1011-00002 · Meridian Consumer Brands LLC · Correspondence

letter-to-committee-counsel-plan-positions.docx DOCUMENT Finance & Banking

1 / 12 → ✕

PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP Attorneys at Law

200 Park Avenue, 38th Floor New York, NY 10166 Telephone: (212) 554-8000 Facsimile: (212) 554-8001 www.calderwoodharkness.com

November 20, 2025

Via Email and Hand Delivery

Diana Prescott, Esq. Garvey & Holbrook LLP 750 Third Avenue, 30th Floor New York, NY 10017

Re: *In re Cascadia Home & Lifestyle Inc.*, Case No. 25-12087 (Bankr. D. Del.) — Plan Negotiation Positions of Meridian Consumer Brands LLC

Dear Ms. Prescott:

I. Introduction and Purpose

We write on behalf of our client, Meridian Consumer Brands LLC ("Meridian" or "MCB"), a member of the Official Committee of Unsecured Creditors (the "Committee") appointed by the United States Trustee on October 28, 2025, in the above-captioned Chapter 11 case. The purpose of this letter is to set forth Meridian's priorities and negotiating positions in anticipation of plan negotiations with the debtor, Cascadia Home & Lifestyle Inc. ("Cascadia" or the "Debtor"), and its counsel, Brindoval Baines & Lord LLP (Harrison Caldwell, lead partner).

We respectfully request that Garvey & Holbrook LLP, as counsel to the Committee, incorporate these positions into the Committee's plan term sheet discussions with the Debtor's counsel. We believe that Meridian's perspectives are representative of the interests of trade creditors more broadly and that these positions, if adopted by the Committee, will strengthen the Committee's advocacy on behalf of the unsecured creditor constituency as a whole.

Meridian's positions as articulated herein are informed by its status as one of the largest trade creditors in this case, holding approximately $14,726,418.37 in pre-petition claims across 83 unpaid invoices, its designation as a critical vendor under the Debtor's critical vendor motion filed on October 16, 2025, its pending Section 503(b)(9) administrative expense claim in the amount of $1,847,200.00, and its ongoing post-petition supply relationship with the Debtor involving approximately $4,800,000 per month in goods and products.

We are mindful of Meridian's dual role in this proceeding. Meridian serves both as an individual creditor — represented in that capacity by Calderwood & Harkness LLP — and as a member of the Committee, in which capacity it owes fiduciary duties to all unsecured creditors. The positions articulated in this letter are Meridian's individual creditor positions, submitted for the Committee's consideration in formulating its collective negotiating strategy. To the extent that any of these positions may diverge from the Committee's ultimate collective determination, Meridian reserves the right to advocate for its individual interests through separate filings and court appearances. We trust, however, that many of these positions will align with the interests of the broader unsecured creditor body and will serve as a constructive contribution to the Committee's plan advocacy.

II. Background — Meridian's Claims and Relationship with the Debtor

To provide appropriate context for the positions set forth below, we summarize Meridian's claims profile and its commercial relationship with Cascadia.

Meridian Consumer Brands LLC. Meridian is a Delaware limited liability company with its principal offices located at 575 Lexington Avenue, 22nd Floor, New York, New York 10022. MCB is a portfolio company of Briarstone Capital Partners Fund IV, LP. Meridian is a leading consumer products company engaged in the manufacture and distribution of household cleaning products, personal care items, and small kitchen appliances, with fiscal year 2024 ("FY2024") revenues of approximately $1.24 billion and EBITDA of approximately $167 million. Meridian employs approximately 3,800 individuals and distributes products through a diversified network of retail and e-commerce channels throughout the United States and Canada.

Relationship with Cascadia. Cascadia has historically been one of Meridian's top-five retail customers and was its fourth-largest customer by revenue in FY2024. In that fiscal year, Cascadia purchased approximately $58.3 million in Meridian products, accounting for a meaningful portion of Meridian's domestic retail sales. The commercial relationship between Meridian and Cascadia dates back to 2016 and has encompassed a broad range of Meridian's product lines across Cascadia's 347 retail store locations and its e-commerce platform.

Pre-Petition Trade Receivables. As of the petition date (October 14, 2025), Meridian holds approximately $14,726,418.37 in pre-petition trade receivables, comprised of 83 unpaid invoices. These invoices span the period from July 18, 2025 (Invoice MCB-092174) through October 10, 2025 (Invoice MCB-095301). The invoices reflect ordinary-course shipments of consumer products to Cascadia's distribution centers and retail locations, all made consistent with the parties' longstanding trade terms.

Section 503(b)(9) Administrative Expense Claim. Meridian has timely asserted a Section 503(b)(9) administrative expense claim in the amount of $1,847,200.00. This claim represents the value of goods received by the Debtor in the ordinary course of business within twenty (20) days prior to the petition date — specifically, goods received between September 24, 2025, and October 14, 2025. This administrative expense claim is entitled to priority treatment under Sections 503(b)(9) and 507(a)(2) of the Bankruptcy Code and must be paid in full as a condition to confirmation of any plan under Section 1129(a)(9)(A).

Reclamation Rights. Meridian has also asserted reclamation rights under Section 546(c) of the Bankruptcy Code for approximately $3,218,650.00 in goods shipped to the Debtor within forty-five (45) days prior to the petition date — specifically, goods shipped between August 30, 2025, and October 14, 2025. To the extent these reclamation rights are not fully honored, they give rise to an administrative expense claim or a lien on the subject goods, as applicable under Section 546(c)(2).

Critical Vendor Designation. The Debtor filed a motion for authority to pay critical vendor claims on October 16, 2025 (Dkt. No. 28). Meridian was designated as a critical vendor under that motion, with a proposed payment of $2,500,000 on account of its pre-petition claims. Meridian accepted this partial critical vendor payment subject to a reservation of rights with respect to the remaining balance of its pre-petition claim and all administrative expense claims. The critical vendor payment does not constitute satisfaction, release, or waiver of any portion of Meridian's remaining allowed claim.

Ongoing Post-Petition Supply Relationship. Meridian continues to supply goods to Cascadia on a post-petition basis under agreed trade terms. Current post-petition shipments total approximately $4,800,000 per month, with payment terms of Net 30 and a cash-on-delivery ("COD") backstop provision. This ongoing supply relationship creates significant administrative expense exposure for Meridian and underscores the importance of adequate protections for post-petition trade creditors in any plan of reorganization.

Trade Credit Insurance. Meridian holds trade credit insurance from Clearwater Surety & Insurance Co. under Policy No. TCI-2024-00783. The policy contains a Cascadia-specific sub-limit of $5,000,000. After application of the 10% co-insurance retention ($500,000), Meridian expects a net insurance recovery of approximately $4,500,000. This leaves an uninsured claim balance of approximately $10,226,418.37. We note that the insurance recovery is a private contractual arrangement between Meridian and its insurer and does not reduce the estate's obligation to Meridian as a creditor. The subrogation rights of Clearwater Surety & Insurance Co. must be addressed in any plan, as discussed in further detail in Section V.E below.

III. Overview of Cascadia's Capital Structure and Unsecured Claims Pool

A clear understanding of the Debtor's capital structure and the composition of the unsecured claims pool is essential to any plan negotiation. Based on information available to date — including the Debtor's First Day Declarations, schedules of assets and liabilities, and publicly available information — Meridian's understanding of the relevant capital structure is as follows.

Total Funded Debt. As of the petition date, Cascadia's total funded debt was approximately $1.379 billion, consisting of the following:

• First Lien Revolving Credit Facility: Approximately $189 million drawn (against a $225 million total facility commitment), with Ridgeline National Bank, N.A. serving as administrative agent for the revolving lenders.

• First Lien Term Loan B: $625 million outstanding (original principal amount of $700 million, reflecting scheduled amortization and voluntary prepayments), pari passu with the First Lien Revolving Credit Facility.

• Second Lien Term Loan: $350 million outstanding, with Thornfield Capital Management LP serving as agent for the second lien lenders.

• 8.75% Senior Unsecured Notes due 2027: $215 million in aggregate principal amount outstanding, with Pacific Continental Trust Company serving as indenture trustee.

