1006-00002 · Crestline Packaging Solutions LLC · DIP Financing

motion-dip-financing.docx DOCUMENT Finance & Banking

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UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

^1 The Debtors in these jointly administered Chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, are: Crestline Packaging Solutions LLC (EIN: XX-XXX4837) and CPS Holdings Inc. (EIN: XX-XXX9215). The Debtors' mailing address is 4710 Industrial Corridor Drive, Akron, OH 44308.

DEBTORS' MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS (I) AUTHORIZING THE DEBTORS TO OBTAIN POSTPETITION FINANCING PURSUANT TO 11 U.S.C. §§ 105, 361, 362, 363, AND 364, (II) GRANTING LIENS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS, (III) AUTHORIZING THE USE OF CASH COLLATERAL, (IV) GRANTING ADEQUATE PROTECTION TO PREPETITION SECURED PARTIES, AND (V) SCHEDULING A FINAL HEARING

Crestline Packaging Solutions LLC and CPS Holdings Inc., each as debtors and debtors in possession (collectively, the "Debtors"), hereby move this Court (the "Motion") pursuant to Sections 105, 361, 362, 363, and 364 of Title 11 of the United States Code (the "Bankruptcy Code"), Rules 2002, 4001(b), 4001(c), and 9014 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), and the Local Rules for the United States Bankruptcy Court for the Northern District of Ohio (the "Local Rules"), for entry of interim and final orders, substantially in the forms attached hereto as Exhibit A (the "Interim DIP Order") and Exhibit B (the "Final DIP Order" and, together with the Interim DIP Order, the "DIP Orders"), (i) authorizing the Debtors to obtain postpetition financing (the "DIP Facility") pursuant to that certain Senior Secured Superpriority Debtor-in-Possession Revolving Credit Agreement (the "DIP Credit Agreement"), a copy of which is attached hereto as Exhibit C, (ii) granting liens and superpriority administrative expense status to the DIP Agent and the DIP Lenders (each as defined herein), (iii) authorizing the Debtors to use cash collateral, (iv) granting adequate protection to the prepetition secured parties, and (v) scheduling a final hearing on this Motion. In support of this Motion, the Debtors respectfully represent as follows:

I. PRELIMINARY STATEMENT

1. On June 20, 2022 (the "Petition Date"), the Debtors each filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code, commencing these jointly administered cases. The Debtors continue to manage and operate their businesses as debtors in possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. No trustee, examiner, or statutory committee of unsecured creditors has been appointed in these cases as of the date hereof.

2. By this Motion, the Debtors seek authority to enter into a $30.0 million senior secured superpriority revolving debtor-in-possession credit facility (the "DIP Facility") with Ridgeline National Bank, N.A., as administrative agent (in such capacity, the "DIP Agent"), and the consenting first lien lenders party thereto from time to time (the "DIP Lenders"). The DIP Facility is governed by the DIP Credit Agreement, which is attached hereto as Exhibit C. The terms and conditions of the DIP Facility are the product of arm's-length, good-faith negotiations among the Debtors, the DIP Agent, the DIP Lenders, and the Ad Hoc Group of First Lien Lenders (as defined herein), with the assistance of their respective legal and financial advisors.

3. The DIP Facility is critical to the Debtors' ability to fund their operations during the pendency of these Chapter 11 cases, maintain going-concern value for the benefit of all stakeholders—including employees, customers, vendors, and creditors—and implement the prepackaged plan of reorganization (the "Plan") contemplated by the Restructuring Support Agreement (the "RSA") described more fully below. Without the DIP Facility, the Debtors simply cannot continue operating.

4. Crestline Packaging Solutions LLC ("Crestline" or the "Company") is an Ohio-headquartered manufacturer of specialty chemical packaging and industrial containment products, including high-density polyethylene ("HDPE") drums, intermediate bulk containers ("IBCs"), steel pails, and specialty containment vessels. The Company operates four manufacturing plants located in Ohio, Indiana, and Louisiana and employs approximately 1,420 people. Crestline's products serve customers in the chemical, petrochemical, and agricultural sectors across the United States and are essential to the safe storage and transportation of hazardous and non-hazardous materials.

5. Absent the DIP Facility, the Debtors will be unable to pay employees, purchase raw materials—including critical HDPE resin supply from Northstar Polymers Inc. and steel from domestic suppliers—maintain operations at their four manufacturing plants, and satisfy administrative obligations arising during these Chapter 11 cases. Such a cessation of operations would result in immediate and irreparable harm to the Debtors' estates, their approximately 1,420 employees, their customers (many of whom depend on Crestline as a sole or primary source for specialty containment packaging), and the broader restructuring process.

6. The terms of the DIP Facility reflect arm's-length negotiations and are reasonable and appropriate under the circumstances. As described more fully below, the pricing of the DIP Facility—including an interest rate of SOFR plus 500 basis points, a commitment fee of 1.50%, and a closing fee of 2.00%—is within the range of market terms for comparable debtor-in-possession financing facilities for companies of similar size and credit profile in the specialty manufacturing sector.

7. As set forth more fully herein, the Debtors request that the Court enter the Interim DIP Order approving the DIP Facility on an interim basis, authorizing the Debtors to borrow up to the full $30.0 million commitment immediately and to use cash collateral, and schedule a final hearing (the "Final Hearing") within approximately 25 days of the Petition Date, at which time the Debtors will seek entry of the Final DIP Order approving the DIP Facility on a final basis.

II. JURISDICTION AND VENUE

8. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the General Order of Reference from the United States District Court for the Northern District of Ohio. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2), and the Debtors confirm that they consent to the entry of final orders by this Court to the extent that it is determined that this Court, absent consent of the parties, cannot enter final orders or judgments consistent with Article III of the United States Constitution. See Stern v. Marshall, 564 U.S. 462 (2011).

9. Venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409. The Debtors' corporate headquarters are located at 4710 Industrial Corridor Drive, Akron, OH 44308, which is within the Eastern Division of the Northern District of Ohio. Crestline has maintained its principal place of business and the primary location of its manufacturing operations in Akron, Ohio since its formation in 2007.

10. The statutory predicates for the relief requested herein are Sections 105, 361, 362, 363(c)(2), 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1), and 364(e) of the Bankruptcy Code and Bankruptcy Rules 2002, 4001(b), 4001(c), and 9014.

III. BACKGROUND

A. General Background and Business Description

11. Crestline Packaging Solutions LLC is an Ohio limited liability company formed in 2007, with its principal office and headquarters located at 4710 Industrial Corridor Drive, Akron, OH 44308. The Company is a leading North American manufacturer of specialty chemical packaging and industrial containment products, serving a diversified base of customers in the chemical, petrochemical, and agricultural sectors. Crestline's product lines include HDPE drums (ranging from 15-gallon to 55-gallon capacities), intermediate bulk containers (275-gallon and 330-gallon configurations), steel pails (1-gallon to 7-gallon capacities), and specialty containment vessels designed for specific chemical and hazardous material applications.

12. CPS Holdings Inc. ("CPS Holdings") is a Delaware corporation and the direct parent of Crestline, formed in connection with the 2017 leveraged buyout described below. CPS Holdings' registered agent is National Corporate Services, Inc., located at 1209 Orange Street, Wilmington, DE 19801. CPS Holdings has no independent business operations and serves solely as a holding company for Crestline.

13. Crestline operates four manufacturing facilities, each of which is critical to the Company's ongoing operations:

(a) Plant 1 (Headquarters): 4710 Industrial Corridor Drive, Akron, OH 44308. Plant 1 is the Company's primary HDPE drum manufacturing facility and serves as Crestline's corporate headquarters. This facility houses approximately 480 employees, including the Company's executive management team, and contains nine blow-molding production lines, quality control laboratories, and warehousing capacity for finished goods inventory.

(b) Plant 2: 2255 Commerce Parkway, Evansville, IN 47725. Plant 2 is the Company's IBC and steel pail manufacturing facility, employing approximately 390 production, maintenance, and administrative personnel. This facility operates seven IBC assembly lines and four steel pail stamping and forming lines, and serves as the primary distribution hub for customers in the Midwest and Southeast regions.

(c) Plant 3: 8100 River Road, Baton Rouge, LA 70820. Plant 3 is dedicated to the manufacture of specialty containment vessels, including double-walled and triple-walled containment systems for the petrochemical industry. Approximately 310 employees work at this facility, which is strategically located to serve the concentration of petrochemical customers along the Gulf Coast.

(d) Plant 4: 1480 State Route 59, Ravenna, OH 44266. Plant 4 is the Company's extrusion and secondary processing facility, employing approximately 240 workers. This facility produces the HDPE sheet stock and extruded components used as inputs at Plants 1 and 3, and also performs secondary processing operations, including printing, labeling, and customization of finished products.

14. As of the Petition Date, the Debtors employ approximately 1,420 full-time employees across the four facilities described above. Approximately 870 of these employees are hourly production workers, 320 are salaried operations and administrative staff, and 230 are management and professional employees. None of the Debtors' employees are represented by a collective bargaining unit.

15. For the fiscal year ended December 31, 2021 ("FY2021"), Crestline generated revenue of approximately $312.6 million and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $38.4 million. On a trailing twelve-month basis through the first quarter of 2022 ("TTM Q1 2022"), the Company's EBITDA had declined to approximately $29.1 million. Revenue declined approximately 18% from fiscal year 2020 to FY2021, driven primarily by significant increases in the cost of HDPE resin—the Company's single largest raw material input—and persistent supply chain disruption affecting the availability and cost of steel, transportation, and ancillary materials. These cost pressures compressed the Company's margins significantly, as the Company was unable to pass through the full extent of raw material cost increases to customers under existing contracts with price adjustment lag periods of 60 to 90 days.

B. The 2017 Leveraged Buyout

16. In October 2017, Thornfield Capital Partners LP ("Thornfield"), a Delaware limited partnership with approximately $4.8 billion in assets under management (managing partner Julian Ashford; deal partner Rebecca Strand), acquired 100% of the equity interests in CPS Holdings Inc. for an enterprise value of approximately $410.0 million (the "Acquisition"). The Acquisition was structured as a leveraged buyout, with Thornfield contributing approximately $163.0 million of equity capital and the balance of the purchase price funded through a combination of first lien and second lien debt.

17. The Acquisition debt was arranged pursuant to the following instruments:

(a) First Lien Credit Agreement: That certain Credit Agreement, dated as of October 13, 2017 (as amended, restated, supplemented, or otherwise modified from time to time, the "First Lien Credit Agreement"), by and among Crestline Packaging Solutions LLC, as borrower, CPS Holdings Inc., as guarantor, Ridgeline National Bank, N.A., as administrative agent and collateral agent, and the lenders from time to time party thereto (the "First Lien Lenders"). The First Lien Credit Agreement provided for (i) a $175.0 million first lien term loan (the "First Lien Term Loan") and (ii) a $40.0 million revolving credit facility (the "First Lien Revolver" and, together with the First Lien Term Loan, the "First Lien Facilities"). The First Lien Facilities are secured by substantially all assets of the Debtors, including inventory, accounts receivable, equipment, intellectual property, and the equity interests in Crestline held by CPS Holdings.

(b) Second Lien Notes: Those certain 9.75% Senior Secured Second Lien Notes due 2024 (the "Second Lien Notes"), issued on October 13, 2017, in the aggregate principal amount of $60.0 million, pursuant to that certain Indenture, dated as of October 13, 2017 (as amended, supplemented, or otherwise modified from time to time, the "Second Lien Indenture"), by and among Crestline Packaging Solutions LLC, as issuer, CPS Holdings Inc., as guarantor, and Continental Fiduciary Trust Company, as indenture trustee (the "Indenture Trustee"). The Second Lien Notes are secured by second-priority liens on substantially all assets of the Debtors, junior and subordinate to the first lien liens in all respects.

18. The intercreditor relationship between the First Lien Lenders and the holders of the Second Lien Notes is governed by that certain Intercreditor Agreement, dated as of October 13, 2017 (the "Intercreditor Agreement"), among Ridgeline National Bank, N.A., as first lien collateral agent, Continental Fiduciary Trust Company, as second lien collateral representative, and the Debtors.

C. Prepetition Capital Structure

19. As of the Petition Date, the Debtors' funded debt capital structure is as follows:

^2 The aggregate principal amount of the Second Lien Notes was reduced from $60.0 million to $56.0 million as a result of $4.0 million in open-market repurchases conducted by the Company in 2019.

20. As of the Petition Date, accrued and unpaid interest on the Second Lien Notes totals approximately $3.9 million, including default rate interest at an additional 2.00% per annum above the stated coupon rate accruing since the date of the Notice of Default on April 22, 2022. Accordingly, total Second Lien claims (inclusive of principal and accrued interest) aggregate approximately $59.9 million.

