vest in the litigation trust; dissolution of the debtors does not impair the trust's ability to assert covered claims or recover policy proceeds.
• All indemnification obligations other than those in the D&O policies, and those assumed by a purchaser in a sale, are rejected on the effective date; the trustee's obligation to fund any indemnification is capped at available D&O coverage, and trust assets other than the policies will not be used to fund it.
• Only released parties may benefit from indemnification obligations, and the equityholder released parties may not seek indemnification from any current or former director, officer, manager, member, or employee of the debtors for obligations arising under the settlement, including the settlement consideration, or under the permitted litigation claims transferred to the trust.

Treatment of Claims and Interests

• Administrative and priority tax claims are unclassified. DIP claims are paid in full in cash on the effective date or on such other terms as the DIP holders agree; to the extent unsatisfied, they are allowed administrative claims for the full outstanding amount under the DIP credit agreement and are satisfied from wind-down reserve cash and, only as necessary, distributable proceeds under the waterfall, a pro rata share of the lender litigation trust interests, and a pro rata share of any lender excess settlement cash. Consistent with the final DIP order, DIP claims are treated junior to other allowed administrative claims as set forth in the then-effective DIP budget, to the extent necessary to pay those claims in full.
• Class 1, other secured claims (unimpaired, deemed to accept): payment in full in cash, return of collateral, reinstatement, or other unimpairing treatment, at the debtor's option.
• Class 2, other priority claims (unimpaired, deemed to accept): satisfied in full in cash or treated consistent with section 1129(a)(9).
• Class 3, prepetition ABL/FILO claims (impaired, entitled to vote): allowed in the aggregate amount of $49,670,170 plus accrued and unpaid interest, fees, and other amounts under the prepetition credit agreement; each holder receives its pro rata share of distributable proceeds under the waterfall and, subject to the litigation trust conditions, of the lender litigation trust interests and any lender excess settlement cash.
• Class 4, second lien claims (impaired, deemed to reject): waived, set off, settled, contributed, cancelled, or released with no distribution, including any participation interests held by the NBG released parties.
• Class 5, owner notes claims (impaired, deemed to reject): waived, set off, settled, contributed, cancelled, or released with no distribution.
• Class 6, prepetition ABL/FILO deficiency claims (impaired, entitled to vote): the same treatment as Class 3, a pro rata share of distributable proceeds plus, subject to conditions, lender litigation trust interests and lender excess settlement cash.
• Class 7, general unsecured claims (impaired, entitled to vote): pro rata share of distributable proceeds under the waterfall and, subject to conditions, of the GUC litigation trust interests, which include the GUC cash consideration to the extent the trustee elects to distribute it and any GUC excess settlement cash.
• Class 8, intercompany claims (unimpaired or impaired, not voting): reinstated, set off, settled, contributed, merged, cancelled, or otherwise addressed at the debtors' option.
• Class 9, intercompany interests (unimpaired or impaired, not voting): same optional treatment.
• Class 10, interests in RNDC (impaired, deemed to reject): cancelled, released, and extinguished with no distribution.
• Class 11, section 510(b) claims (impaired, deemed to reject): cancelled, released, discharged, and extinguished with no distribution.
• Holders of allowed claims entitled to $100 or less receive no distribution, and those claims are discharged.
• Requests for payment of administrative claims are due 30 days after the effective date and final professional fee applications 45 days after; untimely administrative claims are forever barred and deemed satisfied and released. Claims from rejected contracts and leases must be filed within 30 days of the rejection effective date, are automatically disallowed if late, and when allowed are classified as general unsecured claims. The claims objection deadline is the later of 180 days after the effective date or a date the court fixes.
• The debtors will seek confirmation under section 1129(b) as to any rejecting class.

Distributable Proceeds and Waterfall Recovery

• Distributable proceeds are paid, pro rata at each level, in the following priority:
  • First, unpaid DIP claims, in cash unless the DIP holders agree otherwise.
  • Second, allowed administrative and priority tax claims, other than DIP claims and professional fee claims.
  • Third, allowed other secured claims, solely from proceeds of their collateral.
  • Fourth, allowed other priority claims.
  • Fifth, allowed prepetition ABL/FILO claims.
  • Sixth, allowed prepetition ABL/FILO deficiency claims and allowed general unsecured claims.
• Distributions are funded from the wind-down reserve, distributable proceeds under the waterfall, the litigation trust assets and their proceeds, and any lender excess settlement cash; allowed professional fee claims are paid first from the professional fee escrow account.

