PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Nathaniel Bower, Responsible Partner, Bankruptcy & Restructuring, Calderwood & Harkness LLP
FROM: Gabrielle Moss, Lead Associate, Bankruptcy & Restructuring, Calderwood & Harkness LLP
DATE: May 16, 2025
RE: Analysis of DIP Financing Term Sheet Received from Ironclad Capital Partners LP — Greenfield Agricultural Partners LLC, Case No. 25-01147 (N.D. Iowa)
CLIENT/MATTER: Greenfield Agricultural Partners LLC / 1020-00002
CC: Colette Whitman (Billing Partner); Amy Chesterton (Working Associate)
I. EXECUTIVE SUMMARY
The purpose of this memorandum is to analyze, in detail, the debtor-in-possession financing term sheet received from Ironclad Capital Partners LP on May 15, 2025, and to identify the principal negotiation issues for discussion with the client and in markup to lender's counsel, Harmon & Keach LLP (Richard Yeung, lead partner; Laura Brennan, associate). This memorandum is intended to inform the negotiation strategy in advance of the anticipated interim hearing and to serve as a working framework for all members of the deal team as we proceed through the documentation process on an expedited timeline.
Greenfield Agricultural Partners LLC (the "Debtor" or "Greenfield") filed a voluntary petition for relief under Chapter 11 of title 11 of the United States Code on May 15, 2025, in the United States Bankruptcy Court for the Northern District of Iowa, Cedar Rapids Division, Case No. 25-01147, before the Honorable Margaret R. Dunleavy. The filing follows a period of significant financial distress attributable to adverse weather conditions, depressed commodity pricing, and a delayed EPA re-registration of the Debtor's flagship herbicide product. The Debtor requires immediate access to post-petition financing to continue operations, fund the reorganization process, and preserve going-concern value for the benefit of all stakeholders.
The proposed DIP Facility consists of a $175,000,000 senior secured superpriority revolving credit facility (the "DIP Facility") led by Ironclad Capital Partners LP ("Ironclad") as Administrative Agent, with co-lenders Ridgeline Opportunity Fund III LP ("Ridgeline," committing $50,000,000) and Bramblewood Credit Advisors LLC ("Bramblewood," committing $25,000,000). The facility is structured as a revolving credit facility with an interim draw of $80,000,000 upon entry of the Interim DIP Order and the remaining $95,000,000 becoming available upon entry of the Final DIP Order.
This memorandum identifies areas where Greenfield should seek to negotiate more favorable terms and flags provisions that may be difficult to present to the Court for approval or that may draw objection from the Official Committee of Unsecured Creditors (the "UCC" or "Committee"), once appointed. Based on preliminary indications, we expect the Committee to be represented by Archer Grayson & Cole LLP, with Franklin Desmond serving as lead partner. We anticipate the Committee will scrutinize, among other things, the carve-out structure, the ABL roll-up, the milestone schedule, and the overall cost of financing.
Overall Assessment: The term sheet is broadly consistent with market terms for agricultural and chemical sector DIP facilities, and the pricing compares favorably to the alternative proposal received during the marketing process. However, the term sheet contains several provisions warranting significant pushback, particularly with respect to the following areas:
• The proposed roll-up of $20,000,000 of pre-petition ABL obligations into the DIP Facility, which will elevate those claims to superpriority status and is likely to draw Committee objection;
• The milestone schedule, which imposes an aggressive 150-day deadline for filing a plan of reorganization or §363 sale motion, which is unrealistic given the seasonal dynamics of the agricultural chemicals business;
• Certain event of default triggers, including an overbroad material adverse change clause and cross-default provisions that, as drafted, would render the DIP immediately in default;
• The post-trigger carve-out quantum of $3,000,000, which is at the low end of the market range and may be insufficient to fund orderly wind-down of estate professional services; and
• The minimum liquidity covenant testing mechanism, which as proposed requires continuous compliance and could be triggered by routine intra-day cash fluctuations.
The balance of this memorandum provides detailed background, a section-by-section summary of the proposed DIP Facility terms, a comprehensive analysis of each key negotiation issue, a comparison to market precedents, and a proposed negotiation strategy organized by priority level, followed by a timeline of next steps.
II. BACKGROUND
A. The Debtor and Its Financial Condition
Greenfield Agricultural Partners LLC is an Iowa limited liability company headquartered at 1400 Prairie Ridge Drive, Cedar Falls, Iowa 50613 (EIN 42-8837291). Greenfield is a vertically integrated agricultural chemicals manufacturer and distributor, with product lines encompassing herbicides, fungicides, adjuvants, and seed treatments. The company serves customers throughout the United States and, to a lesser extent, in Canada and select Latin American markets, through a combination of direct sales, cooperative distribution arrangements, and independent dealer networks.
Greenfield's operational footprint includes three manufacturing plants located in Cedar Falls, Iowa (the headquarters facility); Decatur, Illinois (2200 Industrial Boulevard, Decatur, IL 62521); and Jonesboro, Arkansas (815 County Road 740, Jonesboro, AR 72401). In addition to these manufacturing facilities, the Debtor operates fourteen regional distribution centers strategically positioned across the Midwest and Southern United States, which serve as staging points for product delivery during the critical planting and application seasons. Greenfield also maintains a 640-acre research and development farm in Ames, Iowa (4500 University Boulevard), where the company conducts product testing, efficacy trials, and new product development activities.
As of the Petition Date, Greenfield employed approximately 2,300 individuals across all locations, including manufacturing, sales, distribution, research, and administrative personnel. The workforce represents a significant component of the Debtor's going-concern value, and retention of key employees is a critical priority during the reorganization process.
The Debtor's financial performance over recent periods reflects the adverse conditions that precipitated the filing. For fiscal year 2024, Greenfield reported revenue of $612.4 million and EBITDA of $38.7 million. These figures represent a meaningful decline from fiscal year 2023 levels, driven by the factors discussed in Section II.C below. Cash on hand as of the Petition Date was approximately $11.8 million, which is insufficient to fund ongoing operations and the costs of the Chapter 11 case without access to post-petition financing.
