Viridis Chemical - Chapter 11 Plan Terms

Plan Terms

Overview

• The Debtors filed the Combined Disclosure Statement and Chapter 11 Plan of Liquidation (the “Combined Disclosure Statement and Plan”) for the purpose of distributing the proceeds from the sale of substantially all of their assets to creditors in accordance with their legal priorities and otherwise providing for the orderly winddown and liquidation of the Debtors.
• The Debtors commenced the Chapter 11 Cases following prepetition efforts to identify and generate investor interest for an investment or other transaction that would allow them to either complete construction of their plant in Peoria, Illinois and return to operations or consummate a value-maximizing sale of substantially all of their assets.
  • Notwithstanding significant efforts to explore viable alternatives, the Debtors faced a diminishing liquidity position, had no operations to fund working capital, and were in payment default on their funded debt.
  • These challenges, together with the assertion of mechanic’s liens by the Debtors’ general contractor and various subcontractors, made continued out-of-court efforts to maximize value untenable, and the Debtors commenced the Chapter 11 Cases.
• The Debtors believe that pursuing confirmation of the Combined Disclosure Statement and Plan, as opposed to converting the Chapter 11 Cases to chapter 7, also gives them the best opportunity to potentially unlock $1.5 million of value for creditors that have filed mechanics’ liens.

Company Background

• As of the Petition Date and prior to the closing of the 363 Asset Sale, the Debtors were a privately held company and a developer of bio-based, low-carbon chemical technology for the production of ethyl acetate.
  • As one of only three ethyl acetate plants in the United States, Viridis Chemical developed a proprietary “Prairie Green™ catalytic process” to produce ethyl acetate using only 100% corn-based ethanol.
• Due to various operational and cost challenges, the Debtors made the strategic decision to relocate their ethyl acetate plant from Columbus, Nebraska (the “Nebraska Plant”) to Peoria, Illinois, announcing the move in November 2024.
  • The relocation was initiated to improve the cost of utilities, wastes, product shipping and storage, as well as additional product storage and other plant improvements that were made to help ensure that the plant could achieve its full production volume in the future, with a projected margin expansion exceeding 20%, and to position the Debtors closer to their expected core customer base.
  • The core of the strategy change was a set of long-term agreements between BioUrja Renewables, LLC (“BioUrja Renewables”) and Viridis Chemical to relocate the plant to available land on BioUrja Renewables’ large Peoria site, including a long-term ethanol supply agreement, services including utilities and wastewater treatment, and assistance with loading and shipping products.
  • The plant would be strategically co-located with BioUrja Renewables’ high-purity, corn-based ethanol plant, which was expected to enable more efficient and sustainable production of the Debtors’ renewable ethyl acetate.
• To effectuate the move, the Debtors entered into a master services agreement with Sterling Global Industries, LLC in January 2025 to act as general contractor on the project.
  • Disassembly of the Nebraska Plant began in January 2025, and the majority of the plant components and equipment were on site in Peoria by summer 2025.
  • The relocation was originally expected to be completed by December 2025; however, the Debtors experienced significant cost overruns and construction delays that ultimately rendered completion of the Peoria plant project unfeasible absent additional capital.

Corporate Structure

• As of the Petition Date, the Debtors’ organizational structure consisted of five entities, all of which are Debtors in the Chapter 11 Cases: Viridis Chemical, LLC; Viridis Chemical Payroll Holdings, LLC; Viridis Chemical Payroll, LLC; Viridis Chemical NE Asset Co 1, LLC; and Viridis Chemical NE Asset Co 2, LLC.
• Viridis Chemical is the ultimate parent of the Debtors and served as the primary operating entity.
  • Viridis Chemical holds the company’s main operating and money market bank accounts, is the issuer of the Secured Notes and Subordinated Unsecured Notes, and held the Debtors’ intellectual property.
  • Viridis Chemical directly holds 100% of the equity in each of Viridis Chemical Payroll Holdings, LLC, Viridis Chemical NE Asset Co 1, LLC, and Viridis Chemical NE Asset Co 2, LLC, and directly holds 99% of the equity of Viridis Chemical Payroll, LLC.
  • Viridis Chemical Payroll Holdings, LLC is a holding company with no material investments or ownership interests other than its direct ownership of 1% of the equity interests of Viridis Chemical Payroll, LLC.
  • Viridis Chemical Payroll, LLC, together with the Debtors’ co-employer, Insperity PEO Services, L.P., employs the Debtors’ employees.
• As of the Petition Date, Viridis Chemical NE Asset Co 1, LLC was a guarantor under the Secured Notes and owned assets related to the Debtors’ former Nebraska Plant, including the real property on which the plant was previously located and certain equipment stored in Nebraska.
• As of the Petition Date, Viridis Chemical NE Asset Co 2, LLC was a guarantor under the Secured Notes and had no material investments or ownership interests.

