CRGE Charge Enterprises Inc

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	CHARGE ENTERPRISES, INC.
	(Exact name of registrant as specified in its charter)

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Delaware		001-41354		90-0471969
(State or other jurisdiction of incorporation)		(Commission file number)		(I.R.S. Employer  Identification No.)

125 Park Avenue, 25th Floor New York, NY		10017
(Address of principal executive offices)		(Zip Code)

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.0001		CRGE		*

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1.

an order approving debtor-in-possession financing and use of cash collateral on an interim basis (the “Interim DIP Order”) [Dkt. 59], described in more detail below;

2.

an order (a) scheduling a hearing to seek approval of the Debtor’s combined disclosure statement (the “Disclosure Statement”) and the Plan (the Plan, together with the Disclosure Statement, the “Combined DS & Plan”), (b) establishing an objection deadline for the Combined DS & Plan, (c) approving solicitation and notice procedures for the Combined DS & Plan, (d) approving notice and objection procedures for executory contracts, and (e) addressing the requirements regarding the filing of the Debtor’s statements of assets and liabilities and schedules of financial affairs (the “Solicitation Procedures Order”) [Dkt. 58], described in more detail below;

3.

an order establishing notification procedures and approving restrictions on certain transfers of, or worthless stock deductions with respect to, stock of the Debtor on an interim basis (the “Interim Stock Procedures Order”) [Dkt. 54], described in more detail below;

4.

an order authorizing the Debtor to pay certain claims of trade creditors [Dkt. 51];

5.

an order authorizing the Debtor to pay outstanding pre-petition employee obligations and continue employee benefit programs [Dkt. 53];

6.

an order allowing the Debtor to continue to use its existing bank accounts and cash management system [Dkt. 55];

7.

an order authorizing the Debtor to redact certain personally identifiable information and modifying certain notice requirements related to equity security holders [Dkt. 52] (the “Notice Procedures Order”); and

8.

an order approving Epiq Corporate Restructuring, LLC (“Epiq”) as the Claims and Noticing Agent, including maintaining the publicly-available website for the Bankruptcy Case available at: https://dm.epiq11.com/case/charge-enterprises/info [Dkt. 50].  The documents and other information available via website or elsewhere are not part of this Form 8-K and shall not be deemed incorporated herein.

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be in writing;

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comply with the Bankruptcy Rules and the Local Rules;

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state the name and address of the objecting party and the amount and nature of the Claim or Interest beneficially owned by such entity (as each such term is defined by the Bankruptcy Code);

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state with particularity the legal and factual basis for such objections, and, if practicable, a proposed modification to the Combined D.S. and Plan that would resolve such objection; and

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be filed with the Bankruptcy Court with proof of service thereof and served so as to be actually received no later than 4:00 p.m. (prevailing Eastern Time) on April 12, 2024, by (i) proposed counsel to the Debtor, Faegre Drinker Biddle & Reath LLP, 222 Delaware Ave., Suite 1410, Wilmington, DE 19801, Attn: Patrick Jackson (patrick.jackson@faegredrinker.com), Ian Bambrick (ian.bambrick@faegredrinker.com) and Sarah Silveira (sarah.silveira@faegredrinker.com); (ii) counsel to any official committee of unsecured creditors appointed in this Chapter 11 Case; (iii) the Office of the United States Trustee for the District of Delaware, J. Caleb Boggs Federal Building, 844 King Street, Suite 2207, Lockbox 35, Wilmington, DE 19801, Attn: Rosa Sierra-Fox, Esq. (rosa.sierra-fox@usdoj.gov); and (iv) counsel to the DIP Lender, White & Case LLP, 1221 Avenue of the Americas, New York, New York 10020, Attn: Harrison Denman (harrison.denman@whitecase.com), Laura Garr (laura.garr@whitecase.com), and Trudy Smith (trudy.smith@whitecase.com), and Richards, Layton & Finger, P.A., 920 N. King Street | Wilmington, DE 19801, Attn: Paul N. Heath (heath@rlf.com) and Amanda R. Steele (steele@rlf.com).

Exhibit Number		Description
10.1		Interim DIP Order, including the DIP Term Sheet as Exhibit 1 thereto.
99.1		Solicitation Procedures Order.
99.2		Combined Hearing Notice.
99.3		Interim Stock Procedures Order.
99.4		Debtor's Combined Disclosure Statement and Prepackaged Chapter 11 Plan of Reorganization.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

	CHARGE ENTERPRISES, INC.
	By:	/s/ Leah Schweller
		Leah Schweller Chief Financial Officer

Exhibit 10.1

 

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

 

 

In re: CHARGE ENTERPRISE, INC. Debtor.

) ) ) ) ) ) )

Chapter 11 Case No. 24-10349 (TMH)

 

 

INTERIM ORDER PURSUANT TO
SECTIONS 105, 361, 362, 363, AND 364 OF THE BANKRUPTCY
CODE AND RULES 2002, 4001, 6004 AND 9014 OF THE FEDERAL RULES
OF BANKRUPTCY PROCEDURE (A) AUTHORIZING THE DEBTOR TO (I) USE
CASH COLLATERAL, (II) OBTAIN SENIOR SECURED SUPERPRIORITY
POSTPETITION FINANCING AND GRANTING LIENS AND SUPERPRIORITY
ADMINISTRATIVE CLAIMS, AND (III) PROVIDE ADEQUATE PROTECTION,
(B) SCHEDULING A FINAL HEARING, AND (C) GRANTING RELATED RELIEF

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Upon the motion, dated March 7, 2024 (the “Motion”) of Charge Enterprises, Inc., as debtor and debtor in possession (the “Debtor” or “Borrower”) in the above-captioned chapter 11 case (the “Chapter 11 Case”), for the entry of an order pursuant to sections 105, 361, 362, 363, and 364 of title 11 of the United States Code (as amended, the “Bankruptcy Code”), rules 2002, 4001, 6004, and 9014 of the Federal Rules of Bankruptcy Procedure (as amended, the “Bankruptcy Rules”) and rules 2002-1, 4001-2, 9006-1, and 9013-1 of the Local Rules of Bankruptcy Practice and Procedure for the District of Delaware (the “Local Rules”) (A) authorizing the Debtor to (I) use cash collateral, (II) obtain senior secured superpriority postpetition financing and granting liens and superpriority administrative expenses claims and, and (III) provide adequate protection, (B) scheduling interim and final hearings, and (C) granting related relief, the Debtor sought, among other things, the following relief:

 

(i)    the Court’s authorization, pursuant to sections 363 and 364(c)(1), (2), (3), and (d)(1) of the Bankruptcy Code, for the Debtor (in such capacity, the “DIP Borrower”) to obtain a senior secured superpriority debtor-in-possession financing facility (the “DIP Facility”) consisting of a multiple-draw senior secured priming term loan facility pursuant to the terms herein, the terms and conditions set forth in the term sheet attached hereto as Exhibit 1 (as may be amended, restated, supplemented or otherwise modified from time to time, in each case with the consent of the DIP Lender (as defined below), the “DIP Term Sheet”), and, if and when applicable in accordance with the DIP Term Sheet, a credit agreement governing the DIP Facility on the terms and conditions set forth in the DIP Term Sheet and as otherwise agreed to by the Debtor and DIP Secured Parties (as defined below) (the “DIP Credit Agreement” and, collectively with this order, this “Interim Order”, the Final Order (as defined below), the DIP Budget (as defined below), and all other agreements, documents, and instruments delivered or executed in connection therewith to the extent that the DIP Agent (as defined below) and the DIP Lenders determine there is a need for such other agreements, documents, and instruments, in each case as amended, restated, supplemented, or otherwise modified from time to time, the “DIP Loan Documents”) provided by AI Amped I, LLC (as successor and assignee, “Amped I”), as administrative agent and collateral agent (collectively, in such capacities, together with any successor administrative agents and collateral agents, the “DIP Agent”), and as a lender (in such capacity, together with any successors and assigns permitted under the DIP Loan Documents, the “DIP Lender” and, together with the DIP Agent, the “DIP Secured Parties”), which DIP Facility shall be available, subject to the terms and conditions set forth in this Interim Order and the other DIP Loan Documents, (1) during the period (the “Interim Period”) from the date hereof through and including the earlier to occur of (x) the date of entry of the Final Order by this Court and (y) the Termination Date (as defined below) in a single draw in an aggregate principal amount not to exceed $4,000,000 (the “Initial DIP Loan”) and (2) with the remaining amount to be drawn in subsequent draws upon or after entry of the Final Order (the “Subsequent DIP Loans”), in an aggregate principal amount not to exceed $10,000,000 (less the aggregate principal amount drawn with respect to the Initial DIP Loan), provided that the Borrower may not borrow less than $500,000 in any individual subsequent borrowing, and no Subsequent DIP Loan shall be requested or made within three (3) business days of a prior Subsequent DIP Loan (the Initial DIP Loan and each Subsequent DIP Loan, collectively, the “DIP Loans”);

 

 

(ii)    the Court’s authorization for the Debtor to execute, deliver, and perform, as applicable, under the DIP Term Sheet and all other DIP Loan Documents, and to perform such other and further acts as may be necessary or appropriate in connection therewith;

 

(iii)    the Court’s authorization for the Debtor to use proceeds of the DIP Loans solely in accordance with the budget and cash flow forecast prepared by the Debtor and annexed hereto as Exhibit 2 (as updated from time to time in accordance with the terms of the DIP Term Sheet and the other DIP Loan Documents, subject to the prior approval of the DIP Lender in its sole discretion, the “DIP Budget”), subject to the variances permitted under the DIP Term Sheet and as otherwise provided herein and in the other DIP Loan Documents;

 

(iv)    the Court’s authorization to grant to the DIP Agent, for the benefit of the DIP Secured Parties, in respect of the DIP Obligations (as defined below), a superpriority administrative claim pursuant to section 364(c)(1) of the Bankruptcy Code and first priority priming liens on and security interests in substantially all assets and property of the Debtor (now owned or hereafter acquired) pursuant to sections 364(c)(2), (c)(3), and (d)(1) of the Bankruptcy Code, in each case as and to the extent, set forth more fully below and in the DIP Loan Documents (including the DIP Term Sheet);

 

(v)    the Court’s authorization for the Debtor to use “cash collateral” as such term is defined in section 363 of the Bankruptcy Code in which the Prepetition Secured Parties (as defined below) or the DIP Secured Parties has an interest (the “Cash Collateral”) solely in accordance with the DIP Budget and the DIP Term Sheet, subject to the variances permitted under the DIP Term Sheet;

 

(vi)    the Court’s authorization to grant, as of the Petition Date, adequate protection for the benefit of the Prepetition Secured Parties, as set forth more fully below, including the Adequate Protection Superpriority Claim, Adequate Protection Liens, and Adequate Protection Payments (each as defined below), to the extent of and as compensation for any Diminution in Value (as defined below), the payment of fees and expenses of the Prepetition Agent (as defined below) and the Prepetition Secured Parties;

 

(vii)    the modification or waiver by the Court of the automatic stay imposed by section 362 of the Bankruptcy Code and any other applicable stay (including Bankruptcy Rule 6004) to the extent necessary to implement and effectuate the terms and provisions of the DIP Facility and this Interim Order and the other DIP Loan Documents, and to provide for the immediate effectiveness of this Interim Order;

 

(viii)    the scheduling by the Court of an interim hearing (the “Interim Hearing”) to consider entry of this Interim Order;

 

(ix)    the scheduling by the Court of a final hearing (the “Final Hearing”) to consider entry of an order (the “Final Order”) granting the relief requested in the Motion on a final basis and approving the form of notice with respect to the Final Hearing and the transactions contemplated by the Motion; and

 

(x)    approval of the Final Order.

 

The Court having considered the Motion, the terms of the DIP Facility and the DIP Loan Documents (including the DIP Term Sheet), the Declaration of Craig Harper-Denson in Support of Debtor’s Chapter 11 Petition and First Day Motions and Applications, the Karotkin Declaration, and the evidence submitted at the Interim Hearing held before this Court on March 8, 2024, to consider entry of this Interim Order; and it appearing that approval of the interim relief requested in the Motion is necessary to avoid immediate and irreparable harm to the Debtor pending the Final Hearing and is otherwise fair and reasonable and in the best interests of the Debtor, its creditors, and its estate, and essential for the continued operation of the Debtor’s business; and all objections, if any, to the entry of this Interim Order having been withdrawn, resolved, or overruled by the Court; and after due deliberation and consideration, and for good and sufficient cause appearing therefor:

 

 

THE COURT HEREBY MAKES THE FOLLOWING FINDINGS OF FACT AND CONCLUSIONS OF LAW:

 

A.    Petition Date. On March 7, 2024, (the “Petition Date”), the Debtor filed voluntary petitions under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware (the “Court”). The Debtor has continued in the management and operation of its business and property as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in the Chapter 11 Case.

 

B.    Jurisdiction and Venue. The Court has jurisdiction over this proceeding, pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference dated February 29, 2012, from the United States District Court for the District of Delaware. Consideration of the Motion constitutes a core proceeding under 28 U.S.C. § 157(b)(2), and the Court may enter a final order consistent with Article III of the United States Constitution. Venue for the Chapter 11 Case and the proceeding on the Motion is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409.

 

C.    Committee Formation. As of the date hereof, no official committee of unsecured creditors has been appointed in the Chapter 11 Case pursuant to section 1102 of the Bankruptcy Code (a “Committee”).

 

D.    Notice. The Interim Hearing was held pursuant to Bankruptcy Rule 4001(b)(2) and (c)(2). Notice per the Local Rules of the Interim Hearing and the relief requested in the Motion has been provided to (a) the Office of the United States Trustee for the District of Delaware (the “U.S. Trustee”), (b) counsel to the Prepetition Secured Parties and DIP Secured Parties, (c) all other parties asserting a lien on or a security interest in the assets of the Debtor to the extent reasonably known to the Debtor, (d) the Office of the United States Attorney General for the State of Delaware, (e) the Internal Revenue Service, (f) those creditors holding the 30 largest unsecured claims against the Debtor’s estate (excluding insiders), (g) the Securities and Exchange Commission, and (h) all parties who have filed a notice of appearance and request for service of papers pursuant to Bankruptcy Rule 2002 (the “Notice Parties”). Under the circumstances, such notice of the Interim Hearing and the relief requested in the Motion is appropriate notice and complies with section 102(1) of the Bankruptcy Code, Bankruptcy Rules 2002 and 4001(b) and (c), and the Local Rules.

 

E.    Prepetition Indebtedness.

 

(i)    Prepetition Notes. The Borrower, as Issuer, is a party to the following:

(a)

that certain Securities Purchase Agreement dated as of May 8, 2020 (as amended, modified, supplemented, and restated prior to the date hereof, the “May 2020 SPA”) pursuant to which the Debtor (f/k/a GoIP Global, Inc.) agreed to issue, among other things, certain Original Issue Discount Senior Secured Convertible Promissory Notes due May 8, 2023 (the “May 2020 Convertible Notes”) to AI Amped II, LLC (as successor and assignee, “AI Amped II” and, collectively with AI Amped I and the Prepetition Agent (as defined below), the “Prepetition Secured Parties”) in the amounts and manner set forth in the May 2020 SPA;

 

(b)

that certain Securities Purchase Agreement dated as of November 3, 2020 (as amended, modified, supplemented, and restated prior to the date hereof, the “November SPA”) pursuant to which the Debtor (f/k/a Transworld Holdings, Inc.) agreed to issue, among other things, certain Original Issue Discount Senior Secured Convertible Promissory Notes due November 3, 2023 (the “November Notes”) to AI Amped II in the amounts and manner set forth in the November SPA;

 

(c)

that certain Securities Purchase Agreement dated as of May 19, 2021 (as amended, modified, supplemented, and restated prior to the date hereof, the “May 2021 SPA”) pursuant to which the Debtor issued that certain Original Issue Discount Senior Secured Non-Convertible Promissory Notes due November 19, 2023 (the “May 2021 Non-Convertible Notes”) to AI Amped I and Original Issue Discount Senior Secured Convertible Promissory Notes due May 19, 2024, to AI Amped II (the “May 2021 Convertible Notes” and, together with the May 2020 Convertible Notes and November Notes, the “Prepetition Convertible Notes”) in the amounts and manner set forth in the May 2021 SPA;

 

(d)

that certain Securities Purchase Agreement dated as of December 17, 2021 (as amended, modified, supplemented, and restated prior to the date hereof, the “December SPA,” and together with the May 2020 SPA, the November SPA, and the May 2021 SPA, the “Prepetition Securities Purchase Agreements”) pursuant to which the Debtor agreed to issue (1) certain Original Issue Discount Senior Secured Non-Convertible Promissory Notes due November 19, 2023, (the “December Non-Convertible Notes” and together with the May 2021 Non-Convertible Notes, the “Prepetition Non-Convertible Notes” and, collectively with the Convertible Notes, the “Prepetition Notes”) to AI Amped I and (2) 2,370,370 shares of Series C preferred stock and warrants to purchase the Debtor’s common stock in the amounts and manner set forth in the December SPA;

 

(e)

that certain Exchange Agreement dated as of June 30, 2022 (as amended, modified, supplemented, and restated prior to the date hereof, the “Prepetition Exchange Agreement”); and

 

(f)

that certain Security Agreement dated as of December 17, 2021 (as amended, modified, and supplemented from time to time, the “Security Agreement” and, together with the Prepetition Securities Purchase Agreements, Prepetition Exchange Agreement, the Prepetition Notes, and all other agreements, documents, and instruments executed or delivered in connection therewith, including, without limitation, all notes, guarantees, mortgages, Uniform Commercial Code financing statements, and fee letters, each as may be amended, restated, supplemented or otherwise modified prior to the Petition Date, collectively, the “Prepetition Notes Documents”) pursuant to which the Debtor and certain of its direct and indirect subsidiaries granted to AI Amped I (in its capacity as agent, the “Prepetition Agent”), on behalf of the Prepetition Secured Parties, a security interest in and lien (the “Prepetition Liens”) on all Prepetition Collateral (as defined below) to secure the prompt payment, performance, and discharge in full of all of the Debtor’s Prepetition Obligations (as defined below) under the Prepetition Notes Documents.

 

 

(ii)    Certain direct and indirect subsidiaries of the Debtor are guarantors under that certain Guaranty Agreement dated as of December 17, 2021, (as amended, modified, and supplemented from time to time) (collectively, the “Prepetition Notes Guarantors”) and have guaranteed as co-obligors the prompt payment of all outstanding amounts (including without limitation all costs and expenses, principal, premiums, and interest) owed to the Prepetition Secured Parties under the Prepetition Notes.

F.    Stipulations as to Prepetition Obligations. Without limiting the rights of any party in interest as and to the extent set forth in paragraph 11 hereof, after consultation with its attorneys, the Debtor permanently, immediately, and irrevocably acknowledges, represents, stipulates, and agrees with the provisions set forth in this paragraph F, the “Stipulations”:

 

(i)    Prepetition Obligations. As of the Petition Date, the Debtor is indebted and liable to the Prepetition Secured Parties under the Prepetition Notes Documents, without objection, defense, counterclaim, or offset of any kind, in the aggregate amount of not less than $51,000,000.00 with respect to the Prepetition Notes (on account of principal and certain accrued and unpaid prepetition interest, fees and damages), plus accrued and accruing (both before and after the Petition Date) and unpaid interest (including at the default rate), interest late fees, liquidated damages, other fees and expenses, and all other obligations under the Prepetition Notes Documents, including any and all attorneys’, accountants’, consultants’, appraisers’ and financial and other advisors’ fees that are chargeable or reimbursable under the Prepetition Notes Documents (collectively, the “Prepetition Obligations”).

 

(ii)    Enforceability, Etc. of the Prepetition Obligations. The Prepetition Notes Documents and the Prepetition Obligations are (a) legal, valid, binding, and enforceable against the Debtor and (b) not subject to any contest, attack, objection, recoupment, defense, counterclaim, offset, subordination, re-characterization, avoidance, or other claim, cause of action, or other challenge of any kind or nature under the Bankruptcy Code, under applicable non-bankruptcy law or otherwise.

 

(iii)    Validity, Perfection, and Priority of the Prepetition Liens. The Prepetition Liens granted by the Debtor under the Prepetition Notes Documents to the Prepetition Agent for the benefit of the Prepetition Secured Parties as security for the Prepetition Obligations encumber all Collateral (as defined in the Security Agreement), which includes substantially all assets of the Debtor, including but not limited to all personal property of the Debtor of every kind and nature, wherever located, including goods, instruments, documents, accounts, chattel paper, deposit accounts, letter-of-credit rights, commercial tort claims, securities and other investment property, intellectual property, computer software, intercompany obligations, general intangibles, supporting obligations and all proceeds thereof (collectively, the “Prepetition Collateral”). The Prepetition Liens on the Prepetition Collateral have been properly recorded and perfected under applicable law and are legal, valid, binding, enforceable, non-avoidable, and not subject to contest, avoidance, attack, offset, recharacterization, subordination, or other challenge of any kind or nature under the Bankruptcy Code, under applicable nonbankruptcy law, or otherwise, and were granted to or for the benefit of the Prepetition Secured Parties for fair consideration and reasonably equivalent value. As of the Petition Date, (a) the Prepetition Liens are senior in priority over any and all other liens on the Prepetition Collateral, subject only to any liens that were permitted under the Prepetition Securities Purchase Agreements, which, as of the Petition Date, were senior to the Prepetition Liens (solely to the extent any such Prepetition Permitted Liens were (i) valid, properly perfected, and non-avoidable as of the Petition Date or (ii) perfected after the Petition Date solely to the extent permitted by section 546(b) of the Bankruptcy Code), (b) the Prepetition Obligations constitute legal, valid, binding, and non-avoidable obligations of the Debtor enforceable in accordance with the terms of the Prepetition Notes Documents, (c) no offsets, recoupments, challenges, objections, defenses, claims, or counterclaims of any kind or nature to any of the Prepetition Liens or Prepetition Obligations exist, and no portion of the Prepetition Liens or Prepetition Obligations is subject to any challenge or defense including avoidance, disallowance, disgorgement, recharacterization, or subordination (equitable or otherwise) pursuant to the Bankruptcy Code or any other applicable law, and (d) the Debtor and its estate have no claims, objections, challenges, causes of action, and/or choses in action, including avoidance claims under Chapter 5 of the Bankruptcy Code or applicable state law equivalents or actions for recovery or disgorgement, against any of the Prepetition Secured Parties or any of its respective affiliates, agents, attorneys, advisors, professionals, officers, directors, and employees arising out of, based upon, or related to the Prepetition Notes Documents, (e) the Debtor has waived, discharged, and released any right to challenge any of the Prepetition Obligations, the priority of the Debtor’s obligations thereunder, and the validity, extent, perfection, and priority of the liens securing the Prepetition Obligations, and (f) the Prepetition Obligations constitute allowed, secured claims within the meaning of sections 502 and 506 of the Bankruptcy Code.

 

(iv)    Indemnity. The Prepetition Secured Parties and the DIP Secured Parties and their Related Parties (as defined below) have acted in good faith and without negligence, misconduct, or violation of public policy or law, in respect of all actions taken by them in connection with or related in any way to negotiating, implementing, documenting, or obtaining requisite approvals of the DIP Facility and the use of Cash Collateral, including in respect of the granting of the DIP Liens, the DIP Superpriority Claim, the Adequate Protection Liens, the Adequate Protection Superpriority Claim (each as defined below), and any of the other rights, privileges, remedies, and protections granted hereunder or under the DIP Loan Documents (including the DIP Term Sheet), any challenges or objections to the DIP Facility or the use of Cash Collateral, and all documents related to and all transactions contemplated by the foregoing. Accordingly, without limitation to any other right to indemnification (including any and all rights of the Prepetition Secured Parties to indemnification under the Prepetition Notes Documents), the DIP Secured Parties and, subject to paragraph 11 hereof, the Prepetition Secured Parties and each of their respective affiliates, officers, directors, fiduciaries, employees, agents, advisors, attorneys, successors, predecessors, assignors, assignees, funds, and representatives, in each case solely in their capacities as such (collectively, the “Related Parties”) shall be and hereby are indemnified and held harmless by the Debtor in respect of any claim or liability incurred in respect thereof or in any way related thereto. No exception or defense in contract, law, or equity exists as to any obligation set forth, as the case may be, in this paragraph F(iv), in the Prepetition Notes Documents, or in the DIP Term Sheet, to indemnify and/or hold harmless any Prepetition Secured Party, DIP Secured Party, and any Related Party, as the case may be, and any such defenses are hereby waived.

 

(v)    No Control. None of the DIP Secured Parties or Prepetition Secured Parties are control persons or insiders of the Debtor or any of its affiliates by virtue of any of the actions taken with respect to, in connection with, related to, or arising from the DIP Facility, the DIP Loan Documents (including the DIP Term Sheet), and/or the Prepetition Notes Documents.

 

(vi)    No Claims, Causes of Action. As of the date hereof, there exist no claims or causes of action against any of the Prepetition Secured Parties, the DIP Secured Parties, or their Related Parties with respect to, in connection with, related to, or arising from the Prepetition Notes Documents and/or the DIP Loan Documents (including the DIP Term Sheet) that may be asserted by the Debtor or any other person or entity.

 

 

(vii)    Cash Collateral. Any and all of the Debtor’s cash, whether existing as of the Petition Date or thereafter, wherever located (including, without limitation, all cash or cash equivalents in the control of or on deposit or maintained by the Debtor in any account or accounts, any amounts generated by the sale or other disposition of Prepetition Collateral, and all income, proceeds, products, rents or profits of any Prepetition Collateral), constitutes Cash Collateral of the Prepetition Secured Parties.

(viii)    Default. The Debtor is in default under the Prepetition Notes Documents, including as a result of the Chapter 11 Case, and an event of default has occurred under the Prepetition Note Documents.

 

(ix)    Release. Effective as of the date of entry of this Interim Order, the Debtor and its estate hereby forever and irrevocably release and discharge all former, current and future (a) DIP Secured Parties, (b) Prepetition Secured Parties (subject to paragraph 11 hereof), (c) the Related Parties, (d) affiliates of the DIP Secured Parties and Prepetition Secured Parties, and (e) officers, employees, directors, agents, representatives, owners, members, partners, financial and other advisors and consultants, legal advisors, shareholders, managers, accountants, attorneys, investment committee members, sub advisors and predecessors and successors in interest of each of the DIP Secured Parties and Prepetition Secured Parties and each of their respective Affiliates, in each case acting in their respective capacities as such and for the avoidance of doubt excluding any former or current officers, directors, financial advisors and other consultants of the Debtor and Korr Acquisitions Group, Inc. (collectively, the “Releasees”) of and from any and all claims, demands, liabilities, responsibilities, disputes, remedies, causes of action, indebtedness and obligations, rights, assertions, allegations, actions, suits, controversies, proceedings, losses, damages, injuries, attorneys’ fees, costs, expenses, or judgments of every type, whether known, unknown, asserted, unasserted, suspected, unsuspected, accrued, unaccrued, fixed, contingent, pending or threatened including, without limitation, all legal and equitable theories of recovery, arising under common law, statute or regulation or by contract, of every nature and description, arising prior to the Petition Date and arising out of, in connection with, or relating to the Prepetition Notes, the DIP Facility, the DIP Loan Documents (including the DIP Term Sheet), the Prepetition Notes Documents, and/or the transactions contemplated hereunder or thereunder including, without limitation, (x) any so-called “lender liability” or equitable subordination claims or defenses, (y) any and all claims and causes of action arising under the Bankruptcy Code, and (z) any and all claims and causes of action with respect to the validity, priority, perfection, or avoidability of the liens or claims of any of the Prepetition Secured Parties or the DIP Secured Parties, except to the extent any such claim, damage, loss, liability, or expense is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such Releasee’s actual fraud or willful misconduct; provided that nothing in this paragraph is intended to limit or release any commitments and obligations of any of the DIP Secured Parties under the DIP Term Sheet. The Debtor further waives and releases any defense, right of counterclaim, right of setoff or deduction to the payment of the Prepetition Secured Obligations and the DIP Obligations which the Debtor now has or may claim to have against the Releasees arising out of, connected with, or relating to any and all acts, omissions, or events occurring prior to the entry of this Interim Order by the Court.

 

(x)    Sale and Credit Bidding. The DIP Secured Parties and the Prepetition Secured Parties shall have the right to credit bid (independently or together) up to the full amount of the applicable outstanding Prepetition Obligations (including any Adequate Protection Superpriority Claims) and the DIP Obligations, in each case including, without limitation, any accrued interest and fees, in a sale of any DIP Collateral or Prepetition Collateral, as applicable, and whether such sale is effectuated through sections 363 or 1129 of the Bankruptcy Code, or otherwise.

 

G.    Immediate Need for Postpetition Financing and Use of Cash Collateral. The Debtor has requested immediate entry of this Interim Order pursuant to Bankruptcy Rules 4001(b)(2) and (c)(2). Good cause has been shown for entry of this Interim Order. An immediate need exists for the Debtor to use Cash Collateral on an interim basis and to obtain credit in an amount up to the Initial DIP Loan pursuant to this Interim Order and the DIP Term Sheet in order to, among other things, enable the orderly continuation of its operations and to administer and preserve the value of its estate. In the absence of the immediate availability of such funds and liquidity in accordance with the terms hereof, the ability of the Debtor to maintain business relationships with its vendors, suppliers, licensors, licensees, and customers, to retain and pay its employees and otherwise finance its operations, including to continue to operate as a going concern, would not be possible, and immediate and irreparable harm to the Debtor and its estate and creditors would occur. Thus, the ability of the Debtor to preserve and maintain the value of its assets and maximize returns for creditors requires the availability of working capital from the DIP Loans and the use of Cash Collateral.

 

H.    No Credit Available on More Favorable Terms. The Debtor has been unable to obtain on more favorable terms and conditions than those provided in this Interim Order, including for (a) adequate unsecured credit allowable under section 503(b)(1) of the Bankruptcy Code as an administrative expense, (b) credit for money borrowed with priority over any or all administrative expenses of the kind specified in sections 503(b) or 507(b) of the Bankruptcy Code, (c) credit for money borrowed secured by a lien on property of the estate that is not otherwise subject to a lien, or (d) credit for money borrowed secured by a junior lien on property of the estate which is subject to a lien. The Debtor is unable to obtain credit for borrowed money without granting the DIP Liens and the DIP Superpriority Claim (as defined below) to (or for the benefit of) the DIP Secured Parties and without granting the adequate protection as set forth herein (in each case, subject to the Carve Out (as defined below)).

 

I.    Use of Cash Collateral and Proceeds of the DIP Facility, DIP Collateral, and Prepetition Collateral. The Debtor represents and stipulates that all of the Debtor’s cash, cash equivalents, negotiable instruments, investment property, and securities constitute Cash Collateral of the Prepetition Agent on behalf of the Prepetition Secured Parties and the DIP Agent on behalf of the DIP Secured Parties. All Cash Collateral, all proceeds of the Prepetition Collateral and the DIP Collateral (as defined below), including proceeds realized from any sale or disposition thereof, or from payment thereon, and all proceeds of the DIP Facility (net of any amounts used to pay fees, costs, and expenses payable under the DIP Facility pursuant to this Interim Order or the Final Order) shall be used or applied in accordance with the terms and conditions of this Interim Order, the DIP Budget (subject to variances permitted under the DIP Term Sheet), and the DIP Loan Documents (including the DIP Term Sheet) and for no other purpose.

 

 

J.    Adequate Protection for the Prepetition Secured Parties. The Prepetition Secured Parties have negotiated in good faith regarding the Debtor’s use of the Prepetition Collateral (including the Cash Collateral) to fund the administration of the Debtor’s estate and the continued operation of its business, in accordance with the terms hereof and the DIP Budget (subject to variances permitted under the DIP Term Sheet). The Prepetition Secured Parties have agreed to permit the Debtor to use the Prepetition Collateral, including the Cash Collateral, in accordance with the terms hereof and the DIP Budget (subject to variances permitted under the DIP Term Sheet) during the Interim Period subject to the terms and conditions set forth herein, including the protections afforded parties acting in “good faith” under section 364(e) of the Bankruptcy Code. The Prepetition Secured Parties are entitled to the adequate protection as and to the extent set forth herein pursuant to sections 361, 362, 363, and 364 of the Bankruptcy Code, subject to paragraph 11 hereof. Based on the Motion and on the record presented to the Court at the Interim Hearing, the terms of the proposed adequate protection arrangements and of the use of the Prepetition Collateral (including the Cash Collateral) are fair and reasonable, reflect the Debtor’s prudent exercise of business judgment and constitute reasonably equivalent value and fair consideration for the Prepetition Agent’s consent thereto; provided that nothing in this Interim Order shall (i) be construed as a consent by any Prepetition Secured Parties (a) that it would be adequately protected in the event debtor-in-possession financing is provided by a third party (i.e., other than the DIP Lender) or (b) to the terms of any other such financing, including the consent to any lien encumbering the Prepetition Collateral (whether senior or junior) or to the use of Cash Collateral (except under the terms hereof), or (ii) prejudice, limit, or otherwise impair the rights of the Prepetition Agent (for the benefit of the Prepetition Secured Parties) to seek new, different, or additional adequate protection under any circumstances. The Prepetition Secured Parties’ consent to the Debtor’s use of Cash Collateral and the granting of DIP Liens on the Prepetition Collateral is expressly conditioned upon entry of this Interim Order and does not and shall not constitute consent other than pursuant to this Interim Order and on the terms set forth herein.

 

K.    Sections 506(b) and 552; Marshaling. In light of and in exchange for (i) the DIP Secured Parties’ willingness to provide the DIP Facility to the extent set forth herein, (ii) the DIP Secured Parties’ agreement that their liens and superpriority claims shall be subject to the Carve Out, as set forth herein, (ii) the Prepetition Secured Parties’ agreement that their Prepetition Liens and claims, including any adequate protection liens and claims, shall be subject to the Carve Out, as set forth herein, (iii) the consensual use of Cash Collateral consistent with the DIP Budget and the terms of this Interim Order, and (iv) the DIP Secured Parties’ and the Prepetition Secured Parties’ agreement to the payment (in a manner consistent with the DIP Budget (subject to permitted variances as provided in the DIP Term Sheet) and subject to the terms and conditions of this Interim Order) of certain expenses of administration of this Chapter 11 Case, subject to and upon entry of the Final Order granting such relief, the DIP Secured Parties the Prepetition Secured Parties shall be entitled to a waiver of any “equities of the case” exception under section 552(b) of the Bankruptcy Code and a waiver of the provisions of section 506(c) of the Bankruptcy Code and of the equitable doctrine of marshaling and other similar doctrines upon entry of the Final Order.

 

L.    Extension of Financing. The DIP Secured Parties have indicated a willingness to provide financing to the Debtor in accordance with the DIP Loan Documents (including the DIP Term Sheet and the DIP Budget) and subject to (i) the entry of this Interim Order and the Final Order, (ii) approval of the terms and provisions of this Interim Order and the DIP Loan Documents (including the DIP Term Sheet), including the Milestones (as defined in the DIP Term Sheet) and the waivers set forth herein, and (iii) findings by this Court that such financing is essential to the Debtor’s estate, that the DIP Secured Parties are good faith financiers, and that the reversal or modification on appeal of the authorization hereunder for the Debtor to incur the debt under the DIP Facility, or the grant hereunder of the priority of the DIP Liens and the Adequate Protection Liens, does not affect the validity of such debt, or any priority of any such lien so granted as provided in section 364(e) of the Bankruptcy Code.

 

M.    Limitation of Liability. The Debtor stipulates and, subject to paragraph 11, this Court finds that in making decisions to advance loans to the Debtor, in administering any loans, in permitting the Debtor to use Cash Collateral, in accepting the DIP Budget, or in taking any other actions permitted by this Interim Order or the DIP Loan Documents (including the DIP Term Sheet), none of the DIP Secured Parties or Prepetition Secured Parties shall be deemed to be in control of the operations of the Debtor or to be acting as a “responsible person” or “owner or operator” with respect to the operation or management of the Debtor.

 

N.    Business Judgment and Good Faith Pursuant to Section 364(e).

(i)    The terms and conditions of the DIP Facility, and the fees paid and to be paid thereunder, are fair, reasonable, and the best available under the circumstances, reflect the Debtor’s exercise of prudent business judgment, and are supported by reasonably equivalent value and consideration;

(ii)    all obligations incurred, payments made, and transfers or grants of security set forth in this Interim Order and the other DIP Loan Documents (including the DIP Term Sheet) by the Debtor are granted to or for the benefit of the DIP Secured Parties for fair consideration and reasonably equivalent value and are granted contemporaneously with the making of the loans and commitments and other financial accommodations secured thereby;

(iii)    the DIP Facility was negotiated in good faith and at arm’s length among the Debtor and the DIP Secured Parties; and

(iv)    the use of the proceeds to be extended under the DIP Facility will be so extended in good faith and for valid business purposes and uses, as a consequence of which the DIP Secured Parties are entitled to the protection and benefits of section 364(e) of the Bankruptcy Code.

 

 

O.    Relief Essential; Best Interest. The relief requested in the Motion (and provided in this Interim Order) is necessary, essential, and appropriate for the continued operation of the Debtor’s business and the management and preservation of the Debtor’s assets and property, and satisfies the requirements of Bankruptcy Rule 6003. It is in the best interest of the Debtor’s estate and consistent with the Debtor’s exercise of its fiduciary duties that the Debtor be allowed to enter into the DIP Facility, incur the DIP Obligations, grant the liens and claims contemplated herein and under the DIP Loan Documents (including the DIP Term Sheet) to the DIP Secured Parties and the Prepetition Secured Parties, and use Prepetition Collateral, including Cash Collateral, as contemplated herein.

 

P.    Findings Regarding Corporate Authority. The Debtor has all requisite corporate power and authority to enter into, ratify, and perform all of its obligations under the DIP Loan Documents (including the DIP Term Sheet) to which it is a party.

 

Q.    Immediate Entry. Sufficient cause exists for immediate entry of this Interim Order pursuant to Bankruptcy Rules 4001(b)(2) and (c)(2).

 

NOW, THEREFORE, on the Motion of the Debtor and the record before this Court with respect to the Motion, including the record made during the Interim Hearing, and with the consent of the Debtor, the Prepetition Secured Parties, and the DIP Secured Parties, and good and sufficient cause appearing therefor,

 

IT IS ORDERED that:

 

1.    Motion Granted. The Motion is granted on an interim basis in accordance with the terms and conditions set forth in this Interim Order. Any objections to the Motion with respect to entry of this Interim Order, to the extent not withdrawn, waived or otherwise resolved, and all reservation of rights included therein, are hereby denied and overruled.

 

2.    DIP Facility.

 

(a)    DIP Obligations, Etc. The Debtor is expressly and immediately authorized and empowered to enter into the DIP Facility and to incur and to perform the DIP Obligations in accordance with and subject to this Interim Order (and, upon its entry, a Final Order) and the other DIP Loan Documents, to execute and deliver all DIP Loan Documents and all other related instruments, certificates, agreements, and documents, and to take all actions which may be reasonably required or otherwise necessary for the performance by the Debtor under the DIP Facility, including the creation and perfection of the DIP Liens described and provided for herein. The Debtor is hereby authorized and directed to pay all principal, interest, fees, expenses, indemnities, the OID/Upfront Fee (as defined in the DIP Term Sheet), Exit Fee (as defined in the DIP Term Sheet), the Make Whole Amount (as defined in the DIP Term Sheet), and other amounts described herein, in the DIP Term Sheet, and in the other DIP Loan Documents as such shall accrue and become due hereunder or thereunder, including, without limitation, the reasonable and documented fees and expenses of the attorneys and financial and other advisors and consultants of the DIP Agent and the DIP Lender subject to fee review procedures, as and to the extent provided for herein, in the DIP Term Sheet, and in the other DIP Loan Documents (collectively, all loans, advances, extensions of credit, financial accommodations, fees (which shall be fully earned and non-refundable upon entry of this Interim Order), expenses, and other liabilities and obligations (including indemnities and similar obligations) in respect of DIP Loans, the DIP Facility, the DIP Term Sheet, and the other DIP Loan Documents, including all “DIP Facility Obligations” under and as defined in the DIP Term Sheet, the “DIP Obligations”). The DIP Term Sheet, the other DIP Loan Documents, and all DIP Obligations shall represent, constitute, and evidence, as the case may be, valid and binding obligations of the Debtor, enforceable against the Debtor, its estate, and any successor thereto in accordance with their terms. All obligations incurred, payments made, and transfers or grants of security set forth in this Interim Order and in the other DIP Loan Documents by any DIP Loan Party are granted to or for the benefit of the DIP Secured Parties for fair consideration and reasonably equivalent value and are granted contemporaneously with the making of the loans and commitments and other financial accommodations secured thereby. No obligation, payment, transfer, or grant of security under the DIP Loan Documents (including the DIP Term Sheet) as approved under this Interim Order shall be voided, voidable, or recoverable under the Bankruptcy Code or under any applicable non-bankruptcy law, or subject to any defense, reduction, setoff, recoupment, or counterclaim. The term of the DIP Facility shall commence on the date of entry of this Interim Order and end on the Termination Date (as defined below), subject to the terms and conditions set forth herein and in the DIP Loan Documents (including the DIP Term Sheet).

 

(b)    Authorization to Borrow, Etc. In order to continue to operate its business, subject to the terms and conditions of this Interim Order and the other DIP Loan Documents (including the DIP Term Sheet), the DIP Borrower is hereby authorized to borrow under the DIP Facility and incur DIP Obligations during the Interim Period.

 

(c)    Conditions Precedent. The DIP Lenders shall have no obligation to make any DIP Loans or any other financial accommodation hereunder or under the other DIP Loan Documents (including the DIP Term Sheet) (and the Debtor shall not make any request therefor) unless all conditions precedent to making DIP Loans under the DIP Term Sheet have been satisfied or waived in accordance with the terms of the DIP Term Sheet.

 

(d)    DIP Collateral. As used herein, “DIP Collateral” shall mean all assets, interests, rights, and property of any nature whatsoever of the Debtor, including, without limitation, all property in which the Debtor and its estate have an interest (whether tangible, intangible, real, personal or mixed), whether now owned or hereafter acquired and wherever located, before or after the Petition Date, including, without limitation, all accounts, proceeds of leases, inventory, equipment, equity interests or capital stock in subsidiaries, investment property, instruments, chattel paper, contracts, patents, copyrights, trademarks and other general intangibles, commercial litigation claims, cash, any investment of such cash, inventory, accounts receivable, including intercompany accounts (and all rights associated therewith), other rights to payment whether arising before or after the Petition Date, any deposit accounts, “core concentration accounts,” “cash collateral accounts” and the DIP Proceed Account (as defined below), and, in each case all amounts on deposit therein from time to time, the proceeds of all claims or causes of action, and all rents, products, offspring, profits, proceeds, and substitutions thereof (including, without limitation, all Prepetition Collateral and, subject to the entry of the Final DIP Order granting such relief, all claims or causes of action of the Borrower arising under sections 502(d), 542, 544, 545, 547, 548, 549, 550, and 553 of the Bankruptcy Code and any other avoidance or similar action under the Bankruptcy Code or similar state law avoidance actions under chapter 5 of the Bankruptcy Code).

 

(e)    DIP Liens. Effective immediately upon the entry of this Interim Order and subject to the Carve-Out, as set forth more fully in this Interim Order, the DIP Agent for the benefit of the DIP Secured Parties is hereby granted the following security interests and liens, which shall immediately be valid, binding, perfected, continuing, enforceable, and non-avoidable without the need for execution by the Borrower or the recordation or other filing by the DIP Secured Parties of security agreements, control agreements, pledge agreements, financing statements, or other similar documents or the possession or control by the DIP Secured Parties of any DIP Collateral (all liens and security interests granted to the DIP Agent for the benefit of the DIP Secured Parties pursuant to this Interim Order, any Final Order, and the DIP Term Sheet, the “DIP Liens”):

 

 

(i)

pursuant to section 364(c)(2) of the Bankruptcy Code, valid, binding, continuing, enforceable, fully perfected first-priority liens on and security interests in all DIP Collateral that is not subject to any liens or encumbrances immediately prior to the Petition Date, including, without limitation, the DIP Proceeds Account (as defined in the DIP Term Sheet), subject only to the Carve Out; and

 

(ii)

pursuant to section 363(c)(3) and 364(d)(1) of the Bankruptcy Code, valid, binding, continuing, enforceable, fully perfected first priority, priming liens on and security interests in all other DIP Collateral, which liens and security interests shall be subject only to (a) any valid, enforceable, perfected, and non-avoidable lien or security interest in favor of any person other than the Prepetition Secured Parties that was in existence immediately prior to the Petition Date or that is perfected as permitted by Section 546(b) of the Bankruptcy Code, in each case, with respect to any DIP Collateral comprised of Prepetition Collateral, solely to the extent such lien is senior to the Prepetition Liens (a “Permitted Encumbrance”) and (b) the Carve-Out, and senior to all other liens and encumbrances in respect of the DIP Collateral ((i) – (ii), collectively, the “DIP Liens”).

 

(f)    Other Provisions Relating to the DIP Liens. Effective immediately upon entry of this Interim Order, the DIP Liens shall secure all of the DIP Obligations, to the extent and subject to the priorities set forth herein, and such liens (and any superpriority claims and other senior liens, including adequate protection liens, granted hereunder) shall at all times have a higher priority and shall remain senior to the rights of the Debtor, any chapter 7 or chapter 11 trustee, and any secured, administrative priority, unsecured or other claims of any party in this Case under the Bankruptcy Code (except as (and solely to the extent) expressly provided herein), and the DIP Liens, the DIP Superpriority Claims, the Adequate Protection Claims, and the Adequate Protection Liens granted herein shall not be made or become subject, junior, or subordinated to any “priming” or other liens, nor made pari passu with any other lien, security interest, or claim heretofore or hereafter granted under Bankruptcy Code section 364 or otherwise, in this Case (except as (and solely to the extent) expressly provided herein) or any Successor Case, including to (i) any lien or security interest that is avoided and preserved for the benefit of the Debtor and its estate under section 551 of the Bankruptcy Code, (ii) any lien or security interest existing on or arising on or after the Petition Date, including, without limitation, any lien or security interests granted in favor of any federal, state, municipal or other domestic or foreign governmental unit (including any regulatory body), commission, board or court for any liability of the Debtor, (iii) any intercompany or affiliate lien or claim; or (iv) any other lien, claim, or security interest under sections 361, 363, or 364 of the Bankruptcy Code or otherwise, in each case other than as (and solely to the extent) expressly set forth herein. The DIP Liens and the Adequate Protection Liens shall be valid and enforceable against any trustee appointed in the Chapter 11 Case, upon the conversion of the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code or in any other proceedings related to any of the foregoing (such case or proceeding, a “Successor Case”), and/or upon the dismissal of the Chapter11 Case. Subject to and upon entry of the Final Order granting such relief, the DIP Liens and the Adequate Protection Liens shall not be subject to section 510 of the Bankruptcy Code, to the “equities of the case” exception of section 552 of the Bankruptcy Code, or to section 506(c) of the Bankruptcy Code, or sections 549, 550, or 551 of the Bankruptcy Code.

(g)    Superpriority Administrative Claim Status. The DIP Obligations shall, pursuant to section 364(c)(1) of the Bankruptcy Code, at all times constitute an allowed superpriority claim (the “DIP Superpriority Claim”) of the DIP Agent for the benefit of the DIP Secured Parties against the Debtor, and be payable from and have recourse to all assets and properties of the Debtor, with priority over any and all other administrative expenses, adequate protection claims, diminution in value claims, and all other claims asserted against the Debtor now existing or hereafter arising of any kind whatsoever, including, without limitation, all administrative expenses of the kind specified in sections 503(b) and 507(b) of the Bankruptcy Code, and over any and all other administrative expenses or other claims arising under any other provisions of the Bankruptcy Code, including sections 105, 326, 327, 328, 330, 331, 363, 364, 365, 503, 506(b), 506(c), 507(a), 507(b), 507(d), 546, 726, 1113, or 1114 of the Bankruptcy Code, whether or not such expenses or claims may become secured by a judgment lien or other nonconsensual lien, levy, or attachment, subject only to the Carve Out, which DIP Superpriority Claim shall for purposes of section 1129(a)(9)(A) of the Bankruptcy Code be considered an administrative expense allowed under section 503(b) of the Bankruptcy Code and shall be payable from and have recourse to all pre- and postpetition assets and property, whether existing on the Petition Date or thereafter acquired, of the Debtor and all proceeds thereof. The DIP Superpriority Claim shall be subject only to the Carve-Out. Other than as expressly provided herein, including in paragraph 13 hereof with respect to the Carve-Out, no costs or expenses of administration, including, without limitation, professional fees allowed and payable under sections 328, 330, and 331 of the Bankruptcy Code, or otherwise, that have been or may be incurred in this proceeding or in any Successor Case and no priority claims are or will be senior to, prior to, or pari passu with the DIP Liens, the DIP Superpriority Claim, or any of the DIP Obligations or with any other claims of the DIP Secured Parties arising hereunder or under the DIP Loan Documents (including the DIP Term Sheet), or otherwise in connection with the DIP Facility.

 

(h)    Proceeds of DIP Loans. All proceeds of the DIP Loans shall be funded and held in the DIP Proceeds Account, in accordance with the terms of the DIP Loan Documents (including the DIP Term Sheet) and as otherwise agreed by the DIP Secured Parties, which DIP Proceeds Account shall be maintained as a segregated account by the Borrower as set forth in the DIP Loan Documents (including the DIP Term Sheet), and such account (and any funds therein) shall be subject to a first-priority senior security interest and lien in favor of the DIP Agent, and shall be subject to a deposit control agreement in favor of the DIP Agent.

 

(i)    Professional Fees and Expenses.

 

(I)    Subject to the Fee Review Procedures set forth in clause (II) below, the Debtor shall pay in cash and in full (x) on the Funding Date and (y) thereafter, from time to time, all reasonable and documented out of pocket fees, costs and expenses of the DIP Agent and the DIP Lenders (including, without limitation, fees and disbursements of counsel, including White & Case LLP and Richards, Layton & Finger, PA, financial and accounting advisors, and any other advisors) in connection with the Bankruptcy Case, including, without limitation (i) the negotiation, preparation, execution, and entry, as applicable, of the Restructuring Support Agreement, Plan Term Sheet, and this DIP Term Sheet, (ii) any litigation, contest, dispute, suit, proceeding or action (whether instituted by DIP Agent, the Borrower or any other person) in any way relating to the Restructuring Support Agreement, Plan Term Sheet, or this DIP Term Sheet, and (iii) the enforcement of any rights and remedies under the DIP Term Sheet, including, without limitation, any accrued and unpaid fees, costs, and expenses of the DIP Agent and the DIP Lenders (including, without limitation, any fees and disbursements of counsel and any other advisors to the DIP Agent and to the DIP Lenders) prior to the Petition Date. Payment of any amounts set forth in this clause (i)(I) shall not be subject to disgorgement.

 

 

(II)    Professionals for the DIP Secured Parties (and professionals for the Prepetition Secured Parties) shall not be required to comply with the U.S. Trustee fee guidelines, however, any time that such professionals seek payment of fees and expenses from the Debtors prior to confirmation of a chapter 11 plan, each such professional shall provide summary copies of its invoices (including aggregate amounts of fees, costs and expenses, a general description of the nature of the matters worked on, and total amount of time on a per-professional basis), which are not required to contain time detail and which may be redacted or modified to the extent necessary to delete any information subject to the attorney-client privilege, any information constituting attorney work product, or any other confidential information by email to counsel to the Debtor, the U.S. Trustee, and counsel to the Committee (if any) (collectively the “Fee Notice Parties”); provided, however, that the provision of such invoices shall not constitute a waiver of the attorney-client privilege or of any benefits of the attorney work product doctrine or any other evidentiary privilege or protection recognized under applicable law; provided, further, that the U.S. Trustee reserves the right to seek additional information regarding such invoices and time entries of any such professional and/or to challenge any assertion of privilege with respect to the same. Any objections raised by any Fee Notice Party with respect to such invoices must be in writing and state with particularity the grounds therefor and must be submitted to the applicable professional within ten (10) calendar days after receipt (the “Review Period”). If no written objection is received by 11:59 p.m., prevailing Eastern Time, on the last date of the Review Period, the Debtors shall pay such invoices within three (3) business days. If an objection to a professional’s invoice is received within the Review Period, the Debtors shall promptly pay the undisputed amount of the invoice, regardless of whether the invoiced amount arose or was incurred before or after the Petition Date, and this Court shall have jurisdiction to determine the disputed portion of such invoice if the parties are unable to resolve the dispute consensually. No attorney or advisor to any DIP Secured Party or any Prepetition Secured Party shall be required to file an application seeking compensation for services or reimbursement of expenses with the Court.

 

3.    Authorization and Approval to Use Cash Collateral and Proceeds of DIP Facility. Subject to the terms and conditions of this Interim Order and the other DIP Loan Documents (including the DIP Term Sheet) to the adequate protection granted to or for the benefit of the Prepetition Secured Parties as hereinafter set forth, the Debtor is authorized during the Interim Period (and not beyond) to (a) use the Cash Collateral and (b) request and use proceeds of the DIP Loans, in each case as set forth in the DIP Budget (subject to variances permitted under the DIP Loan Documents) and in accordance with this Interim Order the other DIP Loan Documents (including the DIP Term Sheet). Notwithstanding anything herein to the contrary, subject only to the Debtor’s rights under paragraph 22(b) hereof and the Carve-Out, the Debtor’s right to request or use proceeds of DIP Loans or to use Cash Collateral shall terminate on the Termination Date. Nothing in this Interim Order shall authorize the disposition of any assets of the Debtor or its estate or proceeds resulting therefrom outside the ordinary course of business except as expressly permitted herein and in the other DIP Loan Documents (including the DIP Term Sheet) (subject to any required Court approval).

 

4.    Adequate Protection for Prepetition Secured Parties. The Prepetition Secured Parties shall receive adequate protection of their interests in the Prepetition Collateral, including the Cash Collateral, in an amount equal to the aggregate diminution in the value of the Prepetition Secured Parties’ interests in the Prepetition Collateral (including Cash Collateral) from and after the Petition Date, if any, for any reason provided for under the Bankruptcy Code, including, without limitation, as a result of the use of Prepetition Collateral, including Cash Collateral, the priming of their interests in Prepetition Collateral by the DIP Facility and the Carve-Out, and the imposition or enforcement of the automatic stay (collectively, “Diminution in Value”). As adequate protection, the Prepetition Secured Parties will be granted the following, in each case subject to paragraph 11 hereof (provided that the Adequate Protection Liens, Adequate Protection Claims and Adequate Protection Payments provided herein shall be granted as and on the terms provided herein and shall remain unaffected absent any timely and successful Challenge in accordance with paragraph 11 hereof which is applicable thereto):

 

(a)    Adequate Protection Liens. Pursuant to sections 361, 363(e), and 364(d) of the Bankruptcy Code, effective as of the Petition Date and perfected without the need for execution by the Borrower or the recordation or other filing by the Prepetition Secured Parties of security agreements, control agreements, pledge agreements, financing statements, or other similar documents or the possession or control by the Prepetition Secured Parties of any DIP Collateral, the Prepetition Secured Parties, solely to the extent of any Diminution in Value, shall be granted valid, binding, continuing, enforceable, fully perfected replacement and additional liens on and security interests in (collectively, the “Adequate Protection Liens”) all DIP Collateral. The Adequate Protection Liens shall be junior only to the DIP Liens, the Carve-Out, and any Permitted Encumbrance, and senior to all other security interests in, liens on, or claims against the DIP Collateral. The Adequate Protection Liens shall be nonavoidable and shall not be subject to sections 510, 549, 550, or 551 of the Bankruptcy Code. The Adequate Protection Liens shall be enforceable against and binding upon the Borrower, its estate and any successors thereto, including, without limitation, any trustee or other estate representative appointed in any Successor Case.

 

(b)    Adequate Protection Superpriority Claim. To the extent of the aggregate Diminution in Value, the Prepetition Secured Parties shall be granted allowed superpriority administrative expense claims against the Borrower and its estate, as provided in section 507(b) of the Bankruptcy Code, immediately junior to the DIP Obligations and subject only to the Carve-Out, and with priority in payment over any and all other claims and administrative expense claims against the Borrower, now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, administrative expenses of the kinds specified in or ordered pursuant to sections 105, 326, 327, 328, 330, 331, 361, 362, 363, 364, 365, 503(a), 503(b), 507(a), 507(b), 546(c), 546(d), 552(b), 726, 1113, 1114, and any other provision of the Bankruptcy Code, and shall at all times be senior to the rights of the Borrower and any successor trustee or creditor in the Bankruptcy Case or any Successor Case (the “Adequate Protection Superpriority Claims”).