Based on the preliminary valuation analysis conducted by Bellwether Valuation Services Inc., the Debtor's estimated enterprise value falls in the range of $280 million to $340 million, with a mid-point estimate of approximately $310 million. This valuation range is relevant both to the adequate protection analysis and to the overall feasibility of the reorganization, as the Debtor's total funded debt obligations of approximately $489.2 million significantly exceed estimated enterprise value, underscoring the need for a comprehensive restructuring of the balance sheet.
B. Pre-Petition Capital Structure
The Debtor's pre-petition capital structure consists of the following funded indebtedness:
First Lien Term Loan. Greenfield is the borrower under a first lien term loan in the original principal amount of $310,000,000 (the "First Lien Term Loan"), which remains outstanding in full as of the Petition Date. Prairie State Bank, N.A. serves as administrative agent for the First Lien lender group. The First Lien Term Loan bears interest at a rate of SOFR plus 450 basis points, matures in November 2026, and is secured by a first-priority lien on substantially all of the Debtor's assets (other than the receivables and inventory subject to the split-collateral arrangement under the ABL Revolver described below). The First Lien Term Loan was originally closed in November 2021 to finance the Debtor's acquisition of certain product lines and distribution assets.
ABL Revolver. Greenfield is also the borrower under an asset-based revolving credit facility (the "ABL Revolver") with total commitments of $95,000,000, of which $72,300,000 was drawn as of the Petition Date. Prairie State Bank, N.A. serves as administrative agent, with Hawthorn National Bank and Northland Savings Bank, F.S.B. as participating lenders. The ABL Revolver bears interest at a rate of SOFR plus 275 basis points, matures in May 2026, and 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 lenders. The ABL Revolver was originally closed in March 2023 to support working capital needs.
Senior Unsecured Notes. The Debtor has outstanding $84,200,000 in aggregate principal amount of 9.50% Senior Unsecured Notes due March 2027 (the "Senior Unsecured Notes"). Meridian Trust Company serves as indenture trustee. The Senior Unsecured Notes were issued in March 2024 and are unsecured obligations of the Debtor.
Trade and Other Unsecured Claims. As of the Petition Date, the Debtor estimates that it has approximately $22,700,000 in trade payables and other general unsecured obligations.
Summary of Total Indebtedness:
C. Events Leading to Filing
The Debtor's financial distress is attributable to a confluence of adverse factors that materialized during 2024 and early 2025:
Severe Drought Conditions. The 2024 growing season was marked by severe drought conditions across much of the Midwest, which significantly reduced crop acreage and farmer demand for agricultural chemicals. This resulted in lower-than-projected sales volumes across all of the Debtor's product lines, particularly herbicides and adjuvants, which are the company's highest-margin products.
Depressed Commodity Pricing. In addition to reduced volumes, the Debtor experienced significant pricing pressure during fiscal year 2024 as a result of depressed commodity prices, which reduced farmer purchasing power and increased competitive intensity among agricultural chemical suppliers.
Delayed EPA Re-Registration. The Debtor's flagship herbicide product, ClearGuard XR, has been subject to a delayed re-registration process by the United States Environmental Protection Agency. The re-registration, which was originally expected to be completed in the second quarter of 2024, remains pending as of the Petition Date. The delay has created uncertainty among customers and distributors, leading to deferred purchasing decisions and lost sales opportunities. The ClearGuard XR product line historically accounted for approximately 18–22% of the Debtor's annual revenue.
Covenant Default. As a result of the foregoing factors, the Debtor breached the Total Net Leverage Ratio financial covenant under the First Lien Term Loan as of December 31, 2024. The covenant required maintenance of a Total Net Leverage Ratio not to exceed 6.50x. The Debtor's actual ratio as of December 31, 2024, was 9.82x, calculated as follows:
Total Net Debt = $310,000,000 (First Lien) + $72,300,000 (ABL) – $11,800,000 (Cash) = $370,500,000
LTM Adjusted EBITDA = $37,700,000 (as defined in the First Lien Credit Agreement)
Total Net Leverage Ratio = $370,500,000 ÷ $37,700,000 = 9.82x (vs. 6.50x maximum)
Forbearance and Expiration. Following the covenant breach, the Debtor entered into a Forbearance Agreement with the First Lien lender group, executed on January 31, 2025. The Forbearance Agreement expired on May 1, 2025, after the parties were unable to reach agreement on an out-of-court restructuring.
Missed Interest Payment. The Debtor was unable to make its semi-annual interest payment on the Senior Unsecured Notes, which was due on March 15, 2025. The full payment due was $3,999,500 (calculated as $84,200,000 × 9.50% ÷ 2). The Debtor was able to make a partial payment of $318,250, leaving $3,681,250 unpaid. The 30-day grace period under the indenture expired on April 14, 2025, constituting an event of default under the Senior Unsecured Notes.
With the forbearance expired, the covenant default outstanding, and the notes default uncured, the Debtor's board of managers determined that a Chapter 11 filing was necessary to preserve going-concern value and pursue an orderly restructuring.
D. DIP Marketing Process
Prior to the Petition Date, the Debtor retained Claridge Advisory Group LLC ("Claridge") as its financial advisor, with Nolan Ashworth, Managing Director, and Rebecca Liu, Director, serving as the lead engagement team. Among other responsibilities, Claridge conducted an expedited canvass of potential DIP lenders to identify the most favorable post-petition financing available to the Debtor.
The marketing process yielded two proposals:
(i) Ironclad-Led Syndicate Proposal: $175,000,000 senior secured superpriority revolving credit facility at SOFR + 850 basis points, with a $20,000,000 ABL roll-up, a 2.00% closing fee, and the milestone and covenant structure described in this memorandum.
(ii) Ridgeline Standalone Indicative Bid: $125,000,000 senior secured superpriority revolving credit facility at SOFR + 900 basis points, with a $25,000,000 ABL roll-up, a 2.50% closing fee, and more restrictive milestones (including a 120-day plan filing deadline and a 240-day confirmation deadline).
