UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF IOWA CEDAR RAPIDS DIVISION
DECLARATION OF NOLAN ASHWORTH IN SUPPORT OF EMERGENCY MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS AUTHORIZING DEBTOR-IN-POSSESSION FINANCING PURSUANT TO 11 U.S.C. §§ 105, 361, 362, 363, 364, AND 507
I, Nolan Ashworth, hereby declare as follows under penalty of perjury pursuant to 28 U.S.C. § 1746:
I. INTRODUCTION AND QUALIFICATIONS
A. Identity and Engagement
1. My name is Nolan Ashworth. I am a Managing Director of Claridge Advisory Group LLC ("Claridge"), a Delaware limited liability company with its principal office located at 299 Park Avenue, 18th Floor, New York, New York 10171. I am over the age of 18, am competent to testify in this matter, and submit this Declaration in support of the Emergency Motion for Entry of Interim and Final Orders Authorizing Debtor-in-Possession Financing (the "DIP Motion") filed by Greenfield Agricultural Partners LLC ("Greenfield" or the "Debtor") in the above-captioned Chapter 11 case.
2. Claridge was engaged as the restructuring and financial advisor to the Debtor in connection with this Chapter 11 case and the debtor-in-possession financing described herein (the "DIP Facility"). In this capacity, Claridge's responsibilities include, but are not limited to, the preparation of the 13-week cash flow model underlying the DIP budget, the development and refinement of the Debtor's operational business plan, the preparation and negotiation of the DIP budget, and the assessment and evaluation of DIP financing proposals received from prospective lenders. Claridge has also been advising the Debtor's management team and counsel on matters relating to the Debtor's capital structure, liquidity requirements, and reorganization strategy.
3. In addition to myself, the other key member of the Claridge engagement team assigned to this matter is Rebecca Liu, a Director at Claridge. Ms. Liu has been extensively involved in the financial modeling, budget preparation, and analysis of DIP proposals described in this Declaration.
B. Professional Background
4. I have over twenty years of experience in the fields of restructuring advisory, distressed debt, and debtor-in-possession financing. Throughout my career, I have advised debtors, creditors, equity holders, and other parties-in-interest in complex financial restructurings and Chapter 11 proceedings across a broad range of industries, including the agricultural, industrial, chemical, energy, and manufacturing sectors.
5. During my career, I have led or participated in more than forty-five (45) Chapter 11 engagements in various capacities, including as financial advisor to debtors, as advisor to official committees of unsecured creditors, and as advisor to secured lending groups. These engagements have ranged in size from middle-market companies with funded debt of approximately $50 million to large-cap enterprises with funded debt in excess of $3 billion. In each of these engagements, I have been involved in the analysis, negotiation, and implementation of debtor-in-possession financing arrangements.
6. I am thoroughly familiar with the DIP lending market, including the customary terms, pricing conventions, fee structures, covenant packages, and milestone schedules that are standard in DIP facilities for debtors of comparable size, industry, and risk profile. I regularly monitor market conditions in the DIP lending space and maintain professional relationships with a broad network of credit-focused alternative investment firms, distressed debt funds, specialty lenders, and commercial banks that participate in DIP financing transactions.
7. Prior to joining Claridge, I held senior positions at two other nationally recognized restructuring advisory firms, where I developed and honed my expertise in the areas described above. I hold a Bachelor of Science in Finance from the University of Michigan and a Master of Business Administration from the Columbia Business School.
C. Basis of Declaration
8. The statements contained in this Declaration are based upon my personal knowledge and upon my review and analysis of the Debtor's books, records, financial statements, and business operations. Since the commencement of Claridge's engagement, I have conducted extensive analysis of the Debtor's financial condition, capital structure, liquidity position, and operational performance.
9. In preparing this Declaration, I have had numerous conversations and working sessions with the Debtor's senior management team, including Derek Calloway, Chief Executive Officer; Patricia Langford, Chief Financial Officer; Russell Teague, Chief Operating Officer; James Delacroix, Vice President, Treasury & Capital Markets; and Monica Huang, General Counsel. These conversations have provided me with detailed insight into the Debtor's business operations, customer and supplier relationships, manufacturing processes, seasonal revenue patterns, and the circumstances that precipitated the commencement of this Chapter 11 case.
10. I have also reviewed appraisal materials and valuation analyses prepared by Bellwether Valuation Services Inc. ("Bellwether"), with Gregory Pineda, Senior Managing Director, serving as the lead engagement professional. These materials were instrumental in informing the estimated enterprise value range discussed herein. Additionally, I have reviewed audit materials and financial records prepared or reviewed by Holloway & Birch LLP ("Holloway & Birch"), the Debtor's independent auditor, with Andrew Sorensen, Audit Partner, serving as the engagement partner. These materials provided a foundation for the financial data and performance metrics referenced throughout this Declaration.
11. This Declaration has been prepared with the assistance of counsel at Calderwood & Harkness LLP ("Calderwood & Harkness"), counsel to the Debtor, for filing with this Court.
II. OVERVIEW OF THE DEBTOR'S BUSINESS AND FINANCIAL CONDITION
A. Business Description
12. Greenfield Agricultural Partners LLC is an Iowa limited liability company, Employer Identification Number 42-8837291, with its corporate headquarters located at 1400 Prairie Ridge Drive, Cedar Falls, Iowa 50613. The Debtor is a vertically integrated agricultural chemicals manufacturer and distributor, engaged in the development, production, marketing, and distribution of a diversified portfolio of crop protection products, including herbicides, fungicides, adjuvants, and seed treatments.
13. The Debtor operates three manufacturing plants located in the Midwest and Mid-South regions of the United States:
(a) Cedar Falls, Iowa — The Debtor's flagship manufacturing facility, co-located with its corporate headquarters at 1400 Prairie Ridge Drive, Cedar Falls, Iowa 50613. This plant is the primary production facility for the Debtor's herbicide product lines, including its flagship product, ClearGuard XR.
