Yardbird Group - Chapter 11 Bidding Procedures / APA Summary

Bidding Procedures / Asset Purchase Agreement Summary

Sale Overview

• SH Acquisition, LLC is the stalking horse for substantially all of the Yardbird restaurant group's assets. The debtors' DIP lenders own the vehicle and directed its formation, and they are also the debtors' prepetition secured lenders. The bid is a credit bid of all outstanding DIP and prepetition term loan obligations, plus assumed liabilities and wind-down cash.
• The APA defines the business being sold as the Yardbird restaurants in Dallas, Chicago and Washington, D.C., plus two licensed locations in Las Vegas and Singapore. The sellers own no real property, and all real property used in the business is leased, subleased or licensed.
• The debtors filed Chapter 11 in Delaware on Sept. 20, 2026, which is also the date of the stalking horse APA. They moved for approval of bidding procedures and the sale on Sept. 21 [Docket No. 14].
• On Oct. 27, 2026, the same day as the bid deadline, the court entered an amended and superseding order [Docket No. 172]. The order approves the procedures, designates the stalking horse and approves its APA as the form agreement for the auction.
• The order finds that the stalking horse is not an insider or affiliate of the debtors. It also finds that the stalking horse acted in good faith under section 363(m) in negotiating the procedures and the APA.
• If no other qualified bid is submitted, the stalking horse is deemed the successful bidder, no auction is held, and the debtors will seek approval of the stalking horse bid at the Nov. 9 sale hearing.

Stalking Horse Bid

• Purchase price: a credit bid of the DIP and prepetition facility obligations, plus assumed liabilities and the excluded cash, consisting of the sum of:
  • A section 363(k) credit bid by Brightwood Loan Services LLC, as administrative and collateral agent under both the DIP facility and the prepetition facilities, of all outstanding DIP obligations and prepetition facility obligations (excluding indemnities, expenses and agency fees), applied first to the DIP until paid in full and then to the prepetition debt
  • The assumption of the assumed liabilities
  • The excluded cash, drawn from cash on hand and DIP borrowings, equal to a $250,000 wind-down amount plus enough to pay accrued but unpaid ordinary-course postpetition administrative expenses that are included in the DIP budget and are neither assumed liabilities nor covered by the wind-down budget
• Prepetition debt being credit bid: under Yardbird Group LLC's July 28, 2022, credit and guaranty agreement with Brightwood as agent (amended April 19, 2024, and by an amendment and waiver dated Nov. 14, 2025), the debt consists of:
  • An initial term loan with $11.2 million of principal outstanding
  • Delayed-draw term loans with $2.1 million of principal outstanding
  Each balance is stated plus accrued interest, fees and other amounts.
• The DIP and prepetition lenders direct the credit bid through an irrevocable bid direction letter to Brightwood, which is also the stalking horse's sole member.
• Deposit: None. The APA waives any deposit and treats the buyer's credit bid commitment as adequate assurance in place of cash. The bidding procedures also exempt the stalking horse bid from the deposit requirement.
• The stalking horse is deemed a qualified bidder and its bid a qualified bid, and that status cannot be changed by later amendments to the procedures without a further court order.
• The buyer represents that at closing it will have enough cash to pay cure costs (up to the cure cap) and the other assumed liabilities.
• The buyer may name affiliates, or other persons chosen by the required DIP lenders, to take specified assets, assume specified liabilities or employ transferred employees, and may assign the APA to them without consent. Any designee is jointly and severally liable with the buyer.
• Wind-down funding: $250,000.
  • The sellers must deliver to the DIP lenders a wind-down budget, including professional fees, that may not exceed that amount.
  • The budget is due at least 10 business days before the sale hearing, or earlier if a revised budget is delivered in connection with a second DIP draw.
  • The funds go into the account holding the excluded cash at closing or, if later, once the parties agree on the budget.

Credit Bid

• The stalking horse may credit bid all or any portion of its DIP claims and the Brightwood prepetition obligations, and may raise its credit bid up to the full amount regardless of any earlier or lower credit bid. This right is subject in all respects to the challenge period under the interim or, once entered, final DIP order.
• Any qualified bidder with a valid, perfected lien may credit bid up to its claims against its collateral, whether or not the lien is still subject to a DIP order challenge period. Credit bids count at face value as the equivalent of cash and may not be treated as inferior to a comparable cash bid.
• No party may seek to block or limit the DIP secured parties' credit bid rights. A credit bid by the DIP or prepetition secured parties automatically counts as a qualified bid.
• The order does not modify the DIP orders, which control if the two are inconsistent.
• The buyer's obligation to close depends on three things:
  • Court authorization of the credit bid
  • No pending action challenging the lenders' right to credit bid
  • Expiration of the DIP order challenge period with no challenge asserted against the DIP lenders or prepetition lenders
  The buyer may also terminate if it cannot credit bid up to the full DIP and prepetition obligations.

