1024-00001 · Driftwood Absolute Return Fund Ltd · Court Filings

proposed-final-dip-order.docx DOCUMENT Finance & Banking

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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

FINAL ORDER (I) AUTHORIZING THE DEBTORS TO OBTAIN SENIOR SECURED SUPERPRIORITY DEBTOR-IN-POSSESSION FINANCING, (II) GRANTING FINAL PRIMING LIENS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, (III) APPROVING THE ROLL-UP OF PRE-PETITION SECURED CLAIMS, (IV) GRANTING ADEQUATE PROTECTION TO PRE-PETITION SECURED PARTIES, (V) ESTABLISHING CHALLENGE PERIOD, AND (VI) GRANTING RELATED RELIEF

Upon consideration of the motion (the "DIP Motion") filed by the above-captioned debtors and debtors-in-possession (collectively, the "Debtors") for entry of interim and final orders, inter alia, (i) authorizing the Debtors to obtain senior secured superpriority debtor-in-possession financing, (ii) granting priming liens and superpriority administrative expense claims, (iii) approving the roll-up of certain pre-petition secured claims, (iv) granting adequate protection to pre-petition secured parties, (v) establishing a challenge period, and (vi) granting related relief; and upon consideration of the Senior Secured Superpriority Debtor-in-Possession Credit Agreement dated as of October 13, 2023 (the "DIP Credit Agreement"), by and among Cascabel Financial Holdings, Inc. and Cascabel Asset Management LLC, as Borrowers, and Driftwood Absolute Return Fund Ltd., as DIP Lender; and upon consideration of the declarations, exhibits, memoranda of law, and all other evidence and arguments presented at the Final Hearing (defined below); and the Court having jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated February 29, 2012; and this being a core proceeding pursuant to 28 U.S.C. § 157(b)(2); and venue being proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409; and due and proper notice of the DIP Motion, the Final Hearing, and the relief requested therein having been given to all parties entitled to receive such notice; and after due deliberation and consideration and for the reasons stated on the record at the Final Hearing; and good and sufficient cause appearing therefor;

THE COURT HEREBY FINDS AND DETERMINES AS FOLLOWS:

RECITALS

A. Petition and Case Background. On September 8, 2023 (the "Petition Date"), Cascabel Financial Holdings, Inc. ("CFH"), a corporation duly organized and existing under the laws of the State of Delaware, with its principal offices located at 1200 Market Street, Suite 900, Wilmington, Delaware 19801, and Cascabel Asset Management LLC ("CAM"), a Delaware limited liability company (collectively, the "Debtors"), each filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the "Bankruptcy Code"), thereby commencing these jointly administered Chapter 11 cases. Since the Petition Date, the Debtors have continued to operate their respective businesses and manage their properties as debtors-in-possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in these cases, and no request for such appointment is currently pending.

Ridgeline Community Bank, a Delaware state-chartered commercial bank regulated by the Delaware Office of the State Bank Commissioner and the Federal Deposit Insurance Corporation ("FDIC"), with approximately $385,000,000 in total deposits as of the Petition Date, is a subsidiary of CFH but is not a debtor in these Chapter 11 cases. Ridgeline Community Bank and all of its assets, deposits, and operations are ring-fenced from the Chapter 11 proceedings in accordance with applicable banking regulatory requirements and by agreement of the parties. This Final Order does not purport to affect, encumber, or in any way bind Ridgeline Community Bank or its assets.

On September 22, 2023, the United States Trustee for the District of Delaware (the "U.S. Trustee") appointed the Official Committee of Unsecured Creditors (the "Committee") in these cases, pursuant to Section 1102 of the Bankruptcy Code.

B. The Debtors' Motion. On the Petition Date, September 8, 2023, the Debtors filed the DIP Motion, seeking, among other things, authority under Sections 364(c) and 364(d) of the Bankruptcy Code to enter into a $75,000,000 senior secured superpriority debtor-in-possession credit facility (the "DIP Facility" or the "DIP Credit Facility") with Driftwood Absolute Return Fund Ltd. ("Driftwood" or the "DIP Lender"), a Cayman Islands exempted company with a principal office located at 280 Park Avenue, 38th Floor, New York, New York 10017. The DIP Motion was filed as a first-day motion and sought both interim and final relief. The DIP Motion was drafted by Calderwood & Harkness LLP, counsel to the DIP Lender, in coordination with Whitfield, Graves & Sato LLP, counsel to the Debtors, and was supported by declarations of the Debtors' Chief Financial Officer and the Debtors' financial advisor.

C. Interim DIP Order. On September 15, 2023, following a hearing on the DIP Motion held on that same date, this Court entered the Interim Order (I) Authorizing the Debtors to Obtain Senior Secured Superpriority Debtor-in-Possession Financing, (II) Granting Interim Priming Liens, and (III) Providing Interim Adequate Protection to Pre-Petition Secured Parties (the "Interim DIP Order") [Dkt. No. _], which authorized the Debtors to borrow up to $18,000,000 (constituting "Draw 1") under the DIP Credit Facility on an interim basis, granted interim priming liens in favor of the DIP Lender, and provided interim adequate protection to the pre-petition secured parties. Draw 1 proceeds in the amount of $18,000,000 were funded by the DIP Lender on September 18, 2023, from which $1,500,000 was applied to the commitment fee payable under Section 2.05 of the DIP Credit Agreement and $3,500,000 was deposited into a segregated adequate protection reserve account (the "Adequate Protection Reserve") maintained at Velthorn National Bank, N.A. The remaining net proceeds of $13,000,000 were made available to the Debtors for general working capital purposes and case administration costs in accordance with the DIP Budget.

D. DIP Credit Agreement. The Debtors and the DIP Lender have entered into that certain Senior Secured Superpriority Debtor-in-Possession Credit Agreement dated as of October 13, 2023 (the "DIP Credit Agreement"), by and among Cascabel Financial Holdings, Inc. and Cascabel Asset Management LLC, as Borrowers, and Driftwood Absolute Return Fund Ltd., as DIP Lender. The DIP Credit Agreement, together with all schedules, exhibits, and ancillary documents executed in connection therewith (collectively, the "DIP Documents"), set forth the terms and conditions governing the DIP Facility. Capitalized terms used but not otherwise defined in this Final Order shall have the meanings ascribed to them in the DIP Credit Agreement.

E. Pre-Petition Capital Structure. As of the Petition Date, CFH's pre-petition funded indebtedness consisted of the following:

(i) A $120,000,000 senior secured first lien term loan (the "Pre-Petition First Lien Term Loan") pursuant to that certain Credit Agreement dated January 15, 2021, as amended, modified, or supplemented from time to time (the "Pre-Petition First Lien Credit Agreement"), by and among CFH, as borrower, the lenders party thereto, and Velthorn National Bank, N.A. ("Velthorn"), as administrative agent and collateral agent. The Pre-Petition First Lien Term Loan bears interest at a rate of Secured Overnight Financing Rate ("SOFR") plus 425 basis points per annum, and matures on January 15, 2026. As of the Petition Date, the outstanding principal balance of the Pre-Petition First Lien Term Loan was $120,000,000, plus accrued and unpaid interest;

(ii) $45,000,000 in aggregate principal amount of 10.50% Senior Secured Second Lien Notes due 2027 (the "Pre-Petition Second Lien Notes"), issued under that certain Indenture dated June 1, 2022 (the "Pre-Petition Second Lien Indenture"), by and between CFH, as issuer, and Zynvaro Trust Company, as indenture trustee (the "Second Lien Indenture Trustee"). The Pre-Petition Second Lien Notes are secured by second-priority liens on substantially the same collateral securing the Pre-Petition First Lien Term Loan, subject to the terms of an intercreditor agreement;

(iii) $18,500,000 in aggregate principal amount of 8.00% unsecured notes due March 1, 2025 (the "Pre-Petition Unsecured Notes"); and

(iv) Accordingly, the Debtors' total pre-petition funded indebtedness as of the Petition Date was approximately $183,500,000.

As of the Petition Date, the Debtors had total consolidated assets of approximately $620,000,000, including the equity value of Ridgeline Community Bank, and total consolidated liabilities of approximately $710,000,000, reflecting a negative equity position of approximately $90,000,000 on a book-value basis.

The holders of the Pre-Petition First Lien Term Loan and their respective holdings as of the Petition Date are as follows:

Driftwood holds $32,000,000 in face value of the Pre-Petition First Lien Term Loan, constituting approximately 26.67% of the total $120,000,000 facility. Driftwood is both the DIP Lender and a Pre-Petition First Lien Lender. The dual capacity in which Driftwood acts has been disclosed to this Court and all parties in interest.

F. Objections and Resolution. Following service of the DIP Motion and the notice of the Final Hearing, certain parties filed objections or limited objections, all of which have been resolved as set forth below:

(i) On September 19, 2023, the Ad Hoc Group of First Lien Lenders, consisting of Velthorn National Bank, N.A. and Pinnacle Credit Partners Fund II, LP (together, the "Ad Hoc Group"), collectively holding $66,000,000, or 55.0%, of the outstanding $120,000,000 Pre-Petition First Lien Term Loan, represented by Hartwell & Crane LLP (Monica L. Hartwell, lead partner), filed an objection (the "First Lien Objection") to the DIP Motion [Dkt. No. _], challenging, among other things, the priming of their first-priority liens, the proposed roll-up of Driftwood's pre-petition first lien claims, the adequacy of the proposed adequate protection package, and the terms and conditions of the DIP Facility.

(ii) On October 2, 2023, the Committee, represented by Breckenridge McCoy LLP (Thomas A. Breckenridge, lead partner), filed a limited objection (the "Committee Limited Objection") to the DIP Motion [Dkt. No. _], raising concerns regarding the sufficiency of the Carve-Out amount allocated to the Committee's professionals and the length of the Challenge Period available to the Committee to investigate and, if warranted, challenge the validity and priority of the pre-petition secured liens and the Roll-Up.

(iii) Following extensive, good-faith, arm's-length negotiations conducted between and among the DIP Lender, the Debtors, and the Ad Hoc Group, with the participation of their respective legal and financial advisors, the parties reached a global settlement resolving all objections raised in the First Lien Objection on October 6, 2023. The material terms of this settlement are set forth in the Stipulation Regarding Adequate Protection (the "Adequate Protection Stipulation"), which was filed with this Court on October 9, 2023 [Dkt. No. _].

(iv) The Committee's Limited Objection was resolved through negotiations that resulted in the following modifications to the DIP Facility terms: (a) the share of the Carve-Out available for fees and expenses of professionals retained by the Committee was increased from $500,000, as originally proposed, to $750,000; and (b) the Challenge Period available to the Committee was extended from 60 days to 75 days from the date of entry of this Final Order.

As a result of the foregoing resolutions, no unresolved objections remain pending with respect to the DIP Motion, and this Final Order has been entered with the consent, or non-objection, of all major constituencies.

G. Final Hearing. A final hearing on the DIP Motion (the "Final Hearing") was held before this Court on October 13, 2023. At the Final Hearing, the Court received testimony and evidence, heard argument of counsel, and reviewed the DIP Motion, the DIP Credit Agreement and related DIP Documents, the Interim DIP Order, the Adequate Protection Stipulation, the declarations filed in support of the DIP Motion, and all other submissions, filings, and evidence of record in these cases. All parties in interest were given proper notice of the Final Hearing and were afforded a full and fair opportunity to object to and be heard with respect to all relief requested in the DIP Motion.

H. Findings Regarding Need for DIP Financing. Based upon the evidence presented and the representations of counsel at the Final Hearing, the Court finds and determines the following:

(i) The Debtors have demonstrated an immediate and critical need for the DIP Financing to, among other things, fund their ongoing operations during the pendency of these Chapter 11 cases, preserve the going-concern value of their assets, maintain the viability of Cascabel Asset Management LLC, which manages approximately $1.2 billion in client assets under management ("AUM") as of the Petition Date, maintain regulatory compliance for the benefit of Ridgeline Community Bank and its depositors, satisfy payroll and other critical vendor obligations, and pay the administrative costs of these Chapter 11 cases.

(ii) Without the DIP Financing, the Debtors would suffer immediate and irreparable harm, including the risk of client attrition from CAM, potential regulatory intervention with respect to Ridgeline Community Bank, and the destruction of going-concern value to the detriment of all stakeholders.

(iii) The Debtors were unable to obtain financing on more favorable terms from any alternative source. Solstice Partners LLC, the Debtors' investment banker (David R. Chin, Managing Director), commenced a marketing process for debtor-in-possession financing on August 10, 2023, approximately four weeks prior to the Petition Date, contacting more than a dozen potential DIP lenders and financing sources. After a thorough canvassing of the market, Solstice Partners LLC confirmed that no alternative DIP financing proposals were received on terms superior to, or even comparable to, those offered by Driftwood. In particular, no potential lender was willing to provide new money DIP financing at the required scale without receiving priming liens and a roll-up component.

