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PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

In re:

THALASSA AMERICAS INC., a Delaware corporation,

Debtor.

Case No. ____ (to be assigned upon filing)

Chapter 11

INTERIM ORDER (I) AUTHORIZING THE DEBTOR TO OBTAIN POSTPETITION FINANCING PURSUANT TO 11 U.S.C. §§ 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3), AND 364(d)(1); (II) GRANTING LIENS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS; (III) AUTHORIZING USE OF CASH COLLATERAL; (IV) GRANTING ADEQUATE PROTECTION TO PREPETITION SECURED PARTIES; (V) MODIFYING THE AUTOMATIC STAY; AND (VI) SCHEDULING A FINAL HEARING

Date of Draft: January 18, 2023

NOTATION: DRAFT — PREPARED ON STANDBY — NEVER FILED

Prepared by: Calderwood & Harkness LLP, 780 Third Avenue, New York, NY 10017; Nathaniel Bower, Responsible Partner; Amy Chesterton, Lead Associate; Nathan Ikeda, Working Associate; proposed counsel to the Debtor, Thalassa Americas Inc.

Upon consideration of the Motion of the Debtor for Entry of Interim and Final Orders (I) Authorizing the Debtor to Obtain Postpetition Financing Pursuant to 11 U.S.C. §§ 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3), and 364(d)(1); (II) Granting Liens and Superpriority Administrative Expense Status; (III) Authorizing Use of Cash Collateral; (IV) Granting Adequate Protection to Prepetition Secured Parties; (V) Modifying the Automatic Stay; and (VI) Scheduling a Final Hearing (Dkt. No. _) (the "DIP Motion"), the Declaration of Marcus Hale in Support of the DIP Motion, the DIP Credit Agreement (as defined herein), the DIP Budget (as defined herein), and the evidence submitted and arguments of counsel at the interim hearing held on ___, 2023 (the "Interim Hearing"), and upon the record of these proceedings and after due deliberation, the Court hereby makes the following findings of fact and conclusions of law and enters this Interim Order (this "Interim Order"):

RECITALS

A. Commencement of the Case. On ___, 2023 (the "Petition Date"), Thalassa Americas Inc., a corporation duly organized and existing under the laws of the State of Delaware (EIN: 84-3291057) (the "Debtor"), 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"), in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Court"), thereby commencing the above-captioned case (the "Chapter 11 Case"). The Debtor continues to operate its business and manage its properties and assets as a debtor-in-possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. No request for the appointment of a trustee or examiner has been made in the Chapter 11 Case as of the date hereof. No official committee of unsecured creditors has been appointed in the Chapter 11 Case as of the date hereof.

The Debtor's principal office is located at 1400 McKinney Street, Suite 2200, Houston, Texas 77010. The Debtor is a wholly-owned subsidiary of Thalassa Shipping & Logistics Société Anonyme ("TSL"), a société anonyme organized and existing under the laws of the Hellenic Republic, with its registered headquarters at 42 Akti Miaouli, Piraeus 18538, Greece. TSL is the Debtor's sole shareholder and the ultimate parent entity of the Thalassa corporate group. The Debtor's registered agent in the State of Delaware is Capitol Registered Agents LLC, located at 1209 Orange Street, Wilmington, Delaware 19801.

B. The Debtor's Motion. On the Petition Date, the Debtor filed the DIP Motion, seeking entry of interim and final orders (i) authorizing the Debtor to obtain postpetition financing on the terms and conditions described therein; (ii) granting liens and superpriority administrative expense status to the DIP Lenders (as defined herein); (iii) authorizing the use of cash collateral; (iv) granting adequate protection to the Prepetition Secured Parties (as defined herein); (v) modifying the automatic stay imposed by Section 362 of the Bankruptcy Code; and (vi) scheduling a final hearing on the DIP Motion. The DIP Motion was supported by the Declaration of Marcus Hale, the President of the Debtor (the "Hale Declaration"), which was filed contemporaneously with the DIP Motion and which set forth, among other things, the Debtor's business operations, the circumstances leading to the commencement of the Chapter 11 Case, the Debtor's immediate need for postpetition financing, and the terms and conditions of the proposed DIP Facility (as defined herein). The DIP Motion was further accompanied by the proposed DIP Credit Agreement (attached to the DIP Motion as Exhibit A and incorporated herein by reference) and the proposed DIP Budget (attached to the DIP Motion as Exhibit B and incorporated herein by reference).

C. Prepetition Capital Structure — Senior Secured Credit Facility. As set forth in the Hale Declaration and the other evidence before the Court, the Debtor's prepetition capital structure includes a Senior Secured Credit Agreement, dated as of June 15, 2019 (as amended, supplemented, restated, or otherwise modified from time to time prior to the Petition Date, the "Prepetition Credit Agreement"), by and among TSL (as borrower), the Debtor (as co-borrower with respect to the U.S. Tranche, as defined therein), Nordbank International AG, a banking institution organized under the laws of the Swiss Confederation (as administrative agent and collateral agent, in such capacities, the "Prepetition Agent"), and the several banks and financial institutions party thereto from time to time as lenders (collectively, the "Prepetition Senior Secured Lenders," and together with the Prepetition Agent, the "Prepetition Senior Secured Parties"). The Prepetition Credit Agreement, together with all ancillary documents, security agreements, pledge agreements, mortgages, and other instruments executed in connection therewith, are collectively referred to as the "Prepetition Senior Loan Documents."

Under the Prepetition Credit Agreement, the Prepetition Senior Secured Lenders provided aggregate commitments in the total amount of Six Hundred Eighty-Five Million Dollars ($685,000,000), structured as follows:

(i) Term Loan A in the original principal amount of Four Hundred Million Dollars ($400,000,000), amortizing in accordance with the schedule set forth in the Prepetition Credit Agreement, of which Two Hundred Seventy Million Dollars ($270,000,000) remained outstanding as of September 30, 2022;

(ii) Revolving Credit Facility in the maximum commitment amount of Two Hundred Million Dollars ($200,000,000), of which One Hundred Eighty-Five Million Dollars ($185,000,000) was drawn and outstanding as of September 30, 2022; and

(iii) U.S. Tranche Term Loan B in the original principal amount of Eighty-Five Million Dollars ($85,000,000), a non-amortizing bullet facility, all of which remained outstanding as of September 30, 2022.

The total outstanding principal under the Prepetition Credit Agreement as of September 30, 2022 was approximately Five Hundred Forty Million Dollars ($540,000,000). Interest accrues under the Prepetition Credit Agreement at a rate of SOFR plus 375 basis points per annum, with a default rate of an additional 200 basis points per annum upon the occurrence and during the continuance of an event of default. The stated maturity date of the Prepetition Credit Agreement is June 15, 2024.

Obligations under the Prepetition Credit Agreement are secured by first-priority liens and security interests (the "Prepetition Senior Secured Liens") in substantially all of the Debtor's assets, including, without limitation: (a) thirty-eight (38) dry-bulk carrier vessels; (b) twelve (12) container vessels; (c) the Debtor's interest in the Houston terminal lease; (d) all accounts receivable of the Debtor; and (e) all equity interests held by the Debtor, directly or indirectly, in the Debtor and fourteen (14) vessel-owning special purpose vehicles (collectively, the "Prepetition Senior Collateral").

The nine-member lender syndicate under the Prepetition Credit Agreement, together with each lender's approximate exposure as of September 30, 2022, is as follows:

The obligations of the Debtor under the Prepetition Credit Agreement, together with all accrued and unpaid interest, fees, costs, expenses, and other amounts payable thereunder, are referred to herein as the "Prepetition Senior Secured Obligations."

D. Prepetition Capital Structure — Mezzanine Notes. In addition to the Prepetition Senior Secured Obligations, the Debtor's prepetition capital structure includes mezzanine indebtedness in the aggregate principal amount of One Hundred Twelve Million Three Hundred Thousand Dollars ($112,300,000), consisting of the original principal amount of One Hundred Million Dollars ($100,000,000) plus Twelve Million Three Hundred Thousand Dollars ($12,300,000) in payment-in-kind ("PIK") interest that has been capitalized and added to the outstanding principal balance through September 30, 2022. Such mezzanine indebtedness is evidenced by certain subordinated secured notes (the "Prepetition Mezzanine Notes") held by Dralvecen Mezzanine Capital LLC ("BMC"), a Delaware limited liability company with its principal office at 600 Lexington Avenue, 22nd Floor, New York, New York 10022 (the "Prepetition Mezzanine Lender," and together with the Prepetition Senior Secured Parties, the "Prepetition Secured Parties"). Interest accrues on the Prepetition Mezzanine Notes at a rate of 11.5% per annum on a PIK toggle basis, and all interest has been paid in kind (rather than in cash) since the second quarter of 2022. The stated maturity date of the Prepetition Mezzanine Notes is December 15, 2024.

The Prepetition Mezzanine Notes are secured by second-priority liens and security interests (the "Prepetition Mezzanine Liens") on the same collateral that secures the Prepetition Senior Secured Obligations (i.e., the Prepetition Senior Collateral). The relative rights and priorities of the Prepetition Senior Secured Parties and BMC with respect to such collateral are governed by that certain Intercreditor Agreement, dated as of June 15, 2019 (as amended, supplemented, or otherwise modified from time to time prior to the Petition Date, the "Prepetition Intercreditor Agreement"), by and between Nordbank International AG (in its capacity as first-lien agent) and BMC (in its capacity as second-lien holder). The obligations of the Debtor under the Prepetition Mezzanine Notes, together with all accrued and unpaid interest, fees, costs, expenses, and other amounts payable thereunder, are referred to herein as the "Prepetition Mezzanine Obligations."

E. Prepetition Capital Structure — Unsecured Notes and Trade Debt. The Debtor's prepetition capital structure further includes Fifty Million Dollars ($50,000,000) in aggregate principal amount of 8.25% Senior Unsecured Notes due March 1, 2025 (the "Unsecured Notes"), issued pursuant to an indenture (the "Unsecured Notes Indenture") with Garrison Trust Company, located at 100 Wall Street, 16th Floor, New York, New York 10005, as indenture trustee (the "Indenture Trustee"). The Debtor failed to make a semi-annual interest payment of Two Million Sixty-Two Thousand Five Hundred Dollars ($2,062,500) that was due on December 1, 2022. The thirty (30)-day cure period provided under the Unsecured Notes Indenture expired on January 1, 2023, without the payment having been made, constituting an event of default under the Unsecured Notes Indenture. The Unsecured Notes are unsecured obligations of the Debtor and are not guaranteed by TSL or any other entity.

In addition, as of the Petition Date, the Debtor has approximately Thirty-Eight Million Seven Hundred Thousand Dollars ($38,700,000) in outstanding trade payables owed to various vendors, suppliers, and service providers. The Debtor's largest trade creditor is Olympian Fuel & Supply SA, to which the Debtor owes approximately Nine Million Two Hundred Thousand Dollars ($9,200,000) in respect of fuel and bunker supply obligations.

F. Prepetition Capital Structure — Intercompany Note. The Debtor is obligated under a subordinated intercompany promissory note in the principal amount of Seventy-Six Million Four Hundred Thousand Dollars ($76,400,000) (the "Intercompany Note") payable to TSL. The Intercompany Note bears interest at a rate of 5.0% per annum. The Intercompany Note is an unsecured, subordinated obligation of the Debtor and is junior to all other indebtedness and obligations of the Debtor.

G. Events Precipitating the Filing. The filing of the Chapter 11 Case was precipitated by a severe liquidity crisis driven primarily by the dramatic collapse in dry-bulk charter rates during calendar year 2022. The Baltic Dry Index, a widely followed barometer of global dry-bulk shipping rates, declined approximately 58% between January 2022 and September 2022, reflecting a precipitous downturn in global trade volumes and an oversupply of vessel tonnage. As a direct consequence of this decline, the Debtor's average daily time-charter equivalent ("TCE") rate fell from $24,800 per day for the fiscal year ended December 31, 2021 to $11,200 per day for the third quarter of 2022 — a decline of approximately 55%.

The deterioration in charter rates and operating revenues caused the Debtor to breach multiple financial covenants under the Prepetition Credit Agreement. Specifically:

(i) Minimum Liquidity Covenant. On September 15, 2022, the Debtor's unrestricted cash and cash equivalents fell to Twenty-Seven Million Three Hundred Thousand Dollars ($27,300,000), below the minimum liquidity threshold of Forty Million Dollars ($40,000,000) required under the Prepetition Credit Agreement, resulting in a shortfall of Twelve Million Seven Hundred Thousand Dollars ($12,700,000).

(ii) Maximum Net Leverage Ratio. As of the testing date in the third quarter of 2022, the Debtor's Net Leverage Ratio (as defined in the Prepetition Credit Agreement) was 7.82x (Net Debt of $770,900,000 divided by last-twelve-months ("LTM") EBITDA of $98,600,000), in excess of the maximum permitted ratio of 5.50x.

(iii) Minimum Interest Coverage Ratio. As of the same testing date, the Debtor's Interest Coverage Ratio (as defined in the Prepetition Credit Agreement) was 1.74x (LTM EBITDA of $98,600,000 divided by LTM Interest Expense of $56,700,000), below the minimum required ratio of 2.50x.

