TM36 - Chapter 11 Case Summary

Business Description

Headquartered in Houston, TX, TM36 LLC, along with its Debtor affiliates (collectively, "TM36" or the "Company"), provides emergency response and property restoration services, focusing primarily on large, commercial buildings that have sustained significant disaster and weather-related damage.

---

Corporate History

StopLoss Specialists LLC ("Specialists") predates the existence of StopLoss LLC and the other Debtors by more than a decade. Specialists is owned by John Lewis and his wife, with Lewis currently serving as CEO of each of the Debtors.

Formation and Joint Venture Structure

• StopLoss LLC was created in 2023 as a joint venture between Specialists and Command 247 LLC ("Command 247"), an entity controlled by Scott Butaud. At the time of its creation, StopLoss LLC was owned 50% by each of Specialists and Command 247.
• StopLoss LLC operates primarily as a holding company which owns 100% of the other Debtors—Response Services, Logistics, and TM36.

Operational Roles

• Specialists held a general contractor license in numerous states and served as the party who entered contracts for work to be performed by the Debtors.
• StopLoss Response Services LLC ("Response Services") would retain subcontractors and perform work in support of these contracts.
• StopLoss Logistics LLC ("Logistics") provided transportation and logistics services related to mobilizing and demobilizing equipment for the Debtors' projects. Logistics did not provide these services to any unaffiliated parties.
• TM36 LLC ("TM36") was created to hold title to equipment that was financed by Recovery Logistics Finance, LLC ("RLF").

Debt-for-Equity Conversion

A debt-for-equity conversion occurred pursuant to which 431 KW, LLC acquired 100% of the equity in StopLoss LLC. This conversion is the subject of pending litigation in the Texas Business Court but does not impact the managing control over the Debtors.

---

Operations Overview

John Lewis is the Chief Executive Officer of each of the Debtors. As of the Petition Date, the Debtors have no other employees because they have not operated in several months. The Debtors outsource IT and accounting support from independent contractors.

Current Assets

The Debtors' assets primarily consist of equipment and vehicles, litigation claims that have been filed against IAG for failing to fund the Renaissance Project, claims under a settlement agreement with Graystreet, and accounts receivable.

---

Prepetition Obligations

As of the Petition Date, the Debtors' primary debt obligations consisted of secured obligations owed to RLF, miscellaneous other equipment-specific financing with Wells Fargo, Bank of America, Sumitomo, and others, secured obligations owed to 431 KW, and unsecured trade debt.

RLF Facility

• TM36, as borrower, entered into a Loan and Security Agreement dated July 1, 2024, with RLF, as lender, for a multi-draw senior revolving loan facility with a maximum amount of $75 million (the "RLF Facility"). The purpose of the RLF Facility was to finance TM36's purchase of equipment that would be used in the Debtors' business.
  • Each of the other Debtors and Command 247 are guarantors of the RLF Facility.
  • Each of the Debtors granted RLF a security interest in their receivables and accounts, the purchased equipment and all other personal property, and general intangibles.
  • As of the Petition Date, the balance on the RLF Facility was approximately $7.8 million.

431 KW Facility

• On July 11, 2025, StopLoss LLC entered into a Convertible Note Agreement and Secured Convertible Note with 431 KW (the "431 KW Facility"). The purpose of the 431 KW Facility was to finance the litigation against IAG arising out of the Renaissance Project.
  • The collateral for the 431 KW Facility is all proceeds from a settlement agreement between Specialists and Graystreet Management Services LLC ("Graystreet"), the manager of the Renaissance Tower and the insured party, and the proceeds from the litigation against IAG.
  • As part of the 431 KW Facility, Specialists assigned 431 KW an interest in the litigation claims arising out of the Renaissance Project (the "Renaissance Claims"). Under the parties' agreement, 431 KW will receive 45% of the proceeds from any recovery on the Renaissance Claims after reimbursement of 431 KW's costs and legal expenses that it advances if the recovery is greater than $15 million and 35% if the recovery is equal to or less than $15 million. The remaining proceeds would be paid to StopLoss LLC.
  • As of the Petition Date, the balance on the 431 KW Facility was approximately $1.9 million.