(iv) The terms and conditions of the DIP Credit Agreement, including the interest rate, fees, priming liens, superpriority administrative expense claims, roll-up of Driftwood's pre-petition first lien claims, and all other terms, are fair and reasonable under the circumstances prevailing in these Chapter 11 cases and were negotiated at arm's length and in good faith among the Debtors, the DIP Lender, and their respective advisors.

(v) The DIP Financing is in the best interests of the Debtors, their estates, their creditors, and all other parties in interest, and the Debtors' decision to enter into the DIP Credit Agreement constitutes a sound exercise of their business judgment.

I. Good Cause Finding. Based upon the foregoing findings and the entire record in these cases, the Court finds and determines that good cause has been shown for the entry of this Final Order pursuant to Sections 364(c) and 364(d) of the Bankruptcy Code, and for the granting of all relief requested herein, on a final basis.

ORDERING PROVISIONS

NOW, THEREFORE, based upon the foregoing findings and conclusions, and upon the entire record of these Chapter 11 cases, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED AS FOLLOWS:

1. Authorization of DIP Facility. The DIP Motion is GRANTED on a final basis to the full extent set forth herein. The Debtors are hereby authorized, on a final basis, to enter into, execute, deliver, and perform under the DIP Credit Agreement and all related DIP Documents, and to take all actions contemplated thereby and necessary to implement the DIP Facility. The Debtors are authorized to borrow, on a final basis, up to $43,000,000 in aggregate new money advances under the DIP Credit Facility (the "New Money DIP Tranche"), consisting of:

(a) Draw 1: $18,000,000, which was previously authorized on an interim basis pursuant to the Interim DIP Order and has been funded by the DIP Lender; and

(b) Draw 2: $25,000,000, which is hereby authorized on a final basis and shall be available to be drawn by the Debtors upon satisfaction of the conditions precedent set forth in Paragraph 21 of this Final Order and in the DIP Credit Agreement.

In addition, and as more fully described in Paragraph 5 of this Final Order, the Roll-Up Tranche in the amount of $32,000,000, representing the dollar-for-dollar roll-up of Driftwood's pre-petition first lien claims under the Pre-Petition First Lien Credit Agreement, is hereby authorized and approved on a final basis. The total authorized amount of the DIP Facility is $75,000,000, consisting of $43,000,000 in new money advances and $32,000,000 in the Roll-Up Tranche. All borrowings under the DIP Credit Facility shall be used solely for purposes permitted by the DIP Credit Agreement and the DIP Budget.

2. DIP Facility Terms. The DIP Facility shall be subject to the following material economic terms, in addition to all other terms and conditions set forth in the DIP Credit Agreement:

(a) Interest Rate. The DIP Facility shall bear interest at a rate per annum equal to Adjusted Term SOFR (as defined in the DIP Credit Agreement) plus 900 basis points, with a SOFR floor of 4.00%, resulting in a minimum all-in interest rate of 13.00% per annum. Interest shall accrue from the date of each advance and shall be calculated on the basis of a 360-day year and actual days elapsed. Interest shall be payable monthly in arrears on the first business day of each calendar month.

(b) Default Interest Rate. Upon the occurrence and during the continuance of an Event of Default (as defined in the DIP Credit Agreement and as set forth in Paragraph 14 of this Final Order), interest on all outstanding DIP Obligations shall accrue at the default rate, which shall be an additional 200 basis points above the otherwise applicable rate (i.e., Adjusted Term SOFR plus 1,100 basis points; minimum all-in default rate of 15.00% per annum).

(c) Commitment Fee. A commitment fee of 2.00% of the total $75,000,000 DIP Facility commitment amount, equaling $1,500,000, was earned upon execution of the DIP Credit Agreement and was paid from the proceeds of Draw 1 upon entry of the Interim DIP Order. The commitment fee is fully earned, non-refundable, and not subject to disgorgement.

(d) Exit Fee. An exit fee equal to 1.50% of all amounts drawn under the DIP Facility (estimated at $1,125,000 if the full $75,000,000 is drawn), shall be due and payable upon the earliest to occur of (i) the Maturity Date, (ii) full repayment of all DIP Obligations, or (iii) acceleration of the DIP Obligations following an Event of Default.

(e) Unused Line Fee. An unused line fee of 0.50% per annum, calculated on the average daily undrawn and uncancelled portion of the New Money DIP Tranche, shall accrue from the date of entry of this Final Order and shall be payable monthly in arrears.

(f) Maturity Date. The DIP Facility shall mature on the earliest to occur of: (i) September 8, 2024, which is twelve (12) months from the Petition Date; (ii) the effective date (the "Effective Date") of a confirmed plan of reorganization in these Chapter 11 cases; (iii) the consummation of a sale of all or substantially all of the Debtors' assets pursuant to Section 363 of the Bankruptcy Code; or (iv) the occurrence of an Event of Default under the DIP Credit Agreement that is not cured within any applicable cure period or waived by the DIP Lender in writing (the earliest such date, the "Maturity Date").

3. Superpriority Administrative Expense Claims. Pursuant to Section 364(c)(1) of the Bankruptcy Code, all obligations arising under or in connection with the DIP Facility, including without limitation all principal, interest (including default interest), fees, costs, expenses, indemnification obligations, and other amounts payable under the DIP Credit Agreement and the DIP Documents, in respect of both the New Money DIP Tranche and the Roll-Up Tranche (collectively, the "DIP Obligations"), shall constitute allowed superpriority administrative expense claims against each of the Debtors and their respective estates (the "DIP Superpriority Claims"), with priority over any and all other administrative expense claims and unsecured claims against the Debtors and their estates, whether now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, administrative expense claims arising under Sections 105, 326, 328, 330, 331, 365, 503(b), 507(a), and 507(b) of the Bankruptcy Code, whether or not such claims may arise in these Chapter 11 cases, in any successor cases, or upon conversion of these cases to cases under Chapter 7 of the Bankruptcy Code, subject only to the Carve-Out as set forth in Paragraph 10 of this Final Order. The Roll-Up Tranche obligations shall rank pari passu with the New Money DIP Tranche obligations in all respects, including as to superpriority administrative expense claim status, DIP Lien priority, payment priority, and all other rights, benefits, and protections afforded under this Final Order and the DIP Credit Agreement.

4. Grant of Final DIP Liens (Priming Liens). Pursuant to Sections 364(c)(2), 364(c)(3), and 364(d)(1) of the Bankruptcy Code, as security for all DIP Obligations, the DIP Lender is hereby granted, on a final basis, valid, binding, enforceable, non-avoidable, and automatically perfected first-priority priming security interests in and liens upon (the "DIP Liens") substantially all assets of the Debtors and their estates, of any kind or nature whatsoever, whether now owned or hereafter acquired, whether tangible or intangible, wherever located, including but not limited to:

(a) all personal property, including all accounts, accounts receivable, deposit accounts, securities accounts, commodity accounts, and all funds and amounts on deposit therein;

(b) all inventory, equipment, fixtures, goods, and other tangible personal property;

(d) all intellectual property, including trademarks, service marks, trade names, copyrights, patents, and all licenses and rights arising therefrom;

(e) all investment property, including equity interests in subsidiaries (other than Ridgeline Community Bank, to the extent subject to regulatory restrictions);

(f) all instruments, documents, chattel paper (whether tangible or electronic), commercial tort claims, and letter-of-credit rights;

(g) all real property and interests in real property, if any;

(h) all proceeds of avoidance actions and other causes of action arising under Chapter 5 of the Bankruptcy Code, including without limitation actions arising under Sections 544, 545, 547, 548, 549, 550, and 553 of the Bankruptcy Code;

(i) all books and records, ledgers, and data relating to any of the foregoing; and

(j) all proceeds, products, rents, profits, offspring, accessions, and all additions and attachments to any of the foregoing (all of the foregoing, collectively, the "DIP Collateral").

Excluded Assets. Notwithstanding anything to the contrary in this Final Order or the DIP Credit Agreement, the DIP Collateral shall not include any assets of Ridgeline Community Bank that are subject to regulatory restrictions or limitations imposed by the Delaware Office of the State Bank Commissioner and/or the FDIC, and the DIP Liens shall not attach to, or encumber, any such assets. Ridgeline Community Bank is not a debtor in these Chapter 11 cases, and its assets are ring-fenced from these proceedings.

The DIP Liens shall prime, and shall be senior in priority to, all pre-petition liens on the DIP Collateral, including without limitation the liens securing the Pre-Petition First Lien Term Loan under the Pre-Petition First Lien Credit Agreement and the liens securing the Pre-Petition Second Lien Notes under the Pre-Petition Second Lien Indenture. The DIP Liens shall be senior in priority to all other liens, claims, security interests, and encumbrances of any kind or nature, including any liens granted as adequate protection pursuant to this Final Order, subject only to (x) the Carve-Out as set forth in Paragraph 10 of this Final Order, and (y) any liens that (I) are valid, properly perfected, and senior in priority to the pre-petition first lien liens as of the Petition Date, and (II) were not subject to avoidance under any provision of the Bankruptcy Code or applicable non-bankruptcy law. The DIP Liens are granted to secure the DIP Obligations on a joint and several basis as against both Debtors.

5. Roll-Up Authorization and Mechanics. Upon entry of this Final Order, and without the necessity of any further action or order, $32,000,000 in face amount of Driftwood's pre-petition first lien claims held under the Pre-Petition First Lien Credit Agreement shall be, and hereby are, deemed rolled up into the DIP Facility on a dollar-for-dollar basis (the "Roll-Up"). The Roll-Up shall be effected automatically upon entry of this Final Order.

The Roll-Up Tranche of $32,000,000 shall constitute obligations under the DIP Credit Agreement and shall be entitled to all of the protections, priorities, liens, superpriority administrative expense claim status, and other rights and benefits afforded to the New Money DIP Tranche under this Final Order and the DIP Credit Agreement, pari passu in all respects, without distinction or subordination of any kind.

The Roll-Up is hereby approved as a fair and reasonable exercise of the Debtors' business judgment under the totality of the circumstances of these Chapter 11 cases. In making this determination, the Court has considered, among other factors: (i) Driftwood's willingness to provide $43,000,000 in new money debtor-in-possession financing on the terms set forth in the DIP Credit Agreement; (ii) the demonstrated inability of the Debtors to obtain alternative DIP financing from any source without incorporating a roll-up component; (iii) the testimony and evidence presented by Solstice Partners LLC regarding the marketing process and the absence of superior alternative proposals; (iv) the resolution of the objections of the Ad Hoc Group and the Committee; and (v) the overall benefit of the DIP Facility to the Debtors' estates and their stakeholders.

Upon the effectiveness of the Roll-Up, Driftwood's pre-petition first lien claims in the amount of $32,000,000 shall no longer constitute claims arising under or governed by the Pre-Petition First Lien Credit Agreement. Such claims shall instead be governed exclusively by the DIP Credit Agreement and shall be treated in all respects as DIP Obligations. The Roll-Up shall not affect or diminish Driftwood's rights to receive any distributions that may be payable in respect of any accrued but unpaid pre-petition interest on the rolled-up claims to the extent provided for in the DIP Credit Agreement. Velthorn, as administrative agent under the Pre-Petition First Lien Credit Agreement, shall adjust its records and the register of lenders to reflect the Roll-Up.

6. Adequate Protection for Pre-Petition First Lien Lenders. As adequate protection for the priming of the liens securing the Pre-Petition First Lien Term Loan, pursuant to Sections 361, 363(e), and 364(d)(1) of the Bankruptcy Code, the Pre-Petition First Lien Lenders (other than Driftwood, whose $32,000,000 in pre-petition first lien claims have been rolled up into the DIP Facility pursuant to Paragraph 5) holding $88,000,000 in aggregate claims (consisting of Velthorn National Bank, N.A.: $38,000,000; Pinnacle Credit Partners Fund II, LP: $28,000,000; and Brindoval Institutional Lending, LLC: $22,000,000) (collectively, the "Remaining First Lien Lenders") shall receive the following adequate protection package, as set forth in the Adequate Protection Stipulation:

(a) Replacement Liens. The Remaining First Lien Lenders are hereby granted valid, binding, enforceable, non-avoidable, and automatically perfected replacement liens and security interests on all of the DIP Collateral (the "Adequate Protection Liens"). The Adequate Protection Liens shall be junior in priority only to (i) the DIP Liens and (ii) the Carve-Out. The Adequate Protection Liens shall be senior in priority to all other liens, claims, security interests, and encumbrances of any kind, including without limitation the liens securing the Pre-Petition Second Lien Notes. The Adequate Protection Liens are granted to protect against any diminution in value of the Remaining First Lien Lenders' interests in the DIP Collateral, including any diminution resulting from the use, sale, or lease of the DIP Collateral, the priming of the pre-petition first liens by the DIP Liens, or the imposition of the automatic stay under Section 362 of the Bankruptcy Code.

(b) Superpriority Claims. The Remaining First Lien Lenders are hereby granted allowed superpriority administrative expense claims under Section 507(b) of the Bankruptcy Code (the "Adequate Protection Superpriority Claims") to the extent that the adequate protection provided hereunder proves insufficient to compensate for any diminution in value of their interests in the DIP Collateral. The Adequate Protection Superpriority Claims shall be junior in priority to the DIP Superpriority Claims but shall be senior to all other administrative expense claims and unsecured claims of any kind or nature in these cases or in any successor cases.