21. Total First Lien Secured Claims as of the Petition Date aggregate approximately $191.3 million, consisting of $158.7 million of outstanding principal under the First Lien Term Loan and $32.6 million of outstanding principal under the First Lien Revolver, exclusive of accrued interest, fees, and expenses.

D. Events Leading to the Chapter 11 Filing

22. The First Lien Credit Agreement contains a Maximum Leverage Ratio financial maintenance covenant set forth in Section 7.11, which requires that the Debtors' Total Net Debt to EBITDA ratio not exceed 5.75x, tested on a quarterly basis. This covenant was designed to ensure that the Company's leverage remained at sustainable levels and was a material term of the First Lien Credit Agreement.

23. As a result of the deterioration in the Company's financial performance described above, the Debtors breached the Maximum Leverage Ratio covenant as of the end of the first quarter of 2022. Specifically, the Company's actual leverage ratio as of Q1 2022 was approximately 8.50x (calculated as $247.3 million in Total Net Debt divided by $29.1 million in TTM EBITDA), which exceeded the covenant maximum of 5.75x by approximately 2.75x, or 47.8% above the permitted level.

24. On April 22, 2022, Ridgeline National Bank, N.A., as administrative agent under the First Lien Credit Agreement, delivered a formal Notice of Default to the Debtors, citing breach of Section 7.11 of the First Lien Credit Agreement. The Notice of Default had the immediate effect of restricting the Debtors' ability to draw upon the unused portion of the First Lien Revolver and triggering the accrual of default rate interest under the First Lien Credit Agreement.

25. The Notice of Default under the First Lien Credit Agreement triggered a cross-default under Section 6.01(e) of the Second Lien Indenture, which defines an "Event of Default" to include, among other things, any default under the First Lien Credit Agreement that results in the acceleration or right of acceleration of indebtedness thereunder in an aggregate principal amount exceeding $5.0 million.

26. Following delivery of the Notice of Default, the Debtors engaged in intensive negotiations with the First Lien Lenders in an effort to obtain a forbearance and explore restructuring alternatives. On May 18, 2022, the Debtors, Ridgeline National Bank, N.A. (as administrative agent), and consenting first lien lenders holding approximately 68% of the outstanding principal amount of the First Lien Term Loan executed a Forbearance Agreement (the "Forbearance Agreement"), pursuant to which the consenting first lien lenders agreed to forbear from exercising their rights and remedies under the First Lien Credit Agreement for a period of 45 days through July 2, 2022. The Forbearance Agreement was subsequently extended once, to July 15, 2022, to allow the parties sufficient time to finalize the terms of the Restructuring Support Agreement described below.

27. In connection with the events described above, the Debtors retained Calderwood & Harkness LLP as debtor's counsel and engaged Aldersgate Advisory Group LLC ("Aldersgate") as financial advisor to the Debtors. Aldersgate is led by managing director Priya Narayanan, who has overseen the financial advisory engagement, including the development of the Debtors' business plan, the analysis of restructuring alternatives, and the negotiation of the DIP Facility. Aldersgate prepared the 13-week cash flow projections that form the basis of the DIP Budget (attached hereto as Exhibit D) and has provided advice on the reasonableness of the DIP Facility's terms in comparison to market benchmarks.

28. Simultaneously, an ad hoc group of holders of the First Lien Term Loan (the "Ad Hoc Group of First Lien Lenders"), represented by Hargrove, Mitchell & Saunders LLP (lead partner Victoria Kline), and an ad hoc group of holders of the Second Lien Notes (the "Ad Hoc Group of Second Lien Noteholders"), represented by Pemberton & Locke LLP (lead partner Raymond Delvecchio), organized to negotiate the terms of a consensual restructuring.

29. Following extensive negotiations among all principal constituencies, on July 8, 2022, the Debtors, CPS Holdings, Thornfield Capital Partners LP, the Ad Hoc Group of First Lien Lenders, and the Ad Hoc Group of Second Lien Noteholders executed the Restructuring Support Agreement (the "RSA"), which contemplates a prepackaged Chapter 11 plan of reorganization. The RSA sets forth the principal economic terms of the Plan and establishes the following milestone schedule:

(a) Petition Date: No later than July 31, 2022.

(b) Disclosure Statement Approval: Within 45 days of the Petition Date.

(d) Effective Date: Within 15 business days following entry of the Confirmation Order.

30. Consistent with the milestones set forth in the RSA, the Debtors commenced these Chapter 11 cases on June 20, 2022.

IV. THE DIP FACILITY

A. Summary of Material Terms

31. The material terms of the DIP Facility, as set forth in the DIP Credit Agreement (attached hereto as Exhibit C), are summarized below. In the event of any inconsistency between the summary set forth herein and the DIP Credit Agreement, the terms of the DIP Credit Agreement shall control.

DIP Agent: Ridgeline National Bank, N.A. (200 Public Square, Cleveland, OH 44114), serving as administrative agent under the DIP Credit Agreement.

DIP Lenders: The consenting first lien lenders party to the DIP Credit Agreement from time to time, including members of the Ad Hoc Group of First Lien Lenders. As of the date hereof, the DIP Lenders include Blackmoor Capital Management LLC, Greystone Fixed Income Partners LP, Wexford Opportunity Fund III LP, and other institutional investors that are existing holders of claims under the First Lien Credit Agreement.

Type of Facility: Senior secured superpriority revolving credit facility.

Commitment Amount: $30.0 million in aggregate commitments.

DIP Credit Agreement Date: The DIP Credit Agreement shall become effective on June 24, 2022, upon entry of the Interim DIP Order and satisfaction of all conditions precedent to effectiveness.

Borrower: Crestline Packaging Solutions LLC, as debtor and debtor in possession.

Guarantor: CPS Holdings Inc., as debtor and debtor in possession.

Interest Rate: Secured Overnight Financing Rate ("SOFR") plus 500 basis points per annum, payable monthly in arrears.

Default Interest Rate: An additional 200 basis points per annum above the otherwise applicable interest rate, accruing automatically upon the occurrence and during the continuance of any Event of Default under the DIP Credit Agreement.

Commitment Fee: 1.50% of the total commitment amount ($30.0 million × 1.50% = $450,000), fully earned upon the entry of the Interim DIP Order and payable upon such entry.

Closing Fee: 2.00% of the total commitment amount ($30.0 million × 2.00% = $600,000), fully earned upon execution of the DIP Credit Agreement and payable upon entry of the Interim DIP Order.

Maturity Date: The earliest of (a) the date that is 120 calendar days after the Petition Date (i.e., October 18, 2022), (b) the effective date of the Plan, and (c) the date of acceleration of the DIP Facility obligations following an Event of Default.

Use of Proceeds: Proceeds of the DIP Facility shall be used solely to (i) fund the Debtors' ongoing working capital needs, (ii) fund general corporate purposes, (iii) pay administrative expenses of the Chapter 11 cases, including professional fees, U.S. Trustee fees, and court costs, (iv) fund adequate protection obligations to prepetition secured parties, and (v) pay fees and expenses related to the DIP Facility—in each case in accordance with the approved DIP Budget.

Budget: A 13-week rolling cash flow budget (the "DIP Budget"), in the form attached hereto as Exhibit D, to be updated every four weeks and delivered to the DIP Agent, the U.S. Trustee, and counsel to each Ad Hoc Group. The initial DIP Budget covers the period from the week ending June 24, 2022 through the week ending September 16, 2022.

Variance Testing: Permitted variance of ±15% on aggregate disbursements, tested on a bi-weekly (i.e., every two weeks) basis, measured against the corresponding period in the DIP Budget. Any variance in excess of ±15% shall constitute an Event of Default under the DIP Credit Agreement unless waived by the Required Lenders (as defined in the DIP Credit Agreement).

Events of Default: Customary events of default for DIP financing facilities of this nature, including without limitation: (a) failure to comply with budget variances within the permitted tolerances; (b) failure to achieve any milestone set forth in the RSA within the time periods prescribed therein; (c) conversion of the Chapter 11 cases to cases under Chapter 7 of the Bankruptcy Code; (d) appointment of a trustee or examiner with expanded powers in the Chapter 11 cases; (e) reversal, vacatur, modification, amendment, supplement, or stay of the DIP Orders without the prior written consent of the Required Lenders and the DIP Agent; (f) any material breach of representations and warranties under the DIP Credit Agreement; (g) failure to pay any amounts due under the DIP Credit Agreement when due; and (h) the occurrence of certain other events customary for debtor-in-possession credit facilities.

Conditions Precedent to Closing: The effectiveness of the DIP Credit Agreement and the availability of the DIP Facility are conditioned upon, among other things: (a) entry of the Interim DIP Order, in form and substance acceptable to the DIP Agent and the Required Lenders; (b) execution and delivery of the DIP Credit Agreement and all related loan documents; (c) payment of all fees and expenses due upon closing, including the commitment fee, the closing fee, and reasonable fees and expenses of counsel to the DIP Agent and counsel to the Ad Hoc Group of First Lien Lenders; (d) delivery of the initial DIP Budget, in form and substance acceptable to the DIP Agent and the Required Lenders; (e) delivery of evidence of insurance on collateral in form and substance satisfactory to the DIP Agent; and (f) other customary conditions precedent.

Conditions Precedent to Each Borrowing: Each borrowing under the DIP Facility shall be subject to the satisfaction of the following conditions: (a) no Event of Default shall have occurred and be continuing or would result from such borrowing; (b) the Debtors shall be in compliance with the DIP Budget within the permitted variances; (c) the representations and warranties made by the Debtors in the DIP Credit Agreement shall be true and correct in all material respects as of the date of such borrowing; and (d) the DIP Agent shall have received a borrowing notice at least two (2) business days prior to the requested date of borrowing.

B. Security and Priority — Liens

32. The DIP Facility will be secured by first-priority priming liens (the "DIP Liens") on substantially all assets of the Debtors, whether now owned or hereafter acquired, real and personal, tangible and intangible, including, without limitation, accounts receivable, inventory, equipment, general intangibles, intellectual property, deposit accounts, investment property, fixtures, real property interests, contract rights, and the equity interests in Crestline held by CPS Holdings. The DIP Liens shall be subject only to (i) the carve-out described in Section IV.D below, (ii) valid, perfected, and non-avoidable liens that existed as of the Petition Date and that are senior to the liens of the prepetition first lien secured parties (collectively, "Permitted Prior Liens"), and (iii) certain other permitted liens as specifically defined in the DIP Credit Agreement.

33. Specifically, pursuant to Section 364(d)(1) of the Bankruptcy Code, the DIP Liens shall constitute priming liens that are senior in priority to the existing first lien liens securing the obligations under the First Lien Credit Agreement. The Debtors submit that the requirements of Section 364(d)(1) are satisfied because (a) the Debtors are unable to obtain the DIP Facility without the grant of priming liens, and (b) the interests of the prepetition first lien secured parties are adequately protected, as described more fully in Section V below.

34. Pursuant to Section 364(c)(2) of the Bankruptcy Code, the DIP Liens shall also constitute first-priority liens on all assets of the Debtors that are not already encumbered by valid, perfected, and non-avoidable liens as of the Petition Date—that is, on all unencumbered assets of the Debtors.

35. Pursuant to Section 364(c)(3) of the Bankruptcy Code, to the extent there exist any valid, perfected, and non-avoidable liens on assets of the Debtors that are senior to the liens of the prepetition first lien secured parties, the DIP Liens shall constitute junior liens on such assets, subordinate only to such Permitted Prior Liens.

36. The DIP Liens shall not be subject to any lien subordination or marshaling principle and shall be deemed automatically perfected upon entry of the Interim DIP Order without the need for the filing of any financing statements, deeds of trust, mortgages, or other documents of perfection, or the taking of any other action, to perfect such liens, although the DIP Agent shall be authorized (but not required) to file such documents or take such actions in its discretion.

C. Superpriority Administrative Expense Status

37. Pursuant to Section 364(c)(1) of the Bankruptcy Code, all obligations arising under or in connection with the DIP Facility, including principal, interest, fees, expenses, indemnification obligations, and all other amounts owing under the DIP Credit Agreement and the related loan documents (collectively, the "DIP Obligations"), shall constitute allowed superpriority administrative expense claims (the "DIP Superpriority Claims") against each of the Debtors' estates. The DIP Superpriority Claims shall have priority over all other claims and expenses of the kind specified in Sections 503(b), 507(a), and 507(b) of the Bankruptcy Code, whether or not such expenses or claims may become allowed claims or have arisen or arise in these cases or in any superseding cases, subject only to the carve-out described below.

