Signal National - Chapter 11 DIP Terms

DIP Terms

Overview

• The Debtors' postpetition financing was approved in two stages, by two different lender groups:
  • Interim DIP (Docket No. 161, entered Aug. 21, 2026): up to $8.6 million new-money line of credit, with $600,000 available on an interim basis, provided by the Debtors' prepetition lenders
  • Final DIP (Docket No. 364, entered Oct. 6, 2026): up to $10 million in new-money term loans under a Debtor-in-Possession Credit Agreement dated Oct. 5, 2026, provided by SPV 777 DIP Lender LLC, a lender that is expressly excluded from the definition of "Pre-Petition Lenders"
• The final order authorizes and directs the Debtors to use final DIP proceeds to repay in full in cash, upon entry of the final order, all outstanding "DIP Obligations" under the interim order (the "Interim DIP Obligations")
• Assets that were encumbered only by liens securing the Interim DIP Obligations are included in the "Unencumbered DIP Collateral" on which the final DIP lender takes a senior first-priority lien
• The final order was entered following a final hearing held Sept. 28, 2026 (the interim order had scheduled the final hearing for Sept. 8, 2026; notice of the final hearing was provided in the Notice of Reset Hearing [Docket No. 185]), and is supported by the declaration and supplemental declaration of Mark Shapiro [Docket Nos. 13 and 310]; the final DIP loan documents also include the Summary of Principal Terms and Conditions attached as Exhibit A to the Debtors' Notice of Selection of DIP Lender [Docket No. 229]
• The interim order expressly excludes from the DIP loan documents the Priming Superpriority Debtor-in-Possession Credit Agreement dated June 9, 2026, by and among the Initial Debtors, ACM Delegate LLC, as agent, and the Pre-Petition Lenders; the final DIP credit agreement expressly permits DIP proceeds to be used to investigate prepetition releases granted in connection with that agreement

Borrower(s) / Guarantor(s)

• 777 Partners LLC ("777"), 600 Partners LLC ("600"), and Signal National LLC ("Signal"), as Borrowers, under both facilities
• The Debtors that filed chapter 11 petitions on Aug. 9, 2026 (the "Original Petition Date," and such Debtors, the "Initial Debtors") are authorized to borrow, and the Debtors that filed on Sept. 10, 2026 (the "Subsequent Petition Date," and such Debtors, the "Subsequent Debtors") to guaranty, the DIP facility
  • The Debtors are authorized to cause any direct or indirect subsidiary that files a chapter 11 case as a Subsequent Debtor to promptly execute and deliver to the agent and the DIP lenders a "Guarantor Joinder," substantially in the form and substance mutually agreeable to the DIP lenders and the Debtors, after which such Subsequent Debtor will be deemed an additional guarantor with the same force and effect as if originally named a guarantor under the DIP loan documents, and is authorized and directed to perform all obligations of a guarantor thereunder
  • Under the final DIP credit agreement, each guarantor unconditionally and irrevocably guarantees the due and punctual payment of the DIP obligations
• The Debtors are jointly and severally liable for the DIP obligations

Agent / Lender(s)

• Interim DIP:
  • ACM Delegate LLC, as sole and exclusive administrative agent
  • AAV2024 LLC, Advantage Capital Holdings LLC, Haymarket Insurance Company, Dacian Master Fund LP, and National Founders LP, as DIP Lenders (and, in their capacity as prepetition lenders, the "Pre-Petition Lenders")
  • Foley & Lardner LLP and Croke Fairchild Duarte & Beres LLC, as counsel to the DIP agent
  • Each DIP lender's interest in its respective prepetition collateral in which it or its affiliate holds a first-priority security interest in its capacity as a prepetition lender remains with such lender, and neither the agent nor any other DIP lender may release, dispose of, or take any action with respect to such collateral without that lender's prior written consent
• Final DIP:
  • SPV 777 DIP Lender LLC, as administrative agent and sole DIP lender, with a DIP commitment of $10 million
  • Leadenhall Capital Partners LLP ("Leadenhall"), as sub-agent, appointed pursuant to a Sub-Agent Letter Agreement among the agent, NatWest Pension Trustee Limited (solely as trustee of The NatWest Group Pension Fund, Main Section), and Leadenhall; notices to the agent are directed c/o Leadenhall, with copies to Paul Hastings LLP
  • "Pre-Petition Lenders" under the final DIP credit agreement includes Advantage Capital Holdings, LLC, AAV204 LLC, Haymarket Insurance Company, ACM Delegate LLC, Dacian Master Fund LP, National Founders LP, and their affiliates, but expressly excludes the agent, the DIP lenders party to the agreement as of the closing date, and their affiliates
  • "Required Lenders" means DIP lenders holding at least 50.1% of the sum of unused DIP commitments and outstanding DIP loans