After careful evaluation by Claridge and this firm, the Ironclad-led syndicate proposal was selected as the more favorable option based on its larger facility size ($175M vs. $125M), lower interest rate (SOFR + 850 vs. SOFR + 900), lower closing fee (2.00% vs. 2.50%), smaller ABL roll-up ($20M vs. $25M), and less restrictive milestones. A separate comparison memorandum setting forth the detailed analysis supporting the selection of the Ironclad syndicate will be prepared and circulated to the team for inclusion in the §364 motion and supporting declarations.
Notably, the Ironclad syndicate includes Ridgeline as a co-lender (committing $50,000,000), which effectively resolves the competitive dynamics between the two proposals and aligns the interests of both potential financing sources behind a single transaction structure.
III. SUMMARY OF PROPOSED DIP FACILITY TERMS
Set forth below is a summary of the principal terms of the proposed DIP Facility as reflected in the term sheet received from Ironclad Capital Partners LP on May 15, 2025. This summary is organized by topic and is intended to provide a comprehensive overview of the proposed terms for purposes of the negotiation analysis that follows in Section IV.
A. Facility Size and Commitments
The proposed DIP Facility is a senior secured superpriority revolving credit facility in an aggregate principal amount of $175,000,000. The commitments among the lender group are allocated as follows:
Ironclad Capital Partners LP will serve as Administrative Agent under the DIP Credit Agreement. Meridian Trust Company will serve as Collateral Agent. The dual-agent structure is standard for syndicated DIP facilities of this size and reflects the fact that Meridian Trust Company already serves as indenture trustee for the Senior Unsecured Notes and is familiar with the Debtor's collateral package.
B. Availability and Draw Structure
The DIP Facility contemplates a bifurcated draw structure, which is standard practice in Chapter 11 cases:
Interim Draw. Upon entry of the Interim DIP Order, the Debtor will have access to an initial draw of $80,000,000. This amount is designed to bridge the Debtor through the period between the interim and final hearings and to fund the initial weeks of the Chapter 11 case, including first-day relief costs, professional retainers, and ongoing operational expenditures.
Final Draw. Upon entry of the Final DIP Order, the remaining $95,000,000 ($175,000,000 minus $80,000,000) will become available to the Debtor on a revolving basis.
The $80,000,000 interim draw is calibrated to the 13-week budget's projections. The budget projects a net cash outflow of $35,050,000 over the 13-week period. When combined with the Debtor's opening cash balance of $11,800,000, the $80,000,000 interim draw is intended to provide sufficient liquidity to fund operations through the budget period, yielding projected ending cash of approximately $56,750,000 at Week 13. This provides a meaningful cushion above the $15,000,000 minimum liquidity covenant.
C. Interest Rate and Fees
Interest Rate. The DIP Facility bears interest at a rate of SOFR plus 850 basis points (8.50%). The term sheet specifies a SOFR floor of 4.00%, which establishes an effective minimum all-in interest rate of 12.50% (4.00% SOFR floor plus 8.50% spread). As of the date of this memorandum, the prevailing 1-month Term SOFR rate is approximately 4.31%, which is above the floor, resulting in a current effective all-in rate of approximately 12.81%.
Default Rate. Upon the occurrence and during the continuance of an Event of Default, the interest rate automatically increases by an additional 200 basis points, to SOFR plus 1,050 basis points.
Closing Fee. The DIP Lenders will receive a closing fee equal to 2.00% of total commitments, or $3,500,000 (calculated as $175,000,000 × 0.02). Per the term sheet, this fee is payable in full upon closing, which is defined as the date of entry of the Interim DIP Order.
Unused Line Fee. The Debtor will pay an unused line fee of 0.50% per annum on the average daily undrawn commitments under the DIP Facility. This fee accrues daily and is payable monthly in arrears.
Exit Fee. The DIP Lenders will receive an exit fee equal to 1.00% of aggregate commitments, or $1,750,000 (calculated as $175,000,000 × 0.01). This fee is payable at maturity or upon termination of the DIP Facility.
Summary of Fee Economics:
D. Maturity. The DIP Facility matures on the earliest 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 §363 of the Bankruptcy Code; or
(d) the occurrence of an Event of Default (as defined in the DIP Credit Agreement).
The twelve-month outside maturity date is standard for DIP facilities and provides adequate time for the Debtor to pursue a restructuring transaction. The interaction between the maturity date and the milestone schedule is discussed in Section IV.F below.
E. Security and Priority
The DIP Facility is secured by, and entitled to priority treatment as follows:
(i) A superpriority administrative expense claim pursuant to §364(c)(1) of the Bankruptcy Code, with priority over all administrative expenses of the kind specified in §§503(b) and 507(b) of the Bankruptcy Code (subject to the Carve-Out);
(ii) A first-priority priming lien on all pre-petition collateral, including all assets subject to pre-existing liens under the First Lien Term Loan and the ABL Revolver, pursuant to §364(d) of the Bankruptcy Code; and
(iii) A first-priority lien on all previously unencumbered assets of the Debtor and the estate, pursuant to §364(c)(2) and §364(c)(3) of the Bankruptcy Code.
The DIP liens and superpriority claims will be senior to all other liens and claims, subject only to the Carve-Out for professional fees and U.S. Trustee fees as described in Section III.J below. The security and priority structure will require the Court's approval of the priming of the pre-petition lenders' liens under §364(d), which in turn requires either the consent of the pre-petition lenders or a demonstration that the pre-petition lenders' interests are adequately protected.
F. Adequate Protection for Pre-Petition Secured Lenders
In order to satisfy the requirements of §364(d) and to secure the consent of the pre-petition secured lenders to the priming of their liens, the term sheet provides for the following adequate protection package:
(i) Replacement Liens. The pre-petition secured lenders will receive replacement liens on all DIP collateral, junior to the DIP liens and the Carve-Out, to the same extent, validity, and priority as their pre-petition liens.
