WEIL:\97485855\13\54457.0008

WEIL, GOTSHAL & MANGES LLP

Ray C. Schrock, P.C. (admitted pro hac vice)

Ryan Preston Dahl (admitted pro hac vice)

Candace M. Arthur (admitted pro hac vice)

Daniel Gwen (admitted pro hac vice)

767 Fifth Avenue

New York, New York 10153

Telephone: (212) 310-8000

Facsimile: (212) 310-8007

HUNTON ANDREWS KURTH LLP

Tyler P. Brown (VSB No. 28072)

Henry P. (Toby) Long, III (VSB No. 75134)

Nathan Kramer (VSB No. 87720)

Riverfront Plaza, East Tower

951 East Byrd Street

Richmond, Virginia 23219

Telephone: (804) 788-8200

Facsimile: (804) 788-8218

Attorneys and Proposed Attorneys for Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF VIRGINIA

RICHMOND DIVISION

------------------------------------------------------------ x

:

In re : Chapter 11

:

CHINOS HOLDINGS, INC., et al., : Case No. 20–32181 (KLP)

:

Debtors.1 : (Jointly Administered)

:

------------------------------------------------------------ x

DEBTORS’ OMNIBUS REPLY TO OBJECTIONS 

TO MOTION OF DEBTORS FOR ENTRY OF 

ORDERS (I) AUTHORIZING THE DEBTORS TO OBTAIN 

POSTPETITION FINANCING, (II) AUTHORIZING THE 

DEBTORS TO USE CASH COLLATERAL, (III) GRANTING 

LIENS AND PROVIDING SUPERPRIORITY ADMINISTRATIVE 

EXPENSE CLAIMS, (IV) GRANTING ADEQUATE PROTECTION TO 

PREPETITION SECURED PARTIES, (V) MODIFYING THE AUTOMATIC STAY, 

(VI) SCHEDULING A FINAL HEARING, AND (VII) GRANTING RELATED RELIEF

Chinos Holdings, Inc. and its debtor affiliates, as debtors and debtors in possession 

in the above-captioned chapter 11 cases (collectively, the “Debtors”) file this omnibus reply to the 

 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification 

number, as applicable, are Chinos Holdings, Inc. (3834); Chinos Intermediate Holdings A, Inc. (3301); Chinos 

Intermediate, Inc. (3871); Chinos Intermediate Holdings B, Inc. (3244); J. Crew Group, Inc. (4486); J. Crew 

Operating Corp. (0930); Grace Holmes, Inc. (1409); H.F.D. No. 55, Inc. (9438); J. Crew Inc. (6360); J. Crew 

International, Inc. (2712); J. Crew Virginia, Inc. (5626); Madewell Inc. (8609); J. Crew Brand Holdings, LLC 

(7625); J. Crew Brand Intermediate, LLC (3860); J. Crew Brand, LLC (1647); J. Crew Brand Corp. (1616); J. 

Crew Domestic Brand, LLC (8962); and J. Crew International Brand, LLC (7471). The Debtors’ corporate 

headquarters and service address is 225 Liberty St., New York, NY 10281.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 1 of 223
2

WEIL:\97485855\13\54457.0008

objections filed to the Motion of Debtors for Entry of Orders (I) Authorizing the Debtors to Obtain 

Postpetition Financing, (II) Authorizing the Debtors to Use Cash Collateral, (III) Granting Liens 

and Providing Superpriority Administrative Expense Claims, (IV) Granting Adequate Protection 

to Prepetition Secured Parties, (V) Modifying the Automatic Stay, (VI) Scheduling a Final 

Hearing, and (VII) Granting Related Relief [Docket No. 31] (the “Motion”).

2

 The relief requested 

by the Motion is opposed on a limited basis by: (i) the official committee of unsecured creditors 

in these Chapter 11 Cases (the “Committee”) (see Docket No. 358) (the “Committee 

Objection”); and (ii) certain of the Debtors’ landlords (collectively, the “Objecting Landlords,”

and together with the Committee, the “Objectors”)

3 (see Docket Nos. 288, 289, 294, 295, 296, 

312, 334, 386, and 418) (such objections and joinders, the “Landlord Objections,” and together 

with the Committee Objection, the “Objections”).

In response, the Debtors have implemented a number of revisions to their proposed 

form of Final Order, filed contemporaneously herewith (as modified, the “Proposed Final 

 2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion 

and the DIP Credit Agreement, as applicable.

3 The Landlord Objections include responses submitted on behalf of the following entities: (i) BPP East Union 

LLC (Docket No. 288) (“BPP Objection”); (ii) Garden City Owner LLC, Legacy Place Properties LLC, Market 

Street Retail South LLC, W/S/M Hingham Properties LLC, W/S Peak Canton Properties LLC, Hilldale Shopping 

Center LLC, W/S Tampa Owner LLC, BP PruCenter Acquisition LLC, Reston Town Center Property LLC, and 

Wilson Canal Place II, LLC (Docket No. 289) (“Garden City Objection”); (iii) Grand Place LLC and STRS L3 

ACQ1 LLC (Docket No. 294) (“Grand Place Objection”); (iv) Brookfield, Property REIT Inc., Hines Global 

REIT, Jones Lang LaSalle Americas, Inc., SITE Centers Corp., Tanger Management, LLC, and Turnberry 

Associates (Docket No. 295) (“Brookfield Objection”); (v) 5616 Bay Street Investors LLC, Brixmor Operating 

Partnership L.P., Centercal Properties, LLC, DDR Deer Park Town Center LLC, ERY Retail Podium LLC, Edens, 

Federal Realty Investment Trust, Pgim Real Estate, Related Companies, Retail Properties of America, Inc., 

Starwood Retail Partners LLC, The Forbes Company, The Macerich Company, Trademark Property Company, 

and Urban Edge Properties L.P. (Docket No. 296) (“Bay Street Objection”); (vi) Atlanta Outlet Shoppes, LLC, 

Bluegrass Outlet Shoppes CMBS, LLC, Westfield, LLC and certain of their landlord affiliates (Docket No. 312) 

(“Atlanta Outlet Objection”); (vii) Eastview Mall, LLC and Pittsford Plaza SPE, LLC. (Docket No. 334) 

(“Eastview Objection”); (viii) Simon Property Group, Inc. (Docket No. 386) (“Simon Objection”); and (ix) 

CBL & Associates Management, Inc. (Docket No. 418).

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 2 of 223
3

WEIL:\97485855\13\54457.0008

Order”), that resolve some, but not all of the Objections.4 The Debtors will also continue in their 

efforts to resolve the Objections if at all reasonably possible in advance of the Court’s hearing on 

this matter.5 To the extent the Objections are not resolved by modifications set forth in the 

Proposed Final Order, the Debtors respectfully submit that such Objections should be overruled

and that the Proposed Final Order should be entered by the Court.

Preliminary Statement

1. The Debtors commenced these chapter 11 cases approximately thirty (30) 

days ago in order to swiftly reorganize as a going concern. All parties must agree that time is of 

the essence for any retailer in bankruptcy, but particularly amidst the unprecedented crises arising 

in the wake of COVID-19. A retail debtor’s successful reorganization is very much the exception, 

not the rule, even before taking into account the extraordinary impact of the pandemic facing our 

country. 

2. The Debtors firmly believe that all stakeholders will be better served by a 

reorganization versus the sort of liquidation suffered by so many retailers in chapter 11. In this 

regard, the Debtors are the only parties tasked to serve as fiduciaries for all stakeholders; the 

Debtors do not serve the interests of any one constituency or client. As fiduciaries, the Debtors 

believe that all suppliers, landlords, vendors, customers, and their more than 10,000 employees 

will benefit by having a healthy, viable, de-leveraged, and re-vitalized business partner for years 

to come in a manner consistent with chapter 11’s more fundamental commitment to the 

 4 The Proposed Final Order is attached hereto as Exhibit A. A redline of the Proposed Final Order to the Interim 

Order is attached hereto as Exhibit B.

5 In addition, the Debtors received informal responses from Comenity Bank and certain governmental authorities 

(collectively, the “Informal Objections”). Each of the Informal Objections has been resolved, and such 

resolutions are reflected in modifications to the Proposed Final Order.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 3 of 223
4

WEIL:\97485855\13\54457.0008

preservation of going concerns. See Bank of Am. Nat’l Tr. & Sav. Ass’n v. 203 N. Lasalle St. 

Partnership, 526 U.S. 434, 453 (1999).

3. To this end, the Debtors entered chapter 11 mindful of the track record for 

retail debtors, and the Debtors fought hard to enter chapter 11 with a clear path to emergence. This 

effort was ultimately successful and memorialized in two fundamental ways: (i) first, a transaction 

support agreement that provides for the full recapitalization of the Debtors’ balance sheet and is 

supported by the overwhelming majority of the Debtors’ funded debt holders (the “TSA”);

6 and 

(ii) second, a $400 million financing package, secured on a junior basis, that provides necessary 

liquidity for these chapter 11 cases and automatically converts to an exit facility upon 

consummation of their chapter 11 plan. In other words, the Debtors entered chapter 11 without 

shutting the door behind them. 

4. The Debtors have already made substantial progress in their reorganization. 

The Debtors have successfully transitioned into chapter 11 with the benefit of the relief granted by 

the Court. The Debtors have built substantial support for their reorganization, as evidenced by the 

overwhelming number of creditors joining the TSA. The Debtors have entered-into more than 80 

trade agreements with critical vendors and business counterparties. Further, the Debtors filed their 

Plan of Reorganization and Disclosure Statement on May 18, 2020, (Docket. Nos. 247, 248), a 

hearing to consider disclosure statement approval is scheduled for June 25, 2020 and, subject to 

approval, the Debtors will seek plan confirmation on or around August 25, 2020.

5. During this time, the Debtors have continued to engage constructively with 

the Committee since its formation on May 13, 2020. The Debtors readily acknowledge the 

 6 As of the date hereof, parties to the TSA include 95.7% of Prepetition Term Lenders, 95.2% of Prepetition IPCo 

Note Holders, 84.7% of the Series A Preferred Stock Holders, and 88.6% of Holders of Common Equity Shares.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 4 of 223
5

WEIL:\97485855\13\54457.0008

substantial efforts by the Committee and its professionals to work constructively in their shared 

goal to drive a successful and efficient reorganization here. Nor should the mere fact that the 

Debtors and the Committee may disagree on certain aspects of the Debtors’ proposed DIP 

Financing be taken to mean that the Debtors and the Committee will not be able to continue to 

work constructively and collaboratively going forward. 

6. But much work remains to be done. The Debtors’ survival, together with 

the jobs of thousands and thousands of men and women, hang in the balance.

7. The Debtors’ proposed DIP financing is, without question, fundamental to 

their ability to reorganize as a going concern. As a baseline matter, the Debtors require access to 

the liquidity provided by their DIP Facility to pay rent, to buy inventory, to pay vendors, to pay 

employees, and to satisfy the costs of administering these chapter 11 cases.7

 There is no real 

dispute in this regard. No objecting party seriously argues that the Debtors do not require DIP 

Financing or that the Debtors should administer these chapter 11 cases on a “cash collateral only” 

basis. Rather, all parties (including Objectors) have effectively acknowledged that the Debtors’ 

proposed financing is essential for the survival and success of this reorganization. 

8. Nor has any party seriously argued that the necessary financing is either 

available from alternative sources or could be incurred on an unsecured or “administrative priority 

only” basis. Rather, DIP financing in the amounts required here is available only because the 

 7 The Debtors’ DIP Budget, as revised on June 2, 2020, and attached to the Proposed Final Order as Schedule 2,

makes clear that the Debtors will have the ability to make rental payments in July 2020 on account of May, June 

and July rent. In addition, the Debtors will pay more than 50% of all claims estimated to hold priority under 

section 503(b)(9) of the Bankruptcy Code (approximately $26 million out of an estimated total of approximately 

$46 million of such priority claims) by July 15, 2020 in accordance with trade agreements entered into by the 

Debtors.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 5 of 223
6

WEIL:\97485855\13\54457.0008

Debtors’ incumbent lenders are willing to “self-prime” their existing liens.

8

 Despite these 

constraints, the Debtors still negotiated a highly attractive financing package with their existing 

lender group and, notably, no Objector has argued that the Debtors’ proposed DIP Financing is 

either “too expensive” in terms of the interest rate and fees payable by the Debtors’ estates or that 

the Debtors have agreed to terms that are, on the whole, materially off-market or draconian.9

 As 

detailed below, the Debtors’ proposed financing is materially consistent with terms regularly 

approved in this District (even on a pre-pandemic basis), and, in any event, reflect a sound exercise 

of business judgment in light of the extraordinary challenges facing these estates.

9. Fundamentally, the matter before the Court is a question of business 

judgment: does the Debtors’ proposed DIP Financing, viewed in terms of both its benefits and 

concessions, reflect a reasonable business judgment under the particular facts and circumstances 

of these chapter 11 cases? See In re L.A. Dodgers LLC, 457 B.R. 308, 313 (Bankr. D. Del. 2011); 

In re YL W. 87th Holdings I LLC, 423 B.R. 421, 441 (Bankr. S.D.N.Y. 2010) (“Courts have 

generally deferred to a debtor’s business judgment in granting section 364 financing.”). The

answer here is clearly “yes.” As a matter of process, the Debtors entered into their DIP Financing 

package with the benefit of advice from experienced professionals, the supervision of disinterested 

 8 No party has asserted that the Debtors could have, or even should have, sought to incur financing secured only 

by unencumbered assets—although such a step is of course required by the Bankruptcy Code before the Debtors 

might incur priming financing. See 11 U.S.C. § 364(c)(2). 

9 The Debtors acknowledge that the Committee has objected to the portion of fees due payable in connection with 

the DIP Facility in the form of reorganized equity upon consummation of the chapter 11 plan contemplated by 

the TSA. As noted at their first day hearing, the Debtors respectfully submit that, while these fees are certainly 

appropriate, any objection with respect to such fees is properly addressed in the context of plan confirmation, and 

the Committee’s disputes in this regard are fully reserved. 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 6 of 223
7

WEIL:\97485855\13\54457.0008

directors, and only after vigorous, arm’s length, and hard-fought negotiations. This independent, 

disinterested process alone supports approval of the Debtors’ business judgment here.10 

10. And, as a matter of substance, the Court’s review should not occur in a 

vacuum or without regard to the broader circumstances at work in these chapter 11 cases. See 

Hr’g Tr. at 734 35:24, In re Lyondell Chem. Co., Case No. 09-10023 (Bankr. S.D.N.Y. March 5, 

2009) (recognizing “the terms that are now available for DIP Financing in the current economic 

environment aren’t as desirable” as in the past). Such consideration should take into account the 

benefits provided under the DIP Facility and the give-and-take necessary for any successful 

commercial negotiation, all in the context of truly extraordinary circumstances arising from our 

present national pandemic. 

11. And, to be clear, the Debtors agree that their financing would be even more 

attractive for prepetition unsecured creditors if all of the concessions demanded by the Committee 

were accepted by their DIP Lenders and Prepetition Secured Parties. But the perfect cannot be the 

enemy of the good, nor can the interest of any one constituency override the Debtors’ informed, 

independent, and disinterested determination that this proposed DIP Financing fairly benefits all 

stakeholders (including general unsecured creditors) here. As even the Objectors must 

acknowledge, all parties benefit from (and require) the liquidity—and path to emergence—

provided by the DIP Facility. To this end, the Debtors respectfully submit that the Objections that 

are not otherwise resolved should be overruled on the merits.

 10 See In re Adelphia Commc’ns Corp., Case No. 02-41729, 2004 WL 1634538, at *3 (Bankr. S.D.N.Y. June 22, 

2004) (“Some predict that equally satisfactory terms could be obtained down the road. That may or may not be 

so. Predictions of that character are, at best, educated guesses, and the Debtor’s determination that this was a risk 

not worth taking, that this package would be difficult if not impossible to replicate in the future, and that 

advantageous terms should be locked in while they could be had, is exactly the kind of business decision that 

the business judgment rule respects. That decision was hardly an abuse of discretion or waste of corporate 

assets.”).

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 7 of 223
8

WEIL:\97485855\13\54457.0008

The Objections and the Debtors’ Proposed DIP Modifications

12. The Objections fall into two principal categories. First, the Objecting 

Landlords primarily oppose the Debtors’ undertaking to grant section 506(c) and 552(b) waivers 

in favor of the Prepetition Secured Parties upon entry of the Final Order unless rental payments 

are provided with priority payment status or are otherwise paid on a superpriority basis.11 Second, 

the Committee opposes entry the Final DIP Order on three principal bases: (i) the liens and claims 

granted under the DIP Order, (whether to secure the DIP Facility or as adequate protection) should 

not have recourse to unencumbered assets, such as avoidance action proceeds; (ii) the Committee 

should be provided with a mechanism to assert derivative standing to assert claims that may exist 

in favor of Debtors that are limited liability companies organized under Delaware law; and (iii) the 

Committee largely joins in the Landlord Objectors’ opposition to section 506(c) and 552(b) 

waivers unless rental payments and certain administrative claims are granted superpriority status 

and are paid in full outside consummation of a chapter 11 plan.

12 

13. In response, the Debtors have made substantial efforts to negotiate further 

with their DIP Lenders and Prepetition Secured Parties to reach a consensual resolution or, at the 

very least, minimize the issues requiring adjudication by the Court. To this end, the Debtors’ 

revised Proposed Final Order, among other things:

• requires the Prepetition Secured Parties to marshal their adequate protection 

liens and claims away from the proceeds of avoidance actions;

 11 The Debtors note that certain landlords objected on the basis that the DIP Facility fails to provide such parties 

with “adequate protection.” See, e.g., Atlanta Outlet Objection; Bay Street Objection. To the extent any such 

parties seek adequate protection, they must do so by motion and on an appropriate record—not through an 

objection to the Debtors’ proposed financing. 

12 The balance of the Committee’s objections are addressed at Part V, below.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 8 of 223
9

WEIL:\97485855\13\54457.0008

• In other words, such adequate protection will have recourse to 

avoidance action proceeds only if there are truly no other assets 

available to satisfy such claims.

• increases the Committee’s investigation budget from $50,000 to $200,000;

• extends the Committee’s Challenge Period to August 3, 2020;

13

• provides a mechanism for the Committee to preserve claims it believes may 

exist that are held by the five “IPCo” Debtors that are limited liability 

companies organized under Delaware law—notwithstanding the fact that 

that substantially all creditors of those Debtors actually oppose the 

Committee’s Objection;

• includes fees and expenses of Committee members incurred pursuant to 

Section 503(b)(3)(F) in the Carve Out;

• provides the Committee with enhanced reporting and information delivery

on terms consistent with reporting delivered to other key stakeholders, 

including prior notice of any proposed DIP Amendment; and

• the Debtors’ current DIP Budget provides that (i) the Debtors will have the 

ability to pay May, June, and July rent in July 2020; and (ii) more than 50% 

of all estimated 503(b)(9) claims will be paid in July 2020 (approximately 

$26 million out of an estimated total of approximately $46 million of such 

priority claims).

The Debtors believe these modifications materially improve the terms and conditions of their

already-favorable financing package. The Debtors also remain committed to continuing to narrow 

or resolve various aspects of the Objections if possible ahead of the hearing.

14. The Debtors further acknowledge the Committee is particularly focused on 

claims and causes of action the Committee believes may exist in connection with certain balance 

sheet transactions undertaken by the Debtors in 2016 and 2017, and which are subject to the 

stipulations and releases granted under the Final DIP Order—but that remain subject to a

 13 For reference, and subject to Court approval, the Debtors anticipate completing solicitation with respect to their 

Plan by mid-August 2020. The extension demanded by the Committee by its Objection (i.e., 120 days from the 

Final Hearing), would cause the Challenge Period to run until October 2020, (Comm. Obj. ¶ 67), well past the 

point in time by which the Debtors intend to emerge from chapter 11.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 9 of 223
10

WEIL:\97485855\13\54457.0008

customary challenge period in favor of the Committee and other parties. As the Court is aware, 

these transactions have already been litigated prior to the commencement of these bankruptcy 

cases, and the Debtors’ releases in this regard were further subject to an independent investigation 

undertaken by a disinterested estate fiduciary, namely the Review Committee of Debtor J. Crew 

Operating Corp. In this process, the Review Committee separately engaged pre-eminent financial 

and legal advisors in the form of Goldin Associates, LLC and Quinn Emanuel Urquhart & Sullivan 

LLP, respectively. 

15. The Review Committee has independently determined to consent to the 

relevant stipulations contemplated by the Final DIP Order, stating that litigation on account of the 

transactions at issue would be “speculative and unlikely to lead to any value to the estate of [J. 

Crew Operating Corp.] or any of its subsidiaries.”14 The Debtors appreciate that the Committee 

has its own investigation to undertake in this regard, and, as noted above, the Debtors have secured 

concessions to both increase funding for such investigation and extend the timeframe in which the 

Committee might complete that investigation. But the Debtors are hopeful the Committee will not 

simply dispute the Review Committee’s analysis and conclusions for its own sake. 

16. The Debtors further acknowledge that they may be unable to resolve all 

Objections in advance of the Court’s hearing, particularly with respect to the section 506(c) and 

552(b) waivers contemplated by the Proposed Final Order. The Debtors respectfully submit that 

such waivers were fundamental components of the overall financing and adequate protection 

package negotiated here, and the Debtors would not have been able to incur their DIP Financing 

 14 Response of the Review Committee of J. Crew Operating Corp. to Motion of Debtors for Entry of Orders (I) 

Authorizing the Debtors to Obtain Postpetition Financing, (II) Authorizing the Debtors to Use Cash Collateral, 

(III) Granting Liens and Providing Superpriority Administrative Expense Claims, (IV) Granting Adequate 

Protection to Prepetition Secured Parties, (V) Modifying the Automatic Stay, (VI) Scheduling a Final Hearing, 

and (VII) Granting Related Relief [Docket No. 414] (the “Review Committee Response”) ¶ 25, filed on 

June 1, 2020. 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 10 of 223
11

WEIL:\97485855\13\54457.0008

(which is being provided on a junior basis) or use Cash Collateral on a consensual basis absent this

undertaking. And, as detailed below such provisions are customarily negotiated on financings 

approved by this Court and others. More fundamentally, no Prepetition Secured Creditor is 

obtaining a “windfall” on account of such waivers: unlike other retail bankruptcies, these chapter 

11 cases are not being run as a sort of global “GOB sale” by which secured creditors are simply 

liquidating collateral through piecemeal dispositions. Rather, the Debtors are de-leveraging, 

recapitalizing, and reorganizing on the strength of this DIP Facility; secured lenders are also 

equitizing nearly $2 billion of debt in this process. There can be no doubt that all stakeholders 

will benefit if and when the Debtors succeed in this regard.

17. Similarly, the Debtors acknowledge that they may be unable to resolve the 

Committee’s request that unencumbered assets, including avoidance action proceeds, be exempted 

from the liens or claims, including the Adequate Protection Obligations, granted by the Proposed 

Final Order. In this regard, the Committee is presumably concerned that the relief granted here 

would unduly prejudice unsecured creditors. But this argument overstates the case. The Debtors’ 

Plan provides for more than $50 million of aggregate cash distributions to general unsecured 

creditors. See Plan §§ 4.6, 4.7.15 The Plan further provides for payment, in full, of statutory fees, 

administrative claims, priority claims, priority tax claims, and cure obligations. See Plan §§ 2.1, 

2.4, 2.5, 8.1. Additionally, the Plan provides for the waiver of what would otherwise be substantial 

deficiency claims arising under the Debtors’ $1.4 billion Prepetition Secured Term Loan and $350 

million of secured IPCo Notes. See Plan §§ 4.6, 4.7. The Plan further provides for a waiver of 

any diminution in value claims that could arise in favor of Prepetition Secured Term Loan Lenders 

 15 “Plan” means the Joint Prearranged Chapter 11 Plan of Reorganization of Chinos Holdings, Inc. and Its Affiliated 

Debtors, dated as of May 18, 2020 (Docket No. 248). As noted above, a hearing to consider approval of the 

Disclosure Statement with respect to the Plan is scheduled for June 25, 2020—i.e., three (3) weeks from today.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 11 of 223
12

WEIL:\97485855\13\54457.0008

and IPCo Noteholders—which waiver has been granted by the relevant parties pursuant to the 

Debtors’ Proposed Final Order. See Proposed Final Order ¶ 12(e), (g); Plan § 2.1(b).16 The 

Debtors submit that these facts should resolve any concerns that their proposed financing is 

somehow intended to unduly prejudice prepetition general unsecured creditors. 

18. Moreover, the granting of liens and claims with respect to unencumbered 

assets reflects the requirements imposed by the Bankruptcy Code with respect to postpetition 

financing. The Debtors must first look to grant liens on unencumbered assets before they may 

incur senior or priming financing, which is precisely why the DIP Liens and claims have recourse 

to such assets, see 11 U.S.C. § 364(c)(2). Nor can the Debtors incur priming financing without 

also granting administrative priority status to the DIP Lenders, see 11 U.S.C. § 364(c)(1). And 

here, the Debtors could not have obtained such financing without granting such liens and claims: 

the DIP Lenders would not have agreed to commit $400 million of new capital without being able 

to secure that new capital by recourse to substantially all the Debtors’ assets, including previously 

unencumbered assets—particularly since that new capital is already being provided on a junior 

basis to the Debtors’ prepetition ABL Facility.

19. With respect to adequate protection, section 507(b) of the Bankruptcy Code 

in fact requires that parties entitled to adequate protection “shall” receive superpriority 

administrative expense status for their claims. See 11 U.S.C. 507(b) (“[S]uch creditor’s claim 

under such subsection shall have priority over every other claim allowable under such subsection.”

 16 See, e.g. Proposed Amended Order ¶ 12(e): “Notwithstanding their status as 507(b) Claims, the Prepetition 

ABL Secured Parties’ Adequate Protection Claims may be satisfied in a plan of reorganization or liquidation 

confirmed in the Chapter 11 Cases in any manner set forth in such plan if the Requisite Lenders (as defined 

in the Prepetition ABL Credit Agreement) consent to such treatment, which shall include any class including 

such Requisite Lenders voting to accept such plan of reorganization or plan of liquidation.”); see also Plan 

§ 2.1(b): “[T]he holders of any adequate protection claims granted by the DIP Order will not receive any 

recovery on account of such claims, having waived such recovery solely for purposes of the Plan.” 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 12 of 223
13

WEIL:\97485855\13\54457.0008

(emphasis added)). Section 507(b) does not authorize, or even permit (“shall”), unencumbered 

assets to be exempted from claims entitled to this priority. Rather, such claims are required to 

have recourse to all the Debtors’ assets—there is no statutory exemption for unencumbered assets. 

That said, and as noted above, the Debtors have successfully negotiated that their Prepetition 

Secured Parties will marshal such adequate protection liens and claims away from avoidance 

action proceeds, thereby preserving such value for the benefit of other administrative, priority, and 

prepetition creditors absent a wholesale failure in adequate protection. 

20. In sum, the Debtors’ proposed financing results from vigorous, arm’s length 

negotiation, reflects fair and market terms, including with respect to the waivers and adequate 

protection contemplated by the Proposed Final Order, and has in fact improved since the Petition 

Date with the benefit of the Committee’s input and engagement. The Debtors therefore 

respectfully submit that the Objections should be overruled, and that their proposed DIP Financing 

should be approved on a final basis.

Reply

21. The following Reply is organized in five (5) parts. First, the Debtors further 

establish that the DIP Facility reflects a sound exercise of business judgment and benefits all 

stakeholders. Second, the Debtors provide further support for the section 506(c) and 552(b) 

waivers provided by the Final Order. Third, the Debtors further demonstrate why recourse to 

unencumbered assets in favor of the DIP Facility and adequate protection obligations is necessary 

and appropriate here. Fourth, the Debtors’ address the Committee’s concerns with respect to the 

status of claims that may be held by limited liability companies organized under Delaware law. 

Finally, the Debtors address the balance of the Objections.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 13 of 223
14

WEIL:\97485855\13\54457.0008

I. The DIP Facility Benefits the Debtors’ Estates and All

Stakeholders and Reflects a Sound Exercise of Business Judgment

22. There is no real dispute that all stakeholders benefit from the Debtors’ 

proposed DIP Facility. The DIP Facility:

• provides vitally necessary liquidity to pay wages, vendors, suppliers, and 

landlords, and administer these chapter 11 cases;

• is attractively priced in terms of both its interest rate and minimal cash fees;

• provides for the waiver of any diminution in value claims, if any, held by 

the Prepetition Secured Parties where such parties vote in favor of a chapter 

11 plan;

• provides a substantial investigation budget in favor of the Committee, as 

well as a customary challenge period in favor of third parties; 

• provides junior financing with respect to the Prepetition ABL Facility, 

thereby obviating the need for a contested priming fight there; and

• provides a clear path to emergence by including a commitment to convert 

to an exit facility upon consummation of the Debtors’ Plan;

The DIP Facility positions the Debtors’ reorganization for success, and, on this record alone, the 

DIP Facility can and should be approved as a sound exercise of business judgment. Indeed, the 

balance of Objections may be characterized as trying to “cherry pick” certain provisions required 

to obtain the benefits arising from the DIP Facility as a whole. Of course, such concessions reflect 

the realities of commercial negotiations, and simply because the DIP Facility is imperfect is no 

basis on which parties should ignore its clear benefit to these chapter 11 estates.

23. Further, the DIP Facility results from an independent, arm’s length 

negotiation led by the disinterested fiduciaries. See First Day Declaration ¶ 63 (describing Chinos 

A Special Committee). As noted above, the Debtors vigorously negotiated with their DIP Lenders 

in a process where each side was represented by experienced professionals. While this process 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 14 of 223
15

WEIL:\97485855\13\54457.0008

was hard fought, the Debtors submit that all parties acted in good faith and on a commercially 

reasonable basis. 

24. No party seriously argues otherwise. Admittedly, the Committee asserts in 

passing that the DIP Facility may somehow have wrongly benefitted certain unidentified

“Insiders.” This is not correct. To the extent “insiders” may also be prepetition lenders, such 

parties should and will, of course, benefit from the stipulations granted pursuant to the Final DIP 

Order in that capacity—but only in that capacity.

17 But the Committee’s objection overstates the 

case and provides no basis to support their assertion that such parties be treated differently at this 

juncture. Should any insiders hold debt such that they are subject to the releases and stipulations 

contemplated by the Final DIP Order, such releases and stipulations are, again, being granted 

solely in such parties’ capacity as lenders. Moreover, such releases and stipulations remain subject 

to the challenge period in favor of the Committee and third parties. See Proposed Final Order ¶ F.

 

Thus, no parties are improperly or prematurely obtaining releases absent independent oversight 

and an opportunity for challenge—separate and apart from the conclusions already drawn by the 

Review Committee.

II. Section 506(c) and 552(b) Waivers Should Be Granted

25. The Committee and Landlords assert that the Proposed Final Order should 

not include waivers of rights under sections 506(c) or 552(b) of the Bankruptcy Code. At their

core, these Objections are premised on the notion that the DIP Lenders must agree to fund rent 

expense, in full, ahead of all other unsecured claims before such waivers may be granted. See, 

 17 See, e.g., Proposed Final Order ¶ F(iv), which grants Releases to “DIP Secured Parties and the Prepetition Secured 

Parties (in each case, solely in their capacities as such) and each of their respective successors, assigns, affiliates, 

subsidiaries, parents, officers, shareholders, directors, employees, attorneys, and agents, past, present, and future, 

and their respective heirs, predecessors, successors, and assigns, each solely in their capacities as such . . . .” 

(emphasis added).

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 15 of 223
16

WEIL:\97485855\13\54457.0008

e.g., Committee Objection at p.2; Grand Place Obj. ¶ 12 (arguing that because the “lenders will 

substantially benefit from the continued use and occupancy of Debtors’ retail location . . . the 

lenders should be required to fund the expenses of that benefit rather than escape any responsibility 

for occupancy costs through attempted waivers of Sections 506(c) and 552”); Brookfield Obj. at ¶ 

13 (same).

26. There is no legal basis for such a demand. As a starting point, a section 

506(c) surcharge is itself an extraordinary remedy. A surcharge may be applied only in “sharply 

limited” circumstances to avoid a windfall where expenses have been incurred solely and directly 

for the surcharged party’s benefit. See In re Towne, Inc., 536 F. App’x 265, 268 (3d Cir. 2013).

Conversely, courts consistently acknowledge that section 506(c) and 552(b) waivers may be 

granted within the totality of a financing package that provides material benefit to a chapter 11 

estate. Indeed, courts in this district and elsewhere have regularly authorized such waivers. See, 

e.g., In re Craftworks Parent, LLC, No. 20-10475 (BLS) (Bankr. D. Del. May 20, 2020); In re 

Pier 1 Imports, Inc., No. 20-30805 (KRH) (Bankr. E.D. Va. March 13, 2020); In re Gymboree 

Group, Inc., No. 19-30258 (KLP) (Bankr. E.D. Va. Feb. 15, 2019); In re Gymboree Corp., No 17-

32986 (KLP) (Bankr. E.D. Va. July 16, 2017); In re Penn Virginia Corp., No. 16-32395 (KLP) 

(Bankr. E.D. Va. June 8, 2016); In re Alpha Natural Resources, Inc., No. 16-33896 (KRH) (Bankr. 

E.D. Va. Sept. 17, 2015); In re Patriot Coal, No. 15-32450 (KLP) (Bankr. E.D. Va. June 4, 2015).

27. Nor do any cases require that rent expense be elevated to superpriority 

status, or require that 503(b)(9) claims must be paid in full ahead of plan consummation as a 

precondition for such waivers. Pier 1 Imports makes clear that rent expense and similar obligations 

are entitled only to administrative priority—not an absolute guaranty of payment or accelerated 

payment outside a chapter 11 plan. In re Pier 1 Imps., Inc., Case No. 20-30805 (KRH), 2020 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 16 of 223
17

WEIL:\97485855\13\54457.0008

Bankr. LEXIS 1242, at *12 (Bankr. E.D. Va. May 10, 2020) (“[T]o the extent that the Debtors are 

obligated to pay rent and fail to timely pay such rent, the Lessors are entitled to an administrative 

expense claim.”); accord In re Circuit City Stores, Inc., 447 B.R. 475, 511 (Bankr. E.D. Va. 2009)

(“If a debtor fails to perform its obligations under § 365(d)(3), all a Lessor has is an administrative 

expense claim under § 365(d)(3), not a claim entitled to superpriority.”). Indeed, Congress has 

made it clear that claims for rent are not entitled to the sort of superpriority demanded by the 

Objectors here by enacting sections 545(3) and (4) of the Bankruptcy Code, which avoids liens for 

“rent” and for a “lien for distress of rent.” As a result, the Objectors’ assertion that section 506(c) 

and 552(b) waivers may be granted only if rental payments are either guaranteed in full or afforded 

superpriority status cannot be squared with the Bankruptcy Code and established case law.

28. The Objectors’ efforts to condition a section 506(c) waiver on the Debtors’ 

absolute undertaking to pay rent further misunderstands the application of section 506(c) itself. 

Section 506(c) does not permit an involuntary surcharge where the costs in question only indirectly 

or incidentally benefit a secured creditor. In re Flagstaff Foodservice Corp., 739 F.2d 73, 76 (2d 

Cir. 1984). There can be no surcharge where expenses fail to provide a “clear benefit” to the 

secured creditor. In re Ware, 2014 WL 2508731 Case No. 12-30566, 2014 WL 2508731, at *6 

(Bankr. E.D. Va. June 3, 2014) (Phillips, J.). Rather, “[t]he debtor in possession also must show 

that its funds were expended primarily for the benefit of the creditor and that the creditor directly 

benefited from the expenditure.” In re Flagstaff Foodservice Corp., 762 F.2d 10, 12 (2d Cir. 1985) 

(emphasis added). 

29. The Debtors’ obligation to pay rent per section 365(d)(3) provides, at best, 

an indirect and unsolicited benefit to the Prepetition Secured Parties. Here, the Debtors will still 

incur rental obligations per section 365(d)(3) whether or not the Prepetition Secured Parties derive 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 17 of 223
18

WEIL:\97485855\13\54457.0008

any benefit from the Debtors’ retail footprint. In fact, the Debtors could completely remove all 

inventory from store locations (assuming “shelter in place” or similar orders no longer apply), and 

the Debtors would still incur rental obligations unless or until leases are rejected. Such expenses

are therefore not ‘necessary’ such that surcharge is even available pursuant to section 506(c):

“‘Necessary’ costs are those that are unavoidably incurred by a trustee in the preservation or 

disposal of the secured property.” Ware, 2014 WL 2508731, at *6 (emphasis added). Ongoing 

rent expense is not “unavoidably incurred” for the benefit of the Prepetition Secured Parties here; 

rather, the Debtors will continue to incur rent unless or until leases are rejected—regardless of 

whether the Prepetition Secured Parties derive any benefit whatsoever. 

30. Moreover, the Debtors’ current budget provides them with the ability to 

make rental payments in the first three weeks of July, including ‘catch up’ payments for rent 

deferred pursuant to the relief granted by the Order (I) Extending Time for Performance of 

Obligations Arising Under Unexpired Non-Residential Real Property Leases, and (II) Granting 

Related Relief [Docket No. 323], entered on May 26, 2020, and the Debtors will pay more than 

half of all estimated 503(b)(9) claims under that budget as well. And, should landlords seek 

adequate protection, they are free to do so by motion, on an appropriate record, and with the 

Debtors having an opportunity to respond.18 In any event, a debtor’s business judgment to grant 

506(c) or 552(b) waivers are in no way contingent on also providing landlords with an absolute 

guaranty of timely payment. Rather, such a waiver is entirely appropriate where, as a here, such a 

 18 To date, no such motions have been filed. Furthermore, as already ruled by the Court with respect to the Debtors’ 

rent deferral motion, “[a]s for the request for adequate protection. . . . Judge Huennekens found that the deferred 

payment of rent does not decrease the value of any lessor’s interest in its property. . . . Moreover, under the 

proposed restructuring agreement and DIP facility, it’s anticipated that the remainder of deferred rent will be paid 

within a few short months after the effect—and no later than the effective date of the plan. Judge Huennekens 

found that this assurance of cure payment and continued payment of no-rent payments was sufficient to protect 

the landlords to the extent that adequate protection is required. I agree.” In re Chinos Holdings, Inc., Case No. 

20-32181 (KLP) (Bankr. E.D. Va. May 26, 2020), Hr’g Tr. at 62.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 18 of 223
19

WEIL:\97485855\13\54457.0008

waiver is granted within the context of a DIP financing that benefits all parties by providing a clear 

path to reorganization. 

31. The Committee’s reliance on an oral ruling from the United States 

Bankruptcy Court for the District of Delaware in In re Sports Authority Holdings, No. 16-10527 

(MFW) (Bankr. D. Del. Apr. 26, 2016), is similarly misplaced. As a procedural matter, the 

Sports Authority court neither issued a precedential ruling, nor is a ruling of the Delaware 

bankruptcy court binding on courts in this jurisdiction. More fundamentally, Sports Authority

actually demonstrates precisely why a 506(c) waiver is entirely appropriate here. The Sports 

Authority court denied a 506(c) waiver only after the debtors filed a GOB motion and informed 

the court that “it has become apparent that the debtors will not reorganize under a plan, but instead, 

will pursue a sale,” and where the budget provided no certainty whatsoever with respect to payment 

of rental or other administrative expenses, other than limited provisions for GOB leases. See In re 

Sports Authority Holdings, No. 16-10527 (MFW) (Bankr. D. Del. Apr. 26, 2016), Hr’g Tr. at 194-

195. 

32. These cases are clearly on very different footing. Here, the Debtors are 

pursuing a Plan with overwhelming levels of creditor support. As noted above, that Plan already 

contemplates payment, in full, of all statutory fees, administrative claims, priority claims, priority 

tax claims, and cure obligations—and further incorporates waivers of potentially substantial 

deficiency claims and diminution in value claims. By comparison, secured lenders in Sports 

Authority were using chapter 11 to liquidate collateral—nothing more. Here, the Debtors’ secured 

lenders have agreed to equitize almost $2 billion of debt; in Sports Authority, those secured lenders 

were simply conducting a wholesale GOB process. Here, the Debtors’ prearranged Plan is 

supported, as of the date of this Reply, by 95.7% of Prepetition Term Lenders, 95.2% of Prepetition 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 19 of 223
20

WEIL:\97485855\13\54457.0008

IPCo Note Holders, 84.7% of the Series A Preferred Stock Holders, and 88.6% of Holders of 

Common Equity Shares—and with more than 80 critical vendors having executed trade 

agreements to further support the Debtors. In Sports Authority, no such support was in place. 

Further, the Debtors have a budget that provides the Debtors with the ability to pay for May, June 

and July rent in the first three weeks of July 2020, as well as more than half of their estimated 

503(b)(9) claims; in Sports Authority, no comparable expenses were budgeted to be paid. See In 

re Sports Authority Holdings, No. 16-10527 (MFW) (Bankr. D. Del. May 3, 2016), Hr’g Tr. at 10-

11. In short, the Debtors submit that the facts of these chapter 11 cases, especially in comparison 

to Sports Authority, clearly support their business judgment to waive surcharge rights as provided 

by the Proposed Final Order. 