Bid Protections

• Break-up fee: None
• Expense reimbursement: up to $175,000 of reasonable and documented expenses under the bidding procedures order, which gives it administrative priority, directs payment without further order and provides that it survives termination of the APA. The APA states a cap of $275,000.
• Triggers: the order directs payment in accordance with the APA, which makes the reimbursement payable on termination by the sellers for a missed outside date, a final legal restraint or court approval of an alternative restructuring proposal, or under section 10.1(g), the buyer's own termination section; the APA's list does not include the automatic termination that occurs if the buyer is neither the successful nor the backup bidder, while the sale notice describes the reimbursement as payable if the stalking horse is not the successful bidder.
• The stalking horse must send documentation of its expenses to debtors' counsel and the U.S. Trustee, who have five days to object. Time entries are not required.
• The reimbursement is built into the minimum bid and the first overbid, and each later stalking horse bid is deemed increased by it. No other bidder is entitled to any bid protection.

Minimum Bid and Overbid

• Minimum bid: the value of the stalking horse bid plus $200,000 plus the expense reimbursement.
• Any competing bid must also be large enough to repay in full, in cash, all DIP obligations and all Brightwood prepetition obligations the stalking horse credit bids. The debtors may assign value to non-cash components only if that requirement is met.
• Initial overbid: the baseline bid plus $200,000, plus the expense reimbursement if the stalking horse bid is the baseline bid.
• In later rounds, bids must exceed the prior round's leading bid, and the debtors may raise or lower the minimum overbid at any time during the auction.
• Partial bids for parts of the business are allowed. They may be combined with other partial bids, or valued together with the debtors' good-faith estimate of the liquidation value of the assets no one bid on.

Good Faith Deposit

• Deposit: 10% of the proposed purchase price, in cash, paid into escrow by Oct. 27, 2026, at 4 p.m. ET. The stalking horse is exempt.
• Deposits are returned on the following schedule:
  • Bidders that do not qualify: within five business days after the debtors make final qualification decisions
  • Qualified bidders other than the successful and backup bidders: within 10 business days after the auction
  • The backup bidder: within 10 business days after the backup bid expiration date
• The successful bidder's deposit is credited against the purchase price at closing.
• A deposit is forfeited to the estates, as partial compensation, if a qualified bidder tries to withdraw while its bid is irrevocable. The same applies if the successful or backup bidder fails to close because of a breach that lets the debtors terminate its APA.

Bid Requirements

• To count as a qualified bid, a bid must, among other things:
  • Be an irrevocable offer in the form of an executed APA marked against the stalking horse APA, priced in U.S. dollars and identifying the assets, contracts and liabilities to be assumed, with a proposed sale order marked against the debtors' form
  • Meet the minimum bid amount and the full cash repayment requirement, and come with the 10% deposit
  • State whether it is all cash and, if not, value any non-cash components
  • Identify everyone bidding, sponsoring, financing or participating in the bid, state whether the bidder is an insider, and disclose any connections with the stalking horse, other bidders, the DIP secured parties or their officers and directors
  • Include evidence of financial wherewithal and adequate assurance information in a form that can be shared immediately with counterparties; this may include an organizational chart, financial statements, tax returns, annual reports and the proposed use of leased premises
  • Contain no financing or due diligence contingencies and acknowledge that the assets are sold as-is, where-is
  • Remain irrevocable until the successful bid is selected or, if the bid is chosen as the successful or backup bid, until the backup bid expiration date, with the bidder agreeing to serve as backup bidder
  • Waive any bid protection and any section 503(b) substantial contribution claim
  • State whether the bidder intends to offer jobs to any of the debtors' employees and, if so, to whom
  • Certify that the bidder has not colluded and include evidence of board or equity holder authorization
• To get data room access, prospective bidders must first give Soravine Advisors LLC:
  • Identifying information
  • An executed confidentiality agreement
  • A statement of bona fide interest
  • Preliminary proof of financial capacity
  The debtors may withhold competitively sensitive information from competitors.
• The debtors may negotiate with bidders to cure deficiencies in their bids. After consultation, they may also waive or amend the qualification requirements.