(ii) Superpriority Administrative Expense Claim. The pre-petition secured lenders will receive a superpriority administrative expense claim under §507(b) of the Bankruptcy Code, junior in priority to the DIP superpriority administrative expense claim.
(iii) Current-Pay Interest. The pre-petition secured lenders will receive current payment of interest at the non-default contract rate: SOFR + 450 basis points on the First Lien Term Loan ($310,000,000 outstanding) and SOFR + 275 basis points on the ABL Revolver ($72,300,000 outstanding).
(iv) Monthly Reporting. The Debtor will provide the pre-petition lenders with a monthly financial reporting package, the contents of which will be specified in the adequate protection stipulation.
Prairie State Bank, N.A., as administrative agent for both the First Lien and ABL facilities, has indicated conditional consent to the priming of its liens, subject to finalization of the adequate protection terms. A formal consent letter is expected to be delivered by Thomas Whitaker, Senior Vice President, on or before May 20, 2025.
G. Financial Covenants
The DIP Facility includes the following three financial covenants:
1. Minimum Liquidity. The Debtor shall maintain minimum liquidity of not less than $15,000,000 at all times. Liquidity is defined as the sum of unrestricted cash and cash equivalents held by the Debtor plus availability under the DIP Facility.
2. Maximum Cumulative Variance to Budget. Actual disbursements shall not exceed budgeted disbursements by more than 15% on a rolling four-week basis, tested weekly. This variance is measured on a cumulative basis over the applicable four-week testing period.
3. Minimum EBITDA. EBITDA (as defined in the DIP Credit Agreement) for any rolling four-week period shall not be less than negative $5,000,000 (i.e., ($5,000,000)).
H. DIP Budget
The DIP Facility is governed by a 13-week operating budget (the "DIP Budget") covering the period from May 15, 2025, through August 13, 2025. The DIP Budget was prepared by Claridge Advisory Group LLC in coordination with the Debtor's management and Calderwood & Harkness LLP. Extensions of the budget in four-week increments are permitted upon the approval of the DIP Lenders (with such approval not to be unreasonably withheld, it is expected this standard will be negotiated into the credit agreement).
The DIP Budget reflects the following summary cash flow projections for the 13-week period:
The projected ending cash balance of $56,750,000 exceeds the $15,000,000 minimum liquidity covenant by a substantial margin, indicating compliance under the base-case scenario. However, as discussed in Section IV.I below, stress scenarios involving delayed seasonal receivables could cause liquidity to approach the covenant threshold during the early weeks of the case.
I. Milestones. The term sheet imposes the following milestone schedule:
Failure to meet any milestone constitutes an Event of Default under the DIP Facility, subject to any cure or extension provisions that may be negotiated into the definitive documentation.
J. Carve-Out. The DIP Facility includes a carve-out for professional fees and U.S. Trustee fees (the "Carve-Out"), structured as follows:
Pre-Trigger Carve-Out. Prior to the delivery of a Carve-Out Trigger Notice, all accrued but unpaid professional fees and expenses of estate professionals retained pursuant to §327, §328, or §363 of the Bankruptcy Code, and any fees payable to the U.S. Trustee under 28 U.S.C. §1930, are carved out from the DIP Lenders' liens and superpriority claims without limitation.
Post-Trigger Carve-Out. Following the delivery of a Carve-Out Trigger Notice, estate professionals may incur and be paid fees and expenses in an aggregate amount not to exceed $2,500,000, and fees payable to the U.S. Trustee may be paid in an aggregate amount not to exceed $500,000, for a total post-trigger carve-out of $3,000,000.
K. Roll-Up of Pre-Petition ABL Obligations
The term sheet provides that, as a condition of the transaction, $20,000,000 of the Debtor's pre-petition obligations under the ABL Revolver will be "rolled up" into the DIP Facility. The effect of this roll-up is to convert $20,000,000 of pre-petition ABL claims into post-petition DIP obligations, thereby elevating those claims from their current pre-petition first-priority lien status (on receivables and inventory) to post-petition superpriority status on a pari passu basis with the new-money DIP obligations.
The roll-up has been presented as a condition imposed by the ABL lender group (Prairie State Bank, N.A., Hawthorn National Bank, and Northland Savings Bank, F.S.B.) in exchange for their consent to the priming of their liens and their support for the DIP financing.
L. Governing Law
The DIP Credit Agreement will be governed by the laws of the State of New York, without regard to conflicts of law principles. All bankruptcy proceedings will continue in the United States Bankruptcy Court for the Northern District of Iowa, Cedar Rapids Division.
IV. ANALYSIS OF KEY NEGOTIATION ISSUES
A. Interest Rate (SOFR + 850 bps)
The proposed interest rate of SOFR plus 850 basis points, with a 4.00% SOFR floor establishing an effective minimum all-in rate of 12.50%, is at the higher end of recent precedent for DIP facilities in the agricultural and chemical sectors. Based on the market precedent analysis set forth in Section V and Appendix E, comparable DIP facilities have ranged from SOFR + 700 bps to SOFR + 1,000 bps, with the mid-point of the range falling at approximately SOFR + 825 bps.
However, the Debtor's negotiating leverage on pricing is limited by the following considerations. First, the DIP marketing process conducted by Claridge yielded only two proposals, and the alternative Ridgeline standalone proposal was priced at SOFR + 900 basis points — 50 basis points higher than the Ironclad syndicate proposal. The selection of the Ironclad syndicate as the more favorable option is in part predicated on this pricing advantage, and aggressive negotiation on spread could undermine the rationale for the selection and risk losing the deal. Second, the current lending environment for distressed agricultural credits remains challenging, with limited lender appetite and elevated risk premiums driven by commodity price uncertainty and regulatory risk.
Recommendation: Accept the interest rate at SOFR + 850 basis points. We do not believe a reduction below SOFR + 800 bps is achievable in the current environment, and the marginal cost savings of a 25–50 basis point reduction (approximately $437,500 to $875,000 annualized on a full draw of $175M) does not justify the risk of impairing the relationship with the lender group at this early stage.