(b) Decatur, Illinois — Located at 2200 Industrial Boulevard, Decatur, Illinois 62521. This facility focuses on the production of fungicides and adjuvants, and serves as a key node in the Debtor's central distribution network.
(c) Jonesboro, Arkansas — Located at 815 County Road 740, Jonesboro, Arkansas 72401. This facility produces seed treatments and certain specialty formulations, and is the Debtor's primary manufacturing presence serving the Mid-South agricultural market.
14. In addition to its three manufacturing plants, the Debtor operates fourteen (14) regional distribution centers strategically positioned across the Midwest and Mid-South regions. These distribution centers enable the Debtor to efficiently deliver its products to its customer base, which includes agricultural cooperatives, independent farm supply retailers, large-scale commercial farming operations, and distributors.
15. The Debtor also operates a 640-acre research and development farm located at 4500 University Boulevard, Ames, Iowa 50010 (the "R&D Farm"). The R&D Farm is used for the development and field-testing of new crop protection formulations, efficacy trials, and regulatory testing in support of EPA product registrations.
16. As of the Petition Date, the Debtor employed approximately 2,300 individuals across its corporate headquarters, manufacturing plants, distribution centers, and R&D operations. The Debtor's workforce includes scientists, engineers, manufacturing technicians, logistics and distribution personnel, sales representatives, and corporate and administrative staff.
17. The Debtor's flagship herbicide product, ClearGuard XR, is a broad-spectrum, post-emergence herbicide that has been a market leader in its segment since its initial commercial launch. ClearGuard XR accounts for a significant portion of the Debtor's annual revenue and is a key driver of customer relationships and brand recognition in the agricultural chemicals market.
B. Pre-Petition Financial Performance
18. The Debtor's financial performance in the fiscal year ended December 31, 2024 ("FY 2024") reflected the challenging market conditions and operational headwinds discussed in further detail below. The key financial metrics for FY 2024 are as follows:
(a) Revenue: $612.4 million
(b) EBITDA: $38.7 million
(c) LTM Adjusted EBITDA (as calculated pursuant to the definition set forth in the First Lien Credit Agreement): $37.7 million
(d) Cash on Hand at Petition Date (May 15, 2025): $11.8 million
(e) Estimated Enterprise Value (mid-point, as determined by Bellwether Valuation Services Inc.): $280 million to $340 million, with a mid-point of $310 million
19. The Debtor's FY 2024 revenue of $612.4 million represented a meaningful decline from prior-year levels, driven by the factors described in Section II.D below. EBITDA of $38.7 million reflected compressed margins resulting from reduced sales volumes, unfavorable product mix, and the inability to fully offset fixed manufacturing costs across the Debtor's three production facilities.
20. The LTM Adjusted EBITDA figure of $37.7 million, calculated in accordance with the definition and addback provisions contained in the First Lien Credit Agreement, is the metric relevant for purposes of the financial covenant calculations discussed below.
C. Pre-Petition Capital Structure
21. As of the Petition Date, the Debtor's funded debt obligations and pre-petition capital structure were as follows:
22. First Lien Term Loan. The Debtor is the borrower under a First Lien Term Loan in the original principal amount of $310,000,000 (the "First Lien Term Loan"). The administrative agent for the First Lien Term Loan is Prairie State Bank, N.A., located at 500 Main Street, Suite 1200, Kansas City, Missouri 64105. The First Lien Term Loan bears interest at a floating rate of SOFR plus 450 basis points, and matures in November 2026. The First Lien Term Loan is secured by a first-priority lien on substantially all of the Debtor's assets (subject to the split-collateral arrangement with the ABL Revolver described below). The First Lien Term Loan was originally closed in November 2021.
23. ABL Revolver. The Debtor is the borrower under an Asset-Based Revolving Credit Facility with total commitments of $95,000,000 and $72,300,000 outstanding as of the Petition Date (the "ABL Revolver"). The administrative agent for the ABL Revolver is also Prairie State Bank, N.A. The ABL Revolver bears interest at a floating rate of SOFR plus 275 basis points, and matures in May 2026. The ABL Revolver is secured by a first-priority lien on the Debtor's accounts receivable and inventory pursuant to a split-collateral intercreditor arrangement with the First Lien Term Loan. The participating banks in the ABL Revolver syndicate include Hawthorn National Bank and Northland Savings Bank, F.S.B. The ABL Revolver was originally closed in March 2023.
24. Senior Unsecured Notes. The Debtor has outstanding Senior Unsecured Notes in the aggregate principal amount of $84,200,000 (the "Senior Unsecured Notes"). The Senior Unsecured Notes bear interest at a fixed rate of 9.50% per annum, are due in March 2027, and were issued in March 2024. The indenture trustee for the Senior Unsecured Notes is Meridian Trust Company, located at 101 Park Avenue, 20th Floor, New York, New York 10178.
25. Trade and Other Unsecured Claims. In addition to the Senior Unsecured Notes, the Debtor estimates that it has approximately $22,700,000 in trade payables and other unsecured claims as of the Petition Date.
26. In summary, the Debtor's total funded debt as of the Petition Date was approximately $489,200,000, comprised of the First Lien Term Loan ($310,000,000), the ABL Revolver ($72,300,000 drawn), the Senior Unsecured Notes ($84,200,000), and trade and other unsecured claims ($22,700,000). The total unsecured claims pool is approximately $106,900,000, consisting of $84,200,000 in Senior Unsecured Notes and $22,700,000 in trade and other unsecured claims.