The revenue decline was substantial across the Thalassa consolidated enterprise. TSL reported consolidated revenue of approximately €1,420,000,000 for the fiscal year ended December 31, 2021, which declined to an estimated €987,000,000 for the fiscal year ended December 31, 2022 — a decrease of approximately 30.5%. The Debtor's own revenue declined from $312,000,000 for the fiscal year ended December 31, 2021 to an estimated $198,000,000 for the fiscal year ended December 31, 2022 — a decrease of approximately 36.5%.

Following the occurrence of the covenant defaults, the Debtor, TSL, and the Prepetition Agent entered into a Forbearance Agreement, dated as of October 10, 2022 (the "Forbearance Agreement"), pursuant to which the Prepetition Senior Secured Lenders agreed to forbear from exercising their rights and remedies under the Prepetition Credit Agreement for a period of ninety (90) days. The Forbearance Agreement was subsequently extended by mutual agreement of the parties.

During the forbearance period, the Debtor's fleet was appraised by Drakos Maritime Valuations Ltd., an independent maritime valuation firm, as of November 1, 2022. The appraised value of the Debtor's fleet as of such date was Six Hundred Twenty-Three Million Dollars ($623,000,000), reflecting a decline of Two Hundred Sixty-Eight Million Dollars ($268,000,000), or approximately 30.1%, from the appraised value of Eight Hundred Ninety-One Million Dollars ($891,000,000) as of January 2022. Additionally, Kensington Veltrian Partners LLC, the Debtor's financial advisor, estimated the enterprise value of the Debtor at between Five Hundred Eighty Million Dollars ($580,000,000) and Six Hundred Forty Million Dollars ($640,000,000).

H. Need for Postpetition Financing. The Debtor has an immediate and critical need for postpetition financing to fund its ongoing operations, maintain its fleet of vessels in operable and seaworthy condition, pay its approximately 680 employees located in the United States, satisfy insurance obligations, fund ordinary-course operating expenditures, and preserve the going-concern value of the Debtor's estate for the benefit of all stakeholders. Without access to postpetition financing, the Debtor would be unable to continue its business operations, would be forced to defer essential vessel maintenance, would be unable to meet payroll and employee benefit obligations, and the Debtor's estate and its creditors would suffer immediate and irreparable harm. The Debtor has been unable to obtain unsecured credit allowable as an administrative expense under Section 503(b)(1) of the Bankruptcy Code, or credit under Section 364(b) of the Bankruptcy Code, or credit secured solely by a lien on unencumbered property or by a junior lien on encumbered property under Section 364(c) of the Bankruptcy Code, on terms more favorable than those provided by the DIP Facility.

I. The DIP Facility. The Debtor has negotiated a postpetition financing facility (the "DIP Facility") pursuant to that certain Superpriority Secured Debtor-in-Possession Credit Agreement (the "DIP Credit Agreement"), by and between the Debtor (as borrower), Nordbank International AG (as administrative agent for the DIP Lenders, in such capacity, the "DIP Agent"), and Nordbank International AG and Triton Credit Partners LP (as lenders, collectively the "DIP Lenders," and together with the DIP Agent, the "DIP Secured Parties"). The DIP Credit Agreement provides for a superpriority secured debtor-in-possession credit facility in the aggregate principal amount of Seventy-Five Million Dollars ($75,000,000). This Interim Order authorizes borrowings of up to Thirty Million Dollars ($30,000,000) on an interim basis (the "Interim Amount") pending the Final Hearing (as defined herein). Interest under the DIP Credit Agreement accrues at a rate of SOFR plus 600 basis points per annum. A commitment fee of 0.50% per annum is payable on undrawn commitments. The DIP Facility matures twelve (12) months from the Petition Date, unless earlier terminated in accordance with the terms of the DIP Credit Agreement.

The principal contacts for the DIP Lenders are as follows: Henrik Lüdemann, Managing Director, Shipping & Offshore Finance, Nordbank International AG, Bahnhofstrasse 78, 8001 Zürich, Switzerland; and David Sorokin, Partner, Triton Credit Partners LP, 399 Park Avenue, 14th Floor, New York, New York 10022.

J. The Interim Hearing. An interim hearing on the DIP Motion (the "Interim Hearing") was held on ___, 2023 before this Court. Notice of the Interim Hearing was given in accordance with Rules 2002, 4001(b), 4001(c), and 4001(d) of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") and the Local Rules of the United States Bankruptcy Court for the Southern District of Texas, and such notice was sufficient and adequate under the circumstances and no further notice is required. At the Interim Hearing, appearances were noted by the following:

(i) Calderwood & Harkness LLP, as proposed counsel to the Debtor;

(ii) counsel for the DIP Lenders;

(iii) counsel for the Prepetition Agent, Nordbank International AG;

(iv) Whitfield, Crane & Burgess LLP, 51 West 52nd Street, 38th Floor, New York, New York 10019, as counsel to the Ad Hoc Group of Senior Secured Lenders (the "Ad Hoc Group");

(v) Kellner & Foss LLP, 1185 Avenue of the Americas, 30th Floor, New York, New York 10036, as counsel to Dralvecen Mezzanine Capital LLC;

(vi) Ashford, Brightmoor Group & McKay PC, 299 Park Avenue, 18th Floor, New York, New York 10171, as counsel to the informal group of unsecured noteholders;

(vii) the United States Trustee for Region 7; and

(viii) other parties in interest.

K. Findings. Based upon the record before the Court, including the DIP Motion, the Hale Declaration, the DIP Credit Agreement, the DIP Budget, the evidence submitted, and the arguments of counsel at the Interim Hearing, the Court finds that:

(i) Good cause has been shown for the entry of this Interim Order.

(ii) The terms of the DIP Facility are fair and reasonable and reflect the Debtor's exercise of prudent business judgment. The DIP Facility was negotiated in good faith and at arm's length between the Debtor and the DIP Lenders. The DIP Lenders are providing the DIP Facility in good faith within the meaning of Section 364(e) of the Bankruptcy Code, and each of the DIP Lenders is entitled to the protections of Section 364(e) of the Bankruptcy Code.

(iii) The Debtor is unable to obtain unsecured credit allowable under Section 503(b)(1) of the Bankruptcy Code as an administrative expense, or credit under Section 364(b) of the Bankruptcy Code, or credit under Section 364(c) of the Bankruptcy Code, on more favorable terms than those offered under the DIP Facility. The Debtor has made diligent efforts to obtain financing on terms more favorable than the DIP Facility and has been unable to do so.

(iv) The DIP Facility is essential to the continued operation of the Debtor's business and the preservation of estate value for the benefit of all creditors and parties in interest. Without access to the DIP Facility, the Debtor's estate would suffer immediate and irreparable harm.

(v) The DIP Budget is reasonable and appropriate under the circumstances and provides sufficient detail to enable monitoring of the Debtor's use of DIP Facility proceeds and cash collateral.

(vi) The Debtor has requested interim relief pursuant to Bankruptcy Rule 4001(c)(2), and the relief requested is necessary to avoid immediate and irreparable harm to the Debtor's estate pending the Final Hearing.

(vii) Sufficient and adequate notice of the DIP Motion and the Interim Hearing has been given in accordance with the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules.

NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED AS FOLLOWS:

SECTION 1. AUTHORIZATION OF DIP FACILITY (INTERIM)

1.1. Approval of DIP Facility. The DIP Motion is hereby GRANTED on an interim basis to the extent set forth in this Interim Order. The Debtor is hereby authorized, on an interim basis pending the Final Hearing, to borrow up to Thirty Million Dollars ($30,000,000) (the "Interim Amount") under and in accordance with the DIP Credit Agreement, subject in all respects to the terms and conditions of this Interim Order and the DIP Credit Agreement. The authorization granted herein is on an interim basis only, and the full Seventy-Five Million Dollar ($75,000,000) DIP Facility shall be subject to final approval by the Court at the Final Hearing (as defined in Section 16 below). To the extent not inconsistent with this Interim Order, the Debtor is authorized and directed to execute, deliver, and perform under all documents, instruments, and agreements required by or contemplated under the DIP Credit Agreement as may be necessary or desirable to effectuate the transactions contemplated herein.

1.2. Terms of DIP Facility. The DIP Facility shall be on the terms and conditions set forth in the DIP Credit Agreement (attached hereto as Exhibit A and incorporated herein by reference) and this Interim Order, including, without limitation, the following material terms:

(a) Interest Rate. SOFR plus 600 basis points per annum, calculated on the basis of a 360-day year for actual days elapsed, payable monthly in arrears on the first business day of each calendar month.

(b) Commitment Fee. 0.50% per annum on undrawn and uncommitted amounts under the DIP Facility, payable quarterly in arrears.

(c) Maturity. Twelve (12) months from the Petition Date (the "DIP Maturity Date"), unless earlier terminated in accordance with the terms of the DIP Credit Agreement or this Interim Order.

(d) DIP Credit Agreement Controls. The DIP Credit Agreement is approved in its entirety on an interim basis to the extent consistent with this Interim Order. To the extent of any conflict between the terms of the DIP Credit Agreement and this Interim Order, the terms of this Interim Order shall govern and control.

1.3. DIP Budget. All borrowings under the DIP Facility and all use of cash collateral by the Debtor shall be used solely in accordance with the DIP Budget (attached hereto as Exhibit B and incorporated herein by reference), subject to permitted variances of not more than ten percent (10%) on a cumulative basis for any individual line item measured on a rolling four-week basis (the "Permitted Variance"). The DIP Budget reflects estimated administrative costs of Eighteen Million Five Hundred Thousand Dollars ($18,500,000) for the first twelve (12) months of the Chapter 11 Case, inclusive of legal fees, financial advisor fees, chief restructuring officer ("CRO") costs, quarterly fees payable to the United States Trustee pursuant to 28 U.S.C. § 1930(a)(6), and claims and noticing agent expenses. The DIP Budget may be modified, amended, or supplemented only with the prior written consent of the DIP Agent (which consent may be given or withheld in the DIP Agent's sole discretion), and any such modification shall be filed with the Court and served on all notice parties identified herein.

1.4. Use of Proceeds. Proceeds of the DIP Facility shall be used solely for the following purposes:

(a) Working capital and general corporate purposes of the Debtor in the ordinary course of business, including, without limitation, vessel operating expenses, maintenance and drydocking costs, employee wages and benefits, insurance premiums, port charges, and other expenses necessary to maintain and operate the Debtor's fleet and business;

(b) Payment of fees, costs, and expenses related to the DIP Facility, including origination fees, commitment fees, agency fees, and the reasonable and documented fees and expenses of counsel and advisors to the DIP Agent and the DIP Lenders;

(c) Payment of administrative expenses of the Chapter 11 Case as permitted by and in accordance with the DIP Budget, including the fees and expenses of professionals retained by the Debtor and any official committee of unsecured creditors; and

(d) Such other purposes as may be approved by the Court upon motion duly noticed and heard.

Notwithstanding the foregoing, proceeds of the DIP Facility shall not be used, directly or indirectly, for any of the following purposes:

(i) To investigate, prepare, initiate, prosecute, join, or otherwise support any claim, action, adversary proceeding, or cause of action against any of the DIP Lenders, the DIP Agent, the Prepetition Agent, the Prepetition Senior Secured Lenders, or the Prepetition Mezzanine Lender, or any of their respective officers, directors, employees, agents, attorneys, or advisors, in each case in their capacities as such, including without limitation any action to avoid, disallow, subordinate, recharacterize, or otherwise challenge any claim or lien of any such party; provided, however, that up to Fifty Thousand Dollars ($50,000) in the aggregate may be used by any official committee of unsecured creditors (if one is appointed) to investigate the claims and liens described in the stipulations set forth in Section 9 hereof during the Challenge Period (as defined in Section 10 hereof);

(ii) To pay any prepetition claim or obligation of the Debtor, whether secured, unsecured, or otherwise, except as specifically authorized by separate order of this Court;

(iii) To make any distribution or payment on account of equity interests in the Debtor, including without limitation dividends, redemptions, repurchases, or other transfers to TSL or any other equity holder; or

(iv) To make any loan, advance, or other transfer of value to TSL or any non-Debtor affiliate, except as specifically provided in the DIP Budget and approved by the DIP Agent.

SECTION 2. SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS

2.1. Superpriority Status. All obligations of the Debtor arising under or in connection with the DIP Credit Agreement and this Interim Order, including, without limitation, all principal, interest (including default interest, if applicable), fees, costs, expenses, indemnification obligations, and other amounts payable thereunder (collectively, the "DIP Obligations"), shall constitute allowed superpriority administrative expense claims against the Debtor and its estate pursuant to Section 364(c)(1) of the Bankruptcy Code (collectively, the "DIP Superpriority Claims"). The DIP Superpriority Claims shall have priority in payment over all administrative expense claims and unsecured claims of any kind or nature against the Debtor and its estate, now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, administrative expense claims arising under Sections 503(b), 507(a), and 507(b) of the Bankruptcy Code and any administrative expense claims arising under Sections 726, 1113, or 1114 of the Bankruptcy Code. The DIP Superpriority Claims shall at all times be senior to the rights of the Debtor and its estate and any successor thereto, and any of the Debtor's creditors, in the Chapter 11 Case or in any superseding case. The DIP Superpriority Claims shall be subject only to the Carve-Out (as defined below).

