Yardbird Group - Chapter 11 DIP Terms

DIP Terms

Borrower / Guarantors

• Yardbird Group LLC, as borrower
• Yardbird DFW, LLC; Yardbird DC, LLC; Yardbird Chicago, LLC; Yardbird Denver LLC; The Bird Singapore LLC; Yardbird Beverly Hills, LLC; Yardbird DFW Concession, LLC; Yardbird DFW Management LLC; and YB Las Vegas, LLC, as guarantors, on a joint and several first-priority secured basis

Agent / Lenders

• Brightwood Loan Services LLC, as administrative and collateral agent, which also serves as agent under the prepetition credit agreement
• Brightwood Capital SBIC III, LP and/or its affiliates and designees, as DIP lenders, each a prepetition lender under the credit agreement they are priming
• All holders of initial term loans or delayed draw term loans under the prepetition credit agreement will be offered the opportunity to participate in the DIP loans pro rata

DIP Commitments

• $5.4 million superpriority priming term loan facility consisting of:
  • $1.8 million of new money term loans
    • $1 million available on an interim basis, borrowed in a single draw on the closing date simultaneously with the interim roll-up
    • Up to $800,000 available in multiple draws upon entry of the final order, subject to the budget
  • Up to $3.6 million roll-up of prepetition initial term loans and delayed draw term loans, converted on a cashless, dollar-for-dollar basis at $2 of prepetition obligations for every $1 of new money funded, with up to $2 million rolled up on an interim basis and the balance upon entry of the final order
• Rolled-up loans cease to be outstanding under the prepetition credit agreement and no longer constitute prepetition obligations upon conversion, with a corresponding dollar-for-dollar reduction in remaining prepetition obligations and no prepayment premium. The DIP lenders conditioned the new money on inclusion of the roll-up.
• Amounts paid or prepaid may not be reborrowed.
• The debtors project a need for approximately $1.8 million of new money funding between the petition date and the anticipated sale closing.

Interest Rate

• New money DIP loans: Term SOFR (1.00% floor) + 12.00%, payable in kind monthly
• Roll-up loans: Term SOFR (1.00% floor) + 12.00%, payable in kind
• Default rate increase: 2.0%
• Interest accrues on a 360-day year basis and is paid in kind on the last business day of each calendar month; all other DIP obligations due and payable are paid monthly in arrears on the last business day of each month and on the maturity date

Fees

• Closing Premium: 2.00% of the new money DIP loans, paid in kind on the closing date
• Exit Premium: 2.00% of the DIP loans, payable in cash on the maturity date; not due if the DIP lenders acquire all or a portion of the debtors' assets through a credit bid. The interim order makes the exit premium subject to entry of the final order.
• Agent Fee: Payable per a separate fee letter between the borrower and the DIP agent
• DIP lender expenses, covering a single financial advisor, single lead counsel and single local counsel per jurisdiction, are payable by the debtors subject to a 10-business-day review period for the debtor, U.S. Trustee and any committee counsel

Maturity

• The earliest to occur of:
  • 75 days after the petition date
  • Acceleration of the DIP loans and termination of commitments following an event of default
  • Appointment of a Chapter 11 trustee or other court-mandated fiduciary with decision-making authority, including an examiner with expanded powers
  • Consummation of a sale of all or substantially all of the debtors' assets
  • Conversion of the cases to Chapter 7 or dismissal
  • The effective date of a confirmed Chapter 11 plan
• The interim order adds a maturity trigger the motion's summary of maturity terms omits: 30 days after the petition date if the final order has not been entered by then.
• Voluntary prepayment is permitted on three business days' notice without premium or penalty other than the exit premium. Mandatory prepayment at 100% of proceeds in excess of the Carve Out applies to asset dispositions outside the ordinary course, insurance and condemnation proceeds, and proceeds of impermissible indebtedness. All prepayments apply first to the new money loans until repaid in full, then to the roll-up loans.

