The_Lycra_Company_LLC - Chapter 11 Case Summary

Business Description

Headquartered in Wilmington, DE, The LYCRA Company LLC ("TLC"), along with its Debtor and non-Debtor affiliates (collectively, "The LYCRA Company" or the "Company"), is the leading global innovator and producer of fiber and technology solutions for the apparel and personal care industries, operating through a sophisticated portfolio of consumer brands, including LYCRA®, LYCRA HyFit®, COOLMAX®, and THERMOLITE®, which are integral to virtually every apparel category from activewear to everyday denim and medical compression garments.

• The Company is one of the world's leading spandex producers, commanding unparalleled brand recognition with end customers. Spandex is a specialty fiber with exceptional stretch and recovery properties used to produce elastomeric fabrics, which provide garments with superior comfort and fit.
• Although spandex was initially used in women's intimate apparel and hosiery, it is now a universal component providing comfort and fit in men's and women's denim, activewear, underwear, and hygiene products such as baby diapers and adult incontinence products.

The Company is not itself an apparel manufacturer. Rather, The LYCRA Company innovates fiber technology solutions and produces fibers that it sells to mills, which incorporate the fibers into fabrics. Those fabrics are then supplied to garment manufacturers, which produce finished garments for apparel brands. The Company's business model involves "pushing" innovation from mills to brands to retailers, while simultaneously "pulling" demand by having brands specify LYCRA® fibers to their suppliers.

The Company has a globally integrated supply chain with a presence in fifteen countries across four continents and sales to customers in dozens of countries around the world, achieving revenue of approximately $724 million for fiscal year 2025.

• In fiscal year 2025, the Company had sales to customers in more than 80 countries throughout North America, Europe, Asia, South America, and Central America. Approximately 57% of global sales were concentrated in four countries: China (29%), the United States (15%), Brazil (7%), and Italy (6%).

Today, The LYCRA Company is one of the world's leading spandex innovators and producers in the apparel and personal care industries, with approximately 2,000 employees, eight manufacturing facilities, and eleven offices across North America, Europe, Asia, and South America, along with additional fiber processing operations in various locations around the world.

---

Corporate History

The LYCRA Company traces its origins to 1958, when a team of pioneering chemical scientists at DuPont, led by Dr. Joseph Shivers, invented LYCRA® fiber—the original spandex (elastane) yarn. This groundbreaking innovation fundamentally transformed the apparel industry, which had long been dominated by structured, restrictive designs.

• Before Dr. Shivers' invention, garments requiring stretch and support relied heavily on natural rubber or rubberized materials, which were restrictive and deteriorated quickly.
• Initially adopted in foundation garments and swimwear, LYCRA fiber quickly expanded into hosiery, activewear, and eventually into nearly every category of apparel.
• The fiber's remarkable versatility meant it could be incorporated into fabrics in small percentages often just 2%-5% while still delivering dramatic improvements in fit, comfort, and shape retention.

DuPont Expansion Era

Beginning in the 1980s through the early 2000s, DuPont continued to invest heavily in research and development, introducing new fiber technologies and expanding its brand portfolio beyond LYCRA® spandex.

• During this period, DuPont developed and acquired several complementary fiber brands that would become integral to the business, including COOLMAX® brand moisture-wicking fibers for active and performance wear, THERMOLITE® brand lightweight warming fibers and insulations, SUPPLEX® and TACTEL® brand nylon fibers for apparel applications, and ELASPAN® elastomeric offerings.
• These brands allowed the Company to serve a broader range of customer needs across multiple segments of the apparel and textile industries.

2004 Koch Acquisition

In 2004, Koch acquired DuPont's textiles and interiors business for approximately $4.4 billion. This acquisition included the LYCRA® spandex business, along with other textile fiber operations.

• Following the acquisition, Koch consolidated these textile businesses under a new entity called INVISTA, which became one of the world's largest integrated fiber, resin, and intermediates companies.
• Throughout this time, the Company continued to make major investments to increase its manufacturing capacity, expand its product line, and grow the LYCRA® brand globally.
• The Company anticipated the shift of fabric production to Asia and strategically built capabilities in China and throughout the region.
• By the mid-2010s, The LYCRA Company had evolved into a truly global enterprise with manufacturing operations across multiple continents, sales in more than 80 countries, and a diversified portfolio of leading fiber brands. The business has maintained strong brand recognition, with the LYCRA® brand remaining one of the most recognized ingredient brands in the apparel industry.

2019 Sale to Ruyi

In January 2019, The LYCRA Company was acquired by Ruyi from Koch (the "Ruyi Acquisition") where it operated as an independent subsidiary business within the Ruyi conglomerate.

• In connection with the Ruyi Acquisition: (i) Eagle Intermediate Global Holding B.V. ("EIGH BV"), as borrower, entered into a $100 million revolving credit facility dated May 4, 2018 with J.P. Morgan Chase Bank N.A. and Barclays Bank Plc, as original lenders (the "Acquisition RCF"); (ii) EIGH BV and Eagle US Finance LLC (together, the "Co-Issuers") issued €250 million of 5.375% senior secured notes due May 2023 (the "2019 Acquisition Notes"); (iii) the Co-Issuers issued $690 million of 7.500% senior secured notes due May 1, 2025 (the "Dollar Notes"); and (iv) Ruyi, as borrower (the "Mezzanine Borrower"), entered into a $400 million mezzanine financing (the "Mezzanine Financing") dated September 21, 2018 with certain affiliates of Lindeman Asia Investment Co. Ltd, Lindeman Partners Asset Management Co. Ltd, Tor Investment Management (Hong Kong) Limited and China Everbright Limited, as lenders (the "Mezzanine Lenders").
• The Mezzanine Financing was secured by, among other things, a Dutch law share pledge by the Mezzanine Borrower's direct subsidiary, Eagle Ultimate Global Holdings B.V., of its equity interests in Eagle Super Global Holding B.V. ("ESGH BV").

