Simply Interior Homes - Chapter 11 Plan Terms

Plan Terms

Overview

• Simply Interior Homes, LLC and its debtor affiliates (the “Debtors”) filed an Amended Combined Disclosure Statement and Chapter 11 Plan of Liquidation (the “Combined Disclosure Statement and Plan”) providing for the liquidation of the Debtors’ remaining assets and the distribution of proceeds to holders of allowed claims. The Debtors are the plan proponents within the meaning of Bankruptcy Code section 1129.
  • The Debtors comprise Simply Interior Homes, LLC; Simply Interior Homes AcquisitionCo, LLC; SIH Beckham Buyer, LLC; SIH-HSD Holdings, LLC; SIH-BB Holdings, LLC; SIH-DMD Holdings, LLC; and SIH-SR Holdings, LLC, with cases jointly administered under lead Case No. 26-10922 (CTG). SIH Acquisition is the parent Debtor entity and SIH is its direct subsidiary; the entities above SIH Acquisition — SIH Intermediate, Simply Interior Homes Holdings, LLC and Simply Interior Homes TopCo, LLC — are not Debtors. SIH Beckham Buyer, LLC and its four Debtor subsidiaries were formed by CLP in early 2026 to facilitate a contemplated acquisition that could not close due to unavailability of financing; those entities never operated.
  • The Debtors commenced their chapter 11 cases on June 8, 2026 (the “Petition Date”). The U.S. Trustee appointed the Official Committee of Unsecured Creditors (the “Committee”) on June 18, 2026. No trustee or examiner has been appointed.
• The Debtors operate a home textiles and home décor business that designs, sources and supplies fashion bedding, window treatments, bath products, decorative textiles and related home furnishings (“soft goods”) for major retailers. The Debtors were formed in early 2025 in connection with the carve-out of the soft goods business divisions from Keeco, LLC (“Keeco”), a portfolio company of Centre Lane Partners (“CLP”), and related affiliates (the “Carve-Out Transaction”). Keeco, previously one of North America’s largest home textile suppliers, was rebranded as “Live Comfortably” following the Carve-Out Transaction.
• The Debtors attribute the filing to a series of compounding and interconnected challenges:
  • An undercapitalized opening balance sheet at the time of the Carve-Out Transaction as compared to CLP’s projections, which the Debtors intend to investigate thoroughly during the chapter 11 cases.
  • The inheritance of diminished customer and supplier relationships from the prior Keeco operations, and a reduction in certain major customer programs that severely impaired the Debtors’ revenue base.
  • An ongoing dispute regarding a Transition Services Agreement with Live Comfortably.
  • The failure of multiple recapitalization, M&A and refinancing efforts led by CLP, and CLP’s refusal to provide necessary liquidity and capital support in the face of such failed transactions.
  • The imposition of reciprocal tariffs that eroded the Debtors’ margins.
• Despite these obstacles, the Debtors state that their core business retains real commercial value, including a portfolio of recognized home textiles brands, strong international sourcing capabilities and close relationships with major retail partners. The cases were commenced to stabilize operations, preserve going-concern value to the extent possible, maximize estate value, pursue a value-maximizing transaction and consider possible claims and causes of action against related or other parties that contributed directly or indirectly to the Debtors’ circumstances.
• Every out-of-court option pursued failed to provide a sustainable solution to the Debtors’ original structural undercapitalization and deteriorating financial condition, and CLP’s promises to provide liquidity or financial support did not materialize. The Debtors were left with critical liquidity needs that could not be funded outside a formal restructuring process, a disputed TSA whose termination would destroy their ability to operate, damaged supplier relationships and existing defaults under the Prepetition Credit Facility. Together with their advisors, the Debtors determined that preservation of value would be best accomplished by (i) commencing an orderly liquidation of inventory and other working capital assets and (ii) pursuing a sale of the business and/or assets as a going concern or otherwise.
• Beginning in June 2025 and through April 2026, the Prepetition Agent delivered notices asserting defaults and events of default under the Prepetition Credit Agreement, and the Debtors’ borrowing base was in an overadvance position such that the Debtors had no available financing. Since December 2025, the Prepetition Lenders funded critical obligations — including payroll, lease payments, vendor payments and payments to the Debtors’ third-party logistics provider — in their permitted discretion notwithstanding those defaults. After repeated refusal by CLP to provide requested liquidity and capital support, on April 27, 2026 the Prepetition Agent delivered a Notice of Exercise of Proxy Rights (the “Proxy Exercise”), acting as SIH Intermediate’s and SIH’s proxy and attorney-in-fact under the Prepetition Collateral Documents, and adopted a written consent removing SIH Intermediate as the sole member of SIH Acquisition and appointing Stuart Kaufman, Managing Director of Arete Capital Partners, LLC, as Independent Manager of SIH Acquisition, vested with sole and exclusive decision-making authority. Following the Proxy Exercise, the newly constituted management, acting through Goodwin Procter LLP as replacement counsel, directed CLP and its affiliates, including Live Comfortably, to cease engaging with customers, vendors, lenders and other counterparties on the Debtors’ behalf and to cooperate with the Independent Manager and the Debtors’ officers and advisors, while expressly demanding that Live Comfortably continue performing all of its obligations under the TSA.
• The Debtors acknowledge that CLP and Live Comfortably, together with their respective affiliates, funds, partners, members, managers, officers, directors, employees, agents, advisors and representatives (the “CLP and Live Comfortably Parties”), dispute and deny many of the allegations, characterizations and assertions in the Combined Disclosure Statement and Plan to the extent they relate to those parties. The Debtors are advised that the CLP and Live Comfortably Parties will vigorously contest and defend against any claims, causes of action, equitable subordination, recharacterization, disallowance or other proceedings that may be asserted by the Debtors, the estates, any committee, the Liquidating Trust or any other party in interest. Creditors and other stakeholders are cautioned that the allegations and statements in the disclosure statement are contested and should not be relied upon as established facts, admissions or evidence of the truth of any matter asserted, or as an indication of the merits, likelihood of success or potential recoveries from any actual or potential litigation involving any CLP and Live Comfortably Party, all of whose rights, remedies, defenses, objections, claims, counterclaims, setoff, recoupment, privileges and immunities are expressly reserved.
• The Debtors support the Combined Disclosure Statement and Plan, believe it is in the best interests of all stakeholders, and recommend that all holders of claims in Class 3 (Prepetition Secured Claims), Class 4 (Subordinated Sponsor Secured Note Claims) and Class 5 (General Unsecured Claims) that received a ballot vote to accept it. Case documents are available without charge at https://dm.epiq11.com/simplyinterior.
• The Debtors are represented by Goodwin Procter LLP as restructuring counsel and Potter Anderson & Corroon LLP as restructuring co-counsel, with Reflect Advisors, LLC providing a chief restructuring officer (Adam Zalev) and restructuring staff, Rock Creek as sales agent, SB360 as liquidation consultant and Epiq Corporate Restructuring, LLC as claims and noticing agent and administrative advisor. The Committee has applied to retain Lowenstein Sandler LLP as counsel and Foresight Restructuring LLC and Dundon Advisers LLC as co-financial advisors.