DIP Commitments

• Interim DIP:
  • $8.6 million senior secured superpriority debtor-in-possession credit facility, consisting of up to $8.6 million of new-money term loans funded in multiple draws in accordance with the approved budget (described in the interim order as a new-money line of credit) and authorized under sections 364(c) and (d) of the Bankruptcy Code
    • $600,000 available during the period from entry of the interim order until entry of the final order (the "Interim Period")
    • All remaining amounts were to be available upon entry of a final order, subject to the DIP budget and as may otherwise be limited by the final order
  • The financing orders shall not roll up any amounts of the prepetition advances or prepetition indebtedness
  • The DIP lenders agreed to match and raise by $50,000 any offer received by the Debtors from Leadenhall at or prior to the agreed-upon deadline of Aug. 18, 2026, at 12 p.m. CT
  • Funding was subject to finalization of definitive financing documentation in form and substance acceptable to the DIP agent, and the Debtors' management, governance, and decision-making were to continue to be exercised by independent managers, officers, and similar fiduciaries acceptable to the DIP lenders
• Final DIP:
  • Up to $10 million in new-money term loans, available from entry of the final order through the maturity date, subject to the approved budget and permitted variances
  • DIP loans are drawn by borrowing certificate delivered at least two business days before the borrowing date, certifying that the requested amount is consistent with the budget, and are funded into the Debtors' operating account; each borrowing permanently reduces the total DIP commitment, and repaid amounts may not be reborrowed
  • The Debtors may voluntarily prepay the DIP obligations in whole or in part on three business days' notice, with a minimum partial prepayment of $100,000
  • Conditions precedent include entry of the final order in form and substance satisfactory to the agent, receipt of an initial budget satisfactory to the agent, cash management arrangements under which all material cash is subject to DIP liens and segregated in the operating account, and no material adverse effect since the petition date; within 10 days after closing, the Debtors must deliver authorizing resolutions of each Debtor's governing body
• Under both orders, any material modification or amendment to the DIP loan documents is subject to five business days' notice to the U.S. Trustee and counsel to the creditors' committee (and, under the interim order, counsel to the DIP lenders; under the final order, the notice must also be filed on the docket), unless the noticed parties agree in writing to a shorter period, becoming effective upon expiration of the notice period absent a timely objection, which the court would resolve before the amendment takes effect
• Governing law: New York, subject to the jurisdiction of the bankruptcy court

Use of Proceeds

• Interim DIP:
  • Proceeds of the DIP facility and cash collateral could be used solely in accordance with the approved budget, subject to permitted variances, to provide working capital and fund general corporate purposes; pay the fees, costs, and expenses of estate professionals as set forth in the approved budget and approved by the court, including the investigation of liens and claims; make all permitted payments of costs of administration of the cases; and pay prepetition expenses solely as consented to by each of the DIP lenders and approved by the court
  • No DIP proceeds, DIP collateral, prepetition collateral, carve-out, or cash collateral could be used to take any action prohibited by the Bankruptcy Code or the interim order, to use funds other than as set forth in the approved budget, to directly or indirectly finance litigation adverse to the prepetition lenders, the agent, or the DIP lenders or any other action that would result in an event of default, or to fund any plan distribution that does not provide for indefeasible payment in full in cash of the DIP obligations, unless otherwise agreed in writing by the required lenders
  • Notwithstanding the foregoing, DIP collateral and prepetition collateral, including cash collateral, could be used in the aggregate by an estate fiduciary to investigate any and all claims and causes of action, including those under chapter 5, in an amount to be determined by the Debtors in consultation with any appointed creditors' committee, and/or for independent counsel for the independent manager, if appropriate in her discretion; no dollar cap on that amount is stated in the interim order
• Final DIP:
  • Proceeds of the DIP facility and DIP cash collateral may be used solely in accordance with the approved budget, subject to permitted variances, for:
    • Repayment in full in cash of the Interim DIP Obligations upon entry of the final order
    • General operating and working capital purposes, fees, expenses, and costs of the chapter 11 cases, including the investigation of liens and claims, and other lawful corporate purposes
    • Other payments expressly provided for in the final order and the approved budget, including the carve-out and the professional fees of the Debtors and the creditors' committee
    • Prepetition expenses solely as consented to by each DIP lender and approved by the court
  • The final DIP credit agreement specifies that permitted uses include investigating any and all liens, claims, and causes of action, including any prepetition releases granted by the Debtors with respect to the June 9, 2026, Priming Superpriority Debtor-in-Possession Credit Agreement, and pursuing such claims against any party, including the agent, the DIP lenders, and any Pre-Petition Lender or creditor
  • No DIP proceeds, DIP collateral, carve-out, or DIP cash collateral may be used to take any action prohibited by the Bankruptcy Code or the final order, to make any payments in connection with adequate protection (other than payment of allowed adequate protection claims under a confirmed chapter 11 plan), or in any manner except as set forth in the approved budget