DIP Facility. The Debtor has obtained debtor-in-possession financing in the aggregate amount of $275 million, consisting of $150 million in new money and a $125 million roll-up of pre-petition first lien revolving loans. Ridgeline National Bank, N.A. serves as DIP Agent. The DIP Facility bears interest at SOFR plus 450 basis points, with a 1.00% SOFR floor. The maturity of the DIP Facility is the earlier of (i) twelve months from the date of the Final DIP Order, (ii) the effective date of a plan of reorganization, or (iii) the consummation of a Section 363 sale.

Estimated Unsecured Claims Pool. Based on the Debtor's schedules and available information, the estimated total unsecured claims pool ranges from approximately $180 million to $220 million. This pool is comprised of the following principal categories of claims:

• 8.75% Senior Unsecured Notes: $215 million in principal amount, plus accrued and unpaid pre-petition interest. These noteholder claims are expected to constitute the single largest component of the unsecured claims pool.

• Trade Creditor Claims: Including, among others, Meridian's claim of approximately $14,726,418.37, Wavecrest Logistics Corp.'s claim of approximately $9.1 million, Summit Packaging Solutions Inc.'s claim of approximately $6.4 million, Northstar Textiles Ltd.'s claim of approximately $11.3 million, Redmond & Park Advertising LLC's claim of approximately $4.8 million, and numerous other vendor claims of varying sizes.

• Landlord Rejection Claims: Including, among others, the aggregate claims of Ironwood Property Holdings LLC of approximately $22 million arising from the anticipated rejection of multiple leases across Cascadia's store portfolio.

• Other Unsecured Claims: Including litigation claims, contract rejection damages, employee-related claims, and other scheduled or filed unsecured obligations.

Debtor's Financial Performance. Cascadia's FY2024 financial performance was poor by any measure. The Debtor reported revenues of approximately $1.87 billion, negative EBITDA of ($42 million), and a net loss of ($214 million). As of the petition date, the Debtor operated 347 stores across 38 states and employed approximately 12,400 individuals. These financial results reflect a sustained period of declining performance and call into serious question the prospects for a reorganization that delivers meaningful value to unsecured creditors, much less to equity holders.

Equity Sponsor. Cascadia's equity is held by Pinecrest Equity Partners III, LP, an affiliate of Pinecrest Equity Group LLC ("Pinecrest"). Pinecrest acquired Cascadia in a leveraged buyout in 2019 at an enterprise value of approximately $2.1 billion, contributing approximately $740 million in equity capital. Theodore "Ted" Langford is the Managing Director at Pinecrest primarily responsible for the Cascadia investment. The magnitude of Pinecrest's equity loss does not entitle it to participate in plan distributions in derogation of the absolute priority rule, and any attempt to negotiate a recovery for equity should be resisted by the Committee.

IV. Meridian's Plan Negotiation Positions

Against this background, Meridian sets forth the following positions for incorporation into the Committee's plan negotiations.

A. Enhanced Recovery for Trade Creditors Relative to Bond Claims

Position. It is Meridian's position that trade creditor claims should receive enhanced or preferential recovery relative to the 8.75% Senior Unsecured Notes ($215 million outstanding) within the unsecured creditor distribution framework of any plan.

Rationale. Trade creditors are essential to the Debtor's going-concern value. Cascadia's ability to reorganize or to consummate a value-maximizing sale depends on the continued willingness of its trade vendors — including Meridian and other consumer products suppliers — to provide goods on credit and to maintain commercial relationships with the Debtor and any successor entity. This ongoing trade support sustains store inventory levels, maintains the Debtor's brand proposition to consumers, and preserves the jobs of thousands of Cascadia employees. Without trade creditor confidence and continued participation, the reorganization prospect collapses and creditor recoveries diminish across the board.

The Debtor itself acknowledged the indispensable nature of trade vendor relationships in its critical vendor motion filed on October 16, 2025. In that motion, the Debtor represented to the Court that the continued supply of goods from critical vendors — including Meridian — was essential to the preservation of the estate and the success of any restructuring transaction. This principle, which the Debtor invoked to obtain court authority to make critical vendor payments, should logically carry through to plan distributions. If trade creditors are sufficiently critical to justify priority payment in the early days of the case, they are sufficiently distinct to warrant enhanced recovery in the plan itself.

By contrast, the holders of the 8.75% Senior Unsecured Notes are passive financial creditors. They purchased debt instruments in a capital markets transaction and have no ongoing operational relationship with the Debtor. While their claims are legitimate and must be addressed in any plan, their claims do not contribute ongoing value to the estate in the same manner as trade creditor claims. The noteholders' relationship with the Debtor is purely financial in nature, and their claims arise from a negotiated indenture rather than from the provision of goods and services that sustain the Debtor's business operations.

Proposal. Meridian proposes that the plan should accomplish enhanced trade creditor recovery through one of the following mechanisms: (a) the creation of a separate classification for trade creditor claims under Section 1122(a), with a higher distribution percentage than the class containing the unsecured note claims; or (b) the establishment of a "convenience class" option or priority tranche within the general unsecured class that effectively provides trade creditors with a higher blended recovery.

Legal Basis. Separate classification of trade claims and bond claims is appropriate under Section 1122(a) of the Bankruptcy Code. That provision requires only that claims classified together be "substantially similar." Trade claims and bond claims possess different legal characteristics, arise from fundamentally different relationships with the debtor, involve different economic incentives and interests, and reflect different degrees of ongoing contribution to the debtor's operations. Courts have recognized that such differences can support separate classification. To be sure, separate classification cannot be employed solely for the purpose of gerrymandering voting results, but where legitimate business justifications exist — as they do here — separate classification is both permissible and appropriate.

Meridian recognizes that this position must be evaluated by the Committee in light of its fiduciary duties to all unsecured creditors, including noteholders. Nevertheless, Meridian believes that enhanced trade creditor recovery is consistent with the Committee's obligation to maximize aggregate recoveries for the unsecured creditor class, as trade creditor cooperation is directly linked to going-concern value and, therefore, to the overall recovery available to all unsecured creditors.

B. Third-Party Release Provisions Must Provide Meaningful Consideration

Position. Meridian's position is that any plan containing third-party release or exculpation provisions must provide meaningful, quantifiable consideration to the releasing parties, including unsecured creditors.

Specific Concern. Meridian anticipates that the Debtor or its equity sponsor, Pinecrest Equity Partners III, LP, Pinecrest Equity Group LLC, and their respective affiliates, officers, and directors, may seek broad third-party releases as a component of a plan of reorganization. Such releases, if granted, would extinguish potentially valuable causes of action that Meridian and other unsecured creditors may hold against Pinecrest, its principals (including Managing Director Ted Langford), and other third parties.

Requirements. Any release of claims against Pinecrest, its officers, its directors, and related parties must be supported by a demonstrable, material contribution to unsecured creditor recoveries. Releases cannot be "free." The consideration for releases must be clearly identified and must take the form of tangible value — whether in the form of cash contributions, increased plan distributions, releases of claims against the estate, or other quantifiable benefits. Nominal or pretextual consideration is insufficient.

Before the Committee agrees to any release provisions, the Committee and its financial advisor, Broadleaf Advisory Group LLC (Robert Tanaka), should conduct a thorough and independent investigation of potential estate causes of action against Pinecrest and other proposed released parties. This investigation should encompass, at a minimum, an analysis of the circumstances surrounding the 2019 leveraged buyout, the adequacy of capitalization at that time, the payment of management fees and dividends to Pinecrest or its affiliates during the period of financial decline, the conduct of Pinecrest-appointed officers and directors, and any potential claims for breach of fiduciary duty, fraudulent transfer, or other causes of action. Only after this investigation has been completed and the value of such claims has been assessed can the Committee make an informed determination as to whether the consideration offered for releases is adequate.

Furthermore, the value of claims being released must be fully quantified and disclosed to all creditors so that they can make an informed decision in voting on the plan. Creditors should not be asked to grant releases in the dark.

Meridian will object to any plan containing non-consensual third-party releases that do not satisfy the standards articulated in applicable Third Circuit and Delaware bankruptcy case law, including the requirements that releases be essential to the reorganization, that the released party make a substantial contribution to the plan, and that affected creditors receive adequate consideration.