Wind-Down and Plan Administrator

• The plan administrator is selected jointly by the debtors and the DIP agent, in consultation with the committee, with its identity disclosed in the plan supplement; it acts as sole officer and director of the wind-down debtors and holds the rights, powers, and duties of a bankruptcy trustee. Causes of action split on the effective date: the permitted litigation claims vest in the litigation trust for the trustee to pursue, and every other cause of action vests in the wind-down debtors, with the administrator prosecuting the retained causes of action scheduled in the plan supplement and consulting the DIP agent on them until the DIP obligations are paid in full. Its costs and compensation are paid from the wind-down debtors' assets in accordance with the wind-down budget.
• The wind-down budget is delivered to the DIP agent no later than seven days before the effective date, must be acceptable to the debtors and the DIP agent, and projects the wind-down debtors' and administrator's receipts, disbursements, and expenditures from the reserve.
• The wind-down reserve is a segregated account funded solely from estate cash on hand as of the effective date in the budgeted amount, sized to cover allowed administrative claims (excluding professional fee claims), priority tax claims, other secured claims, and other priority claims not otherwise paid or assumed under sale documents, plus the administrator's anticipated costs of administering the plan.
• The wind-down debtors fund the professional fee escrow account with cash equal to the professional fee reserve amount on the effective date.
• Sales are one or more section 363 sales of some, all, or substantially all assets, by private sale or auction, on the terms of any purchase agreement with the applicable purchaser; assumed liabilities are those the purchaser takes on under that agreement. The debtors' owned real property comprises 229 Distribution Drive, Lafayette, La. and 14402 Franklin Avenue, Tustin, Calif. Any disposition of inventory, meaning the beer, wine, spirits, and other alcoholic beverages held for sale or distribution, must comply with the state and local laws governing its disposal or transfer, and that constraint binds the wind-down debtors and the plan administrator alike.
• The committee dissolves on the effective date but survives, with its professionals retained without further order, for final fee applications and for the prosecution, resolution, or transition to the litigation trustee of any challenge or standing motion it filed under paragraph 16 of the final DIP order, including substituting the trustee as plaintiff or movant.

DIP Facility and Prepetition Debt

• The DIP facility is a senior secured asset-based revolving debtor-in-possession credit facility under a senior secured super-priority priming credit agreement dated July 28, 2026, with Wells Fargo Bank, National Association as administrative agent. The court entered the interim order [Docket No. 60] and the final order [Docket No. 275].
• Wells Fargo also serves as agent under the prepetition credit agreement, a third amended and restated credit agreement dated Nov. 1, 2022 governing the prepetition ABL/FILO facility.
• All DIP distributions are made to the DIP agent for onward distribution to the DIP lenders unless the agent and the debtors agree otherwise in writing; on satisfaction of the allowed DIP claims, all liens and security interests securing them terminate automatically.
• Until the DIP claims are paid in full in cash, the DIP agent keeps perfected first-priority liens on the wind-down debtors' property and on the wind-down reserve, which is otherwise free and clear; surplus reserve cash goes to the DIP agent until then and to the general account afterward.

Milestones

• Each settlement binds the released parties on signing of its term sheet, but ceases to bind them if a conforming plan is not confirmed within 120 days of the term sheet and effective within 30 days after that 120-day period elapses, unless extended by mutual agreement — of the NBG released parties and RNDC in the NBG settlement, and of NDC and RNDC in the NDC settlement.
• If a settlement is not approved and no conforming plan is confirmed, the debtors and the released parties reserve all rights and defenses on the underlying claims, the released parties owe no settlement consideration, and the debtors need not agree to the trust construct or release the non-covered claims. Under Federal Rule of Evidence 408, neither term sheet nor the negotiations are admissible in any proceeding on the validity or amount of the underlying claims, and the parties agree the terms were reached without admission or concession of fact or law.

Plan Support

• Under both term sheets, the released parties agree to use commercially reasonable efforts to cooperate in and assist with obtaining support for the settlement and a conforming plan from the debtors' other stakeholders.
• They further agree not to propose, file, or support any plan that is not a conforming plan — meaning one that does not provide for approval and implementation of their settlement on the stated terms — or to take any other action that would or would reasonably be expected to prevent, interfere with, delay, or impede approval or implementation of the settlement or the conforming plan.