Cash Collateral

• Interim DIP:
  • The Debtors were authorized under section 363(c)(2) to use cash collateral of the Pre-Petition Lenders solely in accordance with the DIP loan documents and as limited by the approved budget, subject to permitted variances, and only while in compliance with all obligations under the DIP loan documents and the interim order, including that no event of default has occurred
  • Absent entry of the final order, the Debtors' authority to use cash collateral terminated at the expiration of the Interim Period without the prior written approval of the DIP lenders
  • Borrowings under the DIP facility constitute "cash collateral" of the DIP lenders (the "DIP Cash Collateral"), to be held in a segregated account acceptable to the DIP agent and not commingled with cash collateral of any prepetition secured party
• Final DIP:
  • DIP loan proceeds are deposited into a segregated account, constitute DIP Cash Collateral, and may be used solely in accordance with the DIP credit agreement and the approved budget, subject to permitted variances; DIP proceeds must remain in the operating account and may not be commingled with cash collateral of any prepetition lender
  • Nothing in the final order authorizes the Debtors to use the cash collateral of any Prepetition Lender
  • Until the DIP obligations are paid in full in cash and all DIP commitments are terminated, the Debtors must maintain the cash management system in effect as of the petition date, as modified by the final order and the DIP credit agreement, and a segregated deposit account holding only DIP proceeds; upon the agent's request, the Debtors must use commercially reasonable efforts to enter into account control agreements, other than for the payroll account, which may be funded from the operating account only for budgeted payroll and no more than 48 hours before disbursement
• Under both orders, cash receipts and disbursements of SuttonPark Capital LLC, SuttonPark Servicing LLC, and its subsidiaries that are not otherwise captured in the budget may be used to fund their operations in the ordinary course; the final order adds that nothing modifies the rights and priorities of any creditors with respect to those receipts and disbursements
• The Debtors may not sell, transfer, lease, encumber, or otherwise dispose of DIP collateral outside the ordinary course without the consent of the agent (acting at the direction of the required lenders) or further court order

Interest Rate

• Interim DIP: 0.45% per annum; Default Rate Increase: 2.0%
• Final DIP: Fixed rate of 0.00% per annum from and after entry of the final order, computed on a 30/360 basis; default interest accrues at a simple rate of 0.00% per annum

Fees

• Interim DIP: None. The "Upfront Fee" referred to in Section 2.6(d) of the DIP credit agreement was never collected and was to be removed from the DIP credit agreement; the DIP lenders further agreed to waive the other fees contemplated in Sections 2.6(e) and 2.6(f) of the DIP credit agreement
• Final DIP: No fees are specified in the final DIP credit agreement; the approved budget does not include line items for professional fees and expenses owed to the agent or any DIP lender, and each DIP lender agrees to reimburse the agent, ratably and to the extent not reimbursed by the Debtors, for its reasonable costs and expenses
• Under both facilities, the DIP obligations expressly exclude the fees, costs, and expenses of the DIP agent and the DIP lenders, including those of the agent's and lenders' counsel

Maturity

• Interim DIP: 195 days after the petition date, and as otherwise provided in the DIP credit agreement; borrowings up to $600,000 were authorized from entry of the interim order through the earliest of entry of the final order (with respect to all Debtors) and Feb. 22, 2027
• Final DIP: The earliest of:
  • 180 days after the Original Petition Date
  • The effective date of a chapter 11 plan in any of the cases
  • The closing of a section 363 sale of all or substantially all of the Debtors' assets
  • Entry of an order dismissing any case or converting it to chapter 7, unless otherwise consented to by the agent
  • Acceleration of the DIP facility as directed by the agent during an event of default
• Under the plan term sheet attached to the final order, subject to plan effectiveness, the final DIP obligations are to be exchanged for and converted into Exchanged Liquidating Trust Loans on a dollar-for-dollar basis rather than repaid in cash (see "Plan Treatment and Exit Financing" below)

Milestones

• Interim DIP: The Debtors were required to strictly comply with the following milestones, unless extended in writing by the agent acting at the direction of the required lenders, with failure constituting an event of default:
  • Aug. 20, 2026: Entry of an interim financing order in form and substance acceptable to the DIP lenders (the interim order was entered Aug. 21, 2026)
  • Within 30 days of the petition date: Entry of an order directing transfer of the SD Fla. case to the court for consolidation with the chapter 11 cases, or otherwise resolving the pendency of that case on terms reasonably satisfactory to the DIP lenders
  • 35 days following entry of the interim DIP order: Entry of the final order in form and substance acceptable to the DIP lenders in all respects
  • Sept. 23, 2026: Filing of the chapter 11 cases for the Subsequent Debtors (filed Sept. 10, 2026)
  • Nov. 6, 2026: Filing of a chapter 11 plan and disclosure statement, together with a motion seeking approval of the disclosure statement and solicitation procedures and to set a confirmation hearing
  • Jan. 18, 2027: Entry of an order confirming the plan
  • 14 days after entry of the confirmation order: Plan effective date
• Final DIP: The following "Bankruptcy Milestones," measured from the Original Petition Date, replace the interim milestones and must be strictly complied with unless extended in writing by the DIP agent acting at the direction of the required lenders; failure to timely satisfy any milestone, unless waived in writing by the DIP agent, constitutes an event of default:
  • Nov. 21, 2026: Filing of a joint chapter 11 plan consistent with the plan term sheet attached to the final order (as amended or modified with the consent of the Debtors, the creditors' committee, and the DIP agent), an associated disclosure statement, and a motion to approve the disclosure statement and solicitation procedures, each in form and substance satisfactory to the DIP agent, the Debtors, and the creditors' committee
  • Jan. 22, 2027: Entry of an order confirming the plan, in form and substance acceptable to the DIP agent, the Debtors, and the creditors' committee
  • Feb. 5, 2027: Satisfaction of all conditions precedent to plan effectiveness and occurrence of the plan effective date
• All time periods are calculated in accordance with Bankruptcy Rule 9006(a)