Prepetition Capital Structure

• As of the Petition Date, the Debtors’ capital structure consisted of (i) funded debt under the Prepetition Credit Facility; (ii) subordinated secured and unsecured debt obligations owed to CLP affiliates under the Subordinated CLP Secured Notes; and (iii) general unsecured liabilities, principally trade payables and disputed TSA obligations.
  • The Debtors’ primary assets consist of inventory, accounts receivable, FF&E, brand license agreements, international product sourcing and vendor relationships, and intangible intellectual property. As of Aug. 3, 2026, the Debtors had approximately $274,307.35 in cash on hand; such amounts are swept daily, with weekly operational disbursements received in accordance with the Debtors’ cash management system and the DIP Documents.
  • CLP projected that the new company would open with $5 million of cash and approximately $49 million of finished goods inventory. Because the Carve-Out Transaction closed approximately four months late, CLP pre-funded a portion of the purchase price, releasing inventory and enabling Live Comfortably to recognize approximately $21 million of revenue from the soft goods business for January and February 2025 prior to the Debtors’ formation. The Debtors state they started with no cash on hand, received only approximately $29 million of inventory (of which approximately $22 million was excess and obsolete), and assumed accounts payable of approximately $32 million versus the projected $25 million, requiring management to revise the 2025 revenue plan from $185 million down to $86 million. In fiscal year 2025 the Debtors generated approximately $84.7 million in gross revenue and approximately $3.4 million in Adjusted EBITDA; fill rates began at approximately 30% to 40% against retail partner expectations of 95% or greater, rebounding to over 90% by the fourth quarter of 2025 after certain programs had already been lost. Reciprocal tariffs took effect April 15, 2025.
• Prepetition Credit Facility: As of the Petition Date, the Debtors were obligors with respect to not less than $17,916,002.34 (plus accrued but unpaid interest and fees, including commitment termination fees and expenses) in funded debt under a revolving credit facility governed by the Prepetition Credit Agreement, dated as of Feb. 21, 2025, among non-Debtor SIH Intermediate (f/k/a Soft Goods Intermediate, LLC), SIH Acquisition and SIH (f/k/a Soft Goods Operating, LLC), as borrowers, the other guarantors party thereto, the Prepetition Agent and the Prepetition Lenders.
  • The facility provides for aggregate revolving credit commitments of $30 million and matures Feb. 21, 2029. The obligations are secured by a first-priority lien on substantially all of the Debtors’ assets.
  • Great Rock Capital Partners Management, LLC serves as administrative agent and collateral agent, and GRC SPV Investments, LLC and Wingspire Capital, LLC are the lenders.
  • As of July 31, 2026, the Debtors had paid down approximately $582,000 of the Prepetition Secured Obligations, which may be subject to adjustment in accordance with the Final DIP Order, and believe the approximate outstanding balance as of that date is $7.7 million.
• Subordinated Sponsor Secured Notes: In connection with the formation of the Debtors and subsequent capital contributions, CLP, through its affiliated funds, provided capital structured as the Subordinated Sponsor Notes and the 11th Lane Unsecured Note, held by CLP IV, CLP V and 11th Lane (an affiliate of Centre Lane Partners), respectively. The Subordinated Sponsor Secured Notes are subordinated in right of payment and lien priority to the Prepetition Credit Facility pursuant to a Subordination and Intercreditor Agreement dated Feb. 21, 2025.
  • CLP IV Secured Note: Issued Feb. 8, 2024 by SIH in favor of CLP IV in an original principal amount of $5 million, as amended and restated from time to time. The principal balance was $6,875,633 as of June 30, 2025, with all unpaid principal and accrued interest due Aug. 21, 2029. The note accrues interest at 12% per annum, compounded annually, with interest capitalized and added to outstanding principal on each anniversary of the issuance date. Per the Debtors’ books and records, the total outstanding balance as of the Petition Date was $7,954,818.
  • CLP V Secured Note: Issued Feb. 8, 2024 by SIH in favor of CLP V in an original principal amount of $42 million, as amended from time to time. The principal balance was $53,175,734 as of June 30, 2025, with all unpaid principal and accrued interest due Aug. 21, 2029. Like the CLP IV Secured Note, it bears interest at 12% per annum, compounded annually, with interest payable as PIK interest. Per the Debtors’ books and records, the total outstanding balance as of the Petition Date was $61,680,012, comprised of the $53,175,734 principal amount plus accrued interest.
  • Each of the CLP IV and CLP V note obligations is purportedly secured by a second-priority lien on substantially all of the Debtors’ assets pursuant to Second Lien Security Agreements dated as of Feb. 21, 2025, between SIH, as borrower, SIH Acquisition, as guarantor, non-Debtor SIH Intermediate, as the holding company, and the applicable lender.
  • The combined outstanding balances of the two notes, as reflected in the Debtors’ books and records, total $69,634,830.
• 11th Lane Unsecured Note: Debtor SIH Acquisition and 11th Lane are parties to a note issued in favor of 11th Lane, dated Sept. 13, 2024, in an original principal amount of $17 million, with all unpaid principal and accrued interest due Sept. 19, 2028. The note is unsecured and, while papered as a “promissory note,” is not reflected as a debt obligation on the Debtors’ balance sheet; rather, amounts advanced are reflected on the Debtors’ books and records as an equity contribution.
  • The Debtors state that the circumstances surrounding the note raise significant concerns. First, the Debtors are not in possession of any duly executed copy of the note or any amendments thereto. Second, equity contributions under the note may have been improperly elevated to debt obligations under the CLP IV Secured Note without the Debtors’ informed consent.
  • The Debtors possess an unsigned amendment to the note dated Nov. 26, 2025, alleging that CLP IV paid $1,952,362 to 11th Lane on behalf of SIH Acquisition on such date, resulting in a purported decrease in the 11th Lane Unsecured Note obligations from $17 million to $15,047,638. Upon information and belief, the amounts CLP IV ostensibly “paid down” were then purportedly added to the secured CLP IV Secured Note — converting an equity investment to a secured debt obligation, in each case without the Debtors’ consent and with no consideration to the Debtors.
  • The circumstances surrounding the negotiation and preparation of the note, and the propriety of the purported paydown and resulting increase to the CLP IV Secured Note, are among the matters being examined as part of the Debtors’ investigation.
• Hookless Litigation: Debtor SIH is a plaintiff, together with Zahner Design Group, Ltd. and Hookless Systems of North America, Inc., in the First Hookless Litigation, an intellectual property infringement action pending in the U.S. District Court for the Southern District of New York against Kartri Sales Company, Inc. and Marquis Mills, International, Inc. concerning U.S. Patent Nos. 6,494,248; 7,296,609; and 8,235,088, U.S. Design Patent No. D746,078, and claims of trademark infringement and unfair competition, including trade dress violations relating to the HOOKLESS mark. The court issued a written opinion on Dec. 22, 2022; on remand, the parties have completed two stages of briefing and await a ruling. On March 8, 2023, Keeco LLC (n/k/a Live Comfortably), with HSNA and ZDG, filed the Second Hookless Litigation against Kartri to redress further infringement and violation of the injunction issued in the first action; Kartri’s motion to dismiss is pending and the issues center on the trade dress questions in the first action.
  • The Debtors anticipate a favorable outcome in both actions, with the potential for a net recovery of approximately $2 million, and plan to allocate a significant portion of the proceeds to payment of creditors rather than to counsel’s fees, as approximately 90% of such fees are paid through the assignment of royalty payments resulting from a prior successful infringement action. Although Live Comfortably is the named plaintiff in the second action, the Debtors state that SIH is the successor-in-interest to the licensing rights relating to the Hookless brand and expect to receive their proper allocation of any award.
  • CLP has asserted that the Debtors do not own or hold any right, title or interest in the Hookless Litigation, and that CLP holds such right, title and interest to the exclusion of the Debtors. The Debtors state that they are not aware, and have not been made aware, of any documentation suggesting that is the case.
• Unsecured claims: As of the Petition Date, unsecured liabilities primarily consisted of trade payables owed to vendors, including approximately $12 million in aged payables owed to non-go-forward vendors, and also include (a) amounts owed to go-forward trade vendors, the full scope of which the Debtors continue to assess; (b) disputed amounts asserted by Live Comfortably under the TSA; (c) lease obligations relating to the Debtors’ office, showroom and other facility locations; (d) disputed amounts under the 11th Lane Unsecured Note; and (e) employee-related obligations.
  • The Debtors’ filed Schedules evidence aggregate unsecured liabilities of approximately $45 million. The Debtors continue to analyze the universe of general unsecured claims and anticipate potential updates following passage of the General Bar Date.