Alleged China Asset Transfers and Dutch Share Pledge Enforcement

In November 2019, nine months following the closing of the Ruyi Acquisition, the Mezzanine Borrower defaulted on the Mezzanine Financing. Throughout 2020 and 2021, Ruyi and the Mezzanine Lenders attempted to reach a consensual solution to the defaults.

• However, in December 2021, the Mezzanine Lenders learned that Ruyi had allegedly transferred (or would imminently transfer) certain of the Company's valuable Chinese assets, including onshore cash, plants, equipment, raw materials, and intellectual property rights (the "Alleged China Asset Transfers") out from the LYCRA group and therefore beyond the recourse of the Mezzanine Lenders, the holders of the Dollar Notes (the "Dollar Noteholders"), the holders of the 2019 Acquisition Notes (the "2019 Acquisition Noteholders"), and the lenders under the Acquisition RCF.

As a result of the ongoing defaults under the Mezzanine Financing and the Alleged China Asset Transfers, the Mezzanine Lenders took ownership of the Company through a share pledge enforcement over the equity of ESGH BV, which was approved by the Netherlands Commercial Court pursuant to the judgment entered on June 23, 2022 in Case Number NCC 22/011 (C/13/718393) (the "Dutch Share Pledge Enforcement").

• Post-enforcement, the Mezzanine Lenders held the ESGH BV equity through Eagle Investments Holdco, in which the Mezzanine Lenders held 100% of the Class A shares (in such capacity, the "Post-Enforcement Shareholders").
• In connection with the Dutch Share Pledge Enforcement, a group of noteholders holding more than 50.01% of the Dollar Notes and 2019 Acquisition Notes in aggregate (the "2022 Consenting Noteholders") agreed to waive a change of control put option under each series of notes in exchange for the issuance to the 2022 Consenting Noteholders of: (i) $14,584,000 of additional Dollar Notes by the Co-Issuers; (ii) a $19,446,000 unsecured promissory note due May 1, 2025 by the Co-Issuers (the "Promissory Note," and the payees thereof in such capacity, the "Promissory Note Payees"); and (iii) certain non-voting Class B shares in Eagle Investments Holdco (the holders of such Class B shares in such capacity, the "Class B Shareholders").

2023 Refinancing Transactions

Following the Dutch Share Pledge Enforcement, the Company continued to face financial difficulties due to a confluence of headwinds. In Q4 2022, ahead of the maturities of the Acquisition RCF and the 2019 Acquisition Notes, the Company approached the 2022 Consenting Noteholders to negotiate a maturity extension of the 2019 Acquisition Notes or an alternative solution to the Company's financial difficulties. The 2022 Consenting Noteholders were not supportive of the extension on the terms proposed, and negotiations stalled.

• Thereafter, the Company commenced negotiations with a group of 2019 Acquisition Noteholders (the "Consenting 2019 Acquisition Noteholders") on the terms of a potential refinancing, culminating in a transaction pursuant to which the Consenting 2019 Acquisition Noteholders agreed to refinance the Acquisition RCF and provide the Company with incremental liquidity through the issuance by EIGH BV of a super senior term loan in an original principal amount of $109 million (the "SSTL").

Following the issuance of the SSTL, the Company refinanced the 2019 Acquisition Notes in May 2023 by implementing an exchange and financing transaction (the "2023 Refinancing") with certain 2019 Acquisition Noteholders ("Exchanging Noteholders"), certain of the Post-Enforcement Shareholders, and certain third-party investors.

• In connection with the 2023 Refinancing, Eagle UK Finance Limited ("Eagle UK Finance") issued €300,161,202 in aggregate principal amount of 16.000% senior secured notes due April 1, 2025 (the "Euro Notes") to Linx Capital Limited ("Linx Capital SPV"), a non-Debtor Jersey entity formed as a special purpose vehicle in a securitization-style structure that is not an affiliate of the Company.
• In turn, Linx Capital SPV issued: (x) 15.200% first lien senior secured notes initially due April 1, 2025 (the "1L Linx Notes") to the Exchanging Noteholders and certain participating Post-Enforcement Shareholders and third-party investors (collectively, the "1L Linx Noteholders"); and (y) 20.000% second lien senior secured notes initially due April 1, 2025 (the "2L Linx Notes," and together with the 1L Linx Notes, the "Linx Notes") to certain other participating Post-Enforcement Shareholders and third-party investors (collectively, the "2L Linx Noteholders," and together with the 1L Linx Noteholders, the "Linx Noteholders").
• The Linx Notes were issued to the Linx Noteholders so that Linx Capital SPV could subscribe for the Euro Notes issued by Eagle UK Finance (and, in turn, upstream funds to the Co-Issuers in order to refinance the 2019 Acquisition Notes as part of the overall 2023 Refinancing).

2025 Change of Control Transaction

Following the failure of a proposed sale of the Company to a third-party buyer, the Company underwent a subsequent change of control in September 2025 in furtherance of the Backstop Restructuring, whereby the Post-Enforcement Shareholders and the Class B Shareholders ceded control of EIGH BV and its subsidiaries to a new ultimate holding company, Debtor Eagle Holding Co B.V. ("Eagle Holding").

• The equity interests in Eagle Holding are currently held in trust by GLAS Trustees Limited for the benefit of certain Prepetition Lenders and Post-Enforcement Shareholders in the following proportions: (1) Dollar Noteholders (76.3%); (2) 2L Linx Noteholders (11.9%); (3) Post-Enforcement Shareholders (7.0%); and (4) Promissory Note Payees (4.8%) (collectively, the "Current Shareholders").

---

Operations Overview

These employees and the Company's global footprint are essential to The LYCRA Company's business, which operates through its integrated portfolio of leading fiber brands that include: (i) LYCRA® Spandex Fibers, (ii) LYCRA HyFit® Personal Care Fibers, (iii) LYCRA® T400® Stretch Fibers, (iv) COOLMAX® Performance Fibers, (v) THERMOLITE® Insulation Fibers, (vi) ELASPAN® Elastomeric Fibers, and (vii) SUPPLEX® and TACTEL® Nylon Fibers.

