TRM NRE Holding - Chapter 11 APA Summary

Private Sale / Asset Purchase Agreement Summary

Overview

• The Debtors seek entry of an order pursuant to section 363 of the Bankruptcy Code (a) authorizing the private sale of locomotives and related assets located at the Debtors' Paducah, Kentucky operating facility (the "Purchased Locomotive Assets") to the Buyer, free and clear of liens, claims, encumbrances, and other interests, as contemplated by the Locomotive Sale Agreement (the "Purchase Agreement"), and (b) granting related relief (the "Paducah Locomotives Sale").
• The sale is being pursued in connection with the Debtors' intended exit from the Paducah Facility, which the Debtors intend to complete by no later than Aug. 27, 2026, as part of an agreement in principle with their landlord. Per the Debtors, if they exit by that date, they will be entitled to an incentive payment in the amount of $200,000.
• The Debtors are one of the world's leading independent providers of locomotive and rail equipment services.

Parties Involved

• Seller: TRM NRE Acquisition LLC (one of the Debtors, together with TRM NRE Holding LLC).
• Buyer: LHAGS Inc.
  • The Buyer and its affiliates are not "insiders" as that term is defined in section 101(35) of the Bankruptcy Code.
• The Purchase Agreement was executed on behalf of the Buyer by George L. Bakeris, President, and on behalf of the Seller by Shaun Karn, CEO of TRM NRE Acquisition LLC.

Assets Being Sold

• The Purchased Locomotive Assets consist of the locomotives and related assets located at the Paducah operating facility and identified on Exhibit 1 to the Purchase Agreement. At Closing, the Seller will sell and deliver, and the Buyer will purchase and accept, all right, title, and interest in the Purchased Assets.
• The Buyer has inspected the locomotives and is satisfied with the condition of the Purchased Assets. The Purchased Assets are sold "AS IS," "WHERE IS," and "WITH ALL FAULTS."

Consideration

• The Purchase Price is $2.1 million ($2,100,000.00 USD) in cash for the locomotives and related assets identified on Exhibit 1 to the Purchase Agreement.
• Following arm's-length, hard-fought, and good-faith negotiations with multiple bidders, the Debtors determined that the Buyer's offer constituted the highest or otherwise best offer received for the Purchased Locomotive Assets.
• The Purchase Price is payable in two installments: a $1 million deposit funded upon signing (see below), with the remainder payable upon satisfaction of the Court-order condition. All payments will be made by wire transfer in immediately available funds without cost to the Seller.

Good Faith Deposit

• The Buyer is to fund $1 million of the Purchase Price as a deposit (the "Deposit") upon signing the Purchase Agreement, which the Debtors have received.
• The Deposit is non-refundable other than as set forth in Section 3.7 of the Purchase Agreement. The Deposit will be released to the Seller, and the Buyer will pay the remainder of the Purchase Price, upon satisfaction of the condition set forth in Section 3.3(d) (entry of an appropriate Court order).

Bid Protections

• In the event the Seller terminates the Purchase Agreement other than as a result of the Buyer's breach or failure to perform its obligations when due, the Buyer shall be entitled to:
  • the return of the Deposit; and
  • expense reimbursement, not to exceed $25,000 in the aggregate (the "Expense Reimbursement"), for actual, reasonable, and documented expenses incurred after the Effective Date in connection with preparing to remove the Purchased Locomotive Assets from the Paducah Facility by the Sept. 7, 2026 Removal Deadline.
• For the avoidance of doubt, in all other scenarios the Deposit shall be non-refundable and no Expense Reimbursement will be due and payable.

Private Sale

• This is a private sale to the Buyer following the marketing process, as detailed in the Karn Declaration. The Debtors' decision to proceed on a private sale basis, rather than through a formal auction, is supported by the facts and circumstances of the case.
• The Debtors have no further use for the Purchased Locomotive Assets and are actively trying to exit the Paducah Facility as expeditiously as possible. Given the quantum of indicative values received over the last three months, the Debtors believe a private sale is both efficient and cost-effective and will allow them to avoid unnecessary administrative expenses while proceeding on a timeframe that supports an optimal exit.
• Notwithstanding the private sale format, the Debtors, with the assistance of Biggs, marketed the Purchased Locomotives and entertained offers from several other potential purchasers.
• The Debtors' obligations under the Purchase Agreement are expressly conditioned upon entry of an appropriate sale order, and the agreement contains a customary fiduciary out.
• The Debtors intend to serve the Motion on all parties who expressed an interest in acquiring the Purchased Locomotive Assets and will consider any competing bids received prior to the Sale Hearing.

