West Marine - Chapter 11 Bidding Procedures Summary

Bidding Procedures Summary

Parties Involved

• Debtors / Sellers: West Marine, Inc. and its affiliated debtors, including Marine One Holdco, LLC; Marine One Parent, Inc.; Rising Tide Holdings Inc.; Rising Tide Parent Inc.; Seascapes, Inc.; W Marine Management Company, Inc.; and West Marine Products, Inc.
• The Debtors commenced these chapter 11 cases after entering into a Restructuring Support Agreement (the "RSA") with:
  • Certain FILO Lenders holding 100% of outstanding FILO Claims (the "Consenting FILO Lenders");
  • Certain Term Loan Lenders holding 96.2% of outstanding Term Loan Claims (the "Consenting Term Loan Lenders," together with the Consenting FILO Lenders, the "Consenting Lenders"); and
  • Certain Equity Holders holding 93.9% of outstanding Interests in West Marine (the "Consenting Equity Holders," together with the Consenting Lenders, the "Consenting Stakeholders").
• Debtors' Advisors (as defined in the Bidding Procedures) consist of (i) Kirkland & Ellis LLP, (ii) Young Conaway Stargatt & Taylor, LLP, (iii) FTI Consulting, Inc., as proposed restructuring advisor, and (iv) Triple P Securities, LLC ("Portage Point"), as proposed investment banker.

Overview of the Restructuring and Toggle to Sale

• The RSA contemplates that the Debtors will pursue a standalone recapitalization of their balance sheet (the "Recapitalization Transaction") through:
  • The equitization of Term Loan Claims in exchange for 100% of the equity interests in Reorganized West Marine;
  • The payment in full of the ABL Claims or conversion into loans under the Exit ABL Facility; and
  • The payment in full of the FILO Claims or conversion into loans under the Exit Term Loan Facility, each pursuant to the Plan.
• The Recapitalization Transaction serves as a baseline restructuring proposal. The Debtors may continue their Marketing Process postpetition on an expedited basis and toggle to a sale of all or substantially all of the Debtors' assets (the "Assets") through one or more Sale Transactions, with the consent of the Required Consenting Term Loan Lenders (not to be unreasonably withheld), to the extent the net cash proceeds of a Successful Bid are higher than the aggregate amount of Prepetition ABL Claims, Prepetition FILO Claims, Term Loan Claims, other projected distributions on Claims under the Plan, and the Wind-Down Amount.

Assets Being Sold

• The Debtors seek the highest or otherwise best offer(s) for the purchase of some or all of the Assets.
• The ability of the Debtors to undertake and consummate any Sale Transaction is subject to competitive bidding as set forth in the Bidding Procedures and approval of any Sale Transaction by the Court.
• The Sale Notice will include a general description of the contents of the Assets.

Stalking Horse Bid

• The Debtors are authorized, but not obligated, in an exercise of their reasonable business judgment and in consultation with the Consultation Parties, to select one or more Qualified Bidders (or Acceptable Bidders) to act as Stalking Horse Bidders in connection with a Sale Transaction and to enter into one or more Stalking Horse Purchase Agreements with such Stalking Horse Bidders.
• Any Stalking Horse Bid shall constitute and be deemed a Qualified Bid, and any Stalking Horse Bidder shall be deemed a Qualified Bidder.
• No later than one (1) Business Day after designating a Stalking Horse Bidder, the Debtors shall file with the Court and serve a Stalking Horse Notice that:
  • Identifies the Stalking Horse Bidder and the material terms of the applicable Stalking Horse Bid, including the Purchase Price and the portion of the Assets to which such Stalking Horse Bid relates; and
  • Attaches a copy of the corresponding Stalking Horse Purchase Agreement.
• The Stalking Horse Notice will seek approval of the designation, provide no less than three (3) Business Days' notice of the deadline to object to the approval of the Stalking Horse Bid (including any proposed Bid Protections), and set forth the information required by Local Rule 6004-1(b)(iv).