(c) Adequate Protection Payments. The Debtors shall make monthly adequate protection payments to the Remaining First Lien Lenders in an amount equal to current-pay interest on the aggregate outstanding principal amount of $88,000,000 at the non-default contract rate under the Pre-Petition First Lien Credit Agreement, which is SOFR plus 425 basis points per annum. Based on an assumed SOFR rate of 5.33% as of the date of this Final Order, the estimated all-in applicable rate is approximately 9.58% per annum, resulting in estimated monthly adequate protection payments of approximately $702,133. Adequate protection payments shall be due and payable on the first business day of each calendar month, commencing November 1, 2023, and shall be made to Velthorn National Bank, N.A., as administrative agent under the Pre-Petition First Lien Credit Agreement, for distribution to the Remaining First Lien Lenders pro rata in accordance with their respective holdings of the Pre-Petition First Lien Term Loan. The monthly adequate protection payment amount shall be adjusted on each interest rate reset date under the Pre-Petition First Lien Credit Agreement to reflect changes in the applicable SOFR rate.

(d) Adequate Protection Reserve. The Adequate Protection Reserve in the amount of $3,500,000, previously funded from Draw 1 proceeds and maintained in a segregated deposit account at Velthorn National Bank, N.A., shall continue to be maintained as security for the Debtors' adequate protection obligations to the Remaining First Lien Lenders. Funds in the Adequate Protection Reserve shall be applied to cover any shortfall in monthly adequate protection payments if and when the Debtors fail to make such payments when due, and shall otherwise not be disbursed without the prior written consent of the DIP Lender and the Remaining First Lien Lenders (acting through the Ad Hoc Group) or further order of this Court.

(e) Professional Fees of Ad Hoc Group Counsel. As additional adequate protection, the Debtors shall pay the reasonable and documented fees and expenses of Hartwell & Crane LLP, counsel to the Ad Hoc Group of First Lien Lenders, as and when incurred, subject to an aggregate cap of $1,200,000 (the "Ad Hoc Group Fee Cap"). Such fees and expenses shall be paid within thirty (30) days of submission of monthly invoices to the Debtors and the DIP Lender, subject to review for reasonableness. Any dispute regarding the reasonableness of such fees and expenses shall be resolved by this Court upon motion and after notice and a hearing.

7. Adequate Protection for Pre-Petition Second Lien Noteholders. As adequate protection for the priming of the liens securing the Pre-Petition Second Lien Notes, the holders of the Pre-Petition Second Lien Notes (collectively, the "Pre-Petition Second Lien Noteholders"), holding $45,000,000 in aggregate principal amount of Pre-Petition Second Lien Notes (with Ashford Mezzanine Capital, LP holding approximately $30,000,000, or approximately 66.67%, of the outstanding Pre-Petition Second Lien Notes), are hereby granted replacement liens and security interests on all of the DIP Collateral. Such replacement liens shall be junior in priority to (i) the DIP Liens, (ii) the Adequate Protection Liens granted to the Remaining First Lien Lenders, and (iii) the existing liens securing the Pre-Petition First Lien Term Loan (to the extent such liens remain in effect following the Roll-Up and the grant of Adequate Protection Liens). Such replacement liens shall be automatically perfected upon entry of this Final Order without the need for the filing of financing statements, mortgages, notices, or any other instruments or documents, and without the need for any further action by the Debtors, the Pre-Petition Second Lien Noteholders, or the Second Lien Indenture Trustee. No other adequate protection is provided to the Pre-Petition Second Lien Noteholders at this time, without prejudice to the right of any Pre-Petition Second Lien Noteholder to seek additional adequate protection by motion and upon proper notice.

8. Budget Compliance. The Debtors shall operate in compliance with the Approved Budget (the "DIP Budget"), which consists of a 13-week rolling cash flow forecast setting forth the Debtors' projected receipts and disbursements, a copy of which is attached to the DIP Credit Agreement as Exhibit B. The DIP Budget shall be updated by the Debtors every four (4) weeks and delivered to the DIP Lender, with a copy to counsel for the Committee, no later than the Friday preceding the commencement of each subsequent 4-week period. The Debtors shall comply with the following variance thresholds, tested on a cumulative bi-weekly basis:

(a) Revenue Variance. Actual aggregate revenues shall not be less than 90% or more than 110% of the projected aggregate revenues set forth in the DIP Budget for the applicable measurement period (i.e., a permitted variance of plus or minus 10%).

(b) Disbursement Variance. Actual aggregate disbursements shall not exceed 115% of the projected aggregate disbursements set forth in the DIP Budget for the applicable measurement period (i.e., a permitted variance of plus 15%). For the avoidance of doubt, actual aggregate disbursements may be less than projected disbursements without limitation.

Failure by the Debtors to comply with the budget variance thresholds set forth in this Paragraph 8 shall constitute an Event of Default under the DIP Credit Agreement. The DIP Lender shall provide written notice to the Debtors and the Committee of any budget variance that the DIP Lender believes constitutes an Event of Default within five (5) business days of the DIP Lender's receipt of the applicable variance report.

9. Milestones. The following milestones shall apply in these Chapter 11 cases, and the failure to satisfy any milestone by the applicable deadline (unless such deadline is extended in writing by the DIP Lender) shall constitute an Event of Default under the DIP Credit Agreement:

(a) Entry of the Interim DIP Order: no later than five (5) business days after the Petition Date — SATISFIED (the Interim DIP Order was entered on September 15, 2023);

(b) Entry of this Final DIP Order: no later than thirty-five (35) days after the Petition Date — SATISFIED (this Final Order is entered on October 13, 2023, the thirty-fifth day after the Petition Date);

(c) Filing of a plan of reorganization and related disclosure statement: no later than ninety (90) days after the Petition Date, i.e., by December 7, 2023;

(d) Entry of an order confirming a plan of reorganization: no later than one hundred fifty (150) days after the Petition Date, i.e., by February 5, 2024; and

(e) Occurrence of the Effective Date of a confirmed plan of reorganization: no later than one hundred eighty (180) days after the Petition Date, i.e., by March 6, 2024.

10. Carve-Out. The DIP Liens, the DIP Superpriority Claims, the Adequate Protection Liens, and the Adequate Protection Superpriority Claims shall in each case be subject to, and subordinate to, the following carve-out (the "Carve-Out"):

(a) Professional Fee Carve-Out. The sum of $2,500,000 shall be reserved and available for the payment of allowed fees and expenses of professionals retained by the Debtors and the Committee pursuant to Sections 327 and 1103 of the Bankruptcy Code, respectively, as approved by this Court. Of the $2,500,000 Professional Fee Carve-Out, no more than $750,000 shall be available for the payment of allowed fees and expenses of professionals retained by the Committee. The balance of the Professional Fee Carve-Out (i.e., up to $1,750,000) shall be available for the payment of allowed fees and expenses of professionals retained by the Debtors. The Professional Fee Carve-Out may be used, in whole or in part, to fund any challenge commenced during the Challenge Period to the extent of the amounts allocated to the professionals bringing such challenge, as provided in Paragraph 11 of this Final Order.

(b) Court and U.S. Trustee Fees. The sum of $250,000 shall be reserved and available for the payment of all fees payable to the Clerk of the Bankruptcy Court and to the U.S. Trustee under 28 U.S.C. § 1930 and 31 U.S.C. § 3717, including quarterly fees due and payable during the pendency of these Chapter 11 cases.

(c) Total Carve-Out. The aggregate Carve-Out shall be $2,750,000, consisting of the $2,500,000 Professional Fee Carve-Out and the $250,000 Court and U.S. Trustee Fee reserve. The Carve-Out shall be available notwithstanding the occurrence of an Event of Default or the termination of the DIP Facility.

11. Challenge Period. In connection with the entry of this Final Order and the stipulations and findings contained herein, the following Challenge Period provisions shall apply:

(a) Committee Challenge Period. The Committee shall have seventy-five (75) days from the date of entry of this Final Order (i.e., through and including December 27, 2023) (the "Committee Challenge Period") to investigate and, if appropriate, commence an adversary proceeding or contested matter in this Court challenging any of the following:

(i) The validity, extent, perfection, priority, or enforceability of the liens securing the Pre-Petition First Lien Term Loan or the Pre-Petition Second Lien Notes;

(ii) The Roll-Up, the DIP Liens, or any other relief granted under this Final Order or the Interim DIP Order;

(iii) Any claims, causes of action, objections, or defenses against or with respect to the DIP Lender, the Pre-Petition First Lien Lenders, or any of their respective agents, affiliates, or assigns, related to or arising out of the pre-petition secured indebtedness, including but not limited to any avoidance claims, equitable subordination claims, or recharacterization claims; or

(iv) Any other matter related to the DIP Facility, the pre-petition secured debt, or the transactions contemplated hereby or thereby that the Committee deems appropriate to investigate or challenge.

(b) Other Parties' Challenge Period. Any other party in interest (other than the Committee) shall have sixty (60) days from the date of entry of this Final Order (i.e., through and including December 12, 2023) to commence any challenge of the type described in subparagraph (a) above.

(c) Effect of Expiration Without Challenge. If no challenge of the type described in subparagraph (a) above is timely commenced within the applicable Challenge Period, then, without the necessity of any further action or order:

(i) The liens securing the Pre-Petition First Lien Term Loan and the Pre-Petition Second Lien Notes shall be deemed, for all purposes in these cases and in any successor cases, to be legal, valid, binding, enforceable, properly perfected, and not subject to avoidance, subordination, recharacterization, or any other challenge under any provision of the Bankruptcy Code or applicable non-bankruptcy law;

(ii) The Roll-Up shall be deemed fully authorized, valid, and not subject to challenge, avoidance, or reversal; and

(iii) Neither the Committee, any party in interest, nor any subsequently appointed trustee shall have standing to assert, and shall be forever barred from asserting, any challenge or claim of the type described in subparagraph (a) above.

(d) Funding of Challenges. The Carve-Out shall be available to fund any timely commenced challenge to the extent of the amounts allocated to the professionals bringing the challenge, and the exercise of rights under the Challenge Period shall not constitute a default under the DIP Credit Agreement or this Final Order.

12. Reimbursement of DIP Lender's Professional Fees. All reasonable and documented fees, costs, and expenses of Calderwood & Harkness LLP, counsel to the DIP Lender, and of any other professionals, consultants, or advisors retained by the DIP Lender in connection with the DIP Facility and these Chapter 11 cases, shall be paid by the Debtors as administrative expenses of the Debtors' estates pursuant to Section 11.04 of the DIP Credit Agreement, without the necessity of any further order of this Court, and without the need for such professionals to file formal fee applications under Sections 330 or 331 of the Bankruptcy Code. Such fees, costs, and expenses shall be paid by the Debtors within thirty (30) days of submission of reasonably detailed invoices (which may be redacted to preserve privilege) to the Debtors and the Committee. The Debtors and the Committee shall have fifteen (15) days following receipt of any such invoice to raise any objection to the reasonableness of any fees, costs, or expenses reflected therein. To the extent any dispute arises regarding the reasonableness of the DIP Lender's professional fees, costs, or expenses, such dispute shall be resolved by this Court upon motion, after notice and a hearing.

13. Perfection of DIP Liens. The DIP Liens granted pursuant to this Final Order shall be deemed automatically and fully perfected upon the entry of this Final Order, without the necessity of filing financing statements under the Uniform Commercial Code, recording mortgages, deeds of trust, or similar instruments in any real property records, taking possession or control of any DIP Collateral, or taking any other action that would otherwise be required under applicable federal or state law to perfect a security interest or lien. If the DIP Lender, in its sole discretion, elects to file financing statements, mortgages, notices, or other documents or instruments to evidence or further perfect the DIP Liens, the Debtors shall cooperate with and assist the DIP Lender and shall promptly execute and deliver any and all such documents and instruments as the DIP Lender may reasonably request. All such financing statements, mortgages, notices, or other documents or instruments shall be deemed to have been filed, recorded, or served at the time of, and effective as of, the entry of this Final Order.

The automatic stay imposed by Section 362 of the Bankruptcy Code is hereby modified to the extent necessary to permit the DIP Lender to file, record, or serve any financing statements, mortgages, notices, or other documents or instruments to evidence or further perfect the DIP Liens, without further order of this Court and without notice.