DIP Financing

• The DIP Facility was provided pursuant to an ABL DIP Financing Term Sheet dated as of July 1, 2026, between the Debtors and the DIP Secured Parties, and the Final DIP Order entered by the Bankruptcy Court on July 2, 2026 at Docket No. 214. Great Rock Capital Partners Management, LLC serves as sole and exclusive administrative agent, with GRC SPV Investments, LLC and Wingspire Capital, LLC as DIP Lenders.
• Prior to the Petition Date, Rock Creek Advisors, LLC (“Rock Creek”) reached out to several parties in addition to the eventual DIP Secured Parties regarding the potential provision of debtor-in-possession financing, as the Debtors did not otherwise have the necessary liquidity to continue their business in the ordinary course while funding the chapter 11 cases. None of these parties were willing to provide such financing on both better and executable terms than the DIP Secured Parties.
  • The Debtors state that, without the proceeds of the DIP Facility, they would be unable to fund payroll obligations or services from vendors, run the necessary sale process, or administer the chapter 11 cases, thereby dissipating value to the detriment of the estates and stakeholders.
• Treatment: On the effective date, except to the extent a holder agrees to less favorable or alternative treatment, each holder of an allowed DIP claim — including interest, fees and all other amounts due and owing under the DIP Facility — has consented to receive, and shall receive, payment in full in cash in the amount of such holder’s pro rata share of Distributable Value in accordance with the Waterfall Recovery, applied in accordance with the DIP Documents. For the avoidance of doubt, the provisions of the DIP Order survive entry of the confirmation order. All DIP facility claims and prepetition secured claims are deemed allowed under the plan.
• The Wind-Down DIP Draw constitutes the Debtors’ final draw under the DIP Facility, occurring on the effective date in an amount sufficient to fund the Wind-Down Account.

Liquidation Process and Asset Sales

• Prior to the Petition Date, and after soliciting proposals from four liquidation firms, the Debtors engaged SB360 Capital Partners, LLC (“SB360”) as liquidation consultant to conduct liquidation sales of the Debtors’ inventory, receivables, FF&E and intellectual property, subject to court approval (the “Liquidation Process”).
  • Proceeds from the asset sales have been critical to the success and ongoing funding of the chapter 11 cases and will remain so until the closing of any sale. As of the beginning of August 2026, the Debtors had generated and collected approximately $2 million in gross sales and receivables from the Liquidation Process.
• The Debtors also engaged Rock Creek as sales agent to develop and implement a comprehensive sale and marketing process designed to maximize the value of the business and assets on a going-concern basis, and to conduct lender outreach to ensure access to competitive debtor-in-possession financing.
  • In parallel with SB360’s Liquidation Process, Rock Creek reached out to approximately 200 parties (65 strategic and 135 financial), sent marketing materials, set up a comprehensive data room, offered advisor and management calls, and made itself available to answer diligence questions, providing periodic updates to management on marketing efforts and discussions with potentially interested parties.
• The Bankruptcy Court entered the Bidding Procedures Order on June 23, 2026 at Docket No. 111, setting July 1, 2026 at 4 p.m. ET as the deadline to select a stalking horse bidder (subsequently extended by notice to July 13, 2026 at 4 p.m. ET), July 27, 2026 at 5 p.m. ET as the bid deadline for qualified bids, and July 29, 2026 as the deadline to designate qualified bids or cancel the auction. The Debtors did not designate a stalking horse bidder.
• The Debtors received six qualified bids for certain of the assets and held an auction on July 30, 2026, at which they declared the following successful bids:
  • Eclipse brand intellectual property — Y M F Carpets, Inc. d/b/a Creative Home Ideas: $2.3 million upfront cash plus a 2% royalty on net sales through Dec. 31, 2029, including guaranteed minimum royalty payments totaling $600,000 payable in equal quarterly installments from 2027 through 2029, which the Debtors, in consultation with the consultation parties, valued together at $2,963,600. S. Lichtenberg & Co., Inc. was the backup bidder, at $2.4 million upfront plus a 2% royalty through Dec. 31, 2029 including guaranteed minimum royalties totaling $150,000 ($50,000 payable each year from 2027 through 2029), valued together at $2,924,700.
  • Hookless brand intellectual property — Elegant Home Interiors Inc. (“EHI”): $100,000 upfront cash plus a 3% royalty on net sales up to a $900,000 cap, including guaranteed minimum royalty payments of $100,000 each year from 2027 through 2029 (totaling $300,000), valued together at $403,000. No backup bidder.
  • Historic Charleston brand intellectual property — Beatrice Home Fashions, Inc.: $40,000 upfront cash, valued at $40,000. No backup bidder.
  Following the sale hearing, the Bankruptcy Court entered two sale orders — the Eclipse IP Sale Order and the Historic Charleston IP Sale Order — approving the Asset Purchase Agreement with Y M F Carpets, Inc. and the Bill of Sale and Assignment Agreement with Beatrice Home Fashions, Inc. and the respective sales to the respective purchasers.
  • The Debtors anticipate the closing of these sales occurring no later than Aug. 21, 2026, and anticipate generating approximately $3 million of cash to the estates following the closings and payment of the minimum guaranteed royalty payments.
  • Due to concerns about Elegant Home Interiors Inc.’s ability to close a sale of the Hookless brand intellectual property, the Debtors have not sought approval of a Hookless IP Sale Order. To the extent the Debtors enter into an asset purchase agreement with either an alternate purchaser or with EHI for such assets, they will make appropriate filings on the docket and serve them on parties in interest; parties in interest are advised to monitor the docket. Any proceeds from a sale of the Hookless brand intellectual property are not included in the assets comprising the basis for the estimated recoveries described in the Combined Disclosure Statement and Plan.
• Cash proceeds from the sales and the Liquidation Process will form the preliminary basis for distributions contemplated under the Combined Disclosure Statement and Plan, to be augmented by the monetization of other Liquidating Trust Assets.

