ZOM Holding - Chapter 11 DIP Terms

DIP Terms

DIP Commitments

• $10.3 million non-amortizing, priming, superpriority senior secured term loan facility, consisting of:
  • $5.01 million initial new-money commitment
  • Up to $1.5 million incremental new-money commitment, used only for the reasonable fees and expenses of the debtors' professionals
  • $3.8 million roll-up, available upon entry of the final order, of the secured note ZOM Holding, Inc. (ZHI) issued to ZOM Holding, LP (ZHLP), the DIP lender. The roll-up consists of $3,773,819 of principal and $54,676 of accrued and capitalized interest.
• Interim availability: up to $1.53 million of new money upon entry of the interim order. Upon entry of the final order, aggregate new-money borrowings rise to up to $6.5 million, made up of the interim loans and an additional $4.99 million.
• The $1.5 million incremental advance can be funded only once three conditions are met: at least 90 days have passed since the petition date; the debtors and the DIP lender have agreed on an updated budget specific to the advance; and the debtors' professionals have delivered good-faith fee estimates showing that the initial budget for their fees is insufficient. The estimates cover the first 90 days and the rest of the cases, and must be acceptable to the DIP lender in its discretion.
• Draws: the initial draw funds within three business days after entry of the interim order. Later draws require three business days' written notice, come in minimum amounts of $100,000 and multiples of that amount, and are available until three business days before the DIP termination date. Borrowings permanently reduce the commitments, and repaid amounts cannot be reborrowed.
• Conditions: the initial draw requires entry of the interim order within three business days of filing, an acceptable budget, perfected DIP liens, payment of the DIP lender's expenses, a borrowing notice, no default, and no pending or threatened litigation reasonably expected to cause a material adverse effect. Later draws also require entry of the final order within 35 days of filing, filing of the bid procedures motion within seven days, accurate representations, compliance with the milestones, the DIP orders and the budget, and no material adverse effect since filing.
• The proposed interim order would find that the DIP lender would not extend credit without the roll-up, which remains subject to the challenge rights.
• The debtors filed for Chapter 11 on Oct. 30, 2026. The same day, they moved on an emergency basis for approval of the facility and attached a proposed interim order and the term sheet, which becomes binding subject to entry of the interim order. A proposed final order is to be filed before the final hearing. Where the DIP orders and the term sheet conflict, the DIP orders govern.
• Under the proposed interim order, the debtors and the DIP lender may amend the DIP documents and the budget without further court approval, except that amendments that shorten maturity, increase the commitments or the interest rate, or are otherwise material require notice, a hearing and court approval; the motion's summary adds a requirement to file and serve any amendment on the U.S. Trustee and any committee within three business days, which the proposed order does not carry.

Interest Rate

• Term SOFR + 2.50% per annum, payable in kind quarterly in arrears by adding accrued interest to principal on the last business day of each fiscal quarter
• Term SOFR is the three-month rate, subject to a 0.00% floor. Interest is computed on a 365- or 366-day year and actual days elapsed.
• Default Rate Increase: 2.00% per annum, payable in cash on demand together with the non-default interest

Fees

• None, including no exit fee, other than the DIP lender's counsel fees and expenses.
• The debtors reimburse the DIP lender's reasonable, documented out-of-pocket professional fees and expenses, including enforcement costs and documentary taxes, whether or not the facility closes. Under the proposed interim order:
  • Invoices may be in summary and redacted form and are payable within 10 calendar days after delivery to the debtors, the U.S. Trustee and any committee, with no fee application required.
  • Once that period passes, the fees are not subject to further review, challenge or disgorgement.
  • Failing to pay amounts the budget does not provide for is not an event of default.
• The budget carries DIP lender counsel at $650,000 over 13 weeks and $800,000 over 17 weeks.
• The debtors jointly and severally indemnify the DIP lender and its affiliates, officers, directors, employees, agents and advisors against losses arising from the financing and the use of proceeds, except losses a final, non-appealable judgment attributes to the indemnified person's fraud, gross negligence or willful misconduct (the term sheet adds bad faith); indemnified persons also bear no liability to the debtors or their creditors except for those causes, and never for consequential or punitive damages.
• The motion and term sheet state that no fees, including any exit fee, are payable, yet the term sheet's prepayment provisions allocate prepayments to a ratable portion of an exit fee and the motion's request for relief refers to an upfront fee and an exit fee, neither of which is defined or sized; the proposed interim order's request for relief refers to neither.

