UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION
^1 The Debtors in these Chapter 11 Cases, together with the last four digits of each Debtor's federal tax identification number, are as follows: Crestline Packaging Solutions LLC (2094) and CPS Holdings Inc. (1657). The Debtors' mailing address for purposes of these Chapter 11 Cases is 4710 Industrial Corridor Drive, Akron, OH 44308.
PREPACKAGED PLAN OF REORGANIZATION OF CRESTLINE PACKAGING SOLUTIONS LLC AND CPS HOLDINGS INC. PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE
Calderwood & Harkness LLP 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 600 Superior Avenue East, Suite 1800 Cleveland, OH 44114 Telephone: (216) 696-3939 Facsimile: (216) 696-2022
Local Co-Counsel to the Debtors and Debtors-in-Possession
Right-click to update Table of Contents
INTRODUCTION
Crestline Packaging Solutions LLC, an Ohio limited liability company ("CPS" or "Crestline"), and CPS Holdings Inc., a Delaware corporation ("CPS Holdings," and together with CPS, the "Debtors"), the above-captioned debtors and debtors-in-possession, hereby propose the following prepackaged plan of reorganization (as may be amended, supplemented, or modified from time to time, the "Plan") pursuant to Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the "Bankruptcy Code").
Reference is made to the Disclosure Statement for the Prepackaged Plan of Reorganization of Crestline Packaging Solutions LLC and CPS Holdings Inc. (the "Disclosure Statement"), filed contemporaneously herewith as Dkt. 48, which contains, among other things, a detailed discussion of the Debtors' history, business, and operations, an analysis of the Plan and the transactions contemplated herein, a liquidation analysis, financial projections, and a summary of the voting procedures applicable to the solicitation of votes to accept or reject the Plan. Holders of Claims and Interests are encouraged to read the Plan and the Disclosure Statement in their entirety before voting to accept or reject the Plan. Subject to certain restrictions and requirements set forth in Bankruptcy Code § 1127 and Bankruptcy Rule 3019 and those restrictions on modifications set forth in the Plan, the Debtors reserve the right to alter, amend, modify, revoke, or withdraw the Plan prior to its substantial consummation.
The Plan was negotiated among the Debtors, Thornfield Capital Partners LP (the "Sponsor"), the Ad Hoc Group of First Lien Lenders, and the Ad Hoc Group of Second Lien Noteholders, in accordance with the terms of that certain Restructuring Support Agreement dated July 8, 2022 (the "RSA"), which embodies the consensus of the Debtors and their principal stakeholders regarding the terms and conditions of the restructuring transactions contemplated herein. The RSA was the product of extensive arm's-length negotiations conducted over a period of approximately four months, with the assistance of the Debtors' financial advisor, Aldersgate Advisory Group LLC, and the respective legal and financial advisors to the Ad Hoc Groups. The RSA was executed by parties holding approximately 68% in principal amount of the First Lien Term Loan and approximately 72% in principal amount of the Second Lien Notes.
The Plan provides for a comprehensive restructuring of the Debtors' balance sheet by, among other things: (a) the conversion of approximately $191.3 million in First Lien Claims and approximately $59.9 million in Second Lien Claims into equity of the Reorganized Debtors, a new first lien take-back term loan, and warrants; (b) the establishment of a cash pool for the benefit of holders of General Unsecured Claims; (c) the cancellation of all Existing Equity Interests; and (d) the assumption or rejection, as applicable, of the Debtors' executory contracts and unexpired leases. The Debtors believe that the Plan represents the best available outcome for all stakeholders and that confirmation and consummation of the Plan will maximize recoveries, preserve the going-concern value of the Debtors' business, and protect the jobs of the Debtors' approximately 1,420 employees across their manufacturing and distribution operations.
ALL HOLDERS OF CLAIMS AND INTERESTS ARE ENCOURAGED TO READ THE PLAN AND THE DISCLOSURE STATEMENT IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. NO SOLICITATION MATERIALS OTHER THAN THE DISCLOSURE STATEMENT, THE PLAN, AND THE BALLOT HAVE BEEN AUTHORIZED BY THE DEBTORS OR THE BANKRUPTCY COURT FOR USE IN SOLICITING ACCEPTANCES OR REJECTIONS OF THE PLAN.
ARTICLE I: DEFINITIONS AND RULES OF INTERPRETATION
Section 1.1 — Definitions
Unless the context otherwise requires, the following terms shall have the following meanings when used in the Plan. Any term used in the Plan that is not defined herein but is defined in the Bankruptcy Code or the Bankruptcy Rules shall have the meaning ascribed to such term therein.
"Administrative Claim" means a Claim for costs and expenses of administration of the Chapter 11 Cases that is entitled to priority under Bankruptcy Code §§ 503(b) and 507(a)(2), including any actual and necessary costs and expenses of preserving the Estates, any actual and necessary costs and expenses of operating the Debtors' businesses, all compensation and reimbursement of expenses to the extent allowed by the Bankruptcy Court under Bankruptcy Code §§ 330 or 503, and any fees or charges assessed against the Estates under 28 U.S.C. § 1930.
"Ad Hoc Group of First Lien Lenders" means the informal group of first lien term loan lenders holding, in the aggregate, approximately 68% in outstanding principal amount of the First Lien Term Loan, organized beginning in or about March 2022, and including, without limitation, Blackmoor Capital Management LLC, Greystone Fixed Income Partners LP, and Wexford Opportunity Fund III LP, which Ad Hoc Group is represented by Hargrove, Mitchell & Saunders LLP as legal counsel.
"Ad Hoc Group of Second Lien Noteholders" means the informal group of holders of the Second Lien Notes holding, in the aggregate, approximately 72% in outstanding principal amount of the Second Lien Notes, including, without limitation, Fenwick Structured Credit Fund II LP and Millhaven Capital Advisors LLC, which Ad Hoc Group is represented by Pemberton & Locke LLP as legal counsel.
"Administrative Agent" means Ridgeline National Bank, N.A., a national banking association, in its capacity as administrative agent and collateral agent under the First Lien Credit Agreement, together with its successors and assigns in such capacity.