 

 

(c)    Adequate Protection Payments, Etc. As further adequate protection, from and after entry of this Interim Order, the Prepetition Agent (on behalf of the Prepetition Secured Parties) shall receive from the Debtor, (1) payment in cash, as and when due under the terms of the Prepetition Notes Documents, of all interest due under the Prepetition Notes Documents, calculated at the default rates under the Prepetition Notes Documents, and (2) (x) upon entry of the Interim Order, immediate cash payment of all accrued and unpaid fees and disbursements (including all reasonable and documented fees, out-of-pocket costs and expenses of legal, financial, and other advisory professionals of the Prepetition Secured Parties (including, without limitation, White & Case LLP and Richards Layton)) owing to the Prepetition Secured Parties under the Prepetition Notes Documents, whether incurred prior to or after the Petition Date and (y) thereafter, when due, all fees and other amounts (including all reasonable and documented legal and advisory fees, out-of-pocket costs and expenses of legal, financial, and other advisory professionals of the Prepetition Secured Parties (including, without limitation, White & Case LLP and Richards Layton)) owing to the Prepetition Secured Parties by the Debtor under the Prepetition Notes Documents, provided that payment of any fees and expenses of the Prepetition Secured Parties’ professionals incurred after entry of the Interim Order shall be subject to the notice and objection provisions of paragraph 26(ii).

 

5.    DIP Budget.

 

(a)    The DIP Budget attached hereto as Exhibit 2 constitutes an “Initial DIP Budget” under the DIP Tern Sheet. The Borrower will subsequently provide the DIP Agent with an updated budget every fourth Friday prior to the end of the DIP Budget Period (defined below) for the remaining weeks left under the Initial DIP Budget. The “DIP Budget Period” shall refer to period commencing on the date that the Interim DIP Order is entered and ending on the Outside Effective Date (as defined in the DIP Term Sheet). Each updated budget shall be subject to the approval of the DIP Lenders in their sole discretion (each such approved budget, a “Supplemental Approved DIP Budget” and together with the Initial DIP Budget, the “DIP Budget”); provided that until such time as the DIP Agent approves any updated budget, the Borrower shall be subject to and be governed by the terms of the Initial DIP Budget or such Supplemental Approved DIP Budget, as applicable, then in effect in accordance with the DIP Order. The DIP Budget may only be amended, supplemented, modified, restated, replaced, or extended in accordance with this Interim Order and the other DIP Loan Documents (including the DIP Term Sheet). Any such amendment, supplement, modification, restatement, replacement, or extension in accordance with the DIP Term Sheet may be effected without further order of the Court. The DIP Budget is an integral part of this Interim Order and has been relied upon by the DIP Secured Parties to provide the DIP Facility and consent to this Interim Order.

 

(b)    Pursuant to the terms of the DIP Loan Documents (including the DIP Term Sheet), the Borrower shall provide to the DIP Agent a budget variance report (the “Budget Variance Report”) on the Friday of every other week during the DIP Budget Period, and the DIP Budget Variance Report shall set forth in reasonable detail actual receipts and disbursements of Borrower, together with a statement certifying compliance with the DIP Budget Covenant (as defined below) set forth below. The Borrower shall not permit or suffer to exist, a negative variance of 15% or more of total aggregate Operating Disbursements and Non-Operating Disbursements (each as reflected in the DIP Budget) in the aggregate from the amounts set forth in the DIP Budget (each, a “Permitted Variance”), tested on a cumulative rolling two (2) week basis (the “DIP Budget Covenant”). The Debtor shall operate in accordance with the DIP Budget and all disbursements of the Debtor shall be consistent with the provisions of the DIP Budget, subject in each case to any Permitted Variance provided herein and in the DIP Term Sheet.

 

(c)    The DIP Agent shall have no obligation to permit the use of proceeds of DIP Loans or Cash Collateral, and the Borrower shall have no authority to use proceeds of DIP Loans or Cash Collateral, other than in accordance with the DIP Budget, subject to the DIP Budget Covenant and as set forth in the DIP Order.

 

6.    Monitoring of Collateral. The Prepetition Secured Parties, the DIP Secured Parties, and their consultants and advisors shall be given reasonable access to the Debtor’s books, records, assets, and properties for purposes of monitoring the Debtor’s business and the value of the DIP Collateral, including view access to the DIP Proceeds Account, at the Debtor’s cost and expense, as provided in the DIP Term Sheet.

 

7.    Financial Reporting, Etc. Without limitation of the requirements of the DIP Term Sheet, the Debtor shall provide to the DIP Secured Parties and to the Prepetition Secured Parties (and, in each case, their consultants, advisors, and professionals) (a) all financial information required under the DIP Loan Documents (including the DIP Term Sheet) and (b) access upon reasonable notice and during regular business hours to the Debtor’s and its direct and indirect subsidiaries’ books and records, assets, and properties for purposes of monitoring its business and the value of the DIP Collateral. The Debtor shall also provide such reports and information required to be provided in the DIP Term Sheet and reasonably cooperate, discuss with, and provide to the DIP Secured Parties and the Prepetition Secured Parties (and, in each case, their professionals) all such information as may be reasonably requested. In addition, the Debtor hereby authorizes its accountants, attorneys, financial advisors, investment bankers, and consultants to cooperate, consult with, and provide to the DIP Secured Parties and the Prepetition Secured Parties (and, in each case, their consultants, advisors and professionals) all such information as may be reasonably requested with respect to the business, results of operations and financial condition of the Debtor consistent with the requirements set forth in the DIP Loan Documents (including the DIP Term Sheet).

 

8.    [Reserved.].

 

9.    Subordination of Intercompany, Affiliate Liens. All intercompany or affiliate liens of the Debtor, if any (other than any liens granted to the DIP Secured Parties), will be contractually subordinated to the DIP Liens and the Adequate Protection Liens granted pursuant to this Interim Order and under the DIP Term Sheet, on terms satisfactory to the DIP Lenders.

 

 

10.    DIP Lien and Adequate Protection Replacement Lien Perfection. Automatically upon entry of this Interim Order, the DIP Liens and the Adequate Protection Liens shall be deemed to be valid, binding, perfected, enforceable, non-avoidable, and effective by operation of law, and not subject to challenge as of the Petition Date, without the need of any further action of any kind. This Interim Order shall be sufficient and conclusive evidence of the validity, perfection, and priority of the DIP Liens and the Adequate Protection Liens without the necessity of filing or recording any financing statement, deed of trust, mortgage, or other instrument or document which may otherwise be required under the law of any jurisdiction or the taking of any other action to validate or perfect the DIP Liens and the Adequate Protection Liens or to entitle the DIP Liens and the Adequate Protection Liens to the priorities granted herein. Notwithstanding the foregoing, the DIP Agent may, in its sole discretion, file such financing statements, deeds of trust, mortgages, security agreements, notices of liens, and other similar documents and is hereby granted relief from the automatic stay of section 362 of the Bankruptcy Code in order to do so, and all such financing statements, deeds of trust, mortgages, security agreements, notices, and other agreements or documents shall be deemed to have been filed or recorded at the time and on the date of the commencement of the Chapter 11 Case. The Debtor shall execute and deliver to the DIP Agent all such financing statements, mortgages, security agreements, notices and other documents as the DIP Agent may reasonably request to evidence, confirm, validate, or perfect or to insure the contemplated priority of the DIP Liens and the Adequate Protection Liens, and the Debtor shall take all such further actions that may be required under any applicable law or that the DIP Secured Parties or Prepetition Secured Parties, as applicable, may reasonably request in order to grant, preserve, protect or perfect the DIP Liens and Adequate Protection Liens granted pursuant to this Interim Order. The DIP Agent, in its sole discretion, may file a photocopy of this Interim Order as a financing statement with any recording officer designated to file financing statements or with any registry of deeds or similar office in any jurisdiction in which the Debtor have real or personal property and, in such event, the subject filing or recording officer shall be authorized to file or record such copy of this Interim Order. To the extent that the Prepetition Agent is the secured party under any account control agreements, listed as loss payee under any of the Debtor’s insurance policies or is the secured party under any loan document, financing statement, deed of trust, mortgage, or other instrument or document which may otherwise be required under the law of any jurisdiction to create, validate, attach, perfect, or prioritize liens (any such instrument or document, a “Security Document”), then (i) such Prepetition Secured Party shall be deemed to maintain such possession or notation or exercise such control as a gratuitous bailee and/or gratuitous agent for perfection for the benefit of the DIP Agent and the DIP Lender, and such Prepetition Secured Party shall comply with the instructions of the DIP Agent with respect to the exercise of such control and (ii) the DIP Agent is also hereby deemed to be the secured party under such account control agreements, loss payee under the Debtor’s insurance policies and the secured party under each such Security Document, and shall have all rights and powers attendant to that position (including, without limitation, rights of enforcement) and shall act in that capacity and distribute any proceeds recovered or received in accordance with the terms of this Interim Order and the other DIP Loan Documents (including the DIP Term Sheet).

 

11.    Reservation of Certain Third-Party Rights and Bar of Challenges and Claims.

 

(a)    The Debtor’s stipulations, admissions, agreements, releases, and waivers contained in this Interim Order, including the Stipulations, are and shall be irrevocably binding upon the Debtor.

 

(b)    The Stipulations and all other admissions, agreements, releases, and waivers set forth in this Interim Order also are and shall be binding upon all other persons and entities (including any Committee), a chapter 7 trustee, and a chapter 11 trustee, and each of their respective successors in interest and assigns in all circumstances and for all purposes, unless, and solely to the extent that (i) such parties in interest (including any Committee) in each case with standing and requisite authority to do so (subject in all respects to any agreement or applicable law which may limit or affect such entity’s right or ability to do so) have timely filed the proper pleadings, and timely commenced the appropriate proceedings under the Bankruptcy Code and Bankruptcy Rules, including, without limitation, as required pursuant to Part VII of the Bankruptcy Rules (in each case subject to the limitations set forth below in this paragraph 11), (x) objecting to or challenging any of the Stipulations or (y) otherwise asserting or prosecuting any action against the Prepetition Secured Parties or any of their respective affiliates, agents, attorneys, advisors, professionals, officers, directors, or employees in connection with or related to the matters covered by the Stipulations (each such proceeding or appropriate pleading commencing a proceeding or other contested matter, a “Challenge”), no later than seventy-five (75) calendar from the Petition Date for any party in interest with requisite standing (such period, the “Challenge Period” and the date that is the next calendar day after the termination of the Challenge Period shall be referred to as the “Challenge Period Termination Date”), as such date may be extended to any such party in interest by the Prepetition Agent and each applicable Prepetition Secured Party that is the subject of a Challenge or by any such later date as has been ordered by the Court for cause upon a motion filed and served within the Challenge Period (before giving effect to such extension) and (ii) the Court enters judgment in favor of the plaintiff or movant in any such timely and properly commenced Challenge proceeding, and any such judgment has become final and is not subject to any further review or appeal. The filing of a motion seeking standing to file a Challenge Action before the expiration of the Challenge Period, which attaches a draft complaint setting forth the legal and factual bases of the proposed Challenge Action, shall extend the Challenge Period with solely respect to that party (and solely with respect to the claims and causes of action asserted) until such motion is resolved or adjudicated by the Court. If the case converts to a Chapter 7, or if a Chapter 11 trustee is appointed, prior to the Challenge Period Termination Date, the Challenge Period Termination Date shall be extended for the Chapter 7 or Chapter 11 trustee to 20 days after their appointment. For the avoidance of doubt, any trustee appointed or elected in these Chapter 11 Cases shall, until the expiration of the period provided herein for asserting Challenges, and thereafter for the duration of any adversary proceeding or contested matter commenced pursuant to this paragraph (whether commenced by such trustee or commenced by any other party in interest on behalf of the Debtors’ estates), be deemed to be a party other than the Debtors and shall not, for purposes of such adversary proceeding or contested matter, be bound by the acknowledgments, admissions, confirmations and stipulations of the Debtors in this Interim Order, but shall be bound by such acknowledgments, admissions, confirmations and stipulations in this Interim Order as otherwise provided under this paragraph 11.

 

(c)    Any Challenge not asserted by the timely and proper filing of a pleading by a party in interest with the requisite standing and authority as contemplated herein prior to the Challenge Period Termination Date shall be deemed forever waived, released, and barred with respect to such party in interest. To the extent a party in interest with requisite standing and authority timely and properly commences a Challenge prior to the Challenge Period Termination Date, all claims, causes of action and other matters not specifically set forth in such Challenge shall be deemed forever waived, released, and barred with respect to such party in interest.

 

(d)    To the extent the Stipulations (or any of them) are (i) not subject to a Challenge timely and properly commenced prior to the Challenge Period Termination Date or (ii) subject to a Challenge timely and properly commenced prior to the Challenge Period Termination Date, to the extent any such Challenge does not result in a final and non-appealable judgment or order of the Court that is inconsistent with such Stipulations, then, in each case, without further notice, motion or application to, or order of, or hearing before this Court and without the need or requirement to file any proof of claim: (1) any and all such Challenges by any Committee or any other party in interest shall be deemed to be forever waived, released, and barred (including in any Successor Case), and the Prepetition Obligations shall be deemed to be an allowed secured claim within the meaning of sections 502 and 506 of the Bankruptcy Code for all purposes in connection with this Chapter 11 Case, and all of the Stipulations and all other waivers, releases, and affirmations set forth in this Interim Order (or any not properly and timely challenged) shall be in full force and effect and shall be binding, conclusive, and final on any person, entity, or party in interest, including any Committee, (in each case, and their successors and assigns) in the Chapter 11 Case and in any Successor Case for all purposes, without any further order of the Court, and shall not be subject to challenge or objection by the Committee or any other party in interest, including, without limitation, any other statutory committee, any trustee, responsible individual, examiner with expanded powers or other representative of the Debtor’s estate.

 

 

(e)    If any Challenge is timely and properly filed during the Challenge Period, the Stipulations and all other waivers, releases, and affirmations contained in this Interim Order shall nonetheless remain binding and preclusive, as provided in this paragraph 11, on all other parties in interest (including any Committee) and on any other person or entity, except for the plaintiff or movant timely and successfully asserting such Challenge, as set forth in a final, non-appealable order of a court of competent jurisdiction. Notwithstanding anything to the contrary herein, the right to commence any Challenge under this Interim Order is preserved only as against any particular Prepetition Obligation or against any Prepetition Secured Party to the extent such Challenge is commenced timely and properly prior to the Challenge Period Termination Date and, in respect of such Prepetition Obligation or Prepetition Secured Party, is otherwise waived as set forth in this paragraph 11.

 

(f)    All remedies or defenses of any party with respect to any Challenge are hereby preserved. Nothing in this Interim Order vests or confers on any person (as defined in the Bankruptcy Code), including any Committee (if any) appointed in this Chapter 11 Case, standing or authority to pursue any cause of action belonging to the Debtor or its estate, including, without limitation, any Challenges with respect to the Prepetition Obligations, and an order of the Court (or any other court of competent jurisdiction) conferring such standing on a Committee or other party in interest shall be a prerequisite for the prosecution of a Challenge by the Committee or such other party in interest.

 

12.    Limitations on Use of DIP Facility and Cash Collateral. Notwithstanding anything herein to the contrary, no portion of the proceeds of the DIP Facility, the DIP Collateral, the Prepetition Collateral, any Cash Collateral, or the Carve Out and no disbursements set forth in the DIP Budget may be used, in any way, directly or indirectly (a) for any investigation, adversary action, suit, arbitration, proceeding, application, motion, objection, defense, other contested matter, or other litigation of any type, including any Challenge, adverse to the interests of any or all of DIP Lenders, the DIP Agent, the Prepetition Secured Parties, or their respective rights and remedies under the DIP Facility, the DIP Orders, the DIP Term Sheet, or the Prepetition Notes Documents and other documents and instruments in respect of the Prepetition Secured Obligations, including without limitation (i) any action arising under the Bankruptcy Code, (ii) any so-called “lender liability” claims and causes of action, (iii) any action with respect to the validity and extent of the DIP Obligations or Prepetition Obligations or the validity, extent, perfection and priority of the DIP Liens or Prepetition Liens, (iv) any action seeking to invalidate, set aside, avoid, reduce, set off, offset, recharacterize, subordinate (whether equitable, contractual, or otherwise), recoup against, disallow, impair, raise any defenses, cross-claims, or counterclaims, or raise any other challenges under the Bankruptcy Code or any other applicable domestic or foreign law or regulation against or with respect to the DIP Liens or the Prepetition Liens, in whole or in part, or (v) appeal or otherwise challenge this Interim Order or the Final Order; provided that no more than $25,000 in the aggregate of the proceeds of the DIP Facility, the DIP Collateral, the Prepetition Collateral, and the Cash Collateral (including any proceeds of the DIP Facility, the DIP Collateral, the Prepetition Collateral, or the Cash Collateral used to fund the Carve Out) may be used by a Committee (if any) appointed in this Chapter 11 Case to investigate (but not prosecute or Challenge, or commence, or initiate the prosecution of, any Challenge, including the preparation of any complaint or motion on account of, or objection to) the Stipulations before termination of the Challenge Period, (b) for any other action, which with the giving of notice or passing of time, would result in an Event of Default under the DIP Facility, (c) for any purpose that is prohibited under the Bankruptcy Code, DIP Loan Documents (including the DIP Term Sheet), or the DIP Orders or that is not in accordance with the DIP Budget, (d) to make any payment, advance, intercompany advance or transfer, or any other remittance or transfer whatsoever (including any intercompany loans and investments) that is not in accordance with the express terms of the DIP Budget, (e) to make any payment to any board member, in such capacity as such, or shareholder of the Debtor or any of its affiliates or subsidiaries, (f) to make any payment in settlement of any claim, action, or proceeding without Bankruptcy Court approval and the prior written consent of the DIP Lenders, which consent will not be unreasonably withheld or delayed, (g) to prevent, hinder, impede, or delay any of the DIP Secured Parties’ or Prepetition Secured Parties’ enforcement or realization upon or exercise of rights in respect of any of the DIP Collateral or Prepetition Collateral in accordance with the DIP Term Sheet, or (h) to seek to amend or modify any of the rights or interests granted to any of the DIP Secured Parties or Prepetition Secured Parties under this Interim Order, the DIP Term Sheet, or the Prepetition Notes Documents, in a manner adverse to any DIP Secured Party or Prepetition Secured Party, including seeking to use Cash Collateral on a contested basis, without the prior written consent of the DIP Agent.

 

13.    Carve-Out.

 

(a)    As used in this Interim Order, the “Carve-Out” means the sum of (i) all fees required to be paid to the Clerk of the Bankruptcy Court (“Court Fees”) and all statutory fees required to be paid to the Office of the United States Trustee (the “United States Trustee”) under section 1930(a) of title 28 of the United States Code plus interest at the statutory rate (“US Trustee Fees”) (without regard to the notice set forth in (iii) below), (ii) up to the amounts set forth in the respective DIP Budget line items and to the extent allowed by the Court pursuant to a fee application on notice or other procedure permitted by any Court order allowing interim compensation or the payment of fees of ordinary course professionals, whether by interim order, final order, procedural order, or otherwise, all reasonable and documented unpaid fees and expenses, all unpaid fees and expenses (the “Allowed Professional Fees”) incurred by persons or firms retained by the Borrower pursuant to section 327, 328, or 363 of the Bankruptcy Code (the “Debtor Professionals”) and the Committee, if any, appointed in the Bankruptcy Case (the “Committee Professionals,” and together with the Debtor Professionals, the “Professionals”) at any time on or before one business day following delivery by the DIP Agent of a Carve-Out Trigger Notice (as defined below), whether allowed by the Bankruptcy Court prior to or after delivery of a Carve-Out Trigger Notice, and (iii) Allowed Professional Fees of Professionals in an aggregate amount not to exceed $250,000 incurred after delivery by the DIP Agent of the Carve-Out Trigger Notice (the amount set forth in this clause (iii) being the “Post Carve-Out Trigger Notice Cap”); provided that, under no circumstances shall any success, completion, transaction or similar fees be payable from the Carve-Out; provided, further, that the Post Carve-Out Trigger Notice Cap shall be reduced, dollar-for-dollar, by the amount of any fees and expenses incurred and accruing by the Debtor and paid to the applicable Professionals following delivery of a Carve-Out Trigger Notice. For purposes of this Interim Order, “Carve-Out Trigger Notice” shall mean a written notice delivered by email (or other electronic means) by the DIP Agent to counsel to the Borrower, the United States Trustee, and counsel to the Committee (if any), which notice may be delivered following the occurrence and during the continuation of an Event of Default, stating that the Post Carve-Out Trigger Notice Cap has been invoked.

 

(b)    The Debtor shall be authorized and permitted to establish an escrow account, to be held by a qualified institutional escrow agent to be agreed upon by the Debtor and the DIP Secured Parties (the “Escrow Holder”), for the benefit of the Professionals and to fund by wire transfer such escrow on a weekly basis, in each case as provided herein and in the DIP Loan Documents (including the DIP Term Sheet) (such account, to the extent of such deposited amounts, the “Professional Fee Reserve Account”), in an amount equal to, but not to exceed, the professional fees and costs set forth in the DIP Budget line item for Debtor Professionals for such week. The Professional Fee Reserve Account shall be funded on a weekly basis in accordance with the DIP Budget and ending on the date upon which a Carve-Out Trigger Notice is delivered, plus any amounts provided for in the DIP Budget, if any, since the most recent funding of the Professional Fee Reserve Account through the delivery of the Carve-Out Trigger Notice, in accordance with the DIP Budget. After the delivery of a Carve-Out Trigger Notice, notwithstanding anything herein to the contrary, the Debtor shall be authorized to deposit any cash on hand into the Professional Fee Reserve Account up to the amount of any remaining unpaid professional fees for each of the Professionals set forth in the DIP Budget for the period until delivery of the Carve-Out Trigger Notice plus an amount equal to the Post Carve-Out Trigger Notice Cap.

 

 

(c)    From the funds held in the Professional Fee Reserve Account, the Escrow Holder shall release to the Debtor Professionals solely such amounts as are payable from time to time pursuant to the DIP Budget and an applicable order of the Bankruptcy Court, including an order approving interim compensation procedures in the Chapter 11 Case and any order granting interim or final fee applications for Professionals (each, a “Fee Order”). For the avoidance of doubt, (a) in making payments from the Professional Fee Reserve Account, Escrow Holder shall be entitled to rely upon written certifications of each Debtor Professional as to the amount such Debtor Professional is authorized pursuant to the DIP Budget and an applicable order of the Bankruptcy Court to be paid at such time from the Professional Fee Reserve Account; and (b) in no circumstances shall the Escrow Holder be obligated to pay any Debtor Professional other than from the funds held, from time to time, in the Professional Fee Reserve Account in accordance with the DIP Budget and an applicable order of the Bankruptcy Court. Funds held in the Professional Fee Reserve Account shall be applied to Allowed Professional Fees that have been incurred following the Petition Date in accordance with procedures to be established in the Chapter 11 Case (the “Interim Fee Procedures”). Payments and reimbursements made to a Professional prior to delivery of the Carve-Out Trigger Notice shall reduce the amounts available to such Professional under section (ii) of the Carve-Out, and neither the Professional Fee Reserve Account nor payments therefrom shall in any way increase the Carve-Out. All Allowed Professional Fees payable to Debtor Professionals shall be paid first from funds in the Professional Fee Reserve Account, if any, and, upon exhaustion thereof, from the Carve-Out (less any amounts previously funded into the Professional Fee Reserve Account). For the avoidance of doubt the DIP Liens, Prepetition Liens, and Adequate Protection Liens shall attach to, and shall have a residual right to and lien on, any excess funds in the Professional Fee Reserve Account after satisfaction of the Carve-Out in respect of Allowed Professional Fees, which excess funds shall then be used to satisfy amounts due under the DIP Facility, the Prepetition Secured Obligations, and the Adequate Protection Amount, as applicable, in accordance with their rights and priorities as of the Petition Date and under this Interim Order, in each case, until paid in full in cash.

 

(d)    None of the DIP Secured Parties or the Prepetition Secured Parties shall be responsible for the payment or reimbursement of any fees or disbursements of any Professional incurred in connection with the Chapter 11 Case or any successor case under any chapter of the Bankruptcy Code. Nothing in this Interim Order or otherwise shall be construed to obligate the DIP Secured Parties or the Prepetition Secured Parties, in any way, to pay compensation to, or to reimburse expenses of, any Professional or to guarantee that the Debtor has sufficient funds to pay such compensation or reimbursement. The DIP Secured Parties and the Prepetition Secured Parties reserve the right to review and object to any fee statement, interim application, or monthly application issued or filed by the Professionals.

 

14.    Payment of Compensation. Nothing herein shall be construed as a consent to the allowance of any professional fees or expenses of any of the Debtor or the Committee (if any) or shall limit or otherwise affect the right of the DIP Secured Parties or the Prepetition Secured Parties or any other party in interest to object to the allowance and payment of any such fees and expenses. No professional fees shall be paid absent a Court order allowing such payment, pursuant to a fee application on notice, or other procedure permitted by any Court order allowing interim compensation or the payment of fees of ordinary course professionals; provided that such professional fees shall be paid in accordance with the DIP Budget or otherwise consistent with the Bankruptcy Code. So long as no Event of Default exists that has not been waived in writing, the Debtor shall be permitted to pay compensation and reimbursement of expenses allowed by the Court and payable under sections 330 and 331 of the Bankruptcy Code or compensation procedures approved by the Court and in form and substance reasonably acceptable to the Debtor and the DIP Secured Parties, as the same may be due and payable, and the same shall not reduce the Post Carve-Out Trigger Notice Cap.

 

15.    Section 506(c) Claims. As a further condition of the DIP Facility, any obligation of the DIP Secured Parties to make DIP Loans, and the Debtor’s authorization to use the Cash Collateral and the consent of the DIP Secured Parties and the Prepetition Secured Parties to the payment of the Carve-Out to the extent provided herein, subject to and upon entry of the Final Order granting such relief, the Debtor (and any successors thereto or any representatives thereof, including any trustees appointed in the Chapter 11 Case or any Successor Case) shall be deemed to have waived any rights, benefits, or causes of action under section 506(c) of the Bankruptcy Code (x) as they may relate to or be asserted against the DIP Secured Parties, the DIP Liens, and the DIP Collateral and (y) as they may relate to or be asserted against the Prepetition Secured Parties, the Adequate Protection Liens, the Prepetition Liens, and the Prepetition Collateral, and except to the extent of the Carve-Out, nothing contained in this Interim Order, the Final Order, or the DIP Term Sheet shall be deemed a consent by the Prepetition Secured Parties or the DIP Secured Parties to any charge, lien, assessment, or claim against or in respect of the DIP Collateral or the Prepetition Collateral under sections 105 or 506(c) of the Bankruptcy Code or otherwise, and no such consent shall be implied from any other action, inaction, or acquiescence by any by any such parties.

 

16.    Collateral Rights; Limitations in Respect of Subsequent Court Orders. Without limiting any other provisions of this Interim Order, unless the DIP Agent and the Prepetition Agent have provided their prior written consent, it shall be an Event of Default under the DIP Facility for there to be entered in this Chapter 11 Case, or in any Successor Case, any order which authorizes (i) the obtaining of credit or the incurring of indebtedness that is secured by a security, mortgage, or collateral interest or other lien on all or any portion of the DIP Collateral or entitled to priority administrative status which is superior to or pari passu with those granted pursuant to this Interim Order to or for the benefit of the DIP Secured Parties or the Prepetition Secured Parties or (ii) the use of proceeds of the DIP Facility or Cash Collateral for any purpose other than as permitted under the DIP Term Sheet and consistent with this Interim Order and the DIP Budget.

 

 

17.    Proceeds of Subsequent Financing. Without limiting the provisions and protections of paragraph 17 hereof, if at any time prior to the confirmation of the Plan with respect to the Debtor, the Debtor’s estate, any trustee, any examiner with enlarged powers or any responsible officer subsequently appointed shall obtain credit or incur debt in violation of this Interim Order and the other DIP Loan Documents (including the DIP Term Sheet), then all of the cash proceeds derived from such credit or debt and all Cash Collateral in the amount necessary to satisfy all DIP Obligations then outstanding shall immediately be turned over to the DIP Agent for the indefeasible repayment and satisfaction in full in cash of all DIP Obligations then outstanding. For the avoidance of doubt, if the Debtor, any trustee, any examiner with expanded powers, or any responsible officer subsequently appointed in the Chapter 11 Case or any Successor Case shall obtain credit or incur debt pursuant to section 364(d) of the Bankruptcy Code at any time prior to the confirmation of the Plan, the Prepetition Secured Parties’ rights to object to the Debtor’s use of Cash Collateral and assert a lack of adequate protection shall be fully preserved.

 

18.    Cash Management. From and after the date of the entry of this Interim Order, the Debtor shall use a cash management system that is the same as or substantially similar to its prepetition cash management system or as otherwise agreed by the DIP Lenders and authorized by DIP Lenders (in their sole discretion) and the Court. The Debtor shall maintain no accounts except those identified in any order of this Court approving the maintenance of the Debtor’s cash management system (the “Cash Management Order”). It shall constitute an Event of Default (as defined in the DIP Term Sheet) if the Debtor’s cash management system shall not at all times be maintained in accordance with the terms of the DIP Term Sheet and the Cash Management Order in all material respects, and otherwise in a manner which shall be reasonably satisfactory to the DIP Secured Parties in accordance with the terms of the DIP Loan Documents (including the DIP Term Sheet). The Debtor and the financial institutions where the Debtor maintain deposit accounts (as identified in the Cash Management Order) are authorized and directed to remit, without offset or deduction, funds in such deposit accounts upon receipt of any direction to that effect from the DIP Agent (acting at the direction of the DIP Lender). The DIP Agent shall be deemed to have “control” over all cash management accounts for all purposes of perfection under the Uniform Commercial Code pursuant to this Interim Order and, if required or requested by the DIP Agent, pursuant to control agreements reasonably acceptable to the DIP Agent.

 

19.    Disposition of DIP Collateral. It shall constitute an Event of Default (as defined in the DIP Term Sheet) if the Debtor shall sell (including, without limitation, any sale and leaseback transaction), transfer (including any assignment of rights), lease, encumber or otherwise dispose of any portion of the DIP Collateral, except as expressly permitted under the DIP Term Sheet or pursuant to the Plan.

 

20.    Survival of Certain Provisions. In the event of the entry of any order converting any of this Chapter 11 Case into a Successor Case, the DIP Liens, the DIP Superpriority Claim, the Adequate Protection Liens, the Adequate Protection Superpriority Claim, and the Carve-Out shall continue in this proceeding and in any Successor Case, and such DIP Liens, DIP Superpriority Claim, Adequate Protection Liens, Adequate Protection Superpriority Claim, and Carve-Out shall maintain their respective priorities as provided by this Interim Order.

 

21.    Events of Default; Termination Date; Rights and Remedies Upon Event of Default.

 

(a)    Any automatic stay otherwise applicable to the DIP Secured Parties and the Prepetition Agent, whether arising under sections 105 or 362 of the Bankruptcy Code or otherwise, is hereby modified so that, (i) upon the occurrence and during the continuance of an Event of Default, the DIP Secured Parties, in their sole and absolute discretion, may immediately (w) deliver a notice of an Event of Default; (x) terminate any pending DIP Loans and use of Cash Collateral; (y) sweep all cash in any controlled accounts, and (z) terminate the DIP Facility and all commitments thereunder and (ii) upon and after the occurrence of the Termination Date, the DIP Agent and the Prepetition Agent shall, without further notice to, hearing of, or order from this Court, to the extent necessary to permit the DIP Secured Parties to take any or all of the following actions, at the same time or different times, unless the Court orders otherwise, and subject only to subparagraph (b) of this paragraph 22, as applicable, be immediately entitled to exercise all of their rights and remedies in respect of the DIP Collateral and the Prepetition Collateral, in accordance with this Interim Order, the DIP Loan Documents (including the DIP Term Sheet) and/or the Prepetition Notes Documents, and applicable law, as applicable. The term “Termination Date” shall mean the earliest to occur of (i) the Maturity Date (as defined in the DIP Term Sheet), (ii) thirty (30) calendar days after the Petition Date if the Court has not yet entered the Final Order, (iii) failure by the Debtor to comply with any of the Milestones set forth in the DIP Term Sheet, and (iv) the occurrence of any “Event of Default” (as defined in) the DIP Term Sheet.

 

(b)    Notwithstanding the foregoing subparagraph (a) of this paragraph 22, immediately following the giving of notice by the DIP Agent to counsel to the Debtor, the U.S. Trustee, and counsel to the Committee, if any, of the occurrence of an Event of Default under the DIP Loan Documents (the “Termination Notice”) (i) all Commitments of the DIP Lender to provide any DIP Loans shall immediately be suspended; (ii) the Debtor shall have no right to request or use any proceeds of any DIP Loans or DIP Collateral, or to use Cash Collateral, other than towards the satisfaction of the DIP Obligations and the Carve-Out, as provided in this Interim Order and the DIP Loan Documents (including the DIP Term Sheet); provided that, during the Default Notice Period (as defined below), the Debtor shall be permitted solely to continue to use drawn proceeds of the DIP Facility and any Cash Collateral subject to the consent of the DIP Lender for any critical business-related expenses necessary to operate the Debtor’s business and preserve the DIP Collateral as determined by the Debtor in its reasonable discretion and in good faith; provided, further that the only basis on which the Debtor, a Committee (if any), or any other party in interest shall have the right to contest a Termination Notice shall be with respect to the validity of the Event of Default giving rise to such Termination Notice (i.e., whether or not such Event of Default has occurred or not) or any other basis that the Court deems proper, (iii) the Debtor shall deliver and cause the delivery of the proceeds of the DIP Loans and the DIP Collateral to the DIP Agent as provided herein and in the DIP Loan Documents (including the DIP Term Sheet) subject to the funding of the Carve-Out, and (iv) the DIP Agent shall be permitted to apply such proceeds in accordance with the terms of this Interim Order and the other DIP Loan Documents (including the DIP Term Sheet). The Debtor and, a Committee (if any) shall be entitled to an emergency hearing before this Court within five (5) calendar days after the Termination Notice (subject to the Court’s availability) is sent by the DIP Agent to the Debtor, the U.S. Trustee, and counsel to the Committee (if any) (such 5 calendar day period, the “Default Notice Period”)). If the Debtor, the Committee (if any), or any other party in interest does not contest the occurrence of the Event of Default within the Default Notice Period or if there is a timely contest of the occurrence of an Event of Default and the Court after notice and a hearing declines to stay the enforcement thereof, the Termination Date shall be deemed to have occurred for all purposes and the automatic stay shall be modified to permit the DIP Agent and the DIP Lenders to exercise all remedies under the DIP Orders, the other DIP Loan Documents (including the DIP Term Sheet), and applicable law, including, without limitation, to (i) set-off any and all amounts in accounts maintained by the Debtor with the DIP Agent or the DIP Lenders against the DIP Obligations, (ii) to otherwise enforce any and all rights against the DIP Collateral in the possession of any of the applicable DIP Lenders, including, without limitation, disposition of the DIP Collateral solely for application towards the DIP Obligations; and (iii) take any other actions or exercise any other rights or remedies permitted under the DIP Orders, the other DIP Loan Documents (including the DIP Term Sheet), or applicable law to effect the repayment of the DIP Obligations. Nothing herein shall preclude the DIP Secured Parties or the Prepetition Secured Parties from seeking an order from the Court upon written notice (which may be sent by e-mail)to the U.S. Trustee, counsel to the Debtor, and counsel to the Committee (if any) authorizing the DIP Agent or the Prepetition Agent to exercise any enforcement rights or remedies with respect to the DIP Collateral on less than five (5) calendar days’ notice or the Debtor’s right to contest such relief.

 

 

(c)    The automatic stay imposed under section 362(a) of the Bankruptcy Code is hereby modified pursuant to this Interim Order and the DIP Loan Documents (including the DIP Term Sheet) as necessary to (i) permit the Debtor to grant the Adequate Protection Liens and the DIP Liens and to incur all DIP Obligations and all liabilities and obligations to the Prepetition Secured Parties hereunder and under the DIP Term Sheet, as the case may be, and (ii) authorize the DIP Secured Parties Agent and Prepetition Secured Parties Agent to retain and apply payments and otherwise enforce their respective rights and remedies hereunder, subject to the provisions of paragraph 22(b) hereof.

 

(d)    The Debtor shall reasonably cooperate with the DIP Secured Parties and/or the Prepetition Secured Parties in their efforts to enforce their liens and security interests in the DIP Collateral or the Prepetition Collateral, as applicable, in accordance with this Interim Order and (other than the right to contest whether a DIP Termination Event has occurred and is continuing) the Debtor shall not take or direct any entity to take any action designed or intended to hinder or restrict in any respect such party from enforcing its rights or remedies in the DIP Collateral or the Prepetition Collateral, as applicable.

 

(e)    Nothing included herein shall prejudice, impair, or otherwise affect the Prepetition Agent’s or the DIP Agent’s rights to seek (on behalf of the Prepetition Secured Parties and the DIP Secured Parties, respectively) any other or supplemental relief in respect of the Debtor (including, as the case may be, other or additional adequate protection).

 

22.    Applications of Proceeds of Collateral, Payments and Collections.

 

(a)    As a condition to the DIP Loans and the authorization to use Cash Collateral, the Debtor has agreed that proceeds of any DIP Collateral and Prepetition Collateral, any amounts held on account of the DIP Collateral or Prepetition Collateral, and all payments and collections received by the Debtor with respect to all proceeds of DIP Collateral and Prepetition Collateral shall be used and applied in accordance with the terms and conditions of the DIP Term Sheet) (including repayment and reduction of the DIP Obligations), including the DIP Budget (subject to variances permitted under the DIP Loan Documents) and this Interim Order.

 

(b)     Subject to the Debtor’s rights under paragraph 22(b) hereof and the funding of the Carve-Out, if applicable, upon and after the occurrence of the Termination Date, all proceeds of DIP Collateral and Prepetition Collateral, whenever received, shall be paid and applied as follows: (i) first, to permanently and indefeasibly repay and reduce the DIP Obligations then due and owing in accordance with the DIP Loan Documents (including the DIP Term Sheet), until paid and satisfied in full in cash; (ii) second, subject to paragraph 11 hereof, to permanently and indefeasibly repay and reduce the Prepetition Secured Obligations (including any adequate protection obligations) then due and owing in accordance with the Prepetition Notes Documents, until paid and satisfied in full in cash; and (iii) third, to the Debtor’s estate. For avoidance of doubt, nothing in this Interim Order shall be construed to limit the voluntary and mandatory repayment provisions set forth in the DIP Loan Documents (including the DIP Term Sheet).

 

23.    Proofs of Claim, etc. None of the DIP Secured Parties or the Prepetition Secured Parties shall be required to file proofs of claim in the Chapter 11 Case or any Successor Case for any claim described herein. Notwithstanding any order entered by the Court in relation to the establishment of a bar date in the Chapter 11 Case or any Successor Case to the contrary, the DIP Agent, on behalf of itself and the DIP Secured Parties, and the Prepetition Agent, on behalf of itself and the Prepetition Secured Parties, respectively, are hereby authorized and entitled, in each of their sole and absolute discretion but not required to file (and amend or supplement, as each sees fit) a proof of claim or aggregate proofs of claim in the Chapter 11 Case or any Successor Case for any claim described herein; any proof of claim filed by the DIP Agent or the Prepetition Agent shall be deemed to be in addition to and not in lieu of any other proof of claim that may be filed by any of the respective DIP Secured Parties or Prepetition Secured Parties. Any order entered by the Court in relation to the establishment of a bar date for any claim (including without limitation administrative claims) in the Case or any Successor Case shall not apply to the DIP Agent, the other DIP Secured Parties, the Prepetition Agent or the other Prepetition Secured Parties.

 

24.    Payments Free and Clear. Any and all payments or proceeds remitted to the DIP Secured Parties or, except as otherwise provided herein, subject to paragraph 11 hereof, the Prepetition Secured Parties, pursuant to the provisions of this Interim Order, the DIP Loan Documents (including the DIP Term Sheet) or any subsequent order of the Court shall be irrevocable, received free and clear of any claim, charge, assessment or other liability.

 

25.    Other Rights and Obligations.

 

(i)    Good Faith Under Section 364(e) of the Bankruptcy Code; No Modification or Stay of this Interim Order. The DIP Secured Parties and the Prepetition Secured Parties have acted in good faith in connection with the DIP Facility, the DIP Loans, the DIP Loan Documents (including the DIP Term Sheet), the Prepetition Notes Documents, and this Interim Order and are entitled to rely upon the protections granted herein and by section 364(e) of the Bankruptcy Code. Based on the findings set forth in this Interim Order and in accordance with section 364(e) of the Bankruptcy Code, which is applicable to the DIP Facility as approved by this Interim Order, and notwithstanding any modification or reversal of any or all of this Interim Order by a subsequent order of the Court or any other court, the DIP Secured Parties and the Prepetition Secured Parties are entitled to the protections provided in section 364(e) of the Bankruptcy Code, and no such modification or reversal, shall affect the validity and enforceability of any DIP Obligation, DIP Lien, Adequate Protection Superpriority Claim, or Adequate Protection Lien, or any other advances made hereunder or the claims, liens, security interest, or priority authorized or created hereby or pursuant to the DIP Loan Documents (including the DIP Term Sheet). Notwithstanding any such modification or reversal, any claim granted to the DIP Secured Parties hereunder arising prior to the effective date of such modification or reversal of any DIP Liens or of the DIP Superpriority Claims granted to or for the benefit of the DIP Secured Parties shall be governed in all respects by the original provisions of this Interim Order, and the DIP Secured Parties shall be entitled to all of the rights, remedies, privileges, and benefits, including the DIP Liens and the DIP Superpriority Claims granted herein, with respect to any such claim.

 

 

(ii)    Expenses. To the fullest extent provided in the Prepetition Notes Documents and this Interim Order, the Debtor shall pay all expenses incurred by the DIP Secured Parties and the Prepetition Secured Parties (including, without limitation, the reasonable and documented fees and disbursements of their counsel, including White & Case LLP and Richards Layton & Finger, any other advisors and any other local counsel that they shall retain and any internal or third-party appraisers, consultants, financial, restructuring or other advisors and auditors advising any such counsel) without duplication, in connection with (i) the preparation, execution, delivery, funding, and administration of the DIP Term Sheet and the other DIP Loan Documents, including, without limitation, all due diligence fees and expenses incurred or sustained in connection therewith, (ii) the administration of the Prepetition Notes Documents, (iii) the Chapter 11 Case or any Successor Case, or (iv) enforcement of any rights or remedies under the DIP Loan Documents (including the DIP Term Sheet) or the Prepetition Notes Documents, or applicable law, in each case whether or not the transactions contemplated hereby are fully consummated. Notwithstanding any other provisions of this Interim Order, the Prepetition Secured Parties and the DIP Secured Parties, and their advisors and professionals shall not be required to comply with the U.S. Trustee fee guidelines but shall submit an invoice in summary form, which shall not be required to include time entry detail and may be redacted or modified to the extent necessary to delete any information subject to the attorney-client privilege, any information constituting attorney work product, or any other confidential information, and the provision of such invoices shall not constitute any waiver of the attorney-client privilege or of any benefits of the attorney work‑product doctrine for fees and expenses incurred after entry of this Interim Order to the Office of the U.S. Trustee and counsel for the Committee (if any) and the Debtor. Thereafter, within ten (10) calendar days of presentment of such statements, if no written objections to the reasonableness of the fees and expenses charged in any such invoice (or portion thereof) is made, the Debtor shall pay in cash all such fees and expenses of the Prepetition Secured Parties, the DIP Secured Parties, and their advisors and professionals. Any objection to the payment of such fees or expenses shall be made only on the basis of “reasonableness,” and shall specify in writing the amount of the contested fees and expenses and the detailed basis for such objection. To the extent an objection only contests a portion of an invoice, the undisputed portion thereof shall be promptly paid. If any such objection to payment of an invoice (or any portion thereof) is not otherwise resolved between the objecting party and the issuer of the invoice, either party may submit such dispute to the Court for a determination as to the reasonableness of the relevant disputed fees and expenses set forth in the invoice. This Court shall resolve any dispute as to the reasonableness of any fees and expenses. For the avoidance of doubt and without limiting any of the forgoing or any other provision of this Interim Order, the fees specified in the “Costs and Expenses” section of the DIP Term Sheet are, upon entry of this Interim Order and irrespective of any subsequent order approving or denying the DIP Facility or any other financing pursuant to section 364 of the Bankruptcy Code, entitled to all of the protections of section 364(e) of the Bankruptcy Code that may apply to such fees, and are deemed fully earned, indefeasibly paid, non-refundable, irrevocable and non-avoidable as of the date of this Interim Order.

 

(iii)    Credit Bid. The DIP Secured Parties and, subject to paragraph 11 hereof, the Prepetition Secured Parties shall each have the right to credit bid (either directly or through one or more acquisition vehicles), up to the full amount of the DIP Obligations, the Prepetition Obligations, and the Adequate Protection Superpriority Claims, or any of them in connection with any sale of all or any portion of the Prepetition Collateral or the DIP Collateral, including (without limitation) any sale occurring pursuant to section 363 of the Bankruptcy Code or included as part of any chapter 11 plan subject to confirmation under section 1129(b)(2)(A)(ii)-(iii) of the Bankruptcy Code, by a chapter 7 trustee under section 725 of the Bankruptcy Code, or otherwise, without the need for further court order authorizing the same. The Debtor shall not object to any DIP Secured Party or any Prepetition Secured Party credit bidding up to the full amount of the applicable outstanding DIP Obligations or Prepetition Obligations (including any Adequate Protection Superpriority Claims), in each case including any accrued interest, fees, and expenses, in any sale of any DIP Collateral or Prepetition Collateral, as applicable, whether such sale is effectuated through sections 363 or 1129 of the Bankruptcy Code, by a chapter 7 trustee under section 725 of the Bankruptcy Code, or otherwise.

 

(iv)    Binding Effect. The provisions of this Interim Order shall be binding upon and inure to the benefit of the DIP Secured Parties and the Prepetition Secured Parties, the Debtor, and its successors and assigns (including any trustee or other fiduciary hereinafter appointed as a legal representative of the Debtor or with respect to the property of the estate of the Debtor) whether in the Case, in any Successor Case, or upon dismissal of any such Chapter 11 or Chapter 7 case.

 

(v)    No Waiver.

(a)    The failure of the DIP Secured Parties or the Prepetition Secured Parties to seek relief or otherwise exercise their rights and remedies under this Interim Order, the other DIP Loan Documents (including the DIP Term Sheet), or the Prepetition Notes Documents or otherwise, as applicable, shall not constitute a waiver of any of the DIP Secured Parties’ or Prepetition Secured Parties’ rights hereunder, thereunder, or otherwise. Notwithstanding anything herein, the entry of this Interim Order is without prejudice to and does not constitute a waiver of, expressly or implicitly, or otherwise impair any of the rights, claims, privileges, objections, defenses, or remedies of the DIP Secured Parties or the Prepetition Secured Parties under the Bankruptcy Code or under non-bankruptcy law against any other person or entity in any court, including without limitation, the rights of the DIP Agent and the Prepetition Agent (i) to request conversion of the Chapter 11 Case to a case under Chapter 7, dismissal of the Chapter 11 Case, or the appointment of a trustee in the Chapter 11 Case, (ii) to propose, subject to the provisions of section 1121 of the Bankruptcy Code, a Plan, or (iii) to exercise any of the rights, claims or privileges (whether legal, equitable, or otherwise) on behalf of the DIP Secured Parties or the Prepetition Secured Parties.

(b)    The failure or delay on the part of any DIP Secured Parties or Prepetition Secured Parties to seek relief or otherwise exercise their rights and remedies under this Interim Order, the other DIP Loan Documents (including the DIP Term Sheet), the Prepetition Notes Documents, or applicable law, as the case may be, shall not constitute a waiver of any of their respective rights hereunder, thereunder, or otherwise. No delay on the part of any party in the exercise of any right or remedy under this Interim Order shall preclude any other or further exercise of any such right or remedy or the exercise of any other right or remedy. None of the rights or remedies of any party under this Interim Order shall be deemed to have been amended, modified, suspended, or waived unless such amendment, modification, suspension, or waiver is express, in writing and signed by the party against whom such amendment, modification, suspension, or waiver is sought. No consents required hereunder by any DIP Secured Parties or Prepetition Secured Parties shall be implied by any inaction or acquiescence by any of the DIP Secured Parties or Prepetition Secured Parties, respectively.

 

(vi)    No Third-Party Rights. Except as explicitly provided for herein, this Interim Order does not create any rights for the benefit of any third party, creditor, equity holder or any direct, indirect, third party, or incidental beneficiary.

 

(vii)    No Marshaling. Subject to and upon entry of the Final Order granting such relief, the DIP Secured Parties and the Prepetition Secured Parties shall not be subject to the equitable doctrine of “marshaling” or any other similar doctrine with respect to any of the DIP Collateral or the Prepetition Collateral, as applicable.

 

 

(viii)    Section 552(b). The Prepetition Secured Parties shall each be entitled to all of the rights and benefits of section 552(b) of the Bankruptcy Code and, subject to and upon the entry of the Final Order granting such relief, to the extent provided therein, the “equities of the case” exception under section 552(b) of the Bankruptcy Code shall not apply to the DIP Secured Parties or the Prepetition Secured Parties with respect to proceeds, product, offspring, or profits of any of the Prepetition Collateral or the DIP Collateral.

 

(ix)    Amendment. The Debtor and the DIP Agent may amend, modify, supplement, or waive any provision of the DIP Term Sheet (a “DIP Loan Amendment”) without further approval of the Court; provided that (1) such DIP Loan Amendment is not material (for purposes hereof, a “material DIP Loan Amendment” shall mean any modification or amendment that (a) increases the interest rate (other than as a result of the imposition of the default rate) or fees charged in connection with the DIP Facility, (b) increases the commitments of the DIP Lenders to make DIP Loans under the DIP Term Sheet, or (c) changes the Termination Date) and is undertaken in good faith by the DIP Lenders and DIP Agent and (b) the Debtor provides written notice of the DIP Loan Amendment on the docket. Any material DIP Loan Amendment to the DIP Term Sheet must be set forth in writing, signed by, or on behalf of the Debtor and the DIP Agent (after having obtained the approval of the requisite DIP Secured Parties as provided in the DIP Term Sheet) and approved by the Court on five (5) days’ prior notice to parties in interest in order to be effective, provided that the DIP Secured Parties and the Debtor reserves the right to seek approval of any material DIP Loan Amendment on an expedited basis.

 

(x)    Priority of Terms. To the extent of any conflict between or among (a) the express terms or provisions of any of the DIP Loan Documents (including the DIP Term Sheet), the Motion, or any other agreements, on the one hand, and (b) the terms and provisions of this Interim Order, on the other hand, unless such term or provision herein is phrased in terms of “defined in” or “as set forth in” the DIP Loan Documents (including the DIP Term Sheet), the terms and provisions of this Interim Order prevail.

 

(xi)    Survival of Interim Order. The provisions of this Interim Order and any actions taken pursuant hereto shall survive entry of any order which may be entered (a) confirming any Plan in the Chapter 11 Case, (b) converting of the Chapter 11 Case to a case under Chapter 7 of the Bankruptcy Code, (c) to the extent authorized by applicable law, dismissing the Chapter 11 Case, (d) withdrawing of the reference of the Chapter11 Case from this Court, or (e) providing for abstention from handling or retaining of jurisdiction of the Chapter 11 Case in this Court. The terms and provisions of this Interim Order, including the DIP Liens and DIP Superpriority Claim and any Adequate Protection Liens and Adequate Protection Superpriority Claims granted pursuant to this Interim Order, the DIP Term Sheet, and the and any priorities and protections granted to or for the benefit of the DIP Secured Parties and Prepetition Secured Parties (including the Adequate Protection Liens and the Adequate Protection Superpriority Claim) hereunder and thereunder shall continue in full force and effect to the fullest extent provided by section 364(e) of the Bankruptcy Code.

 

(xii)    Enforceability. This Interim Order shall constitute findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052 and shall take effect and be fully enforceable nunc pro tunc to the Petition Date immediately upon execution hereof.

 

(xiii)    No Waivers or Modification of Interim Order. The Debtor irrevocably waives any right to seek any modification or extension of this Interim Order without the prior written consent of the DIP Agent and the Prepetition Agent, and no such consent shall be implied by any other action, inaction, or acquiescence of the DIP Agent or the Prepetition Agent. The Debtor may not seek to modify or to alter relative lien priority of the DIP Liens, the Prepetition Liens and the Adequate Protection Liens set forth in this Interim Order.

 

(xiv)    Waiver of any Applicable Stay. Any applicable stay (including, without limitation, under Bankruptcy Rule 6004(h)) is hereby waived and shall not apply to this Interim Order.

 

26.    Reservations to Final Order. Notwithstanding language in this Interim Order that provides that certain relief is subject to or conditioned upon entry of a Final Order, such provisions are not intended to be automatically effective and are without prejudice to rights of parties in interest to object to the relief on a final basis and the Court’s authority to determine the final relief.

 

27.    Final Hearing.

 

(i)    The Final Hearing to consider entry of the Final Order and final approval of the DIP Facility is scheduled for April 8, 2024 at 11:00 a.m. (ET) at the United States Bankruptcy Court for the District of Delaware.

 

(ii)    On or before two (2) business days after entry of this Interim Order, the Debtor shall cause to be served, by United States mail, first-class postage prepaid, notice of the entry of this Interim Order and of the Final Hearing (the “Final Hearing Notice”), together with copies of this Interim Order and the Motion, on the Notice Parties and to any other party that has filed a request for notices with this Court prior thereto. The Final Hearing Notice shall state that any party in interest objecting to the entry of the proposed Final Order shall file written objections with the Clerk of the Court no later than March 27, 2024 at 4:00 p.m. (ET), which objections shall be served so that the same are received on or before such date by (a) proposed counsel for the Debtor, Faegre Drinker Biddle & Reath LLP, 320 S. Canal Street Suite 3100 Chicago, IL 60606, Attn: Mike T. Gustafson (mike.gustafson@faegredrinker.com) and 222 Delaware Avenue, Suite 1410, Wilmington, Delaware 19801, Attn.: Patrick A. Jackson (patrick.jackson@faegredrinker.com), (b) counsel to the DIP Secured Parties and Prepetition Secured Parties, White & Case LLP, 1221 Avenue of the Americas, New York, NY 10020, Attn: Harrison Denman (harrison.denman@whitecase.com) and Laura Garr (laura.garr@whitecase.com); (d) co-counsel for the Prepetition Secured Parties and DIP Secured Parties, Richards, Layton & Finger, P.A. 920 N. King Street, Wilmington, DE 19801, Attn.: Paul N. Heath (heath@rlf.com) and Amanda R. Steele (Steele@RLF.com); and (e) the U.S. Trustee, J. Caleb Boggs Federal Building, 844 King Street, Suite 2207, Wilmington, DE 19801.

 

28.    Retention of Jurisdiction. The Court has and will retain jurisdiction to enforce this Interim Order according to its terms.