Product Lines

The LYCRA Company's main product lines consist of the following:

• LYCRA® fiber

  The original spandex (elastane) brand now boasts more than 200 fibers that add lasting comfort, fit, and performance benefits to apparel.

• LYCRA HyFit® fiber

  Spandex fiber used in diapers and incontinence products to provide a snug fit that helps prevent leaks.

• COOLMAX®, THERMOLITE®, LYCRA® T400®

  Specialty polyester fibers produced from primarily recycled or renewable feedstocks, with production outsourced to partners (primarily in Asia) for an asset-light model.

• SUPPLEX®, TACTEL®

  Single nylon 6 and nylon 6,6 fiber used in warp knit and circular knit for higher end activewear and intimate apparel, manufactured in Monterrey, Mexico.

The fiber products produced by the Company allow downstream customers to co-brand their garments with the Company's LYCRA® brand and deliver innovative garments to their end-customers.

Manufacturing Facilities

The LYCRA Company manufactures fiber products directly through eight manufacturing and processing facilities (two of which are majority-owned joint ventures) and two additional 50%-owned joint ventures across nine countries, consisting of the following facilities and headcounts:

• Waynesboro, Virginia (321 employees)
• Monterrey, Mexico (345 employees)
• Paulina, Brazil (362 employees)
• Maydown, Northern Ireland (323 employees)
• Tuas, Singapore (90%-owned joint venture with 262 employees)
• Kerkrade, Netherlands (107 employees)
• Foshan, China (471 employees)
• Yinchuan, China (75%-owned joint venture with 292 employees)
• Shiga, Japan (50%-owned joint venture)
• Taipei, Taiwan (50%-owned joint venture)

The Company also operates a distribution hub and eleven offices located around the world.

Research and Development

Research and development are core components of The LYCRA Company's business model, serving as the primary driver for its "ingredient branding" strategy. The Company's continuous cycle of innovation strengthens its position as a leading technology solutions innovator in the industry.

• The Company conducts R&D at three state-of-the-art labs: (i) Waynesboro, Virginia (polymer/fiber development), (ii) Casaloldo, Italy, and (iii) Foshan, China (apparel textile innovation).
• By integrating polymer science with proprietary consumer insights, the Company's research and development ensures that new products are not only technically advanced but commercially viable and responsive to global trends in activewear, personal care, and medical textiles.

Even with decades of global expansion, the Company has consistently maintained its unwavering focus on excellence and innovation by continuing to invest in the development of novel products across all of its product portfolios.

• Today, The LYCRA Company maintains and actively defends over 1,000 patents and applications comprising more than 100 unique patent families, in addition to a portfolio of approximately 2,400 trademarks that protect approximately 105 unique brands, marks, and logos.

Corporate Structure

The LYCRA Company's corporate structure includes forty-three entities, twenty-six of which are Debtors in the Prepackaged Cases. The LYCRA Company's corporate family includes entities incorporated in Brazil, China, Germany, Hong Kong, India, Italy, Japan, Jersey, Mexico, the Netherlands, Singapore, South Korea, Spain, Switzerland, Taiwan, Turkey, the United Kingdom, and the United States.

---

Prepetition Obligations

As of the Petition Date, the Debtors have approximately $1,534,000,000 in Prepetition Debt. Presently, the Company's capital structure consists of: (a) secured financing composed of the SSTL, the Euro Notes, and the Dollar Notes (collectively, the "Prepetition Secured Debt," and the holders thereof (in addition to the Linx Noteholders), the "Prepetition Secured Lenders"); and (b) unsecured financing composed of the Promissory Note (together with the Prepetition Secured Debt, the "Prepetition Debt," and the holders thereof, the "Prepetition Lenders").

The Prepetition Secured Debt is secured by Shared Collateral and ranks pari passu in right of payment and lien priority; however, the proceeds of enforcement of the Shared Collateral are to be distributed in accordance with an agreed waterfall pursuant to an Intercreditor Agreement and the distributions contemplated by the Prepackaged Plan respect the agreed waterfall.

Super Senior Term Loan

• On March 1, 2023, EIGH BV, as borrower, entered into a super senior term loan facility agreement for the SSTL with, among others, certain of the other Debtors as guarantors, Kroll Agency Services Limited as agent, and the lenders from time-to-time party thereto (the "SSTL Lenders").
  • At issuance, the SSTL had an aggregate principal amount of approximately $109 million, which was later upsized to $139 million in April 2023.
  • The SSTL had an initial maturity date of February 1, 2025, which has since been extended on various occasions including most recently until March 31, 2026.
  • The SSTL bears interest at Term SOFR plus 9.000% per year, payable in kind, and is secured by the Shared Collateral.
• As of the Petition Date, approximately $214.1 million, inclusive of accrued but unpaid interest, is outstanding under the SSTL.
• As provided in the Intercreditor Agreement, the SSTL ranks pari passu with the Euro Notes and the Dollar Notes in right of payment and lien priority but ranks senior to the Euro Notes and the Dollar Notes in respect of the proceeds of enforcement of the Shared Collateral.