2.2. Carve-Out. As used in this Interim Order, the "Carve-Out" shall mean and include the sum of the following:

(a) All fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the United States Trustee pursuant to 28 U.S.C. § 1930(a) and 31 U.S.C. § 3717, together with any interest payable thereon;

(b) All reasonable fees and expenses incurred by a trustee under Section 726(b) of the Bankruptcy Code in a case converted from Chapter 11 to Chapter 7, in an aggregate amount not to exceed Fifty Thousand Dollars ($50,000);

(c) All allowed and unpaid fees and disbursements of professionals retained by the Debtor and by any official committee of unsecured creditors appointed in the Chapter 11 Case pursuant to Sections 327, 328, or 1103 of the Bankruptcy Code (collectively, "Estate Professionals"), in each case incurred at any time prior to the delivery of a Carve-Out Trigger Notice (as defined below), in an amount not to exceed the budgeted amounts for such Estate Professionals as set forth in the DIP Budget as in effect at such time; and

(d) Following delivery of a Carve-Out Trigger Notice, all allowed and unpaid fees and disbursements of Estate Professionals incurred after the delivery of such Carve-Out Trigger Notice, in an aggregate amount not to exceed Two Million Dollars ($2,000,000) (the "Post-Trigger Carve-Out Amount"); provided, however, that the Post-Trigger Carve-Out Amount shall not be available to pay any fees or expenses incurred in connection with the investigation, initiation, prosecution, or assertion of any claims, actions, or causes of action against any of the DIP Secured Parties or the Prepetition Secured Parties.

For purposes of this Interim Order, a "Carve-Out Trigger Notice" means a written notice delivered by the DIP Agent (acting at the direction of the Required Lenders, as defined in the DIP Credit Agreement) to counsel to the Debtor (Calderwood & Harkness LLP), counsel to any official committee of unsecured creditors, and the United States Trustee, stating that an Event of Default (as defined in the DIP Credit Agreement) has occurred and is continuing and that the DIP Agent is exercising its right to invoke the Carve-Out trigger.

Notwithstanding anything to the contrary herein, the Carve-Out shall be senior in priority to, and shall not be subject to, the DIP Superpriority Claims, the DIP Liens, the Adequate Protection Liens, the Adequate Protection Superpriority Claims, or any other claims or liens of the DIP Secured Parties or the Prepetition Secured Parties.

SECTION 3. DIP LIENS

3.1. Grant of DIP Liens. Pursuant to Sections 364(c)(2), 364(c)(3), and 364(d)(1) of the Bankruptcy Code, as security for the prompt and complete payment and performance of all DIP Obligations, the Debtor hereby grants to the DIP Agent, for the ratable benefit of the DIP Lenders, valid, binding, continuing, enforceable, fully perfected, non-avoidable first-priority and priming liens and security interests in and upon all of the Debtor's assets, properties, and rights of every kind and description, whether now existing or hereafter acquired, wherever located, whether real, personal, or mixed, tangible or intangible (collectively, the "DIP Collateral"), including, without limitation, all accounts, chattel paper, commercial tort claims, deposit accounts, documents, equipment, fixtures, general intangibles (including intellectual property), goods, instruments, inventory, investment property, letter-of-credit rights, proceeds, and supporting obligations, as well as the Debtor's interest in the Houston terminal lease, all equity interests in vessel-owning special purpose vehicles, all insurance proceeds, and all products and proceeds of the foregoing (collectively, the "DIP Liens"), as follows:

(a) Pursuant to Section 364(c)(2) of the Bankruptcy Code: A first-priority lien on all assets and property of the Debtor and its estate that are not otherwise subject to valid, perfected, and non-avoidable liens or security interests as of the Petition Date (collectively, the "Unencumbered Assets"), including, without limitation, any claims and causes of action arising under Sections 502(d), 544, 545, 547, 548, 549, 550, or 553 of the Bankruptcy Code and the proceeds thereof (subject to entry of a Final Order).

(b) Pursuant to Section 364(c)(3) of the Bankruptcy Code: A junior lien on all assets and property of the Debtor and its estate that are subject to valid, perfected, and non-avoidable liens or security interests as of the Petition Date, other than the Prepetition Senior Collateral with respect to which priming liens are granted as set forth in clause (c) below.

(c) Pursuant to Section 364(d)(1) of the Bankruptcy Code: A first-priority priming lien on all Prepetition Senior Collateral, including, without limitation, the Debtor's interest in the Houston terminal lease, all accounts receivable, and all equity interests in the fourteen (14) vessel-owning special purpose vehicles, which priming liens shall be senior in priority to the Prepetition Senior Secured Liens and the Prepetition Mezzanine Liens.

3.2. Priming of Prepetition Liens. The DIP Liens granted pursuant to Section 364(d)(1) of the Bankruptcy Code shall prime the existing liens of (i) Nordbank International AG, in its capacity as collateral agent for the Prepetition Senior Secured Lenders, under and as defined in the Prepetition Credit Agreement and the Prepetition Senior Loan Documents, and (ii) Dralvecen Mezzanine Capital LLC, in its capacity as second-lien holder, under and as defined in the Prepetition Mezzanine Notes and the related security documents, in each case in accordance with the Prepetition Intercreditor Agreement. The Prepetition Senior Secured Parties have consented to the priming of their liens as described herein. To the extent that the Prepetition Mezzanine Lender has not consented to the priming of its liens, the Court finds that the Prepetition Mezzanine Lender is adequately protected as set forth in Section 4 below and that the requirements of Section 364(d)(1) of the Bankruptcy Code have been satisfied.

3.3. Priority of DIP Liens. The relative priority of the DIP Liens, the Prepetition Senior Secured Liens, the Prepetition Mezzanine Liens, the Adequate Protection Liens (as defined below), and all other liens on the Debtor's assets shall be as follows:

(1) First: DIP Liens (subject only to the Carve-Out);

(2) Second: Prepetition Senior Secured Liens (including Adequate Protection Liens granted to the Prepetition Senior Secured Parties);

(3) Third: Prepetition Mezzanine Liens (including Adequate Protection Liens granted to the Prepetition Mezzanine Lender);

(4) Fourth: All other liens, whether arising by operation of law, by agreement, or otherwise.

The DIP Liens shall be valid, binding, enforceable, non-avoidable, and perfected upon entry of this Interim Order without the necessity of the execution, filing, or recording of any financing statements, mortgages, notices, or other documents that might otherwise be required under the law of any jurisdiction, and without further action by or order of this Court; provided, however, that the DIP Agent may, in its sole discretion, file or record such documents as it deems appropriate to evidence or perfect the DIP Liens, and the Debtor is hereby authorized and directed to execute any and all such documents upon request by the DIP Agent. To the extent that any such filings or recordings are made, they shall be deemed to have been made nunc pro tunc to the Petition Date.

SECTION 4. ADEQUATE PROTECTION

4.1. Adequate Protection for Prepetition Senior Secured Lenders. As adequate protection of the interests of the Prepetition Senior Secured Parties in the Prepetition Senior Collateral for any diminution in the value of such interests resulting from (a) the priming of the Prepetition Senior Secured Liens by the DIP Liens; (b) the Debtor's use, sale, or lease of the Prepetition Senior Collateral (including cash collateral) during the Chapter 11 Case; (c) the imposition of the automatic stay pursuant to Section 362 of the Bankruptcy Code; and (d) depreciation, wear and tear, or other diminution in the value of the Prepetition Senior Collateral during the Chapter 11 Case, the Prepetition Senior Secured Parties shall receive the following adequate protection, in each case pursuant to Sections 361 and 363(e) of the Bankruptcy Code:

(a) Adequate Protection Liens. The Prepetition Agent, for the benefit of the Prepetition Senior Secured Lenders, is hereby granted valid, binding, continuing, enforceable, fully perfected, non-avoidable replacement liens and security interests pursuant to Section 361(2) of the Bankruptcy Code on all postpetition assets of the Debtor and its estate, including, without limitation, all DIP Collateral and all proceeds thereof (the "Senior Adequate Protection Liens"). The Senior Adequate Protection Liens shall be subordinate and junior only to (i) the DIP Liens and (ii) the Carve-Out, and shall otherwise be senior to all other liens, claims, and interests in such assets.

(b) Adequate Protection Superpriority Claims. The Prepetition Senior Secured Parties are hereby granted allowed superpriority administrative expense claims pursuant to Section 507(b) of the Bankruptcy Code (the "Senior Adequate Protection Superpriority Claims") to the extent that the adequate protection provided herein proves insufficient to compensate the Prepetition Senior Secured Parties for any diminution in the value of their interests in the Prepetition Senior Collateral. The Senior Adequate Protection Superpriority Claims shall be junior only to (i) the DIP Superpriority Claims and (ii) the Carve-Out, and shall otherwise be senior to all other administrative expense claims and unsecured claims of any kind or nature.

(c) Current Interest Payments. As further adequate protection, the Debtor shall make current cash interest payments to the Prepetition Agent, for the ratable benefit of the Prepetition Senior Secured Lenders, at the non-default contract rate under the Prepetition Credit Agreement (i.e., SOFR plus 375 basis points per annum) on the aggregate outstanding principal balance of Five Hundred Forty Million Dollars ($540,000,000) under the Prepetition Credit Agreement, payable monthly in arrears in accordance with the terms of the Prepetition Credit Agreement and the DIP Budget. The payment of adequate protection interest shall not constitute a determination that the Prepetition Senior Secured Lenders are entitled to payment of interest at any other rate, including the default rate, or a determination that the Prepetition Senior Secured Obligations are allowable in any particular amount.

(d) Professional Fee Reimbursement. As further adequate protection, the Debtor shall reimburse the reasonable and documented fees and expenses of the professionals retained by the Ad Hoc Group of Senior Secured Lenders, including Whitfield, Crane & Burgess LLP (as counsel) and Draycott Advisory Group LLC (as financial advisor), subject to and in accordance with the amounts budgeted for such professionals in the DIP Budget. Such reimbursement shall be made monthly upon submission of summary invoices, without the need for formal fee applications or Court approval, but subject to the right of the Debtor, the United States Trustee, or any official committee of unsecured creditors to object to the reasonableness of such fees and expenses within thirty (30) days of receipt of such invoices.

(e) Reporting. As further adequate protection, the Debtor shall provide to the Prepetition Agent and each of the Prepetition Senior Secured Lenders (or their counsel) the following reporting:

(i) Weekly 13-week rolling cash flow forecasts, to be delivered no later than the close of business each Friday for the preceding week, prepared by Kensington Veltrian Partners LLC (the Debtor's financial advisor);

(ii) Monthly financial reports, including unaudited balance sheets, income statements, and cash flow statements for the preceding month, to be delivered no later than the thirtieth (30th) day following the end of each calendar month, prepared by the Debtor with the assistance of Kensington Veltrian Partners LLC;

(iii) Monthly variance reports comparing actual results to the DIP Budget, to be delivered concurrently with the monthly financial reports; and

(iv) Such other financial and operational information as the Prepetition Agent may reasonably request from time to time.

4.2. Adequate Protection for Prepetition Mezzanine Lender (BMC). As adequate protection of the interests of the Prepetition Mezzanine Lender in the Prepetition Senior Collateral for any diminution in the value of such interests resulting from the priming of the Prepetition Mezzanine Liens by the DIP Liens, the Debtor's use of cash collateral, the imposition of the automatic stay, and depreciation or other diminution in the value of the collateral, the Prepetition Mezzanine Lender shall receive the following adequate protection, in each case pursuant to Sections 361 and 363(e) of the Bankruptcy Code:

(a) Adequate Protection Liens. BMC is hereby granted valid, binding, continuing, enforceable, fully perfected, non-avoidable replacement liens and security interests pursuant to Section 361(2) of the Bankruptcy Code on all postpetition assets of the Debtor and its estate, including, without limitation, all DIP Collateral and all proceeds thereof (the "Mezzanine Adequate Protection Liens"). The Mezzanine Adequate Protection Liens shall be subordinate and junior to (i) the DIP Liens, (ii) the Prepetition Senior Secured Liens (including the Senior Adequate Protection Liens), and (iii) the Carve-Out, and shall otherwise be senior to all other liens, claims, and interests in such assets, except as otherwise provided in the Prepetition Intercreditor Agreement.

(b) Adequate Protection Superpriority Claims. BMC is hereby granted allowed superpriority administrative expense claims pursuant to Section 507(b) of the Bankruptcy Code (the "Mezzanine Adequate Protection Superpriority Claims") to the extent that the adequate protection provided herein proves insufficient to compensate BMC for any diminution in the value of its interests in the Prepetition Senior Collateral. The Mezzanine Adequate Protection Superpriority Claims shall be junior to (i) the DIP Superpriority Claims, (ii) the Senior Adequate Protection Superpriority Claims, and (iii) the Carve-Out, and shall otherwise be senior to all other administrative expense claims and unsecured claims of any kind or nature.

(c) Reporting. BMC shall receive the same financial reporting as provided to the Prepetition Senior Secured Parties as described in Section 4.1(e) above, delivered concurrently therewith.

For the avoidance of doubt, BMC shall not receive current cash interest payments on account of the Prepetition Mezzanine Obligations as part of the adequate protection package. The Court notes that the Prepetition Mezzanine Notes provide for PIK toggle interest and that all interest has been paid in kind (rather than in cash) since the second quarter of 2022. The Court finds that the adequate protection provided to BMC pursuant to this Section 4.2 is sufficient and adequate under the circumstances.