Securities and Priorities

• Under both orders, the DIP obligations are entitled to allowed superpriority administrative expense claim status under section 364(c)(1), with priority over all other administrative expenses, including those specified in or ordered pursuant to sections 105, 326, 328, 330, 331, 503(b), 506(c), 507, 546(c), 726, or 1114 (with sections 506(c) and 552(b) under the interim order subject to entry of the final order), payable from and having recourse to all assets of the Debtors, subject only to the carve-out
• Interim DIP: The DIP lenders were granted liens on all of the Debtors' property, effective as of the petition date and subject solely to the carve-out, with the following priorities:
  • Senior first-priority liens under section 364(c)(2) on all unencumbered DIP collateral and, subject to entry of the final order, on the Chapter 5 DIP Collateral
  • Junior liens under section 364(c)(3) on all other assets subject to valid, properly perfected, and non-avoidable liens existing as of the petition date
  • Subject to entry of the final order, first-priority priming liens under section 364(d)(1) securing each DIP lender's ratable portion of the then-outstanding DIP loans, attaching solely to that lender's prepetition collateral in which it held a first-priority security interest as of the petition date in its capacity as a prepetition lender (the "Existing First-Priority DIP Collateral")
  • Where proceeds are generated from Debtor assets subject to the liens of more than one DIP lender, including Existing First-Priority DIP Collateral, and the affected lenders cannot stipulate to allocation, the full amount is to be escrowed by the agent pending further court order or stipulation
• Final DIP: The DIP agent, for the benefit of the DIP lenders, is granted liens effective as of the petition date and subject solely to the carve-out, as follows:
  • Senior first-priority liens under section 364(c)(2) on all assets not subject to valid, perfected, and non-avoidable liens as of the Original Petition Date (the "Unencumbered DIP Collateral"), including the proceeds of causes of action, the proceeds of avoidance actions, and any assets of the Debtors that were encumbered only by liens securing the Interim DIP Obligations
  • Junior liens under section 364(c)(3) on all other assets subject to valid, properly perfected, and non-avoidable liens existing as of the petition date
  • The final order does not grant section 364(d) priming liens; the priming liens on Existing First-Priority DIP Collateral contemplated by the interim order did not carry over to the final facility
  • DIP collateral excludes any claims or causes of action that the Debtors, their estates, affiliates, or subsidiaries may have against the DIP agent or DIP lenders, including claims and defenses relating to servicing fees that may be owed by lenders managed by Leadenhall, or upon the bond posted in Leadenhall Capital Partners LLP v. Wander, et al., 24 Civ. 3453 (S.D.N.Y.) or Signal SML 4 LLC, et al. v. Leadenhall Life Insurance Linked Investments Fund PLC, Index No. 652929/2025 (N.Y. Cnty. Sup. Ct.), or any proceeds thereof
• Under both orders, the DIP collateral and cash collateral, and any liens, security interests, or superpriority claims granted to the DIP lenders, expressly exclude the Disputed Property — proceeds derived from certain Purchased Receivables under the May 7, 2021, sale agreement between Signal Medical Receivables LLC, as seller, and Signal SML 4 LLC, as purchaser, that were subject to the May 15, 2025, foreclosure auction by Leadenhall Life Insurance Linked Investments Fund Plc and assigned to DASIR 2 LLC ("DASIR 2") — pending further court order or a final, non-appealable adjudication of the estates' interest
  • DASIR 2's right to assert that the Disputed Property and traceable proceeds are subject to a constructive trust, resulting trust, or other equitable ownership interest, and therefore excluded from property of the estates under section 541(d), is fully preserved
  • Nothing in the orders, the motion, or the DIP loan documents operates as an adjudication, waiver, release, impairment, or priming of DASIR 2's rights, claims, or defenses regarding the Disputed Property
  • Until a final, non-appealable ownership determination, the Debtors must use reasonable best efforts to cause their non-Debtor subsidiaries and affiliates to segregate and hold any Disputed Property in their possession in a separate depository account, and may not use, sell, lease, or encumber the Disputed Property or its traceable proceeds to fund operations, pay DIP professional fees, or satisfy any prepetition or postpetition obligations without DASIR 2's express written consent or further court order
• Each order is sufficient and conclusive evidence of the priority, perfection, and validity of the postpetition liens, effective as of the petition date, without further filing, recording, or control agreements, although the DIP lenders may elect to effectuate any perfection act, including by filing a certified copy of the order; any defect or failure in such an attempt does not affect the validity, priority, or perfection of the DIP liens
• Absent the DIP agent's and DIP lenders' prior written consent, no order may be entered in the chapter 11 cases or any successor cases, including a plan confirmation order, authorizing credit or indebtedness secured by a lien on DIP collateral or entitled to administrative priority senior to or pari passu with the DIP liens or DIP superpriority claims, other than the carve-out, unless the DIP obligations are simultaneously paid or discharged in full, or authorizing the use of DIP cash collateral for any purpose not permitted under the DIP loan documents and the order
• If the Debtors, a trustee, or any other estate representative obtains credit or incurs debt other than as provided in the order prior to repayment in full of the DIP obligations, all cash proceeds must immediately be turned over to the DIP lenders in an amount sufficient to indefeasibly pay the DIP obligations in full
• The DIP obligations, DIP superpriority claims, and DIP liens shall not be discharged by entry of an order confirming a plan, notwithstanding section 1141(d), unless indefeasibly paid in full in cash or otherwise discharged with the consent of the DIP lenders on or before the plan effective date