Capital Structure

The Debtors entered the Chapter 11 Cases with approximately $17.3 million in funded debt and obligations, consisting of approximately $13.5 million in aggregate principal (the Secured Notes and the Subordinated Unsecured Notes) plus accrued and unpaid interest.

• On August 8, 2023, the Debtors entered into the Secured Notes Purchase Agreement for the Secured Notes.
  • The Secured Notes are the senior secured convertible notes issued by Viridis Chemical, LLC, as issuer, with EIV Viridis Chemical, LLC, IFG Viridis Investors, LLC, and Carl V Rush, Jr. as purchasers.
  • The Secured Notes are secured by interests and/or liens on substantially all of the assets of the Debtors.
  • The Secured Notes had a stated maturity of September 2025 and approximately $10.0 million in principal amount outstanding.
• The Subordinated Unsecured Notes are an unsecured subordinated note issued by Viridis Chemical in the principal amount of $4 million to finance the purchase of the plant assets and intellectual property of Prairie Catalytic, LLC out of a court-appointed receivership in 2021.
  • As of the Petition Date, the Debtors’ aggregate principal outstanding unsecured debt obligations under the Subordinated Unsecured Notes totaled approximately $3.5 million, plus accrued and unpaid interest.
  • The Subordinated Unsecured Notes are subordinated to the Secured Notes Purchase Agreement pursuant to an Intercreditor Agreement dated as of March 7, 2025.

Sale Process and 363 Asset Sale

• Prior to the Petition Date, the Debtors, with the assistance of their investment banker, CMA, prepared marketing materials and began soliciting interest from financial and strategic parties identified as the most likely to be interested in a potential transaction.
• Following the commencement of the Chapter 11 Cases, the Debtors, with the assistance of CMA, continued conducting a Sale Process to identify a purchaser for some or all of the Debtors’ Assets, governed by the Bidding Procedures Order entered on April 1, 2026.
  • In connection with the Sale Process, CMA contacted approximately 230 parties and facilitated a diligence process that included executing approximately 33 confidentiality agreements, conducting in-depth conversations with approximately 45 potential buyers, and hosting two site visits.
• On April 29, 2026, the Debtors designated BioUrja Capital, LLC as the Stalking Horse Bidder and entered into a Stalking Horse Agreement for the sale of substantially all of the Debtors’ Assets, which provided for:
  • A cash payment of $750,000;
  • $1.5 million to be placed in escrow, to be paid to the Debtors if the Lien Release Condition is satisfied; and
  • Assumption of certain liabilities, including payment of cure amounts associated with the assumption and assignment of certain executory contracts and unexpired leases.
• The Debtors did not receive any Qualified Bids other than the Stalking Horse Bid, and the auction was therefore cancelled, with the Stalking Horse Bidder named as the Winning Bidder.
• On May 8, 2026, the Bankruptcy Court entered the Sale Order [Docket No. 153] approving and authorizing the Debtors to consummate the 363 Asset Sale to the Purchaser, and the 363 Asset Sale closed on May 26, 2026.