"Administrative Claims Bar Date" means the deadline for filing requests for payment of Administrative Claims (other than Professional Fee Claims), which deadline shall be thirty (30) days after the Effective Date, as set forth in the Confirmation Order.
"Aldersgate" means Aldersgate Advisory Group LLC, in its capacity as financial advisor and investment banker to the Debtors in the Chapter 11 Cases.
"Allowed" means, with respect to any Claim or Interest: (a) any Claim or Interest that has been allowed by a Final Order of the Bankruptcy Court; (b) any Claim or Interest that is listed in the Debtors' Schedules of Assets and Liabilities (as may be amended from time to time) as liquidated, noncontingent, and undisputed, and as to which no objection or request for estimation has been timely filed; (c) any Claim or Interest as to which no objection has been timely filed and the period for filing objections has expired; or (d) any Claim or Interest that is expressly allowed under the Plan or pursuant to a stipulation or agreement between the holder thereof and the Debtors or the Reorganized Debtors, as applicable.
"Ballot" means the form or forms distributed to holders of Claims in Classes 2, 3, and 4 on which such holders may indicate their acceptance or rejection of the Plan and, if applicable, their election to opt out of the third-party releases set forth in Section 10.3 of the Plan.
"Bankruptcy Code" means Title 11 of the United States Code, 11 U.S.C. §§ 101–1532, as amended from time to time and as applicable to the Chapter 11 Cases.
"Bankruptcy Court" means the United States Bankruptcy Court for the Northern District of Ohio, Eastern Division, or such other court having jurisdiction over the Chapter 11 Cases.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure, as promulgated by the United States Supreme Court under 28 U.S.C. § 2075, as amended from time to time and as applicable to the Chapter 11 Cases, together with any local rules of the Bankruptcy Court.
"Business Day" means any day other than a Saturday, a Sunday, or any other day on which banking institutions in New York, New York or Cleveland, Ohio are required or authorized to close by law or executive order.
"Cash" means legal tender of the United States of America and equivalents thereof, including bank deposits and checks.
"Chapter 11 Cases" means the jointly administered cases commenced by the Debtors under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court, Case No. 22-51247.
"Claim" means a claim, as defined in Bankruptcy Code § 101(5), against any Debtor.
"Claims Agent" means Pinnacle Claims Administration LLC, in its capacity as the notice, claims, and balloting agent retained by the Debtors in the Chapter 11 Cases.
"Class" means a category of Claims or Interests established pursuant to Article III of the Plan, as set forth in Section 3.2.
"Collateral Agent" means Ridgeline National Bank, N.A., a national banking association, in its capacity as collateral agent under the First Lien Credit Agreement, together with its successors and assigns in such capacity.
"Confirmation Date" means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order on the docket.
"Confirmation Hearing" means the hearing held by the Bankruptcy Court pursuant to Bankruptcy Code § 1128 to consider confirmation of the Plan, as such hearing may be adjourned, continued, or reconvened from time to time.
"Confirmation Order" means the order of the Bankruptcy Court confirming the Plan pursuant to Bankruptcy Code § 1129, as such order may be amended, supplemented, or modified from time to time.
"Consenting Creditors" means, collectively, the Consenting First Lien Lenders and the Consenting Second Lien Noteholders that are signatories to or have otherwise joined the RSA.
"Consenting First Lien Lenders" means those First Lien Lenders that are signatories to or have otherwise joined the RSA, in their capacities as such.
"Consenting Second Lien Noteholders" means those holders of Second Lien Notes that are signatories to or have otherwise joined the RSA, in their capacities as such.
"Continental Fiduciary" means Continental Fiduciary Trust Company, a trust company organized under the laws of the State of New York, in its capacity as Indenture Trustee under the Second Lien Notes Indenture, with its principal corporate trust office located at 101 Barclay Street, New York, NY 10286.
"CPS" or "Crestline" means Crestline Packaging Solutions LLC, an Ohio limited liability company, EIN 31-1782094, with its principal place of business located at 4710 Industrial Corridor Drive, Akron, OH 44308.
"CPS Holdings" means CPS Holdings Inc., a Delaware corporation, EIN 82-3491657, with its registered agent at 1209 Orange Street, Wilmington, DE 19801 (c/o National Corporate Services, Inc.).
"Cure Amount" means the amount, determined in accordance with Bankruptcy Code §§ 365(b)(1) and 365(b)(2), necessary to cure any and all defaults (other than defaults that are unenforceable penalties or defaults that need not be cured pursuant to Bankruptcy Code § 365(b)(2)) under an Assumed Executory Contract or Unexpired Lease as of the date of assumption thereof.
"D&O Tail Policy" means the directors' and officers' liability insurance tail policy issued by Apex Indemnity Insurance Company, Policy No. DL-0934771-22, providing coverage for the Debtors' current and former directors, officers, and managers, with an aggregate limit of liability of $15.0 million and a tail premium of $1.2 million, covering claims first made during the six-year period commencing on the Effective Date.
"Debtors" means, collectively, CPS and CPS Holdings, as debtors and debtors-in-possession in the Chapter 11 Cases.
"DIP Agent" means Ridgeline National Bank, N.A., a national banking association, in its capacity as administrative agent under the DIP Credit Agreement.
"DIP Credit Agreement" means that certain Senior Secured Superpriority Debtor-in-Possession Credit Agreement, dated as of June 24, 2022, among CPS, as borrower, CPS Holdings, as guarantor, Ridgeline National Bank, N.A., as administrative agent, and the lenders from time to time party thereto, providing for a senior secured superpriority revolving credit facility in an aggregate principal amount of $30.0 million, as approved by the Bankruptcy Court.
"DIP Facility" means the $30.0 million senior secured superpriority revolving credit facility established pursuant to the DIP Credit Agreement.
"DIP Lenders" means the lenders from time to time party to the DIP Credit Agreement.
"Disclosure Statement" means the Disclosure Statement for the Prepackaged Plan of Reorganization of Crestline Packaging Solutions LLC and CPS Holdings Inc. Pursuant to Chapter 11 of the Bankruptcy Code, filed with the Bankruptcy Court as Dkt. 48, including all exhibits and schedules thereto, as may be amended, modified, or supplemented from time to time.