Euro Notes and Linx Notes

• On April 25, 2023, in connection with the 2023 Refinancing, an indenture was entered into between, among others, Eagle UK Finance Limited as issuer, Kroll Trustee Services Limited as trustee, U.S. Bank Europe DAC, UK Branch (formerly Elavon Financial Services DAC, UK Branch) as initial paying agent and authenticating agent, and U.S. Bank Europe DAC (formerly Elavon Financial Services DAC) as registrar and transfer agent, for the issuance by Eagle UK Finance of the Euro Notes in the aggregate principal amount of €300,161,202.
  • The Euro Notes were issued to Linx Capital SPV which is not a Debtor and is not a part of the Company.
  • The Euro Notes had an initial maturity date of April 1, 2025, which has since been extended on various occasions including most recently until March 31, 2026.
  • The Euro Notes bear interest at 16.000% per year, payable in kind, and are secured by the Shared Collateral.
• On April 25, 2023, an indenture was entered into between, among others, Linx Capital SPV as issuer, Kroll Trustee Services Limited as trustee (the "1L Linx Notes Trustee"), U.S. Bank Europe DAC, UK Branch (formerly Elavon Financial Services DAC, UK Branch) as initial paying agent and authenticating agent, and U.S. Bank Europe DAC (formerly Elavon Financial Services DAC) as registrar and transfer agent, for the issuance by Linx Capital SPV of the 15.200% 1L Linx Notes to the 1L Linx Noteholders.
  • At the same time, another indenture was entered into between, among others, Linx Capital SPV as issuer, Kroll Trustee Services Limited as trustee (the "2L Linx Notes Trustee," and together with the 1L Linx Notes Trustee, the "Linx Notes Trustees"), U.S. Bank Europe DAC, UK Branch (formerly Elavon Financial Services DAC, UK Branch) as initial paying agent and authenticating agent, and U.S. Bank Europe DAC (formerly Elavon Financial Services DAC) as registrar and transfer agent, for the issuance by Linx Capital SPV of the 20.000% 2L Linx Notes to the 2L Linx Noteholders.
  • The Linx Notes had an initial maturity date of April 1, 2025, which has since been extended on various occasions including most recently until March 31, 2026.
  • The 1L Linx Notes and 2L Linx Notes benefit from a shared security package consisting of liens on the shares and bank accounts of Linx Capital SPV as well as Linx Capital SPV's rights under the Euro Notes (collectively, the "Linx Notes Collateral").
  • The 1L Linx Notes rank senior to the 2L Linx Notes in terms of payment priority, lien priority, and proceeds of enforcement and have the authority to direct the actions of Linx Capital SPV in connection with the exercise of its voting rights.
• As of the Petition Date, approximately $520.4 million, inclusive of accrued but unpaid interest, is outstanding under the Euro Notes.
• As provided in the Intercreditor Agreement, the Euro Notes rank pari passu with the SSTL and the Dollar Notes in right of payment and lien priority. However, in respect of proceeds of enforcement of the Shared Collateral:
  • $120 million in equivalent principal amount of Euro Notes (referred to as the "Euro Notes Priority Tranche") ranks junior to the SSTL but senior to the balance of the Euro Notes (referred to as the "Euro Notes Non-Priority Tranche") and the Dollar Notes.
  • The Euro Notes Non-Priority Tranche ranks junior to both the SSTL and the Euro Notes Priority Tranche, but pari passu with the Dollar Notes.

Dollar Notes

• On May 4, 2018, in connection with the Ruyi Acquisition, an indenture was entered into between, among others, the Co-Issuers (i.e., EIGH BV and Eagle US Finance LLC) as issuers, and Wilmington Trust, National Association as trustee, paying agent, registrar and transfer agent (the "Dollar Notes Indenture").
  • Eagle Finance Co B.V. later replaced Eagle US Finance LLC as Co-Issuer following the 2025 Change in Control Transaction.
  • The Dollar Notes Indenture provides for the issuance of $704,584,000 in aggregate principal amount of 7.500% senior secured notes with an initial maturity date of May 1, 2025, which has since been extended on various occasions including most recently until March 31, 2026.
• As of the Petition Date, approximately $780.0 million, inclusive of accrued but unpaid interest, is outstanding under the Dollar Notes.
• The Dollar Notes rank pari passu with the SSTL and the Euro Notes in right of payment and lien priority but rank junior to the SSTL and the Euro Notes Priority Tranche and pari passu with the Euro Notes Non-Priority Tranche in respect of proceeds on account of the Shared Collateral.
• The Dollar Notes bear interest at 7.500% per year, payable in kind.

Intercreditor Agreement

The Prepetition Secured Debt benefits from a shared collateral package consisting of substantially all of the Debtors' assets (the "Shared Collateral"), and is subject to an intercreditor agreement originally dated May 4, 2018 (as amended and/or restated on August 25, 2023 and as further amended on December 30, 2025) governed by English law (the "Intercreditor Agreement").

• The Intercreditor Agreement governs the relationship between the Prepetition Secured Lenders and their respective rights with respect to, among other things, the Shared Collateral.
• The Intercreditor Agreement sets forth the agreed waterfall in the event of any enforcement action whereby net proceeds of the Shared Collateral will be distributed in the following order of priority: (a) first, in repayment of the SSTL; (b) second, in repayment of the Euro Notes Priority Tranche; and (c) third, in repayment of the Euro Notes Non-Priority Tranche and the Dollar Notes (which rank pari passu with each other).

Promissory Note

• On June 28, 2022, in connection with the Dutch Share Pledge Enforcement, the Co-Issuers issued the unsecured Promissory Note to the Promissory Note Payees, which were made up of Dollar Noteholders.
  • The Promissory Note provides for the payment of an amount equal to $19,446,000 initially due May 1, 2025.
  • On April 17, 2025, the Promissory Note was amended so that its maturity date would automatically be extended in line with the maturity date of the Dollar Notes and, thus, the maturity date of the Promissory Note is currently March 31, 2026.
• As of the Petition Date, the amount outstanding under the Promissory Note remains at $19,446,000 and the Promissory Note does not accrue interest.
• The Promissory Note is not subject to the Intercreditor Agreement.