C. Recovery Waterfall Must Recognize the Full Unsecured Claims Pool

Position. Meridian's position is that any plan term sheet must accurately and fully account for the estimated total unsecured claims pool, which ranges from approximately $180 million to $220 million based on the Debtor's schedules and available information.

Recovery projections and the distribution waterfall must be based on a thorough, creditor-by-creditor reconciliation of claims. This reconciliation must encompass, at a minimum, the following categories and known claims:

• 8.75% Senior Unsecured Notes: $215 million in principal amount, plus accrued and unpaid pre-petition interest.

• Trade Creditor Claims: Including Meridian Consumer Brands LLC ($14,726,418.37), Wavecrest Logistics Corp. (approximately $9.1 million), Summit Packaging Solutions Inc. (approximately $6.4 million), Northstar Textiles Ltd. (approximately $11.3 million), Redmond & Park Advertising LLC (approximately $4.8 million), and all other filed and scheduled trade claims.

• Landlord Rejection Claims: Including Ironwood Property Holdings LLC (aggregate claims of approximately $22 million) and all other landlord claims arising from lease rejections.

• Other Unsecured Claims: Including litigation claims, executory contract rejection damages, employee-related claims, and all other scheduled or filed unsecured obligations.

Meridian requests that the Committee's financial advisor, Broadleaf Advisory Group LLC, prepare a detailed claims analysis and recovery waterfall for review by all Committee members before any plan term sheet is finalized or presented to the Debtor. This analysis should include a range of recovery estimates based on varying assumptions regarding enterprise value, claim allowance, and distribution mechanics.

Any plan must disclose the projected percentage recovery for unsecured creditors based on realistic enterprise valuations and supportable financial projections. Meridian will scrutinize — and, if necessary, challenge — any plan that relies upon understated claims estimates or inflated enterprise valuations designed to justify inadequate distributions to unsecured creditors.

D. Section 503(b)(9) Administrative Claims Must Be Paid in Full on the Effective Date

Position. Meridian's position is that all allowed Section 503(b)(9) administrative expense claims, including Meridian's pending claim of $1,847,200.00, must be paid in full, in cash, on the effective date of any plan.

Legal Basis. This is a statutory right. Section 503(b)(9) of the Bankruptcy Code grants administrative expense priority to the value of goods received by the debtor in the ordinary course of business within twenty (20) days before the commencement of the case. Such claims are entitled to priority treatment as administrative expenses under Section 507(a)(2). Section 1129(a)(9)(A) provides that, unless the holder of an administrative expense claim agrees to different treatment, the plan must provide for full cash payment of such claims on the effective date. This is a mandatory confirmation requirement, not a negotiable plan term.

Accordingly, no plan should propose to pay Section 503(b)(9) claims on a deferred basis, in installments, or in any form other than cash on the effective date, unless the holder of the specific claim has voluntarily consented to such alternative treatment. Meridian has not consented and does not anticipate consenting to any such alternative.

The Committee should take the position that any plan term sheet must expressly address the mechanism and timing for payment of all Section 503(b)(9) claims, including a clear identification of the funding source for such payments and a confirmation that sufficient liquidity will be available on the effective date to satisfy all such obligations.

E. Assurance of Payment of Post-Petition Administrative Claims

Position. Meridian's position is that vendors that have continued to supply goods to the Debtor on a post-petition basis, thereby incurring administrative expense claims under Section 503(b)(1)(A) of the Bankruptcy Code, must receive firm assurance that all such claims will be paid in full, regardless of the ultimate plan structure or the outcome of this case.

Exposure. Meridian's ongoing post-petition supply relationship with Cascadia creates substantial and growing administrative expense exposure. At approximately $4,800,000 per month in shipments under Net 30 terms with a COD backstop, Meridian's cumulative post-petition administrative exposure could reach tens of millions of dollars over the course of this case. Meridian has continued to supply the Debtor in reliance upon the protections afforded by Section 503(b)(1)(A) and the Debtor's assurances regarding post-petition payment. That reliance must be honored.

Plan Treatment. Any plan of reorganization must provide for the full payment of all allowed administrative expense claims on the effective date, consistent with Section 1129(a)(9)(A). This includes not only Section 503(b)(9) claims (discussed above) but also all Section 503(b)(1)(A) claims arising from post-petition goods and services provided by trade creditors.

Protective Mechanisms. In the event that this case converts to Chapter 7 or the plan is not confirmed, post-petition trade creditors face the risk of non-payment of their administrative claims. Meridian requests that the Committee advocate for adequate assurance mechanisms to protect post-petition trade obligations. Such mechanisms could include, without limitation, the establishment of escrow accounts or reserve funds, the imposition of requirements in the DIP order or cash collateral order to maintain adequate liquidity for payment of post-petition trade claims, and periodic reporting on the Debtor's administrative expense obligations and liquidity position.

The plan should contain specific provisions addressing the treatment of post-petition trade claims, including a clear administrative claims bar date process with adequate notice, and a mechanism for resolving disputes regarding the allowance and payment of such claims.

F. Opposition to Equity Recovery While Unsecured Creditors Receive Less Than Full Payment

Position. Meridian will oppose any plan of reorganization that provides any recovery or distribution — whether in the form of cash, equity in a reorganized entity, options, warrants, management incentive plan allocations, or any other form of value — to equity holders, specifically Pinecrest Equity Partners III, LP, Pinecrest Equity Group LLC, and their respective affiliates, while unsecured creditors receive less than payment in full of their allowed claims.

Legal Basis. This position is grounded in the absolute priority rule codified in Section 1129(b)(2)(B) of the Bankruptcy Code, which provides that, with respect to a class of unsecured claims that has not accepted the plan, the plan may not be confirmed unless no holder of any interest that is junior to the claims of such class will receive or retain any property under the plan on account of such junior interest. This is a fundamental protection for creditors and a cornerstone of Chapter 11 jurisprudence.

Application to This Case. Given Cascadia's capital structure — with $1.379 billion in total funded debt, negative EBITDA of ($42 million), and a net loss of ($214 million) in FY2024 — it is exceedingly difficult to envision any realistic scenario in which the enterprise value of the Debtor would be sufficient to provide full recovery to all creditor classes, let alone a recovery for equity. The 2019 leveraged buyout was consummated at an enterprise value of approximately $2.1 billion; the Debtor's current financial condition strongly suggests that the enterprise value has declined dramatically, likely below the level of the senior secured debt. Under these circumstances, equity is deeply out of the money and should receive nothing.

"Gifting" and "Tips" to Equity. Meridian is aware that in some Chapter 11 cases, plan proponents have negotiated consensual arrangements in which senior classes agree to "gift" or "tip" a portion of their recovery to equity holders in exchange for equity's support of the plan and to avoid the costs and delays of a contested confirmation proceeding. Meridian will scrutinize any such arrangement and will oppose it unless unsecured creditors receive full payment of their allowed claims. Unsecured creditors should not be asked to subsidize or acquiesce in equity recoveries while their own claims remain impaired.

The Committee should take a firm and unequivocal position that the absolute priority rule must be strictly enforced in any cramdown scenario. To the extent that Pinecrest seeks to participate in any new-money investment in a reorganized entity — for example, through a rights offering or a backstop commitment — the terms of such participation must be negotiated at arm's length, must be on market terms, and must not dilute or diminish unsecured creditor recoveries. Any new-money contribution by Pinecrest must be evaluated independently of its existing equity position, and any equity received in exchange for new money must reflect the fair value of the contribution, not a disguised recovery on account of pre-petition equity interests.

V. Additional Considerations for Plan Negotiations

In addition to the core plan negotiation positions set forth in Section IV, Meridian identifies the following supplemental issues that the Committee should address in plan discussions.

A. Valuation and Enterprise Value

Meridian requests that the Committee's financial advisor, Broadleaf Advisory Group LLC, prepare an independent valuation of Cascadia both as a going concern and under a liquidation scenario. This valuation work is essential to the Committee's ability to evaluate any plan proposal and to advocate effectively for unsecured creditor recoveries.