Maturity

• The earliest to occur of:
  • March 29, 2027
  • The effective date of any Chapter 11 plan for a loan party
  • Entry of an order approving a sale of the debtors' assets to a buyer other than the DIP lender or its designee
  • Consummation of a sale of all or substantially all of the loan parties' assets to the DIP lender or its designee
  • Acceleration following an event of default
  • The filing of any cause of action relating to the debtors, by the debtors or by a third party with the debtors' support, against the DIP lender, the prepetition secured parties, or their affiliates and related parties
  • Dismissal or conversion of any case, or appointment of a trustee or an examiner with enlarged powers
  • 35 days after the petition date if the final order has not been entered, unless the DIP lender extends the date in writing
• The obligations are payable in full in cash or in other consideration the DIP lender and the borrower agree on.
• The first seven triggers operate automatically, but the DIP lender's rights remain subject to the five-business-day waiting period.
• Once the termination date occurs, the debtors can no longer borrow or use DIP proceeds or cash collateral, except for the carve-out.

Prepayments

• Voluntary: permitted at any time in minimum principal amounts of $100,000, together with accrued interest
• Mandatory, in each case with accrued interest:
  • 100% of net cash proceeds from dispositions of DIP collateral, including insurance and condemnation proceeds. The term sheet requires payment within one business day of receipt; the proposed interim order allows until the second business day.
  • 100% of the proceeds of non-permitted debt, within three business days
• The proposed interim order also sends insurance, condemnation and similar proceeds to the DIP lender by the second business day, excluding amounts under D&O policies. Once the DIP is paid in full, proceeds from non-ordinary-course dispositions go to ZHLP as prepetition lender, up to the prepetition secured obligations.
• Proceeds cannot be reinvested without the DIP lender's prior written consent.

Milestones

• A sale of substantially all assets must be approved within 120 days and closed within 150 days of the petition date. The milestones below may each be extended or waived by the DIP lender in writing, and email is sufficient:
  • Interim order entered within three business days after the petition date
  • Motion filed within seven calendar days after the petition date seeking approval of bid procedures, entry into a stalking horse asset purchase agreement, and a sale of substantially all assets
  • Final order and bid procedures order entered within 35 days after the petition date
  • Hearing held to approve the winning bid, and sale order entered, within 120 days after the petition date
  • If the sale order approves a buyer other than the DIP lender or its designee, that buyer must, within three business days, either obtain the DIP lender's consent to extend the DIP termination date or pay the DIP obligations in full
  • Sale consummated within 150 days after the petition date
• The debtors must also take whatever actions are needed to address maturities of project-level financings that ZHI guarantees, by the following dates:
  • Ludham Phase I and Phase II land loans: Nov. 17, 2026
  • Azola Avery Centre loan: Dec. 9, 2026
  • Carpenter Fire in Cary land loan: Jan. 17, 2027
  • Hazel & Azure National Landing loan: March 25, 2027
• The debtors ask the court to schedule the final hearing early enough for the final order to be entered by the 35-day milestone.

Parties

• Borrower: ZOM Holding, Inc., which does business as Zom Living
• Guarantors: ZH Development I, LLC and ZOM Associates, Inc., along with any other affiliate that becomes a debtor. Each guarantee is joint and several, unconditional, and a guaranty of payment and performance. ZHI is the sole shareholder of ZOM Associates and the member and manager of ZH Development I.
• DIP lender: ZOM Holding, LP or its designee. ZHLP is also ZHI's prepetition secured lender.
• ZHI and ZHLP share some, but not all, indirect equityholders and have no common parent.
  • Under a management services agreement among ZHI, ZOM Associates and ZHLP, ZHI and ZOM Associates supply ZHLP with management, administrative, back-office and other services; the motion adds that ZHI provides employees essential to ZHLP's operations.
  • ZHLP pays or reimburses ZHI and ZOM Associates for those services at cost.
• How the DIP lender was selected:
  • Before filing, the team of Neil Luria, ZHI's chief restructuring officer since Jan. 27, 2026 (the budget carries SOLIC Capital Advisors as CRO), contacted ten potential financing sources. None could offer the financing the cases needed on more favorable terms.
  • The debtors concluded that priming DIP financing over ZHLP's objection was unlikely, because there was not a sufficient equity cushion. They also judged a priming fight risky given their liquidity position and the timing constraints imposed by the May 15, 2026 judgment of the Superior Court of Arizona, Maricopa County, in the Gray Services, LLC and Gray Development LLC litigation. ZHI appealed that judgment on May 26, 2026.
  • The CRO negotiated the facility at the direction of the independent directors, who approved it. The debtors state that no ZHI employees, directors or officers with a role at ZHLP were involved in the negotiations.