Avoidance Actions

• Interim DIP: Subject to entry of the final order, the DIP liens were to extend to the proceeds of DIP causes of action, including any proceeds or property recovered in connection with the pursuit of claims or causes of action arising under chapter 5 of the Bankruptcy Code (the "Chapter 5 DIP Collateral"), provided that the liens securing the Chapter 5 DIP Collateral shall not exceed the DIP obligations; "Unencumbered Property" excluded the proceeds of any claims or causes of action against the agent, the DIP lenders, or the prepetition lenders, although each DIP lender would receive DIP liens on such claims and causes of action other than those asserted against that lender
• Final DIP: The senior first-priority DIP liens attach to the proceeds of the Debtors' causes of action and of avoidance actions under sections 502(d), 544, 545, 547, 548, and 550 or otherwise under the Bankruptcy Code; DIP collateral does not include the causes of action or avoidance actions themselves, only the proceeds thereof, and excludes claims against the DIP agent and DIP lenders as described above

Adequate Protection

Pre-Petition Secured Parties

• Interim DIP:
  • Adequate protection was provided in an amount equal to any diminution in value of the prepetition secured parties' interests in their collateral, including cash collateral, consisting of replacement security interests in and liens on their respective prepetition collateral, subordinate to the carve-out, and allowed superpriority administrative expense claims under sections 503 and 507(b), including on a dollar-for-dollar basis for cash collateral used in accordance with the approved budget, subject only to the DIP superpriority claims and the carve-out
  • The prepetition lenders consented to the adequate protection and, upon entry of the final order, to the priming of their respective prepetition liens; such consent was expressly conditioned on entry of the final order, did not extend to any other replacement or debtor-in-possession financing, and is of no force or effect if the final order is not entered or is subsequently reversed, modified, vacated, or stayed
  • Each prepetition lender expressly reserved the right to seek adequate protection of its interests in its sole discretion, and nothing in the interim order constitutes a finding that the prepetition lenders' interests are adequately protected with respect to any non-consensual use of the prepetition collateral
• Final DIP: Parties holding valid, perfected, non-avoidable liens on the Debtors' property (the "Prepetition Lenders") receive, solely to the extent of any diminution in value of their interests in their prepetition collateral as of the petition date:
  • Valid and perfected replacement liens on their respective prepetition collateral (the "Adequate Protection Liens"), subject and subordinate to the carve-out, which may not be made subject to or pari passu with any other lien absent the Prepetition Lenders' consent and are senior to the DIP liens solely with respect to their respective prepetition collateral
  • To the extent the Adequate Protection Liens are insufficient, allowed superpriority administrative expense claims under sections 503 and 507(b), with priority over all other administrative, priority, and unsecured claims, subject only to the DIP superpriority claims and the carve-out
• Under both orders, if a prepetition lender's prepetition liens are avoided or subordinated, the related adequate protection liens and claims are deemed null and void (under the final order, retroactively to the date of the final order)
• The final order preserves the DIP agent's, DIP lenders', and their affiliates' rights to seek adequate protection to the extent they believe proceeds of collateral securing liens at the Debtors' non-Debtor affiliates are in the possession of the Debtors' estates

Carve Out

• Post-Carve-Out Trigger Notice Cap: $250,000 (both orders)
• Chapter 7 Trustee Fee: $100,000, in the event of a conversion of the chapter 11 cases to chapter 7, covering the reasonable and documented fees and expenses of a trustee under section 726(b) and not subject to the carve-out trigger notice (both orders)
• The carve-out also includes clerk and U.S. Trustee fees under 28 U.S.C. § 1930(a) plus statutory interest, not subject to any budget or to the carve-out trigger notice, and unpaid allowed professional fees of the Debtors' and the creditors' committee's professionals incurred at any time before or on the day of delivery of a carve-out trigger notice (whether allowed before or after such delivery), limited to the amounts set forth in the approved budget, including any permitted variance, for each professional person (the "Pre-Trigger Carve-Out")
• A carve-out trigger notice is delivered by the agent, acting at the direction of the DIP lenders, by email to the Debtors, Debtors' counsel, the U.S. Trustee, and counsel to the creditors' committee, stating that the post-carve-out trigger notice cap has been invoked, and may be delivered only following the occurrence and during the continuation of an event of default
• Payments of allowed professional fees made prior to the EOD notice date do not reduce the carve-out; payments made on or after that date permanently reduce the carve-out on a dollar-for-dollar basis
• Under the final order, prior to delivery of a carve-out trigger notice, the Debtors may, in their discretion, fund weekly from the DIP facility or DIP cash collateral into a segregated "Funded Reserve Account" for professionals an amount equal to estimated accrued budgeted professional fees; promptly after delivery of a trigger notice, the Debtors must fund the Pre-Trigger Carve-Out amounts and the Post-Carve-Out Trigger Notice Cap into that account, and the DIP agent may not sweep or foreclose on the Debtors' cash until those reserves are fully funded, but holds a security interest in any residual after payment of all carve-out amounts
• The carve-out is senior to all liens and claims securing the DIP obligations, any adequate protection liens and superpriority claims, and all other liens or claims granted by the orders
• Any payment of the carve-out is added to and made part of the DIP obligations secured by the DIP collateral; payments on account of the carve-out do not reduce the DIP obligations or subordinate the DIP liens or DIP superpriority claims to any junior interest
• None of the agent or the DIP lenders (or, under the interim order, the prepetition lenders) is responsible for paying or reimbursing any professional person or any U.S. Trustee or clerk fees, and neither the approved budget nor the carve-out caps the amount of allowed professional fees that professionals may seek to be paid by the Debtors from sources other than the DIP facility and DIP cash collateral
• Under the interim order, the carve-out was to be available for payment of the Debtors' and any creditors' committee's professional fees only upon entry of the final order, solely as set forth in the approved budget