Plan Implementation and Liquidating Trust

• The Combined Disclosure Statement and Plan will be implemented by, among other things, (i) the establishment of the Liquidating Trust, the appointment of the Trust Oversight Board and the appointment of the Liquidating Trustee as of the effective date; and (ii) the making of distributions to holders of allowed claims from the Liquidating Trust Assets. All consideration necessary to make monetary payments will be obtained from the Liquidating Trust Assets to be monetized by the Liquidating Trustee.
• The plan is a joint plan for each of the Debtors and provides for the limited substantive consolidation of the Debtors’ estates, solely for plan purposes, including voting and distributions. On the effective date: (i) all assets and liabilities of the Debtors will, solely for voting and distribution purposes, be treated as if merged; (ii) each claim will be deemed a single claim against and a single obligation of the Debtors; (iii) any claims filed or to be filed will be deemed single claims against all Debtors; (iv) all guarantees by any Debtor of the payment, performance or collection of obligations of any other Debtor will be eliminated and canceled; (v) all transfers, disbursements and distributions on account of claims made by or on behalf of any estate will be deemed made by or on behalf of all estates; and (vi) any obligation of the Debtors as to claims will be deemed one obligation of all Debtors.
• The Liquidating Trust will be established for the sole purpose of liquidating and distributing Liquidating Trust Assets in accordance with Treasury Regulation section 301.7701-4(d) and as a “grantor trust” for U.S. federal income tax purposes pursuant to sections 671 through 679 of the Internal Revenue Code (excluding any Disputed Claims Reserve), with no objective to continue or engage in the conduct of a trade or business except to the extent reasonably necessary to, and consistent with, its liquidating purpose. On the effective date, the Liquidating Trust Assets will immediately vest in the Liquidating Trust for the benefit of the Liquidating Trust Beneficiaries.
  • Liquidating Trust Assets comprise (i) Remaining Cash; (ii) after payment of allowed professional fee claims, cash in the Professional Fee Reserve (if any); (iii) after payment of allowed professional fee claims, any retainers, deposits or similar instruments or agreements held by the Debtors’ professionals; (iv) the Excluded Assets; (v) the Retained Causes of Action (and proceeds thereof); (vi) all cash in the Wind-Down Account; and (vii) any and all other assets, including inventory, of the Debtors other than Acquired Assets.
  • The Liquidating Trustee will be selected by the Committee, with the consent of the Debtors and the DIP Lenders, and identified in the Plan Supplement and the Liquidating Trust Agreement. The Liquidating Trust Agreement must be in form and substance reasonably acceptable to the DIP Secured Parties and the Committee.
  • Liquidating Trust Interests are non-certificated beneficial interests allocable to holders of allowed claims, entitling each holder to its pro rata share of Liquidating Trust Net Assets in accordance with the Waterfall Recovery.
  • The Liquidating Trustee has sole authority to investigate, prosecute, settle or abandon the Retained Causes of Action, consulting with the Trust Oversight Board on any decision to abandon, and may enter into arrangements to fund such litigation with third parties or with certain holders of beneficial interests, provided that any such funding has recourse solely to the proceeds of the Retained Causes of Action. The trust succeeds to the tolling provisions of Bankruptcy Code section 108 and to the Debtors’, the estates’ and the Committee’s evidentiary privileges — including attorney-client privilege and work product — which are shared with and vest in the trust without waiver. On the effective date the trust is deemed substituted as the party to any pending litigation to which a Debtor is a party. The Liquidating Trustee is indemnified solely from trust assets, other than for fraud, gross negligence, willful misconduct, criminal conduct or intentional breach, and is the sole representative of the estates appointed under section 1123(b)(3). Issuance of the beneficial interests satisfies Bankruptcy Code section 1145 and is exempt from registration.
• Governance: The Liquidating Trustee will be overseen and managed by a Trust Oversight Board comprising three members — two selected by the DIP Secured Parties and one by the Committee. Great Rock Capital Partners Management, LLC, Wingspire Capital, LLC and the Committee shall each have authority to appoint one member. The initial members are to be identified in the Plan Supplement, and each member shall have one vote. The Liquidating Trustee will hold meetings with the board at least quarterly to consult in good faith on all material issues affecting the trust, including claims resolution and the disposition of trust assets, and must seek board approval for material decisions and give reasonable advance notice of (a) any proposed sale, transfer or exchange of Liquidating Trust Assets above $150,000; (b) any settlement of causes of action asserted in an amount exceeding $250,000, or asserted in an unliquidated amount that the Liquidating Trustee reasonably estimates could exceed $250,000; (c) any claims resolution resulting in an allowed claim exceeding $250,000; (d) any decision to abandon a Retained Cause of Action; and (e) any proposed material modification to the Liquidating Trust Agreement, including any adjustment to the Liquidating Trustee’s compensation. Where the plan and the Liquidating Trust Agreement conflict on trust governance, administration of trust assets, resolution of Retained Causes of Action or the board’s oversight authority, the Liquidating Trust Agreement governs.
• Dissolution: The Liquidating Trustee, the Trust Oversight Board and the Liquidating Trust shall be discharged or dissolved, as applicable, once (i) all Liquidating Trust Assets have been liquidated and (ii) all required distributions have been made, but in no event later than five years from the effective date unless the Bankruptcy Court, upon motion filed within the six-month period prior to the fifth anniversary of the effective date (and, for any extension, within six months prior to the end of such extension), determines that a fixed-period extension is necessary to facilitate or complete the recovery and liquidation of the trust’s assets. Any such extension may not exceed three years, together with any prior extensions, absent a favorable IRS letter ruling that a further extension would not adversely affect the trust’s status as a liquidating trust for U.S. federal income tax purposes.

Retained Causes of Action

• The plan provides for all Retained Causes of Action — collectively, all of the Debtors’ and the estates’ causes of action, including any avoidance actions, that (i) do not constitute Acquired Assets or (ii) are not waived, released, compromised or settled pursuant to the plan or a final order of the Bankruptcy Court, including the DIP Order — to vest in the Liquidating Trust.
• The vesting, further investigation and prosecution of the Retained Causes of Action is described as a critical and integral component of the plan. The Retained Causes of Action, set forth in greater detail in the Plan Supplement, include causes of action against the Non-Released Parties and relate to, among other things, the Carve-Out Transaction, transactions between the Debtors and Live Comfortably (including related to the TSA), the Subordinated Sponsor Secured Notes and the 11th Lane Unsecured Note.
• The Retained Causes of Action and related rights constitute the majority of the Liquidating Trust Assets that will vest in the Liquidating Trust for the benefit of holders of allowed claims entitled to the Distributable Value of the Liquidating Trust Net Assets.
  • It is expected that holders of allowed claims in Class 3 (Prepetition Secured Claims) and Class 5 (General Unsecured Claims) would not vote in favor of the plan absent the Liquidating Trust’s express responsibility and authority to investigate and pursue such claims in order to facilitate and maximize distributions. As such, the Liquidating Trust’s ability to pursue the Retained Causes of Action is fundamental to plan implementation and the administration of the estates and the Liquidating Trust.
  • Notwithstanding that characterization, no value has been ascribed to the Retained Causes of Action for purposes of the Combined Disclosure Statement and Plan, and the projected recoveries do not reflect them. The Debtors caution that there is no guarantee any Retained Cause of Action will be prosecuted or is viable as a matter of fact or law, that pursuit will be successful, or that success would increase the funds available for distribution; both the outcomes and the expenses of investigating and prosecuting the claims may materially affect recoveries. The Plan Supplement schedule of Retained Causes of Action is non-exclusive, and no person or entity other than the Released Parties may rely on the absence of a specific reference as an indication that the claim will not be pursued; causes of action against any and all non-Debtor affiliates are Retained Causes of Action.

Waterfall Recovery

• Distributable Value shall be paid to holders of allowed claims until paid in full, from time to time, in the following priority, in each case on a pro rata basis:
  • First, allowed administrative claims (which, as defined, include allowed professional fee claims, DIP facility claims, 503(b)(9) claims and U.S. Trustee fees) and allowed priority tax claims;
  • Second, allowed other secured claims;
  • Third, allowed priority non-tax claims;
  • Fourth, allowed prepetition secured claims;
  • Fifth, allowed subordinated sponsor secured note claims; and
  • Sixth, allowed general unsecured claims and allowed deficiency claims, subject, in the case of any subordinated sponsor note deficiency claims, to the outcome of litigation (whether by final order or by settlement approved by the Bankruptcy Court), including with respect to the Retained Causes of Action.