D. Causes of Financial Distress
27. The Debtor's current financial distress is attributable to a confluence of adverse market conditions and regulatory developments that converged over the 2024 growing season and into early 2025. These factors include:
(a) Severe Drought Conditions. The 2024 growing season was marked by severe and prolonged drought conditions across significant portions of the Midwest and Mid-South, the Debtor's primary market regions. These drought conditions resulted in reduced planted acreage, lower crop yields, and diminished demand for crop protection products, as farmers curtailed input spending in response to anticipated lower revenues from their harvests.
(b) Depressed Commodity Pricing. Throughout 2024 and into early 2025, prices for key agricultural commodities, including corn, soybeans, and wheat, remained at depressed levels relative to recent historical norms. These lower commodity prices reduced farm income and further constrained farmer spending on agricultural chemical inputs, compounding the demand reduction caused by the drought.
(c) Delayed EPA Re-Registration of ClearGuard XR. The Debtor's flagship herbicide product, ClearGuard XR, has been subject to a delayed re-registration process by the United States Environmental Protection Agency ("EPA"). The uncertainty surrounding the timing and outcome of this re-registration has constrained the Debtor's ability to market and sell ClearGuard XR to its customer base, particularly among larger agricultural cooperatives and institutional buyers that require assurance of continued product availability and regulatory compliance.
(d) Insufficient Operational Cash Flow. The combined effect of reduced revenues, compressed margins, and ongoing fixed cost obligations rendered the Debtor's operational cash flow insufficient to service its existing capital structure, including the interest obligations on the First Lien Term Loan, the ABL Revolver, and the Senior Unsecured Notes.
E. Pre-Petition Defaults Precipitating the Filing
28. The financial distress described above resulted in several pre-petition defaults that ultimately precipitated the filing of this Chapter 11 case:
29. Total Net Leverage Ratio Covenant Breach. The First Lien Credit Agreement governing the First Lien Term Loan contains a Total Net Leverage Ratio financial maintenance covenant requiring the Debtor to maintain a ratio of Net Total Debt to LTM Adjusted EBITDA not exceeding 6.50x. As of December 31, 2024, the Debtor's actual Total Net Leverage Ratio was 9.82x, calculated as follows:
Net Total Debt = First Lien Term Loan ($310,000,000) + ABL Revolver ($72,300,000) – Cash ($11,800,000) = $370,500,000
Total Net Leverage Ratio = $370,500,000 ÷ $37,700,000 (LTM Adjusted EBITDA) = 9.82x
This actual ratio of 9.82x significantly exceeded the maximum permitted ratio of 6.50x, constituting an Event of Default under the First Lien Credit Agreement.
30. Forbearance Agreement. Following the December 31, 2024 covenant breach, the Debtor and the administrative agent and required lenders under the First Lien Credit Agreement entered into a Forbearance Agreement dated January 31, 2025 (the "Forbearance Agreement"), pursuant to which the First Lien lenders agreed to forbear from exercising remedies in respect of the covenant default for a limited period. The Forbearance Agreement expired by its terms on May 1, 2025, and was not extended.
31. Missed Interest Payment on Senior Unsecured Notes. A semi-annual interest payment on the Senior Unsecured Notes came due on March 15, 2025. The full amount of the interest payment due was $3,999,500 (calculated as $84,200,000 × 9.50% ÷ 2). The Debtor was able to make only a partial payment of $318,250, leaving $3,681,250 unpaid. The indenture governing the Senior Unsecured Notes provides for a 30-day grace period for missed interest payments, which expired on April 14, 2025, at which time the missed payment constituted an Event of Default under the indenture.
32. Voluntary Petition. Facing the expiration of the Forbearance Agreement, the acceleration of the Senior Unsecured Notes, and the prospect of imminent enforcement actions by its creditors, the Debtor filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code on May 15, 2025 (the "Petition Date").
III. THE DIP FINANCING MARKETING PROCESS
A. Pre-Petition Outreach
33. In the weeks preceding the Petition Date, Claridge, acting on behalf of and at the direction of Greenfield, conducted a comprehensive marketing process to identify potential sources of debtor-in-possession financing. The objective of this marketing process was to secure the most favorable DIP financing available for the Debtor's estate, on terms that would provide adequate liquidity to fund operations during the Chapter 11 case while minimizing cost and preserving maximum flexibility for the Debtor to pursue its restructuring objectives.
34. Claridge contacted and solicited proposals from multiple credit-focused alternative investment firms, distressed debt funds, and specialty lenders with demonstrated experience in providing DIP financing to agricultural and industrial debtors. In identifying potential lenders, Claridge drew upon its extensive network of relationships in the DIP lending market and targeted institutions with the financial capacity to underwrite a facility of the size required by the Debtor's liquidity needs. The outreach process was designed to maximize competitive tension among potential lenders and thereby secure the most favorable terms for the estate.
35. Throughout the marketing process, Claridge provided potential lenders with a confidential information memorandum containing key financial and operational information regarding the Debtor, including historical financial statements, the preliminary 13-week cash flow model, a summary of the Debtor's pre-petition capital structure, and a description of the Debtor's business and operations. Each potential lender was required to execute a confidentiality agreement prior to receiving this information.
B. Proposals Received
36. Following the marketing process described above, Claridge received two actionable proposals from prospective DIP lenders. Each proposal was reviewed and analyzed by Claridge in detail:
37. Ironclad-Led Syndicate Proposal. The first proposal (the "Ironclad Proposal") was submitted by a syndicate of three institutional lenders led by Ironclad Capital Partners LP ("Ironclad") as administrative agent and lead arranger. The Ironclad Proposal contemplated a $175,000,000 senior secured superpriority revolving credit facility bearing interest at SOFR plus 850 basis points. The syndicate commitments under the Ironclad Proposal were allocated as follows:
(i) Ironclad Capital Partners LP: $100,000,000 commitment (57.14% of total commitments)
(ii) Ridgeline Opportunity Fund III LP ("Ridgeline"): $50,000,000 commitment (28.57% of total commitments)
(iii) Bramblewood Credit Advisors LLC ("Bramblewood"): $25,000,000 commitment (14.29% of total commitments)
38. Ridgeline Standalone Indicative Proposal. The second proposal (the "Ridgeline Standalone Proposal") was an indicative proposal submitted by Ridgeline on a standalone basis, without syndicate partners. The Ridgeline Standalone Proposal contemplated a $125,000,000 facility bearing interest at SOFR plus 900 basis points, subject to more restrictive milestone requirements and tighter financial covenant thresholds than those contained in the Ironclad Proposal.