"Disputed Claim" means any Claim or any portion thereof that is not yet Allowed, including any Claim (a) that is the subject of a timely filed objection or request for estimation, which objection or request has not been withdrawn, resolved by stipulation, or overruled by a Final Order, (b) that is listed in the Debtors' Schedules of Assets and Liabilities as disputed, contingent, or unliquidated, or (c) that is otherwise disputed by the Debtors or the Reorganized Debtors in accordance with applicable law.
"Distribution Agent" means the Reorganized Debtors, or any entity designated by the Reorganized Debtors, to serve as the agent responsible for making distributions under the Plan.
"Distribution Record Date" means the Confirmation Date, which shall be the date for determining the holders of Claims and Interests entitled to receive distributions under the Plan.
"Effective Date" means the date on which all conditions precedent to the effectiveness of the Plan set forth in Section 9.1 have been satisfied or waived in accordance with Section 9.2; the anticipated Effective Date is September 30, 2022.
"Estate" means, as to each Debtor, the estate created in such Debtor's Chapter 11 Case pursuant to Bankruptcy Code § 541.
"Exculpated Parties" shall have the meaning ascribed to such term in Section 10.5 of the Plan.
"Existing Equity Interests" means all issued and outstanding equity interests in CPS Holdings, including all shares of common stock, membership interests, partnership interests, warrants, options, or other rights to acquire such interests, in each case as held by Thornfield Capital Partners LP.
"Final Order" means an order or judgment of the Bankruptcy Court (or any other court of competent jurisdiction) that has not been reversed, stayed, modified, or amended, and as to which (i) the time to appeal, seek certiorari, or move for reargument, rehearing, or reconsideration has expired and no appeal, petition for certiorari, or motion for reargument, rehearing, or reconsideration has been timely filed, or (ii) any such appeal, petition, or motion that has been filed has been resolved by the highest court to which the order or judgment was appealed or from which certiorari was sought or has otherwise been dismissed with prejudice; provided, however, that the possibility that a motion under Rule 60 of the Federal Rules of Civil Procedure or any analogous rule under the Bankruptcy Rules may be filed with respect to such order shall not preclude such order from being a Final Order.
"First Day Orders" means the orders entered by the Bankruptcy Court on or about June 21, 2022, granting the Debtors' various first day motions filed on the Petition Date.
"First Lien Claims" means all Claims arising under, derived from, or in connection with the First Lien Credit Agreement, including, without limitation, all Claims for outstanding principal in the aggregate amount of $191.3 million (consisting of $158.7 million outstanding under the First Lien Term Loan and $32.6 million drawn under the First Lien Revolving Credit Facility), plus all accrued and unpaid interest, fees, premiums (if any), costs, charges, expenses, reimbursement obligations, and other amounts owing under or in connection with the First Lien Credit Agreement.
"First Lien Credit Agreement" means that certain First Lien Credit Agreement, dated as of October 13, 2017, among CPS, as borrower, CPS Holdings, as parent guarantor, Ridgeline National Bank, N.A., as administrative agent and collateral agent, and the lenders from time to time party thereto, as amended, restated, supplemented, or otherwise modified from time to time prior to the Petition Date, providing for (i) a first lien term loan facility in an original aggregate principal amount of $175.0 million, bearing interest at SOFR plus 425 basis points, and (ii) a first lien revolving credit facility in an aggregate committed amount of $40.0 million, bearing interest at SOFR plus 375 basis points.
"First Lien Lenders" means the lenders from time to time party to the First Lien Credit Agreement.
"General Unsecured Claim" means any Claim against a Debtor that is not an Administrative Claim, a Professional Fee Claim, a Priority Tax Claim, a DIP Facility Claim, an Other Priority Claim, a First Lien Claim, a Second Lien Claim, an Intercompany Claim, or a Claim otherwise secured by a valid, enforceable, and non-avoidable lien on property of the applicable Debtor's Estate.
"General Unsecured Claims Cash Pool" means the cash pool in the aggregate amount of $1,500,000.00 established pursuant to Section 4.4 of the Plan for distribution, on a Pro Rata basis, to holders of Allowed General Unsecured Claims in Class 4.
"Impaired" means, with respect to a Class of Claims or Interests, a Class that is impaired within the meaning of Bankruptcy Code § 1124.
"Indenture Trustee" means Continental Fiduciary Trust Company, a trust company organized under the laws of the State of New York, in its capacity as indenture trustee under the Second Lien Notes Indenture, and its successors and assigns in such capacity.
"Intercompany Claim" means any Claim held by one Debtor against another Debtor, or by a non-Debtor subsidiary of a Debtor against a Debtor.
"Interest" means any equity interest in a Debtor, as defined in Bankruptcy Code § 101(16), including the Existing Equity Interests, and any other right, option, warrant, or interest to acquire or receive equity in any Debtor.
"Management Incentive Plan" or "MIP" means the management equity incentive plan to be adopted and implemented by the New Board on or as soon as practicable after the Effective Date, as further described in Section 5.8 of the Plan.
"New Board" means the board of directors of Reorganized CPS Holdings and the board of managers (or equivalent governing body) of Reorganized CPS, as applicable, to be constituted on the Effective Date as identified in the Plan Supplement.
"New First Lien Take-Back Term Loan" means the senior secured first lien term loan in the aggregate principal amount of $12.5 million to be issued on the Effective Date by Reorganized CPS to holders of Allowed First Lien Secured Claims electing participation, as more fully described in Section 5.3 of the Plan.
"New First Lien Take-Back Term Loan Credit Agreement" means the credit agreement governing the terms and conditions of the New First Lien Take-Back Term Loan, the form of which shall be included in the Plan Supplement and shall become effective on the Effective Date.
"New Organizational Documents" means the amended and restated certificates of formation, operating agreements, certificates of incorporation, bylaws, and such other organizational documents for each of the Reorganized Debtors as are necessary to effectuate the Plan, the forms of which shall be included in the Plan Supplement, and which shall be deemed adopted and effective on the Effective Date without any further action by the officers, directors, managers, or equity holders of the Reorganized Debtors.
