Warrior Technologies - Chapter 11 Case Summary

Business Description

Warrior Technologies, LLC (the "Debtor") is an independent environmental and industrial services company founded in 2017.

• The Debtor's core business services clients in upstream, midstream, and downstream oil & gas operations, as well as renewable energy, construction, food processing, and public-sector clients.
• Its core business activities include: (a) environmental and industrial cleaning, (b) mechanical services, (c) hydroexcavation and line finding, (d) trucking and transportation, (e) demolition, abandonment, and abatement, and (f) gas mitigation and scrubbing.

The Debtor's main assets include trucks and other machinery necessary to perform its core business activities, as well as certain intellectual property for in-house developed cleaning tools and above ground tank cleaning processes, and accounts receivable.

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Operations Overview

The Debtor's key customers have large operation hubs located primarily in the west and south Texas energy resource basins. To provide timely services to its key customers, the Debtor maintains yards at strategic locations.

• The Debtor has more than 300 master service agreements with some of the largest global energy and infrastructure companies in the continental United States, including Chevron, ExxonMobil, and Diamondback Energy, among others.

Workforce

• In connection with the operation of its business, the Debtor currently has more than 250 full-time employees (the "Employees").
• None of the Employees are represented by a union or a collective bargaining unit.
• The Debtor's average payroll obligation per cycle is approximately $980,000, paid on a bi-weekly basis through third-party processor ADP.

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Prepetition Obligations

As of the Petition Date, the Debtor has approximately $38 million of secured debt outstanding, along with approximately $4.5 million in unsecured trade debt and approximately $6 million in related-party loans. The Debtor's prepetition capital structure is summarized below:

Secured Debt

• Credit Agreement: On September 26, 2024, the Debtor, as borrower, entered into a Loan and Security Agreement (the "Credit Agreement") with Commercial Funding, Inc., as lender (the "Lender").
  • Approximately $14.2 million was due and outstanding under the Loan Documents as of the Petition Date (the "Loan").
  • The Lender asserts that the repayment of the Loan is secured by substantially all of the Debtor's assets, other than assets securing various purchase money loans permitted under the Loan Documents.
• Secured Equipment Financing: The Debtor has various secured equipment financing agreements with more than 25 lenders, totaling approximately $23 million in aggregate of secured equipment financing.

Unsecured Debt

• The Debtor owes approximately $4.5 million to vendors and other trade creditors on an unsecured basis.
• The Debtor also owes related-party loans in the amount of approximately $6 million, which have been advanced to pay for expenses in excess of amounts the Debtor was able to borrow under the terms of the Loan and to otherwise pay the expenses of the Debtor's operational needs.

Proposed Postpetition Financing

• As set forth in the Debtor's motion to obtain debtor-in-possession financing, the Debtor intends to obtain post-petition financing from the Lender that will roll-up the Loan, allow the Debtor to obtain further advances under the Loan, and increase the Debtor's borrowing capacity under the Loan by $3.8 million.
• The Debtor also intends to enter into a term loan with an affiliate of the Lender, Commercial Credit Group, Inc., in the amount of $5.7 million to fund shortfalls between revolving advances available under the Loan and the actual costs and expenses of operating the Debtor's business and administering the Chapter 11 Case.

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Events Leading to Bankruptcy

Rising Costs and Revenue Slowdown

The Debtor's Chapter 11 Case was precipitated by increased costs and a slowdown in receipt of revenues. Over the past year, the price of insurance and fuel—two of the Debtor's main expenses—rose significantly, making it harder for the Debtor to maintain sufficient cash on hand to cover its day-to-day operations.

• While the business usually sees a seasonal slowdown at the end of the year, this past year was especially difficult. Some of the Debtor's biggest customers gave their employees longer holiday breaks in November and December, which meant fewer jobs and less revenue for the Debtor during November, December, and January.
• Just as business was starting to pick up again in January, a major ice storm forced the Debtor to shut down for over a week, leading to additional lost income.