 

 

 

 

EXHIBIT 1

 

DIP TERM SHEET

 

 

DIP Facility Summary of Terms and Conditions This summary of terms and conditions (the “DIP Term Sheet”) of a proposed debtor-in-possession credit facility (the “DIP Facility”) which shall be binding on the undersigned Parties (as defined below) from and after, and subject to, the entry of the Interim DIP Order (as defined below) by the Bankruptcy Court (as defined below). In the event of any conflict between this DIP Term Sheet and the terms of the DIP Orders (as defined below), the terms of the DIP Orders shall govern
Borrower:	Charge Enterprises, Inc. (the “Borrower” or “Debtor”)
DIP Agent:	AI Amped I, LLC (the “DIP Agent”)
DIP Lenders:	AI Amped I, LLC (the “DIP Lenders” and collectively with the Borrower and DIP Agent, the “Parties”)
DIP Facility:	A multiple-draw senior secured priming term loan facility (the “DIP Facility,” and all loans under such DIP Facility, collectively, the “DIP Loans,” and each, a “DIP Loan”) in the aggregate principal amount of up to $10,000,000 (the “Total Commitment Amount”), in each case subject to and in accordance with the DIP Budget (as defined below). All DIP Loans outstanding under the DIP Facility (together with all accrued and unpaid interest, fees, expenses and other amounts payable under or in respect of the DIP Facility, collectively, the “DIP Facility Obligations”) shall become due and payable on the Maturity Date (as defined below).
DIP Loan Documents:	The DIP Facility shall be governed by the DIP Orders (as defined below), this DIP Term Sheet , the DIP Budget, the DIP Credit Agreement (as defined below), and all instruments and documents executed at any time in connection therewith, each as may be amended, restated, supplemented or otherwise modified from time to time in accordance with their terms and shall be referred to collectively as the “DIP Loan Documents.” If the DIP Agent and the DIP Lenders in their sole discretion determine there is a need for a debtor in possession credit agreement in respect of the DIP Facility (the “DIP Credit Agreement”), the Parties shall work together in good faith to negotiate and document the DIP Credit Agreement within a reasonable (consistent with the term of this DIP Term Sheet) time period, and in any event prior to the deadline for entry of the Final DIP Order. The DIP Credit Agreement will be based on a customary form for debtor-in-possession financing transactions of this type as selected by the DIP Lenders, will include the terms and conditions of this DIP Term Sheet, such representations and warranties, mandatory prepayment provisions, affirmative and negative covenants and events of default and such other terms and conditions, in each case as are customary for debtor-in-possession financing transactions of this type as selected by the DIP Lenders and be otherwise in form and substance acceptable to the DIP Lenders in their sole discretion.
Bankruptcy Case:	The bankruptcy case (the “Bankruptcy Case”) of the Borrower to be filed under chapter 11 of title 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) on or before the milestone set forth in the RSA.

 

 

 

 

Terms & Conditions – DIP Facility
Availability:	Subject to the entry by the Bankruptcy Court of an interim order approving the DIP Facility on an interim basis, in form and substance acceptable to the DIP Lenders (the “Interim DIP Order”), and satisfaction by the Borrower of the conditions precedent set forth in the “Conditions Precedent to the Initial DIP Loans” section of this DIP Term Sheet, the Borrower shall be permitted to borrow an amount up to $4,000,000 (or such greater amount, as approved in writing by the DIP Lenders in their sole discretion) (the “Initial DIP Loan”) for the purposes set forth below and in accordance with the DIP Budget (as defined below). Subject to the entry by the Bankruptcy Court of an order approving the DIP Facility on a final basis, in substantially the same form as the Interim DIP Order and otherwise in form and substance acceptable to the DIP Lenders in their sole discretion, the “Final DIP Order” and, together with the Interim DIP Order, the “DIP Orders”, and each a “DIP Order”), and satisfaction by the Borrower of the conditions precedent set forth in the “Conditions Precedent to Each Subsequent Borrowing” section of this DIP Term Sheet, the Borrower shall be permitted to borrow an additional aggregate amount up to (x) the Total Commitment Amount minus (y) the principal amount of the Initial DIP Loan in one or more subsequent borrowings (each a “Subsequent DIP Loan”) for the purposes set forth below and in accordance with the DIP Budget; provided that the Borrower may not borrow less than $500,000 in any individual subsequent borrowing, and no Subsequent DIP Loan shall be requested or made within three (3) business days of a prior Subsequent DIP Loan.
Term:	Unless otherwise extended in writing by the DIP Lenders in their sole discretion, the period from the Funding Date (as defined below) to the earliest of: (i) the Scheduled Maturity Date (as defined below); (ii) the occurrence of an Event of Default (as defined below); (iii) the effective date of a plan of reorganization of the Borrower approved by the Bankruptcy Court (the “Confirmed Plan”) pursuant to section 1129 of the Bankruptcy Code; (iv) the consummation of a sale of all or substantially all of the assets of the Borrower or its subsidiaries; or (v) the date of the entry of an order converting the Bankruptcy Case to a case under Chapter 7 of the Bankruptcy Code (such date with respect to (i) through (v), the “Maturity Date”). “Scheduled Maturity Date” shall mean May 31, 2024.
Funding Date:	The date on which each of the conditions precedent set forth in the “Conditions Precedent to the Initial DIP Loans” section of this DIP Term Sheet below shall have been met (the “Funding Date”).
Use of Proceeds:	Subject to the provisions of the DIP Order, and in accordance with the DIP Budget, proceeds of the DIP Loans may be used by the Borrower to: (a) finance their working capital needs and for other general corporate purposes, (b) pay related transaction costs, fees, liabilities and expenses (including professional fees and expenses), adequate protection payments, and other administration costs incurred in connection with and for the benefit of the Bankruptcy Case, in each case in accordance with the DIP Budget; and (c) pay fees, liabilities and expenses (including professional fees and expenses incurred by the DIP Agent and the DIP Lenders) under the DIP Facility, including those incurred in connection with the preparation, negotiation, documentation, and court approval of the DIP Facility. Nothing in the DIP Order shall authorize the disposition of any assets of the Borrower outside the ordinary course of business, or Borrower’s use of any proceeds resulting therefrom, except in accordance with the DIP Budget. No proceeds of the DIP Loans, any Cash Collateral, any DIP Collateral or Prepetition Collateral, or the Carve-Out, shall be used, among other things, whether directly or indirectly: (i)         to finance or reimburse for expenses incurred or to be incurred, in both instances, in any way: (a) any investigation, adversary action, suit, arbitration, proceeding, application, motion or other litigation of any type adverse to the interests of any or all of DIP Lenders, the DIP Agent or the Prepetition Secured Parties (as defined below), or their respective rights and remedies under the DIP Facility, the DIP Orders, the DIP Loan Documents, or the Notes and other documents and instruments in respect of the Prepetition Secured Obligations (as defined below); or (b) any other action, which with the giving of notice or passing of time, would result in an Event of Default under the DIP Facility; (ii)         for any purpose that is prohibited under the Bankruptcy Code or the DIP Orders or that is not in accordance with the DIP Budget; (iii)         to make any payment, advance, intercompany advance, or any other remittance or transfer whatsoever (including any intercompany loans and investments) that is not in accordance with the express terms of the DIP Budget; (iv)         to make any payment to any board member, in such capacity as such, or shareholder of the Debtor or any of its affiliates or subsidiaries; or (v)         to make any payment in settlement of any claim, action or proceeding without Bankruptcy Court approval and the prior written consent of the DIP Lenders, which consent will not be unreasonably withheld or delayed.

 

 

DIP Proceeds Account:	The DIP Proceeds shall be funded into a controlled, segregated bank account (the “DIP Proceeds Account”), which DIP Proceeds Account (and the funds therein) shall be subject to first-priority senior security interests in favor of the DIP Agent, including a control agreement in favor of the DIP Agent.
Interest:	DIP Loans under the DIP Facility shall bear interest at a rate per annum equal to Secured Overnight Financing Rate (“SOFR”) for a one month interest period (floor of 5.00%) plus 10.00% paid in cash at the end of each applicable interest period. Interest shall be calculated on the basis of the actual number of days elapsed in a 360-day year. All accrued and unpaid interest shall be paid on the Maturity Date. In the event any amounts remain outstanding after the Maturity Date, interest on such amounts shall be payable at the default rate in cash, upon demand by the DIP Agent. During the continuance of an Event of Default (as defined below), any amounts outstanding under the DIP Facility will bear interest at an additional 5.00% per annum above the then applicable interest rate.
OID/Upfront Fee:	The Borrower shall pay 1.00% of the principal amount of the aggregate commitments under the DIP Facility in cash on the Funding Date, which amount may be netted from the Initial DIP Loan.
Exit Fee:	The Borrower shall pay 3.00% of the principal amount of the aggregate commitments under the DIP Facility in cash upon any termination or repayment or prepayment of principal amount of the DIP Facility or any commitment thereunder, whether through optional prepayments, mandatory prepayments, at maturity, upon acceleration or otherwise to the DIP Lenders; provided, however, such fee shall be deemed waived upon consummation of the Plan (as defined below).
Mandatory Prepayments:	Mandatory prepayments of the DIP Loans shall be required in an amount equal to (i) 100% of the proceeds from asset sales or series of related asset sales by the Borrower, net only of actual costs necessary to close such sale or sales, so long as such costs are approved by the Bankruptcy Court; (ii) 100% of insurance and condemnation proceeds (including the return of unearned premiums), in each case received by the Borrower; and (iii) 100% of the proceeds of any extraordinary amounts received by or on behalf of the Borrower, including without limitation, the proceeds of the incurrence of any indebtedness (including any indebtedness incurred under section 363 or 364 of the Bankruptcy Code from anyone other than the DIP Lenders) or any equity contributions. Mandatory Prepayments shall be subject to the Make Whole Amount (as defined below).
Voluntary Prepayments	The DIP Loans shall not be voluntarily prepaid under any circumstance. A Make Whole Amount (as defined below) shall be payable upon acceleration, termination, prepayment, or repayment. “Make Whole Amount” means, as of any date of determination, an amount equal to the aggregate amount of interest which would have otherwise been payable on the principal amount of the DIP Loans repaid or prepaid (or deemed repaid or prepaid in the case of acceleration or termination) on such date from the date of repayment or prepayment until the Scheduled Maturity Date discounted at the Treasury Rate (as defined below) plus 0.50%. “Treasury Rate” means, with respect to any repayment or prepayment of DIP Loans, a rate per annum (computed on the basis of actual days elapsed over a year of 360 days) equal to the rate determined by the DIP Agent on the date falling three Business Days prior to the date of such repayment or prepayment, to be the yield expressed as a rate listed in the Wall Street Journal for United States Treasury securities most nearly equal to the period from the date of such prepayment or repayment to and including the Scheduled Maturity Date.
DIP Superpriority Claims; Priority:	Subject only to the Carve-Out (as defined below), all amounts owing by the Borrower under the DIP Facility at all times will constitute allowed superpriority administrative expense claims in the Bankruptcy Case, having priority over all claims and administrative expense claims against the Borrower, now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, of the kinds specified in or ordered pursuant to sections 105, 326, 327, 328, 330, 331, 361, 362, 363, 364, 365, 503(a), 503(b), 506(c), 507(a), 507(b), 546(c), 546(d), 552(b), 726, 1113, 1114 and any other provision of the Bankruptcy Code, and shall at all times be senior to the rights of the Borrower and any successor trustee or creditor in the Bankruptcy Case or any successor case thereto. All liens authorized and granted pursuant to the DIP Order entered by the Bankruptcy Court approving the DIP Facility shall be deemed effective and perfected as of the Petition Date (as defined below), without necessity of the execution, filing or recording of security agreements, pledge agreements, control agreements, financing statements or other agreements and no further filing, notice or act will be required to effect such perfection. However, the DIP Agent shall be permitted (and is hereby authorized by the Debtor), but not required, to (or to require the Debtors to) make any filings, deliver any notices, make recordations, perform any searches or take any other acts as may be desirable under federal or state law in order to reflect the security, perfection or priority of the DIP Lenders’ claims described herein, including prior to the Petition Date.

 

 

DIP Liens; DIP Collateral:

All obligations of the Borrower under the DIP Facility shall be secured by the following: (i)         pursuant to section 364(c)(2) of the Bankruptcy Code, valid, binding, continuing, enforceable, fully perfected first-priority liens on and security interests in all DIP Collateral that is not subject to any liens or encumbrances immediately prior to the Petition Date, subject only to the Carve Out; and (ii)         pursuant to section 363(c)(3) and 364(d)(1) of the Bankruptcy Code, valid, binding, continuing, enforceable, fully perfected first priority, priming liens on and security interests in all other DIP Collateral, which liens and security interests shall be subject only to (x) any valid, enforceable, perfected, and non-avoidable lien or security interest in favor of any person other than the Prepetition Secured Parties that was in existence immediately prior to the Petition Date or that is perfected as permitted by Section 546(b) of the Bankruptcy Code (a “Permitted Encumbrance”) and (y) the Carve-Out, and senior to all other liens and encumbrances in respect of the DIP Collateral ((i) – (ii), collectively, the “DIP Liens”). “DIP Collateral” shall include all assets (whether tangible, intangible, personal or mixed) of the Borrower, whether now owned or hereafter acquired and wherever located, before or after the Petition Date, including, without limitation, all accounts, proceeds of leases, inventory, equipment, equity interests or capital stock in subsidiaries, investment property, instruments, chattel paper, contracts, patents, copyrights, trademarks and other general intangibles, commercial litigation claims, the proceeds of all claims or causes of action, and all rents, products, offspring, profits and proceeds thereof (including, without limitation, all Prepetition Collateral and, subject to the entry of the Final DIP Order, all claims or causes of action of the Borrower arising under sections 502(d), 542, 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code and any other avoidance or similar action under the Bankruptcy Code or similar state law avoidance actions under chapter 5 of the Bankruptcy Code). The DIP Liens shall be enforceable against and binding upon the Borrower, its estate and any successors thereto, including, without limitation, any trustee or other estate representative appointed in the Borrower’s Bankruptcy Case, or any Successor Case (as defined below). The Borrower shall use a cash management system that is the same as or substantially similar to its prepetition cash management system, or as otherwise agreed by the DIP Lenders and authorized by DIP Lenders (in their sole discretion) and the Bankruptcy Court. The DIP Order shall provide the DIP Lenders with a valid, binding, perfected and enforceable first priority security interest in and lien on the cash held in the Borrower’ bank accounts, subject only to Permitted Encumbrances, provided that nothing herein or in the DIP Order shall constitute an admission, or a finding or ruling by the Bankruptcy Court, that any alleged Permitted Encumbrance is valid, senior, enforceable, prior, perfected or non-avoidable.

Carve-Out:

The DIP Liens, Prepetition Secured Obligations, the Prepetition Liens, the Adequate Protection Superpriority Claims (as defined below), and the Adequate Protection Liens (as defined below) shall, in all instances, be subject and subordinate to prior payment of the Carve-Out. The “Carve-Out” means the sum of: (i) all fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the United States Trustee under section 1930(a) of title 28 of the United States Code plus interest at the statutory rate (without regard to the notice set forth in (iii) below); (ii) up to the amounts set forth in the respective DIP Budget line items and, to the extent allowed by the Bankruptcy Court, all unpaid fees and expenses (the “Allowed Professional Fees”) incurred by persons or firms retained by the Borrowers pursuant to section 327, 328, or 363 of the Bankruptcy Code (the “Debtor Professionals”) and any official committee (the “Committee”), if any, appointed in the Bankruptcy Case (the “Committee Professionals,” and together with the Debtor Professionals, the “Professionals”) at any time on or before one business day following delivery by the DIP Agent of a Carve-Out Trigger Notice, whether allowed by the Bankruptcy Court prior to or after delivery of a Carve-Out Trigger Notice; and (iii) Allowed Professional Fees of Professionals in an aggregate amount not to exceed $250,000 incurred after delivery by the DIP Agent of the Carve-Out Trigger Notice (the amount set forth in this clause (iii) being the “Post Carve-Out Trigger Notice Cap”); provided that under no circumstances shall any success, completion, transaction or similar fees be payable from the Carve Out.. For purposes of this DIP Term Sheet, “Carve-Out Trigger Notice” shall mean a written notice delivered by email (or other electronic means) by the DIP Agent to counsel to the Borrower, the United States Trustee, and counsel to the Committee (if any), which notice may be delivered following the occurrence and during the continuation of an Event of Default, stating that the Post Carve-Out Trigger Notice Cap has been invoked. Prior to the delivery of a Carve-Out Trigger Notice, the Borrower shall wire transfer funds, on a weekly basis, to an escrow account held by a qualified escrow agent to be agreed upon by the Parties (“Escrow Holder”) (such account, to the extent of such funds actually deposited, the “Professional Fee Reserve Account”) in an amount equal to, but not to exceed, the professional fees and costs set forth in the DIP Budget for Debtor Professionals for each such week. From such funds held in the Professional Fee Reserve Account, Escrow Holder shall release to the Debtor Professionals solely such amounts as are payable from time to time pursuant to the DIP Budget and an applicable order of the Bankruptcy Court, including an order approving interim compensation procedures in the Chapter 11 Case and any order granting interim or final fee applications for Professionals (each, a “Fee Order”). For the avoidance of doubt, (a) in making payments from the Professional Fee Reserve Account, Escrow Holder shall be entitled to rely upon written certifications of each Debtor Professional as to the amount such Debtor Professional is authorized pursuant to the DIP Budget and an applicable order of the Bankruptcy Court to be paid at such time from the Professional Fee Reserve Account; and (b) in no circumstances shall Escrow Holder be obligated to pay any Debtor Professional other than from the funds held, from time to time, in the Professional Fee Reserve Account in accordance with the DIP Budget and an applicable order of the Bankruptcy Court. Funds held in the Professional Fee Reserve Account shall be applied to Allowed Professional Fees that have been incurred following the Petition Date in accordance with the procedures established in the Bankruptcy Case (the “Interim Fee Procedures”). Payments and reimbursements made to a Professional prior to delivery of the Carve-Out Trigger Notice shall reduce the amounts available to such Professional under section (ii) of the Carve-Out, and neither the Professional Fee Reserve Account nor payments therefrom shall in any way increase the Carve-Out. All Allowed Professional Fees payable to Debtor Professionals shall be paid first from funds in the Professional Fee Reserve Account, if any, and, upon exhaustion thereof, from the Carve-Out (less any amounts previously funded into the Professional Fee Reserve Account). For the avoidance of doubt the DIP Liens, Prepetition Liens, and Adequate Protection Liens shall attach to, and shall have a residual right to and lien on, any excess funds in the Professional Fee Reserve Account after satisfaction of the Carve-Out in respect of Allowed Professional Fees, which excess funds shall then be used to satisfy amounts due under the DIP Facility, the Prepetition Secured Obligations, and the Adequate Protection Amount, as applicable, in each case, until paid in full in cash.

 

 

Conditions Precedent to the Initial DIP Loans:

The obligation of the DIP Lenders to provide Initial DIP Loan shall be subject to the satisfaction of the following conditions precedent and any other conditions precedent (the “Initial Borrowing Conditions”): 1.         The delivery of the Initial DIP Budget (as defined below) in form and substance satisfactory to the DIP Agent and DIP Lenders in their sole discretion; 2.         Within three (3) business days after the Petition Date, the Bankruptcy Court shall have entered the Interim DIP Order, in form and substance satisfactory to the DIP Agent and DIP Lenders in their sole discretion authorizing and approving the DIP Facility and granting continued use of cash collateral and the transactions contemplated thereby, including, without limitation, authorizing customary stipulations and releases by the Debtor as set forth in the Interim DIP Order and the granting of valid, enforceable, non-avoidable and fully perfected superpriority priming security interests and liens on all DIP Collateral and superpriority claims in favor of the DIP Agent on behalf of itself and the DIP Lenders and adequate protection to the Prepetition Secured Parties as set forth herein, and such Interim DIP Order shall be in full force and effect, and shall not (in whole or in part) have been reversed, modified, amended, stayed, vacated, appealed, or subject to a stay pending appeal or otherwise challenged or subject to any challenge and the Debtor shall be in compliance with the Interim DIP Order; 3.         All orders entered by the Bankruptcy Court pertaining to cash management, adequate protection, and all other “first day” relief, and all motions and other documents filed or to be filed with, and submitted to, the Bankruptcy Court in connection therewith shall be in form and substance reasonably satisfactory to the DIP Agent and DIP Lenders in their sole discretion; 4.         No Event of Default (as defined below) and no condition which would constitute an Event of Default with the giving of notice or lapse of time or both shall exist or result from the borrowing of the Initial DIP Loan; 5.         Receipt of a borrowing notice at least three (3) business days prior to proposed date of borrowing from the Borrower in form and substance satisfactory to the DIP Agent; 6.         All fees, costs, and expenses (including reasonable and documented legal and advisory fees and expenses) of the DIP Agent and DIP Lenders and other compensation required by the DIP Loan Documents and this DIP Term Sheet shall have been paid or reimbursed on or prior to the Funding Date; 7.         The DIP Lenders shall be satisfied that the Debtor has complied with the following customary closing conditions: (a) the delivery of corporate records and documents from public officials, secretary’s certificates, and officer’s certificates; and (b) evidence of authority. The Debtor and the transactions contemplated by this DIP Term Sheet and the DIP Orders shall be in compliance in all material respects with all applicable laws and regulations; and 8.         The DIP Agent and DIP Lenders shall have received all documentation and other information that the DIP Agent and/or the DIP Lenders reasonably request in order to comply with its ongoing obligations under applicable “know your customer” and anti- money laundering rules and regulations, including the USA Patriot Act.

Conditions Precedent to Each Subsequent DIP Loan:

Unless otherwise indicated, the obligation to provide each DIP Loan after the Initial DIP Loan shall be subject to the satisfaction of the Initial Borrowing Conditions and the following additional conditions precedent: (i)         All Initial Borrowing Conditions have been satisfied and the Borrower remains in compliance with the terms of all such conditions immediately prior to and after giving effect to any Subsequent DIP Loans; (ii)         The Borrower, the DIP Agent, the DIP Lenders, and each other party thereto shall have entered into the final DIP Loan Agreements, including the DIP Credit Agreement to the extent requested by the DIP Lenders as provided herein, and such DIP Loan Documents shall be in full force and effect and shall not have been reversed, modified, amended, stayed, or vacated; (iii)         The Bankruptcy Court shall have entered the Final DIP Order, in form and substance satisfactory to the DIP Agent and DIP Lenders in their sole discretion authorizing and approving the DIP Facility and granting continued use of cash collateral and the transactions contemplated thereby, including, without limitation, authorizing customary stipulations and releases by the Debtor, granting waivers with respect to sections 506(c) and 552(b) of the Bankruptcy Code and marshaling as provided herein, and the granting of valid, enforceable, non-avoidable and fully perfected superpriority security interests and liens on all DIP Collateral and the granting superpriority claims, in each case in favor of the DIP Agent on behalf of itself and the DIP Lenders on a final basis and such Final DIP Order shall be in full force and effect, and shall not (in whole or in part) have been reversed, modified, amended, stayed, vacated, appealed, or subject to a stay pending appeal or otherwise challenged or subject to any challenge; (iv)         The Borrower shall be in compliance with all terms of the Interim DIP Order, the Final DIP Order, and the DIP Loan Documents; (v)         The Borrower shall be in compliance with the DIP Budget; (vi)         The representations and warranties contained in the DIP Loan Documents shall be true and correct as though made on and as of such date, except to the extent that any such representation or warranty expressly relates to an earlier date (in which case such representation or warranty shall be true and correct on and as of such earlier date); (vii)         No Event of Default and no condition which would constitute an Event of Default with the giving of notice or lapse of time or both shall exist or result from the borrowing of the Subsequent DIP Loan; (viii)         All final orders entered by the Bankruptcy Court pertaining to cash management, adequate protection, and all other “second day” relief, and all motions and other documents filed or to be filed with, and submitted to, the Bankruptcy Court in connection therewith shall be in form and substance reasonably satisfactory to the DIP Agent and DIP Lenders in their sole discretion; (ix)         Receipt of a borrowing notice at least three (3) business days prior to proposed date of borrowing from the Borrower in form and substance satisfactory to the DIP Agent; (x)         The Debtor and the transactions contemplated by the DIP Loan Document shall be in compliance in all material with all applicable laws and regulations; and (xi)         All fees, costs, expenses (including reasonable and documented legal and advisory fees and expenses) of the DIP Agent and DIP Lenders and other compensation required by the DIP Loan Documents shall have been paid or reimbursed on or prior to the funding of any Subsequent DIP Loan in accordance with the Budget.

 

 

Financial Reporting Requirements:	The Borrower and its operating subsidiaries shall provide the DIP Agent with financial reporting customary and appropriate for similar loan agreements for similar debtor-in-possession financings or deemed by the DIP Agent appropriate or otherwise required by them in relation to this specific transaction, including without limitation the reporting obligations set forth in the DIP Order. After delivery of the Initial DIP Budget (as defined below), the Borrower will subsequently provide the DIP Agent with an updated DIP Budget through the Outside Effective Date (as defined herein) every fourth Friday. All DIP Budgets shall be subject to the approval of the DIP Lenders in their sole discretion.
DIP Budget and Budget Variance Covenant:	The Borrower and the DIP Agent shall agree to an initial budget, including a cash-flow forecast setting forth all projected cash receipts and cash disbursements on a weekly basis (the “Initial DIP Budget”). The “DIP Budget Period” shall refer to period commencing on the date that the Interim DIP Order is entered and the Outside Effective Date. The Borrower will subsequently provide the DIP Agent with an updated budget every fourth Friday prior to the end of the DIP Budget Period for the remaining weeks left under the Initial DIP Budget. Each updated budget shall be subject to the approval of the DIP Lenders in their sole discretion (each such approved budget, a “Supplemental Approved DIP Budget” and together with the Initial DIP Budget, the “DIP Budget”); provided that until such time as the DIP Agent approves any updated budget, the Borrower shall be subject to and be governed by the terms of the Initial DIP Budget or such Supplemental Approved DIP Budget, as applicable, then in effect in accordance with the DIP Order. The Borrower shall provide to the DIP Agent a budget variance report (the “Budget Variance Report”) on the Friday of every other week during the DIP Budget Period, and the DIP Budget Variance Report shall set forth in reasonable detail actual receipts and disbursements of Borrower, together with a statement certifying compliance with the DIP Budget Covenant (as defined below) set forth below. The Borrower shall not permit or suffer to exist, a negative variance of 15% or more of total aggregate Operating Disbursements and Non-Operating Disbursements (as reflected in the DIP Budget) in the aggregate from the amounts set forth in the DIP Budget (each, a “Permitted Variance”), tested on a cumulative rolling two (2) week basis (the “DIP Budget Covenant”). The DIP Agent shall have no obligation to permit the use of proceeds of DIP Loans or cash collateral, and the Borrower shall have no authority to use proceeds of DIP Loans or cash collateral, other than in accordance with the DIP Budget, subject to the DIP Budget Covenant and as set forth in the DIP Order.
Affirmative Covenants:	The DIP Loan Documents will contain customary and appropriate affirmative covenants for debtor in possession financings of this type, and as otherwise determined by the DIP Lenders to be necessary and appropriate for this particular transaction, including, without limitation, the following which apply pursuant to this DIP Term Sheet: The Borrower shall and shall cause each of its subsidiaries to, at all times, (a) comply with the DIP Order and each other order entered by the Bankruptcy Court in the Bankruptcy Case and all applicable laws, rules and regulations, (b) comply with the DIP Budget Covenant, (c) provide access to the DIP Agent and DIP Lenders to the Borrower’s financial advisors, management team and books and records and other information (including historical information), in all cases, including with respect to strategic planning, cash, and liquidity management, and operational and restructuring activities (subject to customary exceptions), (d) operate in the ordinary course of business, and (e) absent emergent circumstances, deliver all pleadings, motions and other documents filed with the Bankruptcy Court on behalf of the Borrower to the DIP Agent at least two (2) days prior to filing such pleadings, motions or other documents with the Bankruptcy Court.

 

 

Negative Covenants:

The DIP Loan Documents will contain customary and appropriate negative covenants for debtor in possession financings of this type, and as otherwise determined by the DIP Lenders to be necessary and appropriate for this particular transaction, including, without limitation, the following which apply pursuant to this DIP Term Sheet: The Borrower shall at all times not do, not cause to be done, and agree not to do or cause to be done any of the following: (a) create, incur, assume or permit to exist any indebtedness, other than the DIP Facility and the Prepetition Secured Obligations; (b) purchase, hold or acquire (including pursuant to any merger, consolidation or amalgamation with a person that is not a wholly owned subsidiary immediately prior to such merger, consolidation or amalgamation) any equity interests, evidences of indebtedness or other securities of, make or permit to exist any loans or advances to or guarantees of the obligations of, or make or permit to exist any investment or any other interest in any other person other than the subsidiaries of the Borrower as of the Petition Date; (c) merge into, or consolidate or amalgamate with, any other person, or permit any other person to merge into or consolidate with it, or sell, transfer, license, lease or otherwise dispose of (in one transaction or in a series of transactions) all or any part of its assets, or issue, sell, transfer or otherwise dispose of any equity interests of the Borrower or any subsidiary of the Borrower, or purchase, lease or otherwise acquire (in one transaction or a series of transactions) all or any substantial part of the assets of any other person or any division, unit or business of any other person, other than (i) asset sales approved by an order of the Bankruptcy Court that is in form and substance acceptable to the DIP Lenders in their sole discretion or is otherwise in accordance with the DIP Budget, (ii) any disposition which would indefeasibly satisfy the DIP Facility Obligations in full in cash, (iii) asset sales in the ordinary course of business and consistent with past practice and (iv) dispositions of obsolete, worn out, used or surplus property in the ordinary course of business and consistent with past practice; (d) incur or make any Restricted Payment (as defined below), investment, loan or other payment without the prior written consent of the DIP Lenders, other than as expressly contemplated under the DIP Budget; (e) modify or alter (i) in any material manner the nature and type of its business or the manner in which such business is conducted or (ii) its organizational documents, except as required by the Bankruptcy Code or a plan of reorganization consistent with the Restructuring Support Agreement and otherwise acceptable to the DIP Lenders, or in a manner that is not materially adverse to the interests of the DIP Lenders without the prior written consent of the DIP Lenders; (f) absent prior written consent of the DIP Lenders assume or reject any executory contract or unexpired lease; (g) file or propose any plan of reorganization that is inconsistent with the Restructuring Support Agreement; (h) engage in any activities that would result in the Borrower becoming an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940; or (i) transfer any cash or cash equivalents that constitute DIP Collateral to a subsidiary of the Borrower without the prior written approval of the DIP Lenders (other than as expressly contemplated under the DIP Budget. The Borrower shall and, shall cause each of its subsidiaries to, at all times not do, not cause to be done, and agree not to do or cause to be done any of the following: (1) other than liens securing the DIP Facility and the Prepetition Secured Obligations or liens existing prior to the Petition Date, create, incur, assume or suffer to exist any lien upon any of its property, assets, income or profits, whether now owned or hereafter acquired, except the Carve-Out; or (2) sell or transfer any property or assets, or purchase or acquire any property or assets, other than in the ordinary course of business and consistent with past practice or with the written consent of the DIP Agent. As used in this DIP Term Sheet, “Restricted Payment” means, with respect to any person, (a) the declaration or payment of any dividend (whether in cash, securities or other property or assets) or (b) any other distribution (by reduction of capital or otherwise), in each case directly or indirectly, whether in cash, property, securities or a combination thereof, with respect to any of its equity interests or directly or indirectly redeem, purchase, retire or otherwise acquire for value any of its equity interests or set aside any amount for any such purpose.

 

 

Events of Default:

Each of the following shall be an event of default (each an “Event of Default”) under the DIP Loan Documents, including under this DIP Term Sheet: (i)         there is a material breach under the Restructuring Support Agreement dated February 25, 2024 among Charge and Arena (each as defined therein) (the “Restructuring Support Agreement”) or the Restructuring Support Agreement terminates; (ii)         the Borrower’s failure to timely meet any Milestone (as defined below) unless extended in writing by the DIP Lenders, which extension may be granted via email by counsel to the DIP Lenders; (iii)         the Borrower’s noncompliance with the DIP Budget or the DIP Budget Covenant which is not curable or, solely if curable, not cured within two (2) business days; (iv)         the entry of an order: (a) appointing a trustee, receiver or examiner with expanded powers, including to manage the Borrower’s business, (b) dismissing the Borrower’s Bankruptcy Case, (c) converting the Borrowers’ Bankruptcy Case to a case under chapter 7 of the Bankruptcy Code, or (d) terminating or reducing the Borrower’s exclusivity period under section 1121 of the Bankruptcy Code for any reason whatsoever, or the expiration of such period without extension; (v)         the granting of relief from any stay of proceeding (including, without limitation, the automatic stay) so as to allow a third party to proceed against any assets of the Borrower in excess of $100,000, in the aggregate; (vi)         the filing of a motion by the Borrower, without written consent of the DIP Lenders, to incur debt secured by a lien with priority equal to, or superior to, the DIP Liens, the Prepetition Liens or the Adequate Protection Liens, or any of them, or which is given superpriority administrative expense status under section 364(c) of the Bankruptcy Code, unless such motion provides for the proceeds of such debt to be used for the indefeasible payment in full in cash of the DIP Loans, the Prepetition Secured Obligations, the Adequate Protection Amount, and any and all other amounts due to the DIP Lenders and the Prepetition Secured Parties; (vii)         entry of an order granting any lien or superpriority claim with the priority set forth immediately above; (viii)         the filing of a motion by the Borrower to use cash collateral of the DIP Lenders or the Prepetition Secured Parties under section 363(c) of the Bankruptcy Code or any equivalent provision of relevant applicable law without prior written consent of the DIP Lenders and the Prepetition Secured Parties; (ix)         the Borrower shall (a) challenge or contest the validity or enforceability of the DIP Orders or deny that it has further liability thereunder, (b) challenge or contest the nature, extent, amount, enforceability, validity, priority or perfection of the obligations under the DIP Facility, the DIP Liens, the DIP superpriority claims, the Adequate Protection Liens, Adequate Protection Amount, the Adequate Protection Superpriority Claims, the Prepetition Secured Obligations, or the Prepetition Liens, (c) assert any claim, defense or cause of action that seeks to avoid, recharacterize, subordinate (whether equitable subordination or otherwise), disgorge, disallow, impair or offset all or any portion of the obligations under the DIP Facility, the DIP Liens, the DIP superpriority claims, the Adequate Protection Liens, Adequate Protection Amount, the Adequate Protection Superpriority Claims, the Prepetition Secured Obligations, or the Prepetition Liens, (d) investigate, join or file any motion, application or other pleading in support of, or publicly support any other entity that has asserted any of the claims, challenges or other requested relief contemplated in clauses –a) - (c) above. (x)         entry of an order staying, reversing, vacating, or otherwise modifying the DIP Facility or the DIP Orders in any manner not consented to in writing by the DIP Lenders; (xi)         the filing by the Borrower of any motion or a pleading seeking to stay, reverse, amend, vacate, or modify any of the provisions of the Interim DIP Order other than in connection with a Final DIP Order consented to by the DIP Lenders; (xii)         the allowance of any claim or claims under section 506(c) of the Bankruptcy Code or otherwise against or in relation to any DIP Lender or the DIP Collateral; (xiii)         cessation of liens or superpriority claims granted in the DIP Orders to be valid, perfected and enforceable in all respects with the priority described herein; and (xiv)         the filing of any motion or other pleading by the Borrower seeking, supporting, or otherwise consenting to, entry of any of the orders described above, or the Borrower’s failure to timely contest any such motion or pleading filed by another party, including but not limited to the filing by the Borrower of, or any motion or other pleading in support of, a plan of reorganization other than the Plan of Reorganization (as defined in the RSA).

 

 

Representations and Warranties:	All representations and warranties contained in the Notes (as defined below) and made by, or applicable to, the Debtor and its subsidiaries, are hereby incorporated herein by reference, mutatis mutandis, as of the date of this DIP Term Sheet, except to the extent such representations and warranties and negative covenants are violated as a result of the Debtor filing the Bankruptcy Case or existed prior to the Petition Date. In addition, on each Funding Date, the Borrower represents and warrants that it is in valid existence, has the requisite power, is due authorized, there is no conflict with the Interim DIP Order or the Final DIP Order (as applicable) or applicable law, governmental consent, enforceability of DIP Loan Documents, accuracy of financial statements, and all other non-forward looking information provided, compliance with law, absence of “Material Adverse Change” (other than arising from specified known events), no default under the DIP Loan Documents, taxes, subsidiaries, is in compliance with ERISA and pension and benefit plans, good and marketable title and ownership of properties and necessary rights to intellectual property, insurance, inapplicability of Investment Company Act, compliance with OFAC, money laundering laws, PATRIOT Act and other anti-terrorism laws and anti-corruption laws, continued accuracy of representations and continued effectiveness of the applicable DIP Order and each other order of the Bankruptcy Court with respect to the DIP Facility.
Remedies:	In addition to other customary terms and remedies, and to such other rights and remedies as are available to the DIP Agent and DIP Lenders at law or at equity, subject to the Carve-Out, upon the occurrence and during the continuance of an Event of Default, the DIP Agent, in its sole and absolute discretion may immediately (w) deliver a notice of an Event of Default; (x) terminate any pending DIP Loans and use of Cash Collateral; (y) sweep all cash in any controlled accounts, and (z) terminate the DIP Facility and all commitments thereunder. In the case of the enforcement of liens and other remedies with respect to the DIP Collateral and subject to the Carve-Out, the terms and conditions set forth in the DIP Orders will be customary and otherwise acceptable to the DIP Lenders in their sole discretion, and shall provide for the automatic stay to be modified to permit the DIP Agent and the DIP Lenders (in the case of any exercise of remedies upon the occurrence of an Event of Default, upon five (5) calendar days’ written notice to counsel to the Debtors (the “Termination Notice”) by the DIP Agent of the occurrence of an Event of Default (such 5-calendar day period, the “Default Notice Period”)), to exercise all remedies under the DIP Orders, the other DIP Loan Documents and applicable law, including, without limitation, to (x) set-off any and all amounts in accounts maintained by the Debtors with the DIP Agent or the DIP Lenders against the DIP Obligations, (y) to otherwise enforce any and all rights against the DIP Collateral in the possession of any of the applicable DIP Lenders, including, without limitation, disposition of the DIP Collateral solely for application towards the DIP Obligations; and (z) take any other actions or exercise any other rights or remedies permitted under the DIP Orders, the DIP Loan Documents or applicable law to effect the repayment of the DIP Obligations; provided that during the Default Notice Period, the Debtor shall be permitted solely to continue to use drawn proceeds of the DIP Facility and any cash collateral subject to the consent of the DIP Lenders for any critical business-related expenses necessary to operate the Debtors’ business and preserve the DIP Collateral as determined by the Debtor in its reasonable discretion and in good faith; and provided, further, that the only basis on which the Debtor, a committee (if any) or any other party-in-interest shall have the right to contest a Termination Notice shall be with respect to the validity of the Event of Default giving rise to such Termination Notice (i.e., whether or not such Event of Default has occurred or not). Upon payment in full of the DIP Obligations, the foregoing enforcement rights may be exercised by the Prepetition Secured Parties.
Milestones:	The DIP Orders shall require the Borrowers to comply with the following milestones (collectively, the “Milestones”): (i)         On or before the date that is three (3) business days after the Petition Date, the Interim DIP Order authorizing and approving on an interim basis the DIP Facility and the transactions contemplated thereby, in form and substance consistent with this DIP Term Sheet, shall have been entered by the Bankruptcy Court; (ii)         The Debtor shall have filed its Plan of Reorganization which shall be in form and substance consistent with the RSA and otherwise acceptable to the DIP Lenders (the “Plan”) and the related disclosure statement (the “Disclosure Statement”) on the Petition Date; (iii)         On or before the date that is thirty (30) days after the Petition Date, the Final DIP Order authorizing and approving the DIP Facility and the transactions contemplated thereby, in form and substance consistent with this DIP Term Sheet and approved by the DIP Lenders in their sole discretion, shall have been entered by the Bankruptcy Court; (iv)         The Bankruptcy Court shall have entered an order scheduling a combined Disclosure Statement and Plan confirmation hearing within three (3) business days of the Petition Date; (v)         The Bankruptcy Court shall have entered an order confirming the Plan (the “Confirmation Order”) on or before forty-eight (48) days of the Petition Date; and (vi)         The Plan shall be consummated and have gone effective on or before May 5, 2024 (the “Outside Effective Date”).

 

 

Costs and Expenses:	The Borrower shall pay in cash in full (x) on the Funding Date and (y) thereafter, from time to time, all reasonable and documented out of pocket fees, costs and expenses of the DIP Agent and the DIP Lenders (including, without limitation, fees and disbursements of counsel, including White & Case LLP and local counsel, and financial and accounting advisors) in connection with the Bankruptcy Case, including, without limitation (i) the negotiation, preparation, execution and entry, as applicable, of the Restructuring Support Agreement, Plan Term Sheet and this DIP Term Sheet, (ii) any litigation, contest, dispute, suit, proceeding or action (whether instituted by DIP Agent, the Borrower or any other person) in any way relating to the Restructuring Support Agreement, Plan Term Sheet, or this DIP Term Sheet, and (iii) the enforcement of any rights and remedies under the DIP Loan Documents, including, without limitation, any accrued and unpaid fees, costs and expenses of the DIP Agent and the DIP Lenders (including, without limitation, any fees and disbursements of counsel and any other advisors to the DIP Agent and to the DIP Lenders) prior to the Petition Date.
Indemnification; Expenses:	The Borrower shall be obligated to indemnify and hold harmless the DIP Agent, the DIP Lenders and each of their respective affiliates, officers, directors, fiduciaries, employees, agents, advisors, attorneys, and representatives (collectively, the “Related Parties”) from and against all losses, claims, liabilities, damages, and expenses (including out-of-pocket fees and disbursements of counsels) in connection with any investigation, litigation, or proceeding, or the preparation of any defense with respect thereto, arising out of or relating to the DIP Facility, the DIP Loan Documents or the transactions contemplated in this DIP Term Sheet; provided that, notwithstanding the foregoing, such indemnity shall not, as to any indemnitee, be available to the extent that such losses, damages, claims, liabilities and expenses resulted solely from the gross negligence or willful misconduct of such indemnitee as determined by the final non-appealable judgment of a court of competent jurisdiction. The Borrower Loan Parties shall be obligated to pay or reimburse the DIP Agent, the DIP Lenders and each of their respective affiliates, officers, directors, fiduciaries, employees, agents, advisors, attorneys, and representatives incurred in connection with (i) the preparation, negotiation and execution of this DIP Term Sheet and the other DIP Loan Documents, and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby (including out-of-pocket fees and disbursements of counsels) and (ii) the enforcement (whether through negotiations, legal proceedings or otherwise) of any rights or remedies under this DIP Term Sheet or the other DIP Loan Documents (including out-of-pocket fees and disbursements of counsels). To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against the DIP Agent, the DIP Lenders and their Related Parties, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this DIP Term Sheet, any other DIP Loan Document or any agreement or instrument contemplated hereby or thereby. The provisions of this section entitled “Indemnity; Expenses” shall survive the resignation or replacement of the DIP Agent, the termination of the DIP Loan Documents, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any DIP Loan Document.
Credit Bidding	For the avoidance of doubt, the Prepetition Secured Parties will have the rights to credit bid up to the full amount of the Prepetition Lender Claims (as defined herein). The DIP Agent, upon the instruction of the DIP Lenders, shall have the right and authority to credit bid up to the full amount of the DIP Obligations.
Assignments and Participations:	The Borrower shall not sell, assign or transfer any interest in the DIP Facility, or any of the obligations thereunder, or any portion thereof, including the Borrower’ rights, title, interests, remedies, powers, and duties hereunder or thereunder, without the DIP Agent’s prior written consent. The DIP Lenders shall be free to sell, assign or transfer any interest in the DIP Facility or any of the obligations thereunder, or any portion thereof, and to syndicate the DIP Loans (or any portion thereof), to any person or persons selected by DIP Lenders in their sole discretion. Subject to the foregoing, the DIP Order shall be binding upon and inure to the benefit of the successors and permitted assigns of the Borrower and the DIP Agent and DIP Lenders.

 

 

Prepetition Secured Parties:	AI Amped I, LLC (“AI Amped I”) and AI Amped II, LLC (“AI Amped II,” together with AI Amped I, the “Prepetition Secured Parties”), which hold claims against the Debtor under certain Securities Purchase Agreements, certain Convertible and Non-Convertible Promissory Notes (collectively, with the Securities Purchase Agreements, the “Notes”), and that certain Exchange Agreement collectively referred to herein as the “Prepetition Lender Claims.”
Prepetition Secured Obligations:	The Debtor stipulates that the Prepetition Lender Claims are not less than $51M in aggregate principal amount and are secured by a security interest in and first priority liens (the “Prepetition Liens”) on substantially all assets of Borrower (the “Prepetition Collateral”) pursuant to that certain Security Agreement dated as of December 17, 2021 (as amended, modified, and supplemented from time to time, the “Security Agreement”) to secure the prompt payment, performance, and discharge in full of all of the Borrower’s obligations under the Notes (the “Prepetition Secured Obligations”).
Cash Collateral of the Prepetition Secured Parties:	All of the Borrower’s cash and cash equivalents as of the Petition Date, wherever located, including cash held in deposit accounts, whether as original collateral or proceeds of other Prepetition Collateral or DIP Collateral, constitutes Cash Collateral (as defined below) and is Prepetition Collateral of the Prepetition Secured Parties. “Cash Collateral” shall mean and include all “cash collateral,” as defined in section 363(a) of the Bankruptcy Code, in or on which the Prepetition Secured Parties have a lien, security interest or other interest.
Use of Cash Collateral:	Subject to the terms and conditions of the DIP Orders and this DIP Term Sheet, the Borrower will be authorized to use Cash Collateral in accordance with the DIP Budget for the period (the “Specified Period”) from the Petition Date through the date which is the earliest to occur of (a) the expiration of the Default Notice Period (subject to the terms and conditions set forth herein and in the DIP Orders) and (b) the date that is thirty (30) days after the Petition Date if the Bankruptcy Court has not entered the Final DIP Order on or before such date (unless such date is extended with the written consent of the Prepetition Secured Parties). Subject to the provisions of the DIP Orders, and in accordance with the DIP Budget, Cash Collateral may be used during the Specified Period by the Borrower to: (a) finance their working capital needs and for any other general corporate purposes; and (b) pay related transaction costs, fees, liabilities and expenses (including all professional fees and expenses) and other administration costs incurred in connection with and for the benefit of the Bankruptcy Case. No portion of the Cash Collateral, the proceeds of the DIP Facility, the Collateral, or the Carve-Out may be used: (i)         for any purpose that is prohibited under the Bankruptcy Code or the DIP Order; (ii)         unless expressly provided for in the DIP Budget, to make any payment or distribution, directly or indirectly, to any insider of the Debtor; (iii)         to make any payment, advance, intercompany advance, or any other remittance or transfer whatsoever (including any intercompany loans and investments (including to and in foreign subsidiaries)) that is not in accordance with the express terms of the DIP Budget; and (iv)         to finance or reimburse for expenses incurred or to be incurred, in both instances, directly or directly and in any way: (i) any adversary action, suit, arbitration, proceeding, application, motion or other litigation of any type adverse to the interests of any or all of the DIP Agent, the DIP Lenders, the Prepetition Agents/Trustees, the Prepetition Secured Parties, or their respective rights and remedies under the DIP Facility, the Interim DIP Order, or the DIP Order or (ii) any other action, which with the giving of notice or passing of time, would result in an event of default under the DIP Facility.

 

 

Adequate Protection:	Pursuant to sections 361, 362, 363(c)(2), 363(e), 364(d) and 507 of the Bankruptcy Code, the Prepetition Secured Parties are entitled to adequate protection of their interests in the Prepetition Collateral, including the Cash Collateral, in an amount equal to the aggregate diminution in the value of the Prepetition Secured Parties’ interests in the Prepetition Collateral (including Cash Collateral) from and after the Petition Date, if any, for any reason provided for under the Bankruptcy Code, including, without limitation, as a result of the use of Prepetition Collateral, including Cash Collateral, the priming of their interests in Prepetition Collateral by the DIP Facility, and the imposition of the automatic stay (such diminution in value, the “Adequate Protection Amount”). As adequate protection for the Adequate Protection Amount, and solely to the extent of same, the Prepetition Secured Parties will be granted in the DIP Orders the following: (i)         Adequate Protection Liens. Pursuant to sections 361, 363(e), and 364(d) of the Bankruptcy Code, effective as of the Petition Date and perfected without the need for execution by the Borrower or the recordation or other filing by the Prepetition Secured Parties of security agreements, control agreements, pledge agreements, financing statements, or other similar documents, or the possession or control by the Prepetition Secured Parties of any DIP Collateral, the Prepetition Secured Parties, solely to the extent of the Adequate Protection Amount, shall be granted valid, binding, continuing, enforceable, fully perfected, first priority senior replacement liens on and security interests in (collectively, the “Adequate Protection Liens”) all DIP Collateral. (ii)         The Adequate Protection Liens shall be junior only to the DIP Liens, the Carve-Out and any Permitted Encumbrance. The Adequate Protection Liens shall otherwise be senior to all other security interests in, liens on, or claims against the DIP Collateral. The Adequate Protection Liens shall be nonavoidable and shall not be subject to sections 510, 549, 550, or 551 of the Bankruptcy Code. The Adequate Protection Liens shall be enforceable against and binding upon the Borrower, its estate and any successors thereto, including, without limitation, any trustee or other estate representative appointed in the Borrower’s Bankruptcy Case, or any case under chapter 7 of the Bankruptcy Code upon the conversion of any of the Borrower’s Bankruptcy Case, or in any other proceedings superseding or related to any of the foregoing (each, a “Successor Case”). (iii)         Adequate Protection Superpriority Claims. The Adequate Protection Amount due to the Prepetition Secured Parties shall constitute allowed superpriority administrative expense claims against the Borrower and its estate, as provided in section 507(b) of the Bankruptcy Code, with priority in payment over any and all claims and administrative expense claims (except amounts due under the DIP Facility and the Carve-Out) against the Borrower, now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, administrative expenses of the kinds specified in or ordered pursuant to sections 105, 326, 327, 328, 330, 331, 361, 362, 363, 364, 365, 503(a), 503(b), 507(a), 507(b), 546(c), 546(d), 552(b), 726, 1113, 1114 and any other provision of the Bankruptcy Code, and shall at all times be senior to the rights of the Borrower and any successor trustee or creditor in the Bankruptcy Case or any Successor Case (the “Adequate Protection Superpriority Claims”). (iv)         Adequate Protection Payments. The Borrower shall pay to the Prepetition Secured Parties all postpetition interest at the default rate, fees, and costs due, or that become due, under the Prepetition Documents, as and when such amounts become due under the terms of the Prepetition Documents. (v)         Prepetition Secured Parties’ Fees and Expenses. The Borrowers shall pay the reasonable and documented prepetition and postpetition fees and disbursements of legal counsel and advisors to the Prepetition Secured Parties. (vi)         Reporting and Information. To include, at a minimum, the reporting described above in “Financial Reporting Requirements” and “Other Reporting Requirements”.
Stipulations; Waivers:	The DIP Orders shall: (i)         include customary stipulations with respect to the Prepetition Obligations and Prepetition Liens; (ii)         include customary releases in favor of the DIP Agent, the DIP Lenders, the Prepetition Agent and the Prepetition Lenders, and their related parties; (iii)         provide that nothing in the DIP Order or in the Plan shall prejudice, waive, or affect in any way Arena’s claims as against the PTGi Guarantors; (iv)         subject to the entry of the Final DIP Order, provide that in no event shall the DIP Agent, the DIP Lenders or the Prepetition Secured Parties be subject to the equitable doctrine of “marshaling” or any similar doctrine with respect to the DIP Collateral or Prepetition Collateral, and all proceeds shall be received and applied pursuant to the Final DIP Order and the DIP Loan Documents notwithstanding any other agreement or provision to the contrary; and (v)         subject to the entry of the Final DIP Order, the Debtor (on behalf of itself and its estate) shall waive, and shall not assert in the Bankruptcy Case or any Successor Case, (a) any surcharge claim under sections 105(a) and/or 506(c) of the Bankruptcy Code or otherwise for any costs and expenses incurred in connection with the preservation, protection or enhancement of, or realization by the DIP Agent, the DIP Lenders, or the Prepetition Secured Parties, upon the DIP Collateral or the Prepetition Collateral, and (b) the DIP Agent, the DIP Lenders, and the Prepetition Secured Parties shall each be entitled to all of the rights and benefits of section 552(b) of the Bankruptcy Code, and the “equities of the case” exception under section 552(b) of the Bankruptcy Code shall not apply to the DIP Agent, the DIP Lenders, and the Prepetition Secured Parties with respect to proceeds, product, offspring or profits of any of the Prepetition Collateral or DIP Collateral.
Governing Law and Submission to Jurisdiction:	New York law except as governed by the Bankruptcy Code. Non-exclusive jurisdiction of the Bankruptcy Court, including with respect to the exercise of remedies by the DIP Agent and DIP Lenders and preservation of the DIP Collateral’s value.

 

 

 

CHARGE ENTERPRISES, INC. By: ______________________________ Name: ____________________________ Title: _____________________________

AI AMPED I, LLC By: ______________________________ Name: ____________________________ Title: _____________________________

 

 

 

 

EXHIBIT 2

 

DIP BUDGET

Exhibit 99.1

 

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Docket Ref. No. 14

 

ORDER (I) SCHEDULING A COMBINED DISCLOSURE
STATEMENT APPROVAL AND PLAN CONFIRMATION HEARING, (II) ESTABLISHING A PLAN AND DISCLOSURE STATEMENT OBJECTION DEADLINE AND RELATED PROCEDURES, (III) APPROVING SOLICITATION AND RELATED PROCEDURES, (IV) APPROVING THE NOTICE PROCEDURES, (V) APPROVING NOTICE AND OBJECTION PROCEDURES FOR THE ASSUMPTION, ASSIGNMENT, AND REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (VI) EXTENDING THE TIME AND, UPON CONFIRMATION, WAIVING THE REQUIREMENTS THAT SCHEDULES AND STATEMENTS BE FILED AND A CREDITORS’ MEETING BE CONVENED

 

Upon consideration of the motion (the “Motion”), of the Debtor for entry of an order, as more fully described in the Motion: (i) scheduling the Combined Hearing on the adequacy of the Combined Disclosure Statement and Plan and confirmation of the Plan of Reorganization; (ii) establishing the Objection Deadline and approving related procedures; (iii) approving the Solicitation Procedures and the Vote Tabulation Procedures; (iv) approving the Notice Procedures; (v) approving the Executory Contract Procedures; (vi) providing that (a) the deadline to file the Schedules and Statements, other than Schedule E/F, shall be extended until the Deadline, (b) the Creditors’ Meeting shall not be convened until the Deadline has passed, and (c) the requirement to file the Schedules and Statements, other than Schedule E/F, and convene the Creditors’ Meeting shall be waived without further order of the Court if the Plan of Reorganization is confirmed by the Deadline; and (vii) granting related relief; and upon the First Day Declaration; and the Court having jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Standing Order; and the Court having found that this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2), and that the Court may enter a final order consistent with Article III of the United States Constitution; and the Court having found that venue of this proceeding and the Motion in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409; and the Court having found that the relief requested in the Motion is in the best interests of the Debtor, its estate, its creditors, and other parties in interest; and it appearing that proper and adequate notice of the Motion has been given and that no other or further notice is necessary; and the Court having reviewed the Motion and having heard the statements in support of the relief requested therein at a hearing before the Court (the “Hearing”); and the Court having determined that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and upon all of the proceedings had before the Court; and after due deliberation and sufficient cause appearing therefor; it is hereby

 

ORDERED, ADJUDGED AND DECREED that:

 

1.    The Motion is GRANTED as set forth herein.

 

2.    The Court shall hold the Combined Hearing, at which time the Court will consider, among other things, the adequacy and confirmation of the Combined Disclosure Statement and Plan, on April 23, 2024 at 1:00 p.m. (prevailing Eastern Time). Any objections to the Combined Disclosure Statement and Plan must be filed and served upon counsel to the Notice Parties by April 12, 2024 at 4:00 p.m. (prevailing Eastern Time) (the “Objection Deadline”).

 

3.    Any objections to the adequacy of the Combined Disclosure Statement and Plan or confirmation of the Plan of Reorganization must:

 

a.

be in writing;

 

b.

comply with the Bankruptcy Rules and the Local Rules;

 

c.

state the name and address of the objecting party and the amount and nature of the Claim or Interest beneficially owned by such entity;

 

d.

state with particularity the legal and factual basis for such objections, and, if practicable, a proposed modification to the Combined Disclosure Statement and Plan that would resolve such objection; and

 

e.

be filed with the Court with proof of service thereof and served upon the Notice Parties by the Objection Deadline.

 

4.    Any objections not satisfying the requirements of this Order shall not be considered and shall be overruled unless otherwise ordered by the Court.

 

 

5.    To the extent that section 1125(b) of the Bankruptcy Code requires that the Debtor’s prepetition solicitation of acceptances for the Plan of Reorganization to be pursuant an approved disclosure statement to continue on a postpetition basis, the Court conditionally approves the Combined Disclosure Statement and Plan as having adequate information as required by section 1125 of the Bankruptcy Code, without prejudice to any party in interest objecting to the Combined Disclosure Statement and Plan at the Combined Hearing.