Carve Out

• Post-Carve-Out Trigger Notice Cap: $200,000 for all professional persons
• Chapter 7 Trustee Fee: $50,000
• Pre-trigger cap for debtor professionals: the lesser-of construct caps reported fees at 115% of the professional fees in the final carve-out report delivered before the trigger notice, with any earned restructuring, sale, success or other transaction fee capped at 100%, plus actual fees incurred between that report and the trigger cap date
• Pre-trigger cap for committee professionals: limited to the cumulative budgeted amount for committee professionals through the trigger date, without giving effect to any permitted variance
• Clerk and U.S. Trustee statutory fees are not subject to any budget
• The debtors will fund a segregated reserve account weekly in the budgeted professional-fee amount; those funds are the sole source for carve-out obligations, and the DIP agent may not sweep or foreclose on cash until the account is fully funded. The Carve Out is senior to the DIP superpriority claims, the DIP liens and all adequate protection.
• Professionals must apply unused retainers before drawing on the reserve account

Use of Proceeds

• Fund working capital and general corporate purposes, including costs of the asset sale and payments authorized under first-day orders
• Make payroll, honor employee obligations, maintain vendor and supplier relationships, and make capital expenditures
• Pay administrative costs of the cases, including U.S. Trustee fees, allowed committee professional fees, and the DIP agent's and lenders' professional fees
• Pay adequate protection obligations
• Roll-up proceeds are used solely to refinance and repay prepetition obligations through cashless conversion

Budget and Permitted Variance

• Permitted Variance: actual operating disbursements across all line items, including professional fees, may not exceed the budget by more than 15% for any variance testing period; food and liquor disbursements may be adjusted on a pro forma basis tied to revenue and cash receipts by up to 20%
• Variance testing periods run on a rolling two-week basis beginning the second full week after the petition date, with variance reports due each Wednesday
• The budget is a 13-week statement of sources and uses prepared in consultation with Albert Altro of Traverse LLC, the proposed chief restructuring officer, with updated budgets delivered every fourth Friday; absent agreement with the required DIP lenders, the then-current budget remains in effect
• Upon a termination event, the permitted variance is reduced to 0.00% of budgeted disbursements
• Exceeding the permitted variance, or spending DIP proceeds outside the budget, is an event of default

Milestones

• Petition date: file the bidding procedures motion, which must also seek approval of a stalking horse bid by the DIP lenders or their designee under an asset purchase agreement acceptable to the required DIP lenders
• 3 business days after the petition date: entry of the interim order
• 18 days after the petition date: entry of the bidding procedures order
• 30 days after the petition date: entry of the final order
• 37 days after the petition date: bid deadline
• 45 days after the petition date: commencement of the auction, if any
• 50 days after the petition date: sale hearing, subject to court availability
• 53 days after the petition date: closing of the approved sale
• The term sheet also required commencement of the cases no later than Sept. 20, 2026; the debtors filed Sept. 21, 2026. Failure to meet any milestone, absent waiver or extension by the required DIP lenders, is an immediate event of default. The interim order conditions the milestone package on entry of the final order.

Securities and Priorities

• The DIP obligations receive allowed superpriority administrative expense claims under section 364(c)(1), senior to all other administrative expenses including those under sections 503(b) and 507(b), subject only to the Carve Out and, as to the CNB priority collateral, to CNB's administrative expense claims. Their priority over section 506(c) claims, as it applies to the roll-up loans, takes effect only on entry of the final order.
• The DIP agent receives automatically perfected liens on substantially all prepetition and postpetition property, subject to the Carve Out and permitted liens, with the following priorities:
  • Section 364(c)(2) first-priority liens on unencumbered property, including, upon entry of the final order, avoidance action proceeds
  • Section 364(d)(1) priming liens senior to the prepetition liens on all property securing the prepetition obligations, including cash collateral
  • Section 364(c)(3) junior liens on property subject to valid, perfected and unavoidable prepetition liens senior to the prepetition liens
• The DIP liens, prepetition liens and adequate protection liens are junior at all times to CNB's validly perfected prepetition liens on all property and assets of Southern Operations, LLC, and the section 364(d) priming liens do not prime CNB on that collateral
• Cash collateral consists of all of the debtors' cash, including amounts on deposit in any account and proceeds of accounts receivable or other dispositions of prepetition collateral; all cash on hand at filing is cash collateral
• The interim order prohibits the debtors from incurring indebtedness ranking pari passu with or senior to the DIP obligations, and grant or allowance of any other superpriority claim is a termination event
• Effective upon entry of the final order, anti-assignment provisions in leases and other agreements requiring landlord consent or payment of fees to a governmental entity are deemed inconsistent with the Bankruptcy Code as to the DIP and adequate protection liens