The valuation analysis should account for, among other things, the Debtor's declining revenue trajectory over the past several fiscal years, its negative EBITDA and substantial net losses, the composition and performance of its store portfolio (347 stores across 38 states), the value and growth potential of its e-commerce platform, the Debtor's brand value and customer demographics, and projected post-emergence financial performance under realistic assumptions. The valuation should also consider comparable transactions in the home goods and lifestyle retail sector and should be benchmarked against the enterprise values implied by any plan proposals.

This valuation will be critical to assessing whether unsecured creditors are receiving their fair share of estate value and whether any proposed plan satisfies the "best interests of creditors" test under Section 1129(a)(7), which requires that each creditor receive at least as much under the plan as it would in a Chapter 7 liquidation. Given the Debtor's financial distress, the liquidation analysis may set a meaningful floor for plan distributions.

B. Sale Process Alternative (Section 363 Sale)

Should the Debtor elect to pursue a Section 363 sale process rather than a standalone plan of reorganization, Meridian's core positions as articulated in this letter — including its positions regarding priority of trade claims, full payment of administrative claims, and opposition to equity recovery — remain fully applicable.

Any sale process must be conducted through a fair, open, and competitive auction process that maximizes value for the estate and its creditors. The Committee should have a meaningful role in any sale process, including full access to data room materials and bidder information, active participation in bidder negotiations and the formulation of bid procedures, and substantive input on bid protections (including break-up fees, expense reimbursements, and overbid increments).

Meridian notes that the maturity of the DIP Facility — the earlier of twelve months from the Final DIP Order, the effective date of a plan, or the consummation of a Section 363 sale — may drive the timeline for any restructuring transaction. The Committee should ensure that sufficient time exists to conduct a value-maximizing process and should resist any artificial acceleration of the timeline that would prejudice unsecured creditor interests.

C. Treatment of Critical Vendor Payments

Any plan must expressly clarify the treatment of critical vendor payments previously authorized by the Court. Specifically, the plan must provide that the $2,500,000 critical vendor payment received by Meridian was a partial payment of its pre-petition claim and does not constitute a waiver, release, or satisfaction of the remaining balance of Meridian's pre-petition claim.

The plan should further provide that critical vendor payments are credited against the recipient's pre-petition claim but do not affect the creditor's right to receive the plan distribution applicable to the remaining allowed claim amount. In other words, the critical vendor payment should reduce the amount of the pre-petition claim that is subject to plan distribution on a dollar-for-dollar basis, but the percentage recovery applicable to the reduced claim amount should be no less than the percentage recovery applicable to other allowed unsecured claims in the same class.

D. Preference Claim Settlements

Meridian acknowledges that the Committee and the estate may pursue avoidance actions, including preference actions under Section 547 of the Bankruptcy Code. Meridian received approximately $8,430,000 in payments during the 90-day preference period (July 16, 2025, through October 14, 2025).

Meridian believes it has strong and meritorious defenses to any preference action that might be asserted against it. Specifically:

• Ordinary Course of Business Defense (Section 547(c)(2)): Meridian's historical payment terms with Cascadia averaged Net 53 days, while payments during the preference period averaged Net 58 days. The preference-period payments were made in the ordinary course of business and according to ordinary business terms, consistent with the parties' historical practices.

• New Value Defense (Section 547(c)(4)): Meridian continued to supply substantial quantities of goods to Cascadia throughout the preference period, providing new value that offsets or exceeds the amount of the alleged preferential transfers.

• Contemporaneous Exchange Defense (Section 547(c)(1)): Certain payments during the preference period were made substantially contemporaneously with the provision of goods and were intended by both parties as contemporaneous exchanges for new value.

Meridian intends to vigorously defend any preference action that may be brought against it. However, Meridian recognizes that preference actions are often addressed through global settlement frameworks as part of the plan process. To the extent the Committee or the Debtor proposes a global preference settlement protocol, Meridian insists that any such protocol must not unfairly burden trade creditors who have meritorious defenses. The Committee should advocate for reasonable preference settlement protocols that recognize the strength of available defenses and that do not impose a blanket settlement percentage without regard to the individual circumstances of each preference defendant.

E. Coordination of Insurance Proceeds

Meridian's trade credit insurance policy with Clearwater Surety & Insurance Co. (Policy No. TCI-2024-00783, Cascadia sub-limit of $5,000,000, net expected recovery of $4,500,000 after the 10% co-insurance retention of $500,000) introduces subrogation and coordination issues that any plan must address.

Upon payment of the insurance claim, Clearwater Surety & Insurance Co. will become subrogated to Meridian's rights against the estate to the extent of the insurance payment. The plan must address the treatment of insured creditor claims and the rights of the insurer as subrogee in a manner that is clear, equitable, and consistent with applicable law.

Meridian's position on this issue is as follows: the insurance recovery is a private contractual arrangement between Meridian and its insurer and should not reduce Meridian's allowed claim against the estate or its plan distribution. Meridian's claim against the estate arises from the Debtor's failure to pay for goods received; the insurance recovery arises from an entirely separate contractual relationship to which the Debtor is not a party. The plan should not provide a windfall to the estate or to other creditors at the expense of an insured creditor. To the extent the plan addresses insurance subrogation, it should respect the insurer's subrogation rights and Meridian's contractual entitlements under the insurance policy.

VI. Request for Incorporation of Positions into Committee Advocacy

In light of the foregoing, Meridian respectfully requests that Garvey & Holbrook LLP incorporate the positions set forth in this letter into the Committee's plan term sheet discussions with Brindoval Baines & Lord LLP (Harrison Caldwell) and the Debtor's financial advisor, Ashworth Partners LLC (Sandra Ng). We believe that these positions reflect not only Meridian's individual interests but also the interests of trade creditors as a class and, in many respects, the interests of all unsecured creditors.

Meridian specifically requests that the Committee take a unified and firm position on the following core principles:

1. Strict enforcement of the absolute priority rule and opposition to any equity recovery while unsecured creditors are impaired;

2. Adequate and meaningful consideration for any third-party release provisions;

3. Full cash payment of all administrative expense claims — including Section 503(b)(9) claims and Section 503(b)(1)(A) post-petition trade claims — on the effective date of any plan; and

4. Opposition to any equity recovery absent full payment of unsecured creditor claims.

Meridian is prepared to support the Committee's positions at any hearing before the Honorable Christine M. Aldridge, United States Bankruptcy Judge, and to provide testimony, declarations, or other evidentiary support as needed. Meridian's general counsel, Priya Anand, and its vice president of finance, Douglas Hargrove, are available to provide factual testimony regarding Meridian's claims, its commercial relationship with the Debtor, and its ongoing post-petition supply arrangements.

Meridian reserves the right to take individual positions and to file pleadings through Calderwood & Harkness LLP to the extent that its individual interests diverge from the Committee's collective position. However, Meridian's strong preference is to work collaboratively within the Committee framework and to support a unified Committee negotiating strategy that advances the interests of all unsecured creditors.

VII. Closing and Contact Information

We would welcome the opportunity to discuss the positions set forth in this letter with you and your team in advance of the next plan negotiation session with the Debtor's counsel. Please let us know your availability to schedule a call or in-person meeting at your earliest convenience.

I am available to discuss this matter at any time. My contact information is as follows:

Colette Whitman, Partner Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, NY 10166 Telephone: (212) 554-8142

Email: cwhitman@calderwoodharkness.com

Copies of this letter are being provided to Priya Anand, General Counsel of Meridian Consumer Brands LLC, and Douglas Hargrove, Vice President of Finance of Meridian Consumer Brands LLC, for their records and reference.

Meridian reserves all rights and remedies, whether at law or in equity, in the Chapter 11 case and otherwise, including but not limited to all rights with respect to its pre-petition claims, administrative expense claims, reclamation rights, and any other rights or interests it may hold in this case. Nothing in this letter shall be construed as a waiver, release, or limitation of any such rights or remedies.