Auction and Backup Bid

• The auction will be held on Nov. 2, 2026, at 10 a.m. ET only if the debtors receive more than one qualified bid, counting combined bids. Otherwise, the debtors will seek approval of the stalking horse bid at the sale hearing.
• Bidding opens at the baseline bid the debtors select, and the leading bid is announced after each round. Bidding is open to all qualified bidders, the auction is transcribed or video-recorded, and each participant must confirm on the record that it has not colluded.
• Backup bid: it may not be a credit bid, and it stays binding until the earlier of the first business day after closing with the successful bidder or 30 days after the sale hearing.
  • If the successful bidder's sale is terminated before then, the backup bidder becomes the successful bidder.
  • If the successful bidder fails to close because of its own breach, the debtors may close with the backup bidder without a further court order.
  • The debtors may also choose not to pursue the backup bid.
• There will be no further bidding at the sale hearing, which is an evidentiary hearing unless the court orders otherwise. The debtors are bound to a successful bid only once the court approves it.
• Supplemental sale objections filed after the auction may address only the conduct of the auction or a successful or backup bidder other than the stalking horse.

Key Dates

• Deadline to file the sale notice, the assumption and assignment notice, and the stalking horse APA schedules: Oct. 15, 2026
• Bid deadline and deposit deadline: Oct. 27, 2026, at 4 p.m. ET
• Sale objection, cure objection and contract objection deadline: Oct. 29, 2026, at 4 p.m. ET
• Notice of baseline bid to qualified bidders: Oct. 30, 2026, at 5 p.m. ET
• Auction (if necessary): Nov. 2, 2026, at 10 a.m. ET, at Potter Anderson & Corroon LLP's Wilmington offices, another location or virtually
• Notice of auction results: one business day after the auction concludes
• Supplemental sale objection and adequate assurance objection deadline (if necessary): Nov. 4, 2026, at 4 p.m. ET. The order's assumption procedures separately allow adequate assurance objections to be filed at or before the sale hearing.
• Deadline to reply to sale objections: Nov. 5, 2026, at 12 p.m. ET
• Sale hearing: Nov. 9, 2026, at 10 a.m. ET
• Target date for the sale order (commercially reasonable efforts) and APA outside date: Nov. 12, 2026

Assets Being Sold

• Substantially all assets under the stalking horse bid. The procedures allow bids for all, substantially all or a portion of the assets.
• The buyer acquires all of the sellers' assets except the excluded assets, including:
  • Cash other than the excluded cash, receivables, and bank accounts other than those holding the excluded cash, professional-fee funds and utility reserves
  • Deposits and prepaid items
  • Assigned contracts and scheduled leased real property
  • Inventory, equipment and other tangible assets
  • Transferable permits and owned intellectual property
  • Books and records and tax returns
  • Assumed benefit plans, and insurance policies and claims
  • Goodwill and other general intangibles
• The buyer also acquires all of the sellers' claims and causes of action, including:
  • Avoidance actions under the Bankruptcy Code, including sections 544, 547, 548 and 550, and state-law equivalents, together with their proceeds
  • Claims against current and former officers, directors, employees and representatives
  • The sellers' rights under employee confidentiality, non-compete and non-solicitation agreements
• Liquor licenses are delivered at closing. If any cannot legally be transferred, the transition services agreement must let the buyer use them after closing so the business can keep operating in the ordinary course.
• Until closing, the buyer may redesignate any asset or liability as acquired, assumed or excluded. Without seller consent, however, it may not take as acquired assets:
  • The sellers' equity
  • The excluded cash and professional-fee funds
  • Retained books and records
  • Rights relating to excluded assets or liabilities
  • D&O policies
  • The sellers' rights under the APA

Excluded Assets

• The sellers keep their equity securities, the excluded cash and, subject to the DIP order, professional retainers and fee escrows, except that the DIP reversionary interest, meaning any excluded cash left after administrative and wind-down expenses are paid, is carved out of both the excluded-cash and the retainer and escrow exclusions.
• The following are also excluded:
  • Contracts not assigned to the buyer and retained benefit plans
  • D&O and fiduciary insurance policies and the rights under them
  • The sellers' organizational documents, privileged records and records of employees who do not transfer
  • Rights relating to excluded assets or liabilities
  • The sellers' rights under the APA
  • Scheduled excluded assets