14. Events of Default. The Events of Default under the DIP Credit Agreement, as incorporated into this Final Order, include without limitation the following:

(a) Failure by the Debtors to make any payment of principal, interest, fees, or other amounts when due under the DIP Credit Agreement or the DIP Documents;

(b) Any breach by the Debtors of any representation, warranty, or covenant contained in the DIP Credit Agreement, the DIP Documents, or this Final Order;

(c) Failure by the Debtors to comply with the DIP Budget variance thresholds set forth in Paragraph 8 of this Final Order;

(d) Failure by the Debtors to satisfy any milestone by the applicable deadline set forth in Paragraph 9 of this Final Order;

(e) The conversion of these Chapter 11 cases, or any of them, to cases under Chapter 7 of the Bankruptcy Code, or the appointment of a trustee or examiner with expanded powers in these cases;

(f) The dismissal of these Chapter 11 cases, or any of them;

(g) The entry of an order by this Court or any other court of competent jurisdiction reversing, vacating, staying, or modifying this Final Order or the Interim DIP Order in any manner adverse to the DIP Lender, without the DIP Lender's prior written consent;

(h) The filing by the Debtors of a plan of reorganization or disclosure statement that is not in form and substance reasonably acceptable to the DIP Lender;

(i) The granting of any lien or superpriority claim that is equal or senior in priority to the DIP Liens or DIP Superpriority Claims (other than the Carve-Out), without the DIP Lender's prior written consent;

(j) The occurrence of a material adverse change in the business, operations, financial condition, or prospects of the Debtors, taken as a whole, since the Petition Date; and

(k) Any other event specified as an "Event of Default" in the DIP Credit Agreement.

Upon the occurrence of an Event of Default under the DIP Credit Agreement that is not cured within any applicable cure period or waived in writing by the DIP Lender, the DIP Lender may, upon five (5) business days' prior written notice (the "Remedies Notice Period") delivered to counsel for the Debtors, counsel for the Committee, and the U.S. Trustee, exercise any and all remedies available to it under the DIP Credit Agreement, this Final Order, and applicable law, including without limitation: (i) declaring all DIP Obligations immediately due and payable; (ii) terminating any remaining commitment to make advances under the DIP Facility; and (iii) exercising remedies against the DIP Collateral, including foreclosure, set-off, and application of funds in deposit accounts. During the Remedies Notice Period, the Debtors and the Committee may seek an emergency hearing before this Court to contest whether an Event of Default has occurred. The exercise of default remedies shall be subject in all events to the Carve-Out.

15. Modification of the Automatic Stay. The automatic stay imposed by Section 362 of the Bankruptcy Code is hereby modified to the extent necessary to implement and effectuate the terms and provisions of this Final Order, the DIP Credit Agreement, the DIP Documents, and the Adequate Protection Stipulation. Without limiting the generality of the foregoing, the automatic stay is modified to permit:

(a) The DIP Lender to apply payments received from the Debtors, charge interest on outstanding DIP Obligations, and charge fees as contemplated by the DIP Credit Agreement and this Final Order;

(b) The Debtors to make, and the Remaining First Lien Lenders to receive, the adequate protection payments contemplated by Paragraph 6(c) of this Final Order;

(c) The DIP Lender to send notices, make demands, and exercise remedies upon the occurrence of an Event of Default, in each case following the expiration of the Remedies Notice Period set forth in Paragraph 14 of this Final Order; and

(d) The DIP Lender and the Remaining First Lien Lenders to take any actions necessary to implement and enforce their respective rights under this Final Order, the DIP Credit Agreement, and the Adequate Protection Stipulation.

16. No Third-Party Rights. Nothing contained in this Final Order, the DIP Credit Agreement, the DIP Documents, or the Adequate Protection Stipulation shall be construed to create any rights for the benefit of, or enforceable by, any person or entity other than the DIP Lender, the Debtors, the Remaining First Lien Lenders (solely as to the adequate protection rights set forth in Paragraphs 6 and 7 of this Final Order and the Adequate Protection Stipulation), and the Committee (solely as to the Carve-Out and Challenge Period provisions set forth in Paragraphs 10 and 11 of this Final Order). No other person or entity shall be a third-party beneficiary of, or shall have any right, claim, or interest arising under or by virtue of, this Final Order.

17. Binding Effect and Successors. The provisions of this Final Order, including all findings, determinations, authorizations, grants of liens and superpriority claims, and other relief granted herein, shall be binding upon and inure to the benefit of: (a) the Debtors and their estates; (b) the DIP Lender; (c) the Pre-Petition First Lien Lenders, including both the Remaining First Lien Lenders and Driftwood (in its capacity as a pre-petition lender prior to the Roll-Up); (d) the Pre-Petition Second Lien Noteholders and the Second Lien Indenture Trustee; (e) the Committee and its members; and (f) the respective successors, assigns, heirs, executors, administrators, and legal representatives of each of the foregoing. This Final Order shall be binding upon, and shall not be subject to challenge by, any trustee appointed in these cases or in any successor cases under Chapter 7 of the Bankruptcy Code, or any other fiduciary or representative of the Debtors' estates. If these Chapter 11 cases are converted to cases under Chapter 7 of the Bankruptcy Code, or if these cases are dismissed and subsequently refiled, any Chapter 7 trustee, any successor debtor-in-possession, or any other fiduciary or representative of the Debtors' estates shall be bound by and subject to all of the terms and provisions of this Final Order.

18. Survival and Section 364(e) Protection. The DIP Liens, the DIP Superpriority Claims, the Adequate Protection Liens, the Adequate Protection Superpriority Claims, and all other rights, protections, and benefits granted to the DIP Lender and the Remaining First Lien Lenders under this Final Order shall survive the dismissal of these Chapter 11 cases, the conversion of these cases to cases under Chapter 7 of the Bankruptcy Code, or the entry of any order terminating or closing these cases, and shall continue in full force and effect until all DIP Obligations have been indefeasibly paid in full in cash and all commitments under the DIP Facility have been terminated. Pursuant to Section 364(e) of the Bankruptcy Code, the DIP Liens, the DIP Superpriority Claims, and the authorization of the DIP Facility shall not be modified, reversed, revoked, or otherwise affected by any reversal or modification of this Final Order on appeal, so long as the DIP Lender acted in good faith in extending credit under the DIP Facility. The Court has determined, as set forth in Paragraph 19 of this Final Order, that the DIP Lender has acted in good faith in connection with the DIP Facility, and the DIP Lender is entitled to the protections afforded by Section 364(e) of the Bankruptcy Code.

19. Good Faith Determination. The Court finds and determines, based upon the evidence and record before it, that the DIP Lender has acted in good faith in connection with the negotiation, documentation, execution, and funding of the DIP Facility, and in all of its dealings with the Debtors, the Pre-Petition First Lien Lenders, the Committee, and all other parties in interest in these Chapter 11 cases. The DIP Lender is entitled to all of the rights, privileges, and protections afforded to a good-faith lender under Section 364(e) of the Bankruptcy Code. The terms and conditions of the DIP Credit Agreement, including without limitation the interest rate, fees, DIP Liens, superpriority administrative expense claim status, the Roll-Up, the milestones, the budget covenants, and all other provisions thereof, were negotiated in good faith, at arm's length, and are fair and reasonable under the circumstances prevailing in these Chapter 11 cases. No party has presented evidence or argument sufficient to overcome the good-faith determination made herein.

20. Incorporation of Adequate Protection Stipulation. The Adequate Protection Stipulation, filed on October 9, 2023 [Dkt. No. _], is hereby approved in its entirety and is incorporated into this Final Order by reference as though fully set forth herein. The terms and provisions of the Adequate Protection Stipulation shall be enforceable and binding upon the parties thereto to the same extent as though such terms and provisions were contained in this Final Order. To the extent of any inconsistency or conflict between this Final Order and the Adequate Protection Stipulation, the terms and provisions of this Final Order shall control and govern.

21. Conditions Precedent to Draw 2. The obligation of the DIP Lender to fund Draw 2 in the amount of $25,000,000 shall be subject to the satisfaction (or waiver by the DIP Lender in its sole discretion) of the following conditions precedent, in addition to any other conditions precedent set forth in the DIP Credit Agreement:

(a) Entry of this Final Order in form and substance satisfactory to the DIP Lender in its reasonable discretion;

(b) No Event of Default shall have occurred and be continuing as of the date of the Draw 2 funding, and no event shall have occurred that, with the passage of time or the giving of notice (or both), would constitute an Event of Default;

(c) The Debtors shall be in compliance with the DIP Budget, including with respect to all variance thresholds, as of the most recently completed measurement period;

(d) The Debtors shall have delivered to the DIP Lender all officer's certificates, compliance certificates, legal opinions, and other documents and instruments required by the DIP Credit Agreement to be delivered as a condition to each advance;

(e) All representations and warranties of the Debtors set forth in the DIP Credit Agreement shall be true and correct in all material respects as of the date of the Draw 2 funding (except that any representation or warranty that is qualified by materiality shall be true and correct in all respects); and

(f) The Debtors shall have executed and delivered a borrowing request in the form required by the DIP Credit Agreement, specifying the amount and proposed use of Draw 2 proceeds.

22. No Waiver. Nothing in this Final Order, the DIP Credit Agreement, the DIP Documents, or the Adequate Protection Stipulation shall constitute, or shall be deemed to constitute, a waiver of any rights, claims, causes of action, or defenses of any party in interest, except as expressly set forth herein, in the Adequate Protection Stipulation, or in the DIP Credit Agreement. Without limiting the generality of the foregoing, (a) the Challenge Period provisions set forth in Paragraph 11 of this Final Order shall not be deemed waived or shortened except upon the expiration of the applicable Challenge Period without the timely commencement of a challenge, and (b) the reservation of rights of the Committee and the Remaining First Lien Lenders shall remain in full force and effect except to the extent expressly modified by the Adequate Protection Stipulation or this Final Order.

23. Effectiveness; Immediate Effect. This Final Order shall become effective immediately upon its entry on the docket of this Court, and shall not be stayed or otherwise delayed by operation of Bankruptcy Rules 6004(h), 6006(d), 7062, or any other provision of the Federal Rules of Bankruptcy Procedure, the Federal Rules of Civil Procedure, the Local Rules of this Court, or otherwise. The Debtors, the DIP Lender, and all other parties are authorized to take all actions, execute all documents, and perform all acts necessary or appropriate to implement, effectuate, and consummate the transactions contemplated by this Final Order and the DIP Credit Agreement immediately upon entry of this Final Order.

24. Retention of Jurisdiction. This Court retains exclusive jurisdiction over the following matters, and no other court shall exercise jurisdiction over such matters except as required by applicable law:

(a) To interpret, implement, and enforce this Final Order, the DIP Credit Agreement, the DIP Documents, and the Adequate Protection Stipulation, and to resolve any ambiguity in the terms thereof;

(b) To adjudicate any and all disputes, claims, or controversies arising from, relating to, or in connection with the DIP Facility, the DIP Obligations, the DIP Liens, the DIP Superpriority Claims, the Adequate Protection Liens, the Adequate Protection Superpriority Claims, or any other matter addressed in this Final Order;

(c) To hear and determine any challenges timely commenced during the Challenge Period pursuant to Paragraph 11 of this Final Order, including any adversary proceedings or contested matters brought by the Committee or any other party in interest;

(d) To consider and rule upon any proposed modifications, amendments, supplements, or waivers to this Final Order, the DIP Credit Agreement, or the Adequate Protection Stipulation, upon appropriate motion and after notice and a hearing;

(e) To resolve any disputes regarding the DIP Budget, budget compliance, variance calculations, or the occurrence of Events of Default; and

(f) To enter such further orders as may be necessary or appropriate to effectuate the intent and purpose of this Final Order.