Credit Bid

• The DIP agent, at the direction of the required DIP lenders and directly or through one or more acquisition vehicles, may credit bid up to the full amount of the DIP obligations under section 363(k) in any sale of DIP collateral, whether under section 363, a plan under section 1129, or a Chapter 7 disposition under section 725, and may assign, sell or otherwise dispose of that right to any acquisition entity or joint venture formed for the bid
• The credit bid amount includes outstanding principal on both the new money and roll-up loans, accrued and unpaid interest including PIK interest, all fees, premiums and expenses owing under the facility (including the exit premium, if applicable), and any other DIP obligations
• Subject to entry of the final order and satisfaction of the DIP obligations, or as otherwise consented to by the DIP agent, the prepetition agent may credit bid up to the full amount of the prepetition obligations then outstanding, reflecting all dollar-for-dollar reductions from the roll-up
• Any motion or order impairing the unqualified credit bid rights of the DIP agent, any DIP lender or the prepetition agent is an event of default

Avoidance Actions

• Avoidance actions themselves are excluded from the DIP collateral; upon entry of the final order, the proceeds of chapter 5 claims become subject to the section 364(c)(2) lien and are recourse for the DIP superpriority claims and the adequate protection claims

Challenge Period and Budget

• The deadline to file an adversary proceeding challenging the roll-up loans, the prepetition liens or the prepetition obligations is the earlier of:
  • Subject to entry of the final order, entry of an order approving the sale of substantially all of the debtors' assets
  • 75 calendar days after entry of the interim order
• Any committee may agree to terminate the challenge period early. If the cases convert to Chapter 7 or a Chapter 11 trustee is appointed before expiration, the period is extended as to that trustee to the later of the challenge period and 10 days after appointment.
• Challenge Budget: no more than $50,000 of DIP proceeds, DIP collateral or cash collateral in the aggregate may be used by a committee to investigate the roll-up loans, prepetition liens and prepetition obligations; subject to entry of the final order, committee investigation fees above that amount are not payable from the Carve Out. The term sheet carries the same $50,000 cap as the "Investigation Budget."
• Because every debtor is a limited liability company, the interim order preserves a committee's or other party's ability to file an LLC challenge motion seeking a mechanism to prosecute a challenge for which it may lack standing as a matter of law; the challenge period is tolled as to that specific challenge pending further order, and the debtors retain authority to prosecute it in their business judgment
• If no timely challenge is filed, the roll-up loans and prepetition obligations become allowed claims and the prepetition liens are deemed valid, perfected and non-avoidable as of the petition date

Debtor Stipulations and Prepetition Capital Structure

• The debtors stipulate that the credit parties were jointly and severally liable to the Brightwood prepetition secured parties for approximately $13,324,252 as of the petition date, consisting of roughly $11,215,290 of initial term loans and $2,108,962 of delayed draw term loans (including Amendment No. 2 delayed draw term loans), plus fees, expenses and indemnities. The facility, dated July 28, 2022 and amended in April 2024 and November 2025, provided for $13 million of initial and delayed draw term loans.
• The prepetition obligations are secured by first-priority liens on substantially all of the debtors' assets, other than the assets of Southern Operations, on which the Brightwood parties hold a second lien.
• City National Bank of Florida holds approximately $8.4 million under an August 2020 Main Street Loan Facility to Southern Operations as borrower and Yardbird Group as guarantor, originally funded at $9.9 million and amended in April 2025 to add YB DFW, YB Denver, YB DC, YB Chicago and YB Beverly Hills as guarantors. CNB holds a first lien on the Southern Operations collateral, which currently consists of stored equipment and possibly a liquor license tied to the closed Miami location, and a second lien on the collateral of Yardbird Group, YB DFW, YB DC, YB Chicago, YB Denver and YB Beverly Hills. The interim order expressly declines to stipulate that the CNB obligations are valid debt or that the CNB liens are perfected, enforceable or non-avoidable.
• CNB sued Southern Operations, YB Beverly Hills, YB Chicago, YB DC, YB DFW and YB Denver on or about March 24, 2026 in the Circuit Court of the 11th Judicial Circuit for Miami-Dade County, Florida, for breach of contract and enforcement of the loan documents; that litigation remained pending as of the petition date.
• inKind Cards Inc., inKind Credit Fund LP and inKind Warehouse Facility, LLC hold approximately $3.1 million under a June 27, 2025 credit purchase agreement under which inKind advanced $1.2 million of working capital in exchange for $2.4 million of credits redeemable by inKind's customers at the debtors' restaurants. inKind's UCC-1 filings against YB DFW, YB DC, YB Chicago, YB Denver and YB Beverly Hills give it a third-priority lien on those debtors' Article 9 collateral.
• A July 28, 2022 intercompany subordination agreement subordinates obligations of the credit parties owing to Southern Operations and non-debtor The Bird Singapore Pte. LTD for the benefit of the prepetition secured parties.
• The stipulations bind the debtors and their representatives, successors and assigns on entry of the interim order; they bind the estates and every other party in interest, including any committee and any Chapter 7 or Chapter 11 trustee, only subject to entry of the final order and to the challenge period.