 

6.    The solicitation of acceptances or rejections of the Plan of Reorganization in accordance with this Order by the use of the Combined Disclosure Statement and Plan and the Combined Hearing Notice shall be deemed to be in good faith within the meaning of section 1125(e) of the Bankruptcy Code.

 

7.    The Notice Procedures utilized by the Debtor as set forth in the Motion satisfy the requirements of the Bankruptcy Code and the Bankruptcy Rules and are approved. The form of the Combined Hearing Notice, substantially in the form attached hereto as Exhibit 1, the Publication Notice, substantially in the form attached hereto as Exhibit 2, the Unimpaired Notice of Non-Voting Status, substantially in the form attached to the Motion as Exhibit 3, and the Impaired Notice of Non-Voting Status, substantially in the form attached to the Motion as Exhibit 4, comply with the requirements of the Bankruptcy Code and the Bankruptcy Rules, constitute a court-approved summary under Bankruptcy Rule 3017(d), and are approved. The Combined Hearing Notice shall be served via email where authorized under Local Rules, and via regular mail where email service is not authorized.

 

8.    The Combined Hearing Notice shall be served on all known registered holders of CRGE Stock. All registered holders of CRGE Stock, as applicable, served with the Combined Hearing Notice shall be required to serve such Combined Hearing Notice on any holder for whose benefit such registered holder holds CRGE Stock.

 

9.    The Debtor is authorized to enter into transactions to cause the Publication Notice to be published in the New York Times within eight (8) business days after entry of this Order (or as soon as reasonably practicable thereafter), and to make reasonable payments required for such publication.

 

 

10.    The Voting Record Date and the Voting Deadline are approved.

 

               11.    The Executory Contract Procedures are approved. The Debtor shall file and serve the Rejection Schedule at least seven (7) days prior to the Combined Hearing.

 

               12.    Without amending or altering any prior order of the Court approving the assumption or rejection of any executory contracts and unexpired leases, entry of the Confirmation Order by the Court shall constitute approval of the assumptions and rejections, as applicable, pursuant to sections 365(a), 365(f), and 1123 of the Bankruptcy Code. To the extent any provision in any executory contracts and unexpired leases assumed pursuant to the Plan of Reorganization (including, without limitation, any “change of control” provision) conditions, restricts or prevents, or purports to restrict or prevent, or is breached or deemed breached by, the applicable assumption of such executory contract or unexpired lease, or that terminates or modifies such executory contract or unexpired lease or allows the counterparty to such executory contract or lease to terminate, modify, recapture, impose any penalty, condition renewal or extension, or modify any term or condition upon any such assumption, then such provision shall be deemed void and of no force or effect such that the transactions contemplated by the Combined Disclosure Statement and Plan shall not entitle the non-debtor party thereto to terminate or modify such executory contract or unexpired lease or to exercise any other default-related rights with respect thereto. Confirmation of the Plan of Reorganization and consummation of the transactions contemplated thereby shall not constitute a change of control under any executory contract or unexpired lease assumed by the Debtor on or prior to the Effective Date.

 

13.    The Solicitation Procedures utilized by the Debtor for distribution of the Solicitation Packages as set forth in the Motion in soliciting acceptances and rejections of the Plan of Reorganization, the form of Ballot attached to the Motion as Exhibit E, and the Vote Tabulation Procedures set forth in the Motion satisfy the requirements of the Bankruptcy Code and the Bankruptcy Rules and are conditionally approved, with final approval to be granted at the Combined Hearing, if appropriate.

 

14.    The Debtor is not required to mail a copy of the Combined Disclosure Statement and Plan to holders of claims that are unimpaired and conclusively presumed to accept the Plan of Reorganization or impaired and conclusively presumed to reject the Plan. All holders of claims conclusively presumed to accept the Plan of Reorganization shall receive the Combined Hearing Notice and Unimpaired Notice of Non-Voting Status. All holders of claims conclusively presumed to reject the Plan of Reorganization shall receive the Combined Hearing Notice and Impaired Notice of Non-Voting Status. The Combined Hearing Notice shall contain a QR Code to electronically access all documents contained in the Solicitation Package. The Debtor is not otherwise required to provide a copy of the Combined Disclosure Statement and Plan to any holders of claims conclusively presumed to accept or reject the Plan of Reorganization but will do so upon request from such holders of claims.

 

15.    The time within which the Debtor shall file its Schedules and Statements, other than Schedule E/F, is extended through and including April 24, 2024 (the “Deadline”), without prejudice to the Debtor’s rights to seek further extensions of the time within which to file the Schedules and Statements or to seek additional relief from this Court regarding the filing of, or waiver of the requirement to file, the Schedules and Statements.

 

16.    The requirement that the Debtor file the Schedules and Statements is permanently waived effective upon the date of approval and confirmation of the Combined Disclosure Statement and Plan, provided confirmation occurs on or before April 24, 2024.

 

17.    The Creditors’ Meeting shall be deferred until after the Deadline has passed and shall be waived unless the Combined Disclosure Statement and Plan is not approved and the Plan of Reorganization is not confirmed by April 24, 2024.

 

18.    Nothing contained in the Motion or this Order shall be deemed or construed as an admission as to the validity or priority of any claim or lien against the Debtor or as a waiver of the Debtor’s rights to dispute any claim or lien.

 

19.    All time periods set forth in this Order shall be calculated in accordance with Bankruptcy Rule 9006(a).

 

20.    Notice of the Motion as provided therein shall be deemed good and sufficient notice of such Motion and the requirements of Bankruptcy Rule 6004(a) and the Local Rules are satisfied by such notice.

 

21.    The Debtor is authorized to take all actions necessary to effectuate the relief granted in this Order in accordance with the Motion.

 

22.    Notwithstanding any provision in the Federal Rules of Bankruptcy Procedure to the contrary, (i) the terms of this Order shall be immediately effective and enforceable upon entry, (ii) the Debtor is not subject to any stay in the implementation, enforcement, or realization of the relief granted in this Order, and (iii) the Debtor may, in its discretion and without further delay, take any action and perform any act authorized under this Order.

 

23.    The Court retains jurisdiction with respect to all matters arising from or related to the interpretation or implementation of this Order.

 

 

Exhibit 1

 

Combined Hearing Notice

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Plan/Disclosure Statement Objection Deadline: April 12, 2024, at 4:00 p.m. (ET) Contract Objection Deadline: {♦}, 2024, at 4:00 p.m. (ET) Combined Hearing: April 23, 2024, at 1:00 p.m. (ET) Docket Ref. Nos. {♦}

 

NOTICE OF (A) COMMENCEMENT OF PREPACKAGED
CHAPTER 11 BANKRUPTCY CASES, (B) COMBINED HEARING
ON THE DEBTOR’S COMBINED DISCLOSURE STATEMENT AND
PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION, AND
RELATED MATTERS, (C) ASSUMPTION OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES AND CURE COSTS, (D) OBJECTION DEADLINES,
AND (E) SUMMARY OF THE PLAN OF REORGANIZATION

 

NOTICE IS HEREBY GIVEN as follows:

On March 7, 2024 (the “Petition Date”), Charge Enterprises, Inc. (the “Debtor”), the debtor and debtor in possession in the above-captioned chapter 11 case (the “Chapter 11 Case”) filed with the United States Bankruptcy Court for the District of Delaware (the “Court”) a chapter 11 bankruptcy petition. On the same date, the Debtor filed the proposed Debtor’s Combined Disclosure Statement and Prepackaged Chapter 11 Plan of Reorganization (as amended, modified, or supplemented from time to time, the “Combined Disclosure Statement and Plan” and, the consensual prepackaged plan of reorganization set forth in Articles II–XIV therein, the “Plan of Reorganization”) pursuant to sections 1125 and 1126(b) of title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the “Bankruptcy Code”). A copy of the Combined Disclosure Statement and Plan is available for inspection on the Court’s website at www.deb.uscourts.gov or free of charge on the Debtor’s restructuring website at https://dm.epiq11.com/ChargeEnterprises. The Combined Disclosure Statement and Plan also may be obtained upon request of the Debtor’s proposed counsel at the address specified below and is on file with the Clerk of the Bankruptcy Court, 824 North Market Street, Third Floor, Wilmington, Delaware 19801, where it is available for review between the hours of 8:00 a.m. to 4:00 p.m. (prevailing Eastern Time).

 

The Plan of Reorganization is a “prepackaged” plan of reorganization agreed to by the Debtor and the Prepetition Lenders. The primary purpose of the Plan of Reorganization is to substantially deleverage the reorganized enterprise. More specifically, the Plan of Reorganization provides for the reorganization of the Debtor as a going concern and the resolution of all Claims against and Equity Interests in the Debtor in the Chapter 11 Case. The Debtor believes that any valid alternative to confirmation of the Plan of Reorganization would result in significant delays, litigation, and additional costs, and, ultimately, would jeopardize recoveries for holders of Allowed Claims.

 

The Debtor will be filing a schedule of creditors that it believes holds unsecured claims, and the amount of such claims by March 21, 2024. Your claim will be allowed in the amount scheduled unless: your claim is designated as disputed, contingent, or unliquidated; you file a proof of claim in a different amount; or you receive another notice. If your claim is not scheduled or if your claim is designated as disputed, contingent, or unliquidated, you must file a proof of claim or you might not be paid on your claim and you might be unable to vote on a plan. You may file a proof of claim even if your claim is scheduled.  The deadline to file proofs of claims will be established by the Plan of Reorganization, if confirmed.

 

Information Regarding the Chapter 11 Case: On the Petition Date, the Debtor filed with the Court a petition for reorganization relief under chapter 11 of the Bankruptcy Code. You may be a creditor of the Debtor. This notice lists important deadlines. You may want to consult an attorney to protect your rights. You may not receive all documents filed in the Chapter 11 Case. All documents filed with the Court are available for inspection at the Clerk of the Bankruptcy Court, 824 North Market Street, 3rd Floor, Wilmington, Delaware 19801, between the hours of 8:00 a.m. to 4:00 p.m. (prevailing Eastern Time) and on the Debtor’s restructuring website at https://dm.epiq11.com/ChargeEnterprises.

 

Notice to Holders of Ordinary Shares in Charge Enterprises, Inc.: On March __, 2024, this Court entered the Interim Order (I) Establishing Notification Procedures and Approving Restrictions on Certain Transfers of, or Worthless Stock Deductions with Respect to, Stock of the Debtor and (II) Granting Related Relief [Docket No. __] (the “Stock Procedures Order”), establishing procedures surrounding certain transfers of Ordinary Shares in Charge Enterprises, Inc. and restricting the ability of certain shareholders to take worthless stock deductions on their income tax returns with respect to their shares in Charge Enterprises, Inc. All registered holders of Ordinary Shares in Charge Enterprises, Inc. have been served with a copy of this notice. For a full description of these procedures, a copy of the Stock Procedures Order is available for inspection on the Court’s website at www.deb.uscourts.gov or free of charge on the Debtor’s restructuring website at https://dm.epiq11.com/ChargeEnterprises, or may be obtained upon request of the Debtor’s proposed counsel at the address specified below.

 

Objections to the Plan of Reorganization or Disclosure Statement: Any objection (each, a “Plan/Disclosure Statement Objection”) to the Combined Disclosure Statement and Plan must: (a) be in writing; (b) comply with the Federal Rules of Bankruptcy Procedure and the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware; (c) state the name and address of the objecting party and the amount and nature of the Claim or Interest beneficially owned by such entity; and (d) state with particularity the legal and factual basis for such objections, and, if practicable, a proposed modification to the Plan of Reorganization that would resolve such objection.

 

 

Plan/Disclosure Statement Objections must be filed with the Court and served upon the following parties (collectively, the “Notice Parties”) no later than April 12, 2024, at 4:00 p.m. (Eastern Time): (a) counsel to the Debtor: Faegre Drinker Biddle & Reath LLP (Attn: Patrick A. Jackson, Ian J. Bambrick, and Sarah E. Silveira); (b) counsel to the Prepetition Lenders: White & Case LLP (Attn: Harrison Denman) and Richards, Layton & Finger, P.A. (Attn: Paul N. Heath and Amanda R. Steele); (c) the Office of the United States Trustee (Attn: Rosa Sierra-Fox); and (d) counsel to any statutory committees appointed in the Chapter 11 Case.

 

Notice to Counterparties to Executory Contracts and Unexpired Leases: You or one of your affiliates may be a counterparty to one or more contracts or leases that may be Executory Contracts or Unexpired Leases with the Debtor. In that event, except as otherwise provided in the Plan of Reorganization, each Executory Contract and Unexpired Lease not previously assumed or rejected shall be deemed automatically assumed pursuant to sections 365 and 1123 of the Bankruptcy Code as of the Effective Date, other than: (i) those identified on the Rejection Schedule; (ii) those that have been previously rejected by a Final Order; (iii) those that are the subject of a motion to reject that is pending on the Confirmation Date; (iv) those that are subject to a motion to reject pursuant to which the requested effective date of such rejection is after the Effective Date, or (v) those that are otherwise rejected pursuant to the terms of the Plan of Reorganization.

 

As set forth in the Plan of Reorganization, entry of the Confirmation Order by the Court shall constitute an order approving the assumption of all Executory Contracts and Unexpired Leases other than those identified in clauses (i), (ii), (iii), and (iv) of the foregoing paragraph, pursuant to sections 365(a) and 1123 of the Bankruptcy Code as of the Effective Date or as otherwise set forth in the Plan Supplement. Each Executory Contract and Unexpired Lease assumed pursuant to the Plan of Reorganization or by Bankruptcy Court order shall re-vest in and be fully enforceable by the applicable contracting Reorganized Debtor in accordance with its terms.

 

The proposed Cure Claim for any Executory Contract or Unexpired Lease that is assumed pursuant to the Plan of Reorganization shall be zero dollars unless otherwise indicated on a Cure Notice. No later than the filing date of the Plan Supplement, to the extent not previously filed with the Court and served on affected counterparties, the Debtor shall provide for the Cure Notice to be sent to applicable contract and lease counterparties, together with procedures for objecting thereto and resolution of disputes by the Court.

 

As set forth in the Plan of Reorganization, entry of the Confirmation Order by the Court shall constitute an order approving such rejections pursuant to sections 365 and 1123 of the Bankruptcy Code as of the Effective Date or as otherwise set forth in the Plan Supplement.

 

ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE PURSUANT TO THE PLAN OF REORGANIZATION OR OTHERWISE SHALL RESULT IN THE FULL RELEASE AND SATISFACTION OF ANY CLAIMS, OBLIGATIONS OR DEFAULTS, WHETHER MONETARY OR NONMONETARY, INCLUDING DEFAULTS OF PROVISIONS RESTRICTING THE CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION, FAILURE TO COMPLY WITH OBLIGATIONS ARISING FROM PROVISIONS RESTRICTING THE CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION OR OTHER BANKRUPTCY-RELATED DEFAULTS, ARISING UNDER ANY ASSUMED EXECUTORY CONTRACT OR UNEXPIRED LEASE AT ANY TIME BEFORE THE DATE THE DEBTOR OR THE REORGANIZED DEBTOR ASSUMES SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE. ANY PROOFS OF CLAIM FILED WITH RESPECT TO AN EXECUTORY CONTRACT OR UNEXPIRED LEASE THAT HAS BEEN ASSUMED SHALL BE DEEMED DISALLOWED AND EXPUNGED, WITHOUT FURTHER NOTICE TO OR ACTION, ORDER OR APPROVAL OF THE COURT.

 

Objections to the Assumption or Rejection of Executory Contracts and Unexpired Leases and/or Cure Claim: If you wish to object to the proposed assumption or rejection of your Executory Contract or Unexpired Lease or to the Cure Claim associated with your Executory Contract or Unexpired Lease (all such objections, “Contract Objections”), your Contract Objection must: (a) be in writing; (b) comply with the Federal Rules of Bankruptcy Procedure and the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware; and (c) set forth the name of the objecting party, the basis for the objection, and the specific grounds therefor.

 

Contract Objections must be filed with the Court and served on the Debtor’s proposed counsel at the addresses specified below by the date as may be provided in the applicable Cure Notice or the Plan of Reorganization. Any counterparty to an Executory Contract or Unexpired Lease that fails to object timely to the proposed assumption or Cure Claim will be deemed to have assented to such assumption or Cure Claim.

 

UNLESS A PLAN/DISCLOSURE STATEMENT OBJECTION OR A CONTRACT OBJECTION IS TIMELY SERVED AND FILED IN ACCORDANCE WITH THIS NOTICE, IT MAY NOT BE CONSIDERED BY THE COURT.

---

 

 

Hearing on Confirmation of the Plan of Reorganization, the Adequacy of the Combined Disclosure Statement and Plan, Assumption and Rejection of Executory Contracts
and Unexpired Leases, and Proposed Cure Costs

 

The hearing (the “Combined Hearing”) will be held before the Honorable Thomas M. Horan, United States Bankruptcy Judge, at the United States Bankruptcy Court, 824 North Market Street, Wilmington, Delaware, 19801, on April 23, 2024, at 1:00 p.m. (prevailing Eastern Time) to consider the adequacy of the Combined Disclosure Statement and Plan, confirmation of the Plan of Reorganization, the assumption of Executory Contracts and Unexpired Leases, and the proposed Cure Claims, any objections to any of the foregoing, and any other matter that may properly come before the Court. Please be advised that the Combined Hearing may be continued from time to time by the Court or the Debtor without further notice other than by such adjournment being announced in open court or by a notice of adjournment filed with the Court and served on other parties entitled to notice.

 

Summary of Classification, Impairment, and Voting Status

 

The following chart summarizes the classification of Claims and Interests provided by the Plan of Reorganization and indicates the voting status of each class.

 

Classification, Impairment, and Voting Status of Claims and Interests
Class	Description	Status	Voting Rights
1	Other Priority Claims	Unimpaired	Not Entitled to Vote (Presumed to Accept)
2	Prepetition Lender Claims	Impaired	Entitled to Vote
3	Other Secured Claims	Unimpaired	Not Entitled to Vote (Presumed to Accept)
4	General Unsecured Claims	Unimpaired	Not Entitled to Vote (Presumed to Accept)
5	Section 510(b) Claims	Impaired	Not Entitled to Vote (Presumed to Reject)
6	Other Subordinated Claims	Impaired	Not Entitled to Vote (Presumed to Reject)
7	Series C Preferred Interests	Impaired	Not Entitled to Vote (Presumed to Reject)
8	Series D Preferred Interests	Impaired	Not Entitled to Vote (Presumed to Reject)
9	Series E Preferred Interests	Impaired	Not Entitled to Vote (Presumed to Reject)
10	Common Interests	Impaired	Not Entitled to Vote (Presumed to Reject)

 

Discharge, Injunction, Exculpation, and Release

 

YOU ARE ADVISED TO CAREFULLY REVIEW AND CONSIDER THE COMBINED DISCLOSURE STATEMENT AND PLAN, INCLUDING THE DISCHARGE, INJUNCTION, EXCULPATION, AND RELEASE PROVISIONS, DESCRIBED BELOW, AS YOUR RIGHTS MIGHT BE AFFECTED.

 

Relevant Definitions

 

“Ds & Os” means, collectively, the Directors and Officers (each of whom is a “D&O”). For the avoidance of doubt, the Ds & Os do not include any individual who previously served as a director or officer of the Debtor but is not a Director or Officer as defined herein.

 

“Exculpated Party” means each of the following in its capacity as such: (a) the Debtor; (b) the Debtor’s post-petition officers, directors, trustees, principals, employees, agents, financial advisors, attorneys, accountants, investment bankers, consultants, and representatives (including specifically the Ds & Os and the Professionals); and (c) Arena.

 

“Released Parties” means, collectively, (i) Arena, (ii) the Arena Related Parties, and (iii) the Ds & Os (each of whom is a “Released Party”).

 

Article IX, Section 9.1—Discharge of Claims and Termination of Interests

 

Pursuant to section 1141(d) of the Bankruptcy Code, and except as otherwise specifically provided in the Plan of Reorganization or in any contract, instrument, or other agreement or document created pursuant to the Plan of Reorganization, the distributions, rights, and treatment that are provided in the Plan of Reorganization shall be in complete satisfaction, discharge, and release, effective as of the Effective Date, of Claims, Interests, and Causes of Action of any nature whatsoever, including any interest accrued on Claims from and after the Petition Date, whether known or unknown, against, liabilities of, Liens on, obligations of, rights against, and Interests in, the Debtor or any of its assets or properties, regardless of whether any property shall have been distributed or retained pursuant to the Plan of Reorganization on account of such Claims and Interests, including demands, liabilities, and Causes of Action that arose before the Effective Date, any liability to the extent such Claims or Causes of Action accrued before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, in each case whether or not: (1) a Proof of Claim based upon such debt or right is filed or deemed filed pursuant to section 501 of the Bankruptcy Code; (2) a Claim based upon such debt or right is Allowed pursuant to section 502 of the Bankruptcy Code; or (3) the holder of such a Claim or Interest has accepted the Plan of Reorganization. Unless expressly provided in the Plan of Reorganization, the Confirmation Order shall be a judicial determination of the discharge of all Claims and Interests subject to the Effective Date occurring.

 

For the avoidance of doubt, pursuant to section 1124(e) of the Bankruptcy Code, the discharge of any Debt of the Debtor under Section 9.1 of the Plan of Reorganization does not affect the liability of any other Entity on, or the property of any other Entity for, such Debt.

 

 

Article IX, Section 9.4—Releases by the Debtor

 

Pursuant to section 1123(b) of the Bankruptcy Code, for good and valuable consideration, on and after the Effective Date, each Released Party is deemed released and discharged by the Debtor and its Estate from any and all Causes of Action, including any derivative claims asserted on behalf of the Debtor or its Subsidiaries, that the Debtor or its Estate would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest, or that any holder of any Claim or Interest could have asserted on behalf of the Debtor or its Subsidiaries, including, without limitation, any Causes of Action based on or relating to, or in any manner arising from, in whole or in part:

 

(a)

the Debtor, the Debtor’s in- or out-of-court restructuring efforts, intercompany transactions, the formulation, preparation, dissemination, negotiation, or filing of the Plan Documents;

 

(b)

any Plan Document, contract, instrument, release, or other agreement or document (including providing any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by the Plan of Reorganization or the reliance by any Released Party on the Plan of Reorganization or the Confirmation Order in lieu of such legal opinion) created or entered into in connection with the Plan of Reorganization;

 

(c)

the Chapter 11 Case, the Plan of Reorganization, the RSA, the DIP Term Sheet, the filing of the Chapter 11 Case, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan of Reorganization, including the distribution of property under the Plan of Reorganization or any other related agreement; or

 

(d)

the business or contractual arrangements between any Debtor and any Released Party, and any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date relating to any of the foregoing.

 

Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (i) any Company D&O Claims that are or may be covered by the Debtor’s D&O Liability Insurance Policies (as determined in good faith by the Reorganized Debtor), except to the extent set forth in Section 5.1(i) of the Plan of Reorganization, or (ii) any post-Effective Date obligations of any party or Entity under the Plan of Reorganization, any Plan Document, or any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan of Reorganization.

 

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the release set forth in Section 9.4 of the Plan of Reorganization, which includes by reference each of the related provisions and definitions contained herein, and further, shall constitute the Bankruptcy Court’s finding that such release is: (a) in exchange for the good and valuable consideration provided by the Released Parties; (b) in the best interests of the Debtor and all Holders of Claims; (c) fair, equitable, and reasonable; (d) given and made after due notice and opportunity for hearing; and (e) a bar to the Debtor, or anyone claiming by or through the Debtor, asserting any Claim or Cause of Action released by Section 9.4 of the Plan of Reorganization.

 

Article IX, Section 9.5—Exculpation

 

Except as otherwise specifically provided in the Plan of Reorganization, no Exculpated Party shall have or incur, and each Exculpated Party is hereby released and exculpated from any Cause of Action related to any act or omission in connection with, relating to, or arising out of, the RSA, the Chapter 11 Case, the Plan of Reorganization, or any Plan Document, contract, instrument, release or other agreement or document (including providing any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by the Plan of Reorganization or the reliance by any Exculpated Party on the Plan of Reorganization or the Confirmation Order in lieu of such legal opinion) created or entered into in connection with the Plan of Reorganization, the filing of the Chapter 11 Case, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan of Reorganization, including the distribution of property under the Plan of Reorganization or any other related agreement (“Exculpated Acts or Omissions”), provided that any act or omission that is determined in a Final Order to have constituted actual fraud, willful misconduct, or gross negligence shall not be considered an Exculpated Act or Omission, provided further that in all respects the Exculpated Parties shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the Plan of Reorganization.

 

For the avoidance of doubt, the exculpation set forth above does not provided for exculpation or release of any Cause of Action of the Debtor (i) against any advisor that arose prior to the Petition Date for any act or omission that was not an Exculpated Act or Omission, or (ii) against any former director or officer of the Debtor.

 

Article IX, Section 9.6—Injunction

 

Except as otherwise expressly provided in the Plan of Reorganization or for obligations issued or required to be paid pursuant to the Plan of Reorganization or Confirmation Order, all Entities who have held, hold, or may hold Causes of Action that have been released or exculpated pursuant to Sections 5.1, 9.4, or 9.5 of the Plan of Reorganization, or Claims or Interests that have been discharged pursuant to Section 9.1 of the Plan of Reorganization, are permanently enjoined, from and after the Effective Date, from taking any of the following actions against, as applicable, the Debtor, the Subsidiaries, the Reorganized Debtor, the Released Parties, or the Exculpated Parties: (a) commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests, as applicable; (b) enforcing, attaching, collecting, or recovering by any manner or means any judgment, award, decree, or order against such Entities on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests, as applicable; (c) creating, perfecting, or enforcing any Lien or encumbrance of any kind against such Entities or the property or the estates of such Entities on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests, as applicable; (d) asserting any right of setoff, subrogation, or recoupment of any kind against any obligation due from such Entities or against the property of such Entities on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests, as applicable; and (e) commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests released or settled pursuant to the Plan of Reorganization. Notwithstanding anything to the contrary in the foregoing, the injunction does not enjoin any party under the Plan of Reorganization or under any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan of Reorganization from bringing an action to enforce the terms of the Plan of Reorganization or such document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan of Reorganization.

 

 

A copy of the Combined Disclosure Statement and Plan and any related documents can be obtained, free of charge at https://dm.epiq11.com/ChargeEnterprises or scanning the Quick Response Barcode below using the camera on a smart phone or tablet:

 

[PLACEHOLDER FOR QR CODE.]

 

Dated: {♦}, 2024
FAEGRE DRINKER BIDDLE & REATH LLP
/s/ DRAFT
Patrick A. Jackson (No. 4976) Ian J. Bambrick (No. 5455) Sarah E. Silveira (No. 6580) 222 Delaware Ave., Suite 1410 Wilmington, DE 19801 Tel: (302) 467-4200 Fax: (302) 467-4201 patrick.jackson@faegredrinker.com ian.bambrick@faegredrinker.com sarah.silveira@faegredrinker.com		Michael P. Pompeo (pro hac vice pending) Kyle R. Kistinger (pro hac vice pending) 1177 Avenue of the Americas, 41st Floor New York, NY 10036 Tel: (212) 248-3140 Fax: (212 248-3141 michael.pompeo@faegredrinker.com kyle.kistinger@faegredrinker.com
Michael T. Gustafson (pro hac vice pending) 320 South Canal Street, Suite 3300 Chicago, IL 60606 Tel: (312)569-1000 Fax: (312) 569-3000 mike.gustafson@faegredrinker.com
Proposed Counsel to the Debtor and Debtor in Possession

 

 

 

Exhibit 2

 

Publication Notice

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Plan/Disclosure Statement Objection Deadline: April 12, 2024, at 4:00 p.m. (ET) Contract Objection Deadline: {♦}, 2024, at 4:00 p.m. (ET) Combined Hearing: April 23, 2024, at 1:00 p.m. (ET) Docket Ref. Nos. {♦}

 

NOTICE OF (A) COMMENCEMENT OF PREPACKAGED
CHAPTER 11 BANKRUPTCY CASES, (B) COMBINED HEARING
ON THE DEBTOR’S COMBINED DISCLOSURE STATEMENT AND
PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION, AND
RELATED MATTERS, (C) ASSUMPTION OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES AND CURE COSTS, (D) OBJECTION DEADLINES,
AND (E) SUMMARY OF THE PLAN OF REORGANIZATION

 

NOTICE IS HEREBY GIVEN as follows:

 

On March 7, 2024 (the “Petition Date”), Charge Enterprises, Inc. (the “Debtor”), the debtor and debtor in possession in the above-captioned chapter 11 case (the “Chapter 11 Case”) filed with the United States Bankruptcy Court for the District of Delaware (the “Court”) a chapter 11 bankruptcy petition. On the same date, the Debtor filed a proposed Debtor’s Combined Disclosure Statement and Prepackaged Chapter 11 Plan of Reorganization (as amended, modified, or supplemented from time to time, the “Combined Disclosure Statement and Plan” and, the consensual prepackaged plan of reorganization set forth in Articles II–XIV therein, the “Plan of Reorganization”) pursuant to sections 1125 and 1126(b) of title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the “Bankruptcy Code”). A copy of the Combined Disclosure Statement and Plan is available for inspection on the Court’s website at www.deb.uscourts.gov or free of charge on the Debtor’s restructuring website at https://dm.epiq11.com/ChargeEnterprises. The Combined Disclosure Statement and Plan also may be obtained upon request of the Debtor’s proposed counsel at the address specified below and is on file with the Clerk of the Bankruptcy Court, 824 North Market Street, Third Floor, Wilmington, Delaware 19801, where it is available for review between the hours of 8:00 a.m. to 4:00 p.m. (prevailing Eastern Time).

 

Information Regarding the Chapter 11 Case: On the Petition Date, the Debtor filed with the Court a petition for reorganization relief under chapter 11 of the Bankruptcy Code. You may be a creditor of the Debtor. This notice lists important deadlines. You may want to consult an attorney to protect your rights. You may not receive all documents filed in the Chapter 11 Case. All documents filed with the Court are available for inspection at the Clerk of the Bankruptcy Court, 824 North Market Street, 3rd Floor, Wilmington, Delaware 19801, between the hours of 8:00 a.m. to 4:00 p.m. (prevailing Eastern Time) and on the Debtor’s restructuring website at https://dm.epiq11.com/ChargeEnterprises.

 

The Debtor will be filing a schedule of creditors that it believes holds unsecured claims, and the amount of such claims by March 21, 2024. Your claim will be allowed in the amount scheduled unless: your claim is designated as disputed, contingent, or unliquidated; you file a proof of claim in a different amount; or you receive another notice. If your claim is not scheduled or if your claim is designated as disputed, contingent, or unliquidated, you must file a proof of claim or you might not be paid on your claim and you might be unable to vote on a plan. You may file a proof of claim even if your claim is scheduled.  The deadline to file proofs of claims will be established by the Plan of Reorganization, if confirmed.

 

Notice to Holders of Ordinary Shares in Charge Enterprises, Inc.: On March __, 2024, this Court entered the Interim Order (I) Establishing Notification Procedures and Approving Restrictions on Certain Transfers of, or Worthless Stock Deductions with Respect to, Stock of the Debtor and (II) Granting Related Relief [Docket No. __] (the “Stock Procedures Order”), establishing procedures surrounding certain transfers of Ordinary Shares in Charge Enterprises, Inc. and restricting the ability of certain shareholders to take worthless stock deductions on their income tax returns with respect to their shares in Charge Enterprises, Inc. All registered holders of Ordinary Shares in Charge Enterprises, Inc. have been served with a copy of this notice. For a full description of these procedures, a copy of the Stock Procedures Order is available for inspection on the Court’s website at www.deb.uscourts.gov or free of charge on the Debtor’s restructuring website at https://dm.epiq11.com/ChargeEnterprises, or may be obtained upon request of the Debtor’s proposed counsel at the address specified below.

 

Objections to the Plan of Reorganization or Disclosure Statement: Any objection (each, a “Plan/Disclosure Statement Objection”) to the Combined Disclosure Statement and Plan must: (a) be in writing; (b) comply with the Federal Rules of Bankruptcy Procedure and the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware; (c) state the name and address of the objecting party and the amount and nature of the Claim or Interest beneficially owned by such entity; and (d) state with particularity the legal and factual basis for such objections, and, if practicable, a proposed modification to the Plan of Reorganization that would resolve such objection.

 

Plan/Disclosure Statement Objections must be filed with the Court and served upon the following parties (collectively, the “Notice Parties”) no later than April 12, 2024, at 4:00 p.m. (Eastern Time): (a) counsel to the Debtor: Faegre Drinker Biddle & Reath LLP (Attn: Patrick A. Jackson, Ian J. Bambrick, and Sarah E. Silveira); (b) counsel to the Prepetition Lenders: White & Case LLP (Attn: Harrison Denman) and Richards, Layton & Finger, P.A. (Attn: Paul N. Heath and Amanda R. Steele); (c) the Office of the United States Trustee (Attn: Rosa Sierra-Fox); and (d) counsel to any statutory committees appointed in the Chapter 11 Case.

 

 

Notice to Counterparties to Executory Contracts and Unexpired Leases: You or one of your affiliates may be a counterparty to one or more contracts or leases that may be Executory Contracts or Unexpired Leases with the Debtor. In that event, except as otherwise provided in the Plan of Reorganization, each Executory Contract and Unexpired Lease not previously assumed or rejected shall be deemed automatically assumed pursuant to sections 365 and 1123 of the Bankruptcy Code as of the Effective Date, other than: (i) those identified on the Rejection Schedule; (ii) those that have been previously rejected by a Final Order; (iii) those that are the subject of a motion to reject that is pending on the Confirmation Date; (iv) those that are subject to a motion to reject pursuant to which the requested effective date of such rejection is after the Effective Date, or (v) those that are otherwise rejected pursuant to the terms of the Plan of Reorganization.

 

Objections to the Assumption or Rejection of Executory Contracts and Unexpired Leases and/or Cure Claim: If you wish to object to the proposed assumption or rejection of your Executory Contract or Unexpired Lease or to the Cure Claim associated with your Executory Contract or Unexpired Lease (all such objections, “Contract Objections”), your Contract Objection must: (a) be in writing; (b) comply with the Federal Rules of Bankruptcy Procedure and the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware; and (c) set forth the name of the objecting party, the basis for the objection, and the specific grounds therefor.

 

Contract Objections must be filed with the Court and served on the Debtor’s proposed counsel at the addresses specified below by the date as may be provided in the applicable Cure Notice or the Plan of Reorganization. Any counterparty to an Executory Contract or Unexpired Lease that fails to object timely to the proposed assumption or Cure Claim will be deemed to have assented to such assumption or Cure Claim.

 

UNLESS A PLAN/DISCLOSURE STATEMENT OBJECTION OR A CONTRACT OBJECTION IS TIMELY SERVED AND FILED IN ACCORDANCE WITH THIS NOTICE, IT MAY NOT BE CONSIDERED BY THE COURT.

---

 

Hearing on Confirmation of the Plan of Reorganization, the Adequacy of the
Combined Disclosure Statement and Plan, Assumption and Rejection of Executory Contracts and Unexpired Leases, and Proposed Cure Costs

 

The hearing (the “Combined Hearing”) will be held before the Honorable Thomas M. Horan, United States Bankruptcy Judge, at the United States Bankruptcy Court, 824 North Market Street, Wilmington, Delaware, 19801, on April 23, 2024, at 1:00 p.m. (prevailing Eastern Time) to consider the adequacy of the Combined Disclosure Statement and Plan, confirmation of the Plan of Reorganization, the assumption of Executory Contracts and Unexpired Leases, and the proposed Cure Claims, any objections to any of the foregoing, and any other matter that may properly come before the Court. Please be advised that the Combined Hearing may be continued from time to time by the Court or the Debtor without further notice other than by such adjournment being announced in open court or by a notice of adjournment filed with the Court and served on other parties entitled to notice.

 

Discharge, Injunction, Exculpation, and Release

 

ARTICLE IX OF THE COMBINED DISCLOSURE STATEMENT AND PLAN CONTAINS CERTAIN DISCHARGE, INJUNCTION, EXCULPATION, AND RELEASE PROVISIONS. YOU ARE ADVISED TO CAREFULLY REVIEW AND CONSIDER THE PLAN, INCLUDING THE DISCHARGE, INJUNCTION, EXCULPATION, AND RELEASE PROVISIONS AS YOUR RIGHTS MIGHT BE AFFECTED.

 

 

A copy of the Combined Disclosure Statement and Plan and any related documents can be obtained, free of charge at https://dm.epiq11.com/ChargeEnterprises or scanning the Quick Response Barcode below using the camera on a smart phone or tablet:

 

[PLACEHOLDER FOR QR CODE.]

 

Dated: {♦}, 2024
FAEGRE DRINKER BIDDLE & REATH LLP
/s/ DRAFT
Patrick A. Jackson (No. 4976) Ian J. Bambrick (No. 5455) Sarah E. Silveira (No. 6580) 222 Delaware Ave., Suite 1410 Wilmington, DE 19801 Tel: (302) 467-4200 Fax: (302) 467-4201 patrick.jackson@faegredrinker.com ian.bambrick@faegredrinker.com sarah.silveira@faegredrinker.com		Michael P. Pompeo (pro hac vice pending) Kyle R. Kistinger (pro hac vice pending) 1177 Avenue of the Americas, 41st Floor New York, NY 10036 Tel: (212) 248-3140 Fax: (212 248-3141 michael.pompeo@faegredrinker.com kyle.kistinger@faegredrinker.com
Michael T. Gustafson (pro hac vice pending) 320 South Canal Street, Suite 3300 Chicago, IL 60606 Tel: (312)569-1000 Fax: (312) 569-3000 mike.gustafson@faegredrinker.com
Proposed Counsel to the Debtor and Debtor in Possession

 

 

 

Exhibit 3

 

Unimpaired Notice of Non-Voting Status

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Objection Deadline: April 12, 2024, at 4:00 p.m. (ET) Combined Hearing: April 23, 2024, at 1:00 p.m. (ET) Docket Ref. Nos. {♦}

 

NOTICE OF NON-VOTING STATUS WITH RESPECT TO
(A) UNIMPAIRED CLASSES DEEMED TO ACCEPT THE PLAN
OF REORGANIZATION AND (B) UNCLASSIFIED CLAIMS

 

TO:         ALL HOLDERS OF (I) CLAIMS IN CLASSES 1, 3, AND 4; (II) UNCLASSIFIED CLAIMS; AND (III) OTHER PRIORITY CLAIMS

 

PLEASE TAKE NOTICE that on March {♦}, 2024, the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) entered that certain Order (I) Scheduling a Combined Disclosure Statement Approval and Plan Confirmation Hearing, (II) Establishing a Plan and Disclosure Statement Objection Deadline and Related Procedures, (III) Approving Solicitation and Related Procedures, (IV) Approving the Notice Procedures, (V) Approving Notice and Objection Procedures for the Assumption, Assignment, and Rejection of Executory Contracts and Unexpired Leases and (VI) Extending the Time and, Upon Confirmation, Waiving the Requirements that Schedules and Statements Be Filed and a Creditors’ Meeting Be Convened [D.I. {♦}] (the “Combined Hearing Order”). In the Combined Hearing Order, among other things, the Court set a date for a combined hearing on the adequacy of information contained in and confirmation of the Debtor’s Combined Disclosure Statement and Prepackaged Chapter 11 Plan of Reorganization [D.I. {♦}] (as amended, modified, or supplemented from time to time, the “Combined Disclosure Statement and Plan”).

 

PLEASE TAKE FURTHER NOTICE that you are receiving this Notice because under the terms of the Combined Disclosure Statement and Plan, either: (a) your Claim(s) against the Debtor is unimpaired and, therefore, in accordance with section 1126(f) of the United States Bankruptcy Code, 11 U.S.C. §§ 101–1532 (the “Bankruptcy Code”), you are (i) deemed to have Accepted the Plan of Reorganization and (ii) not entitled to vote on the Plan of Reorganization; or (b) your Claims are unclassified pursuant to section 1123(a)(1) of the Bankruptcy Code and, therefore, you are not entitled to vote on the Plan of Reorganization. Accordingly, this Notice and the Notice of (A) Commencement of Prepackaged Chapter 11 Bankruptcy Cases, (B) Combined Hearing on the Debtor’s Combined Disclosure Statement and Prepackaged Chapter 11 Plan of Reorganization, and Related Matters, (C) Assumption of Executory Contracts and Unexpired Leases and Cure Costs, (D) Objection Deadlines, and (e) Summary of the Plan of Reorganization (the “Combined Hearing Notice”) are being sent to you for informational purposes only.

 

PLEASE TAKE FURTHER NOTICE that, although you are not entitled to vote on the Plan of Reorganization with respect to your unimpaired Claim(s), you are a party in interest in the Debtor’s Chapter 11 Case.

 

PLEASE TAKE FURTHER NOTICE that, if you are a holder of a Claim in Class  1 ‑ Other Priority Claims, Class 3 – Other Secured Claims, or Class 4 – General Unsecured Claims your Claim shall be paid in full, or otherwise unimpaired under the Plan of Reorganization. For specific treatment of the Claims in each such class, you should consult Section 4.2 of the Combined Disclosure Statement and Plan, which can be accessed free of charge at https://dm.epiq11.com/ChargeEnterprises or through the QR Code contained in the Combined Hearing Notice.

 

PLEASE TAKE FURTHER NOTICE that if the Plan of Reorganization is confirmed by the Court, the Plan of Reorganization will be binding on all holders of a Claim against or Interest in the Debtor, regardless of whether the Claim or Interest of such holder is impaired under the Plan of Reorganization and whether such holder has accepted the Plan of Reorganization. Additionally, if the Plan of Reorganization is confirmed by the Court, the release, injunction, and exculpation provisions set forth in Article IX of the Combined Disclosure Statement and Plan may be binding on you.

 

PLEASE TAKE FURTHER NOTICE that the Combined Disclosure Statement and Plan, Combined Hearing Order, any documents, exhibits or appendices related to such pleadings, and all other materials in the Debtor’s Solicitation Package (other than the Ballot) may be obtained (i) from the website maintained by Epiq Corporate Restructuring, LLC (“Epiq”), the Debtor’s Voting Agent, at https://dm.epiq11.com/ChargeEnterprises or through the QR Code contained in the Combined Hearing Notice, or (ii) by contacting Epiq (a) by calling (888) 295-3602 (U.S. and Canada) or (971) 257-1944 (international); or (b) by sending an email to ChargeEnterprises@epiqglobal.com.

 

PLEASE TAKE FURTHER NOTICE THAT IF YOU HAVE ANY QUESTIONS ABOUT THE STATUS OF YOUR CLAIM(S), YOU SHOULD CONTACT EPIQ AT THE EMAIL ADDRESS OR TELEPHONE NUMBERS SET FORTH ABOVE.

 

 

 

Dated: {♦}, 2024
FAEGRE DRINKER BIDDLE & REATH LLP
/s/ DRAFT
Patrick A. Jackson (No. 4976) Ian J. Bambrick (No. 5455) Sarah E. Silveira (No. 6580) 222 Delaware Ave., Suite 1410 Wilmington, DE 19801 Tel: (302) 467-4200 Fax: (302) 467-4201 patrick.jackson@faegredrinker.com ian.bambrick@faegredrinker.com sarah.silveira@faegredrinker.com		Michael P. Pompeo (pro hac vice pending) Kyle R. Kistinger (pro hac vice pending) 1177 Avenue of the Americas, 41st Floor New York, NY 10036 Tel: (212) 248-3140 Fax: (212 248-3141 michael.pompeo@faegredrinker.com kyle.kistinger@faegredrinker.com
Michael T. Gustafson (pro hac vice pending) 320 South Canal Street, Suite 3300 Chicago, IL 60606 Tel: (312)569-1000 Fax: (312) 569-3000 mike.gustafson@faegredrinker.com
Proposed Counsel to the Debtor and Debtor in Possession

 

 

Exhibit 4

 

Impaired Notice of Non-Voting Status

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Objection Deadline: April 12, 2024, at 4:00 p.m. (ET) Combined Hearing: April 23, 2024, at 1:00 p.m. (ET) Docket Ref. Nos. {♦}

 

NOTICE OF NON-VOTING STATUS WITH RESPECT TO IMPAIRED CLASSES DEEMED TO REJECT THE PLAN OF REORGANIZATION

 

TO:         ALL HOLDERS OF CLAIMS IN CLASSES 5, 6, 7, 8, 9 & 10

 

PLEASE TAKE NOTICE that on March {♦}, 2024, the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) entered that certain Order (I) Scheduling a Combined Disclosure Statement Approval and Plan Confirmation Hearing, (II) Establishing a Plan and Disclosure Statement Objection Deadline and Related Procedures, (III) Approving Solicitation and Related Procedures, (IV) Approving the Notice Procedures, (V) Approving Notice and Objection Procedures for the Assumption, Assignment, and Rejection of Executory Contracts and Unexpired Leases and (VI) Extending the Time and, Upon Confirmation, Waiving the Requirements that Schedules and Statements Be Filed and a Creditors’ Meeting Be Convened [D.I. {♦}] (the “Combined Hearing Order”). In the Combined Hearing Order, among other things, the Court set a date for a combined hearing on the adequacy of information contained in and confirmation of the Debtor’s Combined Disclosure Statement and Prepackaged Chapter 11 Plan of Reorganization [D.I. {♦}] (as amended, modified, or supplemented from time to time, the “Combined Disclosure Statement and Plan”).

 

PLEASE TAKE FURTHER NOTICE that you are receiving this Notice because under the terms of the Combined Disclosure Statement and Plan your Claim(s) against the Debtor is impaired and you shall not receive or retain any distribution under the Combined Disclosure Statement and Plan and, therefore, in accordance with section 1126(f) of the United States Bankruptcy Code, 11 U.S.C. §§ 101–1532 (the “Bankruptcy Code”), you are (i) deemed to have Rejected the Plan of Reorganization and (ii) not entitled to vote on the Plan of Reorganization. Accordingly, this Notice and the Notice of (A) Commencement of Prepackaged Chapter 11 Bankruptcy Cases, (B) Combined Hearing on the Debtor’s Combined Disclosure Statement and Prepackaged Chapter 11 Plan of Reorganization, and Related Matters, (C) Assumption of Executory Contracts and Unexpired Leases and Cure Costs, (D) Objection Deadlines, and (e) Summary of the Plan of Reorganization (the “Combined Hearing Notice”) are being sent to you for informational purposes only.

 

PLEASE TAKE FURTHER NOTICE that, although you are not entitled to vote on the Plan of Reorganization with respect to your Claim(s), you are a party in interest in the Debtor’s Chapter 11 Case.

 

PLEASE TAKE FURTHER NOTICE that, as a holder of a fully impaired Claim in Class 5, 6, 7, 8, 9 or 10, your Claim shall be cancelled, released and extinguished and you will not receive or retain any distribution under the Combined Disclosure Statement and Plan. For specific treatment of the Claims in your class, you should consult Section 4.2 of the Combined Disclosure Statement and Plan, which can be accessed free of charge at https://dm.epiq11.com/ChargeEnterprises or through the QR Code contained in the Combined Hearing Notice.

 

PLEASE TAKE FURTHER NOTICE that if the Plan of Reorganization is confirmed by the Court, the Plan of Reorganization will be binding on all holders of a Claim against or Interest in the Debtor, regardless of whether the Claim or Interest of such holder is impaired under the Plan of Reorganization and whether such holder has accepted the Plan of Reorganization. Additionally, if the Plan of Reorganization is confirmed by the Court, the release, injunction, and exculpation provisions set forth in Article IX of the Combined Disclosure Statement and Plan may be binding on you.

 

PLEASE TAKE FURTHER NOTICE that the Combined Disclosure Statement and Plan, Combined Hearing Order, any documents, exhibits or appendices related to such pleadings, and all other materials in the Debtor’s Solicitation Package (other than the Ballot) may be obtained (i) from the website maintained by Epiq Corporate Restructuring, LLC (“Epiq”), the Debtor’s Voting Agent, at https://dm.epiq11.com/ChargeEnterprises or through the QR Code contained in the Combined Hearing Notice, or (ii) by contacting Epiq (a) by calling (888) 295-3602 (U.S. and Canada) or (971) 257-1944 (international); or (b) by sending an email to ChargeEnterprises@epiqglobal.com.

 

PLEASE TAKE FURTHER NOTICE THAT IF YOU HAVE ANY QUESTIONS ABOUT THE STATUS OF YOUR CLAIM(S), YOU SHOULD CONTACT EPIQ AT THE EMAIL ADDRESS OR TELEPHONE NUMBERS SET FORTH ABOVE.

 

 

 

Dated: {♦}, 2024
FAEGRE DRINKER BIDDLE & REATH LLP
/s/ DRAFT
Patrick A. Jackson (No. 4976) Ian J. Bambrick (No. 5455) Sarah E. Silveira (No. 6580) 222 Delaware Ave., Suite 1410 Wilmington, DE 19801 Tel: (302) 467-4200 Fax: (302) 467-4201 patrick.jackson@faegredrinker.com ian.bambrick@faegredrinker.com sarah.silveira@faegredrinker.com		Michael P. Pompeo (pro hac vice pending) Kyle R. Kistinger (pro hac vice pending) 1177 Avenue of the Americas, 41st Floor New York, NY 10036 Tel: (212) 248-3140 Fax: (212 248-3141 michael.pompeo@faegredrinker.com kyle.kistinger@faegredrinker.com
Michael T. Gustafson (pro hac vice pending) 320 South Canal Street, Suite 3300 Chicago, IL 60606 Tel: (312)569-1000 Fax: (312) 569-3000 mike.gustafson@faegredrinker.com
Proposed Counsel to the Debtor and Debtor in Possession

 

 

Exhibit 99.2

 

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Plan/Disclosure Statement Objection Deadline: April 12, 2024, at 4:00 p.m. (ET) Contract Objection Deadline: April 12, 2024, at 4:00 p.m. (ET) Combined Hearing: April 23, 2024, at 1:00 p.m. (ET) Docket Ref. Nos. 14 & 58

 

NOTICE OF (A) COMMENCEMENT OF PREPACKAGED
CHAPTER 11 BANKRUPTCY CASES, (B) COMBINED HEARING
ON THE DEBTOR’S COMBINED DISCLOSURE STATEMENT AND
PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION, AND
RELATED MATTERS, (C) ASSUMPTION OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES AND CURE COSTS, (D) OBJECTION DEADLINES,
AND (E) SUMMARY OF THE PLAN OF REORGANIZATION

 

NOTICE IS HEREBY GIVEN as follows:

 

On March 7, 2024 (the “Petition Date”), Charge Enterprises, Inc. (the “Debtor”), the debtor and debtor in possession in the above-captioned chapter 11 case (the “Chapter 11 Case”) filed with the United States Bankruptcy Court for the District of Delaware (the “Court”) a chapter 11 bankruptcy petition. On the same date, the Debtor filed the proposed Debtor’s Combined Disclosure Statement and Prepackaged Chapter 11 Plan of Reorganization (as amended, modified, or supplemented from time to time, the “Combined Disclosure Statement and Plan” and, the consensual prepackaged plan of reorganization set forth in Articles II–XIV therein, the “Plan of Reorganization”) pursuant to sections 1125 and 1126(b) of title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the “Bankruptcy Code”). A copy of the Combined Disclosure Statement and Plan is available for inspection on the Court’s website at www.deb.uscourts.gov or free of charge on the Debtor’s restructuring website at https://dm.epiq11.com/ChargeEnterprises. The Combined Disclosure Statement and Plan also may be obtained upon request of the Debtor’s proposed counsel at the address specified below and is on file with the Clerk of the Bankruptcy Court, 824 North Market Street, Third Floor, Wilmington, Delaware 19801, where it is available for review between the hours of 8:00 a.m. to 4:00 p.m. (prevailing Eastern Time).

 

The Plan of Reorganization is a “prepackaged” plan of reorganization agreed to by the Debtor and the Prepetition Lenders. The primary purpose of the Plan of Reorganization is to substantially deleverage the reorganized enterprise. More specifically, the Plan of Reorganization provides for the reorganization of the Debtor as a going concern and the resolution of all Claims against and Equity Interests in the Debtor in the Chapter 11 Case. The Debtor believes that any valid alternative to confirmation of the Plan of Reorganization would result in significant delays, litigation, and additional costs, and, ultimately, would jeopardize recoveries for holders of Allowed Claims.

 

The Debtor will be filing a schedule of creditors that it believes holds unsecured claims, and the amount of such claims by March 21, 2024. Your claim will be allowed in the amount scheduled unless: your claim is designated as disputed, contingent, or unliquidated; you file a proof of claim in a different amount; or you receive another notice. If your claim is not scheduled or if your claim is designated as disputed, contingent, or unliquidated, you must file a proof of claim or you might not be paid on your claim. You may file a proof of claim even if your claim is scheduled.  The deadline to file proofs of claims will be established by the Plan of Reorganization, if confirmed.

 

Information Regarding the Chapter 11 Case: On the Petition Date, the Debtor filed with the Court a petition for reorganization relief under chapter 11 of the Bankruptcy Code. You may be a creditor of the Debtor. This notice lists important deadlines. You may want to consult an attorney to protect your rights. You may not receive all documents filed in the Chapter 11 Case. All documents filed with the Court are available for inspection at the Clerk of the Bankruptcy Court, 824 North Market Street, 3rd Floor, Wilmington, Delaware 19801, between the hours of 8:00 a.m. to 4:00 p.m. (prevailing Eastern Time) and on the Debtor’s restructuring website at https://dm.epiq11.com/ChargeEnterprises.

 

Notice to Holders of Ordinary Shares in Charge Enterprises, Inc.: On March 11, 2024, this Court entered the Interim Order (I) Establishing Notification Procedures and Approving Restrictions on Certain Transfers of, or Worthless Stock Deductions with Respect to, Stock of the Debtor and (II) Granting Related Relief [Docket No. 54] (the “Stock Procedures Order”), establishing procedures surrounding certain transfers of Ordinary Shares in Charge Enterprises, Inc. and restricting the ability of certain shareholders to take worthless stock deductions on their income tax returns with respect to their shares in Charge Enterprises, Inc. All registered holders of Ordinary Shares in Charge Enterprises, Inc. have been served with a copy of this notice. For a full description of these procedures, a copy of the Stock Procedures Order is available for inspection on the Court’s website at www.deb.uscourts.gov or free of charge on the Debtor’s restructuring website at https://dm.epiq11.com/ChargeEnterprises, or may be obtained upon request of the Debtor’s proposed counsel at the address specified below.

 

 

Objections to the Plan of Reorganization or Disclosure Statement: Any objection (each, a “Plan/Disclosure Statement Objection”) to the Combined Disclosure Statement and Plan must: (a) be in writing; (b) comply with the Federal Rules of Bankruptcy Procedure and the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware; (c) state the name and address of the objecting party and the amount and nature of the Claim or Interest beneficially owned by such entity; and (d) state with particularity the legal and factual basis for such objections, and, if practicable, a proposed modification to the Plan of Reorganization that would resolve such objection.

 

Plan/Disclosure Statement Objections must be filed with the Court and served upon the following parties (collectively, the “Notice Parties”) no later than April 12, 2024, at 4:00 p.m. (Eastern Time): (i) proposed counsel to the Debtor, Faegre Drinker Biddle & Reath LLP, 222 Delaware Ave., Suite 1410, Wilmington, Delaware 19801, Attn: Patrick Jackson (patrick.jackson@faegredrinker.com), Ian Bambrick (ian.bambrick@faegredrinker.com) and Sarah Silveira (sarah.silveira@faegredrinker.com); (ii) counsel to any official committee of unsecured creditors appointed in the Chapter 11 Case; (iii) the Office of the United States Trustee for the District of Delaware, J. Caleb Boggs Federal Building, 844 King Street, Suite 2207, Lockbox 35, Wilmington, DE 19801, Attn: Rosa Sierra-Fox, Esq. (rosa.sierra-fox@usdoj.gov); and (iv) counsel to the DIP Lender, White & Case LLP, 1221 Avenue of the Americas, New York, New York 10020, Attn: Harrison Denman (harrison.denman@whitecase.com), Laura Garr (laura.garr@whitecase.com), and Trudy Smith (trudy.smith@whitecase.com), and Richards, Layton & Finger, P.A., 920 N. King Street, Wilmington, DE 19801, Attn: Paul N. Heath (heath@rlf.com) and Amanda R. Steele (steele@rlf.com).