Bid Protections

• In connection with any Stalking Horse Purchase Agreement, and other than with respect to a Stalking Horse Bidder that is a Secured Party, the Debtors may, in consultation with the Consultation Parties, determine to (i) provide a breakup fee (the "Breakup Fee") and/or (ii) reimburse the Stalking Horse Bidder's reasonable and documented out-of-pocket fees and expenses (including attorney's fees and expenses) actually incurred in connection with preparation and negotiation of the Stalking Horse Purchase Agreement (the "Expense Reimbursement," and together with the Breakup Fee, the "Bid Protections"), subject to Court approval.
• The aggregate of the Breakup Fee and the total Expense Reimbursements shall in no event exceed three percent (3%) of the cash portion of the applicable Purchase Price, and shall be junior in right of payment to the ABL 507(b) Claim and the Term Loan 507(b) Claim.
• Any Bid Protections payable under a Stalking Horse Purchase Agreement shall be deemed an actual and necessary cost of preserving the Debtors' estates and treated as an allowed administrative expense claim pursuant to sections 503(b) and 507(a)(2) of the Bankruptcy Code.
• Except to the extent of the Bid Protections provided to any Stalking Horse Bidder, no person or entity participating in the sale process shall be entitled to any expense reimbursement, break-up fee, "topping" fee, termination fee, or other fee, and by submitting a Bid, such party is deemed to have waived any right to request or file any such request, whether under section 503(b) of the Bankruptcy Code or otherwise.

Credit Bid

• Subject to the Committee's challenge rights under the Cash Collateral Order and section 363(k) of the Bankruptcy Code, any Qualified Bidder that has a valid and perfected lien on any Assets (a "Secured Party") shall be entitled to credit bid all or a portion of the face value of such Secured Party's claims toward the Purchase Price (a "Credit Bid").
• A Secured Party may Credit Bid its claim(s) only with respect to Assets subject to a valid and perfected lien in its favor. A Credit Bid shall not constitute a Qualified Bid if it does not include a cash component sufficient to pay in full all claims for which there are valid, perfected, and unavoidable liens senior in priority to those of the Secured Party seeking to Credit Bid.
• Any Credit Bid may be combined with, supplemented by, or replaced with a cash bid, and shall include a cash component sufficient to pay in full in cash all claims secured by a senior lien, as well as projected distributions under the Plan and the Wind-Down Amount.
• Subject to each applicable intercreditor agreement and agreement among lenders, any Credit Bid submitted by a Secured Party shall be deemed a Qualified Bid; each Secured Party (or person authorized to bid on its behalf) shall be deemed a Qualified Bidder; no Deposit shall be required with respect to the Credit Bid portion of its Qualified Bid; the Secured Parties may enter a Credit Bid for the full face value of their respective Claims; and any such Credit Bid may, at the applicable Secured Party's election, be implemented through a plan of reorganization.
• All rights of the Debtors, the Committee, and other parties in interest to object to any Credit Bid are expressly preserved.

Participation Requirements & Due Diligence

• To participate in the bidding process and receive due diligence — including full access to the Debtors' electronic data room (the "Data Room") and additional non-public information — a Potential Bidder must deliver to the Debtors' Advisors the required preliminary documentation (the "Preliminary Documents").
• The Debtors, in their reasonable business judgment, will determine and notify each Potential Bidder whether it has submitted adequate Preliminary Documents to proceed to further due diligence and submit a Bid (each, an "Acceptable Bidder"). If a Potential Bidder is deemed not to be an Acceptable Bidder, the Debtors will promptly inform the Consultation Parties of such determination and the reasons therefor.
• Only Acceptable Bidders shall be eligible to receive due diligence materials, access to the Data Room, and additional non-public information. The Consultation Parties and their advisors will be given access to the Data Room on a professional eyes-only basis.
• The due diligence period for any Stalking Horse Bidder will end upon execution of the applicable Stalking Horse Purchase Agreement, unless otherwise agreed; for all other Acceptable Bidders, the due diligence period will end on the applicable Bid Deadline.
• All due diligence requests directed to the Debtors must be directed to Steven Bremer (sbremer@pppllc.com) and Stephen Golmont (sgolmont@pppllc.com) of Portage Point.