Marketing Process and Business Justification

• The Debtors began marketing the Purchased Locomotive Assets and other parts, machinery, and equipment located at the Paducah Facility on or around April 2026, engaging Edward D. Biggs III, LLC ("Biggs"), a locomotive industry expert familiar with the Debtors' assets, to assist in the marketing and sale process.
• Biggs contacted more than 8 strategic buyers over a two-and-a-half-month timeframe. The Debtors' internal sales team also received several direct offers from industry participants, as well as quotes from a separate liquidation firm for all assets located at the Paducah Facility.
• At least four parties submitted bids to acquire the Purchased Locomotive Assets. The Debtors consulted with each of Great Rock Capital ("GRC"), their prepetition first lien lender, and the DIP Lender prior to entering into the Purchase Agreement.
• The Debtors submit that a strong business justification exists, including: the wind-down of operations at the Paducah Facility and the need to vacate the premises expeditiously; the extensive, arm's-length marketing and negotiation process; and the incremental value generated by the sale, measured not only by the Purchase Price but also by reduced operating costs associated with a value-maximizing exit.

Removal and Delivery

• On the Payment Date, the Buyer will take possession of the Purchased Assets from the Seller, AS-IS and WHERE-IS. The Buyer will be permitted to begin preparing to take possession upon signing the Purchase Agreement, and, upon receipt of the Deposit, the Buyer and its contractors will have the right to access the site solely for the purpose of preparing to dismantle and remove the assets, which the Buyer may do after title transfers.
• The Buyer is solely responsible for each locomotive to be accepted and interchanged per the PAL and CSX interchange requirements, and is responsible for PAL and CSX transportation waybill and expense.
• The Buyer is responsible for removal of all locomotives on or before Sept. 7, 2026 (the "Removal Deadline"). To the extent the Buyer has not removed any assets listed on Exhibit 1 by the Removal Deadline, title to such assets will revert to the Debtors.

Liabilities and Taxes

• All liabilities, claims, costs, expenses, revenues, and obligations attributable to each Purchased Asset for any period prior to the Payment Date will be the responsibility of the Seller; those attributable on and after the Payment Date will be the responsibility of the Buyer. The "Payment Date" is the date on which the Purchase Price is paid in full to the Seller.
• All federal, state, and local sales tax, use tax, property tax, transfer tax, customs fees, value-added tax, and other similar taxes, fees, or duties applicable to the Buyer's purchase of the Purchased Assets will be the responsibility of the Buyer.

Closing Conditions

• The obligation of the Buyer to complete the Transaction is subject to conditions precedent including delivery by the Seller, on or before the Closing Date and after receiving full payment, of a final consolidated Bill of Sale; the Seller's performance of all covenants and agreements; and the truth and correctness in all material respects of the Seller's representations and warranties.
• The obligation of the Seller to complete the Transaction is subject to conditions precedent including payment of the Purchase Price; the Buyer's performance of all covenants and agreements; the truth and correctness in all material respects of the Buyer's representations and warranties; and entry of an appropriate Court order.
  • Court Order: The bankruptcy court presiding over the chapter 11 cases (In re TRM NRE Holding LLC, et al., Case No. 26-10568 (KBO) (Bankr. D. Del.)) shall have entered an appropriate order authorizing the Transaction by no later than Aug. 7, 2026.
• Transfer of title and risk of loss of the Purchased Assets shall occur upon the Seller's receipt of the Purchase Price. Each Party may waive in writing any of its conditions precedent, without relinquishing any claim against the other Party for breach except to the extent expressly waived in writing.

