U.S. TelePacific Corp. - Chapter 11 Plan Terms

Plan / RSA Terms

Overview

• The court confirmed the amended joint Chapter 11 plan of U.S. TelePacific Corp. and its debtor affiliates on Sept. 2, 2026, the same day the combined hearing was held, and approved the disclosure statement on a final basis under section 1125.
• The telecommunications provider filed Chapter 11 on June 28, 2026 in the Southern District of Texas alongside a plan, disclosure statement, and bid procedures motion, and pursued a dual-track sale and reorganization; the prepetition marketing process continued postpetition under the bid procedures order, no qualified bids arrived by the bid deadline, and the debtors filed notice on Aug. 10, 2026 cancelling the auction and proceeding with the reorganization transaction, which the court found the most value-maximizing transaction available.
  • The plan the court confirmed is the version filed Aug. 31, 2026 carrying technical and non-substantive modifications, which followed an amended plan filed Aug. 18, 2026 and the plan supplement filed Aug. 17, 2026.
  • The creditors' committee was appointed July 9, 2026 and reached a global settlement with the debtors and the ad hoc group, filed as a settlement term sheet notice at Docket No. 230.
• The plan reorganizes rather than liquidates: assets vest in the reorganized debtors free and clear, the business emerges on a first lien exit facility, and the plan issues new equity interests, comprising common and preferred equity, together with warrants to holders of allowed second lien secured claims.

Key Dates

• Petition date: June 28, 2026.
• Bid procedures order entered June 29, 2026; notice of auction cancellation filed Aug. 10, 2026 after no qualified bids were received by the bid deadline.
• Objection deadline: Aug. 26, 2026 at 4:00 p.m. prevailing Central Time.
• Combined hearing and confirmation: Sept. 2, 2026, with the confirmation order signed the same day.
• Notice of effective date must be served within seven days of the effective date; rejection damages claims are due within 30 days of the effective date; professional fee claim applications are due within 45 days of the effective date.

Voting and Class Treatment

• Every voting class accepted. Class 3 (pari funded debt secured claims), Class 4 (second lien secured claims), Class 5 (third lien secured claims), and Class 6 (general unsecured claims) are impaired and voted to accept by the requisite numbers and amounts under section 1126(c), excluding insider acceptances.
• Class 1 (other secured claims) and Class 2 (other priority claims) are unimpaired and presumed to accept.
• Class 7 (intercompany claims) and Class 9 (intercompany interests) are either impaired or unimpaired and are deemed to accept or reject; neither votes.
• Class 8 (subordinated claims) and Class 10 (existing equity interests) are impaired and deemed to reject, and the debtors sought confirmation over those two classes under section 1129(b) rather than 1129(a)(8).
  • The court found the plan fair and equitable as to both rejecting classes because no junior holder receives or retains property on account of a junior claim or interest and no senior class receives more than payment in full, and found no unfair discrimination because similarly situated holders receive substantially similar treatment.
• Administrative claims, DIP claims, professional fee claims, priority tax claims, and transaction expenses are unclassified and treated under Article II; the court found their treatment satisfies section 1129(a)(9), subject to bar date provisions.

Committee Settlement

• The plan incorporates a global settlement among the debtors, the ad hoc group, and the Committee, documented in the settlement term sheet at Docket No. 230 and approved by entry of the confirmation order under Rule 9019 and section 1123 as fair, equitable, reasonable, and in the estates' best interest.
• The DIP lenders and the consenting investor provide the consideration used to fund the Total GUC Consideration under the settlement; the third-party release is itself part of the consideration for the Total GUC Consideration and was critical to incentivizing the committee to support the plan.
• The compromises in the committee settlement are integrated with and dependent on every other compromise contemplated by the plan, and are necessary and integral to the plan and to the success of the cases.
• The challenge period under the final DIP order has expired as to all parties in interest, including the Committee.