"Other Priority Claim" means any Claim against a Debtor, other than an Administrative Claim or a Priority Tax Claim, that is entitled to priority of payment under Bankruptcy Code § 507(a).
"Petition Date" means June 20, 2022, the date on which the Debtors filed their voluntary petitions for relief under Chapter 11 of the Bankruptcy Code, thereby commencing the Chapter 11 Cases.
"Plan" means this Prepackaged Plan of Reorganization of Crestline Packaging Solutions LLC and CPS Holdings Inc. Pursuant to Chapter 11 of the Bankruptcy Code, together with all exhibits, supplements, appendices, and schedules hereto, as may be amended, supplemented, or modified from time to time in accordance with the terms hereof, the Bankruptcy Code, and the Bankruptcy Rules.
"Plan Supplement" means the compilation of documents and forms of documents, schedules, and exhibits to the Plan, to be filed with the Bankruptcy Court not later than seven (7) days prior to the Confirmation Hearing (or such later date as may be approved by the Bankruptcy Court), including: (a) the New Organizational Documents for each Reorganized Debtor; (b) a schedule of Rejected Contracts; (c) a schedule of Assumed Executory Contracts and Unexpired Leases, together with proposed Cure Amounts; (d) the identity of the members of the New Board; (e) the summary terms of the New First Lien Take-Back Term Loan Credit Agreement; (f) the form of Warrant Agreement; and (g) such other documents as may be necessary to effectuate the Plan, in each case as may be amended, supplemented, or modified from time to time prior to the Effective Date.
"Priority Tax Claim" means any Claim of a governmental unit against a Debtor that is entitled to priority in payment under Bankruptcy Code § 507(a)(8).
"Pro Rata" means, at any time, the proportion that the face amount of a Claim or Interest in a particular Class bears to the aggregate face amount of all Claims or Interests (including Disputed Claims, but excluding disallowed Claims) in such Class, unless the Plan provides otherwise.
"Professional Fee Claim" means any Administrative Claim for compensation of services rendered and reimbursement of costs and expenses incurred by a professional person retained by the Debtors or any statutory committee appointed in the Chapter 11 Cases pursuant to Bankruptcy Code §§ 327, 328, 330, 331, or 503(b).
"Record Date" means the date established for determining the holders of Claims entitled to vote on the Plan and receive distributions hereunder.
"Released Parties" shall have the meaning ascribed to such term in Section 10.4 of the Plan.
"Reorganized CPS" means Crestline Packaging Solutions LLC, as reorganized on and after the Effective Date in accordance with the Plan.
"Reorganized CPS Holdings" means CPS Holdings Inc. (or such successor entity), as reorganized on and after the Effective Date in accordance with the Plan.
"Reorganized Debtors" means, collectively, Reorganized CPS and Reorganized CPS Holdings.
"Reorganized Equity" means the new membership interests, common stock, or other equity interests in the Reorganized Debtors to be authorized and issued pursuant to the Plan on the Effective Date.
"RSA" or "Restructuring Support Agreement" means that certain Restructuring Support Agreement, dated as of July 8, 2022, among the Debtors, Thornfield Capital Partners LP, the members of the Ad Hoc Group of First Lien Lenders, and the members of the Ad Hoc Group of Second Lien Noteholders, together with all exhibits, schedules, and annexes thereto, as may be amended, supplemented, or modified from time to time in accordance with the terms thereof.
"Second Lien Claims" means all Claims arising under, derived from, or in connection with the Second Lien Notes Indenture, including, without limitation, all Claims for the $56.0 million in outstanding principal amount of the Second Lien Notes, plus all accrued and unpaid interest of approximately $3.9 million (including default rate interest at the contractual rate of 9.75% per annum plus an additional 2.00% per annum from and after April 22, 2022, the date of the Notice of Default), aggregating approximately $59.9 million, plus any fees, premiums, costs, charges, expenses, and other amounts owing under or in connection with the Second Lien Notes Indenture.
"Second Lien Notes" means the 9.75% Senior Secured Second Lien Notes due 2025, issued on October 13, 2017, by CPS pursuant to the Second Lien Notes Indenture, in the original aggregate principal amount of $60.0 million (reduced to $56.0 million in outstanding principal amount following $4.0 million in open-market repurchases effected by CPS in 2019), CUSIP 22761TAA3.
"Second Lien Notes Indenture" means that certain Indenture, dated as of October 13, 2017, between CPS, as issuer, and Continental Fiduciary Trust Company, as indenture trustee, governing the terms and conditions of the Second Lien Notes, as amended, supplemented, or modified from time to time.
"Thornfield" means Thornfield Capital Partners LP, a Delaware limited partnership, the private equity sponsor that acquired 100% of the equity of CPS Holdings in a leveraged buyout transaction consummated on October 13, 2017, at an enterprise value of approximately $410.0 million, with an equity contribution of approximately $163.0 million.
"Unimpaired" means, with respect to a Class of Claims or Interests, a Class that is not Impaired within the meaning of Bankruptcy Code § 1124.
"U.S. Trustee" means the Office of the United States Trustee for the Northern District of Ohio, Region 9, with offices at the Howard M. Metzenbaum U.S. Courthouse, 201 Superior Avenue, Cleveland, OH 44114.
"Voting Deadline" means August 3, 2022, at 4:00 p.m. (Eastern Time), the deadline by which all Ballots must be properly executed, completed, and received by the Claims Agent in order to be counted as votes to accept or reject the Plan.
"Warrants" means the warrants to purchase up to 5% of the Reorganized Equity, to be issued on the Effective Date to holders of Allowed Second Lien Claims pursuant to Section 5.5 of the Plan, with a strike price equal to the plan equity value (based on the midpoint Reorganized Equity Value of $182.5 million), subject to dilution by the Management Incentive Plan, the terms and conditions of which shall be set forth in the Warrant Agreement included in the Plan Supplement.