Prepetition Capital Structure

• At filing, approximately $3.8 million of principal and accrued interest, plus costs, fees and expenses, was outstanding under ZHI's Feb. 4, 2026 secured note held by ZHLP. The note is secured by a first-priority lien on all of ZHI's assets, and the debtors have no other material prepetition secured debt.
• ZHI ran into liquidity problems earlier in 2026, and the note was put in place to maintain access to the services and employees ZHI provides to ZHLP. Under the note, ZHLP agreed to make advances at its discretion when ZHI requested them, and ZHI used the funding to cover budget shortfalls and operating expenses.

Cash Collateral

• Approximately $94,681 in cash at filing: $94,263 in ZHI's PNC Bank checking account and $418 in ZOM Associates' PNC Bank payroll account
• Cash collateral covers all of the debtors' cash and deposits, collections of receivables, and proceeds of the prepetition collateral. ZHLP, as noteholder, holds the interest in it.
• The proposed interim order authorizes the debtors to use cash collateral through the final hearing, solely in line with the DIP documents and the applicable budget, including for adequate protection payments. The DIP lender's consent to a budget is not consent to use cash collateral or DIP loans after an event of default.
• Except as the DIP documents, the DIP orders or a further court order permit, no party may use cash collateral, or sell or dispose of DIP or prepetition collateral, without the DIP lender's consent.

Use of Proceeds

• Working capital and general corporate purposes
• Costs of administering the Chapter 11 cases, including professional fees and expenses and the carve-out
• Fees, interest and other payments under the facility, including adequate protection obligations
• All uses are subject to the budget and the permitted variance. The proposed interim order cites the need to keep the business operating, maintain relationships with vendors, and meet payroll.

Budget

• The budget projects net cash flow of negative $7.0 million over the initial 13 weeks and negative $9.6 million over the full 17 weeks presented. Receipts over those periods are $700,663 and $796,844, respectively.
• The debtors start with $94,681 of cash, and the budget projects an ending balance of $182,883.
• The budget relies on two funding sources:
  • DIP borrowings, which track non-operating disbursements (bankruptcy fees and DIP interest) week for week, totaling $4.6 million over 13 weeks and $6.5 million over 17 weeks
  • Management fees paid by ZHLP under the management services agreement, which offset weekly operating shortfalls, totaling $2.5 million and $3.2 million, respectively
• Draw schedule: $160,000 in the week beginning Nov. 2, 2026, followed by four large draws, with smaller draws in between. Each large draw coincides with budgeted payments to debtors' counsel and the CRO:
  • Week beginning Nov. 23, 2026: $1.4 million
  • Week beginning Dec. 21, 2026: $1.4 million
  • Week beginning Jan. 18, 2027: $1.4 million
  • Week beginning Feb. 22, 2027: $1.8 million
• Several of the smaller budgeted draws, including $60,000 in the week beginning Nov. 30, 2026 and $22,919 in the week beginning Dec. 28, 2026, fall below the term sheet's $100,000 minimum for later draws.
• Operating disbursements total $3.1 million over 13 weeks and $3.9 million over 17 weeks. Payroll is the largest component, at $2.0 million and $2.4 million.
• Bankruptcy fees total $4.6 million over 13 weeks and $6.4 million over 17 weeks. The 17-week figures include:
  • Baker & Hostetler (debtors' counsel): $3.0 million
  • SOLIC Capital Advisors (CRO): $1.75 million
  • DIP lender counsel: $800,000
  • Osborn Maledon (appellate counsel): $275,000
  • Independent directors' fees: $240,000
  • D&O insurance for the CRO and independent directors: $125,000
  • Angeion (noticing agent): $100,000
  • U.S. Trustee fees: $92,026
  • An unsecured creditors' committee: $25,000
• Baker & Hostetler's and SOLIC's fees for weeks 14 through 17 remain subject to budget approval.
• DIP interest expense is budgeted at $50,483 over 13 weeks and $106,820 over 17 weeks.
• The debtors may deliver updated 13-week forecasts, which become the budget once the DIP lender accepts them in its sole discretion. If the parties cannot agree, the existing budget or a budget the court approves after a hearing applies.