D. Carve-Out.

38. Notwithstanding the foregoing, the DIP Liens and the DIP Superpriority Claims shall be subject to a carve-out (the "Carve-Out") for the following:

(i) All statutory fees required to be paid to the Office of the United States Trustee pursuant to 28 U.S.C. § 1930(a)(6) and any interest thereon required to be paid pursuant to 31 U.S.C. § 3717;

(ii) All fees required to be paid to the Clerk of the Bankruptcy Court;

(iii) All allowed and unpaid professional fees and disbursements incurred by professionals retained by the Debtors' estates and any official committee appointed in these cases (if any), in each case to the extent allowed by the Court, subject to a cap to be established in the Interim DIP Order and the Final DIP Order, as applicable, which cap shall not be reduced or modified without further order of the Court.

39. The specific dollar amounts of the professional fee component of the Carve-Out will be set forth in the DIP Orders and are the subject of ongoing negotiation among the parties.

E. Cash Collateral

40. In addition to the authority to obtain postpetition financing under the DIP Facility, the Debtors seek authority to use cash collateral (as defined in Section 363(a) of the Bankruptcy Code) of the prepetition secured parties during the pendency of these Chapter 11 cases. Cash collateral includes, without limitation, cash, deposit accounts, accounts receivable, and proceeds of prepetition collateral, all of which constitute collateral of the prepetition first lien secured parties and, on a junior basis, the prepetition second lien secured parties. The Debtors' use of cash collateral shall be subject to the terms and conditions set forth in the DIP Orders and the adequate protection provisions described in Section V below.

41. The Debtors require immediate access to cash collateral to fund ongoing operations, including payroll, raw material purchases, and overhead expenses, pending the availability of borrowings under the DIP Facility. Without the ability to use cash collateral, the Debtors would be unable to continue operations even for a brief period.

V. ADEQUATE PROTECTION FOR PREPETITION SECURED PARTIES

42. Pursuant to Sections 361, 362, 363(e), and 364(d)(1) of the Bankruptcy Code, the Debtors propose to provide adequate protection to the prepetition secured parties to protect against any diminution in the value of their interests in prepetition collateral resulting from (a) the Debtors' use of cash collateral, (b) the imposition of the automatic stay under Section 362 of the Bankruptcy Code, and (c) the granting of the DIP Liens, including the priming of the existing first lien liens.

A. Prepetition First Lien Secured Parties

43. The Debtors propose the following adequate protection to Ridgeline National Bank, N.A. (in its capacity as administrative agent and collateral agent under the First Lien Credit Agreement) and the prepetition First Lien Lenders (collectively, the "Prepetition First Lien Secured Parties"), against any diminution in the value of their interests in prepetition collateral arising from the Debtors' use of cash collateral and the priming of their existing first lien liens by the DIP Liens:

(a) Replacement Liens. The Prepetition First Lien Secured Parties shall receive automatically perfected replacement liens (the "First Lien Replacement Liens") on substantially all assets of the Debtors, whether now owned or hereafter acquired, real and personal, tangible and intangible. The First Lien Replacement Liens shall be junior only to (i) the DIP Liens, (ii) the Carve-Out, and (iii) Permitted Prior Liens, and shall be senior to all other liens, claims, and encumbrances, including the liens of the prepetition second lien secured parties.

(b) Superpriority Administrative Expense Claims. The Prepetition First Lien Secured Parties shall receive allowed superpriority administrative expense claims (the "First Lien Adequate Protection Claims") under Section 507(b) of the Bankruptcy Code against each of the Debtors' estates, which claims shall be junior only to the DIP Superpriority Claims and the Carve-Out, and shall be senior to all other administrative expense claims in these cases.

(c) Current Payment of Professional Fees and Expenses. The Debtors shall pay, in accordance with the DIP Budget, the accrued and unpaid reasonable and documented professional fees and expenses of (i) counsel to Ridgeline National Bank, N.A. in its capacity as DIP Agent and as prepetition administrative agent, and (ii) Hargrove, Mitchell & Saunders LLP, as counsel to the Ad Hoc Group of First Lien Lenders, in each case without the requirement of filing fee applications or obtaining further Court approval, subject to the right of the Debtors, the U.S. Trustee, or any statutory committee to object to the reasonableness of such fees and expenses.

(d) Financial Reporting. The Debtors shall deliver to the Prepetition First Lien Secured Parties (through the DIP Agent) the DIP Budget and variance reports, monthly unaudited financial statements (including income statements, balance sheets, and cash flow statements), and such other financial information as may be reasonably requested by the DIP Agent or counsel to the Ad Hoc Group of First Lien Lenders.

(e) Other Adequate Protection. The Debtors shall maintain insurance on all collateral in amounts and types consistent with prepetition practices and as required by the DIP Credit Agreement, take all reasonable steps to preserve the value of the collateral, and comply with the DIP Budget, all as further specified in the DIP Orders.

B. Prepetition Second Lien Secured Parties

44. The Debtors also propose adequate protection to Continental Fiduciary Trust Company (in its capacity as indenture trustee under the Second Lien Indenture) and the holders of the Second Lien Notes (collectively, the "Prepetition Second Lien Secured Parties"), against any diminution in the value of their interests in prepetition collateral. Such adequate protection shall be subordinate and subject in all respects to the DIP Liens, the DIP Superpriority Claims, the first lien liens (including the First Lien Replacement Liens), and the First Lien Adequate Protection Claims, consistent with the priorities established under the Intercreditor Agreement.

(a) Junior Replacement Liens. The Prepetition Second Lien Secured Parties shall receive automatically perfected replacement liens (the "Second Lien Replacement Liens") on substantially all assets of the Debtors, which liens shall be junior to (i) the DIP Liens, (ii) the Carve-Out, (iii) the First Lien Replacement Liens, (iv) the existing prepetition first lien liens, and (v) Permitted Prior Liens, and senior only to any other liens, claims, and encumbrances that are junior to the prepetition second lien liens.

(b) Junior Superpriority Administrative Expense Claims. The Prepetition Second Lien Secured Parties shall receive allowed superpriority administrative expense claims (the "Second Lien Adequate Protection Claims") under Section 507(b) of the Bankruptcy Code, which claims shall be junior to (i) the DIP Superpriority Claims, (ii) the Carve-Out, and (iii) the First Lien Adequate Protection Claims, and senior only to any other administrative expense claims that are junior to the First Lien Adequate Protection Claims.

45. The Debtors submit that the adequate protection proposed herein is sufficient to protect the interests of both the Prepetition First Lien Secured Parties and the Prepetition Second Lien Secured Parties against any diminution in value of their respective interests in prepetition collateral. The adequate protection is consistent with the priorities and subordination provisions of the Intercreditor Agreement and the Bankruptcy Code.

VI. NEED FOR POSTPETITION FINANCING AND USE OF CASH COLLATERAL

46. The Debtors have an immediate and critical need for the liquidity provided by the DIP Facility and the use of cash collateral. The 13-week cash flow projections prepared by the Debtors, with the assistance of Aldersgate Advisory Group LLC, demonstrate that the Debtors will require access to the DIP Facility to fund ongoing operations throughout the pendency of these Chapter 11 cases. Without the DIP Facility, the Debtors cannot sustain their business through the anticipated confirmation and consummation of the Plan.

47. Specifically, the DIP Facility and cash collateral are necessary to fund the following critical operational and administrative needs:

(a) Payroll and Employee Obligations. The Debtors must continue to pay wages and salaries to approximately 1,420 employees across their four manufacturing plants, as well as fund payroll taxes, health insurance, workers' compensation, and other employee-related obligations. Any interruption in payroll would result in immediate attrition of the Debtors' workforce, particularly the skilled manufacturing and engineering personnel who are essential to continued plant operations and who cannot easily be replaced.

(b) Raw Material Procurement. The Debtors must continue to purchase HDPE resin, steel, and other raw materials from critical suppliers to maintain production across all four plants. HDPE resin, the Company's single largest input cost, is sourced primarily from Northstar Polymers Inc. under a resin supply agreement that requires regular payment terms to maintain supply continuity. A disruption in resin supply would halt HDPE drum production at Plants 1 and 4 and specialty vessel production at Plant 3 within a matter of days. Similarly, steel supply for the IBC and pail operations at Plant 2 must continue without interruption.

(c) Facility Operations. The Debtors must continue to fund the operation and maintenance of all four manufacturing facilities, including utilities, equipment maintenance, lease payments (to the extent applicable), property taxes, environmental compliance costs, and other fixed and variable overhead.

(d) Administrative Expenses of the Chapter 11 Cases. The Debtors must fund the administrative expenses of these Chapter 11 cases, including professional fees and expenses of the Debtors' retained professionals (Calderwood & Harkness LLP, as debtor's counsel; Kellner & Hartwick LLP, as local co-counsel; and Aldersgate Advisory Group LLC, as financial advisor), U.S. Trustee quarterly fees, and other costs of administration. Total professional fees for the duration of the cases are estimated at approximately $9.3 million.

(e) Adequate Protection Payments. The Debtors must fund the adequate protection payments to the prepetition secured parties as described in Section V above, including payment of professional fees and expenses of counsel to the DIP Agent and counsel to the Ad Hoc Group of First Lien Lenders.

(f) Directors' and Officers' Insurance. The Debtors must fund the payment of a directors' and officers' liability insurance tail policy premium in the amount of $1.2 million to Apex Indemnity Insurance Company, providing aggregate coverage of $15.0 million, which is necessary to ensure the continued service and participation of the Debtors' directors and officers during the restructuring process.

48. Without the DIP Facility, the Debtors' existing cash on hand as of the Petition Date is insufficient to sustain operations through the anticipated timeline of the prepackaged plan. The DIP Budget, attached hereto as Exhibit D, reflects the Debtors' projected cash needs over the 13-week period commencing with the Petition Date and is consistent with the milestone schedule set forth in the RSA. The DIP Budget demonstrates that the Debtors will require access to the full $30.0 million commitment under the DIP Facility to fund operations through the plan effective date.

49. In sum, approval of the DIP Facility and authorization to use cash collateral are essential to the preservation of the Debtors' going-concern value, the continued employment of approximately 1,420 workers, and the successful implementation of the prepackaged plan of reorganization.

VII. THE DEBTORS WERE UNABLE TO OBTAIN UNSECURED CREDIT

50. Sections 364(c) and 364(d) of the Bankruptcy Code authorize a debtor in possession to obtain credit secured by senior or priming liens and with superpriority administrative expense status when the debtor is unable to obtain credit on an unsecured basis allowable under Section 503(b)(1) of the Bankruptcy Code as an administrative expense. See 11 U.S.C. §§ 364(c), 364(d).

51. The Debtors submit that they have satisfied this threshold requirement. Given the Debtors' financial condition—characterized by a leverage ratio of 8.50x (nearly 50% above the maximum covenant level), existing defaults across the entire capital structure (both the First Lien Credit Agreement and the Second Lien Indenture), total funded debt of $247.3 million against trailing twelve-month EBITDA of only $29.1 million, and the pendency of these Chapter 11 cases—no lender was willing to extend unsecured credit to the Debtors on any terms.

52. The Debtors, with the assistance of their financial advisor, Aldersgate Advisory Group LLC, explored alternative financing sources and determined that postpetition credit was not available to the Debtors without the grant of (a) superpriority administrative expense status under Section 364(c)(1), (b) first-priority liens on unencumbered assets under Section 364(c)(2), (c) junior liens on encumbered assets under Section 364(c)(3), and (d) priming liens senior to the existing first lien liens under Section 364(d)(1).

53. Aldersgate contacted several potential alternative DIP financing sources and assessed whether any third-party lender would be willing to provide the necessary postpetition liquidity on terms more favorable than those offered by the existing first lien lenders. No such alternative was identified. The DIP Facility, offered by the existing First Lien Lenders through the Ad Hoc Group of First Lien Lenders, represents the best available—and, indeed, the only available—postpetition financing given the Debtors' financial circumstances and the expedited timeline required by the prepackaged plan.

54. Accordingly, the Debtors were unable to obtain unsecured credit and could not obtain sufficient credit under Sections 364(a) or 364(b) of the Bankruptcy Code. The DIP Facility, with the superpriority administrative expense status, liens, and priming liens described herein, is the minimum level of protection required to induce the DIP Lenders to extend credit to the Debtors.

VIII. THE DIP FACILITY TERMS ARE FAIR AND REASONABLE

A. Good Faith and Arm's-Length Negotiations

55. The terms of the DIP Facility were the product of extensive arm's-length negotiations among the Debtors (advised by Calderwood & Harkness LLP and Aldersgate Advisory Group LLC), Ridgeline National Bank, N.A. (as proposed DIP Agent), and the consenting first lien lenders (through the Ad Hoc Group of First Lien Lenders, advised by Hargrove, Mitchell & Saunders LLP). These negotiations occurred over a period of several weeks in connection with the broader restructuring negotiations that culminated in the execution of the RSA. The DIP Facility was not the product of collusion, overreaching, or any other inequitable conduct by any party.