###

Dated: October 13, 2023 Wilmington, Delaware

________________________________________

THE HONORABLE KAREN F. McALLISTER UNITED STATES BANKRUPTCY JUDGE

SUBMITTED BY:

CALDERWOOD & HARKNESS LLP Counsel to Driftwood Absolute Return Fund Ltd., DIP Lender

By: ________

Colette Whitman (Responsible Partner) CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, New York 10022

Delaware Office: 1000 North King Street, Suite 300 Wilmington, Delaware 19801

CONSENTED TO AS TO FORM:

WHITFIELD, GRAVES & SATO LLP Counsel to the Debtors

By: ________

Jonathan R. Whitfield

HARTWELL & CRANE LLP Counsel to the Ad Hoc Group of First Lien Lenders

By: ________

Monica L. Hartwell

BRECKENRIDGE McCOY LLP Counsel to the Official Committee of Unsecured Creditors

By: ________

Thomas A. Breckenridge

In re:	Chapter 11
CASCABEL FINANCIAL HOLDINGS, INC. (EIN: 84-3291057), and CASCABEL ASSET MANAGEMENT LLC,	Case No. 23-11487 (KFM)
Debtors.	(Jointly Administered)

Re: Debtors' Motion for Entry of Interim and Final Orders Authorizing DIP Financing, Granting Priming Liens, and Approving Roll-Up [Dkt. No. _]

Lender	Principal Amount Held	Percentage of Total
Velthorn National Bank, N.A.	$38,000,000	31.67%
Driftwood Absolute Return Fund Ltd.	$32,000,000	26.67%
Pinnacle Credit Partners Fund II, LP	$28,000,000	23.33%
Brindoval Institutional Lending, LLC	$22,000,000	18.33%
Total	$120,000,000	100.00%