Classification and Treatment of Claims and Interests

• All claims and interests other than administrative claims (including professional fee claims) and priority tax claims are placed in classes; in accordance with Bankruptcy Code section 1123(a)(1), such unclassified claims have not been classified.
  • Administrative claims (including allowed professional fee claims): As soon as practicable after the effective date, each holder shall receive, from the Liquidating Trust Assets, (i) cash equal to the amount of such allowed claim or (ii) such other treatment as agreed upon in writing with the Debtors or the Liquidating Trustee.
  • Priority tax claims: Within the time period provided in Article X of the plan, each holder shall receive, from the Liquidating Trust Assets, (i) cash equal to the amount of such allowed claim or (ii) such other treatment as agreed upon in writing with the Debtors or the Liquidating Trustee.
• The Debtors’ estimated claim amounts and projected recoveries, which the plan states are estimates only and subject to material change, are: Class 1 (Other Secured Claims), $1.5 million, 100%; Class 2 (Priority Non-Tax Claims), de minimis, 100%; Class 3 (Prepetition Secured Claims), $7.9 million, 1% to 35%; Class 4 (Subordinated Sponsor Secured Note Claims), $0.00 to $69.6 million, unknown; Class 5 (General Unsecured Claims), $28.4 million to $123.6 million, 0% to 17%; and Classes 6 through 9, no recovery. The actual allowed amounts of Class 4 and Class 5 claims may be subject to the outcome of litigation, including with respect to the Retained Causes of Action, and no value is ascribed in these estimates to the ultimate litigation, settlement or other monetization of those claims. All DIP facility claims and prepetition secured claims are deemed allowed under the plan.
• Class 1 (Other Secured Claims) — Unimpaired; conclusively presumed to accept and not entitled to vote. On the effective date, each holder shall receive, at the option of the Debtors or the Liquidating Trustee: (i) return of the collateral securing such claim; (ii) payment in full in cash; or (iii) such other treatment rendering the claim unimpaired.
• Class 2 (Priority Non-Tax Claims) — Unimpaired; conclusively presumed to accept and not entitled to vote. Each holder shall receive (i) payment in full in cash or (ii) treatment consistent with Bankruptcy Code section 1129(a)(9).
• Class 3 (Prepetition Secured Claims) — Impaired; entitled to vote. Each holder shall receive, in full and final satisfaction, settlement and release of its claim, its pro rata share of Liquidating Trust Interests entitling it to its pro rata distribution of Distributable Value in accordance with the Waterfall Recovery.
• Class 4 (Subordinated Sponsor Secured Note Claims) — Impaired; entitled to vote. Each holder shall receive, in full and final satisfaction, settlement and release of its claim, its pro rata share of Liquidating Trust Interests entitling it to its pro rata distribution of Distributable Value in accordance with the Waterfall Recovery. The Class 4 claims arise under the CLP IV and CLP V Secured Notes and are held by CLP IV and CLP V, which are Non-Released Parties and among the targets of the Retained Causes of Action; the classification, voting rights and distribution entitlements of any subordinated sponsor note deficiency claims are subject to and governed by the outcome of litigation, whether by final order or by settlement approved by the Bankruptcy Court.
• Class 5 (General Unsecured Claims) — Impaired; entitled to vote. Each holder shall receive, in full and final satisfaction, settlement and release of its claim, its pro rata share of Liquidating Trust Interests entitling it to its pro rata distribution of Distributable Value in accordance with the Waterfall Recovery.
  • For purposes of calculating each holder’s pro rata share of Liquidating Trust Interests and Distributable Value, no subordinated sponsor note deficiency claim shall be included in the aggregate amount of allowed general unsecured claims unless and until such claim has been finally determined by the outcome of litigation (whether by final order or by settlement approved by the Bankruptcy Court), including with respect to the Retained Causes of Action.
• Class 6 (Intercompany Claims) — Impaired; conclusively presumed to reject and not entitled to vote. All intercompany claims between the Debtors will be canceled on the effective date and the Debtors shall not receive any recovery, subject to tax considerations minimizing the Debtors’ tax liabilities.
• Class 7 (Intercompany Interests) — Impaired; conclusively presumed to reject and not entitled to vote. All intercompany interests shall be canceled and extinguished as of the effective date, with no distribution to holders.
• Class 8 (510(b) Claims) — Impaired; conclusively presumed to reject and not entitled to vote. All 510(b) claims shall be canceled and extinguished as of the effective date, with no distribution to holders.
• Class 9 (Interests) — Impaired; conclusively presumed to reject and not entitled to vote. All interests shall be canceled and extinguished as of the effective date, with no distribution to holders.
• Any class that does not contain a holder of an allowed claim or interest, or a claim temporarily allowed under Bankruptcy Rule 3018, as of the commencement of the Confirmation Hearing will be deemed deleted from the plan for all purposes, including for determining acceptance under section 1129(a)(8). Because Classes 6 through 9 are deemed to reject, the Debtors will seek confirmation by satisfying the cramdown requirements of Bankruptcy Code section 1129(b)(2)(B), and reserve the right to seek confirmation under section 1129(b) as to any other rejecting class. For an impaired class of claims to accept, holders of at least two-thirds in dollar amount and more than one-half in number of the allowed claims in that class that timely and properly vote must vote to accept. Except as expressly provided, nothing in the plan affects the Debtors’ rights and defenses, legal and equitable, with respect to any claims or interests, including unimpaired claims and interests and defenses to alleged rights of setoff or recoupment.

Distributions

• The Liquidating Trustee will serve as Disbursing Agent from and after the effective date, and may retain a third party or professionals to make disbursements. All distributions are made in accordance with the Waterfall Recovery, and no distribution on account of allowed general unsecured claims may be made unless and until all allowed claims of higher priority under the Bankruptcy Code have been paid in full or reserved for and all Liquidating Trust Expenses have been paid in full or reserved for.
• On any distribution date, the Liquidating Trustee will reserve cash or property equal to 100% of what would be distributed on account of disputed claims as if each were allowed, unless the Bankruptcy Court orders otherwise following notice to the affected holder, with such amounts held in trust pending determination.
• Cash payments will be made by wire, check or other method at the Liquidating Trustee’s discretion; claims denominated in foreign currency will be converted at the published exchange rate in effect on the Petition Date. Fractional cents are rounded to the nearest whole penny. No distribution will be made to a holder if the amount is less than $100, and any such holder is forever barred from asserting the claim against the Liquidating Trust Assets.
• Checks are void if not negotiated within 90 days of issuance, and reissuance requests must be made within 30 days after a check is voided. Notwithstanding any escheat law, any distribution that remains undeliverable for 90 days or is represented by a voided check is deemed unclaimed property under section 347(b), reverts to and revests in the Liquidating Trust as Liquidating Trust Assets available for redistribution, and the corresponding claim is deemed disallowed, expunged and forever barred.
• The Liquidating Trustee may require an executed Form W-9, Form W-8 or other appropriate tax documentation as a condition precedent to any distribution, on no less than 90 days’ written notice; a holder that fails to comply may, at the Liquidating Trustee’s discretion, receive a distribution net of withholding or be deemed to have forfeited the distribution, in which case the amount reverts to the trust and the claim is waived, discharged and forever barred.
• The Debtors or the Liquidating Trustee may set off against any allowed claim any claims, rights and causes of action they hold against the holder, provided that neither the failure to effect a setoff nor the allowance of a claim waives such rights; no holder may set off against the Debtors unless it filed a motion seeking such authority on or before the Confirmation Date, though filing a proof of claim is sufficient to preserve a right of setoff. Distributions may be reduced by amounts a holder receives from third parties.
• After the effective date, the Liquidating Trustee has sole authority to file, withdraw or litigate objections to claims and interests, to settle, compromise or allow any claim without further Bankruptcy Court approval, to amend the Schedules and to adjust the claims register, and may request estimation of any contingent or unliquidated claim under section 502(c), with any estimated amount constituting the allowed amount.