56. The DIP Lenders are entitled to the protections of Section 364(e) of the Bankruptcy Code, which provides that "[t]he reversal or modification on appeal of an authorization under this section to obtain credit . . . does not affect the validity of any debt so incurred, or any priority or lien so granted, to an entity that extended such credit in good faith." 11 U.S.C. § 364(e). The DIP Lenders have acted in good faith and without any intent to defraud or take unfair advantage of any party in interest, and the DIP Facility should be accorded the full protections of Section 364(e).

B. Reasonableness of Pricing

57. The pricing terms of the DIP Facility are reasonable and consistent with market terms for comparable DIP financing facilities. Specifically:

(a) The interest rate of SOFR plus 500 basis points is within the range of interest rates charged in DIP facilities for borrowers of comparable size and credit profile in the specialty manufacturing sector. Based on an analysis conducted by Aldersgate Advisory Group LLC of recent DIP facilities approved by bankruptcy courts during 2021 and 2022, interest rates for similarly situated borrowers have ranged from SOFR plus 400 basis points to SOFR plus 650 basis points, with a median of approximately SOFR plus 475 to 525 basis points. The rate proposed here falls squarely within the market range.

(b) The commitment fee of 1.50% of the total commitment ($450,000) is market-standard for DIP revolving facilities of this nature and size. Commitment fees in comparable DIP facilities typically range from 1.00% to 2.50%.

(c) The closing fee of 2.00% of the total commitment ($600,000) is similarly within the range observed in comparable transactions, where closing fees typically range from 1.50% to 3.00%.

(d) In the aggregate, the total upfront fees of $1,050,000 ($450,000 commitment fee + $600,000 closing fee) represent approximately 3.50% of the total $30.0 million commitment, which is reasonable in light of the size of the facility, the complexity of the restructuring, and the risks assumed by the DIP Lenders in extending credit in a Chapter 11 context.

C. Budget Controls

58. The DIP Facility incorporates robust budget controls and reporting requirements that provide sufficient oversight and transparency for all parties in interest, including the DIP Agent, the U.S. Trustee, and counsel to the Ad Hoc Groups:

(a) The 13-week rolling DIP Budget provides a detailed week-by-week projection of the Debtors' cash receipts and disbursements, allowing the DIP Agent and other parties to monitor the Debtors' financial performance and compliance in real time.

(b) Bi-weekly variance testing at ±15% on aggregate disbursements ensures appropriate monitoring of the Debtors' cash management during the cases. Any variance in excess of the permitted tolerance constitutes an Event of Default, providing the DIP Lenders with the ability to exercise remedies if the Debtors' actual performance deviates materially from the approved budget.

(c) The DIP Budget will be updated every four weeks and provided promptly to the DIP Agent, the U.S. Trustee, and counsel to each Ad Hoc Group, ensuring that all parties have current information regarding the Debtors' projected cash needs and performance.

59. These budget controls are consistent with standard practice in DIP financing facilities and provide a balanced framework that allows the Debtors to operate their business with appropriate flexibility while protecting the interests of the DIP Lenders and other parties in interest.

IX. INTERIM AND FINAL RELIEF

A. Request for Interim Approval

60. Pursuant to Bankruptcy Rule 4001(c)(2), the Debtors request that the Court enter the Interim DIP Order, substantially in the form attached hereto as Exhibit A, approving the DIP Facility on an interim basis and authorizing the Debtors to borrow up to the full $30.0 million commitment immediately upon entry of the Interim DIP Order. Bankruptcy Rule 4001(c)(2) expressly authorizes the Court to "authorize the obtaining of credit . . . before a final hearing" on not less than 14 days' notice. Fed. R. Bankr. P. 4001(c)(2).

61. The exigent circumstances of these cases warrant interim approval of the full $30.0 million commitment. As described in Section VI above and as reflected in the DIP Budget, the Debtors face an immediate and critical need for liquidity to fund payroll, raw material purchases, facility operations, and other essential expenses. Any delay in making the full DIP Facility available would jeopardize the Debtors' ability to maintain operations and preserve going-concern value during the interim period before a final hearing can be held.

62. The Debtors request that the Court schedule the interim hearing on this Motion for June 24, 2022, concurrent with the first day hearings in these Chapter 11 cases. Following entry of the Interim DIP Order, the Debtors will serve appropriate notice of the Final Hearing on all required parties, including the parties listed in Section XI below.

B. Request for Final Approval

63. The Debtors further request that the Court schedule a Final Hearing on this Motion within approximately 25 days of the Petition Date and, following such hearing, enter the Final DIP Order, substantially in the form attached hereto as Exhibit B, approving the DIP Facility on a final basis. The Final DIP Order will incorporate all of the terms and provisions set forth in the Interim DIP Order, together with such additional or modified provisions as may be appropriate for final approval.

C. Proposed Timeline

64. The Debtors propose the following timeline for interim and final approval of the DIP Facility:

65. This timeline is consistent with the milestone schedule set forth in the RSA and provides all parties in interest with adequate notice and opportunity to be heard at the Final Hearing.

X. REQUEST FOR WAIVER OF BANKRUPTCY RULES 6004(a) AND 6004(h)

66. To the extent applicable, the Debtors request that any order approving this Motion be effective immediately upon entry, notwithstanding the provisions of Bankruptcy Rules 6004(a) and 6004(h). Bankruptcy Rule 6004(h) provides that an "order authorizing the use, sale, or lease of property . . . is stayed until the expiration of 14 days after entry of the order, unless the court orders otherwise." Fed. R. Bankr. P. 6004(h). Given the Debtors' urgent need for postpetition financing and the use of cash collateral, the Debtors respectfully submit that cause exists to waive the 14-day stay and make any order entered in connection with this Motion effective immediately upon entry. Any delay in the effectiveness of the DIP Orders would deprive the Debtors of the immediate liquidity required to fund ongoing operations and preserve going-concern value, to the detriment of all stakeholders.

XI. NOTICE

67. Notice of this Motion has been provided to, or will promptly be provided to, the following parties:

(a) The Office of the United States Trustee, Region 9, Howard M. Metzenbaum U.S. Courthouse, 201 Superior Avenue, Cleveland, OH 44114;

(b) Ridgeline National Bank, N.A., as administrative agent under the First Lien Credit Agreement and as proposed DIP Agent, 200 Public Square, Cleveland, OH 44114;

(c) Hargrove, Mitchell & Saunders LLP, counsel to the Ad Hoc Group of First Lien Lenders, 51 West 52nd Street, New York, NY 10019, Attn: Victoria Kline;

(d) Pemberton & Locke LLP, counsel to the Ad Hoc Group of Second Lien Noteholders, 1 Liberty Plaza, New York, NY 10006, Attn: Raymond Delvecchio;

(e) Continental Fiduciary Trust Company, as indenture trustee for the Second Lien Notes, 101 Barclay Street, New York, NY 10286;

(f) Thornfield Capital Partners LP, 590 Lexington Avenue, Suite 3200, New York, NY 10022;

(g) All other parties entitled to notice pursuant to Bankruptcy Rule 4001(c) and the Local Rules of the United States Bankruptcy Court for the Northern District of Ohio.

68. The Debtors submit that no further notice of this Motion is required or necessary under the circumstances. The Debtors will serve notice of the Final Hearing on all parties entitled to such notice in accordance with the Bankruptcy Rules and the Local Rules.

XII. CONCLUSION AND PRAYER FOR RELIEF

WHEREFORE, the Debtors respectfully request that the Court:

1. Enter the proposed Interim DIP Order, substantially in the form attached hereto as Exhibit A, authorizing the Debtors to obtain postpetition financing under the DIP Facility on an interim basis, granting the DIP Lenders superpriority administrative expense claims and priming liens as described herein, authorizing the Debtors to use cash collateral, granting adequate protection to the prepetition secured parties, and waiving the 14-day stay under Bankruptcy Rule 6004(h);

2. Schedule a Final Hearing on this Motion within approximately 25 days of the Petition Date;

3. Enter the proposed Final DIP Order, substantially in the form attached hereto as Exhibit B, authorizing the DIP Facility on a final basis and granting all related relief described in this Motion; and

4. Grant such other and further relief as this Court deems just and proper.

Dated: June 20, 2022

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Colette Whitman (Responsible Partner) Nathaniel Bower (Billing Partner) Gabrielle Moss (Lead Associate) Amy Chesterton (Working Associate)

30 Rockefeller Plaza New York, NY 10112 Telephone: (212) 558-4000 Facsimile: (212) 558-3588

— and —

127 Public Square, Suite 4100 Cleveland, OH 44114 Telephone: (216) 479-8500 Facsimile: (216) 479-8780

Counsel to the Debtors and Debtors in Possession

KELLNER & HARTWICK LLP

By: ________

Bruce Tatelman (Lead Partner)

600 Superior Avenue East, Suite 1800 Cleveland, OH 44114 Telephone: (216) 861-7000 Facsimile: (216) 861-7119

Local Co-Counsel to the Debtors and Debtors in Possession

EXHIBITS

The following Exhibits are attached hereto and incorporated herein by reference:

CERTIFICATE OF SERVICE

I, Colette Whitman, hereby certify that on June 20, 2022, I caused a true and correct copy of the foregoing Debtors' Motion for Entry of Interim and Final Orders (I) Authorizing the Debtors to Obtain Postpetition Financing Pursuant to 11 U.S.C. §§ 105, 361, 362, 363, and 364, (II) Granting Liens and Superpriority Administrative Expense Status, (III) Authorizing the Use of Cash Collateral, (IV) Granting Adequate Protection to Prepetition Secured Parties, and (V) Scheduling a Final Hearing, together with all Exhibits attached thereto, to be served upon the following parties by electronic mail and/or first-class mail, postage prepaid, in accordance with the Federal Rules of Bankruptcy Procedure and the Local Rules of the United States Bankruptcy Court for the Northern District of Ohio:

1. Office of the United States Trustee, Region 9, Howard M. Metzenbaum U.S. Courthouse, 201 Superior Avenue, Cleveland, OH 44114;

2. Ridgeline National Bank, N.A., as administrative agent and proposed DIP Agent, 200 Public Square, Cleveland, OH 44114;

3. Hargrove, Mitchell & Saunders LLP, counsel to the Ad Hoc Group of First Lien Lenders, 51 West 52nd Street, New York, NY 10019, Attn: Victoria Kline;

4. Pemberton & Locke LLP, counsel to the Ad Hoc Group of Second Lien Noteholders, 1 Liberty Plaza, New York, NY 10006, Attn: Raymond Delvecchio;

5. Continental Fiduciary Trust Company, as indenture trustee for the Second Lien Notes, 101 Barclay Street, New York, NY 10286;

6. Thornfield Capital Partners LP, 590 Lexington Avenue, Suite 3200, New York, NY 10022;

7. All other parties entitled to notice pursuant to Bankruptcy Rule 4001(c) and the Local Rules of the Northern District of Ohio.

