[sheet: Cover]

[sheet: Cover]
Field | Value
Document Title | Approved DIP Budget — 13-Week Cash Flow Forecast
Exhibit Reference | Exhibit B to the Senior Secured Superpriority Debtor-in-Possession Credit Agreement
DIP Credit Agreement Date | October 13, 2023
Borrowers | Cascabel Financial Holdings, Inc. and Cascabel Asset Management LLC
Borrower Principal Address | 1200 Market Street, Suite 900, Wilmington, DE 19801
Borrower EIN | 84-3291057
DIP Lender | Driftwood Absolute Return Fund Ltd.
DIP Lender Principal Office | 280 Park Avenue, 38th Floor, New York, NY 10017
DIP Lender's Counsel | Calderwood & Harkness LLP, 599 Lexington Avenue, New York, NY 10022
Bankruptcy Case | In re Cascabel Financial Holdings, Inc., et al., Case No. 23-11487 (KFM)
Court | United States Bankruptcy Court for the District of Delaware
Judge | The Honorable Karen F. McAllister
Petition Date | September 8, 2023
Budget Prepared By | Alderpoint Advisory Partners LLC (CRO: Terrence M. Kowalski) in coordination with Calderwood & Harkness LLP
Budget Reviewed By | Susan K. Nakamura, CFO, Cascabel Financial Holdings, Inc.
Budget Approval Date | October 13, 2023 (upon entry of Final DIP Order)
Update Frequency | Every 4 weeks (rolling 13-week forecast)
Variance Testing | Revenue ±10%, Disbursements ±15%; tested on a cumulative bi-weekly basis
Note | Ridgeline Community Bank is excluded from the Chapter 11 filing and ring-fenced from this budget; all figures pertain solely to the Debtors (CFH and CAM)
Debtors' Counsel | Whitfield, Graves & Sato LLP (Jonathan R. Whitfield / Rachel P. Dumont)
Debtor's Investment Banker | Solstice Partners LLC (David R. Chin)
DIP Facility Total Commitment | $75,000,000 ($43,000,000 New Money + $32,000,000 Roll-Up)
[sheet: 13-Week Cash Flow Forecast]
Line Item | Week 1 ending 10/20/2023 | Week 2 ending 10/27/2023 | Week 3 ending 11/03/2023 | Week 4 ending 11/10/2023 | Week 5 ending 11/17/2023 | Week 6 ending 11/24/2023 | Week 7 ending 12/01/2023 | Week 8 ending 12/08/2023 | Week 9 ending 12/15/2023 | Week 10 ending 12/22/2023 | Week 11 ending 12/29/2023 | Week 12 ending 01/05/2024 | Week 13 ending 01/12/2024 | 13-Week Total
RECEIPTS
Advisory / Management Fee Revenue (CAM) | 615,000 | 615,000 | 615,000 | 615,000 | 615,000 | 615,000 | 615,000 | 615,000 | 615,000 | 615,000 | 615,000 | 615,000 | 615,000 | 7,995,000
Sub-Advisory Revenue | 125,000 | 125,000 | 125,000 | 125,000 | 125,000 | 125,000 | 125,000 | 125,000 | 125,000 | 125,000 | 125,000 | 125,000 | 125,000 | 1,625,000
Intercompany Dividends / Distributions from Ridgeline Community Bank | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
Other Receipts (misc.) | 35,000 | 35,000 | 35,000 | 35,000 | 35,000 | 35,000 | 35,000 | 35,000 | 35,000 | 35,000 | 35,000 | 35,000 | 35,000 | 455,000
TOTAL RECEIPTS | 775,000 | 775,000 | 775,000 | 775,000 | 775,000 | 775,000 | 775,000 | 775,000 | 775,000 | 775,000 | 775,000 | 775,000 | 775,000 | 10,075,000
OPERATING DISBURSEMENTS