4.3. Adequate Protection Cushion. The Court finds that there exists a sufficient adequate protection cushion to support the relief granted in this Interim Order. The Debtor's assets — including a fleet of vessels appraised at Six Hundred Twenty-Three Million Dollars ($623,000,000) as of November 1, 2022 by Drakos Maritime Valuations Ltd., together with the Debtor's other assets (including accounts receivable, the Houston terminal lease, equity interests in vessel-owning SPVs, and other tangible and intangible property) — exceed the aggregate amount of the DIP Obligations that may be incurred on an interim basis (up to $30,000,000), plus the Prepetition Senior Secured Obligations ($540,000,000), plus the Prepetition Mezzanine Obligations ($112,300,000).

The aggregate amount of secured claims that will prime or be pari passu with the fleet and other collateral, on an interim basis, is as follows:

The Court acknowledges that the fleet appraised value of $623,000,000 does not, standing alone, exceed the total secured claims of $682,300,000. However, the Court notes that (a) the fleet appraisal does not include the value of the Debtor's other assets, including accounts receivable, the Houston terminal lease, and other tangible and intangible property; (b) Kensington Veltrian Partners LLC has estimated the enterprise value of the Debtor at between $580,000,000 and $640,000,000; (c) the Prepetition Senior Secured Parties have consented to the priming of their liens; (d) the adequate protection package includes replacement liens, superpriority claims, current interest payments, and professional fee reimbursement; and (e) the relief granted herein is on an interim basis only, authorizing borrowings of only $30,000,000 pending the Final Hearing. The Court finds that the adequate protection provided herein is sufficient under the circumstances for interim purposes, subject to reconsideration at the Final Hearing.

SECTION 5. AUTHORIZATION TO USE CASH COLLATERAL

5.1. Cash Collateral. Pursuant to Section 363 of the Bankruptcy Code, the Debtor is hereby authorized to use cash collateral (as defined in Section 363(a) of the Bankruptcy Code) in accordance with the DIP Budget, subject in all respects to the adequate protection provisions of Section 4 of this Interim Order and the other terms and conditions of this Interim Order. For purposes of this Interim Order, "cash collateral" includes, without limitation, all cash, deposit accounts, certificates of deposit, securities, and other cash equivalents in the possession, custody, or control of the Debtor or its agents, and all accounts receivable, contract rights, and other payment rights constituting proceeds of the Prepetition Senior Collateral, in each case whether now existing or hereafter arising or acquired. The Debtor's use of cash collateral shall be subject to the Permitted Variance and the other limitations set forth in this Interim Order and the DIP Credit Agreement.

SECTION 6. MILESTONES

6.1. DIP Milestones. The following milestones (each, a "Milestone") shall apply to the Chapter 11 Case, subject in each case to extension by the prior written agreement of the DIP Agent (acting at the direction of the Required Lenders):

(a) Interim Order. Within three (3) business days of the Petition Date, the Court shall have entered this Interim Order authorizing interim borrowings under the DIP Facility.

(b) Final Order. Within forty-five (45) days of the Petition Date, the Court shall have entered a final order (the "Final Order") approving the DIP Motion and authorizing the full Seventy-Five Million Dollar ($75,000,000) DIP Facility on a final basis.

(c) Plan Support Solicitation. Within one hundred twenty (120) days of the Petition Date, the Debtor shall have commenced solicitation of plan support from major creditor constituencies, including the Ad Hoc Group, BMC, and the informal group of unsecured noteholders.

(d) Plan Filing. Within one hundred eighty (180) days of the Petition Date, the Debtor shall have filed a Chapter 11 plan of reorganization and related disclosure statement with the Court.

(e) Confirmation Hearing. Within two hundred seventy (270) days of the Petition Date, the Court shall have commenced a hearing on confirmation of the Chapter 11 plan.

(f) Plan Effective Date. Within three hundred (300) days of the Petition Date, the effective date of the confirmed Chapter 11 plan shall have occurred.

Failure to achieve any Milestone within the time periods specified above (as such periods may be extended by agreement of the DIP Agent) shall constitute an Event of Default under the DIP Credit Agreement, subject to the notice and cure provisions set forth in Section 8 of this Interim Order and the applicable provisions of the DIP Credit Agreement.

SECTION 7. EVENTS OF DEFAULT

7.1. DIP Events of Default. In addition to the Events of Default set forth in the DIP Credit Agreement, each of the following shall constitute an "Event of Default" under the DIP Credit Agreement and this Interim Order:

(a) The Debtor's failure to make any payment of principal, interest, fees, or other amounts when due under the DIP Credit Agreement or this Interim Order;

(b) Any representation, warranty, or certification made or deemed made by the Debtor in the DIP Credit Agreement, this Interim Order, or in any document, certificate, or financial statement delivered in connection therewith, proves to have been incorrect or misleading in any material respect when made or deemed made;

(c) The Debtor's breach of, or failure to comply with, any covenant, agreement, or obligation under the DIP Credit Agreement or this Interim Order, including, without limitation, any breach of the DIP Budget (subject to the Permitted Variance);

(d) The Debtor's failure to meet any Milestone set forth in Section 6 of this Interim Order within the time periods specified therein (as such periods may be extended by agreement of the DIP Agent);

(e) The conversion of the Chapter 11 Case to a case under Chapter 7 of the Bankruptcy Code, or the dismissal of the Chapter 11 Case, in each case unless such conversion or dismissal is consented to in writing by the DIP Agent;

(f) The appointment of a Chapter 11 trustee in the Chapter 11 Case, or the appointment of an examiner with expanded powers (i.e., powers beyond those set forth in Sections 1104(c) and 1106(a)(3) and (4) of the Bankruptcy Code);

(g) The entry of any order of this Court or any other court of competent jurisdiction reversing, staying, vacating, amending, supplementing, or otherwise modifying this Interim Order or the Final Order (when entered) in a manner adverse to the interests of the DIP Secured Parties, unless such modification is consented to in writing by the DIP Agent;

(h) The Debtor's grant or creation of, or acquiescence in, any lien, claim, or superpriority administrative expense claim that is equal or senior to the DIP Liens or the DIP Superpriority Claims (other than the Carve-Out), without the prior written consent of the DIP Agent;

(i) Any of the stipulations or admissions set forth in Section 9 of this Interim Order are challenged, contested, disputed, or denied by the Debtor or, following the expiration of the Challenge Period (as defined in Section 10 below), by any party in interest; and

(j) The occurrence of any other "Event of Default" as defined in the DIP Credit Agreement.

SECTION 8. REMEDIES UPON EVENT OF DEFAULT

8.1. Notice and Remedies. Upon the occurrence and during the continuance of an Event of Default under the DIP Credit Agreement or this Interim Order:

(a) Notice. The DIP Agent shall provide five (5) business days' prior written notice (the "Remedies Notice") of the Event of Default and the DIP Agent's intention to exercise remedies to each of the following parties: (i) the Debtor, c/o Thalassa Americas Inc., 1400 McKinney Street, Suite 2200, Houston, Texas 77010, Attention: Marcus Hale, President; (ii) counsel to the Debtor, Calderwood & Harkness LLP, 780 Third Avenue, New York, New York 10017, Attention: Nathaniel Bower; (iii) the Office of the United States Trustee for Region 7; and (iv) counsel to any official committee of unsecured creditors, if one has been appointed. The Remedies Notice shall identify the Event of Default with reasonable specificity and state the remedies that the DIP Agent intends to exercise upon expiration of the notice period.

(b) Exercise of Remedies. Upon the expiration of the five (5)-business-day Remedies Notice period, unless the applicable Event of Default has been cured to the satisfaction of the DIP Agent or waived in writing by the DIP Agent (acting at the direction of the Required Lenders), the DIP Agent and the DIP Lenders shall be entitled, without further order of this Court (except as otherwise expressly required by this Interim Order), to exercise any or all of the following remedies:

(i) Terminate all remaining commitments under the DIP Facility;

(ii) Declare all outstanding DIP Obligations immediately due and payable, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by the Debtor;

(iii) Exercise any and all rights and remedies available to the DIP Secured Parties under the DIP Credit Agreement, this Interim Order, and applicable law, including, without limitation, the right to foreclose on, collect, or otherwise realize upon any or all of the DIP Collateral;

(iv) Set off any amounts owed by the Debtor to the DIP Secured Parties against any amounts held by the DIP Secured Parties for the account of the Debtor; and

(v) Take such other and further actions as the DIP Agent may deem necessary or appropriate to protect the interests of the DIP Secured Parties.

(c) Stay Modification. The automatic stay imposed by Section 362 of the Bankruptcy Code is hereby modified to the extent necessary to permit the DIP Agent and the DIP Lenders to deliver the Remedies Notice and, following the expiration of the Remedies Notice period, to exercise any and all remedies as provided in this Section 8, without the need for any further relief from the automatic stay. Notwithstanding the foregoing, the Debtor and any other party in interest shall have the right, during the five (5)-business-day Remedies Notice period, to seek an emergency hearing before this Court to contest the exercise of remedies by the DIP Secured Parties; provided, however, that the filing of any such motion shall not extend the Remedies Notice period absent an order of this Court.

SECTION 9. STIPULATIONS AND ADMISSIONS

9.1. Debtor's Stipulations. Subject in all respects to the rights of parties in interest as expressly set forth in Section 10 of this Interim Order, the Debtor hereby stipulates, acknowledges, and agrees to the following:

(a) Validity of Prepetition Senior Secured Obligations. As of the Petition Date, the Prepetition Senior Secured Obligations (in the aggregate principal amount of approximately Five Hundred Forty Million Dollars ($540,000,000), plus accrued and unpaid interest, fees, and other amounts) constitute the legal, valid, binding, and enforceable obligations of the Debtor, are not subject to avoidance, disallowance, recharacterization, subordination (whether equitable, contractual, or otherwise), or any other challenge under the Bankruptcy Code or applicable non-bankruptcy law, and are not subject to any offset, recoupment, defense, counterclaim, or claim of any kind or nature.

(b) Validity of Prepetition Senior Secured Liens. The liens and security interests securing the Prepetition Senior Secured Obligations are valid, properly and duly perfected, enforceable, first-priority liens and security interests on and in the Prepetition Senior Collateral, and are not subject to avoidance, disallowance, recharacterization, subordination, or any other challenge under the Bankruptcy Code or applicable non-bankruptcy law.

(c) Validity of Prepetition Mezzanine Obligations and Liens. As of the Petition Date, the Prepetition Mezzanine Obligations (in the aggregate principal amount of approximately One Hundred Twelve Million Three Hundred Thousand Dollars ($112,300,000), plus accrued and unpaid interest, fees, and other amounts) constitute the legal, valid, binding, and enforceable obligations of the Debtor, are not subject to avoidance, disallowance, recharacterization, subordination, or any other challenge under the Bankruptcy Code or applicable non-bankruptcy law, and are secured by valid, properly and duly perfected, enforceable, second-priority liens and security interests on and in the Prepetition Senior Collateral, junior only to the Prepetition Senior Secured Liens.

(d) No Claims Against Prepetition Secured Parties. The Debtor does not possess, and hereby waives and releases (to the extent permitted by law), any and all claims, counterclaims, defenses, causes of action, rights of setoff, or recoupment of any kind or nature, whether known or unknown, whether arising at law or in equity, that the Debtor or its estate may have against the Prepetition Agent, any of the Prepetition Senior Secured Lenders, or the Prepetition Mezzanine Lender, or any of their respective officers, directors, employees, agents, attorneys, advisors, or representatives, arising out of, relating to, or in connection with the Prepetition Credit Agreement, the Prepetition Senior Loan Documents, the Prepetition Mezzanine Notes, the Prepetition Intercreditor Agreement, or any actions taken or omitted to be taken in connection therewith prior to the Petition Date.

The stipulations set forth in this Section 9 have been made by the Debtor after consultation with its counsel and financial advisors and are binding upon the Debtor and its estate in all respects, subject only to the Challenge Period provisions of Section 10 below.

SECTION 10. CHALLENGE PERIOD AND RESERVATION OF RIGHTS

10.1. Challenge Period. Notwithstanding the stipulations and admissions of the Debtor set forth in Section 9 of this Interim Order, any party in interest with requisite standing (including any official committee of unsecured creditors appointed in the Chapter 11 Case) shall have until the later of (a) sixty (60) days after the Petition Date and (b) thirty (30) days after the entry of an order appointing an official committee of unsecured creditors in the Chapter 11 Case (such later date, the "Challenge Deadline"), to investigate and, if appropriate, commence a Challenge (as defined below) to any of the stipulations set forth in Section 9 of this Interim Order.