 

Notice to Counterparties to Executory Contracts and Unexpired Leases: You or one of your affiliates may be a counterparty to one or more contracts or leases that may be Executory Contracts or Unexpired Leases with the Debtor. In that event, except as otherwise provided in the Plan of Reorganization, each Executory Contract and Unexpired Lease not previously assumed or rejected shall be deemed automatically assumed pursuant to sections 365 and 1123 of the Bankruptcy Code as of the Effective Date, other than: (i) those identified on the Rejection Schedule; (ii) those that have been previously rejected by a Final Order; (iii) those that are the subject of a motion to reject that is pending on the Confirmation Date; (iv) those that are subject to a motion to reject pursuant to which the requested effective date of such rejection is after the Effective Date, or (v) those that are otherwise rejected pursuant to the terms of the Plan of Reorganization.

 

As set forth in the Plan of Reorganization, entry of the Confirmation Order by the Court shall constitute an order approving the assumption of all Executory Contracts and Unexpired Leases other than those identified in clauses (i), (ii), (iii), and (iv) of the foregoing paragraph, pursuant to sections 365(a) and 1123 of the Bankruptcy Code as of the Effective Date or as otherwise set forth in the Plan Supplement. Each Executory Contract and Unexpired Lease assumed pursuant to the Plan of Reorganization or by Bankruptcy Court order shall re-vest in and be fully enforceable by the Reorganized Debtor in accordance with its terms.

 

The proposed Cure Claim for any Executory Contract or Unexpired Lease that is assumed pursuant to the Plan of Reorganization shall be zero dollars unless otherwise indicated on a Cure Notice. No later than the filing date of the Plan Supplement, to the extent not previously filed with the Court and served on affected counterparties, the Debtor shall provide for the Cure Notice to be sent to applicable contract and lease counterparties, together with procedures for objecting thereto and resolution of disputes by the Court.

 

As set forth in the Plan of Reorganization, entry of the Confirmation Order by the Court shall constitute an order approving such rejections pursuant to sections 365 and 1123 of the Bankruptcy Code as of the Effective Date or as otherwise set forth in the Plan Supplement.

 

ASSUMPTION OF ANY EXECUTORY CONTRACT OR UNEXPIRED LEASE PURSUANT TO THE PLAN OF REORGANIZATION OR OTHERWISE SHALL RESULT IN THE FULL RELEASE AND SATISFACTION OF ANY CLAIMS, OBLIGATIONS OR DEFAULTS, WHETHER MONETARY OR NONMONETARY, INCLUDING DEFAULTS OF PROVISIONS RESTRICTING THE CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION, FAILURE TO COMPLY WITH OBLIGATIONS ARISING FROM PROVISIONS RESTRICTING THE CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION OR OTHER BANKRUPTCY-RELATED DEFAULTS, ARISING UNDER ANY ASSUMED EXECUTORY CONTRACT OR UNEXPIRED LEASE AT ANY TIME BEFORE THE DATE THE DEBTOR OR THE REORGANIZED DEBTOR ASSUMES SUCH EXECUTORY CONTRACT OR UNEXPIRED LEASE. ANY PROOFS OF CLAIM FILED WITH RESPECT TO AN EXECUTORY CONTRACT OR UNEXPIRED LEASE THAT HAS BEEN ASSUMED SHALL BE DEEMED DISALLOWED AND EXPUNGED, WITHOUT FURTHER NOTICE TO OR ACTION, ORDER OR APPROVAL OF THE COURT.

 

Objections to the Assumption or Rejection of Executory Contracts and Unexpired Leases and/or Cure Claim: If you wish to object to the proposed assumption or rejection of your Executory Contract or Unexpired Lease or to the Cure Claim associated with your Executory Contract or Unexpired Lease (all such objections, “Contract Objections”), your Contract Objection must: (a) be in writing; (b) comply with the Federal Rules of Bankruptcy Procedure and the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware; and (c) set forth the name of the objecting party, the basis for the objection, and the specific grounds therefor.

 

Contract Objections must be filed with the Court and served on the Debtor’s proposed counsel at the addresses specified below by the date as may be provided in the applicable Cure Notice or the Plan of Reorganization. Any counterparty to an Executory Contract or Unexpired Lease that fails to object timely to the proposed assumption or Cure Claim will be deemed to have assented to such assumption or Cure Claim.

 

UNLESS A PLAN/DISCLOSURE STATEMENT OBJECTION OR A CONTRACT OBJECTION IS TIMELY SERVED AND FILED IN ACCORDANCE WITH THIS NOTICE, IT MAY NOT BE CONSIDERED BY THE COURT.

---

 

 

Hearing on Confirmation of the Plan of Reorganization, the Adequacy of the Combined Disclosure Statement and Plan, Assumption and Rejection of Executory Contracts
and Unexpired Leases, and Proposed Cure Costs

 

The hearing (the “Combined Hearing”) will be held before the Honorable Thomas M. Horan, United States Bankruptcy Judge, at the United States Bankruptcy Court, 824 North Market Street, Wilmington, Delaware, 19801, on April 23, 2024, at 1:00 p.m. (prevailing Eastern Time) to consider the adequacy of the Combined Disclosure Statement and Plan, confirmation of the Plan of Reorganization, the assumption of Executory Contracts and Unexpired Leases, and the proposed Cure Claims, any objections to any of the foregoing, and any other matter that may properly come before the Court. Please be advised that the Combined Hearing may be continued from time to time by the Court or the Debtor without further notice other than by such adjournment being announced in open court or by a notice of adjournment filed with the Court and served on other parties entitled to notice.

 

Summary of Classification, Impairment, and Voting Status

 

The following chart summarizes the classification of Claims and Interests provided by the Plan of Reorganization and indicates the voting status of each class.

 

Classification, Impairment, and Voting Status of Claims and Interests
Class	Description	Status	Voting Rights
1	Other Priority Claims	Unimpaired	Not Entitled to Vote (Presumed to Accept)
2	Prepetition Lender Claims	Impaired	Entitled to Vote
3	Other Secured Claims	Unimpaired	Not Entitled to Vote (Presumed to Accept)
4	General Unsecured Claims	Unimpaired	Not Entitled to Vote (Presumed to Accept)
5	Section 510(b) Claims	Impaired	Not Entitled to Vote (Presumed to Reject)
6	Other Subordinated Claims	Impaired	Not Entitled to Vote (Presumed to Reject)
7	Series C Preferred Interests	Impaired	Not Entitled to Vote (Presumed to Reject)
8	Series D Preferred Interests	Impaired	Not Entitled to Vote (Presumed to Reject)
9	Series E Preferred Interests	Impaired	Not Entitled to Vote (Presumed to Reject)
10	Common Interests	Impaired	Not Entitled to Vote (Presumed to Reject)

 

Discharge, Injunction, Exculpation, and Release

 

YOU ARE ADVISED TO CAREFULLY REVIEW AND CONSIDER THE COMBINED DISCLOSURE STATEMENT AND PLAN, INCLUDING THE DISCHARGE, INJUNCTION, EXCULPATION, AND RELEASE PROVISIONS, DESCRIBED BELOW, AS YOUR RIGHTS MIGHT BE AFFECTED.

 

Relevant Definitions

 

“Ds & Os” means, collectively, the Directors and Officers (each of whom is a “D&O”). For the avoidance of doubt, the Ds & Os do not include any individual who previously served as a director or officer of the Debtor but is not a Director or Officer as defined herein.

 

“Exculpated Party” means each of the following in its capacity as such: (a) the Debtor; (b) the Debtor’s post-petition officers, directors, trustees, principals, employees, agents, financial advisors, attorneys, accountants, investment bankers, consultants, and representatives (including specifically the Ds & Os and the Professionals); and (c) Arena.

 

“Released Parties” means, collectively, (i) Arena, (ii) the Arena Related Parties, and (iii) the Ds & Os (each of whom is a “Released Party”).

 

Article IX, Section 9.1—Discharge of Claims and Termination of Interests

 

Pursuant to section 1141(d) of the Bankruptcy Code, and except as otherwise specifically provided in the Plan of Reorganization or in any contract, instrument, or other agreement or document created pursuant to the Plan of Reorganization, the distributions, rights, and treatment that are provided in the Plan of Reorganization shall be in complete satisfaction, discharge, and release, effective as of the Effective Date, of Claims, Interests, and Causes of Action of any nature whatsoever, including any interest accrued on Claims from and after the Petition Date, whether known or unknown, against, liabilities of, Liens on, obligations of, rights against, and Interests in, the Debtor or any of its assets or properties, regardless of whether any property shall have been distributed or retained pursuant to the Plan of Reorganization on account of such Claims and Interests, including demands, liabilities, and Causes of Action that arose before the Effective Date, any liability to the extent such Claims or Causes of Action accrued before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, in each case whether or not: (1) a Proof of Claim based upon such debt or right is filed or deemed filed pursuant to section 501 of the Bankruptcy Code; (2) a Claim based upon such debt or right is Allowed pursuant to section 502 of the Bankruptcy Code; or (3) the holder of such a Claim or Interest has accepted the Plan of Reorganization. Unless expressly provided in the Plan of Reorganization, the Confirmation Order shall be a judicial determination of the discharge of all Claims and Interests subject to the Effective Date occurring.

 

For the avoidance of doubt, pursuant to section 1124(e) of the Bankruptcy Code, the discharge of any Debt of the Debtor under Section 9.1 of the Plan of Reorganization does not affect the liability of any other Entity on, or the property of any other Entity for, such Debt.

 

Article IX, Section 9.4—Releases by the Debtor

 

Pursuant to section 1123(b) of the Bankruptcy Code, for good and valuable consideration, on and after the Effective Date, each Released Party is deemed released and discharged by the Debtor and its Estate from any and all Causes of Action, including any derivative claims asserted on behalf of the Debtor or its Subsidiaries, that the Debtor or its Estate would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest, or that any holder of any Claim or Interest could have asserted on behalf of the Debtor or its Subsidiaries, including, without limitation, any Causes of Action based on or relating to, or in any manner arising from, in whole or in part:

 

(a)

the Debtor, the Debtor’s in- or out-of-court restructuring efforts, intercompany transactions, the formulation, preparation, dissemination, negotiation, or filing of the Plan Documents;

 

(b)

any Plan Document, contract, instrument, release, or other agreement or document (including providing any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by the Plan of Reorganization or the reliance by any Released Party on the Plan of Reorganization or the Confirmation Order in lieu of such legal opinion) created or entered into in connection with the Plan of Reorganization;

 

(c)

the Chapter 11 Case, the Plan of Reorganization, the RSA, the DIP Term Sheet, the filing of the Chapter 11 Case, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan of Reorganization, including the distribution of property under the Plan of Reorganization or any other related agreement; or

 

(d)

the business or contractual arrangements between any Debtor and any Released Party, and any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date relating to any of the foregoing.

 

Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (i) any Company D&O Claims that are or may be covered by the Debtor’s D&O Liability Insurance Policies (as determined in good faith by the Reorganized Debtor), except to the extent set forth in Section 5.1(i) of the Plan of Reorganization, or (ii) any post-Effective Date obligations of any party or Entity under the Plan of Reorganization, any Plan Document, or any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan of Reorganization.

 

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the release set forth in Section 9.4 of the Plan of Reorganization, which includes by reference each of the related provisions and definitions contained herein, and further, shall constitute the Bankruptcy Court’s finding that such release is: (a) in exchange for the good and valuable consideration provided by the Released Parties; (b) in the best interests of the Debtor and all Holders of Claims; (c) fair, equitable, and reasonable; (d) given and made after due notice and opportunity for hearing; and (e) a bar to the Debtor, or anyone claiming by or through the Debtor, asserting any Claim or Cause of Action released by Section 9.4 of the Plan of Reorganization.

 

Article IX, Section 9.5—Exculpation

 

Except as otherwise specifically provided in the Plan of Reorganization, no Exculpated Party shall have or incur, and each Exculpated Party is hereby released and exculpated from any Cause of Action related to any act or omission in connection with, relating to, or arising out of, the RSA, the Chapter 11 Case, the Plan of Reorganization, or any Plan Document, contract, instrument, release or other agreement or document (including providing any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by the Plan of Reorganization or the reliance by any Exculpated Party on the Plan of Reorganization or the Confirmation Order in lieu of such legal opinion) created or entered into in connection with the Plan of Reorganization, the filing of the Chapter 11 Case, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan of Reorganization, including the distribution of property under the Plan of Reorganization or any other related agreement (“Exculpated Acts or Omissions”), provided that any act or omission that is determined in a Final Order to have constituted actual fraud, willful misconduct, or gross negligence shall not be considered an Exculpated Act or Omission, provided further that in all respects the Exculpated Parties shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the Plan of Reorganization.

 

For the avoidance of doubt, the exculpation set forth above does not provided for exculpation or release of any Cause of Action of the Debtor (i) against any advisor that arose prior to the Petition Date for any act or omission that was not an Exculpated Act or Omission, or (ii) against any former director or officer of the Debtor.

 

Article IX, Section 9.6—Injunction

 

Except as otherwise expressly provided in the Plan of Reorganization or for obligations issued or required to be paid pursuant to the Plan of Reorganization or Confirmation Order, all Entities who have held, hold, or may hold Causes of Action that have been released or exculpated pursuant to Sections 5.1, 9.4, or 9.5 of the Plan of Reorganization, or Claims or Interests that have been discharged pursuant to Section 9.1 of the Plan of Reorganization, are permanently enjoined, from and after the Effective Date, from taking any of the following actions against, as applicable, the Debtor, the Subsidiaries, the Reorganized Debtor, the Released Parties, or the Exculpated Parties: (a) commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests, as applicable; (b) enforcing, attaching, collecting, or recovering by any manner or means any judgment, award, decree, or order against such Entities on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests, as applicable; (c) creating, perfecting, or enforcing any Lien or encumbrance of any kind against such Entities or the property or the estates of such Entities on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests, as applicable; (d) asserting any right of setoff, subrogation, or recoupment of any kind against any obligation due from such Entities or against the property of such Entities on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests, as applicable; and (e) commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests released or settled pursuant to the Plan of Reorganization. Notwithstanding anything to the contrary in the foregoing, the injunction does not enjoin any party under the Plan of Reorganization or under any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan of Reorganization from bringing an action to enforce the terms of the Plan of Reorganization or such document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan of Reorganization.

 

A copy of the Combined Disclosure Statement and Plan and any related documents can be obtained, free of charge, at https://dm.epiq11.com/ChargeEnterprises or by scanning the Quick Response Barcode below using the camera on a smart phone or tablet:

 

 

Dated: March 12, 2024
FAEGRE DRINKER BIDDLE & REATH LLP
/s/ Sarah E. Silveira
Patrick A. Jackson (No. 4976) Ian J. Bambrick (No. 5455) Sarah E. Silveira (No. 6580) 222 Delaware Ave., Suite 1410 Wilmington, DE 19801 Tel: (302) 467-4200 Fax: (302) 467-4201 patrick.jackson@faegredrinker.com ian.bambrick@faegredrinker.com sarah.silveira@faegredrinker.com		Michael P. Pompeo (pro hac vice) Kyle R. Kistinger (pro hac vice) 1177 Avenue of the Americas, 41st Floor New York, NY 10036 Tel: (212) 248-3140 Fax: (212 248-3141 michael.pompeo@faegredrinker.com kyle.kistinger@faegredrinker.com
Michael T. Gustafson (pro hac vice) 320 South Canal Street, Suite 3300 Chicago, IL 60606 Tel: (312) 569-1000 Fax: (312) 569-3000 mike.gustafson@faegredrinker.com
Proposed Counsel to the Debtor and Debtor in Possession

 

 

Exhibit 99.3

 

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Ref. D.I. 8

 

INTERIM ORDER (I) ESTABLISHING NOTIFICATION PROCEDURES
AND APPROVING RESTRICTIONS ON CERTAIN TRANSFERS OF, OR
WORTHLESS STOCK DEDUCTIONS WITH RESPECT TO, STOCK
OF THE DEBTOR AND (II) GRANTING RELATED RELIEF

 

Upon consideration of the motion (the “Motion”) of the above-captioned debtor and debtor in possession (the “Debtor”) for the entry of interim and final orders, pursuant to sections 105(a), 362, and 541 of the Bankruptcy Code establishing Stock Procedures and Worthless Stock Deduction Procedures to protect the potential value of the Debtor’s Tax Attributes for use in connection with the reorganization of the Debtor and in future periods and authorizing application of such Stock Procedures to Ordinary Shares and Options, and granting related relief; and upon consideration of the record of the Chapter 11 Case; and the Court having found that due and proper notice of the Motion has been given and no other or further notice of the Motion is required under the circumstances; and the Court having found that it has jurisdiction to consider the Motion under 28 U.S.C. §§ 1334 and 157, and the Standing Order; and the Court having found that its consideration of the Motion and the relief requested therein is a core proceeding under 28 U.S.C. § 157(b) and that it may enter a final order consistent with Article III of the United States Constitution; and the Court having found that venue of these proceedings and the Motion is proper pursuant to 28 U.S.C. §§ 1408 and 1409; and the Court having found and determined that the relief requested in the Motion and provided for herein is in the best interest of the Debtor, its estate, and its creditors; and after due deliberation and sufficient cause appearing therefor,

IT IS HEREBY ORDERED THAT:

 

1.    The Motion is GRANTED on an interim basis, as set forth herein.

2.    The Court shall hold a final hearing on the relief sought in the Motion on April 8, 2024, at 11:00 a.m. (ET) (the “Final Hearing”). Any party-in-interest objecting to the relief sought at the Final Hearing or the Proposed Final Order shall file and serve a written objection, which objection shall be served upon (i) proposed counsel to the Debtor, Faegre Drinker Biddle & Reath LLP, 222 Delaware Ave., Suite 1410, Wilmington, DE 19801, Attn: Ian Bambrick (ian.bambrick@faegredrinker.com) and Sarah Silveira (sarah.silveira@faegredrinker.com), (ii) counsel to any official committee of unsecured creditors appointed in these Chapter 11 Case; and (iii) the Office of the United States Trustee for the District of Delaware, J. Caleb Boggs Federal Building, 844 King Street, Suite 2207, Lockbox 35, Wilmington, DE 19801, Attn: Rosa Sierra-Fox, Esq. (rosa.sierra-fox@usdoj.gov), in each case no later than March 27, 2024, at 4:00 p.m. (ET). If no objections to the entry of the Proposed Final Order are timely filed, this Court may enter the Proposed Final Order without further notice or a hearing. The Debtor shall file a notice of the Final Hearing within two (2) business days after entry of this Order.

3.    The Debtor’s Tax Attributes are property of the Debtor’s estate and are protected by section 362(a) of the Bankruptcy Code.

4.    The Stock Procedures and Worthless Stock Deduction Procedures, as set forth in Exhibit 1 and Exhibit 2 attached hereto, are approved.

5.    Any transfer of Ordinary Shares in violation of the Stock Procedures, including but not limited to the notice requirements, shall be null and void ab initio.

6.    In the case of any such transfer of Ordinary Shares in violation of the Stock Procedures, including, but not limited to, the notice requirements, the person or entity making such transfer shall be required to take remedial actions specified by the Debtor, to appropriately reflect that such transfer is null and void ab initio.

7.    The taking of worthless stock deduction in violation of the Worthless Stock Deduction Procedures, including but not limited to the notice requirements, shall be null and void ab initio.

8.    If any such worthless stock deduction is taken in violation of the Worthless Stock Deduction Procedures, including, but not limited to, the notice requirements, the person or entity taking such worthless stock deduction shall be required to take remedial actions specified by the Debtor, to appropriately reflect that such worthless stock deduction is null and void ab initio.

9.    The Debtor is authorized, in consultation with the Prepetition Lenders, to retroactively or prospectively waive any and all restrictions, stays, and notification procedures set forth in the Stock Procedures and Worthless Stock Deduction Procedures.

10.    Nothing in the Motion or this Interim Order waives or modifies the requirements of the RSA including, without limitation, the consent and consultation rights contained therein.

11.    The requirements set forth in this Interim Order are in addition to the requirements of Federal Rule of Bankruptcy Procedure 3001(e) and applicable law, and do not excuse compliance therewith.

12.    The Debtor shall include in the Notice of Commencement and in a Form 8-K filed with the Securities and Exchange Commission within four (4) business days of the Petition Date a reference to the Court’s entry of this Interim Order, a description of the relief granted herein, and an explanation as to how interested parties may receive a copy of this Interim Order.

13.    Notwithstanding entry of this Interim Order, nothing herein shall create, nor is intended to create, any rights in favor of or enhance the status of any claim held by, any party.

14.    The requirements set forth in this Interim Order are in addition to the requirements of all applicable law and do not excuse compliance therewith.

15.    The Debtor is authorized to take any and all actions necessary to effectuate the relief granted herein.

16.    The requirements of Bankruptcy Rule 6003(b) are satisfied.

17.    Notwithstanding any applicability of Bankruptcy Rule 6004(h), the terms and conditions of this Interim Order shall be effective and enforceable immediately upon its entry.

18.    Notice of the Motion as provided therein satisfies the requirements of Bankruptcy Rule 6004(a) and the Local Rules.

19.    This Court shall retain jurisdiction to hear and determine all matters arising from or related to the implementation of this Order.

 

 

EXHIBIT 1

 

Stock Procedures

A.         Procedures for Certain Transfers of Ordinary Shares. The following procedures apply to transfers of Ordinary Shares:

 

a.         Any person or entity that currently is or becomes a Substantial Shareholder must file with the Court and serve upon the Disclosure Parties (as defined herein) a declaration of such status, substantially in the form annexed to the Stock Procedures as Exhibit 1A (each, a “Declaration of Status as a Substantial Shareholder”), on or before the later of (i) twenty (20) calendar days after the date of the Notice of Interim Order, and (ii) ten (10) calendar days after becoming a Substantial Shareholder; provided that, for the avoidance of doubt, the other procedures set forth herein shall apply to any Substantial Shareholder even if no Declaration of Status as a Substantial Shareholder has been filed.

 

b.         Disclosure Parties consist of the following: (i) the Office of the United States Trustee for the District of Delaware, 844 King Street, Suite 2207, Wilmington, Delaware 19801 (Attn: Rosa Sierra-Fox, Esq. (rosa.sierra-fox@usdoj.gov)); (ii) Charge Enterprises, Inc., 125 Park Avenue, 25^th Floor, New York, New York 10017, Attn: Marc Rosenwald, (mrosenwald@charge.enterprises); and (iii) proposed counsel to the Debtor, Faegre Drinker Biddle & Reath LLP, 222 Delaware Ave., Suite 1410, Wilmington, DE 19801, Attn: Ian Bambrick (ian.bambrick@faegredrinker.com) and Sarah Silveira (sarah.silveira@faegredrinker.com) (together, the “Disclosure Parties”).

 

c.         Seven (7) days prior to effectuating any transfer of Ordinary Shares that would (i) increase the size of a Substantial Shareholder’s Beneficial Ownership, or (ii) would result in an entity or individual becoming a Substantial Shareholder, such Substantial Shareholder (or person or entity that may become a Substantial Shareholder) must file with the Court, and serve upon the Disclosure Parties, an advance written declaration of the intended transfer of Ordinary Shares, substantially in the form annexed to the Stock Procedures as Exhibit 1B (each, a “Declaration of Intent to Accumulate Ordinary Shares”).

 

d.         Seven (7) days prior to effectuating any transfer of Ordinary Shares that would (i) reduce the size of a Substantial Shareholder’s Beneficial Ownership, or (ii) would result in an entity or individual ceasing to be a Substantial Shareholder, such Substantial Shareholder must file with the Court, and serve upon the Disclosure Parties, an advance written declaration of the intended transfer of Ordinary Shares, substantially in the form annexed to the Stock Procedures as Exhibit 1C (each, a “Declaration of Intent to Transfer Ordinary Shares,” and together with a Declaration of Intent to Accumulate Ordinary Shares, each a “Declaration of Proposed Transfer”).

 

e.         The Debtor and, in the event the Debtor advises that it does not intend to object itself, the other Disclosure Parties shall have seven (7) calendar days after receipt of a Declaration of Proposed Transfer to file with the Court and serve on such Substantial Shareholder or potential Substantial Shareholder an objection to any proposed transfer of Ordinary Shares described in the Declaration of Proposed Transfer on the grounds that such transfer might adversely affect the Debtor’s ability to utilize its Tax Attributes.

 

i.         If the Debtor or another Disclosure Party timely object, the proposed transaction will remain ineffective unless such objection is withdrawn by such party, or such transaction is approved by a final and non-appealable order of the Court.

 

ii.         If the Debtor or another Disclosure Party do not object, the proposed transaction may proceed solely as set forth in the Declaration of Proposed Transfer. Further transactions within the scope of these procedures must be the subject of additional notices in accordance with the Stock Procedures set forth herein, with an additional fourteen-day waiting period for each Declaration of Proposed Transfer.

 

B.         Notice Procedures. The following procedures apply to these Stock Procedures.

 

a.         No later than three (3) business days following entry of the Interim Order, or as soon as reasonably practicable thereafter, the Debtor shall serve by first class or overnight mail, postage prepaid, substantially in the form of Exhibit 3 attached to these Stock Procedures (the “Notice of Interim Order”), on: (i) the Office of the United States Trustee for the District of Delaware; (ii) the Office of the United States Attorney for the District of Delaware; (iii) the Internal Revenue Service; (iv) the Debtor’s thirty (30) largest unsecured creditors (excluding insiders); (v) the Securities and Exchange Commission; (vi) counsel to the Prepetition Lenders; (vii) each equity security holder directly registered with the transfer agent for the Debtor’s Ordinary Shares and all banks, brokers, intermediaries, other nominees or their mailing agents that hold the Ordinary Shares in “street name’ for the beneficial holders (with instructions to serve down to the beneficial holders of Ordinary Shares, as applicable); and (xiii) all parties who have filed a notice of appearance and request for service of papers pursuant to Bankruptcy Rule 2002 (collectively, the “Debtor’s Notice Parties”). Additionally, no later than three (3) business days following entry of the Final Order, or as soon as reasonably practicable thereafter, the Debtor shall serve a Notice of Interim Order modified to reflect that the final order has been entered (as modified, the “Notice of Final Order”) on the Debtor’s Notice Parties and in the same manner as such Notice of Interim Order was served.

 

b.         All registered and nominee holders of Ordinary Shares shall be required to serve the Notice of Interim Order or Notice of Final Order, as applicable, on any holder for whose benefit such registered or nominee holder holds such Ordinary Shares down the chain of ownership to the beneficial owners of such Ordinary Shares.

 

c.         Any entity, individual, broker or agent acting on such entity’s or individual’s behalf who sells Ordinary Shares to another entity or individual shall be required to serve a copy of the Notice of Interim Order or Notice of Final Order, as applicable, on such purchaser, or any broker or agent acting on such purchaser’s behalf.

 

d.         The Debtor may, in consultation with the Prepetition Lender, retroactively or prospectively waive any and all restrictions, stays, and notification procedures to be imposed on a Substantial Shareholder as set forth in the Motion.

 

 

EXHIBIT 1A

 

Declaration of Status as a Substantial Shareholder

 

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Ref. D.I. 8 & ___

 

DECLARATION OF STATUS AS A SUBSTANTIAL SHAREHOLDER

 

PLEASE TAKE NOTICE that the undersigned party is/has become a Substantial Shareholder with respect to the ordinary shares of Charge Enterprises, Inc. or of any Beneficial Ownership therein (the “Ordinary Shares”). Charge Enterprises, Inc. is the debtor and debtor in possession in the above-captioned chapter 11 case pending in the United States Bankruptcy Court for the District of Delaware (the “Court”).

PLEASE TAKE FURTHER NOTICE that, as of                                     , 2024, the undersigned party currently has Beneficial Ownership of                             Ordinary Shares. The following table sets forth the date(s) on which the undersigned party acquired Beneficial Ownership of such Ordinary Shares:

Number of Shares	Date Acquired

(Attach additional page or pages if necessary)

 

PLEASE TAKE FURTHER NOTICE that the last four digits of the taxpayer identification number of the undersigned party are                                     ^.

PLEASE TAKE FURTHER NOTICE that, pursuant to that certain [Interim/Final] Order (I) Establishing Notification Procedures and Approving Restrictions on Certain Transfers of, or Worthless Stock Deductions With Respect to, Stock of the Debtor and (II) Granting Related Relief [Docket No.                   ], this declaration (this “Declaration”) is being filed with the Court and served on the following parties: (i) the Office of the United States Trustee for the District of Delaware, 844 King Street, Suite 2207, Wilmington, Delaware 19801 (Attn: Rosa Sierra-Fox, Esq. (rosa.sierra-fox@usdoj.gov)); (ii) Charge Enterprises, Inc., 125 Park Avenue, 25^th Floor, New York, New York 10017, Attn: Marc Rosenwald, (mrosenwald@charge.enterprises); and (iii) proposed counsel to the Debtor, Faegre Drinker Biddle & Reath LLP, 222 Delaware Ave., Suite 1410, Wilmington, DE 19801, Attn: Ian Bambrick (ian.bambrick@faegredrinker.com) and Sarah Silveira (sarah.silveira@faegredrinker.com).

PLEASE TAKE FURTHER NOTICE that, pursuant to 28 U.S.C. § 1746, under penalties of perjury, the undersigned party hereby declares that he or she has examined this Declaration and accompanying attachments (if any), and, to the best of his or her knowledge and belief, this Declaration and any attachments hereto are true, correct, and complete.

 

 

EXHIBIT 1B

 

Declaration of Intent to Accumulate Ordinary SharesIN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Ref. D.I. 8 & ___

 

 

DECLARATION OF INTENT TO ACCUMULATE ORDINARY SHARES

 

PLEASE TAKE NOTICE that the undersigned party hereby provides notice of its intention to purchase, acquire, or otherwise accumulate (the “Proposed Transfer”) one or more ordinary shares of Charge Enterprises, Inc. or of any Beneficial Ownership therein (the “Ordinary Shares”). Charge Enterprises, Inc. is the debtor and debtor in possession in the above-captioned chapter 11 case pending in the United States Bankruptcy Court for the District of Delaware (the “Court”).

PLEASE TAKE FURTHER NOTICE that, if applicable, on                            , 2024, the undersigned party filed a Declaration of Status as a Substantial Shareholder with the Court and served copies thereof as set forth therein.

PLEASE TAKE FURTHER NOTICE that the undersigned party currently has Beneficial Ownership of                             Ordinary Shares.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Proposed Transfer, the undersigned party proposes to purchase, acquire, or otherwise accumulate Beneficial Ownership of                             Ordinary Shares or an Option with respect to                             Ordinary Shares. If the Proposed Transfer is permitted to occur, the undersigned party will have Beneficial Ownership of                             Ordinary Shares after such transfer becomes effective.

PLEASE TAKE FURTHER NOTICE that the last four digits of the taxpayer identification number of the undersigned party are                            ^.

PLEASE TAKE FURTHER NOTICE that, pursuant to that certain [Interim/Final] Order (I) Establishing Notification Procedures and Approving Restrictions on Certain Transfers of, or Worthless Stock Deductions With Respect to, Stock of the Debtor and (II) Granting Related Relief [Docket No.                   ] (the “Order”), this declaration (this “Declaration”) is being filed with the Court and served on the following parties: (i) the Office of the United States Trustee for the District of Delaware, 844 King Street, Suite 2207, Wilmington, Delaware 19801 (Attn: Rosa Sierra-Fox, Esq. (rosa.sierra-fox@usdoj.gov)); (ii) Charge Enterprises, Inc., 125 Park Avenue, 25^th Floor, New York, New York 10017, Attn: Marc Rosenwald, (mrosenwald@charge.enterprises); and (iii) proposed counsel to the Debtor, Faegre Drinker Biddle & Reath LLP, 222 Delaware Ave., Suite 1410, Wilmington, DE 19801, Attn: Ian Bambrick (ian.bambrick@faegredrinker.com) and Sarah Silveira (sarah.silveira@faegredrinker.com).

PLEASE TAKE FURTHER NOTICE that, pursuant to the Order, the undersigned party acknowledges that it is prohibited from consummating the Proposed Transfer unless and until the undersigned party complies with the Stock Procedures set forth therein.

PLEASE TAKE FURTHER NOTICE that the Debtor, and the other Disclosure Parties in the event the Debtor advises that it does not intend to object itself, have seven (7) days calendar after receipt of this Declaration to object to the Proposed Transfer described herein. If the Debtor, or another Disclosure Party in the event the Debtor advises that it does not intend to object itself, timely file an objection, such Proposed Transfer will remain ineffective unless such objection is withdrawn by the Debtor or such Disclosure Party, or the Court approves such transaction by a final and non-appealable order. If the Debtor, or another Disclosure Party in the event the Debtor advises that it does not intend to object itself, do not object within such fourteen-day period, then after expiration of such period the Proposed Transfer may proceed solely as set forth in this Declaration.

PLEASE TAKE FURTHER NOTICE that any further transactions contemplated by the undersigned party that may result in the undersigned party purchasing, acquiring, or otherwise accumulating Beneficial Ownership of additional Ordinary Shares will each require an additional notice filed with the Court and served in the same manner as this Declaration.

PLEASE TAKE FURTHER NOTICE that, pursuant to 28 U.S.C. § 1746, under penalties of perjury, the undersigned party hereby declares that he or she has examined this Declaration and accompanying attachments (if any), and, to the best of his or her knowledge and belief, this Declaration and any attachments hereto are true, correct, and complete.

 

 

EXHIBIT 1C

 

Declaration of Intent to Transfer Ordinary Shares

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Ref. D.I. 8 & ___

 

 

DECLARATION OF INTENT TO TRANSFER ORDINARY SHARES

 

PLEASE TAKE NOTICE that the undersigned party hereby provides notice of its intention to sell, trade, or otherwise transfer (the “Proposed Transfer”) one or more Ordinary Shares of Charge Enterprises, Inc. or of any Beneficial Ownership therein (the “Ordinary Shares”). Charge Enterprises, Inc. is the debtor and debtor in possession in the above-captioned chapter 11 case pending in the United States Bankruptcy Court for the District of Delaware (the “Court”).

PLEASE TAKE FURTHER NOTICE that, if applicable, on                            , 2024, the undersigned party filed a Declaration of Status as a Substantial Shareholder with the Court and served copies thereof as set forth therein.

PLEASE TAKE FURTHER NOTICE that the undersigned party currently has Beneficial Ownership of                             Ordinary Shares.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Proposed Transfer, the undersigned party proposes to sell, trade or otherwise transfer Beneficial Ownership of                             Ordinary Shares or an Option with respect to                             Ordinary Shares. If the Proposed Transfer is permitted to occur, the undersigned party will have Beneficial Ownership of                             Ordinary Shares after such transfer becomes effective.

PLEASE TAKE FURTHER NOTICE that the last four digits of the taxpayer identification number of the undersigned party are                            ^.

PLEASE TAKE FURTHER NOTICE that, pursuant to that certain [Interim/Final] Order (I) Establishing Notification Procedures and Approving Restrictions on Certain Transfers of, or Worthless Stock Deductions With Respect to, Stock of the Debtor and (II) Granting Related Relief [Docket No.                   ] (the “Order”), this declaration (this “Declaration”) is being filed with the Court and served on the following parties: (i) the Office of the United States Trustee for the District of Delaware, 844 King Street, Suite 2207, Wilmington, Delaware 19801 (Attn: Rosa Sierra-Fox, Esq. (rosa.sierra-fox@usdoj.gov)); (ii) Charge Enterprises, Inc., 125 Park Avenue, 25^th Floor, New York, New York 10017, Attn: Marc Rosenwald, (mrosenwald@charge.enterprises); and (iii) proposed counsel to the Debtor, Faegre Drinker Biddle & Reath LLP, 222 Delaware Ave., Suite 1410, Wilmington, DE 19801, Attn: Ian Bambrick (ian.bambrick@faegredrinker.com) and Sarah Silveira (sarah.silveira@faegredrinker.com).

PLEASE TAKE FURTHER NOTICE that, pursuant to the Order, the undersigned party acknowledges that it is prohibited from consummating the Proposed Transfer unless and until the undersigned party complies with the Stock Procedures set forth therein.

PLEASE TAKE FURTHER NOTICE that the Debtor, and the other Disclosure Parties in the event the Debtor advises that it does not intend to object itself, have seven (7) calendar days after receipt of this Declaration to object to the Proposed Transfer described herein. If the Debtor, or another Disclosure Party in the event the Debtor advises that it does not intend to object itself, timely file an objection, such Proposed Transfer will remain ineffective unless such objection is withdrawn by the Debtor or such Disclosure Party, or the Court approves such transaction by a final and non-appealable order. If the Debtor, or another Disclosure Party in the event the Debtor advises that it does not intend to object itself, do not object within such fourteen-day period, then after expiration of such period the Proposed Transfer may proceed solely as set forth in this Declaration.

PLEASE TAKE FURTHER NOTICE that any further transactions contemplated by the undersigned party that may result in the undersigned party selling, trading, or otherwise transferring Beneficial Ownership of additional Ordinary Shares will each require an additional notice filed with the Court to be served in the same manner as this Declaration.

PLEASE TAKE FURTHER NOTICE that, pursuant to 28 U.S.C. § 1746, under penalties of perjury, the undersigned party hereby declares that he or she has examined this Declaration and accompanying attachments (if any), and, to the best of his or her knowledge and belief, this Declaration and any attachments hereto are true, correct, and complete.

 

 

EXHIBIT 2

 

Worthless Stock Deduction Procedures

A.          Procedures for Worthless Stock Deductions. The following procedures apply to any 50-percent Shareholders taking any worthless stock deductions:

 

a.         Any person or entity that currently is or becomes a 50-percent Shareholder, at any time on or after the Petition Date, must file with the Court, and serve on the Disclosure Parties (as defined herein) a declaration of such status, substantially in the form annexed to the Worthless Stock Deduction Procedures as Exhibit 2A (a “50 percent Stock Ownership Notice”), on or before the later of (i) twenty (20) calendar days after the date of the Notice of Interim Order (as defined herein), and (ii) ten (10) calendar days after becoming a 50-percent Shareholder; provided that, for the avoidance of doubt, the other procedures set forth herein shall apply to any 50-percent Shareholder even if no 50 percent Stock Ownership Notice has been filed.

 

b.         Disclosure Parties consist of the following: (i) the Office of the United States Trustee for the District of Delaware, 844 King Street, Suite 2207, Wilmington, Delaware 19801 (Attn: Rosa Sierra-Fox, Esq. (rosa.sierra-fox@usdoj.gov)); (ii) Charge Enterprises, Inc., 125 Park Avenue, 25^th Floor, New York, New York 10017, Attn: Marc Rosenwald, (mrosenwald@charge.enterprises); and (iii) proposed counsel to the Debtor, Faegre Drinker Biddle & Reath LLP, 222 Delaware Ave., Suite 1410, Wilmington, DE 19801, Attn: Ian Bambrick (ian.bambrick@faegredrinker.com) and Sarah Silveira (sarah.silveira@faegredrinker.com).

 

c.         At least seven (7) calendar days before filing any income tax return, or any amendment to such a return, taking any worthless stock deduction with respect to Ordinary Shares for a tax year ending before the consummation of a debt-for-stock restructuring, such 50-percent Shareholder must file with the Court, and serve on the Disclosure Parties, an advance written notice of the intended worthless stock deduction, in substantially the form attached to the Worthless Stock Deduction Procedures as Exhibit 2B (each, a “Notice of Intent to Take a Worthless Stock Deduction”).

 

d.         In the event that a 50-percent Shareholder takes a worthless stock deduction with respect to Ordinary Shares in violation of the Worthless Stock Deduction Procedures, such worthless stock deduction will be null and void ab initio as an act in violation of the automatic stay under section 362 of the Bankruptcy Code and pursuant to the Bankruptcy Court’s equitable powers under section 105(a) of the Bankruptcy Code. Furthermore, any such 50-percent Shareholder will be subject to sanctions as provided under the Interim Order and by applicable law and will be required to file an amended income tax return revoking such worthless stock deduction.

 

e.         The Debtor, the other Disclosure Parties, the Prepetition Lenders, and any Official Committee will have seven (7) calendar days after the receipt of a Notice of Intent to Take a Worthless Stock Deduction (the “Worthless Stock Objection Period”) to file with the Court and serve on such 50-percent Shareholder an objection (a “Worthless Stock Objection”) to any proposed worthless stock deduction described in such Notice of Intent to Take a Worthless Stock Deduction. If the Debtor, another Disclosure Party, the Prepetition Lender, or any Official Committee file a Worthless Stock Objection by the expiration of the Worthless Stock Objection Period (the “Worthless Stock Objection Deadline”), then the filing of the income tax return with such deduction will not be permitted or effective unless approved by a final and non-appealable order of the Court or such objection is withdrawn. If none of the Debtor, another Disclosure Party, the Prepetition Lender, or any Official Committee file a Worthless Stock Objection by the Worthless Stock Objection Deadline, then such deduction will be permitted as set forth in the Notice of Intent to Take a Worthless Stock Deduction. Any further income tax returns within the scope of the Worthless Stock Deduction Procedures must be the subject of an additional Notice of Intent to Take a Worthless Stock Deduction and Worthless Stock Objection Period.

 

B.          Notice Procedures. The following notice procedures apply to these Worthless Stock Deduction Procedures:

 

a.         No later than three (3) business days following entry of the Interim Order, or as soon as reasonably practicable thereafter, the Debtor shall serve by first class or overnight mail, postage prepaid, substantially in the form of Exhibit 3 attached to the Interim Order (the “Notice of Interim Order”), on: (i) the Office of the United States Trustee for the District of Delaware; (ii) the Office of the United States Attorney for the District of Delaware; (iii) the Internal Revenue Service; (iv) the Debtor’s thirty (30) largest unsecured creditors (excluding insiders); (v) the Securities and Exchange Commission; (vi) counsel to the Prepetition Lenders; (vii) each equity security holder directly registered with the transfer agent for the Debtor’s Ordinary Shares and all banks, brokers, intermediaries, other nominees or their mailing agents that hold the Ordinary Shares in “street name’ for the beneficial holders (with instructions to serve down to the beneficial holders of Ordinary Shares, as applicable); and (xiii) all parties who have filed a notice of appearance and request for service of papers pursuant to Bankruptcy Rule 2002 (collectively, the “Debtor’s Notice Parties”). Additionally, no later than three (3) business days following entry of the Final Order, or as soon as reasonably practicable thereafter, the Debtor shall serve a Notice of Interim Order modified to reflect that the final order has been entered (as modified, the “Notice of Final Order”) on the Debtor’s Notice Parties and in the same manner as such Notice of Interim Order was served.

 

b.         All registered and nominee holders of Ordinary Shares shall be required to serve the Notice of Interim Order or Notice of Final Order, as applicable, on any holder for whose benefit such registered or nominee holder holds such Ordinary Shares Any entity or individual or broker or agent acting on such entity’s or down the chain of ownership to the beneficial owners of such Ordinary Shares.

 

c.         Any entity, individual, broker or agent acting on such entity’s or individual’s behalf who sells Ordinary Shares to another entity or individual shall be required to serve a copy of the Notice of Interim Order or Notice of Final Order, as applicable, on such purchaser, or any broker or agent acting on such purchaser’s behalf..

 

d.         The Debtor may, in consultation with the Prepetition Lenders, retroactively or prospectively waive any and all restrictions, stays, and notification procedures to be imposed on a 50-percent Shareholder as set forth in the Motion.

 

 

EXHIBIT 2A

 

50-Percent Shareholder Notice

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Ref. D.I. 8 & ___

 

 

NOTICE OF STATUS AS A 50-PERCENT SHAREHOLDER

 

PLEASE TAKE NOTICE that the undersigned party is/has become a 50-Percent Shareholder with respect to Charge Enterprises, Inc. Charge Enterprises, Inc. is the debtor and debtor in possession in the above-captioned chapter 11 case pending in the United States Bankruptcy Court for the District of Delaware (the “Court”).

PLEASE TAKE FURTHER NOTICE that, as of [Date], [Name of undersigned party] Beneficially Owns [ • ] Ordinary Shares. The following table sets forth the date(s) on which [Name of undersigned party] acquired or otherwise became the Beneficial Owner of such Ordinary Shares:

Number of Shares	Date Acquired

(Attach additional page or pages if necessary)

 

PLEASE TAKE FURTHER NOTICE that the last four digits of the taxpayer identification number of the undersigned party are                             .

PLEASE TAKE FURTHER NOTICE that, pursuant to that certain [Interim/Final] Order (I) Establishing Notification Procedures and Approving Restrictions on Certain Transfers of, or Worthless Stock Deductions With Respect to, Stock of the Debtor and (II) Granting Related Relief [Docket No.                   ], this notice (this “Notice”) is being filed with the Court and served on the following parties: (i) the Office of the United States Trustee for the District of Delaware, 844 King Street, Suite 2207, Wilmington, Delaware 19801 (Attn: Rosa Sierra-Fox, Esq. (rosa.sierra-fox@usdoj.gov)); (ii) Charge Enterprises, Inc., 125 Park Avenue, 25^th Floor, New York, New York 10017, Attn: Marc Rosenwald, (mrosenwald@charge.enterprises); and (iii) proposed counsel to the Debtor, Faegre Drinker Biddle & Reath LLP, 222 Delaware Ave., Suite 1410, Wilmington, DE 19801, Attn: Ian Bambrick (ian.bambrick@faegredrinker.com) and Sarah Silveira (sarah.silveira@faegredrinker.com).

PLEASE TAKE FURTHER NOTICE that, pursuant to 28 U.S.C. § 1746, under penalties of perjury, the undersigned party hereby declares that he or she has examined this Notice and accompanying attachments (if any), and, to the best of his or her knowledge and belief, this Notice and any attachments hereto are true, correct, and complete.

 

 

EXHIBIT 2B

 

Notice of Intent to Take a Worthless Stock Deduction

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Ref. D.I. 8 & ___

 

 

NOTICE OF INTENT TO TAKE WORTHLESS STOCK DEDUCTION

 

PLEASE TAKE NOTICE that the undersigned party hereby provides notice of its intention to take a worthless stock deduction (the “Proposed Worthless Stock Deduction”) with respect to one or more ordinary shares of Charge Enterprises, Inc. or of any Beneficial Ownership therein (the “Ordinary Shares”). Charge Enterprises, Inc. is the debtor and debtor in possession in the above-captioned chapter 11 case pending in the United States Bankruptcy Court for the District of Delaware (the “Court”).

PLEASE TAKE FURTHER NOTICE that, if applicable, on                            , 2024, the undersigned party filed a Notice of Status as a 50-percent Shareholder with the Court and served copies thereof as set forth therein.

PLEASE TAKE FURTHER NOTICE that the undersigned party currently Beneficially Owns [ • ] Ordinary Shares.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Proposed Worthless Stock Deduction, the undersigned party proposes to declare for income tax purposes that [ • ] Ordinary Shares became worthless during the tax year ending [ • ].

PLEASE TAKE FURTHER NOTICE that the last four digits of the taxpayer identification number of the undersigned party are                            .

PLEASE TAKE FURTHER NOTICE that, pursuant to that certain [Interim/Final] Order (I) Establishing Notification Procedures and Approving Restrictions on Certain Transfers of, or Worthless Stock Deductions With Respect to, Stock of the Debtor and (II) Granting Related Relief [Docket No.                   ] (the “Order”), this notice (this “Notice”) is being filed with the Court and served on the following parties: (i) the Office of the United States Trustee for the District of Delaware, 844 King Street, Suite 2207, Wilmington, Delaware 19801 (Attn: Rosa Sierra-Fox, Esq. (rosa.sierra-fox@usdoj.gov)); (ii) Charge Enterprises, Inc., 125 Park Avenue, 25^th Floor, New York, New York 10017, Attn: Marc Rosenwald, (mrosenwald@charge.enterprises); and (iii) proposed counsel to the Debtor, Faegre Drinker Biddle & Reath LLP, 222 Delaware Ave., Suite 1410, Wilmington, DE 19801, Attn: Ian Bambrick (ian.bambrick@faegredrinker.com) and Sarah Silveira (sarah.silveira@faegredrinker.com).

PLEASE TAKE FURTHER NOTICE that, pursuant to the Order, the undersigned party acknowledges that it is enjoined from filing an income tax return with respect to the Proposed Worthless Stock Deduction unless and until the undersigned party complies with the Worthless Stock Deduction Procedures.

PLEASE TAKE FURTHER NOTICE that the Debtor, the other Disclosure Parties, the Prepetition Lender and any Official Committee have seven (7) calendar days after receipt of this Notice to object to the Proposed Worthless Stock Deduction described herein. If the Debtor, another Disclosure Party, the Prepetition Lender, or any Official Committee file a Worthless Stock Objection, such Proposed Worthless Stock Deduction will not be permitted or effective unless approved by a final and non-appealable order of the Court. If none of the Debtor, another Disclosure Party, the Prepetition Lender, or any Official Committee object within such 20-calendar-day period, then after expiration of such period the Proposed Worthless Stock Deduction may proceed solely as set forth in this Notice.

PLEASE TAKE FURTHER NOTICE that any further transactions contemplated by the undersigned party that may result in the undersigned party filing an income tax return with respect to a Proposed Worthless Stock Deduction will each require an additional notice filed with the Court to be served in the same manner as this Notice.

PLEASE TAKE FURTHER NOTICE that, pursuant to 28 U.S.C. § 1746, under penalties of perjury, the undersigned party hereby declares that he or she has examined this Notice and accompanying attachments (if any), and, to the best of his or her knowledge and belief, this Notice and any attachments hereto are true, correct, and complete.

 

 

 

EXHIBIT 3

 

Notice of Interim Order

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-10349 (TMH) Ref. D.I. 8 & ___

 

 

NOTICE OF DISCLOSURE PROCEDURES
APPLICABLE TO CERTAIN HOLDERS OF ORDINARY
SHARES, DISCLOSURE PROCEDURES FOR TRANSFERS OF
STOCKS, DISCLOSURE PROCEDURES FOR WORTHLESS STOCK
DEDUCTIONS, AND FINAL HEARING ON THE APPLICATION THEREOF

 

TO: ALL ENTITIES (AS DEFINED BY SECTION 101(15) OF THE BANKRUPTCY CODE) THAT MAY HOLD BENEFICIAL OWNERSHIP OF ORDINARY SHARES OF CHARGE ENTERPRISES, INC. (THE “ORDINARY SHARES”):

 

PLEASE TAKE NOTICE that on March 7, 2024 (the “Petition Date”), the above‑captioned debtor and debtor in possession (the “Debtor”), filed a petition with the United States Bankruptcy Court for the District of Delaware (the “Court”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). Subject to certain exceptions, section 362 of the Bankruptcy Code operates as a stay of any act to obtain possession of property of or from the Debtor’s estate or to exercise control over property of or from the Debtor’s estate.

PLEASE TAKE FURTHER NOTICE that on the Petition Date, the Debtor filed the Debtor’s Motion for Interim and/or Final Order(s) (I) Establishing Notification Procedures and Approving Restrictions on Certain Transfers of, or Worthless Stock Deductions with Respect to,

Stock of the Debtor and (II) Granting Related Relief [Docket No. 8] (the “Motion”).

 

PLEASE TAKE FURTHER NOTICE that on [                   ], 2024, the Court entered the Interim Order (I) Establishing Notification Procedures and Approving Restrictions on Certain Transfers of, or Worthless Stock Deductions with Respect To, Stock of the Debtor and (II) Granting Related Relief [Docket No.                   ] (the “Interim Order”) approving procedures for certain transfers of Ordinary Shares, set forth in Exhibit 1 attached to the Interim Order (the “Stock Procedures”), and procedures for worthless stock deductions, set forth in Exhibit 2 attached to the Interim Order (the “Worthless Stock Deduction Procedures”).

PLEASE TAKE FURTHER NOTICE that, pursuant to the Interim Order, a Substantial Shareholder may not consummate any purchase, sale, or other transfer of Ordinary Shares or Beneficial Ownership of Ordinary Shares in violation of the Stock Procedures, any such transaction in violation of the Stock Procedures shall be null and void ab initio, and certain remedial actions (including mandatory purchases or sales of Ordinary Shares) may be required to restore the status quo.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Interim Order, the Stock Procedures shall apply to the holding and transfers of Ordinary Shares or any Beneficial Ownership therein by a Substantial Shareholder or someone who may become a Substantial Shareholder.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Interim Order, a 50-percent Shareholder may not take a worthless stock deduction with respect to Ordinary Shares in violation of the Worthless Stock Deduction Procedures, any such deduction in violation of the Worthless Stock Deduction Procedures shall be null and void ab initio, and certain remedial actions may be required to restore the status quo.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Interim Order, the Worthless Stock Deduction Procedures shall apply to each person who is or becomes a 50-percent Shareholder.

PLEASE TAKE FURTHER NOTICE that upon the request of any entity, the proposed notice, claims, and solicitation agent for the Debtor, Epiq Corporate Restructuring LLC will provide a copy of the Interim Order and a form of each of the declarations required to be filed by the Stock Procedures in a reasonable period of time. Such declarations are also available via PACER on the Court’s website at https://ecf.deb.uscourts.gov for a fee, or free of charge by accessing the Debtor’s restructuring website at https://dm.epiq11.com/ChargeEnterprises.

PLEASE TAKE FURTHER NOTICE that the final hearing (the “Final Hearing”) on the Motion shall be held on                            , 2024, at __:__ __.m. (Eastern Time). Any objections or responses to entry of a final order on the Motion must be filed on or before 4:00 p.m. (Eastern Time) on                            , 2024, and served on the following parties: (i) the Office of the United States Trustee for the District of Delaware, 844 King Street, Suite 2207, Wilmington, Delaware 19801 (Attn: Rosa Sierra-Fox, Esq. (rosa.sierra-fox@usdoj.gov)); (ii) Charge Enterprises, Inc., 125 Park Avenue, 25^th Floor, New York, New York 10017, Attn: Marc Rosenwald, (mrosenwald@charge.enterprises); (iii) proposed counsel to the Debtor, Faegre Drinker Biddle & Reath LLP, 222 Delaware Ave., Suite 1410, Wilmington, DE 19801, Attn: Ian Bambrick (ian.bambrick@faegredrinker.com) and Sarah Silveira (sarah.silveira@faegredrinker.com); and (v) counsel to any official committee of unsecured creditors appointed in these Chapter 11 Case. In the event no objections to entry of a final order on the Motion are timely received, this Court may enter such final order without need for the Final Hearing.

PLEASE TAKE FURTHER NOTICE THAT FAILURE TO FOLLOW THE STOCK PROCEDURES AND WORTHLESS STOCK DEDUCTION PROCEDURES SET FORTH IN THE INTERIM ORDER SHALL CONSTITUTE A VIOLATION OF, AMONG OTHER THINGS, THE AUTOMATIC STAY PROVISIONS OF SECTION 362 OF THE BANKRUPTCY CODE.

PLEASE TAKE FURTHER NOTICE THAT ANY (I) PROHIBITED PURCHASE, SALE, OTHER TRANSFER OF ORDINARY SHARES, BENEFICIAL OWNERSHIP THEREOF, OR OPTION WITH RESPECT THERETO OR (II) PROHIBITED WORTHLESS STOCK DEDUCTION, IN EACH CASE, IN VIOLATION OF THE INTERIM ORDER IS PROHIBITED AND SHALL BE NULL AND VOID AB INITIO AND MAY BE PUNISHED BY CONTEMPT OR OTHER SANCTIONS IMPOSED BY THE COURT.

PLEASE TAKE FURTHER NOTICE that the requirements set forth in the Interim Order are in addition to the requirements of applicable law and do not excuse compliance therewith.

 

Exhibit 99.4

 

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: Charge Enterprises, Inc., Debtor.

