US Magnesium - Chapter 11 Plan Terms

Plan Terms

Overview

• The Official Committee of Unsecured Creditors (the “Committee” or “Plan Proponent”), appointed in the Chapter 11 Case of US Magnesium LLC (the “Debtor”), proposes the combined disclosure statement and plan of liquidation (the “Combined Disclosure Statement and Plan”) pursuant to sections 1121(a) and 1125(b) of the Bankruptcy Code.
  • The Debtor commenced its Chapter 11 Case on September 10, 2025 (the “Petition Date”) to address its prepetition liabilities, including its legacy environmental liabilities arising out of its former operations, and to implement a sale of its assets to maximize value for the Debtor’s estate and its Creditors. The Debtor was successful in this goal.
• The Combined Disclosure Statement and Plan is the result of extensive, good faith, arm’s-length negotiations among the Committee, the Debtor, Wells Fargo, EPA, FFSL, PBGC, and other parties in interest, proposed with the legitimate purpose of maximizing the value of the Debtor’s estate for all stakeholders.
• The Debtor supports the Plan and believes that confirmation and consummation of the Plan is in the best interests of the Debtor and its Creditors.
• The Combined Disclosure Statement and Plan, including the Plan Supplement, as modified by the Confirmation Order, was approved and confirmed pursuant to section 1129 of the Bankruptcy Code.

Sale Transaction

• On September 15, 2025, the Debtor filed the Sale Motion seeking approval of, among other things, the Bid Procedures and the Stalking Horse Bid. On December 19, 2025, the Bankruptcy Court entered the Bid Procedures Order approving the Bid Procedures and the Stalking Horse Bid, with certain modifications to the originally proposed terms.
  • The Stalking Horse Bid provided for the acquisition of substantially all of the Debtor’s assets, including certain unencumbered assets, namely the Rowley Property and the Mineral Lease.
• On January 16, 2026, FFSL submitted a bid for $15 million to purchase certain of the Debtor’s unencumbered assets, including the Rowley Property and the Mineral Lease, and was thereafter deemed a Qualified Bidder.
• On January 21, 2026, the Debtor commenced an auction between the two Qualified Bidders—the Stalking Horse Bidder and FFSL—which concluded on January 23, 2026.
  • The Debtor ultimately selected FFSL as the highest and best bid, with a purchase price of $30 million in Cash and the assumption by FFSL of certain liabilities of the Debtor, including the Debtor’s obligations under the Consent Decree and certain tax obligations.
• On February 5, 2026, the Bankruptcy Court entered the FFSL Sale Order approving the Sale to FFSL pursuant to the terms of the FFSL APA (dated January 26, 2026), and the FFSL Sale closed on February 6, 2026.
  • Pursuant to the FFSL APA, the Purchaser acquired the Sold Unencumbered Assets—which include, but are not limited to, the Rowley Property and the Mineral Lease—and assumed, among other liabilities, the Debtor’s obligations under the Consent Decree.
• Following the consummation of the sale to FFSL, the main objective in the Chapter 11 Case has been to determine a process to liquidate the Debtor’s Prepetition Collateral and propose and consummate a chapter 11 plan that distributes the Debtor’s remaining value to its Creditors as soon as reasonably possible and in a fair and efficient manner.

Other Asset Sales

• On November 11, 2025, the Debtor filed a motion to sell certain lithium carbonate (the “Lithium Sale”), which lithium carbonate assets constitute Collateral of the Prepetition Secured Lenders. On December 22, 2025, the Bankruptcy Court entered an order approving the Lithium Sale.
  • The purchase price for the Lithium Sale was $7,500.00 per metric ton of lithium carbonate for up to 1,100 metric tons, or a maximum of $8,250,000.00.
• On February 4, 2026, the Debtor filed the Turbine Sale Motion seeking approval of the sale of a 26MW GE Frame 5PA (MS5001) gas turbine generator package (the “Turbine”) for a purchase price of $7,511,010.19. On March 24, 2026, the Bankruptcy Court entered an order granting the Turbine Sale Motion.