EIV Settlement

• The Combined Disclosure Statement and Plan is made possible by a critical concession by the Debtors’ largest Secured Noteholder and equity holder, EIV Viridis Chemical, LLC (“EIV”), which has agreed to waive the entirety of its right to any recovery on its Secured Notes Claim (approximately $12.2 million) in exchange for and contingent upon:
  • A release of any claims or causes of action the Debtors might have against EIV; and
  • A mutual release of any claims or Causes of Action between EIV and the other Secured Noteholder, IFG Viridis Investors, LLC (“IFG”).
• This concession unlocks significant value that can be used for:
  • The payment of all remaining costs of the bankruptcy process, including all Administrative, Professional and Priority Claims;
  • Funding of an appropriate winddown budget to pay the costs of preparing and filing final tax returns, dissolving the Debtor entities, winding down the Chapter 11 Cases, and related costs; and
  • Providing a substantially higher recovery for IFG, as the sole other Secured Noteholder, estimated to be approximately $125,000 to $150,000 under the Combined Disclosure Statement and Plan, as compared to an estimated approximately $24,000 in a chapter 7 scenario in which EIV would retain and collect on its Secured Notes Claim.
• The Debtors’ Independent Manager, Mark McDermott, considered this compromise with EIV and determined it is reasonable, appropriate, and in the best interests of the Debtors’ Estates.
  • EIV has not received any dividends, management fees, or payments of any kind from the Debtors.
  • The period to challenge the validity, priority, and enforceability of the liens securing the Secured Notes held by EIV and IFG has passed.
  • EIV has not received any dividends, management fees, or payments of any kind from the Debtors.
  • Viridis Chemical’s LLC agreement contains an explicit and complete waiver of fiduciary duties, consistent with Delaware law, and the rest of the Debtors are member-managed by Viridis Chemical.
  • The period to challenge the validity, priority, and enforceability of the liens securing the Secured Notes held by EIV and IFG has passed.
  • The Debtors appear to have appropriately followed corporate formalities, and there is no evidence of fraud or abuse of the corporate form that would suggest any viable veil-piercing cause of action.
  • For these reasons, the Independent Manager determined that obtaining access to incremental proceeds was more than sufficient consideration to include a release of theoretical claims the Debtors might have against EIV.
  • For these reasons, the Independent Manager determined that obtaining access to incremental proceeds was more than sufficient consideration to include a release of theoretical claims the Debtors might have against EIV.
• Each Holder of a Secured Notes Claim agrees to waive any right it may have to receive any recovery from the Lien Release Cash Pool.
• Pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, and in consideration for the classification, distributions, releases, and other benefits provided under the Combined Disclosure Statement and Plan, upon the Effective Date the provisions of the Combined Disclosure Statement and Plan shall constitute a good faith compromise and settlement of all Claims, Interests, issues, disputes, and controversies that were, or could have been, asserted in connection with the Debtors and the Chapter 11 Cases, except for those expressly preserved.

CMA Fee Compromise

• Subsequent to the Bankruptcy Court’s approval of CMA’s retention as the Debtors’ investment banker and financial advisor, and given the results of the Sale Process, CMA has agreed to voluntarily compromise its investment banking transaction fee resulting from the closing of the 363 Asset Sale from $600,000 to $350,000 (the “CMA Fee Compromise”).
  • CMA will seek allowance of this reduced transaction fee, along with all other fees to which it is entitled, in its fee application to be Filed with the Bankruptcy Court.

Statutory Lien Claims and Lien Release

• In order for Class 3 (Statutory Lien Claims) to receive any recovery under the Combined Disclosure Statement and Plan, all Holders of Statutory Lien Claims must vote in favor of the Combined Disclosure Statement and Plan and affirmatively consent to releasing their respective liens on the BioUrja Property, which is the property owned by BioUrja Renewables in Peoria, Illinois.
  • Each Holder of an Allowed Statutory Lien Claim will receive its Pro Rata share of the Lien Release Cash Pool (after accounting for any Statutory Lien Claim Costs) only if the Lien Release Condition is satisfied and 100% of the Holders of Statutory Lien Claims vote in favor of the Combined Disclosure Statement and Plan.
• The Lien Release Cash Pool means Cash in the amount of $1,500,000, which will be released from escrow to the Estates only if the Lien Release Condition has been satisfied.
• The Lien Release Condition means that, on or before July 10, 2026, the Debtors provide lien releases satisfactory to the Purchaser in its sole discretion of any and all liens, including any statutory, materialmen, or mechanic’s lien, asserted against the BioUrja Property.