33. A similar analysis applies to the Debtors’ determination to provide a section

552(b) waiver here. As with section 506(c) waivers, such section 552(b) waivers are customarily 

negotiated as part of DIP financing—regardless of whether or not a party objects. See, e.g., In re 

Craftworks Parent, LLC, No. 20-10475 (BLS) (Bankr. D. Del. May 20, 2020); In re Pier 1 Imports, 

Inc., No. 20-30805 (KRH) (Bankr. E.D. Va. March 13, 2020); In re Gymboree Group, Inc., No. 

19-30258 (KLP) (Bankr. E.D. Va. Feb. 15, 2019); In re Gymboree Corp., No 17-32986 (KLP) 

(Bankr. E.D. Va. July 16, 2017); In re Penn Virginia Corp., No. 16-32395 (KLP) (Bankr. E.D. Va. 

June 8, 2016); In re Alpha Natural Resources, Inc., No. 16-33896 (KRH) (Bankr. E.D. Va. Sept. 

17, 2015); In re In re Patriot Coal, No. 15-32450 (KLP) (Bankr. E.D. Va. June 4, 2015). Indeed, 

it would be an extraordinary case where such a waiver was not granted. Furthermore, a section 

552(b) waiver, being typical in cash collateral orders, was part of the negotiations for consensual 

use of the cash collateral in these chapter 11 cases.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 20 of 223
21

WEIL:\97485855\13\54457.0008

34. Such an approach recognizes, yet again, that invoking 552(b)’s limited 

‘equities of the case’ exception is an extraordinary remedy—not the rule. Here, the Debtors 

ultimately agreed to waive this limited right as part of the overall give and take in their DIP 

negotiations. And, particularly given section 552(b)’s limited application, the Debtors respectfully 

submit that such a concession was a reasonable determination in light of their DIP Facilities’

manifest benefits. 

III. DIP Claims and Adequate Protection Claims Appropriately

Have Recourse to Unencumbered Assets, Including Avoidance Action Proceeds

35. The Committee argues that DIP Claims and adequate protection should not 

have recourse (whether through liens or administrative claims) to avoidance actions proceeds and 

certain other unencumbered assets. See Committee Objection ¶¶ 49–51. In this regard, the 

Committee argues, “[a]voidance powers are intended to allow the debtor in possession to gain 

recoveries for all unsecured creditors.” Id. ¶ 49.

36. This position is not correct or it is, at best, incomplete. The Bankruptcy 

Code does not reserve either avoidance actions in particular, or unencumbered assets in general, 

for the benefit of prepetition, unsecured creditors alone. Quite the opposite. Sections 364 and 

507(b) require that the Debtors look first to unencumbered value when raising capital or providing 

adequate protection. Section 550 of the Bankruptcy Code preserves avoided transfers for the 

benefit of the chapter 11 estate—including administrative and priority claimants. See In re 

Fleming Packaging Corp., No. 03-82408, 2007 WL 4556985, at *6 (Bankr. C.D. Ill. Dec. 20, 

2007) (“This Court does not consider Section 550(a)’s ‘for the benefit of the estate’ phraseology 

as a statutory requirement that the unsecured creditors benefit directly from the recovery of an 

avoided transfer, i.e., that the recovered funds end up in the pockets of the unsecured creditors.”). 

The disposition of such assets remains a question of the debtors’ sound business judgment in terms 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 21 of 223
22

WEIL:\97485855\13\54457.0008

of how such disposition benefitsthe chapter 11 estate as a whole: “Section 550(a) speaks of benefit 

to the estate—which in bankruptcy parlance denotes the set of all potentially interested parties—

rather than to any particular class of creditors.” Mellon Bank, N.A. v. Dick Corp., 351 F.3d 290, 

293 (7th Cir. 2003) (emphasis in original).

37. The same rule applies here. The Debtors’ agreement to grant their DIP 

Lenders’ recourse to unencumbered assets, including avoidance action proceeds, reflects the 

Debtors’ determination that such a concession would benefit their estates as a whole, and only 

after substantial negotiation. In this regard, all parties (including the Objectors) agree that these 

chapter 11 cases require a substantial amount of postpetition financing. The Bankruptcy Code, in 

turn, requires the Debtors to obtain financing on an administrative basis or secured by 

unencumbered assets before they might otherwise incur financing secured by encumbered assets. 

See 11 U.S.C. § 364(c)(1), (2). Nor would the DIP Lenders agree to provide financing—which is 

being provided on a junior basis with respect to approximately $375 million of obligations 

outstanding under the Debtors’ Prepetition ABL Facility—without recourse to such unencumbered 

assets. And, based on the independent determination reached by the Review Committee, these 

estates have lost no material value by virtue of the recourse the DIP Lenders may have to claims 

arising from the 2017 Transaction. (Review Comm. Resp. ¶¶ 24–25.)

38. This analysis applies with equal force to the Debtors’ determination to 

provide adequate protection with recourse to such unencumbered assets. Section 507(b) is clear 

that, where adequate protection fails, a secured creditor’s adequate protection claim “shall have 

priority” over every other administrative claim. 11 U.S.C. § 507(b) (emphasis added). Section 

507(b) does not contemplate, or even permit, assets to be excluded from such claims, absent 

agreement. Further, and as noted above, the Debtors have successfully negotiated with their 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 22 of 223
23

WEIL:\97485855\13\54457.0008

Prepetition Secured Parties such that those parties have agreed to marshal their adequate protection 

liens and claims away from avoidance action proceeds. In other words, the Prepetition Secured 

Parties will seek recourse against avoidance action proceeds only in a scenario where their 

adequate protection completely fails to satisfy any diminution in value otherwise incurred by these

parties. Such an approach is thus entirely consistent with the requirements of Section 507(b) The 

Debtors’ business judgment in this regard is further supported by the Review Committee’s 

independent determination that claims arising from the 2017 Transaction are “speculative and 

unlikely to lead to any value to the estate of [J. Crew Operating Corp.] or any of its subsidiaries.”

(Review Comm. Resp. ¶ 25.).

39. Notably, courts in this district and others regularly approve liens on, and 

claims with recourse to, avoidance action proceeds in the same context and form as requested by 

the Debtors in the Proposed Final Order. See, e.g., In re Toys “R” Us, Inc., Case No. 17-34665 

(KLP) (Bankr. E.D. Va. Oct. 24, 2017) (approving liens on proceeds of avoidance actions for the 

North American Debtors, as defined therein); In re Toys “R” Us, Inc., Case No. 17-34665 (KLP) 

(Bankr. E.D. Va. Oct. 25, 2017) (approving liens on proceeds of avoidance actions for the Taj

Debtors, as defined therein); In re Penn Virginia Corporation, Case No. 16-32395 (Bankr. E.D. 

Va. June 8, 2016) (KLP); In re Alpha Natural Resources, Inc., Case No. 15-33896 (Bankr. E.D. 

Va. Sept. 17, 2015) (KRH); In re BCBG Max Azria Glob. Holdings, LLC, No. 17-10466 (SCC) 

(Bankr. S.D.N.Y. Mar. 28, 2017); In re Int’l Shipholding Corp., No. 16-12220 (SMB) (Bankr. 

S.D.N.Y. Sept. 21, 2016); In re Breitburn Energy Partners LP, et al., No. 16-11390 (SMB) (Bankr. 

S.D.N.Y. Aug. 19, 2016).

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 23 of 223
24

WEIL:\97485855\13\54457.0008

IV. The Debtors Have Modified the DIP Order to

Provide the Committee with a Mechanism to Preserve 

Claims of Limited Liability Companies Organized Under Delaware Law

40. As part of its Objection, the Committee has requested that the Debtors 

provide a mechanism by which the Committee can, in effect, obtain standing to prosecute 

derivative claims on behalf of limited liability companies organized under Delaware law. The 

Debtors understand the Committee’s focus in this regard arises from various provisions of the 

Delaware Limited Liability Company Act, which provide that a “proper plaintiff” may only be “a 

member or an assignee” of a limited liability company. See 6 Del. Code § 18-1002 (2016). In 

other words, creditors may be unable to obtain derivative standing on behalf of a limited liability 

company organized under Delaware law. In particular, the Committee has identified J. Crew 

Domestic Brand, LLC as potentially holding valuable claims that may be otherwise released if the 

Company could be precluded from obtaining standing to assert claims on its behalf. See

Committee Objection ¶ 69.

41. The Committee’s demand in this regard is based on what may be a 

misunderstanding of the Debtors’ corporate and capital structure. As the Committee rightly notes, 

(see Comm. Obj. ¶ 69), five (5) Debtors are limited liability companies organized under Delaware 

law: (i) J. Crew Brand Holdings, LLC; (ii) J. Crew Brand Intermediate, LLC; (iii) J. Crew Brand, 

LLC; (iv) J. Crew Domestic Brand, LLC; and (v) J. Crew International Brand, LLC (collectively, 

the “IPCo Debtors”). The IPCo Debtors are not engaged in an active trade or business; they do 

not have trade creditors; they are not parties to leases or contracts in the ordinary course; and they 

do not have employees. The IPCo Debtors are either holding companies or otherwise exist solely 

for the purpose of having issued the approximately $350 million of secured IPCo Notes, servicing 

the IPCo Notes, and/or owning intellectual property that collateralizes the IPCo Notes. In fact, 

those entities may not have any unsecured creditors at all.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 24 of 223
25

WEIL:\97485855\13\54457.0008

42. It must also be observed that the Committee’s demand to pursue litigation 

on behalf of the IPCo Debtors is not supported by the IPCo Debtors’ actual creditors—i.e., the 

IPCo Noteholders. Holders of 95.2% IPCo Notes have executed the TSA and, as result, those 

parties have no interest in seeing the Committee pursue litigation that has been described as 

“speculative, and unlikely to lead to any value to the estate of [J. Crew Operating Corp.] or its 

subsidiaries” on behalf of the IPCo Debtors. (Review. Comm. Resp. ¶ 25.) On this record then, 

the Debtors respectfully submit that the Committee’s demand for de facto standing with respect to 

the IPCo Debtors would, at most, foster unnecessary and speculative litigation for its own sake, 

and would disregard the views expressed by the IPCo Debtors’ actual stakeholders.

43. Further, the Committee’s demand for de facto standing would conflict with 

a fundamental premise of American bankruptcy law under Butner v. United States, 440 U.S. 48

(1979). Namely, the assets of a debtor’s estate are determined by recourse to prevailing state law. 

The Delaware Limited Liability Company Act precisely identifies who may (and may not) have 

standing to pursue particular claims or causes of action on behalf of a Delaware limited liability 

company. There is no basis on which the parties can simply override Delaware law by simply 

demanding that this Court ignore the terms and provisions lawfully enacted by the Delaware 

legislature. 

44. At the same time, the Debtors acknowledge the Committee’s concern that 

claims in favor of the IPCo Debtors could be inadvertently released and that the Committee could 

therefore lose the opportunity to prosecute those claims for the benefit of the IPCo Debtors’ 

creditors—regardless of whether the IPCo Noteholders actually support such litigation. The

Debtors therefore revised the Proposed Final Order to provide that releases granted under the 

Proposed Final Order solely with respect to IPCo Debtors will not be binding on those entities or 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 25 of 223
26

WEIL:\97485855\13\54457.0008

their estates if, upon a motion filed by the Committee (and no other party), the Court converts the 

case in question to chapter 7 of the Bankruptcy Code or appoints a chapter 11 trustee to administer 

such case prior expiration of the Challenge Period, and the Challenge Period shall be tolled while 

any such motion filed by the Committee remains pending. The Debtors respectfully submit that 

this mechanism provides an appropriate mechanism by which the Committee can seek to cause 

such claims to be available for the benefit of the IPCo Debtors’ creditors.

19

45. Despite this substantial modification, the Debtors anticipate that the 

Committee may still seek to compel a different approach—such as by demanding the right to 

appoint a separate fiduciary for one or more of the IPCo Debtors to commence causes of action on 

the Committee’s behalf. And the Debtors recognize that a trustee’s appointment or conversion are 

severe remedies. But they also reflect the Bankruptcy Code’s more fundamental proposition that 

the debtor-in-possession must remain the locus of corporate decision making in chapter 11 absent 

extraordinary circumstances, and this bedrock principle should not be lightly disturbed—

particularly where more than 95% of affected creditors have already expressed their opposition to 

the Committee’s approach. 

46. The Debtors respectfully submit that the Committee should not be permitted 

to override the Debtors’ corporate governance on the facts of these chapter 11 cases. The Debtors 

do not believe it would be appropriate for a quasi-fiduciary to be appointed to serve the interests 

of unsecured creditors where the overwhelming majority of creditors have already expressed their 

views by joining the TSA—separate and apart from the fact that the IPCo Debtors may not have 

 19 It bears repeating that the Debtors believe that all or substantially all of the creditors at these entities consist of 

the IPCo Noteholders, and holders of more than 95% of the IPCo Notes are party to the TSA and support entry 

of the Final DIP Order.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 26 of 223
27

WEIL:\97485855\13\54457.0008

any unsecured creditors at all.

20 A debtor in possession, like a trustee, is tasked with balancing the 

interests of all parties, but the Committee, unlike the Debtors or a trustee, is not a fiduciary for all

stakeholders—the Committee represents only one class among many. But it must be 

acknowledged that the Committee’s continued pursuit of any litigation on behalf of the IPCo 

Debtors would be disconnected from affected creditors’ own preferences given that more than 

95% of IPCo Noteholders are already party to the TSA, and, again, the IPCo Debtors may not 

actually have any unsecured creditors. 

47. So, should the Committee determine that the claims addressed by the 

Review Committee are not in fact “unlikely to lead to any value to the estate of OpCo or any of its 

subsidiaries,” the proper remedy is for the Committee to displace the Debtors in the manner 

permitted by the Bankruptcy Code—not to appoint a quasi-fiduciary tasked with representing the 

interest of a single constituency. At a certain point, the Committee must have the courage of its 

convictions in terms of being willing to disregard the views of the overwhelming majority of IPCo 

Noteholders and the independent Review Committee’s own analysis. 

V. The Remaining Objections Should Be Overruled

48. As detailed below, the Debtors believe the balance of the Committee’s or 

other parties’ Objections should be overruled for the reasons set forth below, in the DIP Motion, 

and on the record of these chapter 11 cases:

Objection Response

Adequate Protection is not needed 

(Comm. Obj. ¶ 63.)

• The Debtors’ proposed adequate protection 

is customary for financings of this type

• Adequate protection liens and claims are 

being granted only to the extent of 

diminution in value

 20 The Debtors also acknowledge that a different approach might be appropriate where, unlike here, more than 95% 

of affected creditors have not already stated their preferred approach, and where an independent investigation has 

not already been undertaken.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 27 of 223
28

WEIL:\97485855\13\54457.0008

Objection Response

• Additionally, parties’ rights to seek the 

recharacterization of certain payments as 

on account of principal are reserved

Stipulations should not benefit insiders

(Comm. Obj. ¶ 64–65)

• Releases are provided to lenders in such 

capacities only and, in any event, are 

subject to the Committee’s challenge right

Carve-Out should include Committee 

Member Fees and Expenses and should be 

payable from Collateral

(Comm. Obj. ¶¶ 72–76).

• Debtors have revised the Carve-Out to 

include such expenses to the extent 

incurred per section 503(b)(3)(F) of the 

Bankruptcy Code

• There is no basis to demand that CarveOut be paid first from existing collateral, 

which will only work to increase 

diminution in value claims in any event

Determination of “Oversecured” Status 

should not be Subject to Challenge 

Limitations

(Comm. Obj. ¶¶ 77–79)

• The Committee’s Challenge Period, 

which has been extended to August 3, 

2020, provides ample time for the 

Committee to investigate and, if 

necessary, challenge the “oversecured” 

status of the Prepetition ABL Secured 

Parties

Automatic Stay should continue in effect 

during Remedies Notice Period

(Comm. Obj. ¶ 80)

• The Proposed Final Order already permits 

the Court to continue the stay in its 

discretion

Cross Defaults and certain Events of Default 

Should be Eliminated

(Comm. Obj. ¶¶ 81, 84)

• Default provisions, including cross default 

to TSA, were a key aspect of adequate 

protection and the DIP Lenders’ 

undertaking to provide $400 million of 

commitments on a junior basis

Reporting should include Committee

(Comm. Obj. ¶ 82)

• Debtors have revised the order 

accordingly and believe they have 

addressed the Committee’s concerns in 

this regard

Indemnification Is Overbroad

(Comm. Obj. ¶ 83)

• Debtors respectfully submit that 

indemnification rights are customary and 

appropriate and, in any event, were 

negotiated as part of the overall benefits 

provided by the DIP Facility

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 28 of 223
29

WEIL:\97485855\13\54457.0008

Objection Response

Restrictions on DIP Proceeds are 

Impermissible

(Comm. Obj. ¶ 85)

• The use of proceeds contemplated by the 

DIP Facility are customary and 

appropriate here

• DIP Proceeds and Cash Collateral are also 

being used to fund, among other things, 

rental payments and 503(b)(9) claims

IPCo Intercreditor Agreement should only be 

approved if filed

(Comm. Obj. ¶ 86)

• The Debtors have caused this document to 

be filed with the Court21

DIP Amendments should not be permitted 

without prior notice to the Committee

(Comm. Obj. ¶ 87)

• The Debtors have revised the order to 

provide the Committee with prior notice 

of DIP Amendments where commercially 

practicable

Credit bidding rights are premature

(Comm. Obj. ¶ 88)

• The proposed credit bidding rights are 

customary and preserve parties’ rights 

under section 363(k) of the Bankruptcy 

Code

Conclusion

WHEREFORE, for the foregoing reasons and for the reasons set forth in the 

Motion, the Debtors respectfully request that (a) the Court overrule each of the Objections to the 

extent not withdrawn and (b) grant the relief requested in the Motion on a final basis as set forth 

in the Proposed Final Order.

 21 See Notice of Filing of IPCO Intercreditor Agreement (Docket No. 421).

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 29 of 223
30

WEIL:\97485855\13\54457.0008

Dated: June 3, 2020

Richmond, Virginia

/s/ Henry P. (Toby) Long

HUNTON ANDREWS KURTH LLP

Tyler P. Brown (VSB No. 28072)

Henry P. (Toby) Long, III (VSB No. 75134)

Nathan Kramer (VSB No. 87720)

Riverfront Plaza, East Tower

951 East Byrd Street

Richmond, Virginia 23219

Telephone: (804) 788-8200

Facsimile: (804) 788-8218

-andWEIL, GOTSHAL & MANGES LLP

Ray C. Schrock, P.C. (admitted pro hac vice)

Ryan Preston Dahl (admitted pro hac vice)

Candace M. Arthur (admitted pro hac vice)

Daniel Gwen (admitted pro hac vice)

767 Fifth Avenue

New York, New York 10153

Telephone: (212) 310-8000

Facsimile: (212) 310-8007

Attorneys and Proposed Attorneys for Debtors 

and Debtors in Possession

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 30 of 223
WEIL:\97485855\13\54457.0008

Exhibit A

Proposed Final Order

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 31 of 223
44670.00001



SWDOCIDLOCATION

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF VIRGINIA

RICHMOND DIVISION

------------------------------------------------------------ x

:

In re : Chapter 11

:

CHINOS HOLDINGS, INC., et al., : Case No. 20–32181 (KLP)

:

Debtors.1: (Jointly Administered)

:

------------------------------------------------------------ x

FINAL ORDER (I) AUTHORIZING THE DEBTORS TO OBTAIN 

POSTPETITION FINANCING, (II) AUTHORIZING THE DEBTORS TO 

USE CASH COLLATERAL, (III) GRANTING LIENS AND PROVIDING 

SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, (IV) GRANTING 

ADEQUATE PROTECTION TO PREPETITION SECURED PARTIES, 

(V) MODIFYING AUTOMATIC STAY, AND (VII) GRANTING RELATED RELIEF

Upon the motion, dated May 4, 2020 (the “Motion”)2 of Chinos Holdings, Inc. (“Ultimate 

Holdings”) and its debtor affiliates, as debtors and debtors in possession (collectively, the 

“Debtors”) in the above-captioned chapter 11 cases (collectively, the “Chapter 11 Cases”), 

seeking entry of an order (this “Final Order”) pursuant to sections 105, 361, 362, 363, 364(c)(l), 

364(c)(2), 364(c)(3), 364(d), 364(e), 503, and 507 of chapter 11 of title 11 of the United States 

Code (the “Bankruptcy Code”) and Rules 2002, 4001, 6003, 6004, and 9014 of the Federal Rules 

of Bankruptcy Procedure (the “Bankruptcy Rules”), and Rule 4001(a)-1 of the Local Rules of 

 

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification 

number, as applicable, are Chinos Holdings, Inc. (3834); Chinos Intermediate Holdings A, Inc. (3301); Chinos 

Intermediate, Inc. (3871); Chinos Intermediate Holdings B, Inc. (3244); J. Crew Group, Inc. (4486); J. Crew 

Operating Corp. (0930); Grace Holmes, Inc. (1409); H.F.D. No. 55, Inc. (9438); J. Crew Inc. (6360); J. Crew 

International, Inc. (2712); J. Crew Virginia, Inc. (5626); Madewell Inc. (8609); J. Crew Brand Holdings, LLC 

(7625); J. Crew Brand Intermediate, LLC (3860); J. Crew Brand, LLC (1647); J. Crew Brand Corp. (1616); J. 

Crew Domestic Brand, LLC (8962); and J. Crew International Brand, LLC (7471). The Debtors’ corporate 

headquarters and service address is 225 Liberty St., New York, NY 10281.

2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the 

Motion.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 32 of 223
- 2 -

WEIL:\97486216\9\54457.0008

the United States Bankruptcy Court for the Eastern District of Virginia (the “Local Rules”) inter 

alia:

(i) authorizing (x) the Borrower (as defined below) to obtain senior secured 

postpetition financing on a superpriority basis in the aggregate principal amount of up to 

$400,000,000 (the “DIP Facility” and, all amounts extended under the DIP Facility, the “DIP 

Loans”), pursuant to the terms and conditions of that certain Debtor-in-Possession Credit 

Agreement (as the same may be amended, restated, amended and restated, supplemented, waived 

and/or otherwise modified from time to time, the “DIP Credit Agreement” and, together with 

any exhibits and schedules attached thereto and the Loan Documents (as defined in the DIP Credit 

Agreement) the “DIP Documents”), by and among Chinos Intermediate Holdings A, Inc., a 

Delaware corporation (in such capacity, the “Borrower”), Ultimate Holdings, Wilmington 

Savings Fund Society, FSB, as administrative agent and collateral agent for the DIP Secured 

Parties (as defined below) (in such capacities, the “DIP Agent”), and the lenders party thereto

from time to time (the “DIP Lenders” and, together with the DIP Agent, the “DIP Secured 

Parties”), attached hereto as Schedule 1 and (y) each of the Debtors other than the Borrower 

(collectively in such capacities, the “DIP Guarantors” and together with the Borrower, the “DIP 

Obligors”), to guaranty the Borrower’s (and each other DIP Guarantor’s) obligations under the 

DIP Facility and under, or secured by, the DIP Documents (collectively, and including all 

“Obligations” as defined in the DIP Credit Agreement, the “DIP Obligations”).

(ii) authorizing the Debtors to execute and enter into the DIP Documents and to 

perform such other acts as may be necessary or appropriate in connection with the same; 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 33 of 223
- 3 -

WEIL:\97486216\9\54457.0008

(iii) authorizing the Borrower to borrow up to $400,000,000 of term loans under the 

DIP Facility (the “Final Loans”) upon entry of this Final Order on a final basis;

(iv) granting the DIP Obligations the status of allowed superpriority administrative 

expense claims in each of the Chapter 11 Cases, which, for the avoidance of doubt, shall be subject 

to the Carve-Out in all respects; 

(v) granting to the DIP Agent, for the benefit of the DIP Secured Parties, to secure 

the DIP Obligations, automatically perfected security interests in and liens on all of the DIP 

Collateral (as defined below), including, without limitation, all property constituting “cash 

collateral” as defined in section 363(a) of the Bankruptcy Code (the “Cash Collateral”), which 

liens shall have the priorities set forth herein and shall be subject to the Carve-Out (as defined 

below); provided that in no event shall the “Cash Collateral” include Excluded Property (as defined 

in the DIP Documents) or funds held in the Professional Fees Account (other than the Debtors’ 

reversionary interest, if any, therein, after all Professional Fees benefitting from the Carve-Out 

have been indefeasibly paid in full, in cash); 

(vi) authorizing and directing the Debtors to pay the principal, interest, premiums, 

fees, expenses, and other amounts payable under the DIP Documents as such become due and 

payable;

(vii) authorizing the Debtors to use the Prepetition Collateral (as defined below) of 

the Prepetition Secured Parties and provide adequate protection to the Prepetition Secured Parties 

(as defined below) solely to the extent of the diminution in value, if any, of their respective interests 

in the Prepetition Collateral as of the Petition Date, including, as applicable, with respect to the 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 34 of 223
- 4 -

WEIL:\97486216\9\54457.0008

Cash Collateral (“Diminution in Value”), resulting from (a) the imposition of the automatic stay, 

(b) the Debtors’ postpetition use, sale, or lease of the Prepetition Collateral, including Cash 

Collateral, (c) the priming of the Prepetition ABL Secured Parties’ liens on the ABL Priority 

Collateral (as defined in the ABL Intercreditor Agreement (as defined below) by the Carve-Out, 

or (d) the priming (including by the Carve-Out (as defined below)) of (i) the Prepetition ABL 

Secured Parties’ liens on the Term Priority Collateral (as defined in the ABL Intercreditor 

Agreement (as defined below), the “Term Priority Collateral”), (ii) the Prepetition Term Secured 

Parties’ (as defined below) liens on the Prepetition Term Collateral (as defined below), and (iii) 

the Prepetition IPCo Secured Parties’ (as defined below) liens on the Prepetition IPCo Collateral 

(as defined below); 

(viii) vacating and modifying the automatic stay imposed by section 362 of the 

Bankruptcy Code to the extent necessary to implement and effectuate the terms and provisions of 

the DIP Documents; and

(ix) scheduling a final hearing (the “Final Hearing”) within thirty-five (35) days of 

the Petition Date to consider the relief requested in the Motion on a final basis and approving the 

form of notice with respect to the Final Hearing.

The Court having considered the Motion, the exhibits attached thereto, the Cowan 

Declaration, the Zanna Declaration, and the First Day Declaration (collectively, the 

“Declarations”), and the evidence submitted and arguments made at the interim hearing held on 

May 5, 2020; and the Court having entered an order approving the relief requested in the Motion 

on an interim basis on May 5, 2020 [Docket No. 84] (the “Interim Order”); and the Court having 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 35 of 223
- 5 -

WEIL:\97486216\9\54457.0008

considered the Motion, the exhibits attached thereto, the Declarations, and the evidence submitted 

and arguments made at the final hearing held on June 4, 2020 (the “Final Hearing”); and notice 

of the Final Hearing having been given in accordance with the Interim Order, Bankruptcy Rules 

2002, 4001(b), (c) and (d), and all applicable Local Rules; and the Final Hearing having been held

and concluded; and all objections, if any, to the relief requested in the Motion having been 

withdrawn, resolved, or overruled by the Court; and it appearing that approval of the relief 

requested in the Motion, as granted hereby, is fair and reasonable and in the best interests of the 

Debtors, their estates, and all parties-in-interest, and is essential for the continued operation of the 

Debtors’ businesses and the preservation of the value of the Debtors’ assets; and it appearing that 

the Debtors’ entry into the DIP Credit Agreement and the other DIP Documents as granted hereby

is a sound and prudent exercise of the Debtors’ business judgment; and after due deliberation and 

consideration, and good and sufficient cause appearing therefor: 

BASED UPON THE RECORD ESTABLISHED AT THE FINAL HEARING, THE COURT 

MAKES THE FOLLOWING FINDINGS OF FACT AND CONCLUSIONS OF LAW:3

A. Petition Date. On May 4, 2020 (the “Petition Date”), the Debtors each 

commenced with this Court a voluntary case under chapter 11 of the Bankruptcy Code. 

B. Debtors in Possession. The Debtors are authorized to continue operating their 

businesses and managing their properties as debtors in possession pursuant to sections 1107(a) and 

 

3 The findings and conclusions set forth herein constitute the Court’s findings of fact and conclusions of law 

pursuant to Bankruptcy Rule 7052, made applicable to this proceeding pursuant to Bankruptcy Rule 9014. To 

the extent that any of the following findings of fact constitute conclusions of law, they are adopted as such. To 

the extent any of the following conclusions of law constitute findings of fact, they are adopted as such.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 36 of 223
- 6 -

WEIL:\97486216\9\54457.0008

1108 of the Bankruptcy Code. No trustee or examiner has been appointed in these Chapter 11 

Cases.

C. Jurisdiction and Venue. This Court has jurisdiction to consider this matter 

pursuant to 28 U.S.C. § 1334, and the Standing Order of Reference from the United States District 

Court for the Eastern District of Virginia, dated July 10, 1984. This proceeding is core pursuant 

to 28 U.S.C. § 157(b). Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

D. Committee Formation. On May 13, 2020, the United States Trustee for the 

Eastern District of Virginia appointed an official committee of unsecured creditors in these Chapter 

11 Cases (the “Committee”) pursuant to section 1102 of the Bankruptcy Code [Docket No. 188].

E. Notice. Proper, timely, adequate, and sufficient notice of the Motion and the 

Final Hearing has been provided in accordance with the Interim Order, the Bankruptcy Code, the 

Bankruptcy Rules, and the Local Rules, and no other or further notice of the Motion with respect 

to the relief requested at the Final Hearing or the entry of this Final Order shall be required.

F. Debtors’ Stipulations. Subject to the rights of parties in interest that are set 

forth and reserved in paragraph 44 herein (including with respect to a Challenge that may brought 

through or on behalf of a Debtors’ estate upon obtaining proper standing and complying with the 

terms of paragraph 44 herein), and subject to the terms hereof and the rights reserved by the 

Debtors at paragraph F(v) hereof, the Debtors admit, stipulate, acknowledge, and agree as follows 

(paragraph F herein shall be referred to as the “Debtors’ Stipulations”):

(i) Prepetition ABL Facility. 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 37 of 223
- 7 -

WEIL:\97486216\9\54457.0008

(a) Pursuant to that certain ABL Credit Agreement, dated as of 

March 7, 2011 (as amended by that certain First Amendment to Credit Agreement, 

dated as of October 11, 2012, that certain Second Amendment to Credit Agreement, 

dated as of March 5, 2014, that certain Third Amendment to Credit Agreement, 

dated as of December 10, 2014, that certain Fourth Amendment to Credit 

Agreement (Incremental Amendment), dated as of December 17, 2015, that certain 

Fifth Amendment to Credit Agreement and Consent to Release of Mortgages, dated 

as of November 17, 2016, that certain Sixth Amendment to Credit Agreement, 

dated as of September 19, 2018, and as further amended, restated, amended and 

restated, supplemented, waived and/or otherwise modified from time to time, the 

“Prepetition ABL Credit Agreement” and, collectively with the Loan Documents 

(as defined in the Prepetition ABL Credit Agreement) and any other agreements 

and documents executed or delivered in connection therewith, each as amended, 

restated, amended and restated, supplemented, waived and/or otherwise modified 

from time to time, the “Prepetition ABL Documents”), among, inter alios, (I) J. 

Crew Group, Inc., a Delaware corporation (in such capacity, the “Prepetition ABL

Borrower”) (II) Chinos Intermediate Holdings B, Inc., a Delaware corporation 

(“Holdings”), (III) Bank of America, N.A., as administrative agent and collateral 

agent for the Prepetition ABL Secured Parties (as defined below) (in such 

capacities, the “Prepetition ABL Agent”), and (IV) the lenders party thereto from 

time to time (the “Prepetition ABL Lenders” and, collectively with the Prepetition 

ABL Agent, and other “Secured Parties” as defined in the Prepetition ABL Credit 

Agreement, the “Prepetition ABL Secured Parties”), the Prepetition ABL 

Lenders and Issuing Banks (as defined in the Prepetition ABL Credit Agreement) 

provided revolving loans, swingline loans, and letters of credit to, or for the benefit 

of, the Prepetition ABL Borrower (collectively, the “Prepetition ABL Facility”). 

Pursuant to that certain Guaranty Agreement, dated as of March 7, 2011 (as 

amended, restated, amended and restated, supplemented and/or otherwise modified 

from time to time, the “Prepetition ABL Guaranty”), Holdings, J. Crew 

Operating Corp., a Delaware corporation (“J. Crew OpCo”), J. Crew Inc., a 

Delaware corporation (“JCI”), J. Crew International, Inc., a Delaware corporation 

(“J. Crew International”), Grace Holmes, Inc., a Delaware corporation (“Grace 

Holmes”), H. F. D. No. 55, Inc., a Delaware corporation (“H.F.D.”), Madewell 

Inc., a Delaware corporation (“Madewell”), and J. Crew Virginia, Inc., a Virginia 

corporation (“J. Crew Virginia”) (in such capacities, the “Prepetition ABL 

Guarantors” and, together with the Prepetition ABL Borrower, the “Prepetition 

ABL Obligors” or the “ABL Debtors”) guaranteed the Obligations (as defined in 

the Prepetition ABL Credit Agreement). 

(b) Prepetition ABL Obligations. As of the Petition Date, the 

Prepetition ABL Obligors were indebted to the Prepetition ABL Secured Parties, 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 38 of 223
- 8 -

WEIL:\97486216\9\54457.0008

without defense, counterclaim, or offset of any kind, in respect of the outstanding 

loans and reimbursement obligations in respect of letters of credit incurred by the 

Prepetition ABL Borrower under the Prepetition ABL Facility (collectively, the 

“Prepetition ABL Loans”), in an aggregate principal amount, as of the Petition 

Date, not less than approximately $309,093,952.114(collectively, together with 

accrued and unpaid interest, fees, expenses, and disbursements (including, without 

limitation, any accrued and unpaid attorneys’ fees, accountants’ fees, appraisers’ 

fees, and financial advisors’ fees and related expenses and disbursements), cash 

management obligations, indemnification obligations, and other charges, amounts, 

and costs of whatever nature owing, whether or not contingent, whenever arising, 

accrued, accruing, due, owing, or chargeable in respect of any of the Prepetition 

ABL Obligors’ obligations pursuant to the Prepetition ABL Documents, including 

all “Obligations” as defined in the Prepetition ABL Credit Agreement, in each case, 

as of the Petition Date, and all interest, fees, costs, and other charges allowable 

under Section 506(b) of the Bankruptcy Code, the “Prepetition ABL 

Obligations”). 

(c) Prepetition ABL Liens and Prepetition ABL Collateral. As 

more fully set forth in the Prepetition ABL Documents, prior to the Petition Date, 

the Prepetition ABL Obligors granted to the Prepetition ABL Agent, for the benefit 

of the Prepetition ABL Secured Parties, a security interest in and continuing lien 

(the “Prepetition ABL Liens”) on “Collateral,” as such term is defined in the 

Prepetition ABL Credit Agreement (the “Prepetition ABL Collateral”), and the 

Prepetition ABL Obligations were fully secured as of the Petition Date by the 

Prepetition ABL Liens; provided that for the avoidance of doubt Prepetition ABL 

Collateral shall not include the “Excluded Property” as defined in that certain 

Security Agreement, dated March 7, 2011 (as amended, restated, amended and 

restated, supplemented, waived and/or otherwise modified from time to time, the 

“ABL Security Agreement”), by and among the Prepetition ABL Obligors and the 

Prepetition ABL Agent in connection with the Prepetition ABL Obligations. 

(d) Validity, Perfection, and Priority of Prepetition ABL Liens and 

Prepetition ABL Obligations. As of the Petition Date, (I) the Prepetition ABL Liens 

on the Prepetition ABL Collateral were valid, binding, enforceable, non-avoidable, 

and, to the extent (x) required by the Prepetition ABL Documents, or (y) or 

otherwise actually properly perfected and were granted to, or for the benefit of, the 

Prepetition ABL Secured Parties for fair consideration and reasonably equivalent 

value; (II) the Prepetition ABL Liens were senior in priority over any and all other 

liens on the Prepetition ABL Collateral, subject only to the Prepetition Term 

 

4

In addition, there are approximately $65,906,047.89 million of outstanding but undrawn letters of credit issued 

under the Prepetition ABL Facility. 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 39 of 223
- 9 -

WEIL:\97486216\9\54457.0008

Liens on the Term Priority Collateral and certain liens permitted by the Prepetition 

ABL Documents (in each case, to the extent that such existing liens were valid, 

properly perfected, non-avoidable, and senior in priority to the Prepetition 

ABL Liens as of the Petition Date or were valid non-avoidable senior liens that are 

perfected subsequent to the Petition Date as permitted by Section 546(b) of the 

Bankruptcy Code, the “ABL Permitted Liens”);

5

(III) the Prepetition ABL 

Obligations constitute legal, valid, binding, and non-avoidable obligations of the 

Prepetition ABL Obligors, enforceable in accordance with the terms of the 

applicable Prepetition ABL Documents; (IV) no offsets, recoupments, challenges, 

objections, defenses, claims, or counterclaims of any kind or nature to any of the 

Prepetition ABL Liens or Prepetition ABL Obligations exist, and no portion of the 

Prepetition ABL Liens or Prepetition ABL Obligations is subject to any challenge 

or defense, including, without limitation, avoidance, disallowance, disgorgement, 

recharacterization, or subordination (equitable or otherwise) pursuant to the 

Bankruptcy Code or applicable non-bankruptcy law; (V) other than with respect to 

the Debtor Reserved Claims, the Debtors and their estates have no claims, 

objections, challenges, causes of action, and/or choses in action, including, without 

limitation, avoidance claims under chapter 5 of the Bankruptcy Code or applicable 

state law equivalents or actions for recovery or disgorgement against any of the 

Prepetition ABL Secured Parties or any of their respective affiliates, agents, 

attorneys, advisors, professionals, officers, directors, or employees, arising out of, 

based upon, or related to the Prepetition ABL Facility; and (VI) other than other 

than with respect to the Debtor Reserved Claims, the Debtors have waived, 

discharged, and released any right to challenge any of the Prepetition 

ABL Obligations, the priority of the Debtors’ obligations thereunder, or the 

validity, extent, or priority of the Prepetition ABL Liens.

(ii) Prepetition Term Facility. 

(a) Pursuant to that certain Amended and Restated Credit 

Agreement, dated as of March 5, 2014 (as amended by that certain Amendment No. 

1 to Amended and Restated Credit Agreement, dated as of July 13, 2017, and as 

further amended, restated, amended and restated, supplemented, waived and/or 

otherwise modified from time to time, the “Prepetition Term Credit Agreement” 

and, collectively with the Loan Documents (as defined in the Prepetition Term 

Credit Agreement) and any other agreements and documents executed or delivered 

 

5 For the avoidance of doubt, none of the Professional Fees Account, the Operating Account, or the Disbursement 

Account (each as defined herein or in the DIP Credit Agreement) constitute or be deemed to constitute ABL 

Priority Collateral, except to the extent such accounts contain proceeds of Prepetition ABL Collateral, but 

solely with respect to such proceeds. 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 40 of 223
- 10 -

WEIL:\97486216\9\54457.0008

in connection therewith, each as amended, restated, amended and restated, 

supplemented, waived and/or otherwise modified from time to time, the 

“Prepetition Term Documents”), among (I) J. Crew Group, Inc., a Delaware 

corporation (in such capacity, the “Prepetition Term Borrower”), (II) Holdings 

(III) Wilmington Savings Fund Society, FSB, as administrative agent (the 

“Prepetition Term Administrative Agent”) and collateral agent (the “Prepetition 

Term Collateral Agent”) for the Prepetition Term Secured Parties (in such 

capacities, as successor-in-interest to Bank of America, N.A., the “Prepetition 

Term Agent” and, together with the Prepetition ABL Agent, the “Prepetition 

Agents”) and (IV) the lenders from time to time party thereto (the “Prepetition 

Term Lenders” and, collectively with the Prepetition Term Agent, the 

“Prepetition Term Secured Parties”), the Prepetition Term Lenders provided 

term loans to the Prepetition Term Borrower (the “Prepetition Term Facility” and, 

together with the Prepetition ABL Facility, the “Prepetition Secured Facilities”). 

Pursuant to that certain Guaranty Agreement, dated as of March 7, 2011 (as 

amended, restated, amended and restated, supplemented and/or otherwise modified 

from time to time, the “Prepetition Term Guaranty”), Holdings, J. Crew OpCo, 

JCI, J. Crew International, Grace Holmes, H.F.D., Madewell and J. Crew Virginia 

(in such capacities, the “Prepetition Term Guarantors” and, together with the 

Prepetition Term Borrower, the “Prepetition Term Obligors” or the “Term 

Debtors”) guaranteed the Obligations (as defined in the Prepetition Term Credit 

Agreement).

(b) Prepetition Term Obligations. As of the Petition Date, the 

Prepetition Term Obligors were indebted to the Prepetition Term Secured Parties, 

without defense, counterclaim, or offset of any kind, in respect of the loans incurred 

under the Prepetition Term Facility (collectively, the “Prepetition Term Loans”), 

in an aggregate outstanding principal amount, as of the Petition Date, exclusive of 

accrued but unpaid interest, costs, fees, and expenses, not less than 

$1,337,363,321.82 (collectively, together with accrued and unpaid interest, fees, 

expenses, and disbursements (including, without limitation, any accrued and unpaid 

attorneys’ fees, accountants’ fees, appraisers’ fees, and financial advisors’ fees and 

related expenses and disbursements), indemnification obligations, and other 

charges, amounts, and costs of whatever nature owing, whether or not contingent, 

whenever arising, accrued, accruing, due, owing, or chargeable in respect of any of 

the Prepetition Term Obligors’ obligations pursuant to the Prepetition 

Term Documents, including all “Obligations” as defined in the Prepetition Term 

Credit Agreement, in each case, as of the Petition Date, and all interest, fees, costs, 

and other charges allowable under Section 506(b) of the Bankruptcy Code (the 

“Prepetition Term Obligations”).

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 41 of 223
- 11 -

WEIL:\97486216\9\54457.0008

(c) Prepetition Term Liens and Prepetition Term Collateral. As 

more fully set forth in the Prepetition Term Documents, prior to the Petition Date, 

the Prepetition Term Obligors granted to the Prepetition Term Agent, for the benefit 

of the Prepetition Term Secured Parties, a security interest in and continuing lien 

(the “Prepetition Term Liens”) on “Collateral,” as such term is defined in the 

Prepetition Term Credit Agreement (the “Prepetition Term Collateral”); 

provided that for the avoidance of doubt Prepetition Term Collateral shall not 

include “Excluded Collateral” as defined in that certain Security Agreement, 

dated March 7, 2011 (as amended, restated, amended and restated, supplemented, 

waived and/or otherwise modified from time to time, the “Prepetition Term 

Security Agreement”), by and among the Prepetition Term Obligors and the 

Prepetition Term Collateral Agent, in connection with the Prepetition Term 

Obligations.

(d) Validity, Perfection, and Priority of Prepetition Term Liens 

and Prepetition Term Obligations. As of the Petition Date, (I) the Prepetition Term 

Liens on the Prepetition Term Collateral were valid, binding, enforceable, nonavoidable, and, to the extent (x) required by the Prepetition Term Loan Documents 

or (y) otherwise actually perfected, properly perfected and were granted to, or for 

the benefit of, the Prepetition Term Secured Parties for fair consideration and 

reasonably equivalent value; (II) the Prepetition Term Liens were senior in priority 

over any and all other liens on the Prepetition Term Collateral, subject only to the

Prepetition ABL Liens on the ABL Priority Collateral (as defined in the ABL 

Intercreditor Agreement (defined below), the “ABL Priority Collateral”) and 

certain liens permitted by the Prepetition Term Documents (in each case, to the 

extent that such existing liens were valid, properly perfected, non-avoidable, and 

senior in priority to the Prepetition Term Liens as of the Petition Date or were valid 

non-avoidable senior liens that are perfected subsequent to the Petition Date as 

permitted by Section 546(b) of the Bankruptcy Code, the “Term Permitted 

Liens”); (III) the Prepetition Term Obligations constitute legal, valid, binding, and 

non-avoidable obligations of the Prepetition Term Obligors, enforceable in 

accordance with the terms of the applicable Prepetition Term Documents; (IV) no 

offsets, recoupments, challenges, objections, defenses, claims, or counterclaims of 

any kind or nature to any of the Prepetition Term Liens or Prepetition Term 

Obligations exist, and no portion of the Prepetition Term Liens or Prepetition Term 

Obligations is subject to any challenge or defense, including, without limitation, 

avoidance, disallowance, disgorgement, recharacterization, or subordination 

(equitable or otherwise) pursuant to the Bankruptcy Code or applicable nonbankruptcy law; (V) other than with respect to the Debtor Reserved Claims, the 

Debtors and their estates have no claims, objections, challenges, causes of action, 

and/or choses in action, including, without limitation, avoidance claims under 

chapter 5 of the Bankruptcy Code or applicable state law equivalents or actions for 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 42 of 223
- 12 -

WEIL:\97486216\9\54457.0008

recovery or disgorgement against any of the Prepetition Term Secured Parties or 

any of their respective affiliates, agents, attorneys, advisors, professionals, officers, 

directors, or employees, arising out of, based upon, or related to the Prepetition 

Term Facility; and (VI) other than with respect to the Debtor Reserved Claims, the 

Debtors have waived, discharged, and released any right to challenge any of the 

Prepetition Term Obligations, the priority of the Debtors’ obligations thereunder, 

or the validity, extent, or priority of the Prepetition Term Liens.

(iii) Prepetition IPCo Notes. 

(a) Prepetition IPCo New Money Notes. Pursuant to that certain 

Indenture for certain 13.00% notes due 2021, dated as of July 13, 2017, (as 

amended, restated, amended and restated, supplemented, waived and/or otherwise 

modified from time to time, the “Prepetition IPCo New Money Notes Indenture” 

and, collectively with the Security Documents (as defined in the Prepetition IPCo 

New Money Notes Indenture) and any other agreements, documents, certificates 

and instruments executed or delivered in connection therewith, each as amended, 

restated, amended and restated, supplemented, waived and/or otherwise modified 

from time to time, the “Prepetition IPCo New Money Notes Documents”, among 

J. Crew Brand, LLC (in such capacity, the “Prepetition LLC Issuer”), J. Crew 

Brand Corp. (in such capacity, the “Prepetition Corporate Issuer” and, together 

with the Prepetition LLC Issuer, the “Prepetition Issuers”), U.S. Bank National 

Association, as trustee and collateral agent, (in such capacities, the “Prepetition 

IPCo New Money Notes Indenture Trustee”), the guarantors thereunder (the 

“Prepetition IPCo New Money Notes Guarantors” and, together with the 

Prepetition Issuers, the “Prepetition IPCo New Money Notes Obligors”), and the 

Holders (as defined in the Prepetition IPCo New Money Notes Indenture, the 

“Prepetition IPCo New Money Noteholders” and, collectively with the 

Prepetition IPCo New Money Notes Indenture Trustee, the “Prepetition IPCo 

New Money Notes Secured Parties”), the Prepetition Issuers incurred 

indebtedness to the Prepetition IPCo New Money Noteholders of 13.00% Senior 

Secured New Money Notes due 2021 (collectively, the “Prepetition IPCo New 

Money Notes”). 

(b) Prepetition IPCo Exchange Notes. Pursuant to that certain 

Indenture for certain 13.00% notes due 2021, dated as of July 13, 2017 (as 

amended, restated, amended and restated, supplemented, waived and/or otherwise 

modified from time to time, the “Prepetition IPCo Exchange Notes Indenture”

6

and, collectively with the Security Documents (as defined in the IPCo Exchange 

Notes Indenture) and any other agreements, documents, certificates and 

 

6 The Prepetition IPCo New Money Notes Indenture and the Prepetition IPCo Exchange Notes Indenture are 

collectively referred to as the “Prepetition IPCo Indentures”.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 43 of 223
- 13 -

WEIL:\97486216\9\54457.0008

instruments executed or delivered in connection therewith, each as amended, 

restated, amended and restated, supplemented, waived and/or otherwise modified 

from time to time, the “Prepetition IPCo Exchange Notes Documents” and, 

collectively with the Prepetition IPCo New Money Notes Documents, the 

“Prepetition IPCo Notes Documents” and, collectively with the Prepetition ABL 

Documents and the Prepetition Term Documents, the “Prepetition Documents”), 

among the Prepetition Issuers U.S. Bank National Association, as trustee and 

collateral agent, (in such capacities, the “Prepetition IPCo Exchange Notes 

Indenture Trustee” and, together with the Prepetition IPCo New Money Notes 

Indenture Trustee, the “Prepetition IPCo Indenture Trustees”), the guarantors 

thereunder (the “Prepetition IPCo Exchange Notes Guarantors”

7

and, 

collectively with the Prepetition Issuers, the “Prepetition IPCo Exchange Notes 

Obligors”

8

), and the Holders (as defined in the Prepetition IPCo Exchange Notes 

Indenture, the “Prepetition IPCo Exchange Noteholders”

9

and, collectively with 

the Prepetition IPCo Exchange Notes Indenture Trustee, the “Prepetition IPCo 

Exchange Notes Secured Parties” and, collectively with the Prepetition IPCo 

New Money Notes Secured Parties, the “Prepetition IPCo Secured Parties” and, 

collectively with the Prepetition ABL Secured Parties and the Prepetition Term 

Secured Parties, the “Prepetition Secured Parties”), the Prepetition Issuers 

incurred indebtedness to the Prepetition IPCo Exchange Noteholders of 13.00% 

Senior Secured Notes due 2021 (collectively, the “Prepetition IPCo Exchange 

Notes” and, collectively with the Prepetition IPCo New Money Notes, the 

“Prepetition IPCo Notes” and, collectively with the Prepetition Secured Facilities, 

the “Prepetition Secured Debt”). 

(c) Prepetition IPCo Notes Obligations. Pursuant to the 

Prepetition IPCo New Money Notes Indenture, the Prepetition IPCo New Money 

Notes were issued with a face value of $97,000,000. As of the Petition Date, the 

aggregate principal amount outstanding under the Prepetition IPCo New Money 

Notes was $97,000,000 (collectively, together with accrued and unpaid interest, 

premiums, fees, expenses, and disbursements (including, without limitation, any 

accrued and unpaid attorneys’ fees, accountants’ fees, appraisers’ fees, and 

financial advisors’ fees and related expenses and disbursements), indemnification 

obligations, and other charges, amounts, and costs of whatever nature owing, 

whether or not contingent, whenever arising, accrued, accruing, due, owing, or 

chargeable in respect of any of the Prepetition IPCo New Money Notes Obligors’ 

 

7 The Prepetition IPCo New Money Notes Guarantors and the Prepetition IPCo Exchange Notes Guarantors are 

collectively referred to as the “Prepetition IPCo Notes Guarantors”.

8 The Prepetition IPCo New Money Notes Obligors and the Prepetition IPCo Exchange Notes Obligors are 

collectively referred to as the “Prepetition IPCo Notes Obligors” or the “IPCo Debtors”.

9 The Prepetition IPCo New Money Noteholders and the Prepetition IPCo Exchange Noteholders are collectively 

referred to as the “Prepetition IPCo Noteholders”.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 44 of 223
- 14 -

WEIL:\97486216\9\54457.0008

obligations pursuant to the Prepetition IPCo New Money Notes Documents, 

including all “Notes Obligations” as defined in the Prepetition IPCo New Money 

Notes Indenture, in each case, as of the Petition Date, and all interest, fees, costs, 

and other charges allowable under Section 506(b) of the Bankruptcy Code (the 

“Prepetition IPCo New Money Notes Obligations”). Pursuant to the Prepetition 

IPCo Exchange Notes Indenture, the Prepetition IPCo Exchange Notes were issued

with a face value of $249,596,000. As of the Petition Date, the aggregate principal 

amount outstanding under the Prepetition IPCo Exchange Notes was $250,599,000

(collectively, together with accrued and unpaid interest, premiums, fees, expenses, 

and disbursements (including, without limitation, any accrued and unpaid 

attorneys’ fees, accountants’ fees, appraisers’ fees, and financial advisors’ fees and 

related expenses and disbursements), indemnification obligations, and other 

charges, amounts, and costs of whatever nature owing, whether or not contingent, 

whenever arising, accrued, accruing, due, owing, or chargeable in respect of any of 

the Prepetition IPCo Exchange Notes Obligors’ obligations pursuant to the 

Prepetition IPCo Exchange Notes Documents, including all “Notes Obligations” as 

defined in the Prepetition IPCo Exchange Notes Indenture, in each case, as of the 

Petition Date, and all interest, fees, costs, and other charges allowable under Section 

506(b) of the Bankruptcy Code (the “Prepetition IPCo Exchange Notes 

Obligations” and, collectively with the Prepetition IPCo New Money Notes 

Obligations, the “Prepetition IPCo Notes Obligations” and, collectively with the 

Prepetition ABL Obligations and the Prepetition Term Obligations, the 

“Prepetition Obligations”).

(d) Prepetition IPCo Liens and Prepetition IPCo Collateral. As 

more fully set forth in the Prepetition IPCo New Money Notes Documents, prior to 

the Petition Date, the Prepetition IPCo New Money Notes Obligors granted to the 

Prepetition IPCo New Money Notes Indenture Trustee, for the benefit of the 

Prepetition IPCo New Money Notes Secured Parties, a security interest in and 

continuing lien (the “Prepetition IPCo New Money Notes Liens”) on 

“Collateral,” as such term is defined in the Prepetition IPCo New Money Notes 

Indenture (the “Prepetition IPCo New Money Notes Collateral”). As more fully 

set forth in the Prepetition IPCo Exchange Notes Documents, prior to the Petition 

Date, the Prepetition IPCo Exchange Notes Obligors granted to the Prepetition 

IPCo Exchange Notes Indenture Trustee, for the benefit of the Prepetition IPCo 

Exchange Notes Secured Parties, a security interest in and continuing lien (the 

“Prepetition IPCo Exchange Notes Liens” and, together with the Prepetition 

IPCo New Money Notes Liens, the “Prepetition IPCo Liens” and, collectively 

with the Prepetition ABL Liens and the Prepetition Term Liens, the “Prepetition 

Liens”) on “Collateral,” as such term is defined in the Prepetition IPCo Exchange 

Notes Indenture (the “Prepetition IPCo Exchange Notes Collateral” and, 

together with the Prepetition IPCo New Money Notes Collateral, the “Prepetition 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 45 of 223
- 15 -

WEIL:\97486216\9\54457.0008

IPCo Collateral” and, collectively with the Prepetition ABL Collateral and the 

Prepetition Term Collateral, the “Prepetition Collateral”).

(e) Validity, Perfection, and Priority of Prepetition IPCo Liens 

and Prepetition IPCo Notes Obligations. As of the Petition Date, (I) the Prepetition 

IPCo Liens on the Prepetition IPCo Collateral were valid, binding, enforceable, 

non-avoidable, and, to the extent (x) required by the Prepetition IPCo Notes 

Documents or (y) otherwise actually perfected, properly perfected and were granted 

to, or for the benefit of, the Prepetition IPCo Secured Parties for fair consideration 

and reasonably equivalent value; (II) the Prepetition IPCo Liens were senior in 

priority over any and all other liens on the Prepetition IPCo Collateral, subject only 

to certain liens permitted by the Prepetition IPCo Notes Documents (in each case, 

to the extent that such existing liens were valid, properly perfected, non-avoidable, 

and senior in priority to the Prepetition IPCo Liens as of the Petition Date or were 

valid non-avoidable senior liens that are perfected subsequent to the Petition Date 

as permitted by Section 546(b) of the Bankruptcy Code, the “IPCo Permitted 

Liens” and, collectively with the ABL Permitted Liens and the Term Permitted 

Liens, the “Permitted Liens”); (III) the Prepetition IPCo Notes Obligations 

constitute legal, valid, binding, and non-avoidable obligations of the Prepetition 

IPCo Notes Obligors, enforceable in accordance with the terms of the applicable 

Prepetition IPCo Notes Documents; (IV) no offsets, recoupments, challenges, 

objections, defenses, claims, or counterclaims of any kind or nature to any of the 

Prepetition IPCo Liens or Prepetition IPCo Notes Obligations exist, and no portion 

of the Prepetition IPCo Liens or Prepetition IPCo Notes Obligations is subject to 

any challenge or defense, including, without limitation, avoidance, disallowance, 

disgorgement, recharacterization, or subordination (equitable or otherwise) 

pursuant to the Bankruptcy Code or applicable non-bankruptcy law; (V) other than 

with respect to the Debtor Reserved Claims, the Debtors and their estates have no 

claims, objections, challenges, causes of action, and/or choses in action, including, 

without limitation, avoidance claims under chapter 5 of the Bankruptcy Code or 

applicable state law equivalents or actions for recovery or disgorgement against any 

of the Prepetition IPCo Secured Parties or any of their respective affiliates, agents, 

attorneys, advisors, professionals, officers, directors, or employees, arising out of, 

based upon, or related to the Prepetition IPCo Notes; and (VI) other than with 

respect to the Debtor Reserved Claims, the Debtors have waived, discharged, and 

released any right to challenge any of the Prepetition IPCo Notes Obligations, the 

priority of the Debtors’ obligations thereunder, or the validity, extent, or priority of 

the Prepetition IPCo Liens.

(iv) Releases. Subject to the Debtors’ rights reserved with regard to the 

Debtor Reserved Claims, the Debtors hereby stipulate and agree that they forever and irrevocably 

release, discharge, and acquit the DIP Secured Parties and the Prepetition Secured Parties (in each 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 46 of 223
- 16 -

WEIL:\97486216\9\54457.0008

case, solely in their capacities as such) and each of their respective successors, assigns, affiliates, 

subsidiaries, parents, officers, shareholders, directors, employees, attorneys, and agents, past, 

present, and future, and their respective heirs, predecessors, successors, and assigns, each solely 

in their capacities as such (collectively, the “Releasees”), of and from any and all claims, 

controversies, disputes, liabilities, obligations, demands, damages, expenses (including, without 

limitation, reasonable attorneys’ fees), debts, liens, actions, and causes of action of any and every 

nature whatsoever relating to, as applicable, the DIP Facility, the DIP Documents, the Prepetition 

Documents, and/or the transactions contemplated hereunder or thereunder including, without 

limitation, (i) any so-called “lender liability” or equitable subordination or recharacterization 

claims or defenses, (ii) any and all claims and causes of action arising under the Bankruptcy Code, 

(iii) any and all claims and causes of action with respect to the Specified Liability Management 

Transactions (as defined in the Prepetition Term Credit Agreement), and (iv) any and all claims 

and causes of actions with respect to the validity, priority, perfection, or avoidability of the liens 

or claims of the DIP Secured Parties and the Prepetition Secured Parties. The Debtors further 

waive and release any defense, right of counterclaim, right of set-off, or deduction to the payment 

of the DIP Obligations and the Prepetition Obligations that the Debtors may now have or may 

claim to have against the Releasees arising out of, connected with, or relating to any and all acts, 

omissions, or events occurring prior to the Court’s entry of the Interim Order; provided that the 

Debtors’ Stipulations shall not release any claims, defenses or rights in favor of the Debtors with 

respect to certain litigation, captioned as Eaton Vance Management, et al v. Wilmington Savings 

Fund Society, FSB, as Administrative Agent and Collateral Agent, et al, pending in the Supreme 

Court of New York for New York County, Index No.: 654397/2017.

(v) Debtors’ Reserved Rights. 

(a) The Debtors make no stipulation, and, notwithstanding 

anything in the DIP Documents to the contrary, reserve all rights, with respect to 

(i) any liens (whether on account of a deposit account control agreement or 

otherwise) asserted with respect to that certain bank account maintained at Wells 

Fargo Bank, N.A., account number ending 1816, in the name of J. Crew Operating 

Corp. (the “Concentration Account”), and any cash held in or disbursed from the 

Concentration Account that is not otherwise proceeds of Prepetition Collateral, and 

the Debtors’ rights to challenge any lien (whether pursuant to an action commenced 

pursuant to chapter 5 of the Bankruptcy Code or otherwise) asserted by any party 

with respect to the Concentration Account, including cash held in or disbursed from 

such account (other than with respect to cash that is otherwise proceeds from 

Prepetition Collateral) are expressly preserved (the “Concentration Account 

Claims”); and (ii) any claims or causes of action relating to the obligations incurred 

and liens granted pursuant to the transaction among certain of the Debtors on 

December 5, 2016 and June 12, 2017 involving, among other things (A) the transfer 

of certain domestic intellectual property to J. Crew Domestic Brand, LLC, (B) an 

amendment to the Prepetition Term Credit Agreement to facilitate, among other 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 47 of 223
- 17 -

WEIL:\97486216\9\54457.0008

things, the repurchase of loans then-outstanding under the Prepetition Term Credit 

Agreement, and additional borrowings under the Prepetition Term Credit 

Agreement, and (C) to the extent not covered by (A) and (B), the exchange of 

7.75%/8.50% Senior PIK Toggle Notes due 2019 issued by Chinos Intermediate 

Holdings A, Inc. for, among other things, notes issued by J. Crew Brand LLC and 

J. Crew Brand Corp., including, without limitation, the Specified Liability 

Management Transactions (as defined in the Prepetition Term Credit Agreement) 

(the “2017 Transaction,” and together with the Concentration Account Claims, the 

“Debtor Reserved Claims”). 

(b) Any action prosecuted by the Debtors on account the Debtor 

Reserved Claims must be commenced, if at all, but subject to paragraph 44 herein, 

pursuant to an adversary proceeding filed in the Bankruptcy Court (i) with respect 

to Debtor Reserved Claims identified at Paragraph F(v)(a)(i), on or before the first 

Business Day that is seventy five (75) calendar days after the Petition Date and (ii) 

with respect to Debtor Reserved Claims identified at Paragraph F(v)(a)(ii), prior to 

entry of this Final Order, or in each case such claims shall otherwise be waived by 

the Debtors, and all defenses of the Prepetition Secured Parties with respect to any 

such Claim, Challenge or action are expressly preserved; provided that, such dates 

may be extended by agreement of the Debtors, on the one hand and (w) with respect 

to the Prepetition ABL Facility, the Prepetition ABL Agent, (x) with respect to the 

Prepetition Term Facility, the Prepetition Term Agent (acting at the direction of the 

Required Term Lenders (as defined in the Prepetition Term Credit Agreement, the 

“Required Term Lenders”)), (y) with respect to the Prepetition IPCo Exchange 

Notes, the Prepetition IPCo Exchange Notes Trustee, and (z) with respect to the 

Prepetition IPCo New Money Notes, the Prepetition New Money Notes Trustee, on 

the other hand.

Notwithstanding anything in this paragraph F or in the DIP Documents to the contrary, the 

Debtors’ rights to seek a determination on the value of the Prepetition Collateral securing the 

Prepetition Obligations are fully preserved; provided that, with respect to the Prepetition ABL 

Collateral, the foregoing shall apply solely in order to determine the amount of the “equity 

cushion” with respect to the Prepetition ABL Claims as of the Petition Date.

G. Cash Collateral. Subject to the Debtors’ rights reserved with regard to the 

Debtor Reserved Claims, all of the Debtors’ cash including any cash in their deposit accounts, 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 48 of 223
- 18 -

WEIL:\97486216\9\54457.0008

wherever located, whether as original collateral or proceeds of other Prepetition Collateral, 

constitutes Cash Collateral of the Prepetition Secured Parties.

H. Intercreditor Agreements. Pursuant to section 510 of the Bankruptcy Code, 

(i) that certain Intercreditor Agreement, dated as of March 7, 2011 (as amended, restated, amended 

and restated, supplemented, waived and/or otherwise modified from time to time, the “ABL 

Intercreditor Agreement”), by and between the Prepetition ABL Agent and the Prepetition Term 

Agent and (ii) that certain Intercreditor Agreement, dated as of July 13, 2017 (as amended, restated, 

amended and restated, supplemented, waived and/or otherwise modified from time to time, the 

“IPCo Intercreditor Agreement” and, together with the ABL Intercreditor Agreement, the 

“Intercreditor Agreements”), by and between the Prepetition IPCo New Money Notes Indenture 

Trustee and the Prepetition IPCo Exchange Notes Indenture Trustee, and any other applicable 

intercreditor or subordination provisions contained in any of the other Prepetition Documents, 

(i) shall remain in full force and effect, (ii) shall continue to govern the relative priorities, rights, 

and remedies of the Prepetition Secured Parties (including the relative priorities, rights, and 

remedies of such parties with respect to the replacement liens, administrative expense claims, and 

superpriority administrative expense claims granted or the amounts payable by the Debtors under 

the Interim Order, this Final Order or otherwise), and (iii) shall not be deemed to be amended, 

altered, or modified by the terms of this Final Order or the DIP Documents, unless expressly set 

forth herein or therein. 

I. Permitted Prior Liens; Continuation of Prepetition Liens. Nothing herein 

shall constitute a finding or ruling by this Court that any lien other than (and subject to the 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 49 of 223
- 19 -

WEIL:\97486216\9\54457.0008

exceptions and qualifications regarding such liens contained herein) the Prepetition ABL Liens, 

the Prepetition Term Liens, and the Prepetition IPCo Liens are (i) valid, enforceable, perfected, or 

non-avoidable or (ii) senior to any of the Prepetition ABL Liens, the Prepetition Term Liens, and 

the Prepetition IPCo Liens. Moreover, and subject in all respects to the Intercreditor Agreements, 

nothing shall prejudice the rights of any party in interest, including, but not limited to, the Debtors, 

the DIP Agent, the DIP Lenders, the Prepetition Secured Parties, or the Committee, to challenge 

the validity, priority, enforceability, seniority, avoidability, perfection, or extent of any asserted

lien that is not the subject of the stipulations granted pursuant to paragraph F hereof.

J. Findings Regarding Postpetition Financing and Use of Cash Collateral.

(i) Request for Postpetition Financing and Use of Cash Collateral. The 

Debtors seek final approval of the DIP Facility, the incurrence of the DIP Obligations and the use 

of Cash Collateral on a final basis on the terms described herein and in the DIP Documents, in 

each case, to, among other things, administer their Chapter 11 Cases and fund their operations.

(ii) Priming of the Prepetition Liens. The priming of the Prepetition 

Term Liens, Prepetition ABL Liens (except with respect to ABL Priority Collateral), and 

Prepetition IPCo Liens under section 364(d) of the Bankruptcy Code, as contemplated by the DIP 

Documents and as provided herein, will enable the Debtors to obtain the DIP Facility and the 

Debtors to continue to operate their business during the pendency of the Chapter 11 Cases, for the 

benefit of their estates and creditors. The Prepetition Secured Parties are entitled to receive 

adequate protection as set forth in this Final Order pursuant to sections 361, 363, and 364 of the 

Bankruptcy Code, solely to the extent of any Diminution in Value of their respective interests in 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 50 of 223
- 20 -

WEIL:\97486216\9\54457.0008

the Prepetition Collateral (including Cash Collateral) as of the Petition Date.

(iii) Need for Postpetition Financing and Use of Cash Collateral. The 

Debtors have demonstrated the need to use Cash Collateral on a final basis and to obtain credit in 

the form of the Final Loans under the DIP Facility in order to, among other things, continue their 

ordinary course operations, administer these Chapter 11 Cases, and preserve the going-concern 

value of their estates. 

(iv) No Credit Available on More Favorable Terms. The DIP Facility is 

the best source of debtor-in-possession financing reasonably available to the Debtors at this time. 

Given their current financial condition, financing arrangements, and capital structure, the Debtors 

have been and continue to be unable to obtain financing from sources other than the DIP Lenders 

on terms more favorable than the DIP Facility. The Debtors are unable to obtain adequate 

unsecured credit allowable under section 503(b)(1) of the Bankruptcy Code as an administrative 

expense. The Debtors have also been unable to obtain: (a) adequate unsecured credit having 

priority over that of administrative expenses of the kind specified in sections 503(b), 507(a), and 

507(b) of the Bankruptcy Code; (b) adequate credit secured solely by a lien on property of the 

Debtors and their estates that is not otherwise subject to a lien; or (c) adequate credit secured solely 

by a junior lien on property of the Debtors and their estates that is subject to a lien. Financing on 

a postpetition basis on better terms is not available without granting the DIP Agent, for the benefit 

of itself and the DIP Lenders, (1) perfected security interests in and liens on (each as provided 

herein) the DIP Collateral (as defined below), with the priorities set forth herein; (2) superpriority 

claims; and (3) the other protections set forth in this Final Order.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 51 of 223
- 21 -

WEIL:\97486216\9\54457.0008

(v) Use of Cash Collateral and Proceeds of the DIP Facility. As a 

condition to entry into the DIP Credit Agreement, the extension of credit under the DIP Facility 

and the authorization to use the Prepetition Collateral, including Cash Collateral, the DIP Agent, 

the DIP Lenders, and the Prepetition Secured Parties require, and the Debtors have agreed, that 

proceeds of the DIP Facility and the Prepetition Secured Parties’ Cash Collateral shall be used in 

a manner consistent with the terms and conditions of this Final Order and the DIP Documents and 

in accordance with the budget (including with respect to any variances as permitted in the DIP 

Documents, as would not trigger a Budget Event (as defined in the DIP Documents), and as set 

forth in paragraph 15 hereof, the “Budget” and the requirement to use the proceeds of the DIP 

Facility and the Prepetition Secured Parties’ Cash Collateral in a manner that does not trigger a 

Budget Event, the “Budget Requirement”),10 solely for the purposes set forth in the DIP Credit 

Agreement and this Final Order, including (a) ongoing working capital, capital expenditures, other 

general corporate purposes of the Debtors and any other purpose not prohibited by the DIP Credit 

Agreement; (b) permitted payment of costs of administration of the Chapter 11 Cases; (c) payment 

of such prepetition expenses as consented to by the DIP Agent, acting at the direction of the 

Required DIP Lenders; (d) payment of interest, premiums, fees, expenses, and other amounts 

(including, without limitation, the fees and expenses of the DIP Agent and the legal and other 

professionals’ fees and expenses of the DIP Agent and the DIP Lenders) owed under the DIP 

Documents, including those incurred in connection with the preparation, negotiation, 

 

10 A copy of the current Budget is attached hereto as Schedule 2.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 52 of 223
- 22 -

WEIL:\97486216\9\54457.0008

documentation, and Court approval of the DIP Facility; (e) payment of certain adequate protection 

amounts to the Prepetition Secured Parties, as set forth in paragraph 12 hereof; and (f) payment of 

obligations benefitting from the Carve-Out (as defined below), and making disbursements 

therefrom, including by funding the Carve-Out Reserve Account (as defined below); provided that, 

for the avoidance of doubt, and notwithstanding anything herein or in the DIP Documents 

(including the DIP Credit Agreement) to the contrary, in no instance shall the Debtors’ use of 

Collateral (including Cash Collateral) to pay obligations benefiting from the Carve-Out, including 

Professional Fees, be limited or deemed limited by any Budget. 

(vi) Application of Proceeds of DIP Collateral. As a condition to entry 

into the DIP Credit Agreement, the extension of credit under the DIP Facility, and authorization 

to use Cash Collateral, the Debtors, the DIP Agent, the DIP Lenders, and the applicable Prepetition 

Secured Parties have agreed that as of and commencing on the date of the Interim Hearing, the 

Debtors shall apply the proceeds of the DIP Collateral as permitted by the DIP Documents and 

this Final Order.

(vii) DIP Election Procedures. The procedures governing the 

participation of the Prepetition Term Lenders and the Prepetition IPCo Noteholders in the DIP 

Facility (the “DIP Election Procedures”), as set forth in the DIP Credit Agreement, are fair and 

reasonable. 

K. Adequate Protection. (i) The Prepetition Term Agent, for the benefit of the 

Prepetition Term Secured Parties, (ii) the Prepetition ABL Agent, for the benefit of the Prepetition 

ABL Secured Parties, and (iii) the Prepetition IPCo Indenture Trustees, for the benefit of the 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 53 of 223
- 23 -

WEIL:\97486216\9\54457.0008

applicable Prepetition IPCo Secured Parties, are entitled to receive adequate protection solely to 

the extent of Diminution in Value, if any, of their respective interests as of the Petition Date in the 

Prepetition Collateral, including, without limitation, the Cash Collateral. Pursuant to sections 361, 

363, 503, and 507(b) of the Bankruptcy Code, as adequate protection, subject in all respects to the 

Carve-Out (as defined below), the Prepetition Secured Parties will receive, and subject to the Carve 

Out in all respects, (i) solely to the extent of any Diminution of Value, if any, of their interests in 

the Prepetition Collateral as of the Petition Date, Adequate Protection Liens (as defined below)

and 507(b) Claims (as defined below); (ii) current payment of reasonable and documented fees 

and expenses and other disbursements as set forth in paragraph 12 herein; (iii) financial and other 

reporting in each case, as set forth in paragraph 12 herein; and (iv) solely with respect to the 

Prepetition ABL Secured Parties, current cash payments on a monthly basis in an amount equal to 

the postpetition interest and Letter of Credit Fees (as defined in the Prepetition ABL Credit 

Agreement) on the Prepetition ABL Facility at the non-default rate as set forth in the Prepetition 

ABL Credit Agreement and accrual of default interest as set forth in paragraph 12 herein. 

Notwithstanding the foregoing, subject to paragraph 44 herein, the Debtors’ and any party in 

interest’s rights are fully reserved to seek a determination that adequate protection payments 

should be recharacterized under section 506(b) of the Bankruptcy Code as payment on account of 

the secured portion of the applicable Prepetition Secured Parties’ claims as of the Petition Date.

L. Sections 506(c) and 552(b). In light of, among other things: (i) the superpriority 

of the Carve-Out with respect to the Prepetition Liens; (ii) the DIP Agent’s and the DIP Lenders’ 

agreement that their liens and superpriority claims shall be subject to the Carve-Out (as defined 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 54 of 223
- 24 -

WEIL:\97486216\9\54457.0008

below); (iii) the Prepetition Secured Parties’ agreement that their respective liens and claims, 

including any adequate protection liens and claims, shall be subject to the Carve-Out (as defined 

below) and subordinate to the DIP Liens (as defined below), except as otherwise set forth herein; 

(iv) the authority to use Cash Collateral as provided herein; and (v) the funding made available 

pursuant to the DIP Facility (a) the Prepetition Secured Parties are entitled to a waiver of any 

“equities of the case” exception under section 552(b) of the Bankruptcy Code and (b) the DIP 

Agent, the DIP Lenders, and the Prepetition Secured Parties are each entitled to a waiver of the 

provisions of section 506(c) of the Bankruptcy Code as provided herein. 

M.Good Faith of the DIP Agent and DIP Lenders and the Prepetition Secured 

Parties. 

(i) Based upon the pleadings and the record in the Chapter 11 Cases, (i) 

the terms and conditions of the DIP Facility are fair and reasonable, are appropriate for secured 

financing to debtors in possession, are the best available to the Debtors under the circumstances, 

reflect the Debtors’ exercise of prudent business judgment consistent with their fiduciary duties, 

and are supported by reasonably equivalent value and fair consideration; (ii) the terms and 

conditions of the DIP Facility and the use of the Cash Collateral have been negotiated in good faith 

and at arm’s length among the Debtors and the DIP Secured Parties and the Prepetition Secured 

Parties, with the assistance and counsel of their respective advisors; (iii) the use of Cash Collateral, 

including, without limitation, pursuant to this Final Order, has been allowed in “good faith” within 

the meaning of section 364(e) of the Bankruptcy Code; (iv) any credit to be extended, loans to be 

made, and other financial accommodations to be extended to the Debtors by the DIP Secured 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 55 of 223
- 25 -

WEIL:\97486216\9\54457.0008

Parties and the Prepetition Secured Parties including, without limitation, pursuant to this Final

Order, have been allowed, advanced, extended, issued, or made, as the case may be, in “good faith” 

within the meaning of section 364(e) of the Bankruptcy Code by the DIP Secured Parties and the 

Prepetition Secured Parties in express reliance upon the protections offered by section 364(e) of 

the Bankruptcy Code; and (v) the DIP Facility, the DIP Liens (as defined below), the DIP 

Superpriority Claims (as defined below), the Adequate Protection Liens, and the 507(b) Claims 

(as defined below) shall be entitled to the full protection of section 364(e) of the Bankruptcy Code 

in the event that this Final Order or any provision hereof is vacated, reversed, or modified, on 

appeal or otherwise.

(ii) Absent an order of this Court and the provision of Adequate 

Protection, (a) consent of the Prepetition ABL Secured Parties and Prepetition Term Secured 

Parties is required for the Debtors’ use of Cash Collateral and other Prepetition ABL Collateral 

and Prepetition Term Collateral and (b) consent of the Prepetition IPCo Secured Parties is required 

for the Debtors’ use of the Prepetition IPCo Collateral. The Prepetition ABL Secured Parties and 

Prepetition Term Secured Parties have consented, or have not objected, to the Debtors’ use of Cash 

Collateral and other Prepetition ABL Collateral and Prepetition Term Collateral or to the Debtors’ 

entry into the DIP Documents in accordance with and subject to the terms and conditions in this 

Final Order and the DIP Documents. The Prepetition IPCo Secured Parties have consented, or 

have not objected, to the Debtors’ use of the Prepetition IPCo Collateral or to the Debtors’ entry 

into the DIP Documents in accordance with and subject to the terms and conditions in this Final

Order and the DIP Documents.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 56 of 223
- 26 -

WEIL:\97486216\9\54457.0008

N. Immediate Entry. Sufficient cause exists for immediate entry of this Final

Order pursuant to Bankruptcy Rule 4001(c)(2).

Based upon the foregoing findings and conclusions, the Motion, the Declarations, and the 

record before the Court with respect to the Motion, and after due consideration and good and 

sufficient cause appearing therefor,

IT IS HEREBY ORDERED THAT:

1. DIP Facility and Use of Cash Collateral Approved on Final Basis. The Motion 

is granted to the extent provided herein on a final basis. The DIP Facility, the borrowing of the 

Final Loans thereunder, and the guaranty by the DIP Guarantors of such borrowing (and related 

obligations under the DIP Facility), is hereby authorized and approved, and the use of Cash 

Collateral on a final basis is authorized, in each case subject to the terms and conditions set forth 

in the DIP Documents and this Final Order. All objections to this Final Order, to the extent not 

withdrawn, waived, settled, or resolved, are hereby denied and overruled. This Final Order shall 

become effective immediately upon its entry.

2. Authorization of the DIP Facility. The DIP Facility is hereby approved. The 

Debtors are expressly and immediately authorized and empowered to incur and to perform the DIP 

Obligations in accordance with, and subject to, the terms of this Final Order and the DIP 

Documents and to deliver all instruments, certificates, agreements, and documents that may be 

required, desirable or necessary for the performance by the Debtors under the DIP Facility and the 

creation and perfection of the DIP Liens (as defined below). The Debtors are hereby authorized 

and directed to pay, in accordance with this Final Order, the principal, interest, premiums, fees, 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 57 of 223
- 27 -

WEIL:\97486216\9\54457.0008

payments, expenses, and other amounts described in the DIP Documents as such amounts 

(including, without limitation, legal and other professional fees and expenses of the DIP Agent 

and the DIP Lenders) become due and payable in accordance with the terms and conditions of the 

DIP Documents, without need to obtain further Court approval, whether or not such fees arose 

before or after the Petition Date, and whether or not the transactions contemplated hereby are 

consummated, and to take any other related actions that may be necessary, desirable or appropriate, 

all to the extent provided in this Final Order or the DIP Documents. The DIP Documents shall 

represent valid and binding obligations of the Debtors, enforceable against each of the Debtors and 

their estates in accordance with their terms. The Backstop Premium set forth in the Backstop 

Commitment Letter (as defined in the DIP Credit Agreement) (the “Backstop Premium”) is fully 

earned, non-refundable, and non-avoidable and shall be payable in accordance with and at the 

times specified in the DIP Documents. 

3. Authorization to Borrow. From the entry of this Final Order through and 

including the DIP Termination Date (as defined below), and subject to the terms and conditions 

set forth in the DIP Documents and this Final Order, the Debtors are hereby authorized to request 

extensions of credit (in the form of the Final Loans) under the DIP Facility in an original principal 

amount equal to up to $400,000,000. 

4. Amendment of the DIP Documents. The DIP Documents may from time to time 

be amended, restated, amended and restated, waived, modified, and/or supplemented by the parties 

thereto (or, to the extent provided for in the applicable DIP Document, a subset of such parties) in 

accordance with the terms and conditions of the applicable DIP Documents, provided that the 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 58 of 223
- 28 -

WEIL:\97486216\9\54457.0008

Debtors shall use commercially reasonable efforts to provide not less than three (3) business days’ 

notice to the Committee in advance in writing, without further order of the Court if the amendment, 

restatement, amendment and restatement, waiver, modification or supplement does not (i) shorten 

the original stated maturity of the DIP Loans, (ii) increase the aggregate commitments or the rate 

of interest payable thereunder, or (iii) amend the Events of Default (as defined in the DIP Credit 

Agreement) or covenants in the DIP Documents to be materially more restrictive to the Debtors 

(taken as a whole) than those set forth in the DIP Documents as originally executed and delivered 

(any such amendment, restatement, amendment and restatement, waiver, modification or 

supplement, an “Approved Modification”); provided, that for the avoidance of doubt, other than 

as explicitly set forth in the DIP Credit Agreement, updates and supplements to the Budget required 

to be delivered by the Borrower under the DIP Documents shall not require further order of the 

Court. Prior to or promptly after the effectiveness of any Approved Modification, the Debtors 

shall (i) provide notice (which may be provided through electronic mail or facsimile) to counsel to 

the Committee, the U.S. Trustee, the DIP Agent, the Prepetition Agents, the Prepetition IPCo 

Indenture Trustees, and counsel to the Ad Hoc Committee and (ii) provide notice to the Court. In 

the case of an amendment, restatement, amendment and restatement, waiver, supplement or other 

modification of the DIP Documents that is not an Approved Modification, the Debtors shall (i) 

provide notice (which may be provided through electronic mail or facsimile) to counsel to the

Committee, the U.S. Trustee, the DIP Agent, the Prepetition Agents, the Prepetition IPCo 

Indenture Trustees, and counsel to the Ad Hoc Committee, (ii) provide notice to the Court and (iii) 

obtain approval of the Court.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 59 of 223
- 29 -

WEIL:\97486216\9\54457.0008

5. DIP Obligations. The DIP Documents and this Final Order shall constitute and 

evidence the validity and binding effect of the DIP Obligations, which shall be enforceable in 

accordance with their terms against the Debtors, their estates and any successors thereto, including, 

without limitation, any trustee appointed in the Chapter 11 Cases or in any case under chapter 7 of 

the Bankruptcy Code upon the conversion of any of the Chapter 11 Cases, or in any other 

proceedings superseding or related to any of the foregoing (collectively, the “Successor Cases”). 

Upon entry of this Final Order, the DIP Obligations will include all loans and any other 

indebtedness or obligations, contingent or absolute, which may now or from time to time hereafter 

be owing by any of the Debtors party to the DIP Documents to the DIP Agent or any of the DIP 

Lenders, in each case, under and in accordance with the terms and conditions of the DIP 

Documents or this Final Order or secured by the DIP Liens (as defined below), including, without 

limitation, all principal, accrued and unpaid interest, costs, fees, expenses, and other amounts 

owing under and in accordance with the DIP Documents; provided that, for the avoidance of doubt 

the DIP Liens and the DIP Obligations shall be subject to the Carve-Out in all respects. The 

Debtors shall be jointly and severally liable for the DIP Obligations as and to the extent provided 

in the DIP Documents, which shall be subject to the Carve-Out in all respects. The DIP 

Obligations shall be due and payable without notice or demand on the DIP Termination Date (as 

defined below), and the Debtors’ authority to use Cash Collateral under this Final Order shall

automatically cease, in each case, without notice or demand on the Cash Collateral Termination 

Date (as defined below), in each case except as provided in paragraph 26 hereof and subject to the 

requirements of the Carve-Out (as defined below); provided that the Debtors’ rights to seek the 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 60 of 223
- 30 -

WEIL:\97486216\9\54457.0008

use of Cash Collateral upon entry of a further order of the Court after the occurrence of the Cash 

Collateral Termination Date are fully reserved, and nothing herein shall waive, limit, or modify or 

be deemed to waive, limit or modify the Debtors’ rights to seek the use of Cash Collateral upon 

entry of a further order of the Court after the occurrence of the Cash Collateral Termination Date. 

It shall be an event of default if any Order is entered that renders an obligation, payment, transfer, 

or grant of collateral security hereunder or under the DIP Documents (including any DIP 

Obligation or DIP Liens (as defined below) and including in connection with any adequate 

protection provided to the Prepetition Secured Parties hereunder) stayed, restrained, voidable, 

avoidable, or recoverable under the Bankruptcy Code or under any applicable law (including, 

without limitation, under chapter 5 of the Bankruptcy Code, section 724(a) of the Bankruptcy 

Code, or any other provision with respect to avoidance actions under the Bankruptcy Code or 

applicable state law equivalents), is determined to constitute original issue discount, or is 

determined to be subject to any avoidance, reduction, setoff, recoupment, offset, 

recharacterization, subordination (whether equitable, contractual, or otherwise), counterclaim, 

cross-claim, defense, or any other challenge under the Bankruptcy Code or any applicable law or 

regulation by any person or entity.

6. DIP Liens. Subject and subordinate to the Carve-Out in all respects, as set forth 

in this Final Order and effective immediately upon entry of this Final Order, pursuant to, as 

applicable, sections 361, 362, 364(c)(2), 364(c)(3), and 364(d) of the Bankruptcy Code, the DIP 

Agent, for the benefit of itself and the DIP Lenders, is hereby granted, in order to secure the DIP 

Obligations, continuing, valid, binding, enforceable, non-avoidable, and automatically and 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 61 of 223
- 31 -

WEIL:\97486216\9\54457.0008

properly perfected postpetition security interests in and liens on (collectively, the “DIP Liens”) all 

real and personal property, whether now existing or hereafter arising and wherever located, 

tangible or intangible, of each of the Debtors (the “DIP Collateral”), including, without limitation 

(a) all cash, cash equivalents, deposit accounts, securities accounts, accounts, other receivables 

(including credit card receivables), chattel paper, contract rights, inventory (wherever located), 

instruments, documents, securities (whether or not marketable) and investment property 

(including, without limitation, all of the issued and outstanding capital stock of each Debtor (other 

than Ultimate Holdings), other equity or ownership interests, including equity interests in 

subsidiaries and non-wholly-owned subsidiaries), hedge agreements, furniture, fixtures, 

equipment (including documents of title), goods, franchise rights, trade names, trademarks, 

servicemarks, copyrights, patents, license rights, intellectual property, general intangibles 

(including, for the avoidance of doubt, payment intangibles), rights to the payment of money 

(including, without limitation, tax refunds and any other extraordinary payments), supporting 

obligations, guarantees, letter of credit rights, commercial tort claims, causes of action, and all 

substitutions, indemnification rights, all present and future intercompany debt, leases other than 

nonresidential real property leases, fee interests in real property owned by the Debtors, books and 

records related to the foregoing, and accessions and proceeds of the foregoing, wherever located, 

including insurance or other proceeds; (b) all owned real property interests and all proceeds of 

leased real property; (c) actions brought under section 549 of the Bankruptcy Code to recover any 

post-petition transfer of DIP Collateral; (d) the proceeds of any avoidance actions brought pursuant 

to chapter 5 of the Bankruptcy Code or section 724(a) of the Bankruptcy Code or any other 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 62 of 223
- 32 -

WEIL:\97486216\9\54457.0008

avoidance actions under the Bankruptcy Code or applicable state law equivalents (the “Avoidance 

Action Proceeds”), but not the actions themselves; (d) the proceeds of any exercise of the Debtors’ 

rights under section 506(c) and 550 of the Bankruptcy Code; and (e) all DIP Collateral that was 

not otherwise subject to valid, perfected, enforceable, and unavoidable liens on the Petition Date; 

provided that the DIP Collateral shall not include (and the DIP Liens shall not extend to) (w) funds 

held in the Borrowing Base Account (if any), provided DIP Collateral shall include the Debtors’ 

reversionary interest in such funds (x) any “Excluded Property” (as defined in the DIP 

Documents), (y) any nonresidential real property leases (although the DIP Collateral shall include 

the proceeds of any such leases) or (z) the Professional Fees Account (as defined herein) and all 

funds held therein, which shall constitute “Excluded Property” under this Final Order and the DIP 

Documents, except to the extent of the Debtors’ reversionary interest, if any, in funds held in the 

Professional Fees Account, after all Professional Fees benefitting from the Carve-Out have been 

indefeasibly paid in full, in cash; provided further that neither the DIP Funding Account (as defined 

in the DIP Credit Agreement) nor the Operating Account (as defined in the DIP Credit Agreement) 

shall be subject to any lien in favor of the Prepetition Secured Parties, including with respect to 

any lien granted as adequate protection.

7. DIP Lien Priority. The DIP Liens shall have the following priority with respect 

to assets of the Debtors’ estates, and subject in all respects to the Carve-Out: 

(a) pursuant to Section 364(c)(2) of the Bankruptcy Code, the DIP 

Liens shall be first priority liens, as granted hereby, on all of the assets (now or hereafter acquired 

and all proceeds thereof) of the Debtors that are not otherwise subject to valid, perfected, and 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 63 of 223
- 33 -

WEIL:\97486216\9\54457.0008

unavoidable liens in existence immediately prior to the Petition Date or liens that are perfected 

after the Petition Date as permitted by section 546(b) of the Bankruptcy Code; provided that in no 

instance shall the DIP Liens encumber the Excluded Property (as defined in the DIP Documents);

(b) pursuant to Section 364(c)(3) of the Bankruptcy Code, the DIP 

Liens shall be junior priority liens, as granted hereby, upon all DIP Collateral constituting the ABL 

Priority Collateral (now owned or hereafter acquired and all proceeds thereof), subject and junior 

only to, in order of priority: (1) the Carve Out; (2) the ABL Permitted Liens; (3) ABL Adequate 

Protection Liens (as defined herein); and (4) Prepetition ABL Liens; provided that, for the 

avoidance of doubt, the DIP Liens shall be senior in priority to the Prepetition Term Liens and 

Prepetition IPCo Liens and any liens granted as adequate protection in favor of the Prepetition 

Term Secured Parties or Prepetition IPCo Secured Parties with respect to ABL Priority Collateral 

(now owned or hereafter acquired);

(c) pursuant to Section 364(d) of the Bankruptcy Code, the DIP Liens 

shall be priming first-priority liens, as granted hereby, on all DIP Collateral (now or hereafter 

acquired and all proceeds thereof) that is “Collateral” as defined by each of the Prepetition Term 

Credit Agreement, the Prepetition ABL Credit Agreement, and the Prepetition IPCo Indentures to 

the extent such Collateral is not ABL Priority Collateral; provided that such DIP Liens shall be 

junior to, in order of priority, to: (i) the Carve Out, and (ii) the Permitted Liens. For the avoidance

of doubt, the Prepetition ABL Liens, the Prepetition Term Liens, and the Prepetition IPCo Liens 

shall be junior to the DIP Liens and the Carve Out in all respects with respect to DIP Collateral 

that is not ABL Priority Collateral (now owned or hereafter acquired). 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 64 of 223
- 34 -

WEIL:\97486216\9\54457.0008

(d) Other than as set forth herein (including with respect to the CarveOut) or in the DIP Documents, the DIP Liens shall not be made subject to or pari passu with any 

lien or security interest heretofore or hereinafter granted in the Chapter 11 Cases or any Successor 

Cases and shall be valid and enforceable against any trustee appointed in the Chapter 11 Cases or 

any Successor Cases, upon the conversion of any of the Chapter 11 Cases to any Successor Case, 

and/or upon the dismissal of any of the Chapter 11 Cases or Successor Cases. The DIP Liens shall 

not be subject to any of sections 510, 549 or 550 of the Bankruptcy Code. No lien or interest 

avoided and preserved for the benefit of the estate pursuant to section 551 of the Bankruptcy Code 

shall be pari passu with or senior to the DIP Liens. 

8. Superpriority Claims. Subject and subordinate to the Carve-Out in all respects, 

upon entry of this Final Order, the DIP Agent, on behalf of itself and the DIP Lenders, is hereby 

granted, pursuant to section 364(c)(1) of the Bankruptcy Code, allowed superpriority 

administrative expense claims in each of the Chapter 11 Cases and any Successor Cases 

(collectively, the “DIP Superpriority Claims”) for all DIP Obligations (a) with priority over any 

and all administrative expense claims and unsecured claims against the Debtors or their estates in 

any of their Chapter 11 Cases or any Successor Cases, at any time existing or arising, of any kind 

or nature whatsoever, including, without limitation, administrative expenses of the kinds specified 

in or ordered pursuant to sections 105, 326, 328, 330, 331, 364, 503(a), 503(b), 507(a), 507(b), 

546(c), 546(d), 726, 1113, or 1114 of the Bankruptcy Code or any other provision of the 

Bankruptcy Code and (b) which shall at all times be senior to the rights of the Debtors and their 

estates, and any successor trustee or other estate representative to the extent permitted by law. The 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 65 of 223
- 35 -

WEIL:\97486216\9\54457.0008

DIP Superpriority Claims shall be payable from, and have recourse to, all prepetition and 

postpetition property of the Debtors and all proceeds thereof; provided, that, for the avoidance of 

doubt, the DIP Superpriority Claims shall not have recourse to (x) the amounts deposited in the 

Carve-Out Reserve Account (as defined below) in accordance with the Interim Order and this Final

Order, or (y) the amounts held in the Professional Fees Account (as defined below), other than the 

Debtors’ reversionary interest therein, if any, after all Professional Fees benefitting from the 

Carve-Out have been indefeasibly paid in full, in cash.

9. No Obligation to Extend Credit. Except as required to fund the Carve-Out (as 

defined below) as set forth in this Final Order, the DIP Lenders shall have no obligation to make 

any loan or advance or to issue, amend, renew, or extend any letters of credit or bankers’ 

acceptance under the DIP Documents unless all of the conditions precedent to the making of such 

extension of credit or the issuance, amendment, renewal, or extension of such letter of credit or 

bankers’ acceptance under the DIP Documents and this Final Order have been satisfied in full or 

waived by the DIP Agent, acting at the direction of the Required Lenders (or the requisite 

consenting DIP Lenders, as applicable) in accordance with the terms of the DIP Credit Agreement.

10. Use of Proceeds of DIP Facility. From and after the Petition Date, the 

Debtors shall use proceeds of borrowings under the DIP Facility in accordance with the Budget 

Requirement and the terms and conditions in this Final Order and the DIP Documents; provided 

that, for the avoidance of doubt, the Debtors’ use of borrowings under the DIP Facility and the 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 66 of 223
- 36 -

WEIL:\97486216\9\54457.0008

DIP Collateral (including Cash Collateral) to pay obligations benefiting from the Carve-Out shall 

not be limited or deemed limited by any Budget.

11. Authorization to Use Cash Collateral. Subject to the terms and conditions 

of this Final Order and the DIP Documents, and in a manner that does not trigger a Budget Event,

the Debtors are authorized to use Cash Collateral until the Cash Collateral Termination Date (as 

defined below); provided, however, that during the Remedies Notice Period (as defined below), 

the Debtors are authorized to use Cash Collateral (x) solely to pay expenses necessary to avoid 

immediate and irreparable harm to the Debtors’ estates, in accordance with the Budget 

Requirement and (y) as otherwise agreed by the DIP Agent, acting at the direction of the Required 

Lenders; provided that, with respect to Cash Collateral from proceeds of ABL Priority Collateral,

with the consent of the Prepetition ABL Agent. Nothing in this Final Order shall authorize the 

disposition of any assets of the Debtors’ estates outside the ordinary course of business, or any 

Debtor’s use of any Cash Collateral or other proceeds resulting therefrom, except as permitted in 

this Final Order (including with respect to the Carve-Out (as defined below)), the DIP Facility, or 

the DIP Documents, or, with respect to the ABL Priority Collateral, with consent of the Prepetition 

ABL Agent and “Required Lenders” as defined in the Prepetition ABL Credit Agreement.

12. Adequate Protection for the Prepetition Secured Parties. The Prepetition 

Secured Parties are entitled, pursuant to sections 361, 362, 363(c)(2), 363(e), 503, and 507 of the 

Bankruptcy Code, to adequate protection of their interests in the Prepetition Collateral as of the 

Petition Date, including the Cash Collateral, solely to the extent of Diminution in Value, if any, of 

their interests in the Prepetition Collateral as of the Petition Date (the “Adequate Protection 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 67 of 223
- 37 -

WEIL:\97486216\9\54457.0008

Claim”); provided, that, for the avoidance of doubt, the Adequate Protection Obligations shall not 

have any recourse to the amounts deposited in accordance with the Interim Order or this Final

Order in the Carve-Out Reserve Account or the Professional Fees Account (each as defined below) 

(in each case other than the Debtors’ reversionary interest therein, if any, after all Professional 

Fees benefiting from the Carve-Out have been indefeasibly paid in full in cash). As adequate 

protection, the Prepetition Secured Parties are hereby granted the following (the “Adequate 

Protection Obligations”):

(a) ABL Adequate Protection Liens. Subject to the Carve-Out in all 

respects, as security for the payment of the Prepetition ABL Secured Parties’ Adequate Protection 

Claims, if any, the Prepetition ABL Agent (for itself and for the benefit of the Prepetition ABL 

Lenders) is hereby granted (effective and perfected upon the date of the Interim Order and without 

the necessity of the execution by the Debtors of security agreements, pledge agreements, 

mortgages, financing statements, or other agreements) a valid, perfected replacement security 

interest in and lien on all of the DIP Collateral of each of the Debtors (including Avoidance Action 

Proceeds, but not avoidance actions themselves) (the “ABL Adequate Protection Liens”), subject 

and subordinate only to (i) the Carve-Out (as defined below) in all respects; (ii) with respect to the 

Term Priority Collateral, in order of priority (1) the Term Permitted Liens; (2) the DIP Liens, (3) 

the Prepetition Term Liens, and (4) the Term Adequate Protection Liens (as defined below); 

(iii) with respect to ABL Priority Collateral, the ABL Permitted Liens; (iv) with respect to the DIP 

Collateral of the ABL Debtors that is neither ABL Priority Collateral nor Term Priority Collateral, 

the DIP Liens (and any liens permitted by the DIP Documents to be senior to the DIP Liens); 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 68 of 223
- 38 -

WEIL:\97486216\9\54457.0008

(v) with respect to the DIP Collateral of the IPCo Debtors, (1) the IPCo Permitted Liens, (2) the 

DIP Liens (and any liens permitted by the DIP Documents to be senior to the DIP Liens), (3) the 

IPCo Adequate Protection Liens (as defined below), and (4) the Prepetition IPCo Liens; and (v) 

with respect to the DIP Collateral of Debtors other than the ABL Debtors, the Term Debtors, or 

the IPCo Debtors, the DIP Liens (and any liens permitted by the DIP Documents to be senior to 

the DIP Liens). 

(b) ABL Section 507(b) Claims. Subject to the Carve-Out in all 

respects, the Prepetition ABL Agent (for itself and for the benefit of the Prepetition ABL Lenders) 

is hereby granted an allowed superpriority claim against each of the Debtors as provided in sections 

503 and 507(b) of the Bankruptcy Code (the “ABL 507(b) Claims”) in the amount of the 

Prepetition ABL Secured Parties’ Adequate Protection Claims, if any, with priority in payment 

over any and all administrative expenses of the kinds specified or ordered pursuant to any provision 

of the Bankruptcy Code, including, without limitation, sections 105, 326, 328, 330, 331, 503(a), 

503(b), 507(a), 506(c), 507(b), 546(c), 546(d), 726, 1113, or 1114 of the Bankruptcy Code, subject 

and subordinate only to (i) (1) the Carve-Out (as defined below) in all respects, and (2) the DIP 

Superpriority Claims granted in respect of the DIP Obligations and (ii) with respect to the ABL 

507(b) Claims against the IPCo Debtors, the IPCo 507(b) Claims (as defined below). Except to 

the extent expressly set forth in this Final Order, the Prepetition ABL Secured Parties shall not 

receive or retain any payments, property, or other amounts in respect of the ABL 507(b) Claims 

unless and until (x) all obligations benefitting from the Carve-Out have been indefeasibly paid in 

full, in cash, (y) all DIP Obligations shall have been indefeasibly paid in full in cash, and (z) with 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 69 of 223
- 39 -

WEIL:\97486216\9\54457.0008

respect to the ABL 507(b) Claims against the IPCo Debtors, all IPCo 507(b) Claims (as defined 

below) shall have been indefeasibly paid in full in cash. Only the Prepetition ABL Agent, acting 

at the direction of the Requisite Lenders (as defined in the Prepetition ABL Credit Agreement), 

may assert the ABL 507(b) Claims against the Debtors. Notwithstanding their status as 507(b) 

Claims, the Prepetition ABL Secured Parties’ Adequate Protection Claims may be satisfied in a 

plan of reorganization or liquidation confirmed in the Chapter 11 Cases in any manner set forth in 

such plan if the Requisite Lenders (as defined in the Prepetition ABL Credit Agreement) consent 

to such treatment, which shall include any class including such Requisite Lenders voting to accept 

such plan of reorganization or plan of liquidation.

(c) ABL Postpetition Interest Payments. From and after entry of the

Interim Order, the Prepetition ABL Agent, on behalf of itself and the Prepetition ABL Lenders, 

shall receive current cash payment during the Chapter 11 Cases of all accrued interest and Letter 

of Credit Fees (as defined in the Prepetition ABL Credit Agreement) on the Prepetition ABL 

Obligations under the Prepetition ABL Credit Agreement as such interest and Letter of Credit Fees 

become due and payable and as set forth in the following sentence, at the applicable contractual 

non-default rate thereunder and in the amounts specified in the Prepetition ABL Credit Agreement;

provided that, the default rate as set forth in the Prepetition ABL Credit Agreement shall accrue 

from and after the Petition Date. The first such interest payment date shall be May 29, 2020, and 

thereafter, the last business day of every calendar month; provided that the Debtors’ or any party 

in interest’s rights are fully reserved to seek a determination that adequate protection payments (as 

set forth in this paragraph 12(c)) should be recharacterized under section 506(b) of the Bankruptcy 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 70 of 223
- 40 -

WEIL:\97486216\9\54457.0008

Code as payment on account of the secured portion of the Prepetition ABL Obligations as of the 

Petition Date.

(d) Term Adequate Protection Liens. Subject in all respects to the 

Carve-Out, as security for the payment of the Prepetition Term Secured Parties’ Adequate 

Protection Claims, the Prepetition Term Agent (for itself and for the benefit of the Prepetition 

Term Secured Parties) is hereby granted (effective and perfected upon the date of the Interim Order 

and without the necessity of the execution by the Debtors of security agreements, pledge 

agreements, mortgages, financing statements, or other agreements) a valid, perfected replacement 

security interest in and lien on all of the DIP Collateral of each of the Debtors (including Avoidance 

Action Proceeds) (the “Term Adequate Protection Liens”), subject and subordinate only to (i) 

(1) the Carve-Out (as defined below) and (2) the DIP Liens (and any liens permitted by the DIP 

Documents to be senior to the DIP Liens); (ii) with respect to the ABL Priority Collateral, (1) the 

Prepetition ABL Liens and (2) the ABL Adequate Protection Liens; and (iii) with respect to the 

DIP Collateral of the IPCo Debtors, (1) the IPCo Adequate Protection Liens (as defined below) 

and (2) the Prepetition IPCo Liens.

(e) Term Section 507(b) Claims. Subject to the Carve-Out in all 

respects, the Prepetition Term Agent (for itself and for the benefit of the Prepetition Term Lenders) 

is hereby granted an allowed superpriority claim against each of the Debtors as provided in sections 

503 and 507(b) of the Bankruptcy Code (the “Term 507(b) Claims”) in the amount of the 

Prepetition Term Secured Parties’ Adequate Protection Claims, if any, with priority in payment 

over any and all administrative expenses of the kinds specified or ordered pursuant to any provision 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 71 of 223
- 41 -

WEIL:\97486216\9\54457.0008

of the Bankruptcy Code, including, without limitation, sections 105, 326, 328, 330, 331, 503(a), 

503(b), 507(a), 506(c), 507(b), 546(c), 546(d), 726, 1113, or 1114 of the Bankruptcy Code, subject 

and subordinate only to (i) (1) the Carve-Out (as defined below) and (2) the DIP Superpriority 

Claims granted in respect of the DIP Obligations and (ii) with respect to the Term 507(b) Claims 

against the IPCo Debtors, the IPCo 507(b) Claims (as defined below). Except to the extent 

expressly set forth in this Final Order, the Prepetition Term Secured Parties shall not receive or 

retain any payments, property, or other amounts in respect of the Term 507(b) Claims unless and 

until (x) the Carve-Out (as defined below) is funded, (y) all DIP Obligations shall have been 

indefeasibly paid in full in cash, and (z) with respect to the Term 507(b) Claims against the IPCo 

Debtors, all IPCo 507(b) Claims (as defined below) shall have been indefeasibly paid in full in 

cash. Only the Prepetition Term Agent, acting at the direction of the Required Term Lenders, may 

assert the Term 507(b) Claims against the Debtors. Notwithstanding their status as 507(b) Claims, 

the Prepetition Term Secured Parties’ Adequate Protection Claims may be satisfied in a plan of 

reorganization or liquidation confirmed in the Chapter 11 Cases in any manner set forth in such 

plan if the Required Term Lenders consent to such treatment, which shall include the class 

including such Required Term Lenders voting to accept such plan of reorganization or liquidation.

(f) IPCo Notes Adequate Protection Liens. As security for the payment 

of the Prepetition IPCo Secured Parties’ respective Adequate Protection Claims, the Prepetition 

IPCo Indenture Trustees (for themselves and for the benefit of the applicable Prepetition IPCo 

Noteholders) are each hereby granted (effective and perfected upon the date of the Interim Order 

and without the necessity of the execution by the Debtors of security agreements, pledge 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 72 of 223
- 42 -

WEIL:\97486216\9\54457.0008

agreements, mortgages, financing statements, or other agreements) a valid, perfected replacement 

security interest in and lien on all of the DIP Collateral of each of the Debtors (including Avoidance 

Action Proceeds) (the “IPCo Adequate Protection Liens”), subject and subordinate only to (i) 

(1) the Carve-Out (as defined below) and (2) the DIP Liens (and any liens permitted by the DIP 

Documents to be senior to the DIP Liens) and (ii) with respect to the DIP Collateral of the ABL 

Debtors and the Term Debtors, (1) the ABL Adequate Protection Liens, (2) the Prepetition ABL 

Liens, (3) the Term Adequate Protection Liens, and (4) the Prepetition Term Liens. 

(g) IPCo Notes Section 507(b) Claims. The Prepetition IPCo Indenture 

Trustees (for themselves and for the benefit of the applicable Prepetition IPCo Noteholders) are 

hereby granted an allowed superpriority claim against the Debtors as provided in sections 503 and 

507(b) of the Bankruptcy Code (the “IPCo 507(b) Claims” and, collectively with the ABL 507(b) 

Claims and the Term 507(b) Claims, the “507(b) Claims”) in the amount of the Prepetition IPCo 

Secured Parties’ respective Adequate Protection Claims, with priority in payment over any and all 

administrative expenses of the kinds specified or ordered pursuant to any provision of the 

Bankruptcy Code, including, without limitation, sections 105, 326, 328, 330, 331, 503(a), 503(b), 

507(a), 506(c), 507(b), 546(c), 546(d), 726, 1113, or 1114 of the Bankruptcy Code, subject and 

subordinate only to (i) (1) the Carve-Out (as defined below) and (2) the DIP Superpriority Claims 

granted in respect of the DIP Obligations and (ii) with respect to the IPCo 507(b) Claims against 

the ABL Debtors and the Term Debtors, (1) the ABL 507(b) Claims and (2) the Term 507(b) 

Claims. Except to the extent expressly set forth in this Final Order, the Prepetition IPCo Secured 

Parties shall not receive or retain any payments, property, or other amounts in respect of the IPCo 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 73 of 223
- 43 -

WEIL:\97486216\9\54457.0008

507(b) Claims unless and until (x) the Carve-Out (as defined below) is funded, (y) all DIP 

Obligations shall have been indefeasibly paid in full in cash, and (z) with respect to the IPCo 

507(b) Claims against the ABL Debtors and the Term Debtors, the ABL 507(b) Claims and the 

Term 507(b) Claims shall have been indefeasibly paid in full in cash. Only the Prepetition IPCo 

Indenture Trustees, acting at the direction of Holders (as defined under the applicable Prepetition 

IPCo Notes Indenture) of a majority in principal amount of the total Prepetition IPCo Notes then 

outstanding under the applicable Prepetition IPCo Notes Indenture, may assert the IPCo 507(b) 

Claims against the Debtors. Notwithstanding their status as 507(b) Claims, the Prepetition IPCo 

Secured Parties’ Adequate Protection Claims may be satisfied in a plan of reorganization or plan 

of liquidation confirmed in the Chapter 11 Cases, which shall include any class including holders 

of more than 50% in amount of the Prepetition IPCo Secured Parties’ Adequate Protection Claims 

voting to accept such plan of reorganization or liquidation.

(h) Fees and Expenses. The Debtors are authorized and directed to pay, 

as adequate protection, all accrued and unpaid fees and reasonable and documented disbursements 

(but not success fees, transaction fees, or similar fees) incurred, whether accrued before, on, or 

after the Petition Date, by the legal and financial advisors to (i) the ad hoc committee of crossholder 

creditors (the “Ad Hoc Committee”) under the Prepetition Term Credit Agreement and 

Prepetition IPCo Indentures, (ii) the Prepetition ABL Agent, (iii) the Prepetition Term Agent, and 

(iv) the Prepetition IPCo Indenture Trustees; provided, that such payments shall be subject to the 

Debtors’ or any other party’s rights to seek a determination such payments should be

recharacterized under section 506(b) of the Bankruptcy Code as payments of the secured portion 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 74 of 223
- 44 -

WEIL:\97486216\9\54457.0008

of the applicable claims as of the Petition Date. The legal and financial advisors to the Ad Hoc 

Committee, the Prepetition ABL Agent, the Prepetition Term Agent, and the Prepetition IPCo 

Indenture Trustees shall not be required to comply with the U.S. Trustee fee guidelines; however, 

any time that such professionals seek payment of fees and expenses from the Debtors, each 

professional shall provide summary copies of its fee and expense statements or invoices (which 

shall not be required to contain time entries and which may be redacted or modified to the extent 

necessary to delete any information subject to the attorney-client privilege, any information 

constituting attorney work product, or any other confidential information, and the provision of 

such invoices shall not constitute any waiver of the attorney-client privilege or of any benefits of 

the attorney work-product doctrine) to the U.S. Trustee and counsel to the Committee, 

contemporaneously with the delivery of such fee and expense statements to the Debtors. After 

delivery of a fee and expense statement or invoice, the Debtors, the U.S. Trustee, and the 

Committee shall have ten (10) days to raise an objection thereto. If an objection is timely raised, 

such objection shall be subject to resolution by the Court. Pending such resolution, the undisputed 

portion of any such fee and expense statement or invoice shall be paid promptly by the Debtors. 

Notwithstanding the foregoing, the Debtors are authorized and directed to pay all reasonable and 

documented fees, costs, and out-of-pocket expenses (but not any “success”, “transaction”, or 

similar fees) of the legal and financial advisors to (i) the Ad Hoc Committee, (ii) the Prepetition 

ABL Agent, (iii) the Prepetition Term Agent, and (iv) the Prepetition IPCo Indenture Trustees 

incurred on or prior to the date of the Interim Order without the need for any professional engaged 

by such parties to first deliver a copy of its invoice as provided for herein. No attorney or advisor 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 75 of 223
- 45 -

WEIL:\97486216\9\54457.0008

to the Ad Hoc Committee, the Prepetition ABL Agent, the Prepetition Term Agent, and the 

Prepetition IPCo Indenture Trustees shall be required to file an interim or final application seeking 

compensation for services or reimbursement of expenses with the Court. 

(i) Financial Reporting. The Debtors shall concurrently deliver to the 

Prepetition Agents, the Prepetition IPCo Indenture Trustees, the legal and financial advisors to the 

Ad Hoc Committee, and the Committee, subject to customary confidentiality provisions, all 

information, reports, documents, and other materials that the Debtors provide to the DIP Secured 

Parties pursuant to the DIP Documents, and this Final Order, including Budgets. 

13. Adequate Protection Reservation. Other than with respect to the priority of 

the Carve-Out (as defined below), nothing herein shall impair or modify the application of section 

507(b) of the Bankruptcy Code in the event that the adequate protection provided to the Prepetition 

Secured Parties hereunder is insufficient to compensate for any Diminution in Value, if any, of 

their respective interests in the Prepetition Collateral as of the Petition Date during the Chapter 11 

Cases or any Successor Cases, or the Debtors’ or any party in interest’s rights to challenge such 

an assertion. The receipt by the Prepetition Secured Parties of the adequate protection provided 

herein shall not be deemed an admission that the interests of the Prepetition Secured Parties are 

adequately protected or that any of the Prepetition Secured Parties are entitled to other or different 

adequate protection. Further, this Final Order shall not prejudice or limit the rights of the 

Prepetition Secured Parties to seek additional relief with respect to the use of Cash Collateral or 

for additional adequate protection, subject in all respects to the terms and limitations of the 

Intercreditor Agreements, or the Debtors’ or any party in interest’s rights to challenge such request 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 76 of 223
- 46 -

WEIL:\97486216\9\54457.0008

on any basis whatsoever.

14. Effect of Order on Adequate Protection. In the event that it is determined 

by a final order, which order shall not be subject to any appeal, stay, reversal, or vacatur, that (a) no 

Diminution in Value of any Prepetition Secured Party’s respective interests in the Prepetition 

Collateral as of the Petition Date has occurred, (b) such Prepetition Secured Party is determined to 

be undersecured, or (c) the aggregate value of postpetition interest, fees, and expenses paid to or 

the benefit of the Prepetition ABL Secured Parties exceeds the extent permitted by section 506(b) 

of the Bankruptcy Code, then in each case a party in interest subject to paragraph 44 herein shall 

have the right to assert that payments of Adequate Protection shall be applied toward repayment 

of the secured portion of the applicable Prepetition Secured Debt as is owing to such Prepetition 

Secured Party as of the Petition Date.

15. Budget Maintenance. The Debtors shall use the proceeds of all borrowings 

under the DIP Facility and Cash Collateral in accordance with the Budget Requirement or as 

otherwise permitted by the DIP Documents and this Final Order; provided that, for the avoidance 

of doubt, the Debtors’ authorization to use proceeds of the DIP Facility, DIP Collateral, and Cash 

Collateral to satisfy obligations benefitting from the Carve Out shall in no way be subject to the 

Budget. The Budget annexed hereto as Schedule 2 shall constitute the current Budget. On the 

first Tuesday that is four (4) full weeks after the Petition Date, and no later than the Tuesday of 

each fourth week thereafter (or more frequently as the Borrower may elect), the Borrower shall 

provide to the DIP Agent, the legal and financial advisors of the Ad Hoc Committee, and the 

Prepetition ABL Agent, an updated 13-week statement of the Debtors’ anticipated cash receipts 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 77 of 223
- 47 -

WEIL:\97486216\9\54457.0008

and disbursements for the subsequent 13-week period (a “Proposed Budget”), which Proposed 

Budget shall modify and supersede any prior Budget upon the approval of the Required Lenders 

in their reasonable discretion (such approval not to be unreasonably withheld), in consultation with 

the Prepetition ABL Agent. Until the Required Lenders approve the Proposed Budget in their 

reasonable discretion (such approval not to be unreasonably withheld), the then-current Budget 

shall remain the Budget, and the DIP Lenders shall have no obligation to fund such Proposed 

Budget. Each Budget delivered to the DIP Agent, the legal and financial advisors to the Ad Hoc 

Committee and the Prepetition ABL Agent shall be accompanied by such supporting 

documentation as reasonably requested by such legal and financial advisors, and each Budget shall 

be prepared in good faith based upon assumptions the Debtors believe to be reasonable. A copy 

of the Budget shall be delivered to the legal and financial advisors to the Committee and the U.S. 

Trustee following such Budget’s approval. The Committee shall be provided concurrent drafts of 

any proposed modifications to, or amendment or update to, the Budget, and the Debtors shall use 

commercially reasonable efforts to provide the Committee with three (3) business days’ prior 

notice of any proposed amendment or modification.

16. Budget and Reporting Compliance. The occurrence of a Budget Event or 

the Debtors’ failure to provide the reports and other information required in the DIP Credit 

Agreement shall constitute an Event of Default under the DIP Credit Agreement and this Final

Order, following the expiration of any applicable grace period set forth in the DIP Credit 

Agreement. Contemporaneously with their delivery to the DIP Agent, all reports and information 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 78 of 223
- 48 -

WEIL:\97486216\9\54457.0008

required to be provided to the DIP Agent under the DIP Credit Agreement shall be provided to the 

Prepetition ABL Agent and the Committee.

17. Borrowing Base; Borrowing Base Reporting. The Debtors shall deliver to 

the Prepetition ABL Agent, with copies to the DIP Agent, counsel to the Ad Hoc Committee, and 

counsel to the Committee, a Borrowing Base Certificate (as defined in the Prepetition ABL Credit 

Agreement), together with all back up reports and information, in each case in the format 

customarily provided prior to the Petition Date, delivered with such Borrowing Base Certificates 

prior to the Petition Date, setting forth the Borrowing Base (as defined in the Prepetition ABL 

Credit Agreement) (i) calculated as of the last day of the immediately preceding calendar week on 

Wednesday of each week commencing on June 3, 2020 for the week ending May 30, 2020 and 

each Wednesday thereafter; provided that in preparing such weekly Borrowing Base Certificate 

the Debtors shall only be required to roll forward the stock ledger inventory and the JCI Listing 

for In Transit Inventory, and the Prepetition ABL Agent may increase the “Store Closing Reserve”, 

if any, in such weekly calculation and (ii) calculated as of the last business day of the immediately 

preceding fiscal month, promptly, but in no event later than May 15, 2020 with respect to the fiscal 

month ended April 2020 and ten (10) business days following the end of each subsequent fiscal 

month which monthly Borrowing Base Certificates shall reconcile all weekly inventory roll 

forwards; provided that (x) none of the Prepetition ABL Secured Parties shall be permitted to take 

any Reserves (whether Availability Reserves (as defined in the Prepetition ABL Credit 

Agreement), Inventory Reserves (as defined in the Prepetition ABL Credit Agreement), or 

otherwise) against the Borrowing Base that were not in place as of May 2, 2020 other than (I) a

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 79 of 223
- 49 -

WEIL:\97486216\9\54457.0008

reserve in the amount of $6,000,000 on account of the Post Carve-Out Trigger Notice and (II) the

Store Closing Reserve, (y) the appraisals used to calculate the Borrowing Base shall be the most 

recent appraisals delivered by the Debtors in accordance with the Prepetition ABL Credit 

Agreement as of May 2, 2020, and (z) no subsequent appraisals, valuations, or reserves (other than 

a Store Closing Reserve) shall be applied with respect to the Borrowing Base or any determination 

of Net Recovery Percentage (as defined in the Prepetition ABL Credit Agreement), although the 

Prepetition ABL Agent may obtain appraisals subsequent to the Petition Date solely for 

informational purposes and the Debtors shall use commercially reasonable efforts to cooperate 

with the Prepetition ABL Agent in obtaining such appraisals (and such appraisals shall not affect 

the Borrowing Base), and the Debtors shall pay the Prepetition ABL Agent’s reasonable and 

documented expenses associated with obtaining such appraisals. 

18. Store Closing Reserve. The Prepetition ABL Agent may implement a Store 

Closing Reserve (as defined below) as an Availability Reserve against the Borrowing Base, which 

Store Closing Reserve may be taken by the Prepetition ABL Agent, on two (2) business days’ 

written notice to the Debtors, the DIP Agent, and the Committee, in its Permitted Discretion (as 

defined in the Prepetition ABL Credit Agreement) solely on account of Eligible Inventory (as 

defined in the Prepetition ABL Credit Agreement) held in stores where “store closing sales” have 

been commenced after the Petition Date (each a “Closing Store”); provided that a Store Closing

Reserve may not be taken: 

(a) before the first business day that is at least five (5) weeks after the 

Petition Date;

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 80 of 223
- 50 -

WEIL:\97486216\9\54457.0008

(b) unless more than 10% of the Debtors’ aggregate store count 

(excluding up to 25 stores in the aggregate that are closed after the Petition Date in connection 

with the termination of the lease term applicable thereto or otherwise in the ordinary course of 

business) as of the Petition Date shall have become Closing Store after the Petition Date;

(c) more than once per week; and

(d) for at least five (5) weeks after the commencement of a “store 

closing sale” at the applicable store location.

“Store Closing Reserve” means a reserve in an amount equal the results of reducing the Net 

Recovery Percentage (as defined in the Prepetition ABL Credit Agreement) by 1000 bps per week, 

commencing on week six and each week thereafter, multiplied by the Inventory Advance Rate 

multiplied by the Cost of Eligible Inventory located at all Closing Stores.

19. To the extent the Borrowing Base set forth on the most recent Borrowing 

Base Certificate is less than the lesser of (a) $375,000,000 and (b) the aggregate amount of

Revolving Credit Outstandings (as defined in the ABL Credit Agreement) (such difference, if any, 

the “Borrowing Base Shortfall”), the Debtors shall cause the lesser of (x) such Borrowing Base 

Shortfall and (y) $20,000,000 to be deposited in a segregated account (the “Borrowing Base 

Account”) established by the Debtors at Bank of America, N.A. on or within two (2) business 

days of delivery of such Borrowing Base Certificate, as additional adequate protection for the 

Prepetition ABL Lenders, which Borrowing Base Account and all funds held in the Borrowing 

Base Account, if any, shall be ABL Priority Collateral but not DIP Collateral (but DIP Collateral 

shall include the Debtors’ reversionary interest in such funds); provided, further, that (x) funds 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 81 of 223
- 51 -

WEIL:\97486216\9\54457.0008

held in the Borrowing Base Account shall be added to the Borrowing Base and (y) on two (2) 

Business Days’ notice the Prepetition ABL Agent the Debtors may withdraw funds held in the 

Borrowing Base Account to the extent the Borrowing Base Shortfall is less than $20,000,000, as 

set forth by any subsequent Borrowing Base Certificate delivered as provided herein. 

20. Modification of Automatic Stay. The automatic stay imposed under section 

362(a)(2) of the Bankruptcy Code is hereby modified as necessary to effectuate all of the terms 

and provisions of this Final Order, including, without limitation, to (a) permit the Debtors to grant 

the DIP Liens, Adequate Protection Liens, DIP Superpriority Claims, and 507(b) Claims; 

(b) permit the Debtors to perform such acts as the DIP Agent, the Prepetition ABL Agent, the 

Prepetition Term Agent, and the Prepetition IPCo Indenture Trustees each may reasonably request 

to assure the perfection and priority of the liens granted herein; (c) permit the Debtors to incur all 

liabilities and obligations to the DIP Agent, DIP Lenders, and Prepetition Secured Parties under 

the DIP Documents, the DIP Facility, and this Final Order, as applicable; and (d) authorize the 

Debtors to pay, and the DIP Agent, the DIP Lenders, and the Prepetition Secured Parties to retain 

and apply, payments made in accordance with the terms of this Final Order.

21. Perfection of DIP Liens and Adequate Protection Liens. This Final Order 

shall be sufficient and conclusive evidence of the creation, validity, perfection, and priority of all 

liens granted herein, including the Carve Out, the DIP Liens and the Adequate Protection Liens, 

without the necessity of filing or recording any financing statement, mortgage, notice, or other 

instrument or document which may otherwise be required under the law or regulation of any 

jurisdiction or the taking of any other action (including, for the avoidance of doubt, entering into 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 82 of 223
- 52 -

WEIL:\97486216\9\54457.0008

any deposit account control agreement) to validate or perfect (in accordance with applicable nonbankruptcy law) the DIP Liens or the Adequate Protection Liens or to entitle the DIP Agent, the 

DIP Lenders, and the Prepetition Secured Parties to the priorities granted herein. Notwithstanding 

the foregoing, each of the DIP Agent, the Prepetition ABL Agent, the Prepetition Term Agent, and 

the Prepetition IPCo Indenture Trustees is authorized to file or record, as it in its sole discretion 

deems necessary or advisable, such financing statements, security agreements, mortgages, notices 

of liens, and other similar documents to perfect its respective liens in accordance with applicable 

non-bankruptcy law, and all such financing statements, mortgages, notices, and other documents 

shall be deemed to have been filed or recorded as of the Petition Date; provided, however, that no 

such filing or recordation shall be necessary or required in order to create or perfect the DIP Liens 

or the Adequate Protection Liens. The Debtors are authorized and directed to execute and deliver, 

promptly upon demand to the DIP Agent, the Prepetition ABL Agent, the Prepetition Term Agent, 

and the Prepetition IPCo Indenture Trustees, all such financing statements, mortgages, notices, 

and other documents as the DIP Agent, the Prepetition ABL Agent, the Prepetition Term Agent, 

or the Prepetition IPCo Indenture Trustees, as applicable, may reasonably request. Each of the 

DIP Agent, the Prepetition ABL Agent, the Prepetition Term Agent, and the Prepetition IPCo 

Indenture Trustees, in its discretion, may file a photocopy of this Final Order as a financing 

statement with any filing or recording office or with any registry of deeds or similar office, in 

addition to or in lieu of such financing statements, notices of lien, or similar instrument, and all 

applicable officials are hereby directed to accept a photocopy of this Final Order for filing or 

recordation for such purpose. To the extent the Prepetition ABL Agent, the Prepetition Term 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 83 of 223
- 53 -

WEIL:\97486216\9\54457.0008

Agent, the Prepetition IPCo New Money Notes Indenture Trustee, or the Prepetition IPCo 

Exchange Notes Indenture Trustee is the secured party under any security agreement, mortgage, 

landlord waiver, credit card processor notices or agreements, bailee letters, custom broker 

agreements, financing statement, account control agreements, or any other Prepetition Documents 

or is listed as loss payee or additional insured under any of the Debtors’ insurance policies, the 

DIP Agent shall also be deemed without any further action to be the secured party or the loss payee 

or additional insured, as applicable, under such documents. The Prepetition ABL Agent, the 

Prepetition Term Agent, and the Prepetition IPCo Indenture Trustees, as applicable, shall serve as 

agents for the DIP Agent for purposes of perfecting the DIP Liens on all DIP Collateral that is of 

a type such that, without giving effect to the Bankruptcy Code and this Final Order, perfection of 

a lien thereon may be accomplished only by possession or control by a secured party.

22. Protections of Rights of DIP Agent, DIP Lenders and Prepetition Secured 

Parties.

(a) Unless the Required Lenders shall have provided their prior written 

consent, or all DIP Obligations (excluding contingent indemnification obligations for which no 

claim has been asserted) have been indefeasibly paid in full in cash and the lending commitments 

under the DIP Facility have terminated, the entry of any order in these Chapter 11 Cases shall be 

an Event of Default for purposes of the DIP Credit Agreement if such order authorizes any of the 

following (unless such order provides for the simultaneous satisfaction of such obligations): (i) the 

obtaining of credit or the incurrence of indebtedness that is secured by a security, mortgage, or 

collateral interest or other lien on all or a portion of the DIP Collateral or that is entitled to 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 84 of 223
- 54 -

WEIL:\97486216\9\54457.0008

administrative priority with a value in excess of $500,000 in the aggregate that are superior to or 

pari passu with the DIP Liens, the DIP Superpriority Claims, the Prepetition Liens, the Adequate 

Protection Liens, or the 507(b) Claims except as expressly set forth in this Final Order or the DIP 

Documents; (ii) the use of Cash Collateral for any purpose other than as permitted pursuant to the 

Budget Requirement, the DIP Documents, and this Final Order; provided that Debtors’ rights to 

seek to use Cash Collateral on a non-consensual basis after the Cash Collateral Termination Date 

are fully reserved; or (iii) any modification of any of the DIP Agent’s, any DIP Lender’s, or any 

Prepetition Secured Party’s rights under this Final Order, the DIP Documents, or the Prepetition

Documents with respect any DIP Obligations or Prepetition Obligations except as specifically 

provided herein.

(b) The Debtors (and/or their legal and financial advisors in the case of 

clauses (ii) through (iv) below) will, whether or not the DIP Obligations (excluding contingent 

indemnification obligations for which no claim has been asserted) have been indefeasibly paid in 

full in cash, (i) use commercially reasonable efforts to maintain books, records, and accounts to 

the extent and as required by the DIP Documents and the Prepetition Documents (and subject to 

the applicable grace periods set forth therein); (ii) reasonably cooperate with, consult with, and 

provide to the DIP Agent (solely in its capacity as such) all such information and documents that 

any or all of the Debtors are obligated (including upon reasonable request by the DIP Agent) to 

provide under the DIP Documents or the provisions of this Final Order; and (iii) permit the DIP 

Agent and the Prepetition ABL Agent, the Prepetition Term Agent, and the Prepetition IPCo 

Indenture Trustees and their advisors and appraisers to consult with the Debtors’ management and 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 85 of 223
- 55 -

WEIL:\97486216\9\54457.0008

advisors on matters concerning the Debtors’ businesses, financial condition, operations, and assets 

in each case during regular business hours and commercially reasonable advance notice and 

otherwise use commercially reasonable efforts to cooperate with such advisors and appraisers. 

The Debtors shall use commercially reasonable efforts to cause the Committee to receive any 

financial reporting required to be provided by the Debtors contemporaneously with the provision 

of such reports to the DIP Agent, Prepetition ABL Agent, Prepetition Term Agent, or Prepetition 

IPCo Indenture Trustees.

23. Credit Bidding. In connection with any sale process authorized by the 

Court, whether effectuated through sections 363, 725, or 1123 of the Bankruptcy Code, the DIP 

Agent (or its designee) at the direction of the Required Lenders, the DIP Lenders, and the 

Prepetition Term Agent (or its designee), at the direction of the Required Term Lenders, and the 

Prepetition IPCo Indenture Trustees, may credit bid up to the full amount of the outstanding DIP 

Obligations or the relevant Prepetition Obligations, as applicable, in each case including any 

accrued and unpaid interest, expenses, fees, and other obligations for their respective priority 

collateral (each such bid, a “Credit Bid”) pursuant to section 363(k) of the Bankruptcy Code, 

subject in each case to the Intercreditor Agreements.

24. Proceeds of Subsequent Financing. If the Debtors, any trustee, any 

examiner with expanded powers, or any responsible officer subsequently appointed in these Cases 

or any Successor Cases shall obtain credit or incur debt pursuant to sections 364(b), 364(c), 364(d) 

of the Bankruptcy Code in violation of the DIP Documents or this Final Order at any time prior to 

the indefeasible repayment in full of all DIP Obligations and the termination of the DIP Agent’s 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 86 of 223
- 56 -

WEIL:\97486216\9\54457.0008

and DIP Lenders’ obligation to extend credit under the DIP Facility, including subsequent to the 

confirmation of any plan with respect to any or all of the Debtors (if applicable), then all the cash 

proceeds derived from such credit or debt shall immediately be turned over to the DIP Agent to be 

applied in accordance with this Final Order and the DIP Documents.

25. Maintenance of DIP Collateral. Until the indefeasible payment in full of all 

DIP Obligations, all Prepetition Obligations, and the termination of the DIP Lenders’ obligation 

to extend credit under the DIP Facility, the Debtors shall (a) insure the DIP Collateral as required 

under the DIP Facility or the Prepetition Documents, as applicable; and (b) maintain the cash 

management system in effect as of the Petition Date, as modified by any order entered by the 

Court.

26. Termination Dates. Subject to the Carve-Out in all respects, (a) on the DIP 

Termination Date (as defined below), subject to the Carve-Out (as defined below), all DIP 

Obligations shall be immediately due and payable, all commitments to extend credit under the DIP 

Facility will terminate, other than as required in paragraph 41 with respect to the Carve-Out (as 

defined below); and (b) on the Cash Collateral Termination Date (as defined below) all authority 

to use Cash Collateral shall cease, provided, however, that (x) during the Remedies Notice Period, 

the Debtors may use Cash Collateral (i) solely to pay expenses necessary to avoid immediate and 

irreparable harm to the Debtors’ estates, in accordance with the Budget Requirement; (ii) to satisfy 

obligations benefitting from the Carve Out without regard to whether or not a Budget Event would 

be triggered, and (iii) as otherwise agreed by the DIP Agent, acting at the direction of the Required 

Lenders, and (y) the Debtors’ rights to seek to use Cash Collateral on a non-consensual basis after 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 87 of 223
- 57 -

WEIL:\97486216\9\54457.0008

the Cash Collateral Termination Date are fully reserved; and (c) upon occurrence of a Termination 

Date, the Debtors may otherwise exercise rights and remedies under the DIP Documents in 

accordance with this Final Order. 

27. Events of Default. The occurrence and continuation of any of the following 

events, unless waived by the Required Lenders in writing and in accordance with the terms of the 

DIP Credit Agreement, shall constitute an event of default (collectively, the “Events of Default”) 

under this Final Order: (a) the failure of the Debtors to perform, in any respect, any of the terms, 

provisions, conditions, covenants, or obligations under this Final Order, subject to a three business 

day cure period following receipt of notice (if such failure is capable of being cured); (b) the 

occurrence of an “Event of Default” as defined in the DIP Credit Agreement; or (c) delivery of an 

ABL Cash Collateral Termination Declaration (as defined herein). 

28. DIP Case Milestones. The occurrence an Event of Default under Section 

8.01(c) of the DIP Credit Agreement of the DIP Credit Agreement, unless waived by the Required 

Lenders in writing and in accordance with the terms of the DIP Credit Agreement, shall, 

(a) constitute an Event of Default under each of (i) the DIP Credit Agreement and (ii) this Final

Order; (b) subject to the expiration of the Remedies Notice Period, result in the automatic 

termination of the Debtors’ authority to use Cash Collateral under this Final Order except as 

otherwise provided herein; and (c) permit the DIP Agent, subject to the terms of paragraph 31, to 

exercise the rights and remedies provided for in this Final Order and the DIP Documents.

29. Termination Date; Remedies. (a) Subject to any applicable notice and cure 

period under the DIP Documents and/or this Final Order, while (x) any Event of Default (as 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 88 of 223
- 58 -

WEIL:\97486216\9\54457.0008

defined in the DIP Credit Agreement) (in the case of the subsequent subclause (a)) or (y) any Event 

of Default (in the case of the subsequent subclause (b)), in each case, has occurred and is 

continuing, following the Debtors’ and Committee’s receipt of notice, notwithstanding the 

provisions of section 362 of the Bankruptcy Code, without any application, motion or notice to, 

hearing before, or order of the Court, but subject to the terms of this Final Order, (i) the DIP Agent,

acting at the direction of the Required Lenders, may declare in accordance with Section 8.02 of 

the DIP Credit Agreement (w) the Commitments (as defined in the DIP Credit Agreement) of each 

DIP Lender to be terminated, (x) the unpaid principal amount of all outstanding DIP Loans, all 

interest accrued and unpaid thereon, and all other amounts owing or payable under the DIP 

Documents to be immediately due and payable, (y) subject to the Carve-Out, termination of the 

DIP Facility and the DIP Documents as to any future obligation of the DIP Agent and the DIP 

Lenders, without affecting any of the DIP Liens or the DIP Obligations, or the post-petition 

administrative superpriority claim status of the DIP Obligations, and (z) that the application of the 

Carve-Out (as defined below) has occurred through the delivery of the Carve-Out Trigger Notice 

(as defined below) to the Debtors (any such declaration shall be referred to as a “DIP Termination 

Declaration” and the date on which a DIP Termination Declaration is delivered shall be referred 

to as the “DIP Termination Date”) and (ii) the DIP Agent, acting at the direction of the Required 

Lenders, may declare a termination, reduction or restriction of the Debtors’ ability to use any Cash 

Collateral derived solely from the proceeds of DIP Collateral or that constitutes Cash Collateral as 

of the Petition Date (any such declaration shall be referred to as a “DIP Cash Collateral 

Termination Declaration” and the date on which either a DIP Cash Collateral Termination 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 89 of 223
- 59 -

WEIL:\97486216\9\54457.0008

Declaration or an ABL Cash Collateral Termination Declaration is delivered shall be referred to 

as the “Cash Collateral Termination Date”; the Cash Collateral Termination Declaration and the 

DIP Termination Declaration are each a “Termination Declaration”; the Cash Collateral 

Termination Date and the DIP Termination Date are each a “Termination Date”); and (b) upon 

the occurrence and during the continuation of an ABL Cash Collateral Termination Event, the 

Prepetition ABL Agent, may declare a termination, reduction, or restriction of the Debtors’ ability 

to use Cash Collateral (any such declaration shall be referred to as an “ABL Cash Collateral 

Termination Declaration”). 

30. A Termination Declaration or ABL Cash Collateral Termination 

Declaration shall be given by electronic mail (or other electronic means) to counsel to the Debtors, 

counsel to the Committee, counsel to the DIP Agent (solely with respect to an ABL Cash Collateral 

Termination Declaration) counsel to the Prepetition ABL Agent (other than with respect to an ABL 

Cash Collateral Termination Declaration), counsel to the Prepetition Term Agent, counsel to the 

Prepetition IPCo Indenture Trustees, counsel to the Ad Hoc Committee, and the U.S. Trustee. 

31. The automatic stay is hereby modified so that five (5) business days after 

the date a Termination Declaration is delivered (such five (5) business day period, the “Remedies 

Notice Period”), the DIP Agent, acting at the direction of the Required Lenders, shall be entitled 

to exercise its applicable rights and remedies in accordance with the DIP Documents and this Final

Order, subject in all respects to the Carve-Out (as defined below) except as otherwise ordered by 

the Court. During the Remedies Notice Period, the Debtors and/or the Committee shall be entitled 

to seek an emergency hearing from the Court for the sole purpose of contesting whether an Event 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 90 of 223
- 60 -

WEIL:\97486216\9\54457.0008

of Default (hereunder and/or under the DIP Credit Agreement) or an ABL Cash Collateral 

Termination Event has occurred and/or is continuing, and/or seeking to use the Cash Collateral on 

a non-consensual basis, and upon and after delivery of the Termination Declaration, each of the 

DIP Agent, acting at the direction of the Required Lenders, and the Prepetition ABL Agent consent 

to such emergency hearing being heard on an expedited basis. 

32. Unless the Courts orders otherwise during the Remedies Notice Period, the

automatic stay shall automatically be terminated at the end of the Remedies Notice Period without 

further notice or order as to the DIP Agent and the DIP Lenders, subject to the Carve-Out (as 

defined below). Upon expiration of the Remedies Notice Period, the DIP Agent and any liquidator 

or other professional will have the right to access and utilize, at no cost or expense, any trade 

names, trademarks, copyrights, or other intellectual property of the Debtors to the extent necessary 

or appropriate in order to sell, lease, or otherwise dispose of any of the DIP Collateral, including 

pursuant to any Court-approved sale process.

33. ABL Cash Collateral Termination Event. An “ABL Cash Collateral 

Termination Event” shall mean:

(a) the Final Order shall not have been entered on or within forty-five 

(45) days from the Petition Date; 

(b) an order confirming a plan of reorganization shall not have been 

entered on or within one hundred thirty (130) days from the Petition Date;

(c) the effective date of a plan of reorganization shall not have occurred 

within one hundred fifty (150) days from the Petition Date;

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 91 of 223
- 61 -

WEIL:\97486216\9\54457.0008

(d) an Event of Default (as defined herein) that occurred and is 

continuing and has not been waived under the DIP Credit Agreement within (5) days’ of the 

occurrence thereof and for which a forbearance is not in place under the DIP Credit Agreement;

(e) the termination of all Commitments (as defined in the DIP Credit 

Agreement) or the acceleration of the unpaid principal amount of all outstanding DIP Loans;

(f) the delivery of a Termination Declaration by the DIP Agent;

(g) the DIP Lenders have failed to fund the Final Loans in the Final 

Loan Amount on the Final Loan Date as each such term is defined in the DIP Credit Agreement 

as of the Petition Date, and such default has not been cured within seven (7) calendar days thereof;

(h) the Debtors shall have failed to pay their monetary obligations under 

paragraph 12(c) within two (2) business days of its due dates or paragraph 19, or the Debtors shall 

otherwise failed to perform with respect to their adequate protection obligations in favor of the 

Prepetition Secured Parties to the extent required under this Final Order after two (2) business days 

from receipt of written notice from the Prepetition ABL Agent (also to be provided to the 

Committee) and an opportunity to cure, which cure shall occur within two (2) business days of 

such notice;

(i) the Borrowing Base Shortfall at any time is greater than $20,000,000

and the Debtors have not funded such shortfall into the Borrowing Base Account within two (2) 

business days of delivery of the Borrowing Base Certificate reflecting such Borrowing Base 

Shortfall;

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 92 of 223
- 62 -

WEIL:\97486216\9\54457.0008

(j) the Debtors shall have filed a motion or pleading with the Court to 

(i) stay, vacate, or reverse this Final Order; or (ii) amend or modify this Final Order in a manner 

adverse to Prepetition ABL Secured Parties and such motion shall not have been withdrawn after 

two (2) business days written notice thereof;

(k) other than with respect to the Debtor Reserved Claims set forth at 

Paragraph F(v)(a)(i), the Debtors shall attempt to invalidate, reduce, or otherwise impair the 

Prepetition ABL Liens or the Prepetition ABL Obligations, in each case pursuant to a pleading 

filed with the Court that is not withdrawn after two (2) business days’ notice thereof; 

(l) the entry of an order (i) appointing a trustee, receiver, or examiner 

with expanded powers with respect to any of the Debtors; (ii) dismissing any of the Debtors’ 

Chapter 11 Cases; or (iii) converting any of the Debtors’ cases to cases under chapter 7 of the 

Bankruptcy Code, in each case where such order has become a final order not subject to appeal; 

(m) (i) the failure to deliver all Borrowing Base Certificates as and when 

required; or (ii) the failure to deliver all other reports and certificates, (2) business days’ after 

notice to the Debtor and opportunity to cure;

(n) the breach of paragraphs 22(a) or 43 in each case after two (2) 

business days’ notice and an opportunity to cure;

(o) the failure to fund the Professional Fees Account as and when 

required pursuant to paragraph 38;

(p) the effective date of a chapter 11 plan in any of the Chapter 11 Cases 

that is confirmed pursuant to an order of the Bankruptcy Court; and/or

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 93 of 223
- 63 -

WEIL:\97486216\9\54457.0008

(q) any stay, reversal, vacatur, rescission or other modification of the 

terms of this Final Order in any matter that is adverse to the Prepetition ABL Secured Parties and 

that is not consented to by the Prepetition ABL Agent

34. Good Faith Under Section 364(e) of the Bankruptcy Code; No Modification 

or Stay of this Final Order. Based on the findings set forth in this Final Order and the record made 

during the Final Hearing, and in accordance with section 364(e) of the Bankruptcy Code, in the 

event any or all of the provisions of this Final Order are hereafter modified, amended, or vacated 

by a subsequent order of this Court or any other court of competent jurisdiction, the DIP Agent, 

the DIP Lenders, and Prepetition Secured Parties are entitled to the protections provided in section 

364(e) of the Bankruptcy Code. Any such modification, amendment, or vacatur shall not affect 

the validity and enforceability of any advances previously made or made hereunder, or lien, claim, 

or priority authorized or created hereby.

35. Payment of Fees and Expenses. The Debtors are authorized and directed to 

pay all reasonable and documented prepetition and postpetition fees and out-of-pocket expenses 

(but not “success”, “transaction”, or similar fees), of the legal and financial advisors to the DIP 

Agent and the legal and financial advisors to the Ad Hoc Committee, the members of which 

constitute DIP Lenders, in connection with the DIP Facility, as provided in the DIP Documents. 

Professionals of the DIP Agent and the Ad Hoc Committee shall not be required to comply with 

the U.S. Trustee fee guidelines; however, any time that such professionals seek payment of fees 

and expenses from the Debtors, each professional shall provide summary copies of its fee and 

expense statements or invoices (which shall not be required to contain time entries and which may 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 94 of 223
- 64 -

WEIL:\97486216\9\54457.0008

be redacted or modified to the extent necessary to delete any information subject to the attorneyclient privilege, any information constituting attorney work product, or any other confidential 

information, and the provision of such invoices shall not constitute any waiver of the attorneyclient privilege or of any benefits of the attorney work-product doctrine) to the U.S. Trustee and 

counsel to the Committee contemporaneously with the delivery of such fee and expense statements 

to the Debtors. After delivery of a fee and expense statement or invoice, the Debtors, the U.S. 

Trustee, and the Committee shall have ten (10) days to raise an objection thereto. If an objection 

is timely raised, such objection shall be subject to resolution by the Court. Pending such resolution, 

the undisputed portion of any such fee and expense statement or invoice shall be paid promptly by 

the Debtors. Notwithstanding the foregoing, the Debtors are authorized and directed to pay all 

reasonable and documented fees, costs, and out-of-pocket expenses of legal and financial advisors 

to the DIP Agent provided for in the DIP Credit Agreement incurred on or prior to entry of the 

Interim Order without the need for any professional engaged by the DIP Agent or the DIP Lenders 

to first deliver a copy of its invoice as provided for herein. No attorney or advisor to the DIP Agent 

or Ad Hoc Committee shall be required to file an application seeking compensation for services 

or reimbursement of expenses with the Court. Any and all fees, costs, and expenses paid prior to 

the Petition Date by any of the Debtors to the (i) DIP Agent or DIP Lenders in connection with the 

DIP Facility, (ii) Prepetition Secured Parties in connection with the Chapter 11 Cases, and (iii) 

legal and financial advisors to the Ad Hoc Committee, the members of which constitute DIP 

Lenders, are hereby approved in full. For the avoidance of doubt, the fees set forth in any 

engagement letter executed by any of the Debtors prior to the Petition Date with any of the legal 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 95 of 223
- 65 -

WEIL:\97486216\9\54457.0008

or financial advisors to the Ad Hoc Committee shall be deemed reasonable for all purposes under 

this Order, including, without limitation, under paragraph 12(h) hereof and this paragraph 35.

36. Indemnification. To the extent provided by the DIP Credit Agreement, the 

Debtors shall, jointly and severally, indemnify and hold harmless the DIP Agent, each of the DIP 

Lenders, and each of their respective affiliates, officers, directors, fiduciaries, employees, agents, 

advisors, attorneys and representatives from and against all losses, claims, liabilities, damages, and 

expenses (including out-of-pocket fees and disbursements of counsel) in connection with any 

investigation, litigation or proceeding, or the preparation of any defense with respect thereto, 

arising out of or relating to the DIP Facility or the transactions contemplated in the DIP Credit 

Agreement or the other DIP Documents.

37. Proofs of Claim. The DIP Agent, the DIP Lenders, and the Prepetition 

Secured Parties will not be required to file proofs of claim in any of the Chapter 11 Cases or 

Successor Cases for any claim allowed herein. Notwithstanding any order entered by the Court in 

relation to the establishment of a bar date in any of the Chapter 11 Cases or Successor Cases to the 

contrary, each of the Prepetition ABL Agent, the Prepetition Term Agent, the Prepetition IPCo 

New Money Notes Indenture Trustee and the Prepetition IPCo Exchange Notes Indenture Trustee 

is hereby authorized and entitled, in its sole discretion, to file a single consolidated master proof 

of claim on behalf of the Prepetition ABL Secured Parties, the Prepetition Term Secured Parties, 

the Prepetition IPCo New Money Notes Secured Parties, and the Prepetition IPCo Exchange Notes 

Secured Parties, as applicable, in each of the Chapter 11 Cases or Successor Cases, and such master 

proof of claim shall constitute the filing of a proof of claim. Any proof of claim filed by Prepetition 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 96 of 223
- 66 -

WEIL:\97486216\9\54457.0008

ABL Agent, the Prepetition Term Agent, the Prepetition IPCo New Money Notes Indenture 

Trustee, or the Prepetition IPCo Exchange Notes Indenture Trustee shall be deemed to be in 

addition to and not in lieu of any other proof of claim that may be filed by any of the Prepetition 

ABL Secured Parties, the Prepetition Term Secured Parties, the Prepetition IPCo New Money 

Notes Secured Parties, and the Prepetition IPCo Exchange Notes Secured Parties, respectively. 

The provisions of this paragraph 37 and each master proof of claim are intended solely for the 

purpose of administrative convenience and shall not affect the right of each Prepetition Secured 

Party (or its successors in interest) to vote separately on any plan proposed in these Chapter 11 

Cases or to assert that the amount of its claim is different from that set forth on the applicable 

master proof of claim. The master proofs of claim shall not be required to attach any instruments, 

agreements or other documents evidencing the obligations owing by each of the Debtors to the 

applicable Prepetition Secured Parties, which instruments, agreements or other documents will be 

provided upon written request to counsel to the applicable Prepetition Secured Party.

38. Professional Fees Account. The Debtors shall (i) contemporaneously with 

the initial funding of the Loans, transfer cash proceeds from the DIP Facility in an amount equal 

to the total budgeted weekly Professional Fees for the first two weekly periods set forth in the 

Budget and (ii) thereafter on a weekly basis transfer cash proceeds from the DIP Facility or cash 

on hand in an amount equal to the total budgeted weekly Professional Fees for the next unfunded 

week set forth in the Budget, in each case into a segregated account not subject to the control of 

the DIP Agent, any DIP Lender, or any Prepetition Secured Party (the “Professional Fees 

Account”). 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 97 of 223
- 67 -

WEIL:\97486216\9\54457.0008

39. The Debtors shall cause funds held in the Professional Fees Account to be 

used to pay Professional Fees solely as they become allowed and payable pursuant to any interim 

or final orders of the Bankruptcy Court or otherwise; provided that when all allowed Professional 

Fees have been paid in full (regardless of when such Professional Fees are allowed by the 

Bankruptcy Court), any funds remaining in the Professional Fees Account shall revert to the 

Debtors for use in accordance with the DIP Credit Agreement and this Final Order; provided

further that the Debtors’ obligations to pay allowed Professional Fees shall not be limited or be 

deemed limited to funds held in the Professional Fees Account. 

40. The Professional Fees Account, and all funds held in the Professional Fees 

Account, shall be held in trust exclusively for the benefit the Professional Persons (as defined 

below), including with respect to obligations arising out of the Carve-Out. Funds transferred to 

the Professional Fees Account shall not be subject to any liens or claims granted to the DIP Lenders 

or to any other party pursuant to this Final Order (whether on account of adequate protection, 

Diminution in Value, or otherwise), shall not constitute Collateral, Cash Collateral, or DIP 

Collateral, and shall not be or be deemed to be property of any Debtor’s estate; provided that the 

DIP Collateral shall include the Debtors’ reversionary interest in funds held in the Professional 

Fees Account, after all Professional Fees have been indefeasibly paid in full in cash (regardless of 

when such Professional Fees are allowed by the Court. 

41. Carve-Out.

(a) As used in this Final Order, the term “Carve-Out” means the sum 

of: (i) all fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 98 of 223
- 68 -

WEIL:\97486216\9\54457.0008

United States Trustee under section 4001(c)(1)(B) 1930(a) of title 28 of the United States Code 

plus interest at the statutory rate and expenses of members of the Committee allowable under 

section 503(b)(3)(F) of the Bankruptcy Code (without regard to the notice set forth in (iii) below); 

(ii) fees and expenses up to $50,000 incurred by a trustee under section 726(b) of the Bankruptcy 

Code (without regard to the notice set forth in (iii) below); (iii) to the extent allowed at any time, 

whether by interim or final compensation order, all unpaid fees and expenses (including 

transaction fees or success fees) incurred by persons or firms retained by the Debtors pursuant to 

section 327, 328 or 363 of the Bankruptcy Code (collectively, the “Debtor Professionals”) and 

the Committee (the “Committee Professionals” and, together with the Debtor Professionals, the 

“Professional Persons” and such fees and expenses of the Professional Persons, the “Professional 

Fees”) appointed in the Cases pursuant to section 1103 of the Bankruptcy Code at any time before 

or on the first business day after delivery by the DIP Agent of a Carve-Out Trigger Notice (defined 

below) including success or transaction fees earned by or payable to a Professional Person, whether 

allowed by the Bankruptcy Court prior to or after delivery of a Carve-Out Trigger Notice (as 

defined below) and without regard to whether such fees and expenses are provided for in the 

Budget; and (iv) allowed Professional Fees incurred after the first Business Day following delivery 

by the DIP Agent of the Carve-Out Trigger Notice (as defined below), to the extent allowed at any 

time, whether by interim order, procedural order or otherwise in an aggregate amount not to exceed 

$6,000,000 with respect to Professional Persons (the amount set forth in this clause (iv) being the 

“Post-Carve-Out Trigger Notice Cap”). 

(b) For purposes of the foregoing, “Carve-Out Trigger Notice” shall 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 99 of 223
- 69 -

WEIL:\97486216\9\54457.0008

mean a written notice delivered by email (or other electronic means) by the DIP Agent, acting at 

the direction of the Required Lenders (or, following the satisfaction in full of all DIP Obligations, 

the Prepetition Agents and Prepetition IPCo Trustees, upon appropriate direction in accordance 

with the applicable underlying documents) to the Debtors, their lead restructuring counsel (Weil,

Gotshal & Manges LLP), counsel to the Ad Hoc Committee (Milbank LLP), the U.S. Trustee, and 

lead counsel to the Committee, which notice may be delivered following the occurrence and during 

the continuation of an Event of Default and acceleration of the obligations under the DIP Facility 

(or, following a DIP Repayment, any occurrence that would constitute an Event of Default 

hereunder) or the occurrence of the Maturity Date (as defined in the DIP Credit Agreement), stating 

that the Post-Carve-Out Trigger Notice Cap has been invoked; provided that after the occurrence 

of an ABL Cash Collateral Termination Event the Prepetition ABL Agent may deliver a CarveOut Trigger Notice in accordance with the notice requirements and upon the delivery of such notice 

and to the extent that the Carve-Out Reserve Account (as defined below) has been fully funded in 

the amounts required to be funded as of the date of the Carve-Out-Trigger Notice, the Prepetition 

ABL Liens and Prepetition Adequate Protection Liens, in each case with respect to ABL Priority 

Collateral including all proceeds thereof shall not be subject to the Carve-Out on account of 

obligations benefitting from the Carve-Out, that arise after delivery of such notice.

(c) On the day on which a Carve-Out Trigger Notice is received by the 

Loan Parties, the Carve-Out Trigger Notice shall constitute a demand to the Debtors to utilize all 

cash on hand (including cash contained in the DIP Funding Account (as defined in the DIP Credit 

Agreement)) to fund a cash reserve in an amount equal to all obligations benefitting from the 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 100 of 223
- 70 -

WEIL:\97486216\9\54457.0008

Carve-Out, to the extent not previously funded into the Professional Fees Account. The Debtors 

will deposit and hold such amounts in a segregated account outside the control of any DIP Lender 

or any Prepetition Secured Party exclusively to pay such obligations (the “Carve-Out Reserve 

Account”), provided that the Carve-Out Reserve Account may be the Professional Fees Account.

(d) For the avoidance of doubt, to the extent that Professional Fees and 

expenses of the Professional Persons have been incurred by the Debtors at any time before or on 

the first business day after delivery by the DIP Agent (or, following a DIP Repayment, the 

Prepetition Agents and Prepetition IPCo Indenture Trustees) of a Carve-Out Trigger Notice but 

have not yet been allowed by the Bankruptcy Court on the date that the DIP Agent (or, following 

a DIP Repayment, the Prepetition Agents and Prepetition IPCo Indenture Trustees) delivers a 

Carve-Out Trigger Notice, such Professional Fees and expenses of the Professional Persons shall 

benefit in all respects from the Carve-Out, regardless of whether such fees are allowed by the 

Bankruptcy Court pursuant to an interim order, final order, or otherwise entered before or after 

delivery of the Carve-Out Trigger Notice. 

(e) Following delivery of a Carve-Out Trigger Notice, the DIP Agent 

shall deposit into the Carve-Out Reserve Account any and all cash swept or foreclosed upon 

(including cash received as a result of the sale or other disposition of any assets) until the CarveOut Reserve Account has been fully funded in an amount equal to all obligations benefiting from 

the Carve-Out regardless of whether such obligations have been allowed by the Bankruptcy Court 

(pursuant to an interim order, final order, or otherwise) as of such date. Notwithstanding anything 

to the contrary herein or in the DIP Documents, following delivery of a Carve-Out Trigger Notice, 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 101 of 223
- 71 -

WEIL:\97486216\9\54457.0008

the DIP Agent shall not sweep or foreclose on cash (including cash received as a result of the sale 

or other disposition of any assets) of the Debtors until the Carve-Out Reserve Account has been 

fully funded in an amount equal to all obligations benefiting from the Carve-Out. Further, 

notwithstanding anything to the contrary herein, (i) disbursements by the Debtors from the CarveOut Reserve Account shall not constitute DIP Loans, (ii) the failure of the Carve-Out Reserve 

Account to satisfy in full the Professional Fees shall not affect the priority of the Carve-Out, and 

(iii) in no way shall the Carve-Out, the Professional Fees Account or the Budget Requirement, or 

any of the foregoing be construed as a cap or limitation on the amount of the Professional Fees 

that may be allowed by the Bankruptcy Court and payable by the Debtors and their estates at any 

time (whether by interim order, final order, or otherwise).

(f) For the avoidance of doubt and notwithstanding anything to the 

contrary herein or in the DIP Documents, the Carve-Out shall be senior to all liens and claims with 

respect to the Debtors’ estates, including all liens securing and all claims on account of the DIP 

Facility, any adequate protection liens, and superpriority claims (whether granted on account of 

the DIP Facility, as adequate protection, or otherwise), and any and all other liens and claims. For 

the avoidance of doubt, if a DIP Repayment occurs or the DIP Facility is otherwise terminated, the 

DIP Order shall remain in full force and effect, including with respect to the Debtors’ use of Cash 

Collateral, the Carve-Out, the Carve-Out Reserve Account, and all related provisions in respect 

thereof, and the Prepetition Agents and Prepetition IPCo Indenture Trustees shall assume any 

rights and obligations that the DIP Agent previously had with respect to the Carve-Out and the 

Carve-Out Reserve Account.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 102 of 223
- 72 -

WEIL:\97486216\9\54457.0008

42. No Direct Responsibility for Fees or Disbursements. Subject to any of the 

DIP Agent’s, DIP Lenders’, or Prepetition Secured Parties’ obligations with respect to the CarveOut, none of the DIP Agent, the DIP Lenders, or the Prepetition Secured Parties shall be (i) 

responsible for the direct payment or reimbursement of any fees or disbursements of any 

Professional Persons incurred in connection with the Chapter 11 Cases or any Successor Cases, or 

(ii) obligated in any way to compensate, or to reimburse expenses of, any Professional Persons or 

to guarantee that the Debtors have sufficient funds to pay such compensation or reimbursement.

43. Limitations on Use of DIP Proceeds, Cash Collateral, and Carve-Out. No 

proceeds of the DIP Facility, the DIP Collateral, or the Prepetition Collateral, in each case, 

including Cash Collateral may be used in connection with (a) except to contest the occurrence of 

an Event of Default (hereunder or under the DIP Credit Agreement) or an ABL Cash Collateral 

Termination Event, or to seek the non-consensual use of Cash Collateral following the 

commencement of the Remedies Notice Period, preventing, hindering, or delaying any of the DIP 

Agent’s or the DIP Lenders’ realization upon any of the DIP Collateral or enforcement of any of 

their respective rights thereto in accordance with paragraph 31; (b) for any purpose that is 

prohibited under this Final Order, the DIP Documents, or the Bankruptcy Code; (c) to prosecute 

or finance in any way any adversary action, suit, arbitration, proceeding, application, motion, or 

other litigation of any type adverse to the interests of any or all of the DIP Agent, the DIP Lenders, 

or the Prepetition Secured Parties, any of their respective affiliates, agents, attorneys, advisors, 

professionals, officers, directors, or employees, in their respective capacities as such, or their 

respective rights and remedies under DIP Documents, this Final Order, or the Prepetition 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 103 of 223
- 73 -

WEIL:\97486216\9\54457.0008

Documents, including, without limitation, any actions under chapter 5 of the Bankruptcy Code, 

section 724(a) of the Bankruptcy Code, or any other avoidance actions under the Bankruptcy Code 

or applicable state law equivalents; (d) for the payment of fees, expenses, interest, or principal 

under the Prepetition Documents (in each case, other than payments on account of the Adequate 

Protection Obligations or required by this Final Order); (e) unless the Exit Conversion occurs, to 

make any distribution under a plan of reorganization confirmed in the Chapter 11 Cases that does 

not provide for the indefeasible payment of the DIP Loans in full and in cash; (f) except as 

permitted by the Budget Requirement, to make any payment in settlement of any claim, action, or 

proceeding in excess of $500,000 in the aggregate without the prior written consent of the DIP 

Agent, acting at the direction of the Required Lenders; (g) [reserved]; (h) incurring Indebtedness 

(as defined in the DIP Credit Agreement), except to the extent permitted under the DIP Credit 

Agreement or this Final Order; (i) seeking to amend or modify any of the rights granted to the DIP 

Agent, the DIP Lenders, or the Prepetition Secured Parties under this Final Order, the DIP 

Documents, or the Prepetition Documents; (j) seeking to subordinate, recharacterize, disallow, or 

avoid the DIP Obligations or the Prepetition Obligations, other than seeking a determination (i) 

that payments provided on account of adequate protection should be recharacterized under section 

506(b) of the Bankruptcy Code as payments on account of the secured portion of the Prepetition 

Secured Facilities and (ii) as to the value of collateral securing the Prepetition Secured Facilities 

as of the Petition Date; (k) reserved; or (l) to pay allowed fees and expenses, in an amount in excess 

of $250,000 in the aggregate (the “Investigation Budget Amount”), incurred by Committee 

Professionals, in investigating (but not prosecuting or challenging) the validity, enforceability, 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 104 of 223
- 74 -

WEIL:\97486216\9\54457.0008

perfection, priority, or extent of the Prepetition Liens (the “Investigation”) before the Challenge 

Deadline (as defined below); provided that the foregoing shall not limit or be deemed to limit in 

any way the Debtors’ authority to (x) seek a determination (i) that payments provided on account 

of adequate protection should be recharacterized under section 506(b) of the Bankruptcy Code as 

payments on account of the secured portion of the Prepetition Secured Facilities and (ii) as to the 

value of collateral securing the Prepetition Secured Facilities as of the Petition Date; and (y) to 

satisfy obligations benefitting from the Carve Out, in each case incurred by Professional Persons 

retained by the Debtors. Except with respect to the Committee’s Investigation Budget Amount, 

any Professional Fees incurred by or on behalf of Committee Professionals in connection with any 

of the activities described in this paragraph 43 shall not constitute an allowed administrative 

expense claim for purposes of section 1129(a)(9)(A) of the Bankruptcy Code..

44. Effect of Stipulations on Third Parties. 

(a) Generally. The Debtors’ Stipulations set forth in paragraph F of this 

Final Order shall be binding on the Debtors and any successor thereto (including, without 

limitation, any chapter 7 or chapter 11 trustee appointed or elected for any of the Debtors) upon 

entry of this Final Order. The Stipulations shall also be binding on all creditors and all other parties 

in interest and all of their respective successors and assigns, including, without limitation, the

Committee, unless, and solely to the extent that, a party in interest with standing and requisite 

authority (i) has timely commenced an appropriate proceeding or contested matter required under 

the Bankruptcy Code and Bankruptcy Rules, including, without limitation, as required pursuant to 

Part VII of the Bankruptcy Rules (in each case subject to the limitations set forth in this paragraph 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 105 of 223
- 75 -

WEIL:\97486216\9\54457.0008

44) (A) objecting to or challenging the amount, validity, or enforceability of the Prepetition 

Obligations or the perfection or priority of the Prepetition Liens or (B) otherwise asserting or 

prosecuting any action for preferences, fraudulent conveyances, other avoidance power claims or 

any other claims, counterclaims or causes of action, objections, contests or defenses against the 

Prepetition Secured Parties or any of such parties’ affiliates, representatives, attorneys or advisors 

in connection with matters related to the Prepetition Documents, the Prepetition Secured Debt, and 

the Prepetition Collateral (each such proceeding or contested matter, a “Challenge”) by no later

than (a) for the Committee, August 3, 2020 or (b) for all other parties in interest (excluding the 

Debtors), seventy-five (75) days following the entry of the Interim Order (the “Challenge 

Deadline”), as such deadline may be extended in writing from time to time in the sole discretion 

of the Prepetition ABL Agent (with respect to the Prepetition ABL Liens and Prepetition ABL 

Obligations), the Prepetition Term Agent, acting at the direction of the Required Term Lenders

(with respect to the Prepetition Term Liens and Prepetition Term Obligations), and the Prepetition 

IPCo Indenture Trustees (with respect to the Prepetition IPCo Liens and Prepetition IPCo Notes 

Obligations) or by this Court for good cause shown pursuant to an application filed by a party in 

interest prior to the expiration of the Challenge Deadline, and (ii) this Court enters judgment in 

favor of the plaintiff or movant in any such timely and properly commenced Challenge and any 

such judgment has become a final judgment that is not subject to any further review or appeal, and 

then only to the extent of any such final judgment.

(b) Binding Effect. To the extent no Challenge is timely and properly 

commenced by the Challenge Deadline, or to the extent such Challenge does not result in a final 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 106 of 223
- 76 -

WEIL:\97486216\9\54457.0008

and non-appealable judgment or order that is inconsistent with any of the Debtors’ Stipulations, 

then, without further notice, motion, or application to, order of, or hearing before, this Court and 

without the need or requirement to file any proof of claim, the Debtors’ Stipulations shall, pursuant 

to this Final Order, become irrevocably binding on any person, entity, or party in interest in the 

Chapter 11 Cases, as well as their successors and assigns, and in any Successor Case for all 

purposes and shall not be subject to further challenge or objection. Notwithstanding anything to 

the contrary herein, if any Challenge is properly and timely commenced by a party in interest, the 

Debtors’ Stipulations shall nonetheless remain binding on all other parties in interest. To the extent 

any Challenge is timely and properly commenced, the Prepetition Secured Parties shall be entitled 

to, as adequate protection, payment of the related costs and expenses, including, but not limited to, 

reasonable attorneys’ fees, incurred in defending themselves against any Challenge; provided that, 

any such fees shall be subject to recharacterization in the event a Challenge is granted pursuant to 

a final order not subject to appeal.

(c) Delaware LLCs. Solely with respect to (i) J. Crew Brand Holdings, 

LLC, (ii) J. Crew Brand Intermediate, LLC, (iii) J. Crew Brand, LLC, (iv) J. Crew Domestic Brand, 

LLC, and (v) J. Crew International Brand, LLC, the Debtors’ Stipulations and releases contained 

in paragraph F hereof will not be binding on a trustee appointed for such Debtors if, upon a motion 

filed by the Committee (and no other party) prior to expiration of the Challenge Period (a 

“Committee Motion”) that specifically identifies the Debtors’ Stipulations and releases opposed 

by the Committee, the Court (i) converts the chapter 11 case in question to chapter 7 of the 

Bankruptcy Code, or (ii) appoints a chapter 11 trustee to administer such case; provided that the 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 107 of 223
- 77 -

WEIL:\97486216\9\54457.0008

Challenge Period shall be tolled with respect to such Debtors’ Stipulations and releases specifically 

identified in the Committee Motion, while it remains pending with respect to such Debtors’ 

Stipulations or Releases; provided further that, the Debtors’ Stipulations and releases will be 

reserved for a Court-appointed trustee solely to the extent they are specifically identified in the 

Committee Motion, if any, and are approved by the Court in any order appointing the chapter 7 or 

11 trustee.

45. No Third-Party Rights. Except as explicitly provided for herein, this Final

Order does not create any rights for the benefit of any third party, creditor, equity holder, or any 

direct, indirect, or incidental beneficiary.

46. Section 506(c) Claims. Except to the extent of the Carve-Out, no costs or 

expenses of administration that have been or may be incurred in the Chapter 11 Cases at any time 

shall be charged against the DIP Agent, the DIP Lenders, the Prepetition ABL Agent, the 

Prepetition ABL Secured Parties; Prepetition Term Agent, the Prepetition Term Lenders, the 

Prepetition IPCo Indenture Trustees, the Prepetition IPCo Noteholders, the DIP Collateral, or the 

Prepetition Collateral pursuant to sections 105 or 506(c) of the Bankruptcy Code, or otherwise, 

without the prior written consent of the DIP Agent (acting at the direction of the Required 

Lenders), the Prepetition Term Agent (acting at the direction of the Required Lenders), or the 

Prepetition IPCo Indenture Trustees, as applicable, and no such consent shall be implied from any 

action, inaction, or acquiescence by any party. 

47. No Marshaling/Applications of Proceeds. The DIP Agent, the DIP Lenders 

and the Prepetition Secured Parties shall not be subject to the equitable doctrine of “marshaling” 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 108 of 223
- 78 -

WEIL:\97486216\9\54457.0008

or any other similar doctrine with respect to any of the DIP Collateral or the Prepetition Collateral; 

provided, that the Prepetition ABL Agent, acting at the direction of the Requisite Lenders (as 

defined in the Prepetition ABL Credit Agreement), shall first realize on the ABL Adequate 

Protection Liens and ABL 507(b) Claims from DIP Collateral that constitutes ABL Priority 

Collateral (now owned or hereafter acquired) before realizing on such liens and claims from DIP 

Collateral of any other Debtor; provided, further, that the Prepetition Term Agent, acting at the 

direction of the Required Term Lenders, shall first realize on the Term Adequate Protection Liens 

and Term 507(b) Claims from DIP Collateral of the Term Debtors before realizing on such liens 

and claims from DIP Collateral of any other Debtor; provided, further, still that the Prepetition 

IPCo Trustees, acting at the direction of Holders (as defined under the applicable Prepetition IPCo 

Notes Indenture) of a majority in principal amount of the total Prepetition IPCo Notes then 

outstanding under the applicable Prepetition IPCo Notes Indenture, shall first realize on the IPCo 

Adequate Protection Liens and IPCo 507(b) Claims from DIP Collateral of the IPCo Debtors 

before realizing on such liens and claims from DIP Collateral of any other Debtor. 

Notwithstanding anything herein or in the DIP Documents to the contrary, the Prepetition Secured 

Parties shall use commercially reasonable efforts to satisfy their applicable Adequate Protection 

Liens and 507(b) Claims, if any, from proceeds of the DIP Collateral other than Avoidance Action 

Proceeds before satisfying such liens and claims from Avoidance Action Proceeds.

48. Section 552(b). The Prepetition Secured Parties shall each be entitled to all 

of the rights and benefits of section 552(b) of the Bankruptcy Code, and the “equities of the case” 

exception thereunder shall not apply to any of them. 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 109 of 223
- 79 -

WEIL:\97486216\9\54457.0008

49. Limits on Lender Liability. Nothing in this Final Order, any of the DIP 

Documents, the Prepetition Documents, or any other documents related thereto, shall in any way 

be construed or interpreted to impose or allow the imposition upon the DIP Agent, the DIP 

Lenders, or the Prepetition Secured Parties of any liability for any claims arising from any activities 

by the Debtors in the operation of their businesses or in connection with the administration of these 

Chapter 11 Cases or any Successor Cases. The DIP Agent, the DIP Lenders, and the Prepetition 

Secured Parties shall not, solely by reason of having made loans under the DIP Facility or 

authorizing the use of Cash Collateral, be deemed in control of the operations of the Debtors or to 

be acting as a “responsible person” or “owner or operator” with respect to the operation or 

management of the Debtors (as such terms, or any similar terms, are used in the United States 

Comprehensive Environmental Response, Compensation and Liability Act, 29 U.S.C. §§ 9601 et 

seq., as amended, or any similar federal or state statute). Nothing in this Final Order or the DIP 

Documents, shall in any way be construed or interpreted to impose or allow the imposition upon 

the DIP Agent, the DIP Lenders, or any of the Prepetition Secured Parties of any liability for any 

claims arising from the prepetition or postpetition activities of any of the Debtors.

50. Insurance Proceeds and Policies. As of the date of the Interim Order, to the 

fullest extent provided by applicable law, the DIP Agent (for itself and for the benefit of the DIP 

Secured Parties), the Prepetition ABL Agent (for itself and for the benefit of the Prepetition ABL 

Lenders), the Prepetition Term Agent (for itself and for the benefit of the Prepetition Term Secured 

Parties), and the Prepetition IPCo Indenture Trustees (for themselves and for the benefit of the 

applicable Prepetition IPCo Noteholders), shall be, and shall be deemed to be, without any further 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 110 of 223
- 80 -

WEIL:\97486216\9\54457.0008

action or notice, named as additional insured and loss payee on each insurance policy maintained 

by the Debtors that in any way relates to the DIP Collateral.

51. Joint and Several Liability. Nothing in this Final Order shall be construed 

to constitute a substantive consolidation of any of the Debtors’ estates, it being understood, 

however, that the Debtors shall be jointly and severally liable for the obligations hereunder and all 

DIP Obligations in accordance with the terms hereof and of the DIP Documents.

52. Rights Preserved. Notwithstanding anything herein to the contrary, the 

entry of this Final Order is without prejudice to, and does not constitute a waiver of, expressly or 

implicitly, subject to the Transaction Support Agreement, the DIP Documents, the Prepetition 

Documents and the Intercreditor Agreements: (a) the DIP Agent’s, DIP Lenders’, and Prepetition 

Secured Parties’ rights to seek any other or supplemental relief; (b) any of the rights of any of the 

DIP Agent, DIP Lenders, and/or the Prepetition Secured Parties under the Bankruptcy Code or 

applicable non-bankruptcy law, including, without limitation, the right to (i) request modification 

of the automatic stay imposed by section 362 of the Bankruptcy Code, (ii) request dismissal of any 

of the Chapter 11 Cases or Successor Cases, conversion of any of the Chapter 11 Cases to cases 

under chapter 7, or appointment of a chapter 11 trustee or examiner with expanded powers, or 

(iii) propose, subject to the provisions of section 1121 of the Bankruptcy Code, a chapter 11 plan 

or plans; or (c) any other rights, claims, or privileges (whether legal, equitable, or otherwise) of 

any of the DIP Agent, the DIP Lenders, or the Prepetition Secured Parties. Notwithstanding 

anything herein to the contrary, the entry of this Final Order is without prejudice to, and does not 

constitute a waiver of, expressly or implicitly, the Debtors’, the Committee’s, or any party in 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 111 of 223
- 81 -

WEIL:\97486216\9\54457.0008

interest’s right to oppose any of the relief requested in accordance with the immediately preceding 

sentence except as expressly set forth in this Final Order. Entry of this Final Order is without 

prejudice to any and all rights of any party in interest with respect to any other position which any 

party in interest deems appropriate to raise in these Chapter 11 Cases or any Successor Cases. For 

all adequate protection and stay relief purposes throughout the Chapter 11 Cases, the Prepetition 

Secured Parties shall be deemed to have requested relief from the automatic stay and adequate 

protection as of the Petition Date. 

53. No Waiver by Failure to Seek Relief. The failure of the DIP Agent, the DIP 

Lenders, or the Prepetition Secured Parties to seek relief or otherwise exercise their rights and 

remedies under this Final Order, the DIP Documents, the Prepetition Documents, or applicable 

law, as the case may be, shall not constitute a waiver of any of the rights hereunder, thereunder, or 

otherwise of the DIP Agent, the DIP Lenders, or the Prepetition Secured Parties.

54. Binding Effect of Final Order. Immediately upon entry on the docket of 

this Court, the terms and provisions of this Final Order shall become binding upon the Debtors, 

the DIP Agent, the DIP Lenders, the Prepetition Secured Parties, all other creditors of any of the 

Debtors, the Committee, and all other parties in interest and their respective successors and assigns, 

including any trustee or other fiduciary hereafter appointed in any of the Chapter 11 Cases, any 

Successor Cases, or upon dismissal of any Case or Successor Case.

55. No Modification of Final Order. A motion or pleading filed by any of the 

Debtors to modify, stay, vacate, amend, or reverse this Order shall be an Event of Default: (a) as 

to the DIP Obligations (other than contingent obligations with respect to then unasserted claims), 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 112 of 223
- 82 -

WEIL:\97486216\9\54457.0008

unless and until (i) they have been indefeasibly paid in full in cash (such payment being without 

prejudice to any terms or provisions contained in the DIP Documents which survive such discharge 

by their terms) or otherwise deemed satisfied or waived by the DIP Agent (acting at the direction 

of the Required Lenders), and all commitments to extend credit under the DIP Facility have been 

terminated or (ii) the DIP Agent (acting at the direction of the Required Lenders) consents to such 

pleading or motion; or (b) as to the Prepetition Obligations (other than contingent obligations with 

respect to then unasserted claims), unless and until (i) they have been indefeasibly paid in full in 

cash or otherwise deemed satisfied or waived by, as applicable, the Prepetition ABL Agent, the 

Prepetition Term Agent (acting at the direction of the Required Term Lenders), and/or the 

Prepetition IPCo Indenture Trustees, or (ii) the Prepetition ABL Agent, the Prepetition Term Agent 

(acting at the direction of the Required Term Lenders), or the Prepetition IPCo Indenture Trustees, 

as applicable, consent to such motion or pleading.

56. Continuing Effect of Intercreditor Agreements. The Debtors, the DIP 

Agent, the DIP Lenders, and the Prepetition Secured Parties each shall be bound by, and in all 

respects of the DIP Facility shall be governed by, and be subject to all the terms, provisions, and 

restrictions of the Intercreditor Agreements.

57. Final Order Controls. In the event of any inconsistency between the terms 

and conditions of the DIP Documents and this Final Order, the provisions of this Final Order shall 

control. 

58. Discharge. The DIP Obligations and, except as otherwise provided in 

Paragraphs 12(b), 12(e), and 12(g) hereof, the obligations of the Debtors with respect to the 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 113 of 223
- 83 -

WEIL:\97486216\9\54457.0008

adequate protection provided herein shall not be discharged by the entry of an order confirming 

any plan of reorganization in any of the Chapter 11 Cases, notwithstanding the provisions of 

section 1141(d) of the Bankruptcy Code, unless (x) such obligations have been indefeasibly paid 

in full in cash (other than contingent indemnification obligations for which no claim has been 

asserted), on or before the effective date of such plan of reorganization, (y) each of the DIP Agent, 

the DIP Lenders, the Prepetition Agents, and the Prepetition IPCo Indenture Trustees, as 

applicable, has otherwise agreed in writing or as otherwise provided herein or (z) each of DIP 

Agent, the DIP Lenders, the Prepetition Agents, and the Prepetition IPCo Indenture Trustees have 

accepted their treatment in a plan of reorganization or liquidation as provided herein; provided, 

that the DIP Loans shall automatically and mandatorily convert into the Exit Term Loans upon the 

occurrence of the Exit Conversion (as defined in the DIP Credit Agreement, the “Exit 

Conversion”) in accordance with the DIP Credit Agreement. It shall be an Event of Default if the 

Debtors shall propose or support any plan of reorganization or sale of all or substantially all of the 

Debtors’ assets, or order confirming such plan or approving such sale, that is not (1) conditioned 

upon the indefeasible payment in full in cash of the DIP Obligations (other than contingent 

indemnification obligations for which no claim has been asserted), and the payment of the Debtors’ 

obligations with respect to the adequate protection provided for herein, in full in cash within a 

commercially reasonable period of time (and in no event later than the effective date of such plan 

of reorganization or sale) or (2) on such other terms as are set forth in the Transaction Support 

Agreement (a “Prohibited Plan or Sale”), without the written consent of each of the DIP Agent 

(acting at the direction of the Required Lenders), DIP Lenders, the Prepetition Term Agent (acting 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 114 of 223
- 84 -

WEIL:\97486216\9\54457.0008

at the direction of the Required Term Lenders), the Prepetition ABL Agents, and Prepetition IPCo 

Indenture Trustees, as applicable. For the avoidance of doubt, the Debtors’ proposal or support of 

a Prohibited Plan or Sale, or the entry of an order with respect thereto, shall constitute an Event of 

Default hereunder and under the DIP Documents.

59. Survival. The provisions of this Final Order, including with respect to the 

priority of the Carve Out, and any actions taken pursuant hereto shall survive entry of any order 

which may be entered: (a) confirming any plan of reorganization in any of the Chapter 11 Cases; 

(b) converting any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code; 

(c) dismissing any of the Chapter 11 Cases or any Successor Cases; or (d) pursuant to which this 

Court abstains from hearing any of the Chapter 11 Cases or any Successor Cases. The terms and 

provisions of this Final Order shall continue in the Chapter 11 Cases, in any Successor Cases, or 

following dismissal of the Chapter 11 Cases or any Successor Cases notwithstanding the entry of 

any orders described in clauses (a)-(d) above, and all claims, liens, security interests, and other 

protections granted to the DIP Agent, the DIP Lenders, and the Prepetition Secured Parties 

pursuant to this Final Order and/or the DIP Documents shall maintain their validity and priority as 

provided by this Final Order until: (i) in respect of the DIP Facility, all the DIP Obligations have 

been indefeasibly paid in full in cash (other than contingent indemnification obligations for which 

no claim has been asserted) or the Exit Conversion shall have occurred; and (ii) in respect of the 

Prepetition ABL Facility, all of the Prepetition ABL Obligations have been indefeasibly paid in 

full in cash (other than contingent indemnification obligations for which no claim has been 

asserted); (iii) in respect of the Prepetition Term Facility, all of the Prepetition Term Obligations 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 115 of 223
- 85 -

WEIL:\97486216\9\54457.0008

have been indefeasibly paid in full in cash (other than contingent indemnification obligations for 

which no claim has been asserted); (iv) in respect of the Prepetition IPCo New Money Notes, all 

of the Prepetition IPCo New Money Notes Obligations have been indefeasibly paid in full in cash 

(other than contingent indemnification obligations for which no claim has been asserted); and (v) 

in respect of the Prepetition IPCo Exchange Notes, all of the Prepetition IPCo Exchange Notes 

Obligations have been indefeasibly paid in full in cash (other than contingent indemnification 

obligations for which no claim has been asserted). The terms and provisions concerning the 

indemnification of the DIP Agent and the DIP Lenders shall continue in the Chapter 11 Cases, in 

any Successor Cases, following dismissal of the Chapter 11 Cases or any Successor Cases, 

following termination of the DIP Documents, and/or the indefeasible repayment of the DIP 

Obligations.

60. Payments Held in Trust. Except as expressly permitted in this Final Order 

or the DIP Credit Agreement, and subject to the Carve-Out in all respects, in the event that any 

person or entity receives any payment on account of a security interest in DIP Collateral, receives 

any DIP Collateral or any proceeds of DIP Collateral, or receives any other payment with respect 

thereto from any other source prior to all DIP Obligations in accordance with the DIP Credit 

Agreement, such person or entity shall be deemed to have received, and shall hold, any such 

payment or proceeds of DIP Collateral in trust for the benefit of the DIP Agent and the DIP Lenders 

and shall immediately turn over such proceeds to the DIP Agent, or as otherwise instructed by this 

Court, for application in accordance with the DIP Credit Agreement and this Final Order.

61. Headings. Section headings used herein are for convenience only and are 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 116 of 223
- 86 -

WEIL:\97486216\9\54457.0008

not to affect the construction of or to be taken into consideration in interpreting this Final Order.

62. Retention of Jurisdiction. The Court has and will retain jurisdiction to 

enforce the terms of any and all matters arising from or related to the DIP Facility and/or this Final

Order.

63. DIP Election Procedures. The DIP Election Procedures are hereby 

approved. The DIP Agent may, in connection with allocations of the commitments under the DIP 

Facility or any other allocations contemplated to be made pursuant to, and in accordance with, the 

DIP Credit Agreement, conclusively rely on, and shall have no obligation to determine, investigate 

or confirm, and shall incur no liability whatsoever with respect to, any ownership information with 

respect to the Prepetition Term Obligations and Prepetition IPCo Notes Obligations as set forth on 

any election joinder (the form of which is attached as Exhibit M to the DIP Credit Agreement) 

submitted by an Electing DIP Term Lender (as defined in the DIP Credit Agreement). The DIP 

Agent may conclusively rely on any allocations of the commitments under the DIP Facility as 

provided to the DIP Agent by the advisors to the Debtors and/or Ad Hoc Committee without 

incurring liability therefor.

64. Exit Conversion. It is understood and agreed that any provision in this Final

Order requiring the indefeasible payment of the DIP Obligations in full in cash shall be deemed to 

be satisfied to the extent any such DIP Obligation is converted into an Exit Term Loan (as defined 

in the DIP Documents) pursuant to the Exit Conversion.

65. During the Support Period (as defined in the Transaction Support 

Agreement), J. Crew Domestic, LLC agrees to forbear from collection or enforcement of the 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 117 of 223
- 87 -

WEIL:\97486216\9\54457.0008

“License Fees” as defined in and contemplated under the Amended and Restated Intellectual 

Property License Agreement and 2017 Intellectual Property License Agreement, each dated July 

13, 2017, provided that the accrued and unpaid License Fees will remain outstanding without 

interest, penalties, or other charges through the earlier of the Support Period, payment in full, or 

consummation of the Plan (as defined in the Transaction Support Agreement).

66. Notwithstanding anything to the contrary herein, the rights of the DIP Agent 

and DIP Lenders to use or occupy any premises subject to a lease of non-residential real property 

shall be limited to (i) any such rights agreed to in writing by the applicable landlord, (ii) any rights 

of the DIP Agent or DIP Lenders that are valid and enforceable under applicable non-bankruptcy 

law, if any, and (iii) such rights as may be granted by this Court upon appropriate notice to the 

applicable landlord.

67. Nothing in this Final Order shall affect the priority of ad valorem tax liens 

existing as of the Petition Date, if any, and which may arise during the pendency of these Chapter 

11 Cases. The Debtors shall provide notice to applicable ad valorem taxing authorities of sales 

out of the ordinary course of business during the course of these Chapter 11 Cases.

68. Comenity. 

(a) Comenity Bank’s, f/k/a World Financial Network National Bank, 

(“Comenity”) rights with respect to the Amended and Restated Private Label Credit Card Program 

Agreement between Comenity and J. Crew Operating Corp., dated as of May 11, 2011, as amended 

from time to time (the “Program Agreement”): (i) shall not be affected, modified, waived, 

primed, subordinated, or impaired in any way by this Final Order, (ii) shall not be made subject 

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 118 of 223
- 88 -

WEIL:\97486216\9\54457.0008

to, subordinated by, or pari passu with any new (x) secured financing, security interests, or liens, 

and/or (y) super priority, administrative, or adequate protection claims.

(b) The Debtors and Comenity shall remain bound by the terms of the 

Program Agreement, including the confidentiality provisions therein; provided that nothing herein 

shall (i) expand Comenity’s rights under the Program Agreement or the Bankruptcy Code, or 

(ii) be deemed to constitute an assumption of the Program Agreement or a waiver or modification 

of the Debtors’ rights to assume, assume and assign, or reject the Program Agreement pursuant to 

section 365 of title 11 of the Bankruptcy Code in these Chapter 11 Cases. The Debtors hereby 

reserve all rights available to them in their Chapter 11 Cases.

(c) All of Comenity’s rights, remedies, claims, defenses, and other 

relief arising from or related to the Program Agreement, including, but not limited to, those set 

forth in in this paragraph 68, are expressly preserved and reserved.

Dated: , 2020

 Richmond, Virginia

UNITED STATES BANKRUPTCY JUDGE

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 119 of 223
SWDOCIDLOCATION

Schedule 1

DIP Credit Agreement

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 120 of 223
SWDOCIDLOCATION

Schedule 2

Current DIP Budget

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 121 of 223
J. Crew

2nd DIP Budget 

($ in thousands)

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13

5/31 6/7 6/14 6/21 6/28 7/5 7/12 7/19 7/26 8/2 8/9 8/16 8/23

6/6 6/13 6/20 6/27 7/4 7/11 7/18 7/25 8/1 8/8 8/15 8/22 8/29

Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast

Total Receipts 19,690 18,364 18,364 18,364 18,364 20,860 20,860 20,860 20,860 42,026 34,752 34,752 34,935

Payroll 4,142 10,348 3,569 10,348 3,438 10,149 3,342 9,360 3,227 10,315 3,235 10,190 3,506

Operating Expenses 13,266 51,229 41,353 22,297 31,374 87,710 36,004 25,145 25,358 38,911 26,737 31,607 30,308

Total Operating Disbursements 17,409 61,577 44,922 32,645 34,812 97,859 39,346 34,505 28,585 49,226 29,972 41,797 33,814

OPERATING CASH FLOW 2,281 (43,213) (26,558) (14,281) (16,448) (76,999) (18,486) (13,645) (7,725) (7,200) 4,780 (7,045) 1,121

Professional Fees - - 100 - 100 125 - 100 100 - 125 100 -

Restructuring Charges 23,454 4,954 4,954 4,954 - - - (18,500) - - - - -

Utility Deposit - - - - - - - - - - - - -

Professional Fees Account 1,581 1,581 1,581 1,581 1,481 1,481 1,481 1,481 1,225 1,225 1,225 1,225 1,225

Total 25,035 6,535 6,635 6,535 1,581 1,606 1,481 (16,919) 1,325 1,225 1,350 1,325 1,225

ABL Interest - - - - 1,335 - - - 1,073 - - - -

Adequate Protection Payments - 160 2,570 - - 160 - 2,120 - - 160 2,120 -

DIP TL Proceeds - - - - - (145,000) - - - - - - -

DIP TL Interest - - - - 853 - - - 2,040 - - - -

Total - 160 2,570 - 2,188 (144,840) - 2,120 3,113 - 160 2,120 -

NET CASH FLOW (22,754) (49,908) (35,763) (20,816) (20,217) 66,235 (19,967) 1,154 (12,162) (8,425) 3,270 (10,490) (104)

ENDING LIQUIDITY 210,982 161,074 125,311 104,495 84,278 150,513 130,546 131,699 119,537 111,112 114,382 103,892 103,788

ADDITIONAL DIP TL FUNDS AVAILABILE 290,000 290,000 290,000 290,000 290,000 145,000 145,000 145,000 145,000 145,000 145,000 145,000 145,000

Other 

Disbursements

Financing 

Disbursements

Operating Cash 

Flow Liquidity

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 122 of 223
WEIL:\97485855\13\54457.0008

Exhibit B

Redline to Interim Order

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 123 of 223
44670.00001

- SWDOCIDLOCATION

:

CHINOS HOLDINGS, INC., et al., : Case No. 20–32181 (KLP)

:

:

Debtors.1 : (Jointly Administrationered

Requested)

------------------------------------------------------------ In re

:

:

------------------------------------------------------------

x

x

Chapter 11

INTERIMFINAL ORDER (I) AUTHORIZING THE DEBTORS TO

OBTAIN

POSTPETITION FINANCING, (II) AUTHORIZING THE DEBTORS TO

USE CASH COLLATERAL, (III) GRANTING LIENS AND PROVIDING

SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, (IV) GRANTING

ADEQUATE PROTECTION TO PREPETITION SECURED PARTIES, (V) MODIFYING AUTOMATIC STAY, (VI) SCHEDULING A FINAL HEARING, AND

(VII) GRANTING RELATED RELIEF

Upon the motion, dated May 4, 2020 (the “Motion”)

2 of Chinos Holdings, Inc. (“Ultimate

Holdings”) and its debtor affiliates, as debtors and debtors in possession (collectively, the

“Debtors”) in the above-captioned chapter 11 cases (collectively, the “Chapter 11 Cases”), seeking entry of an order (this “InterimFinal Order”) pursuant to sections 105, 361, 362, 363, 364(c)(l), 364(c)(2), 364(c)(3), 364(d), 364(e), 503, and 507 of chapter 11 of title 11 of the

United States Code (the “Bankruptcy Code”) and Rules 2002, 4001, 6003, 6004, and 9014 of

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF VIRGINIA

RICHMOND DIVISION

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax

identification number, as applicable, are Chinos Holdings, Inc. (3834); Chinos Intermediate Holdings A, Inc. (3301); Chinos Intermediate, Inc. (3871); Chinos Intermediate Holdings B, Inc. (3244); J. Crew Group, Inc. (4486); J. Crew Operating Corp. (0930); Grace Holmes, Inc. (1409); H.F.D. No. 55, Inc. (9438); J. Crew Inc. (6360); J. Crew International, Inc. (2712); J. Crew Virginia, Inc. (5626); Madewell Inc. (8609); J. Crew Brand

Holdings, LLC (7625); J. Crew Brand Intermediate, LLC (3860); J. Crew Brand, LLC (1647); J. Crew Brand

Corp. (1616); J. Crew Domestic Brand, LLC (8962); and J. Crew International Brand, LLC (7471). The

Debtors’ corporate headquarters and service address is 225 Liberty St., New York, NY 10281. 2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the

Motion.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 124 of 223
the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Rule 4001(a)-1 of

the Local Rules of the United States Bankruptcy Court for the Eastern District of Virginia (the

“Local Rules”) inter alia:

(i) authorizing (x) the Borrower (as defined below) to obtain senior secured

postpetition financing on a superpriority basis in the aggregate principal amount of up to

$400,000,000 (the “DIP Facility” and, all amounts extended under the DIP Facility, the “DIP

Loans”), pursuant to the terms and conditions of that certain Debtor-in-Possession Credit

Agreement (as the same may be amended, restated, amended and restated, supplemented, waived

and/or otherwise modified from time to time, the “DIP Credit Agreement” and, together with

any exhibits and schedules attached thereto and the Loan Documents (as defined in the DIP

Credit Agreement) the “DIP Documents”), by and among Chinos Intermediate Holdings A, Inc., a Delaware corporation (in such capacity, the “Borrower”), Ultimate Holdings, Wilmington

Savings Fund Society, FSB, as administrative agent and collateral agent for the DIP Secured

Parties (as defined below) (in such capacities, the “DIP Agent”), and the lenders party thereto

from time to time (the “DIP Lenders” and, together with the DIP Agent, the “DIP Secured

Parties”), substantially in the form attached hereto as Schedule 1 and (y) each of the Debtors

other than the Borrower (collectively in such capacities, the “DIP Guarantors” and together

with the Borrower, the “DIP Obligors”), to guaranty the Borrower’s (and each other DIP

Guarantor’s) obligations under the DIP Facility and under, or secured by, the DIP Documents

(collectively, and including all “Obligations” as defined in the DIP Credit Agreement, the “DIP

- 2 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 125 of 223
Obligations”). (ii) authorizing the Debtors to execute and enter into the DIP Documents and to

perform such other acts as may be necessary or appropriate in connection with the same;

(iii) authorizing the Borrower to borrow up to $11400,000,000 of term loans under

the DIP Facility (the “InterimFinal Loans”) upon entry of this Interim Order to avoid

immediate and irreparable harm to the Debtors’ estatesFinal Order on a final basis;

(iv) granting the DIP Obligations the status of allowed superpriority administrative

expense claims in each of the Chapter 11 Cases, which, for the avoidance of doubt, shall be

subject to the Carve-Out in all respects;

(v) granting to the DIP Agent, for the benefit of the DIP Secured Parties, to secure

the DIP Obligations, automatically perfected security interests in and liens on all of the DIP

Collateral (as defined below), including, without limitation, all property constituting “cash

collateral” as defined in section 363(a) of the Bankruptcy Code (the “Cash Collateral”), which

liens shall have the priorities set forth herein and shall be subject to the Carve-Out (as defined

below); provided that in no event shall the “Cash Collateral” include Excluded Property (as

defined in the DIP Documents) or funds held in the Professional Fees Account (other than the

Debtors’ reversionary interest, if any, therein, after all Professional Fees benefitting from the

Carve-Out have been indefeasibly paid in full, in cash);

(vi) authorizing and directing the Debtors to pay the principal, interest, premiums, fees, expenses, and other amounts payable under the DIP Documents as such become due and

- 3 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 126 of 223
payable;

(vii) authorizing the Debtors to use the Prepetition Collateral (as defined below) of

the Prepetition Secured Parties and provide adequate protection to the Prepetition Secured

Parties (as defined below) solely to the extent of the diminution in value, if any, of their

respective interests in the Prepetition Collateral as of the Petition Date, including, as applicable, with respect to the Cash Collateral (“Diminution in Value”), resulting from (a) the imposition

of the automatic stay, (b) the Debtors’ postpetition use, sale, or lease of the Prepetition

Collateral, including Cash Collateral, (c) the priming of the Prepetition ABL Secured Parties’

liens on the ABL Priority Collateral (as defined in the ABL Intercreditor Agreement (as defined

below) by the Carve-Out, or (d) the priming (including by the Carve-Out (as defined below)) of

(i) the Prepetition ABL Secured Parties’ liens on the Term Priority Collateral (as defined in the

ABL Intercreditor Agreement (as defined below), the “Term Priority Collateral”), (ii) the

Prepetition Term Secured Parties’ (as defined below) liens on the Prepetition Term Collateral (as

defined below), and (iii) the Prepetition IPCo Secured Parties’ (as defined below) liens on the

Prepetition IPCo Collateral (as defined below);

(viii) vacating and modifying the automatic stay imposed by section 362 of the

Bankruptcy Code to the extent necessary to implement and effectuate the terms and provisions

of the DIP Documents; and

(ix) scheduling a final hearing (the “Final Hearing”) within thirty-five (35) days

of the Petition Date to consider the relief requested in the Motion on a final basis and approving

- 4 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 127 of 223
the form of notice with respect to the Final Hearing. The Court having considered the Motion, the exhibits attached thereto, the Cowan

Declaration, the Zanna Declaration, and the First Day Declaration (collectively, the

“Declarations”), and the evidence submitted and arguments made at the interim hearing held on

May 5, 2020 (the “Interim ; and the Court having entered an order approving the relief

requested in the Motion on an interim basis on May 5, 2020 [Docket No. 84] (the “Interim

Order”); and the Court having considered the Motion, the exhibits attached thereto, the

Declarations, and the evidence submitted and arguments made at the final hearing held on June

4, 2020 (the “Final Hearing”); and notice of the InterimFinal Hearing having been given in

accordance with the Interim Order, Bankruptcy Rules 2002, 4001(b), (c) and (d), and all

applicable Local Rules; and the InterimFinal Hearing having been held and concluded; and all

objections, if any, to the interim relief requested in the Motion having been withdrawn, resolved, or overruled by the Court; and it appearing that approval of the interim relief requested in the

Motion is necessary to avoid immediate and irreparable harm to the Debtors and their estates

pending the Final Hearing, and otherwise, as granted hereby, is fair and reasonable and in the

best interests of the Debtors, their estates, and all parties-in-interest, and is essential for the

continued operation of the Debtors’ businesses and the preservation of the value of the Debtors’ assets; and it appearing that the Debtors’ entry into the DIP Credit Agreement and the other DIP

Documents as granted hereby is a sound and prudent exercise of the Debtors’ business judgment;

and after due deliberation and consideration, and good and sufficient cause appearing therefor: - 5 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 128 of 223
- 6 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

BASED UPON THE RECORD ESTABLISHED AT THE INTERIMFINAL HEARING, THE COURT MAKES THE FOLLOWING FINDINGS OF FACT AND CONCLUSIONS

OF LAW:

3

A. Petition Date. On May 4, 2020 (the “Petition Date”), the Debtors each

commenced with this Court a voluntary case under chapter 11 of the Bankruptcy Code. B. Debtors in Possession. The Debtors are authorized to continue operating their

businesses and managing their properties as debtors in possession pursuant to sections 1107(a)

and 1108 of the Bankruptcy Code. No trustee, or examiner, or statutory committee has been

appointed in these Chapter 11 Cases. C. Jurisdiction and Venue. This Court has jurisdiction to consider this matter

pursuant to 28 U.S.C. § 1334, and the Standing Order of Reference from the United States

District Court for the Eastern District of Virginia, dated July 10, 1984. This proceeding is core

pursuant to 28 U.S.C. § 157(b). Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408

and 1409. D. Committee Formation. As of the date hereofOn May 13, 2020, the United

States Trustee for the Eastern District of Virginia, Richmond Division (the “U.S. Trustee”) has

not yet appointed an official committee of unsecured creditors in these Chapter 11 Cases (athe

“Committee”) pursuant to section 1102 of the Bankruptcy Code [Docket No. 188].

3 The findings and conclusions set forth herein constitute the Court’s findings of fact and conclusions of law

pursuant to Bankruptcy Rule 7052, made applicable to this proceeding pursuant to Bankruptcy Rule 9014. To

the extent that any of the following findings of fact constitute conclusions of law, they are adopted as such. To

the extent any of the following conclusions of law constitute findings of fact, they are adopted as such.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 129 of 223
E. Notice. Proper, timely, adequate, and sufficient notice of the Motion and the

InterimFinal Hearing has been provided in accordance with the Interim Order, the Bankruptcy

Code, the Bankruptcy Rules, and the Local Rules, and no other or further notice of the Motion

with respect to the relief requested at the InterimFinal Hearing or the entry of this InterimFinal

Order shall be required. F. Debtors’ Stipulations. Subject to the rights of parties in interest that are set

forth and reserved in paragraph 44 herein (including with respect to a Challenge that may

brought through or on behalf of a Debtors’ estate upon obtaining proper standing and complying

with the terms of paragraph 44 herein), and subject to the terms hereof and the rights reserved by

the Debtors at paragraph F(v) hereof, the Debtors admit, stipulate, acknowledge, and agree as

follows (paragraph F herein shall be referred to as the “Debtors’ Stipulations”):

(i) Prepetition ABL Facility. (a) Pursuant to that certain ABL Credit Agreement, dated as of

March 7, 2011 (as amended by that certain First Amendment to Credit

Agreement, dated as of October 11, 2012, that certain Second Amendment to

Credit Agreement, dated as of March 5, 2014, that certain Third Amendment to

Credit Agreement, dated as of December 10, 2014, that certain Fourth

Amendment to Credit Agreement (Incremental Amendment), dated as of

December 17, 2015, that certain Fifth Amendment to Credit Agreement and

Consent to Release of Mortgages, dated as of November 17, 2016, that certain

Sixth Amendment to Credit Agreement, dated as of September 19, 2018, and as

further amended, restated, amended and restated, supplemented, waived and/or

otherwise modified from time to time, the “Prepetition ABL Credit Agreement”

and, collectively with the Loan Documents (as defined in the Prepetition ABL

Credit Agreement) and any other agreements and documents executed or

delivered in connection therewith, each as amended, restated, amended and

restated, supplemented, waived and/or otherwise modified from time to time, the

“Prepetition ABL Documents”), among, inter alios, (I) J. Crew Group, Inc., a

Delaware corporation (in such capacity, the “Prepetition ABL Borrower”) (II)

- 7 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 130 of 223
- 8 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Chinos Intermediate Holdings B, Inc., a Delaware corporation (“Holdings”), (III)

Bank of America, N.A., as administrative agent and collateral agent for the

Prepetition ABL Secured Parties (as defined below) (in such capacities, the

“Prepetition ABL Agent”), and (IV) the lenders party thereto from time to time

(the “Prepetition ABL Lenders” and, collectively with the Prepetition ABL

Agent, and other “Secured Parties” as defined in the Prepetition ABL Credit

Agreement, the “Prepetition ABL Secured Parties”), the Prepetition ABL

Lenders and Issuing Banks (as defined in the Prepetition ABL Credit Agreement)

provided revolving loans, swingline loans, and letters of credit to, or for the

benefit of, the Prepetition ABL Borrower (collectively, the “Prepetition ABL

Facility”). Pursuant to that certain Guaranty Agreement, dated as of March 7, 2011 (as amended, restated, amended and restated, supplemented and/or

otherwise modified from time to time, the “Prepetition ABL Guaranty”), Holdings, J. Crew Operating Corp., a Delaware corporation (“J. Crew OpCo”), J. Crew Inc., a Delaware corporation (“JCI”), J. Crew International, Inc., a

Delaware corporation (“J. Crew International”), Grace Holmes, Inc., a

Delaware corporation (“Grace Holmes”), H. F. D. No. 55, Inc., a Delaware

corporation (“H.F.D.”), Madewell Inc., a Delaware corporation (“Madewell”), and J. Crew Virginia, Inc., a Virginia corporation (“J. Crew Virginia”) (in such

capacities, the “Prepetition ABL Guarantors” and, together with the Prepetition

ABL Borrower, the “Prepetition ABL Obligors” or the “ABL Debtors”)

guaranteed the Obligations (as defined in the Prepetition ABL Credit Agreement). (b) Prepetition ABL Obligations. As of the Petition Date, the

Prepetition ABL Obligors were indebted to the Prepetition ABL Secured Parties, without defense, counterclaim, or offset of any kind, in respect of the outstanding

loans and reimbursement obligations in respect of letters of credit incurred by the

Prepetition ABL Borrower under the Prepetition ABL Facility (collectively, the

“Prepetition ABL Loans”), in an aggregate principal amount, as of the Petition

Date, not less than approximately $309,093,952.11

4 (collectively, together with

accrued and unpaid interest, fees, expenses, and disbursements (including, without limitation, any accrued and unpaid attorneys’ fees, accountants’ fees, appraisers’ fees, and financial advisors’ fees and related expenses and

disbursements), cash management obligations, indemnification obligations, and

other charges, amounts, and costs of whatever nature owing, whether or not

contingent, whenever arising, accrued, accruing, due, owing, or chargeable in

respect of any of the Prepetition ABL Obligors’ obligations pursuant to the

Prepetition ABL Documents, including all “Obligations” as defined in the

4 In addition, there are approximately $65,906,047.89 million of outstanding but undrawn letters of credit issued

under the Prepetition ABL Facility.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 131 of 223
- 9 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Prepetition ABL Credit Agreement, in each case, as of the Petition Date, and all

interest, fees, costs, and other charges allowable under Section 506(b) of the

Bankruptcy Code, the “Prepetition ABL Obligations”). (c) Prepetition ABL Liens and Prepetition ABL Collateral. As

more fully set forth in the Prepetition ABL Documents, prior to the Petition Date, the Prepetition ABL Obligors granted to the Prepetition ABL Agent, for the

benefit of the Prepetition ABL Secured Parties, a security interest in and

continuing lien (the “Prepetition ABL Liens”) on “Collateral,” as such term is

defined in the Prepetition ABL Credit Agreement (the “Prepetition ABL

Collateral”), and the Prepetition ABL Obligations were fully secured as of the

Petition Date by the Prepetition ABL Liens; provided that for the avoidance of

doubt Prepetition ABL Collateral shall not include the “Excluded Property” as

defined in that certain Security Agreement, dated March 7, 2011 (as amended, restated, amended and restated, supplemented, waived and/or otherwise modified

from time to time, the “ABL Security Agreement”), by and among the

Prepetition ABL Obligors and the Prepetition ABL Agent in connection with the

Prepetition ABL Obligations. (d) Validity, Perfection, and Priority of Prepetition ABL Liens

and Prepetition ABL Obligations. As of the Petition Date, (I) the Prepetition

ABL Liens on the Prepetition ABL Collateral were valid, binding, enforceable, non-avoidable, and, to the extent (x) required by the Prepetition ABL Documents, or (y) or otherwise actually properly perfected and were granted to, or for the

benefit of, the Prepetition ABL Secured Parties for fair consideration and

reasonably equivalent value; (II) the Prepetition ABL Liens were senior in

priority over any and all other liens on the Prepetition ABL Collateral, subject

only to the Prepetition Term Liens on the Term Priority Collateral and certain

liens permitted by the Prepetition ABL Documents (in each case, to the extent

that such existing liens were valid, properly perfected, non-avoidable, and senior

in priority to the Prepetition ABL Liens as of the Petition Date or were valid non- avoidable senior liens that are perfected subsequent to the Petition Date as

permitted by Section 546(b) of the Bankruptcy Code, the “ABL Permitted

Liens”);5 (III) the Prepetition ABL Obligations constitute legal, valid, binding, and non-avoidable obligations of the Prepetition ABL Obligors, enforceable in

accordance with the terms of the applicable Prepetition ABL Documents; (IV) no

5 For the avoidance of doubt, none of the Professional Fees Account, the Operating Account, or the

Disbursement Account (each as defined herein or in the DIP Credit Agreement) constitute or be deemed to

constitute ABL Priority Collateral, except to the extent such accounts contain proceeds of Prepetition ABL

Collateral, but solely with respect to such proceeds.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 132 of 223
offsets, recoupments, challenges, objections, defenses, claims, or counterclaims of

any kind or nature to any of the Prepetition ABL Liens or Prepetition ABL

Obligations exist, and no portion of the Prepetition ABL Liens or Prepetition

ABL Obligations is subject to any challenge or defense, including, without

limitation, avoidance, disallowance, disgorgement, recharacterization, or

subordination (equitable or otherwise) pursuant to the Bankruptcy Code or

applicable non-bankruptcy law; (V) other than with respect to the Debtor

Reserved Claims, the Debtors and their estates have no claims, objections, challenges, causes of action, and/or choses in action, including, without

limitation, avoidance claims under chapter 5 of the Bankruptcy Code or

applicable state law equivalents or actions for recovery or disgorgement against

any of the Prepetition ABL Secured Parties or any of their respective affiliates, agents, attorneys, advisors, professionals, officers, directors, or employees, arising out of, based upon, or related to the Prepetition ABL Facility; and

(VI) other than other than with respect to the Debtor Reserved Claims, the

Debtors have waived, discharged, and released any right to challenge any of the

Prepetition ABL Obligations, the priority of the Debtors’ obligations thereunder, or the validity, extent, or priority of the Prepetition ABL Liens. (ii) Prepetition Term Facility. (a) Pursuant to that certain Amended and Restated Credit

Agreement, dated as of March 5, 2014 (as amended by that certain Amendment

No. 1 to Amended and Restated Credit Agreement, dated as of July 13, 2017, and

as further amended, restated, amended and restated, supplemented, waived and/or

otherwise modified from time to time, the “Prepetition Term Credit

Agreement” and, collectively with the Loan Documents (as defined in the

Prepetition Term Credit Agreement) and any other agreements and documents

executed or delivered in connection therewith, each as amended, restated, amended and restated, supplemented, waived and/or otherwise modified from

time to time, the “Prepetition Term Documents”), among (I) J. Crew Group, Inc., a Delaware corporation (in such capacity, the “Prepetition Term

Borrower”), (II) Holdings (III) Wilmington Savings Fund Society, FSB, as

administrative agent (the “Prepetition Term Administrative Agent”) and

collateral agent (the “Prepetition Term Collateral Agent”) for the Prepetition

Term Secured Parties (in such capacities, as successor-in-interest to Bank of

America, N.A., the “Prepetition Term Agent” and, together with the Prepetition

ABL Agent, the “Prepetition Agents”) and (IV) the lenders from time to time

party thereto (the “Prepetition Term Lenders” and, collectively with the

Prepetition Term Agent, the “Prepetition Term Secured Parties”), the

Prepetition Term Lenders provided term loans to the Prepetition Term Borrower

- 10 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 133 of 223
(the “Prepetition Term Facility” and, together with the Prepetition ABL

Facility, the “Prepetition Secured Facilities”). Pursuant to that certain Guaranty

Agreement, dated as of March 7, 2011 (as amended, restated, amended and

restated, supplemented and/or otherwise modified from time to time, the

“Prepetition Term Guaranty”), Holdings, J. Crew OpCo, JCI, J. Crew

International, Grace Holmes, H.F.D., Madewell and J. Crew Virginia (in such

capacities, the “Prepetition Term Guarantors” and, together with the

Prepetition Term Borrower, the “Prepetition Term Obligors” or the “Term

Debtors”) guaranteed the Obligations (as defined in the Prepetition Term Credit

Agreement). (b) Prepetition Term Obligations. As of the Petition Date, the

Prepetition Term Obligors were indebted to the Prepetition Term Secured Parties, without defense, counterclaim, or offset of any kind, in respect of the loans

incurred under the Prepetition Term Facility (collectively, the “Prepetition Term

Loans”), in an aggregate outstanding principal amount, as of the Petition Date, exclusive of accrued but unpaid interest, costs, fees, and expenses, not less than

$1,337,363,321.82 (collectively, together with accrued and unpaid interest, fees, expenses, and disbursements (including, without limitation, any accrued and

unpaid attorneys’ fees, accountants’ fees, appraisers’ fees, and financial advisors’

fees and related expenses and disbursements), indemnification obligations, and

other charges, amounts, and costs of whatever nature owing, whether or not

contingent, whenever arising, accrued, accruing, due, owing, or chargeable in

respect of any of the Prepetition Term Obligors’ obligations pursuant to the

Prepetition Term Documents, including all “Obligations” as defined in the

Prepetition Term Credit Agreement, in each case, as of the Petition Date, and all

interest, fees, costs, and other charges allowable under Section 506(b) of the

Bankruptcy Code (the “Prepetition Term Obligations”). (c) Prepetition Term Liens and Prepetition Term Collateral. As

more fully set forth in the Prepetition Term Documents, prior to the Petition Date, the Prepetition Term Obligors granted to the Prepetition Term Agent, for the

benefit of the Prepetition Term Secured Parties, a security interest in and

continuing lien (the “Prepetition Term Liens”) on “Collateral,” as such term is

defined in the Prepetition Term Credit Agreement (the “Prepetition Term

Collateral”); provided that for the avoidance of doubt Prepetition Term

Collateral shall not include “Excluded Collateral” as defined in that certain

Security Agreement, dated March 7, 2011 (as amended, restated, amended and

restated, supplemented, waived and/or otherwise modified from time to time, the

“Prepetition Term Security Agreement”), by and among the Prepetition Term

- 11 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 134 of 223
Obligors and the Prepetition Term Collateral Agent, in connection with the

Prepetition Term Obligations. (d) Validity, Perfection, and Priority of Prepetition Term Liens

and Prepetition Term Obligations. As of the Petition Date, (I) the Prepetition

Term Liens on the Prepetition Term Collateral were valid, binding, enforceable, non-avoidable, and, to the extent (x) required by the Prepetition Term Loan

Documents or (y) otherwise actually perfected, properly perfected and were

granted to, or for the benefit of, the Prepetition Term Secured Parties for fair

consideration and reasonably equivalent value; (II) the Prepetition Term Liens

were senior in priority over any and all other liens on the Prepetition

Term Collateral, subject only to the Prepetition ABL Liens on the ABL Priority

Collateral (as defined in the ABL Intercreditor Agreement (defined below), the

“ABL Priority Collateral”) and certain liens permitted by the Prepetition

Term Documents (in each case, to the extent that such existing liens were valid, properly perfected, non-avoidable, and senior in priority to the Prepetition

Term Liens as of the Petition Date or were valid non-avoidable senior liens that

are perfected subsequent to the Petition Date as permitted by Section 546(b) of

the Bankruptcy Code, the “Term Permitted Liens”); (III) the Prepetition Term

Obligations constitute legal, valid, binding, and non-avoidable obligations of the

Prepetition Term Obligors, enforceable in accordance with the terms of the

applicable Prepetition Term Documents; (IV) no offsets, recoupments, challenges, objections, defenses, claims, or counterclaims of any kind or nature to

any of the Prepetition Term Liens or Prepetition Term Obligations exist, and no

portion of the Prepetition Term Liens or Prepetition Term Obligations is subject

to any challenge or defense, including, without limitation, avoidance, disallowance, disgorgement, recharacterization, or subordination (equitable or

otherwise) pursuant to the Bankruptcy Code or applicable non-bankruptcy law;

(V) other than with respect to the Debtor Reserved Claims, the Debtors and their

estates have no claims, objections, challenges, causes of action, and/or choses in

action, including, without limitation, avoidance claims under chapter 5 of the

Bankruptcy Code or applicable state law equivalents or actions for recovery or

disgorgement against any of the Prepetition Term Secured Parties or any of their

respective affiliates, agents, attorneys, advisors, professionals, officers, directors, or employees, arising out of, based upon, or related to the Prepetition

Term Facility; and (VI) other than with respect to the Debtor Reserved Claims, the Debtors have waived, discharged, and released any right to challenge any of

the Prepetition Term Obligations, the priority of the Debtors’ obligations

thereunder, or the validity, extent, or priority of the Prepetition Term Liens. (iii) Prepetition IPCo Notes. - 12 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 135 of 223
- 13 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

(a) Prepetition IPCo New Money Notes. Pursuant to that

certain Indenture for certain 13.00% notes due 2021, dated as of July 13, 2017, (as amended, restated, amended and restated, supplemented, waived and/or

otherwise modified from time to time, the “Prepetition IPCo New Money Notes

Indenture” and, collectively with the Security Documents (as defined in the

Prepetition IPCo New Money Notes Indenture) and any other agreements, documents, certificates and instruments executed or delivered in connection

therewith, each as amended, restated, amended and restated, supplemented, waived and/or otherwise modified from time to time, the “Prepetition IPCo New

Money Notes Documents”, among J. Crew Brand, LLC (in such capacity, the

“Prepetition LLC Issuer”), J. Crew Brand Corp. (in such capacity, the

“Prepetition Corporate Issuer” and, together with the Prepetition LLC Issuer, the “Prepetition Issuers”), U.S. Bank National Association, as trustee and

collateral agent, (in such capacities, the “Prepetition IPCo New Money Notes

Indenture Trustee”), the guarantors thereunder (the “Prepetition IPCo New

Money Notes Guarantors” and, together with the Prepetition Issuers, the

“Prepetition IPCo New Money Notes Obligors”), and the Holders (as defined in

the Prepetition IPCo New Money Notes Indenture, the “Prepetition IPCo New

Money Noteholders” and, collectively with the Prepetition IPCo New Money

Notes Indenture Trustee, the “Prepetition IPCo New Money Notes Secured

Parties”), the Prepetition Issuers incurred indebtedness to the Prepetition IPCo

New Money Noteholders of 13.00% Senior Secured New Money Notes due 2021

(collectively, the “Prepetition IPCo New Money Notes”). (b) Prepetition IPCo Exchange Notes. Pursuant to that certain

Indenture for certain 13.00% notes due 2021, dated as of July 13, 2017 (as

amended, restated, amended and restated, supplemented, waived and/or otherwise

modified from time to time, the “Prepetition IPCo Exchange Notes Indenture”

6

and, collectively with the Security Documents (as defined in the IPCo Exchange

Notes Indenture) and any other agreements, documents, certificates and

instruments executed or delivered in connection therewith, each as amended, restated, amended and restated, supplemented, waived and/or otherwise modified

from time to time, the “Prepetition IPCo Exchange Notes Documents” and, collectively with the Prepetition IPCo New Money Notes Documents, the

“Prepetition IPCo Notes Documents” and, collectively with the Prepetition

ABL Documents and the Prepetition Term Documents, the “Prepetition

Documents”), among the Prepetition Issuers U.S. Bank National Association, as

trustee and collateral agent, (in such capacities, the “Prepetition IPCo Exchange

Notes Indenture Trustee” and, together with the Prepetition IPCo New Money

6 The Prepetition IPCo New Money Notes Indenture and the Prepetition IPCo Exchange Notes Indenture are

collectively referred to as the “Prepetition IPCo Indentures”.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 136 of 223
- 14 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Notes Indenture Trustee, the “Prepetition IPCo Indenture Trustees”), the

guarantors thereunder (the “Prepetition IPCo Exchange Notes Guarantors”

7

and, collectively with the Prepetition Issuers, the “Prepetition IPCo Exchange

Notes Obligors”

8), and the Holders (as defined in the Prepetition IPCo Exchange

Notes Indenture, the “Prepetition IPCo Exchange Noteholders”

9 and, collectively with the Prepetition IPCo Exchange Notes Indenture Trustee, the

“Prepetition IPCo Exchange Notes Secured Parties” and, collectively with the

Prepetition IPCo New Money Notes Secured Parties, the “Prepetition IPCo

Secured Parties” and, collectively with the Prepetition ABL Secured Parties and

the Prepetition Term Secured Parties, the “Prepetition Secured Parties”), the

Prepetition Issuers incurred indebtedness to the Prepetition IPCo Exchange

Noteholders of 13.00% Senior Secured Notes due 2021 (collectively, the

“Prepetition IPCo Exchange Notes” and, collectively with the Prepetition IPCo

New Money Notes, the “Prepetition IPCo Notes” and, collectively with the

Prepetition Secured Facilities, the “Prepetition Secured Debt”). (c) Prepetition IPCo Notes Obligations. Pursuant to the

Prepetition IPCo New Money Notes Indenture, the Prepetition IPCo New Money

Notes were issued with a face value of $97,000,000. As of the Petition Date, the

aggregate principal amount outstanding under the Prepetition IPCo New Money

Notes was $97,000,000 (collectively, together with accrued and unpaid interest, premiums, fees, expenses, and disbursements (including, without limitation, any

accrued and unpaid attorneys’ fees, accountants’ fees, appraisers’ fees, and

financial advisors’ fees and related expenses and disbursements), indemnification

obligations, and other charges, amounts, and costs of whatever nature owing, whether or not contingent, whenever arising, accrued, accruing, due, owing, or

chargeable in respect of any of the Prepetition IPCo New Money Notes Obligors’ obligations pursuant to the Prepetition IPCo New Money Notes Documents, including all “Notes Obligations” as defined in the Prepetition IPCo New Money

Notes Indenture, in each case, as of the Petition Date, and all interest, fees, costs, and other charges allowable under Section 506(b) of the Bankruptcy Code (the

“Prepetition IPCo New Money Notes Obligations”). Pursuant to the

Prepetition IPCo Exchange Notes Indenture, the Prepetition IPCo Exchange

Notes were issued with a face value of $249,596,000. As of the Petition Date, the

aggregate principal amount outstanding under the Prepetition IPCo Exchange

7 The Prepetition IPCo New Money Notes Guarantors and the Prepetition IPCo Exchange Notes Guarantors are

collectively referred to as the “Prepetition IPCo Notes Guarantors”. 8 The Prepetition IPCo New Money Notes Obligors and the Prepetition IPCo Exchange Notes Obligors are

collectively referred to as the “Prepetition IPCo Notes Obligors” or the “IPCo Debtors”. 9 The Prepetition IPCo New Money Noteholders and the Prepetition IPCo Exchange Noteholders are collectively

referred to as the “Prepetition IPCo Noteholders”.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 137 of 223
Notes was $250,599,000 (collectively, together with accrued and unpaid interest, premiums, fees, expenses, and disbursements (including, without limitation, any

accrued and unpaid attorneys’ fees, accountants’ fees, appraisers’ fees, and

financial advisors’ fees and related expenses and disbursements), indemnification

obligations, and other charges, amounts, and costs of whatever nature owing, whether or not contingent, whenever arising, accrued, accruing, due, owing, or

chargeable in respect of any of the Prepetition IPCo Exchange Notes Obligors’ obligations pursuant to the Prepetition IPCo Exchange Notes Documents, including all “Notes Obligations” as defined in the Prepetition IPCo Exchange

Notes Indenture, in each case, as of the Petition Date, and all interest, fees, costs, and other charges allowable under Section 506(b) of the Bankruptcy Code (the

“Prepetition IPCo Exchange Notes Obligations” and, collectively with the

Prepetition IPCo New Money Notes Obligations, the “Prepetition IPCo Notes

Obligations” and, collectively with the Prepetition ABL Obligations and the

Prepetition Term Obligations, the “Prepetition Obligations”). (d) Prepetition IPCo Liens and Prepetition IPCo Collateral. As more fully set forth in the Prepetition IPCo New Money Notes Documents, prior to the Petition Date, the Prepetition IPCo New Money Notes Obligors

granted to the Prepetition IPCo New Money Notes Indenture Trustee, for the

benefit of the Prepetition IPCo New Money Notes Secured Parties, a security

interest in and continuing lien (the “Prepetition IPCo New Money Notes

Liens”) on “Collateral,” as such term is defined in the Prepetition IPCo New

Money Notes Indenture (the “Prepetition IPCo New Money Notes Collateral”). As more fully set forth in the Prepetition IPCo Exchange Notes Documents, prior

to the Petition Date, the Prepetition IPCo Exchange Notes Obligors granted to the

Prepetition IPCo Exchange Notes Indenture Trustee, for the benefit of the

Prepetition IPCo Exchange Notes Secured Parties, a security interest in and

continuing lien (the “Prepetition IPCo Exchange Notes Liens” and, together

with the Prepetition IPCo New Money Notes Liens, the “Prepetition IPCo

Liens” and, collectively with the Prepetition ABL Liens and the Prepetition Term

Liens, the “Prepetition Liens”) on “Collateral,” as such term is defined in the

Prepetition IPCo Exchange Notes Indenture (the “Prepetition IPCo Exchange

Notes Collateral” and, together with the Prepetition IPCo New Money Notes

Collateral, the “Prepetition IPCo Collateral” and, collectively with the

Prepetition ABL Collateral and the Prepetition Term Collateral, the “Prepetition

Collateral”). (e) Validity, Perfection, and Priority of Prepetition IPCo Liens

and Prepetition IPCo Notes Obligations. As of the Petition Date, (I) the

Prepetition IPCo Liens on the Prepetition IPCo Collateral were valid, binding, enforceable, non-avoidable, and, to the extent (x) required by the Prepetition

- 15 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 138 of 223
IPCo Notes Documents or (y) otherwise actually perfected, properly perfected

and were granted to, or for the benefit of, the Prepetition IPCo Secured Parties for

fair consideration and reasonably equivalent value; (II) the Prepetition IPCo Liens

were senior in priority over any and all other liens on the Prepetition

IPCo Collateral, subject only to certain liens permitted by the Prepetition

IPCo Notes Documents (in each case, to the extent that such existing liens were

valid, properly perfected, non-avoidable, and senior in priority to the Prepetition

IPCo Liens as of the Petition Date or were valid non-avoidable senior liens that

are perfected subsequent to the Petition Date as permitted by Section 546(b) of

the Bankruptcy Code, the “IPCo Permitted Liens” and, collectively with the

ABL Permitted Liens and the Term Permitted Liens, the “Permitted Liens”);

(III) the Prepetition IPCo Notes Obligations constitute legal, valid, binding, and

non-avoidable obligations of the Prepetition IPCo Notes Obligors, enforceable in

accordance with the terms of the applicable Prepetition IPCo Notes Documents;

(IV) no offsets, recoupments, challenges, objections, defenses, claims, or

counterclaims of any kind or nature to any of the Prepetition IPCo Liens or

Prepetition IPCo Notes Obligations exist, and no portion of the Prepetition IPCo

Liens or Prepetition IPCo Notes Obligations is subject to any challenge or

defense, including, without limitation, avoidance, disallowance, disgorgement, recharacterization, or subordination (equitable or otherwise) pursuant to the

Bankruptcy Code or applicable non-bankruptcy law; (V) other than with respect

to the Debtor Reserved Claims, the Debtors and their estates have no claims, objections, challenges, causes of action, and/or choses in action, including, without limitation, avoidance claims under chapter 5 of the Bankruptcy Code or

applicable state law equivalents or actions for recovery or disgorgement against

any of the Prepetition IPCo Secured Parties or any of their respective affiliates, agents, attorneys, advisors, professionals, officers, directors, or employees, arising out of, based upon, or related to the Prepetition IPCo Notes; and

(VI) other than with respect to the Debtor Reserved Claims, the Debtors have

waived, discharged, and released any right to challenge any of the Prepetition

IPCo Notes Obligations, the priority of the Debtors’ obligations thereunder, or the

validity, extent, or priority of the Prepetition IPCo Liens. (iv) Releases. Subject to the Debtors’ rights reserved with regard to

the Debtor Reserved Claims, the Debtors hereby stipulate and agree that they forever and

irrevocably release, discharge, and acquit the DIP Secured Parties and the Prepetition Secured

Parties (in each case, solely in their capacities as such) and each of their respective successors, assigns, affiliates, subsidiaries, parents, officers, shareholders, directors, employees, attorneys, and agents, past, present, and future, and their respective heirs, predecessors, successors, and

assigns, each solely in their capacities as such (collectively, the “Releasees”), of and from any

and all claims, controversies, disputes, liabilities, obligations, demands, damages, expenses

- 16 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 139 of 223
(including, without limitation, reasonable attorneys’ fees), debts, liens, actions, and causes of

action of any and every nature whatsoever relating to, as applicable, the DIP Facility, the DIP

Documents, the Prepetition Documents, and/or the transactions contemplated hereunder or

thereunder including, without limitation, (i) any so-called “lender liability” or equitable

subordination or recharacterization claims or defenses, (ii) any and all claims and causes of

action arising under the Bankruptcy Code, (iii) any and all claims and causes of action with

respect to the Specified Liability Management Transactions (as defined in the Prepetition Term

Credit Agreement), and (iv) any and all claims and causes of actions with respect to the validity, priority, perfection, or avoidability of the liens or claims of the DIP Secured Parties and the

Prepetition Secured Parties. The Debtors further waive and release any defense, right of

counterclaim, right of set-off, or deduction to the payment of the DIP Obligations and the

Prepetition Obligations that the Debtors may now have or may claim to have against the

Releasees arising out of, connected with, or relating to any and all acts, omissions, or events

occurring prior to the Court’s entry of thisthe Interim Order; provided that the Debtors’ Stipulations shall not release any claims, defenses or rights in favor of the Debtors with respect

to certain litigation, captioned as Eaton Vance Management, et al v. Wilmington Savings Fund

Society, FSB, as Administrative Agent and Collateral Agent, et al, pending in the Supreme

Court of New York for New York County, Index No.: 654397/2017. (v) Debtors’ Reserved Rights. (a) The Debtors make no stipulation, and, notwithstanding

anything in the DIP Documents to the contrary, reserve all rights, with respect to

(i) any liens (whether on account of a deposit account control agreement or

otherwise) asserted with respect to that certain bank account maintained at Wells

Fargo Bank, N.A., account number ending 1816, in the name of J. Crew

Operating Corp. (the “Concentration Account”), and any cash held in or

disbursed from the Concentration Account that is not otherwise proceeds of

Prepetition Collateral, and the Debtors’ rights to challenge any lien (whether

pursuant to an action commenced pursuant to chapter 5 of the Bankruptcy Code

or otherwise) asserted by any party with respect to the Concentration Account, including cash held in or disbursed from such account (other than with respect to

cash that is otherwise proceeds from Prepetition Collateral) are expressly

preserved (the “Concentration Account Claims”); and (ii) any claims or causes

of action relating to the obligations incurred and liens granted pursuant to the

transaction among certain of the Debtors on December 5, 2016 and June 12, 2017

involving, among other things (A) the transfer of certain domestic intellectual

property to J. Crew Domestic Brand, LLC, (B) an amendment to the Prepetition

Term Credit Agreement to facilitate, among other things, the repurchase of loans

then-outstanding under the Prepetition Term Credit Agreement, and additional

borrowings under the Prepetition Term Credit Agreement, and (C) to the extent - 17 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 140 of 223
not covered by (A) and (B), the exchange of 7.75%/8.50% Senior PIK Toggle

Notes due 2019 issued by Chinos Intermediate Holdings A, Inc. for, among other

things, notes issued by J. Crew Brand LLC and J. Crew Brand Corp. (, including, without limitation, the Specified Liability Management Transactions (as defined

in the Prepetition Term Credit Agreement) (the “2017 Transaction,”)

(collectively and together with the Concentration Account Claims, the “Debtor

Reserved Claims”). (b) Any action prosecuted by the Debtors on account the Debtor

Reserved Claims must be commenced, if at all, but subject to paragraph 44

herein, pursuant to an adversary proceeding filed in the Bankruptcy Court (i) with

respect to Debtor Reserved Claims identified at Paragraph F(v)(a)(i), on or before

the first Business Day that is seventy five (75) calendar days after the Petition

Date and (ii) with respect to Debtor Reserved Claims identified at Paragraph

F(v)(a)(ii), prior to entry of thethis Final DIP Order, or in each case such claims

shall otherwise be waived by the Debtors, and all defenses of the Prepetition

Secured Parties with respect to any such Claim, Challenge or action are expressly

preserved; provided that, such dates may be extended by agreement of the

Debtors, on the one hand and (w) with respect to the Prepetition ABL Facility, the

Prepetition ABL Agent, (x) with respect to the Prepetition Term Facility, the

Prepetition Term Agent (acting at the direction of the Required Term Lenders (as

defined in the Prepetition Term Credit Agreement, the “Required Term

Lenders”)), (y) with respect to the Prepetition IPCo Exchange Notes, the

Prepetition IPCo Exchange Notes Trustee, and (z) with respect to the Prepetition

IPCo New Money Notes, the Prepetition New Money Notes Trustee, on the other

hand. Notwithstanding anything in this paragraph F or in the DIP Documents to the contrary, the

Debtors’ rights to seek a determination on the value of the Prepetition Collateral securing the

Prepetition Obligations are fully preserved; provided that, with respect to the Prepetition ABL

Collateral, the foregoing shall apply solely in order to determine the amount of the “equity

cushion” with respect to the Prepetition ABL Claims as of the Petition Date. G. Cash Collateral. Subject to the Debtors’ rights reserved with regard to the

Debtor Reserved Claims, all of the Debtors’ cash including any cash in their deposit accounts, - 18 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 141 of 223
wherever located, whether as original collateral or proceeds of other Prepetition Collateral, constitutes Cash Collateral of the Prepetition Secured Parties. H. Intercreditor Agreements. Pursuant to section 510 of the Bankruptcy Code, (i) that certain Intercreditor Agreement, dated as of March 7, 2011 (as amended, restated, amended and restated, supplemented, waived and/or otherwise modified from time to time, the

“ABL Intercreditor Agreement”), by and between the Prepetition ABL Agent and the

Prepetition Term Agent and (ii) that certain Intercreditor Agreement, dated as of July 13, 2017

(as amended, restated, amended and restated, supplemented, waived and/or otherwise modified

from time to time, the “IPCo Intercreditor Agreement” and, together with the ABL

Intercreditor Agreement, the “Intercreditor Agreements”), by and between the Prepetition

IPCo New Money Notes Indenture Trustee and the Prepetition IPCo Exchange Notes Indenture

Trustee, and any other applicable intercreditor or subordination provisions contained in any of

the other Prepetition Documents, (i) shall remain in full force and effect, (ii) shall continue to

govern the relative priorities, rights, and remedies of the Prepetition Secured Parties (including

the relative priorities, rights, and remedies of such parties with respect to the replacement liens, administrative expense claims, and superpriority administrative expense claims granted or the

amounts payable by the Debtors under thisthe Interim Order, this Final Order or otherwise), and

(iii) shall not be deemed to be amended, altered, or modified by the terms of this InterimFinal

Order or the DIP Documents, unless expressly set forth herein or therein.

- 19 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 142 of 223
I. Permitted Prior Liens; Continuation of Prepetition Liens. Nothing herein

shall constitute a finding or ruling by this Court that any lien other than (and subject to the

exceptions and qualifications regarding such liens contained herein) the Prepetition ABL Liens, the Prepetition Term Liens, and the Prepetition IPCo Liens are (i) valid, enforceable, perfected, or non-avoidable or (ii) senior to any of the Prepetition ABL Liens, the Prepetition Term Liens, and the Prepetition IPCo Liens. Moreover, and subject in all respects to the Intercreditor

Agreements, nothing shall prejudice the rights of any party in interest, including, but not limited

to, the Debtors, the DIP Agent, the DIP Lenders, the Prepetition Secured Parties, or athe

Committee (if appointed), to challenge the validity, priority, enforceability, seniority, avoidability, perfection, or extent of any asserted lien that is not the subject of the stipulations

granted pursuant to paragraph F hereof. J. Findings Regarding Postpetition Financing and Use of Cash Collateral. (i) Request for Postpetition Financing and Use of Cash Collateral. The Debtors seek authority (a) for the Debtors to enter intofinal approval of the DIP Facility and, the incurrence of the DIP Obligations and the use of Cash Collateral on a final basis on the terms

described herein and in the DIP Documents and (b) for the Debtors to use Cash Collateral on the

terms described herein, in each case, to, among other things, administer their Chapter 11 Cases

and fund their operations. At the Final Hearing, the Debtors will seek final approval of the DIP

Facility and the use of Cash Collateral pursuant to a proposed final order (the “Final Order”), which (i) shall be substantially the same as the Interim Order except that (x) those provisions in

- 20 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 143 of 223
the Interim Order that are subject to the entry of the Final Order shall be included in the Final

Order without such qualification, and (y) where appropriate, references to this Interim Order

shall be changed to references to the Final Order and (ii) with respect to any other modifications

to the Interim Order, shall be consistent with the DIP Credit Agreement and shall otherwise be in

form and substance acceptable to the Required Lenders (as defined in the DIP Credit Agreement, the “Required Lenders”, the DIP Agent and with respect to the use of Cash Collateral from

proceeds of ABL Priority Collateral, the Prepetition ABL Agent. Notice of the Final Hearing

and the proposed Final Order will be provided in accordance with this Interim Order. (ii) Priming of the Prepetition Liens. The priming of the Prepetition

Term Liens, Prepetition ABL Liens (except with respect to ABL Priority Collateral), and

Prepetition IPCo Liens under section 364(d) of the Bankruptcy Code, as contemplated by the

DIP Documents and as provided herein, will enable the Debtors to obtain the DIP Facility and

the Debtors to continue to operate their business during the pendency of the Chapter 11 Cases, for the benefit of their estates and creditors. The Prepetition Secured Parties are entitled to

receive adequate protection as set forth in this InterimFinal Order pursuant to sections 361, 363, and 364 of the Bankruptcy Code, solely to the extent of any Diminution in Value of their

respective interests in the Prepetition Collateral (including Cash Collateral) as of the Petition

Date. (iii) Need for Postpetition Financing and Use of Cash Collateral. The

Debtors have demonstrated an immediatethe need to use Cash Collateral on an interima final - 21 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 144 of 223
basis and to obtain credit in the form of the InterimFinal Loans under the DIP Facility in order

to, among other things, continue their ordinary course operations, administer these Chapter 11

Cases, and preserve the going-concern value of their estates. (iv) No Credit Available on More Favorable Terms. The DIP Facility

is the best source of debtor-in-possession financing reasonably available to the Debtors at this

time. Given their current financial condition, financing arrangements, and capital structure, the

Debtors have been and continue to be unable to obtain financing from sources other than the DIP

Lenders on terms more favorable than the DIP Facility. The Debtors are unable to obtain

adequate unsecured credit allowable under section 503(b)(1) of the Bankruptcy Code as an

administrative expense. The Debtors have also been unable to obtain: (a) adequate unsecured

credit having priority over that of administrative expenses of the kind specified in sections

503(b), 507(a), and 507(b) of the Bankruptcy Code; (b) adequate credit secured solely by a lien

on property of the Debtors and their estates that is not otherwise subject to a lien; or (c) adequate

credit secured solely by a junior lien on property of the Debtors and their estates that is subject to

a lien. Financing on a postpetition basis on better terms is not available without granting the DIP

Agent, for the benefit of itself and the DIP Lenders, (1) perfected security interests in and liens

on (each as provided herein) the DIP Collateral (as defined below), with the priorities set forth

herein; (2) superpriority claims; and (3) the other protections set forth in this InterimFinal Order. (v) Use of Cash Collateral and Proceeds of the DIP Facility. As a

condition to entry into the DIP Credit Agreement, the extension of credit under the DIP Facility

- 22 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 145 of 223
- 23 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

and the authorization to use the Prepetition Collateral, including Cash Collateral, the DIP Agent, the DIP Lenders, and the Prepetition Secured Parties require, and the Debtors have agreed, that

proceeds of the DIP Facility and the Prepetition Secured Parties’ Cash Collateral shall be used in

a manner consistent with the terms and conditions of this InterimFinal Order and the DIP

Documents and in accordance with the budget (including with respect to any variances as

permitted in the DIP Documents, as would not trigger a Budget Event (as defined in the DIP

Documents), and as set forth in paragraph 15 hereof, the “Budget” and the requirement to use

the proceeds of the DIP Facility and the Prepetition Secured Parties’ Cash Collateral in a manner

that does not trigger a Budget Event, the “Budget Requirement”),10 solely for the purposes set

forth in the DIP Credit Agreement and this InterimFinal Order, including (a) ongoing working

capital, capital expenditures, other general corporate purposes of the Debtors and any other

purpose not prohibited by the DIP Credit Agreement; (b) permitted payment of costs of

administration of the Chapter 11 Cases; (c) payment of such prepetition expenses as consented

to by the DIP Agent, acting at the direction of the Required DIP Lenders; (d) payment of

interest, premiums, fees, expenses, and other amounts (including, without limitation, the fees and

expenses of the DIP Agent and the legal and other professionals’ fees and expenses of the DIP

Agent and the DIP Lenders) owed under the DIP Documents, including those incurred in

connection with the preparation, negotiation, documentation, and Court approval of the DIP

Facility; (e) payment of certain adequate protection amounts to the Prepetition Secured Parties,

10 A copy of the initialcurrent Budget is attached hereto as ExhibitSchedule 2.

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 146 of 223
as set forth in paragraph 12 hereof; and (f) payment of obligations benefitting from the Carve- Out (as defined below), and making disbursements therefrom, including by funding the Carve- Out Reserve Account (as defined below); provided that, for the avoidance of doubt, and

notwithstanding anything herein or in the DIP Documents (including the DIP Credit Agreement)

to the contrary, in no instance shall the Debtors’ use of Collateral (including Cash Collateral) to

pay obligations benefiting from the Carve-Out, including Professional Fees, be limited or

deemed limited by any Approved Budget. (vi) Application of Proceeds of DIP Collateral. As a condition to entry

into the DIP Credit Agreement, the extension of credit under the DIP Facility, and authorization

to use Cash Collateral, the Debtors, the DIP Agent, the DIP Lenders, and the applicable

Prepetition Secured Parties have agreed that as of and commencing on the date of the Interim

Hearing, the Debtors shall apply the proceeds of the DIP Collateral as permitted by the DIP

Documents and this InterimFinal Order. (vii) DIP Election Procedures. The procedures governing the

participation of the Prepetition Term Lenders and the Prepetition IPCo Noteholders in the DIP

Facility (the “DIP Election Procedures”), as set forth in the DIP Credit Agreement, are fair and

reasonable. K. Adequate Protection. (i) The Prepetition Term Agent, for the benefit of the

Prepetition Term Secured Parties, (ii) the Prepetition ABL Agent, for the benefit of the

Prepetition ABL Secured Parties, and (iii) the Prepetition IPCo Indenture Trustees, for the

- 24 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 147 of 223
benefit of the applicable Prepetition IPCo Secured Parties, are entitled to receive adequate

protection solely to the extent of Diminution in Value, if any, of their respective interests as of

the Petition Date in the Prepetition Collateral, including, without limitation, the Cash Collateral. Pursuant to sections 361, 363, 503, and 507(b) of the Bankruptcy Code, as adequate protection, subject in all respects to the Carve-Out (as defined below), the Prepetition Secured Parties will

receive, and subject to the Carve Out in all respects, (i) solely to the extent of any Diminution of

Value, if any, of their interests in the Prepetition Collateral as of the Petition Date, Adequate

Protection Liens (as defined below) and 507(b) Claims (as defined below); (ii) current payment

of reasonable and documented fees and expenses and other disbursements as set forth in

paragraph 12 herein; (iii) financial and other reporting in each case, as set forth in paragraph 12

herein; and (iv) solely with respect to the Prepetition ABL Secured Parties, current cash

payments on a monthly basis in an amount equal to the postpetition interest and Letter of Credit

Fees (as defined in the Prepetition ABL Credit Agreement) on the Prepetition ABL Facility at

the non-default rate as set forth in the Prepetition ABL Credit Agreement and accrual of default

interest as set forth in paragraph 12 herein. Notwithstanding the foregoing, subject to paragraph

44 herein, the Debtors’ and any party in interest’s rights are fully reserved to seek a

determination that adequate protection payments should be recharacterized under section 506(b)

of the Bankruptcy Code as payment on account of the secured portion of the applicable

Prepetition Secured Parties’ claims as of the Petition Date.