C. Evaluation Criteria and Selection
39. Claridge evaluated the two proposals against a comprehensive set of criteria, including: (i) total facility size and the adequacy of committed liquidity; (ii) pricing, encompassing the interest rate spread, closing fee, exit fee, and unused commitment fee; (iii) covenant flexibility, including the terms of financial maintenance covenants and the degree of operational latitude afforded to the Debtor; (iv) milestone timing and the achievability of deadlines for key case milestones; (v) availability of interim funding and the amount available upon entry of an interim order; and (vi) lender experience, track record, and reliability in DIP financing transactions.
40. After careful evaluation, Claridge determined that the Ironclad Proposal was superior to the Ridgeline Standalone Proposal in all material respects. Specifically:
(a) The Ironclad Proposal provided a significantly larger facility ($175,000,000 versus $125,000,000), affording the Debtor substantially greater liquidity and financial cushion.
(b) The Ironclad Proposal offered a lower interest rate spread (SOFR + 850 basis points versus SOFR + 900 basis points), resulting in meaningful interest cost savings to the estate over the life of the facility.
(c) The Ironclad Proposal contained more flexible milestones and financial covenants, providing the Debtor with greater operating room to execute its business plan and pursue its restructuring strategy.
(d) The Ironclad Proposal provided for an interim draw of $80,000,000, which was adequate to address the Debtor's immediate liquidity needs in the critical weeks following the Petition Date.
41. Based on this evaluation, Claridge recommended, and the Debtor's management and Board of Managers accepted, the Ironclad-led syndicate proposal as the most favorable DIP financing available for the estate.
42. The key personnel involved in the DIP financing process from each of the lender parties were as follows:
(a) Ironclad Capital Partners LP: Martin Halberstam, Managing Partner; Diana Voss, Partner and Head of Structured Credit; and Kevin Pratt, Vice President, Portfolio Management, who served as the deal lead for Ironclad.
(b) Ridgeline Opportunity Fund III LP: Samuel Ostrowski, Managing Director, Special Situations. It is noted that Ridgeline initially submitted its own standalone proposal and subsequently agreed to participate as a co-lender in the Ironclad-led syndicate, committing $50,000,000.
(c) Bramblewood Credit Advisors LLC: Christine Morel, Principal.
D. Arm's-Length Negotiation
43. The terms of the DIP Facility, as set forth in the DIP Credit Agreement, were the product of extensive, arm's-length negotiations between the Debtor, with the assistance of Claridge and Calderwood & Harkness LLP, on the one hand, and the DIP Lender group (Ironclad, Ridgeline, and Bramblewood), with the assistance of their counsel, Harmon & Keach LLP (Richard Yeung, Partner, lead counsel), on the other hand.
44. The negotiation process involved multiple rounds of iterative markups and revisions to the DIP Credit Agreement and related documents. Key areas of negotiation included the interest rate and fee structure, the milestone schedule and the consequences of milestone defaults, the events of default and related cure provisions, the roll-up mechanics with respect to the pre-petition ABL Revolver obligations, and the terms and amount of the carve-out for professional fees and United States Trustee fees. The negotiations were conducted in good faith by all parties and reflected a genuine balancing of the interests of the Debtor's estate and the DIP Lenders.
IV. SUMMARY OF THE DIP FACILITY TERMS
A. Principal Terms
45. The principal terms of the DIP Facility, as set forth in the DIP Credit Agreement, are summarized below:
46. Facility Type. The DIP Facility is a senior secured superpriority revolving credit facility.
47. Facility Size. The aggregate commitments under the DIP Facility are $175,000,000.
48. Lender Commitments. The commitments of the individual DIP Lenders are as follows:
49. Administrative Agent. Ironclad Capital Partners LP, with offices at 600 Lexington Avenue, 34th Floor, New York, New York 10022, shall serve as Administrative Agent under the DIP Credit Agreement.
50. Collateral Agent. Meridian Trust Company shall serve as Collateral Agent under the DIP Credit Agreement.
51. Interest Rate. The DIP Facility bears interest at a rate per annum equal to SOFR plus 850 basis points, subject to a SOFR floor of 4.00%. The effective minimum all-in interest rate is therefore 12.50% (4.00% SOFR floor plus 8.50% spread). Upon the occurrence and during the continuance of an Event of Default, the interest rate shall increase by an additional 200 basis points to SOFR plus 1,050 basis points (the "Default Rate").
52. Closing Fee. A closing fee equal to 2.00% of total commitments, in the amount of $3,500,000, payable upon closing of the DIP Facility.
53. Unused Line Fee. An unused commitment fee of 0.50% per annum on the undrawn portion of the DIP Facility commitments, payable quarterly in arrears.
54. Exit Fee. An exit fee equal to 1.00% of aggregate commitments, in the amount of $1,750,000, payable upon the maturity or earlier termination of the DIP Facility.
B. Availability and Draws
55. Interim Draw. Upon entry of the Interim DIP Order, the Debtor shall be authorized to draw up to $80,000,000 under the DIP Facility (the "Interim Draw"). The Interim Draw is designed to address the Debtor's immediate and critical liquidity needs during the initial weeks of the Chapter 11 case.