Payroll & Benefits | 310,000 | 310,000 | 310,000 | 310,000 | 310,000 | 310,000 | 310,000 | 310,000 | 310,000 | 310,000 | 310,000 | 310,000 | 310,000 | 4,030,000
Rent & Occupancy (1200 Market St., Suite 900) | 58,000 | 0 | 0 | 0 | 58,000 | 0 | 0 | 0 | 58,000 | 0 | 0 | 0 | 58,000 | 232,000
Technology & Data Systems (incl. Vendara Technology Solutions contract) | 42,000 | 42,000 | 42,000 | 42,000 | 42,000 | 42,000 | 42,000 | 42,000 | 42,000 | 42,000 | 42,000 | 42,000 | 42,000 | 546,000
Insurance Premiums | 0 | 0 | 0 | 25,000 | 0 | 0 | 0 | 25,000 | 0 | 0 | 0 | 25,000 | 0 | 75,000
General & Administrative | 28,000 | 28,000 | 28,000 | 28,000 | 28,000 | 28,000 | 28,000 | 28,000 | 28,000 | 28,000 | 28,000 | 28,000 | 28,000 | 364,000
Regulatory Fees & Compliance | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | 195,000
Capital Expenditures | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 65,000
U.S. Trustee Fees | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 32,500 | 0 | 0 | 0 | 0 | 32,500
TOTAL OPERATING DISBURSEMENTS | 458,000 | 400,000 | 400,000 | 425,000 | 458,000 | 400,000 | 400,000 | 425,000 | 490,500 | 400,000 | 400,000 | 425,000 | 458,000 | 5,539,500
NET OPERATING CASH FLOW | 317,000 | 375,000 | 375,000 | 350,000 | 317,000 | 375,000 | 375,000 | 350,000 | 284,500 | 375,000 | 375,000 | 350,000 | 317,000 | 4,535,500
RESTRUCTURING & PROFESSIONAL FEES
Debtor's Counsel — Whitfield, Graves & Sato LLP | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 975,000
Debtor's Financial Advisor / CRO — Alderpoint Advisory Partners LLC | 62,500 | 62,500 | 62,500 | 62,500 | 62,500 | 62,500 | 62,500 | 62,500 | 62,500 | 62,500 | 62,500 | 62,500 | 62,500 | 812,500
Debtor's Investment Banker — Solstice Partners LLC | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 325,000
UCC Counsel — Breckenridge McCoy LLP | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 390,000
DIP Lender's Counsel — Calderwood & Harkness LLP (admin. expense per § 11.04) | 45,000 | 45,000 | 45,000 | 45,000 | 45,000 | 45,000 | 45,000 | 45,000 | 45,000 | 45,000 | 45,000 | 45,000 | 45,000 | 585,000
Other Professionals | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | 130,000
TOTAL RESTRUCTURING & PROFESSIONAL FEES | 247,500 | 247,500 | 247,500 | 247,500 | 247,500 | 247,500 | 247,500 | 247,500 | 247,500 | 247,500 | 247,500 | 247,500 | 247,500 | 3,217,500
ADEQUATE PROTECTION PAYMENTS
Current-Pay Interest on $88M Pre-Petition First Lien (SOFR+425 bps; ~9.58% p.a.) | 0 | 0 | 0 | 175,533 | 0 | 0 | 0 | 175,533 | 0 | 0 | 0 | 175,533 | 0 | 526,600
Adequate Protection Reserve (initial funding from Draw 1) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
Ad Hoc Group Counsel Fees — Hartwell & Crane LLP (capped at $1,200,000) | 0 | 0 | 0 | 50,000 | 0 | 0 | 0 | 50,000 | 0 | 0 | 0 | 50,000 | 0 | 150,000
TOTAL ADEQUATE PROTECTION PAYMENTS | 0 | 0 | 0 | 225,533 | 0 | 0 | 0 | 225,533 | 0 | 0 | 0 | 225,533 | 0 | 676,600
DIP FACILITY ACTIVITY
DIP Draw 1 Proceeds Received (Interim — $18,000,000) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