Unsecured Debts

• As of the Petition Date, the Debtors have approximately $13.9 million in general unsecured claims. Of this amount, approximately $8.3 million is unpaid trade debt owed to third parties and the remaining amount is intercompany debt.

---

Events Leading to Bankruptcy

Renaissance Project and IAG Breach

In October 2024, Specialists and Graystreet entered into a Work Agreement regarding a remediation and mitigation project for the building known as Renaissance Tower located at 1201 Elm Street, Dallas, Texas (the "Renaissance Project").

• Financing for the Renaissance Project was to be provided through a factoring arrangement with Insured Advocacy Group, LLC ("IAG"). Graystreet and the Debtors expected that IAG would advance funds on an interim basis sufficient to pay the Debtors' obligations incurred on the Renaissance Project.
• The Debtors began work on the Renaissance Project, incurring significant costs and expenses. IAG failed to fund the financing as promised under their agreement.
• Without IAG's financing, the Debtors lacked liquidity to sustain their operations and eventually led Graystreet to terminate its agreement with Specialists.

The Debtors could not sustain the loss of this project, which would have generated many tens of millions of dollars in revenue and instead resulted in millions of dollars of unpaid claims. The Debtors were forced to terminate employees and drastically reduce operations.

• As of termination, the Debtors had sent Graystreet invoices for the Renaissance Project totaling $29,161,298.63.

Graystreet Settlement

On June 3, 2025, Specialists and Graystreet entered into a Contract Termination, Payment, Full and Final Settlement, and Mutual Release Agreement (the "Graystreet Settlement").

• Pursuant to the Graystreet Settlement, Graystreet agreed to pay Specialists $8,340,445.82 in cash over time. The remaining $20,820,852.81 would be paid if, when, and only to the extent that Graystreet receives payment for the invoices from its insurers. If Graystreet does not receive insurance payments, then it is not obligated to pay the remaining amount to the Debtors.
• To date, Graystreet has only paid a portion of the initial cash settlement amount. Upon information and belief, Graystreet has not received payments from its insurers related to the Renaissance Project.

Litigation Against IAG

The Debtors retained the law firm of Susman Godfrey L.L.P. to investigate and pursue claims against IAG for the damage it caused the Debtors by failing to finance their work on the Renaissance Project.

• On August 1, 2025, Specialists filed suit against IAG in the Southern District of New York, Case No. 25-cv-6339. The Debtors assert causes of action against IAG for breach of contract and tortious interference for failing to pay any sums related to invoices in the Renaissance Project. The lawsuit is pending and being actively prosecuted.
• The proceeds from this litigation are critical to the Debtors' plan to repay creditors and restart operations.

RLF Lawsuit and Involuntary Petition

On December 27, 2024, RLF filed suit against the Debtors and other non-debtor parties in New York State Court.

• In the RLF Lawsuit, RLF alleges that it is owed $7,821,482 and that its claim is secured by all assets of the Debtors, including StopLoss. RLF also seeks to foreclose on all assets of all of the Debtors.
• On May 1, 2025, the Debtors and other defendants filed an answer in the RLF Lawsuit, denying key allegations and asserting affirmative defenses.
• On December 12, 2025, RLF filed a motion to amend its complaint in the RLF Lawsuit which was recently denied without prejudice.

On January 20, 2026, RLF and two trade creditors, Koala Roofing LLC and RoofWrap Services, LLC, filed an involuntary bankruptcy petition against only StopLoss LLC in the Western District of Louisiana, Lafayette Division (Case No. 26-50049). The other Debtors were not the subject of involuntary petition.