For purposes of this Interim Order, a "Challenge" means any adversary proceeding, contested matter, motion, claim objection, or other proceeding or action commenced in this Court (or, with leave of this Court, in any other court of competent jurisdiction) by any party in interest that challenges, contests, disputes, or seeks to avoid, disallow, recharacterize, subordinate, or otherwise impair the validity, extent, priority, perfection, or enforceability of all or any portion of the Prepetition Senior Secured Obligations, the Prepetition Mezzanine Obligations, or the liens and security interests securing the same, or that asser

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
In re:
THALASSA AMERICAS INC., a Delaware corporation,
Debtor.
Case No. ____ (to be assigned upon filing)
Chapter 11
INTERIM ORDER (I) AUTHORIZING THE DEBTOR TO OBTAIN POSTPETITION FINANCING PURSUANT TO 11 U.S.C. §§ 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3), AND 364(d)(1); (II) GRANTING LIENS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS; (III) AUTHORIZING USE OF CASH COLLATERAL; (IV) GRANTING ADEQUATE PROTECTION TO PREPETITION SECURED PARTIES; (V) MODIFYING THE AUTOMATIC STAY; AND (VI) SCHEDULING A FINAL HEARING
Date of Draft: January 18, 2023
NOTATION: DRAFT — PREPARED ON STANDBY — NEVER FILED
Prepared by: Calderwood & Harkness LLP, 780 Third Avenue, New York, NY 10017; Nathaniel Bower, Responsible Partner; Amy Chesterton, Lead Associate; Nathan Ikeda, Working Associate; proposed counsel to the Debtor, Thalassa Americas Inc.
Upon consideration of the Motion of the Debtor for Entry of Interim and Final Orders (I) Authorizing the Debtor to Obtain Postpetition Financing Pursuant to 11 U.S.C. §§ 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3), and 364(d)(1); (II) Granting Liens and Superpriority Administrative Expense Status; (III) Authorizing Use of Cash Collateral; (IV) Granting Adequate Protection to Prepetition Secured Parties; (V) Modifying the Automatic Stay; and (VI) Scheduling a Final Hearing (Dkt. No. _) (the "DIP Motion"), the Declaration of Marcus Hale in Support of the DIP Motion, the DIP Credit Agreement (as defined herein), the DIP Budget (as defined herein), and the evidence submitted and arguments of counsel at the interim hearing held on ___, 2023 (the "Interim Hearing"), and upon the record of these proceedings and after due deliberation, the Court hereby makes the following findings of fact and conclusions of law and enters this Interim Order (this "Interim Order"):
RECITALS
A. Commencement of the Case. On ___, 2023 (the "Petition Date"), Thalassa Americas Inc., a corporation duly organized and existing under the laws of the State of Delaware (EIN: 84-3291057) (the "Debtor"), 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"), in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Court"), thereby commencing the above-captioned case (the "Chapter 11 Case"). The Debtor continues to operate its business and manage its properties and assets as a debtor-in-possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. No request for the appointment of a trustee or examiner has been made in the Chapter 11 Case as of the date hereof. No official committee of unsecured creditors has been appointed in the Chapter 11 Case as of the date hereof.
The Debtor's principal office is located at 1400 McKinney Street, Suite 2200, Houston, Texas 77010. The Debtor is a wholly-owned subsidiary of Thalassa Shipping & Logistics Société Anonyme ("TSL"), a société anonyme organized and existing under the laws of the Hellenic Republic, with its registered headquarters at 42 Akti Miaouli, Piraeus 18538, Greece. TSL is the Debtor's sole shareholder and the ultimate parent entity of the Thalassa corporate group. The Debtor's registered agent in the State of Delaware is Capitol Registered Agents LLC, located at 1209 Orange Street, Wilmington, Delaware 19801.
B. The Debtor's Motion. On the Petition Date, the Debtor filed the DIP Motion, seeking entry of interim and final orders (i) authorizing the Debtor to obtain postpetition financing on the terms and conditions described therein; (ii) granting liens and superpriority administrative expense status to the DIP Lenders (as defined herein); (iii) authorizing the use of cash collateral; (iv) granting adequate protection to the Prepetition Secured Parties (as defined herein); (v) modifying the automatic stay imposed by Section 362 of the Bankruptcy Code; and (vi) scheduling a final hearing on the DIP Motion. The DIP Motion was supported by the Declaration of Marcus Hale, the President of the Debtor (the "Hale Declaration"), which was filed contemporaneously with the DIP Motion and which set forth, among other things, the Debtor's business operations, the circumstances leading to the commencement of the Chapter 11 Case, the Debtor's immediate need for postpetition financing, and the terms and conditions of the proposed DIP Facility (as defined herein). The DIP Motion was further accompanied by the proposed DIP Credit Agreement (attached to the DIP Motion as Exhibit A and incorporated herein by reference) and the proposed DIP Budget (attached to the DIP Motion as Exhibit B and incorporated herein by reference).
C. Prepetition Capital Structure — Senior Secured Credit Facility. As set forth in the Hale Declaration and the other evidence before the Court, the Debtor's prepetition capital structure includes a Senior Secured Credit Agreement, dated as of June 15, 2019 (as amended, supplemented, restated, or otherwise modified from time to time prior to the Petition Date, the "Prepetition Credit Agreement"), by and among TSL (as borrower), the Debtor (as co-borrower with respect to the U.S. Tranche, as defined therein), Nordbank International AG, a banking institution organized under the laws of the Swiss Confederation (as administrative agent and collateral agent, in such capacities, the "Prepetition Agent"), and the several banks and financial institutions party thereto from time to time as lenders (collectively, the "Prepetition Senior Secured Lenders," and together with the Prepetition Agent, the "Prepetition Senior Secured Parties"). The Prepetition Credit Agreement, together with all ancillary documents, security agreements, pledge agreements, mortgages, and other instruments executed in connection therewith, are collectively referred to as the "Prepetition Senior Loan Documents."
Under the Prepetition Credit Agreement, the Prepetition Senior Secured Lenders provided aggregate commitments in the total amount of Six Hundred Eighty-Five Million Dollars ($685,000,000), structured as follows:
(i) Term Loan A in the original principal amount of Four Hundred Million Dollars ($400,000,000), amortizing in accordance with the schedule set forth in the Prepetition Credit Agreement, of which Two Hundred Seventy Million Dollars ($270,000,000) remained outstanding as of September 30, 2022;
(ii) Revolving Credit Facility in the maximum commitment amount of Two Hundred Million Dollars ($200,000,000), of which One Hundred Eighty-Five Million Dollars ($185,000,000) was drawn and outstanding as of September 30, 2022; and
(iii) U.S. Tranche Term Loan B in the original principal amount of Eighty-Five Million Dollars ($85,000,000), a non-amortizing bullet facility, all of which remained outstanding as of September 30, 2022.
The total outstanding principal under the Prepetition Credit Agreement as of September 30, 2022 was approximately Five Hundred Forty Million Dollars ($540,000,000). Interest accrues under the Prepetition Credit Agreement at a rate of SOFR plus 375 basis points per annum, with a default rate of an additional 200 basis points per annum upon the occurrence and during the continuance of an event of default. The stated maturity date of the Prepetition Credit Agreement is June 15, 2024.
Obligations under the Prepetition Credit Agreement are secured by first-priority liens and security interests (the "Prepetition Senior Secured Liens") in substantially all of the Debtor's assets, including, without limitation: (a) thirty-eight (38) dry-bulk carrier vessels; (b) twelve (12) container vessels; (c) the Debtor's interest in the Houston terminal lease; (d) all accounts receivable of the Debtor; and (e) all equity interests held by the Debtor, directly or indirectly, in the Debtor and fourteen (14) vessel-owning special purpose vehicles (collectively, the "Prepetition Senior Collateral").
The nine-member lender syndicate under the Prepetition Credit Agreement, together with each lender's approximate exposure as of September 30, 2022, is as follows:
The obligations of the Debtor under the Prepetition Credit Agreement, together with all accrued and unpaid interest, fees, costs, expenses, and other amounts payable thereunder, are referred to herein as the "Prepetition Senior Secured Obligations."
D. Prepetition Capital Structure — Mezzanine Notes. In addition to the Prepetition Senior Secured Obligations, the Debtor's prepetition capital structure includes mezzanine indebtedness in the aggregate principal amount of One Hundred Twelve Million Three Hundred Thousand Dollars ($112,300,000), consisting of the original principal amount of One Hundred Million Dollars ($100,000,000) plus Twelve Million Three Hundred Thousand Dollars ($12,300,000) in payment-in-kind ("PIK") interest that has been capitalized and added to the outstanding principal balance through September 30, 2022. Such mezzanine indebtedness is evidenced by certain subordinated secured notes (the "Prepetition Mezzanine Notes") held by Dralvecen Mezzanine Capital LLC ("BMC"), a Delaware limited liability company with its principal office at 600 Lexington Avenue, 22nd Floor, New York, New York 10022 (the "Prepetition Mezzanine Lender," and together with the Prepetition Senior Secured Parties, the "Prepetition Secured Parties"). Interest accrues on the Prepetition Mezzanine Notes at a rate of 11.5% per annum on a PIK toggle basis, and all interest has been paid in kind (rather than in cash) since the second quarter of 2022. The stated maturity date of the Prepetition Mezzanine Notes is December 15, 2024.
The Prepetition Mezzanine Notes are secured by second-priority liens and security interests (the "Prepetition Mezzanine Liens") on the same collateral that secures the Prepetition Senior Secured Obligations (i.e., the Prepetition Senior Collateral). The relative rights and priorities of the Prepetition Senior Secured Parties and BMC with respect to such collateral are governed by that certain Intercreditor Agreement, dated as of June 15, 2019 (as amended, supplemented, or otherwise modified from time to time prior to the Petition Date, the "Prepetition Intercreditor Agreement"), by and between Nordbank International AG (in its capacity as first-lien agent) and BMC (in its capacity as second-lien holder). The obligations of the Debtor under the Prepetition Mezzanine Notes, together with all accrued and unpaid interest, fees, costs, expenses, and other amounts payable thereunder, are referred to herein as the "Prepetition Mezzanine Obligations."
E. Prepetition Capital Structure — Unsecured Notes and Trade Debt. The Debtor's prepetition capital structure further includes Fifty Million Dollars ($50,000,000) in aggregate principal amount of 8.25% Senior Unsecured Notes due March 1, 2025 (the "Unsecured Notes"), issued pursuant to an indenture (the "Unsecured Notes Indenture") with Garrison Trust Company, located at 100 Wall Street, 16th Floor, New York, New York 10005, as indenture trustee (the "Indenture Trustee"). The Debtor failed to make a semi-annual interest payment of Two Million Sixty-Two Thousand Five Hundred Dollars ($2,062,500) that was due on December 1, 2022. The thirty (30)-day cure period provided under the Unsecured Notes Indenture expired on January 1, 2023, without the payment having been made, constituting an event of default under the Unsecured Notes Indenture. The Unsecured Notes are unsecured obligations of the Debtor and are not guaranteed by TSL or any other entity.
In addition, as of the Petition Date, the Debtor has approximately Thirty-Eight Million Seven Hundred Thousand Dollars ($38,700,000) in outstanding trade payables owed to various vendors, suppliers, and service providers. The Debtor's largest trade creditor is Olympian Fuel & Supply SA, to which the Debtor owes approximately Nine Million Two Hundred Thousand Dollars ($9,200,000) in respect of fuel and bunker supply obligations.
F. Prepetition Capital Structure — Intercompany Note. The Debtor is obligated under a subordinated intercompany promissory note in the principal amount of Seventy-Six Million Four Hundred Thousand Dollars ($76,400,000) (the "Intercompany Note") payable to TSL. The Intercompany Note bears interest at a rate of 5.0% per annum. The Intercompany Note is an unsecured, subordinated obligation of the Debtor and is junior to all other indebtedness and obligations of the Debtor.
G. Events Precipitating the Filing. The filing of the Chapter 11 Case was precipitated by a severe liquidity crisis driven primarily by the dramatic collapse in dry-bulk charter rates during calendar year 2022. The Baltic Dry Index, a widely followed barometer of global dry-bulk shipping rates, declined approximately 58% between January 2022 and September 2022, reflecting a precipitous downturn in global trade volumes and an oversupply of vessel tonnage. As a direct consequence of this decline, the Debtor's average daily time-charter equivalent ("TCE") rate fell from $24,800 per day for the fiscal year ended December 31, 2021 to $11,200 per day for the third quarter of 2022 — a decline of approximately 55%.
The deterioration in charter rates and operating revenues caused the Debtor to breach multiple financial covenants under the Prepetition Credit Agreement. Specifically:
(i) Minimum Liquidity Covenant. On September 15, 2022, the Debtor's unrestricted cash and cash equivalents fell to Twenty-Seven Million Three Hundred Thousand Dollars ($27,300,000), below the minimum liquidity threshold of Forty Million Dollars ($40,000,000) required under the Prepetition Credit Agreement, resulting in a shortfall of Twelve Million Seven Hundred Thousand Dollars ($12,700,000).
(ii) Maximum Net Leverage Ratio. As of the testing date in the third quarter of 2022, the Debtor's Net Leverage Ratio (as defined in the Prepetition Credit Agreement) was 7.82x (Net Debt of $770,900,000 divided by last-twelve-months ("LTM") EBITDA of $98,600,000), in excess of the maximum permitted ratio of 5.50x.
(iii) Minimum Interest Coverage Ratio. As of the same testing date, the Debtor's Interest Coverage Ratio (as defined in the Prepetition Credit Agreement) was 1.74x (LTM EBITDA of $98,600,000 divided by LTM Interest Expense of $56,700,000), below the minimum required ratio of 2.50x.