Assumed and Excluded Liabilities

• Assumed liabilities consist of:
  • Post-closing obligations under assigned contracts, but not pre-closing defaults other than cure costs up to the cure cap
  • Liabilities from the buyer's operation of the business after closing, and post-closing liabilities relating to transferred employees
  • Liabilities under assumed benefit plans, other than pre-closing COBRA liability, and accrued but unpaid paid time off of transferred employees
  • Accrued but unpaid ordinary-course postpetition administrative expenses that are in the DIP budget and not covered by the wind-down amount or budget
  • Cure costs up to the cure cap, expenses under the transition services agreement, and scheduled liabilities
• Cure cap: an amount to be agreed between the buyer and the sellers, reduced by any cure-type payments made during the case. Cure costs above the cap stay with the sellers, and keeping total cure costs within the cap is a closing condition.
• All other liabilities are excluded, including:
  • Obligations under the DIP and prepetition facilities, and intercompany debt
  • Claims under sections 503 and 507
  • The sellers' taxes and pre-closing taxes
  • Accounts payable other than the assumed postpetition expenses
  • Estate professional fees
  • Pre-closing employment and WARN Act liabilities
  • Rejection damages
  • Pre-closing tort and environmental liabilities
  • Indemnification claims
  • Liabilities to equity holders, noteholders and lenders
• The sellers pay all transfer taxes.

Assumption and Assignment

• The buyer may add or remove contracts until two business days before closing under the order (the APA states two days), with no change to the purchase price. Any contract not designated by then becomes an excluded contract, and the buyer owes no cure costs on it.
• For a contract with an unresolved cure or assignment dispute, the designation deadline is extended for as long as the buyer pays the contract's ordinary-course costs. The extension runs to the earliest of:
  • Resolution of the dispute
  • 60 days after closing
  • The date the contract can no longer be assumed or is deemed rejected under section 365(d)(2) or (4)
  • Any date set in the sale order
• Omitted contracts:
  • The sellers must disclose an omitted contract within five business days of finding it, and the buyer then has five business days to designate it.
  • Counterparties get seven business days to object.
  • The buyer may exclude the contract if the court sets cure costs at a level the buyer finds unacceptable.
  • The buyer pays all cure costs on omitted contracts it takes.
• Contract objections are due Oct. 29, 2026, at 4 p.m. ET. They cover cure amounts and assumption on any basis except the adequate assurance of a successful bidder other than the stalking horse. Counterparties who receive a supplemental notice have seven days to object.
• A counterparty that does not object on time:
  • Is deemed to consent and is bound by the noticed cure amount
  • Is barred from contesting the stalking horse's adequate assurance
  • May still seek amounts for defaults that arise between service of the notice and closing
• An unresolved cure objection may be adjourned and decided after closing, so long as the undisputed cure amount is paid and the disputed portion is reserved. The debtors or the successful bidder may drop a contract if a cure objection is resolved in a way that is not in the estates' best interests.
• Through the extended contract period, the sellers may not reject or amend any business contract, or compromise cure costs, without the buyer's consent.

Employees and Transition Services

• The buyer may offer jobs to some, all or none of the employees, on terms it sets in its sole discretion. It assumes accrued but unpaid paid time off for transferred employees.
• The excluded cash is increased, or funded in cash at closing, to cover a paid time off payout if two conditions are met:
  • The law requires the payout to an employee who is terminated because of the buyer's action or inaction
  • Not paying it would reasonably be expected to expose the sellers' directors or officers to personal liability
• The sellers keep pre-closing employment, WARN Act, retained benefit plan and pre-closing COBRA liabilities. They also remain responsible for COBRA coverage for M&A qualified beneficiaries.
• The sellers represent that they are not party to any collective bargaining agreement and that no union represents their employees.
• Employment agreements with individuals agreed by the buyer and the sellers are a closing deliverable. The sellers also assign their rights under transferred employees' non-compete, non-solicitation and confidentiality agreements.
• The order does not authorize any payment that would violate or implicate section 503(c), including insider bonus, severance or retention payments.
• Transition services: if the buyer asks, the sellers will provide payroll, benefits, accounting, IT, facilities and other administrative services for up to 60 days after closing, under an agreement funded by the buyer.