Adequate Protection

Prepetition Senior Secured Parties

• Replacement and additional liens on all DIP collateral, including avoidance proceeds upon entry of the final order, to the extent of any diminution in value; subordinate to the Carve Out, the DIP liens and permitted liens, junior at all times to CNB's perfected liens on the CNB priority collateral, and otherwise senior to all other liens on the DIP collateral, including liens preserved under section 551
• Allowed section 507(b) superpriority administrative expense claims to the extent of any diminution in value, subordinate only to the Carve Out and the DIP superpriority claims, and junior to CNB's administrative claims as to the CNB priority collateral; no payment may be received on those claims until the DIP obligations are paid in full in cash or otherwise satisfied as agreed
• Payment, without further court order, of reasonable and documented fees and expenses of the prepetition secured parties, including those of Winston Taylor LLP and Cole Schotz P.C. as counsel to the prepetition lenders, subject to a 10-business-day review period for the debtor, U.S. Trustee and committee counsel
• The interim order preserves the section 507(b) reservation and makes no finding that the protection granted is in fact adequate
• If the interim order is vacated, reversed or modified on appeal, liens and claims granted to the prepetition secured parties before that date remain governed by the original order, and those parties are entitled to section 363(m) protection for all uses of prepetition collateral, including cash collateral, and for all adequate protection obligations
• The DIP and adequate protection liens, the DIP and adequate protection superpriority claims and the other claims granted under the interim order survive any dismissal of the cases, keep their priorities until the DIP and adequate protection obligations are paid in full in cash, remain binding on all parties in interest, and the court retains jurisdiction to enforce them

Waivers

• Subject to entry of the final order but retroactive to the petition date:
  • Section 506(c): no administrative expenses may be charged against or recovered from the prepetition or DIP collateral, or from the agents and lenders, except to the extent of the Carve Out
  • Section 552(b): the "equities of the case" exception does not apply to the proceeds, products, offspring or profits of the prepetition or DIP collateral
  • Marshaling and similar doctrines do not apply, provided nothing impairs the senior position of CNB's liens on the CNB priority collateral
• Subject to the challenge and release limitations, the debtors waive the right to seek modification of the interim order, any pari passu or senior claim or lien, use of cash collateral outside the DIP documents, section 546(h) goods returns, conversion or dismissal, appointment of a Chapter 11 trustee, or appointment of an examiner with enlarged powers

Releases

• Subject to the challenge-period limitations, the debtors and their estates release the DIP lenders, the DIP agent and the prepetition senior secured parties, together with their officers, directors, employees, agents, owners, members, partners, affiliated investment funds and vehicles, managed or advised accounts, investment and financial advisors, legal advisors, shareholders, managers, consultants, accountants, attorneys, affiliates and predecessors in interest, from all claims existing as of the date of the order relating to the DIP obligations, DIP superpriority claims, DIP liens, prepetition liens and prepetition obligations, including lender liability and equitable subordination claims, Bankruptcy Code causes of action, and challenges to the validity, priority, extent, enforceability, perfection or avoidability of their liens or claims
• The DIP term sheet contains a parallel release by each debtor of the DIP agent and DIP lenders and their directors, officers, employees, subsidiaries, affiliates, attorneys, agents, representatives, successors and assigns, with each debtor representing that it knows of no such claims