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
FINAL ORDER (I) AUTHORIZING THE DEBTORS TO OBTAIN SENIOR SECURED SUPERPRIORITY DEBTOR-IN-POSSESSION FINANCING, (II) GRANTING FINAL PRIMING LIENS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, (III) APPROVING THE ROLL-UP OF PRE-PETITION SECURED CLAIMS, (IV) GRANTING ADEQUATE PROTECTION TO PRE-PETITION SECURED PARTIES, (V) ESTABLISHING CHALLENGE PERIOD, AND (VI) GRANTING RELATED RELIEF
Upon consideration of the motion (the "DIP Motion") filed by the above-captioned debtors and debtors-in-possession (collectively, the "Debtors") for entry of interim and final orders, inter alia, (i) authorizing the Debtors to obtain senior secured superpriority debtor-in-possession financing, (ii) granting priming liens and superpriority administrative expense claims, (iii) approving the roll-up of certain pre-petition secured claims, (iv) granting adequate protection to pre-petition secured parties, (v) establishing a challenge period, and (vi) granting related relief; and upon consideration of the Senior Secured Superpriority Debtor-in-Possession Credit Agreement dated as of October 13, 2023 (the "DIP Credit Agreement"), by and among Cascabel Financial Holdings, Inc. and Cascabel Asset Management LLC, as Borrowers, and Driftwood Absolute Return Fund Ltd., as DIP Lender; and upon consideration of the declarations, exhibits, memoranda of law, and all other evidence and arguments presented at the Final Hearing (defined below); and the Court having jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated February 29, 2012; and this being a core proceeding pursuant to 28 U.S.C. § 157(b)(2); and venue being proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409; and due and proper notice of the DIP Motion, the Final Hearing, and the relief requested therein having been given to all parties entitled to receive such notice; and after due deliberation and consideration and for the reasons stated on the record at the Final Hearing; and good and sufficient cause appearing therefor;
THE COURT HEREBY FINDS AND DETERMINES AS FOLLOWS:
RECITALS
A. Petition and Case Background. On September 8, 2023 (the "Petition Date"), Cascabel Financial Holdings, Inc. ("CFH"), a corporation duly organized and existing under the laws of the State of Delaware, with its principal offices located at 1200 Market Street, Suite 900, Wilmington, Delaware 19801, and Cascabel Asset Management LLC ("CAM"), a Delaware limited liability company (collectively, the "Debtors"), each filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the "Bankruptcy Code"), thereby commencing these jointly administered Chapter 11 cases. Since the Petition Date, the Debtors have continued to operate their respective businesses and manage their properties as debtors-in-possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in these cases, and no request for such appointment is currently pending.
Ridgeline Community Bank, a Delaware state-chartered commercial bank regulated by the Delaware Office of the State Bank Commissioner and the Federal Deposit Insurance Corporation ("FDIC"), with approximately $385,000,000 in total deposits as of the Petition Date, is a subsidiary of CFH but is not a debtor in these Chapter 11 cases. Ridgeline Community Bank and all of its assets, deposits, and operations are ring-fenced from the Chapter 11 proceedings in accordance with applicable banking regulatory requirements and by agreement of the parties. This Final Order does not purport to affect, encumber, or in any way bind Ridgeline Community Bank or its assets.
On September 22, 2023, the United States Trustee for the District of Delaware (the "U.S. Trustee") appointed the Official Committee of Unsecured Creditors (the "Committee") in these cases, pursuant to Section 1102 of the Bankruptcy Code.
B. The Debtors' Motion. On the Petition Date, September 8, 2023, the Debtors filed the DIP Motion, seeking, among other things, authority under Sections 364(c) and 364(d) of the Bankruptcy Code to enter into a $75,000,000 senior secured superpriority debtor-in-possession credit facility (the "DIP Facility" or the "DIP Credit Facility") with Driftwood Absolute Return Fund Ltd. ("Driftwood" or the "DIP Lender"), a Cayman Islands exempted company with a principal office located at 280 Park Avenue, 38th Floor, New York, New York 10017. The DIP Motion was filed as a first-day motion and sought both interim and final relief. The DIP Motion was drafted by Calderwood & Harkness LLP, counsel to the DIP Lender, in coordination with Whitfield, Graves & Sato LLP, counsel to the Debtors, and was supported by declarations of the Debtors' Chief Financial Officer and the Debtors' financial advisor.
C. Interim DIP Order. On September 15, 2023, following a hearing on the DIP Motion held on that same date, this Court entered the Interim Order (I) Authorizing the Debtors to Obtain Senior Secured Superpriority Debtor-in-Possession Financing, (II) Granting Interim Priming Liens, and (III) Providing Interim Adequate Protection to Pre-Petition Secured Parties (the "Interim DIP Order") [Dkt. No. _], which authorized the Debtors to borrow up to $18,000,000 (constituting "Draw 1") under the DIP Credit Facility on an interim basis, granted interim priming liens in favor of the DIP Lender, and provided interim adequate protection to the pre-petition secured parties. Draw 1 proceeds in the amount of $18,000,000 were funded by the DIP Lender on September 18, 2023, from which $1,500,000 was applied to the commitment fee payable under Section 2.05 of the DIP Credit Agreement and $3,500,000 was deposited into a segregated adequate protection reserve account (the "Adequate Protection Reserve") maintained at Velthorn National Bank, N.A. The remaining net proceeds of $13,000,000 were made available to the Debtors for general working capital purposes and case administration costs in accordance with the DIP Budget.
D. DIP Credit Agreement. The Debtors and the DIP Lender have entered into that certain Senior Secured Superpriority Debtor-in-Possession Credit Agreement dated as of October 13, 2023 (the "DIP Credit Agreement"), by and among Cascabel Financial Holdings, Inc. and Cascabel Asset Management LLC, as Borrowers, and Driftwood Absolute Return Fund Ltd., as DIP Lender. The DIP Credit Agreement, together with all schedules, exhibits, and ancillary documents executed in connection therewith (collectively, the "DIP Documents"), set forth the terms and conditions governing the DIP Facility. Capitalized terms used but not otherwise defined in this Final Order shall have the meanings ascribed to them in the DIP Credit Agreement.
E. Pre-Petition Capital Structure. As of the Petition Date, CFH's pre-petition funded indebtedness consisted of the following:
(i) A $120,000,000 senior secured first lien term loan (the "Pre-Petition First Lien Term Loan") pursuant to that certain Credit Agreement dated January 15, 2021, as amended, modified, or supplemented from time to time (the "Pre-Petition First Lien Credit Agreement"), by and among CFH, as borrower, the lenders party thereto, and Velthorn National Bank, N.A. ("Velthorn"), as administrative agent and collateral agent. The Pre-Petition First Lien Term Loan bears interest at a rate of Secured Overnight Financing Rate ("SOFR") plus 425 basis points per annum, and matures on January 15, 2026. As of the Petition Date, the outstanding principal balance of the Pre-Petition First Lien Term Loan was $120,000,000, plus accrued and unpaid interest;
(ii) $45,000,000 in aggregate principal amount of 10.50% Senior Secured Second Lien Notes due 2027 (the "Pre-Petition Second Lien Notes"), issued under that certain Indenture dated June 1, 2022 (the "Pre-Petition Second Lien Indenture"), by and between CFH, as issuer, and Zynvaro Trust Company, as indenture trustee (the "Second Lien Indenture Trustee"). The Pre-Petition Second Lien Notes are secured by second-priority liens on substantially the same collateral securing the Pre-Petition First Lien Term Loan, subject to the terms of an intercreditor agreement;
(iii) $18,500,000 in aggregate principal amount of 8.00% unsecured notes due March 1, 2025 (the "Pre-Petition Unsecured Notes"); and
(iv) Accordingly, the Debtors' total pre-petition funded indebtedness as of the Petition Date was approximately $183,500,000.
As of the Petition Date, the Debtors had total consolidated assets of approximately $620,000,000, including the equity value of Ridgeline Community Bank, and total consolidated liabilities of approximately $710,000,000, reflecting a negative equity position of approximately $90,000,000 on a book-value basis.
The holders of the Pre-Petition First Lien Term Loan and their respective holdings as of the Petition Date are as follows:
Driftwood holds $32,000,000 in face value of the Pre-Petition First Lien Term Loan, constituting approximately 26.67% of the total $120,000,000 facility. Driftwood is both the DIP Lender and a Pre-Petition First Lien Lender. The dual capacity in which Driftwood acts has been disclosed to this Court and all parties in interest.
F. Objections and Resolution. Following service of the DIP Motion and the notice of the Final Hearing, certain parties filed objections or limited objections, all of which have been resolved as set forth below:
(i) On September 19, 2023, the Ad Hoc Group of First Lien Lenders, consisting of Velthorn National Bank, N.A. and Pinnacle Credit Partners Fund II, LP (together, the "Ad Hoc Group"), collectively holding $66,000,000, or 55.0%, of the outstanding $120,000,000 Pre-Petition First Lien Term Loan, represented by Hartwell & Crane LLP (Monica L. Hartwell, lead partner), filed an objection (the "First Lien Objection") to the DIP Motion [Dkt. No. _], challenging, among other things, the priming of their first-priority liens, the proposed roll-up of Driftwood's pre-petition first lien claims, the adequacy of the proposed adequate protection package, and the terms and conditions of the DIP Facility.
(ii) On October 2, 2023, the Committee, represented by Breckenridge McCoy LLP (Thomas A. Breckenridge, lead partner), filed a limited objection (the "Committee Limited Objection") to the DIP Motion [Dkt. No. _], raising concerns regarding the sufficiency of the Carve-Out amount allocated to the Committee's professionals and the length of the Challenge Period available to the Committee to investigate and, if warranted, challenge the validity and priority of the pre-petition secured liens and the Roll-Up.
(iii) Following extensive, good-faith, arm's-length negotiations conducted between and among the DIP Lender, the Debtors, and the Ad Hoc Group, with the participation of their respective legal and financial advisors, the parties reached a global settlement resolving all objections raised in the First Lien Objection on October 6, 2023. The material terms of this settlement are set forth in the Stipulation Regarding Adequate Protection (the "Adequate Protection Stipulation"), which was filed with this Court on October 9, 2023 [Dkt. No. _].
(iv) The Committee's Limited Objection was resolved through negotiations that resulted in the following modifications to the DIP Facility terms: (a) the share of the Carve-Out available for fees and expenses of professionals retained by the Committee was increased from $500,000, as originally proposed, to $750,000; and (b) the Challenge Period available to the Committee was extended from 60 days to 75 days from the date of entry of this Final Order.
As a result of the foregoing resolutions, no unresolved objections remain pending with respect to the DIP Motion, and this Final Order has been entered with the consent, or non-objection, of all major constituencies.
G. Final Hearing. A final hearing on the DIP Motion (the "Final Hearing") was held before this Court on October 13, 2023. At the Final Hearing, the Court received testimony and evidence, heard argument of counsel, and reviewed the DIP Motion, the DIP Credit Agreement and related DIP Documents, the Interim DIP Order, the Adequate Protection Stipulation, the declarations filed in support of the DIP Motion, and all other submissions, filings, and evidence of record in these cases. All parties in interest were given proper notice of the Final Hearing and were afforded a full and fair opportunity to object to and be heard with respect to all relief requested in the DIP Motion.
H. Findings Regarding Need for DIP Financing. Based upon the evidence presented and the representations of counsel at the Final Hearing, the Court finds and determines the following:
(i) The Debtors have demonstrated an immediate and critical need for the DIP Financing to, among other things, fund their ongoing operations during the pendency of these Chapter 11 cases, preserve the going-concern value of their assets, maintain the viability of Cascabel Asset Management LLC, which manages approximately $1.2 billion in client assets under management ("AUM") as of the Petition Date, maintain regulatory compliance for the benefit of Ridgeline Community Bank and its depositors, satisfy payroll and other critical vendor obligations, and pay the administrative costs of these Chapter 11 cases.
(ii) Without the DIP Financing, the Debtors would suffer immediate and irreparable harm, including the risk of client attrition from CAM, potential regulatory intervention with respect to Ridgeline Community Bank, and the destruction of going-concern value to the detriment of all stakeholders.
(iii) The Debtors were unable to obtain financing on more favorable terms from any alternative source. Solstice Partners LLC, the Debtors' investment banker (David R. Chin, Managing Director), commenced a marketing process for debtor-in-possession financing on August 10, 2023, approximately four weeks prior to the Petition Date, contacting more than a dozen potential DIP lenders and financing sources. After a thorough canvassing of the market, Solstice Partners LLC confirmed that no alternative DIP financing proposals were received on terms superior to, or even comparable to, those offered by Driftwood. In particular, no potential lender was willing to provide new money DIP financing at the required scale without receiving priming liens and a roll-up component.
(iv) The terms and conditions of the DIP Credit Agreement, including the interest rate, fees, priming liens, superpriority administrative expense claims, roll-up of Driftwood's pre-petition first lien claims, and all other terms, are fair and reasonable under the circumstances prevailing in these Chapter 11 cases and were negotiated at arm's length and in good faith among the Debtors, the DIP Lender, and their respective advisors.
(v) The DIP Financing is in the best interests of the Debtors, their estates, their creditors, and all other parties in interest, and the Debtors' decision to enter into the DIP Credit Agreement constitutes a sound exercise of their business judgment.
I. Good Cause Finding. Based upon the foregoing findings and the entire record in these cases, the Court finds and determines that good cause has been shown for the entry of this Final Order pursuant to Sections 364(c) and 364(d) of the Bankruptcy Code, and for the granting of all relief requested herein, on a final basis.
ORDERING PROVISIONS
NOW, THEREFORE, based upon the foregoing findings and conclusions, and upon the entire record of these Chapter 11 cases, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED AS FOLLOWS:
1. Authorization of DIP Facility. The DIP Motion is GRANTED on a final basis to the full extent set forth herein. The Debtors are hereby authorized, on a final basis, to enter into, execute, deliver, and perform under the DIP Credit Agreement and all related DIP Documents, and to take all actions contemplated thereby and necessary to implement the DIP Facility. The Debtors are authorized to borrow, on a final basis, up to $43,000,000 in aggregate new money advances under the DIP Credit Facility (the "New Money DIP Tranche"), consisting of:
(a) Draw 1: $18,000,000, which was previously authorized on an interim basis pursuant to the Interim DIP Order and has been funded by the DIP Lender; and
(b) Draw 2: $25,000,000, which is hereby authorized on a final basis and shall be available to be drawn by the Debtors upon satisfaction of the conditions precedent set forth in Paragraph 21 of this Final Order and in the DIP Credit Agreement.
In addition, and as more fully described in Paragraph 5 of this Final Order, the Roll-Up Tranche in the amount of $32,000,000, representing the dollar-for-dollar roll-up of Driftwood's pre-petition first lien claims under the Pre-Petition First Lien Credit Agreement, is hereby authorized and approved on a final basis. The total authorized amount of the DIP Facility is $75,000,000, consisting of $43,000,000 in new money advances and $32,000,000 in the Roll-Up Tranche. All borrowings under the DIP Credit Facility shall be used solely for purposes permitted by the DIP Credit Agreement and the DIP Budget.
2. DIP Facility Terms. The DIP Facility shall be subject to the following material economic terms, in addition to all other terms and conditions set forth in the DIP Credit Agreement:
(a) Interest Rate. The DIP Facility shall bear interest at a rate per annum equal to Adjusted Term SOFR (as defined in the DIP Credit Agreement) plus 900 basis points, with a SOFR floor of 4.00%, resulting in a minimum all-in interest rate of 13.00% per annum. Interest shall accrue from the date of each advance and shall be calculated on the basis of a 360-day year and actual days elapsed. Interest shall be payable monthly in arrears on the first business day of each calendar month.
(b) Default Interest Rate. Upon the occurrence and during the continuance of an Event of Default (as defined in the DIP Credit Agreement and as set forth in Paragraph 14 of this Final Order), interest on all outstanding DIP Obligations shall accrue at the default rate, which shall be an additional 200 basis points above the otherwise applicable rate (i.e., Adjusted Term SOFR plus 1,100 basis points; minimum all-in default rate of 15.00% per annum).
(c) Commitment Fee. A commitment fee of 2.00% of the total $75,000,000 DIP Facility commitment amount, equaling $1,500,000, was earned upon execution of the DIP Credit Agreement and was paid from the proceeds of Draw 1 upon entry of the Interim DIP Order. The commitment fee is fully earned, non-refundable, and not subject to disgorgement.
(d) Exit Fee. An exit fee equal to 1.50% of all amounts drawn under the DIP Facility (estimated at $1,125,000 if the full $75,000,000 is drawn), shall be due and payable upon the earliest to occur of (i) the Maturity Date, (ii) full repayment of all DIP Obligations, or (iii) acceleration of the DIP Obligations following an Event of Default.
(e) Unused Line Fee. An unused line fee of 0.50% per annum, calculated on the average daily undrawn and uncancelled portion of the New Money DIP Tranche, shall accrue from the date of entry of this Final Order and shall be payable monthly in arrears.
(f) Maturity Date. The DIP Facility shall mature on the earliest to occur of: (i) September 8, 2024, which is twelve (12) months from the Petition Date; (ii) the effective date (the "Effective Date") of a confirmed plan of reorganization in these Chapter 11 cases; (iii) the consummation of a sale of all or substantially all of the Debtors' assets pursuant to Section 363 of the Bankruptcy Code; or (iv) the occurrence of an Event of Default under the DIP Credit Agreement that is not cured within any applicable cure period or waived by the DIP Lender in writing (the earliest such date, the "Maturity Date").