As a secondary negotiation point, we recommend seeking a reduction of the SOFR floor from 4.00% to 3.50%. While the current 1-month Term SOFR rate of approximately 4.31% is above the floor, a lower floor would provide modest cost savings in the event that SOFR declines during the pendency of the case. The annualized savings from a 50 basis point floor reduction, in a scenario where SOFR trades at 3.50%, would be approximately $875,000 on a full draw. This is a relatively low-conflict ask that may be achievable as part of a broader negotiation package.
The default rate of an additional 200 basis points (SOFR + 1,050 bps) is market standard for DIP facilities and does not warrant pushback.
B. Closing Fee ($3,500,000)
The proposed closing fee is 2.00% of total commitments, or $3,500,000, payable upon entry of the Interim DIP Order. A closing fee in this range is within the market norm for comparable DIP facilities, where fees have ranged from 1.50% to 3.00%. However, 2.00% is on the higher side for an agricultural borrower, where margins and enterprise values tend to be lower than in other industrial sectors.
A key concern is the timing of payment. The term sheet requires payment of the full $3,500,000 at the interim closing, meaning the Debtor will be required to fund this fee from the initial $80,000,000 draw. This represents a significant day-one cash outflow and reduces the effective proceeds available for operations. We should assess whether the fee can be partially deferred or split between the interim and final closings to reduce the initial cash burden.
When combined with the 1.00% exit fee of $1,750,000, the total fee load associated with the DIP Facility is $5,250,000 (excluding the unused line fee). This total fee burden should be disclosed in the §364 financing motion as part of the cost-of-financing analysis required for Court review. The Court will want to understand the all-in cost of the DIP Facility, including both interest and fees, in evaluating whether the terms are the best available.
Recommendation: Propose a reduction of the closing fee from 2.00% to 1.75%, which would result in a fee of $3,062,500 — a savings of $437,500. If a flat reduction is not achievable, our fallback position should be to accept the 2.00% rate but request bifurcation of the payment: 1.25% ($2,187,500) payable at the interim closing and 0.75% ($1,312,500) payable at the final closing. This bifurcation would preserve $1,312,500 in cash for the Debtor during the critical first weeks of the case.
C. Exit Fee ($1,750,000)
The proposed exit fee is 1.00% of aggregate commitments, or $1,750,000, payable at maturity or termination of the DIP Facility. A 1.00% exit fee is market standard for DIP facilities and is unlikely to draw significant objection from either the Court or the UCC.
However, the term sheet is ambiguous as to whether the exit fee is payable upon acceleration of the DIP Facility following an Event of Default. This is a critical point. If the exit fee is payable upon acceleration, it effectively rewards the DIP Lenders for the Debtor's default — a result that is inequitable and that the Court may view unfavorably. The standard debtor-protective position is that the exit fee should be payable only upon a non-default termination or orderly maturity of the facility, and not upon acceleration.
Recommendation: Clarify in the definitive documentation that the exit fee is payable only upon (i) the scheduled maturity of the DIP Facility, (ii) the effective date of a confirmed plan of reorganization, or (iii) the consummation of a §363 sale, and is not payable upon acceleration of the DIP Facility following an Event of Default. This is a standard market ask and should not face significant resistance from the lender group.
D. Unused Line Fee
The proposed unused line fee of 0.50% per annum on undrawn commitments is market standard and does not warrant significant pushback.
It is worth noting, however, that if only the interim draw of $80,000,000 is outstanding for an extended period prior to the entry of the Final DIP Order, the unused line fee on the remaining $95,000,000 of undrawn commitments would be approximately $475,000 on an annualized basis, or roughly $36,500 per week. While this is not a large amount in the context of a $175,000,000 facility, it is a meaningful cost during the initial weeks when the Debtor's cash resources are most constrained. We should ensure that the DIP Budget adequately accounts for this fee.
Recommendation: No change recommended. The 0.50% rate is at the low end of the market range (0.50%–1.00%), and this is not a point where negotiation will yield material benefit.
E. ABL Roll-Up ($20,000,000)
The proposed roll-up of $20,000,000 of pre-petition ABL obligations into the DIP Facility is one of the most significant negotiation issues in the term sheet and warrants careful analysis from both a legal and practical standpoint.
Legal Analysis. Roll-ups of pre-petition debt into DIP financing are an increasingly common feature of Chapter 11 cases, but they remain a frequent source of controversy and are subject to heightened judicial scrutiny. The legal authority for a roll-up is typically grounded in §364 of the Bankruptcy Code, which authorizes the debtor to obtain credit on terms approved by the court, including the granting of superpriority claims and liens. However, §364 does not expressly authorize the conversion of pre-petition claims into post-petition obligations, and courts have required that roll-ups satisfy the same standards applicable to DIP financing generally — namely, that the terms are the best available, that the roll-up is necessary to obtain the financing, and that the debtor exercised sound business judgment in agreeing to the roll-up.
In this case, the roll-up would convert $20,000,000 of the ABL lenders' pre-petition claims — which currently hold first-priority lien status on receivables and inventory only — into post-petition DIP obligations with superpriority administrative expense status and first-priority priming liens on all of the Debtor's assets. This represents a meaningful enhancement of the ABL lenders' position and a corresponding detriment to other creditors, particularly unsecured creditors.
Impact on Unsecured Creditors. The total unsecured claims pool is estimated at approximately $106,900,000, consisting of $84,200,000 in Senior Unsecured Notes and $22,700,000 in trade and other unsecured claims. Any diminution of estate value resulting from the roll-up flows through to the detriment of the unsecured creditor class. While the $20,000,000 roll-up does not directly reduce the estate's asset base (the underlying ABL obligations exist regardless), the elevation of those claims to superpriority status reduces the pool of assets available for distribution to unsecured creditors in a liquidation or reorganization scenario. The UCC will almost certainly object to the roll-up on these grounds, and we should be prepared to defend it with a robust evidentiary record.