Permitted Variance

• Variance is tested weekly on a cumulative basis from the petition date, without counting DIP borrowings or repayments, against three limits:
  • Disbursements may not exceed 110% of budget on a line-item basis, excluding professional fees.
  • Professional fees and expenses are allowed a 0% variance.
  • Aggregate receipts may not fall below 90% of budget.
• Exceeding the permitted variance is an event of default. The permitted variance does not increase the DIP commitments.
• By 5:00 p.m. ET on the fourth business day of each week, starting after the second full week after the petition date, the borrower delivers a variance report. The report compares actual results for the prior week, and on a cumulative basis, against the budget, certifies compliance and explains variances.
• On request, the debtors also provide a carve-out report estimating unpaid accrued professional fees and projected fees for the next 30 days. They must also give the DIP lender access to their assets, books and records, and officers.

Carve Out

• Post-trigger notice cap: $200,000
• Chapter 7 Trustee Fee: $50,000
• Pre-trigger professional fees: allowed, unpaid fees of debtor and committee professionals incurred through the first business day after a trigger notice, only to the extent the budget provides for them and with a 0% cumulative variance. The proposed interim order caps this amount at the budgeted professional fees from the petition date to the trigger notice.
• U.S. Trustee and clerk fees, plus statutory interest
• The pre- and post-trigger amounts together make up the professional fee carve-out cap. Under the proposed interim order, the cap is net of unused retainers, and professionals must apply their retainers before drawing on the carve-out account.
• Carve-out account mechanics:
  • The debtors fund a segregated account outside the DIP lender's control each week, beginning on the closing date, with the next week's budgeted professional fees.
  • After a trigger notice, and before any DIP obligations are paid, the debtors may top up the account to the professional fee carve-out cap, less amounts already paid.
  • The DIP lender may not sweep or foreclose on the debtors' cash until the account is fully funded.
  • Any residual funds go first to the DIP lender and then to ZHLP as prepetition lender.
• The DIP lender may deliver a trigger notice following a continuing event of default and acceleration of the DIP obligations; the proposed interim order keys the notice to a DIP termination event and acceleration. Under that order, any fees the debtors or a committee incur during the five-business-day notice period permanently reduce the post-trigger cap.
• The carve-out ranks senior to the DIP liens and claims, the adequate protection liens and claims, and the prepetition liens. It cannot be used for restricted uses, and neither the budget nor the carve-out caps allowed professional fees.

Securities and Priorities

• The DIP obligations carry 364(c)(1) superpriority claims, subject only to the carve-out, and are secured by the following liens, subject to the carve-out and any permitted priority liens:
  • 364(d)(1): priming first-priority liens on all property subject to the prepetition liens. ZHLP supports priming its own liens.
  • 364(c)(2): first-priority liens on unencumbered property, including unencumbered cash and any unencumbered real property
  • 364(c)(3): junior liens on property subject to permitted priority liens, meaning valid, perfected liens that existed at filing and are senior to the prepetition liens
• DIP collateral covers all of each loan party's assets, including subsidiary equity, fee interests in real property, commercial tort claims, and Chapter 5 avoidance actions and their proceeds. It is backed by a negative pledge on all loan party assets.
• The DIP superpriority claims rank ahead of all administrative expenses, including 503(b) and 507(b) claims, and have recourse to all property, including avoidance actions and their proceeds.
• The DIP liens are automatically perfected on entry of the interim order. ZHLP's existing prepetition lien filings are deemed postpetition filings perfecting the DIP liens, including those securing the roll-up.
• Under section 1141(d)(4), the debtors waive any discharge of remaining DIP and adequate protection obligations. The liens and claims survive dismissal or conversion.

Avoidance Actions

• Avoidance actions are encumbered from entry of the interim order. The proposed interim order itself extends the DIP liens, the DIP superpriority claims and the adequate protection liens to Chapter 5 avoidance actions and their proceeds; the grant does not wait for the final order.

Adequate Protection

Prepetition Secured Lender (ZHLP)

• Replacement liens to the extent of any diminution in value, junior only to the carve-out, the DIP liens and permitted priority liens. The proposed interim order grants these liens on all DIP collateral, including avoidance actions, while the term sheet and motion describe them as replacement liens on the prepetition collateral.
• 507(b) superpriority claims, junior only to the carve-out and the DIP superpriority claims. ZHLP cannot receive payment on these claims until the DIP obligations are paid in full in cash or otherwise satisfied as the DIP lender agrees.
• Reimbursement of reasonable, documented fees and expenses incurred before or after filing, including those of McDermott Will & Schulte LLP:
  • Under the proposed interim order, invoices are subject to a 10-day review by the debtors, the U.S. Trustee and any committee, and are paid within five days if no one objects.
  • Under the term sheet, amounts exceeding the budget are added to the principal balance of the DIP loans.