Chapter 11 Plan of Liquidation

• The Debtors expect to be able to pay all Administrative Claims and Priority Claims in full from Cash on hand.
• On the Effective Date, the Debtors or the Wind Down Administrator, as applicable, will (1) fund the Claims Reserve in the Claims Reserve Amount and (2) fund the Professional Fee Escrow Account in the Professional Claims Reserve Amount to satisfy certain estimated Claims, and will then distribute any remaining cash in accordance with the terms of the Combined Disclosure Statement and Plan and the Confirmation Order.
• Unless otherwise specified, all Assets (other than the Non-Vesting Assets) not sold pursuant to the 363 Asset Sale or otherwise prior to the Effective Date will vest in the Wind Down Estates for the purpose of winding down the Estates.
• As demonstrated in the Liquidation Analysis, the Debtors believe the plan is feasible, adequately funded, and provides an opportunity for superior recoveries for creditors compared to a chapter 7 liquidation.
  • Based on the Debtors’ analysis and existing Cash on hand (including the Cash proceeds of the 363 Asset Sale), the Wind Down Administrator will have sufficient assets pursuant to the Wind Down Budget to accomplish its tasks and satisfy its obligations under the Combined Disclosure Statement and Plan.

Wind Down Administrator

• The Wind Down Administrator means Thomas A. Howley of Howley Law PLLC, in his capacity as the Person selected by the Debtors to serve as wind down administrator for each of the Debtors and their Wind Down Estates.
  • The Wind Down Administrator shall be selected by the Debtors and shall be reasonably acceptable to the Secured Noteholders.
  • The Wind Down Administrator shall be the successor to and representative of the Estate of each of the Debtors appointed pursuant to section 1123(b)(3)(B) of the Bankruptcy Code.
• On the Effective Date, the authority, power, and incumbency of the Persons acting as managers and officers of the Debtor Entities comprising the Wind Down Estates shall vest in the Wind Down Administrator, who shall be appointed the sole manager and sole officer of each such Debtor Entity and shall succeed to the powers of the Debtors’ managers and officers.
• In the event the Wind Down Administrator becomes incapacitated or unable to continue serving for any reason, the Secured Noteholders shall select a suitable replacement as promptly as possible without the need for any further action or order of the Bankruptcy Court.
• The Wind Down Estates Expenses shall be paid after the Effective Date in accordance with the Wind Down Budget.

Releases

• The Combined Disclosure Statement and Plan contains, among other things, (i) releases by the Debtors and their Estates of all claims and Causes of Action they may have against certain parties and (ii) an exculpation of the Debtors and the Independent Manager.
  • The Debtor Releases include a release of Estate claims and Causes of Action against EIV and IFG.
  • For the avoidance of doubt, no Holders of Claims or Interests are being asked to provide a release under the Combined Disclosure Statement and Plan.
• Pursuant to section 1123(b) of the Bankruptcy Code, on the Effective Date each Released Party is deemed released by the Debtors and their Estates from any and all claims and Causes of Action, whether known or unknown, including any derivative claims, that the Debtors or their Estates would have been legally entitled to assert, based on or relating to, among other things, the Debtors, any securities issued by the Debtors, the Secured Notes, the Debtors’ in- or out-of-court restructuring efforts, intercompany transactions, the Chapter 11 Cases, the Combined Disclosure Statement and Plan, the Plan Supplement, the 363 Asset Sale, and the Sale Process, in each case for occurrences taking place on or before the Effective Date.
• The releases do not release (a) any post-Effective Date obligations of any party or Entity under the Combined Disclosure Statement and Plan, any obligations arising under any 363 Asset Sale Documents, or any document, instrument, or agreement executed to implement the Combined Disclosure Statement and Plan or the 363 Asset Sale, or (b) any Entity from any claim or Causes of Action related to an act or omission that is determined in a Final Order by a court of competent jurisdiction to have constituted actual fraud, willful misconduct, or gross negligence.
• The “Released Parties” include, solely in their respective capacities as such: (a) the Debtors; the Estates; each Debtor’s directors, managers, officers, principals, members, Independent Manager, committees (including any special committee), equity holders, employees, predecessors, successors, assigns, subsidiaries, agents, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, and each of their Related Parties; and (b) the Secured Noteholders, each Holder of a Claim or Interest who votes in favor of the Combined Disclosure Statement and Plan, and each of their Related Parties.