1L Exit Facility

• The reorganized debtors are authorized to execute and perform under the 1L exit facility documents without further court approval, including paying fees, expenses, and indemnities and creating and perfecting liens, and to make modifications they deem necessary to consummate the facility.
• Liens and security interests granted in connection with the facility are valid, binding, perfected, and enforceable upon execution of the documents, with the priorities established under applicable non-bankruptcy law, and the financial accommodations are not subject to avoidance, recharacterization, or equitable subordination.
• The debtors, the ad hoc group, and the consenting investor negotiated the facility at arm's length; the court characterized the terms as fair, reasonable, and customary, and treated the facility as necessary to confirmation and to plan feasibility.
• Exit financing does not prime or subordinate the Texas taxing authorities' liens, to the extent those liens arose in the ordinary course and are valid, senior, properly perfected, and non-avoidable.

New Equity Interests

• The new equity interests comprise common and preferred equity interests, and may be issued by one or more reorganized debtors or by any direct or indirect parent entity, including a newly formed parent that is not a debtor in these cases, as determined under the restructuring transactions with the consent of the ad hoc group.
  • The issuing entity, sequencing, and structure are committed to the debtors' business judgment and require no further order, resolicitation, or additional disclosure.
  • Regardless of which entity issues, each holder receives the same economic entitlements, relative ownership, and distributions it would have received had the ultimate parent issued, and no structuring election may dilute any holder's recovery.
  • Issuance by a non-debtor parent still carries the benefits of section 1145, or another available registration exemption where 1145 is unavailable, to the same extent as if a debtor had issued.
• The new organizational documents prohibit the issuance of non-voting equity securities.

Warrants

• Warrants go to holders of allowed second lien secured claims, issued on or after the effective date by the reorganized debtors or a direct or indirect parent, including a newly formed entity.
  • At a holder's direction or election, warrants may instead issue to one or more affiliates of that holder as designated recipients; warrants so issued are deemed issued on account of the underlying allowed second lien term loan claims and do not alter or dilute any holder's recovery.
  • To receive warrants, a holder or designated recipient must satisfy the conditions in the warrants agreements, including certifying accredited investor status under the securities rules and providing information about the second lien term loan claims held.
  • Upon exercise, common equity interests are issued free and clear of all liens, claims, and interests to the holders of the applicable allowed second lien term loan claims or to the designated recipient holding the warrants.
• Confirmation is deemed approval of the warrants and warrants agreements and of every transaction contemplated by them; all warrants are duly authorized, validly issued, fully paid, and non-assessable, and are not subject to avoidance or recharacterization.
• The specific warrant terms are set out at Article IV.K of the plan, which the court found supported by reasonably equivalent value and negotiated at arm's length.

Implementation and Restructuring Transactions

• Article IV is approved in full, and the debtors and reorganized debtors may take every action needed to effectuate the restructuring transactions without further approvals or consents beyond those the plan expressly requires, including:
  • executing merger, amalgamation, consolidation, conversion, transfer, dissolution, sale, purchase, or liquidation documents;
  • executing instruments of transfer, assignment, assumption, or delegation of any asset, right, or obligation;
  • filing certificates or articles of incorporation, merger, conversion, or dissolution under applicable state or provincial law;
  • issuing and distributing the new equity interests and warrants; and
  • any other transaction set out in the restructuring transactions memorandum.
• The plan's other means of implementation include the cash-out option, the treatment of cash received under the receivables purchase agreements, the terms of the preferred equity interests, the sources of consideration for plan distributions, and the cooperation of the independent directors.
• On the effective date all plan actions are deemed authorized without further court, board, or equityholder approval, and each party to the definitive documents is automatically deemed a party whether or not it signed a signature page.
• All estate property, assumed-but-unassigned contracts and leases, retained causes of action, and interests in non-debtor subsidiaries vest in the reorganized debtors free and clear of liens, claims, charges, and encumbrances; thereafter each reorganized debtor may operate and settle claims without court supervision.
• Existing notes, indentures, options, warrants, and equity instruments are cancelled on the effective date except those reinstated, with the governing documents surviving only to permit distributions and to preserve the agents' rights to compensation, indemnification, expense reimbursement, priority of payment, subrogation, immunity, exculpation, and contribution under the plan and the superpriority, first lien senior secured, second lien, and third lien credit agreements, and to allow the agents to appear and be heard.