Representations and Warranties

• The Seller represents and warrants, among other things, that it is duly organized and validly existing and has authority to consummate the Transaction; that it owns and can deliver good and marketable title to the Purchased Assets, free and clear of any liens or encumbrances; that it has no undisclosed liabilities with respect to the Purchased Assets; and that there are no actions, suits, claims, or proceedings pending or, to its knowledge, threatened with respect to the Purchased Assets.
• The Buyer represents and warrants, among other things, that it is duly organized and validly existing and has authority to consummate the Transaction, and that there are no actions, suits, or proceedings pending or, to its knowledge, threatened with respect to the Transaction that would materially hinder or prevent its ability to carry it out.
• Except as expressly provided, the Seller makes no representation or warranty as to the merchantability, fitness for use, design, condition, quality, materials, or workmanship of the Purchased Assets, which are sold "AS IS," "WHERE IS," and "WITH ALL FAULTS."

Sale Free and Clear

• The Debtors seek to sell the Purchased Locomotive Assets free and clear of liens, claims, encumbrances, and other interests in accordance with at least one of the five conditions of section 363(f) of the Bankruptcy Code.
• Consistent with section 363(f)(2), each party holding liens on the Purchased Locomotive Assets has previously consented to, or absent any objection will be deemed to have consented to, the sale. In the alternative, any lienholder opposing the sale could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.
• Upon consummation, the Purchased Locomotive Assets and good and marketable title thereto will be transferred to the Buyer free and clear of all liens, claims, encumbrances, and other interests, with such interests attaching to the sale proceeds in the order of their priority, subject to any claims and defenses, setoffs, or rights of recoupment the Debtors may possess with respect thereto.

Successor Liability

• The Debtors contemplate a finding and ruling in the Sale Order that the Buyer shall not be a successor in interest to any Seller for any purpose and that the sale is free and clear of any successor liability claims.

Good Faith Purchaser

• The principal economic terms of the Paducah Locomotives Sale were negotiated in good faith and at arm's-length by and among third parties, without collusion of any kind.
• The Debtors request that the Proposed Order provide that the Buyer is a "good faith" purchaser within the meaning of section 363(m) of the Bankruptcy Code and entitled to all of the protections in accordance therewith.

Use of Proceeds and Consultant Commission

• Payment of the Purchase Price shall be made directly to the Debtors.
• The Debtors also seek authority to pay Biggs a commission of $105,000 in connection with the sale. Pursuant to the terms of its engagement, Biggs is entitled to 5% of the gross sale proceeds (i.e., approximately $105,000). Upon closing, the Debtors are authorized to remit $105,000 to Biggs, to be paid from the sale proceeds free and clear of liens, claims, encumbrances, and interests.

Relief from Stay

• The Debtors request that the Court waive the 14-day stay period under Bankruptcy Rule 6004(h) so that the sale may be consummated as soon as practicable to preserve and maximize value and ensure an optimal exit from the Paducah Facility, authorizing the Debtors and the Buyer to implement the relief immediately.

Reservation of Rights

• Nothing contained in the Motion, the Purchase Agreement, or the Order shall be construed as an approval, assumption, or rejection of any agreement, contract, program, policy, or lease under section 365 of the Bankruptcy Code.

Governing Law

• The Purchase Agreement is governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of laws provisions, with Delaware as the choice of forum for all legal proceedings arising from or related to the agreement.

Notice

• Notice of the Motion will be provided to, among others: the Office of the U.S. Trustee for Region 3; the Office of the U.S. Attorney for the District of Delaware; the holders of the 30 largest unsecured claims (on a consolidated basis); the Internal Revenue Service; counsel to Great Rock Capital Partners Management, LLC; any party known or reasonably believed to have expressed an interest in acquiring the Locomotives or to have asserted any lien, claim, encumbrance, or other interest in the Purchased Locomotive Assets; the attorney general for each state in which the Debtors operate; counsel to the Sponsor; any party that has requested notice under Bankruptcy Rule 2002; and any other party entitled to notice under Local Rule 9013-1.

Key Dates

• Petition Date: April 21, 2026
• Effective Date of the Purchase Agreement: July 15, 2026
• Court-Order Condition Deadline (order authorizing the Transaction): Aug. 7, 2026
• Targeted Exit from the Paducah Facility: no later than Aug. 27, 2026
• Removal Deadline: Sept. 7, 2026