DIP Draw 2 Proceeds Received (Final — $25,000,000) | 25,000,000 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 25,000,000
Roll-Up Tranche ($32,000,000 — non-cash; pre-petition claims reclassified) | — | — | — | — | — | — | — | — | — | — | — | — | — | N/A
DIP Interest Payment (13.00% on $75M; ~$187,500/week) | 187,500 | 187,500 | 187,500 | 187,500 | 187,500 | 187,500 | 187,500 | 187,500 | 187,500 | 187,500 | 187,500 | 187,500 | 187,500 | 2,437,500
DIP Commitment Fee (2.00% × $75M = $1,500,000; paid at Interim Order) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
DIP Unused Line Fee (0.50% on undrawn New Money) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
DIP Exit Fee ($1,125,000; payable at maturity/repayment) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0
NET DIP FACILITY CASH FLOW | 24,812,500 | (187,500) | (187,500) | (187,500) | (187,500) | (187,500) | (187,500) | (187,500) | (187,500) | (187,500) | (187,500) | (187,500) | (187,500) | 22,562,500
NET WEEKLY CASH FLOW | 24,882,000 | (59,500) | (59,500) | (310,533) | (117,500) | (59,500) | (59,500) | (310,533) | (150,500) | (59,500) | (59,500) | (310,533) | (117,500) | 23,203,900
BEGINNING CASH BALANCE | 8,500,000 | 33,382,000 | 33,322,500 | 33,263,000 | 32,952,467 | 32,834,967 | 32,775,467 | 32,715,967 | 32,405,433 | 32,254,933 | 32,195,433 | 32,135,933 | 31,825,400
ENDING CASH BALANCE | 33,382,000 | 33,322,500 | 33,263,000 | 32,952,467 | 32,834,967 | 32,775,467 | 32,715,967 | 32,405,433 | 32,254,933 | 32,195,433 | 32,135,933 | 31,825,400 | 31,707,900
[sheet: DIP Sources & Uses]
Item | Amount | Notes
SOURCES
Draw 1 — Interim DIP Order (September 15, 2023) | 18,000,000 | New money; funded upon entry of Interim DIP Order
Draw 2 — Final DIP Order (October 13, 2023) | 25,000,000 | New money; funded upon entry of Final DIP Order
Roll-Up Tranche (non-cash) | 32,000,000 | Dollar-for-dollar roll-up of Driftwood pre-petition first lien claims; non-cash reclassification upon entry of Final DIP Order
TOTAL SOURCES | 75,000,000 | $43M new money + $32M roll-up
USES — FROM DRAW 1 ($18,000,000)
Commitment Fee (2.00% × $75,000,000) | 1,500,000 | Payable upon entry of Interim DIP Order
Adequate Protection Reserve | 3,500,000 | Funded from Draw 1 for benefit of pre-petition first lien lenders
Working Capital / General Corporate Purposes | 13,000,000 | Net proceeds available after fees and reserve
SUBTOTAL DRAW 1 USES | 18,000,000
USES — FROM DRAW 2 ($25,000,000)
Working Capital / General Corporate Purposes | 25,000,000 | Full Draw 2 amount for ongoing operations and restructuring costs
SUBTOTAL DRAW 2 USES | 25,000,000
ESTIMATED TOTAL DIP COST TO BORROWER
Commitment Fee | 1,500,000 | 2.00% × $75M
Exit Fee | 1,125,000 | 1.50% × $75M; payable at maturity/repayment
Estimated Interest (13.00% p.a. on $75M; ~5.3 months: Sept. 8, 2023 – Feb. 16, 2024) | 4,306,250 | Approximately $9,750,000 annualized × 161/365
TOTAL ESTIMATED DIP COST | 6,931,250 | $1,500,000 + $1,125,000 + $4,306,250