56. Final Draw. The remaining $95,000,000 of available commitments under the DIP Facility shall become available to the Debtor upon entry of the Final DIP Order. Upon entry of the Final DIP Order, the Debtor shall have access to the full $175,000,000 of committed capacity under the DIP Facility, subject to the terms and conditions set forth in the DIP Credit Agreement.
C. Maturity.
57. The DIP Facility matures on the earliest to occur of: (a) twelve (12) months from the Petition Date (i.e., May 15, 2026); (b) the effective date of a confirmed plan of reorganization; (c) the consummation of a sale of substantially all of the Debtor's assets pursuant to Section 363 of the Bankruptcy Code; or (d) the occurrence of an Event of Default under the DIP Credit Agreement (subject to any applicable cure periods).
D. Security and Priority
58. The DIP Facility is entitled to the following security and priority protections:
(a) A superpriority administrative expense claim pursuant to Section 364(c)(1) of the Bankruptcy Code, with priority over all other administrative expense claims, including those arising under Sections 503(b), 507(a), and 507(b) of the Bankruptcy Code, subject only to the carve-out described below.
(b) A first-priority priming lien on all pre-petition collateral pursuant to Section 364(d) of the Bankruptcy Code, including all assets subject to the existing liens of the First Lien Term Loan and ABL Revolver lenders.
(c) A first-priority lien on all previously unencumbered assets of the Debtor pursuant to Sections 364(c)(2) and 364(c)(3) of the Bankruptcy Code.
E. Adequate Protection for Pre-Petition Secured Lenders
59. In connection with the priming of the existing liens of the pre-petition secured lenders, the DIP Credit Agreement and the proposed DIP Orders provide the following adequate protection to the pre-petition secured lenders:
(a) Replacement Liens. The pre-petition secured lenders shall receive replacement liens on all DIP collateral, junior in priority to the DIP liens and the carve-out.
(b) Superpriority Administrative Expense Claim. The pre-petition secured lenders shall receive a superpriority administrative expense claim under Section 507(b) of the Bankruptcy Code, junior in priority to the DIP superpriority administrative expense claim.
(c) Current-Pay Interest. The pre-petition secured lenders shall receive current-pay interest at the non-default contract rate. For the First Lien Term Loan, this rate is SOFR plus 450 basis points.
(d) Monthly Reporting. The Debtor shall provide the pre-petition secured lenders with a monthly reporting package containing financial and operational information in a format and with content consistent with that provided to the DIP Lenders.
60. Prairie State Bank, N.A., as administrative agent for both the First Lien Term Loan and the ABL Revolver, through Thomas Whitaker, Senior Vice President, Loan Workout Group, and Angela Reeves, Vice President, Loan Administration, has indicated conditional consent to the priming of the pre-petition liens, subject to the receipt of the adequate protection described above.
F. ABL Roll-Up
61. As a condition of the DIP Facility, and as required by the participating lenders under the ABL Revolver (Prairie State Bank, N.A., Hawthorn National Bank, and Northland Savings Bank, F.S.B.) as a condition of their support for the DIP financing, $20,000,000 of pre-petition ABL Revolver obligations shall be rolled up into the DIP Facility (the "ABL Roll-Up"). The ABL Roll-Up effectively converts $20,000,000 of existing pre-petition ABL indebtedness into DIP obligations, thereby elevating the priority of those obligations to the level of DIP claims. This mechanism was a critical component of the overall DIP financing structure and was required to secure the cooperation and consent of the ABL Revolver lenders.
G. Financial Covenants
62. The DIP Credit Agreement contains the following financial maintenance covenants:
(a) Minimum Liquidity. The Debtor shall maintain minimum liquidity of $15,000,000 at all times. For purposes of this covenant, "liquidity" is defined as the sum of unrestricted cash and cash equivalents held by the Debtor plus unused availability under the DIP Facility.
(b) Maximum Cumulative Variance to Budget. Actual aggregate disbursements for any rolling four (4)-week period shall not exceed budgeted aggregate disbursements for such period by more than fifteen percent (15%). This covenant is tested on a weekly basis.
(c) Minimum EBITDA. EBITDA for any rolling four (4)-week period shall not be less than negative five million dollars (($5,000,000)). This negative EBITDA floor provides a minimum performance threshold while recognizing the seasonal nature of the Debtor's business and the expected initial cash burn during the early weeks of the Chapter 11 case.
H. Milestones.
63. The DIP Credit Agreement contains the following milestone requirements:
(a) Interim DIP Order. The Court shall have entered the Interim DIP Order within five (5) business days of the Petition Date (i.e., by May 22, 2025).
(b) Final DIP Order. The Court shall have entered the Final DIP Order within thirty-five (35) days of the Petition Date (i.e., by June 19, 2025).
(c) Filing of Plan or Section 363 Sale Motion. The Debtor shall have filed either a plan of reorganization or a motion to sell substantially all of its assets pursuant to Section 363 of the Bankruptcy Code within one hundred fifty (150) days of the Petition Date (i.e., by October 12, 2025).
(d) Confirmation or Sale Closing. The Debtor shall have obtained an order confirming a plan of reorganization or shall have consummated a sale of substantially all assets within two hundred seventy (270) days of the Petition Date (i.e., by February 8, 2026).
I. Carve-Out.
64. The DIP Credit Agreement provides for a carve-out (the "Carve-Out") from the DIP Lenders' liens and superpriority claims for the payment of professional fees and United States Trustee fees, as follows:
(a) Pre-Trigger Carve-Out. Prior to the delivery of a carve-out trigger notice by the Administrative Agent (which may be delivered upon the occurrence of an Event of Default or the termination of the DIP commitments), the Carve-Out includes all accrued but unpaid professional fees and expenses of estate professionals, without cap.