We appreciate your attention to these matters and look forward to working with you and the Committee to achieve the best possible outcome for the unsecured creditor constituency.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Colette Whitman Partner, Bankruptcy & Restructuring 200 Park Avenue, 38th Floor New York, NY 10166

cc:

Priya Anand, General Counsel, Meridian Consumer Brands LLC Douglas Hargrove, Vice President of Finance, Meridian Consumer Brands LLC Nathaniel Bower, Calderwood & Harkness LLP Nathan Ikeda, Calderwood & Harkness LLP Gabrielle Moss, Calderwood & Harkness LLP

PRIVILEGED & CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law
200 Park Avenue, 38th Floor New York, NY 10166 Telephone: (212) 554-8000 Facsimile: (212) 554-8001 www.calderwoodharkness.com
November 20, 2025
Via Email and Hand Delivery
Diana Prescott, Esq. Garvey & Holbrook LLP 750 Third Avenue, 30th Floor New York, NY 10017
Re: *In re Cascadia Home & Lifestyle Inc.*, Case No. 25-12087 (Bankr. D. Del.) — Plan Negotiation Positions of Meridian Consumer Brands LLC
Dear Ms. Prescott:
I. Introduction and Purpose
We write on behalf of our client, Meridian Consumer Brands LLC ("Meridian" or "MCB"), a member of the Official Committee of Unsecured Creditors (the "Committee") appointed by the United States Trustee on October 28, 2025, in the above-captioned Chapter 11 case. The purpose of this letter is to set forth Meridian's priorities and negotiating positions in anticipation of plan negotiations with the debtor, Cascadia Home & Lifestyle Inc. ("Cascadia" or the "Debtor"), and its counsel, Brindoval Baines & Lord LLP (Harrison Caldwell, lead partner).
We respectfully request that Garvey & Holbrook LLP, as counsel to the Committee, incorporate these positions into the Committee's plan term sheet discussions with the Debtor's counsel. We believe that Meridian's perspectives are representative of the interests of trade creditors more broadly and that these positions, if adopted by the Committee, will strengthen the Committee's advocacy on behalf of the unsecured creditor constituency as a whole.
Meridian's positions as articulated herein are informed by its status as one of the largest trade creditors in this case, holding approximately $14,726,418.37 in pre-petition claims across 83 unpaid invoices, its designation as a critical vendor under the Debtor's critical vendor motion filed on October 16, 2025, its pending Section 503(b)(9) administrative expense claim in the amount of $1,847,200.00, and its ongoing post-petition supply relationship with the Debtor involving approximately $4,800,000 per month in goods and products.
We are mindful of Meridian's dual role in this proceeding. Meridian serves both as an individual creditor — represented in that capacity by Calderwood & Harkness LLP — and as a member of the Committee, in which capacity it owes fiduciary duties to all unsecured creditors. The positions articulated in this letter are Meridian's individual creditor positions, submitted for the Committee's consideration in formulating its collective negotiating strategy. To the extent that any of these positions may diverge from the Committee's ultimate collective determination, Meridian reserves the right to advocate for its individual interests through separate filings and court appearances. We trust, however, that many of these positions will align with the interests of the broader unsecured creditor body and will serve as a constructive contribution to the Committee's plan advocacy.
II. Background — Meridian's Claims and Relationship with the Debtor
To provide appropriate context for the positions set forth below, we summarize Meridian's claims profile and its commercial relationship with Cascadia.
Meridian Consumer Brands LLC. Meridian is a Delaware limited liability company with its principal offices located at 575 Lexington Avenue, 22nd Floor, New York, New York 10022. MCB is a portfolio company of Briarstone Capital Partners Fund IV, LP. Meridian is a leading consumer products company engaged in the manufacture and distribution of household cleaning products, personal care items, and small kitchen appliances, with fiscal year 2024 ("FY2024") revenues of approximately $1.24 billion and EBITDA of approximately $167 million. Meridian employs approximately 3,800 individuals and distributes products through a diversified network of retail and e-commerce channels throughout the United States and Canada.
Relationship with Cascadia. Cascadia has historically been one of Meridian's top-five retail customers and was its fourth-largest customer by revenue in FY2024. In that fiscal year, Cascadia purchased approximately $58.3 million in Meridian products, accounting for a meaningful portion of Meridian's domestic retail sales. The commercial relationship between Meridian and Cascadia dates back to 2016 and has encompassed a broad range of Meridian's product lines across Cascadia's 347 retail store locations and its e-commerce platform.
Pre-Petition Trade Receivables. As of the petition date (October 14, 2025), Meridian holds approximately $14,726,418.37 in pre-petition trade receivables, comprised of 83 unpaid invoices. These invoices span the period from July 18, 2025 (Invoice MCB-092174) through October 10, 2025 (Invoice MCB-095301). The invoices reflect ordinary-course shipments of consumer products to Cascadia's distribution centers and retail locations, all made consistent with the parties' longstanding trade terms.
Section 503(b)(9) Administrative Expense Claim. Meridian has timely asserted a Section 503(b)(9) administrative expense claim in the amount of $1,847,200.00. This claim represents the value of goods received by the Debtor in the ordinary course of business within twenty (20) days prior to the petition date — specifically, goods received between September 24, 2025, and October 14, 2025. This administrative expense claim is entitled to priority treatment under Sections 503(b)(9) and 507(a)(2) of the Bankruptcy Code and must be paid in full as a condition to confirmation of any plan under Section 1129(a)(9)(A).
Reclamation Rights. Meridian has also asserted reclamation rights under Section 546(c) of the Bankruptcy Code for approximately $3,218,650.00 in goods shipped to the Debtor within forty-five (45) days prior to the petition date — specifically, goods shipped between August 30, 2025, and October 14, 2025. To the extent these reclamation rights are not fully honored, they give rise to an administrative expense claim or a lien on the subject goods, as applicable under Section 546(c)(2).
Critical Vendor Designation. The Debtor filed a motion for authority to pay critical vendor claims on October 16, 2025 (Dkt. No. 28). Meridian was designated as a critical vendor under that motion, with a proposed payment of $2,500,000 on account of its pre-petition claims. Meridian accepted this partial critical vendor payment subject to a reservation of rights with respect to the remaining balance of its pre-petition claim and all administrative expense claims. The critical vendor payment does not constitute satisfaction, release, or waiver of any portion of Meridian's remaining allowed claim.
Ongoing Post-Petition Supply Relationship. Meridian continues to supply goods to Cascadia on a post-petition basis under agreed trade terms. Current post-petition shipments total approximately $4,800,000 per month, with payment terms of Net 30 and a cash-on-delivery ("COD") backstop provision. This ongoing supply relationship creates significant administrative expense exposure for Meridian and underscores the importance of adequate protections for post-petition trade creditors in any plan of reorganization.
Trade Credit Insurance. Meridian holds trade credit insurance from Clearwater Surety & Insurance Co. under Policy No. TCI-2024-00783. The policy contains a Cascadia-specific sub-limit of $5,000,000. After application of the 10% co-insurance retention ($500,000), Meridian expects a net insurance recovery of approximately $4,500,000. This leaves an uninsured claim balance of approximately $10,226,418.37. We note that the insurance recovery is a private contractual arrangement between Meridian and its insurer and does not reduce the estate's obligation to Meridian as a creditor. The subrogation rights of Clearwater Surety & Insurance Co. must be addressed in any plan, as discussed in further detail in Section V.E below.
III. Overview of Cascadia's Capital Structure and Unsecured Claims Pool
A clear understanding of the Debtor's capital structure and the composition of the unsecured claims pool is essential to any plan negotiation. Based on information available to date — including the Debtor's First Day Declarations, schedules of assets and liabilities, and publicly available information — Meridian's understanding of the relevant capital structure is as follows.
Total Funded Debt. As of the petition date, Cascadia's total funded debt was approximately $1.379 billion, consisting of the following:
• First Lien Revolving Credit Facility: Approximately $189 million drawn (against a $225 million total facility commitment), with Ridgeline National Bank, N.A. serving as administrative agent for the revolving lenders.
• First Lien Term Loan B: $625 million outstanding (original principal amount of $700 million, reflecting scheduled amortization and voluntary prepayments), pari passu with the First Lien Revolving Credit Facility.
• Second Lien Term Loan: $350 million outstanding, with Thornfield Capital Management LP serving as agent for the second lien lenders.
• 8.75% Senior Unsecured Notes due 2027: $215 million in aggregate principal amount outstanding, with Pacific Continental Trust Company serving as indenture trustee.
DIP Facility. The Debtor has obtained debtor-in-possession financing in the aggregate amount of $275 million, consisting of $150 million in new money and a $125 million roll-up of pre-petition first lien revolving loans. Ridgeline National Bank, N.A. serves as DIP Agent. The DIP Facility bears interest at SOFR plus 450 basis points, with a 1.00% SOFR floor. The maturity of the DIP Facility is the earlier of (i) twelve months from the date of the Final DIP Order, (ii) the effective date of a plan of reorganization, or (iii) the consummation of a Section 363 sale.