Customer Payment Delays and Borrowing Base Erosion

Compounding these pressures, certain of the Debtor's main customers have been slow to pay their bills, which has made it harder for the Debtor to borrow money against its outstanding invoices.

• Because of these payment delays, much of the money owed to the Debtor no longer qualified as collateral for its loan, reducing how much it could borrow and leading to extra fees for borrowing more than its limit.
• The combination of these factors left the Debtor with very few options, leading to the decision to seek protection under Chapter 11 and reorganize its business.

Chapter 11 Filing and Go-Forward Strategy

On May 21, 2026, the Debtor filed for relief under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division. The Debtor and its management are actively considering all available options during the Chapter 11 process and reserve the right to pursue any course of action as circumstances evolve.

• At this stage, the Debtor's primary focus is on stabilizing and improving operations. To that end, the Debtor intends to:
  • Conduct a thorough review of the performance at each of its yard locations;
  • Assess its equipment portfolio to identify opportunities for reduction or optimization;
  • Continue efforts to streamline the accounts payable process, an initiative that began before the bankruptcy filing; and
  • Improve the collection of outstanding invoices to strengthen cash flow.
• Looking ahead, the Debtor's goal is to develop and implement a reorganization plan that will restructure and replace the current Loan and any debtor-in-possession financing, while reorganizing its financial affairs to better position the company for future success.

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First Day Pleadings

In connection with the filing, the Debtor seeks approval of four First Day Motions and related Proposed Orders, which the Debtor describes as critical to a successful reorganization.

Utilities Motion

• The Debtor purchases electricity, telephone, internet, and related services from vendors that could be considered utilities for bankruptcy purposes, and incurs approximately $19,000 per month in utility costs.
• The Debtor proposes allocating $9,500 into a designated sub-account as adequate assurance of payment for the utility providers during the Chapter 11 Case.

Employee Wages Motion

• The Debtor seeks authority, but not direction, to pay prepetition wages and compensation, honor employee benefits, reimburse prepetition employee expenses, and satisfy payroll-related taxes and workers' compensation obligations.
• The last payroll before the Petition Date was May 15, 2026, covering April 26, 2026 through May 9, 2026. The Debtor estimates approximately $770,000 in compensation had accrued and remained unpaid as of the Petition Date, representing the prorated period from May 10, 2026 through the Petition Date.
• The Debtor believes no employee is owed more than $17,150 in accrued and unpaid prepetition wages or salaries.
• Employee benefits include a Blue Cross Blue Shield medical plan (approximately $216,000 per month; approximately $432,000 owed for May and June premiums); dental and short- and long-term disability coverage through Guardian Life Insurance (approximately $29,000 per month; approximately $58,000 owed for May and June premiums); a 401(k) plan with an employer match of up to 3% of salary; and workers' compensation insurance through Zurich American Insurance Company (approximately $271,532 per year).

Critical Vendors Motion

• The Debtor estimates that Critical Vendors may hold claims in excess of approximately $1.5 million that may not be entitled to administrative or other priority status, of which approximately $850,000 is due on an interim basis.
• The Debtor seeks authority to pay these Critical Vendor Claims, conditioning payment where possible on the vendor's written agreement to continue supplying goods and services on Customary Trade Terms for the duration of the Chapter 11 Case.

Insurance Motion

• The Debtor maintains seven insurance policies administered by three third-party carriers, covering general liability, automobile liability, workers' compensation, umbrella, employment practices liability, management liability, and property, with aggregate annual premiums of approximately $3,920,398.61.
• The policies are financed through a Premium Finance Agreement with AFCO Direct, requiring eleven monthly payments of approximately $336,933.44 beginning August 1, 2025; approximately $715,000 remained outstanding as of the Petition Date.
• The Debtor obtains its policies through its insurance broker, McAnally Wilkins Inc., and seeks to modify the automatic stay solely to permit employees to proceed with claims under the Workers' Compensation Program.