Debtor Stipulations

• ZHI stipulates that it owed ZHLP not less than $3,773,819 of principal under the secured note at filing, without defense, counterclaim or offset.
• The debtors further stipulate that:
  • The prepetition obligations are valid and cannot be avoided.
  • Prepetition payments and transfers to ZHLP cannot be avoided or otherwise challenged.
  • The prepetition liens are valid, perfected first-priority liens that cannot be avoided, recharacterized or subordinated.
  • The motion and term sheet also contemplate a stipulation to the value of the prepetition collateral, which the proposed interim order does not carry.
• The stipulations bind the debtors on entry of the interim order. They bind the estates and all other parties, including any committee or trustee, unless successfully challenged within the challenge period.

Challenge Period and Budget

• The challenge deadline is the earlier of:
  • 60 calendar days after the petition date
  • The qualified-bid deadline set in the bid procedures order
• Any committee and any party granted standing by the court may bring a challenge. The period can be extended only with ZHLP's prior written consent or by court order. If the cases are converted, or a Chapter 11 trustee is appointed, before the period expires, the trustee gets until the later of the period's expiration and 10 calendar days after appointment.
• Challenges may target the roll-up as well as the prepetition obligations and liens. If no adversary proceeding is filed in time:
  • Challenges are barred and the stipulations bind all parties.
  • The roll-up and prepetition obligations become allowed claims, and the prepetition liens are deemed valid and perfected.
  • ZHLP receives its release as prepetition lender.
  A timely challenge preserves only the matters expressly challenged.
• Challenge budget: up to $25,000 for an official committee to investigate, but not litigate, the prepetition liens and claims. Subject to entry of the final order, committee investigation fees above that amount lose administrative expense priority.
• The proposed interim order confers no standing on any party, and the investigation rights do not signal consent to committee standing.
• Under the term sheet, commencing a timely challenge, or filing a motion to allow a late challenge or for derivative standing, is itself an event of default. Separately, a suit against ZHLP brought or supported by the debtors triggers maturity.

Releases

• Effective on entry of the final order, the debtors and their estates release ZHLP, as both DIP lender and prepetition lender, from all claims and obligations arising on or before the date of the final order. The release covers lender liability claims, equitable subordination, Bankruptcy Code claims, and challenges to the validity, priority or avoidability of ZHLP's liens or claims.
• Each release covers only acts or omissions in the applicable capacity. The prepetition lender release remains subject to the challenge rights; the DIP lender release does not. No release relieves the debtors of the prepetition or DIP obligations.

Credit Bid

• The DIP lender may credit bid the full DIP obligations under section 363(k), with any credit bid of the roll-up subject to the challenge rights. Credit bids may be made in a section 363 sale, a sale under a plan, or a sale by a Chapter 7 trustee, and the DIP lender may assign the right to an acquisition entity or joint venture.
• ZHLP may also credit bid the full prepetition obligations, subject to the challenge rights and to either satisfaction of the DIP obligations or the DIP lender's consent.
• Any order materially limiting the right to credit bid is an event of default.
• A sale order approving a buyer other than the DIP lender or its designee triggers maturity, and that buyer must repay the DIP in full or obtain an extension within three business days. A sale to the DIP lender matures the facility on consummation.

Waivers

• Subject to entry of the final order, and retroactive to the petition date under the proposed interim order:
  • Section 506(c): no surcharge of DIP or prepetition collateral, other than the carve-out
  • Section 552(b): the equities-of-the-case exception will not apply
  • Marshaling: the DIP lender and ZHLP are not subject to marshaling
  • Lease and contract terms that require landlord or third-party consent, or fees to a governmental entity, before a leasehold interest is transferred are unenforceable against the DIP and adequate protection liens, effective on entry of the final order without retroactivity
• Until the DIP, prepetition and adequate protection obligations are paid in full, the debtors waive the right to seek or consent to:
  • Conversion or dismissal
  • Appointment of a trustee or an examiner with enlarged powers
  • Without the DIP lender's consent, any modification of the interim order, or any claim or lien equal or senior to the DIP or adequate protection claims