(b) Post-Trigger Carve-Out. Following the delivery of a carve-out trigger notice, the Carve-Out includes: (i) $2,500,000 for the fees and expenses of estate professionals (including counsel, financial advisors, and other retained professionals); and (ii) $500,000 for fees payable to the United States Trustee under 28 U.S.C. § 1930. The aggregate post-trigger Carve-Out is $3,000,000.
J. Governing Law
65. The DIP Credit Agreement is governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of law principles. The Chapter 11 bankruptcy proceedings are pending in the United States Bankruptcy Court for the Northern District of Iowa, Cedar Rapids Division.
V. REASONABLENESS OF THE DIP TERMS
A. Market Comparison
66. Based on my extensive experience in the DIP lending market and my familiarity with DIP financing transactions in Chapter 11 cases involving agricultural and chemical industry debtors of comparable size and risk profile, it is my professional opinion that the pricing and fee structure of the DIP Facility are within the range of market terms for comparable DIP facilities.
67. The interest rate of SOFR plus 850 basis points is consistent with the interest rate spreads observed in recent DIP facilities for middle-market industrial and agricultural debtors with total funded debt in the range of $300 million to $600 million. DIP facilities in this segment of the market have generally priced in a range of SOFR plus 700 basis points to SOFR plus 1,000 basis points, depending on the borrower's specific risk profile, collateral coverage, and the competitive dynamics of the DIP lending process for a particular debtor.
68. The closing fee of 2.00% of total commitments ($3,500,000) is consistent with market norms for DIP facilities of this size. Closing fees in comparable transactions have generally ranged from 1.50% to 3.00% of total commitments. The exit fee of 1.00% of aggregate commitments ($1,750,000) is likewise within the standard range observed in the market for comparable transactions. The unused line fee of 0.50% per annum is a standard term in DIP revolving credit facilities and is consistent with market practice.
69. The competitive nature of the pricing achieved by the Debtor is further demonstrated by comparison to the rejected Ridgeline Standalone Proposal, which contemplated a smaller facility ($125,000,000) at a higher interest rate spread (SOFR plus 900 basis points). The Ironclad Proposal's superior pricing and larger facility size confirm that the marketing process conducted by Claridge generated meaningful competitive tension and resulted in favorable pricing for the estate.
B. Assessment of Covenant Structure
70. The financial covenants contained in the DIP Credit Agreement — specifically, the minimum liquidity covenant, the budget variance test, and the minimum EBITDA floor — are standard covenants commonly found in DIP credit agreements. These covenants are designed to provide appropriate monitoring and oversight of the Debtor's financial performance during the pendency of the Chapter 11 case, while at the same time affording the Debtor adequate operating flexibility to manage its business and execute its restructuring strategy.
71. The minimum liquidity covenant of $15,000,000 provides a meaningful liquidity cushion and is typical of DIP facilities for debtors of this size. The budget variance covenant, which limits actual disbursements to no more than 115% of budgeted disbursements on a rolling four-week basis, tested weekly, is a standard mechanism that provides the DIP Lenders with early visibility into potential operational or financial deviations from the budget while providing the Debtor with a reasonable degree of flexibility to accommodate ordinary course fluctuations in the timing of receipts and disbursements. The minimum EBITDA covenant of negative $5,000,000 for any rolling four-week period establishes an appropriate floor that accounts for the expected seasonal cash flow patterns of the Debtor's business.
72. The milestone schedule set forth in the DIP Credit Agreement is achievable based on Claridge's experience with comparable Chapter 11 cases and the Debtor's current business plan and restructuring timeline. The interim and final order milestones (5 business days and 35 days, respectively) are consistent with standard practice. The 150-day milestone for filing a plan or Section 363 sale motion and the 270-day milestone for confirmation or sale closing provide the Debtor with adequate time to pursue an orderly restructuring process while ensuring that the case progresses toward resolution in a timely manner.
C. Facility Size Adequacy
73. The $175,000,000 DIP Facility provides sufficient liquidity for the Debtor to fund its operations through the reorganization process, based on the projected cash needs reflected in the 13-week DIP budget and the Debtor's longer-term operational projections. The facility size was determined based on Claridge's analysis of the Debtor's projected operating cash flows, restructuring professional fee estimates, debt service and adequate protection obligations, and capital expenditure requirements, with appropriate cushion for unforeseen contingencies.
74. The $80,000,000 Interim Draw addresses the Debtor's immediate and critical liquidity needs in the weeks following the Petition Date. As described in greater detail in Section VII below, the Debtor's cash on hand at the Petition Date is only $11,800,000, which is insufficient to fund even one week of operations. The Interim Draw provides the Debtor with the liquidity necessary to continue operating its manufacturing plants, pay its employees, maintain its supply chain, and meet its other obligations during the initial phase of the Chapter 11 case.
75. The remaining $95,000,000 of DIP Facility capacity, available upon entry of the Final DIP Order, provides the Debtor with adequate runway to execute its business plan and pursue either a plan of reorganization or a Section 363 sale process. The full facility provides a substantial liquidity buffer beyond the Debtor's base-case projected needs, which is important given the seasonal nature of the Debtor's business and the inherent uncertainty associated with cash flow projections in a Chapter 11 context.
D. Conclusion on Reasonableness
76. Based on the foregoing analysis, it is my professional opinion that the terms of the DIP Facility are fair and reasonable, that they represent the best available financing for the Debtor's estate based on the competitive marketing process conducted by Claridge, and that the DIP Facility is in the best interests of the Debtor, its estate, and its creditors.