Other Financial Indebtedness

• Brazil Short-Term Borrowing Facility

  The LYCRA Company Industria E Comercio Textil Ltda, a Debtor, has established an unsecured, short-term borrowing facility with Itaú Unibanco S.A., Nassau Branch (Bahamas) to cover imports of raw materials (the "Brazil Borrowing Facility").
  • The borrowing arrangement includes variable interest which is adjusted based on the U.S. inflation index, averaging 9.28% for borrowings outstanding at December 31, 2024.
  • As of the Petition Date, approximately $7.8 million, inclusive of accrued but unpaid interest, is outstanding under the Brazil Borrowing Facility.

• China Working Capital Facilities

  Chuanglai Fiber (Foshan) Co., Ltd., a non-Debtor member of the Company, has established unsecured working capital facilities with China Merchants Bank for up to RMB 100 million with a two-year term at an interest rate of 3.0% annually.
  • LYCRA Fiber (Yinchuan) Co. Ltd., another non-Debtor member of the Company, has established unsecured working capital facilities with: (a) China Merchants Bank for up to RMB 100 million with a three-year term at an interest rate of 3.0% annually; and (b) Bank of Communication China for RMB 100 million with a two-year term at an interest rate of 3.3% annually.

• Cash Pooling Arrangements

  Chuanglai Fiber (Foshan) Co., Ltd. (a non-Debtor), was approved on August 2, 2019 by the Cross-border Office of the Guangzhou Branch of the People's Bank of China to act as the master enterprise of a cross-border two-way RMB cash pool, with Bank of China Foshan Branch as the settlement bank.
  • Together with three offshore member companies (each a Debtor) The LYCRA Company Hong Kong Limited, CH Hong Kong Holdings II Limited, and The LYCRA Company Singapore Trading Pte. Ltd the Company carries out cross-border two-way RMB cash pool operations.
  • Certain Debtors are party to additional cash pooling arrangements, including a central cash pool with Bank of America, London Branch (denominated in U.S. dollars) (the "USD Cash Pool"), for the Company's global operations, a EUR-denominated companion pool to the USD Cash Pool with Bank of America, London Branch, and a cash pool with HSBC Asia to consolidate liquidity across the Company's Asia operations (denominated in U.S. dollars).
  • These cash pools primarily operate for the benefit of the Debtors, although certain non-Debtors participate from time to time.

---

Events Leading to Bankruptcy

Industry Headwinds and Operational Deterioration

Since the Ruyi Acquisition, the Company has faced significant and persistent financial difficulties due to a confluence of industry headwinds. The global spandex and apparel industries have experienced prolonged periods of weakening demand and soft sales trends, beginning with the disruptions caused by the COVID-19 pandemic, which resulted in extended market closures, supply chain disruptions, and reduced consumer demand.

• Although demand partially recovered following the easing of pandemic restrictions, the anticipated rebound in key Western markets did not materialize as quickly as expected.
• Over the last several years, demand from mills has continued to be impacted as most producers have sought to destock and reduce inventory levels throughout the supply chain, while overall market uncertainty persisted in a higher interest rate and inflationary environment.

The industry has also experienced significant capacity expansions by competitors, altering the competitive dynamics and leading to decreased utilization rates across the Company's manufacturing facilities, from approximately 80% in mid-2024 to approximately 60% by the end of 2025, as the Company was forced to curtail production to control inventory levels in response to softening demand.

• Concurrently, the Company has faced intensifying competition from low-cost manufacturers, particularly in Asia, which has placed downward pressure on pricing and eroded market share in certain segments.
• Generic spandex prices have fallen to near cash-cost levels, compressing margins across the industry.
• In the personal care segment, the market for baby diapers has both softened and fragmented, with private-label products gaining market share, and increased pricing pressure from lower-cost Asian competitors affecting both volume and price.

Macroeconomic uncertainties have further compounded these challenges. Tariff volatility and uncertainty and changing trade policies have created significant uncertainty throughout the value chain, causing brands to adopt cautious ordering practices and conservative inventory management strategies. These effects have cascaded through the supply chain, with particularly acute impacts in South Asia and Central America.

• Fluctuating raw material costs and inflationary pressures have also strained the Company's margins, while the lingering effects of COVID-19-related supply chain disruptions including high garment inventory levels throughout the global value chain have continued to suppress demand for fibers.
• Additionally, fluctuating commodity prices, particularly for energy and raw materials essential for spandex production, significantly raised the Company's operational costs.
• The Company also incurred substantial costs in managing its capital structure, including through refinancing efforts and the various restructuring transactions described above.

These industry-wide and company-specific pressures have collectively contributed to the deterioration of the Company's financial performance and the urgent need for the restructuring contemplated by these Prepackaged Cases. In particular, the Company's EBITDA declined from approximately $132 million in 2024 to a projected EBITDA of approximately $44 million for 2026.

HELM Supply Agreement and Settlement

In 2023, as part of the Company's sustainability initiatives, TLC entered into a collaboration with Qore, LLC ("Qore"), a joint venture between Cargill, Incorporated and HELM US Corporation ("HELM"), to produce sustainable, bio-derived spandex fibers utilizing QIRA, Qore's brand-name for bio-derived 1,4 butanediol.

• In connection with this collaboration, the Company entered into a long-term supply agreement with HELM dated July 10, 2023 (as amended on May 14, 2025, the "HELM Supply Agreement") for the purchase of QIRA.
• The HELM Supply Agreement requires TLC to purchase substantial volumes of QIRA or otherwise to pay HELM a significant portion of the contractual product price for any QIRA that TLC does not purchase.

The HELM Supply Agreement presented significant challenges for the Company, as the current market demand cannot sustain the volume commitments provided in the agreement. In addition, (i) production of QIRA was delayed beyond the originally anticipated start-up date under the contract, weakening any potential market advantage to TLC arising from early production of bio-derived spandex from QIRA; and (ii) broader industry headwinds, including changing consumer preferences and the impact of restrictive trade policies discussed above, have rendered the high-volume take-or-pay commitments in the HELM Supply Agreement unsustainable for the Company's business. Accordingly, the Company determined that the HELM Supply Agreement is not economically viable.