Releases

• The debtor release under Article VIII.C releases the estates' claims and causes of action against the released parties, and the court found it a valid exercise of business judgment given in exchange for good and valuable consideration, integral to and non-severable from the plan, and a bar to the debtors, the estates, or the reorganized debtors asserting any released claim.
  • The released parties whose contributions the court credited are the consenting investor, TSHL, which holds consent rights under the restructuring support agreement alongside the consenting investor, the DIP lenders and DIP agent, the agents, the consenting lenders, and each of their related parties, along with the debtors' own fiduciaries, who share an identity of interest with the debtors and participated in case negotiations.
  • The DIP lenders and the consenting investor supplied the consideration funding the Total GUC Consideration, and the debtor release was a crucial component of it.
• The third-party release under Article VIII.D is consensual, operating through opt-out or opt-in mechanics depending on the holder, with holders given instructions and notice that declining to opt out or electing to opt in constitutes consent.
  • Notice went to all known holders of claims and interests, with publication in The New York Times and The Austin American-Statesman for unknown parties.
  • The release resulted from arm's-length negotiations among the debtors, the ad hoc group, and the Committee, and is part of the consideration for the Total GUC Consideration.
• Carve-outs from the third-party release:
  • The United States is deemed to opt out and is not a releasing party, though the debtors' and non-debtors' rights and defenses under non-bankruptcy law as to any claim relating to the United States are unaffected.
  • The Texas Comptroller of Public Accounts opts out as if it had timely elected to do so under the solicitation procedures.
  • The sureties are not releasing parties in any way and are deemed to have opted out.
• The lien release under Article VIII.B discharges mortgages, deeds of trust, charges, encumbrances, liens, pledges, and other security interests against estate property wherever recorded and under any applicable law, and the court found it necessary to implement the plan.

Exculpation and Injunction

• The exculpation at Article VIII.E carves out acts or omissions determined by final order to constitute fraud, gross negligence, or willful misconduct, and preserves the exculpated parties' entitlement to rely reasonably on advice of counsel as to their duties under the definitive documents.
  • The court found the exculpated parties participated in good faith and fulfilled their fiduciary duties to the extent such duties exist, and that the debtors and their agents are entitled to the protections of section 1125(e).
• The injunction at Article VIII.F bars any person or entity from commencing, continuing, amending, pursuing, joining in, or supporting a claim or cause of action against the debtors, the exculpated parties, or the released parties relating to any act or omission covered by the release, exculpation, or injunction provisions unless the bankruptcy court first determines after notice and a hearing that the claim is colorable and specifically authorizes it to be brought.
  • The bankruptcy court retains sole and exclusive jurisdiction to adjudicate any underlying colorable claim.
• All injunctions and stays arising under sections 105 or 362 and in existence on the confirmation date remain in effect until the effective date.
• The discharge under section 1141(d) extinguishes all claims, interests, and causes of action arising before the effective date, including postpetition interest, employment-termination and withdrawal liability tied to pre-effective-date services, contingent representation and warranty liability, and debts under sections 502(g), (h), and (i), regardless of whether a proof of claim was filed, the claim was allowed, or the holder accepted the plan; reinstated claims and reinstated intercompany interests are excluded.