Events of Default

• Nonpayment of principal when due, or of interest, fees or other amounts within three business days of the due date
• Any representation or warranty inaccurate in any material respect when made; failure to observe any other covenant uncured for three business days after written notice from the DIP agent, with any milestone or additional covenant breach constituting an immediate default
• Spending DIP proceeds outside the budget or exceeding the permitted variance
• The DIP orders ceasing to create valid, perfected liens of the required priority, or ceasing to be in full force and effect; any failure by a debtor to perform under, or any violation of, the DIP orders beyond applicable cure periods; entry of an order amending, supplementing, staying, vacating or otherwise modifying the DIP facility documents or the prepetition credit agreement adversely to the lenders; any debtor action to invalidate, reduce or impair the DIP liens or to surcharge collateral under section 506(c); any challenge by a debtor to the validity, extent, perfection or priority of the prepetition liens or obligations
• Seeking or entry of an order approving payment of a prepetition claim exceeding $100,000 in the aggregate outside the first- and second-day orders and budget; payment of any administrative expense claim of $100,000 or more not in the budget; payment of any prepetition claim in excess of $50,000 outside those orders and the budget without the required DIP lenders' consent
• Stay relief permitting foreclosure on assets with a book value over $50,000, or approval of a settlement over $50,000 with a secured creditor outside the budget and without the required DIP lenders' consent
• Appointment or an application seeking appointment of a Chapter 11 trustee or an examiner with enlarged powers; dismissal without provision for termination of commitments and payment in full; conversion to Chapter 7
• Motions or orders obtaining additional section 364(c) or (d) financing that does not pay the DIP obligations in full at closing, modifying the DIP orders inconsistently with the term sheet, granting equal or superior administrative priority, or granting a senior non-permitted lien on the collateral
• Termination or modification of exclusivity without consent, or an uncontested motion seeking the same
• Filing of any plan or disclosure statement that does not provide for payment in full of the prepetition and DIP obligations before the maturity date, or entry of an order approving or confirming such a plan; amendment or withdrawal of an approved plan or confirmation order adverse to the DIP parties without consent
• Any sale of the debtors' assets other than under the stalking horse APA, unless the DIP and prepetition obligations are paid in full before maturity; revocation, reversal, stay or modification of the bidding procedures order without the required DIP lenders' consent
• Any debtor seeking or supporting disallowance of the DIP lenders' claims or contesting any provision of the term sheet
• A third party obtaining a final section 506(c) charging order or other final order adverse to the DIP agent or lenders, or making an uncontested application for trustee, examiner, dismissal or conversion relief
• Any impairment of credit bid rights, as described above
• A termination event under the interim order is broader than an event of default: it is any event of default, any failure by the debtors to comply with a provision of the interim order or with any other covenant in the interim order or the term sheet, or the maturity date

Remedies

• On a termination event, the debtors' authority to use cash collateral terminates and the DIP obligations become due and payable; the debtors must immediately notify counsel to the DIP agent, DIP lenders and prepetition agent, with copies to committee counsel and the U.S. Trustee
• Following not less than five days' written notice, which may be by email, to debtors' counsel, the U.S. Trustee and committee counsel:
  • The DIP agent and DIP lenders may exercise remedies against the DIP collateral, including terminating all commitments
  • The prepetition secured parties may exercise remedies to satisfy the prepetition obligations, subject to the DIP obligations, DIP superpriority claims, permitted liens and the Carve Out
  • The automatic stay terminates automatically as to all of those parties at the end of the notice period, without further order
• During the notice period the debtors may use DIP proceeds drawn before the termination event and cash collateral only to fund operations consistent with the term sheet and budget, with the permitted variance reduced to zero, and to fund the reserve account. The parties consent to an expedited hearing; if a hearing is requested before the notice period ends but scheduled later, the notice period extends to the hearing date. Fees and expenses incurred by the debtors or a committee during the notice period permanently reduce the post-trigger cap unless the court finds no termination event occurred.
• Any party in interest may seek an emergency hearing to contest whether assets constitute estate property