• On February 11, 2026, StopLoss LLC timely answered the involuntary petition and disputed the claims of the petitioning creditors because the trade creditors' debts are owed by StopLoss Response Services, LLC rather than StopLoss LLC, and the RLF debt is subject to a bona fide dispute in the New York Lawsuit.
• Concurrent with filing the First Day Motions, StopLoss LLC filed a motion to dismiss or, in the alternative, transfer the involuntary case to this Court.

Ownership Dispute and Business Court Lawsuit

On June 3, 2025, StopLoss LLC acknowledged an Equity Purchase Agreement between Command 247 and 431 KW, pursuant to which 431 KW acquired a 0.25% ownership interest in StopLoss LLC from Command 247. Under the StopLoss LLC operating agreement, a simple majority is sufficient to take any action on behalf of StopLoss LLC. As a result of the 431 KW equity purchase, a combination of 431 KW and Specialists was sufficient to have management authority over the company.

• The Secured Convertible Note permitted 431 KW to convert all or a portion of the amounts due into membership interests in StopLoss LLC.
• On September 2, 2025, 431 KW provide notice of its intent to convert.
• On October 17, 2025, Munroe, Park & Johnson delivered its report concluding that StopLoss LLC had zero fair market value as of July 11, 2025.
• On October 17, 2025, 431 KW provided written notice of its election to convert $1,000.00 of the amount due on the Secured Convertible Note.

431 KW and Specialists agree that as a result of the conversion, 431 KW became the sole owner of StopLoss LLC. Command 247 and Butaud disputed the validity of the conversion.

• On October 20, 2025, 431 KW, StopLoss and Specialists originally filed suit against Butaud and Command 247 in Harris County district court. On December 8, 2025, Butaud and Command 247 removed that case to the Texas Business Court - Eleventh Division (the "Business Court Lawsuit").
• On January 16, 2026, the Plaintiffs in the Business Court Lawsuit amended their petition. Among other things, the Plaintiffs seek a declaration that 431 KW is the 100% owner of StopLoss. The Plaintiffs assert breach of fiduciary duty claims against Butaud and Command 247.
• Command 247 and Butaud filed counterclaims and third-party claims alleging claims for breach of fiduciary duty and fraud and seeking compensatory damages. The Debtors and other defendants disputed these allegations.
• On January 21, 2026, the Debtors, Command 247, and Butaud executed and filed a Rule 11 Agreement in the Business Court Lawsuit. Among other things, the parties agreed in the Rule 11 Agreement that Command 247 and Butaud would permit the Debtors and their representatives to pick up all of the Debtors' equipment or vehicles in the possession of Command 247 and Butaud. In the Rule 11 Agreement, Command 247 and Butaud also agreed that they would not take any action or purport to act on behalf of the Debtors.

Chapter 11 Filing and Go-Forward Strategy

The Debtors engaged a financial advisor and legal counsel to explore all potential alternatives and ultimately determined to file these Chapter 11 Cases.

• Effective as of February 18, 2026, the Debtors engaged Porter Hedges L.LP as its restructuring counsel.
• Effective as of February 18, 2026, the Debtors retained Veritas Restructuring Group LLC as its financial advisor and Pablo Bonjour as Chief Restructuring Officer.

On March 5, 2026 (the "Petition Date"), the Debtors filed these Chapter 11 Cases in the U.S. Bankruptcy Court for the Southern District of Texas. The purpose of these Chapter 11 Cases is to maximize the value of the Debtors' assets for the benefit of their estates, which will be achieved through restarting operations, prosecuting significant litigation claims, collecting payments an existing settlement, and pursuing the collection of accounts receivable.

• The Debtors have received a term sheet for approximately $5.75 million in postpetition financing that is still being negotiated. Additionally, the Debtors are actively bidding on new jobs for which new capital will be required.
• The Debtors have not sought approval of DIP financing as part of the First Day Motions but anticipate filing such a motion soon.