UPG Enterprises - Chapter 11 Bidding Procedures Summary

Bidding Procedures / Asset Purchase Agreement Summary

Overview

• UPG Enterprises, LLC and 18 affiliated debtors, an industrial group focused on steel processing and production, manufacturing, distribution and logistics, whose businesses sit in a flat roll group that processes steel into flat sheets or coils and a fabrication group that manufactures finished steel components, filed Chapter 11 in the Northern District of Illinois on Sept. 22 and 23, 2026, and on Sept. 25 moved for bidding procedures covering one or more section 363 sales of any and all or substantially all of their assets, which the bidding procedures extend to subgroups of assets.
• The debtors come into the case with three prepetition high bids in hand across discrete business units, aggregating $14.3 million in cash plus the book value of Chicago Steel and Lexington Steel inventory, each characterized by the debtors as a going-concern bid. The motion seeks authority to designate those bids as stalking horses and offer the listed bid protections, conditioned on execution of binding purchase agreements consistent with the stated terms, and the proposed order would authorize both directly.
• The proposed timeline runs from an Oct. 28, 2026, bid deadline to a Nov. 2 auction, a Nov. 5 sale hearing and a Nov. 19 closing outside date; the proposed order also lets the debtors run more than one auction covering material portions of the assets.

Stalking Horse Bids and Bid Protections

• The motion identifies the three bidders only as Bidder 1, Bidder 2 and Bidder 3; the proposed bidding procedures order names them and carries the same prices and protections:
  • SteelSummit Holdings: assets of Maksteel Wyoming for $5.3 million, with a break-up fee of $150,000.
  • Mill Steel Company: substantially all assets of Chicago Steel and Lexington Steel for $4 million plus the book value of inventory, with a break-up fee of 3%. The motion states the assets exclude accounts receivable; the proposed order's table carries no such exclusion.
  • Alabama Metal Industries Corporation: assets of Metalex, LLC located at the debtors' Libertyville, Ill. facility and certain assets at the San Luis Potosí, Mexico facility for $5 million, with a break-up fee of 3% and expense reimbursement of up to $300,000.
• Ceiling on protections: a break-up fee not to exceed 3% of the purchase price plus reimbursement of reasonable and documented expenses, payable from the proceeds of a successful bid and available only to a non-insider bidder.
• The proposed order would itself authorize the debtors to designate the three named bidders and offer the protections listed above, subject to higher and better offers. For any additional stalking horse, the debtors must file a notice of stalking horse designation attaching the stalking horse agreement, a supporting declaration and a proposed bid protections order by Oct. 21, 2026, at 4 p.m. CT, with objections due by 4 p.m. CT five business days after filing; absent a timely objection the court may enter the bid protections order without a hearing, and if one is filed the debtors will schedule a hearing. The motion, by contrast, routes any protections the debtors decide to offer through the Oct. 21 notice and elsewhere states that no stalking horse has yet been selected.
• The debtors remain authorized, but not directed, to designate additional stalking horse bidders on the same notice-and-objection mechanics.
• Each designated stalking horse bidder is automatically a qualifying bidder and its bid a qualifying bid, and it may credit bid its bid protections claim in any overbid at the auction. No other bidder may seek expense reimbursement or any fee in its capacity as a bidder, and submitting a bid waives that right, including under section 503(b).

Marketing Process

• SC&H Capital was engaged as investment banker immediately before the petition date and began outreach in July 2026, contacting roughly 267 potential buyers, of which 86 executed confidentiality agreements and received a confidential information memorandum covering operations, assets, commercial arrangements and historical financials.
• Ten parties submitted letters of interest after diligence. The highest-value LOIs conditioned their stated values on consummation through a Chapter 11 sale process, and the debtors accordingly began negotiating stalking horse terms with those bidders. SC&H will continue marketing through the case, distributing additional diligence materials and operating a data room, with interested parties directed to Hank Waida at SC&H.