3. Superpriority Administrative Expense Claims. Pursuant to Section 364(c)(1) of the Bankruptcy Code, all obligations arising under or in connection with the DIP Facility, including without limitation all principal, interest (including default interest), fees, costs, expenses, indemnification obligations, and other amounts payable under the DIP Credit Agreement and the DIP Documents, in respect of both the New Money DIP Tranche and the Roll-Up Tranche (collectively, the "DIP Obligations"), shall constitute allowed superpriority administrative expense claims against each of the Debtors and their respective estates (the "DIP Superpriority Claims"), with priority over any and all other administrative expense claims and unsecured claims against the Debtors and their estates, whether now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, administrative expense claims arising under Sections 105, 326, 328, 330, 331, 365, 503(b), 507(a), and 507(b) of the Bankruptcy Code, whether or not such claims may arise in these Chapter 11 cases, in any successor cases, or upon conversion of these cases to cases under Chapter 7 of the Bankruptcy Code, subject only to the Carve-Out as set forth in Paragraph 10 of this Final Order. The Roll-Up Tranche obligations shall rank pari passu with the New Money DIP Tranche obligations in all respects, including as to superpriority administrative expense claim status, DIP Lien priority, payment priority, and all other rights, benefits, and protections afforded under this Final Order and the DIP Credit Agreement.
4. Grant of Final DIP Liens (Priming Liens). Pursuant to Sections 364(c)(2), 364(c)(3), and 364(d)(1) of the Bankruptcy Code, as security for all DIP Obligations, the DIP Lender is hereby granted, on a final basis, valid, binding, enforceable, non-avoidable, and automatically perfected first-priority priming security interests in and liens upon (the "DIP Liens") substantially all assets of the Debtors and their estates, of any kind or nature whatsoever, whether now owned or hereafter acquired, whether tangible or intangible, wherever located, including but not limited to:
(a) all personal property, including all accounts, accounts receivable, deposit accounts, securities accounts, commodity accounts, and all funds and amounts on deposit therein;
(b) all inventory, equipment, fixtures, goods, and other tangible personal property;
(c) all general intangibles, including payment intangibles, contract rights, customer lists, goodwill, and software;
(d) all intellectual property, including trademarks, service marks, trade names, copyrights, patents, and all licenses and rights arising therefrom;
(e) all investment property, including equity interests in subsidiaries (other than Ridgeline Community Bank, to the extent subject to regulatory restrictions);
(f) all instruments, documents, chattel paper (whether tangible or electronic), commercial tort claims, and letter-of-credit rights;
(g) all real property and interests in real property, if any;
(h) all proceeds of avoidance actions and other causes of action arising under Chapter 5 of the Bankruptcy Code, including without limitation actions arising under Sections 544, 545, 547, 548, 549, 550, and 553 of the Bankruptcy Code;
(i) all books and records, ledgers, and data relating to any of the foregoing; and
(j) all proceeds, products, rents, profits, offspring, accessions, and all additions and attachments to any of the foregoing (all of the foregoing, collectively, the "DIP Collateral").
Excluded Assets. Notwithstanding anything to the contrary in this Final Order or the DIP Credit Agreement, the DIP Collateral shall not include any assets of Ridgeline Community Bank that are subject to regulatory restrictions or limitations imposed by the Delaware Office of the State Bank Commissioner and/or the FDIC, and the DIP Liens shall not attach to, or encumber, any such assets. Ridgeline Community Bank is not a debtor in these Chapter 11 cases, and its assets are ring-fenced from these proceedings.
The DIP Liens shall prime, and shall be senior in priority to, all pre-petition liens on the DIP Collateral, including without limitation the liens securing the Pre-Petition First Lien Term Loan under the Pre-Petition First Lien Credit Agreement and the liens securing the Pre-Petition Second Lien Notes under the Pre-Petition Second Lien Indenture. The DIP Liens shall be senior in priority to all other liens, claims, security interests, and encumbrances of any kind or nature, including any liens granted as adequate protection pursuant to this Final Order, subject only to (x) the Carve-Out as set forth in Paragraph 10 of this Final Order, and (y) any liens that (I) are valid, properly perfected, and senior in priority to the pre-petition first lien liens as of the Petition Date, and (II) were not subject to avoidance under any provision of the Bankruptcy Code or applicable non-bankruptcy law. The DIP Liens are granted to secure the DIP Obligations on a joint and several basis as against both Debtors.
5. Roll-Up Authorization and Mechanics. Upon entry of this Final Order, and without the necessity of any further action or order, $32,000,000 in face amount of Driftwood's pre-petition first lien claims held under the Pre-Petition First Lien Credit Agreement shall be, and hereby are, deemed rolled up into the DIP Facility on a dollar-for-dollar basis (the "Roll-Up"). The Roll-Up shall be effected automatically upon entry of this Final Order.
The Roll-Up Tranche of $32,000,000 shall constitute obligations under the DIP Credit Agreement and shall be entitled to all of the protections, priorities, liens, superpriority administrative expense claim status, and other rights and benefits afforded to the New Money DIP Tranche under this Final Order and the DIP Credit Agreement, pari passu in all respects, without distinction or subordination of any kind.
The Roll-Up is hereby approved as a fair and reasonable exercise of the Debtors' business judgment under the totality of the circumstances of these Chapter 11 cases. In making this determination, the Court has considered, among other factors: (i) Driftwood's willingness to provide $43,000,000 in new money debtor-in-possession financing on the terms set forth in the DIP Credit Agreement; (ii) the demonstrated inability of the Debtors to obtain alternative DIP financing from any source without incorporating a roll-up component; (iii) the testimony and evidence presented by Solstice Partners LLC regarding the marketing process and the absence of superior alternative proposals; (iv) the resolution of the objections of the Ad Hoc Group and the Committee; and (v) the overall benefit of the DIP Facility to the Debtors' estates and their stakeholders.
Upon the effectiveness of the Roll-Up, Driftwood's pre-petition first lien claims in the amount of $32,000,000 shall no longer constitute claims arising under or governed by the Pre-Petition First Lien Credit Agreement. Such claims shall instead be governed exclusively by the DIP Credit Agreement and shall be treated in all respects as DIP Obligations. The Roll-Up shall not affect or diminish Driftwood's rights to receive any distributions that may be payable in respect of any accrued but unpaid pre-petition interest on the rolled-up claims to the extent provided for in the DIP Credit Agreement. Velthorn, as administrative agent under the Pre-Petition First Lien Credit Agreement, shall adjust its records and the register of lenders to reflect the Roll-Up.
6. Adequate Protection for Pre-Petition First Lien Lenders. As adequate protection for the priming of the liens securing the Pre-Petition First Lien Term Loan, pursuant to Sections 361, 363(e), and 364(d)(1) of the Bankruptcy Code, the Pre-Petition First Lien Lenders (other than Driftwood, whose $32,000,000 in pre-petition first lien claims have been rolled up into the DIP Facility pursuant to Paragraph 5) holding $88,000,000 in aggregate claims (consisting of Velthorn National Bank, N.A.: $38,000,000; Pinnacle Credit Partners Fund II, LP: $28,000,000; and Brindoval Institutional Lending, LLC: $22,000,000) (collectively, the "Remaining First Lien Lenders") shall receive the following adequate protection package, as set forth in the Adequate Protection Stipulation:
(a) Replacement Liens. The Remaining First Lien Lenders are hereby granted valid, binding, enforceable, non-avoidable, and automatically perfected replacement liens and security interests on all of the DIP Collateral (the "Adequate Protection Liens"). The Adequate Protection Liens shall be junior in priority only to (i) the DIP Liens and (ii) the Carve-Out. The Adequate Protection Liens shall be senior in priority to all other liens, claims, security interests, and encumbrances of any kind, including without limitation the liens securing the Pre-Petition Second Lien Notes. The Adequate Protection Liens are granted to protect against any diminution in value of the Remaining First Lien Lenders' interests in the DIP Collateral, including any diminution resulting from the use, sale, or lease of the DIP Collateral, the priming of the pre-petition first liens by the DIP Liens, or the imposition of the automatic stay under Section 362 of the Bankruptcy Code.
(b) Superpriority Claims. The Remaining First Lien Lenders are hereby granted allowed superpriority administrative expense claims under Section 507(b) of the Bankruptcy Code (the "Adequate Protection Superpriority Claims") to the extent that the adequate protection provided hereunder proves insufficient to compensate for any diminution in value of their interests in the DIP Collateral. The Adequate Protection Superpriority Claims shall be junior in priority to the DIP Superpriority Claims but shall be senior to all other administrative expense claims and unsecured claims of any kind or nature in these cases or in any successor cases.
(c) Adequate Protection Payments. The Debtors shall make monthly adequate protection payments to the Remaining First Lien Lenders in an amount equal to current-pay interest on the aggregate outstanding principal amount of $88,000,000 at the non-default contract rate under the Pre-Petition First Lien Credit Agreement, which is SOFR plus 425 basis points per annum. Based on an assumed SOFR rate of 5.33% as of the date of this Final Order, the estimated all-in applicable rate is approximately 9.58% per annum, resulting in estimated monthly adequate protection payments of approximately $702,133. Adequate protection payments shall be due and payable on the first business day of each calendar month, commencing November 1, 2023, and shall be made to Velthorn National Bank, N.A., as administrative agent under the Pre-Petition First Lien Credit Agreement, for distribution to the Remaining First Lien Lenders pro rata in accordance with their respective holdings of the Pre-Petition First Lien Term Loan. The monthly adequate protection payment amount shall be adjusted on each interest rate reset date under the Pre-Petition First Lien Credit Agreement to reflect changes in the applicable SOFR rate.
(d) Adequate Protection Reserve. The Adequate Protection Reserve in the amount of $3,500,000, previously funded from Draw 1 proceeds and maintained in a segregated deposit account at Velthorn National Bank, N.A., shall continue to be maintained as security for the Debtors' adequate protection obligations to the Remaining First Lien Lenders. Funds in the Adequate Protection Reserve shall be applied to cover any shortfall in monthly adequate protection payments if and when the Debtors fail to make such payments when due, and shall otherwise not be disbursed without the prior written consent of the DIP Lender and the Remaining First Lien Lenders (acting through the Ad Hoc Group) or further order of this Court.
(e) Professional Fees of Ad Hoc Group Counsel. As additional adequate protection, the Debtors shall pay the reasonable and documented fees and expenses of Hartwell & Crane LLP, counsel to the Ad Hoc Group of First Lien Lenders, as and when incurred, subject to an aggregate cap of $1,200,000 (the "Ad Hoc Group Fee Cap"). Such fees and expenses shall be paid within thirty (30) days of submission of monthly invoices to the Debtors and the DIP Lender, subject to review for reasonableness. Any dispute regarding the reasonableness of such fees and expenses shall be resolved by this Court upon motion and after notice and a hearing.
7. Adequate Protection for Pre-Petition Second Lien Noteholders. As adequate protection for the priming of the liens securing the Pre-Petition Second Lien Notes, the holders of the Pre-Petition Second Lien Notes (collectively, the "Pre-Petition Second Lien Noteholders"), holding $45,000,000 in aggregate principal amount of Pre-Petition Second Lien Notes (with Ashford Mezzanine Capital, LP holding approximately $30,000,000, or approximately 66.67%, of the outstanding Pre-Petition Second Lien Notes), are hereby granted replacement liens and security interests on all of the DIP Collateral. Such replacement liens shall be junior in priority to (i) the DIP Liens, (ii) the Adequate Protection Liens granted to the Remaining First Lien Lenders, and (iii) the existing liens securing the Pre-Petition First Lien Term Loan (to the extent such liens remain in effect following the Roll-Up and the grant of Adequate Protection Liens). Such replacement liens shall be automatically perfected upon entry of this Final Order without the need for the filing of financing statements, mortgages, notices, or any other instruments or documents, and without the need for any further action by the Debtors, the Pre-Petition Second Lien Noteholders, or the Second Lien Indenture Trustee. No other adequate protection is provided to the Pre-Petition Second Lien Noteholders at this time, without prejudice to the right of any Pre-Petition Second Lien Noteholder to seek additional adequate protection by motion and upon proper notice.
8. Budget Compliance. The Debtors shall operate in compliance with the Approved Budget (the "DIP Budget"), which consists of a 13-week rolling cash flow forecast setting forth the Debtors' projected receipts and disbursements, a copy of which is attached to the DIP Credit Agreement as Exhibit B. The DIP Budget shall be updated by the Debtors every four (4) weeks and delivered to the DIP Lender, with a copy to counsel for the Committee, no later than the Friday preceding the commencement of each subsequent 4-week period. The Debtors shall comply with the following variance thresholds, tested on a cumulative bi-weekly basis:
(a) Revenue Variance. Actual aggregate revenues shall not be less than 90% or more than 110% of the projected aggregate revenues set forth in the DIP Budget for the applicable measurement period (i.e., a permitted variance of plus or minus 10%).
(b) Disbursement Variance. Actual aggregate disbursements shall not exceed 115% of the projected aggregate disbursements set forth in the DIP Budget for the applicable measurement period (i.e., a permitted variance of plus 15%). For the avoidance of doubt, actual aggregate disbursements may be less than projected disbursements without limitation.
Failure by the Debtors to comply with the budget variance thresholds set forth in this Paragraph 8 shall constitute an Event of Default under the DIP Credit Agreement. The DIP Lender shall provide written notice to the Debtors and the Committee of any budget variance that the DIP Lender believes constitutes an Event of Default within five (5) business days of the DIP Lender's receipt of the applicable variance report.
9. Milestones. The following milestones shall apply in these Chapter 11 cases, and the failure to satisfy any milestone by the applicable deadline (unless such deadline is extended in writing by the DIP Lender) shall constitute an Event of Default under the DIP Credit Agreement:
(a) Entry of the Interim DIP Order: no later than five (5) business days after the Petition Date — SATISFIED (the Interim DIP Order was entered on September 15, 2023);
(b) Entry of this Final DIP Order: no later than thirty-five (35) days after the Petition Date — SATISFIED (this Final Order is entered on October 13, 2023, the thirty-fifth day after the Petition Date);
(c) Filing of a plan of reorganization and related disclosure statement: no later than ninety (90) days after the Petition Date, i.e., by December 7, 2023;
(d) Entry of an order confirming a plan of reorganization: no later than one hundred fifty (150) days after the Petition Date, i.e., by February 5, 2024; and
(e) Occurrence of the Effective Date of a confirmed plan of reorganization: no later than one hundred eighty (180) days after the Petition Date, i.e., by March 6, 2024.
10. Carve-Out. The DIP Liens, the DIP Superpriority Claims, the Adequate Protection Liens, and the Adequate Protection Superpriority Claims shall in each case be subject to, and subordinate to, the following carve-out (the "Carve-Out"):
(a) Professional Fee Carve-Out. The sum of $2,500,000 shall be reserved and available for the payment of allowed fees and expenses of professionals retained by the Debtors and the Committee pursuant to Sections 327 and 1103 of the Bankruptcy Code, respectively, as approved by this Court. Of the $2,500,000 Professional Fee Carve-Out, no more than $750,000 shall be available for the payment of allowed fees and expenses of professionals retained by the Committee. The balance of the Professional Fee Carve-Out (i.e., up to $1,750,000) shall be available for the payment of allowed fees and expenses of professionals retained by the Debtors. The Professional Fee Carve-Out may be used, in whole or in part, to fund any challenge commenced during the Challenge Period to the extent of the amounts allocated to the professionals bringing such challenge, as provided in Paragraph 11 of this Final Order.
(b) Court and U.S. Trustee Fees. The sum of $250,000 shall be reserved and available for the payment of all fees payable to the Clerk of the Bankruptcy Court and to the U.S. Trustee under 28 U.S.C. § 1930 and 31 U.S.C. § 3717, including quarterly fees due and payable during the pendency of these Chapter 11 cases.
(c) Total Carve-Out. The aggregate Carve-Out shall be $2,750,000, consisting of the $2,500,000 Professional Fee Carve-Out and the $250,000 Court and U.S. Trustee Fee reserve. The Carve-Out shall be available notwithstanding the occurrence of an Event of Default or the termination of the DIP Facility.
11. Challenge Period. In connection with the entry of this Final Order and the stipulations and findings contained herein, the following Challenge Period provisions shall apply:
(a) Committee Challenge Period. The Committee shall have seventy-five (75) days from the date of entry of this Final Order (i.e., through and including December 27, 2023) (the "Committee Challenge Period") to investigate and, if appropriate, commence an adversary proceeding or contested matter in this Court challenging any of the following:
(i) The validity, extent, perfection, priority, or enforceability of the liens securing the Pre-Petition First Lien Term Loan or the Pre-Petition Second Lien Notes;
(ii) The Roll-Up, the DIP Liens, or any other relief granted under this Final Order or the Interim DIP Order;
(iii) Any claims, causes of action, objections, or defenses against or with respect to the DIP Lender, the Pre-Petition First Lien Lenders, or any of their respective agents, affiliates, or assigns, related to or arising out of the pre-petition secured indebtedness, including but not limited to any avoidance claims, equitable subordination claims, or recharacterization claims; or
(iv) Any other matter related to the DIP Facility, the pre-petition secured debt, or the transactions contemplated hereby or thereby that the Committee deems appropriate to investigate or challenge.