The revenue decline was substantial across the Thalassa consolidated enterprise. TSL reported consolidated revenue of approximately €1,420,000,000 for the fiscal year ended December 31, 2021, which declined to an estimated €987,000,000 for the fiscal year ended December 31, 2022 — a decrease of approximately 30.5%. The Debtor's own revenue declined from $312,000,000 for the fiscal year ended December 31, 2021 to an estimated $198,000,000 for the fiscal year ended December 31, 2022 — a decrease of approximately 36.5%.
Following the occurrence of the covenant defaults, the Debtor, TSL, and the Prepetition Agent entered into a Forbearance Agreement, dated as of October 10, 2022 (the "Forbearance Agreement"), pursuant to which the Prepetition Senior Secured Lenders agreed to forbear from exercising their rights and remedies under the Prepetition Credit Agreement for a period of ninety (90) days. The Forbearance Agreement was subsequently extended by mutual agreement of the parties.
During the forbearance period, the Debtor's fleet was appraised by Drakos Maritime Valuations Ltd., an independent maritime valuation firm, as of November 1, 2022. The appraised value of the Debtor's fleet as of such date was Six Hundred Twenty-Three Million Dollars ($623,000,000), reflecting a decline of Two Hundred Sixty-Eight Million Dollars ($268,000,000), or approximately 30.1%, from the appraised value of Eight Hundred Ninety-One Million Dollars ($891,000,000) as of January 2022. Additionally, Kensington Veltrian Partners LLC, the Debtor's financial advisor, estimated the enterprise value of the Debtor at between Five Hundred Eighty Million Dollars ($580,000,000) and Six Hundred Forty Million Dollars ($640,000,000).
H. Need for Postpetition Financing. The Debtor has an immediate and critical need for postpetition financing to fund its ongoing operations, maintain its fleet of vessels in operable and seaworthy condition, pay its approximately 680 employees located in the United States, satisfy insurance obligations, fund ordinary-course operating expenditures, and preserve the going-concern value of the Debtor's estate for the benefit of all stakeholders. Without access to postpetition financing, the Debtor would be unable to continue its business operations, would be forced to defer essential vessel maintenance, would be unable to meet payroll and employee benefit obligations, and the Debtor's estate and its creditors would suffer immediate and irreparable harm. The Debtor has been unable to obtain unsecured credit allowable as an administrative expense under Section 503(b)(1) of the Bankruptcy Code, or credit under Section 364(b) of the Bankruptcy Code, or credit secured solely by a lien on unencumbered property or by a junior lien on encumbered property under Section 364(c) of the Bankruptcy Code, on terms more favorable than those provided by the DIP Facility.
I. The DIP Facility. The Debtor has negotiated a postpetition financing facility (the "DIP Facility") pursuant to that certain Superpriority Secured Debtor-in-Possession Credit Agreement (the "DIP Credit Agreement"), by and between the Debtor (as borrower), Nordbank International AG (as administrative agent for the DIP Lenders, in such capacity, the "DIP Agent"), and Nordbank International AG and Triton Credit Partners LP (as lenders, collectively the "DIP Lenders," and together with the DIP Agent, the "DIP Secured Parties"). The DIP Credit Agreement provides for a superpriority secured debtor-in-possession credit facility in the aggregate principal amount of Seventy-Five Million Dollars ($75,000,000). This Interim Order authorizes borrowings of up to Thirty Million Dollars ($30,000,000) on an interim basis (the "Interim Amount") pending the Final Hearing (as defined herein). Interest under the DIP Credit Agreement accrues at a rate of SOFR plus 600 basis points per annum. A commitment fee of 0.50% per annum is payable on undrawn commitments. The DIP Facility matures twelve (12) months from the Petition Date, unless earlier terminated in accordance with the terms of the DIP Credit Agreement.
The principal contacts for the DIP Lenders are as follows: Henrik Lüdemann, Managing Director, Shipping & Offshore Finance, Nordbank International AG, Bahnhofstrasse 78, 8001 Zürich, Switzerland; and David Sorokin, Partner, Triton Credit Partners LP, 399 Park Avenue, 14th Floor, New York, New York 10022.
J. The Interim Hearing. An interim hearing on the DIP Motion (the "Interim Hearing") was held on ___, 2023 before this Court. Notice of the Interim Hearing was given in accordance with Rules 2002, 4001(b), 4001(c), and 4001(d) of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") and the Local Rules of the United States Bankruptcy Court for the Southern District of Texas, and such notice was sufficient and adequate under the circumstances and no further notice is required. At the Interim Hearing, appearances were noted by the following:
(i) Calderwood & Harkness LLP, as proposed counsel to the Debtor;
(ii) counsel for the DIP Lenders;
(iii) counsel for the Prepetition Agent, Nordbank International AG;
(iv) Whitfield, Crane & Burgess LLP, 51 West 52nd Street, 38th Floor, New York, New York 10019, as counsel to the Ad Hoc Group of Senior Secured Lenders (the "Ad Hoc Group");
(v) Kellner & Foss LLP, 1185 Avenue of the Americas, 30th Floor, New York, New York 10036, as counsel to Dralvecen Mezzanine Capital LLC;
(vi) Ashford, Brightmoor Group & McKay PC, 299 Park Avenue, 18th Floor, New York, New York 10171, as counsel to the informal group of unsecured noteholders;
(vii) the United States Trustee for Region 7; and
(viii) other parties in interest.
K. Findings. Based upon the record before the Court, including the DIP Motion, the Hale Declaration, the DIP Credit Agreement, the DIP Budget, the evidence submitted, and the arguments of counsel at the Interim Hearing, the Court finds that:
(i) Good cause has been shown for the entry of this Interim Order.
(ii) The terms of the DIP Facility are fair and reasonable and reflect the Debtor's exercise of prudent business judgment. The DIP Facility was negotiated in good faith and at arm's length between the Debtor and the DIP Lenders. The DIP Lenders are providing the DIP Facility in good faith within the meaning of Section 364(e) of the Bankruptcy Code, and each of the DIP Lenders is entitled to the protections of Section 364(e) of the Bankruptcy Code.
(iii) The Debtor is unable to obtain unsecured credit allowable under Section 503(b)(1) of the Bankruptcy Code as an administrative expense, or credit under Section 364(b) of the Bankruptcy Code, or credit under Section 364(c) of the Bankruptcy Code, on more favorable terms than those offered under the DIP Facility. The Debtor has made diligent efforts to obtain financing on terms more favorable than the DIP Facility and has been unable to do so.
(iv) The DIP Facility is essential to the continued operation of the Debtor's business and the preservation of estate value for the benefit of all creditors and parties in interest. Without access to the DIP Facility, the Debtor's estate would suffer immediate and irreparable harm.
(v) The DIP Budget is reasonable and appropriate under the circumstances and provides sufficient detail to enable monitoring of the Debtor's use of DIP Facility proceeds and cash collateral.
(vi) The Debtor has requested interim relief pursuant to Bankruptcy Rule 4001(c)(2), and the relief requested is necessary to avoid immediate and irreparable harm to the Debtor's estate pending the Final Hearing.
(vii) Sufficient and adequate notice of the DIP Motion and the Interim Hearing has been given in accordance with the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules.
NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED AS FOLLOWS:
SECTION 1. AUTHORIZATION OF DIP FACILITY (INTERIM)
1.1. Approval of DIP Facility. The DIP Motion is hereby GRANTED on an interim basis to the extent set forth in this Interim Order. The Debtor is hereby authorized, on an interim basis pending the Final Hearing, to borrow up to Thirty Million Dollars ($30,000,000) (the "Interim Amount") under and in accordance with the DIP Credit Agreement, subject in all respects to the terms and conditions of this Interim Order and the DIP Credit Agreement. The authorization granted herein is on an interim basis only, and the full Seventy-Five Million Dollar ($75,000,000) DIP Facility shall be subject to final approval by the Court at the Final Hearing (as defined in Section 16 below). To the extent not inconsistent with this Interim Order, the Debtor is authorized and directed to execute, deliver, and perform under all documents, instruments, and agreements required by or contemplated under the DIP Credit Agreement as may be necessary or desirable to effectuate the transactions contemplated herein.
1.2. Terms of DIP Facility. The DIP Facility shall be on the terms and conditions set forth in the DIP Credit Agreement (attached hereto as Exhibit A and incorporated herein by reference) and this Interim Order, including, without limitation, the following material terms:
(a) Interest Rate. SOFR plus 600 basis points per annum, calculated on the basis of a 360-day year for actual days elapsed, payable monthly in arrears on the first business day of each calendar month.
(b) Commitment Fee. 0.50% per annum on undrawn and uncommitted amounts under the DIP Facility, payable quarterly in arrears.
(c) Maturity. Twelve (12) months from the Petition Date (the "DIP Maturity Date"), unless earlier terminated in accordance with the terms of the DIP Credit Agreement or this Interim Order.
(d) DIP Credit Agreement Controls. The DIP Credit Agreement is approved in its entirety on an interim basis to the extent consistent with this Interim Order. To the extent of any conflict between the terms of the DIP Credit Agreement and this Interim Order, the terms of this Interim Order shall govern and control.
1.3. DIP Budget. All borrowings under the DIP Facility and all use of cash collateral by the Debtor shall be used solely in accordance with the DIP Budget (attached hereto as Exhibit B and incorporated herein by reference), subject to permitted variances of not more than ten percent (10%) on a cumulative basis for any individual line item measured on a rolling four-week basis (the "Permitted Variance"). The DIP Budget reflects estimated administrative costs of Eighteen Million Five Hundred Thousand Dollars ($18,500,000) for the first twelve (12) months of the Chapter 11 Case, inclusive of legal fees, financial advisor fees, chief restructuring officer ("CRO") costs, quarterly fees payable to the United States Trustee pursuant to 28 U.S.C. § 1930(a)(6), and claims and noticing agent expenses. The DIP Budget may be modified, amended, or supplemented only with the prior written consent of the DIP Agent (which consent may be given or withheld in the DIP Agent's sole discretion), and any such modification shall be filed with the Court and served on all notice parties identified herein.
1.4. Use of Proceeds. Proceeds of the DIP Facility shall be used solely for the following purposes:
(a) Working capital and general corporate purposes of the Debtor in the ordinary course of business, including, without limitation, vessel operating expenses, maintenance and drydocking costs, employee wages and benefits, insurance premiums, port charges, and other expenses necessary to maintain and operate the Debtor's fleet and business;
(b) Payment of fees, costs, and expenses related to the DIP Facility, including origination fees, commitment fees, agency fees, and the reasonable and documented fees and expenses of counsel and advisors to the DIP Agent and the DIP Lenders;
(c) Payment of administrative expenses of the Chapter 11 Case as permitted by and in accordance with the DIP Budget, including the fees and expenses of professionals retained by the Debtor and any official committee of unsecured creditors; and
(d) Such other purposes as may be approved by the Court upon motion duly noticed and heard.
Notwithstanding the foregoing, proceeds of the DIP Facility shall not be used, directly or indirectly, for any of the following purposes:
(i) To investigate, prepare, initiate, prosecute, join, or otherwise support any claim, action, adversary proceeding, or cause of action against any of the DIP Lenders, the DIP Agent, the Prepetition Agent, the Prepetition Senior Secured Lenders, or the Prepetition Mezzanine Lender, or any of their respective officers, directors, employees, agents, attorneys, or advisors, in each case in their capacities as such, including without limitation any action to avoid, disallow, subordinate, recharacterize, or otherwise challenge any claim or lien of any such party; provided, however, that up to Fifty Thousand Dollars ($50,000) in the aggregate may be used by any official committee of unsecured creditors (if one is appointed) to investigate the claims and liens described in the stipulations set forth in Section 9 hereof during the Challenge Period (as defined in Section 10 hereof);
(ii) To pay any prepetition claim or obligation of the Debtor, whether secured, unsecured, or otherwise, except as specifically authorized by separate order of this Court;
(iii) To make any distribution or payment on account of equity interests in the Debtor, including without limitation dividends, redemptions, repurchases, or other transfers to TSL or any other equity holder; or
(iv) To make any loan, advance, or other transfer of value to TSL or any non-Debtor affiliate, except as specifically provided in the DIP Budget and approved by the DIP Agent.
SECTION 2. SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS
2.1. Superpriority Status. All obligations of the Debtor arising under or in connection with the DIP Credit Agreement and this Interim Order, including, without limitation, all principal, interest (including default interest, if applicable), fees, costs, expenses, indemnification obligations, and other amounts payable thereunder (collectively, the "DIP Obligations"), shall constitute allowed superpriority administrative expense claims against the Debtor and its estate pursuant to Section 364(c)(1) of the Bankruptcy Code (collectively, the "DIP Superpriority Claims"). The DIP Superpriority Claims shall have priority in payment over all administrative expense claims and unsecured claims of any kind or nature against the Debtor and its estate, now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, administrative expense claims arising under Sections 503(b), 507(a), and 507(b) of the Bankruptcy Code and any administrative expense claims arising under Sections 726, 1113, or 1114 of the Bankruptcy Code. The DIP Superpriority Claims shall at all times be senior to the rights of the Debtor and its estate and any successor thereto, and any of the Debtor's creditors, in the Chapter 11 Case or in any superseding case. The DIP Superpriority Claims shall be subject only to the Carve-Out (as defined below).
2.2. Carve-Out. As used in this Interim Order, the "Carve-Out" shall mean and include the sum of the following:
(a) All fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the United States Trustee pursuant to 28 U.S.C. § 1930(a) and 31 U.S.C. § 3717, together with any interest payable thereon;