Bid Requirements

• Participation: a potential bidder must execute a confidentiality agreement satisfactory to the debtors to become a qualifying bidder and obtain data room access, and must respond to reasonable information requests regarding its ability to close. Diligence runs through the bid deadline, after which the debtors may but need not furnish further information, and they may withhold business-sensitive materials.
• Submission: bids are due Oct. 28, 2026, at 4 p.m. CT, in PDF and Word form, to the debtors' counsel, SC&H and the consultation parties; the debtors may extend the deadline after consulting the consultation parties, filing a notice if it is extended for all parties. A party that does not bid by the deadline may be barred from submitting a later offer or participating in the auction. The debtors forward all bids to the consultation parties within one day of receipt and may consider combinations of bids in determining qualifying bidders.
• To be a qualifying bid, a bid must, among other requirements:
  • be in writing, disclose the bidder's identity and a contact person, and specify the assets bid on and the liabilities to be paid or assumed;
  • exceed any stalking horse bid for the applicable assets by at least $100,000 plus the amount of the bid protections, unless the stalking horse agreement requires otherwise;
  • propose payment solely in cash, except as the bidding procedures otherwise permit;
  • attach a purchase and sale agreement on the debtors' form, marked against the stalking horse agreement where applicable, and, where a stalking horse notice has been filed, offer to assume liabilities on terms substantially the same as or better than that agreement;
  • be formal, binding, unconditional and irrevocable until five business days after closing, with no financing, internal-approval or diligence contingencies, and no request for a break-up fee, termination fee or expense reimbursement;
  • demonstrate financial capability to close and supply adequate assurance information under section 365(f)(2)(B), which the debtors will share with senior prepetition secured creditors that are consultation parties and hold liens on the subject assets, subject to confidentiality protections;
  • identify with particularity every executory contract and unexpired lease whose assumption and assignment is a closing condition;
  • commit to close by no later than Nov. 19, 2026;
  • acknowledge in writing that the bidder has had the opportunity to conduct all diligence, relied solely on its own review and did not rely on any statements or representations about the assets or the completeness of information provided;
  • address Hart-Scott-Rodino filings and any other regulatory or third-party approvals, including CFIUS, with the expected timeline and, where approval is expected to take more than five days after execution of the bidder's PSA, the steps the bidder will take to expedite it, plus a covenant to cooperate on antitrust analysis;
  • agree to serve as backup bidder if so selected; and
  • include board or equivalent authorization for submission, execution and delivery of the PSA.
• Submitting a bid waives any substantial contribution claim under section 503 relating to the bid, the procedures or the sale. The debtors may work with a bidder before the auction to cure deficiencies in a bid not initially deemed qualifying.

Good Faith Deposit

• Amount: 10% of the purchase price under the bidder's PSA, or such greater amount as the debtors reasonably determine after consulting the consultation parties.
• A successful bidder or backup bidder must top up its deposit to 10% of the new purchase price within one business day after the auction and before the sale hearing, unless the debtors agree otherwise.
• The deposit is forfeited on breach or failure to perform under the PSA, without prejudice to the debtors' other remedies; a forfeited deposit constitutes proceeds of the subject assets and is subject to secured creditors' liens, including adequate protection liens, with the same validity, extent and priority as against the assets.
• Deposits of bidders not selected as successful or backup bidder are returned within five business days after the auction closes.

Overbid

• Initial overbid: at least $100,000 above the applicable stalking horse bid, plus the amount of the bid protections.
• Subsequent increments: set by the debtors at the auction in consultation with the consultation parties; each overbid must itself be a qualifying bid and remain open and binding until five business days after closing.

Credit Bid

• Any creditor holding a valid and perfected lien on estate assets is deemed a qualified bidder as to those assets and may credit bid all or part of its claim under section 363(k), including at the auction, but only against the collateral securing its lien.
• Any credit bid must include a cash component sufficient to repay in full the secured claims of any senior secured creditor, unless that creditor agrees otherwise, and to pay the investment banker's transaction fee.
• The proposed order preserves the issue: credit bidding remains subject to section 363(k), nothing in the order is a waiver or a finding that a credit bid component satisfies section 363(k), and no party's right to object to the credit bid component of a stalking horse bid is prejudiced. The proposed order also conditions the right on the court not ordering otherwise for cause.