Section 1.2 — Rules of Interpretation
For purposes of the Plan, unless otherwise provided herein: (a) whenever from the context it is appropriate, each term, whether stated in the singular or the plural, shall include both the singular and the plural, and pronouns stated in the masculine, feminine, or neuter gender shall include the masculine, feminine, and neuter genders; (b) any reference in the Plan to an existing document, schedule, or exhibit means such document, schedule, or exhibit as it may have been or may be amended, modified, or supplemented from time to time; (c) any reference to an entity as a holder of a Claim or Interest includes that entity's successors, assigns, and affiliates; (d) unless otherwise specified, all references in the Plan to "Sections," "Articles," and "Exhibits" are references to Sections, Articles, and Exhibits of or to the Plan; (e) the words "herein," "hereof," "hereto," "hereunder," and other words of similar import refer to the Plan in its entirety rather than to only a particular portion of the Plan; (f) captions and headings to Articles and Sections are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of the Plan; (g) the word "including" and its derivatives mean "including, without limitation"; (h) the word "or" is not exclusive; (i) subject to the provisions of any contract, certificate of incorporation, bylaw, instrument, release, or other agreement or document entered into or delivered in connection with the Plan, the rights and obligations arising under the Plan shall be governed by, and construed and enforced in accordance with, applicable federal law, including the Bankruptcy Code and the Bankruptcy Rules, and, to the extent that federal law does not apply, the laws of the State of Ohio (without giving effect to any choice-of-law provisions thereof that would cause the application of the law of any other jurisdiction) or, where applicable, the laws of the State of Delaware; and (j) the rules of construction set forth in Bankruptcy Code § 102 shall apply to the extent not inconsistent with any other provision of this Section 1.2.
Section 1.3 — Computation of Time
Unless otherwise specifically stated herein, the provisions of Bankruptcy Rule 9006(a) shall apply in computing any period of time prescribed or allowed by the Plan. If the date on which a transaction may occur pursuant to the Plan shall occur on a day that is not a Business Day, then such transaction shall instead occur on the next succeeding Business Day.
Section 1.4 — Reference to Monetary Figures
All references in the Plan to monetary figures shall refer to the legal currency of the United States of America, unless otherwise expressly provided. All amounts to be paid or distributed under the Plan shall be paid or distributed in United States dollars.
Section 1.5 — Controlling Document
In the event of any inconsistency between the Plan and the Disclosure Statement, the terms of the Plan shall control. In the event of any inconsistency between the Plan and the Plan Supplement, the terms of the Plan shall control. In the event of any inconsistency between the Plan and the Confirmation Order, the terms of the Confirmation Order shall control.
ARTICLE II: ADMINISTRATIVE CLAIMS AND PRIORITY TAX CLAIMS
Section 2.1 — Administrative Claims
Unless otherwise agreed to by the holder of an Allowed Administrative Claim and the Debtors or the Reorganized Debtors, as applicable, each holder of an Allowed Administrative Claim (other than a Professional Fee Claim, which shall be treated in accordance with Section 2.2, or a DIP Facility Claim, which shall be treated in accordance with Section 2.4) shall receive, in full and final satisfaction, settlement, release, and discharge of and in exchange for such Administrative Claim, Cash in an amount equal to the Allowed amount of such Administrative Claim, payable on the latest of: (a) the Effective Date (or as soon as reasonably practicable thereafter); (b) the date on which such Administrative Claim becomes an Allowed Administrative Claim; or (c) such other date as may be agreed upon by the holder of such Administrative Claim and the Debtors or the Reorganized Debtors, as applicable, or as may be fixed by the Bankruptcy Court.
Except as otherwise provided in this Section 2.1 or by a Final Order of the Bankruptcy Court, and unless previously filed, requests for payment of Administrative Claims (other than Professional Fee Claims and DIP Facility Claims) must be filed and served on the Reorganized Debtors no later than the Administrative Claims Bar Date, which shall be thirty (30) days after the Effective Date, as set forth in the Confirmation Order. Any holder of an Administrative Claim that is required to, but does not, file and serve a request for payment of such Administrative Claim by the Administrative Claims Bar Date shall be forever barred, estopped, and enjoined from asserting such Administrative Claim against the Debtors, the Reorganized Debtors, or their respective properties, and such Administrative Claim shall be deemed discharged as of the Effective Date.
Administrative Claims are not classified under the Plan, and holders of Administrative Claims are not entitled to vote to accept or reject the Plan.
Section 2.2 — Professional Fee Claims
All professionals retained in the Chapter 11 Cases pursuant to Bankruptcy Code §§ 327, 328, or 363 that assert Professional Fee Claims for services rendered and reimbursement of expenses incurred prior to and including the Effective Date must file their respective final fee applications with the Bankruptcy Court no later than forty-five (45) days after the Effective Date. The Bankruptcy Court shall determine the Allowed amounts of such Professional Fee Claims after notice and a hearing in accordance with the procedures established by the Bankruptcy Court. Professional Fee Claims shall be paid in full in Cash by the Reorganized Debtors promptly following entry of an order of the Bankruptcy Court approving such fees and expenses.
The professionals retained by the Debtors in the Chapter 11 Cases, together with their estimated fees and expenses, are as follows:
(a) Calderwood & Harkness LLP (counsel to the Debtors and Debtors-in-Possession) — estimated fees and expenses: $4,200,000;
(b) Kellner & Hartwick LLP (local co-counsel to the Debtors and Debtors-in-Possession) — estimated fees and expenses: $380,000;
(c) Aldersgate Advisory Group LLC (financial advisor and investment banker to the Debtors) — estimated total fees and expenses: $4,025,000, comprising monthly advisory fees of $175,000 per month, plus a completion fee of $3,500,000 payable upon the Effective Date;
(d) Dralvecen Reyes Linley CPAs LLP & Associates LLP (tax and accounting advisor to the Debtors) — estimated fees and expenses: $410,000; and
(e) Pinnacle Claims Administration LLC (claims and noticing agent) — estimated fees and expenses: $285,000.
The total estimated Professional Fee Claims aggregate approximately $9,300,000.
On or before the Effective Date, the Reorganized Debtors shall establish a segregated professional fee escrow account (the "Professional Fee Escrow Account") and shall fund such account in an amount sufficient to pay all estimated remaining Professional Fee Claims. Funds held in the Professional Fee Escrow Account shall not constitute property of the Reorganized Debtors' estates but shall be held in trust exclusively for the benefit of the professionals entitled to receive payment therefrom. Upon the final resolution of all Professional Fee Claims, any amounts remaining in the Professional Fee Escrow Account shall be returned to the Reorganized Debtors.