Wind-Down

• Following the closing of the sale, if any, and the conclusion of the Liquidation Process, the Debtors will focus on efficiently winding down their business, preserving cash and monetizing their remaining assets. The plan provides for the Liquidating Trust Assets, to the extent not already liquidated, to be liquidated over time, with proceeds distributed to holders of allowed claims; the Liquidating Trustee will effect such liquidation and distributions subject to the governance terms of the Liquidating Trust Agreement.
• On the effective date, the authority, power and incumbency of the persons acting as managers, directors and officers of the Debtors terminate and those persons are deemed to have resigned, after which the Liquidating Trustee becomes the sole manager, sole director and sole officer of the Post-Effective Date Debtors and succeeds to their powers. Also on the effective date, except as otherwise provided, all notes, instruments, certificates and other documents evidencing or creating any indebtedness, obligation, ownership interest, equity or profits interest in the Debtors, and any warrants, options or other securities exercisable for or convertible into such interests, are deemed cancelled and surrendered without further action, provided that any such agreement governing a holder’s rights continues in effect solely to allow holders to receive distributions.
• The Wind-Down Account consists of the Debtors’ bank account or accounts used to fund all expenses and payments required to be made by the Post-Effective Date Debtors and the Liquidating Trust, and will be funded on the effective date with cash in the amount of the Wind-Down DIP Draw.
• The Professional Fee Reserve will be established and funded by the Debtors pursuant to the DIP Documents prior to the effective date to satisfy unpaid professional fee claims. The Debtors shall fund and reserve the Professional Fee Reserve until payment in full of all allowed professional fee claims, and may hold it, at their option, in an escrow account. If the reserve is insufficient to fund the full allowed amounts of professional fee claims, the remaining unpaid allowed professional fee claims shall, to the extent permitted under the DIP Order, be paid by the Liquidating Trustee as allowed administrative claims. The reserve may not be used to pay any secured, priority or administrative claims, or to make any other distribution, until all professional fee claims are satisfied or otherwise reserved for. Allowed professional fee claims will be paid from Remaining Cash, the Professional Fee Reserve, Liquidating Trust Assets or any combination thereof, in cash, upon the earlier of the effective date or entry of the order allowing the claim, and objections to any professional fee claim must be filed no later than 21 days after service of the applicable final fee application.
• U.S. Trustee fees due and payable prior to the effective date will be paid by the Debtors in full in cash on the effective date; thereafter the Post-Effective Date Debtors and the Liquidating Trust are jointly and severally liable for all U.S. Trustee fees when due. The Debtors will file monthly operating reports on UST Form 11-MOR for periods before the effective date, and the Liquidating Trustee will file separate UST Form 11-PCR reports thereafter, with the obligation continuing until each Debtor’s case is closed, dismissed or converted. U.S. Trustee fees are allowed, the U.S. Trustee is not required to file a proof of claim, and the U.S. Trustee is not treated as providing any release under the plan; nothing in the plan or Plan Supplement determines that future distributions are not disbursements under 28 U.S.C. section 1930 or prejudices the U.S. Trustee’s rights thereunder.
• The Liquidating Trustee is authorized to take any and all actions necessary to effect the Debtors’ dissolution, termination or cancellation for all purposes under applicable state law, and to file the required documents providing for such dissolution or cancellation. The filing of the Debtors’ certificate of dissolution, termination or cancellation shall be authorized and approved in all respects without further action under applicable law, regulation, order or rule, including any action by the stockholders, members or board of directors of the Debtors.

Executory Contracts and the TSA

• On the effective date, all executory contracts will be deemed rejected in accordance with, and subject to, Bankruptcy Code sections 365 and 1123, except to the extent: (a) the Debtors previously assumed, assumed and assigned, or rejected such contract; (b) prior to the effective date, the Debtors filed a motion to assume, assume and assign, or reject a contract on which the Bankruptcy Court has not ruled; or (c) the contract is specifically described in the plan as to be assumed in connection with confirmation, or is specifically scheduled to be assumed or assumed and assigned pursuant to the plan or the Plan Supplement, including by being listed on the Schedule of Assumed Executory Contracts. Entry of the confirmation order constitutes approval of such assumptions, assignments and rejections.
  • Claims arising from the rejection of executory contracts under the plan must be filed and served on the Liquidating Trustee no later than 30 days after service of notice of the effective date; this deadline applies only to contracts rejected automatically by operation of Article XII of the plan. For any executory contract previously rejected, the Bar Date Order governs.
  • The Debtors or the Liquidating Trustee shall pay cures, if any, on the effective date. Unless otherwise agreed in writing, all requests for payment of cure that differ from ordinary course amounts paid or proposed to be paid shall be dealt with in the ordinary course of business and, if needed, filed with the Claims Agent on or before 30 days after the effective date. Any counterparty that does not receive a notice of assumption and applicable cure amount shall have until 30 days after the effective date to file a request for payment of cure. Any objection to the assumption of an executory contract must be filed on or before 30 days after the effective date; any counterparty that fails to timely object will be deemed to have consented. No executory contract assumed pursuant to section 365, including pursuant to the plan, shall be terminated or cancelled on the effective date.
• TSA background: In connection with the Carve-Out Transaction, on Feb. 21, 2025, the Debtors and Live Comfortably executed a number of ancillary agreements, including the Transition Services Agreement, to facilitate the Debtors’ transition to standalone operations following the separation. The TSA imposed substantial cost burdens on the Debtors, including trailing annual charges exceeding $2.5 million.
  • On April 28, 2026, Live Comfortably delivered a formal notice of breach asserting that the Debtors had failed to pay for transition services under the TSA in the amount of approximately $5.1 million, and reserving the right to terminate the TSA and to suspend or cease providing services.
  • The Debtors dispute Live Comfortably’s characterization of the amounts owed and have demanded a comprehensive reconciliation of all amounts due to and from the parties under the TSA, including a full accounting for all historical wrong-pockets payments received by Live Comfortably on the Debtors’ behalf and all setoffs applied by Live Comfortably. Although the reconciliation has not been completed, the Debtors believe that Live Comfortably, at CLP’s direction, may have inappropriately set off a significant amount of cash collections rightly belonging to the Debtors.
  • The Debtors state that they had no independent information technology systems at formation and, because of delays in updating their formal name change with the IRS, were delayed in establishing new vendor accounts with certain major customers, requiring them to rely on Live Comfortably to receive and remit customer remittance payments throughout 2025 and, for several major customers, into 2026. From January to May 2026, the Debtors’ customers remitted more than 75% of the Debtors’ collections to Live Comfortably’s bank accounts, in amounts ranging from $300,000 to $1.5 million per week; the Debtors state that Live Comfortably, at CLP’s direction, frequently delayed remitting those payments notwithstanding repeated demands. The services provided under the TSA span substantially all of the Debtors’ back-office and certain operational functions, including corporate IT, finance and accounting, human resources and payroll, operations support including customs bond access and logistics, and sales and marketing support.
  • The threatened termination of the TSA by Live Comfortably would not only effectively shut down substantially all of the Debtors’ back-office operations — potentially catastrophic to the business — but would also likely trigger an event of default under the Prepetition Credit Facility. After good faith efforts to resolve the dispute, the Debtors determined that these severe risks could not be mitigated through any available out-of-court mechanism.
• TSA treatment under the plan: Notwithstanding anything to the contrary in the plan or the sale transactions documentation, the Post-Effective Date Debtors and the Liquidating Trustee, as applicable, shall have up to 60 days from the effective date (the “TSA Deadline”) to reject the TSA. The TSA Deadline may be extended in additional 30-day increments upon the prior written consent of Live Comfortably (such consent not to be unreasonably withheld) or by further order of the court.
  • Nothing in the plan precludes the Post-Effective Date Debtors and the Liquidating Trustee, as applicable, and Live Comfortably from modifying the terms of the TSA, subject to the express approval of the Trust Oversight Board. All parties’ rights with respect to the TSA — including those of the Debtors, the Post-Effective Date Debtors, the Liquidating Trust, the Liquidating Trustee and Live Comfortably — are expressly preserved.