Estimated Unsecured Claims Pool. Based on the Debtor's schedules and available information, the estimated total unsecured claims pool ranges from approximately $180 million to $220 million. This pool is comprised of the following principal categories of claims:
• 8.75% Senior Unsecured Notes: $215 million in principal amount, plus accrued and unpaid pre-petition interest. These noteholder claims are expected to constitute the single largest component of the unsecured claims pool.
• Trade Creditor Claims: Including, among others, Meridian's claim of approximately $14,726,418.37, Wavecrest Logistics Corp.'s claim of approximately $9.1 million, Summit Packaging Solutions Inc.'s claim of approximately $6.4 million, Northstar Textiles Ltd.'s claim of approximately $11.3 million, Redmond & Park Advertising LLC's claim of approximately $4.8 million, and numerous other vendor claims of varying sizes.
• Landlord Rejection Claims: Including, among others, the aggregate claims of Ironwood Property Holdings LLC of approximately $22 million arising from the anticipated rejection of multiple leases across Cascadia's store portfolio.
• Other Unsecured Claims: Including litigation claims, contract rejection damages, employee-related claims, and other scheduled or filed unsecured obligations.
Debtor's Financial Performance. Cascadia's FY2024 financial performance was poor by any measure. The Debtor reported revenues of approximately $1.87 billion, negative EBITDA of ($42 million), and a net loss of ($214 million). As of the petition date, the Debtor operated 347 stores across 38 states and employed approximately 12,400 individuals. These financial results reflect a sustained period of declining performance and call into serious question the prospects for a reorganization that delivers meaningful value to unsecured creditors, much less to equity holders.
Equity Sponsor. Cascadia's equity is held by Pinecrest Equity Partners III, LP, an affiliate of Pinecrest Equity Group LLC ("Pinecrest"). Pinecrest acquired Cascadia in a leveraged buyout in 2019 at an enterprise value of approximately $2.1 billion, contributing approximately $740 million in equity capital. Theodore "Ted" Langford is the Managing Director at Pinecrest primarily responsible for the Cascadia investment. The magnitude of Pinecrest's equity loss does not entitle it to participate in plan distributions in derogation of the absolute priority rule, and any attempt to negotiate a recovery for equity should be resisted by the Committee.
IV. Meridian's Plan Negotiation Positions
Against this background, Meridian sets forth the following positions for incorporation into the Committee's plan negotiations.
A. Enhanced Recovery for Trade Creditors Relative to Bond Claims
Position. It is Meridian's position that trade creditor claims should receive enhanced or preferential recovery relative to the 8.75% Senior Unsecured Notes ($215 million outstanding) within the unsecured creditor distribution framework of any plan.
Rationale. Trade creditors are essential to the Debtor's going-concern value. Cascadia's ability to reorganize or to consummate a value-maximizing sale depends on the continued willingness of its trade vendors — including Meridian and other consumer products suppliers — to provide goods on credit and to maintain commercial relationships with the Debtor and any successor entity. This ongoing trade support sustains store inventory levels, maintains the Debtor's brand proposition to consumers, and preserves the jobs of thousands of Cascadia employees. Without trade creditor confidence and continued participation, the reorganization prospect collapses and creditor recoveries diminish across the board.
The Debtor itself acknowledged the indispensable nature of trade vendor relationships in its critical vendor motion filed on October 16, 2025. In that motion, the Debtor represented to the Court that the continued supply of goods from critical vendors — including Meridian — was essential to the preservation of the estate and the success of any restructuring transaction. This principle, which the Debtor invoked to obtain court authority to make critical vendor payments, should logically carry through to plan distributions. If trade creditors are sufficiently critical to justify priority payment in the early days of the case, they are sufficiently distinct to warrant enhanced recovery in the plan itself.
By contrast, the holders of the 8.75% Senior Unsecured Notes are passive financial creditors. They purchased debt instruments in a capital markets transaction and have no ongoing operational relationship with the Debtor. While their claims are legitimate and must be addressed in any plan, their claims do not contribute ongoing value to the estate in the same manner as trade creditor claims. The noteholders' relationship with the Debtor is purely financial in nature, and their claims arise from a negotiated indenture rather than from the provision of goods and services that sustain the Debtor's business operations.
Proposal. Meridian proposes that the plan should accomplish enhanced trade creditor recovery through one of the following mechanisms: (a) the creation of a separate classification for trade creditor claims under Section 1122(a), with a higher distribution percentage than the class containing the unsecured note claims; or (b) the establishment of a "convenience class" option or priority tranche within the general unsecured class that effectively provides trade creditors with a higher blended recovery.
Legal Basis. Separate classification of trade claims and bond claims is appropriate under Section 1122(a) of the Bankruptcy Code. That provision requires only that claims classified together be "substantially similar." Trade claims and bond claims possess different legal characteristics, arise from fundamentally different relationships with the debtor, involve different economic incentives and interests, and reflect different degrees of ongoing contribution to the debtor's operations. Courts have recognized that such differences can support separate classification. To be sure, separate classification cannot be employed solely for the purpose of gerrymandering voting results, but where legitimate business justifications exist — as they do here — separate classification is both permissible and appropriate.
Meridian recognizes that this position must be evaluated by the Committee in light of its fiduciary duties to all unsecured creditors, including noteholders. Nevertheless, Meridian believes that enhanced trade creditor recovery is consistent with the Committee's obligation to maximize aggregate recoveries for the unsecured creditor class, as trade creditor cooperation is directly linked to going-concern value and, therefore, to the overall recovery available to all unsecured creditors.
B. Third-Party Release Provisions Must Provide Meaningful Consideration
Position. Meridian's position is that any plan containing third-party release or exculpation provisions must provide meaningful, quantifiable consideration to the releasing parties, including unsecured creditors.
Specific Concern. Meridian anticipates that the Debtor or its equity sponsor, Pinecrest Equity Partners III, LP, Pinecrest Equity Group LLC, and their respective affiliates, officers, and directors, may seek broad third-party releases as a component of a plan of reorganization. Such releases, if granted, would extinguish potentially valuable causes of action that Meridian and other unsecured creditors may hold against Pinecrest, its principals (including Managing Director Ted Langford), and other third parties.
Requirements. Any release of claims against Pinecrest, its officers, its directors, and related parties must be supported by a demonstrable, material contribution to unsecured creditor recoveries. Releases cannot be "free." The consideration for releases must be clearly identified and must take the form of tangible value — whether in the form of cash contributions, increased plan distributions, releases of claims against the estate, or other quantifiable benefits. Nominal or pretextual consideration is insufficient.
Before the Committee agrees to any release provisions, the Committee and its financial advisor, Broadleaf Advisory Group LLC (Robert Tanaka), should conduct a thorough and independent investigation of potential estate causes of action against Pinecrest and other proposed released parties. This investigation should encompass, at a minimum, an analysis of the circumstances surrounding the 2019 leveraged buyout, the adequacy of capitalization at that time, the payment of management fees and dividends to Pinecrest or its affiliates during the period of financial decline, the conduct of Pinecrest-appointed officers and directors, and any potential claims for breach of fiduciary duty, fraudulent transfer, or other causes of action. Only after this investigation has been completed and the value of such claims has been assessed can the Committee make an informed determination as to whether the consideration offered for releases is adequate.
Furthermore, the value of claims being released must be fully quantified and disclosed to all creditors so that they can make an informed decision in voting on the plan. Creditors should not be asked to grant releases in the dark.
Meridian will object to any plan containing non-consensual third-party releases that do not satisfy the standards articulated in applicable Third Circuit and Delaware bankruptcy case law, including the requirements that releases be essential to the reorganization, that the released party make a substantial contribution to the plan, and that affected creditors receive adequate consideration.
C. Recovery Waterfall Must Recognize the Full Unsecured Claims Pool
Position. Meridian's position is that any plan term sheet must accurately and fully account for the estimated total unsecured claims pool, which ranges from approximately $180 million to $220 million based on the Debtor's schedules and available information.