Indemnification

• The debtors indemnify the DIP lenders, the DIP agent and their officers, directors, affiliates, attorneys, employees and agents, jointly and severally, against claims arising out of the term sheet, the facility, the negotiation and administration of the DIP documents, breaches by the debtors, enforcement of remedies, anti-terrorism law penalties, and related governmental or third-party proceedings, excluding amounts found by final non-appealable decision to result from the indemnified person's fraud, gross negligence or willful misconduct

Assignments and Governing Law

• DIP lenders may assign their loans subject to the borrower's consent (not to be unreasonably withheld, and not required during an event of default or for an assignment to a permitted assignee) and the DIP agent's consent other than for assignments to a DIP lender or its affiliates, with a $3,500 processing and recordation fee that the agent may waive. No affiliate of the debtors may become a DIP lender.
• Permitted assignees comprise the DIP agent, DIP lenders and their affiliates; chartered banks, U.S. branches of foreign banks, insurance companies and commercial finance companies; funds managed or advised by the DIP agent, a DIP lender or their affiliates; and other accredited investors or qualified institutional buyers in the business of investing in commercial loans. Disqualified lenders, meaning bona fide operating competitors identified in writing by the borrower and their clearly identifiable affiliates, are excluded; the agent will not share the disqualified list but will confirm on request whether a person is on it.
• The DIP agent maintains a register of lenders, commitments and outstanding amounts that is conclusive absent manifest error and open to inspection by the borrower and any lender on reasonable notice
• Required DIP lenders means non-defaulting lenders holding more than 50% of outstanding DIP loans and commitments
• New York law governs, with the debtors submitting to the exclusive jurisdiction of the bankruptcy court or, failing that, courts in New York County, and waiving jury trial
• No further court approval is required for amendments, waivers or modifications to the DIP documents or budget agreed among the debtor, the DIP agent and the required DIP lenders, except that modifications shortening maturity, increasing aggregate commitments or the interest rate, or effecting other material amendments require notice, a hearing and court approval as necessary
• Where the interim order and the DIP documents conflict, the interim order governs

Background

• The debtors run a restaurant business and filed Chapter 11 on Sept. 21, 2026 with limited cash on hand and, on their account, insufficient liquidity to make payroll, hold vendor terms and administer the cases without the facility.
• The Miami location has closed; the only collateral left at Southern Operations, the borrower under the CNB loan, is stored equipment and possibly a liquor license from that location.
• The facility is sized to carry the debtors to a sale under section 363, with the bidding procedures motion required to seek approval of a stalking horse bid by the DIP lenders or their designee, and Albert Altro of Traverse LLC serving as proposed chief restructuring officer.

Marketing Process

• Albert Altro of Traverse LLC, the debtors' proposed chief restructuring officer, canvassed approximately 18 potential lenders, including strategic groups, private equity firms, financial investors and traditional lending institutions, asking whether any would extend credit on an unsecured, junior or priming basis given that substantially all assets are encumbered by validly perfected first-priority liens.
• That process produced two term sheets, one from a third party and one from the prepetition secured parties. No third party would lend subordinate to the prepetition secured parties; those that were interested would proceed only on a superpriority senior secured basis with the prepetition secured parties' consent, to avoid a priming fight, and none offered terms better than the proposed facility.
• The prepetition secured parties would not consent to being primed. Following arm's-length negotiations, the debtors executed the term sheet they provided, which also secures consensual use of cash collateral and avoids a first-day priming and cash collateral dispute.

Hearings

• The motion asks the court to set the final hearing no later than 28 days after entry of the interim order; the proposed interim order leaves the final hearing date, time, judge and objection deadline blank, with objections due at 4:00 p.m. prevailing Eastern Time on a date to be filled in
• The proposed interim order provides that it takes effect nunc pro tunc to the petition date immediately upon entry, with no stay of execution or effectiveness
• The debtors filed Chapter 11 on Sept. 21, 2026 in the District of Delaware; no official committee had been appointed when the motion was filed.