Releases, Exculpation and Injunction

• The exculpations, releases and injunctions provided for in section 14.1 of the plan shall be effective upon the effective date.
• Released Parties comprise, in each case in its capacity as such: (a) each Debtor; (b) each Post-Effective Date Debtor; (c) each Prepetition Lender; (d) the Prepetition Agent; (e) the DIP Lenders; (f) the DIP Agent; (g) the Committee and each of its current and former members (solely in their capacity as such); and (h) the Related Parties of each of the foregoing.
  • No Non-Released Party shall be a Released Party. Non-Released Parties comprise Centre Lane Partners, LLC; 11th Lane; CLP IV; CLP V; Mayank Singh; Quinn Morgan; Live Comfortably Borrower, LLC; Live Comfortably LLC; Live Comfortably Holdings LLC; Live Comfortably Inc.; Live Comfortably Bedding Canada ULC; and the Related Parties of each of the foregoing other than the Debtors. Notwithstanding the foregoing, the following Related Parties of the Debtors shall be Released Parties: Stuart Kaufman; Adam Zalev; the Debtors’ professionals; and their respective Related Parties. For the avoidance of doubt, no Non-Released Party shall be a Related Party for purposes of the Debtor releases, the third-party releases or the exculpation.
  • The inclusion of any Prepetition Lender, the Prepetition Agent, any DIP Lender or the DIP Agent (or any of their respective Related Parties) as Released Parties, and any releases, exculpations or injunctions inuring to their benefit, is subject to and limited by the terms and conditions of the challenge period and related provisions in the DIP Order. To the extent any challenge is timely commenced and results in a final order sustaining it in whole or in part, the applicable parties shall not be Released Parties with respect to the claims and causes of action that are the subject of such successful challenge and final order.
• Releasing Parties comprise, in each case in its capacity as such: (a) each Debtor; (b) each Post-Effective Date Debtor; (c) each Prepetition Lender; (d) the Prepetition Agent; (e) the DIP Lenders; (f) the DIP Agent; (g) the Committee and each of its current and former members (solely in their capacity as such); (h) all holders of claims that vote to accept the plan and affirmatively opt into the releases; (i) all holders of claims deemed to accept the plan and that affirmatively opt in; (j) all holders of claims that abstain from voting and affirmatively opt in; (k) all holders of claims that vote to reject the plan and affirmatively opt in; (l) all holders of interests that affirmatively opt in; and (m) each Related Party of each of the foregoing for which such entity is legally entitled to bind such Related Party under applicable law.
  • An Opt-In Form will be circulated to holders of claims and interests allowing them to opt into the third-party releases.
• Debtor releases: On the effective date, each of the Debtors and their estates, on their own behalf and as representatives of their estates, shall be deemed to completely and forever release, waive, void and extinguish unconditionally, as against the Released Parties, any and all claims, causes of action, interests, obligations, suits, judgments, damages, debts, rights, remedies, setoffs and liabilities of any nature whatsoever — whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, in law, equity, tort, contract or otherwise — based in whole or part on any act, omission, transaction, event, occurrence or other circumstance, whether direct or derivative, taking place or existing on or prior to the effective date (including prior to the Petition Date) in connection with or related to the Debtors or their operations, their assets, the estates, in- or out-of-court restructuring efforts, the Prepetition Loan Documents, DIP Documents, any settlement, contract, instrument, release or other agreement or document created or entered into in connection therewith, any prepetition transactions, or the chapter 11 cases, except for any claims arising from or related to any act or omission determined in a final order by a court of competent jurisdiction to have constituted fraud, gross negligence or willful misconduct.
• Third-party releases: As of the effective date, the Releasing Parties shall be deemed to forever release and waive, as against the Released Parties, any and all claims, obligations, suits, judgments, damages, demands, debts, rights, remedies, causes of action and liabilities of any nature whatsoever in connection with or related to the Debtors or their operations, their assets, the estates, in- or out-of-court restructuring efforts, the Prepetition Loan Documents, DIP Documents, any settlement, contract, instrument, release or other agreement or document created or entered into in connection therewith, any prepetition transactions, or the chapter 11 cases, based in whole or in part upon any act, omission, transaction, event or other occurrence taking place or existing on or prior to the effective date (including prior to the Petition Date), other than the rights of holders of allowed claims to enforce the obligations under the confirmation order and the plan.
• Preservation of claims against Non-Released Parties: Nothing in the exculpation, Debtor release, third-party release or injunction provisions shall release, waive, bar, limit or otherwise impair (x) any Retained Causes of Action, including any that may be asserted by the Liquidating Trust or the Liquidating Trustee, or (y) any claims, rights, causes of action or defenses that the Debtors, the estates, the Liquidating Trust, the Liquidating Trustee or any other entity may hold or assert against any Non-Released Party, all of which are expressly preserved and shall vest in the Liquidating Trust. For the avoidance of doubt, no Releasing Party shall be deemed to have released any claim or cause of action against any Non-Released Party, and no Non-Released Party shall be entitled to assert or invoke any injunction, release, exculpation or other protection under Article XIV to bar, limit or impair the assertion or prosecution of any Retained Cause of Action or any claim, right or cause of action against such Non-Released Party.
• Exculpation: The Exculpated Parties — (a) the Debtors; (b) the Debtors’ officers and directors serving at any time between the Petition Date and the effective date; (c) the Committee; (d) each member of the Committee in its capacity as such; (e) each professional, consultant or other advisor retained by the Debtors or the Committee pursuant to a Bankruptcy Court order; and (f) to the extent provided in section 1125(e), each of the Released Parties and their respective Related Parties — shall not have or incur any liability to, or be subject to any right of action by, any holder of a claim or interest, any other party in interest, or their respective agents, employees, representatives, financial advisors, attorneys, affiliates, successors or assigns, for any act or omission occurring between the Petition Date and the effective date relating to or arising from the chapter 11 cases, including:
  • Formulating, negotiating or implementing the plan or any contract, instrument, release or other agreement or document created or entered into in connection with it;
  • The sale and/or Liquidation Process;
  • The review by the Debtors’ board of managers or other similar management structure of the Debtors’ strategic alternatives leading up to the sale and/or Liquidation Process;
  • Any other postpetition act taken or omitted to be taken in connection with or in contemplation of the restructuring, sale or liquidation of the Debtors;
  • The solicitation of acceptances of the plan, the pursuit of confirmation, confirmation, and consummation of the plan; or
  • The administration of the plan or the property to be distributed under it,
  in each case except for fraud, gross negligence or willful misconduct as determined by a final order. The exculpation is in addition to, and not in limitation of, all other releases, indemnities, exculpations and any other applicable law or rules protecting the Exculpated Parties from liability, and the confirmation order shall serve as an injunction against any entity seeking to enforce any exculpated claim or cause of action. No Non-Released Party shall be an Exculpated Party.
• Non-discharge and injunction: In accordance with Bankruptcy Code section 1141(d)(3), the plan does not discharge the Debtors, though section 1141(c) provides that the property dealt with by the plan is free and clear of all claims and interests against the Debtors; accordingly, no entity holding a claim or interest may receive payment from or seek recourse against any assets to be distributed under the plan other than the assets required to be distributed to it. On and after the effective date, and until all Liquidating Trust Assets have been liquidated and distributed and the plan has been fully administered (subject to further extension or reduction by motion on notice), all entities that have held, hold or may hold claims against or interests in the Debtors — whether or not they filed proofs of claim and whether they voted for, against or abstained, or are presumed to accept or deemed to reject — together with their present and former employees, agents, officers, directors, principals and affiliates, are enjoined, solely with respect to claims, interests and causes of action treated by the plan, from taking any of the following actions against the Debtors, the Post-Effective Date Debtors, the Liquidating Trustee, the Exculpated Parties or the Released Parties: (a) commencing, conducting or continuing any suit, action or proceeding of any kind, directly or indirectly; (b) enforcing, attaching, collecting or recovering any judgment, award, decree or order; (c) creating, perfecting or enforcing any lien or encumbrance; (d) asserting a right of setoff, other than rights exercised prior to the Petition Date; and (e) commencing or continuing any action inconsistent with the plan. Those entities remain free to exercise rights consistent with the plan or the confirmation order, and the injunction does not reach obligations expressly preserved by the plan or defenses thereto, nor does it modify any injunction or stay granted in the sale orders. The injunction expressly does not bar, limit or impair any Retained Cause of Action or any claim, right, cause of action or defense against any Non-Released Party, or the enforcement of any judgment, order or settlement obtained in connection therewith. Separately, upon entry of the confirmation order, all holders of claims or interests and their respective current and former employees, agents, officers, directors, principals and affiliates are enjoined from taking any actions to interfere with the implementation or consummation of the plan.

Risk Factors

• The plan may not be confirmed even if the requisite acceptances are received or cramdown requirements are met, modifications may be required that necessitate re-solicitation, and if the plan is not confirmed it is unclear what distributions holders would receive under a subsequent plan or in a chapter 7 case, in which the Debtors state holders would likely receive substantially less favorable treatment.
• Distributions may be inconsistent with projections: both the actual amount of allowed claims in a class and the funds available for distribution may differ from the Debtors’ estimates, and the allowed amount of claims in any class could be greater than projected or the cash realized from liquidating the Liquidating Trust Assets less than anticipated, in either case substantially reducing recoveries.
• Holders may challenge the classification of claims, and a required reclassification could adversely affect classes by changing their composition and the vote required for approval; classification or treatment disputes could delay confirmation and consummation.
• There is no assurance that the conditions to confirmation and effectiveness will be satisfied or waived, or that the plan will be consummated if confirmed.
• There can be no assurance that the releases provided in Article XIV will be granted; failure to grant them may result in a plan of liquidation that differs from the Combined Disclosure Statement and Plan, or in the plan not being confirmed.
• There is no guarantee that any Retained Cause of Action will be prosecuted or is viable as a matter of fact or law, or that pursuit will succeed or increase funds available for distribution; no value has been ascribed to the Retained Causes of Action.
• The U.S. federal income tax consequences of the plan are complex and uncertain and may vary by holder; no ruling has been or will be sought from the IRS and no opinion of counsel has been or will be obtained.

