National Railway Equipment - Chapter 11 Case Summary

Business Description

Headquartered in Mt. Vernon, Illinois, TRM NRE Holding LLC and its direct affiliate TRM NRE Acquisition LLC (together, the "Debtors" or the "Company"), operating as National Railway Equipment Co., is the world's largest independent supplier of locomotive servicing, new and remanufactured locomotives, locomotive leasing, field services, parts, and salvage operations.

• Over four decades, the Company has served Class 1, regional, shortline, government, and industrial railroads across North America and around the world, delivering more than 1,200 new and remanufactured locomotives.
• The Company sources its materials primarily from domestic vendors and competes with other large manufacturers in the rail industry, marketing its goods and services through internal sales representatives and its website.

For the twelve months ended December 2025, the Company generated total revenues of approximately $40.9 million and reported total EBITDA of approximately $6.2 million.

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Corporate History

Founded in 1984, the Company has built a four-decade track record as an independent supplier within the global rail industry, headquartered in Mt. Vernon, Illinois.

• On May 2, 2023, the Sponsor acquired the Company pursuant to an Article 9 sale transaction.

Corporate Structure

As of the Petition Date, the Company's ownership and corporate structure is as follows:

• The Sponsor and SH Ventures – NRE LLC hold approximately 75% and 25%, respectively, of the membership units of TRM NRE Holding LLC.
• TRM NRE Holding LLC owns 100% of the equity interests of TRM NRE Acquisition LLC.
• TRM NRE Acquisition LLC owns 100% of the equity interests in TRM NRE Australia Pty Ltd., a non-debtor incorporated in Australia.
  • The Debtors do not anticipate funding TRM NRE Australia Pty Ltd. during these chapter 11 cases.

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Operations Overview

The Company operates through three complementary, vertically integrated business divisions: the NRE Division, the Power Systems Division, and the Performance Solutions Division. The NRE Division represented approximately 87.5% of the Company's net sales for the twelve months ended December 2025, with the Power Systems Division accounting for the remaining 12.5%.

NRE Division

The NRE Division offers new and remanufactured locomotives, railcars, engines, and a broad range of components and parts, supporting both private and public enterprise domestically and internationally. The Division designs, manufactures, and remanufactures locomotives, including the Company's clean-energy N-ViroMotive and E-Series locomotives.

• Product offerings include the Company's clean-energy N-ViroMotive and E-Series locomotives, as well as re-engineered late-model EMD, GE, Alco, and other locomotives outfitted with modern electronic and propulsion controls, emission and fuel-saving technologies, and new and remanufactured engine designs.
• As of December 31, 2025, the Company held approximately 90 available locomotive units, ranging from running condition to scrap.
• The Division also supplies, services, and/or repairs engines, traction motors, alternators, generators, and approximately 30,000 SKUs of new and rebuilt parts used in locomotive repair and manufacturing, in addition to a work-in-process inventory of locomotives in various stages of build or rebuild.
• Bespoke manufacturing projects typically last six to eighteen months, with customers paying 50% upfront, another 40% upon completion, and the final 10% upon commissioning (or under a similar progress payment formulation), resulting in less predictable or "lumpy" timing of receipts.
• The NRE Division primarily operates out of its own facilities, with locomotives and components transported to the Debtors' plants. As of the Petition Date, several key locomotive projects are near completion.

Power Systems Division

The Power Systems Division supplies, repairs, and services generator and engine parts for marine and diesel engines, including industry-standard new parts, and primarily supports domestic owners and operators of tugs, barges, and other marine vessels using diesel engines.

• The Division maintains approximately 25,000 SKUs and a work-in-process inventory of engines at various stages of assembly.
• Customers purchasing engines typically pay 50% upfront, another 40% upon completion, and the final 10% upon commissioning. Project timing is generally shorter, and the collection of receipts more predictable, relative to the NRE Division.
• The Power Systems team also services customers on an emergency basis, traveling to customers in need of engine repairs, maintenance, or servicing.

Performance Solutions Division

The Performance Solutions Division is a foundry and machining operation that manufactures parts and castings—including valves, liners, cylinder heads, pistons, and similar components—primarily for internal use by the NRE Division and Power Systems Division in engine builds.

• The Division maintains approximately 140 SKUs and has limited external sales.

Vertical Integration & Operational Footprint

The Debtors' three divisions are vertically integrated: Performance Solutions supplies components to the NRE Division (the "rail" business segment), which in turn drives revenue through locomotive sales, parts distribution, and related services, while Performance Solutions also fabricates components for Power Systems (the "marine" business segment).

• Each of the Debtors' operating locations is leased, and most of the Debtors' inventory, machinery, and equipment related to the NRE Division is located in Mt. Vernon, Illinois.