Covenants

• Negative covenants: without the DIP lender's prior written consent, the debtors may not take on new debt or liens or make non-ordinary-course asset dispositions. These limits extend to nondebtor subsidiaries, and the debtors may not spend outside the budget.
• Under the proposed interim order, the debtors must obtain the DIP lender's written consent at least five days before seeking court authority to use, sell or lease material assets outside the ordinary course.
• Affirmative covenants require the debtors to:
  • Meet the milestones and deliver budgets, variance reports and requested information
  • Provide copies of material pleadings at least two days before filing. Pleadings relating to the DIP, the liens, the collateral or the sale must be reasonably acceptable to the DIP lender in its sole discretion.
  • Maintain insurance naming the DIP lender as additional insured and lender's loss payee
  • At the DIP lender's request, address maturities of project-level financings ZHI guarantees

Events of Default

• The term sheet and DIP orders list events of default, each of which the DIP lender may waive only in writing, including:
  • Payment defaults, including on adequate protection payments; covenant breaches, subject to any agreed cure periods; material breaches of representations; invalidity of a material DIP document provision; any violation of a material term of a DIP order by the debtors; and failure to deliver lien-perfection documents
  • A change in ownership or control
  • Failure to comply with the budget, including the permitted variance, or a missed milestone that is not extended or waived in writing
  • Filing of a plan that does not repay the DIP obligations in full in cash on the effective date, unless the DIP lender gives prior written consent
  • A debtor pleading seeking to vacate or modify a DIP order over the DIP lender's objection; entry of an order modifying a DIP order without consent; or reversal, vacatur or stay of a DIP order that is not reversed within 10 business days
  • Third-party 364(d) financing that does not repay the DIP in full, or a superpriority claim or lien senior to or pari passu with the DIP claims
  • Commencement of a timely challenge; a motion to allow a late challenge or for derivative standing; any order in favor of a challenger or adverse to the DIP lender or prepetition lender on the prepetition obligations or liens, including a grant of standing; or the debtors seeking or supporting a challenge to the prepetition secured documents
  • Dismissal or conversion of the case of a debtor with material assets, appointment of a Chapter 11 trustee or an examiner with enlarged powers, or any debtor motion seeking any of these
  • Court termination of cash collateral use, or payment of or adequate protection on prepetition debt beyond what the DIP documents permit
  • Any order materially limiting the right to credit bid the DIP or prepetition obligations, or a section 363 sale motion the DIP lender has not approved
  • Expiration or termination of plan exclusivity for a debtor with material assets, unless the DIP lender or prepetition lender sought it
  • Allowance of any 506(c) claim, subject to entry of the final order; intercompany subrogation or contribution claims before the DIP is paid in full; the DIP liens or claims ceasing to be valid; any order avoiding DIP payments; or a debtor asserting that the guarantee is invalid
  • Stay relief granted without the DIP lender's consent. The one exception is relief allowing ZHI to pursue its May 26, 2026 appeal in the Gray Services and Gray Development litigation.
• Failing to pay DIP lender expenses that the budget does not provide for is not an event of default.

Remedies

• After an event of default and five business days' notice, which may be given by email, the automatic stay lifts for the DIP lender and ZHLP without further court order.
• The proposed interim order defines a DIP termination event to include any event of default, any failure to comply with the order or the term sheet covenants, and the DIP termination date. When one occurs, authority to use cash collateral and DIP proceeds terminates and the DIP obligations become due, subject to the notice period.
• Once the period runs:
  • The DIP lender may terminate, reduce or restrict the commitments, accelerate, charge default interest, terminate cash collateral use (subject to the carve-out), deliver a carve-out trigger notice, and enforce against the collateral.
  • ZHLP, as prepetition lender, may also exercise remedies, subject to the DIP obligations, permitted priority liens and the carve-out.
• During the period, the debtors may seek an emergency hearing. If the court cannot hear the matter in time, the period extends automatically, to the hearing date under the proposed interim order and until the court has ruled under the term sheet. The court may consider only whether an event of default has occurred or is continuing; whether the maturity date has occurred is not open for review.
• During the period, the proposed interim order limits use of cash collateral and of DIP proceeds drawn before the termination event to preserving going-concern value and funding the carve-out account, with the permitted variance reduced to 0%; the term sheet would also allow spending to contest the default in good faith.