Auction

• An auction will be held Nov. 2, 2026, at 9 a.m. CT at the Chicago offices of debtors' co-counsel Vedder Price, or at another location, date or by virtual means as the debtors determine after consulting the consultation parties. The debtors may conduct more than one auction covering material portions of the assets, and will notify qualifying bidders and post notice on the Epiq case site no later than one business day beforehand.
• The auction proceeds only if at least one timely qualifying bid other than a stalking horse bid is received for the applicable assets; if none is, the debtors will forgo the auction, designate the stalking horse bid as the successful bid and seek approval of the stalking horse agreement at the sale hearing. Where assets are not subject to a stalking horse bid and only one qualifying bid arrives, that bid is deemed the successful bid.
• Bidding opens at the baseline bid, which the debtors designate before the auction as the highest or best qualifying bid then received. Stalking horse bidders participate where competing qualifying bids are submitted.
• Attendance and conduct: only qualifying bidders may bid; each must appear in person or through a representative empowered to bind it, subject to the debtors' discretion to permit remote attendance. Under the bidding procedures, attendance is limited to the debtors, auction bidders and consultation parties, with their advisors, absent the debtors' express written consent; the motion's summary would also admit any creditor giving one day's written notice, as an observer only and subject to the debtors' right to object.
• The debtors preside, the auction is transcribed, bidders confirm on the record that they have not colluded, all bids are made on the record before all bidders, and the material terms of each leading bid are disclosed. The debtors may announce additional or modified procedural rules at the auction, including sealed bidding, open outcry and separate bulk or lot rounds, so long as the rules are disclosed and not materially inconsistent with the Bankruptcy Code, the rules or the court's orders.
• Successful bids are selected on total consideration, changes to the stalking horse agreement or form PSA and the resulting cost and delay, transaction structure and execution risk, financing and closing certainty, required approvals, treatment of executory contracts and leases, and net benefit to the estates.
• Each bidder waives jury trial and consents to the bankruptcy court's exclusive jurisdiction over disputes arising from the procedures, the sale and the auction.

Backup Bidder

• The debtors may designate one or more backup bids. If the successful bidder fails to close before Nov. 19, 2026, or a later date the debtors set, the backup bid becomes the successful bid and the debtors may close with the backup bidder without further order or notice.
• The debtors must give at least one business day's written notice to the senior prepetition secured creditor with a lien on the assets being sold, and may not close over that creditor's timely written objection without a further court order.
• Separately, the motion provides that if a sale fails after the sale hearing because of a breach or default under the successful bid or non-approval by the court, the next highest or best backup bid disclosed at the sale hearing becomes the successful bid without further order.
• Successful and backup bids are irrevocable and binding from submission until five business days after closing.

Assumption and Assignment of Contracts

• Within five business days after entry of the bidding procedures order, the debtors will file and serve a contract notice on each counterparty listing the proposed cure amount; supplemental notices follow for later-identified contracts.
• Each listed cure amount is stated to capture all liabilities of the debtors arising under the contract before closing, whether known or unknown, due or to become due, accrued, absolute or contingent, so long as they relate to pre-closing events.
• Contract objections, including objections to cure amounts and to a stalking horse bidder's adequate assurance, are due Oct. 28, 2026, at 4 p.m. CT; counterparties on a supplemental notice filed less than seven days before that deadline get seven days from its service. Objections going solely to adequate assurance by a successful bidder other than a stalking horse bidder are heard at the sale hearing.
• Failure to object timely deems the counterparty to have consented to assumption, assignment and the listed cure amount, deems all defaults and pecuniary losses cured and compensated under section 365(b)(1), and bars any further claim arising before entry of the sale order.
• A cure dispute does not block assignment: the selected contract may be assumed and assigned if the counterparty's asserted cure amount, or a lower agreed amount, is placed in a segregated account pending resolution.
• The debtors will seek approval only of those contracts the successful bidder selects, and reserve all rights as to the rest. Contracts the successful bidder seeks after the sale hearing or entry of the sale order trigger a further contract notice with a seven-day objection window limited to the proposed cure amount, and only to issues that could not have been raised earlier; absent objection, they are assumed and assigned without further order.
• Listing a contract is not an admission that it is executory or unexpired or that it will be assumed, and assumption and assignment remain subject to court approval and closing. The debtors ask the court to find anti-assignment provisions unenforceable under section 365(f).