Investigation, Challenge Rights, and Releases

• Interim DIP:
  • The financing orders do not contain any stipulations as to the validity of liens and security interests granted by the Debtors prior to the petition date, all of which remain subject to challenge by parties in interest, and the challenge period as defined in the DIP motion is eliminated in its entirety
  • The Debtors shall not grant any releases to any parties under the financing orders, including any prepetition secured parties
  • Any party in interest with proper standing by court order may file an adversary proceeding challenging the amount, validity, enforceability, priority, perfection, or extent of the prepetition obligations or prepetition liens, or otherwise asserting claims, counterclaims, causes of action, objections, contests, or defenses against the prepetition lenders on behalf of the estates; a separate order conferring standing is a prerequisite to prosecution of a challenge by a creditors' committee or other party in interest
  • The DIP lenders agreed to support budget items for an independent investigation of all claims and causes of action, including those under chapter 5, in an amount to be determined by the Debtors in consultation with a committee, and/or for independent counsel for the independent director (referred to in the interim order as the independent manager), if appropriate in her discretion
• Final DIP:
  • The DIP lenders agree to support and approve an approved-budget line item of not less than $1 million for use by the creditors' committee (or other estate fiduciary) to pursue an independent investigation and prosecution of all causes of action and avoidance actions, and a line item for independent counsel for the independent director, if appropriate in her discretion; the DIP credit agreement's budget definition refers to a line item of up to $1 million, and the final order governs in the event of a conflict with the DIP loan documents
  • Nothing in the final order releases, waives, or impairs any claims or causes of action that the Debtors or their estates may hold against the DIP agent, the DIP lenders, or their affiliates concerning any prepetition or postpetition conduct; the DIP agent and DIP lenders represent that, to their knowledge, none of them or their non-Debtor affiliates received a release before the petition date, and they rescind any release that may otherwise have been received

Events of Default and Remedies

• Interim DIP: Events of default included, among others, the occurrence of the maturity date; failure to comply with any bankruptcy milestone; the granting of stay relief to any creditor or party in interest other than the DIP lenders or prepetition lenders; the arising, authorization, or allowance of any superpriority administrative expense claim or lien pari passu with or senior to the DIP lenders' claims, charges, or liens; the Debtors' failure to comply in any material respect with the interim or final order; assertion by the Debtors that the guaranties in the DIP loan documents are not valid and binding; the DIP liens ceasing to be valid, perfected, and enforceable other than by repayment in full; pursuit of a sale of DIP collateral or prepetition collateral without the applicable lenders' written consent to the related process and bidding procedures; and entry of an order avoiding or requiring repayment of any portion of payments made on account of the DIP obligations, in each case subject to any applicable notice and cure periods
• Final DIP: Events of default include any event of default under the DIP credit agreement and, in addition:
  • The occurrence of the maturity date or failure to comply with any Bankruptcy Milestone
  • Stay relief granted to any creditor or party in interest other than the DIP lenders, without the DIP agent's consent, to permit foreclosure on any material assets of the Debtors
  • The arising, authorization, or allowance of any superpriority administrative expense claim or lien pari passu with or senior to the DIP lenders' claims, charges, or liens
  • Any DIP loan document ceasing to be valid or effective, or the DIP liens ceasing to be valid, perfected, and enforceable
  • The Debtors' failure to comply in any material respect with the final order
  • The Debtors pursuing a sale of DIP collateral or filing a bidding procedures motion for DIP collateral, or filing a chapter 11 plan or disclosure statement other than the plan and disclosure statement contemplated by the plan term sheet, in each case without the DIP lenders' prior written consent
  • Under the DIP credit agreement, among others: nonpayment of DIP obligations; uncured breach of covenants, the budget (including permitted variances), or the milestones; material misrepresentation; dismissal or conversion of the cases, or the Debtors seeking or failing to oppose such relief, without the agent's consent; impairment of the DIP loan documents or DIP liens; condemnation or forfeiture of material DIP collateral; governmental restraint reasonably expected to result in a material adverse effect; stay relief permitting foreclosure on material assets or other actions the agent deems to have a material adverse effect; noncompliance with or adverse modification of the financing orders; and filings by the Debtors reasonably expected to materially impair the agent's and DIP lenders' rights
• Final DIP cure and contest rights: The Debtors have not less than seven business days after receipt of an EOD notice to cure, deliver a single contest notice, and/or seek a hearing (with the cure period automatically extended if a hearing cannot be scheduled in time), plus up to five business days after a timely contest notice to resolve the contested default to the agent's reasonable satisfaction; no cure period applies to defaults arising from dismissal or conversion of the cases, impairment of the DIP loan documents, or the financing orders; during the cure and contest periods the DIP lenders have no obligation to fund, and the agent's right to terminate commitments and accelerate is suspended
• Under both orders, upon an event of default that has not been cured or waived, the DIP lenders may cease funding, accelerate the DIP obligations, terminate use of DIP cash collateral (subject to the Debtors' right to use DIP cash collateral solely to fund the carve-out and pay expenses critical to estate administration in accordance with the approved budget and any permitted variances), and charge the default rate, and the Debtors are bound by all post-default restrictions and prohibitions in the order and the DIP loan documents; the lenders' rights and remedies are cumulative and may be exercised in whole or in part in any order
• Under both orders, the DIP agent (under the interim order, the DIP lenders) must provide not less than seven business days' advance written notice of an event of default (the "EOD Notice," and such period the "Remedies Notice Period"), which may be by email, to Debtors' counsel, the creditors' committee, and the U.S. Trustee, and file such notice on the docket; upon the request of a party in interest the court may hold a hearing before expiration of the period, and if a hearing cannot be scheduled in time, the Remedies Notice Period is automatically extended until the matter can be heard. Nothing prevents the Debtors from seeking relief from the court, including a determination that no event of default has occurred
• Upon expiration of the Remedies Notice Period, and unless otherwise ordered by the court, the DIP lenders are automatically and completely relieved from the automatic stay to exercise remedies, and the Debtors must cooperate with the DIP lenders in the exercise of such remedies (under the interim order, including assisting with any sale or other disposition of DIP collateral, including a section 363 sale or a section 365 assumption and assignment, on terms acceptable to the DIP lenders); the 14-day stays of Bankruptcy Rules 6004(h) and 4001(a)(3) are waived with respect to the exercise of remedies under the final order