Releases

• Released parties are the debtors, the wind-down debtors, the DIP lenders, the prepetition lenders, the prepetition agent, the committee and its members in that capacity, the equityholder released parties solely as to the equityholder released claims, and each current and former affiliate and related party of the foregoing. An entity is not a released party if it opts out or timely objects to the releases and the objection is not resolved before confirmation; and no equityholder released party is a released party with respect to any equityholder covered claim.
• Releasing parties are the same institutional group plus all holders of claims or interests that vote to accept, are deemed to accept, abstain, or vote to reject, together with their affiliates and related parties to the maximum extent permitted by law. Holders may opt out by checking the box on the ballot or non-voting status notice, or by timely objecting where the objection is unresolved at confirmation. The equityholder released parties are not releasing parties if the settlement is not approved.
• The debtor and third-party releases cover claims arising from the debtors, their management and operation, the restructuring efforts, intercompany transactions, the equityholder settlement and term sheets, the definitive documents, the prepetition ABL/FILO facility and deficiency claims, the second lien facility, the owner notes, any sale, and the plan and its implementation, through the effective date.
• Neither release reaches retained causes of action, permitted litigation claims, or any claim arising from an act or omission determined by final order to constitute actual fraud, willful misconduct, or gross negligence; the debtor release also expressly preserves the preserved challenge claims, which vest in the litigation trust on the effective date upon granting of the applicable standing motion.
• Entry of the confirmation order approves both releases under Rule 9019 and carries the customary consideration, good-faith, best-interests, and fairness findings; notably, the court is asked to find the third-party release consensual and essential to confirmation. Each release operates as a bar, the debtor release against the debtors, wind-down debtors, and estates, the third-party release against the releasing parties.

Exculpation and Injunction

• Exculpated parties are limited to the debtors; the disinterested directors, Scott D. Vogel, Charles T. Piper, and John T. Young, Jr., together with additional disinterested director Jill Frizzley, each serving on the boards of every debtor other than RNDC, Alaska, LLC; and the committee and each of its members.
• Exculpation covers acts and omissions in connection with the cases through the effective date, including negotiation and filing of the equityholder settlement and term sheets, the disclosure statement, the plan, the wind-down transactions, the DIP facility, and the prepetition ABL/FILO facility, except for acts determined by final order to constitute actual fraud, willful misconduct, or gross negligence, and it does not reach retained causes of action or permitted litigation claims.
• The injunction bars holders of released, settled, or exculpated claims from commencing or continuing actions, enforcing judgments, creating or perfecting encumbrances, or asserting setoff or recoupment against the debtors, wind-down debtors, released parties, or exculpated parties, and enjoins all holders and their officers, directors, and affiliates from interfering with implementation or consummation of the plan; each holder accepting or eligible to accept distributions is deemed to consent to it.
• The injunction does not enjoin or impair prosecution of the preserved challenge claims by the committee, the litigation trustee, or any other party granted standing, and nothing in it affects retained causes of action or permitted litigation claims.
• No party may pursue a claim against an exculpated party without the court first determining, after notice and hearing, that the claim is colorable and not released or exculpated, and specifically authorizing it.

Conditions Precedent to the Effective Date

• Entry of the confirmation order, in full force and effect and not reversed, stayed, modified, dismissed, vacated, or reconsidered.
• Satisfaction or waiver of the conditions to effectiveness of the NBG settlement and, separately, the NDC settlement — including approval of each, with its releases, upon entry of the confirmation order.
• Satisfaction or waiver of all conditions precedent to the litigation trust agreement, which must be in full force and effect, and the final DIP order remaining in full force and effect.
• To the extent sales are consummated, entry of a sale order for each, in full force and effect and not stayed, reversed, modified, or amended, and consummation of each sale or capability of consummation by the plan administrator after the effective date.
• Receipt of all authorizations, consents, and regulatory approvals necessary to implement the plan and the wind-down transactions, including any sales; execution or filing of the final plan supplement documents consistent with the plan; and execution and delivery of the definitive documents.
• No pending or threatened action, proceeding, or investigation, and no order, statute, rule, or injunction, that in the debtors' reasonable judgment would prohibit, prevent, or restrict consummation of the wind-down transactions.
• Implementation of the wind-down transactions consistent in all material respects with the plan; funding of the professional fee escrow account; payment of invoiced, court-authorized professional fees and expenses relating to the wind-down transactions; and full funding of the wind-down reserve in cash.
• Waiver: the debtors may waive conditions unilaterally, except that the NBG and NDC settlement conditions require the prior written consent of NBG or NDC, as applicable, and the litigation trust agreement condition requires the committee's prior written consent.

Definitive Documents, Amendments, and Consent Rights

• The definitive documents — the litigation trust documents, the plan and plan supplement, the disclosure statement and solicitation materials, the confirmation and disclosure statement orders, first day pleadings, DIP documents, sale documents, regulatory filings, and related agreements and amendments — must all be acceptable to the DIP agent, and the litigation trust documents must additionally be acceptable to the committee; the debtors must consult the committee before filing, executing, or consummating the other definitive documents.
• The debtors reserve the right to modify the plan before and after confirmation and to revoke or withdraw it before the confirmation date, but may not modify or amend any provision implementing or relating to the equityholder settlement without the prior written consent of NBG or NDC, as applicable, and must consult the committee on any modification materially affecting the treatment of the litigation trust assets or of allowed general unsecured claims.
• New York law governs the plan and related documents, except that corporate governance matters are governed by each debtor's state of formation. The plan controls over the disclosure statement; the confirmation order controls over the plan.