Accordingly, beginning in December 2025, TLC initiated discussions with HELM around a possible restructuring of the HELM Supply Agreement to resolve disputes around TLC's allegations of delays and HELM's mitigation obligation. Good-faith and hard-fought negotiations with HELM ensued for several months, which culminated in the execution of the settlement agreement and mutual release between TLC, HELM, and Qore (the "HELM Settlement Agreement"), which provides for the termination of the HELM Supply Agreement in exchange for a settlement payment of $4.75 million (including $750,000 in respect of existing payables owed to HELM) and a license agreement between certain of the Debtors, as licensors, and HELM and Qore, as licensees (the "HELM License Agreement," and together with the HELM Settlement Agreement, the "HELM Settlement").

• Pursuant to the HELM License Agreement, TLC and The LYCRA Company UK Limited have licensed to HELM and Qore on a non-exclusive basis certain patents related to QIRA.
• The HELM License Agreement was an integral component of the HELM Settlement and provides a path forward for the reorganized Debtors to continue a collaborative relationship with HELM and Qore, notwithstanding the termination of the HELM Supply Agreement.

The HELM Settlement will resolve one of the Debtors' most significant and burdensome operating liabilities on extremely favorable terms, while preserving the Company's optionality to conduct business with HELM in the future, and is unanimously supported by the Debtors' key stakeholders.

• Absent the HELM Settlement, the HELM Supply Agreement could pose a significant risk to the Debtors' reorganization efforts, and the Restructuring Transactions given HELM has alleged potential rejection damages significantly exceeding $100 million.
• Calculation of rejection damages and related issues would also likely be highly contested, including whether the take-or-pay obligations represent enforceable liquidated damages.
• By entering into the HELM Settlement Agreement, the parties resolve such potential claims and eliminate attendant uncertainty.
• Moreover, the HELM Settlement secures the support of HELM, one of the Debtors' major trade creditors, for the Debtors' Prepackaged Plan and removes an obstacle to the Restructuring Transactions.

Based upon an assessment of the potential for a significant rejection damages claim which could have impaired the Company's ability to pursue a prepackaged chapter 11 case in which it will continue to operate in the ordinary course prior to confirmation the Debtors' board of directors, in the exercise of their business judgment, determined that the resolution, payments, and agreements set forth in the HELM Settlement (including the HELM License Agreement) are in the best interests of the Debtors, their estates, and all stakeholders.

China Litigation Risks

In addition to the Company's other business challenges highlighted above, the Company remains embroiled in litigation in China resulting from the Alleged China Asset Transfers (initiated by Ruyi as former shareholder and which precipitated the Dutch Share Pledge Enforcement in June 2022), and which has created a number of operational risks for the Company.

• As background, in August 2021, Laika New Material (Foshan) Co., Ltd. (the "Foshan JV") was jointly established by Chuanglai Fiber (Foshan) Co., Ltd. ("CFF"), the Company's wholly-owned China subsidiary, and Jining Ruyi Wanzhong Venture Capital Investment Management Partnership (L.P.) ("Wanzhong"), an affiliate of Ruyi.
• At the time of establishment, the Foshan JV was effectively under the control of Ruyi, with Ruyi-affiliated persons occupying all positions of legal representative, directors, supervisor, and general manager.
• On December 15, 2021, CFF, Wanzhong, and the Foshan JV entered into a capital increase agreement (the "CIA"), pursuant to which the registered capital of the Foshan JV was to be increased by RMB $74,393,909.22, to be fully subscribed by CFF with its physical assets.
• Given that the capital contribution obligation would effectively deprive CFF of all of its assets and business, and in light of the fact that the transaction constituted a related party transaction, the Company's management became concerned about the fairness and validity of the arrangement, and whether it was in the best interests of the Company.
• Consequently, actions were taken by the Mezzanine Lenders and Company management to gain control over the Foshan JV, and claims were filed with arbitration commissions and courts by both CFF and Wanzhong concerning the performance and validity of the CIA.

There are currently four ongoing legal proceedings pending in connection with the Foshan JV (collectively, the "China Litigation").

• First, CFF initiated arbitration before the Beihai Arbitration Committee (the "BAC") in July 2023 challenging the validity of the CIA. Following a re-arbitration, on February 25, 2025, CFF obtained a favorable arbitral award holding that the CIA is not established and CFF is not required to make any capital contribution to the Foshan JV.
• Second, in July 2025, Wanzhong initiated proceedings before the Nanning Court seeking to set aside the re-arbitration award, alleging that the BAC lacked jurisdiction. Just prior to the Petition Date, in February 2026, the Nanning Court overturned the re-arbitration award in favor of CFF, which gives Wanzhong the ability to commence litigation to compel CFF to perform its capital contribution obligations. Those proceedings could take at least two years to resolve.
• Third, CFF filed a claim before the Foshan Sanshui District Court seeking access to all books, records, and accounts of the Foshan JV. A final ruling was rendered in favor of CFF; however, enforcement proceedings are currently suspended as the current controller of the Foshan JV could not be contacted.
• Fourth, CFF filed a lawsuit for company dissolution with the Foshan Sanshui Court on July 1, 2024. Although the first instance judgment was rendered in favor of CFF on December 28, 2024, the Foshan Court issued a second instance judgment in September 2025 reversing the first instance judgment and concluding that the Foshan JV did not satisfy the statutory requirements for corporate dissolution. CFF is currently considering whether to initiate re-trial proceedings in this matter.

Although the Company strongly believes in the merits of its case and intends to robustly defend its position in the China Litigation, the ultimate outcome remains uncertain, and the proceedings represent material operational and financial risks for the Company.