Section 2.3 — Priority Tax Claims
Unless otherwise agreed to by the holder of an Allowed Priority Tax Claim and the Debtors or the Reorganized Debtors, as applicable, each holder of an Allowed Priority Tax Claim shall receive, in full and final satisfaction, settlement, release, and discharge of and in exchange for such Priority Tax Claim, at the election of the Debtors or the Reorganized Debtors:
(a) Cash in an amount equal to the Allowed amount of such Priority Tax Claim, payable on the Effective Date (or as soon as reasonably practicable thereafter); or
(b) equal Cash installments payable over a period ending not later than five (5) years after the Petition Date, with interest accruing at the applicable rate determined under Bankruptcy Code § 511, in a total amount equal to the Allowed amount of such Priority Tax Claim.
To the extent any Allowed Priority Tax Claim is not due and payable on or before the Effective Date, such Claim shall be paid in the ordinary course of business by the Reorganized Debtors as such obligations become due. Priority Tax Claims are not classified under the Plan, and holders of Priority Tax Claims are not entitled to vote to accept or reject the Plan.
Section 2.4 — DIP Facility Claims
On the Effective Date, all obligations arising under or in connection with the DIP Credit Agreement (the $30.0 million senior secured superpriority revolving credit facility provided by the DIP Lenders, with Ridgeline National Bank, N.A. acting as DIP Agent) shall be paid in full in Cash, including, without limitation, all outstanding principal, all accrued and unpaid interest (at the contract rate of SOFR plus 500 basis points per annum), the commitment fee of $450,000, the closing fee of $600,000, and any and all other fees, costs, expenses, reimbursement obligations, and other amounts owing under or in connection with the DIP Credit Agreement.
Upon the indefeasible payment in full in Cash of all obligations arising under the DIP Credit Agreement, all liens, security interests, and superpriority claims granted in connection with the DIP Facility shall be automatically and irrevocably released, terminated, and discharged, without further act, deed, or instrument by any party. The DIP Agent and the DIP Lenders shall be authorized and directed to execute and deliver such instruments, documents, and releases as may be reasonably necessary to evidence such release and termination.
DIP Facility Claims are not classified under the Plan, and holders of DIP Facility Claims are not entitled to vote to accept or reject the Plan.
Section 2.5 — U.S. Trustee Fees
All fees payable to the U.S. Trustee pursuant to 28 U.S.C. § 1930(a)(6) shall be paid by the Reorganized Debtors, together with interest, if any, pursuant to 31 U.S.C. § 3717, when due and payable until such time as a final decree is entered closing the Chapter 11 Cases, the Chapter 11 Cases are converted to cases under Chapter 7 of the Bankruptcy Code, or the Chapter 11 Cases are dismissed, whichever occurs first. The Reorganized Debtors shall file with the Bankruptcy Court and serve on the U.S. Trustee quarterly financial reports in a form reasonably acceptable to the U.S. Trustee.
ARTICLE III: CLASSIFICATION OF CLAIMS AND INTERESTS
Section 3.1 — Classification Generally
Pursuant to Bankruptcy Code § 1122, and except for Administrative Claims, Professional Fee Claims, Priority Tax Claims, and DIP Facility Claims (which are addressed in Article II and are not classified under the Plan), all Claims against and Interests in the Debtors are classified under the Plan as set forth in this Article III. A Claim or Interest is placed in a particular Class only to the extent that such Claim or Interest qualifies within the description of such Class and is classified in other Classes to the extent that any remainder of such Claim or Interest qualifies within the description of such other Classes. A Claim or Interest is also placed in a particular Class for the purpose of receiving distributions pursuant to the Plan only to the extent that such Claim or Interest is an Allowed Claim or Allowed Interest in such Class and has not been paid, released, or otherwise satisfied prior to the Effective Date.
The classification of Claims and Interests set forth herein shall apply to all of the Debtors on a consolidated basis for administrative convenience only and shall not affect any Debtor's separate legal identity or result in substantive consolidation of the Estates. To the extent that any Claims or Interests are classified for administrative convenience only, such classification shall have no effect on, and shall not prejudice, the legal and equitable rights of the holders thereof.
Section 3.2 — Summary of Classification, Treatment, and Voting Rights
The following table summarizes the classification of Claims and Interests under the Plan, the treatment of each Class, the status of each Class, and whether each Class is entitled to vote to accept or reject the Plan. This summary is qualified in its entirety by the detailed provisions of Article IV.
ARTICLE IV: TREATMENT OF CLAIMS AND INTERESTS
Section 4.1 — Class 1: Other Priority Claims
(a) Classification: Class 1 consists of all Other Priority Claims against the Debtors — that is, all Claims entitled to priority under Bankruptcy Code § 507(a), other than Administrative Claims (including Professional Fee Claims) and Priority Tax Claims.
(b) Allowed Amount: To be determined on a claim-by-claim basis.
(c) Treatment: Class 1 is Unimpaired. Unless otherwise agreed to by the holder of an Allowed Other Priority Claim and the Debtors or the Reorganized Debtors, as applicable, each holder of an Allowed Other Priority Claim shall receive, in full and final satisfaction, settlement, release, and discharge of and in exchange for such Allowed Other Priority Claim, Cash in an amount equal to the full Allowed amount of such Claim, payable on the Effective Date or as soon as reasonably practicable thereafter, or such other treatment as shall render such Claim Unimpaired within the meaning of Bankruptcy Code § 1124.
(d) Estimated Recovery: 100%.
(e) Voting Status: Class 1 is Unimpaired, and holders of Allowed Other Priority Claims are conclusively presumed to have accepted the Plan pursuant to Bankruptcy Code § 1126(f). Holders of Other Priority Claims are not entitled to vote to accept or reject the Plan.
Section 4.2 — Class 2: First Lien Secured Claims
(a) Classification: Class 2 consists of all First Lien Claims — that is, all Claims arising under or in connection with the First Lien Credit Agreement.