Regulatory Approvals and Preserved Governmental Rights

• Except as the order specifically provides otherwise, the confirmation order constitutes any approval or consent required by the laws, rules, or regulations of any state or other governmental authority for implementing or consummating the plan and the documents contemplated by it.
• Nothing in the plan, plan supplement, or confirmation order relieves the debtors from complying with the Communications Act of 1934 and FCC rules and orders, or with state telecommunications laws and orders of any state public utility commission or other state regulatory authority.
  • Before the effective date the debtors must obtain all required approvals, authorizations, consents, and clearances from the FCC and the applicable state authorities, including filing all necessary applications and notifications.
  • No FCC license or authorization, no transfer of control of an FCC licensee, and no state license, certificate of public convenience and necessity, or other state regulatory approval may transfer before the applicable regulator issues its approval, and the regulators' power to impose conditions on those transfers is fully preserved.
• The confirmation order preserves the United States'
• The confirmation order preserves the United States' police, regulatory, and criminal enforcement authority without expanding or enlarging it, preserves its setoff and recoupment rights, and does not discharge obligations that are not claims, claims arising on or after the effective date, post-effective-date owner or operator liability under police or regulatory statutes, or any liability of a non-debtor including released and exculpated parties, while preserving all entities' rights and defenses as to those items; it also does not authorize transfer or assumption of any federal interests without compliance with their terms and applicable non-bankruptcy law, set cure amounts for federal interests, or constitute the United States' consent.
• Texas taxing authorities: allowed secured ad valorem tax claims for 2025 and prior years are paid in full on the effective date or as soon as practicable thereafter, with post-petition interest at the non-bankruptcy rate through payment; 2026 and later ad valorem taxes are paid in the ordinary course before delinquency, with the authorities' remedies preserved if they are not.
  • The authorities retain their prepetition and post-petition liens until paid in full including penalties and interest, and those liens may not be primed or subordinated by exit financing to the extent they arose in the ordinary course and are valid, senior, properly perfected, and non-avoidable.
  • The debtors retain their rights to contest the priority, validity, amount, or extent of any Texas tax claim, lien, or assessment. The covered authorities are Carrollton-Farmers Branch ISD, Dripping Springs ISD, Wimberley ISD, Dallas County, City of Houston, Houston City College, Houston ISD, Tarrant County, Wharton County, Reeves County Tax Districts, Hays County, and Guadalupe County.
• Texas Comptroller: setoff rights are preserved under section 553, no request for payment of post-petition amounts is required under section 503(b)(1)(D), and all pre- and post-petition tax liabilities including audit assessments are determined, resolved, and paid under Texas law with disputes prosecuted in Texas state courts; the bankruptcy has no effect on the Comptroller's rights against non-debtor third parties, and neither the debtors' right to dispute any liability nor any party's position on whether the liability or setoff exists is waived.
• San Francisco Bay Area Rapid Transit District: its claims and rights under applicable non-bankruptcy law are expressly preserved and are not released, exculpated, or enjoined, and the bankruptcy court does not retain jurisdiction over the contract, claims, or disputes between the district and Uniti, which are to be resolved under the terms of that contract.

Surety Bond Program

• The reorganized debtors reaffirm and ratify the entire surety bond program on the effective date, and it continues in full force and effect, undischarged, unenjoined, unimpaired, and unreleased by the plan.
  • The program covers the debtors' current surety bonds, any surety payment and indemnity agreements, any surety collateral and collateral agreements, and ordinary course premium payments.
  • The program is treated by the reorganized debtors and the sureties in the ordinary course as if the Chapter 11 cases had never been commenced, and related agreements are assumed under section 365 on the effective date.
  • No exculpation, release, injunction, or discharge provision, including Article VIII, may bar, alter, limit, impair, release, modify, or enjoin any surety bond obligation or surety right arising under non-bankruptcy law, and the sureties' rights against non-debtors and non-debtors' rights against the sureties are unaffected.