VI. THE 13-WEEK DIP BUDGET AND CASH FLOW ANALYSIS
A. Budget Preparation Process
77. Claridge prepared the 13-week cash flow budget (the "DIP Budget") in close coordination with the Debtor's management team, particularly Patricia Langford, Chief Financial Officer, and James Delacroix, Vice President, Treasury & Capital Markets. The DIP Budget was also reviewed by Calderwood & Harkness LLP prior to finalization. The DIP Budget represents Claridge's best estimate of the Debtor's cash receipts and disbursements over the 13-week period, based on the information available as of the Petition Date.
78. The DIP Budget covers the period from May 15, 2025 through August 13, 2025 (the "Budget Period"). The Budget Period may be extended in four (4)-week increments upon the approval of the Required DIP Lenders, subject to the submission of updated budgets and supporting assumptions.
79. The Budget Period has been designed to capture the tail end of the spring application season and the full summer growing season, which together constitute the Debtor's peak revenue period. The Debtor's business is highly seasonal, with the majority of its annual revenue and cash generation occurring during the second and third quarters of the calendar year (Q2 and Q3), which correspond to the spring planting and summer growing seasons when demand for agricultural chemicals is at its highest.
B. Summary of 13-Week Budget
80. The following table summarizes the DIP Budget by four-week sub-periods and in the aggregate for the full 13-week Budget Period. All figures are presented in thousands of dollars:
81. As reflected in the DIP Budget, the Debtor anticipates total operating receipts of $129,600,000 and total operating disbursements of $133,900,000 over the 13-week Budget Period, resulting in a net operating cash flow deficit of ($4,300,000). This modest operating deficit reflects the seasonal ramp-up in revenue collections during the Budget Period, with the Debtor transitioning from net operating cash outflows in Weeks 1–4 to net operating cash inflows in Weeks 9–13 as spring and summer season receivables are collected.
82. Non-operating cash outflows during the Budget Period include restructuring professional fees of $16,100,000, debt service and adequate protection payments of $11,050,000, and capital expenditures of $3,600,000, for total net cash flow of ($35,050,000) over the 13-week period.
83. The Debtor projects that the $80,000,000 Interim Draw, combined with the $11,800,000 of opening cash, will be sufficient to fund operations and all obligations throughout the 13-week Budget Period without the need for additional DIP draws during this period.
C. Budget Reconciliation
84. The DIP Budget reconciles as follows:
Opening Cash Balance (Petition Date): $11,800,000
Plus: DIP Draws (Interim Draw): $80,000,000
Less: Net Cash Outflow (13-week total): ($35,050,000)
Ending Cash Balance (August 13, 2025): $56,750,000
85. The projected ending cash balance of $56,750,000 significantly exceeds the minimum liquidity covenant of $15,000,000 at all points throughout the Budget Period. At no point during the 13-week Budget Period does the Debtor's projected cash balance (and, by extension, its minimum liquidity, as defined in the DIP Credit Agreement) fall below the $15,000,000 minimum liquidity covenant threshold. The Debtor is therefore projected to be in full compliance with the minimum liquidity covenant at all times during the Budget Period.
D. Key Budget Assumptions
86. The DIP Budget is based on the following key assumptions, which have been developed by Claridge in coordination with the Debtor's management team:
(a) Operating Receipts. Operating receipts reflect the seasonal sales patterns of the Debtor's business. Collections are projected to ramp during Weeks 5–13 as the spring and summer application season generates receivables that are subsequently collected. Peak sales activity occurs during Q2 and Q3, and the Budget Period is designed to capture this seasonal revenue cycle. Receipt projections are based on historical collection patterns, adjusted for current market conditions and the Debtor's existing customer base.
(b) Operating Disbursements. Operating disbursements include raw material purchases for the three manufacturing plants (Cedar Falls, Iowa; Decatur, Illinois; and Jonesboro, Arkansas), payroll and benefits for approximately 2,300 employees, distribution and logistics costs associated with the operation of 14 regional distribution centers, utilities, insurance, and other ordinary course operating expenses. Disbursement projections are based on historical spending patterns and contractual obligations, adjusted for anticipated changes in production volumes and input costs.
(c) Restructuring Professional Fees. Total restructuring professional fees of $16,100,000 over the 13-week Budget Period encompass estimated fees and expenses for Calderwood & Harkness LLP (counsel to the Debtor), Claridge Advisory Group LLC (financial advisor to the Debtor), Holloway & Birch LLP (independent auditor), Bellwether Valuation Services Inc. (valuation advisor), and other estate professionals expected to be retained during the Chapter 11 case.
(d) United States Trustee Fees. Quarterly United States Trustee fees are estimated at approximately $325,000 per quarter, based on the applicable fee schedule for Region 12 (Northern District of Iowa) and the Debtor's projected quarterly disbursement levels. These fees are included in the DIP Budget.
(e) Debt Service and Adequate Protection. Debt service and adequate protection payments include current-pay interest to the pre-petition First Lien lenders at the non-default contract rate (SOFR plus 450 basis points) and interest payments on the DIP Facility, as described in Section IV.E above. These payments are projected based on the applicable interest rates, outstanding principal balances, and the SOFR rate curve as of the Petition Date.
(f) Capital Expenditures. Capital expenditures of $3,600,000 over the Budget Period include essential maintenance expenditures required for the three manufacturing plants, which require continuous operation. These expenditures are limited to maintenance and safety-critical items necessary to sustain operations and are not discretionary in nature.
(g) ABL Roll-Up. The DIP Budget does not include the $20,000,000 ABL Roll-Up as a cash outflow. The ABL Roll-Up is treated as a conversion of existing pre-petition ABL debt into DIP obligations and does not involve a cash disbursement.
E. Critical Vendor Payments
87. The DIP Budget incorporates the payment of up to $12,000,000 in pre-petition critical vendor claims, subject to separate Court approval under Section 503(b)(9) of the Bankruptcy Code and the Court's equitable authority. These critical vendor payments are essential to maintain the Debtor's supply chain, preserve critical vendor relationships, and ensure the continuous operation of the Debtor's three manufacturing plants.