Workforce

As of the Petition Date, the Debtors have approximately 183 full-time employees and contractors across four states, the majority of which support the NRE Division and are located in Mt. Vernon, Illinois. The labor force by location and business division is summarized below:

• Mt. Vernon, IL (NRE Division / Corporate): 78 employees
• Silvis, IL (NRE Division): 12 employees
• Paducah, KY (NRE Division / Performance Solutions): 28 employees
• Weston, WV (Performance Solutions): 16 employees
• Houma, LA (Power Systems): 41 employees
• Remote (Corporate): 8 employees
• Total: 183 employees

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Prepetition Obligations

As of the Petition Date, the Debtors report approximately $33.4 million in aggregate funded debt obligations, alongside roughly $3 million in general unsecured trade claims. The Company's prepetition capital structure is summarized below:

Prepetition Credit Facility — Great Rock Capital

• The Debtors are party to a Loan and Security Agreement, dated March 3, 2025, with Great Rock Capital Partners Management, LLC, as agent, and GRC SPV Investments, LLC, as lender. TRM NRE Acquisition LLC is the borrower, and TRM NRE Holding LLC serves as guarantor.
  • The three-tranche secured credit facility matures on March 3, 2028, and consists of:
    • A $15 million revolving credit facility (the "Revolver"), subject to a borrowing base of eligible accounts receivable and inventory, bearing interest at 6.50%.
    • A term loan facility (the "Term Loans") originally sized at approximately $11.7 million, subject to a borrowing base of eligible machinery, equipment, and locomotives, bearing interest at 7.50%.
    • An uncommitted delayed draw term loan facility of up to $3 million, which remains undrawn.
  • The obligations are secured by first-priority liens on substantially all of the Debtors' assets.
  • As of the Petition Date, approximately $11.5 million is outstanding under the Revolver and $8.7 million under the Term Loans, for aggregate prepetition obligations of roughly $20.2 million (exclusive of interest). Since inception, the Debtors have paid down the Term Loans by approximately $3 million (more than 25% of the original principal balance), well in excess of the approximately $1.3 million of scheduled amortization.
• As credit support, TRM Equity Fund II LP (the "Sponsor" and majority equity owner of TRM NRE Holding LLC) provided the following:
  • Funded $1.5 million in cash into escrow under an Escrow Agreement dated April 7, 2025, with the Agent and Wilmington Trust. The Debtors likewise funded an incremental $500,000 of cash into escrow as further credit support for the benefit of Great Rock Capital, resulting in approximately $2.0 million of aggregate escrowed cash supporting the Prepetition Credit Facility as of the Petition Date.
  • Entered into an Amended and Restated Capital Call and Escrow Deposit Agreement, dated March 3, 2025 (amended April 23, 2025), under which the Sponsor agreed to make "Curative Investments" if Minimum Availability under the Revolver's borrowing base dropped below $2.5 million.
  • The Sponsor's credit support obligations were scheduled to expire on April 23, 2026, subject to certain conditions—including the absence of any continuing Event of Default.

Sponsor Subordinated Note

• TRM NRE Acquisition LLC is the maker of an Amended and Restated Subordinated Note, dated March 3, 2025, in favor of the Sponsor, in the original principal amount of approximately $13.1 million.
  • The note bears interest at 10.00% per annum and matures on August 30, 2028.
  • While secured by a lien on substantially all of TRM NRE Acquisition LLC's assets, both the lien and all rights to payment are fully subordinated to the Prepetition Obligations pursuant to a Subordination Agreement dated March 3, 2025.
  • The Sponsor is contractually barred from taking any enforcement action with respect to the note until the Prepetition Obligations are paid in full.

Unsecured Seller Note

• TRM NRE Acquisition LLC is also the maker of an Unsecured Promissory Note, dated May 2, 2023, originally issued to Patrick and Susan Frangella (the "Sellers") in the original principal amount of $360,000.
  • The note was issued in connection with the April 26, 2023 Asset Purchase Agreement under which TRM NRE Acquisition LLC acquired the locomotive, marine, and engine-services business currently operated by the Debtors.
  • The note bears interest at 5.0% per annum, compounded annually, and is unsecured.
  • As of the Petition Date, approximately $120,000 in principal remains outstanding, with a final balloon payment due at maturity on May 2, 2026.

General Unsecured Trade Claims

• The Debtors estimate approximately $3 million in general unsecured obligations as of the Petition Date.

Cash on Hand

• As of the Petition Date, the Debtors held approximately $400,000 in available cash—substantially all of which constitutes cash collateral of the Prepetition Lender. The Debtors' available cash balance has since grown to approximately $800,000.