Sale Free and Clear and Successor Liability

• The debtors seek to sell on an "as is" basis free and clear of all liens, claims, interests and encumbrances under section 363(f), except as the sale order and the operative stalking horse agreement or PSA provide, with interests attaching to the sale proceeds at the same validity and priority, subject to the parties' rights and defenses.
• Absence of a timely sale objection is treated as consent for purposes of section 363(f)(2), and untimely objectors are barred from contesting the transfer free and clear.
• The sale notice states the sale will be free and clear of any claim arising from pre-closing conduct of the debtors, whether known or unknown, and that the purchaser will not be a successor to the debtors under any theory, including successor liability, except as expressly provided in its purchase and sale agreement.
• The debtors ask that all purchasers under the bidding procedures receive section 363(m) protection, and would conduct the sale without complying with state or local bulk transfer laws.

Consultation Parties

• Counsel to the proposed DIP lenders; counsel to any official committee of unsecured creditors; and Wintrust and White Oak, each a prepetition secured agent and lender, but only as to assets subject to their respective liens.
• Consultation rights do not limit the debtors' discretion or confer a veto, and do not modify the debtors' fiduciary duties.
• A consultation party, committee member or affiliate that submits a qualifying bid loses its consultation rights as to other bids and the selection of the successful and backup bidders, automatically and without further action, with rights restored if it later exits the process. Where a committee member bids, the committee retains its rights but must exclude that member from sale deliberations and withhold sale information from it.

Sale Hearing and Objections

• The sale hearing is set for Nov. 5, 2026, at 10 a.m. CT, or the earliest date thereafter the court can accommodate, subject to continuance by the debtors after consulting the consultation parties.
• Sale objections are due Oct. 28, 2026, at 4 p.m. CT; objections going solely to the conduct of the auction, the identity of a successful bidder other than a stalking horse bidder, or that bidder's adequate assurance are made at the sale hearing. The debtors' reply deadline is Nov. 4, 2026, at noon CT.
• The debtors will present the successful bid or bids for approval at the sale hearing and ask that the sale order take effect immediately, citing the harm any delay would cause to the contemplated closing timeline.

Key Dates

• Bidding Procedures Hearing: Oct. 14, 2026, at 11 a.m. CT
• Objection Deadline to the Motion: Oct. 7, 2026, at 4 p.m. CT
• Sale Notice and Contract Notice Mailing: within 5 business days after entry of the bidding procedures order
• Stalking Horse Designation Notice Deadline: Oct. 21, 2026, at 4 p.m. CT
• Bid Protections Objection Deadline: 4 p.m. CT on the fifth business day after the stalking horse notice is filed
• Bid Deadline: Oct. 28, 2026, at 4 p.m. CT
• Sale Objection and Contract Objection Deadline: Oct. 28, 2026, at 4 p.m. CT
• Qualifying Bid Designation Deadline: Oct. 30, 2026, at 4 p.m. CT
• Auction: Nov. 2, 2026, at 9 a.m. CT
• Notice of Successful Bidder: as soon as practicable after the auction
• Debtors' Reply Deadline: Nov. 4, 2026, at 12 p.m. CT, or noon one day before the sale hearing
• Sale Hearing: Nov. 5, 2026, at 10 a.m. CT, or the earliest date the court can accommodate
• Adequate Assurance Objection Deadline for a successful bidder other than a stalking horse bidder: at the sale hearing
• Sale Closing: no later than Nov. 19, 2026

• All dates and deadlines may be modified by the debtors after consulting the consultation parties, and the debtors reserve the right to extend the bid deadline, modify increments or bidding format, waive bid requirements, impose additional conditions, adjourn or cancel the auction, and adjourn the sale hearing, with reasonable notice of any modification to qualifying bidders, including stalking horse bidders.