Practical Considerations. The ABL lender group — Prairie State Bank, Hawthorn National Bank, and Northland Savings Bank — has conditioned its consent to priming on the inclusion of the roll-up. Without ABL lender consent, the DIP priming motion under §364(d) would face additional opposition, requiring the Debtor to demonstrate adequate protection of the ABL lenders' interests in a contested hearing. Given the time sensitivity of the DIP financing (interim hearing targeted for May 22, 2025), a contested priming fight is not a viable option.
Furthermore, the $20,000,000 roll-up represents approximately 27.7% of the $72,300,000 in drawn ABL obligations — a moderate proportion relative to market precedent, where some recent DIP facilities have included full roll-ups of pre-petition revolving obligations. The relative modesty of the roll-up amount supports the argument that it is a reasonable condition of the financing and not an overreach by the ABL lenders.
Recommendation: Accept the $20,000,000 roll-up as a necessary condition to secure ABL lender consent, and present it to the Court as an essential element of the financing package that was the product of arms-length negotiation. However, we should insist on the following protective measures:
(i) The roll-up shall occur only upon entry of the Final DIP Order, not the Interim DIP Order, thereby providing the UCC with an opportunity to be appointed and to be heard on the roll-up before it becomes effective;
(ii) The roll-up amount shall be capped at $20,000,000, with no provision for expansion or escalation, regardless of changes in the ABL borrowing base or outstanding balance;
(iii) We should prepare a detailed evidentiary record — including declarations from Nolan Ashworth (Claridge) and Derek Calloway (CEO) — documenting the absence of alternative financing options that do not include a roll-up component, the ABL lenders' insistence on the roll-up as a condition of consent, and the overall benefit to the estate of the DIP Facility including the roll-up as compared to the available alternatives.
F. Milestone Schedule
The term sheet imposes a four-milestone schedule: Interim DIP Order by May 22, 2025; Final DIP Order by June 19, 2025; filing of a plan of reorganization or §363 sale motion by October 12, 2025 (P.D. + 150 days); and confirmation of a plan or closing of a sale by February 8, 2026 (P.D. + 270 days). Each milestone warrants separate consideration.
Interim DIP Order (May 22, 2025 / P.D. + 5 Business Days). This timeline is tight but standard for interim DIP hearings. The five-business-day deadline is achievable provided the hearing is scheduled promptly. I will email chambers for Judge Dunleavy today (May 16, 2025) to request scheduling of the interim hearing and will propose a hearing date of May 22. The filing of the emergency motion and supporting papers must be completed by May 20–21 at the latest to allow for the minimum notice period.
Final DIP Order (June 19, 2025 / P.D. + 35 Days). This timeline is standard and allows adequate notice to parties in interest, including the UCC (once appointed). No modification is recommended.
Plan or §363 Sale Motion (October 12, 2025 / P.D. + 150 Days). This milestone is our principal area of concern. A 150-day deadline for filing a plan of reorganization or a §363 sale motion is aggressive for a company in the agricultural chemicals sector, where business performance is highly seasonal. Greenfield's peak selling season runs from approximately April through September (Q2–Q3), meaning that the business performance data necessary to support a credible plan of reorganization — including updated financial projections, marketing processes for asset sales, and discussions with key customers and suppliers regarding future commitments — may not be available until late Q3 (September) at the earliest.
Under the proposed 150-day milestone, the Debtor would be required to file a plan or sale motion by October 12, 2025, which falls only weeks after the end of the peak selling season. As a practical matter, the Debtor would need to begin drafting the plan and disclosure statement (or preparing a §363 sale motion and bidding procedures) no later than August–September 2025, at which point only partial Q3 data would be available. This creates a risk that the filed plan or sale motion will be based on incomplete information and may require significant amendment as full-year data becomes available.
Confirmation / Sale Closing (February 8, 2026 / P.D. + 270 Days). The 270-day deadline for confirmation or sale closing is aggressive but potentially achievable if the plan filing milestone is met. However, it leaves relatively little margin for the solicitation process, objection period, and confirmation hearing, particularly if the plan is contested.
Recommendation: We should negotiate the following modifications to the milestone schedule:
(i) Extension of the plan/sale motion filing milestone from 150 days (October 12, 2025) to 180 days (November 11, 2025), which would allow the Debtor to capture the full Q3 seasonal data and prepare a more robust filing;
(ii) A corresponding extension of the confirmation/sale closing milestone from 270 days (February 8, 2026) to 300 days (March 12, 2026);
(iii) Inclusion of cure provisions allowing a 15-day automatic extension of each milestone upon a good-faith showing of substantial progress toward the applicable milestone, to be demonstrated by written certification of the Debtor's CEO and financial advisor.
Fallback Position: If the DIP Lenders resist the extension of the plan filing milestone to 180 days, we should propose accepting the 150-day deadline with the following modification: an automatic 30-day extension (to P.D. + 180 days / November 11, 2025) that becomes effective if the Debtor has filed a disclosure statement or executed a letter of intent with a stalking horse bidder for a §363 sale by day 120 (September 12, 2025). This structure incentivizes the Debtor to make meaningful progress while providing the additional time necessary to ensure a quality filing.
G. Events of Default
The term sheet includes a standard DIP event of default provision, the specific terms of which will be set forth in the definitive DIP Credit Agreement. Based on our preliminary review of the term sheet language and our experience with comparable DIP facilities, the following event of default triggers require negotiation:
1. Cross-Default to Pre-Petition Credit Facilities. We must resist any cross-default provision that references the pre-petition credit facilities. The Debtor is already in default under both the First Lien Term Loan (Total Net Leverage Ratio breach) and the Senior Unsecured Notes (missed interest payment). A cross-default provision referencing these defaults would render the DIP Facility immediately in default upon closing — an absurd and commercially unworkable result. The DIP Credit Agreement should include an explicit exclusion of pre-petition defaults from any cross-default trigger.