________________________________________

Colette Whitman CALDERWOOD & HARKNESS LLP 127 Public Square, Suite 4100 Cleveland, OH 44114

In re:	Case No.: 22-51247
CRESTLINE PACKAGING SOLUTIONS LLC, et al.,^1	(Jointly Administered)
Debtors.	Chapter 11
Debt Instrument	Outstanding Principal	Original Amount	Interest Rate	Maturity Date
First Lien Revolving Credit Facility	$32.6 million	$40.0 million commitment	SOFR + 375 bps	October 13, 2022
First Lien Term Loan	$158.7 million	$175.0 million	SOFR + 425 bps	October 13, 2024
Second Lien Notes	$56.0 million	$60.0 million^2	9.75% fixed	October 13, 2025
Total Funded Debt	$247.3 million
Event	Proposed Date
Petition Date / Motion Filed	June 20, 2022
Interim DIP Hearing (concurrent with first day hearings)	June 24, 2022 (requested)
Entry of Interim DIP Order	June 24, 2022
Objection Deadline for Final DIP Hearing	July 11, 2022
Final DIP Hearing	Approximately July 18, 2022
Entry of Final DIP Order	July 18, 2022
DIP Maturity	Earlier of (a) October 18, 2022 (120 days after Petition Date) or (b) the Effective Date of the Plan (estimated September 30, 2022, per RSA milestones)
Exhibit	Description
Exhibit A	Proposed Interim Order Approving DIP Financing
Exhibit B	Proposed Final Order Approving DIP Financing
Exhibit C	DIP Credit Agreement (Execution Version)
Exhibit D	DIP Budget (Initial 13-Week Rolling Cash Flow Projection)
Exhibit E	Organizational Chart of the Debtors