Credit Bid

• Interim DIP: Pursuant to section 363(k), the agent (on behalf of the DIP lenders) and the prepetition lenders and their affiliates (each in their individual capacities) may credit bid against the assets of the estates, up to the outstanding aggregate amount of their respective prepetition obligations and DIP obligations, subject to a successful challenge and in a form, including any proposed asset purchase agreement and related sale order, reasonably acceptable to the applicable lenders
• Final DIP: The DIP agent and the DIP lenders are entitled to credit bid all or any portion of the DIP obligations under section 363(k); the final order does not address credit bidding by the prepetition lenders

Waivers

• Interim DIP: Subject to entry of the final order, waivers of section 506(c) surcharge and the equitable doctrine of marshaling in favor of both the prepetition lenders and the DIP lenders, and a waiver of the section 552(b) "equities of the case" exception as to the prepetition lenders and DIP lenders
• Final DIP:
  • Section 506(c): No costs or expenses of administration incurred in the chapter 11 cases or any successor cases may be charged against the DIP lenders, their claims, or the DIP collateral without the DIP lenders' prior written consent, which may not be implied from any action, inaction, or acquiescence
  • In no event shall the DIP lenders be subject to the equitable doctrine of "marshaling" or any similar doctrine with respect to the DIP collateral
  • The final order's waivers run solely in favor of the DIP lenders with respect to the DIP collateral; the final order does not include a section 552(b) waiver or waivers in favor of the prepetition lenders
• The automatic stay under section 362(a) is modified as necessary to effectuate the terms of the orders and the DIP loan documents, including the application of collections, authorization to make payments, and the granting and perfection of liens
• The 21-day provision of Bankruptcy Rule 6003(b), the notice requirements of Rule 6004(a), and the 14-day stay of Rule 6004(h) are waived (and, under the interim order, the 14-day stay of Rule 4001(a)(3))

Permitted Variance

• Interim DIP: Payments for any measuring period could not exceed 120% of the respective budgeted amounts, measured on an aggregate basis, and expenditures for estate professional fees could not exceed 110% of the amount allocated in the approved budget for the applicable measuring period, although the Debtors could incur estate professional fees and expenses in excess of the approved budget and any favorable variance from a measuring period could be used to pay professional fees and expenses incurred in a different measuring period; variances were tested every other week on a rolling four-week basis, with the first measuring period running from the petition date to approximately two weeks thereafter
• Final DIP:
  • Actual disbursements for any measuring period may not exceed 120% of the aggregate disbursements forecasted in the approved budget; professional fees and expenses are excluded from the permitted variance calculation
  • On Wednesday of every other week, beginning with the Wednesday of the second full week after entry of the final order, the Debtors must provide the DIP lenders, counsel to the creditors' committee, and counsel to ACM Delegate LLC with an updated 13-week forecast and a variance report comparing actual disbursements for the trailing four weeks ending the prior Friday against the approved budget; the first measuring period is tested on a trailing two-week basis
  • Under the DIP credit agreement, each bi-weekly budget report must include explanations for all variances in excess of 20% on an aggregate basis
• The Debtors must comply with the approved budget and may not make payments or incur obligations or liabilities not projected and provided for therein, subject to permitted variances
• The approved budget may be modified, amended, and updated from time to time and, once approved in writing by the agent, supersedes and replaces the then-approved budget; any updated budget must be filed with the court within one business day of written approval, and if a revised budget is not approved in writing, the then-existing approved budget remains in full force and effect
• The Debtors must comply with all reporting requirements set forth in the DIP loan documents, including providing bi-weekly budget reports