Bid Requirements

• To be deemed a Qualified Bid, a Bid must, among other requirements:
  • Clearly state which Assets the Bidder seeks to purchase and, if applicable, the liabilities and obligations to be assumed (including any debt and cure costs, the "Assumed Liabilities").
  • Include a statement that the Bidder is making a bona fide offer to consummate a Sale Transaction.
  • Clearly state the Purchase Price, separately identify any cash and non-cash components (non-cash components limited to Credit Bids and Assumed Liabilities), and indicate the allocation of the Purchase Price among the applicable Assets.
  • Include an executed purchase agreement marked to reflect amendments against the Debtors' form (or, if applicable, a Stalking Horse Purchase Agreement), a schedule of contracts and leases to be assumed and assigned (the "Assigned Contracts"), and any other material documents integral to the Bid.
  • Include a written commitment to serve as a Back-Up Bidder if the Bid is not selected as the Successful Bid.
  • Provide proof of financial ability to perform, including unconditional committed financing (not subject to any internal approvals, syndication requirements, diligence, or credit committee approvals) where the Bid is not supported by cash on hand. The Debtors will favor Bids fully backstopped by cash or equity commitments from credit-worthy parties.
  • Not be conditioned on obtaining or the sufficiency of financing, any internal approval, or the outcome of due diligence, and must detail each condition to consummation, including any regulatory approvals and the timing, likelihood, and risks of obtaining them.
  • Fully disclose the identity of each entity bidding or participating, including any equity holder or financial backer, and whether any current or former officer, director, or equity holder of the Debtors (or any affiliated entity) will participate. No undisclosed insiders, principals, equity holders, or financial backers of the Debtors shall be associated with any Bid.
  • Contain evidence of all necessary authorizations or approvals from the Bidder's board of directors (or comparable governing body).
  • Identify each Assigned Contract and be accompanied by adequate assurance of future performance, submitted in a compiled PDF as the "Adequate Assurance Package."
  • Include an "as is, where is" acknowledgement and a representation that the Bidder did not engage in any collusive conduct and acted in good faith.
  • With the exception of a Stalking Horse Bid, expressly state that the Bidder shall not be entitled to, and shall not seek, any break-up fee, termination fee, expense reimbursement, working fee, or similar payment, and waive any related claim under section 503(b) of the Bankruptcy Code.
  • Describe the Bidder's intentions with respect to the Debtors' management team and other employees, and state or estimate the transition services, if any, the Bidder would require of or provide to the Debtors.
  • Include a commitment to close as soon as practicable, but in no event later than five (5) calendar days after entry of the Sale Order, and the expected closing date.
  • Be binding and irrevocable, remaining open for any bidder other than the Successful Bidder and Back-Up Bidder until two (2) Business Days after entry of the Sale Order.
  • Contain a covenant to comply in all respects with the Bidding Procedures and the Bidding Procedures Order, and submit to the jurisdiction of the Court with a waiver of any right to a jury trial.
• Combination Bids for multiple categories of Assets must specify the allocation of the Purchase Price across the Assets and indicate whether the offer is on an "all or none" basis.
• Landlords may submit bids with respect to their own leased premises ("Landlord Bids"), in the form of a lease termination agreement or an assumption and assignment agreement, and may include their uncontested cure amounts as consideration. Landlord Bids shall be deemed Qualified Bids; the Deposit for Landlord Bids is required only with respect to the cash component, and landlords need not provide evidence of adequate assurance of future performance.
• A Bid is a "Qualified Bid" if the Debtors, in their reasonable business judgment and in consultation with the Consultation Parties, determine that it satisfies the Bid Requirements and is reasonably likely to be consummated if selected as the Successful Bid (or Back-Up Bid).

Good Faith Deposit

• Each Bid must be accompanied by a cash deposit equal to ten percent (10%) of the applicable cash portion of the Purchase Price (the "Deposit"), held in one or more escrow accounts on terms acceptable to the Debtors; the Debtors may elect to waive or modify the Deposit requirement on a case-by-case basis.
• If the Purchase Price of a Bid is increased, the Deposit shall automatically increase to equal 10% of the increased Purchase Price, with payment into escrow as promptly as practicable and in any event within one (1) Business Day.
• If an Acceptable Bidder's Bid is determined not to be a Qualified Bid, the Debtors will refund such Bidder's Deposit (if any) by the date that is five (5) Business Days after such determination.
• Deposits will be returned to Qualified Bidders that are not Successful Bidders (or Back-Up Bidders) on the date that is three (3) Business Days after the applicable Auction (if any).
• A Successful Bidder's (or Back-Up Bidder's) Deposit shall be applied to the Purchase Price at closing. If a Successful Bidder (or Back-Up Bidder) fails to consummate the Sale Transaction because of its breach, the Debtors are not obligated to return the Deposit, which may be retained as liquidated damages, in addition to any other rights, remedies, or causes of action available to the Debtors and their estates.

Consultation Parties

• "Consultation Parties" means (A) the Consenting Stakeholders, (B) the Prepetition ABL Agent, and (C) the Official Committee of Unsecured Creditors (the "Committee").
• Any Consultation Party (including any member of the Committee) that submits a Bid, including a Credit Bid or Stalking Horse Bid, or is a participant in any active Bid, shall immediately cease to be a Consultation Party unless and until it unequivocally revokes its Bid in writing and waives its right to continue in the bidding process; provided that the Consenting Stakeholders may act as Consultation Parties notwithstanding their rights under the RSA to pursue a Recapitalization Transaction.
• The Debtors shall consult with the Consultation Parties in good faith regarding the Marketing Process and each Sale Transaction, including evaluation of all Bids, designation of any Stalking Horse Bidder, scheduling and operation of any Auction, selection of Successful Bids, negotiation of purchase agreements, and any modifications of the Bidding Procedures; nothing therein modifies the consent rights provided for in the RSA.