DIP Financing

• On the Petition Date, the Debtor filed the Initial DIP Motion seeking approval of DIP financing pursuant to the terms of the Ratification and Amendment Agreement (the “Ratification Agreement”) and authority to enter into the Ratification Agreement.
  • The Ratification Agreement provided a debtor-in-possession financing facility (the “Initial DIP Facility”) of an aggregate principal amount of up to $20,821,588, consisting of the roll-up of up to $10 million of the Prepetition Credit Agreement and $10 million in new money.
• On September 12, 2025, the Bankruptcy Court entered the First Interim DIP Order. The Committee DIP Objection objected to certain terms of the Initial DIP Facility, including the proposed roll-up and the proposed granting of liens on certain of the Debtor’s assets that were unencumbered as of the Petition Date.
  • Thereafter, the Bankruptcy Court entered the Interim DIP Orders, which were substantially similar to the First Interim DIP Order except that the Debtor’s borrowing limit was increased, the budget was revised, the Challenge Deadline was extended, and the Debtor’s proposed roll-up of prepetition debt was removed, among other things.
  • In connection with the FFSL Sale, the advances made to the Debtor under the Interim DIP Orders were repaid pursuant to paragraph 49 of the FFSL Sale Order.
• On March 4, 2026, the Debtor filed a motion seeking approval of the DIP Liquidation Order, pursuant to which the Debtor sought approval to, among other things, borrow up to $3,276,794 from Wells Fargo in accordance with the budget set forth therein, to be used to fund the liquidation of certain Prepetition Collateral located on the Rowley Property, and to grant liens on all Prepetition Collateral to secure the obligations in connection with such advances.
  • Pursuant to the Cooperation Agreement and the Committee Settlement, the Committee agreed to support and to not object to the DIP Liquidation Order. On March 26, 2026, the Bankruptcy Court entered the DIP Liquidation Order.

Committee Challenge

• On December 29, 2025, the Committee filed the Standing Motion seeking standing to pursue, among other claims:
  • Declaratory judgments that the Ace Claims and certain other Commercial Tort Claims (including causes of action against insiders) are not subject to valid and enforceable security interests or liens as of the Petition Date;
  • The avoidance of any and all security interests that purport to encumber the Ace Claims and certain other Commercial Tort Claims (including causes of action against insiders);
  • A declaratory judgment that the Debtor’s interests in Skull Valley Water Group, LLC (“Skull Valley”) are not subject to enforceable security interests or liens as of the Petition Date;
  • The disallowance of claims of the Prepetition Secured Lenders related to their alleged security interests in and liens against the Ace Claims, certain other Commercial Tort Claims (including causes of action against insiders), and the Debtor’s interests in Skull Valley; and
  • The recharacterization of the Prepetition Term Loan C Facility, the Prepetition Subordinated Loan Agreement, the Prepetition Bridge Loan Agreement, and certain Renco Claims as equity (the “Recharacterization Request”).
• On January 29, 2026, the Bankruptcy Court entered an order granting the Standing Motion, and on the same day the Committee filed the Complaint commencing the Committee Challenge—the adversary proceeding against Wells Fargo Bank, National Association, The Renco Group, Inc., and Renco Global Capital, LLC.

Committee Settlement

• On March 19, 2026, the Debtor filed the Rule 9019 Motion seeking approval of the Committee Settlement, pursuant to which the Debtor, the Committee, Renco, and Wells Fargo agreed to enter into the Cooperation Agreement and the Ace Settlement, in each case subject to the terms and conditions thereto.
• Pursuant to the Cooperation Agreement, the parties agreed, among other things, to cooperate and support:
  • The Debtor in its liquidation of certain Prepetition Collateral located at the Rowley Property, the costs and expenses of which will be funded by Wells Fargo through the DIP Liquidation Order, in accordance with the liquidation budget and the Limited Access Agreement;
  • The entry of the DIP Liquidation Order; and
  • The Focus Management Retention.
• In addition, pursuant to the Cooperation Agreement, Wells Fargo agreed to (a) reimburse the Debtor’s Estate to the extent it incurs costs related thereto, up to the Maximum Reimbursement Amount, and (b) release to the Debtor’s Estate a certain amount of the proceeds from the liquidation of certain Prepetition Collateral located on the Rowley Property.
• Pursuant to the Ace Settlement (dated March 30, 2026), the Debtor, the Committee, Wells Fargo, and Renco agreed to settle the Committee Challenge solely with respect to the Ace Claims by stipulating, among other things, that:
  • The Debtor’s estate shall be entitled to manage and resolve the underlying litigation related to the Ace Claims;
  • Wells Fargo and Renco will receive 55% of any net proceeds for application to their respective remaining allowed secured claims, if any; and
  • 45% of any net proceeds arising from the Ace Claims shall be assigned to the Debtor’s Estate for the benefit of unsecured creditors, free and clear of any alleged liens of Wells Fargo or Renco, subject to the various conditions set forth in the Ace Settlement.
• On March 16, 2026, the Debtor, Wells Fargo, and FFSL executed the Limited Access Agreement, pursuant to which FFSL granted the Debtor and its representatives a license for a period of approximately ninety (90) days to enter and use the Rowley Property for purposes of liquidating certain Prepetition Assets in accordance with the agreed-upon Liquidation Plan.
• On March 26, 2026, the Bankruptcy Court entered an order granting the Rule 9019 Motion, approving the Committee Settlement, including the Debtor’s entry into the Cooperation Agreement, the Ace Settlement, and the Limited Access Agreement.