Chapter 11 Case No. 24-______ (___)

 

DEBTOR’S COMBINED DISCLOSURE STATEMENT AND
PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION

 

 

Patrick A. Jackson (No. 4976 Ian J. Bambrick (No. 5455) Sarah E. Silveira (No. 6580) FAEGRE DRINKER BIDDLE & REATH LLP 222 Delaware Ave., Suite 1410 Wilmington, DE 19801 Tel: (302) 467-4200 Fax: (302) 467-4201 patrick.jackson@faegredrinker.com ian.bambrick@faegredrinker.com sarah.silveira@faegredrinker.com		Michael P. Pompeo (pro hac vice pending) Kyle R. Kistinger (pro hac vice pending) FAEGRE DRINKER BIDDLE & REATH LLP  1177 Avenue of the Americas, 41st Floor New York, NY 10036 Tel: (212) 248-3140 Fax: (212 248-3141 michael.pompeo@faegredrinker.com kyle.kistinger@faegredrinker.com
Michael T. Gustafson (pro hac vice pending) FAEGRE DRINKER BIDDLE & REATH LLP  320 South Canal Street, Suite 3300 Chicago, IL 60606 Tel: (312)569-1000 Fax: (312) 569-3000 mike.gustafson@faegredrinker.com
Proposed Counsel to the Debtor and Debtor in Possession
Dated: March 6, 2024
THIS CHAPTER 11 PLAN IS BEING SOLICITED FOR ACCEPTANCE OR REJECTION IN ACCORDANCE WITH 11 U.S.C. §§ 1125(g) AND 1126(b). THIS CHAPTER 11 PLAN WILL BE SUBMITTED TO THE BANKRUPTCY COURT FOR APPROVAL FOLLOWING SOLICITATION AND THE DEBTOR’S COMMENCEMENT OF CHAPTER 11 BANKRUPTCY PROCEEDINGS.

 

 

TABLE OF CONTENTS

 

 

ARTICLE I DISCLOSURES         5

1.1         Introduction         5

1.2         Disclaimers         5

1.3         Debtor’s Organizational Structure         6

1.4         Overview of Debtor’s Business         7

1.5         Debtor’s Prepetition Indebtedness         9

1.6         Summary of Assets and Liabilities         11

1.7         Events Leading to Debtor’s Chapter 11 Filing         11

1.8         Plan Overview         13

1.9         Eligibility to Vote         15

1.10         Confirmation Hearing         17

1.11         Acceptance and Confirmation of the Plan; Voting Requirements         17

1.12         Certain Factors to be Considered Regarding the Plan         18

1.13         Federal Income Tax Consequences of the Plan         20

 

ARTICLE II DEFINED TERMS, RULES OF INTERPRETATION, COMPUTATION OF TIME, GOVERNING LAW, AND OTHER REFERENCES         20

2.1         Defined Terms         20

2.2         Rules of Interpretation         29

2.3         Computation of Time         29

2.4         Governing Law         29

2.5         Reference to Monetary Figures         29

2.6         Reference to the Debtor or the Reorganized Debtor         30

2.7         Controlling Document         30

 

ARTICLE III ADMINISTRATIVE AND PRIORITY CLAIMS         30

3.1         DIP Lender Claims         30

3.2         Administrative Claims         30

3.3         Professional Claims         30

3.4         Priority Tax Claims and Secured Tax Claims         31

3.5         Statutory Fees         31

 

ARTICLE IV CLASSIFICATION, TREATMENT, AND VOTING OF CLAIMS AND INTERESTS         31

4.1         Summary of Classification         31

4.2         Treatment of Claims and Interests         32

4.3         Special Provision Governing Unimpaired Claims         34

 

ARTICLE V MEANS FOR IMPLEMENTATION OF THE PLAN         35

5.1         General Settlement of Claims and Interest; Particular Settlements         35

5.2         Plan Transactions         38

5.3         Sources of Consideration for Plan Distributions         38

5.4         Securities Registration Exemption         39

5.5         Corporate Existence         39

5.6         Vesting of Assets in the Reorganized Debtor         40

5.7         Cancellation of Notes, Instruments, Certificates, and Other Documents         40

5.8         Corporate Action         40

5.9         New Organizational Documents         40

5.10         Directors and Officers of the Reorganized Debtor         40

5.11         Effectuating Documents; Further Transactions         41

5.12         Exemption from Certain Taxes and Fees         41

5.13         Preservation of Causes of Action         41

 

 

ARTICLE VI TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES         42

6.1         Assumption of Executory Contracts and Unexpired Leases         42

6.2         Cure of Defaults and Objections to Cure and Assumption         42

6.3         Rejection Damages Claims and Objections to Rejections         43

6.4         Director and Officer Liability Insurance         43

6.5         Modifications, Amendments, Supplements, Restatements, or Other Agreements         43

6.6         Reservation of Rights         43

 

ARTICLE VII PROVISIONS GOVERNING DISTRIBUTIONS         44

7.1         Timing and Calculation of Amounts to be Distributed         44

7.2         Delivery of Distributions         44

7.3         Undeliverable Distributions and Unclaimed Property         44

7.4         Compliance with Tax Requirements         44

7.5         Allocations         45

7.6         No Postpetition Interest on Claims         45

7.7         Claims Paid or Payable by Third Parties         45

7.8         Setoffs and Recoupment         46

 

ARTICLE VIII PROCEDURES FOR RESOLVING CONTINGENT, UNLIQUIDATED, AND DISPUTED CLAIMS         46

8.1         Allowance of Claims         46

8.2         Claims Administration Responsibilities         46

8.3         Estimation of Claims         46

8.4         Time to File Objections to Claims         46

8.5         Disallowance of Claims         46

8.6         Amendments to Claims         47

8.7         No Distributions Pending Allowance         47

8.8         Distributions After Allowance         47

 

ARTICLE IX EFFECT OF CONFIRMATION OF THE PLAN         47

9.1         Discharge of Claims and Termination of Interests         47

9.2         Term of Injunctions or Stays         48

9.3         Release of Liens         48

9.4         Releases by the Debtor         48

9.5         Exculpation         49

9.6         Injunction         49

9.7         Protection Against Discriminatory Treatment         50

 

ARTICLE X CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN         50

10.1         Conditions Precedent to the Effective Date         50

10.2         Waiver of Conditions         50

10.3         Substantial Consummation         51

10.4         Effect of Non-Occurrence of Conditions to Consummation         51

 

ARTICLE XI MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN         51

11.1         Modification and Amendments         51

11.2         Effect of Confirmation on Modifications         51

11.3         Revocation or Withdrawal of Plan         51

 

ARTICLE XII RETENTION OF JURISDICTION         52

 

 

ARTICLE XIII MISCELLANEOUS PROVISIONS         53

13.1         Additional Documents         53

13.2         Payment of Statutory Fees         53

13.3         Reservation of Rights         53

13.4         Successors and Assigns         53

13.5         Entire Agreement         53

13.6         Non-Severability         53

13.7         Insurance Neutrality         54

13.8         Votes Solicited in Good Faith         55

 

ARTICLE XIV CRAMDOWN REQUEST         55

 

 

EXHIBIT A         Organizational Chart of the Debtor and its Non-Debtor Subsidiaries

 

 

ARTICLE I

    DISCLOSURES

 

Charge Enterprises, Inc. (“Charge” or the “Debtor”) hereby proposes this combined disclosure statement and prepackaged chapter 11 plan of reorganization for the resolution of outstanding Claims against, and Interests in, the Debtor. Capitalized terms used in this Article I shall have the meanings set forth in Section 2.1 below.

 

The information in this Article I is provided in order to permit the voting creditors to make an informed judgment regarding approval of the Plan. Where appropriate, this Article I includes summaries of, or cross-references to, operative provisions of the Plan in Articles II‑XIV below. To the extent of any inconsistency between this Article I and any operative provision(s) of the Plan, the operative provision(s) shall control.

 

1.1    Introduction

 

If this Plan is accepted by the voting creditors, the Debtor intends to file a voluntary petition under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware, and to submit this Plan for confirmation in accordance with sections 1125 and 1129 of the Bankruptcy Code. On and after the Petition Date, the Debtor will continue to operate and manage its affairs as a debtor in possession under sections 1107 and 1108 of the Bankruptcy Code.

 

This Article I contains information concerning, among other matters: (1) the Debtor’s background, (2) the Debtor’s assets and liabilities, (3) the events leading to solicitation of the Plan and the anticipated commencement of the Chapter 11 Case, and (4) an overview of the Plan and the proposed treatment of Claims against, and Interests in, the Debtor pursuant to the Plan.

 

1.2    Disclaimers

 

This combined disclosure statement and plan was prepared by the Debtor’s professionals in consultation with, and based on information provided by, the Debtor as well as publicly available information. The Debtor is solely responsible for the information contained in this combined disclosure statement and plan. This combined disclosure statement and plan does not constitute financial or legal advice. Creditors of the Debtor should consult their own advisors if they have questions about this combined disclosure statement and plan. A reference in this combined disclosure statement and plan to a “Section” refers to a section of this combined disclosure statement and plan, unless otherwise indicated.

 

While the disclosure provisions in Article I hereof describe certain background matters, descriptions herein of any documents, or of any pleadings or orders in any court proceeding, are qualified in their entirety by reference to the relevant document or court docket, as applicable. You should read this combined disclosure statement and plan to obtain a full understanding of the provisions of the Plan.

 

For the avoidance of doubt, (i) a Creditor’s vote to accept the Plan shall not constitute an admission or agreement regarding any assertion of fact or law in this Article I, and shall be without prejudice to the rights of such Creditor to dispute such assertion in the future, and (ii) the Bankruptcy Court’s approval of this combined disclosure statement and plan as containing “adequate information” within the meaning of section 1125(b) of the Bankruptcy Code shall not, in itself, constitute a finding of fact or conclusion of law with respect to any assertion of fact or law in this Article I.

 

Additional copies of this combined disclosure statement and plan and the Exhibit attached hereto, as well as any docket items from the chapter 11 case, once commenced, will be available for inspection during regular business hours at the office of the Clerk of the Bankruptcy Court, United States Bankruptcy Court for the District of Delaware, 3^rd Floor, 824 Market Street, Wilmington, Delaware 19801. In addition, copies may be obtained for a charge through Delaware Document Retrieval, 230 North Market Street, P.O. Box 27, Wilmington, Delaware 19801, (302) 658-9971, or viewed on the internet at the Bankruptcy Court’s website (http://www.deb.uscourts.gov) by following the directions for accessing the ECF system on such website. Copies will also be available free of charge on Epiq Corporate Restructuring, LLC’s website (https://dm.epiq11.com/chargeenterprises).

 

 

The statements made in this combined disclosure statement and plan are made as of the date hereof unless another time is specified herein. Neither delivery of this combined disclosure statement and plan nor any exchange of rights made in connection with the Plan will under any circumstances create an implication that there has been no change in the information set forth herein since the date this combined disclosure statement and plan and the materials relied upon in preparation thereof were combined. The Debtor assumes no duty to update or supplement the disclosures contained herein and does not intend to update or supplement such disclosures except as expressly provided herein and as may be necessary in connection with the hearing on confirmation of the Plan.

 

No one should construe the contents of this combined disclosure statement and plan as providing any legal, business, financial, or tax advice. Any holder of a Claim against or Interest in the Debtor should consult with its own legal, business, financial, and tax advisors as to any such matters concerning this combined disclosure statement and plan and the transactions contemplated herein.

 

Prior to deciding whether or how to vote on the Plan, each holder of a Claim that is entitled to vote should carefully review all of the information in this combined disclosure statement and plan, including the risk factors described in greater detail herein.

 

1.3    Debtor’s Organizational Structure

 

Charge is a publicly traded company that was traded on The Nasdaq Global Market under the symbol “CRGE” from April 12, 2022, to February 20, 2024. Charge is currently traded on the Over-the-counter market. Charge is the parent company and is the indirect owner of certain Subsidiaries (together with Charge, the “Company”), including the following (the “Operating Subsidiaries”): (a) Go2Tel.com, Inc. (“Go2Tel”) (b) PTGi International Carrier Services, Inc. (“PTGi”), (c) ANS Advance Network Services, LLC., (“ANS”), (d) B W Electrical Services, LLC (“BW”), (e) EVDepot, LLC (“EVDepot”), and (f) Greenspeed Energy Solutions, LLC (“Greenspeed”).

 

Charge was originally incorporated as E-Education Network, Inc. in Nevada on May 8, 2003. On August 10, 2005, E-Education Network, Inc. changed its name to GoIP Global, Inc., and in December 2017, changed its domicile from Nevada to Colorado.

 

On April 30, 2020, GoIP Global, Inc. entered into an agreement to acquire 100% of the outstanding equity interests of Transworld Enterprises, Inc. Pursuant to this transaction, Charge acquired all the outstanding shares of Transworld Enterprises, Inc. The transaction closed on May 8, 2020, and, in connection with it, GoIP Global, Inc. changed its name to Transworld Holdings, Inc. on August 7, 2020, and converted from a Colorado corporation to a Delaware corporation on October 1, 2020. On January 26, 2021, Transworld Holdings, Inc. changed its name to Charge Enterprises, Inc.

 

 

1.4    Overview of Debtor’s Business

 

The Company is an electrical, broadband, and electric vehicle (“EV”) charging infrastructure company that provides clients with end-to-end project management services, from advising, designing, engineering, acquiring, and installing equipment, to monitoring, servicing, and maintenance. The Debtor’s vision is to be a leader in enabling the next wave of transportation and connectivity. By building, designing, and operating seamless infrastructure for EVs and high-speed broadband, the Debtor aims to create a future where transportation is clean, efficient, and connected. The Company has historically consisted of two operating segments that are each made up of a number of Operating Subsidiaries: Infrastructure – ANS, BW, EVDepot and Greenspeed, and Telecommunications – PTGi and Go2Tel.

 

i. Infrastructure

 

The focus of the Infrastructure segment is to implement end-to-end solutions for customers designed to (i) enhance connectivity and productivity, (ii) reduce the cost of operations, and (iii) improve the efficiency of commercial operations for customers and their consumers. The Infrastructure segment consists of several different businesses, including Broadband and Wireless, Electrical Contracting Services, Electric Vehicle Charging (“EVC”) and Fleet Services.

 

ii. Telecommunications

 

The Telecommunications segment ceased operations in December 2023. It had provided routing of voice, data, and Short Message Services to Carriers and Mobile Network Operators globally. The Telecommunications business had contractual relationships with service providers in over forty-five countries globally to provide customers with internet-protocol-based and time-division multiplexing access for the transport of long-distance voice and data minutes.

 

(a)    Operations

 

The Debtor does not maintain a physical office at this time, however, the Debtor’s current mailing address is 125 Park Avenue, 25^th Floor, New York, NY.

 

Prior to the date hereof, the Debtor’s workforce consisted of sales, marketing, general business and administrative support in the United States. As of the date hereof, the Debtor directly employed approximately 21 employees, all of which were full-time employees in the United States.

 

As set forth above, the Debtor is the corporate parent within the Company and its network of direct and indirect Subsidiaries. As is the case with typical corporate families of a similar structure, no operations occur at the Debtor, or parent, level. All of the Company’s ongoing operations occur at the subsidiary level and are broken-down into the business segments described previously. Historically, each subsidiary oversaw its own sales and marketing strategy and implementation. In late 2023, the Debtor created a centralized sales and marketing team, led by a Vice President of Growth, to drive a cohesive and collaborative go to market approach. The goal was to leverage the strengths and products of each subsidiary to offer a full suite of services to end customers throughout the United States.

 

As described above, the Infrastructure operating segment makes up the Company’s only remaining operations. The various business lines contained within the Infrastructure segment are briefly described below.

 

 

i. Broadband and Wireless

 

The Broadband and Wireless services operate through Operating Subsidiary ANS and typically provide services under master or other service agreements, which are multi-year agreements. These projects can vary in length from two to three months on average and depend on size and complexity. The Broadband and Wireless business provides engineering and construction services to large telecommunication and wireless service providers, contractors, government entities, and enterprise organizations, such as higher education institutions, stadiums, and healthcare facilities specializing in the deployment of fixed and wireless broadband infrastructure. Its primary practice areas include network infrastructure deployment, tower services, in-building wireless engineering and implementation, remote maintenance and monitoring, and primary and secondary alternating current /direct current (“AC/DC”) back-up power services, mainly in the Northeast, Mid-Atlantic, and Midwest regions of the United States.

 

The network infrastructure service provides end-to-end network design and implementation services for telecommunication and wireless carriers, cable companies, and enterprise organizations. This business has over 25 years of engineering and deployment experience with Regional Operating Bell Carriers and Original Equipment Manufacturers in creating physical network solutions and implementing specifications for discrete projects or an entire network.

 

The tower services provide cell tower construction and modification services for national and regional wireless service providers, tower owners, and federal, state, and local government agencies. These services include the design and installation of new cellular towers, structural modification of existing tower infrastructure, technology upgrades on existing tower infrastructure and emergency and routine tower infrastructure maintenance.

 

The in-building wireless engineering and implementation services cellular distributed antenna systems and bi-directional antenna public safety systems from initial RF site assessment, through design, engineering, implementation, and testing.

 

The remote maintenance and monitoring services provide a distributed antenna system (“DAS”) maintenance and monitoring service, including an in-house 24-hour network operations center, utilizing Software-as-a-Service cloud-based software and customized maintenance programs. This service allows facility owners to proactively detect issues and reduce downtime.

 

The AC/DC back-up power services design scalable and energy-efficient mission critical power systems to meet the demand of data equipment deployment for mission critical data centers. The power engineers design, project manage and test AC undisrupted power systems, AC back-up generators, 48-volt DC rectifier and distribution systems, and AC/DC battery equipment.

 

ii. Electrical Contracting Services

 

The Electrical Contracting Services business operates through Operating Subsidiary BW and primarily provides electrical services in the New Jersey commercial and industrial markets. Through BW and predecessor companies, the Electrical Contracting Services business has been in operation for over 50 years. The Electrical Contracting Services projects vary in length from six to thirty-six months on average and depend on size, complexity, availability of materials, union labor and coordination with local utilities.

 

The Electrical Contracting Services business provides electrical and telecommunications construction and facilities services to a broad range of commercial, industrial, and institutional facilities, including hospitality, recreational, educational, healthcare, and pharmaceutical facilities, stadiums, building retrofits, standby power additions, emergency generators, photovoltaic infrastructure, and EV charging.

 

The Electrical Contracting Services business primarily involves the design, integration, installation, start-up, operation, maintenance, and related services for substations and underground distribution, emergency power and generators, uninterruptible power supply, transient voltage suppression system, power monitoring equipment and reporting, building automation, telecommunications and cable systems, audio/visual systems, and more. The Electrical Contracting Services cover electrical systems in all types of facilities and the operation, maintenance, and management of those facilities.

 

 

iii. Electric Vehicle Charging

 

The EVC business offers end-to-end solutions for charging ecosystems that are scalable, flexible, and seamless. These services include everything from strategic planning and education, through the design and engineering and ending with construction, installation, and commissioning. The focus of this business is to create custom, seamless, EV charging solutions nationwide for the public and private sectors, including varying industry segments, including automotive Original Equipment Manufacturers, retail automotive dealerships, commercial dealerships, fleet operators, managers and depots, workplace, destination, commercial retail, garages and parking lots and multi-family residential. Currently, the EVC business focuses on the automotive industry, developing relationships to scale with its customers for their future EV Charging infrastructure requirements. Customers vary from dealership groups with multiple brands and campuses to single-brand dealerships. Additionally, the EVC business works with multi-family housing developments focused on provided public charging capabilities to residents that lack individually owned parking or garage space.

 

The EVC business projects can vary in length from three to twelve months on average and depend on size, complexity, availability of electric vehicle service equipment, electrical components, and coordination with local utilities for upgrades and incentive coordination. These projects typically include site evaluation, hardware consultation, design, engineering, construction, and installation.

 

iv. Fleet Services

 

The Fleet Services business operates through Operating Subsidiary EVDepot in locations that are typically close in proximity to shipping ports, airports, and major thoroughfares within the Northeast and Mid-Atlantic regions. With a focus on real estate solutions for commercial and fleet operators, the Fleet Services business is able to find properties that would. be desirable to fleet operators and secure leases for further re-lease to tenants. The Fleet Services business provides its customers with extensive industry knowledge and relationships to be able to secure the best locations for their businesses.

 

The Fleet Services business focuses on real estate solutions for commercial and fleet operators requiring parking. Its vision is to provide EV charging capabilities to these facilities and provide customers with a turnkey solution for parking and electrifying their fleets.

 

1.5    Debtor’s Prepetition Indebtedness

 

i.

Arena Funded Debt

On May 19, 2021, Charge entered a securities purchase agreement (the “May 2021 SPA”) with certain funds affiliated with Arena Investors LP (the “May Investors”) pursuant to which Charge issued and sold, among other securities, non-convertible notes payable in an aggregate face value of $11.03 million for an aggregate purchase price of $10.0 million (the “May 2021 Notes”). The May 2021 Notes were originally set to mature on November 19, 2022. The maturity date was subsequently extended to November 19, 2023.

 

On December 17, 2021, Charge entered into a securities purchase agreement (the “December SPA” and together with the May SPA, the “SPAs”) with certain funds affiliated with Arena Investors LP (the “December Investors” and, collectively with the May Investors, the “Prepetition Lenders”) pursuant to which Charge issued and sold, among other securities, non-convertible notes payable in an aggregate face value of $15.9 million for an aggregate purchase price of $13.3 million (the “December Notes” and together with the May Notes, the “Notes”). The December Notes have a maturity date of November 19, 2023 (the “Notes Maturity Date”).

 

 

ii.

Issuance of Mezzanine Preferred Stock

In connection with the sale of securities contemplated by the December SPA, Charge issued 2,370,370 shares of Series C preferred stock to the December Investors as part of the securities purchase agreement at an aggregate purchase price of $6.7 million and warrants to purchase 2,370,370 shares of the Company’s common stock.

 

On February 25, 2022, Charge entered into a securities purchase agreement with Island Capital Group Charge Me LLC (“Island Capital”) pursuant to which Charge issued Series C preferred stock in an aggregate face value of $12.1 million and aggregate purchase price of $10.8 million.  

 

On April 20, 2022, Charge entered into a Securities Purchase Agreement with an investment vehicle controlled by Island Capital Group LLC, pursuant to which Charge agreed to issue (i) a minimum of 1,071,430 shares and a maximum of 1,428,575 of common stock, par value $0.0001 per share, and (ii) common stock purchase warrants to purchase a minimum of 1,500,000 and a maximum of 2,000,000 shares of Series C preferred stock, par value $0.0001 per share. This transaction closed on April 26, 2022.

 

On June 30, 2022, Charge entered into an Exchange Agreement (the “Exchange Agreement”) with a fund affiliated with Arena Investors LP (the “June Investor”) pursuant to which Charge issued 1,177,023 shares of its newly-designated Series D convertible preferred stock, par value $0.0001 per share (the “Series D Preferred Stock”). The Series D Preferred Stock was issued in exchange for the May 2020 Convertible Notes, the November Notes, and May 2021 Convertible Notes

 

iii. Lines of Credit

On June 19, 2007, Non-Debtor Subsidiary BW entered into a Business Loan Agreement by and between BW and Provident Bank, as successor-in-interest to Team Capital Bank (“Provident”), for a line of credit (the “BW Line of Credit”) in the principal amount of $1,000,000. Provident increased the principal amount of the BW Line of Credit by agreement with BW on August 20, 2015, to $2,000,000, and again on May 24, 2017, to $3,000,000. Pursuant to a modification agreement entered into on May 26, 2022, the current maturity date for the BW Line of Credit is August 1, 2024. The BW Line of Credit is secured with a first priority lien on all of the assets of BW and by corporate guaranties of Charge and Non-Debtor Charge Infrastructure Holdings, Inc. (“Charge Infrastructure”). There is currently no amount outstanding under the BW Line of Credit.

 

On October 25, 2022, Non-Debtor susbsidiary Nextridge, Inc., a New York Corporation (“Nextridge”), Non-Debtor Subsidiary ANS, Charge Infrastructure and the Debtor entered into a Loan Agreement (the “ANS Loan Agreement”) with Pioneer Bank (“Pioneer”), pursuant to which Pioneer is making available, subject to the terms and conditions contained in the Loan Agreement, to provide to Nextridge and ANS a senior secured line of credit in an aggregate principal amount of $8,000,000 (the “ANS Line of Credit”).  The ANS Line of Credit modifies and renews Nextridge’s and ANS’ existing $4,000,000 line of credit and provides additional liquidity of $4,000,000.  The ANS Line of Credit is annually renewable.  Borrowings under the ANS Line of Credit bear interest at a floating rate equal to the prime rate as set forth in the Wall Street Journal with a floor of 5%.  In addition, the Loan Agreement provides for renewal of a $750,000 capital expenditure line of credit (the “CapEx Line”) by Pioneer for Nextridge and ANS, subject to the terms and conditions contained in the Loan Agreement. All obligations under the ANS of Credit and CapEx Line (the “ANS Facility”) are cross-collateralized and cross-defaulted, and secured by a senior lien on the assets of Nextridge and ANS.  In addition, Charge and Charge Infrastructure guarantee all obligations under the ANS Facility. As of the date hereof, there is no amount outstanding under ANS Line of Credit. The expiration date of the ANS Facility is October 31, 2024.

 

 

1.6    Summary of Assets and Liabilities

 

1.

Debtor’s Principal Assets

 

The Debtor’s most recent set of unaudited financial statements reflects assets with a book value totaling approximately $198,495,000 and liabilities totaling approximately $119,667,000 as of January 31, 2024. The Debtor’s assets include, among other things, cash and cash equivalents, accounts receivable, inventory, deposits on purchased inventory, property and equipment, investments in non-marketable securities, deferred tax assets, investments in subsidiaries, intercompany receivables, and intellectual property. The Debtor’s intellectual property includes intangible assets related to customer relationships, backlog, non-compete agreements, off-market favorable leases, and brand.

 

The Debtor’s liabilities include, among other things, accounts payable, deferred tax liabilities, and the Debtor’s obligations under the Securities Purchase Agreements, the Notes, and the Exchange Agreement. As of the date hereof, the current amount outstanding under the Securities Purchase Agreements and the Notes is approximately $51 million in principal, interest, and other fees (but exclusive of liquidated damages in excess of $160 million that have been asserted by the Prepetition Lenders) (the “Prepetition Lender Claims”) and is secured by a security interest in and first priority liens (the “Prepetition Liens”) on substantially all assets of the Debtor (the “Prepetition Collateral”) pursuant to that certain Security Agreement dated as of December 17, 2021 (as amended, modified, and supplemented from time to time, the “Security Agreement”) to secure the prompt payment, performance, and discharge in full of all of the Debtor’s obligations under the Notes.

 

1.7    Events Leading to Debtor’s Chapter 11 Filing

 

1.

Dealings with KORR; KORR Litigation

 

Korr Acquisitions Group, Inc. (“KORR”), an entity controlled by former Charge Chairman Kenneth Orr (who is also the beneficial owner of more than 5% of Charge’s common stock), provided certain investment advisory services and managed the investment and reinvestment of certain assets of the Company (“KORR-Managed Funds”). KORR represented to Charge that the KORR Management Funds were held in the form of cash, cash equivalents, marketable securities, or similar readily liquid assets. However, in the fall of 2023, when Charge sought to utilize the full remaining balance of the KORR-Managed Funds (approximately $9.9 million), they were unexpectedly unavailable. Charge subsequently learned that KORR-Managed Funds had been improperly shifted to accounts for the benefit of other companies affiliated with Mr. Orr and invested in a manner that encumbered such monies and/or used them to cross-collateralize personal investments or loans of Mr. Orr or KORR.

 

In addition, Charge is party to an August 11, 2023, Securities Purchase Agreement (the “August 2023 SPA”) with KORR Value, L.P. (the “KORR Fund”), an affiliate of KORR that is also controlled by Mr. Orr, whereby Charge had the right to require the purchase of up to $5.0 million of common stock (the “KORR Shares”), at a purchase price of $1.00 per share. On November 15, 2023, Charge delivered a notice to the KORR Fund exercising its rights under this agreement to require the purchase of five million shares of Charge’s common stock no later than November 20, 2023. The KORR Fund responded that it did not believe that Charge satisfied the necessary conditions to require the KORR Fund to purchase the KORR Shares; accordingly, it did not deliver the purchase price for the KORR Shares on such date.

 

Charge had intended to repay the Notes utilizing a combination of cash on hand, the KORR-Managed Funds, and the proceeds of the sale of the KORR Shares under the August 2023 SPA. Without the KORR-Managed Funds and proceeds of sale of the KORR Shares, however, it became clear that Charge would have insufficient liquidity to repay the Notes on the Notes Maturity Date.

 

In connection with the foregoing, Charge filed a complaint against Mr. Orr, KORR, Korr Value, L.P. and certain other parties in the Supreme Court of New York, New York County on January 8, 2024, Index No. 650109/2024. The complaint asserts that certain defendants breached their fiduciary duties to Charge as registered investment advisors, and it includes claims of unjust enrichment, constructive trust, conversion, and fraud in the inducement, among others. The complaint seeks equitable relief, including a temporary restraining order and injunction against any further dispersal or movement of Charge’s assets, in addition to damages in excess of $15,000,000.

 

 

2.

Notices of Default Under, and Non-Payment of, the Notes

 

On November 15, 2023, Charge received a default letter (the “Initial Default Letter”) from the Prepetition Lenders asserting that Charge’s guarantee of the ANS Facility was in violation of Section 4.25 of the SPAs (the “Initial Default”). The Initial Default Letter asserted that an additional $3,345,297.87 in interest (reflecting the difference in the default interest rate of 20% and the interest rate of 7.5% per annum commencing from October 25, 2022, on an aggregate principal amount of $25,847,409.00) and additional legal fees, expenses, and other costs of at least $692,216.15 were immediately due and payable. The Initial Default Letter also asserted a 20% per annum late fee and $11,550,000 as partial liquidated damages.

 

Charge did not agree with the Prepetition Lenders’ assertions in the Initial Default Letter. However, Charge did not pay the Notes on the Notes Maturity Date later that month, and on December 1, 2023, Charge received an additional letter of default (the “Supplemental Default Letter”) from the Prepetition Lenders asserting events of default in connection with Charge’s non-payment of the Notes on the Notes Maturity Date (the “Payment Default”) and alleging additional events of default relating to the Special Advisor Agreement (the “SAA”) with KORR and Charge’s investments managed by KORR (the “Supplemental Defaults”).

 

Charge also received a letter (the “Exchange Default Letter”) from the Prepetition Lenders asserting events of default (the “Exchange Default” and together with the Initial Default, the Payment Default, and the Supplemental Defaults, the “Defaults”) under the Exchange Agreement and asserting certain breaches of conditions, representations, warranties, and covenants arising from the SAA and Charge’s investments managed by KORR.

 

On January 19, 2024, the Prepetition Lenders provided Charge with notice (the “Foreclosure Sale Notice”) of their intent to dispose of certain of its collateral pursuant to Section 9-610 of the Uniform Commercial Code by way of a public foreclosure sale, namely: (i) Charge’s equity interests in certain of its Subsidiaries (specifically, Charge Investments, Inc., Charge Infrastructure Holdings, Inc., and Transworld Enterprises, Inc.), and (ii) the assets of certain other Subsidiaries (including Charge Communications, Inc., Go2Tel.com, Inc., and PTGi International Carrier Services, Inc.). The Foreclosure Sale Notice established February 15, 2024, at 4:00 p.m. (ET) as the deadline for submitting bids on the subject collateral (the “Bid Deadline”) and provided that, if no bids were received by the Bid Deadline, the Prepetition Lenders would obtain the collateral via credit bid on February 16, 2024 (the “Foreclosure Date”). The Bid Deadline and Foreclosure Date were extended from time to time by the Prepetition Lenders in connection with the negotiations concerning the RSA (as defined below), as discussed further below.

 

3.

Prepetition Restructuring Efforts

 

In November 2023, the Company engaged Piper Sandler & Co. (“Piper Sandler”) to review strategic alternatives and assist the company in addressing its debt and liquidity positions, including a potential sale of the Company’s assets and a capital raise for a potential restructuring, if necessary. Piper Sandler has been working closely with the Company and rendered investment banking advisory services to the Company, including the marketing and potential sale of the Company’s equity interests in its Operating Subsidiaries as well as the negotiation of financing to support a potential restructuring via chapter 11 of the Bankruptcy Code.

 

As set forth above, however, Charge faced a significant liquidity shortage during the fourth quarter of 2023, and its liquidity continued to decline thereafter. Recognizing the likely need for a chapter 11 filing, Charge instructed Piper Sandler to lead a process to obtain post-petition financing in an amount sufficient to fund operations and estate administration over the course of a chapter 11 proceeding (the “DIP Financing”). To that end, Piper Sandler engaged in a process to seek financing proposals from various capital sources within the Debtor’s existing capital structure and from third parties.

 

The Prepetition Lenders indicated to Charge that they would not consent to priming DIP Financing. Piper Sandler therefore communicated to potential capital sources that the post-petition financing would need to be subordinated to the Notes. Piper Sandler contacted approximately twenty-one parties. Ultimately, no party submitted a term sheet or indication of interest to provide post-petition financing under the circumstances. Among other challenges, Charge and its Subsidiaries have a limited pool of assets available to support a junior-lien financing or to wage a potentially costly “priming” fight with the Prepetition Lenders.

 

In the period following the Defaults, Charge, in consultation with its advisors, engaged in good faith negotiations with the Prepetition Lenders to address its liquidity constraints. In connection therewith, Charge, with the assistance of its advisors, analyzed its cash needs to determine the liquidity levels necessary to maintain its going concern value in connection with a chapter 11 proceeding. In undertaking this analysis, Charge and its advisors considered Charge’s near-term projected financial performance, along with its current liquidity position. Charge’s management also conferred with key operational divisions to understand essential business metrics in both the near and long term.

 

Charge and its advisors originally sought to pursue a chapter 11 bankruptcy filing that would include a process for the sale of all of the Operating Subsidiaries via a sale of the equity of Charge Infrastructure Holdings, Inc. Piper Sandler began its targeted outreach process on January 8, 2024, and broadened the outreach in early February. As of February 27, 2024, Piper Sandler had reached out to approximately ninety-five parties, of which at least thirty-three parties executed NDAs. These parties had been provided access to a data room that included information customary and relevant to a sale process as proposed.

 

While undertaking the marketing process and negotiating with the Prepetition Lenders over their claim amount and their appetite to provide DIP Financing to Charge to fund a bankruptcy sale process, Charge and its advisors engaged with its stakeholders and analyzed, among other things, (a) the negative impacts the Defaults were having on the Operating Subsidiaries, (b) the potential value destruction to the Operating Subsidiaries that could occur during a protracted chapter 11 process, (c) the size of DIP Financing that the Prepetition Lenders were willing to offer, (d) the liabilities of Charge that would need to be satisfied out of any sale proceeds, and (e) the level of interest generated by the marketing process thus far.

 

 

As a result of this analysis, Charge ultimately determined that approaching its Prepetition Lenders to pursue a prepackaged bankruptcy proceeding was in the best interests of its stakeholders, and it began negotiations over such a plan in earnest in mid-February. To facilitate these negotiations, the Bid Deadline and Foreclosure Date were extended by the Prepetition Lenders a number of times. On February 27, 2024, Charge and the Prepetition Lenders reached an agreement regarding a balance-sheet restructuring of Charge, which was memorialized in a certain Restructuring and Plan Support Agreement (the “RSA”) in support of a prepackaged chapter 11 bankruptcy filing to obtain confirmation of this combined disclosure statement and plan.

 

Following good-faith, arm’s length negotiations in the days following execution of the RSA, Charge reached a final agreement with the Prepetition Lenders (in their capacity as lenders under the DIP Facility, the “DIP Lenders”) on the terms of the $10 million DIP Financing set forth in the DIP Term Sheet and the proposed interim DIP Order. These terms allow Charge immediate access to up to $4 million upon entry of the interim DIP Order, and the remaining $6 million through the issuance of a delayed-draw term loan upon entry of the final DIP Order, to continue paying its operating expenses and signal to its customers, vendors, and employees that operations will continue uninterrupted in the ordinary course during the Chapter 11 Case.

 

1.8    Plan Overview

 

The following is a brief overview of the material provisions of the Plan and is qualified in its entirety by reference to its operative provisions in Articles II‑XIV below. The Plan effects a balance-sheet restructuring of the Debtor by cancelling all existing preferred and common stock in the Debtor and converting funded secured debt of the Debtor into new common stock of the Reorganized Debtor, while providing for payment in full of all Allowed administrative, priority (if any), secured (if any), and general unsecured (i.e., non-subordinated) claims against the Debtor.

 

The Plan designates Classes of Claims against, and Interests in, the Debtor, which Classes take into account the differing nature of the various Claims and Interests and their relative priorities under the Bankruptcy Code and applicable non-bankruptcy law.

 

 

The following table (the “Plan Summary Table”) summarizes the classification and treatment of Claims (including certain unclassified Claims) and Interests, along with the projected recoveries for each class. The Plan Summary Table is intended for illustrative purposes only and does not address all issues regarding the classification, treatment, and ultimate recoveries. The Plan Summary Table is not a substitute for a full review of this combined disclosure statement and plan in its entirety. In addition, nothing herein is intended, nor should it be construed, as an admission by the Debtor of the estimated Allowed amount of any Claim or Class thereof, or as a guarantee or assurance of a particular percentage recovery, or range of recoveries, on any Allowed Claim or Class thereof. The Debtor reserves all rights with respect to the estimation and allowance of Claims.

 

Summary of Classification and Treatment of Claims and Interests under the Plan
Class	Description	Estimated Allowed Claim Amounts	Treatment of Claims and Interests Within Class	Anticipated Recovery
1	Other Priority Claims	$0	Paid in full, in Cash, to the extent Allowed.	100%
2	Prepetition Lender Claims	$51,000,000	Arena or its designee(s) shall receive 100% of the New Common Stock on the Effective Date.	< 100%
3	Other Secured Claims	$0	At the option of the Reorganized Debtor: (i) the legal, equitable, and contractual rights to which the Allowed Other Secured Claim entitles the holder thereof shall be left unaltered; (ii) the Allowed Other Secured Claim shall be left Unimpaired in the manner described in section 1124(2) of the Bankruptcy Code; or (iii) paid in full, in Cash, to the extent Allowed.	100%
4	General Unsecured Claims	$1,782,308 - $2,407,308	At the option of the Reorganized Debtor: (i) the legal, equitable, and contractual rights to which the Allowed General Unsecured Claim entitles the holder thereof shall be left unaltered; (ii) the Allowed General Unsecured Claim shall be left Unimpaired in the manner described in section 1124(2) of the Bankruptcy Code; or (iii) paid in full, in Cash, to the extent Allowed.	100%
5	Section 510(b) Claims	$0	Canceled, released, and extinguished, and of be of no further force or effect, and the holder thereof shall receive no recovery or distribution under the Plan.	None
6	Other Subordinated Claims	$0	Canceled, released, and extinguished, and of be of no further force or effect, and the holder thereof shall receive no recovery or distribution under the Plan.	None
7	Series C Preferred Interests	n/a	Canceled, released, and extinguished, and of be of no further force or effect, and the holder thereof shall receive no recovery or distribution under the Plan.	None
8	Series D Preferred Interests	n/a	Canceled, released, and extinguished, and of be of no further force or effect, and the holder thereof shall receive no recovery or distribution under the Plan.	None
9	Series E Preferred Interests	n/a	Canceled, released, and extinguished, and of be of no further force or effect, and the holder thereof shall receive no recovery or distribution under the Plan.	None
10	Common Interests	n/a	Canceled, released, and extinguished, and of be of no further force or effect, and the holder thereof shall receive no recovery or distribution under the Plan.	None

 

**The treatment and distributions, if any, provided to holders of Claims and Interests under this Plan will be in full and complete satisfaction of all legal, equitable, or contractual rights presented by such Claims and Interests.**

 

 

1.9    Eligibility to Vote

 

(a)    Who may Vote

 

Pursuant to the provisions of the Bankruptcy Code, only classes of claims or interests that are “impaired” under a plan may vote to accept or reject such plan. Generally, a claim or interest is impaired under a plan if the holder’s legal, equitable, or contractual rights are changed under such plan. In addition, if the holders of claims or interests in an impaired class do not receive or retain any property under a plan on account of such claims or interests, such impaired class is deemed to have rejected the plan under section 1126(g) of the Bankruptcy Code, and, therefore, such holders do not need to vote on the plan.

 

With respect to the Plan, a Claim must be “Allowed” for purposes of voting in order for such creditor to have the right to vote. Generally, for voting purposes, a Claim is deemed “Allowed” absent an objection to the Claim if (i) a Proof of Claim was timely filed, or (ii) if no Proof of Claim was filed, the Claim is identified in the Debtor’s Schedules as other than “disputed,” “contingent,” or “unliquidated,” and an amount of the Claim is specified in the Schedules, in which case the Claim will be deemed Allowed for the specified amount. In either case, when an objection to a Claim is filed, the holder of such Claim cannot vote unless the Bankruptcy Court, after notice and hearing, either overrules the objection, or deems the Claim to be Allowed for voting purposes.

 

 

In connection with the Plan, therefore:

 

●

Claims in Classes 1 (Other Priority Claims), 3 (Other Secured Claims), and 4 (General Unsecured Claims) are unimpaired; accordingly, holders of such Claims are conclusively presumed to have accepted the Plan and are not entitled to vote to accept or reject the Plan.

 

●

Claims in Class 3 (Prepetition Lender Claims) are impaired and will receive property under the Plan; accordingly, holders of such Claims are entitled to vote to accept or reject the Plan.

 

●

Claims and Interests in Classes 5 (Section 510(b) Claims), 6 (Other Subordinated Claims), 7 (Series C Preferred Interests), 8 (Series D Preferred Interests), 9 (Series E Preferred Interests), and 10 (Common Interests) are impaired but will not receive or retain any property under the Plan; accordingly, holders of such Claims and Interests are conclusively presumed to have rejected the Plan and are not entitled to vote to accept or reject the Plan.

 

The Bankruptcy Code defines “acceptance” of a plan by (a) a class of claims as acceptance by creditors in that class that hold at least two-thirds in dollar amount and more than one-half in number of the claims that cast ballots for acceptance or rejection of the plan and (b) a class of interests as acceptance by holders in the class that hold at least two-thirds of the number of interests that cast ballots for acceptance or rejection of the plan. Your vote on the Plan is important. The Bankruptcy Code requires as a condition to confirmation of a plan of reorganization that each class that is impaired and entitled to vote under a plan vote to accept such plan, unless the provisions of Section 1129(b) of the Bankruptcy Code are met. In view of the deemed rejection of the Plan by Classes 5, 6, 7, 8, 9, and 10, the Debtor will request confirmation of the Plan pursuant to Section 1129(b) of the Bankruptcy Code as to such Classes. Under that section, a plan may be confirmed by a bankruptcy court if it does not “discriminate unfairly” and is “fair and equitable” with respect to each non-accepting class.

 

(b)    How to Vote

 

If you are entitled to vote to accept or reject the Plan, a ballot is enclosed for the purpose of voting on the Plan (the “Ballot”). This combined disclosure statement and plan, the Exhibit attached hereto, and the Ballot are the only materials the Debtor is providing to creditors for their use in determining whether to vote to accept or reject the Plan, and such materials may not be relied upon or used for any purpose other than to vote to accept or reject the Plan.

 

**Return your completed Ballot to the Debtor’s claims, noticing and balloting agent (the “Balloting Agent”) in the manner and at the time provided in the Ballot.**

 

Ballots must be completed and received no later than the voting deadline set forth in the Ballot (the “Voting Deadline”). Any Ballot that is not executed by a duly authorized person will not be counted. Any ballot that is executed by the holder of an Allowed Claim but that does not indicate an acceptance or rejection of the Plan will not be counted. If a holder of a Claim should cast more than one ballot voting the same Claim prior to the Voting Deadline, only the last-dated timely Ballot received by the Balloting Agent will be counted. Additionally, you may not split your votes for your Claims within a particular Class under the Plan. Therefore, a Ballot or group of Ballots within a Plan Class received from a single Creditor that partially rejects and partially accepts the Plan will not be counted.

 

March 5, 2024, at 4:00 p.m. (ET) (the “Voting Record Date”) is the time and date that was used for the determination of Persons who are entitled to receive a copy of this Plan and all of the related materials and to vote whether to accept or reject the Plan. Accordingly, only holders of record of Claims as of the Voting Record Date that are entitled to vote on the Plan, will receive a Ballot and may vote on the Plan.

 

**Unless the Bankruptcy Court permits you to do so after notice and a hearing to determine whether sufficient cause exists to permit the change, you may not change your vote after the Voting Deadline passes.**

 

 

If you have questions concerning voting procedures, please contact the Balloting Agent at (855) 940-0841. Please note that the Balloting Agent cannot provide you with legal advice.

 

All properly completed Ballots received prior to the Voting Deadline from holders of a Claim that are entitled to vote on the Plan will be counted for purposes of determining whether the voting Class of Impaired Claims has accepted the Plan. The Balloting Agent will prepare and file with the Bankruptcy Court a certification of the results of the balloting with respect to the Class entitled to vote.

 

1.10    Confirmation Hearing

 

Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court, after notice, to hold a hearing (the “Confirmation Hearing”) to consider (i) final approval of this Combined Plan and Disclosure Statement as providing adequate information pursuant to section 1125 of the Bankruptcy Code and (ii) confirmation of the Plan pursuant to section 1129 of the Bankruptcy Code. The Debtor will request, on the Petition Date, that the Bankruptcy Court approve the Combined Plan and Disclosure Statement at a joint hearing. The Confirmation Hearing may, however, be continued from time to time without further notice other than an adjournment announced in open court or a notice of adjournment filed with the Bankruptcy Court and served in accordance with the Bankruptcy Rules, without further notice to parties in interest. The Bankruptcy Court, in its discretion and prior to the Confirmation Hearing, may put in place additional procedures governing the Confirmation Hearing. Subject to section 1127 of the Bankruptcy Code, the Plan may be modified, if necessary, prior to, during, or as a result of the Confirmation Hearing, without further notice to parties in interest.

 

Additionally, section 1128(b) of the Bankruptcy Code provides that a party in interest may object to Confirmation of the Plan. The Debtor, in the same motion requesting a date for the Confirmation Hearing, will request that the Bankruptcy Court set a date and time for parties in interest to file objections to Confirmation of the Plan. An objection to Confirmation of the Plan must be filed with the Bankruptcy Court and served on the Debtor and certain other parties in interest in accordance with the applicable order of the Bankruptcy Court so that it is actually received on or before the deadline to file such objections as set forth therein.

 

1.11    Acceptance and Confirmation of the Plan; Voting Requirements

 

The Bankruptcy Code requires that, in order to confirm the Plan, the Bankruptcy Court must make a series of findings concerning the Plan and the Debtor, including that (i) the Plan has classified Claims in a permissible manner; (ii) the Plan complies with applicable provisions of the Bankruptcy Code; (iii) the Debtor has complied with applicable provisions of the Bankruptcy Code; (iv) the Debtor has proposed the Plan in good faith and not by any means forbidden by law; (v) the disclosure required by section 1125 of the Bankruptcy Code has been made; (vi) the Plan has been accepted by the requisite votes of Creditors in each class (except to the extent that cramdown is available under section 1129(b) of the Bankruptcy Code); (vii) the Plan is feasible and confirmation is not likely to be followed by further financial restructuring of the Debtor; (viii) the Plan is in the “best interests” of all holders of Claims in an Impaired class (see “Best Interests Test” below); and (ix) all fees and expenses payable under 28 U.S.C. § 1930, as determined by the Bankruptcy Court at the Confirmation Hearing, have been paid or the Plan provides for the payment of such fees on the Effective Date. The Debtor believes that the Plan satisfies all the requirements for confirmation.

 

(a)    Best Interests Test

 

Section 1129(a)(7) of the Bankruptcy Code requires that each holder of an impaired allowed claim or interest either (i) accepts the plan or (ii) receives or retains under the plan property of a value, as of the effective date of the plan, that is not less than the value such holder would receive or retain if the debtor were liquidated under chapter 7 of the Bankruptcy Code on such date (the “Best Interests Test”). To determine whether the Best Interests Test is satisfied, the Bankruptcy Court must estimate the aggregate cash proceeds that would be generated from the liquidation of the Debtor’s assets by a chapter 7 trustee, net of administrative expenses, and the aggregate claims that would be allowed against the chapter 7 estate, to determine the estimated payout to creditors and interest holders, which is then compared to the estimated payouts to non-accepting Creditors and Interest holders under the Plan. The Debtor will file a hypothetical chapter 7 liquidation analysis (the “Liquidation Analysis”) with the Plan Supplement. As will be evident from the Liquidation Analysis, non-accepting Creditors and Interest holders would be treated the same in a chapter 7 as they are under the Plan, because the estimated proceeds of liquidation of the Debtor’s assets would be insufficient to fully satisfy the Debtor’s funded secured debt. Accordingly, the Debtor believes that the Plan meets the requirements of the Best Interests Test.

 

 

(b)    Financial Feasibility Test

 

In order to confirm a plan, the Bankruptcy Code requires the Bankruptcy Court to find that confirmation of the plan is not likely to be followed by the need for further financial restructuring of the Debtor (the “Feasibility Test”). Thus, for the Plan to meet the Feasibility Test, the Bankruptcy Court must find that there is a reasonable likelihood that the Reorganized Debtor will possess sufficient assets to meet its obligations under the Plan. Given the equitization of the Debtor’s funded secured debt, as well as the release of secured indebtedness at the Debtor’s Operating Subsidiaries, together with the anticipated cash position of the Reorganized Debtor as of the Effective Date of the Plan, the Debtor believes that the Reorganized Debtor will be able to make all distributions required pursuant to the Plan and, therefore, that Confirmation of the Plan is not likely to be followed by the need for further financial restructuring.

 

(c)    Acceptance by Impaired Classes

 

Section 1129(a) of the Bankruptcy Code requires that each Class of Claims or Interests that is Impaired under the Plan accept the Plan, subject to the “cramdown” exception contained in section 1129(b) of the Bankruptcy Code. Under section 1129(b), if at least one but not all Impaired Classes of Claims do not accept the Plan, the Bankruptcy Court may nonetheless confirm the Plan if the non-accepting Classes of Claims and Interests are treated in the manner required by the Bankruptcy Code. The process by which non-accepting Classes are forced to be bound by the terms of the Plan is commonly referred to as “cramdown.” The Bankruptcy Code allows the Plan to be “crammed down” on non-accepting Classes if (i) the Plan meets all confirmation requirements except the requirement of section 1129(a)(8) of the Bankruptcy Code (i.e., that the Plan be accepted by each Impaired Class) and (ii) the Plan does not “discriminate unfairly” and is “fair and equitable” toward each Impaired Class that has not voted to accept the Plan, as referred to in section 1129(b) of the Bankruptcy Code and applicable case law. The Debtor believes that the Plan does not “discriminate unfairly” against, and is otherwise “fair and equitable” toward, each non-accepting Class of Claims and Interests as required by the Bankruptcy Code and applicable case law. Accordingly, the Debtor believes that the cramdown requirements will be satisfied as to such Classes.

 

1.12    Certain Factors to be Considered Regarding the Plan

 

The following provides a summary of various important considerations and risk factors associated with the Plan. However, it is not exhaustive. In considering whether to vote for or against the Plan, voting Creditors should read and carefully consider the factors set forth below, as well as all other information set forth or otherwise referenced in this Plan.

 

(a)    The Debtor May Not Be Able to Secure Confirmation of the Plan

 

There can be no assurance that the Bankruptcy Court will confirm the Plan. A non-accepting Creditor or Interest holder might challenge the Plan or the balloting procedures and results as not being in compliance with the Bankruptcy Code or Bankruptcy Rules. Even if the Bankruptcy Court determined that this Plan and the balloting procedures and results were appropriate, the Bankruptcy Court could still decline to confirm the Plan if it found that any of the statutory requirements for confirmation had not been met, including the requirements discussed above.

 

If the Plan is not confirmed, it is unclear whether a restructuring of the Debtor could be implemented and what distributions holders of Claims ultimately would receive with respect to their Claims. If an alternative reorganization could not be agreed to, it is possible that the Debtor would have to liquidate its assets, in which case holders of Claims would receive substantially less favorable treatment than they would receive under the Plan.

 

 

(b)    Parties in Interest May Object to Debtor’s Classification of Claims and Interests

 

Section 1122 of the Bankruptcy Code provides that a plan of reorganization may place a claim or an interest in a particular class only if such claim or interest is substantially similar to the other claims or interests in such class. The Debtor believes that the classification of Claims and Interests under the Plan complies with the requirements set forth in the Bankruptcy Code because the Debtor created ten Classes of Claims and Interests, each encompassing Claims or Interests that are substantially similar to the other Claims or Interests in each such Class. However, if the Bankruptcy Court determines that the Plan’s classification of Claims and Interests is invalid, then it could result in a delay or denial of Confirmation.

 

(c)    The Debtor May Be Unsuccessful in Obtaining First Day Orders To Permit it to Continue Operating in the Ordinary Course of Business

 

The Debtor has attempted to address potential concerns of its customers, vendors, employees and other key parties in interest that might arise from the filing of the Chapter 11 Case through a variety of provisions incorporated into or contemplated by the Plan and relief to be sought at the outset of the Chapter 11 Case, including the Debtor’s intention to seek appropriate Bankruptcy Court orders to permit the Debtor to pay amounts owed to all general unsecured creditors and employee obligations consistent with its ordinary course practices. However, there can be no guarantee that the Debtor will be successful in obtaining the necessary approvals of the Bankruptcy Court for such arrangements or for every party in interest the Debtor may seek to treat in this manner, and, as a result, the Debtor’s business might suffer.

 

(d)    The Bankruptcy Court May Not Approve the Debtor’s DIP Facility or Use of Cash Collateral

 

Upon commencing the Chapter 11 Case, the Debtor will ask the Bankruptcy Court to authorize the Debtor to enter into postpetition financing arrangements and use cash collateral consistent with the DIP Term Sheet, to fund the Chapter 11 Case and to provide customary adequate protection to the Prepetition Lenders under the applicable prepetition debt documents. Such access to postpetition financing and cash collateral will provide liquidity during the pendency of the Chapter 11 Case. There can be no assurance that the Bankruptcy Court will approve the DIP Term Sheet on the terms requested. Moreover, if the Chapter 11 Case takes longer than expected to conclude, the Debtor may exhaust its available financing and cash collateral. There is no assurance that the Debtor will be able to obtain an extension of the right to obtain further postpetition financing or use cash collateral, in which case, the liquidity necessary for the orderly functioning of the Debtor’s business may be impaired materially.

 

(e)    Risk of Non-Occurrence of the Effective Date

 

Although the Debtor believes that the Effective Date would occur shortly following the Confirmation Date, there can be no assurance that the Effective Date will occur or as to the actual timing of the Effective Date.

 

Any delay in Confirmation and Consummation of the Plan could result in, among other things, increased Administrative Claims and Professional Claims. These or any other negative effects of delays in Confirmation or Consummation of the Plan could endanger the ultimate Consummation of the Plan and materially alter Creditor outcomes.

 

(f)    Risk of Post-Effective Date Default

 

In the Confirmation Order, the Court will be required to make a judicial determination that the Plan is feasible, but that determination does not serve as any guarantee that there will not be any post-Effective Date defaults. Any inability by the Reorganized Debtor to satisfy its obligations under the Plan could materially alter Creditor outcomes.

 

 

(g)    Estimated Claim Amounts by Class May Not be Accurate

 

There can be no assurance that the estimated Allowed Claim amounts assumed for the purposes of preparing this combined disclosure statement and plan are correct. The actual amount of Allowed Claims likely will differ in some respect from the estimates. The estimated amounts are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the actual amount of Allowed Claims may vary from those estimated for the purpose of preparing the Plan. Depending on the outcome of Claims objections, the Allowed Claim amounts that are required to be satisfied by the Reorganized Debtor under the applicable provisions of Article III or IV of the Plan may be different from what was anticipated in this combined disclosure statement and plan.

 

1.13    Federal Income Tax Consequences of the Plan

 

Confirmation of a chapter 11 plan can have a number of tax implications for the debtor and for holders of claims against and interests in the debtor, including discharge/cancellation of indebtedness and capital gains/losses. The tax consequences to holders of claims or interests may vary based upon the individual circumstances of each holder. Moreover, the tax consequences of certain aspects of a plan may be uncertain due to, in some cases, the lack of applicable legal precedent and the possibility of changes in the law.

 

Given the relative size of the Debtor’s Estate and the diverse nature of the Claims against and Interests in the Debtor, the Debtor has not undertaken an analysis of the tax consequences of the Plan upon the Debtor or the holders of Claims or Interests, as applicable. In addition, no ruling has been applied for or obtained from the Internal Revenue Service or any State or local taxing authority, and no opinion of counsel has been requested or obtained, by the Debtor with respect to the tax aspects of the Plan.

