Contract analysis

1. Meridian Consumer Brands LLC is a Delaware limited liability company headquartered at 575 Lexington Avenue, 22nd Floor, New York, New York 10022. Meridian develops, manufactures, and distributes a diversified portfolio of branded consumer products, including household cleaning products, personal care items, and small kitchen appliances, which are sold through major national retailers across the United States. Meri

2. On October 28, 2025, the Office of the United States Trustee for Region 3 appointed the Official Committee of Unsecured Creditors (the "Committee") in this Chapter 11 case. Meridian was appointed as a member of the Committee, reflecting the significant magnitude of Meridian's unsecured claims against the Debtor's estate. Although Meridian serves on the Committee, this Response is filed solely in Meridian's individ

3. On October 16, 2025, two days after the petition date, the Debtor filed the Critical Vendor Motion, requesting authority under Sections 105(a) and 363(b)(1) of Title 11 of the United States Code (the "Bankruptcy Code") to pay pre-petition claims of certain vendors that the Debtor has identified as "critical" to the continued operation of the Debtor's retail business, in an aggregate amount not to exceed $35,000,00

4. The Debtor has designated Meridian as one of its critical vendors under the Critical Vendor Motion. Pursuant to the Motion, the Debtor proposes to pay Meridian $2,500,000.00 of Meridian's pre-petition claims in exchange for Meridian's commitment to continue to supply goods to the Debtor on what the Debtor characterizes as "customary trade terms." The proposed payment of $2,500,000.00 represents a fraction—approxim

5. Meridian does not oppose the Critical Vendor Motion in its entirety. To the contrary, Meridian supports its designation as a critical vendor and acknowledges the importance of the continued supply relationship between Meridian and the Debtor to the preservation of the Debtor's going-concern value and, ultimately, the value of the estate for the benefit of all creditors. Meridian's branded products are prominently

6. However, while Meridian agrees in principle with the critical vendor framework proposed by the Debtor, Meridian respectfully submits this Response to request that the Court condition the relief granted under the Critical Vendor Motion upon certain additional protections that are necessary to safeguard Meridian's interests and to ensure that the proposed critical vendor arrangement is both fair and equitable. These

7. Meridian emphasizes that acceptance of the proposed $2,500,000.00 critical vendor payment—a partial payment representing only approximately seventeen percent (17%) of Meridian's total pre-petition claim—should not prejudice, waive, release, or diminish any of Meridian's other claims, rights, or remedies against the Debtor, the estate, or any third party. The conditions and modifications requested herein are reason

II. RELEVANT BACKGROUND A. The Chapter 11 Case

8. Cascadia Home & Lifestyle Inc. is a Delaware corporation headquartered in Portland, Oregon. The Debtor operates approximately 347 retail stores across 38 states and maintains an e-commerce platform under the "Cascadia Home" and "Lifestyle by Cascadia" brand names. The Debtor's retail stores offer a broad range of home furnishing, lifestyle, and consumer products, including household goods, home décor, kitchen and

9. The Debtor was founded in 1994 by Roland Trask, who grew the business from a single retail location in Portland, Oregon into a nationally recognized retail brand. The Debtor went public in 2006, listing its common stock on the New York Stock Exchange. In 2019, the Debtor was taken private in a leveraged buyout led by Pinecrest Equity Group, a New York-based private equity firm. The leveraged buyout was valued at a

10. For the fiscal year ending January 31, 2025, the Debtor reported revenue of approximately $1.87 billion, a net loss of approximately $214 million, and negative EBITDA of approximately ($42 million). These financial results reflect the significant challenges facing the Debtor, including declining comparable store sales, margin compression, increased competition from e-commerce retailers, and the burden of servicin

11. As of the petition date, the Debtor's funded indebtedness totaled approximately $1.379 billion, structured as follows: (a) First Lien Revolving Credit Facility: A senior secured revolving credit facility in the aggregate principal amount of $225 million, of which approximately $189 million was drawn as of the petition date. The administrative agent for the First Lien Revolving Credit Facility is Ridgeline Nationa

12. The Debtor filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code on October 14, 2025, in this Court (Case No. 25-12087). The case has been assigned to the Honorable Christine M. Aldridge.