(b) Other Parties' Challenge Period. Any other party in interest (other than the Committee) shall have sixty (60) days from the date of entry of this Final Order (i.e., through and including December 12, 2023) to commence any challenge of the type described in subparagraph (a) above.
(c) Effect of Expiration Without Challenge. If no challenge of the type described in subparagraph (a) above is timely commenced within the applicable Challenge Period, then, without the necessity of any further action or order:
(i) The liens securing the Pre-Petition First Lien Term Loan and the Pre-Petition Second Lien Notes shall be deemed, for all purposes in these cases and in any successor cases, to be legal, valid, binding, enforceable, properly perfected, and not subject to avoidance, subordination, recharacterization, or any other challenge under any provision of the Bankruptcy Code or applicable non-bankruptcy law;
(ii) The Roll-Up shall be deemed fully authorized, valid, and not subject to challenge, avoidance, or reversal; and
(iii) Neither the Committee, any party in interest, nor any subsequently appointed trustee shall have standing to assert, and shall be forever barred from asserting, any challenge or claim of the type described in subparagraph (a) above.
(d) Funding of Challenges. The Carve-Out shall be available to fund any timely commenced challenge to the extent of the amounts allocated to the professionals bringing the challenge, and the exercise of rights under the Challenge Period shall not constitute a default under the DIP Credit Agreement or this Final Order.
12. Reimbursement of DIP Lender's Professional Fees. All reasonable and documented fees, costs, and expenses of Calderwood & Harkness LLP, counsel to the DIP Lender, and of any other professionals, consultants, or advisors retained by the DIP Lender in connection with the DIP Facility and these Chapter 11 cases, shall be paid by the Debtors as administrative expenses of the Debtors' estates pursuant to Section 11.04 of the DIP Credit Agreement, without the necessity of any further order of this Court, and without the need for such professionals to file formal fee applications under Sections 330 or 331 of the Bankruptcy Code. Such fees, costs, and expenses shall be paid by the Debtors within thirty (30) days of submission of reasonably detailed invoices (which may be redacted to preserve privilege) to the Debtors and the Committee. The Debtors and the Committee shall have fifteen (15) days following receipt of any such invoice to raise any objection to the reasonableness of any fees, costs, or expenses reflected therein. To the extent any dispute arises regarding the reasonableness of the DIP Lender's professional fees, costs, or expenses, such dispute shall be resolved by this Court upon motion, after notice and a hearing.
13. Perfection of DIP Liens. The DIP Liens granted pursuant to this Final Order shall be deemed automatically and fully perfected upon the entry of this Final Order, without the necessity of filing financing statements under the Uniform Commercial Code, recording mortgages, deeds of trust, or similar instruments in any real property records, taking possession or control of any DIP Collateral, or taking any other action that would otherwise be required under applicable federal or state law to perfect a security interest or lien. If the DIP Lender, in its sole discretion, elects to file financing statements, mortgages, notices, or other documents or instruments to evidence or further perfect the DIP Liens, the Debtors shall cooperate with and assist the DIP Lender and shall promptly execute and deliver any and all such documents and instruments as the DIP Lender may reasonably request. All such financing statements, mortgages, notices, or other documents or instruments shall be deemed to have been filed, recorded, or served at the time of, and effective as of, the entry of this Final Order.
The automatic stay imposed by Section 362 of the Bankruptcy Code is hereby modified to the extent necessary to permit the DIP Lender to file, record, or serve any financing statements, mortgages, notices, or other documents or instruments to evidence or further perfect the DIP Liens, without further order of this Court and without notice.
14. Events of Default. The Events of Default under the DIP Credit Agreement, as incorporated into this Final Order, include without limitation the following:
(a) Failure by the Debtors to make any payment of principal, interest, fees, or other amounts when due under the DIP Credit Agreement or the DIP Documents;
(b) Any breach by the Debtors of any representation, warranty, or covenant contained in the DIP Credit Agreement, the DIP Documents, or this Final Order;
(c) Failure by the Debtors to comply with the DIP Budget variance thresholds set forth in Paragraph 8 of this Final Order;
(d) Failure by the Debtors to satisfy any milestone by the applicable deadline set forth in Paragraph 9 of this Final Order;
(e) The conversion of these Chapter 11 cases, or any of them, to cases under Chapter 7 of the Bankruptcy Code, or the appointment of a trustee or examiner with expanded powers in these cases;
(f) The dismissal of these Chapter 11 cases, or any of them;
(g) The entry of an order by this Court or any other court of competent jurisdiction reversing, vacating, staying, or modifying this Final Order or the Interim DIP Order in any manner adverse to the DIP Lender, without the DIP Lender's prior written consent;
(h) The filing by the Debtors of a plan of reorganization or disclosure statement that is not in form and substance reasonably acceptable to the DIP Lender;
(i) The granting of any lien or superpriority claim that is equal or senior in priority to the DIP Liens or DIP Superpriority Claims (other than the Carve-Out), without the DIP Lender's prior written consent;
(j) The occurrence of a material adverse change in the business, operations, financial condition, or prospects of the Debtors, taken as a whole, since the Petition Date; and
(k) Any other event specified as an "Event of Default" in the DIP Credit Agreement.
Upon the occurrence of an Event of Default under the DIP Credit Agreement that is not cured within any applicable cure period or waived in writing by the DIP Lender, the DIP Lender may, upon five (5) business days' prior written notice (the "Remedies Notice Period") delivered to counsel for the Debtors, counsel for the Committee, and the U.S. Trustee, exercise any and all remedies available to it under the DIP Credit Agreement, this Final Order, and applicable law, including without limitation: (i) declaring all DIP Obligations immediately due and payable; (ii) terminating any remaining commitment to make advances under the DIP Facility; and (iii) exercising remedies against the DIP Collateral, including foreclosure, set-off, and application of funds in deposit accounts. During the Remedies Notice Period, the Debtors and the Committee may seek an emergency hearing before this Court to contest whether an Event of Default has occurred. The exercise of default remedies shall be subject in all events to the Carve-Out.
15. Modification of the Automatic Stay. The automatic stay imposed by Section 362 of the Bankruptcy Code is hereby modified to the extent necessary to implement and effectuate the terms and provisions of this Final Order, the DIP Credit Agreement, the DIP Documents, and the Adequate Protection Stipulation. Without limiting the generality of the foregoing, the automatic stay is modified to permit:
(a) The DIP Lender to apply payments received from the Debtors, charge interest on outstanding DIP Obligations, and charge fees as contemplated by the DIP Credit Agreement and this Final Order;
(b) The Debtors to make, and the Remaining First Lien Lenders to receive, the adequate protection payments contemplated by Paragraph 6(c) of this Final Order;
(c) The DIP Lender to send notices, make demands, and exercise remedies upon the occurrence of an Event of Default, in each case following the expiration of the Remedies Notice Period set forth in Paragraph 14 of this Final Order; and
(d) The DIP Lender and the Remaining First Lien Lenders to take any actions necessary to implement and enforce their respective rights under this Final Order, the DIP Credit Agreement, and the Adequate Protection Stipulation.
16. No Third-Party Rights. Nothing contained in this Final Order, the DIP Credit Agreement, the DIP Documents, or the Adequate Protection Stipulation shall be construed to create any rights for the benefit of, or enforceable by, any person or entity other than the DIP Lender, the Debtors, the Remaining First Lien Lenders (solely as to the adequate protection rights set forth in Paragraphs 6 and 7 of this Final Order and the Adequate Protection Stipulation), and the Committee (solely as to the Carve-Out and Challenge Period provisions set forth in Paragraphs 10 and 11 of this Final Order). No other person or entity shall be a third-party beneficiary of, or shall have any right, claim, or interest arising under or by virtue of, this Final Order.
17. Binding Effect and Successors. The provisions of this Final Order, including all findings, determinations, authorizations, grants of liens and superpriority claims, and other relief granted herein, shall be binding upon and inure to the benefit of: (a) the Debtors and their estates; (b) the DIP Lender; (c) the Pre-Petition First Lien Lenders, including both the Remaining First Lien Lenders and Driftwood (in its capacity as a pre-petition lender prior to the Roll-Up); (d) the Pre-Petition Second Lien Noteholders and the Second Lien Indenture Trustee; (e) the Committee and its members; and (f) the respective successors, assigns, heirs, executors, administrators, and legal representatives of each of the foregoing. This Final Order shall be binding upon, and shall not be subject to challenge by, any trustee appointed in these cases or in any successor cases under Chapter 7 of the Bankruptcy Code, or any other fiduciary or representative of the Debtors' estates. If these Chapter 11 cases are converted to cases under Chapter 7 of the Bankruptcy Code, or if these cases are dismissed and subsequently refiled, any Chapter 7 trustee, any successor debtor-in-possession, or any other fiduciary or representative of the Debtors' estates shall be bound by and subject to all of the terms and provisions of this Final Order.
18. Survival and Section 364(e) Protection. The DIP Liens, the DIP Superpriority Claims, the Adequate Protection Liens, the Adequate Protection Superpriority Claims, and all other rights, protections, and benefits granted to the DIP Lender and the Remaining First Lien Lenders under this Final Order shall survive the dismissal of these Chapter 11 cases, the conversion of these cases to cases under Chapter 7 of the Bankruptcy Code, or the entry of any order terminating or closing these cases, and shall continue in full force and effect until all DIP Obligations have been indefeasibly paid in full in cash and all commitments under the DIP Facility have been terminated. Pursuant to Section 364(e) of the Bankruptcy Code, the DIP Liens, the DIP Superpriority Claims, and the authorization of the DIP Facility shall not be modified, reversed, revoked, or otherwise affected by any reversal or modification of this Final Order on appeal, so long as the DIP Lender acted in good faith in extending credit under the DIP Facility. The Court has determined, as set forth in Paragraph 19 of this Final Order, that the DIP Lender has acted in good faith in connection with the DIP Facility, and the DIP Lender is entitled to the protections afforded by Section 364(e) of the Bankruptcy Code.
19. Good Faith Determination. The Court finds and determines, based upon the evidence and record before it, that the DIP Lender has acted in good faith in connection with the negotiation, documentation, execution, and funding of the DIP Facility, and in all of its dealings with the Debtors, the Pre-Petition First Lien Lenders, the Committee, and all other parties in interest in these Chapter 11 cases. The DIP Lender is entitled to all of the rights, privileges, and protections afforded to a good-faith lender under Section 364(e) of the Bankruptcy Code. The terms and conditions of the DIP Credit Agreement, including without limitation the interest rate, fees, DIP Liens, superpriority administrative expense claim status, the Roll-Up, the milestones, the budget covenants, and all other provisions thereof, were negotiated in good faith, at arm's length, and are fair and reasonable under the circumstances prevailing in these Chapter 11 cases. No party has presented evidence or argument sufficient to overcome the good-faith determination made herein.
20. Incorporation of Adequate Protection Stipulation. The Adequate Protection Stipulation, filed on October 9, 2023 [Dkt. No. _], is hereby approved in its entirety and is incorporated into this Final Order by reference as though fully set forth herein. The terms and provisions of the Adequate Protection Stipulation shall be enforceable and binding upon the parties thereto to the same extent as though such terms and provisions were contained in this Final Order. To the extent of any inconsistency or conflict between this Final Order and the Adequate Protection Stipulation, the terms and provisions of this Final Order shall control and govern.
21. Conditions Precedent to Draw 2. The obligation of the DIP Lender to fund Draw 2 in the amount of $25,000,000 shall be subject to the satisfaction (or waiver by the DIP Lender in its sole discretion) of the following conditions precedent, in addition to any other conditions precedent set forth in the DIP Credit Agreement:
(a) Entry of this Final Order in form and substance satisfactory to the DIP Lender in its reasonable discretion;
(b) No Event of Default shall have occurred and be continuing as of the date of the Draw 2 funding, and no event shall have occurred that, with the passage of time or the giving of notice (or both), would constitute an Event of Default;
(c) The Debtors shall be in compliance with the DIP Budget, including with respect to all variance thresholds, as of the most recently completed measurement period;
(d) The Debtors shall have delivered to the DIP Lender all officer's certificates, compliance certificates, legal opinions, and other documents and instruments required by the DIP Credit Agreement to be delivered as a condition to each advance;
(e) All representations and warranties of the Debtors set forth in the DIP Credit Agreement shall be true and correct in all material respects as of the date of the Draw 2 funding (except that any representation or warranty that is qualified by materiality shall be true and correct in all respects); and
(f) The Debtors shall have executed and delivered a borrowing request in the form required by the DIP Credit Agreement, specifying the amount and proposed use of Draw 2 proceeds.
22. No Waiver. Nothing in this Final Order, the DIP Credit Agreement, the DIP Documents, or the Adequate Protection Stipulation shall constitute, or shall be deemed to constitute, a waiver of any rights, claims, causes of action, or defenses of any party in interest, except as expressly set forth herein, in the Adequate Protection Stipulation, or in the DIP Credit Agreement. Without limiting the generality of the foregoing, (a) the Challenge Period provisions set forth in Paragraph 11 of this Final Order shall not be deemed waived or shortened except upon the expiration of the applicable Challenge Period without the timely commencement of a challenge, and (b) the reservation of rights of the Committee and the Remaining First Lien Lenders shall remain in full force and effect except to the extent expressly modified by the Adequate Protection Stipulation or this Final Order.
23. Effectiveness; Immediate Effect. This Final Order shall become effective immediately upon its entry on the docket of this Court, and shall not be stayed or otherwise delayed by operation of Bankruptcy Rules 6004(h), 6006(d), 7062, or any other provision of the Federal Rules of Bankruptcy Procedure, the Federal Rules of Civil Procedure, the Local Rules of this Court, or otherwise. The Debtors, the DIP Lender, and all other parties are authorized to take all actions, execute all documents, and perform all acts necessary or appropriate to implement, effectuate, and consummate the transactions contemplated by this Final Order and the DIP Credit Agreement immediately upon entry of this Final Order.
24. Retention of Jurisdiction. This Court retains exclusive jurisdiction over the following matters, and no other court shall exercise jurisdiction over such matters except as required by applicable law:
(a) To interpret, implement, and enforce this Final Order, the DIP Credit Agreement, the DIP Documents, and the Adequate Protection Stipulation, and to resolve any ambiguity in the terms thereof;
(b) To adjudicate any and all disputes, claims, or controversies arising from, relating to, or in connection with the DIP Facility, the DIP Obligations, the DIP Liens, the DIP Superpriority Claims, the Adequate Protection Liens, the Adequate Protection Superpriority Claims, or any other matter addressed in this Final Order;
(c) To hear and determine any challenges timely commenced during the Challenge Period pursuant to Paragraph 11 of this Final Order, including any adversary proceedings or contested matters brought by the Committee or any other party in interest;
(d) To consider and rule upon any proposed modifications, amendments, supplements, or waivers to this Final Order, the DIP Credit Agreement, or the Adequate Protection Stipulation, upon appropriate motion and after notice and a hearing;
(e) To resolve any disputes regarding the DIP Budget, budget compliance, variance calculations, or the occurrence of Events of Default; and
(f) To enter such further orders as may be necessary or appropriate to effectuate the intent and purpose of this Final Order.
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Dated: October 13, 2023 Wilmington, Delaware
________________________________________
THE HONORABLE KAREN F. McALLISTER UNITED STATES BANKRUPTCY JUDGE
SUBMITTED BY:
CALDERWOOD & HARKNESS LLP Counsel to Driftwood Absolute Return Fund Ltd., DIP Lender
By: ________
Colette Whitman (Responsible Partner) CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, New York 10022
Delaware Office: 1000 North King Street, Suite 300 Wilmington, Delaware 19801
CONSENTED TO AS TO FORM:
WHITFIELD, GRAVES & SATO LLP Counsel to the Debtors
By: ________
Jonathan R. Whitfield
HARTWELL & CRANE LLP Counsel to the Ad Hoc Group of First Lien Lenders
By: ________
Monica L. Hartwell
BRECKENRIDGE McCOY LLP Counsel to the Official Committee of Unsecured Creditors
By: ________
Thomas A. Breckenridge
In re: | Chapter 11
CASCABEL FINANCIAL HOLDINGS, INC. (EIN: 84-3291057), and CASCABEL ASSET MANAGEMENT LLC, | Case No. 23-11487 (KFM)
Debtors. | (Jointly Administered)
Re: Debtors' Motion for Entry of Interim and Final Orders Authorizing DIP Financing, Granting Priming Liens, and Approving Roll-Up [Dkt. No. _]
Lender | Principal Amount Held | Percentage of Total
Velthorn National Bank, N.A. | $38,000,000 | 31.67%
Driftwood Absolute Return Fund Ltd. | $32,000,000 | 26.67%
Pinnacle Credit Partners Fund II, LP | $28,000,000 | 23.33%
Brindoval Institutional Lending, LLC | $22,000,000 | 18.33%
Total | $120,000,000 | 100.00%

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

THE COURT HEREBY FINDS AND DETERMINES AS FOLLOWS:

RECITALS

ORDERING PROVISIONS

SUBMITTED BY:

CONSENTED TO AS TO FORM:

Record

Parties

Dates

Amounts