(b) All reasonable fees and expenses incurred by a trustee under Section 726(b) of the Bankruptcy Code in a case converted from Chapter 11 to Chapter 7, in an aggregate amount not to exceed Fifty Thousand Dollars ($50,000);
(c) All allowed and unpaid fees and disbursements of professionals retained by the Debtor and by any official committee of unsecured creditors appointed in the Chapter 11 Case pursuant to Sections 327, 328, or 1103 of the Bankruptcy Code (collectively, "Estate Professionals"), in each case incurred at any time prior to the delivery of a Carve-Out Trigger Notice (as defined below), in an amount not to exceed the budgeted amounts for such Estate Professionals as set forth in the DIP Budget as in effect at such time; and
(d) Following delivery of a Carve-Out Trigger Notice, all allowed and unpaid fees and disbursements of Estate Professionals incurred after the delivery of such Carve-Out Trigger Notice, in an aggregate amount not to exceed Two Million Dollars ($2,000,000) (the "Post-Trigger Carve-Out Amount"); provided, however, that the Post-Trigger Carve-Out Amount shall not be available to pay any fees or expenses incurred in connection with the investigation, initiation, prosecution, or assertion of any claims, actions, or causes of action against any of the DIP Secured Parties or the Prepetition Secured Parties.
For purposes of this Interim Order, a "Carve-Out Trigger Notice" means a written notice delivered by the DIP Agent (acting at the direction of the Required Lenders, as defined in the DIP Credit Agreement) to counsel to the Debtor (Calderwood & Harkness LLP), counsel to any official committee of unsecured creditors, and the United States Trustee, stating that an Event of Default (as defined in the DIP Credit Agreement) has occurred and is continuing and that the DIP Agent is exercising its right to invoke the Carve-Out trigger.
Notwithstanding anything to the contrary herein, the Carve-Out shall be senior in priority to, and shall not be subject to, the DIP Superpriority Claims, the DIP Liens, the Adequate Protection Liens, the Adequate Protection Superpriority Claims, or any other claims or liens of the DIP Secured Parties or the Prepetition Secured Parties.
SECTION 3. DIP LIENS
3.1. Grant of DIP Liens. Pursuant to Sections 364(c)(2), 364(c)(3), and 364(d)(1) of the Bankruptcy Code, as security for the prompt and complete payment and performance of all DIP Obligations, the Debtor hereby grants to the DIP Agent, for the ratable benefit of the DIP Lenders, valid, binding, continuing, enforceable, fully perfected, non-avoidable first-priority and priming liens and security interests in and upon all of the Debtor's assets, properties, and rights of every kind and description, whether now existing or hereafter acquired, wherever located, whether real, personal, or mixed, tangible or intangible (collectively, the "DIP Collateral"), including, without limitation, all accounts, chattel paper, commercial tort claims, deposit accounts, documents, equipment, fixtures, general intangibles (including intellectual property), goods, instruments, inventory, investment property, letter-of-credit rights, proceeds, and supporting obligations, as well as the Debtor's interest in the Houston terminal lease, all equity interests in vessel-owning special purpose vehicles, all insurance proceeds, and all products and proceeds of the foregoing (collectively, the "DIP Liens"), as follows:
(a) Pursuant to Section 364(c)(2) of the Bankruptcy Code: A first-priority lien on all assets and property of the Debtor and its estate that are not otherwise subject to valid, perfected, and non-avoidable liens or security interests as of the Petition Date (collectively, the "Unencumbered Assets"), including, without limitation, any claims and causes of action arising under Sections 502(d), 544, 545, 547, 548, 549, 550, or 553 of the Bankruptcy Code and the proceeds thereof (subject to entry of a Final Order).
(b) Pursuant to Section 364(c)(3) of the Bankruptcy Code: A junior lien on all assets and property of the Debtor and its estate that are subject to valid, perfected, and non-avoidable liens or security interests as of the Petition Date, other than the Prepetition Senior Collateral with respect to which priming liens are granted as set forth in clause (c) below.
(c) Pursuant to Section 364(d)(1) of the Bankruptcy Code: A first-priority priming lien on all Prepetition Senior Collateral, including, without limitation, the Debtor's interest in the Houston terminal lease, all accounts receivable, and all equity interests in the fourteen (14) vessel-owning special purpose vehicles, which priming liens shall be senior in priority to the Prepetition Senior Secured Liens and the Prepetition Mezzanine Liens.
3.2. Priming of Prepetition Liens. The DIP Liens granted pursuant to Section 364(d)(1) of the Bankruptcy Code shall prime the existing liens of (i) Nordbank International AG, in its capacity as collateral agent for the Prepetition Senior Secured Lenders, under and as defined in the Prepetition Credit Agreement and the Prepetition Senior Loan Documents, and (ii) Dralvecen Mezzanine Capital LLC, in its capacity as second-lien holder, under and as defined in the Prepetition Mezzanine Notes and the related security documents, in each case in accordance with the Prepetition Intercreditor Agreement. The Prepetition Senior Secured Parties have consented to the priming of their liens as described herein. To the extent that the Prepetition Mezzanine Lender has not consented to the priming of its liens, the Court finds that the Prepetition Mezzanine Lender is adequately protected as set forth in Section 4 below and that the requirements of Section 364(d)(1) of the Bankruptcy Code have been satisfied.
3.3. Priority of DIP Liens. The relative priority of the DIP Liens, the Prepetition Senior Secured Liens, the Prepetition Mezzanine Liens, the Adequate Protection Liens (as defined below), and all other liens on the Debtor's assets shall be as follows:
(1) First: DIP Liens (subject only to the Carve-Out);
(2) Second: Prepetition Senior Secured Liens (including Adequate Protection Liens granted to the Prepetition Senior Secured Parties);
(3) Third: Prepetition Mezzanine Liens (including Adequate Protection Liens granted to the Prepetition Mezzanine Lender);
(4) Fourth: All other liens, whether arising by operation of law, by agreement, or otherwise.
The DIP Liens shall be valid, binding, enforceable, non-avoidable, and perfected upon entry of this Interim Order without the necessity of the execution, filing, or recording of any financing statements, mortgages, notices, or other documents that might otherwise be required under the law of any jurisdiction, and without further action by or order of this Court; provided, however, that the DIP Agent may, in its sole discretion, file or record such documents as it deems appropriate to evidence or perfect the DIP Liens, and the Debtor is hereby authorized and directed to execute any and all such documents upon request by the DIP Agent. To the extent that any such filings or recordings are made, they shall be deemed to have been made nunc pro tunc to the Petition Date.
SECTION 4. ADEQUATE PROTECTION
4.1. Adequate Protection for Prepetition Senior Secured Lenders. As adequate protection of the interests of the Prepetition Senior Secured Parties in the Prepetition Senior Collateral for any diminution in the value of such interests resulting from (a) the priming of the Prepetition Senior Secured Liens by the DIP Liens; (b) the Debtor's use, sale, or lease of the Prepetition Senior Collateral (including cash collateral) during the Chapter 11 Case; (c) the imposition of the automatic stay pursuant to Section 362 of the Bankruptcy Code; and (d) depreciation, wear and tear, or other diminution in the value of the Prepetition Senior Collateral during the Chapter 11 Case, the Prepetition Senior Secured Parties shall receive the following adequate protection, in each case pursuant to Sections 361 and 363(e) of the Bankruptcy Code:
(a) Adequate Protection Liens. The Prepetition Agent, for the benefit of the Prepetition Senior Secured Lenders, is hereby granted valid, binding, continuing, enforceable, fully perfected, non-avoidable replacement liens and security interests pursuant to Section 361(2) of the Bankruptcy Code on all postpetition assets of the Debtor and its estate, including, without limitation, all DIP Collateral and all proceeds thereof (the "Senior Adequate Protection Liens"). The Senior Adequate Protection Liens shall be subordinate and junior only to (i) the DIP Liens and (ii) the Carve-Out, and shall otherwise be senior to all other liens, claims, and interests in such assets.
(b) Adequate Protection Superpriority Claims. The Prepetition Senior Secured Parties are hereby granted allowed superpriority administrative expense claims pursuant to Section 507(b) of the Bankruptcy Code (the "Senior Adequate Protection Superpriority Claims") to the extent that the adequate protection provided herein proves insufficient to compensate the Prepetition Senior Secured Parties for any diminution in the value of their interests in the Prepetition Senior Collateral. The Senior Adequate Protection Superpriority Claims shall be junior only to (i) the DIP Superpriority Claims and (ii) the Carve-Out, and shall otherwise be senior to all other administrative expense claims and unsecured claims of any kind or nature.
(c) Current Interest Payments. As further adequate protection, the Debtor shall make current cash interest payments to the Prepetition Agent, for the ratable benefit of the Prepetition Senior Secured Lenders, at the non-default contract rate under the Prepetition Credit Agreement (i.e., SOFR plus 375 basis points per annum) on the aggregate outstanding principal balance of Five Hundred Forty Million Dollars ($540,000,000) under the Prepetition Credit Agreement, payable monthly in arrears in accordance with the terms of the Prepetition Credit Agreement and the DIP Budget. The payment of adequate protection interest shall not constitute a determination that the Prepetition Senior Secured Lenders are entitled to payment of interest at any other rate, including the default rate, or a determination that the Prepetition Senior Secured Obligations are allowable in any particular amount.
(d) Professional Fee Reimbursement. As further adequate protection, the Debtor shall reimburse the reasonable and documented fees and expenses of the professionals retained by the Ad Hoc Group of Senior Secured Lenders, including Whitfield, Crane & Burgess LLP (as counsel) and Draycott Advisory Group LLC (as financial advisor), subject to and in accordance with the amounts budgeted for such professionals in the DIP Budget. Such reimbursement shall be made monthly upon submission of summary invoices, without the need for formal fee applications or Court approval, but subject to the right of the Debtor, the United States Trustee, or any official committee of unsecured creditors to object to the reasonableness of such fees and expenses within thirty (30) days of receipt of such invoices.
(e) Reporting. As further adequate protection, the Debtor shall provide to the Prepetition Agent and each of the Prepetition Senior Secured Lenders (or their counsel) the following reporting:
(i) Weekly 13-week rolling cash flow forecasts, to be delivered no later than the close of business each Friday for the preceding week, prepared by Kensington Veltrian Partners LLC (the Debtor's financial advisor);
(ii) Monthly financial reports, including unaudited balance sheets, income statements, and cash flow statements for the preceding month, to be delivered no later than the thirtieth (30th) day following the end of each calendar month, prepared by the Debtor with the assistance of Kensington Veltrian Partners LLC;
(iii) Monthly variance reports comparing actual results to the DIP Budget, to be delivered concurrently with the monthly financial reports; and
(iv) Such other financial and operational information as the Prepetition Agent may reasonably request from time to time.
4.2. Adequate Protection for Prepetition Mezzanine Lender (BMC). As adequate protection of the interests of the Prepetition Mezzanine Lender in the Prepetition Senior Collateral for any diminution in the value of such interests resulting from the priming of the Prepetition Mezzanine Liens by the DIP Liens, the Debtor's use of cash collateral, the imposition of the automatic stay, and depreciation or other diminution in the value of the collateral, the Prepetition Mezzanine Lender shall receive the following adequate protection, in each case pursuant to Sections 361 and 363(e) of the Bankruptcy Code:
(a) Adequate Protection Liens. BMC is hereby granted valid, binding, continuing, enforceable, fully perfected, non-avoidable replacement liens and security interests pursuant to Section 361(2) of the Bankruptcy Code on all postpetition assets of the Debtor and its estate, including, without limitation, all DIP Collateral and all proceeds thereof (the "Mezzanine Adequate Protection Liens"). The Mezzanine Adequate Protection Liens shall be subordinate and junior to (i) the DIP Liens, (ii) the Prepetition Senior Secured Liens (including the Senior Adequate Protection Liens), and (iii) the Carve-Out, and shall otherwise be senior to all other liens, claims, and interests in such assets, except as otherwise provided in the Prepetition Intercreditor Agreement.
(b) Adequate Protection Superpriority Claims. BMC is hereby granted allowed superpriority administrative expense claims pursuant to Section 507(b) of the Bankruptcy Code (the "Mezzanine Adequate Protection Superpriority Claims") to the extent that the adequate protection provided herein proves insufficient to compensate BMC for any diminution in the value of its interests in the Prepetition Senior Collateral. The Mezzanine Adequate Protection Superpriority Claims shall be junior to (i) the DIP Superpriority Claims, (ii) the Senior Adequate Protection Superpriority Claims, and (iii) the Carve-Out, and shall otherwise be senior to all other administrative expense claims and unsecured claims of any kind or nature.
(c) Reporting. BMC shall receive the same financial reporting as provided to the Prepetition Senior Secured Parties as described in Section 4.1(e) above, delivered concurrently therewith.
For the avoidance of doubt, BMC shall not receive current cash interest payments on account of the Prepetition Mezzanine Obligations as part of the adequate protection package. The Court notes that the Prepetition Mezzanine Notes provide for PIK toggle interest and that all interest has been paid in kind (rather than in cash) since the second quarter of 2022. The Court finds that the adequate protection provided to BMC pursuant to this Section 4.2 is sufficient and adequate under the circumstances.