Conditions Precedent to the Effective Date

• The following are conditions precedent to the occurrence of the effective date:
  • (a) The confirmation order shall have become a final order in full force and effect;
  • (b) No stay of the confirmation order is then in effect;
  • (c) All actions, documents and agreements necessary to implement the plan, including those necessary to implement any transactions contemplated thereunder, shall have been effectuated or executed;
  • (d) The Wind-Down DIP Draw shall have been funded into the Wind-Down Account;
  • (e) The schedule of Retained Causes of Action shall be in form and substance reasonably acceptable to the DIP Secured Parties and the Committee; and
  • (f) The Liquidating Trust Agreement shall be executed in form and substance reasonably acceptable to the DIP Secured Parties and the Committee, and the Liquidating Trustee shall have been selected.
• The Debtors may at any time, without notice or authorization of the Bankruptcy Court, waive in writing any or all of the conditions precedent, whereupon the effective date shall occur without further action by any entity; provided that the conditions specified in Sections 13.1(a), 13.1(e) and 13.1(f) may not be waived without the prior written consent of the Committee.
• If the conditions are not satisfied or waived within 60 calendar days after the confirmation date (or such later date as agreed to by the Debtors in their reasonable business judgment), then: (i) the confirmation order shall be vacated and of no further force or effect; (ii) no distributions shall be made; (iii) the Debtors and all holders of claims or interests shall be restored to the status quo as of the day immediately preceding the confirmation date, as though the confirmation date had never occurred; and (iv) all of the Debtors’ obligations with respect to claims and interests shall remain unaffected, with nothing deemed to constitute a waiver or release of any claims or interests or to prejudice any party’s rights in further proceedings involving the Debtors, and the plan shall be deemed withdrawn.

Confirmation Standards and Tax Treatment

• Best interests test: attached to the Combined Disclosure Statement and Plan as Exhibit A is a hypothetical chapter 7 liquidation analysis reflecting a greater distribution to creditors under the plan than in a chapter 7 case. The Debtors state that a chapter 7 conversion would add the compensation of a trustee and the trustee’s counsel and other professionals, would likely delay the liquidation and ultimate distribution, and would require the estates to pay unpaid chapter 11 expenses allowed in the chapter 7 cases.
• Feasibility: because the Liquidating Trust Assets have been or will be liquidated and the plan provides for distribution of all cash proceeds to holders of allowed claims, the Debtors analyzed the Liquidating Trustee’s ability to meet its obligations and state that the trustee will have sufficient assets to do so.
• Taxes: the sales constituted taxable dispositions, and the Debtors expect current-year losses and net operating losses carried forward from prior years to offset a portion of the gain, subject to the 80%-of-taxable-income limitation applicable to post-2017 NOLs; the Debtors have not analyzed whether all taxable income from the asset sales can be offset, and any resulting tax would be an administrative claim. Cancellation of indebtedness income excluded under the bankruptcy exception will instead reduce tax attributes after the tax for the year of discharge is determined. Under section 1146(a), transfers under or in connection with the plan, including post-confirmation sales, are exempt from stamp, transfer, recording and similar taxes.
• Insurance: confirmation and the effective date have no effect on insurance policies under which the Debtors are or were an insured party, and the confirmation order will include an injunction barring insurers from denying, refusing, altering or delaying coverage on any basis regarding or related to the chapter 11 cases or the plan.
• The Bankruptcy Court retains jurisdiction over matters arising out of or related to the chapter 11 cases and the plan, including claims allowance and objections, fee applications, adversary proceedings and causes of action (including the Retained Causes of Action), executory contract disputes, distributions, plan interpretation and enforcement, disputes concerning the Liquidation Process and the sales, tax matters under sections 346, 505 and 1146, and entry of a final decree. The plan is governed by Delaware law except where the Bankruptcy Code, Bankruptcy Rules or other federal law applies.

Milestones and Key Dates

• Voting Record Date: Aug. 10, 2026, for determining which holders of claims in Classes 3, 4 and 5 could vote on the plan.
• Plan Supplement: to be filed on or before the date that is seven days prior to the Voting Deadline, and to include the Schedule of Assumed Executory Contracts, the Liquidating Trust Agreement, the identity and compensation of the Liquidating Trustee and the special committee of the Liquidating Trust, and the schedule of Retained Causes of Action. Any amendment to the Liquidating Trust Agreement or the schedule of Retained Causes of Action requires the prior written consent of the DIP Secured Parties and the Committee, not to be unreasonably withheld, conditioned or delayed.
• Voting Deadline: Sept. 11, 2026 at 4 p.m. ET, the date and time by which the Claims Agent must have actually received ballots to accept or reject the plan for them to be counted.
• Plan objection deadline: Sept. 11, 2026 at 4 p.m. ET. Objections to final approval of the disclosures as providing adequate information under section 1125, or to confirmation under section 1129, must be made in writing, filed with the Bankruptcy Court, and served on counsel to the Debtors (Goodwin Procter LLP and Potter Anderson & Corroon LLP), the Office of the United States Trustee, counsel to the DIP Secured Parties (Paul Hastings LLP; Young Conaway Stargatt & Taylor, LLP; and Parker, Hudson, Rainer & Dobbs LLP) and counsel to the Committee (Lowenstein Sandler LLP).
• Confirmation Hearing: Sept. 18, 2026 at 10 a.m. ET before the Bankruptcy Court at 824 North Market Street, 3rd Floor, Courtroom 7, Wilmington, Del., to consider (a) final approval of the disclosures contained in the Combined Disclosure Statement and Plan as providing adequate information pursuant to section 1125 and (b) confirmation of the plan pursuant to section 1129.
• Distribution Record Date: the Confirmation Date, on which the claims registers close and claims and interests become non-transferable except upon death of the holder or by operation of law.
• General Bar Date: Aug. 10, 2026 at 5 p.m. ET. Governmental Bar Date: Dec. 7, 2026 at 5 p.m. ET. The Bar Date Order will also establish the Initial Administrative Claim Bar Date.
• Final Administrative Claim Bar Date: For any unpaid administrative claim arising on or between the closing date and the effective date, 30 calendar days after service of the Effective Date Notice, with such date to be provided therein.
• Professional Fee Claims Bar Date: 30 days after service of the Effective Date Notice.
• Professional fee claim objections: due no later than 21 days after service of the applicable final fee application.
• Cure requests and assumption objections: requests for payment of cure differing from ordinary course amounts, requests by counterparties that did not receive an assumption notice, and objections to assumption are each due on or before 30 days after the effective date.
• Effective Date Notice: On or before five business days after the effective date, the Liquidating Trustee shall mail or cause to be mailed to all holders of claims and interests a notice informing them of (a) the occurrence of the effective date; (b) the Final Administrative Claim Bar Date and Professional Fee Claims Bar Date; (c) the deadline to file claims arising from the rejection of executory contracts under Article XII; and (d) such other matters as the Liquidating Trustee deems appropriate or as may be ordered by the Bankruptcy Court.
• Claims Objection Deadline: 180 days after the effective date, or such later date as may be ordered by the Bankruptcy Court; the Liquidating Trustee may seek extensions from the Bankruptcy Court at any time.
• TSA Deadline: 60 days from the effective date to reject the TSA, extendable in additional 30-day increments upon the prior written consent of Live Comfortably (not to be unreasonably withheld) or by further order of the court.