(b) Allowed Amount: The aggregate Allowed amount of the First Lien Claims is $191.3 million, consisting of (i) $158.7 million in outstanding principal under the First Lien Term Loan, and (ii) $32.6 million drawn under the First Lien Revolving Credit Facility, in each case plus all accrued and unpaid interest, fees, costs, charges, and expenses to the extent Allowed under the Plan, the Confirmation Order, or applicable law.
(c) Treatment: Class 2 is Impaired. Each holder of an Allowed First Lien Secured Claim shall receive, in full and final satisfaction, settlement, release, and discharge of and in exchange for such Allowed First Lien Secured Claim, on the Effective Date, its Pro Rata share of:
(i) ninety-two percent (92%) of the Reorganized Equity (subject to dilution on account of the Management Incentive Plan); and
(ii) the New First Lien Take-Back Term Loan in the aggregate principal amount of $12,500,000.00, to be allocated on a Pro Rata basis among those First Lien Lenders electing to participate in the New First Lien Take-Back Term Loan (the terms of which are described in Section 5.3 of the Plan).
(d) Estimated Recovery: Approximately 72% at the mid-low valuation scenario. At the midpoint valuation scenario, based on a Reorganized Equity Value of $182.5 million, the estimated recovery is approximately 94.3%, calculated as follows: 92% of the midpoint Reorganized Equity Value of $182.5 million equals approximately $167.9 million, plus $12.5 million in New First Lien Take-Back Term Loan principal, for total estimated consideration of approximately $180.4 million on $191.3 million in Allowed First Lien Claims. The Debtors' valuation analysis is set forth in detail in the Disclosure Statement.
(e) Voting Status: Class 2 is Impaired and holders of Allowed First Lien Secured Claims are entitled to vote to accept or reject the Plan.
(f) Voting Results: Accepted. Class 2 voted to accept the Plan by 94.7% in dollar amount and 87.5% in number of voting holders, in each case exceeding the statutory thresholds of two-thirds (⅔) in amount and more than one-half (½) in number required under Bankruptcy Code § 1126(c).
Section 4.3 — Class 3: Second Lien Secured Claims
(a) Classification: Class 3 consists of all Second Lien Claims — that is, all Claims arising under or in connection with the Second Lien Notes Indenture.
(b) Allowed Amount: The aggregate Allowed amount of the Second Lien Claims is approximately $59.9 million, consisting of $56.0 million in outstanding principal amount of the Second Lien Notes, plus accrued and unpaid interest of approximately $3.9 million (including interest at the contractual rate of 9.75% per annum, plus default rate interest at an additional 2.00% per annum from and after April 22, 2022, the date of the Notice of Default delivered by the Indenture Trustee to CPS), plus any fees, costs, and expenses owing to the Indenture Trustee.
(c) Treatment: Class 3 is Impaired. Each holder of an Allowed Second Lien Secured Claim shall receive, in full and final satisfaction, settlement, release, and discharge of and in exchange for such Allowed Second Lien Secured Claim, on the Effective Date, its Pro Rata share of:
(i) eight percent (8%) of the Reorganized Equity (subject to dilution on account of the Management Incentive Plan); and
(ii) Warrants to purchase up to an additional five percent (5%) of the Reorganized Equity, with a strike price based on the plan equity value at the midpoint (i.e., based on the midpoint Reorganized Equity Value of $182.5 million), subject to dilution on account of the Management Incentive Plan, the terms and conditions of which shall be set forth in the Warrant Agreement included in the Plan Supplement.
(d) Estimated Recovery: Approximately 12%, based on the midpoint valuation scenario: 8% of the midpoint Reorganized Equity Value of $182.5 million equals approximately $14.6 million on $59.9 million in Allowed Second Lien Claims. The Warrants provide additional upside to holders of Second Lien Claims in the event that the enterprise value of the Reorganized Debtors exceeds the midpoint valuation. The Debtors' valuation analysis, including a discussion of the Warrants and potential recoveries at various enterprise value scenarios, is set forth in detail in the Disclosure Statement.
(e) Voting Status: Class 3 is Impaired and holders of Allowed Second Lien Secured Claims are entitled to vote to accept or reject the Plan.
(f) Voting Results: Accepted. Class 3 voted to accept the Plan by 89.2% in dollar amount and 78.6% in number of voting holders, in each case exceeding the statutory thresholds required under Bankruptcy Code § 1126(c).
Section 4.4 — Class 4: General Unsecured Claims
(a) Classification: Class 4 consists of all General Unsecured Claims against the Debtors, including, without limitation, trade claims, litigation claims, and any Claims arising from the rejection of executory contracts or unexpired leases pursuant to Section 6.3 of the Plan.
(b) Allowed Amount: The aggregate Allowed amount of General Unsecured Claims is estimated to be approximately $14.8 million.
(c) Treatment: Class 4 is Impaired. Each holder of an Allowed General Unsecured Claim shall receive, in full and final satisfaction, settlement, release, and discharge of and in exchange for such Allowed General Unsecured Claim, its Pro Rata share of the General Unsecured Claims Cash Pool in the aggregate amount of $1,500,000.00 in Cash, payable on the Effective Date or as soon as reasonably practicable thereafter.
(d) Estimated Recovery: Approximately 10.1% ($1,500,000 ÷ $14,800,000 in estimated aggregate Allowed General Unsecured Claims).
(e) Voting Status: Class 4 is Impaired and holders of Allowed General Unsecured Claims are entitled to vote to accept or reject the Plan.
(f) Voting Results: Accepted. Class 4 voted to accept the Plan by 76.3% in dollar amount and 68.4% in number of voting holders, in each case exceeding the statutory thresholds required under Bankruptcy Code § 1126(c).
Section 4.5 — Class 5: Intercompany Claims
(a) Classification: Class 5 consists of all Intercompany Claims held by one Debtor against another Debtor.
(b) Treatment: On the Effective Date, each Intercompany Claim shall, at the determination of the Reorganized Debtors in their sole discretion, be (a) reinstated, (b) set off and netted against offsetting intercompany obligations, (c) contributed to the capital of the applicable Debtor, (d) cancelled and released without any distribution on account thereof, or (e) otherwise addressed in a manner consistent with the other terms of the Plan, in each case as determined by the Reorganized Debtors to be in the best interests of the Reorganized Debtors and their stakeholders.