Executory Contracts and Leases

• All executory contracts and unexpired leases are deemed assumed on the effective date under sections 365 and 1123, without further notice or order, other than those on the rejected contracts and leases schedule, those already expired or terminated by their own terms, those subject to a pending or granted rejection motion, those identified in the debtors' first omnibus rejection motion, and those with a rejection date after the effective date. Assumption or rejection may include assignment of certain contracts to affiliates.
• Assumption fully releases and satisfies all pre-assumption claims and defaults, monetary or nonmonetary, including change-of-control and other bankruptcy-related default provisions, and any scheduled claim or proof of claim tied to an assumed contract or lease is disallowed and expunged without further order.
• The debtors served cure notices and a supplemental cure notice listing proposed cure amounts drawn from their books and records; all cure and assumption or assignment issues are resolved or will be resolved by the effective date, with disputed cure amounts determined beforehand under the Article V.A procedures.
• Rejection damages claims must be filed within 30 days of the effective date, or by the rejection damages bar date where rejection occurred under a separate order, or they are automatically disallowed and forever barred.

Corporate Governance

• All existing directors, managers, and governance body members cease to hold office on the effective date unless selected for a position with the reorganized debtors; post-effective-date directors and officers are appointed under Article IV.Q and serve under the new organizational documents.
• The debtors disclosed in the plan supplement the identity and affiliations of the proposed New Board members and officers, the compensation of known individuals proposed to serve, and the identity of any known insider to be employed by the reorganized debtors.
• Each debtor continues to exist after the effective date as a separate entity under its existing formation documents as amended by the plan; after the effective date the reorganized debtors may amend those documents, and may be disposed of, dissolved, wound down, or liquidated without court supervision.
• The Committee and any other statutory committee dissolves on the effective date, its members are released and discharged from all case-related rights and duties, and the debtors bear no fees or expenses of committee members or advisors incurred after that date.

Retained Causes of Action

• All causes of action not expressly released, waived, or settled under the plan, including those listed on the schedule of retained causes of action and those arising before or after the petition date, vest in the reorganized debtors under section 1123(b)(3) and are expressly reserved for later adjudication, with no preclusion doctrine applying as a consequence of confirmation.
• The reorganized debtors hold the exclusive right and discretion to initiate, prosecute, enforce, abandon, settle, compromise, release, withdraw, or litigate any retained cause of action, or to decline to do so, without any third party's consent or further court approval, and retain them notwithstanding the rejection or repudiation of any contract or lease.

Distributions, Claims, and Fees

• Distributions to holders of allowed claims are final, subject to Article VI, and the Article VI distribution provisions and Article VII disputed claims procedures are approved in full.
• The reorganized debtors may set off or recoup against plan distributions any claims they hold against a holder where the amount is either agreed with the holder or adjudicated by a court, and failure to effectuate a setoff waives nothing; no claim holder may recoup against the debtors unless it actually performed the recoupment in advance and gave written notice on or before the effective date, regardless of any contrary assertion in a proof of claim.
• Administrative expense claim requests must be filed and served by the applicable administrative claims bar date or they are forever barred, will not appear on the claims register, and are automatically disallowed and discharged as of the effective date.
• Professional fee claims for pre-confirmation services are due within 45 days of the effective date and are paid in the amounts the court allows, including from a professional fee account the debtors fund in trust with cash equal to the professional fee amount on the effective date.
• U.S. Trustee quarterly fees under 28 U.S.C. § 1930(a)(6), with interest under 31 U.S.C. § 3717, are payable without any section 503(b) allowance procedure or request for payment; pre-effective-date fees are paid on the effective date or as soon as practicable, and after the effective date U.S. TelePacific Corp. pays for each quarter or fraction until the earlier of a final decree closing its case, dismissal, or conversion, with quarterly reports filed in the U.S. Trustee's form.

Securities Exemptions and Transfer Taxes

• The plan securities, comprising the new equity interests (including common and preferred equity interests), the warrants, and all other securities issued or entered into under the plan, whether by the debtors, the reorganized debtors, or a non-debtor parent, are exempt from Securities Act section 5 registration under section 1145 to the maximum extent permitted, and where 1145 is unavailable, under section 4(a)(2), Regulation D, Regulation S, or another available exemption.
  • No entity, including DTC, may require a legal opinion on the validity of any plan transaction or on the securities' exempt status; transfer agents, trustees, and other non-governmental entities must accept and rely on the plan and confirmation order in lieu of an opinion for registration-exemption and DTC book-entry eligibility purposes.
  • The court found the plan's principal purpose is not tax avoidance or avoidance of Securities Act section 5, and no governmental unit objected on those grounds.
• Under section 1146(a), transfers under or in connection with the plan, including securities issuances, the restructuring transactions, security interest creation and recording, lease-making and assignment, and delivery of any deed or instrument of transfer, are exempt from recording, stamp, conveyance, mortgage, real estate and personal property transfer, sales, use, and UCC and regulatory filing taxes and fees, and governmental officials must forgo collection and accept the instruments for filing.