88. The Debtor's top five chemical raw material suppliers are owed an aggregate of $9,400,000 in pre-petition trade obligations. These suppliers provide essential inputs for the Debtor's herbicide, fungicide, adjuvant, and seed treatment product lines, and the disruption of any of these supply relationships would have an immediate and material adverse impact on the Debtor's manufacturing operations and its ability to fulfill customer orders during the critical spring and summer selling season.
89. Additionally, the critical vendor budget includes an unpaid balance of $1,600,000 owed to Norris Industrial Services LLC in connection with a compressor overhaul project at the Cedar Falls manufacturing plant. The total project cost was $4,200,000, with the work performed during Q1 2025. The compressor overhaul was a critical maintenance project necessary to maintain the operational capacity of the Cedar Falls plant, and the unpaid balance represents a legitimate claim arising from essential services rendered to the Debtor.
90. In the professional judgment of Claridge and the Debtor's management team, the payment of these critical vendor claims is essential to maintain the supply chain and continuous manufacturing operations upon which the Debtor's ability to generate revenue depends.
F. Sensitivity Analysis
91. In addition to the base-case DIP Budget summarized above, Claridge performed sensitivity analyses under both upside and downside scenarios to assess the robustness of the DIP Budget and the Debtor's ability to maintain covenant compliance under a range of plausible operating conditions.
92. The downside scenario stress-tested the impact of delayed receipt of seasonal receivables and reduced operating receipts relative to the base case. Specifically, the downside scenario assumed a 10% reduction in operating receipts across the Budget Period and a two-week delay in the collection of a portion of spring season receivables. Even under this stressed scenario, the Debtor's projected ending cash balance remained above the $15,000,000 minimum liquidity covenant threshold at all points during the 13-week Budget Period.
93. Under all scenarios tested — base, upside, and downside — the Debtor maintains compliance with the minimum liquidity covenant of $15,000,000 throughout the 13-week Budget Period.
94. The budget variance covenant (maximum 15% overrun on actual versus budgeted disbursements, tested on a rolling four-week basis) is achievable under all tested scenarios, given that the DIP Budget has been prepared using conservative assumptions and provides adequate cushion for ordinary course timing fluctuations in disbursements.
95. The minimum EBITDA covenant (negative $5,000,000 floor for any rolling four-week period) provides adequate cushion relative to projected performance. In the base case, EBITDA for the worst-performing four-week period (Weeks 1–4) is projected to be approximately negative $3,800,000, well within the covenant threshold. Under the downside scenario, the worst-performing four-week EBITDA is projected to be approximately negative $4,600,000, still within the covenant threshold.
VII. NEED FOR IMMEDIATE DIP FINANCING
A. Insufficient Cash Reserves
96. The Debtor's cash on hand at the Petition Date is only $11,800,000. This amount is wholly insufficient to fund the Debtor's ongoing operations for any meaningful period of time. Based on the DIP Budget, the Debtor's average weekly operating disbursements over the 13-week Budget Period are approximately $10,300,000 (calculated as $133,900,000 in total operating disbursements divided by 13 weeks). Without DIP financing, the Debtor would exhaust its available cash within approximately one week of the Petition Date.
97. The Debtor's inability to fund even one week of operations from existing cash reserves underscores the critical and immediate need for the DIP Facility. The $80,000,000 Interim Draw is essential to provide the Debtor with the liquidity necessary to fund operations, pay employees, purchase raw materials, and meet its other critical obligations during the initial weeks of the Chapter 11 case, while also providing a liquidity cushion sufficient to meet the minimum liquidity covenant and absorb potential timing variations in cash receipts and disbursements.
B. Seasonal Urgency
98. The Debtor's business is highly seasonal, with the vast majority of its annual revenue and cash generation occurring during the second and third quarters of the calendar year, corresponding to the spring planting and summer growing seasons. The Petition Date of May 15, 2025 falls at the beginning of this critical seasonal period. Failure to fund operations during this window would result in the permanent and irretrievable loss of seasonal revenue and customer relationships that cannot be recaptured later in the year.
99. Agricultural chemicals are a time-sensitive product category. Farmers and agricultural cooperatives make purchasing decisions based on their planting schedules and the growing season calendar. If the Debtor is unable to manufacture and deliver its products during the spring and summer application window, customers will turn to competing suppliers, and the Debtor will lose market position that has been built over many years of operation. The revenue lost during this seasonal window cannot be recovered in subsequent quarters, as demand for crop protection products declines sharply after the summer growing season.
100. Furthermore, the Debtor's suppliers require assurance of payment in order to continue shipping the raw materials necessary for manufacturing. Without the DIP Facility and the associated assurance of post-petition payment, key suppliers may refuse to extend trade credit or even to fill orders on a cash-on-delivery basis, further jeopardizing the Debtor's ability to maintain production during the peak selling season.
C. Continuous Manufacturing Requirement
101. The Debtor's three manufacturing plants — located in Cedar Falls, Iowa; Decatur, Illinois; and Jonesboro, Arkansas — are designed for and require continuous operation. These plants utilize chemical manufacturing processes that involve significant startup and shutdown costs, and that cannot be easily or quickly interrupted and restarted without incurring substantial expense and delay.
102. A shutdown of manufacturing operations would result in not only the direct costs of shutdown and restart, but also the loss of in-process inventory, potential environmental remediation costs, and significant disruption to the Debtor's ability to meet customer demand. The risk of losing key manufacturing personnel during an extended shutdown is also a material concern, as the Debtor's manufacturing workforce possesses specialized skills and training that are not readily replaceable.
103. Any disruption to manufacturing would jeopardize existing customer relationships, product supply commitments, and contractual obligations, all of which are critical to preserving the value of the Debtor's business as a going concern.