13. The Debtor's senior management includes Margaret "Meg" Fontaine, Chief Executive Officer; Vikram Patel, Chief Financial Officer; and Philip Kellner of Kellner & Associates LLC, who was engaged as the Debtor's Chief Restructuring Officer in connection with the Chapter 11 filing. The Debtor's legal counsel in this case is Brindoval Baines & Lord LLP, with Harrison Caldwell serving as lead partner, and Borwick Sato

14. On October 16, 2025, the Debtor filed a motion seeking approval of a debtor-in-possession financing facility (the "DIP Facility") in the aggregate amount of $275 million, consisting of $150 million in new money term loans and a $125 million roll-up of pre-petition first lien revolving credit facility obligations. Ridgeline National Bank, N.A. serves as the DIP Agent. An interim hearing on the DIP motion was held

15. As noted above, Meridian Consumer Brands LLC develops, manufactures, and distributes a portfolio of branded household cleaning products, personal care items, and small kitchen appliances. Meridian's products are sold through major national retailers across the United States, including mass merchandisers, home improvement retailers, grocery chains, and specialty retail outlets such as the Debtor's stores. Meridian

16. Cascadia has historically been one of Meridian's most significant retail customers. For fiscal year 2024, Cascadia ranked as Meridian's fourth-largest customer by revenue, accounting for approximately $58.3 million in annual purchases. This figure represents a substantial and important portion of Meridian's overall revenue base. Meridian's products—spanning multiple product lines of branded household cleaning pro

17. The commercial relationship between Meridian and Cascadia spans more than a decade and has been conducted on standard trade terms, including Net 60 payment terms with a 2% early payment discount available at Net 15. Throughout the history of the relationship, Meridian has consistently supplied Cascadia with high-quality branded products on a timely basis, and the parties have maintained a constructive and mutuall

18. As of the petition date of October 14, 2025, Meridian holds $14,726,418.37 in outstanding pre-petition trade receivables owed by the Debtor. These receivables are comprised of 83 unpaid invoices dated between July 18, 2025 (Invoice No. MCB-092174, in the amount of $212,600.00) and October 10, 2025 (Invoice No. MCB-095301, in the amount of $187,440.50). The receivables arose in the ordinary course of business and

19. In addition to its general unsecured claim, Meridian has asserted reclamation rights under Section 546(c) of the Bankruptcy Code with respect to approximately $3,218,650.00 in goods delivered to the Debtor within the 45-day period preceding the petition date (i.e., from August 30, 2025 through October 14, 2025). A written reclamation demand letter was delivered to the Debtor on October 16, 2025, in accordance wit

20. Meridian has also filed, or intends to file, a motion seeking allowance of an administrative expense claim in the amount of $1,847,200.00 under Section 503(b)(9) of the Bankruptcy Code. This claim is based on the value of goods received by the Debtor in the ordinary course of business within the 20-day period preceding the petition date (i.e., from September 24, 2025 through October 14, 2025). Section 503(b)(9) p

21. Meridian also maintains trade credit insurance coverage with respect to a portion of its exposure to the Debtor. Specifically, Meridian is the holder of a trade credit insurance policy issued by Clearwater Surety & Insurance Co. (Policy No. TCI-2024-00783), which includes a Cascadia sub-limit of $5,000,000. The policy is subject to a 10% co-insurance retention of $500,000, yielding a net expected insurance recove

22. On October 28, 2025, the Office of the United States Trustee for Region 3, District of Delaware, appointed the Official Committee of Unsecured Creditors in this case. The Committee is composed of six members, each of which holds a significant unsecured claim against the Debtor: (a) Meridian Consumer Brands LLC (claim of approximately $14.7 million); (b) Wavecrest Logistics Corp. (claim of approximately $9.1 milli

23. The Committee has retained Garvey & Holbrook LLP, with Diana Prescott serving as lead partner, as its legal counsel, and Broadleaf Advisory Group LLC, with Robert Tanaka serving as managing director, as its financial advisor. The Committee is in the early stages of its investigation of the Debtor's business, operations, financial condition, and prepetition transactions, and has not yet taken a formal position wit

24. As noted above, Meridian files this Response in its individual capacity as a trade creditor of the Debtor, and not on behalf of or in its capacity as a member of the Committee. Nothing in this Response should be construed as representing the views or positions of the Committee or any other member thereof.