Auction Details

• If the Debtors receive multiple Qualified Bids with respect to the same Assets, and determine that each represents a higher or otherwise better value than the Recapitalization Transaction, the Debtors may, in consultation with the Consultation Parties, conduct one or more auctions to determine the Successful Bidder(s) (or Back-Up Bidder).
• If the Debtors determine they have received no Qualified Bids other than any Stalking Horse Bid, or only a single Qualified Bid for a particular portion of the Assets, the Auction will not occur, and the Stalking Horse Bid or single Qualified Bid will be deemed the Successful Bid, so long as it represents a higher or otherwise better value than the Recapitalization Transaction. The Debtors shall file a notice with the Court within twenty-four (24) hours of such determination.
• If an Auction is necessary, it will take place on or after June 29, 2026, at 10:00 a.m. (prevailing Eastern Time), conducted via remote video and/or in person at the Debtors' election, unless otherwise rescheduled. Only Qualified Bidders shall be entitled to bid at the Auction, and each must confirm it has not engaged in collusion. The Auction shall be transcribed or otherwise recorded.
• The Debtors, with the assistance of their advisors, shall direct and preside over any Auction and consult with the Consultation Parties throughout. The Auction shall continue until there is only one Qualified Bid that the Debtors determine to be the highest or otherwise best Qualified Bid for the applicable Assets (the "Successful Bid").
• The Debtors shall file the Notice of Successful Bidder identifying the Successful Bidder, the amount of the Successful Bid, and, if a credit bidder, the portions attributable to credit bid and cash, no later than forty-eight (48) hours after the Auction.

Overbid

• Only incremental Bids complying with the Auction Procedures shall be considered "Overbids." Overbids shall be made and received on an open basis, with all material terms fully disclosed to all other Qualified Bidders.
• At the commencement of the initial solicitation of Overbids, the Debtors, in consultation with the Consultation Parties, shall announce the minimum increment by which any Overbid must exceed the applicable Baseline Bid; for each subsequent round, the minimum increment by which any Overbid must exceed the Prevailing Highest Bid. The Debtors may announce increases or reductions to the minimum Overbid increment at any time during the Auction.
• Any Overbid made by a Stalking Horse Bidder shall be deemed made in an amount equal to the Overbid plus, if applicable, the Expense Reimbursement and the Breakup Fee, to the extent provided in the applicable Stalking Horse Purchase Agreement.
• Following each Overbid Round Deadline, the Debtors shall announce whether they have identified an Overbid as the Prevailing Highest Bid and describe its material terms and attributed value to all applicable Qualified Bidders.

Designation of a Back-Up Bidder

• If the Successful Bidder fails to consummate its Qualified Bid within the time permitted after entry of the Sale Order, the Qualified Bidder with the next highest or otherwise second-best Bid (the "Back-Up Bidder") will automatically be deemed to have submitted the highest or otherwise best Bid (the "Back-Up Bid"), and the Debtors will be authorized, but not required, to consummate the Back-Up Bid without further order of the Court upon at least twenty-four (24) hours' advance notice filed with the Court.
• In all circumstances, the Debtors shall first provide notice to Assigned Contracts counterparties implicated by any Back-Up Bidder's Bid and an opportunity to object to the assignment within five (5) days of receiving such notice.
• Upon designation at the Auction, the Back-Up Bid must remain open and irrevocable until the earlier of (1) the closing of the transactions contemplated by the Successful Bid and (2) the date that is forty-five (45) days following the conclusion of the Auction.

Fiduciary Out & Alternate Proposals

• Nothing in the Bidding Procedures or the Bidding Procedures Order shall require any Debtor or its governing body to take or refrain from taking any action with respect to any Sale Transaction to the extent it determines in good faith, in consultation with counsel, that doing so would be inconsistent with applicable law or its fiduciary obligations; provided that the Debtors shall notify counsel to the Consultation Parties of any such determination within twenty-four hours, such determination shall not impede any Consenting Stakeholder's right to terminate the RSA, and each Consultation Party reserves its right to challenge any such action.
• Until entry of the Sale Order, the Debtors and their representatives retain the right to consider, respond to, and facilitate alternate proposals for sales or other transactions involving any or all of the Assets (each, an "Alternate Proposal"), provide access to non-public information, enter into confidentiality agreements, and maintain or continue discussions and negotiations regarding Alternate Proposals.