Chapter 11 Plan of Liquidation

• The Combined Disclosure Statement and Plan provides for, as of the Effective Date, a Liquidating Trust to liquidate, collect, sell, or otherwise dispose of the remaining assets of the Debtor’s Estate, including, without limitation:
  • Causes of Action of the Debtor and Estate;
  • The Salt Lake City Property; and
  • The Prepetition Collateral, primarily consisting of the inventory and equipment, if and to the extent such assets were not previously monetized to Cash or otherwise transferred or abandoned by the Debtor prior to the Effective Date.
• The Liquidating Trust will distribute all net proceeds to Creditors generally in accordance with the priority scheme under the Bankruptcy Code and subject to the terms of the Combined Disclosure Statement and Plan and the Liquidating Trust Agreement. There will be no Distributions to Holders of Interests.

Liquidating Trust

• On the Effective Date, the Liquidating Trust shall be established pursuant to the Liquidating Trust Agreement for the benefit of the Liquidating Trust Beneficiaries, for the purpose of, inter alia:
  • Administering the Liquidating Trust Assets;
  • Prosecuting and/or resolving all Disputed Claims;
  • Investigating and pursuing any Causes of Action that constitute Liquidating Trust Assets; and
  • Making all Distributions to the Liquidating Trust Beneficiaries as provided for under the Combined Disclosure Statement and Plan.
• The Liquidating Trust is intended to qualify as a liquidating trust pursuant to Treas. Reg. § 301.7701-4(d), with no objective to continue or engage in the conduct of the trade or business, except to the extent reasonably necessary to, and consistent with, the liquidating purpose of the Liquidating Trust.
• On the Effective Date, the Liquidating Trust Oversight Committee shall be formed and the Liquidating Trustee shall be appointed, and the Liquidating Trust Assets shall vest automatically in the Liquidating Trust.
  • The Liquidating Trust Oversight Committee, consisting of four (4) members selected by the Committee, shall oversee the implementation and administration of the Liquidating Trust and the Combined Disclosure Statement and Plan.
  • The Liquidating Trust shall be governed and administered by the Liquidating Trustee, who is selected by the Committee, subject to the supervision of the Liquidating Trust Oversight Committee. From and after the Effective Date, the Liquidating Trustee shall be the representative of the Debtor’s Estate with respect to the Liquidating Trust Assets.
  • The Plan Supplement disclosed the identities of the Liquidating Trustee, the members of the Liquidating Trust Oversight Committee, and the Wind-Down Officer, who will be the managing member of the Post-Effective Date Debtor.

Classification and Treatment of Claims and Interests

• In addition to Administrative Claims, Professional Fee Claims, and Priority Tax Claims, which need not be classified, the Combined Disclosure Statement and Plan designates eight (8) Classes of Claims and/or Interests.
• Class 1 (Priority Non-Tax Claims) and Class 2 (Other Secured Claims) are Unimpaired and therefore deemed to accept the Combined Disclosure Statement and Plan.
• Class 3 (Senior Secured Claims), Class 4 (Subordinated Secured Claims), Class 5 (Deficiency Claims), Class 6 (Insider Unsecured Claims), Class 7 (General Unsecured Claims), and Class 8 (Interests) are Impaired.
  • Class 7 (General Unsecured Claims) has voted to accept the Combined Disclosure Statement and Plan, thereby satisfying section 1129(a)(8) with respect to that Class.
  • Class 3 (Senior Secured Claims), Class 4 (Subordinated Secured Claims), Class 5 (Deficiency Claims), and Class 6 (Insider Unsecured Claims) have voted to reject the Combined Disclosure Statement and Plan.
  • Class 8 (Interests) is deemed to have rejected the Combined Disclosure Statement and Plan pursuant to section 1126(g) of the Bankruptcy Code.
• The Senior Secured Claims, other than any Claims arising under or related to the Prepetition Term Loan C Facility, shall be Allowed in the amount of $41,362,236.82 as of the Petition Date, less any amounts applied thereto after the Petition Date through the Effective Date.
• Holders of Allowed Deficiency Claims, Allowed Insider Unsecured Claims, and Allowed General Unsecured Claims shall receive, in exchange for their respective Claims, their Pro Rata share of the Liquidating Trust Interests, which entitle the Liquidating Trust Beneficiaries to a Pro Rata share of any net proceeds of the Liquidating Trust Assets.
• There shall be no Distribution on account of Class 8 Interests, and on the Effective Date, all Interests shall be cancelled.