 

Accordingly, there can be no assurance that the Internal Revenue Service or any State or local taxing authority will not challenge any position taken by a holder of a Claim or Interest as to the tax consequences of the Plan, or that such a challenge, if asserted, would not be upheld. Furthermore, the Debtor does not provide any representations or warranties to any holders of Claims or Interests with respect to any tax attributes of the Debtor or their extent or availability following confirmation and consummation of the Plan.

 

**Please note that the foregoing discussion does not constitute tax advice or a tax opinion concerning the Plan. Holders of Claims and Interests and other parties in interest are strongly urged to consult with their own tax advisors regarding the tax consequences of the Plan.**

 

ARTICLE II

    DEFINED TERMS, RULES OF INTERPRETATION,
COMPUTATION OF TIME, GOVERNING LAW, AND OTHER REFERENCES

 

2.1    Defined Terms

 

1.“    Administrative Claim” means a Claim (other than a DIP Lender Claim or a Professional Claim) for costs and expenses of administration of the Chapter 11 Case pursuant to sections 503(b), 507(a)(2), 507(b), or 1114(e)(2) of the Bankruptcy Code, including (a) the actual and necessary costs and expenses incurred on or after the Petition Date until and including the Effective Date of preserving the Estate and operating the businesses of the Debtor; (b) all fees and charges assessed against the Estate pursuant to section 1930 of chapter 123 of title 28 of the United States Code; and (c) any other obligation designated as an Allowed Administrative Claim pursuant to a Final Order of the Bankruptcy Court.

 

2.“    Administrative Claims Bar Date” means the deadline for filing requests for payment of Administrative Claims, except as otherwise set forth in the Plan or a Final Order, which shall be 30 days after the Effective Date; provided that filing a request for payment of an Administrative Claim is not required where the Plan, Confirmation Order, Bankruptcy Code, Bankruptcy Rules, or Final Order of the Bankruptcy Court excuses such a requirement.

 

 

3.“    Affiliate” has the meaning set forth in section 101(2) of the Bankruptcy Code.

 

4.“    Allowed” means, as to a Claim, that (i) such Claim was expressly allowed under this Plan or otherwise by a Final Order, (ii) proof of such Claim was properly and timely filed in accordance with all applicable orders of the Bankruptcy Court and provisions of the Plan, the Bankruptcy Code, and the Bankruptcy Rules, and the applicable time for parties in interest to bring objections to allowance of such Claim has passed (or if such an objection was brought by a party in interest, such objection has been determined by a Final Order in favor of the holder of such Claim), or (iii) such Claim has been listed in the Debtor’s Schedules as liquidated in amount and not disputed or contingent, and no contrary proof of Claim has been filed on account of such Claim.

 

5.“    Arena” means, collectively, Arena Investors, LP, the Prepetition Lenders, the DIP Lender, and any Entity affiliated with any of them that holds or previously held Claims against or Interests in the Debtor.

 

6.“    Arena D&O Claims” means all Causes of Action of Arena against the Ds & Os (regardless of whether acting in a fiduciary capacity or otherwise).

 

7.“    Arena D&O Demand Letter” has the meaning set forth in Section 5.1(f).

 

8.“    Arena Exchange Agreement” means that certain Exchange Agreement dated as of June 30, 2022 between the Debtor and AI Amped II, LLC (as amended, modified, supplemented, and restated prior to February 29, 2024).

 

9.“    Arena Notes” means, collectively, (i) those certain Original Issue Discount Senior Secured Convertible Promissory Notes due May 8, 2023, issued by the Debtor pursuant to the May 2020 SPA, (ii) those certain Original Issue Discount Senior Secured Convertible Promissory Notes due November 3, 2023, issued by the Debtor pursuant to the November SPA, (ii) those certain Original Issue Discount Senior Secured Non-Convertible Promissory Notes due November 19, 2023, issued by the Debtor pursuant to the May 2021 SPA, (iii) those certain Original Issue Discount Senior Secured Convertible Promissory Notes due May 19, 2024, issued by the Debtor pursuant to the May 2021 SPA, and (iv) those certain Original Issue Discount Senior Secured Non-Convertible Promissory Notes due November 19, 2023, issued by the Debtor pursuant to the December SPA.

 

10.“    Arena Related Parties” means, collectively, Arena’s current and former officers, directors, employees, advisors, attorneys, professionals, accountants, consultants, agents, and other representatives (including their respective officers, directors, employees, members, and professionals) (each of whom is an “Arena Related Party”).

 

11.“    Arena SPAs” means, collectively, (i) that certain Securities Purchase Agreement dated as of May 8, 2020, between the Debtor and AI Amped II, LLC (as amended, modified, supplemented and restated prior to February 29, 2024) (the “May 2020 SPA”), (ii) that certain Securities Purchase Agreement dated as of November 3, 2020, between the Debtor and AI Amped II, LLC (as amended, modified, supplemented and restated prior to February 29, 2024) (the “November SPA”), (iii) that certain Securities Purchase Agreement dated as of May 19, 2021, between the Debtor, AI Amped I, LLC, and AI Amped II, LLC (as amended, modified, supplemented and restated prior to February 29, 2024) (the “May 2021 SPA”), and (iv) that certain Securities Purchase Agreement dated as of December 17, 2021, between the Debtor and AI Amped II LLC (as amended, modified, supplemented and restated prior to February 29, 2024) (the “December SPA”).

 

12.“    Avoidance Actions” means any and all avoidance, recovery, subordination, or other claims, actions, or remedies that may be brought by or on behalf of the Debtor or its Estate or other authorized parties in interest under the Bankruptcy Code or applicable non-bankruptcy law, including actions or remedies under sections 502, 510, 542, 544, 545, and 547 through and including 553 of the Bankruptcy Code.

 

13.“    Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. §§ 101–1532.

 

14.“    Bankruptcy Court” means the United States Bankruptcy Court for the District of Delaware or such other court having jurisdiction over the Chapter 11 Case.

 

 

15.“    Bankruptcy Rules” means, collectively, the following, as applicable to the Chapter 11 Case: (i) the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the United States Code, 28 U.S.C. § 2075, as applicable to the Chapter 11 Case, (ii) the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware, and (iii) any applicable general orders or chambers procedures of the Bankruptcy Court, all as may be amended or modified from time to time.

 

16.“    Business Day” means any day, other than a Saturday, Sunday, or a legal holiday, as defined in Bankruptcy Rule 9006(a).

 

17.“    Cash” means the legal tender of the United States of America or the equivalent thereof, including bank deposits and checks.

 

18.“    Causes of Action” means, with respect to a given Entity, any and all Claims, actions, causes of action, choses in action, suits, debts, damages, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, judgments, remedies, rights of set-off, third-party claims, subrogation claims, contribution claims, reimbursement claims, indemnity claims, counterclaims, and crossclaims of such Entity (including, with respect to the Debtor, any Avoidance Actions), whether known or unknown, liquidated or unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed, that are or may be pending on the Effective Date or commenced by such Entity after the Effective Date against any other Entity, based in law or equity, including under the Bankruptcy Code, whether direct, indirect, derivative, or otherwise and whether asserted or unasserted as of the date of entry of the Confirmation Order.

 

19.“    Chapter 7 Liquidation Analysis” means an analysis of a hypothetical liquidation of the Debtor under chapter 7 of the Bankruptcy Code, which shall be included in the Plan Supplement.

 

20.“    Chapter 11 Case” means the case that was commenced by the Debtor’s filing of a petition for relief under chapter 11 of the Bankruptcy Code on the Petition Date.

 

21.“    Claim” means a claim, as defined in section 101(5) of the Bankruptcy Code.

 

22.“    Claims Agent” means Epiq Corporate Restructuring, LLC, the claims and solicitation agent retained by the Debtor in the Chapter 11 Case pursuant to order of the Bankruptcy Court.

 

23.“    Claims Bar Date” means the applicable deadline for filing Proofs of Claim, except as otherwise set forth in the Plan or a Final Order, which: (a) with respect to Proofs of Claim filed by any Governmental Unit, shall be 180 days after the Petition Date (the “Government Claims Bar Date”), and (b) with respect to Proofs of Claim filed by any Entity other than a Governmental Unit, shall be 30 days after the Effective Date (the “General Claims Bar Date”), provided that that filing a Proof of Claim is not required where the Plan, Confirmation Order, Bankruptcy Code, Bankruptcy Rule, or a Final Order of the Bankruptcy Court excuses such a requirement.

 

24.“    Claims Objection Deadline” means the deadline for the Reorganized Debtor to object to Proofs of Claim, which shall be on the date that is 120 days after the Effective Date, subject to extension by order of the Bankruptcy Court upon the request by the Reorganized Debtor.

 

25.“    Claims Register” means the official register of Claims against the Debtor maintained by the Claims Agent.

 

26.“    Class” means a category of holders of Claims or Interests under section 1122(a) of the Bankruptcy Code.

 

27.“    Common Interests” means the common stock in the Debtor (OTC: CRGE).

 

 

28.“    Company D&O Claims” means all Causes of Action of the Debtor, its Estate, the Subsidiaries, or anyone claiming by or through any of them, against the Ds & Os (regardless of whether acting in a fiduciary capacity or otherwise).

 

29.“    Confirmation” means the entry of the Confirmation Order on the docket of the Chapter 11 Case.

 

30.“    Confirmation Date” means the date on which the Bankruptcy Court enters the Confirmation Order on the docket of the Chapter 11 Case within the meaning of Bankruptcy Rules 5003 and 9021.

 

31.“    Confirmation Hearing” means the hearing(s) before the Bankruptcy Court under section 1128 of the Bankruptcy Code at which the Debtor seeks entry of the Confirmation Order.

 

32.“    Confirmation Order” means the order of the Bankruptcy Court confirming the Plan under section 1129 of the Bankruptcy Code.

 

33.“    Consummation” means the occurrence of the Effective Date.

 

34.“    Creditor” has the meaning set forth in section 101(10) of the Bankruptcy Code.

 

35.“    Cure Claim” means a Claim (unless waived or modified by the applicable counterparty) based upon the Debtor’s defaults under an Executory Contract or Unexpired Lease that is assumed by the Reorganized Debtor under the Plan pursuant to section 365 of the Bankruptcy Code, other than a default which is not required to be cured pursuant to section 365(b)(2) of the Bankruptcy Code.

 

36.“    Cure Notice” means a notice of a proposed amount to be paid on account of a Cure Claim in connection with an Executory Contract or Unexpired Lease that is to be assumed by the Reorganized Debtor under the Plan pursuant to section 365 of the Bankruptcy Code, which notice shall: (a) include procedures for objecting to proposed assumptions of Executory Contracts and Unexpired Leases; (b) include the proposed amount of any Cure Claims to be paid in connection therewith; (c) include procedures for resolution by the Bankruptcy Court of any related disputes; and (iv) be included in the Plan Supplement and promptly served on all counterparties to such Executory Contracts and Unexpired Leases.

 

37.“    Cure/Assumption Objection Deadline” means the deadline for filing objections to the assumption of an Executory Contract or Unexpired Lease under the Plan, which shall be 14 days after filing of the Plan Supplement and service of the Cure Notice; provided that if any Executory Contract or Unexpired Lease is removed from the Rejection Schedule after the filing of the initial Rejection Schedule, then the Cure/Assumption Objection Deadline with respect to such Executory Contract or Unexpired Lease shall be the earlier of (a) 14 days after service of the amended Rejection Schedule with such modification and (b) at the Confirmation Hearing.

 

38.“    D&O Indemnity Escrow” means the escrow established for the benefit of the Ds & Os in accordance with Section 5.1(j).

 

39.“    D&O Indemnity Escrow Agreement” means the agreement between the Reorganized Debtor and the escrow agent governing the D&O Indemnity Escrow, which shall be included in the Plan Supplement.

 

40.“    D&O Liability Insurance Policies” means all insurance policies for current or former directors’, officers’, employees’, other professionals’, and agents’ liability maintained by the Debtor and its Subsidiaries, as applicable, as of the Petition Date or purchased by the Debtor or its Subsidiaries, as applicable, prior to the Petition Date (each of which is a “D&O Liability Insurance Policy”).

 

41.“    Debtor” means Charge Enterprises, Inc. as debtor and debtor in possession in the Chapter 11 Case.

 

42.“    Debt” means liability on a Claim.

 

43.“    DIP Lender” means AI Amped I, LLC, in its capacity as holder of a DIP Lender Claim.

 

 

44.“    DIP Lender Claim” means any Claim against the Debtor arising under the DIP Term Sheet or DIP Order, or both (other than a Claim for adequate protection due to the Prepetition Lenders under the DIP Order, which Claim shall constitute a Prepetition Lender Claim for purposes of the Plan).

 

45.“    DIP Order” means, collectively, the interim and final orders of the Bankruptcy Court approving the Debtor to obtain post-petition financing from the DIP Lender on the terms and conditions set forth in the DIP Term Sheet.

 

46.“    DIP Term Sheet” means that certain DIP Facility Summary of Terms and Conditions executed by Charge and the DIP Lender effective as of March 1, 2024, as may be amended or modified from time to time in accordance with the terms thereof and the DIP Order.

 

47.“    Director Side Letter Agreement” means a side letter agreement executed by Arena and executable by any Director at his or her option, which shall provide (i) a mutual agreement not to commit torts of defamation, false light, invasion of privacy, or breach of confidence against one another, (ii) that, if (a) a Director commences an independent action against Arena for breach of the Director Side Letter Agreement arising from statements made after February 26, 2024 and (b) the Director is the prevailing party in such action, then the release of Arena D&O Claims against such Director shall not be voidable by Arena, and (iii) an agreement for fee shifting in any action for breach of the Director Side Letter Agreement in favor of the prevailing party to such action. The Director Side Letter Agreement shall be included in the Plan Supplement.

 

48.“    Directors” means, collectively, all directors of the Debtor as of the Petition Date, namely: Amy Hanson, Craig Harper-Denson, Chantel Lenard, Justin E. Deutsch, Andrew Fox, Gary Jacobs, Benjamin Carson, Jr., and Jacky Wu (each of whom is a “Director”).

 

49.“    Disallowed” means, with respect to any Claim, a Claim or any portion thereof that (a) has been disallowed by a Final Order, (b) is Scheduled as zero or as contingent, disputed, or unliquidated and as to which no Proof of Claim or request for payment of an Administrative Claim (if required by the Plan) has been timely filed or deemed timely filed by the Bankruptcy Court pursuant to the Bankruptcy Code, any Final Order of the Bankruptcy Court, or otherwise under applicable law or this Plan, (c) is not Scheduled and as to which no Proof of Claim or request for payment of an Administrative Claim (if required by the Plan) has been has been timely filed or deemed timely filed by the Bankruptcy Court pursuant to the Bankruptcy Code, any Final Order of the Bankruptcy Court, or otherwise under applicable law or this Plan, (d) has been withdrawn by agreement of the Debtor or Reorganized Debtor, as applicable, and the holder of such Claim, or (e) has been withdrawn by the holder of such Claim.

 

50.“    Disputed Claim” means a Claim that is not yet Allowed.

 

51.“    Distribution Record Date” means the date for determining which holders of Claims are eligible to receive distributions hereunder and shall be the Confirmation Date or such other date as designated in advance by the Debtor, with the consent of Arena, by notice on the docket of the Chapter 11 Case.

 

52.“    Ds & Os” means, collectively, the Directors and Officers (each of whom is a “D&O”). For the avoidance of doubt, the Ds & Os do not include any individual who previously served as a director or officer of the Debtor but is not a Director or Officer as defined herein.

 

53.“    Effective Date” means the date that is the first Business Day after the Confirmation Date on which all conditions precedent to the occurrence of the Effective Date set forth in Section 10.1 have been satisfied or waived in accordance with Section 10.2.

 

54.“    Entity” has the meaning set forth in section 101(15) of the Bankruptcy Code.

 

55.“    Estate” means the bankruptcy estate of the Debtor created under sections 301 and 541 of the Bankruptcy Code upon the commencement of the Chapter 11 Case.

 

56.“    Exculpated Acts or Omissions” has the meaning set forth in Section 9.5.

 

 

57.“    Exculpated Party” means each of the following in its capacity as such: (a) the Debtor; (b) the Debtor’s post-petition officers, directors, trustees, principals, employees, agents, financial advisors, attorneys, accountants, investment bankers, consultants, and representatives (including specifically the the Ds & Os and the Professionals); and (c) Arena.

 

58.“    Executory Contract” means a contract or lease for personal property or residential real property to which the Debtor is a party that is subject to assumption or rejection under section 365 of the Bankruptcy Code.

 

59.“    Final Decree” means the decree contemplated under Bankruptcy Rule 3022.

 

60.“    Final Coverage Determination” means, with respect to a coverage claim asserted against a Potentially Applicable D&O Liability Insurance Policy on account of an Arena D&O Claim or Company D&O Claim, as applicable, the latest to occur of (i) a final acceptance or denial of such coverage claim by the Insurer under such policy; or (ii) if an Insurance Coverage Action has been commenced with respect to a denial of such coverage claim by the Insurer under such policy, the resolution of such Insurance Coverage Action. For purposes of clause (ii) in the preceding sentence, the resolution of an Insurance Coverage Action will occur upon the earlier of (a) a settlement of such Insurance Coverage Action agreed to by the Insurer and the parties to the Arena D&O Claim or Company D&O Claim, as applicable, or (b) resolution of such Insurance Coverage Action by a Final Order.

 

61.“    Final Order” means, as applicable, an order or judgment of the Bankruptcy Court or other court of competent jurisdiction with respect to the relevant subject matter, which has not been reversed, stayed, modified, or amended, and as to which the time to appeal or seek certiorari has expired and no appeal or petition for certiorari has been timely taken, or as to which any appeal that has been taken or any petition for certiorari that has been or may be filed has been resolved by the highest court to which the order or judgment could be appealed or from which certiorari could be sought or the new trial, reargument, or rehearing shall have been denied, resulted in no modification of such order, or has otherwise been dismissed with prejudice; provided that the possibility of a motion under Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules or applicable non-bankruptcy law, may be filed relating to such order or judgment shall not prevent such order or judgment from being a Final Order.

 

62.“    General Unsecured Claim” means any Claim other than an Administrative Claim, Professional Claim, Secured Tax Claim, Other Secured Claim, Priority Tax Claim, Other Priority Claim, DIP Lender Claim, Prepetition Lender Claim, Section 510(b) Claim, or Other Subordinated Claim.

 

63.“    Governmental Unit” has the meaning set forth in section 101(27) of the Bankruptcy Code.

 

64.“    Impaired” means, with respect to Claim, Interest, or Class of Claims or Interests, that such Claim, Interest, or Class is not Unimpaired.

 

65.“    Indemnifiable Action” means any threatened, pending, or completed actions, suits, or proceedings, whether civil, criminal, administrative or investigative, against a D&O by reason of the fact that such D&O was a director, officer, employee, or agent of the Debtor, or is or was serving at the request of the Debtor as a director, officer, employee or agent of another Entity.

 

66.“    Insurance Coverage Action” means any action brought before a court, arbitrator, or other tribunal seeking determination of one or more causes of action, including declaratory relief, indemnification, contribution, or an award of damages, arising out of or related to any D&O Liability Insurance Policy.

 

67.“    Insurer” means a counterparty to any D&O Liability Insurance Policy that is not the Debtor or a Subsidiary.

 

68.“    Interest” means any equity security (as defined in section 101(16) of the Bankruptcy Code) in the Debtor.

 

69.“    Island” means ICG Charge Me, LLC.

 

 

70.“    Island Gift Distribution” means Arena’s designation of Island to receive 5% of the New Common Stock on the Effective Date if (and only if) the conditions set forth in Section 5.1(c) are satisfied.

 

71.“    Lien” has the meaning set forth in section 101(37) of the Bankruptcy Code.

 

72.“    Management” means, collectively, (i) Craig Harper-Denson, the Debtor’s Chief Executive Officer, (ii) Leah Schweller, the Debtor’s Chief Financial Officer, and (iii) James Biehl, the Debtor’s Chief Legal and Compliance Officer.

 

73.“    Management Employment Agreements” means, collectively, Management’s employment agreements with the Debtor as of the Petition Date (each of which is a “Management Employment Agreement”).

 

74.“    New Common Stock” means the common stock, par value of $0.01 per share, of the Reorganized Debtor, authorized and issued pursuant to the Plan.

 

75.“    New Organizational Documents” means the form of the certificate or articles of incorporation, bylaws, and other applicable formation documents of the Reorganized Debtor, which shall be provided by Arena and included in the Plan Supplement.

 

76.“    Officer Side Letter Agreement” means a side letter agreement executed by Arena and executable by any Officer at his or her option, which shall provide (i) a mutual agreement not to commit torts of defamation, false light, invasion of privacy, or breach of confidence against one another, or tortious interference in relation to the Management Employment Agreements, (ii) that, if (a) an Officer commences an independent action against Arena for breach of the Officer Side Letter Agreement arising from statements made after February 26, 2024 and (b) the Officer is the prevailing party in such action, then the release of Arena D&O Claims against such Officer shall not be voidable by Arena, and (iii) an agreement for fee shifting in any action for breach of the Officer Side Letter Agreement in favor of the prevailing party to such action. The Officer Side Letter Agreement shall be included in the Plan Supplement.

 

77.“    Officers” means, collectively, all officers of the Debtor as of the Petition Date, namely: Craig Harper-Denson, Leah Schweller, James Biehl, and Mark LaNeve (each of whom is an “Officer”).

 

78.“    Other Priority Claim” means any Claim other than an Administrative Claim or a Priority Tax Claim that is entitled to priority in right of payment under section 507(a) of the Bankruptcy Code.

 

79.“    Other Secured Claim” means any Secured Claim other than a DIP Lender Claim, Secured Tax Claim, or Prepetition Lender Claim.

 

80.“    Other Subordinated Claim” means any unsecured, non-priority Claim that is subordinate in right of distribution to General Unsecured Claims by operation of sections 510(a), 510(c), or 726(a)(3)-(5) of the Bankruptcy Code.

 

81.“    Person” has the meaning set forth in section 101(41) of the Bankruptcy Code.

 

82.“    Petition Date” means the date on which the Debtor filed its petition for relief under chapter 11 of the Bankruptcy Code.

 

83.“    Plan” means this combined disclosure statement and chapter 11 plan, including the Plan Supplement and all exhibits, supplements, appendices and schedules hereto or thereto, either in their present form or as the same may be amended or modified from time to time in accordance with the terms hereof.

 

84.“    Plan Documents” means, collectively, the Plan, the Plan Supplement, and the various agreements and other documents formalizing or implementing the Plan and the transactions contemplated hereunder.

 

 

85.“    Plan Supplement” means the compilation of documents and forms of documents, schedules, and exhibits to the Plan, each of which shall be in form and substance Reasonably Acceptable to the Debtor and Arena (as amended, supplemented, or modified from time to time in accordance with the terms hereof and the Bankruptcy Code and Bankruptcy Rules), to be filed by the Debtor no later than five (5) Business Days before the Plan objection deadline or such later date as may be approved by the Bankruptcy Court on notice to parties in interest, as well as any additional documents filed with the Bankruptcy Court before the Effective Date as amendments the Plan Supplement, including the following, as applicable: (i) the Cure Notice, (ii) the Rejection Schedule; (iii) the Director Side Letter Agreement; (iv) the Officer Side Letter Agreement; (v) the Chapter 7 Liquidation Analysis; (vi) the D&O Indemnity Escrow Agreement; (vii) the New Organizational Documents; (viii) a document listing the members of the New Board; and (ix) the Stockholders Agreement.

 

86.“    Potentially Applicable D&O Liability Insurance Policy” means a D&O Liability Insurance Policy under which Arena, the Reorganized Debtor, or a Subsidiary, as applicable, has in good faith determined there may be coverage for an Arena D&O Claim or Company D&O Claim, as applicable. For the avoidance of doubt, any determination by Arena, the Reorganized Debtor, or any Subsidiary with respect to potential insurance coverage shall not be binding upon (a) any Insurer or (b) the Ds & Os.

 

87.“    Preferred Interests” means, collectively, the Series C Preferred Interests, the Series D Preferred Interests, and the Series E Preferred Interests.

 

88.“    Prepetition Lender Claims” means the Claims against the Debtor arising under the Arena SPAs, the Arena Notes (including, but not limited to, Claims on the secured notes converted into the Series D Preferred Interests), and the Arena Exchange Agreement, which Claims are secured, in whole or in part, by first-priority security interests in all assets of the Debtor.

 

89.“    Prepetition Lenders” means AI Amped I, LLC and AI Amped II, LLC, in their capacity as holders of Prepetition Lender Claims.

 

90.“    Priority Tax Claim” means any Claim of a Governmental Unit of the kind specified in section 507(a)(8) of the Bankruptcy Code.

 

91.“    Professional” means an Entity employed in the Chapter 11 Case pursuant to a Final Order in accordance with sections 327 and 1103 of the Bankruptcy Code and to be compensated for services rendered prior to or on the Effective Date pursuant to sections 327, 328, 329, 330, and 331 of the Bankruptcy Code.

 

92.“    Professional Claim” means a Claim by a Professional seeking an award by the Bankruptcy Court of compensation for services rendered or reimbursement of expenses incurred through and including the Effective Date under sections 330, 331, 503(b)(2), or 503(b)(3) of the Bankruptcy Code.

 

93.“    Professional Fee Escrow Account” means the escrow account established for the benefit of the Professionals pursuant to the DIP Term Sheet and the DIP Order.

 

94.“    Proof of Claim” means a proof of Claim filed against the Debtor in the Chapter 11 Case.

 

95.“    PTGi Guarantors” means, collectively, PTGi International Carrier Services, Inc., Co2Tel.com Inc., and Charge Communications Inc.

 

96.“    Reasonably Acceptable” means acceptable to the Debtor or Arena (as applicable) in such party’s reasonable discretion, provided that any documentation or matter consistent with this Plan shall be deemed Reasonably Acceptable.

 

97.“    Rejection Schedule” means the schedule of Executory Contracts and Unexpired Leases in the Plan Supplement, as may be amended from time to time, setting forth certain Executory Contracts and Unexpired Leases for rejection as of the Effective Date under section 365 of the Bankruptcy Code.

 

98.“    Released Parties” means, collectively, (i) Arena, (ii) the Arena Related Parties, and (iii) the Ds & Os (each of whom is a “Released Party”).

 

 

99.“    Reorganized Debtor” means the Debtor (or any successor thereto by merger, consolidation, or otherwise) on and after the Effective Date.

 

100.“    RSA” means that certain Restructuring and Plan Support Agreement dated as of February 27, 2024, by and among the Debtor, AI Amped I, LLC, AI Amped II, LLC, Arena Finance Markets, LP, Mt Whitney Securities, LLC, Arena Special Opportunities Fund, LP, Arena Special Opportunities Partners I, LP, and Arena Finance Markets, LP.

 

101.“    Scheduled” means, with respect to a Claim, that such Claim was listed in the Schedules.

 

102.“    Schedules” means, collectively, the schedule of assets and liabilities and statement of financial affairs filed by the Debtor pursuant to section 521 of the Bankruptcy Code and in substantial accordance with the Official Bankruptcy Forms, as the same may have been amended, modified, or supplemented from time to time.

 

103.“    Section 510(b) Claim” means any unsecured, non-priority Claim that is subordinated in right of distribution to General Unsecured Claims or Preferred Interests, or both, by operation of section 510(b) of the Bankruptcy Code.

 

104.“    Secured Claim” means a Claim: (a) secured by a Lien on collateral to the extent of the value of such collateral, as determined in accordance with section 506(a) of the Bankruptcy Code or (b) subject to a valid right of setoff pursuant to section 553 of the Bankruptcy Code.

 

105.“    Secured Tax Claim” means a Secured Claim of a type described in section 1129(a)(9)(D) of the Bankruptcy Code.

 

106.“    Security” and “Securities” have the meaning set forth in section 101(49) of the Bankruptcy Code.

 

107.“    Securities Act” means the Securities Act of 1933, 15 U.S.C. §§ 77a‑77aa.

 

108.“    Securities Exchange Act” means the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a‑78nn.

 

109.“    Series C Preferred Interests” means the Series C preferred stock in the Debtor.

 

110.“    Series D Preferred Interests” means the Series D preferred stock in the Debtor.

 

111.“    Series E Preferred Interests” means the Series E preferred stock in the Debtor.

 

112.“    Stipulated Prepetition Lender Claims Amount” means the amount stipulated by the Debtor in the DIP Order as the valid amount of the Prepetition Lender Claims.

 

113.“    Stockholders Agreement” means the stockholders’ agreement that Island would be required to execute as a condition of the Island Gift Distribution, which agreement shall be provided by Arena and included in the Plan Supplement.

 

114.“    Subsidiaries” means, collectively, all direct and indirect wholly-owned subsidiaries of the Debtor, specifically: Transworld Enterprises, Inc., Charge Investments, Inc., Charge Infrastructure Holdings, Inc., Charge Communications, Inc., PTGi International Carrier Services, Inc., Go2Tel.com, Inc., B W Electrical Services, LLC, EV Group Holdings, LLC, EVDepot, LLC, Performance Fleet Maintenance USA, Inc., FMC Property, LLC, GetCharged, Inc., Charge Services, LLC, Nextridge, Inc., ANS Advance Network Services, LLC d/b/a Charge Infrastructure, Greenspeed Energy Solutions, LLC, and Charge Infrastructure, Inc. (each of which is a “Subsidiary”).

 

115.“    Unexpired Lease” means a lease of nonresidential real property to which the Debtor is a party that is subject to assumption or rejection under section 365 of the Bankruptcy Code.

 

116.“    Unimpaired” means a Class of Claims or Interests that is unimpaired within the meaning of section 1124 of the Bankruptcy Code.

 

117.“    U.S. Trustee” means the Office of the United States Trustee for the District of Delaware.

 

 

2.2    Rules of Interpretation

 

For purposes of the Plan: (1) in the appropriate context, each term, whether stated in the singular or the plural, shall include both the singular and the plural, and pronouns stated in the masculine, feminine, or neuter gender shall include the masculine, feminine, and the neuter gender; (2) unless otherwise specified, any reference herein to a contract, lease, instrument, release, indenture, or other agreement or document being in a particular form or on particular terms and conditions means that the referenced document shall be substantially in that form or substantially on those terms and conditions; (3) unless otherwise specified, any reference herein to an existing document, schedule, or exhibit, whether or not filed, having been filed or to be filed shall mean that document, schedule, or exhibit as it may thereafter be amended, modified, or supplemented; (4) any reference to an Entity as a holder of a Claim or Interest includes that Entity’s successors and assigns; (5) unless otherwise specified, all references herein to “Articles” are references to Articles hereof or hereto; (6) unless otherwise specified, all references herein to exhibits are references to exhibits in the Plan Supplement; (7) unless otherwise specified, the words “herein,” “hereof,” and “hereto” refer to the Plan in its entirety rather than to a particular portion of the Plan; (8) captions and headings to Articles are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of the Plan; (9) unless otherwise specified herein, the rules of construction set forth in section 102 of the Bankruptcy Code shall apply; (10) any term used in capitalized form herein that is not otherwise defined but that is used in the Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to that term in the Bankruptcy Code or the Bankruptcy Rules, as the case may be; (11) all references to docket numbers of documents filed in the Chapter 11 Case are references to the docket numbers under the Bankruptcy Court’s CM/ECF system; (12) all references to statutes, regulations, orders, rules of courts, and the like shall mean as amended from time to time, and as applicable to the Chapter 11 Case, unless otherwise stated; (13) any immaterial effectuating provisions may be interpreted by the Debtor or the Reorganized Debtor in such a manner that is consistent with the overall purpose and intent of the Plan, all without further notice to, or action, order, or approval of, the Bankruptcy Court or any other Entity; and (14) except as otherwise specifically provided in the Plan to the contrary, references in the Plan to the Debtor or to the Reorganized Debtor shall mean the Debtor and the Reorganized Debtor, as applicable, to the extent the context requires.

 

2.3    Computation of Time

 

Bankruptcy Rule 9006(a) applies in computing any period of time prescribed or allowed herein.

 

2.4    Governing Law

 

Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules) or unless otherwise specifically stated, the laws of the State of Delaware, without giving effect to the principles of conflict of laws, shall govern the rights, obligations, construction, and implementation of the Plan, any agreements, documents, instruments, or contracts executed or entered into in connection with the Plan (except as otherwise set forth in those agreements, in which case the governing law of such agreement shall control); provided that corporate governance matters relating to the Debtor or the Reorganized Debtor, as applicable, shall be governed by the laws of the state of incorporation or formation of the Debtor or Reorganized Debtor, as applicable.

 

2.5    Reference to Monetary Figures

 

All references in the Plan to monetary figures refer to currency of the United States of America, unless otherwise expressly provided.

 

 

2.6    Reference to the Debtor or the Reorganized Debtor

 

Except as otherwise specifically provided in the Plan to the contrary, references in the Plan to the Debtor or to the Reorganized Debtor mean the Debtor and the Reorganized Debtor, as applicable, to the extent the context requires.

 

2.7    Controlling Document

 

In the event of an inconsistency between the Plan and any document included in the Plan Supplement, the terms of the relevant provision in the Plan shall control (unless stated otherwise in such document or in the Confirmation Order). In the event of an inconsistency between the Confirmation Order and the Plan, the Confirmation Order shall control.

 

ARTICLE III

    ADMINISTRATIVE AND PRIORITY CLAIMS

 

In accordance with section 1123(a)(1) of the Bankruptcy Code, DIP Lender Claims, Administrative Claims, Professional Claims, and Priority Tax Claims have not been classified and thus are excluded from the Classes of Claims set forth in Article IV.

 

3.1    DIP Lender Claims

 

The DIP Lender Claims shall be deemed satisfied by the issuance of New Common Stock to Arena or its designee(s) on the Effective Date in accordance with Section 4.2(b) below.

 

3.2    Administrative Claims

 

Unless otherwise agreed to by the holder of such Claim and the Debtor and Arena (prior to the Effective Date) or the Reorganized Debtor (on and after the Effective Date), as applicable, each Allowed Administrative Claim (other than a Claim for fees and expenses pursuant to section 1930 of chapter 123 of title 28 of the United States Code) shall be paid in full, in Cash, on the Effective Date or as soon as practicable thereafter; provided that if the Administrative Claim is not Allowed as of the Effective Date, then it shall be paid no later than 30 days after the date on which an order Allowing such Administrative Claim becomes a Final Order, or as soon as reasonably practicable thereafter.

 

3.3    Professional Claims

 

(a)    Final Fee Applications and Payment of Professional Claims

 

All final requests for payment of Professional Claims incurred during the period from the Petition Date through the Effective Date shall be filed no later than 45 days after the Effective Date. All such final requests will be subject to approval by the Bankruptcy Court after notice and a hearing in accordance with the procedures established by the Bankruptcy Code, Bankruptcy Rules, and prior orders of the Bankruptcy Court, including any order establishing interim compensation procedures for Professionals, and once approved by the Bankruptcy Court, shall be promptly paid from the Professional Fee Escrow Account up to the full Allowed amount. To the extent that funds held in the Professional Fee Escrow Account are insufficient to satisfy the amount of Professional Claims owing to the Professionals, such Professionals shall have an Allowed Administrative Claim for any such deficiency, and the Reorganized Debtor shall pay the full unpaid amount of such Allowed Administrative Claim in accordance with Section 3.2 above.

 

(b)    Professional Fee Escrow Account

 

Professionals shall reasonably estimate their unpaid Professional Claims and deliver such estimate to the Debtor no later than five days before the Effective Date; provided that such estimate shall not be deemed to limit the amount of the fees and expenses that are the subject of the Professional’s final request for payment of Professional Claims. If a Professional does not provide an estimate, the Debtor may estimate the unpaid and unbilled fees and expenses of such Professional. Based on these estimates, the Debtor shall fund the Professional Fee Escrow Account on the Effective Date with Cash in the amount (if any) necessary to provide for payment in full of any unpaid Professional Claims from the Professional Fee Escrow if and when they are finally Allowed by the Bankruptcy Court. When all Allowed amounts owing to the Professionals have been paid in full, any amount remaining in the Professional Fee Escrow Account shall promptly be paid to the Reorganized Debtor without any further action or order of the Bankruptcy Court.

 

 

3.4    Priority Tax Claims and Secured Tax Claims

 

Unless otherwise agreed to by the holder of such Claim and the Debtor and Arena (prior to the Effective Date) or the Reorganized Debtor (on and after the Effective Date), as applicable: (i) each Allowed Priority Tax Claim (if any) shall be treated in accordance with the terms set forth in section 1129(a)(9)(C) of the Bankruptcy Code, and (ii) each Allowed Secured Tax Claim (if any) shall be treated in accordance with the terms set forth in section 1129(a)(9)(D) of the Bankruptcy Code.

 

3.5    Statutory Fees

 

All fees due and payable pursuant to section 1930 of Title 28 of the United States Code before the Effective Date shall be paid by the Debtor. On and after the Effective Date, to the extent applicable, the Reorganized Debtor shall pay any and all such fees when due and payable, and shall file with the Bankruptcy Court quarterly reports in a form reasonably acceptable to the U.S. Trustee. The Reorganized Debtor shall remain obligated to pay quarterly fees to the U.S. Trustee until the earliest of the Debtor’s Chapter 11 Case being closed, dismissed, or converted to a case under chapter 7 of the Bankruptcy Code.

 

ARTICLE IV

    CLASSIFICATION, TREATMENT, AND VOTING OF CLAIMS AND INTERESTS

 

4.1    Summary of Classification

 

Except for the Claims addressed in Article III, all Claims and Interests are classified in the Classes set forth below in accordance with section 1122 of the Bankruptcy Code. A Claim or Interest is classified in a particular Class only to the extent that the Claim or Interest qualifies within the description of that Class and is classified in other Classes to the extent that any portion of the Claim or Interest qualifies within the description of such other Classes. A Claim is classified in a particular Class for the purpose of receiving distributions pursuant to the Plan only to the extent that such Claim is an Allowed Claim in that Class and has not been paid, released, or otherwise satisfied prior to the Effective Date.

 

Below is a chart assigning each Class a number for purposes of identifying each separate Class, and specifying the impairment and voting status of Claims and Interests within each Class.

 

Classification, Impairment, and Voting Status of Claims and Interests
Class	Description	Status	Voting Rights
1	Other Priority Claims	Unimpaired	Not Entitled to Vote (Presumed to Accept)
2	Prepetition Lender Claims	Impaired	Entitled to Vote
3	Other Secured Claims	Unimpaired	Not Entitled to Vote (Presumed to Accept)
4	General Unsecured Claims	Unimpaired	Not Entitled to Vote (Presumed to Accept)
5	Section 510(b) Claims	Impaired	Not Entitled to Vote (Presumed to Reject)
6	Other Subordinated Claims	Impaired	Not Entitled to Vote (Presumed to Reject)
7	Series C Preferred Interests	Impaired	Not Entitled to Vote (Presumed to Reject)
8	Series D Preferred Interests	Impaired	Not Entitled to Vote (Presumed to Reject)
9	Series E Preferred Interests	Impaired	Not Entitled to Vote (Presumed to Reject)
10	Common Interests	Impaired	Not Entitled to Vote (Presumed to Reject)

 

 

4.2    Treatment of Claims and Interests

 

Except to the extent that a holder of an Allowed Claim agrees to a less favorable treatment, each holder of an Allowed Claim or an Interest shall receive under the Plan the treatment described below in full and final satisfaction, settlement, release, and discharge of and in exchange for such holder’s Claim or Interest.

 

(a)    Class 1 — Other Priority Claims

 

(1)

Classification: Class 1 consists of all Other Priority Claims (if any).

 

(1)

Treatment: Each holder of an Allowed Other Priority Claim shall receive payment of such Claim in full, in Cash, on or as soon as practicable after the later of (a) the Effective Date or (b) the date on which such Claim is Allowed.

 

(2)

Voting: Class 1 is Unimpaired. Holders of Class 1 Claims are conclusively presumed to have accepted the Plan under section 1126(f) of the Bankruptcy Code. Holders of Class 1 Claims are not entitled to vote to accept or reject the Plan.

 

(b)    Class 2 — Prepetition Lender Claims

 

(1)

Classification: Class 2 consists of all Prepetition Lender Claims.

 

(2)

Treatment: In satisfaction of the Allowed Prepetition Lender Claims set forth in Section 5.1(a), 100% of the New Common Stock shall be issued to Arena or its designee(s) on the Effective Date.

 

(3)

Voting: Class 2 is Impaired. Holders of Class 2 Claims are entitled to vote to accept or reject the Plan.

 

(c)    Class 3 — Other Secured Claims

 

(1)

Classification: Class 3 consists of all Other Secured Claims (if any).

 

(2)

Treatment: With respect to any Allowed Other Secured Claims (if any), at the option of the Reorganized Debtor: (i) the legal, equitable, and contractual rights to which the Other Secured Claim entitles the holder thereof shall be left unaltered; (ii) the Other Secured Claim shall be left Unimpaired in the manner described in section 1124(2) of the Bankruptcy Code; or (iii) on or as soon as practicable after the later of (a) the Effective Date or (b) the date on which such Claim is Allowed, the Other Secured Claim shall be paid in full, in Cash.

 

(3)

Voting: Class 3 is Unimpaired. Holders of Class 3 Claims are conclusively presumed to have accepted the Plan under section 1126(f) of the Bankruptcy Code. Holders of Class 3 Claims are not entitled to vote to accept or reject the Plan.

 

 

(d)    Class 4— General Unsecured Claims

 

(1)

Classification: Class 4 consists of all General Unsecured Claims.

 

(2)

Treatment: With respect to any Allowed General Unsecured Claims, at the option of the Reorganized Debtor: (i) the legal, equitable, and contractual rights to which the General Unsecured Claim entitles the holder thereof shall be left unaltered; (ii) the General Unsecured Claim shall be left Unimpaired in the manner described in section 1124(2) of the Bankruptcy Code; or (iii) on or as soon as practicable after the later of (a) the Effective Date or (b) the date on which such Claim is Allowed, the General Unsecured Claim shall be paid in full, in Cash.

 

(3)

Voting: Class 4 is Unimpaired. Holders of Class 4 Claims are conclusively presumed to have accepted the Plan under section 1126(f) of the Bankruptcy Code. Holders of Class 4 Claims are not entitled to vote to accept or reject the Plan.

 

(e)    Class 5 — Section 510(b) Claims

 

(1)

Classification: Class 5 consists of all Section 510(b) Claims (if any).

 

(2)

Treatment: On the Effective Date, each Section 510(b) Claim shall be canceled, released, and extinguished, and will be of no further force or effect, and the holder thereof shall receive no recovery or distribution under the Plan on account of its Section 510(b) Claim.

 

(3)

Voting: Class 5 is Impaired. Holders of Class 5 Claims are conclusively presumed to have rejected the Plan under section 1126(g) of the Bankruptcy Code. Holders of Class 5 Claims are not entitled to vote to accept or reject the Plan.

 

(f)    Class 6 — Other Subordinated Claims

 

(1)

Classification: Class 6 consists of all Other Subordinated Claims (if any).

 

(2)

Treatment: On the Effective Date, each Other Subordinated Claim shall be canceled, released, and extinguished, and will be of no further force or effect, and the holder thereof shall receive no recovery or distribution under the Plan on account of its Other Subordinated Claim.

 

(3)

Voting: Class 6 is Impaired. Holders of Class 6 Claims are conclusively presumed to have rejected the Plan under section 1126(g) of the Bankruptcy Code. Holders of Class 6 Claims are not entitled to vote to accept or reject the Plan.

 

(g)    Class 7 — Series C Preferred Interests

 

(1)

Classification: Class 7 consists of all Series C Preferred Interests.

 

(2)

Treatment: On the Effective Date, each Series C Preferred Interest shall be canceled, released, and extinguished, and will be of no further force or effect, and the holder thereof shall receive no recovery or distribution under the Plan on account of its Series C Preferred Interest.

 

(3)

Voting: Class 7 is Impaired. Holders of Class 7 Interests are conclusively presumed to have rejected the Plan under section 1126(g) of the Bankruptcy Code. Holders of Class 7 Interests are not entitled to vote to accept or reject the Plan.

 

 

(h)    Class 8 — Series D Preferred Interests

 

(1)

Classification: Class 8 consists of all Series D Preferred Interests.

 

(2)

Treatment: On the Effective Date, each Series D Preferred Interest shall be canceled, released, and extinguished, and will be of no further force or effect, and the holder thereof shall receive no recovery or distribution under the Plan on account of its Series D Preferred Interest.

 

(3)

Voting: Class 9 is Impaired. Holders of Class 8 Interests are conclusively presumed to have rejected the Plan under section 1126(g) of the Bankruptcy Code. Holders of Class 8 Interests are not entitled to vote to accept or reject the Plan.

 

(i)    Class 9 — Series E Preferred Interests

 

(1)

Classification: Class 9 consists of all Series E Preferred Interests.

 

(2)

Treatment: On the Effective Date, each Series E Preferred Interest shall be canceled, released, and extinguished, and will be of no further force or effect, and the holder thereof shall receive no recovery or distribution under the Plan on account of its Series E Preferred Interest.

 

(3)

Voting: Class 9 is Impaired. Holders of Class 9 Interests are conclusively presumed to have rejected the Plan under section 1126(g) of the Bankruptcy Code. Holders of Class 9 Interests are not entitled to vote to accept or reject the Plan.

 

(j)    Class 10 — Common Interests

 

(1)

Classification: Class 10 consists of all Common Interests.

 

(2)

Treatment: On the Effective Date, each Common Interest shall be canceled, released, and extinguished, and will be of no further force or effect, and the holder thereof shall receive no recovery or distribution under the Plan on account of its Common Interest.

 

(3)

Voting: Class 10 is Impaired. Holders of Class 10 Interests are conclusively presumed to have rejected the Plan under section 1126(g) of the Bankruptcy Code. Holders of Class 10 Interests are not entitled to vote to accept or reject the Plan.

 

4.3    Special Provision Governing Unimpaired Claims

 

Except as otherwise provided in the Plan, nothing under the Plan shall affect the Debtor’s or the Reorganized Debtor’s rights regarding any Unimpaired Claim, including all rights regarding legal and equitable defenses to or setoffs or recoupments against any such Unimpaired Claim.

 

 

ARTICLE V

    MEANS FOR IMPLEMENTATION OF THE PLAN

 

5.1    General Settlement of Claims and Interest; Particular Settlements

 

Pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, and in consideration for the classification, distributions, releases, and other benefits provided under the Plan, on the Effective Date, the provisions of the Plan shall constitute a good-faith compromise and settlement of all Claims (including, without limitation, the Prepetition Lender Claims), Interests, Causes of Action, and controversies released, settled, compromised, discharged, satisfied, or otherwise resolved pursuant to the Plan. The Plan shall be deemed a motion to approve the good-faith compromise and settlement of all such Claims (including, without limitation, the Prepetition Lender Claims), Interests, Causes of Action, and controversies pursuant to Bankruptcy Rule 9019, and the entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of such compromise and settlement under section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, as well as a finding by the Bankruptcy Court that such settlement and compromise is fair, equitable, reasonable, and in the best interests of the Debtor and its Estate.

 

Provisions of this Plan implementing particular, but interrelated, settlements include, without limitation, Sections 3.1, 4.2(b), 4.2(d), 5.3(b), 5.6, 8.5, 9.4, 9.5, 9.6, 10.1, 13.4, and 13.7 hereof, and the following subsections of this Section 5.1.

 

(a)    Allowance of Prepetition Lender Claims

 

The Prepetition Lender Claims shall be fully and finally Allowed on the Effective Date in the amount of the Stipulated Prepetition Lender Claims Amount.

 

(b)    Arena Releases of Certain Subsidiaries

 

On the Effective Date, Arena shall release all Causes of Action against all Subsidiaries other than the PTGi Guarantors, which release shall be memorialized in the Confirmation Order. For the avoidance of doubt, nothing in the Plan is intended, nor shall it be construed, to eliminate, reduce, satisfy, or otherwise affect any liability of the PTGi Guarantors to Arena.

 

(c)    Island Gift Distribution

 

If the following conditions are satisfied as of the Effective Date, then Arena shall designate Island to receive 5% of the New Common Stock on the Effective Date pursuant to Section 4.2(b)(2) above:

 

(1)

Island and its affiliates (including Island Capital Group Advisor LLC) shall not have objected to Confirmation of the Plan;

 

(2)

Island and its affiliates (including Island Capital Group Advisor LLC) shall have agreed (i) that they will not to file any Proof of Claim or request for payment of an Administrative Claim in the Chapter 11 Case (or if applicable, to withdraw with prejudice any Proof of Claim or request previously filed), and (ii) that they will agree to release all Causes of Action against the Debtor and the Released Parties, which agreements shall be memorialized in a provision of the Confirmation Order that is Reasonably Acceptable to Arena; and

 

(3)

Island shall have executed the Stockholders Agreement.

 

 

(d)    Management Employment Agreements

 

The Management Employment Agreements shall be included on the Rejection Schedule. Any Claims resulting from the rejection of the respective Management Employment Agreements under the Plan shall be fully and finally Allowed in the amounts of $316,228 (Harper-Denson), $241,927 (Biehl), and $224,153 (Schweller), which Claims shall be paid in full, in Cash, on the Effective Date.

 

(e)    Arena Releases of Ds & Os

 

On the Effective Date, Arena shall release all Arena D&O Claims, provided that such release shall not release any Arena D&O Claims that are or may be covered by the Debtor’s D&O Liability Insurance Policies (as determined in good faith by Arena), except to the extent set forth in Section 5.1(f), and provided further that the release set out in this Section 5.1(e) for a particular D&O shall be voidable by Arena in the event that said D&O commences any action against Arena or an Arena Related Party that is related to the Debtor. For the avoidance of doubt, a D&O’s assertion, in the context of any action by Arena or an Arena Related Party that is related to the Debtor, of any counterclaim, defense, or argument based on statements made in connection with such action by Arena or an Arena Related Party shall not cause the release of Arena D&O Claims against said D&O to be voidable by Arena.

 

(f)    Limitation of Liability for Arena D&O Claims

 

Subject to the provisions of Section 5.1(e), (i) any recovery on account of any Arena D&O Claim, including in each case by way of settlement or judgment, shall be satisfied solely by and to the extent of the proceeds of any applicable D&O Liability Insurance Policy after payment from such D&O Liability Insurance Policy of any and all covered costs and expenses incurred in connection with the defense of the Arena D&O Claims; (ii) Arena, in seeking to execute, garnish, or otherwise attempt to collect on any settlement or judgment in connection with the Arena D&O Claims, shall do so solely upon (a) the Insurers, (b) the proceeds of any available insurance coverage from the D&O Liability Insurance Policies; and (iii) Arena shall not (a) record any judgment against the Ds & Os or (b) otherwise attempt to collect, directly or indirectly, from the personal assets (including personal insurance) of the Ds & Os with respect to the Arena D&O Claims.

 

At least 30 days prior to commencing an action against a D&O with respect to any Arena D&O Claims, Arena shall send the D&O a letter setting forth in reasonable detail (i) the factual and legal basis for the Arena D&O Claims to be pursued in such action and (ii) each Potentially Applicable Insurance Policy under which Arena has determined there may be coverage for such Arena D&O Claim, and the basis for such determination (the “Arena D&O Demand Letter”), which shall be tendered by the D&O to the applicable Insurer(s) for a coverage determination with respect to such Arena D&O Claims. If coverage for the Arena D&O Claims against a D&O that are set forth in the Arena D&O Demand Letter is denied on an initial basis by the Insurer under a Potentially Applicable D&O Liability Insurance Policy and there is a good-faith basis to contest such denial, the D&O shall use reasonable efforts to seek a Final Coverage Determination with respect to such Arena D&O Claims, provided that such reasonable efforts may not be construed to require a D&O to commence or prosecute an Insurance Coverage Action unless (i) there is, and at all times continues to be, a good-faith basis for such Insurance Coverage Action and (ii) Arena shall have agreed, in a writing acceptable to the D&O, to pay and fully indemnify and hold harmless the D&O from all costs and expenses in connection with the prosecution of such Insurance Coverage Action.

 

Upon the earlier to occur of (i) a Final Coverage Determination denying coverage under any potentially applicable D&O Liability Insurance Policy identified in the Arena D&O Demand Letter of any coverage claims asserted against, and properly noticed to, the Insurer under such policy, or (ii) exhaustion of the available insurance coverage under all applicable D&O Liability Insurance Policies, the Arena D&O Claims shall be released and discharged without the need for further action or Bankruptcy Court order, provided that the foregoing clause (i) shall only apply to coverage claims asserted against available D&O Liability Insurance Policies on account of the Arena D&O Claims for which coverage is denied by a Final Coverage Determination, and shall not apply to coverage claims asserted against available D&O Liability Insurance Policies for which coverage is not denied by a Final Coverage Determination. For the avoidance of doubt, the Arena D&O Claims shall not be so released until the occurrence of one of the two conditions stated in the preceding sentence, as may be applicable.

 

For the avoidance of doubt, any assignee or successor of interest of Arena with respect to the Arena D&O Claims shall be bound by the provisions of Sections 5.1(e) and (f), including, but not limited to, the restrictions in clause (iii) of the first sentence of this Section 5.1(f).

 

 

(g)    D&O Releases of Arena and Arena Related Parties

 

To the maximum extent permitted by law, on the Effective Date, the Ds & Os shall be deemed to release all Causes of Action against Arena and the Arena Related Parties that are related to the Debtor and arose prior to February 26, 2024, provided that such releases shall not preclude a D&O in the context of any action by Arena or an Arena Related Party that is related to the Debtor, from asserting any counterclaim, defense, or argument based on statements made in connection with such action by Arena or an Arena Related Party.

 

(h)    Releases by Subsidiaries

 

To the maximum extent permitted by law, on the Effective Date, the Subsidiaries, for themselves and anyone claiming by or through them, shall be deemed to have released (i) all Company D&O Claims, provided that such release shall not release any Company D&O Claims that are or may be covered by any Subsidiary’s D&O Liability Insurance Policies (as determined in good faith by such Subsidiary), except to the extent set forth in Section 5.1(i), and (ii) all Causes of Action against Arena and the Arena Related Parties.

 

(i)    Limitation of Liability for Company D&O Claims

 

With respect to the Company D&O Claims, (i) any recovery on account of any Company D&O Claim, including in each case by way of settlement or judgment, shall be satisfied solely by and to the extent of the proceeds of any applicable D&O Liability Insurance Policy after payment from such D&O Liability Insurance Policy of any and all covered costs and expenses incurred in connection with the defense of the Company D&O Claims; (ii) the Reorganized Debtor and the Subsidiaries, in seeking to execute, garnish, or otherwise attempt to collect any settlement or judgment in connection with the Company D&O Claims shall do so solely upon (a) the Insurers, and (b) the proceeds of any available insurance coverage from the D&O Liability Insurance Policies; and (iii) the Reorganized Debtor and the Subsidiaries shall not (a) record any judgment against the Ds & Os or (b) otherwise attempt to collect, directly or indirectly, from the personal assets (including any personal insurance) of the Ds & Os with respect to the Company D&O Claims.

 

At least 30 days prior to commencing an action against a D&O respect to any Company D&O Claims, the Reorganized Debtor or Subsidiary, as applicable, shall send the D&O a letter setting forth in reasonable detail (i) the factual and legal basis for the Company D&O Claims to be pursued in such action and (ii) each Potentially Applicable D&O Liability Insurance Policy under which the Reorganized Debtor or Subsidiary, as applicable, has determined there would be coverage for such Company D&O Claims, and the basis for such determination (the “Company D&O Demand Letter”), which shall be tendered by the D&O to the applicable Insurer(s) for a coverage determination with respect to such Company D&O Claims. If coverage for the Company D&O Claims against a D&O that are set forth in the Company D&O Demand Letter is denied on an initial basis by the Insurer under a Potentially Applicable D&O Liability Insurance Policy and there is a good-faith basis to contest such denial, the D&O shall use reasonable efforts to seek a Final Coverage Determination with respect to such Company D&O Claims, provided that such reasonable efforts may not be construed to require a D&O to commence or prosecute an Insurance Coverage Action unless (i) there is, and at all times continues to be, a good-faith basis for such Insurance Coverage Action and (ii) Arena shall have agreed, in a writing acceptable to the D&O, to pay and fully indemnify and hold harmless the D&O from all costs and expenses in connection with the prosecution of such Insurance Coverage Action.