Exculpation

• Except as otherwise specifically provided, no Exculpated Party shall have or incur liability for, and each Exculpated Party is exculpated from, any Cause of Action for any claim related to any act or omission taking place between the Petition Date and the Effective Date in connection with, relating to, or arising out of the Chapter 11 Cases, the Combined Disclosure Statement and Plan, the Plan Supplement, the 363 Asset Sale, and the Sale Process, except for claims related to any act or omission determined in a Final Order by a court of competent jurisdiction to have constituted actual fraud, willful misconduct, or gross negligence.
  • To the fullest extent permitted by applicable law, such Entities shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities regarding the Chapter 11 Cases and the Combined Disclosure Statement and Plan.
• The “Exculpated Parties” means, each in their respective capacities as such: (a) the Debtors; and (b) the Independent Manager.

Classification and Treatment of Claims and Interests

• The Combined Disclosure Statement and Plan classifies Claims and Interests into eight Classes, with the following status, treatment, and estimated recoveries:
  • Class 1 – Other Priority Claims: Unimpaired; deemed to accept (not entitled to vote); payment in full in Cash; estimated pool $0; estimated recovery 100%.
  • Class 2 – Secured Notes Claims: Impaired; entitled to vote; Pro Rata share of the Residual Cash Payment; estimated pool approximately $13,823,918; estimated recovery 8%–9% (reflecting the recovery to IFG, assuming EIV waives its recovery).
  • Class 3 – Statutory Lien Claims: Impaired; entitled to vote; either a Pro Rata share of the Lien Release Cash Pool or no recovery; estimated pool approximately $10,950,000; estimated recovery 0%–14%.
  • Class 4 – General Unsecured Claims: Impaired; deemed to reject (not entitled to vote); no recovery; estimated pool $5,500,000; estimated recovery 0%.
  • Class 5 – Intercompany Claims: Impaired; deemed to reject; no recovery (0%).
  • Class 6 – 510(b) Claims: Impaired; deemed to reject; no recovery (0%).
  • Class 7 – Intercompany Interests: Impaired; deemed to reject; no recovery (0%).
  • Class 8 – Viridis Chemical Interests: Impaired; deemed to reject; no recovery (0%).
• Only Holders of Claims in Class 2 (Secured Notes Claims) and Class 3 (Statutory Lien Claims) are entitled to vote on the Combined Disclosure Statement and Plan.

Injunction

• Except as otherwise expressly provided, all Entities who have held, hold, or may hold Claims or Interests treated under the Combined Disclosure Statement and Plan, or that are subject to exculpation, are enjoined from and after the Effective Date (through the date all remaining property of the Estates has been liquidated and distributed and the Combined Disclosure Statement and Plan has been fully administered) from, among other things, commencing or continuing any action, enforcing any judgment, creating or enforcing any Lien, or asserting any right of setoff against the Debtors, the Exculpated Parties, or the Released Parties on account of or in connection with any such Claims or Interests.
• No Person or Entity may commence or pursue a claim or Cause of Action against the Exculpated Parties without the Bankruptcy Court first determining, after notice and a hearing, that the claim represents a colorable claim and specifically authorizing the party to bring it.

Confirmation and Voting

• On June 12, 2026, the Bankruptcy Court entered the Conditional Approval and Procedures Order conditionally approving the Combined Disclosure Statement and Plan for solicitation purposes only and authorizing the Debtors to solicit acceptances.
• The Confirmation Hearing is scheduled for July 8, 2026 at 10:00 a.m. (Central Time).
• The Voting Deadline and the deadline to object to Confirmation are each July 3, 2026 at 5:00 p.m. (Central Time).
• Only Holders of Claims in Classes 2 and 3 are entitled to vote. For an Impaired Class to accept the Combined Disclosure Statement and Plan, a majority in number and at least two-thirds in dollar amount of the Claims voting in that Class must vote to accept; in addition, Class 3 receives a recovery only if 100% of Statutory Lien Claim Holders vote in favor and consent to releasing their liens on the BioUrja Property.