[sheet: Adequate Protection Detail]
Period | Outstanding Non-Driftwood First Lien Balance | Assumed SOFR Rate | Spread (bps) | All-In Rate | Monthly Interest Payment | Hartwell & Crane LLP Fee Accrual | Total Adequate Protection Payment | Cumulative Hartwell & Crane Fees | Remaining Fee Cap ($1,200,000)
October 2023 | 88,000,000 | 5.33% | 425 | 9.58% | 702,133 | 125,000 | 827,133 | 125,000 | 1,075,000
November 2023 | 88,000,000 | 5.33% | 425 | 9.58% | 702,133 | 150,000 | 852,133 | 275,000 | 925,000
December 2023 | 88,000,000 | 5.33% | 425 | 9.58% | 702,133 | 175,000 | 877,133 | 450,000 | 750,000
January 2024 | 88,000,000 | 5.33% | 425 | 9.58% | 702,133 | 200,000 | 902,133 | 650,000 | 550,000
February 2024 (through Effective Date 2/16/2024) | 88,000,000 | 5.33% | 425 | 9.58% | 374,738 | 150,000 | 524,738 | 800,000 | 400,000
TOTAL | 3,183,271 | 800,000 | 3,983,271 | 800,000
[sheet: Pre-Petition Capital Structure]
Tranche | Outstanding Amount | Rate | Maturity | Agent / Trustee | Key Holders | Plan Recovery
First Lien Term Loan | 120,000,000 | SOFR + 425 bps | 01/15/2026 | Velthorn National Bank, N.A. | Velthorn ($38M), Driftwood ($32M — rolled up into DIP), Pinnacle ($28M), Brindoval ($22M) | Non-Driftwood: 89¢/$1 in cash; Driftwood: rolled up into DIP (repaid in full)
Second Lien Notes | 45,000,000 | 10.50% fixed | 06/01/2027 | Zynvaro Trust Company | Ashford Mezzanine Capital, LP ($30M of $45M) | 22¢/$1 in cash + new equity
Unsecured Notes | 18,500,000 | 8.00% fixed | 03/01/2025 | N/A (bilateral) | Various | Pro rata share of $4,200,000 unsecured creditor trust
TOTAL FUNDED DEBT | 183,500,000
Driftwood Pre-Petition Position Detail
Face Value Held | 32,000,000 | 26.67% of $120M first lien
Acquisition Price (avg.) | $0.68 | $0.68 per $1 face value
Cost Basis | 21,760,000 | $32M × $0.68
Cascabel Balance Sheet (Petition Date)
Total Assets | 620,000,000
Total Liabilities | 710,000,000
Equity (Deficit) | (90,000,000) | $620M − $710M
Ridgeline Community Bank Deposits | 385,000,000 | Ring-fenced; excluded from Ch. 11
CAM Client AUM | 1,200,000,000 | SEC-registered investment adviser
[sheet: Variance Testing]
Test Period | Period Start | Period End | Budgeted Receipts — Cumulative | Actual Receipts — Cumulative | Receipts Variance ($) | Receipts Variance (%) | Receipts Permitted Variance | Receipts Compliance | Budgeted Disbursements — Cumulative | Actual Disbursements — Cumulative | Disbursements Variance ($) | Disbursements Variance (%) | Disbursements Permitted Variance | Disbursements Compliance
Test 1 | 10/16/2023 | 10/27/2023 | 1,550,000 | ±10% | 858,000 | ±15%
Test 2 | 10/16/2023 | 11/10/2023 | 3,100,000 | ±10% | 1,683,000 | ±15%
Test 3 | 10/16/2023 | 11/24/2023 | 4,650,000 | ±10% | 2,541,000 | ±15%
Test 4 | 10/16/2023 | 12/08/2023 | 6,200,000 | ±10% | 3,366,000 | ±15%
Test 5 | 10/16/2023 | 12/22/2023 | 7,750,000 | ±10% | 4,256,500 | ±15%
Test 6 | 10/16/2023 | 01/05/2024 | 9,300,000 | ±10% | 5,081,500 | ±15%
Test 7 | 10/16/2023 | 01/12/2024 | 10,075,000 | ±10% | 5,539,500 | ±15%