2. Material Adverse Change (MAC) Clause. The term sheet includes a material adverse change trigger as an Event of Default, but does not define "material adverse change" with particularity. This is a critical definition that must be carefully negotiated in the definitive documentation. We should insist that the MAC definition:
(a) is limited to changes in the Debtor's business, operations, financial condition, or prospects arising after the Petition Date;
(b) excludes any matters disclosed in the Debtor's first-day declarations, schedules, or statement of financial affairs;
(c) excludes any matters known to the DIP Lenders at the time of closing;
(d) excludes general economic or industry-wide conditions not specific to the Debtor; and
(e) includes a materiality qualifier and a temporal element (i.e., the change must be material and must have persisted for a period of not less than 30 days).
3. Loss of Key Customer/Supplier. We should resist any standalone event of default triggered by the loss of a single customer or supplier. The Debtor's customer base includes several large agricultural cooperatives and distributors, the loss of any one of which could be characterized as "material" even if the overall business impact is manageable. We propose replacing any single-customer trigger with an aggregate revenue threshold — for example, loss of customers representing more than 20% of trailing 12-month revenue in the aggregate over any 60-day period.
4. Regulatory/EPA Trigger. Given the pending EPA re-registration of ClearGuard XR, which is specifically referenced in the Debtor's first-day declarations as a contributing cause of the filing, we must ensure that the continuation of this existing regulatory delay does not constitute an Event of Default. We propose a specific carve-out for any regulatory matter disclosed as of the Petition Date, including the ClearGuard XR re-registration proceeding, and a general carve-out for any regulatory action that does not result in a final, non-appealable order that materially and permanently impairs the Debtor's ability to manufacture or sell a product line representing more than 15% of trailing 12-month revenue.
5. Management Change. We should resist any automatic Event of Default upon the departure of a named officer of the Debtor. Management changes are not uncommon during Chapter 11 cases, and an automatic default trigger creates perverse incentives and may impair the Debtor's ability to manage its personnel. We propose that the departure of the CEO (Derek Calloway) or CFO (Patricia Langford) trigger only a notice obligation, with a 60-day cure period during which the Debtor must appoint a replacement acceptable to the DIP Agent (such acceptance not to be unreasonably withheld).
6. Failure to Meet Milestones. Failure to meet the milestone schedule should be an Event of Default, but should be subject to the extended timeline and cure provisions negotiated per Section IV.F above.
7. Budget Variance. The financial covenant framework (15% maximum variance, rolling 4-week, tested weekly) should be the exclusive mechanism for addressing budget deviations. There should be no separate Event of Default trigger for minor budget deviations that do not rise to the level of a covenant breach.
Recommendation: We should prepare a detailed markup of each Event of Default provision in the definitive DIP Credit Agreement. Our key priorities, in order of importance, are: (i) the cross-default exclusion for pre-petition defaults, (ii) the MAC carve-out for pre-existing conditions and disclosed matters, (iii) the regulatory carve-out for the ClearGuard XR EPA re-registration, (iv) the management change cure period, and (v) the elimination of any standalone single-customer/supplier trigger.
H. Carve-Out Structure
The proposed carve-out structure is a critical issue for both the Debtor and the estate's professional advisors, and will almost certainly be a focus of the UCC's review of the DIP Facility.
Pre-Trigger Carve-Out. The pre-trigger carve-out — which covers all accrued but unpaid professional fees and U.S. Trustee fees without limitation prior to the delivery of a Carve-Out Trigger Notice — is standard and appropriate. No modification is recommended.
Post-Trigger Carve-Out. The proposed post-trigger carve-out of $3,000,000 ($2,500,000 for estate professionals and $500,000 for U.S. Trustee fees) raises significant concerns regarding adequacy.
The DIP Budget projects total restructuring professional fees of $16,100,000 over the 13-week period, which equates to approximately $1,238,000 per week. If an Event of Default were to occur and a Carve-Out Trigger Notice were issued, the $2,500,000 post-trigger carve-out for estate professionals would fund only approximately two to three weeks of professional services at the budgeted run rate. This is almost certainly insufficient to allow the estate's professionals to conduct an orderly wind-down or pursue a conversion to Chapter 7, negotiate a sale, or take other steps necessary to protect the interests of creditors.
Similarly, the $500,000 allocation for U.S. Trustee fees may prove inadequate. Based on the estimated quarterly U.S. Trustee fee of approximately $325,000, the $500,000 allocation would cover approximately one and one-half quarters of fees — a period that may or may not align with the actual timeline of a wind-down scenario.
In comparable agricultural and industrial Chapter 11 cases, post-trigger carve-outs have ranged from $3,000,000 to $7,500,000, with the proposed $3,000,000 falling at the very low end of this range. The size and complexity of this case — with three manufacturing plants, fourteen distribution centers, approximately 2,300 employees, and approximately $489 million in total debt — warrants a carve-out at or above the midpoint of the market range.
The UCC, once appointed and represented by Archer Grayson & Cole LLP (Franklin Desmond, partner), will almost certainly object to an inadequate carve-out as a means of ensuring that the Committee's professionals — who are typically the most active post-trigger — have sufficient resources to perform their duties. This objection is likely to have traction with Judge Dunleavy, who has historically been receptive to arguments regarding the adequacy of professional fee protections in large Chapter 11 cases.
Recommendation: We should negotiate an increase in the post-trigger carve-out to $4,000,000 for estate professionals and $750,000 for U.S. Trustee fees, for a total of $4,750,000. Our fallback position should be $3,500,000 for estate professionals and $500,000 for U.S. Trustee fees, for a total of $4,000,000. We should be prepared to present market data (summarized in Appendix E) to the Court and the DIP Lenders to justify the requested increase.
In addition, we should address the definition of "Carve-Out Trigger Notice" in the definitive documentation. Specifically, we should insist that:
(i) The trigger requires the delivery of actual written notice from the DIP Agent to the Debtor and all professionals of record — the mere occurrence of an Event of Default should not automatically trigger the carve-out limitation;
(ii) The Carve-Out Trigger Notice may not be delivered until three (3) business days after written notice of an Event of Default has been delivered to the Debtor; and
(iii) The Carve-Out Trigger Notice must identify the specific Event of Default giving rise to the notice and provide the Debtor with a reasonable opportunity to cure (if the default is curable) before the post-trigger cap becomes effective.