Releases

• Pursuant to section 1123(b) of the Bankruptcy Code, and except as otherwise specifically provided in the Combined Disclosure Statement and Plan or in the Committee Settlement, on and after the Effective Date, the Debtor and the Estate (collectively, the “Debtor/Estate Releasors”) shall release each Released Party (the “Debtor/Estate Release”) from any and all claims, obligations, rights, suits, damages, Causes of Action, remedies, and liabilities whatsoever, including any derivative claims, whether known or unknown, based on or relating to, or in any manner arising from, among other things, the Debtor, the Debtor’s business(es) or assets, the Consent Decree, the Committee Settlement, the Ace Settlement, the Access Agreements, the Cooperation Agreement, the Debtor’s postpetition liquidation, sale, and operational efforts, the Chapter 11 Case, and the negotiation, formulation, or preparation of the Combined Disclosure Statement and Plan.
  • The Debtor/Estate Release excludes claims or liabilities arising out of or relating to any act or omission of a Released Party that constitutes actual fraud, willful misconduct, or gross negligence (in each case, subject to determination by final order of a court of competent jurisdiction).
  • The Debtor/Estate Release shall not operate to waive or release any obligations of any party under the Combined Disclosure Statement and Plan or any other document, instrument, or agreement executed to implement the Combined Disclosure Statement and Plan or the Committee Settlement.
• The “Released Parties” means, collectively, (a) the Debtor’s Retained Professionals, in their respective capacities as such, and (b) the Committee, its Retained Professionals, and the individual members thereof in their capacity as such. For the avoidance of doubt, Renco shall not be considered a Released Party under the Plan.
• Importantly, there is no third-party release contemplated by the Combined Disclosure Statement and Plan.
• As set forth in the Confirmation Documents, the Debtor/Estate Release Provision is (a) fair, equitable and reasonable, (b) an integral element of the Combined Disclosure Statement and Plan and resolution of the Chapter 11 Case, without which the Plan Proponent’s ability to confirm the Combined Disclosure Statement and Plan would be seriously impaired, and (c) in the best interests of the Debtor, the estate, and creditors.

Exculpation

• The Debtor, the Debtor’s current and former directors, managers, and officers, the Debtor’s Retained Professionals, the Committee and its Retained Professionals, and the members of the Committee, each solely in their capacities as such who served during the Chapter 11 Case (collectively, the “Exculpated Parties”), will neither have nor incur any liability to any entity for any action in good faith taken or omitted to be taken between the Petition Date and the Effective Date in connection with or related to the Chapter 11 Case, the sale or other disposition of the Debtor’s assets, or the formulation, preparation, dissemination, implementation, Confirmation, or Consummation of the Combined Disclosure Statement and Plan.
  • This limitation will not affect or modify the obligations created under the Combined Disclosure Statement and Plan, or the rights of any Holder of an Allowed Claim to enforce its rights, and shall not exculpate any action (or inaction) constituting willful misconduct, actual fraud, or gross negligence (in each case subject to determination by final order of a court of competent jurisdiction).
  • Each Exculpated Party shall be entitled to and granted the protections of section 1125(e) of the Bankruptcy Code.
• As set forth in the Confirmation Documents, the Exculpation Provision is approved; the Exculpated Parties are fiduciaries of the Debtor’s Estate and no Exculpated Party is being exculpated for acts or omissions that constitute actual fraud, willful misconduct, or gross negligence.