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION
^1 The Debtors in these jointly administered Chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, are: Crestline Packaging Solutions LLC (EIN: XX-XXX4837) and CPS Holdings Inc. (EIN: XX-XXX9215). The Debtors' mailing address is 4710 Industrial Corridor Drive, Akron, OH 44308.
DEBTORS' MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS (I) AUTHORIZING THE DEBTORS TO OBTAIN POSTPETITION FINANCING PURSUANT TO 11 U.S.C. §§ 105, 361, 362, 363, AND 364, (II) GRANTING LIENS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS, (III) AUTHORIZING THE USE OF CASH COLLATERAL, (IV) GRANTING ADEQUATE PROTECTION TO PREPETITION SECURED PARTIES, AND (V) SCHEDULING A FINAL HEARING
Crestline Packaging Solutions LLC and CPS Holdings Inc., each as debtors and debtors in possession (collectively, the "Debtors"), hereby move this Court (the "Motion") pursuant to Sections 105, 361, 362, 363, and 364 of Title 11 of the United States Code (the "Bankruptcy Code"), Rules 2002, 4001(b), 4001(c), and 9014 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), and the Local Rules for the United States Bankruptcy Court for the Northern District of Ohio (the "Local Rules"), for entry of interim and final orders, substantially in the forms attached hereto as Exhibit A (the "Interim DIP Order") and Exhibit B (the "Final DIP Order" and, together with the Interim DIP Order, the "DIP Orders"), (i) authorizing the Debtors to obtain postpetition financing (the "DIP Facility") pursuant to that certain Senior Secured Superpriority Debtor-in-Possession Revolving Credit Agreement (the "DIP Credit Agreement"), a copy of which is attached hereto as Exhibit C, (ii) granting liens and superpriority administrative expense status to the DIP Agent and the DIP Lenders (each as defined herein), (iii) authorizing the Debtors to use cash collateral, (iv) granting adequate protection to the prepetition secured parties, and (v) scheduling a final hearing on this Motion. In support of this Motion, the Debtors respectfully represent as follows:
I. PRELIMINARY STATEMENT
1. On June 20, 2022 (the "Petition Date"), the Debtors each filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code, commencing these jointly administered cases. The Debtors continue to manage and operate their businesses as debtors in possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. No trustee, examiner, or statutory committee of unsecured creditors has been appointed in these cases as of the date hereof.
2. By this Motion, the Debtors seek authority to enter into a $30.0 million senior secured superpriority revolving debtor-in-possession credit facility (the "DIP Facility") with Ridgeline National Bank, N.A., as administrative agent (in such capacity, the "DIP Agent"), and the consenting first lien lenders party thereto from time to time (the "DIP Lenders"). The DIP Facility is governed by the DIP Credit Agreement, which is attached hereto as Exhibit C. The terms and conditions of the DIP Facility are the product of arm's-length, good-faith negotiations among the Debtors, the DIP Agent, the DIP Lenders, and the Ad Hoc Group of First Lien Lenders (as defined herein), with the assistance of their respective legal and financial advisors.
3. The DIP Facility is critical to the Debtors' ability to fund their operations during the pendency of these Chapter 11 cases, maintain going-concern value for the benefit of all stakeholders—including employees, customers, vendors, and creditors—and implement the prepackaged plan of reorganization (the "Plan") contemplated by the Restructuring Support Agreement (the "RSA") described more fully below. Without the DIP Facility, the Debtors simply cannot continue operating.
4. Crestline Packaging Solutions LLC ("Crestline" or the "Company") is an Ohio-headquartered manufacturer of specialty chemical packaging and industrial containment products, including high-density polyethylene ("HDPE") drums, intermediate bulk containers ("IBCs"), steel pails, and specialty containment vessels. The Company operates four manufacturing plants located in Ohio, Indiana, and Louisiana and employs approximately 1,420 people. Crestline's products serve customers in the chemical, petrochemical, and agricultural sectors across the United States and are essential to the safe storage and transportation of hazardous and non-hazardous materials.
5. Absent the DIP Facility, the Debtors will be unable to pay employees, purchase raw materials—including critical HDPE resin supply from Northstar Polymers Inc. and steel from domestic suppliers—maintain operations at their four manufacturing plants, and satisfy administrative obligations arising during these Chapter 11 cases. Such a cessation of operations would result in immediate and irreparable harm to the Debtors' estates, their approximately 1,420 employees, their customers (many of whom depend on Crestline as a sole or primary source for specialty containment packaging), and the broader restructuring process.
6. The terms of the DIP Facility reflect arm's-length negotiations and are reasonable and appropriate under the circumstances. As described more fully below, the pricing of the DIP Facility—including an interest rate of SOFR plus 500 basis points, a commitment fee of 1.50%, and a closing fee of 2.00%—is within the range of market terms for comparable debtor-in-possession financing facilities for companies of similar size and credit profile in the specialty manufacturing sector.
7. As set forth more fully herein, the Debtors request that the Court enter the Interim DIP Order approving the DIP Facility on an interim basis, authorizing the Debtors to borrow up to the full $30.0 million commitment immediately and to use cash collateral, and schedule a final hearing (the "Final Hearing") within approximately 25 days of the Petition Date, at which time the Debtors will seek entry of the Final DIP Order approving the DIP Facility on a final basis.
II. JURISDICTION AND VENUE
8. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the General Order of Reference from the United States District Court for the Northern District of Ohio. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2), and the Debtors confirm that they consent to the entry of final orders by this Court to the extent that it is determined that this Court, absent consent of the parties, cannot enter final orders or judgments consistent with Article III of the United States Constitution. See Stern v. Marshall, 564 U.S. 462 (2011).
9. Venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409. The Debtors' corporate headquarters are located at 4710 Industrial Corridor Drive, Akron, OH 44308, which is within the Eastern Division of the Northern District of Ohio. Crestline has maintained its principal place of business and the primary location of its manufacturing operations in Akron, Ohio since its formation in 2007.
10. The statutory predicates for the relief requested herein are Sections 105, 361, 362, 363(c)(2), 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1), and 364(e) of the Bankruptcy Code and Bankruptcy Rules 2002, 4001(b), 4001(c), and 9014.
III. BACKGROUND
A. General Background and Business Description
11. Crestline Packaging Solutions LLC is an Ohio limited liability company formed in 2007, with its principal office and headquarters located at 4710 Industrial Corridor Drive, Akron, OH 44308. The Company is a leading North American manufacturer of specialty chemical packaging and industrial containment products, serving a diversified base of customers in the chemical, petrochemical, and agricultural sectors. Crestline's product lines include HDPE drums (ranging from 15-gallon to 55-gallon capacities), intermediate bulk containers (275-gallon and 330-gallon configurations), steel pails (1-gallon to 7-gallon capacities), and specialty containment vessels designed for specific chemical and hazardous material applications.
12. CPS Holdings Inc. ("CPS Holdings") is a Delaware corporation and the direct parent of Crestline, formed in connection with the 2017 leveraged buyout described below. CPS Holdings' registered agent is National Corporate Services, Inc., located at 1209 Orange Street, Wilmington, DE 19801. CPS Holdings has no independent business operations and serves solely as a holding company for Crestline.
13. Crestline operates four manufacturing facilities, each of which is critical to the Company's ongoing operations:
(a) Plant 1 (Headquarters): 4710 Industrial Corridor Drive, Akron, OH 44308. Plant 1 is the Company's primary HDPE drum manufacturing facility and serves as Crestline's corporate headquarters. This facility houses approximately 480 employees, including the Company's executive management team, and contains nine blow-molding production lines, quality control laboratories, and warehousing capacity for finished goods inventory.
(b) Plant 2: 2255 Commerce Parkway, Evansville, IN 47725. Plant 2 is the Company's IBC and steel pail manufacturing facility, employing approximately 390 production, maintenance, and administrative personnel. This facility operates seven IBC assembly lines and four steel pail stamping and forming lines, and serves as the primary distribution hub for customers in the Midwest and Southeast regions.
(c) Plant 3: 8100 River Road, Baton Rouge, LA 70820. Plant 3 is dedicated to the manufacture of specialty containment vessels, including double-walled and triple-walled containment systems for the petrochemical industry. Approximately 310 employees work at this facility, which is strategically located to serve the concentration of petrochemical customers along the Gulf Coast.
(d) Plant 4: 1480 State Route 59, Ravenna, OH 44266. Plant 4 is the Company's extrusion and secondary processing facility, employing approximately 240 workers. This facility produces the HDPE sheet stock and extruded components used as inputs at Plants 1 and 3, and also performs secondary processing operations, including printing, labeling, and customization of finished products.
14. As of the Petition Date, the Debtors employ approximately 1,420 full-time employees across the four facilities described above. Approximately 870 of these employees are hourly production workers, 320 are salaried operations and administrative staff, and 230 are management and professional employees. None of the Debtors' employees are represented by a collective bargaining unit.
15. For the fiscal year ended December 31, 2021 ("FY2021"), Crestline generated revenue of approximately $312.6 million and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $38.4 million. On a trailing twelve-month basis through the first quarter of 2022 ("TTM Q1 2022"), the Company's EBITDA had declined to approximately $29.1 million. Revenue declined approximately 18% from fiscal year 2020 to FY2021, driven primarily by significant increases in the cost of HDPE resin—the Company's single largest raw material input—and persistent supply chain disruption affecting the availability and cost of steel, transportation, and ancillary materials. These cost pressures compressed the Company's margins significantly, as the Company was unable to pass through the full extent of raw material cost increases to customers under existing contracts with price adjustment lag periods of 60 to 90 days.
B. The 2017 Leveraged Buyout
16. In October 2017, Thornfield Capital Partners LP ("Thornfield"), a Delaware limited partnership with approximately $4.8 billion in assets under management (managing partner Julian Ashford; deal partner Rebecca Strand), acquired 100% of the equity interests in CPS Holdings Inc. for an enterprise value of approximately $410.0 million (the "Acquisition"). The Acquisition was structured as a leveraged buyout, with Thornfield contributing approximately $163.0 million of equity capital and the balance of the purchase price funded through a combination of first lien and second lien debt.
17. The Acquisition debt was arranged pursuant to the following instruments:
(a) First Lien Credit Agreement: That certain Credit Agreement, dated as of October 13, 2017 (as amended, restated, supplemented, or otherwise modified from time to time, the "First Lien Credit Agreement"), by and among Crestline Packaging Solutions LLC, as borrower, CPS Holdings Inc., as guarantor, Ridgeline National Bank, N.A., as administrative agent and collateral agent, and the lenders from time to time party thereto (the "First Lien Lenders"). The First Lien Credit Agreement provided for (i) a $175.0 million first lien term loan (the "First Lien Term Loan") and (ii) a $40.0 million revolving credit facility (the "First Lien Revolver" and, together with the First Lien Term Loan, the "First Lien Facilities"). The First Lien Facilities are secured by substantially all assets of the Debtors, including inventory, accounts receivable, equipment, intellectual property, and the equity interests in Crestline held by CPS Holdings.
(b) Second Lien Notes: Those certain 9.75% Senior Secured Second Lien Notes due 2024 (the "Second Lien Notes"), issued on October 13, 2017, in the aggregate principal amount of $60.0 million, pursuant to that certain Indenture, dated as of October 13, 2017 (as amended, supplemented, or otherwise modified from time to time, the "Second Lien Indenture"), by and among Crestline Packaging Solutions LLC, as issuer, CPS Holdings Inc., as guarantor, and Continental Fiduciary Trust Company, as indenture trustee (the "Indenture Trustee"). The Second Lien Notes are secured by second-priority liens on substantially all assets of the Debtors, junior and subordinate to the first lien liens in all respects.
18. The intercreditor relationship between the First Lien Lenders and the holders of the Second Lien Notes is governed by that certain Intercreditor Agreement, dated as of October 13, 2017 (the "Intercreditor Agreement"), among Ridgeline National Bank, N.A., as first lien collateral agent, Continental Fiduciary Trust Company, as second lien collateral representative, and the Debtors.
C. Prepetition Capital Structure
19. As of the Petition Date, the Debtors' funded debt capital structure is as follows:
^2 The aggregate principal amount of the Second Lien Notes was reduced from $60.0 million to $56.0 million as a result of $4.0 million in open-market repurchases conducted by the Company in 2019.
20. As of the Petition Date, accrued and unpaid interest on the Second Lien Notes totals approximately $3.9 million, including default rate interest at an additional 2.00% per annum above the stated coupon rate accruing since the date of the Notice of Default on April 22, 2022. Accordingly, total Second Lien claims (inclusive of principal and accrued interest) aggregate approximately $59.9 million.
21. Total First Lien Secured Claims as of the Petition Date aggregate approximately $191.3 million, consisting of $158.7 million of outstanding principal under the First Lien Term Loan and $32.6 million of outstanding principal under the First Lien Revolver, exclusive of accrued interest, fees, and expenses.
D. Events Leading to the Chapter 11 Filing
22. The First Lien Credit Agreement contains a Maximum Leverage Ratio financial maintenance covenant set forth in Section 7.11, which requires that the Debtors' Total Net Debt to EBITDA ratio not exceed 5.75x, tested on a quarterly basis. This covenant was designed to ensure that the Company's leverage remained at sustainable levels and was a material term of the First Lien Credit Agreement.
23. As a result of the deterioration in the Company's financial performance described above, the Debtors breached the Maximum Leverage Ratio covenant as of the end of the first quarter of 2022. Specifically, the Company's actual leverage ratio as of Q1 2022 was approximately 8.50x (calculated as $247.3 million in Total Net Debt divided by $29.1 million in TTM EBITDA), which exceeded the covenant maximum of 5.75x by approximately 2.75x, or 47.8% above the permitted level.
24. On April 22, 2022, Ridgeline National Bank, N.A., as administrative agent under the First Lien Credit Agreement, delivered a formal Notice of Default to the Debtors, citing breach of Section 7.11 of the First Lien Credit Agreement. The Notice of Default had the immediate effect of restricting the Debtors' ability to draw upon the unused portion of the First Lien Revolver and triggering the accrual of default rate interest under the First Lien Credit Agreement.
25. The Notice of Default under the First Lien Credit Agreement triggered a cross-default under Section 6.01(e) of the Second Lien Indenture, which defines an "Event of Default" to include, among other things, any default under the First Lien Credit Agreement that results in the acceleration or right of acceleration of indebtedness thereunder in an aggregate principal amount exceeding $5.0 million.
26. Following delivery of the Notice of Default, the Debtors engaged in intensive negotiations with the First Lien Lenders in an effort to obtain a forbearance and explore restructuring alternatives. On May 18, 2022, the Debtors, Ridgeline National Bank, N.A. (as administrative agent), and consenting first lien lenders holding approximately 68% of the outstanding principal amount of the First Lien Term Loan executed a Forbearance Agreement (the "Forbearance Agreement"), pursuant to which the consenting first lien lenders agreed to forbear from exercising their rights and remedies under the First Lien Credit Agreement for a period of 45 days through July 2, 2022. The Forbearance Agreement was subsequently extended once, to July 15, 2022, to allow the parties sufficient time to finalize the terms of the Restructuring Support Agreement described below.
27. In connection with the events described above, the Debtors retained Calderwood & Harkness LLP as debtor's counsel and engaged Aldersgate Advisory Group LLC ("Aldersgate") as financial advisor to the Debtors. Aldersgate is led by managing director Priya Narayanan, who has overseen the financial advisory engagement, including the development of the Debtors' business plan, the analysis of restructuring alternatives, and the negotiation of the DIP Facility. Aldersgate prepared the 13-week cash flow projections that form the basis of the DIP Budget (attached hereto as Exhibit D) and has provided advice on the reasonableness of the DIP Facility's terms in comparison to market benchmarks.
28. Simultaneously, an ad hoc group of holders of the First Lien Term Loan (the "Ad Hoc Group of First Lien Lenders"), represented by Hargrove, Mitchell & Saunders LLP (lead partner Victoria Kline), and an ad hoc group of holders of the Second Lien Notes (the "Ad Hoc Group of Second Lien Noteholders"), represented by Pemberton & Locke LLP (lead partner Raymond Delvecchio), organized to negotiate the terms of a consensual restructuring.
29. Following extensive negotiations among all principal constituencies, on July 8, 2022, the Debtors, CPS Holdings, Thornfield Capital Partners LP, the Ad Hoc Group of First Lien Lenders, and the Ad Hoc Group of Second Lien Noteholders executed the Restructuring Support Agreement (the "RSA"), which contemplates a prepackaged Chapter 11 plan of reorganization. The RSA sets forth the principal economic terms of the Plan and establishes the following milestone schedule:
(a) Petition Date: No later than July 31, 2022.
(b) Disclosure Statement Approval: Within 45 days of the Petition Date.
(c) Plan Confirmation: Within 90 days of the Petition Date.
(d) Effective Date: Within 15 business days following entry of the Confirmation Order.
30. Consistent with the milestones set forth in the RSA, the Debtors commenced these Chapter 11 cases on June 20, 2022.
IV. THE DIP FACILITY
A. Summary of Material Terms
31. The material terms of the DIP Facility, as set forth in the DIP Credit Agreement (attached hereto as Exhibit C), are summarized below. In the event of any inconsistency between the summary set forth herein and the DIP Credit Agreement, the terms of the DIP Credit Agreement shall control.
DIP Agent: Ridgeline National Bank, N.A. (200 Public Square, Cleveland, OH 44114), serving as administrative agent under the DIP Credit Agreement.
DIP Lenders: The consenting first lien lenders party to the DIP Credit Agreement from time to time, including members of the Ad Hoc Group of First Lien Lenders. As of the date hereof, the DIP Lenders include Blackmoor Capital Management LLC, Greystone Fixed Income Partners LP, Wexford Opportunity Fund III LP, and other institutional investors that are existing holders of claims under the First Lien Credit Agreement.
Type of Facility: Senior secured superpriority revolving credit facility.
Commitment Amount: $30.0 million in aggregate commitments.
DIP Credit Agreement Date: The DIP Credit Agreement shall become effective on June 24, 2022, upon entry of the Interim DIP Order and satisfaction of all conditions precedent to effectiveness.
Borrower: Crestline Packaging Solutions LLC, as debtor and debtor in possession.
Guarantor: CPS Holdings Inc., as debtor and debtor in possession.
Interest Rate: Secured Overnight Financing Rate ("SOFR") plus 500 basis points per annum, payable monthly in arrears.
Default Interest Rate: An additional 200 basis points per annum above the otherwise applicable interest rate, accruing automatically upon the occurrence and during the continuance of any Event of Default under the DIP Credit Agreement.
Commitment Fee: 1.50% of the total commitment amount ($30.0 million × 1.50% = $450,000), fully earned upon the entry of the Interim DIP Order and payable upon such entry.
Closing Fee: 2.00% of the total commitment amount ($30.0 million × 2.00% = $600,000), fully earned upon execution of the DIP Credit Agreement and payable upon entry of the Interim DIP Order.
Maturity Date: The earliest of (a) the date that is 120 calendar days after the Petition Date (i.e., October 18, 2022), (b) the effective date of the Plan, and (c) the date of acceleration of the DIP Facility obligations following an Event of Default.
Use of Proceeds: Proceeds of the DIP Facility shall be used solely to (i) fund the Debtors' ongoing working capital needs, (ii) fund general corporate purposes, (iii) pay administrative expenses of the Chapter 11 cases, including professional fees, U.S. Trustee fees, and court costs, (iv) fund adequate protection obligations to prepetition secured parties, and (v) pay fees and expenses related to the DIP Facility—in each case in accordance with the approved DIP Budget.
Budget: A 13-week rolling cash flow budget (the "DIP Budget"), in the form attached hereto as Exhibit D, to be updated every four weeks and delivered to the DIP Agent, the U.S. Trustee, and counsel to each Ad Hoc Group. The initial DIP Budget covers the period from the week ending June 24, 2022 through the week ending September 16, 2022.
Variance Testing: Permitted variance of ±15% on aggregate disbursements, tested on a bi-weekly (i.e., every two weeks) basis, measured against the corresponding period in the DIP Budget. Any variance in excess of ±15% shall constitute an Event of Default under the DIP Credit Agreement unless waived by the Required Lenders (as defined in the DIP Credit Agreement).
Events of Default: Customary events of default for DIP financing facilities of this nature, including without limitation: (a) failure to comply with budget variances within the permitted tolerances; (b) failure to achieve any milestone set forth in the RSA within the time periods prescribed therein; (c) conversion of the Chapter 11 cases to cases under Chapter 7 of the Bankruptcy Code; (d) appointment of a trustee or examiner with expanded powers in the Chapter 11 cases; (e) reversal, vacatur, modification, amendment, supplement, or stay of the DIP Orders without the prior written consent of the Required Lenders and the DIP Agent; (f) any material breach of representations and warranties under the DIP Credit Agreement; (g) failure to pay any amounts due under the DIP Credit Agreement when due; and (h) the occurrence of certain other events customary for debtor-in-possession credit facilities.
Conditions Precedent to Closing: The effectiveness of the DIP Credit Agreement and the availability of the DIP Facility are conditioned upon, among other things: (a) entry of the Interim DIP Order, in form and substance acceptable to the DIP Agent and the Required Lenders; (b) execution and delivery of the DIP Credit Agreement and all related loan documents; (c) payment of all fees and expenses due upon closing, including the commitment fee, the closing fee, and reasonable fees and expenses of counsel to the DIP Agent and counsel to the Ad Hoc Group of First Lien Lenders; (d) delivery of the initial DIP Budget, in form and substance acceptable to the DIP Agent and the Required Lenders; (e) delivery of evidence of insurance on collateral in form and substance satisfactory to the DIP Agent; and (f) other customary conditions precedent.
Conditions Precedent to Each Borrowing: Each borrowing under the DIP Facility shall be subject to the satisfaction of the following conditions: (a) no Event of Default shall have occurred and be continuing or would result from such borrowing; (b) the Debtors shall be in compliance with the DIP Budget within the permitted variances; (c) the representations and warranties made by the Debtors in the DIP Credit Agreement shall be true and correct in all material respects as of the date of such borrowing; and (d) the DIP Agent shall have received a borrowing notice at least two (2) business days prior to the requested date of borrowing.
B. Security and Priority — Liens
32. The DIP Facility will be secured by first-priority priming liens (the "DIP Liens") on substantially all assets of the Debtors, whether now owned or hereafter acquired, real and personal, tangible and intangible, including, without limitation, accounts receivable, inventory, equipment, general intangibles, intellectual property, deposit accounts, investment property, fixtures, real property interests, contract rights, and the equity interests in Crestline held by CPS Holdings. The DIP Liens shall be subject only to (i) the carve-out described in Section IV.D below, (ii) valid, perfected, and non-avoidable liens that existed as of the Petition Date and that are senior to the liens of the prepetition first lien secured parties (collectively, "Permitted Prior Liens"), and (iii) certain other permitted liens as specifically defined in the DIP Credit Agreement.
33. Specifically, pursuant to Section 364(d)(1) of the Bankruptcy Code, the DIP Liens shall constitute priming liens that are senior in priority to the existing first lien liens securing the obligations under the First Lien Credit Agreement. The Debtors submit that the requirements of Section 364(d)(1) are satisfied because (a) the Debtors are unable to obtain the DIP Facility without the grant of priming liens, and (b) the interests of the prepetition first lien secured parties are adequately protected, as described more fully in Section V below.
34. Pursuant to Section 364(c)(2) of the Bankruptcy Code, the DIP Liens shall also constitute first-priority liens on all assets of the Debtors that are not already encumbered by valid, perfected, and non-avoidable liens as of the Petition Date—that is, on all unencumbered assets of the Debtors.
35. Pursuant to Section 364(c)(3) of the Bankruptcy Code, to the extent there exist any valid, perfected, and non-avoidable liens on assets of the Debtors that are senior to the liens of the prepetition first lien secured parties, the DIP Liens shall constitute junior liens on such assets, subordinate only to such Permitted Prior Liens.
36. The DIP Liens shall not be subject to any lien subordination or marshaling principle and shall be deemed automatically perfected upon entry of the Interim DIP Order without the need for the filing of any financing statements, deeds of trust, mortgages, or other documents of perfection, or the taking of any other action, to perfect such liens, although the DIP Agent shall be authorized (but not required) to file such documents or take such actions in its discretion.
C. Superpriority Administrative Expense Status
37. Pursuant to Section 364(c)(1) of the Bankruptcy Code, all obligations arising under or in connection with the DIP Facility, including principal, interest, fees, expenses, indemnification obligations, and all other amounts owing under the DIP Credit Agreement and the related loan documents (collectively, the "DIP Obligations"), shall constitute allowed superpriority administrative expense claims (the "DIP Superpriority Claims") against each of the Debtors' estates. The DIP Superpriority Claims shall have priority over all other claims and expenses of the kind specified in Sections 503(b), 507(a), and 507(b) of the Bankruptcy Code, whether or not such expenses or claims may become allowed claims or have arisen or arise in these cases or in any superseding cases, subject only to the carve-out described below.
D. Carve-Out.
38. Notwithstanding the foregoing, the DIP Liens and the DIP Superpriority Claims shall be subject to a carve-out (the "Carve-Out") for the following:
(i) All statutory fees required to be paid to the Office of the United States Trustee pursuant to 28 U.S.C. § 1930(a)(6) and any interest thereon required to be paid pursuant to 31 U.S.C. § 3717;
(ii) All fees required to be paid to the Clerk of the Bankruptcy Court;
(iii) All allowed and unpaid professional fees and disbursements incurred by professionals retained by the Debtors' estates and any official committee appointed in these cases (if any), in each case to the extent allowed by the Court, subject to a cap to be established in the Interim DIP Order and the Final DIP Order, as applicable, which cap shall not be reduced or modified without further order of the Court.
39. The specific dollar amounts of the professional fee component of the Carve-Out will be set forth in the DIP Orders and are the subject of ongoing negotiation among the parties.
E. Cash Collateral
40. In addition to the authority to obtain postpetition financing under the DIP Facility, the Debtors seek authority to use cash collateral (as defined in Section 363(a) of the Bankruptcy Code) of the prepetition secured parties during the pendency of these Chapter 11 cases. Cash collateral includes, without limitation, cash, deposit accounts, accounts receivable, and proceeds of prepetition collateral, all of which constitute collateral of the prepetition first lien secured parties and, on a junior basis, the prepetition second lien secured parties. The Debtors' use of cash collateral shall be subject to the terms and conditions set forth in the DIP Orders and the adequate protection provisions described in Section V below.
41. The Debtors require immediate access to cash collateral to fund ongoing operations, including payroll, raw material purchases, and overhead expenses, pending the availability of borrowings under the DIP Facility. Without the ability to use cash collateral, the Debtors would be unable to continue operations even for a brief period.
V. ADEQUATE PROTECTION FOR PREPETITION SECURED PARTIES
42. Pursuant to Sections 361, 362, 363(e), and 364(d)(1) of the Bankruptcy Code, the Debtors propose to provide adequate protection to the prepetition secured parties to protect against any diminution in the value of their interests in prepetition collateral resulting from (a) the Debtors' use of cash collateral, (b) the imposition of the automatic stay under Section 362 of the Bankruptcy Code, and (c) the granting of the DIP Liens, including the priming of the existing first lien liens.
A. Prepetition First Lien Secured Parties
43. The Debtors propose the following adequate protection to Ridgeline National Bank, N.A. (in its capacity as administrative agent and collateral agent under the First Lien Credit Agreement) and the prepetition First Lien Lenders (collectively, the "Prepetition First Lien Secured Parties"), against any diminution in the value of their interests in prepetition collateral arising from the Debtors' use of cash collateral and the priming of their existing first lien liens by the DIP Liens:
(a) Replacement Liens. The Prepetition First Lien Secured Parties shall receive automatically perfected replacement liens (the "First Lien Replacement Liens") on substantially all assets of the Debtors, whether now owned or hereafter acquired, real and personal, tangible and intangible. The First Lien Replacement Liens shall be junior only to (i) the DIP Liens, (ii) the Carve-Out, and (iii) Permitted Prior Liens, and shall be senior to all other liens, claims, and encumbrances, including the liens of the prepetition second lien secured parties.
(b) Superpriority Administrative Expense Claims. The Prepetition First Lien Secured Parties shall receive allowed superpriority administrative expense claims (the "First Lien Adequate Protection Claims") under Section 507(b) of the Bankruptcy Code against each of the Debtors' estates, which claims shall be junior only to the DIP Superpriority Claims and the Carve-Out, and shall be senior to all other administrative expense claims in these cases.
(c) Current Payment of Professional Fees and Expenses. The Debtors shall pay, in accordance with the DIP Budget, the accrued and unpaid reasonable and documented professional fees and expenses of (i) counsel to Ridgeline National Bank, N.A. in its capacity as DIP Agent and as prepetition administrative agent, and (ii) Hargrove, Mitchell & Saunders LLP, as counsel to the Ad Hoc Group of First Lien Lenders, in each case without the requirement of filing fee applications or obtaining further Court approval, subject to the right of the Debtors, the U.S. Trustee, or any statutory committee to object to the reasonableness of such fees and expenses.
(d) Financial Reporting. The Debtors shall deliver to the Prepetition First Lien Secured Parties (through the DIP Agent) the DIP Budget and variance reports, monthly unaudited financial statements (including income statements, balance sheets, and cash flow statements), and such other financial information as may be reasonably requested by the DIP Agent or counsel to the Ad Hoc Group of First Lien Lenders.
(e) Other Adequate Protection. The Debtors shall maintain insurance on all collateral in amounts and types consistent with prepetition practices and as required by the DIP Credit Agreement, take all reasonable steps to preserve the value of the collateral, and comply with the DIP Budget, all as further specified in the DIP Orders.
B. Prepetition Second Lien Secured Parties
44. The Debtors also propose adequate protection to Continental Fiduciary Trust Company (in its capacity as indenture trustee under the Second Lien Indenture) and the holders of the Second Lien Notes (collectively, the "Prepetition Second Lien Secured Parties"), against any diminution in the value of their interests in prepetition collateral. Such adequate protection shall be subordinate and subject in all respects to the DIP Liens, the DIP Superpriority Claims, the first lien liens (including the First Lien Replacement Liens), and the First Lien Adequate Protection Claims, consistent with the priorities established under the Intercreditor Agreement.
(a) Junior Replacement Liens. The Prepetition Second Lien Secured Parties shall receive automatically perfected replacement liens (the "Second Lien Replacement Liens") on substantially all assets of the Debtors, which liens shall be junior to (i) the DIP Liens, (ii) the Carve-Out, (iii) the First Lien Replacement Liens, (iv) the existing prepetition first lien liens, and (v) Permitted Prior Liens, and senior only to any other liens, claims, and encumbrances that are junior to the prepetition second lien liens.
(b) Junior Superpriority Administrative Expense Claims. The Prepetition Second Lien Secured Parties shall receive allowed superpriority administrative expense claims (the "Second Lien Adequate Protection Claims") under Section 507(b) of the Bankruptcy Code, which claims shall be junior to (i) the DIP Superpriority Claims, (ii) the Carve-Out, and (iii) the First Lien Adequate Protection Claims, and senior only to any other administrative expense claims that are junior to the First Lien Adequate Protection Claims.
45. The Debtors submit that the adequate protection proposed herein is sufficient to protect the interests of both the Prepetition First Lien Secured Parties and the Prepetition Second Lien Secured Parties against any diminution in value of their respective interests in prepetition collateral. The adequate protection is consistent with the priorities and subordination provisions of the Intercreditor Agreement and the Bankruptcy Code.
VI. NEED FOR POSTPETITION FINANCING AND USE OF CASH COLLATERAL
46. The Debtors have an immediate and critical need for the liquidity provided by the DIP Facility and the use of cash collateral. The 13-week cash flow projections prepared by the Debtors, with the assistance of Aldersgate Advisory Group LLC, demonstrate that the Debtors will require access to the DIP Facility to fund ongoing operations throughout the pendency of these Chapter 11 cases. Without the DIP Facility, the Debtors cannot sustain their business through the anticipated confirmation and consummation of the Plan.
47. Specifically, the DIP Facility and cash collateral are necessary to fund the following critical operational and administrative needs:
(a) Payroll and Employee Obligations. The Debtors must continue to pay wages and salaries to approximately 1,420 employees across their four manufacturing plants, as well as fund payroll taxes, health insurance, workers' compensation, and other employee-related obligations. Any interruption in payroll would result in immediate attrition of the Debtors' workforce, particularly the skilled manufacturing and engineering personnel who are essential to continued plant operations and who cannot easily be replaced.