III. THE CRITICAL VENDOR MOTION

25. On October 16, 2025, two days after the petition date, the Debtor filed the Critical Vendor Motion [Dkt. No. 27], seeking entry of an order, pursuant to Sections 105(a) and 363(b)(1) of the Bankruptcy Code, authorizing the Debtor to pay pre-petition claims of certain vendors that the Debtor has identified as "critical" to the continued operation of the Debtor's business. The Critical Vendor Motion seeks authority

26. In support of the Motion, the Debtor asserts that the identified critical vendors supply goods and services that are essential to the Debtor's ongoing retail operations, and that the failure to pay pre-petition claims owed to these vendors could result in the disruption of the Debtor's supply chain, the loss of goods necessary for the continued operation of the Debtor's 347 retail stores and e-commerce platform,

27. The Debtor has designated Meridian as a critical vendor under the Critical Vendor Motion. Pursuant to the Motion, the Debtor proposes to pay $2,500,000.00 of Meridian's pre-petition claims of $14,726,418.37, representing approximately 17% of the total amount owed. In exchange for this partial payment, the Debtor requires that Meridian commit to continue to supply goods to the Debtor on what the Motion characteriz

28. The Critical Vendor Motion provides that the "customary trade terms" applicable to each critical vendor shall be the trade terms in effect between the Debtor and such vendor as of the petition date. For Meridian, the pre-petition trade terms were Net 60, with a 2% early payment discount available at Net 15.

29. Critically, under the terms proposed in the Critical Vendor Motion, vendors accepting critical vendor payments are required to agree that the critical vendor payment constitutes "full and final satisfaction" of the vendor's pre-petition claim, unless the proposed order expressly provides otherwise. This provision, if applied to Meridian without modification, could be interpreted to extinguish Meridian's remaining

IV. MERIDIAN'S POSITION A. Support for Critical Vendor Designation

30. Meridian does not object to its designation as a critical vendor under the Critical Vendor Motion. Meridian acknowledges that its products are integral to the Debtor's retail merchandise mix and that a disruption in the supply of Meridian's branded household cleaning products, personal care items, and small kitchen appliances would materially harm the Debtor's retail operations and going-concern value. Meridian's

31. Meridian further acknowledges that the continued supply of its products to the Debtor is in the interest of the estate and all creditors. A functioning supply chain is essential to the Debtor's ability to generate revenue during the pendency of the Chapter 11 case and to preserve the going-concern value of the Debtor's business, whether the case ultimately proceeds through a plan of reorganization or a sale proce

32. The legal framework governing critical vendor payments is well established. In In re Kmart Corp., 359 F.3d 866 (7th Cir. 2004), the Seventh Circuit Court of Appeals held that critical vendor payments are permissible under the Bankruptcy Code where the debtor can demonstrate that the payment is necessary to preserve the going-concern value of the debtor's business and that all creditors benefit from the payment—no

33. Meridian requests that any order granting the Critical Vendor Motion (the "Critical Vendor Order") be conditioned upon the following protections and modifications as they pertain to Meridian:

1. Administrative Expense Priority for All Post-Petition Shipments.

34. Meridian requests that the Critical Vendor Order expressly provide that all goods shipped by Meridian to the Debtor post-petition shall be accorded administrative expense priority under Section 503(b)(1)(A) of the Bankruptcy Code. While this priority should attach as a matter of law to goods and services provided to the estate in the ordinary course of business, Meridian requests that the Critical Vendor Order ex

35. This protection is of critical importance given the scale of Meridian's post-petition supply obligations. Based on the Debtor's requested ongoing supply levels and the historical purchasing patterns between the parties, Meridian estimates that it will ship approximately $4,800,000 per month in goods to the Debtor post-petition, or approximately $57.6 million on an annualized basis. Without the express assurance t

36. The risk that administrative expense claims may go unpaid in this case is not merely theoretical. The Debtor's capital structure is heavily leveraged, with approximately $1.379 billion in funded debt, and the Debtor reported a net loss of approximately $214 million and negative EBITDA of approximately ($42 million) for its most recent fiscal year. In the event that administrative expenses exceed the estate's abil

2. Enhanced Payment Terms: Net 30 with COD Backstop.

37. Meridian requests that the Critical Vendor Order provide that post-petition trade terms between Meridian and the Debtor shall be Net 30 (i.e., payment due within 30 days of invoice date), rather than the pre-petition trade terms of Net 60. The Debtor's Critical Vendor Motion requires vendors accepting critical vendor payments to continue supply on "customary trade terms," which for Meridian were Net 60 terms. How