• Given the Nanning Court's overturning of the re-arbitration award, there is a strong likelihood that Wanzhong will pursue litigation to compel CFF's performance of the CIA.
• If successful, CFF could be required to fulfill its obligations under the CIA, including the transfer of RMB 574 million worth of assets to the Foshan JV (with no ability to settle via cash) and the payment of significant liquidated damages calculated at a penalty of 0.03% per day from February 16, 2022 to the date of actual performance.
• Moreover, the ongoing and protracted nature of the China Litigation and the lack of a conclusive ruling or a ruling in CFF's favor on the validity of the CIA have created uncertainty that has impacted the willingness of potential capital providers to extend further capital to the Company.
• Additionally, the Company has expended significant management time and Company resources in connection with oversight of the China Litigation, diverting attention from core business operations.
• Finally, the China Litigation has posed continued uncertainties and risks of disruptions to the Company's assets and operations in China, given the importance of the Foshan JV facility's role in the procurement of raw materials, global cash management, production, and as a capital provider to the Company.

Failed M&A Process and Backstop Restructuring

In 2024, ahead of the Prepetition Debt's then pending 2025 maturities, the Company and the Post-Enforcement Shareholders progressed an M&A process to sell the Company (the "M&A Process") to a potential third-party buyer. In parallel, the Company and the Post-Enforcement Shareholders engaged with an ad hoc group of 1L Linx Noteholders and SSTL Lenders (the "Euro Ad Hoc Group") and an ad hoc group of Dollar Noteholders (who also became holders of a portion of the SSTL) (the "Dollar Ad Hoc Group") in relation to a potential refinancing, restructuring, or similar transaction in respect of the SSTL, the Dollar Notes, the Euro Notes (and in turn, the Linx Notes), and the Promissory Note, given the instruments' looming maturities and the challenges associated with implementing an "at-par" refinancing given the Company's operational challenges.

• The Euro Ad Hoc Group and the Dollar Ad Hoc Group (the "Ad Hoc Groups") entered into a lock-up agreement originally dated October 24, 2024 (as amended and restated, the "Lock-Up Agreement") amongst themselves, which, among other things, provided for the terms of a restructuring of the SSTL, the Dollar Notes, the Euro Notes (and in turn, the Linx Notes) and the Promissory Note in the event a sale transaction could not be consummated.
• The Company and the Post-Enforcement Shareholders continued negotiations with the Ad Hoc Groups in relation to the Lock-Up Agreement and the terms of a potential restructuring transaction in parallel with the M&A Process.

In January 2025, the Post-Enforcement Shareholders entered into an agreement to sell the Company to a Chinese state-owned enterprise, subject to satisfaction of certain conditions precedent, including regulatory approval by the National Development and Reform Commission of the PRC and the purchaser obtaining sufficient acquisition financing (the "Proposed Sale").

• On March 31, 2025, although it was anticipated that the Proposed Sale would be consummated, the Company and certain of the Post-Enforcement Shareholders acceded to the Lock-Up Agreement, and amended it to provide for, among other things: (i) maturity extensions of the Prepetition Debt to provide runway for the Proposed Sale to complete; (ii) a change of control trigger whereby the share capital of EIGH BV would be transferred to a trust for the benefit of certain parties in the event that the Proposed Sale was not consummated by a certain trigger date; and (iii) a comprehensive debt and equity restructuring following such a change of control (the "Backstop Restructuring").

By August 2025, it appeared that the Proposed Sale would not likely be consummated given the absence of meaningful progress by the proposed purchaser towards completion of the Proposed Sale. As a result, on September 5, 2025, the Ad Hoc Groups proceeded with implementing the first stage of the Backstop Restructuring, whereby the Post-Enforcement Shareholders transferred the shares of EIGH BV (and, thereby, transferring ownership of the Company) to Eagle Holding, which would serve as the new ultimate holding company (the "2025 Change in Control Transaction").

• Upon completion of the 2025 Change in Control Transaction, the equity interests in Eagle Holding and by extension, the ownership of the Company were beneficially held in trust by GLAS Trustees Limited for the benefit of the Current Shareholders, in accordance with the terms of the Backstop Restructuring.
• This ownership structure remains in place as of the Petition Date.

Pivot to Alternative Restructuring and Chapter 11

Following the 2025 Change in Control Transaction, the Company and the Ad Hoc Groups continued to pursue the Backstop Restructuring. However, by November 2025, it became clear that the Company's financial position had deteriorated further, and the Ad Hoc Groups raised questions regarding whether the Backstop Restructuring was still viable.

• When the Backstop Restructuring was paused, the Prepetition Debt was scheduled to mature on December 30, 2025.
• Prior to the maturity date, the Company obtained consents to extend the maturity dates of the Prepetition Debt to March 31, 2026, and the long-stop date and other milestones under the Lock-Up Agreement to give the Company additional time to renegotiate the terms of the Backstop Restructuring with the Ad Hoc Groups.
• The amended Lock-Up Agreement permitted the Euro Ad Hoc Group or the Dollar Ad Hoc Group to provide notice that an Alternative Restructuring (as defined therein) is necessary (an "Alternative Restructuring Notice"), after which the parties would have a further twenty-five business days to agree and execute any amendments to the Lock-Up Agreement needed to implement the Alternative Restructuring; otherwise, each party would have a unilateral termination right.

On January 9, 2026, the Euro Ad Hoc Group delivered an Alternative Restructuring Notice in accordance with the Lock-Up Agreement, and accordingly the parties proceeded with negotiating an Alternative Restructuring and were required to execute any necessary amendments to the Lock-Up Agreement by February 16, 2026 (subject to extension).

• The Debtors explored a range of Alternative Restructuring transactions, including both out-of-court and in-court transactions that might be supported by the Ad Hoc Groups and other key stakeholders.
• Meanwhile, the Company continued to experience severe near-term liquidity issues, notwithstanding its short debt maturity extension through March 31, 2026.

As a result of months of intense, good-faith negotiations, (a) on March 12, 2026, the Euro Ad Hoc Group issued a notice for the termination of the Lock-Up Agreement (which therefore terminated on such date in accordance with its terms); and (b) on March 13, 2026, the Company and each of the lenders party to the RSA (collectively, the "RSA Parties") subsequently entered into the RSA.