Closing Conditions and Termination

• Outside date: Nov. 12, 2026, which the buyer may extend in its sole discretion.
• APA milestones:
  • The bidding procedures order must be entered within 18 days after the petition date.
  • The sellers must use commercially reasonable efforts to obtain the sale order by Nov. 12, 2026.
  • The buyer may terminate if the sale order is not entered within 50 days after the petition date.
• Both sides' obligations to close depend on:
  • No legal restraint in effect and no pending action seeking one
  • Antitrust clearance
  • Entry of the bidding procedures and sale orders as final orders reasonably acceptable to the buyer and the required DIP lenders
• The buyer's additional conditions include:
  • The credit bid conditions described above
  • No unwaived DIP event of default and no material adverse effect
  • Total cure costs within the cure cap
  • No pending or threatened action relating to any pre-closing transaction
  • Delivery of final seller disclosure schedules by Oct. 4, 2026, in a form satisfactory to the buyer in its sole discretion and not rejected by the buyer on or before Nov. 12, 2026
• The buyer may terminate for:
  • A seller breach not cured by the earlier of the outside date or 20 business days after notice
  • Conversion to Chapter 7, appointment of a trustee or an examiner with expanded powers, or relief from the stay as to a material portion of the acquired assets
  • A continuing DIP event of default, or a material modification, reversal, stay or vacatur of the DIP order or DIP facility without its consent
  • Inability to credit bid up to the full DIP and prepetition obligations
  • Any modification, reversal, stay or vacatur of the bidding procedures order or sale order without its consent
  • A missed bidding procedures order or sale order milestone
  • Late delivery of the seller disclosure schedules, or its rejection of them on or before Nov. 12, 2026
• Other termination rights:
  • Either side may terminate if the outside date passes, if a final legal restraint is in place, or if the court approves an alternative restructuring proposal. The sellers may use the alternative-proposal right only if they have materially complied with their bidding procedures and notice covenants.
  • The sellers may terminate for an uncured buyer breach on the same cure terms.
  • The APA terminates automatically if the buyer is neither the successful bidder nor the backup bidder.
• Both sides may seek specific performance without posting a bond. Termination does not release liability for fraud or willful and material breach, and representations and warranties do not survive closing.
• Fiduciary out: the sellers are free to solicit alternative restructuring proposals.
  • They must notify the buyer within 48 hours of any proposal that may reasonably lead to one, and share the material documents.
  • Nothing in the APA requires the sellers to act against their fiduciary duties.
  • The order preserves the debtors' ability to pursue an alternative transaction.

Consultation Parties

• The consultation parties are any official committee and, only once they are no longer the stalking horse or otherwise bidding, the DIP secured parties.
• A consultation party that bids loses its status until it withdraws. If a committee member bids, the committee keeps its rights but must exclude that member from deliberations and confidential information.
• The debtors must send each bid to the consultation parties no later than the day after the bid deadline. They must also report on parties contacted, buyer feedback, letters of intent and draft agreements. Consultation rights carry no veto.
• The debtors may change the procedures after consultation, subject to the DIP orders and the stalking horse APA. They may not change consultation rights without a court order or the consent of the affected parties.

Sale Free and Clear

• The assets transfer free and clear of liens, claims and interests other than permitted liens and assumed liabilities. Under the APA, the sale order must provide that the buyer is a good-faith purchaser under section 363(m) and is not a successor to the sellers.
• Permitted liens include:
  • Validly perfected, non-avoidable liens that existed on the petition date
  • DIP facility liens
  • Ordinary-course liens, such as title retention arrangements, liens securing financed insurance premiums, and statutory pledges and deposits
• The parties waive compliance with bulk sales laws.

Other Terms

• After closing, the sellers must change their names and stop using "Yardbird" for any business purpose.
• Any plan the sellers file after closing may not conflict with the APA.
• The buyer prepares the purchase price allocation within 90 days after closing. It may instead elect to structure the deal as a tax reorganization under section 368(a), in which case the allocation provisions do not apply and the sellers must cooperate.
• The sellers must ask their occurrence-based liability insurers to add the buyer as an additional insured for the current policy year and the six prior years.
• After closing, the buyer must give the sellers access to records and personnel for the wind-down, and each party must keep business records for two years.

Parties Involved

• Sellers: Yardbird Group LLC and nine affiliated debtors. Debtor Southern Operations, LLC is not a seller under the APA.
• Buyer: SH Acquisition, LLC, whose sole member is Brightwood Loan Services, LLC.
• Agent: Brightwood Loan Services LLC, administrative and collateral agent under both the DIP facility and the prepetition facilities.
• Debtors' advisors: Potter Anderson & Corroon LLP (proposed counsel); Soravine Advisors LLC (bidder contact and due diligence); Albert Altro of Traverse LLC (chief restructuring officer).
• Counsel to the DIP and prepetition secured parties and the stalking horse: Winston Taylor LLP and Cole, Schotz, Meisel, Forman & Leonard, P.A.