Recovery projections and the distribution waterfall must be based on a thorough, creditor-by-creditor reconciliation of claims. This reconciliation must encompass, at a minimum, the following categories and known claims:
• 8.75% Senior Unsecured Notes: $215 million in principal amount, plus accrued and unpaid pre-petition interest.
• Trade Creditor Claims: Including Meridian Consumer Brands LLC ($14,726,418.37), Wavecrest Logistics Corp. (approximately $9.1 million), Summit Packaging Solutions Inc. (approximately $6.4 million), Northstar Textiles Ltd. (approximately $11.3 million), Redmond & Park Advertising LLC (approximately $4.8 million), and all other filed and scheduled trade claims.
• Landlord Rejection Claims: Including Ironwood Property Holdings LLC (aggregate claims of approximately $22 million) and all other landlord claims arising from lease rejections.
• Other Unsecured Claims: Including litigation claims, executory contract rejection damages, employee-related claims, and all other scheduled or filed unsecured obligations.
Meridian requests that the Committee's financial advisor, Broadleaf Advisory Group LLC, prepare a detailed claims analysis and recovery waterfall for review by all Committee members before any plan term sheet is finalized or presented to the Debtor. This analysis should include a range of recovery estimates based on varying assumptions regarding enterprise value, claim allowance, and distribution mechanics.
Any plan must disclose the projected percentage recovery for unsecured creditors based on realistic enterprise valuations and supportable financial projections. Meridian will scrutinize — and, if necessary, challenge — any plan that relies upon understated claims estimates or inflated enterprise valuations designed to justify inadequate distributions to unsecured creditors.
D. Section 503(b)(9) Administrative Claims Must Be Paid in Full on the Effective Date
Position. Meridian's position is that all allowed Section 503(b)(9) administrative expense claims, including Meridian's pending claim of $1,847,200.00, must be paid in full, in cash, on the effective date of any plan.
Legal Basis. This is a statutory right. Section 503(b)(9) of the Bankruptcy Code grants administrative expense priority to the value of goods received by the debtor in the ordinary course of business within twenty (20) days before the commencement of the case. Such claims are entitled to priority treatment as administrative expenses under Section 507(a)(2). Section 1129(a)(9)(A) provides that, unless the holder of an administrative expense claim agrees to different treatment, the plan must provide for full cash payment of such claims on the effective date. This is a mandatory confirmation requirement, not a negotiable plan term.
Accordingly, no plan should propose to pay Section 503(b)(9) claims on a deferred basis, in installments, or in any form other than cash on the effective date, unless the holder of the specific claim has voluntarily consented to such alternative treatment. Meridian has not consented and does not anticipate consenting to any such alternative.
The Committee should take the position that any plan term sheet must expressly address the mechanism and timing for payment of all Section 503(b)(9) claims, including a clear identification of the funding source for such payments and a confirmation that sufficient liquidity will be available on the effective date to satisfy all such obligations.
E. Assurance of Payment of Post-Petition Administrative Claims
Position. Meridian's position is that vendors that have continued to supply goods to the Debtor on a post-petition basis, thereby incurring administrative expense claims under Section 503(b)(1)(A) of the Bankruptcy Code, must receive firm assurance that all such claims will be paid in full, regardless of the ultimate plan structure or the outcome of this case.
Exposure. Meridian's ongoing post-petition supply relationship with Cascadia creates substantial and growing administrative expense exposure. At approximately $4,800,000 per month in shipments under Net 30 terms with a COD backstop, Meridian's cumulative post-petition administrative exposure could reach tens of millions of dollars over the course of this case. Meridian has continued to supply the Debtor in reliance upon the protections afforded by Section 503(b)(1)(A) and the Debtor's assurances regarding post-petition payment. That reliance must be honored.
Plan Treatment. Any plan of reorganization must provide for the full payment of all allowed administrative expense claims on the effective date, consistent with Section 1129(a)(9)(A). This includes not only Section 503(b)(9) claims (discussed above) but also all Section 503(b)(1)(A) claims arising from post-petition goods and services provided by trade creditors.
Protective Mechanisms. In the event that this case converts to Chapter 7 or the plan is not confirmed, post-petition trade creditors face the risk of non-payment of their administrative claims. Meridian requests that the Committee advocate for adequate assurance mechanisms to protect post-petition trade obligations. Such mechanisms could include, without limitation, the establishment of escrow accounts or reserve funds, the imposition of requirements in the DIP order or cash collateral order to maintain adequate liquidity for payment of post-petition trade claims, and periodic reporting on the Debtor's administrative expense obligations and liquidity position.
The plan should contain specific provisions addressing the treatment of post-petition trade claims, including a clear administrative claims bar date process with adequate notice, and a mechanism for resolving disputes regarding the allowance and payment of such claims.
F. Opposition to Equity Recovery While Unsecured Creditors Receive Less Than Full Payment
Position. Meridian will oppose any plan of reorganization that provides any recovery or distribution — whether in the form of cash, equity in a reorganized entity, options, warrants, management incentive plan allocations, or any other form of value — to equity holders, specifically Pinecrest Equity Partners III, LP, Pinecrest Equity Group LLC, and their respective affiliates, while unsecured creditors receive less than payment in full of their allowed claims.
Legal Basis. This position is grounded in the absolute priority rule codified in Section 1129(b)(2)(B) of the Bankruptcy Code, which provides that, with respect to a class of unsecured claims that has not accepted the plan, the plan may not be confirmed unless no holder of any interest that is junior to the claims of such class will receive or retain any property under the plan on account of such junior interest. This is a fundamental protection for creditors and a cornerstone of Chapter 11 jurisprudence.
Application to This Case. Given Cascadia's capital structure — with $1.379 billion in total funded debt, negative EBITDA of ($42 million), and a net loss of ($214 million) in FY2024 — it is exceedingly difficult to envision any realistic scenario in which the enterprise value of the Debtor would be sufficient to provide full recovery to all creditor classes, let alone a recovery for equity. The 2019 leveraged buyout was consummated at an enterprise value of approximately $2.1 billion; the Debtor's current financial condition strongly suggests that the enterprise value has declined dramatically, likely below the level of the senior secured debt. Under these circumstances, equity is deeply out of the money and should receive nothing.
"Gifting" and "Tips" to Equity. Meridian is aware that in some Chapter 11 cases, plan proponents have negotiated consensual arrangements in which senior classes agree to "gift" or "tip" a portion of their recovery to equity holders in exchange for equity's support of the plan and to avoid the costs and delays of a contested confirmation proceeding. Meridian will scrutinize any such arrangement and will oppose it unless unsecured creditors receive full payment of their allowed claims. Unsecured creditors should not be asked to subsidize or acquiesce in equity recoveries while their own claims remain impaired.
The Committee should take a firm and unequivocal position that the absolute priority rule must be strictly enforced in any cramdown scenario. To the extent that Pinecrest seeks to participate in any new-money investment in a reorganized entity — for example, through a rights offering or a backstop commitment — the terms of such participation must be negotiated at arm's length, must be on market terms, and must not dilute or diminish unsecured creditor recoveries. Any new-money contribution by Pinecrest must be evaluated independently of its existing equity position, and any equity received in exchange for new money must reflect the fair value of the contribution, not a disguised recovery on account of pre-petition equity interests.
V. Additional Considerations for Plan Negotiations
In addition to the core plan negotiation positions set forth in Section IV, Meridian identifies the following supplemental issues that the Committee should address in plan discussions.
A. Valuation and Enterprise Value
Meridian requests that the Committee's financial advisor, Broadleaf Advisory Group LLC, prepare an independent valuation of Cascadia both as a going concern and under a liquidation scenario. This valuation work is essential to the Committee's ability to evaluate any plan proposal and to advocate effectively for unsecured creditor recoveries.
The valuation analysis should account for, among other things, the Debtor's declining revenue trajectory over the past several fiscal years, its negative EBITDA and substantial net losses, the composition and performance of its store portfolio (347 stores across 38 states), the value and growth potential of its e-commerce platform, the Debtor's brand value and customer demographics, and projected post-emergence financial performance under realistic assumptions. The valuation should also consider comparable transactions in the home goods and lifestyle retail sector and should be benchmarked against the enterprise values implied by any plan proposals.