Covenants

• Under the final DIP credit agreement, the Debtors must, among other things:
  • Deliver to the agent and the DIP lenders, at least two business days in advance where reasonably practicable, all material pleadings, motions, and other material documents to be filed in the cases, and copies of financial information provided to the U.S. Trustee or the creditors' committee
  • Cooperate, and instruct their advisors to cooperate, with the agent and the DIP lenders in connection with the marketing of the Debtors' assets
  • Maintain existing liability, property, and director and officer insurance, with the agent named as an additional insured and/or loss payee
• The Debtors may not, among other things:
  • Incur indebtedness other than the DIP obligations and unsecured ordinary-course indebtedness in compliance with the budget, or grant liens other than the DIP liens
  • Merge, enter into any asset purchase agreement, or sell assets outside the ordinary course without the agent's written consent, except that the Debtors may seek court authority to enter into asset purchase agreements acceptable to the agent subject to court-approved bidding procedures to which the agent has consented in writing
  • Form any subsidiary without the agent's written consent
  • Represent or stipulate that the expected insurance refund for legal fees and expenses previously paid by 777 or other Debtors is collateral of any prepetition lender, or transfer any portion of it to a non-Debtor without the agent's written consent

Plan Treatment and Exit Financing

• The final order attaches a plan term sheet among the Debtors, the DIP secured parties, and the creditors' committee providing for a chapter 11 plan of liquidation and a liquidating trust, subject to definitive documentation and court approval; the term sheet does not prejudge substantive consolidation issues
• Holders of DIP claims are to receive their pro rata share of Liquidating Trust Loans in an aggregate principal amount equal to the outstanding DIP loans, and the DIP superpriority claims are to be irrevocably waived
• On the plan effective date, the DIP lenders and the liquidating trust are to enter into a Liquidating Trust Credit Agreement under which:
  • The DIP lenders exchange their then-outstanding or committed but unborrowed DIP loans for loans in an equal amount issued by the liquidating trust (the "Exchanged Liquidating Trust Loans")
  • The DIP lenders commit to provide up to $3 million in additional new-money term loans (the "New Money Liquidating Trust Loans")
  • All DIP cash collateral and the right to draw any unused DIP commitment vest in the liquidating trust
  • The Liquidating Trust Loans mature on the earliest of five years after the effective date, dissolution of the trust, and the full liquidation and distribution of the trust assets, and are to bear interest at market rates with economics to be agreed
• Distributions from the liquidating trust follow a waterfall under which assets subject to valid, perfected prepetition liens are first distributed to the applicable secured claim holder, followed by repayment of any additional liquidating trust funding and the Liquidating Trust Loans, and then pro rata distributions to holders of allowed general unsecured claims; distributions on account of claims or liens the trust is challenging are escrowed pending a final order
• Holders of prepetition secured claims receive liquidating trust units entitling them to the proceeds of their collateral in accordance with lien priorities, with any deficiency treated as a general unsecured claim; equity interests in 777 and 600 are cancelled
• The liquidating trustee is to be selected by the creditors' committee and the DIP lenders and overseen by a three-member trust oversight board (one member selected by each of the DIP lenders and the committee, and an independent third member selected jointly); under the final order, the committee selects the litigation trustee in consultation with the DIP lenders, and DASIR 2, a committee member, will recuse itself from that selection and will not serve on the trust oversight board
• The plan is not to provide releases by the Debtors or their estates of claims against any other Debtor or affiliate, any equity holder, or any creditor
• The general unsecured claim held by the liquidating trust lender or its affiliates against 777 under its guarantee of the May 7, 2021, Loan and Security Agreement among the liquidating trust lender, as administrative agent, Leadenhall Life Insurance Linked Investments Fund PLC, as initial collateral agent, and the other parties thereto (the "777 Guaranty Obligations"), is to be reduced dollar-for-dollar on account of repayments received from collateral securing those obligations that was foreclosed on prepetition
• Conditions to plan effectiveness include funding of the wind-down DIP draw into the wind-down account, no continuing event of default under the DIP facility, and plan documents, the confirmation order, the schedule of retained causes of action, and the liquidating trust documents acceptable to the DIP agent (or DIP lenders) and the creditors' committee

Other Provisions

• The agent, the DIP lenders, and their respective counsel, advisors, and consultants are granted a "good faith" finding under section 364(e), solely with respect to the DIP facility and the postpetition use of DIP cash collateral; any later modification, amendment, vacatur, or stay of the order does not affect the validity or enforceability of advances previously made or liens, claims, or priorities previously created, provided the order was not stayed pending appeal at the time
• The court found in the final order that the Debtors were unable to obtain financing on more favorable terms from sources other than the DIP lenders, and that the DIP facility terms are fair, reasonable, the best available under the circumstances, and entered into at arm's length
• Nothing in the orders or the DIP loan documents imposes liability on the agent or the DIP lenders for claims arising from the Debtors' postpetition operations, liquidation, or the administration of the cases (the interim order additionally found, on an interim basis, that the DIP lenders did not control the Debtors and are not "responsible persons" or "owners or operators" under environmental or similar law)
• In the event of a conflict between the DIP loan documents and the order, the order governs
• The DIP lenders are not required to file proofs of claim in the chapter 11 cases or any successor cases with respect to the DIP obligations, DIP liens, or DIP superpriority claims, although each may elect to do so
• The orders survive conversion, dismissal, or plan confirmation; upon dismissal, the DIP liens continue in full force until the DIP obligations are indefeasibly paid in full, and the court retains jurisdiction to enforce them