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Events Leading to Bankruptcy

A Viable Business Constrained by Lender Disputes

• Unlike many chapter 11 filers, TRM NRE Holding LLC and its affiliate TRM NRE Acquisition LLC (together, the “Debtors” or the “Company”) did not commence these cases due to a failing business. The Company remains one of the world’s leading independent providers of locomotive and rail equipment services, with a substantial tangible asset base, a loyal customer base, and a skilled workforce.
  • The chapter 11 filing was instead precipitated by the Company’s inability to reach a commercially reasonable resolution with its secured lender, GRC SPV Investments, LLC (the “Prepetition Lender”), acting through its agent, Great Rock Capital Partners Management, LLC (“Great Rock Capital”), regarding the Company’s funding and operational needs.
  • Within roughly a year of entering into the Prepetition Credit Facility, it became clear that the Company would require a different capital partner.

Escalating Disputes with Great Rock Capital

• Tensions between the Company and Great Rock Capital escalated over a series of disputed defaults and demands in late 2025 and early 2026:
  • On November 20, 2025, the parties disputed the treatment of certain sale proceeds.
  • On March 17, 2026, Great Rock Capital noticed purported events of default tied to financial covenants and information sharing—including in connection with the disputed November sale transaction—which the Company contested while providing relevant information.
  • On March 23, 2026, Great Rock Capital signaled that it would need to be refinanced out of its credit position as part of an agreed path forward, an outcome the Company indicated a willingness to accommodate.
  • From March 24 through April 12, 2026, the parties exchanged information and discussed a framework for a consensual resolution.
  • On April 13, 2026, Great Rock Capital asserted a purported payment default of approximately $325,000 based on historical accounting, which the Company disputed and addressed with supporting information.
  • On April 20, 2026, Great Rock Capital demanded payment within one business day of approximately $2.4 million and asserted an immediate borrowing base reduction of an additional approximately $1.7 million, citing a new appraisal that the Company immediately disputed.
• Despite the Debtors’ good-faith efforts to share multiple rounds of additional information, address the disputed defaults under the Prepetition Loan Agreement, and negotiate an early refinancing well in advance of the March 3, 2028 maturity, those efforts did not yield an out-of-court resolution.

Liquidity and Operational Pressures

• Over a period of several weeks, the Prepetition Lender’s assertions and progressively imposed conditions constrained the Company’s liquidity and operational flexibility, including by:
  • Impairing access to working capital and the ability to service customers;
  • Threatening key supplier relationships; and
  • Limiting the Debtors’ ability to pursue value-maximizing alternatives.
• By April 21, 2026, with mounting pressure on liquidity and operations—and the resulting risk to the Company’s ability to meet near-term obligations such as payroll, taxes, and insurance—the Debtors determined that filing chapter 11 was necessary to protect the business, access liquidity through Court orders, and preserve value for all stakeholders.

Advisor Engagement and Governance Enhancements

• In parallel with negotiations, the Debtors built out a restructuring infrastructure designed to evaluate alternatives and steward the Company through chapter 11:
  • On or about March 17, 2026, the Company retained DLA Piper LLP (US) as restructuring counsel to evaluate strategic alternatives, negotiate with the Prepetition Lender, and prepare voluntary petitions if and when needed.
  • On April 21, 2026, the Debtors appointed Mr. Adam Paul as an independent director with substantial chapter 11 experience and established a special committee, with Mr. Paul as its sole member, vested with sole and exclusive authority to negotiate and approve restructuring transactions implicating any potential conflict of interest.
  • On April 23, 2026, the Debtors engaged Mr. James Katchadurian of CR3 Partners as chief restructuring officer to assist with reorganization efforts.
  • The Debtors’ sponsor, TRM Equity, has continued to support the business and indicated a willingness to be part of the solution.

Chapter 11 Strategy and Path Forward

• The Debtors intend to leverage the tools of the Bankruptcy Code to stabilize operations, access liquidity, and execute a reorganization, including:
  • Breathing Space: Utilizing the automatic stay under section 362 to focus on completing key projects, collecting receivables, and sourcing suitable financing partners.
  • Access to Liquidity: Pursuing reliable funding to operate the business and execute the reorganization plan through sections 363 and 364.
  • Non-Core Plant Closure: Exiting at least one manufacturing site in the near term—e.g., the leased Paducah, Kentucky location—using section 365 and other available tools.
  • Discrete Asset Sales: Finalizing the prepetition marketing process and consummating one or more sales of discrete assets, including the “Power Systems” marine business segment out of Louisiana, under sections 363(f) and/or 1123(b).
  • Recapitalization: Reorganizing the business with new and suitable exit financing under section 1129.
• The Debtors remain closely engaged with Great Rock Capital and its legal and financial advisors on a postpetition basis, and currently anticipate consensual use of cash collateral at least through the period ending May 8, 2026, at 11:59 p.m. prevailing Eastern Time.