Effectiveness, Conditions, and Modifications

• The confirmation order binds all parties in interest as of the confirmation date; the plan terms, the Committee settlement, the plan supplement, and all exhibits bind all parties in interest as of the effective date, and any provision conditioned on the effective date becomes operative only then.
• Conditions precedent in Article IX.A may be waived in whole or in part by the debtors only with the prior written consent of the required consenting ad hoc group lenders and the required funding consenting lenders, and, where the restructuring support agreement's consent rights require it, the consenting investor and/or TSHL, without notice, leave, or court order.
• The order is a final order taking effect immediately, with the 14-day confirmation stay waived and no other procedural stay applying, so the debtors may consummate the plan on any business day after entry subject to satisfaction or waiver of the Article IX conditions. Substantial consummation under section 1101(2) is deemed to occur on the effective date.
• After entry of the confirmation order but before substantial consummation, the debtors may alter, amend, or modify the plan with the consent of the ad hoc group under section 1127(b), filing any modified version concurrently with the notice of effective date; they may also make technical adjustments and amend or supplement the plan supplement post-confirmation to the extent the plan or order authorizes.
• The court found the modifications reflected in the confirmation order technical or clarifying, or agreed with the affected holders, requiring no further disclosure and no resolicitation under Rule 3019, with prior acceptances remaining binding.
• The plan and confirmation order are non-severable and mutually dependent, and their provisions apply notwithstanding otherwise applicable non-bankruptcy law under sections 1123(a) and 1142(a). The confirmation order controls over the disclosure statement, the plan, and any prior inconsistent order; the plan controls over the disclosure statement and other orders referenced in it. The debtors state they are unaware of any inconsistency.
• All unresolved objections and reservations of rights to final disclosure statement approval and to confirmation were overruled on the merits and in their entirety, and withdrawn objections are deemed withdrawn with prejudice.

Case Closing and Retained Jurisdiction

• On the effective date, every debtor case other than U.S. TelePacific Corp. is closed, with the confirmation order serving as the final decree for those cases and no further motion or order required; the reorganized debtors must file the Rule 3022 documents to close the remaining U.S. TelePacific Corp. case promptly after full administration.
• The notice of effective date must be served by mail, hand, or overnight courier on all parties served with the combined hearing notice within seven days of the effective date; it has the effect of a court order and is a recordable instrument notwithstanding contrary non-bankruptcy law.
• Post-effective-date, the debtors have no obligation to file monthly operating reports, ordinary course professional reports, or monthly and quarterly professional reports, including for periods left unreported, but must meet the U.S. Trustee's quarterly reporting requirements; between confirmation and the effective date they file the reports the local rules require.
• The court retains jurisdiction under sections 105(a) and 1142 over all matters arising out of and related to the cases to the fullest extent permitted by law, including the matters listed in Article XI, notwithstanding entry of the order, the effective date, or case closure.

Feasibility and Best Interests

• Relying on the Shenker declaration, the confirmation brief, and the evidence at the combined hearing, the court found that upon closing of the restructuring transactions the reorganized debtors will be able to meet their obligations to third parties in the ordinary course after the effective date, and that confirmation is not likely to be followed by liquidation or further reorganization.
• The liquidation analysis and supporting evidence establish that each impaired holder receives or retains at least what it would in a Chapter 7 liquidation.
• The debtors have no obligation to pay retiree benefits as defined in section 1114.