38. Net 30 payment terms are commercially reasonable and customary in the post-petition supply context. Numerous bankruptcy courts have approved critical vendor orders that incorporate shortened payment terms to reflect the enhanced credit risk faced by post-petition vendors. Net 30 terms would reduce Meridian's rolling exposure from approximately $9.6 million (representing two months of shipments at Net 60) to appro

39. In addition, Meridian requests that the Critical Vendor Order provide that, in the event of any payment default by the Debtor on post-petition invoices (i.e., failure to pay any invoice within 30 days of the invoice date), Meridian shall have the right to immediately impose cash-on-delivery ("COD") terms for all subsequent shipments. The COD backstop is a standard and reasonable protection for post-petition vendo

3. Right to Cease Shipments Upon Payment Default Without Further Court Order.

40. Meridian requests that the Critical Vendor Order expressly provide Meridian with the right to suspend or terminate all shipments to the Debtor upon any payment default exceeding five (5) business days, without the need for further court order, motion practice, or other judicial intervention. The right to cease shipments should be exercisable upon written notice to the Debtor and its counsel, Brindoval Baines & Lo

41. This self-help remedy is a standard and well-established protection for post-petition vendors in critical vendor orders. Without such a provision, Meridian could find itself involuntarily locked into a supply relationship in which it is compelled to continue shipping goods—at the rate of approximately $4,800,000 per month—while accumulating unpaid administrative claims that may ultimately prove difficult or impos

4. Adequate Assurance Against Disgorgement Upon Conversion.

42. Meridian requests that the Critical Vendor Order provide adequate assurance that critical vendor payments made to Meridian will not be subject to disgorgement, clawback, or recovery in the event the Debtor's Chapter 11 case is converted to a case under Chapter 7 of the Bankruptcy Code.

43. The risk of conversion in this case is real and cannot be dismissed. The Debtor reported negative EBITDA of approximately ($42 million) and a net loss of approximately ($214 million) for the fiscal year ending January 31, 2025. The Debtor's total funded debt of approximately $1.379 billion represents an unsustainable capital structure that may not be capable of reorganization, particularly in the current economic

44. In the event of conversion, a Chapter 7 trustee would be empowered to investigate and potentially seek to recover pre-plan distributions, including critical vendor payments, as impermissible transfers to the extent that such payments were made outside the ordinary priority scheme established by the Bankruptcy Code. Without adequate assurance against disgorgement, Meridian would be exposed to the risk that the $2,

45. Meridian respectfully requests that the Critical Vendor Order include an express provision that critical vendor payments made to Meridian shall not be subject to disgorgement or clawback in the event the case is converted to Chapter 7. To the extent the Court is not willing to provide a blanket anti-disgorgement provision, Meridian requests that the Critical Vendor Order at minimum provide that any disgorgement c

5. Reservation of All Claims and Rights.

46. Meridian requests that the Critical Vendor Order expressly provide that acceptance of the $2,500,000.00 critical vendor payment does not constitute a waiver, release, satisfaction, or compromise of the balance of Meridian's pre-petition claim of $14,726,418.37. Specifically, the Critical Vendor Order should provide that the $2,500,000.00 payment is a partial payment on account of Meridian's pre-petition claim and

47. In addition, acceptance of the critical vendor payment must not prejudice or constitute a waiver of any of the following claims, rights, and remedies: (a) Meridian's administrative expense claim of $1,847,200.00 under Section 503(b)(9) of the Bankruptcy Code for the value of goods received by the Debtor in the ordinary course of business within the 20-day period preceding the petition date (September 24, 2025 thr

48. Meridian further requests that the Critical Vendor Order specify that the $2,500,000.00 critical vendor payment shall be applied first to the oldest outstanding invoices in Meridian's accounts receivable and shall not be applied against invoices supporting Meridian's Section 503(b)(9) administrative expense claim (i.e., invoices for goods received by the Debtor during the period from September 24, 2025 through Oc

V. PROPOSED MODIFICATIONS TO THE CRITICAL VENDOR ORDER

49. Meridian respectfully requests that the following provisions be included in the proposed Critical Vendor Order with respect to Meridian. Meridian has prepared, and will submit under separate cover if requested by the Court, proposed redline language for insertion into the Debtor's proposed form of order: (a) Administrative Expense Priority for Post-Petition Obligations. A paragraph providing that all post-petitio

VI. LEGAL ARGUMENT A. The Court Has Authority to Impose Conditions on Critical Vendor Payments