Injunction

• Except as otherwise expressly provided in the Confirmation Order or the Combined Disclosure Statement and Plan, and except in connection with the enforcement of the terms thereof, all entities who have held, hold, or may hold Claims against or Interests in the Debtor, the Post-Effective Date Debtor, the Liquidating Trust, or the Estate that arose prior to the Effective Date are permanently enjoined from:
  • Commencing or continuing in any manner, directly or indirectly, any action or other proceeding of any kind against the property of the Debtor, the Post-Effective Date Debtor, the Estate, the Liquidating Trust, or any of the Liquidating Trust Assets, with respect to any such Claim or Interest;
  • The enforcement, attachment, collection, or recovery by any manner or means, directly or indirectly, of any judgment, award, decree, or order against such property, with respect to any such Claim or Interest;
  • Creating, perfecting, or enforcing, directly or indirectly, any Lien or encumbrance of any kind against such property, with respect to any such Claim or Interest; and
  • Any act, in any manner, in any place whatsoever, that does not conform to or comply with the provisions of the Combined Disclosure Statement and Plan with respect to such Claim or Interest.
• As set forth in the Confirmation Documents, the Injunction Provision is appropriate in that it is necessary to implement, preserve, and enforce the provisions of, and the releases and exculpations set forth in, the Combined Disclosure Statement and Plan, and is narrowly tailored to achieve such purpose.

Conditions Precedent

• Confirmation of the Combined Disclosure Statement and Plan is conditioned upon the satisfaction of each of the following conditions precedent, any one or more of which may be waived by the Plan Proponent:
  • The Bankruptcy Court shall have approved the Combined Disclosure Statement and Plan in form and substance acceptable to the Plan Proponent;
  • The Plan Proponent shall have determined that there will be sufficient Cash on the Effective Date to pay (or, with respect to Disputed Claims, to reserve for) Allowed Administrative Claims, Non-Tax Priority Claims, Priority Tax Claims, and, if applicable, Allowed Other Secured Claims;
  • The Plan Proponent and the proposed Liquidating Trustee believe that the Liquidating Trust Assets are sufficient to pay for anticipated or projected Liquidating Trust Expenses; and
  • The Confirmation Order to be presented at the Combined Hearing shall be acceptable to the Plan Proponent.
• The occurrence of the Effective Date is conditioned upon the satisfaction of each of the following conditions precedent:
  • A Confirmation Order in form and substance acceptable to the Plan Proponent shall have been entered by the Bankruptcy Court and become a Final Order not subject to any stay of effectiveness;
  • The Liquidating Trust shall have been created, the Liquidating Trustee shall have been appointed by order of the Bankruptcy Court (which may be the Confirmation Order), and the Liquidating Trust Agreement shall have been executed by the Liquidating Trustee;
  • The Liquidating Trust Assets shall have been transferred to the Liquidating Trust upon the Effective Date;
  • The Professional Fee Reserve shall have been fully funded, and the Debtor and the Committee shall have agreed to the amount of such funding; and
  • All other actions and documents determined by the Plan Proponent to be necessary to implement the Combined Disclosure Statement and Plan shall have been effected and executed.

Wind-Down

• In accordance with the Combined Disclosure Statement and Plan, the Post-Effective Date Debtor’s assets will vest in the Post-Effective Date Debtor or the Liquidating Trust, as applicable, to be liquidated, and the Post-Effective Date Debtor will be wound down and dissolved.
• As of the Effective Date, pursuant to section 14.10 of the Combined Disclosure Statement and Plan, the Debtor’s former officers and directors shall be deemed to have resigned from their positions.
• After the Effective Date, upon completion of the Wind-Down Tasks, the Collateral Liquidation Manager and the Liquidating Trustee may file a joint certification with the Bankruptcy Court that the Combined Disclosure Statement and Plan has been substantially administered for the Debtor, and upon such certification, the Post-Effective Date Debtor shall be deemed dissolved without further order of the Bankruptcy Court or action by the Liquidating Trustee or Collateral Liquidation Manager.
• On the Effective Date, the Committee shall dissolve, and the members thereof shall be released and discharged from all rights and duties from or related to the Chapter 11 Case; provided, however, that the Committee shall continue in existence and retain standing and a right to be heard for limited purposes, including: (a) pursuing claims and final fee applications under sections 330 and 331 of the Bankruptcy Code; (b) any appeals of the Confirmation Order or appeals to which the Committee is a named party; and (c) any adversary proceedings or contested matters existing as of the Effective Date to which the Committee is a named party.