This valuation will be critical to assessing whether unsecured creditors are receiving their fair share of estate value and whether any proposed plan satisfies the "best interests of creditors" test under Section 1129(a)(7), which requires that each creditor receive at least as much under the plan as it would in a Chapter 7 liquidation. Given the Debtor's financial distress, the liquidation analysis may set a meaningful floor for plan distributions.
B. Sale Process Alternative (Section 363 Sale)
Should the Debtor elect to pursue a Section 363 sale process rather than a standalone plan of reorganization, Meridian's core positions as articulated in this letter — including its positions regarding priority of trade claims, full payment of administrative claims, and opposition to equity recovery — remain fully applicable.
Any sale process must be conducted through a fair, open, and competitive auction process that maximizes value for the estate and its creditors. The Committee should have a meaningful role in any sale process, including full access to data room materials and bidder information, active participation in bidder negotiations and the formulation of bid procedures, and substantive input on bid protections (including break-up fees, expense reimbursements, and overbid increments).
Meridian notes that the maturity of the DIP Facility — the earlier of twelve months from the Final DIP Order, the effective date of a plan, or the consummation of a Section 363 sale — may drive the timeline for any restructuring transaction. The Committee should ensure that sufficient time exists to conduct a value-maximizing process and should resist any artificial acceleration of the timeline that would prejudice unsecured creditor interests.
C. Treatment of Critical Vendor Payments
Any plan must expressly clarify the treatment of critical vendor payments previously authorized by the Court. Specifically, the plan must provide that the $2,500,000 critical vendor payment received by Meridian was a partial payment of its pre-petition claim and does not constitute a waiver, release, or satisfaction of the remaining balance of Meridian's pre-petition claim.
The plan should further provide that critical vendor payments are credited against the recipient's pre-petition claim but do not affect the creditor's right to receive the plan distribution applicable to the remaining allowed claim amount. In other words, the critical vendor payment should reduce the amount of the pre-petition claim that is subject to plan distribution on a dollar-for-dollar basis, but the percentage recovery applicable to the reduced claim amount should be no less than the percentage recovery applicable to other allowed unsecured claims in the same class.
D. Preference Claim Settlements
Meridian acknowledges that the Committee and the estate may pursue avoidance actions, including preference actions under Section 547 of the Bankruptcy Code. Meridian received approximately $8,430,000 in payments during the 90-day preference period (July 16, 2025, through October 14, 2025).
Meridian believes it has strong and meritorious defenses to any preference action that might be asserted against it. Specifically:
• Ordinary Course of Business Defense (Section 547(c)(2)): Meridian's historical payment terms with Cascadia averaged Net 53 days, while payments during the preference period averaged Net 58 days. The preference-period payments were made in the ordinary course of business and according to ordinary business terms, consistent with the parties' historical practices.
• New Value Defense (Section 547(c)(4)): Meridian continued to supply substantial quantities of goods to Cascadia throughout the preference period, providing new value that offsets or exceeds the amount of the alleged preferential transfers.
• Contemporaneous Exchange Defense (Section 547(c)(1)): Certain payments during the preference period were made substantially contemporaneously with the provision of goods and were intended by both parties as contemporaneous exchanges for new value.
Meridian intends to vigorously defend any preference action that may be brought against it. However, Meridian recognizes that preference actions are often addressed through global settlement frameworks as part of the plan process. To the extent the Committee or the Debtor proposes a global preference settlement protocol, Meridian insists that any such protocol must not unfairly burden trade creditors who have meritorious defenses. The Committee should advocate for reasonable preference settlement protocols that recognize the strength of available defenses and that do not impose a blanket settlement percentage without regard to the individual circumstances of each preference defendant.
E. Coordination of Insurance Proceeds
Meridian's trade credit insurance policy with Clearwater Surety & Insurance Co. (Policy No. TCI-2024-00783, Cascadia sub-limit of $5,000,000, net expected recovery of $4,500,000 after the 10% co-insurance retention of $500,000) introduces subrogation and coordination issues that any plan must address.
Upon payment of the insurance claim, Clearwater Surety & Insurance Co. will become subrogated to Meridian's rights against the estate to the extent of the insurance payment. The plan must address the treatment of insured creditor claims and the rights of the insurer as subrogee in a manner that is clear, equitable, and consistent with applicable law.
Meridian's position on this issue is as follows: the insurance recovery is a private contractual arrangement between Meridian and its insurer and should not reduce Meridian's allowed claim against the estate or its plan distribution. Meridian's claim against the estate arises from the Debtor's failure to pay for goods received; the insurance recovery arises from an entirely separate contractual relationship to which the Debtor is not a party. The plan should not provide a windfall to the estate or to other creditors at the expense of an insured creditor. To the extent the plan addresses insurance subrogation, it should respect the insurer's subrogation rights and Meridian's contractual entitlements under the insurance policy.
VI. Request for Incorporation of Positions into Committee Advocacy
In light of the foregoing, Meridian respectfully requests that Garvey & Holbrook LLP incorporate the positions set forth in this letter into the Committee's plan term sheet discussions with Brindoval Baines & Lord LLP (Harrison Caldwell) and the Debtor's financial advisor, Ashworth Partners LLC (Sandra Ng). We believe that these positions reflect not only Meridian's individual interests but also the interests of trade creditors as a class and, in many respects, the interests of all unsecured creditors.
Meridian specifically requests that the Committee take a unified and firm position on the following core principles:
1. Strict enforcement of the absolute priority rule and opposition to any equity recovery while unsecured creditors are impaired;
2. Adequate and meaningful consideration for any third-party release provisions;
3. Full cash payment of all administrative expense claims — including Section 503(b)(9) claims and Section 503(b)(1)(A) post-petition trade claims — on the effective date of any plan; and
4. Opposition to any equity recovery absent full payment of unsecured creditor claims.
Meridian is prepared to support the Committee's positions at any hearing before the Honorable Christine M. Aldridge, United States Bankruptcy Judge, and to provide testimony, declarations, or other evidentiary support as needed. Meridian's general counsel, Priya Anand, and its vice president of finance, Douglas Hargrove, are available to provide factual testimony regarding Meridian's claims, its commercial relationship with the Debtor, and its ongoing post-petition supply arrangements.
Meridian reserves the right to take individual positions and to file pleadings through Calderwood & Harkness LLP to the extent that its individual interests diverge from the Committee's collective position. However, Meridian's strong preference is to work collaboratively within the Committee framework and to support a unified Committee negotiating strategy that advances the interests of all unsecured creditors.
VII. Closing and Contact Information
We would welcome the opportunity to discuss the positions set forth in this letter with you and your team in advance of the next plan negotiation session with the Debtor's counsel. Please let us know your availability to schedule a call or in-person meeting at your earliest convenience.
I am available to discuss this matter at any time. My contact information is as follows:
Colette Whitman, Partner Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, NY 10166 Telephone: (212) 554-8142
Email: cwhitman@calderwoodharkness.com
Copies of this letter are being provided to Priya Anand, General Counsel of Meridian Consumer Brands LLC, and Douglas Hargrove, Vice President of Finance of Meridian Consumer Brands LLC, for their records and reference.
Meridian reserves all rights and remedies, whether at law or in equity, in the Chapter 11 case and otherwise, including but not limited to all rights with respect to its pre-petition claims, administrative expense claims, reclamation rights, and any other rights or interests it may hold in this case. Nothing in this letter shall be construed as a waiver, release, or limitation of any such rights or remedies.
We appreciate your attention to these matters and look forward to working with you and the Committee to achieve the best possible outcome for the unsecured creditor constituency.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Colette Whitman Partner, Bankruptcy & Restructuring 200 Park Avenue, 38th Floor New York, NY 10166
cc:
Priya Anand, General Counsel, Meridian Consumer Brands LLC Douglas Hargrove, Vice President of Finance, Meridian Consumer Brands LLC Nathaniel Bower, Calderwood & Harkness LLP Nathan Ikeda, Calderwood & Harkness LLP Gabrielle Moss, Calderwood & Harkness LLP

PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts