CASE SUMMARY: STG Logistics Pursues Billion-Dollar Equitization Transaction in Ch. 11 With Sale Toggle, Supported by Supermajority Holders of 1st-Out, 2nd-Out Debt; $293.75M DIP Agreement in Hand

Restructuring Support Agreement

The debtors’ RSA term sheet contemplates an equitization transaction, with the option to toggle to one or more sales. It states that the debtors will file a bidding procedures motion within seven business days of the petition date.

Proposed treatment of claims and interests in a sale transaction would generally follow a waterfall, with senior claims paid first before junior claims. Treatment of claims and interests in the proposed equitization transaction is detailed in the RSA HERE. Generally, the RSA contemplates that:

• DIP claimholders would receive 57.5% of new equity on account of new-money claims, subject to dilution from a management incentive plan, or MIP, that would be allocated with up to 10% of the new equity. Rollup DIP claims would receive treatment consistent with the treatment for whichever tranche of debt that they were rolled up from.
• Equipment financing claimholders would receive take-back debt pertaining to relevant collateral.
• FLFO RCF claimholders would elect to receive treatment under an exit RCF facility or receive treatment pro rata with FLFO term loan claims.
• FLFO term claimholders would receive 40% of reorganized equity, subject to MIP dilution, and their pro rata share of a $100 million take-back term loan facility, subject to an allocation of value between the Reception purchaser debtor silo and STG Distribution debtor silo.
• Reception purchaser first lien claimholders would receive their pro rata share of take-back term loans, subject to an allocation of value between the Reception purchaser debtor silo and STG Distribution debtor silo.
• FLSO term loan claimholders would receive their pro rata share of 2.5% of pre-diluted reorganized equity.
• FLTO term loan claimholders would receive no distribution.
• Auto liability claimholders would be unimpaired, subject to acceptance of the plan by the FLSO term loan claim class.
• General unsecured claimholders would receive no distribution.
• Equity interests would receive no distribution.

Exit Financing

According to the debtors, the RSA also includes a commitment from certain holders of FLFO RCF claims to provide an exit RCF facility. In exchange for that commitment, the debtors say they have established a restricted, segregated cash amount, called the “RCF Cash Account,” in the amount of about $25 million for the benefit of the lenders. That amount assumes “100% of FLFO RCF Holders are Committed RCF Holders.”

Special Committee / Releases

The RSA states that a “special committee investigation” overseen by Davd Barse, as disinterested supervisor appointed to Reception Holdings’ board on July 21, 2025, remains ongoing. The special committee is represented by White & Case. The scope of a release to be provided by the debtors remains “subject in all respects” to the conclusion of that investigation.

A list of proposed released parties included in the RSA is provided HERE.

Milestones

The RSA provides the following milestones.

• Jan. 15: Interim DIP order;
• Jan. 19: Engagement of an operational consultant;
• Jan. 26: DS motion;
• Feb. 21: Final DIP order;
• March 28: DS order;
• May 7: Confirmation order; and
• May 17: Plan effective date.

DIP Financing Motion

The debtors say that the ad hoc group is prepared to finance the debtors’ cases with a $293.75 million DIP facility. The facility consists of up to $150 million of new-money loans and a rollup of $143.75 million of FLFO and FLSO term loan claims. A copy of the DIP agreement is available HERE.

According to the RSA, participation in the DIP is offered to all holders of FLFO term loan claims on a pro rata basis, provided holders must collectively offer to assign up to 10% to holders of FLSO term loan claims.

Some $85 million of the new-money DIP facility would be made available upon entry of an interim order, $40 million would be available upon the final order, and $25 million of incremental loans would be made available after the chapter 11 plan becomes effective.

The $143.75 million rollup equates to a rollup of $1.15 of debt for every $1 of new money provided, excluding the $25 million of incremental loans, says Thomas Higbie of PJT, the debtors’ investment banker. Some $97.75 million would be rolled up upon the interim order. Rollup loans would also be subordinate in right of payment and lien priority to new-money DIP loans. Further, FLSO rollup DIP loans would be subordinate to FLFO rollup DIP loans.

The DIP contemplates an 8% interest rate, payable in kind, and the following fees, similarly payable in kind:

• Backstop fee: Backstop parties would receive their pro rata share of a 5.55% backstop fee on the new-money DIP commitments.
• Commitment fee: DIP lenders would receive their pro rata share of a 5% commitment fee for initial new-money DIP loans and a 5% commitment fee on delayed new-money term loan commitments.
• Exit Fee: DIP lenders would also receive their pro rata share of a 5% exit fee on new-money DIP loans.

The debtors argue that the DIP is necessary as the debtors only have about $34 million of cash on hand, “well below a critical liquidity threshold that is necessary to operate their business as a going concern,” according to the DIP motion.

A declaration filed by Higbie states that a number of other financing proposals were considered. One proposal by RenWave would have repaid FLFO term loan claims in full and provided the company with an additional $125 million. Higbie says that proposal was not actionable because it did not have “the requisite support of existing stakeholders.” A revised proposal from RenWave similarly failed to achieve support, according to Higbie. “At a minimum,” that proposal would have resulted in “a value-destructive priming fight,” he states.

A declaration filed by Jason Keyes of AlixPartners, the debtors’ financial advisor, states that the debtors’ minimum liquidity threshold is $50 million, which is the amount required to make approximately two weeks of average disbursements.

The 13-week DIP budget is available HERE.

The DIP contemplates a waiver of the debtors’ 506(c) surcharge right as well as the equitable doctrine of marshaling.

Secured parties would receive an adequate protection package, as outlined by the debtors HERE.

The debtors’ stipulations and releases relating to prepetition liens and claims would be binding on third parties, unless a third party with standing files a challenge during the challenge period. The proposed challenge period is 60 days after the interim order. If an official committee of unsecured creditors committee is appointed, the committee’s challenge period would be 60 days after its appointment.

The proposed budget for the official committee of unsecured creditors investigation is $50,000.

The DIP is subject to milestones consistent with the RSA.

Other Motions

The debtors also filed various standard first day motions, including the following:

• Motion for joint administration
  • The cases will be jointly administered under case No. 26-10258.
• Motion to establish trading procedures
  • The debtors seek to establish trading procedures for common stock of debtor Reception Intermediate Holdings LLC to be able to object to and prevent transfers if necessary to preserve net operating losses. The debtors estimate that as of Oct. 31, 2025, they had approximately $47.5 million of federal NOLs, approximately $12.5 million of state NOLs, approximately $88.5 million of 163(j) carryforwards and approximately $380 million of U.S. federal capital loss carryforwards as well as certain other tax attributes.
• Motion to pay employee wages and benefits
  • The debtors seek authority to pay approximately $18 million in prepetition wage and benefit obligations on an interim basis and approximately $22.7 million on a final basis.
• Motion to use cash management system
  • The company has bank accounts with Wells Fargo, JPMorgan Chase and Banamex.
• Motion to pay trade claims
  • The debtors seek to pay prepetition trade claims, including claims of critical vendors, foreign vendors, 503(b)(9) claimholders and lien claimants, $64.4 million on an interim and $79.5 million on a final basis.
• Motion to maintain insurance programs
• Motion to pay taxes and fees
  • The debtors seek authority to pay approximately $1.26 million in prepetition taxes and fees on an interim and final basis.
• Motion to maintain customer programs
  • The debtors seek authority to maintain customer programs including honoring approximately $7 million in prepetition obligations on an interim and final basis.
• Motion to provide utilities with adequate assurance
• Application to appoint Epiq as claims agent