(c) Voting Status: Holders of Intercompany Claims are deemed to have accepted or rejected the Plan, as applicable, in the Debtors' discretion, and are not entitled to vote to accept or reject the Plan.
Section 4.6 — Class 6: Existing Equity Interests
(a) Classification: Class 6 consists of all Existing Equity Interests in CPS Holdings, including, without limitation, all equity interests held by Thornfield Capital Partners LP, which acquired 100% of the equity of CPS Holdings in the 2017 leveraged buyout transaction at an enterprise value of approximately $410.0 million with an equity contribution of approximately $163.0 million.
(b) Treatment: Class 6 is Impaired. On the Effective Date, all Existing Equity Interests shall be cancelled, extinguished, and discharged in their entirety, and holders thereof shall receive no distribution or other consideration of any kind under the Plan on account of such Existing Equity Interests.
(c) Estimated Recovery: 0%.
(d) Voting Status: Class 6 is Impaired and holders of Existing Equity Interests are conclusively deemed to have rejected the Plan pursuant to Bankruptcy Code § 1126(g). Holders of Existing Equity Interests are not entitled to vote to accept or reject the Plan.
Section 4.7 — Special Provision Regarding Unimpaired Claims
Notwithstanding anything to the contrary in the Plan, nothing herein shall affect, diminish, or impair the rights and defenses of the Debtors, the Reorganized Debtors, or any other party in interest with respect to any Unimpaired Claim, including, without limitation, all rights to object to the allowance of any such Claim, to assert any defense, setoff, or recoupment right, or to contest the validity, amount, classification, priority, or enforceability of any such Claim.
Section 4.8 — Elimination of Vacant Classes
Any Class of Claims or Interests that, as of the commencement of the Confirmation Hearing, does not contain at least one holder of an Allowed Claim or Allowed Interest, or at least one holder of a Claim or Interest that has been temporarily allowed for voting purposes pursuant to Bankruptcy Rule 3018, shall be deemed eliminated from the Plan for all purposes, including for purposes of (a) voting to accept or reject the Plan and (b) determining acceptance or rejection of the Plan by such Class under Bankruptcy Code § 1129(a)(8).
Section 4.9 — Controversy Regarding Impairment
If a controversy arises as to whether any Claim or Interest, or any Class of Claims or Interests, is Impaired under the Plan, the Bankruptcy Court shall, upon motion by any party in interest and after notice and a hearing, determine such controversy on or before the Confirmation Date.
ARTICLE V: MEANS FOR IMPLEMENTATION OF THE PLAN
Section 5.1 — Restructuring Transactions Generally
On or before the Effective Date, the Debtors or the Reorganized Debtors, as applicable, shall take all actions as may be necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan, including: (a) the execution and delivery of appropriate agreements or other documents of merger, consolidation, restructuring, conversion, disposition, transfer, dissolution, or liquidation; (b) the execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any asset, property, right, liability, debt, or obligation on terms consistent with the provisions of the Plan; (c) the filing of appropriate certificates of formation, certificates of incorporation, or similar organizational documents with the applicable governmental authorities pursuant to applicable state law; and (d) all other actions that the Debtors or the Reorganized Debtors determine to be necessary or appropriate. All such restructuring transactions shall be deemed authorized and approved in all respects without any requirement of further action by the security holders, directors, managers, officers, or members of the Debtors or the Reorganized Debtors.
The Debtors or the Reorganized Debtors may, in their discretion, determine to implement the restructuring transactions contemplated by the Plan through alternative structural transactions, including mergers, conversions, dissolutions, transfers of assets, or other corporate restructuring transactions, provided that any such alternative structural transactions shall not have a material adverse effect on the treatment of holders of Claims and Interests under the Plan and shall otherwise be consistent with the terms of the RSA.
Section 5.2 — Continued Corporate Existence and Vesting of Assets
Each Reorganized Debtor shall continue to exist on and after the Effective Date as a separate legal entity, with all the powers of a limited liability company organized under the laws of the State of Ohio (in the case of Reorganized CPS) or a corporation organized under the laws of the State of Delaware (in the case of Reorganized CPS Holdings), in each case pursuant to and in accordance with the applicable New Organizational Documents and applicable law, without prejudice to any right to alter or terminate such existence (whether by merger, dissolution, or otherwise) under applicable state law.
On the Effective Date, pursuant to Bankruptcy Code §§ 1123(a)(5), 1123(b)(3), and 1141(b) and (c), all property of the Estates (including all claims, rights, and causes of action, and including, without limitation, all avoidance actions and the proceeds thereof), shall vest in the applicable Reorganized Debtor free and clear of all Claims, liens, charges, encumbrances, rights, and interests, except as otherwise expressly provided in the Plan or the Confirmation Order. On and after the Effective Date, each Reorganized Debtor may operate its business and may use, acquire, and dispose of property, and compromise or settle any claims, rights, or causes of action without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or the Bankruptcy Rules, other than those restrictions expressly imposed by the Plan, the Confirmation Order, and the New Organizational Documents.
The New Organizational Documents for each Reorganized Debtor — including the amended and restated limited liability company agreement for Reorganized CPS and the amended and restated certificate of incorporation and bylaws for Reorganized CPS Holdings — shall be deemed adopted and effective on the Effective Date without any further action by any party. The forms of the New Organizational Documents shall be filed with the Bankruptcy Court as part of the Plan Supplement.
Section 5.3 — New First Lien Take-Back Term Loan
On the Effective Date, the Reorganized Debtors shall enter into the New First Lien Take-Back Term Loan Credit Agreement, and the New First Lien Take-Back Term Loan shall be issued and effective. The material terms of the New First Lien Take-Back Term Loan are as follows:
Borrower: Reorganized Crestline Packaging Solutions LLC.
Administrative Agent: Ridgeline National Bank, N.A.
Lenders: Those holders of Allowed First Lien Secured Claims that elect to participate in the New First Lien Take-Back Term Loan, with commitments allocated on a Pro Rata basis among such electing lenders.
Principal Amount: $12,500,000.00.