(b) Raw Material Procurement. The Debtors must continue to purchase HDPE resin, steel, and other raw materials from critical suppliers to maintain production across all four plants. HDPE resin, the Company's single largest input cost, is sourced primarily from Northstar Polymers Inc. under a resin supply agreement that requires regular payment terms to maintain supply continuity. A disruption in resin supply would halt HDPE drum production at Plants 1 and 4 and specialty vessel production at Plant 3 within a matter of days. Similarly, steel supply for the IBC and pail operations at Plant 2 must continue without interruption.
(c) Facility Operations. The Debtors must continue to fund the operation and maintenance of all four manufacturing facilities, including utilities, equipment maintenance, lease payments (to the extent applicable), property taxes, environmental compliance costs, and other fixed and variable overhead.
(d) Administrative Expenses of the Chapter 11 Cases. The Debtors must fund the administrative expenses of these Chapter 11 cases, including professional fees and expenses of the Debtors' retained professionals (Calderwood & Harkness LLP, as debtor's counsel; Kellner & Hartwick LLP, as local co-counsel; and Aldersgate Advisory Group LLC, as financial advisor), U.S. Trustee quarterly fees, and other costs of administration. Total professional fees for the duration of the cases are estimated at approximately $9.3 million.
(e) Adequate Protection Payments. The Debtors must fund the adequate protection payments to the prepetition secured parties as described in Section V above, including payment of professional fees and expenses of counsel to the DIP Agent and counsel to the Ad Hoc Group of First Lien Lenders.
(f) Directors' and Officers' Insurance. The Debtors must fund the payment of a directors' and officers' liability insurance tail policy premium in the amount of $1.2 million to Apex Indemnity Insurance Company, providing aggregate coverage of $15.0 million, which is necessary to ensure the continued service and participation of the Debtors' directors and officers during the restructuring process.
48. Without the DIP Facility, the Debtors' existing cash on hand as of the Petition Date is insufficient to sustain operations through the anticipated timeline of the prepackaged plan. The DIP Budget, attached hereto as Exhibit D, reflects the Debtors' projected cash needs over the 13-week period commencing with the Petition Date and is consistent with the milestone schedule set forth in the RSA. The DIP Budget demonstrates that the Debtors will require access to the full $30.0 million commitment under the DIP Facility to fund operations through the plan effective date.
49. In sum, approval of the DIP Facility and authorization to use cash collateral are essential to the preservation of the Debtors' going-concern value, the continued employment of approximately 1,420 workers, and the successful implementation of the prepackaged plan of reorganization.
VII. THE DEBTORS WERE UNABLE TO OBTAIN UNSECURED CREDIT
50. Sections 364(c) and 364(d) of the Bankruptcy Code authorize a debtor in possession to obtain credit secured by senior or priming liens and with superpriority administrative expense status when the debtor is unable to obtain credit on an unsecured basis allowable under Section 503(b)(1) of the Bankruptcy Code as an administrative expense. See 11 U.S.C. §§ 364(c), 364(d).
51. The Debtors submit that they have satisfied this threshold requirement. Given the Debtors' financial condition—characterized by a leverage ratio of 8.50x (nearly 50% above the maximum covenant level), existing defaults across the entire capital structure (both the First Lien Credit Agreement and the Second Lien Indenture), total funded debt of $247.3 million against trailing twelve-month EBITDA of only $29.1 million, and the pendency of these Chapter 11 cases—no lender was willing to extend unsecured credit to the Debtors on any terms.
52. The Debtors, with the assistance of their financial advisor, Aldersgate Advisory Group LLC, explored alternative financing sources and determined that postpetition credit was not available to the Debtors without the grant of (a) superpriority administrative expense status under Section 364(c)(1), (b) first-priority liens on unencumbered assets under Section 364(c)(2), (c) junior liens on encumbered assets under Section 364(c)(3), and (d) priming liens senior to the existing first lien liens under Section 364(d)(1).
53. Aldersgate contacted several potential alternative DIP financing sources and assessed whether any third-party lender would be willing to provide the necessary postpetition liquidity on terms more favorable than those offered by the existing first lien lenders. No such alternative was identified. The DIP Facility, offered by the existing First Lien Lenders through the Ad Hoc Group of First Lien Lenders, represents the best available—and, indeed, the only available—postpetition financing given the Debtors' financial circumstances and the expedited timeline required by the prepackaged plan.
54. Accordingly, the Debtors were unable to obtain unsecured credit and could not obtain sufficient credit under Sections 364(a) or 364(b) of the Bankruptcy Code. The DIP Facility, with the superpriority administrative expense status, liens, and priming liens described herein, is the minimum level of protection required to induce the DIP Lenders to extend credit to the Debtors.
VIII. THE DIP FACILITY TERMS ARE FAIR AND REASONABLE
A. Good Faith and Arm's-Length Negotiations
55. The terms of the DIP Facility were the product of extensive arm's-length negotiations among the Debtors (advised by Calderwood & Harkness LLP and Aldersgate Advisory Group LLC), Ridgeline National Bank, N.A. (as proposed DIP Agent), and the consenting first lien lenders (through the Ad Hoc Group of First Lien Lenders, advised by Hargrove, Mitchell & Saunders LLP). These negotiations occurred over a period of several weeks in connection with the broader restructuring negotiations that culminated in the execution of the RSA. The DIP Facility was not the product of collusion, overreaching, or any other inequitable conduct by any party.
56. The DIP Lenders are entitled to the protections of Section 364(e) of the Bankruptcy Code, which provides that "[t]he reversal or modification on appeal of an authorization under this section to obtain credit . . . does not affect the validity of any debt so incurred, or any priority or lien so granted, to an entity that extended such credit in good faith." 11 U.S.C. § 364(e). The DIP Lenders have acted in good faith and without any intent to defraud or take unfair advantage of any party in interest, and the DIP Facility should be accorded the full protections of Section 364(e).
B. Reasonableness of Pricing
57. The pricing terms of the DIP Facility are reasonable and consistent with market terms for comparable DIP financing facilities. Specifically:
(a) The interest rate of SOFR plus 500 basis points is within the range of interest rates charged in DIP facilities for borrowers of comparable size and credit profile in the specialty manufacturing sector. Based on an analysis conducted by Aldersgate Advisory Group LLC of recent DIP facilities approved by bankruptcy courts during 2021 and 2022, interest rates for similarly situated borrowers have ranged from SOFR plus 400 basis points to SOFR plus 650 basis points, with a median of approximately SOFR plus 475 to 525 basis points. The rate proposed here falls squarely within the market range.
(b) The commitment fee of 1.50% of the total commitment ($450,000) is market-standard for DIP revolving facilities of this nature and size. Commitment fees in comparable DIP facilities typically range from 1.00% to 2.50%.
(c) The closing fee of 2.00% of the total commitment ($600,000) is similarly within the range observed in comparable transactions, where closing fees typically range from 1.50% to 3.00%.
(d) In the aggregate, the total upfront fees of $1,050,000 ($450,000 commitment fee + $600,000 closing fee) represent approximately 3.50% of the total $30.0 million commitment, which is reasonable in light of the size of the facility, the complexity of the restructuring, and the risks assumed by the DIP Lenders in extending credit in a Chapter 11 context.
C. Budget Controls
58. The DIP Facility incorporates robust budget controls and reporting requirements that provide sufficient oversight and transparency for all parties in interest, including the DIP Agent, the U.S. Trustee, and counsel to the Ad Hoc Groups:
(a) The 13-week rolling DIP Budget provides a detailed week-by-week projection of the Debtors' cash receipts and disbursements, allowing the DIP Agent and other parties to monitor the Debtors' financial performance and compliance in real time.
(b) Bi-weekly variance testing at ±15% on aggregate disbursements ensures appropriate monitoring of the Debtors' cash management during the cases. Any variance in excess of the permitted tolerance constitutes an Event of Default, providing the DIP Lenders with the ability to exercise remedies if the Debtors' actual performance deviates materially from the approved budget.
(c) The DIP Budget will be updated every four weeks and provided promptly to the DIP Agent, the U.S. Trustee, and counsel to each Ad Hoc Group, ensuring that all parties have current information regarding the Debtors' projected cash needs and performance.
59. These budget controls are consistent with standard practice in DIP financing facilities and provide a balanced framework that allows the Debtors to operate their business with appropriate flexibility while protecting the interests of the DIP Lenders and other parties in interest.
IX. INTERIM AND FINAL RELIEF
A. Request for Interim Approval
60. Pursuant to Bankruptcy Rule 4001(c)(2), the Debtors request that the Court enter the Interim DIP Order, substantially in the form attached hereto as Exhibit A, approving the DIP Facility on an interim basis and authorizing the Debtors to borrow up to the full $30.0 million commitment immediately upon entry of the Interim DIP Order. Bankruptcy Rule 4001(c)(2) expressly authorizes the Court to "authorize the obtaining of credit . . . before a final hearing" on not less than 14 days' notice. Fed. R. Bankr. P. 4001(c)(2).
61. The exigent circumstances of these cases warrant interim approval of the full $30.0 million commitment. As described in Section VI above and as reflected in the DIP Budget, the Debtors face an immediate and critical need for liquidity to fund payroll, raw material purchases, facility operations, and other essential expenses. Any delay in making the full DIP Facility available would jeopardize the Debtors' ability to maintain operations and preserve going-concern value during the interim period before a final hearing can be held.
62. The Debtors request that the Court schedule the interim hearing on this Motion for June 24, 2022, concurrent with the first day hearings in these Chapter 11 cases. Following entry of the Interim DIP Order, the Debtors will serve appropriate notice of the Final Hearing on all required parties, including the parties listed in Section XI below.
B. Request for Final Approval
63. The Debtors further request that the Court schedule a Final Hearing on this Motion within approximately 25 days of the Petition Date and, following such hearing, enter the Final DIP Order, substantially in the form attached hereto as Exhibit B, approving the DIP Facility on a final basis. The Final DIP Order will incorporate all of the terms and provisions set forth in the Interim DIP Order, together with such additional or modified provisions as may be appropriate for final approval.
C. Proposed Timeline
64. The Debtors propose the following timeline for interim and final approval of the DIP Facility:
65. This timeline is consistent with the milestone schedule set forth in the RSA and provides all parties in interest with adequate notice and opportunity to be heard at the Final Hearing.
X. REQUEST FOR WAIVER OF BANKRUPTCY RULES 6004(a) AND 6004(h)
66. To the extent applicable, the Debtors request that any order approving this Motion be effective immediately upon entry, notwithstanding the provisions of Bankruptcy Rules 6004(a) and 6004(h). Bankruptcy Rule 6004(h) provides that an "order authorizing the use, sale, or lease of property . . . is stayed until the expiration of 14 days after entry of the order, unless the court orders otherwise." Fed. R. Bankr. P. 6004(h). Given the Debtors' urgent need for postpetition financing and the use of cash collateral, the Debtors respectfully submit that cause exists to waive the 14-day stay and make any order entered in connection with this Motion effective immediately upon entry. Any delay in the effectiveness of the DIP Orders would deprive the Debtors of the immediate liquidity required to fund ongoing operations and preserve going-concern value, to the detriment of all stakeholders.
XI. NOTICE
67. Notice of this Motion has been provided to, or will promptly be provided to, the following parties:
(a) The Office of the United States Trustee, Region 9, Howard M. Metzenbaum U.S. Courthouse, 201 Superior Avenue, Cleveland, OH 44114;
(b) Ridgeline National Bank, N.A., as administrative agent under the First Lien Credit Agreement and as proposed DIP Agent, 200 Public Square, Cleveland, OH 44114;
(c) Hargrove, Mitchell & Saunders LLP, counsel to the Ad Hoc Group of First Lien Lenders, 51 West 52nd Street, New York, NY 10019, Attn: Victoria Kline;
(d) Pemberton & Locke LLP, counsel to the Ad Hoc Group of Second Lien Noteholders, 1 Liberty Plaza, New York, NY 10006, Attn: Raymond Delvecchio;
(e) Continental Fiduciary Trust Company, as indenture trustee for the Second Lien Notes, 101 Barclay Street, New York, NY 10286;
(f) Thornfield Capital Partners LP, 590 Lexington Avenue, Suite 3200, New York, NY 10022;
(g) All other parties entitled to notice pursuant to Bankruptcy Rule 4001(c) and the Local Rules of the United States Bankruptcy Court for the Northern District of Ohio.
68. The Debtors submit that no further notice of this Motion is required or necessary under the circumstances. The Debtors will serve notice of the Final Hearing on all parties entitled to such notice in accordance with the Bankruptcy Rules and the Local Rules.
XII. CONCLUSION AND PRAYER FOR RELIEF
WHEREFORE, the Debtors respectfully request that the Court:
1. Enter the proposed Interim DIP Order, substantially in the form attached hereto as Exhibit A, authorizing the Debtors to obtain postpetition financing under the DIP Facility on an interim basis, granting the DIP Lenders superpriority administrative expense claims and priming liens as described herein, authorizing the Debtors to use cash collateral, granting adequate protection to the prepetition secured parties, and waiving the 14-day stay under Bankruptcy Rule 6004(h);
2. Schedule a Final Hearing on this Motion within approximately 25 days of the Petition Date;
3. Enter the proposed Final DIP Order, substantially in the form attached hereto as Exhibit B, authorizing the DIP Facility on a final basis and granting all related relief described in this Motion; and
4. Grant such other and further relief as this Court deems just and proper.
Dated: June 20, 2022
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Colette Whitman (Responsible Partner) Nathaniel Bower (Billing Partner) Gabrielle Moss (Lead Associate) Amy Chesterton (Working Associate)
30 Rockefeller Plaza New York, NY 10112 Telephone: (212) 558-4000 Facsimile: (212) 558-3588
— and —
127 Public Square, Suite 4100 Cleveland, OH 44114 Telephone: (216) 479-8500 Facsimile: (216) 479-8780
Counsel to the Debtors and Debtors in Possession
KELLNER & HARTWICK LLP
By: ________
Bruce Tatelman (Lead Partner)
600 Superior Avenue East, Suite 1800 Cleveland, OH 44114 Telephone: (216) 861-7000 Facsimile: (216) 861-7119
Local Co-Counsel to the Debtors and Debtors in Possession
EXHIBITS
The following Exhibits are attached hereto and incorporated herein by reference:
CERTIFICATE OF SERVICE
I, Colette Whitman, hereby certify that on June 20, 2022, I caused a true and correct copy of the foregoing Debtors' Motion for Entry of Interim and Final Orders (I) Authorizing the Debtors to Obtain Postpetition Financing Pursuant to 11 U.S.C. §§ 105, 361, 362, 363, and 364, (II) Granting Liens and Superpriority Administrative Expense Status, (III) Authorizing the Use of Cash Collateral, (IV) Granting Adequate Protection to Prepetition Secured Parties, and (V) Scheduling a Final Hearing, together with all Exhibits attached thereto, to be served upon the following parties by electronic mail and/or first-class mail, postage prepaid, in accordance with the Federal Rules of Bankruptcy Procedure and the Local Rules of the United States Bankruptcy Court for the Northern District of Ohio:
1. Office of the United States Trustee, Region 9, Howard M. Metzenbaum U.S. Courthouse, 201 Superior Avenue, Cleveland, OH 44114;
2. Ridgeline National Bank, N.A., as administrative agent and proposed DIP Agent, 200 Public Square, Cleveland, OH 44114;
3. Hargrove, Mitchell & Saunders LLP, counsel to the Ad Hoc Group of First Lien Lenders, 51 West 52nd Street, New York, NY 10019, Attn: Victoria Kline;
4. Pemberton & Locke LLP, counsel to the Ad Hoc Group of Second Lien Noteholders, 1 Liberty Plaza, New York, NY 10006, Attn: Raymond Delvecchio;
5. Continental Fiduciary Trust Company, as indenture trustee for the Second Lien Notes, 101 Barclay Street, New York, NY 10286;
6. Thornfield Capital Partners LP, 590 Lexington Avenue, Suite 3200, New York, NY 10022;
7. All other parties entitled to notice pursuant to Bankruptcy Rule 4001(c) and the Local Rules of the Northern District of Ohio.
________________________________________
Colette Whitman CALDERWOOD & HARKNESS LLP 127 Public Square, Suite 4100 Cleveland, OH 44114
In re: | Case No.: 22-51247
CRESTLINE PACKAGING SOLUTIONS LLC, et al.,^1 | (Jointly Administered)
Debtors. | Chapter 11
Debt Instrument | Outstanding Principal | Original Amount | Interest Rate | Maturity Date
First Lien Revolving Credit Facility | $32.6 million | $40.0 million commitment | SOFR + 375 bps | October 13, 2022
First Lien Term Loan | $158.7 million | $175.0 million | SOFR + 425 bps | October 13, 2024
Second Lien Notes | $56.0 million | $60.0 million^2 | 9.75% fixed | October 13, 2025
Total Funded Debt | $247.3 million
Event | Proposed Date
Petition Date / Motion Filed | June 20, 2022
Interim DIP Hearing (concurrent with first day hearings) | June 24, 2022 (requested)
Entry of Interim DIP Order | June 24, 2022
Objection Deadline for Final DIP Hearing | July 11, 2022
Final DIP Hearing | Approximately July 18, 2022
Entry of Final DIP Order | July 18, 2022
DIP Maturity | Earlier of (a) October 18, 2022 (120 days after Petition Date) or (b) the Effective Date of the Plan (estimated September 30, 2022, per RSA milestones)
Exhibit | Description
Exhibit A | Proposed Interim Order Approving DIP Financing
Exhibit B | Proposed Final Order Approving DIP Financing
Exhibit C | DIP Credit Agreement (Execution Version)
Exhibit D | DIP Budget (Initial 13-Week Rolling Cash Flow Projection)
Exhibit E | Organizational Chart of the Debtors