4.3. Adequate Protection Cushion. The Court finds that there exists a sufficient adequate protection cushion to support the relief granted in this Interim Order. The Debtor's assets — including a fleet of vessels appraised at Six Hundred Twenty-Three Million Dollars ($623,000,000) as of November 1, 2022 by Drakos Maritime Valuations Ltd., together with the Debtor's other assets (including accounts receivable, the Houston terminal lease, equity interests in vessel-owning SPVs, and other tangible and intangible property) — exceed the aggregate amount of the DIP Obligations that may be incurred on an interim basis (up to $30,000,000), plus the Prepetition Senior Secured Obligations ($540,000,000), plus the Prepetition Mezzanine Obligations ($112,300,000).
The aggregate amount of secured claims that will prime or be pari passu with the fleet and other collateral, on an interim basis, is as follows:
The Court acknowledges that the fleet appraised value of $623,000,000 does not, standing alone, exceed the total secured claims of $682,300,000. However, the Court notes that (a) the fleet appraisal does not include the value of the Debtor's other assets, including accounts receivable, the Houston terminal lease, and other tangible and intangible property; (b) Kensington Veltrian Partners LLC has estimated the enterprise value of the Debtor at between $580,000,000 and $640,000,000; (c) the Prepetition Senior Secured Parties have consented to the priming of their liens; (d) the adequate protection package includes replacement liens, superpriority claims, current interest payments, and professional fee reimbursement; and (e) the relief granted herein is on an interim basis only, authorizing borrowings of only $30,000,000 pending the Final Hearing. The Court finds that the adequate protection provided herein is sufficient under the circumstances for interim purposes, subject to reconsideration at the Final Hearing.
SECTION 5. AUTHORIZATION TO USE CASH COLLATERAL
5.1. Cash Collateral. Pursuant to Section 363 of the Bankruptcy Code, the Debtor is hereby authorized to use cash collateral (as defined in Section 363(a) of the Bankruptcy Code) in accordance with the DIP Budget, subject in all respects to the adequate protection provisions of Section 4 of this Interim Order and the other terms and conditions of this Interim Order. For purposes of this Interim Order, "cash collateral" includes, without limitation, all cash, deposit accounts, certificates of deposit, securities, and other cash equivalents in the possession, custody, or control of the Debtor or its agents, and all accounts receivable, contract rights, and other payment rights constituting proceeds of the Prepetition Senior Collateral, in each case whether now existing or hereafter arising or acquired. The Debtor's use of cash collateral shall be subject to the Permitted Variance and the other limitations set forth in this Interim Order and the DIP Credit Agreement.
SECTION 6. MILESTONES
6.1. DIP Milestones. The following milestones (each, a "Milestone") shall apply to the Chapter 11 Case, subject in each case to extension by the prior written agreement of the DIP Agent (acting at the direction of the Required Lenders):
(a) Interim Order. Within three (3) business days of the Petition Date, the Court shall have entered this Interim Order authorizing interim borrowings under the DIP Facility.
(b) Final Order. Within forty-five (45) days of the Petition Date, the Court shall have entered a final order (the "Final Order") approving the DIP Motion and authorizing the full Seventy-Five Million Dollar ($75,000,000) DIP Facility on a final basis.
(c) Plan Support Solicitation. Within one hundred twenty (120) days of the Petition Date, the Debtor shall have commenced solicitation of plan support from major creditor constituencies, including the Ad Hoc Group, BMC, and the informal group of unsecured noteholders.
(d) Plan Filing. Within one hundred eighty (180) days of the Petition Date, the Debtor shall have filed a Chapter 11 plan of reorganization and related disclosure statement with the Court.
(e) Confirmation Hearing. Within two hundred seventy (270) days of the Petition Date, the Court shall have commenced a hearing on confirmation of the Chapter 11 plan.
(f) Plan Effective Date. Within three hundred (300) days of the Petition Date, the effective date of the confirmed Chapter 11 plan shall have occurred.
Failure to achieve any Milestone within the time periods specified above (as such periods may be extended by agreement of the DIP Agent) shall constitute an Event of Default under the DIP Credit Agreement, subject to the notice and cure provisions set forth in Section 8 of this Interim Order and the applicable provisions of the DIP Credit Agreement.
SECTION 7. EVENTS OF DEFAULT
7.1. DIP Events of Default. In addition to the Events of Default set forth in the DIP Credit Agreement, each of the following shall constitute an "Event of Default" under the DIP Credit Agreement and this Interim Order:
(a) The Debtor's failure to make any payment of principal, interest, fees, or other amounts when due under the DIP Credit Agreement or this Interim Order;
(b) Any representation, warranty, or certification made or deemed made by the Debtor in the DIP Credit Agreement, this Interim Order, or in any document, certificate, or financial statement delivered in connection therewith, proves to have been incorrect or misleading in any material respect when made or deemed made;
(c) The Debtor's breach of, or failure to comply with, any covenant, agreement, or obligation under the DIP Credit Agreement or this Interim Order, including, without limitation, any breach of the DIP Budget (subject to the Permitted Variance);
(d) The Debtor's failure to meet any Milestone set forth in Section 6 of this Interim Order within the time periods specified therein (as such periods may be extended by agreement of the DIP Agent);
(e) The conversion of the Chapter 11 Case to a case under Chapter 7 of the Bankruptcy Code, or the dismissal of the Chapter 11 Case, in each case unless such conversion or dismissal is consented to in writing by the DIP Agent;
(f) The appointment of a Chapter 11 trustee in the Chapter 11 Case, or the appointment of an examiner with expanded powers (i.e., powers beyond those set forth in Sections 1104(c) and 1106(a)(3) and (4) of the Bankruptcy Code);
(g) The entry of any order of this Court or any other court of competent jurisdiction reversing, staying, vacating, amending, supplementing, or otherwise modifying this Interim Order or the Final Order (when entered) in a manner adverse to the interests of the DIP Secured Parties, unless such modification is consented to in writing by the DIP Agent;
(h) The Debtor's grant or creation of, or acquiescence in, any lien, claim, or superpriority administrative expense claim that is equal or senior to the DIP Liens or the DIP Superpriority Claims (other than the Carve-Out), without the prior written consent of the DIP Agent;
(i) Any of the stipulations or admissions set forth in Section 9 of this Interim Order are challenged, contested, disputed, or denied by the Debtor or, following the expiration of the Challenge Period (as defined in Section 10 below), by any party in interest; and
(j) The occurrence of any other "Event of Default" as defined in the DIP Credit Agreement.
SECTION 8. REMEDIES UPON EVENT OF DEFAULT
8.1. Notice and Remedies. Upon the occurrence and during the continuance of an Event of Default under the DIP Credit Agreement or this Interim Order:
(a) Notice. The DIP Agent shall provide five (5) business days' prior written notice (the "Remedies Notice") of the Event of Default and the DIP Agent's intention to exercise remedies to each of the following parties: (i) the Debtor, c/o Thalassa Americas Inc., 1400 McKinney Street, Suite 2200, Houston, Texas 77010, Attention: Marcus Hale, President; (ii) counsel to the Debtor, Calderwood & Harkness LLP, 780 Third Avenue, New York, New York 10017, Attention: Nathaniel Bower; (iii) the Office of the United States Trustee for Region 7; and (iv) counsel to any official committee of unsecured creditors, if one has been appointed. The Remedies Notice shall identify the Event of Default with reasonable specificity and state the remedies that the DIP Agent intends to exercise upon expiration of the notice period.
(b) Exercise of Remedies. Upon the expiration of the five (5)-business-day Remedies Notice period, unless the applicable Event of Default has been cured to the satisfaction of the DIP Agent or waived in writing by the DIP Agent (acting at the direction of the Required Lenders), the DIP Agent and the DIP Lenders shall be entitled, without further order of this Court (except as otherwise expressly required by this Interim Order), to exercise any or all of the following remedies:
(i) Terminate all remaining commitments under the DIP Facility;
(ii) Declare all outstanding DIP Obligations immediately due and payable, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by the Debtor;
(iii) Exercise any and all rights and remedies available to the DIP Secured Parties under the DIP Credit Agreement, this Interim Order, and applicable law, including, without limitation, the right to foreclose on, collect, or otherwise realize upon any or all of the DIP Collateral;
(iv) Set off any amounts owed by the Debtor to the DIP Secured Parties against any amounts held by the DIP Secured Parties for the account of the Debtor; and
(v) Take such other and further actions as the DIP Agent may deem necessary or appropriate to protect the interests of the DIP Secured Parties.
(c) Stay Modification. The automatic stay imposed by Section 362 of the Bankruptcy Code is hereby modified to the extent necessary to permit the DIP Agent and the DIP Lenders to deliver the Remedies Notice and, following the expiration of the Remedies Notice period, to exercise any and all remedies as provided in this Section 8, without the need for any further relief from the automatic stay. Notwithstanding the foregoing, the Debtor and any other party in interest shall have the right, during the five (5)-business-day Remedies Notice period, to seek an emergency hearing before this Court to contest the exercise of remedies by the DIP Secured Parties; provided, however, that the filing of any such motion shall not extend the Remedies Notice period absent an order of this Court.
SECTION 9. STIPULATIONS AND ADMISSIONS
9.1. Debtor's Stipulations. Subject in all respects to the rights of parties in interest as expressly set forth in Section 10 of this Interim Order, the Debtor hereby stipulates, acknowledges, and agrees to the following:
(a) Validity of Prepetition Senior Secured Obligations. As of the Petition Date, the Prepetition Senior Secured Obligations (in the aggregate principal amount of approximately Five Hundred Forty Million Dollars ($540,000,000), plus accrued and unpaid interest, fees, and other amounts) constitute the legal, valid, binding, and enforceable obligations of the Debtor, are not subject to avoidance, disallowance, recharacterization, subordination (whether equitable, contractual, or otherwise), or any other challenge under the Bankruptcy Code or applicable non-bankruptcy law, and are not subject to any offset, recoupment, defense, counterclaim, or claim of any kind or nature.
(b) Validity of Prepetition Senior Secured Liens. The liens and security interests securing the Prepetition Senior Secured Obligations are valid, properly and duly perfected, enforceable, first-priority liens and security interests on and in the Prepetition Senior Collateral, and are not subject to avoidance, disallowance, recharacterization, subordination, or any other challenge under the Bankruptcy Code or applicable non-bankruptcy law.
(c) Validity of Prepetition Mezzanine Obligations and Liens. As of the Petition Date, the Prepetition Mezzanine Obligations (in the aggregate principal amount of approximately One Hundred Twelve Million Three Hundred Thousand Dollars ($112,300,000), plus accrued and unpaid interest, fees, and other amounts) constitute the legal, valid, binding, and enforceable obligations of the Debtor, are not subject to avoidance, disallowance, recharacterization, subordination, or any other challenge under the Bankruptcy Code or applicable non-bankruptcy law, and are secured by valid, properly and duly perfected, enforceable, second-priority liens and security interests on and in the Prepetition Senior Collateral, junior only to the Prepetition Senior Secured Liens.
(d) No Claims Against Prepetition Secured Parties. The Debtor does not possess, and hereby waives and releases (to the extent permitted by law), any and all claims, counterclaims, defenses, causes of action, rights of setoff, or recoupment of any kind or nature, whether known or unknown, whether arising at law or in equity, that the Debtor or its estate may have against the Prepetition Agent, any of the Prepetition Senior Secured Lenders, or the Prepetition Mezzanine Lender, or any of their respective officers, directors, employees, agents, attorneys, advisors, or representatives, arising out of, relating to, or in connection with the Prepetition Credit Agreement, the Prepetition Senior Loan Documents, the Prepetition Mezzanine Notes, the Prepetition Intercreditor Agreement, or any actions taken or omitted to be taken in connection therewith prior to the Petition Date.
The stipulations set forth in this Section 9 have been made by the Debtor after consultation with its counsel and financial advisors and are binding upon the Debtor and its estate in all respects, subject only to the Challenge Period provisions of Section 10 below.
SECTION 10. CHALLENGE PERIOD AND RESERVATION OF RIGHTS
10.1. Challenge Period. Notwithstanding the stipulations and admissions of the Debtor set forth in Section 9 of this Interim Order, any party in interest with requisite standing (including any official committee of unsecured creditors appointed in the Chapter 11 Case) shall have until the later of (a) sixty (60) days after the Petition Date and (b) thirty (30) days after the entry of an order appointing an official committee of unsecured creditors in the Chapter 11 Case (such later date, the "Challenge Deadline"), to investigate and, if appropriate, commence a Challenge (as defined below) to any of the stipulations set forth in Section 9 of this Interim Order.
For purposes of this Interim Order, a "Challenge" means any adversary proceeding, contested matter, motion, claim objection, or other proceeding or action commenced in this Court (or, with leave of this Court, in any other court of competent jurisdiction) by any party in interest that challenges, contests, disputes, or seeks to avoid, disallow, recharacterize, subordinate, or otherwise impair the validity, extent, priority, perfection, or enforceability of all or any portion of the Prepetition Senior Secured Obligations, the Prepetition Mezzanine Obligations, or the liens and security interests securing the same, or that asser