• The RSA provides for a comprehensive deleveraging of the Company's prepetition capital structure and an injection of new liquidity through debtor-in-possession financing in the form of $75 million of committed new money notes (the "DIP Notes Facility"), and, upon emergence from chapter 11, an exit notes facility (the "Exit Notes Facility") consisting of: (i) a committed facility in an amount of not less than $75 million to satisfy all required payments under the Prepackaged Plan, including the DIP Notes Facility, certain professional fees, and administrative expenses; and (ii) an uncommitted $25 million incremental facility.
• The RSA Parties hold or have the power to direct more than two thirds of the claims under each class of Prepetition Debt, including: (a) 100% of the SSTL claims (Class 3 Claims); (b) 100% of the Euro Notes claims (Class 4 Claims); (c) more than 83% of the Dollar Notes claims (Class 5 Claims); and (d) more than 90% of the Promissory Note claims (Class 6 Claims) (and more than 50% of the holders in each class) voting on the Prepackaged Plan.
• The transaction contemplated by the RSA will result in the net deleveraging of approximately $1.2 billion of funded debt obligations while providing the Company with a sustainable capital structure positioned for long-term operational success.

DIP Financing and Chapter 11 Filing

On March 13, 2026, the Debtors and the DIP Noteholders entered into a commitment letter in connection with the DIP Notes Facility. The DIP Notes Facility provides the Debtors with critical liquidity and represents the best (and only) financing alternative available to the Debtors and the only financing the Prepetition Secured Lenders will support. The DIP Notes Facility also forms an integral component of the RSA, which provides for a comprehensive and highly consensual restructuring of the Company's balance sheet.

• To confirm that no other party was willing to provide junior debtor-in-possession financing or debtor-in-possession financing otherwise on better terms, in the weeks preceding the Petition Date, the Company and its advisors launched a targeted "market test" process to gauge third-party interest in providing debtor-in-possession financing on the timeline and in the quantum required.
• In total, the Company contacted eleven parties, two of whom executed confidentiality agreements.
• Ultimately, no other party expressed an interest in providing financing to the Debtors on terms acceptable to the Company and its key stakeholders.

Without access to the DIP Notes Facility, the Debtors would be unable to fund operational cash needs in the immediate short term. The DIP Notes Facility includes up to $75 million in new money superpriority secured notes, consisting of $50 million initially available following entry of the Interim DIP Order and $25 million available upon entry of the Final DIP Order.

• The DIP Notes Facility will bear interest at a rate of 9.00% per annum, payable in kind, and will be secured by substantially all assets and property of the Debtors.
• The DIP Notes Facility will also benefit from superpriority administrative expense claims against the Debtors that are senior to all other administrative expenses or other claims against the Debtors.
• Proceeds of the DIP Notes Facility will be used for: (a) working capital and general corporate purposes of the Debtors; (b) bankruptcy-related costs and expenses in respect of the Prepackaged Cases; (c) costs and expenses related to the DIP Notes Facility; and (d) any other purposes set forth in the budget approved by the DIP Noteholders.

The DIP Notes Facility forms an integral component of the RSA and the Restructuring Transactions and will support the Company's operations during the Prepackaged Cases and ensure a smooth and timely exit from chapter 11. The Debtors require immediate access to the additional liquidity provided through the DIP Notes Facility to continue operations and to administer the Prepackaged Cases. Based on the Debtors' forecast, the Debtors anticipate that absent the funds available from the DIP Notes Facility, the Company will suffer a liquidity shortfall within the first week of these Prepackaged Cases which would be highly disruptive to the operations of the business and result in the loss of support from its most critical customers, suppliers, and vendors on whom the Debtors' business depends and which could ultimately be highly value-destructive for the Company and its stakeholders.

On March 17, 2026 (the "Petition Date"), the Debtors commenced filing voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101-1532 (the "Bankruptcy Code"), with the United States Bankruptcy Court for the Southern District of Texas (the "Court").

• The transactions contemplated by the RSA (the "Restructuring Transactions"), including the issuance of the DIP Notes Facility and the Exit Notes Facility, will eliminate approximately $1.2 billion of current funded debt obligations, while providing additional capital of greater than $75 million to fund the Company's operations both during and following these Prepackaged Cases, while unimpairing employees, suppliers, and other trade creditors.
• As a result, the Company will be in a significantly more robust and resilient position from both a financial and operational perspective going forward.

Prepackaged Plan Treatment

The RSA and Prepackaged Plan contemplate the following treatment for each class of claims and interests:

• Each SSTL Lender will receive its pro rata share of 100% of the New LYCRA Holdco Notes and 100% of the New LYCRA Holdco Common Stock.
• Holders of the Euro Notes Priority Tranche will receive their pro rata share of 95% of the Class A2 Warrants, and holders of the Euro Notes Non-Priority Tranche will receive their pro rata share of 5% of the Class A2 Warrants and 100% of the Class A3 Warrants.
• Each Dollar Noteholder will receive its pro rata share of 100% of the Class B Warrants.
• Each Promissory Note Payee will receive its pro rata share of an amount equal to $1,000.
• General unsecured creditors will be rendered unimpaired and paid in the ordinary course of business, subject to all retained rights and defenses of the Debtors (other than with respect to HELM's claim under the HELM Supply Agreement).
• The Current Shareholders will receive zero recovery on account of their equity interests in Eagle Holding, which will be canceled.
• The Prepackaged Plan also provides for assumption of the HELM Settlement Agreement and License Agreement, rejection of the HELM Supply Agreement and Existing HELM License Agreement, and customary Debtor and consensual third-party releases.

The RSA includes milestones providing for entry of a confirmation order within sixty days of the Petition Date and a plan effective date within seventy-five days (extendable to ninety days) of the Petition Date. The Debtors commenced solicitation of votes on the Prepackaged Plan on March 16, 2026.