Sale Free and Clear & "As Is, Where Is"

• Consummation of any Sale Transaction will be on an "as is, where is" basis, without representations or warranties of any kind except as specifically accepted and agreed to by the Debtors in the executed Definitive Sale Documents.
• The Assets will be transferred to the Successful Bidder (or Back-Up Bidder) free and clear of all liens, claims, interests, and encumbrances pursuant to section 363(f) of the Bankruptcy Code, with such interests to attach to the proceeds of the sale with the same validity and priority as held prior to the sale.
• Any party failing to timely file and serve a Sale Objection by the Sale Transaction Objection Deadline shall be barred from asserting any objection to the Sale Transactions and shall be deemed to "consent" to such Sale Transactions for purposes of section 363(f).

Assumption and Assignment

• The Assumption and Assignment Procedures govern the manner by which the Debtors will notify counterparties (the "Contract Counterparties") to executory contracts and unexpired leases (the "Contracts") of proposed cure amounts where the Debtors determine to assume and assign such Contracts in connection with the Sale Transactions.
• No later than fourteen (14) calendar days prior to the Cure Objection Deadline, the Debtors shall file and serve the Cure Notice, which will list the applicable Assigned Contracts, the Contract Counterparties, the Debtors' good faith estimates of the Cure Costs, and the deadline to object to the proposed assumption, assignment, cure, and/or adequate assurance.
• Within two (2) Business Days of the Auction, to the extent the Debtors seek to assume and assign a Contract, they will provide all proposed forms of adequate assurance of future performance received from each Successful Bidder and Back-Up Bidder to the Contract Counterparties and the Consultation Parties.
• Cure Objections must be in writing, comply with the applicable Bankruptcy Rules and Local Rules, and state with specificity the nature of the objection (and, if pertaining to Cure Costs, the alleged cure amount with supporting documentation). A properly filed Cure Objection reserves the objecting party's rights only with respect to the assumption and assignment of the Contract at issue and/or the related Cure Costs.
• Any Cure Objection that remains unresolved after the Sale Hearing will be heard at a later date set by agreement or by the Court. A Contract may be conditionally assumed and assigned (subject to the Successful Bidder's consent) pending resolution; if a Cure Objection cannot be satisfactorily resolved (to be determined in the Successful Bidder's reasonable discretion), the Successful Bidder may elect not to take the Contract and will not be responsible for its Cure Costs.
• If a Cure Objection relates solely to the Cure Costs (a "Cure Dispute"), the applicable Contract may be assumed by the Debtors and assigned to the Successful Bidder so long as the Debtors deposit into a segregated account the cure amount the Contract Counterparty asserts is required under section 365(b)(1)(A) and (B) of the Bankruptcy Code (or such lower amount as agreed), pending the Court's adjudication or the parties' consensual resolution of the dispute.
• If the Debtors discover omitted Contracts, or a Successful Bidder identifies additional Contracts it desires to assume or assume and assign, the Debtors may, after consultation with such Successful Bidder, supplement or modify the Cure Notice no later than July 15, 2026 (the "Supplemental Cure Notice").

Modification of Bidding Procedures / Reservation of Rights

• The Debtors may, in consultation with the Consultation Parties and consistent with their fiduciary duties, modify the Bidding Procedures to, among other things, extend or waive deadlines, adopt new bidding/auction rules, provide reasonable accommodations to a Stalking Horse Bidder, adjourn or cancel the Auction, and reject any or all Bids or Qualified Bids.
• However, the Debtors may not amend the Bidding Procedures or the bidding process to (i) reduce or modify their obligations to consult with, or to obtain consent from, any Consultation Party (or alter any Consultation Party's other rights) without that party's consent or further order of the Court, or (ii) impair any Qualified Bidder's right to make a Credit Bid. Nothing in the Order or the Bidding Procedures modifies the consent rights provided for in the RSA.

Key Dates

• File and Serve Sale Notice: as soon as reasonably practicable after entry of the Bidding Procedures Order
• File and Serve Cure Notice: five (5) Business Days after entry of the Bidding Procedures Order
• Bid Deadline: June 26, 2026, at 5:00 p.m. (prevailing Eastern Time)
• Auction (if necessary): June 29, 2026, at 10:00 a.m. (prevailing Eastern Time)
• File and Serve Notice of Successful Bidder: as soon as reasonably practicable, but no later than forty-eight (48) hours after the Auction
• Cure Notice and Adequate Assurance Objection Deadline: July 15, 2026, at 5:00 p.m. (prevailing Eastern Time)
• Sale Transaction Objection Deadline: July 22, 2026, at 5:00 p.m. (prevailing Eastern Time)
• Sale Hearing: August 3, 2026, at 10:00 a.m. (prevailing Eastern Time)