 

Upon the earlier to occur of (i) a Final Coverage Determination denying coverage under any potentially applicable D&O Liability Insurance Policy identified in the Company D&O Demand Letter of any coverage claims asserted against, and properly noticed to, the Insurer under such policy, or (ii) exhaustion of the available insurance coverage under all applicable D&O Liability Insurance Policies, the Company D&O Claims shall be released and discharged without the need for further action or Bankruptcy Court order, provided that the foregoing clause (i) shall only apply to coverage claims asserted against available D&O Liability Insurance Policies on account of the Company D&O Claims for which coverage is denied by a Final Coverage Determination, and shall not apply to coverage claims asserted against available D&O Liability Insurance Policies for which coverage is not denied by a Final Coverage Determination. For the avoidance of doubt, the Company D&O Claims shall not be so released until the occurrence of one of the two conditions stated in the preceding sentence, as may be applicable.

 

For the avoidance of doubt, any assignee or successor of interest of the Reorganized Debtor or a Subsidiary with respect to the Company D&O Claims shall be bound by the provisions of Sections 5.1(g)-(i) and 9.4, including, but not limited to, the restrictions in clause (iii) of the first sentence of this Section 5.1(i).

 

 

(j)    D&O Indemnity Escrow

 

On the Effective Date, in lieu of purchasing a coverage “tail” for the Debtor’s current D&O Liability Insurance Policies, the Reorganized Debtor shall establish an escrow for the benefit of the Ds & Os with a reputable institutional escrow agent Reasonably Acceptable to the Debtor and Arena and an initial funding amount of $2,000,000. The D&O Indemnity Escrow will be available for indemnification and advancement of expenses of the Ds & Os in connection with any Indemnifiable Action where (i) coverage for indemnification and advancement of expenses in connection with such Indemnifiable Action would otherwise be within the scope of coverage provided by (and not subject to any coverage exclusion set forth in) one or more of the Debtor’s current D&O Liability Insurance Policies, but (ii) actual coverage under such policy or policies is not available because, through no fault of the individual seeking indemnification or advancement, the Indemnifiable Action or the circumstances giving rise to it were not reported during the policy’s reporting period.

 

On the one-year anniversary of the Effective Date, any amounts in excess of $1,000,000 remaining in the D&O Indemnity Escrow (after taking into account any necessary reserves in connection with any unresolved Indemnifiable Action) shall be released to the Reorganized Debtor. On the two-year anniversary of the Effective Date, any amounts in excess of $750,000 remaining in the D&O Indemnity Escrow (after taking into account any necessary reserves in connection with any unresolved Indemnifiable Action) shall be released to the Reorganized Debtor. On the three-year anniversary of the Effective Date, any amounts remaining in the D&O Indemnity Escrow (after taking into account any necessary reserves in connection with any unresolved Indemnifiable Action) shall be released to the Reorganized Debtor.

 

The D&O Indemnity Escrow agreement shall be in a form Reasonably Acceptable to the Debtor and Arena, but in any event shall provide that determinations regarding (i) Ds & Os’ entitlement to indemnification and advancement from the D&O Indemnity Escrow and (ii) the amount of funding that should be reserved on account of any unresolved Indemnifiable Action shall be made by a neutral third party with substantial experience in Delaware corporate law and directors-and-officers liability insurance matters. The selection, retention, billing rates, and compensation structure of the neutral third party shall be chargeable to and recoverable only from the funds then present in the D&O Indemnity Escrow.

 

5.2    Plan Transactions

 

Before, on, and after the Effective Date, the Debtor or Reorganized Debtor, as applicable, shall take all actions as may be necessary or appropriate to effectuate the terms of this Plan, including: (a) the execution and delivery of any appropriate agreements or other documents of merger, consolidation, restructuring, conversion, disposition, transfer, dissolution, or liquidation containing terms that are consistent with the terms of the Plan, and that satisfy the requirements of applicable law and any other terms to which the applicable Entities may agree; (b) the execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any asset, property, right, liability, debt, or obligation on terms consistent with the terms of the Plan and having other terms for which the applicable parties agree; (c) the filing of appropriate certificates or articles of incorporation, reincorporation, merger, consolidation, conversion, or dissolution pursuant to applicable state law; (d) such other transactions that are required to effectuate the Plan; and (e) all other actions that the applicable Entities determine to be necessary or appropriate, including making filings or recordings that may be required by applicable law.

 

5.3    Sources of Consideration for Plan Distributions

 

The Reorganized Debtor shall fund distribution under the Plan as follows:

 

(a)    Cash on Hand.

 

The Reorganized Debtor shall use Cash on hand to fund distributions to certain holders of Allowed Claims against the Debtor in accordance with Articles III and IV hereof.

 

 

(b)    Issuance and Distribution of New Common Stock.

 

The issuance of the New Common Stock shall be authorized without the need for any further corporate action and without any further action by the holders of Claims or Interests.

 

All of the shares of New Common Stock issued pursuant to the Plan shall be duly authorized, validly issued, fully paid, and non-assessable. Each distribution and issuance of the New Common Stock under the Plan shall be governed by the terms and conditions set forth in the Plan applicable to such distribution or issuance and by the terms and conditions of the instruments evidencing or relating to such distribution or issuance, which terms and conditions shall bind each Entity receiving such distribution or issuance.

 

On the Effective Date, none of the New Common Stock will be registered under the Securities Act or listed on a national securities exchange, the Reorganized Debtor will not be a reporting company under the Securities Exchange Act, the Reorganized Debtor shall not be required to and will not file reports with the Securities and Exchange Commission or any other Entity or party (other than quarterly post-confirmation reports required to be filed in connection with the Chapter 11 Case). In connection with the Island Gift Distribution (if it occurs), in order to prevent the Reorganized Debtor from becoming subject to the reporting requirements of the Securities Exchange Act, except in connection with a public offering, the Stockholders Agreement may impose certain transfer and other restrictions designed to maintain the Reorganized Debtor as a private, non-reporting company.

 

5.4    Securities Registration Exemption

 

Pursuant to section 1145 of the Bankruptcy Code, the issuances of the New Common Stock as contemplated by the Plan are exempt from, among other things, the registration requirements of Section 5 of the Securities Act and any other applicable U.S. state or local law requiring registration prior to the offering, issuance, distribution, or sale of Securities. The New Common Stock (a) are not “restricted securities” as defined in Rule 144(a)(3) under the Securities Act, and (b) are freely tradable and transferable by any initial recipient thereof that (i) is not an “affiliate” of the Reorganized Debtor as defined in Rule 144(a)(1) under the Securities Act, (ii) has not been such an “affiliate” within 90 days of such transfer, and (iii) is not an entity that is an “underwriter” as defined in subsection (b) of Section 1145 of Title 11 of the United States Code.

 

Should the Reorganized Debtor elect on or after the Effective Date to reflect any ownership of the New Common Stock through the facilities of the DTC, the Reorganized Debtor need not provide any further evidence other than the Plan or the Confirmation Order with respect to the treatment of the New Common Stock or under applicable securities laws. The DTC may accept and conclusively rely upon the Plan and Confirmation Order in lieu of a legal opinion regarding whether the New Common Stock are exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services.

 

5.5    Corporate Existence

 

Each of the Debtor and the Subsidiaries shall continue to exist after the Effective Date as a separate corporation, limited liability company, partnership, or other form of entity, as the case may be, with all the powers of a corporation, limited liability company, partnership, or other form of entity, as the case may be, pursuant to the applicable law in the jurisdiction in which each of them was is incorporated or formed and pursuant to the respective certificate of incorporation and by-laws (or other analogous formation documents) in effect before the Effective Date, except to the extent such certificate of incorporation and bylaws (or other analogous formation documents) are amended by the Plan (in the case of the Debtor) or otherwise (in the case of the Subsidiaries). On the Effective Date, the amendment of the Debtor’s formation documents by the New Organizational Documents shall be deemed to have occurred pursuant to the Plan and shall require no further action (other than any requisite filings required under applicable state, provincial, or federal law) or approval by any Entity.

 

 

5.6    Vesting of Assets in the Reorganized Debtor

 

On the Effective Date, all property of the Debtor or its Estate, including all Causes of Action (including, without limitation, the Company D&O Claims), all Executory Contracts and Unexpired Leases assumed by the Debtor, and any property acquired by the Debtor or the Estate after the Petition Date, and all interests held by the Debtor in any Subsidiary, shall vest in the Reorganized Debtor free and clear of all Liens, Claims, charges, or other encumbrances pursuant to section 1141(b) and (c) of the Bankruptcy Code. On and after the Effective Date, except as otherwise provided in the Plan, the Reorganized Debtor may operate its business and may use, acquire, or dispose of property, and compromise or settle any Claims or Causes of Action without supervision or approval by the Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules.

 

5.7    Cancellation of Notes, Instruments, Certificates, and Other Documents

 

On the Effective Date, except to the extent otherwise provided herein, all notes, instruments, certificates, and other documents evidencing Claims or Interests shall be cancelled, and the obligations of the Debtor or Reorganized Debtor thereunder or in any way related thereto shall be supplanted for all purposes by the obligations set forth in this Plan.

 

5.8    Corporate Action

 

Upon the Effective Date, or as soon thereafter as is reasonably practicable, all actions contemplated by the Plan shall be deemed authorized and approved by the Bankruptcy Court in all respects, including, as applicable: (1) the issuance of the New Common Stock; (2) the selection of the directors of the Reorganized Debtor; (3) implementation of the Restructuring Transactions; and (4) all other actions contemplated by the Plan (whether to occur before, on, or after the Effective Date). Upon the Effective Date, all matters provided for in the Plan involving the corporate structure of the Reorganized Debtor, and any corporate action required by the Debtor or the Reorganized Debtor in connection with the Plan shall be deemed to have occurred and shall be in effect, without any requirement of further action by the security holders, directors, or officers of the Debtor or the Reorganized Debtor. The authorizations and approvals contemplated by this Section 5.7 shall be effective notwithstanding any requirements under applicable nonbankruptcy law.

 

5.9    New Organizational Documents

 

To the extent required under the Plan or applicable nonbankruptcy law, on the Effective Date the Reorganized Debtor will file the New Organizational Documents with the applicable Secretary of State and/or other applicable authorities in the state, province, or country of incorporation in accordance with the corporate laws of the respective state, province, or country of incorporation. Pursuant to section 1123(a)(6) of the Bankruptcy Code, the New Organizational Documents of the Reorganized Debtor will prohibit the issuance of non-voting equity securities. After the Effective Date, the Reorganized Debtor may further amend and restate the New Organizational Documents, and the Reorganized Debtor may file its certificate or articles of incorporation, bylaws, or such other applicable formation documents, and other constituent documents as permitted by the laws of the applicable states, provinces, or countries of incorporation and the New Organizational Documents.

 

5.10    Directors and Officers of the Reorganized Debtor

 

On the Effective Date, the term of the current members of the board of directors of the Debtor shall be deemed to have expired and the initial board of directors of the Reorganized Debtor shall be deemed appointed in accordance with the New Organizational Documents. The initial board of directors of the Reorganized Debtor shall consist of those individuals disclosed prior to the Confirmation Hearing as part of the Plan Supplement. Successors will be elected in accordance with the New Organizational Documents and applicable nonbankruptcy law.

 

Pursuant to section 1129(a)(5) of the Bankruptcy Code, the Debtor will, to the extent practicable, disclose in advance of the Confirmation Hearing the identity and affiliations of any individual that is anticipated to serve as a director or officer of the Reorganized Debtor. To the extent any such director or officer is an “insider” of the Debtor under the Bankruptcy Code, the nature of any compensation to be paid to such director or officer will also be disclosed.

 

 

5.11    Effectuating Documents; Further Transactions

 

On and after the Effective Date, the Reorganized Debtor, and the officers and members of the board of directors thereof, are authorized to and may issue, execute, deliver, file, or record such contracts, Securities, instruments, releases, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement, and further evidence the terms and conditions of the Plan and the New Common Stock issued pursuant to the Plan, in the name of and on behalf of Reorganized Debtor, without the need for any approvals, authorization, or consents except those expressly required pursuant to the Plan.

 

5.12    Exemption from Certain Taxes and Fees

 

Pursuant to section 1146(a) of the Bankruptcy Code, any transfers of property under this Plan, including any issuance, transfer or exchange of any Security, shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, sale or use tax, mortgage recording tax, or other similar tax or governmental assessment, and upon entry of the Confirmation Order, the appropriate state or local governmental officials or agents shall forgo the collection of any such tax or governmental assessment and accept for filing and recordation any of the foregoing instruments or other documents pursuant to such transfers of property without the payment of any such tax, recordation fee, or governmental assessment.

 

5.13    Preservation of Causes of Action

 

In accordance with section 1123(b) of the Bankruptcy Code, but subject in all respects to Sections 5.1, 9.4, and 9.5 hereof, and as otherwise set forth in any other order of the Court, the Reorganized Debtor shall retain and may enforce all rights to commence and pursue, as appropriate, any and all Causes of Action, whether arising before or after the Petition Date, and such rights to commence, prosecute, or settle such Causes of Action shall be preserved notwithstanding the occurrence of the Effective Date. The Reorganized Debtor may pursue such Causes of Action, as appropriate, in accordance with the best interests of the Reorganized Debtor. No Entity may rely on the absence of a specific reference in the Plan or the Plan Supplement to any Causes of Action against it as any indication that the Debtor or the Reorganized Debtor will not pursue any and all available Causes of Action against it. The Debtor or the Reorganized Debtor, as applicable, expressly reserves all rights to prosecute any and all Causes of Action against any Entity, except as otherwise expressly provided in the Plan. Unless any Causes of Action against an Entity are expressly waived, relinquished, exculpated, released, compromised, or settled in the Plan, Confirmation Order, or other Bankruptcy Court order, the Debtor or Reorganized Debtor, as applicable, expressly reserves all Causes of Action, for later adjudication, and, therefore, no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, estoppel (judicial, equitable, or otherwise), or laches, shall apply to such Causes of Action upon, after, or as a consequence of the Confirmation or Consummation.

 

In accordance with section 1123(b)(3) of the Bankruptcy Code, except as otherwise provided herein, any Causes of Action that a Debtor may hold against any Entity shall vest in the Reorganized Debtor. The Reorganized Debtor, through its authorized agents or representatives, shall retain and may exclusively enforce any and all such Causes of Action. The Reorganized Debtor shall have the exclusive right, authority, and discretion to determine and to initiate, file, prosecute, enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment any such Causes of Action, and to decline to do any of the foregoing without the consent or approval of any third party or further notice to or action, order, or approval of the Bankruptcy Court.

 

 

ARTICLE VI

    TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES

 

6.1    Assumption of Executory Contracts and Unexpired Leases

 

On the Effective Date, except as otherwise provided herein, all Executory Contracts or Unexpired Leases not otherwise assumed or rejected will be deemed assumed by the Reorganized Debtor in accordance with the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code, other than: (1) those that are identified on the Rejection Schedule; (2) those that have been previously rejected by a Final Order; (3) those that are the subject of a motion to reject Executory Contracts or Unexpired Leases that is pending on the Confirmation Date; or (4) those that are subject to a motion to reject an Executory Contract or Unexpired Lease pursuant to which the requested effective date of such rejection is after the Effective Date.

 

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the assumptions or rejections of such Executory Contracts or Unexpired Leases as set forth herein pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Unless otherwise indicated, assumptions or rejections of Executory Contracts and Unexpired Leases pursuant to the Plan are effective as of the Effective Date. Each Executory Contract or Unexpired Lease assumed pursuant to the Plan shall re-vest in and be fully enforceable by the Reorganized Debtor on and after the Effective Date in accordance with its terms, except as such terms may have been modified by the provisions of the Plan, any order of the Bankruptcy Court, or any agreement between Reorganized Debtor and the counterparty to such Executory Contract or Unexpired Lease.

 

6.2    Cure of Defaults and Objections to Cure and Assumption

 

The Reorganized Debtor shall pay Cure Claims on the Effective Date or as soon as practicable thereafter. Unless otherwise agreed upon in writing by the parties to the applicable Executory Contract or Unexpired Lease, all requests for payment of Cure Claims that differ from the amounts proposed in the Cure Notice must be filed with the Bankruptcy Court on or before 30 days after the Effective Date. Any such request that is not timely filed shall be disallowed and forever barred, estopped, and enjoined from assertion, and shall not be enforceable against the Reorganized Debtor, without the need for any objection by the Reorganized Debtor or any further notice to or action, order, or approval of the Bankruptcy Court. Any Cure Claim shall be deemed fully satisfied, released, and discharged upon payment by the Reorganized Debtor of the Cure Claim; provided, however, that nothing herein shall prevent the Reorganized Debtor from paying any Cure Claim despite the failure of the relevant counterparty to file such request for payment of such Cure Claim. The Reorganized Debtor also may settle any Cure Claim without any further notice to or action, order, or approval of the Bankruptcy Court. In addition, any objection to the assumption of an Executory Contract or Unexpired Lease pursuant to the Plan must be filed with the Bankruptcy Court on or before 30 days after the Effective Date. Any such objection will be scheduled to be heard by the Bankruptcy Court at the Debtor’s or Reorganized Debtor’s, as applicable, first scheduled omnibus hearing for which such objection is timely filed. Any counterparty to an Executory Contract or Unexpired Lease that fails to timely object to the proposed assumption of any Executory Contract or Unexpired Lease will be deemed to have consented to such assumption.

 

If there is a dispute regarding a Cure Claim, the ability of the Reorganized Debtor to provide “adequate assurance of future performance” within the meaning of section 365 of the Bankruptcy Code, or any other matter pertaining to assumption, then payment of the applicable Cure Claim shall occur as soon as practicable after entry of a Final Order resolving such dispute and approving such assumption, or as may be agreed upon by the Debtor or Reorganized Debtor, as applicable, and the counterparty to the Executory Contract or Unexpired Lease. The Debtor or Reorganized Debtor, as applicable, reserve the right either to reject or nullify the assumption of any Executory Contract or Unexpired Lease within 45 days after a Final Order resolving an objection to assumption or determining the Cure Claim or any request for adequate assurance of future performance required to assume such Executory Contract or Unexpired Lease, is entered.

 

Assumption of any Executory Contract or Unexpired Lease pursuant to the Plan or otherwise shall result in the full release and satisfaction of any Cure Claims or defaults, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, arising under any assumed Executory Contract or Unexpired Lease at any time prior to the effective date of assumption. Any and all Proofs of Claim based upon Executory Contracts or Unexpired Leases that have been assumed in the Chapter 11 Case, including pursuant to the Confirmation Order, shall be deemed satisfied as of the Effective Date without the need for any objection thereto or any further notice to or action, order, or approval of the Bankruptcy Court.

 

 

6.3    Rejection Damages Claims and Objections to Rejections

 

Pursuant to section 502(g) of the Bankruptcy Code, counterparties to Executory Contracts or Unexpired Leases that are rejected shall have the right to assert Claims, if any, on account of the rejection of such contracts and leases. Unless otherwise provided by a Bankruptcy Court order, any Proofs of Claim asserting Claims arising from the rejection of Executory Contracts and Unexpired Leases pursuant to the Plan must be filed with the Claims Agent no later than the Claims Bar Date. Any such Proofs of Claim that are not timely filed shall be disallowed without the need for any further notice to or action, order, or approval of the Bankruptcy Court. Such Proofs of Claim shall be forever barred, estopped, and enjoined from assertion. Moreover, such Proofs of Claim shall not be enforceable against the Reorganized Debtor, without the need for any objection by the Reorganized Debtor or any further notice to or action, order, or approval of the Bankruptcy Court, and any Claim arising out of the rejection of the Executory Contract or Unexpired Lease shall be deemed fully satisfied, released, and discharged notwithstanding anything in a Proof of Claim to the contrary. All Allowed Claims arising from the rejection of Executory Contracts and Unexpired Leases shall be classified as Class 4 General Unsecured Claims against the Debtor.

 

6.4    Director and Officer Liability Insurance

 

To the extent that the Debtor’s D&O Liability Insurance Policies are considered to be Executory Contracts, then notwithstanding anything in the Plan to the contrary, effective as of the Effective Date, the Reorganized Debtor shall be deemed to have assumed all such D&O Liability Insurance Policies pursuant to section 365(a) and 1123 of the Bankruptcy Code, and coverage from the Insurer for defense and indemnity under any of the Debtor’s D&O Liability Insurance Policies shall remain available to all individuals within the definition of “Insured” in all such D&O Liability Insurance Policies. Entry of the Confirmation Order will constitute the Bankruptcy Court’s approval of the Reorganized Debtor’s assumption of each of the Debtor’s D&O Liability Insurance Policies pursuant to 365(a) and 1123 of the Bankruptcy Code.

 

6.5    Modifications, Amendments, Supplements, Restatements, or Other Agreements

 

Unless otherwise provided in the Plan, each Executory Contract or Unexpired Lease that is assumed shall include all modifications, amendments, supplements, restatements, or other agreements that in any manner affect such Executory Contract or Unexpired Lease, and Executory Contracts and Unexpired Leases related thereto, if any, including easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, and any other interests, unless any of the foregoing agreements has been previously rejected or repudiated or is rejected or repudiated under the Plan.

 

Modifications, amendments, supplements, and restatements to prepetition Executory Contracts and Unexpired Leases that have been executed by the Debtor during the Chapter 11 Case shall not be deemed to alter the prepetition nature of the Executory Contract or Unexpired Lease, or the validity, priority, or amount of any Claims that may arise in connection therewith.

 

6.6    Reservation of Rights

 

Neither the exclusion nor inclusion of any contract or lease in the Plan Supplement, nor anything contained in the Plan, shall constitute an admission by the Debtor that any such contract or lease is in fact an Executory Contract or Unexpired Lease or that the Reorganized Debtor has any liability thereunder.

 

 

ARTICLE VII

    PROVISIONS GOVERNING DISTRIBUTIONS

 

7.1    Timing and Calculation of Amounts to be Distributed

 

Unless otherwise provided in the Plan, on the Effective Date or as soon as reasonably practicable thereafter (or, if a Claim is not an Allowed Claim on the Effective Date, on the date that such Claim becomes Allowed or as soon as reasonably practicable thereafter), each holder of an Allowed Claim shall receive the full amount of the distributions that the Plan provides for Allowed Claims in each applicable Class. In the event that any payment or act under the Plan is required to be made or performed on a date that is not a Business Day, then the making of such payment or the performance of such act may be completed on the next succeeding Business Day, but shall be deemed to have been completed as of the required date. If and to the extent that there are Disputed Claims, distributions on account of any such Disputed Claims shall be made pursuant to the provisions set forth in Article VII of the Plan. Except as otherwise provided in the Plan, holders of Claims shall not be entitled to interest, dividends, or accruals on the distributions provided for in the Plan, regardless of whether such distributions are delivered on or at any time after the Effective Date.

 

On the Effective Date, or as soon as reasonably practicable thereafter, the Reorganized Debtors shall distribute the New Common Stock pursuant to the terms set forth in the Plan.

 

7.2    Delivery of Distributions

 

Except as otherwise provided in the Plan, distributions to holders of Allowed Claims shall be made to holders of record as of the Distribution Record Date by the Reorganized Debtor: (1) to the signatory set forth on any of the Proofs of Claim filed by such holder or other representative identified therein (or at the last known addresses of such holder if no Proof of Claim is filed or if the Debtor has been notified in writing of a change of address on or before the date that is 10 days before the Effective Date); (2) at the addresses set forth in any written notices of address changes delivered to the Reorganized Debtor after the date of any related Proof of Claim; (3) at the addresses reflected in the Schedules if no Proof of Claim has been filed and the Debtor has not received a written notice of a change of address on or before the date that is 10 days before the Effective Date; or (4) on any counsel that has appeared in the Chapter 11 Case on the holder’s behalf. Subject to this Article VII, distributions under the Plan on account of Allowed Claims shall not be subject to levy, garnishment, attachment, or like legal process, so that each holder of an Allowed Claim shall have and receive the benefit of the distributions in the manner set forth in the Plan. The Debtor and the Reorganized Debtor shall not incur any liability whatsoever on account of any distributions under the Plan except for gross negligence or willful misconduct.

 

7.3    Undeliverable Distributions and Unclaimed Property

 

In the event that any distribution to any holder of an Allowed Claim is returned as undeliverable, no distribution to such holder shall be made unless and until the Reorganized Debtor has determined the then-current address of such holder, at which time such distribution shall be made to such holder without interest; provided that such distributions shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code at the expiration of one year from the Effective Date. After such date, all unclaimed property or interests in property shall revert to the Reorganized Debtor without need for a further order by the Bankruptcy Court (notwithstanding any applicable federal, provincial, or state escheat, abandoned, or unclaimed property laws to the contrary), and any claim of such holder of an Allowed Claim to such property or interest in property shall be discharged and forever barred.

 

7.4    Compliance with Tax Requirements

 

In connection with the Plan, to the extent applicable, Reorganized Debtor shall comply with all tax withholding and reporting requirements imposed on them by any Governmental Unit, and all distributions pursuant to the Plan shall be subject to such withholding and reporting requirements. Notwithstanding any provision in the Plan to the contrary, the Reorganized Debtor shall be authorized to take all actions necessary or appropriate to comply with such withholding and reporting requirements, including liquidating a portion of the distribution to be made under the Plan to generate sufficient funds to pay applicable withholding taxes, withholding distributions pending receipt of information necessary to facilitate such distributions or establishing any other mechanisms they believe are reasonable and appropriate. The Reorganized Debtor reserves the right to allocate all distributions made under the Plan in compliance with applicable wage garnishments, alimony, child support, and other spousal awards, liens, and encumbrances.

 

 

7.5    Allocations

 

Distributions in respect of Allowed Claims shall be allocated first to the principal amount of such Claims (as determined for federal income tax purposes) and then, to the extent the consideration exceeds the principal amount of the Claims, to any portion of such Claims for accrued but unpaid interest as Allowed herein.

 

7.6    No Postpetition Interest on Claims

 

Except Unless otherwise specifically provided for in an order of the Court, the Plan, or the Confirmation Order, or required by applicable bankruptcy law, postpetition interest shall not accrue or be paid on any Claims or Interests and no holder of an Allowed Claim shall be entitled to interest accruing on or after the Petition Date on any such Claim.

 

7.7    Claims Paid or Payable by Third Parties

 

(a)    Claims Paid by Third Parties

 

The Debtor or the Reorganized Debtor, as applicable, shall reduce in full a Claim, and such Claim shall be disallowed without a Claim objection having to be filed and without any further notice to or action, order, or approval of the Bankruptcy Court, to the extent that the holder of such Claim receives payment in full on account of such Claim from a party that is not a Debtor or a Reorganized Debtor; provided that the Debtor or the Reorganized Debtor, as applicable, shall provide 21 days’ notice to the holder prior to any disallowance of such Claim during which period the holder may object to such disallowance, and if the parties cannot reach an agreed resolution, the matter shall be decided by the Bankruptcy Court. Subject to the last sentence of this paragraph, to the extent a holder of a Claim receives a distribution on account of such Claim under the Plan and receives payment from a party that is not a Debtor or a Reorganized Debtor on account of such Claim, such holder shall, within 14 days of receipt thereof, repay or return the distribution to the Reorganized Debtor to the extent the holder’s total recovery on account of such Claim from the third party and under the Plan exceeds the amount of such Claim as of the date of any such distribution under the Plan.

 

(b)    Claims Payable by Third Parties

 

No distributions under the Plan shall be made on account of an Allowed Claim that is payable pursuant to one of the Debtor’s insurance policies until the holder of such Allowed Claim has exhausted all remedies with respect to such insurance policy. To the extent that one or more of the Debtor’s insurers agrees to satisfy in full or in part a Claim (if and to the extent adjudicated by a court of competent jurisdiction), then immediately upon such insurer’s agreement, the applicable portion of such Claim may be expunged without a Claim objection having to be filed and without any further notice to or action, order, or approval of the Bankruptcy Court; provided that the Reorganized Debtor shall provide 21 days’ notice to the Holder of such Claim prior to any disallowance of such Claim during which period the holder may object to such disallowance, and if the parties cannot reach an agreed resolution, the matter shall be decided by the Bankruptcy Court.

 

(c)    Applicability of Insurance Policies

 

Except as otherwise provided herein, distributions to holders of Allowed Claims shall be in accordance with the provisions of an applicable insurance policy. Nothing contained in the Plan shall constitute or be deemed a waiver of any Cause of Action that the Debtor or any Entity may hold against any other Entity, including insurers under any policies of insurance, nor shall anything contained herein constitute or be deemed a waiver by such insurers of any defenses, including coverage defenses, held by such insurers.

 

 

7.8    Setoffs and Recoupment

 

Except as otherwise expressly provided herein, the Debtors or the Reorganized Debtors, as applicable, may, but shall not be required to, setoff against or recoup from any Claims of any nature whatsoever that the Debtors or the Reorganized Debtors may have against the claimant, but neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by the Debtors or the Reorganized Debtors of any such Claim it may have against the Holder of such Claim.

 

ARTICLE VIII

    PROCEDURES FOR RESOLVING CONTINGENT, UNLIQUIDATED, AND DISPUTED CLAIMS

 

8.1    Allowance of Claims

 

On and after the Effective Date, the Reorganized Debtor shall have and retain any and all rights and defenses the Debtor had with respect to any Claim immediately before the Effective Date. Except as expressly provided in the Plan or in any order entered in the Chapter 11 Case before the Effective Date (including the Confirmation Order), no Claim shall become an Allowed Claim unless and until such Claim is deemed Allowed pursuant to the Plan or a Final Order Allowing such Claim.

 

8.2    Claims Administration Responsibilities

 

Except as otherwise specifically provided in the Plan and notwithstanding any requirements that may be imposed pursuant to Bankruptcy Rule 9019, after the Effective Date, the Reorganized Debtor shall have the sole authority: (1) to file, withdraw, or litigate to judgment objections to Claims; (2) to settle or compromise any Disputed Claim without any further notice to or action, order, or approval by the Bankruptcy Court; and (3) to administer and adjust the Claims Register to reflect any such settlements or compromises without any further notice to or action, order, or approval by the Bankruptcy Court.

 

8.3    Estimation of Claims

 

After the Effective Date, the Reorganized Debtor may at any time request pursuant to section 502(c) of the Bankruptcy Code that the Bankruptcy Court estimate any Disputed Claim that is contingent or unliquidated for any reason, regardless of whether any party previously has objected to such Claim or whether the Court has ruled on any such objection, and the Bankruptcy Court shall retain jurisdiction to estimate any such Claim, including during the litigation of any objection to any Claim or during the appeal relating to such objection. Notwithstanding any provision otherwise in the Plan, a Claim that has been expunged from the Claims Register, but that has not been the subject of a Final Order, shall be deemed to be estimated at zero dollars, unless otherwise ordered by the Bankruptcy Court. In the event that the Bankruptcy Court estimates any Disputed Claim that is contingent or unliquidated, that estimated amount shall constitute a maximum limitation on such Claim for all purposes under the Plan (including for purposes of distributions), and the Reorganized Debtor may elect to pursue any supplemental proceedings to object to any ultimate distribution on such Claim. If the estimated amount constitutes a maximum limitation on such Claim, the Reorganized Debtor may elect to pursue any supplemental proceedings to object to any ultimate distribution on account of such Claim. All of the aforementioned Claims and objection, estimation, and resolution procedures are cumulative and not exclusive of one another. Claims may be estimated and subsequently compromised, settled, withdrawn, or resolved by any mechanism approved by the Bankruptcy Court.

 

8.4    Time to File Objections to Claims

 

Any objections to Claims shall be filed on or before the Claims Objection Deadline.

 

8.5    Disallowance of Claims

 

Any Claims held by any Entity from which property is recoverable under section 542, 543, 550, or 553 of the Bankruptcy Code or that is a transferee of a transfer avoidable under section 522(f), 522(h), 544, 545, 547, 548, 549, or 724(a) of the Bankruptcy Code, shall be deemed Disallowed pursuant to section 502(d) of the Bankruptcy Code, and holders of such Claims may not receive any distributions on account of such Claims until such time as such Causes of Action against that Entity have been settled or a Bankruptcy Court order with respect thereto has been entered and all sums due, if any, to the Debtor by that Entity have been turned over or paid to the Debtor or the Reorganized Debtor, as applicable.

 

 

Except as provided herein or otherwise agreed by the Reorganized Debtor, any and all Proofs of Claim filed after the Claims Bar Date shall be deemed Disallowed and expunged without any further notice to or action, order, or approval of the Bankruptcy Court, and holders of such Claims may not receive any distributions on account of such Claims, unless such late-filed Proof of Claim has been deemed timely filed by a Final Order of the Bankruptcy Court.

 

8.6    Amendments to Claims

 

On or after the Claims Bar Date, except as provided in the Plan or Confirmation Order, a Proof of Claim may not be amended without the prior authorization of the Bankruptcy Court or the Reorganized Debtor, and any amended Proof of Claim filed without such prior authorization shall be deemed Disallowed in full and expunged without any further action, order, or approval of the Bankruptcy Court.

 

8.7    No Distributions Pending Allowance

 

If an objection to a Claim or portion thereof is fled as set forth in this Article VIII, no payment or distribution provided under the Plan shall be made on account of such Claim or portion thereof unless and until such Disputed Claim becomes an Allowed Claim.

 

8.8    Distributions After Allowance

 

To the extent that a Disputed Claim ultimately becomes an Allowed Claim, distributions (if any) shall be made to the holder of such Allowed Claim in accordance with the provisions of the Plan. As soon as reasonably practicable after the date that the order or judgment of a court of competent jurisdiction allowing any Disputed Claim becomes a Final Order, the Reorganized Debtor shall provide to the holder of such Claim the distribution (if any) to which such holder is entitled under the Plan as of the Effective Date, less any previous distribution (if any) that was made on account of the undisputed portion of such Claim, without any interest, dividends, or accruals to be paid on account of such Claim unless required under applicable bankruptcy law or as otherwise provided in Articles III and IV hereof.

 

ARTICLE IX

    EFFECT OF CONFIRMATION OF THE PLAN

 

9.1    Discharge of Claims and Termination of Interests

 

Pursuant to section 1141(d) of the Bankruptcy Code, and except as otherwise specifically provided in the Plan or in any contract, instrument, or other agreement or document created pursuant to the Plan, the distributions, rights, and treatment that are provided in the Plan shall be in complete satisfaction, discharge, and release, effective as of the Effective Date, of Claims, Interests, and Causes of Action of any nature whatsoever, including any interest accrued on Claims from and after the Petition Date, whether known or unknown, against, liabilities of, Liens on, obligations of, rights against, and Interests in, the Debtor or any of its assets or properties, regardless of whether any property shall have been distributed or retained pursuant to the Plan on account of such Claims and Interests, including demands, liabilities, and Causes of Action that arose before the Effective Date, any liability to the extent such Claims or Causes of Action accrued before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, in each case whether or not: (1) a Proof of Claim based upon such debt or right is filed or deemed filed pursuant to section 501 of the Bankruptcy Code; (2) a Claim based upon such debt or right is Allowed pursuant to section 502 of the Bankruptcy Code; or (3) the holder of such a Claim or Interest has accepted the Plan. Unless expressly provided in the Plan, the Confirmation Order shall be a judicial determination of the discharge of all Claims and Interests subject to the Effective Date occurring.

 

For the avoidance of doubt, pursuant to section 1124(e) of the Bankruptcy Code, the discharge any Debt of the Debtor under this Section 9.1 does not affect the liability of any other Entity on, or the property of any other Entity for, such Debt.

 

 

9.2    Term of Injunctions or Stays

 

Unless otherwise provided in the Plan or the Confirmation Order, all injunctions or stays in effect in the Chapter 11 Case pursuant to sections 105 or 362 of the Bankruptcy Code or any order of the Bankruptcy Court, and extant on the Confirmation Date (excluding any injunctions or stays contained in the Plan or the Confirmation Order), shall remain in full force and effect until the Effective Date. All injunctions or stays contained in the Plan or the Confirmation Order shall remain in full force and effect in accordance with their terms.

 

9.3    Release of Liens

 

Except as otherwise provided herein or in any contract, instrument, release, or other agreement or document created pursuant to the Plan, on the Effective Date, all mortgages, deeds of trust, Liens, pledges, or other security interests against any property of the Estate shall be fully released and discharged, and all of the right, title, and interest of any holder of such mortgages, deeds of trust, Liens, pledges, or other security interests shall revert to the Reorganized Debtor and its successors and assigns.

 

9.4    Releases by the Debtor

 

Pursuant to section 1123(b) of the Bankruptcy Code, for good and valuable consideration, on and after the Effective Date, each Released Party is deemed released and discharged by the Debtor and its Estate from any and all Causes of Action, including any derivative claims asserted on behalf of the Debtor or its Subsidiaries, that the Debtor or its Estate would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest, or that any holder of any Claim or Interest could have asserted on behalf of the Debtor or its Subsidiaries, including, without limitation, any Causes of Action based on or relating to, or in any manner arising from, in whole or in part:

 

(a)

the Debtor, the Debtor’ in- or out-of-court restructuring efforts, intercompany transactions, the formulation, preparation, dissemination, negotiation, or filing of the Plan Documents;

 

(b)

any Plan Document, contract, instrument, release, or other agreement or document (including providing any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by the Plan or the reliance by any Released Party on the Plan or the Confirmation Order in lieu of such legal opinion) created or entered into in connection with the Plan;

 

(c)

the Chapter 11 Case, the Plan, the RSA, the DIP Term Sheet, the filing of the Chapter 11 Case, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the distribution of property under the Plan or any other related agreement; or

 

(d)

the business or contractual arrangements between any Debtor and any Released Party, and any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date relating to any of the foregoing.

 

Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (i) any Company D&O Claims that are or may be covered by the Debtor’s D&O Liability Insurance Policies (as determined in good faith by the Reorganized Debtor), except to the extent set forth in Section 5.1(i), or (ii) any post-Effective Date obligations of any party or Entity under the Plan, any Plan Document, or any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan.

 

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the release set forth in this Section 9.4, which includes by reference each of the related provisions and definitions contained herein, and further, shall constitute the Bankruptcy Court’s finding that such release is: (a) in exchange for the good and valuable consideration provided by the Released Parties; (b)  in the best interests of the Debtor and all Holders of Claims; (c) fair, equitable, and reasonable; (d) given and made after due notice and opportunity for hearing; and (e) a bar to the Debtor, or anyone claiming by or through the Debtor, asserting any Claim or Cause of Action released by this Section 9.4.

 

 

9.5    Exculpation

 

Except as otherwise specifically provided in the Plan, no Exculpated Party shall have or incur, and each Exculpated Party is hereby released and exculpated from any Cause of Action related to any act or omission in connection with, relating to, or arising out of, the RSA, the Chapter 11 Case, the Plan, or any Plan Document, contract, instrument, release or other agreement or document (including providing any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by the Plan or the reliance by any Exculpated Party on the Plan or the Confirmation Order in lieu of such legal opinion) created or entered into in connection with the Plan, the filing of the Chapter 11 Case, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the distribution of property under the Plan or any other related agreement (“Exculpated Acts or Omissions”), provided that any act or omission that is determined in a Final Order to have constituted actual fraud, willful misconduct, or gross negligence shall not be considered an Exculpated Act or Omission, provided further that in all respects the Exculpated Parties shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the Plan.

 

For the avoidance of doubt, the exculpation set forth above does not provided for exculpation or release of any Cause of Action of the Debtor (i) against any advisor that arose prior to the Petition Date for any act or omission that was not an Exculpated Act or Omission, or (ii) against any former director or officer of the Debtor.

 

9.6    Injunction

 

Except as otherwise expressly provided in the Plan or for obligations issued or required to be paid pursuant to the Plan or Confirmation Order, all Entities who have held, hold, or may hold Causes of Action that have been released or exculpated pursuant to Sections 5.1, 9.4, or 9.5 hereof, or Claims or Interests that have been discharged pursuant to Section 9.1 hereof, are permanently enjoined, from and after the Effective Date, from taking any of the following actions against, as applicable, the Debtor, the Subsidiaries, the Reorganized Debtor, the Released Parties, or the Exculpated Parties: (a) commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests, as applicable; (b) enforcing, attaching, collecting, or recovering by any manner or means any judgment, award, decree, or order against such Entities on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests, as applicable; (c) creating, perfecting, or enforcing any Lien or encumbrance of any kind against such Entities or the property or the estates of such Entities on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests, as applicable; (d) asserting any right of setoff, subrogation, or recoupment of any kind against any obligation due from such Entities or against the property of such Entities on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests, as applicable; and (e) commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such Causes of Action, Claims, or Interests released or settled pursuant to the Plan. Notwithstanding anything to the contrary in the foregoing, the injunction does not enjoin any party under the Plan or under any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan from bringing an action to enforce the terms of the Plan or such document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan.

 

 

9.7    Protection Against Discriminatory Treatment

 

In accordance with section 525 of the Bankruptcy Code, and consistent with paragraph 2 of Article VI of the United States Constitution, no Governmental Unit shall discriminate against the Reorganized Debtor, or any Entity with which the Reorganized Debtor has been or is associated, solely because the Reorganized Debtor was a Debtor under chapter 11, may have been insolvent before the commencement of the Chapter 11 Case (or during the Chapter 11 Case but before the Debtor was granted or denied a discharge), or has not paid a debt that is dischargeable in the Chapter 11 Case.

 

ARTICLE X

    CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN

 

10.1    Conditions Precedent to the Effective Date

 

It shall be a condition to the Consummation of the Plan that the following conditions shall have been satisfied (or waived pursuant to Section 10.2):

 

(a)    the Plan Documents shall be in form and substance Reasonably Acceptable to the Debtor and Arena;

 

(b)    the Confirmation Order shall have been entered, shall be in form and substance Reasonably Acceptable to the Debtor and Arena, and shall not have been stayed, modified, or vacated on appeal;

 

(c)    the Debtor shall have obtained all authorizations, consents, regulatory approvals, rulings, or documents that are necessary to implement and effectuate the Plan and each of the other transactions contemplated by the Plan Documents;

 

(d)    the Debtor shall have paid or reserved for all fees due and payable pursuant to section 1930 of Title 28 of the United States Code;

 

(e)    the Debtor shall have paid or reserved for all expenses and payments due to be made on the Effective Date of the Plan;

 

(f)    Management shall have consented to the treatment of their Management Employment Agreements and rejection damages Claims under the Plan;

 

(g)    The Ds & Os shall have provided notice to the Insurers under the D&O Liability Insurance Policies, in a form and manner Reasonably Acceptable to Arena, of potential claims arising during the policy periods of such policies;

 

(h)    The RSA shall not have terminated;

 

(i)    The D&O Indemnity Escrow shall have been established and fully funded; and

 

(j)    Arena shall have executed the Director Side Letter Agreement and the Officer Side Letter Agreement.

 

10.2    Waiver of Conditions

 

The Debtor may waive any of the conditions to the Effective Date set forth in Section 10.1 any time without any notice to any other parties in interest and without any further notice to or action, order, or approval of the Bankruptcy Court, and without any formal action other than proceeding to consummate the Plan, provided that the Debtor’s waiver of any condition other than the conditions set forth in Sections 10.1(i) and (j) shall require the prior written consent of Arena in its sole discretion.

 

 

10.3    Substantial Consummation

 

“Substantial Consummation” of the Plan, as defined in section 1101(2) of the Bankruptcy Code, shall be deemed to occur on the Effective Date.

 

10.4    Effect of Non-Occurrence of Conditions to Consummation

 

If prior to Consummation, the Confirmation Order is vacated pursuant to a Final Order, then except as provided in any order of the Bankruptcy Court vacating the Confirmation Order, the Plan will be null and void in all respects, and nothing contained in the Plan shall: (a) constitute a waiver or release of any Claims, Interests, or Causes of Action; (b) prejudice in any manner the rights of the Debtor or any other Entity; or (c) constitute an admission, acknowledgment, offer, or undertaking of any sort by the Debtor or any other Entity.

 

ARTICLE XI

    MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN

 

11.1    Modification and Amendments

 

Effective as of the date hereof: (a) the Debtor reserves the right, with the reasonable consent of Arena, in accordance with the Bankruptcy Code and the Bankruptcy Rules, to amend or modify the Plan before the entry of the Confirmation Order, subject to the limitations set forth herein; and (b) after the entry of the Confirmation Order (and before the Effective Date, with the reasonable consent of Arena), the Debtor or the Reorganized Debtor, as applicable, may, upon order of the Bankruptcy Court, amend or modify the Plan, in accordance with section 1127(b) of the Bankruptcy Code, remedy any defect or omission, or reconcile any inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan, subject to the limitations set forth herein. Without limiting the generality of the foregoing, if requested by Arena, the Plan and Plan Supplement may be modified as necessary or appropriate to provide for the registration of the New Common Stock under the Securities Act or listed on a national securities exchange.

 

11.2    Effect of Confirmation on Modifications

 

Entry of the Confirmation Order shall mean that all modifications or amendments to the Plan occurring after the solicitation thereof are approved pursuant to section 1127(a) of the Bankruptcy Code and do not require additional disclosure or resolicitation under Bankruptcy Rule 3019.

 

11.3    Revocation or Withdrawal of Plan

 

The Debtor reserves the right to revoke or withdraw the Plan before the Confirmation Date and to file subsequent chapter 11 plans. If the Debtor revokes or withdraws the Plan, or if Confirmation or the Effective Date does not occur, then: (a) the Plan will be null and void in all respects; (b) any settlement or compromise embodied in the Plan, assumption or rejection of Executory Contracts or Unexpired Leases effected by the Plan, and any document or agreement executed pursuant hereto will be null and void in all respects; and (c) nothing contained in the Plan shall (1) constitute a waiver or release of any Claims, Interests, or Causes of Action, (2) prejudice in any manner the rights of the Debtor or any other Entity, or (3) constitute an admission, acknowledgement, offer, or undertaking of any sort by the Debtor or any other Entity.

 

 

ARTICLE XII

    RETENTION OF JURISDICTION

 

Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, the Bankruptcy Court shall retain jurisdiction, to the maximum extent permitted by applicable law, over all matters arising out of, or related to, the Chapter 11 Case and the Plan pursuant to sections 105(a) and 1142 of the Bankruptcy Code, including specifically jurisdiction to:

 

(a)    allow, disallow, determine, liquidate, classify, estimate, or establish the priority, secured or unsecured status, or amount of any Claim or Interest, including the resolution of any request for payment of any Claim or Interest and the resolution of any and all objections to the secured or unsecured status, priority, amount, or allowance of Claims or Interests;

 

(b)    decide and resolve all matters related to the granting and denying, in whole or in part, any applications for allowance of compensation or reimbursement of expenses to Professionals authorized pursuant to the Bankruptcy Code or the Plan;

 

(c)    resolve any matters related to Executory Contracts or Unexpired Leases, including: (a) the assumption, assumption and assignment, or rejection of any Executory Contract or Unexpired Lease to which the Debtor is party or with respect to which the Debtor may be liable and to hear, determine, and, if necessary, liquidate, any Cure or Claims arising therefrom, including pursuant to section 365 of the Bankruptcy Code; (b) any potential contractual obligation under any Executory Contract or Unexpired Lease that is assumed; and (c) any dispute regarding whether a contract or lease is or was executory or expired;

 

(d)    ensure that distributions to holders of Allowed Claims are accomplished pursuant to the provisions of the Plan and adjudicate any and all disputes arising from or relating to distributions under the Plan;

 

(e)    adjudicate, decide, or resolve any motions, adversary proceedings, contested or litigated matters, and any other matters, and grant or deny any applications involving the Debtor that may be pending on the Effective Date;

 

(f)    enter and implement such orders as may be necessary or appropriate to execute, implement, or consummate the provisions of (a) contracts, instruments, releases, indentures, and other agreements or documents approved by Final Order in the Chapter 11 Case and (b) the Plan or the Confirmation Order, including contracts, instruments, releases, indentures, and other agreements or documents created in connection with the Plan;

 

(g)    enforce any order for the sale of property pursuant to sections 363, 1123, or 1146(a) of the Bankruptcy Code;

 

(h)    issue injunctions, enter and implement other orders, or take such other actions as may be necessary or appropriate to restrain interference by any Entity with Consummation or enforcement of the Plan;

 

(i)    hear, determine, and resolve any cases, matters, controversies, suits, disputes, or Causes of Action in connection with or in any way related to the Chapter 11 Case, including those: (a) with respect to the releases, injunctions, and other provisions contained in Article IX including entry of such orders as may be necessary or appropriate to implement such releases, injunctions, and other provisions; (b) that may arise in connection with the Consummation, interpretation, implementation, or enforcement of the Plan or the Confirmation Order, or any Entity’s obligations incurred in connection with the Plan or the Confirmation Order, including those arising under agreements, documents, or instruments executed in connection with the Plan; or (c) related to section 1141 of the Bankruptcy Code;

 

(j)    enter and implement such orders as are necessary or appropriate if the Confirmation Order is for any reason modified, stayed, reversed, revoked, or vacated;

 

 

(k)    consider any modifications of the Plan, to cure any defect or omission, or to reconcile any inconsistency in any Bankruptcy Court order, including the Confirmation Order;

 

(l)    hear and determine matters concerning state, local, and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;

 

(m)    enter an order or Final Decree concluding or closing the Chapter 11 Case;

 

(n)    enforce all orders previously entered by the Bankruptcy Court; and

 

(o)    hear any other matter not inconsistent with the Bankruptcy Code.

 

 

ARTICLE XIII

    MISCELLANEOUS PROVISIONS

 

13.1    Additional Documents

 

On or before the Effective Date, the Debtor may file with the Bankruptcy Court such agreements and other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. The Debtor or the Reorganized Debtor, as applicable, and all holders of Claims receiving distributions pursuant to the Plan and all other parties in interest shall, from time to time, prepare, execute, and deliver any agreements or documents and take any other actions as may be necessary or advisable to effectuate the provisions and intent of the Plan.

 

13.2    Payment of Statutory Fees

 

All fees payable pursuant to 28 U.S.C. § 1930(a) shall be paid for each quarter (including any fraction thereof) until the Chapter 11 Case is converted, dismissed, or a Final Decree is issued, whichever occurs first.

 

13.3    Reservation of Rights

 

Except as expressly set forth herein, the Plan shall have no force or effect unless the Bankruptcy Court shall enter the Confirmation Order. None of the filing of the Plan, any statement or provision contained in the Plan, or the taking of any action by the Debtor with respect to the P Plan, or the Plan Supplement shall be or shall be deemed to be an admission or waiver of any rights of the Debtor with respect to the holders of Claims or Interests prior to the Effective Date.

 

13.4    Successors and Assigns

 

The rights, benefits, and obligations of any Entity named or referred to in the Plan shall be binding on, and shall inure to the benefit of any heir, executor, administrator, successor or assign, affiliate, officer, director, trustee, agent, representative, attorney, beneficiary, or guardian, if any, of each Entity.

 

13.5    Entire Agreement

 

The Plan supersedes all previous and contemporaneous negotiations, promises, covenants, agreements, understandings, and representations on the subject matter hereof, all of which have become merged with and integrated into the Plan.

 

13.6    Non-Severability

 

If, prior to Confirmation, any term or provision of the Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void, or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration, or interpretation, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired, or invalidated by such holding, alteration, or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is: (a) valid and enforceable pursuant to its terms; (b) integral to the Plan and may not be deleted or modified without the Debtor’s and Arena’s consent; and (c) nonseverable and mutually dependent.

 

 

13.7    Insurance Neutrality

 

Unless otherwise expressly agreed to by an Insurer in writing, nothing in the Plan or in the Confirmation Order, including any provision that purports to be preemptory or supervening, shall (a) impose, or be deemed or construed to impose, any obligation on any Insurer to provide a defense for, pay defense costs, settle, or pay any settlement or judgment with respect to, any claim or cause of action against any insured, or (b) have the effect of impairing the Insurers’ legal, equitable, or contractual rights in any respect; rather, an Insurer’s obligations, if any, with respect to any claim or cause of action against an insured shall be determined solely by and in accordance with the allegedly applicable D&O Liability Insurance Policies.

 

Without limiting the generality of the foregoing, unless otherwise expressly agreed to by an Insurer in writing, nothing in the Plan or the Confirmation Order, including any provision that purports to be preemptory or supervening, shall diminish or impair, or be deemed to diminish or impair, the rights of any Insurer to assert: any defense, right, or claim, including but not limited to, any claim for deductibles, self-insured retentions, retrospective premiums, or any other premium or similar obligation of any kind; any claim for contribution, indemnification, or subrogation; or any setoff, recoupment, or counterclaim arising out of or relating to any of the D&O Liability Insurance Policies.

 

Again without limiting the generality of the foregoing, unless otherwise expressly agreed to by an Insurer in writing, nothing in the Plan or the Confirmation Order, including any provision that purports to be preemptory or supervening, shall, under any theory:

 

(a)         constitute, or be deemed to constitute, a trial, adjudication, judgment, hearing on the merits, finding, conclusion, other determination, evidence, or suggestion of any determination establishing the liability of any Insurer (in the aggregate or otherwise) or establishing a coverage obligation in subsequent litigation relating to any claim or cause of action, or under any of the D&O Liability Insurance Policies;

 

(b)         establish that any Insurer was invited to participate in, participated in, consulted on, and/or consented to the negotiation, proposal, solicitation, or approval of the Plan;

 

(c)         grant, or be deemed to grant, to any Entity any right to sue any Insurer directly in connection with a claim or cause of action, or in connection with or under any of the D&O Liability Insurance Policies;

 

(d)         constitute, or be deemed to constitute, a finding or determination that any Entity is a named insured, additional insured, or insured in any other way under any of the D&O Liability Insurance Policies; or

 

(e)         constitute, or be deemed to constitute, a determination that any Insurer has any defense or indemnity obligation with respect to any Claim or Insured Claim. The Insurers shall retain, and be permitted to assert, (i) all of their rights and defenses with respect to coverage of any Claim, including any Insured Claim, notwithstanding any provision of the Plan or the Confirmation Order, including any provision that purports to be preemptory or supervening, and (ii) all of the Debtors’ defenses to liability in connection with any Claim, including any Insured Claim, and that the Insurers’ rights to assert all such underlying defenses to liability and all such defenses to coverage of any Claim, including any Insured Claim, will not be impaired in any way by the Plan or the Confirmation Order.

 

The Debtor acknowledges that, in considering whether to confirm the Plan, the Bankruptcy Court need not and will not consider, and need not and will not decide, any matter at issue or which may be raised as an issue in any Insurance Coverage Action.

 

 

13.8    Votes Solicited in Good Faith

 

Upon entry of the Confirmation Order, the Debtors will be deemed to have solicited votes on the Plan in good faith and in compliance with the Bankruptcy Code, and pursuant to section 1125(e) of the Bankruptcy Code, the Debtors and each of their respective Affiliates, agents, representatives, members, principals, shareholders, officers, directors, employees, advisors, and attorneys will be deemed to have participated in good faith and in compliance with the Bankruptcy Code in the offer, issuance, sale, and purchase of Securities offered and sold under the Plan, and, therefore, neither any of such parties or individuals nor the Reorganized Debtor will have any liability for the violation of any applicable law, rule, or regulation governing the solicitation of votes on the Plan or the offer, issuance, sale, or purchase of the Securities offered and sold under the Plan.

 

ARTICLE XIV

    CRAMDOWN REQUEST

 

The Debtor hereby requests Confirmation of the Plan pursuant to section 1129(b) of the Bankruptcy Code with respect to any rejecting Classes of Claims or Interests. The Debtor reserves the right to modify the Plan in accordance with Article XI hereof to the extent, if any, that Confirmation pursuant to section 1129(b) of the Bankruptcy Code requires such modification.

 

Dated: March 6, 2024	CHARGE ENTERPRISES, INC.
	By: /s/ Craig Harper-Denson
	Name:         Craig Harper-Denson Title:         Interim Chief Executive Officer and Chief Operating Officer

 

 

Exhibit A

 

Organizational Chart for the Debtor and its Non-Debtor Subsidiaries

v3.24.0.1

Document And Entity Information	Mar. 06, 2024
Document Information [Line Items]
Entity, Registrant Name	CHARGE ENTERPRISES, INC.
Document, Type	8-K
Document, Period End Date	Mar. 06, 2024
Entity, Incorporation, State or Country Code	DE
Entity, File Number	001-41354
Entity, Tax Identification Number	90-0471969
Entity, Address, Address Line One	125 Park Avenue, 25th Floor
Entity, Address, City or Town	New York
Entity, Address, State or Province	NY
Entity, Address, Postal Zip Code	10017
City Area Code	212
Local Phone Number	921-2100
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock
Trading Symbol	CRGE
Entity, Emerging Growth Company	true
Entity, Ex Transition Period	false
Amendment Flag	false
Entity, Central Index Key	0001277250

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