I. Financial Covenant Structuring Issues
Each of the three financial covenants included in the DIP Facility requires careful analysis of the testing methodology, compliance cushion, and practical implications for the Debtor's operations.
1. Minimum Liquidity ($15,000,000). The minimum liquidity covenant requires the Debtor to maintain liquidity (defined as cash plus availability under the DIP Facility) of not less than $15,000,000 at all times. The phrase "at all times" creates a continuous testing standard, meaning that any dip in liquidity below $15,000,000 — even if momentary and attributable to routine cash management activities — could technically constitute a breach and trigger an Event of Default.
This is a practical concern for the Debtor. Large payroll processing (the Debtor has approximately 2,300 employees), large vendor payments (particularly for raw materials such as active ingredients, surfactants, and packaging materials), and seasonal tax payments can cause significant intra-day or intra-week fluctuations in cash balances. A momentary dip below the $15,000,000 threshold during the processing of a large payment — even if liquidity returns to compliant levels within hours — would constitute a technical default under the "at all times" standard.
Under the base-case DIP Budget, ending cash at Week 13 is $56,750,000, which provides a substantial cushion above the $15,000,000 covenant. However, the budget also shows that the early weeks of the case (Weeks 1–4) involve significant net cash outflows: operating cash outflow of approximately $5,900,000 and restructuring professional fee payments of approximately $6,200,000 during the same period. Under stress scenarios — such as a two-week delay in seasonal receivables collections — liquidity during Weeks 1–4 could approach or briefly dip below the $15,000,000 threshold before stabilizing in subsequent weeks.
Recommendation: We should negotiate one of the following modifications to the liquidity testing methodology:
(a) Modify the testing standard from "at all times" to "as of the close of business on each business day," or alternatively, "as of 5:00 p.m. Eastern Time on each Friday" (end-of-week testing);
(b) In the alternative, include a three (3) business day cure period before a breach of the minimum liquidity covenant constitutes an Event of Default, thereby allowing the Debtor to remedy temporary liquidity dips caused by routine cash management activities; or
(c) At minimum, include a carve-out providing that temporary intra-day liquidity fluctuations attributable to payroll processing or vendor payment cycles, so long as liquidity is restored to compliant levels by the close of business on the same business day, shall not constitute a breach.
2. Budget Variance (15% Maximum, Rolling 4-Week, Tested Weekly). The budget variance covenant limits actual disbursements to no more than 115% of budgeted disbursements on a cumulative rolling four-week basis, tested weekly. This is a standard feature of DIP facilities, but the specific threshold of 15% warrants scrutiny in the context of the Debtor's seasonal business.
Greenfield's agricultural chemicals business is inherently seasonal, with disbursement timing subject to significant variability based on planting and application season timing, weather conditions, raw material delivery schedules, and customer demand patterns. In a typical year, disbursements can vary by 20–30% from week to week depending on the timing of raw material purchases, production scheduling, and distribution logistics. While the four-week rolling measurement period dampens some of this weekly volatility, a 15% cumulative threshold may still prove challenging if disbursement timing shifts by even a few days relative to the budget.
In addition, the budget includes a significant line item for restructuring professional fees ($16,100,000 over 13 weeks), the payment timing of which is governed by the Court's interim fee approval process and may not align precisely with the weekly budget projections. A large professional fee payment in one week that was budgeted for the following week could create a temporary budget variance exceeding 15% that reverses itself in the subsequent testing period.
Recommendation: We should negotiate one or more of the following modifications:
(a) Increase the budget variance threshold from 15% to 20% to accommodate the inherent seasonality and timing variability of the Debtor's disbursement patterns;
(b) In the alternative (or in addition), propose exclusions from the variance calculation for (i) "extraordinary items" above a de minimis threshold of $500,000, which would require identification and notification to the DIP Agent, and (ii) Court-approved professional fee payments, which are subject to the Court's own review process and should not be penalized if payment timing deviates from the budget; and
(c) Include a cure mechanism allowing the Debtor to amend the DIP Budget on a prospective basis with the consent of the DIP Agent (not to be unreasonably withheld) if actual disbursement patterns deviate materially from the original budget due to seasonal timing shifts.
A separate memorandum from Amy Chesterton on budget variance methodology and testing protocol, including a detailed analysis of the Debtor's historical disbursement variability by week, will follow.
3. Minimum EBITDA (($5,000,000) Rolling 4-Week). The minimum EBITDA covenant establishes a floor of negative $5,000,000 for any rolling four-week period. Given the Debtor's FY 2024 EBITDA of $38,700,000, which translates to a run-rate of approximately $2,960,000 per four-week period (or approximately $740,000 per week), this covenant provides significant cushion under normal operating conditions. Even if EBITDA declines substantially from FY 2024 levels during the restructuring period, the Debtor would need to incur a swing of approximately $7,960,000 relative to the four-week run rate before breaching the covenant.
However, compliance with this covenant depends critically on the definition of "EBITDA" in the DIP Credit Agreement, particularly the treatment of restructuring and reorganization charges, non-cash items, and extraordinary items. If restructuring professional fees (budgeted at $16,100,000 over 13 weeks) are included in the EBITDA calculation as operating expenses, the negative $5,000,000 floor could be breached during the first four-week period, when the professional fee burden is heaviest (approximately $6,200,000 for Weeks 1–4 alone). However, if restructuring and reorganization charges are excluded from EBITDA (which is the standard approach in DIP facilities), the covenant should be comfortably met under the base case.
Recommendation: Confirm the EBITDA definition with Claridge Advisory Group LLC (Nolan Ashworth) and the Debtor's CFO (Patricia Langford) to ensure that it includes customary add-backs for:
(i) restructuring and reorganization charges (including professional fees, severance costs, and plant rationalization costs);