- 25 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 148 of 223
L. Sections 506(c) and 552(b). In light of, among other things: (i) the

superpriority of the Carve-Out with respect to the Prepetition Liens; (ii) the DIP Agent’s and the

DIP Lenders’ agreement that their liens and superpriority claims shall be subject to the Carve- Out (as defined below); (iii) the Prepetition Secured Parties’ agreement that their respective liens

and claims, including any adequate protection liens and claims, shall be subject to the Carve-Out

(as defined below) and subordinate to the DIP Liens (as defined below), except as otherwise set

forth herein; (iv) the authority to use Cash Collateral as provided herein; and (v) the funding

made available pursuant to the DIP Facility (a) subject to entry of the Final Order, the

Prepetition Secured Parties are entitled to a waiver of any “equities of the case” exception under

section 552(b) of the Bankruptcy Code and (b) the DIP Agent, the DIP Lenders, and, subject to

entry of the Final Order, the Prepetition Secured Parties are each entitled to a waiver of the

provisions of section 506(c) of the Bankruptcy Code as provided herein. M.Good Faith of the DIP Agent and DIP Lenders and the Prepetition

Secured Parties. (i) Based upon the pleadings and the record in the Chapter 11 Cases, (i) the terms and conditions of the DIP Facility are fair and reasonable, are appropriate for

secured financing to debtors in possession, are the best available to the Debtors under the

circumstances, reflect the Debtors’ exercise of prudent business judgment consistent with their

fiduciary duties, and are supported by reasonably equivalent value and fair consideration; (ii) the

terms and conditions of the DIP Facility and the use of the Cash Collateral have been negotiated

- 26 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 149 of 223
in good faith and at arm’s length among the Debtors, and the DIP Secured Parties, and the

Prepetition Secured Parties, with the assistance and counsel of their respective advisors; (iii) the

use of Cash Collateral, including, without limitation, pursuant to this InterimFinal Order, has

been allowed in “good faith” within the meaning of section 364(e) of the Bankruptcy Code; (iv)

any credit to be extended, loans to be made, and other financial accommodations to be extended

to the Debtors by the DIP Secured Parties and the Prepetition Secured Parties, including, without

limitation, pursuant to this InterimFinal Order, have been allowed, advanced, extended, issued, or made, as the case may be, in “good faith” within the meaning of section 364(e) of the

Bankruptcy Code by the DIP Secured Parties and the Prepetition Secured Parties in express

reliance upon the protections offered by section 364(e) of the Bankruptcy Code; and (v) the DIP

Facility, the DIP Liens (as defined below), the DIP Superpriority Claims (as defined below), the

Adequate Protection Liens, and the 507(b) Claims (as defined below) shall be entitled to the full

protection of section 364(e) of the Bankruptcy Code in the event that this InterimFinal Order or

any provision hereof is vacated, reversed, or modified, on appeal or otherwise. (ii) Absent an order of this Court and the provision of Adequate

Protection, (a) consent of the Prepetition ABL Secured Parties and Prepetition Term Secured

Parties is required for the Debtors’ use of Cash Collateral and other Prepetition ABL Collateral

and Prepetition Term Collateral and (b) consent of the Prepetition IPCo Secured Parties is

required for the Debtors’ use of the Prepetition IPCo Collateral. The Prepetition ABL Secured

Parties and Prepetition Term Secured Parties have consented, or have not objected, to the

- 27 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 150 of 223
Debtors’ use of Cash Collateral and other Prepetition ABL Collateral and Prepetition Term

Collateral or to the Debtors’ entry into the DIP Documents in accordance with and subject to the

terms and conditions in this InterimFinal Order and the DIP Documents. The Prepetition IPCo

Secured Parties have consented, or have not objected, to the Debtors’ use of the Prepetition IPCo

Collateral or to the Debtors’ entry into the DIP Documents in accordance with and subject to the

terms and conditions in this InterimFinal Order and the DIP Documents. N. Immediate Entry. Sufficient cause exists for immediate entry of this

InterimFinal Order pursuant to Bankruptcy Rule 4001(c)(2). O. Interim Hearing. Notice of the Interim Hearing and the relief requested in

the Motion has been provided by the Debtors, whether by facsimile, electronic mail, overnight

courier, or hand delivery to certain parties in interest, including the Notice Parties. The Debtors

have made reasonable efforts to afford the best notice possible under the circumstances, and no

other notice is required in connection with the relief set forth in this Interim Order. Based upon the foregoing findings and conclusions, the Motion, the Declarations, and the

record before the Court with respect to the Motion, and after due consideration and good and

sufficient cause appearing therefor, IT IS HEREBY ORDERED THAT:

1. DIP Facility and Use of Cash Collateral Approved on InterimFinal Basis. The

Motion is granted to the extent provided herein on an interima final basis. The DIP Facility, the

borrowing of the InterimFinal Loans thereunder, and the guaranty by the DIP Guarantors of such

- 28 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 151 of 223
borrowing (and related obligations under the DIP Facility), is hereby authorized and approved, and the use of Cash Collateral on an interima final basis is authorized, in each case subject to the

terms and conditions set forth in the DIP Documents and this InterimFinal Order. All objections

to this InterimFinal Order, to the extent not withdrawn, waived, settled, or resolved, are hereby

denied and overruled. This InterimFinal Order shall become effective immediately upon its

entry. 2. Authorization of the DIP Facility. The DIP Facility is hereby approved. The

Debtors are expressly and immediately authorized and empowered to execute and deliver the

DIP Documents and to incur and to perform the DIP Obligations in accordance with, and subject

to, the terms of this InterimFinal Order and the DIP Documents and to deliver all instruments, certificates, agreements, and documents that may be required, desirable or necessary for the

performance by the Debtors under the DIP Facility and the creation and perfection of the DIP

Liens (as defined below). The Debtors are hereby authorized and directed to pay, in accordance

with this InterimFinal Order, the principal, interest, premiums, fees, payments, expenses, and

other amounts described in the DIP Documents as such amounts (including, without limitation, legal and other professional fees and expenses of the DIP Agent and the DIP Lenders) become

due and payable in accordance with the terms and conditions of the DIP Documents, without

need to obtain further Court approval, whether or not such fees arose before or after the Petition

Date, and whether or not the transactions contemplated hereby are consummated, and to take any

other related actions that may be necessary, desirable or appropriate, all to the extent provided in

- 29 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 152 of 223
this InterimFinal Order or the DIP Documents. Upon execution and delivery, tThe DIP

Documents shall represent valid and binding obligations of the Debtors, enforceable against each

of the Debtors and their estates in accordance with their terms. Upon entry of this Interim Order, tThe Backstop Premium set forth in the Backstop Commitment Letter (as defined in the DIP

Credit Agreement) (the “Backstop Premium”) shall beis fully earned, non-refundable, and non- avoidable and shall be payable in accordance with and at the times specified in the DIP

Documents. 3. Authorization to Borrow. To prevent immediate and irreparable harm to the

Debtors’ estates, fFrom the entry of this InterimFinal Order through and including the earliest to

occur of (i) entry of the Final Order or (ii) the DIP Termination Date (as defined below), and

subject to the terms and conditions set forth in the DIP Documents and this InterimFinal Order, the Debtors are hereby authorized to request extensions of credit (in the form of the InterimFinal

Loans) under the DIP Facility in an original principal amount equal to up to $11400,000,000. 4. Amendment of the DIP Documents. The DIP Documents may from time to

time be amended, restated, amended and restated, waived, modified, and/or supplemented by the

parties thereto (or, to the extent provided for in the applicable DIP Document, a subset of such

parties) in accordance with the terms and conditions of the applicable DIP Documents, provided

that the Debtors shall use commercially reasonable efforts to provide not less than three (3)

business days’ notice to the Committee in advance in writing, without further order of the Court

if the amendment, restatement, amendment and restatement, waiver, modification or supplement - 30 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 153 of 223
does not (i) shorten the original stated maturity of the DIP Loans, (ii) increase the aggregate

commitments or the rate of interest payable thereunder, or (iii) amend the Events of Default (as

defined in the DIP Credit Agreement) or covenants in the DIP Documents to be materially more

restrictive to the Debtors (taken as a whole) than those set forth in the DIP Documents as

originally executed and delivered (any such amendment, restatement, amendment and

restatement, waiver, modification or supplement, an “Approved Modification”); provided, that

for the avoidance of doubt, other than as explicitly set forth in the DIP Credit Agreement, updates and supplements to the Budget required to be delivered by the Borrower under the DIP

Documents shall not require further order of the Court. Prior to or promptly after the

effectiveness of any Approved Modification, the Debtors shall (i) provide notice (which may be

provided through electronic mail or facsimile) to counsel to anythe Committee (if appointed), the

U.S. Trustee, the DIP Agent, the Prepetition Agents, the Prepetition IPCo Indenture Trustees, and counsel to the Ad Hoc Committee and (ii) provide notice to the Court. In the case of an

amendment, restatement, amendment and restatement, waiver, supplement or other modification

of the DIP Documents that is not an Approved Modification, the Debtors shall (i) provide notice

(which may be provided through electronic mail or facsimile) to counsel to anythe Committee (if

appointed), the U.S. Trustee, the DIP Agent, the Prepetition Agents, the Prepetition IPCo

Indenture Trustees, and counsel to the Ad Hoc Committee, (ii) provide notice to the Court and

(iii) obtain approval of the Court. 5. DIP Obligations. The DIP Documents and this InterimFinal Order shall - 31 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 154 of 223
constitute and evidence the validity and binding effect of the DIP Obligations, which shall be

enforceable in accordance with their terms against the Debtors, their estates and any successors

thereto, including, without limitation, any trustee appointed in the Chapter 11 Cases or in any

case under chapter 7 of the Bankruptcy Code upon the conversion of any of the Chapter 11

Cases, or in any other proceedings superseding or related to any of the foregoing (collectively, the “Successor Cases”). Upon entry of this InterimFinal Order, the DIP Obligations will

include all loans and any other indebtedness or obligations, contingent or absolute, which may

now or from time to time hereafter be owing by any of the Debtors party to the DIP Documents

to the DIP Agent or any of the DIP Lenders, in each case, under and in accordance with the

terms and conditions of the DIP Documents or this InterimFinal Order or secured by the DIP

Liens (as defined below), including, without limitation, all principal, accrued and unpaid

interest, costs, fees, expenses, and other amounts owing under and in accordance with the DIP

Documents; provided that, for the avoidance of doubt the DIP Liens and the DIP Obligations

shall be subject to the Carve-Out in all respects. The Debtors shall be jointly and severally liable

for the DIP Obligations as and to the extent provided in the DIP Documents, which shall be

subject to the Carve-Out in all respects. The DIP Obligations shall be due and payable without

notice or demand on the DIP Termination Date (as defined below), and the Debtors’ authority to

use Cash Collateral under this InterimFinal Order shall automatically cease, in each case, without notice or demand on the Cash Collateral Termination Date (as defined below), in each

case except as provided in paragraph 26 hereof and subject to the requirements of the Carve-Out - 32 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 155 of 223
(as defined below); provided that the Debtors’ rights to seek the use of Cash Collateral upon

entry of a further order of the Court after the occurrence of the Cash Collateral Termination Date

are fully reserved, and nothing herein shall waive, limit, or modify or be deemed to waive, limit

or modify the Debtors’ rights to seek the use of Cash Collateral upon entry of a further order of

the Court after the occurrence of the Cash Collateral Termination Date. NoIt shall be an event of

default if any Order is entered that renders an obligation, payment, transfer, or grant of collateral

security hereunder or under the DIP Documents (including any DIP Obligation or DIP Liens (as

defined below) and including in connection with any adequate protection provided to the

Prepetition Secured Parties hereunder) shall be stayed, restrained, voidable, avoidable, or

recoverable under the Bankruptcy Code or under any applicable law (including, without

limitation, under chapter 5 of the Bankruptcy Code, section 724(a) of the Bankruptcy Code, or

any other provision with respect to avoidance actions under the Bankruptcy Code or applicable

state law equivalents), shallis determined to constitute original issue discount, or shallis

determined to be subject to any avoidance, reduction, setoff, recoupment, offset, recharacterization, subordination (whether equitable, contractual, or otherwise), counterclaim, cross-claim, defense, or any other challenge under the Bankruptcy Code or any applicable law or

regulation by any person or entity. 6. DIP Liens. Subject and subordinate to the Carve-Out in all respects, as set

forth in this InterimFinal Order and effective immediately upon entry of this InterimFinal Order, pursuant to, as applicable, sections 361, 362, 364(c)(2), 364(c)(3), and 364(d) of the Bankruptcy

- 33 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 156 of 223
Code, the DIP Agent, for the benefit of itself and the DIP Lenders, is hereby granted, in order to

secure the DIP Obligations, continuing, valid, binding, enforceable, non-avoidable, and

automatically and properly perfected postpetition security interests in and liens on (collectively, the “DIP Liens”) all real and personal property, whether now existing or hereafter arising and

wherever located, tangible or intangible, of each of the Debtors (the “DIP Collateral”), including, without limitation (a) all cash, cash equivalents, deposit accounts, securities accounts, accounts, other receivables (including credit card receivables), chattel paper, contract rights, inventory (wherever located), instruments, documents, securities (whether or not marketable)

and investment property (including, without limitation, all of the issued and outstanding capital

stock of each Debtor (other than Ultimate Holdings), other equity or ownership interests, including equity interests in subsidiaries and non-wholly-owned subsidiaries), hedge

agreements, furniture, fixtures, equipment (including documents of title), goods, franchise rights, trade names, trademarks, servicemarks, copyrights, patents, license rights, intellectual property, general intangibles (including, for the avoidance of doubt, payment intangibles), rights to the

payment of money (including, without limitation, tax refunds and any other extraordinary

payments), supporting obligations, guarantees, letter of credit rights, commercial tort claims, causes of action, and all substitutions, indemnification rights, all present and future

intercompany debt, leases other than nonresidential real property leases, fee interests in real

property owned by the Debtors, books and records related to the foregoing, and accessions and

proceeds of the foregoing, wherever located, including insurance or other proceeds; (b) all - 34 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 157 of 223
owned real property interests and all proceeds of leased real property; (c) actions brought under

section 549 of the Bankruptcy Code to recover any post-petition transfer of DIP Collateral; (d)

the proceeds of any avoidance actions brought pursuant to chapter 5 of the Bankruptcy Code or

section 724(a) of the Bankruptcy Code or any other avoidance actions under the Bankruptcy

Code or applicable state law equivalents (the “Avoidance Action Proceeds”), but not the

actions themselves; (d) the proceeds of any exercise of the Debtors’ rights under section 506(c)

and 550 of the Bankruptcy Code; and (e) all DIP Collateral that was not otherwise subject to

valid, perfected, enforceable, and unavoidable liens on the Petition Date; provided that the DIP

Collateral shall not include (and the DIP Liens shall not extend to) (w) funds held in the

Borrowing Base Account (if any), provided DIP Collateral shall include the Debtors’

reversionary interest in such funds (x) any “Excluded Property” (as defined in the DIP

Documents), (y) any nonresidential real property leases (although the DIP Collateral shall

include the proceeds of any such leases) or (z) the Professional Fees Account (as defined herein)

and all funds held therein, which shall constitute “Excluded Property” under this InterimFinal

Order and the DIP Documents, except to the extent of the Debtors’ reversionary interest, if any, in funds held in the Professional Fees Account, after all Professional Fees benefitting from the

Carve-Out have been indefeasibly paid in full, in cash; provided further that neither the DIP

Funding Account (as defined in the DIP Credit Agreement) nor the Operating Account (as

defined in the DIP Credit Agreement) shall be subject to any lien in favor of the Prepetition

Secured Parties, including with respect to any lien granted as adequate protection. - 35 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 158 of 223
7. DIP Lien Priority. The DIP Liens shall have the following priority with

respect to assets of the Debtors’ estates, and subject in all respects to the Carve-Out:

(a) pursuant to Section 364(c)(2) of the Bankruptcy Code, the DIP

Liens shall be first priority liens, as granted hereby, on all of the assets (now or hereafter

acquired and all proceeds thereof) of the Debtors that are not otherwise subject to valid, perfected, and unavoidable liens in existence immediately prior to the Petition Date or liens that

are perfected after the Petition Date as permitted by section 546(b) of the Bankruptcy Code;

provided that in no instance shall the DIP Liens encumber the Excluded Property (as defined in

the DIP Documents);

(b) pursuant to Section 364(c)(3) of the Bankruptcy Code, the DIP

Liens shall be junior priority liens, as granted hereby, upon all DIP Collateral constituting the

ABL Priority Collateral (now owned or hereafter acquired and all proceeds thereof), subject and

junior only to, in order of priority: (1) the Carve Out; (2) the ABL Permitted Liens; (3) ABL

Adequate Protection Liens (as defined herein); and (4) Prepetition ABL Liens; provided that, for

the avoidance of doubt, the DIP Liens shall be senior in priority to the Prepetition Term Liens

and Prepetition IPCo Liens and any liens granted as adequate protection in favor of the

Prepetition Term Secured Parties or Prepetition IPCo Secured Parties with respect to ABL

Priority Collateral (now owned or hereafter acquired);

(c) pursuant to Section 364(d) of the Bankruptcy Code, the DIP Liens

shall be priming first-priority liens, as granted hereby, on all DIP Collateral (now or hereafter

- 36 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 159 of 223
acquired and all proceeds thereof) that is “Collateral” as defined by each of the Prepetition Term

Credit Agreement, the Prepetition ABL Credit Agreement, and the Prepetition IPCo Indentures

to the extent such Collateral is not ABL Priority Collateral; provided that such DIP Liens shall

be junior to, in order of priority, to: (i) the Carve Out, and (ii) the Permitted Liens. For the

avoidance of doubt, the Prepetition ABL Liens, the Prepetition Term Liens, and the Prepetition

IPCo Liens shall be junior to the DIP Liens and the Carve Out in all respects with respect to DIP

Collateral that is not ABL Priority Collateral (now owned or hereafter acquired). (d) Other than as set forth herein (including with respect to the Carve- Out) or in the DIP Documents, the DIP Liens shall not be made subject to or pari passu with any

lien or security interest heretofore or hereinafter granted in the Chapter 11 Cases or any

Successor Cases and shall be valid and enforceable against any trustee appointed in the Chapter

11 Cases or any Successor Cases, upon the conversion of any of the Chapter 11 Cases to any

Successor Case, and/or upon the dismissal of any of the Chapter 11 Cases or Successor Cases. The DIP Liens shall not be subject to any of sections 510, 549 or 550 of the Bankruptcy Code. No lien or interest avoided and preserved for the benefit of the estate pursuant to section 551 of

the Bankruptcy Code shall be pari passu with or senior to the DIP Liens. 8. Superpriority Claims. Subject and subordinate to the Carve-Out in all

respects, upon entry of this InterimFinal Order, the DIP Agent, on behalf of itself and the DIP

Lenders, is hereby granted, pursuant to section 364(c)(1) of the Bankruptcy Code, allowed

superpriority administrative expense claims in each of the Chapter 11 Cases and any Successor

- 37 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 160 of 223
Cases (collectively, the “DIP Superpriority Claims”) for all DIP Obligations (a) with priority

over any and all administrative expense claims and unsecured claims against the Debtors or their

estates in any of their Chapter 11 Cases or any Successor Cases, at any time existing or arising, of any kind or nature whatsoever, including, without limitation, administrative expenses of the

kinds specified in or ordered pursuant to sections 105, 326, 328, 330, 331, 364, 503(a), 503(b), 507(a), 507(b), 546(c), 546(d), 726, 1113, or 1114 of the Bankruptcy Code or any other

provision of the Bankruptcy Code and (b) which shall at all times be senior to the rights of the

Debtors and their estates, and any successor trustee or other estate representative to the extent

permitted by law. The DIP Superpriority Claims shall be payable from, and have recourse to, all

prepetition and postpetition property of the Debtors and all proceeds thereof; provided, that, for

the avoidance of doubt, the DIP Superpriority Claims shall not have recourse to (x) the amounts

deposited in the Carve-Out Reserve Account (as defined below) in accordance with thisthe

Interim Order and this Final Order, or (y) the amounts held in the Professional Fees Account (as

defined below), other than the Debtors’ reversionary interest therein, if any, after all Professional

Fees benefitting from the Carve-Out have been indefeasibly paid in full, in cash. 9. No Obligation to Extend Credit. Except as required to fund the Carve-Out (as

defined below) as set forth in this InterimFinal Order, the DIP Lenders shall have no obligation

to make any loan or advance or to issue, amend, renew, or extend any letters of credit or

bankers’ acceptance under the DIP Documents unless (and subject to the occurrence of the

Closing Date (as defined in the DIP Credit Agreement)) all of the conditions precedent to the

- 38 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 161 of 223
making of such extension of credit or the issuance, amendment, renewal, or extension of such

letter of credit or bankers’ acceptance under the DIP Documents and this InterimFinal Order

have been satisfied in full or waived by the DIP Agent, acting at the direction of the Required

Lenders (or the requisite consenting DIP Lenders, as applicable) in accordance with the terms of

the DIP Credit Agreement. 10. Use of Proceeds of DIP Facility. From and after the Petition Date, the

Debtors shall use proceeds of borrowings under the DIP Facility in accordance with the Budget

Requirement and the terms and conditions in this InterimFinal Order and the DIP Documents;

provided that, for the avoidance of doubt, the Debtors’ use of borrowings under the DIP Facility

and the DIP Collateral (including Cash Collateral) to pay obligations benefiting from the Carve- Out shall not be limited or deemed limited by any Budget. 11. Authorization to Use Cash Collateral. Subject to the terms and conditions

of this InterimFinal Order and the DIP Documents, and in a manner that does not trigger a

Budget Event a “Budget Event”), the Debtors are authorized to use Cash Collateral until the

Cash Collateral Termination Date (as defined below); provided, however, that during the

Remedies Notice Period (as defined below), the Debtors are authorized to use Cash Collateral

(x) solely to pay expenses necessary to avoid immediate and irreparable harm to the Debtors’ estates, in accordance with the Budget Requirement and (y) as otherwise agreed by the DIP

Agent, acting at the direction of the Required Lenders; provided that, with respect to Cash

Collateral from proceeds of ABL Priority Collateral, with the consent of the Prepetition ABL

- 39 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 162 of 223
Agent. Nothing in this InterimFinal Order shall authorize the disposition of any assets of the

Debtors’ estates outside the ordinary course of business, or any Debtor’s use of any Cash

Collateral or other proceeds resulting therefrom, except as permitted in this InterimFinal Order

(including with respect to the Carve-Out (as defined below)), the DIP Facility, or the DIP

Documents, or, with respect to the ABL Priority Collateral, with consent of the Prepetition ABL

Agent and “Required Lenders” as defined in the Prepetition ABL Credit Agreement. 12. Adequate Protection for the Prepetition Secured Parties. The Prepetition

Secured Parties are entitled, pursuant to sections 361, 362, 363(c)(2), 363(e), 503, and 507 of the

Bankruptcy Code, to adequate protection of their interests in the Prepetition Collateral as of the

Petition Date, including the Cash Collateral, solely to the extent of Diminution in Value, if any, of their interests in the Prepetition Collateral as of the Petition Date (the “Adequate Protection

Claim”); provided, that, for the avoidance of doubt, the Adequate Protection Obligations shall

not have any recourse to the amounts deposited in accordance with thisthe Interim Order or this

Final Order in the Carve-Out Reserve Account or the Professional Fees Account (each as

defined below) (in each case other than the Debtors’ reversionary interest therein, if any, after all

Professional Fees benefiting from the Carve-Out have been indefeasibly paid in full in cash). As

adequate protection, the Prepetition Secured Parties are hereby granted the following (the

“Adequate Protection Obligations”):

(a) ABL Adequate Protection Liens. Subject to the Carve-Out in all

respects, as security for the payment of the Prepetition ABL Secured Parties’ Adequate

- 40 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 163 of 223
Protection Claims, if any, the Prepetition ABL Agent (for itself and for the benefit of the

Prepetition ABL Lenders) is hereby granted (effective and perfected upon the date of thisthe

Interim Order and without the necessity of the execution by the Debtors of security agreements, pledge agreements, mortgages, financing statements, or other agreements) a valid, perfected

replacement security interest in and lien on all of the DIP Collateral of each of the Debtors

(including, subject to entry of the Final Order, Avoidance Action Proceeds, but not avoidance

actions themselves) (the “ABL Adequate Protection Liens”), subject and subordinate only to

(i) the Carve-Out (as defined below) in all respects; (ii) with respect to the Term Priority

Collateral, in order of priority (1) the Term Permitted Liens; (2) the DIP Liens, (3) the

Prepetition Term Liens, and (4) the Term Adequate Protection Liens (as defined below);

(iii) with respect to ABL Priority Collateral, the ABL Permitted Liens; (iv) with respect to the

DIP Collateral of the ABL Debtors that is neither ABL Priority Collateral nor Term Priority

Collateral, the DIP Liens (and any liens permitted by the DIP Documents to be senior to the DIP

Liens); (v) with respect to the DIP Collateral of the IPCo Debtors, (1) the IPCo Permitted Liens, (2) the DIP Liens (and any liens permitted by the DIP Documents to be senior to the DIP Liens), (3) the IPCo Adequate Protection Liens (as defined below), and (4) the Prepetition IPCo Liens;

and (v) with respect to the DIP Collateral of Debtors other than the ABL Debtors, the Term

Debtors, or the IPCo Debtors, the DIP Liens (and any liens permitted by the DIP Documents to

be senior to the DIP Liens). (b) ABL Section 507(b) Claims. Subject to the Carve-Out in all - 41 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 164 of 223
respects, the Prepetition ABL Agent (for itself and for the benefit of the Prepetition ABL

Lenders) is hereby granted an allowed superpriority claim against each of the Debtors as

provided in sections 503 and 507(b) of the Bankruptcy Code (the “ABL 507(b) Claims”) in the

amount of the Prepetition ABL Secured Parties’ Adequate Protection Claims, if any, with

priority in payment over any and all administrative expenses of the kinds specified or ordered

pursuant to any provision of the Bankruptcy Code, including, without limitation, sections 105, 326, 328, 330, 331, 503(a), 503(b), 507(a), 506(c), 507(b), 546(c), 546(d), 726, 1113, or 1114 of

the Bankruptcy Code, subject and subordinate only to (i) (1) the Carve-Out (as defined below) in

all respects, and (2) the DIP Superpriority Claims granted in respect of the DIP Obligations and

(ii) with respect to the ABL 507(b) Claims against the IPCo Debtors, the IPCo 507(b) Claims (as

defined below). Except to the extent expressly set forth in this InterimFinal Order, the

Prepetition ABL Secured Parties shall not receive or retain any payments, property, or other

amounts in respect of the ABL 507(b) Claims unless and until (x) all obligations benefitting

from the Carve-Out have been indefeasibly paid in full, in cash, (y) all DIP Obligations shall

have been indefeasibly paid in full in cash, and (z) with respect to the ABL 507(b) Claims

against the IPCo Debtors, all IPCo 507(b) Claims (as defined below) shall have been

indefeasibly paid in full in cash. Only the Prepetition ABL Agent, acting at the direction of the

Requisite Lenders (as defined in the Prepetition ABL Credit Agreement), may assert the ABL

507(b) Claims against the Debtors. Notwithstanding their status as 507(b) Claims, the

Prepetition ABL Secured Parties’ Adequate Protection Claims may be satisfied in a plan of

- 42 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 165 of 223
reorganization or liquidation confirmed in the Chapter 11 Cases in any manner set forth in such

plan if the Requisite Lenders (as defined in the Prepetition ABL Credit Agreement) consent to

such treatment, which shall include any class including such Requisite Lenders voting to accept

such plan of reorganization or plan of liquidation. (c) ABL Postpetition Interest Payments. From and after entry of

thisthe Interim Order, the Prepetition ABL Agent, on behalf of itself and the Prepetition ABL

Lenders, shall receive current cash payment during the Chapter 11 Cases of all accrued interest

and Letter of Credit Fees (as defined in the Prepetition ABL Credit Agreement) on the

Prepetition ABL Obligations under the Prepetition ABL Credit Agreement as such interest and

Letter of Credit Fees become due and payable and as set forth in the following sentence, at the

applicable contractual non-default rate thereunder and in the amounts specified in the Prepetition

ABL Credit Agreement; provided that, the default rate as set forth in the Prepetition ABL Credit

Agreement shall accrue from and after the Petition Date. The first such interest payment date

shall be May 29, 2020, and thereafter, the last business day of every calendar month; provided

that the Debtors’ or any party in interest’s rights are fully reserved to seek a determination that

adequate protection payments (as set forth in this paragraph 12(c)) should be recharacterized

under section 506(b) of the Bankruptcy Code as payment on account of the secured portion of

the Prepetition ABL Obligations as of the Petition Date. (d) Term Adequate Protection Liens. Subject in all respects to the

Carve-Out, as security for the payment of the Prepetition Term Secured Parties’ Adequate

- 43 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 166 of 223
Protection Claims, the Prepetition Term Agent (for itself and for the benefit of the Prepetition

Term Secured Parties) is hereby granted (effective and perfected upon the date of thisthe Interim

Order and without the necessity of the execution by the Debtors of security agreements, pledge

agreements, mortgages, financing statements, or other agreements) a valid, perfected

replacement security interest in and lien on all of the DIP Collateral of each of the Debtors

(including, subject to entry of the Final Order, Avoidance Action Proceeds) (the “Term

Adequate Protection Liens”), subject and subordinate only to (i) (1) the Carve-Out (as defined

below) and (2) the DIP Liens (and any liens permitted by the DIP Documents to be senior to the

DIP Liens); (ii) with respect to the ABL Priority Collateral, (1) the Prepetition ABL Liens and

(2) the ABL Adequate Protection Liens; and (iii) with respect to the DIP Collateral of the IPCo

Debtors, (1) the IPCo Adequate Protection Liens (as defined below) and (2) the Prepetition IPCo

Liens. (e) Term Section 507(b) Claims. Subject to the Carve-Out in all

respects, the Prepetition Term Agent (for itself and for the benefit of the Prepetition Term

Lenders) is hereby granted an allowed superpriority claim against each of the Debtors as

provided in sections 503 and 507(b) of the Bankruptcy Code (the “Term 507(b) Claims”) in the

amount of the Prepetition Term Secured Parties’ Adequate Protection Claims, if any, with

priority in payment over any and all administrative expenses of the kinds specified or ordered

pursuant to any provision of the Bankruptcy Code, including, without limitation, sections 105, 326, 328, 330, 331, 503(a), 503(b), 507(a), 506(c), 507(b), 546(c), 546(d), 726, 1113, or 1114 of

- 44 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 167 of 223
the Bankruptcy Code, subject and subordinate only to (i) (1) the Carve-Out (as defined below)

and (2) the DIP Superpriority Claims granted in respect of the DIP Obligations and (ii) with

respect to the Term 507(b) Claims against the IPCo Debtors, the IPCo 507(b) Claims (as defined

below). Except to the extent expressly set forth in this InterimFinal Order, the Prepetition Term

Secured Parties shall not receive or retain any payments, property, or other amounts in respect of

the Term 507(b) Claims unless and until (x) the Carve-Out (as defined below) is funded, (y) all

DIP Obligations shall have been indefeasibly paid in full in cash, and (z) with respect to the

Term 507(b) Claims against the IPCo Debtors, all IPCo 507(b) Claims (as defined below) shall

have been indefeasibly paid in full in cash. Only the Prepetition Term Agent, acting at the

direction of the Required Term Lenders, may assert the Term 507(b) Claims against the Debtors. Notwithstanding their status as 507(b) Claims, the Prepetition Term Secured Parties’ Adequate

Protection Claims may be satisfied in a plan of reorganization or liquidation confirmed in the

Chapter 11 Cases in any manner set forth in such plan if the Required Term Lenders consent to

such treatment, which shall include the class including such Required Term Lenders voting to

accept such plan of reorganization or liquidation. (f) IPCo Notes Adequate Protection Liens. As security for the

payment of the Prepetition IPCo Secured Parties’ respective Adequate Protection Claims, the

Prepetition IPCo Indenture Trustees (for themselves and for the benefit of the applicable

Prepetition IPCo Noteholders) are each hereby granted (effective and perfected upon the date of

thisthe Interim Order and without the necessity of the execution by the Debtors of security

- 45 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 168 of 223
agreements, pledge agreements, mortgages, financing statements, or other agreements) a valid, perfected replacement security interest in and lien on all of the DIP Collateral of each of the

Debtors (including, subject to entry of the Final Order, Avoidance Action Proceeds) (the “IPCo

Adequate Protection Liens”), subject and subordinate only to (i) (1) the Carve-Out (as defined

below) and (2) the DIP Liens (and any liens permitted by the DIP Documents to be senior to the

DIP Liens) and (ii) with respect to the DIP Collateral of the ABL Debtors and the Term Debtors, (1) the ABL Adequate Protection Liens, (2) the Prepetition ABL Liens, (3) the Term Adequate

Protection Liens, and (4) the Prepetition Term Liens. (g) IPCo Notes Section 507(b) Claims. The Prepetition IPCo

Indenture Trustees (for themselves and for the benefit of the applicable Prepetition IPCo

Noteholders) are hereby granted an allowed superpriority claim against the Debtors as provided

in sections 503 and 507(b) of the Bankruptcy Code (the “IPCo 507(b) Claims” and, collectively

with the ABL 507(b) Claims and the Term 507(b) Claims, the “507(b) Claims”) in the amount

of the Prepetition IPCo Secured Parties’ respective Adequate Protection Claims, with priority in

payment over any and all administrative expenses of the kinds specified or ordered pursuant to

any provision of the Bankruptcy Code, including, without limitation, sections 105, 326, 328, 330, 331, 503(a), 503(b), 507(a), 506(c), 507(b), 546(c), 546(d), 726, 1113, or 1114 of the

Bankruptcy Code, subject and subordinate only to (i) (1) the Carve-Out (as defined below) and

(2) the DIP Superpriority Claims granted in respect of the DIP Obligations and (ii) with respect

to the IPCo 507(b) Claims against the ABL Debtors and the Term Debtors, (1) the ABL 507(b)

- 46 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 169 of 223
Claims and (2) the Term 507(b) Claims. Except to the extent expressly set forth in this

InterimFinal Order, the Prepetition IPCo Secured Parties shall not receive or retain any

payments, property, or other amounts in respect of the IPCo 507(b) Claims unless and until (x)

the Carve-Out (as defined below) is funded, (y) all DIP Obligations shall have been indefeasibly

paid in full in cash, and (z) with respect to the IPCo 507(b) Claims against the ABL Debtors and

the Term Debtors, the ABL 507(b) Claims and the Term 507(b) Claims shall have been

indefeasibly paid in full in cash. Only the Prepetition IPCo Indenture Trustees, acting at the

direction of Holders (as defined under the applicable Prepetition IPCo Notes Indenture) of a

majority in principal amount of the total Prepetition IPCo Notes then outstanding under the

applicable Prepetition IPCo Notes Indenture, may assert the IPCo 507(b) Claims against the

Debtors. Notwithstanding their status as 507(b) Claims, the Prepetition IPCo Secured Parties’ Adequate Protection Claims may be satisfied in a plan of reorganization or plan of liquidation

confirmed in the Chapter 11 Cases, which shall include any class including holders of more than

50% in amount of the Prepetition IPCo Secured Parties’ Adequate Protection Claims voting to

accept such plan of reorganization or liquidation. (h) Fees and Expenses. The Debtors are authorized and directed to

pay, as adequate protection, all accrued and unpaid fees and reasonable and documented

disbursements (but not success fees, transaction fees, or similar fees) incurred, whether accrued

before, on, or after the Petition Date, by the legal and financial advisors to (i) the ad hoc

committee of crossholder creditors (the “Ad Hoc Committee”) under the Prepetition Term

- 47 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 170 of 223
Credit Agreement and Prepetition IPCo Indentures, (ii) the Prepetition ABL Agent, (iii) the

Prepetition Term Agent, and (iv) the Prepetition IPCo Indenture Trustees; provided, that such

payments shall be subject to the Debtors’ or any other party’s rights to seek a determination such

payments should be recharacterized under section 506(b) of the Bankruptcy Code as payments of

the secured portion of the applicable claims as of the Petition Date. The legal and financial

advisors to the Ad Hoc Committee, the Prepetition ABL Agent, the Prepetition Term Agent, and

the Prepetition IPCo Indenture Trustees shall not be required to comply with the U.S. Trustee fee

guidelines; however, any time that such professionals seek payment of fees and expenses from

the Debtors, each professional shall provide summary copies of its fee and expense statements or

invoices (which shall not be required to contain time entries and which may be redacted or

modified to the extent necessary to delete any information subject to the attorney-client

privilege, any information constituting attorney work product, or any other confidential

information, and the provision of such invoices shall not constitute any waiver of the attorney- client privilege or of any benefits of the attorney work-product doctrine) to the U.S. Trustee and

counsel to the Committee (if appointed), contemporaneously with the delivery of such fee and

expense statements to the Debtors. After delivery of a fee and expense statement or invoice, the

Debtors, the U.S. Trustee, and the Committee (if appointed) shall have ten (10) days to raise an

objection thereto. If an objection is timely raised, such objection shall be subject to resolution

by the Court. Pending such resolution, the undisputed portion of any such fee and expense

statement or invoice shall be paid promptly by the Debtors. Notwithstanding the foregoing, the

- 48 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 171 of 223
Debtors are authorized and directed to pay upon entry of this Interim Order all reasonable and

documented fees, costs, and out-of-pocket expenses (but not any “success”, “transaction”, or

similar fees) of the legal and financial advisors to (i) the Ad Hoc Committee, (ii) the Prepetition

ABL Agent, (iii) the Prepetition Term Agent, and (iv) the Prepetition IPCo Indenture Trustees

incurred on or prior to suchthe date of the Interim Order without the need for any professional

engaged by such parties to first deliver a copy of its invoice as provided for herein. No attorney

or advisor to the Ad Hoc Committee, the Prepetition ABL Agent, the Prepetition Term Agent, and the Prepetition IPCo Indenture Trustees shall be required to file an interim or final

application seeking compensation for services or reimbursement of expenses with the Court. (i) Financial Reporting. The Debtors shall concurrently deliver to the

Prepetition Agents, the Prepetition IPCo Indenture Trustees, the legal and financial advisors to

the Ad Hoc Committee, and the Committee (if appointed), subject to customary confidentiality

provisions, all information, reports, documents, and other materials that the Debtors provide to

the DIP Secured Parties pursuant to the DIP Documents, and this Interim Order, and the Final

Order, including Budgets. 13. Adequate Protection Reservation. Other than with respect to the priority

of the Carve-Out (as defined below), Nnothing herein shall impair or modify the application of

section 507(b) of the Bankruptcy Code in the event that the adequate protection provided to the

Prepetition Secured Parties hereunder is insufficient to compensate for any Diminution in Value, if any, of their respective interests in the Prepetition Collateral as of the Petition Date during the

- 49 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 172 of 223
Chapter 11 Cases or any Successor Cases, or the Debtors’ or any party in interest’s rights to

challenge such an assertion. The receipt by the Prepetition Secured Parties of the adequate

protection provided herein shall not be deemed an admission that the interests of the Prepetition

Secured Parties are adequately protected or that any of the Prepetition Secured Parties are

entitled to other or different adequate protection. Further, this InterimFinal Order shall not

prejudice or limit the rights of the Prepetition Secured Parties to seek additional relief with

respect to the use of Cash Collateral or for additional adequate protection, subject in all respects

to the terms and limitations of the Intercreditor Agreements, or the Debtors’ or any party in

interest’s rights to challenge such request on any basis whatsoever. 14. Effect of Order on Adequate Protection. In the event that it is determined

by a final order, which order shall not be subject to any appeal, stay, reversal, or vacatur, that

(a) no Diminution in Value of any Prepetition Secured Party’s respective interests in the

Prepetition Collateral as of the Petition Date has occurred, (b) such Prepetition Secured Party is

determined to be undersecured, or (c) the aggregate value of postpetition interest, fees, and

expenses paid to or the benefit of the Prepetition ABL Secured Parties exceeds the extent

permitted by section 506(b) of the Bankruptcy Code, then in each case a party in interest subject

to paragraph 44 herein shall have the right to assert that payments of Adequate Protection shall

be applied toward repayment of the secured portion of the applicable Prepetition Secured Debt

as is owing to such Prepetition Secured Party as of the Petition Date.

- 50 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 173 of 223
15. Budget Maintenance. The Debtors shall use the proceeds of all

borrowings under the DIP Facility and Cash Collateral in accordance with the Budget

Requirement or as otherwise permitted by the DIP Documents and this InterimFinal Order;

provided that, for the avoidance of doubt, the Debtors’ authorization to use proceeds of the DIP

Facility, DIP Collateral, and Cash Collateral to satisfy obligations benefitting from the Carve

Out shall in no way be subject to the Budget. The Budget annexed hereto as Schedule 2 shall

constitute the initialcurrent Budget. On the first Tuesday that is four (4) full weeks after the

Petition Date, and no later than the Tuesday of each fourth week thereafter (or more frequently

as the Borrower may elect), the Borrower shall provide to the DIP Agent, the legal and financial

advisors of the Ad Hoc Committee, and the Prepetition ABL Agent, an updated 13-week

statement of the Debtors’ anticipated cash receipts and disbursements for the subsequent 13- week period (a “Proposed Budget”), which Proposed Budget shall modify and supersede any

prior Budget upon the approval of the Required Lenders in their reasonable discretion (such

approval not to be unreasonably withheld), in consultation with the Prepetition ABL Agent. Until the Required Lenders approve the Proposed Budget in their reasonable discretion (such

approval not to be unreasonably withheld), the then-current Budget shall remain the Budget, and

the DIP Lenders shall have no obligation to fund such Proposed Budget. Each Budget delivered

to the DIP Agent, the legal and financial advisors to the Ad Hoc Committee and the Prepetition

ABL Agent shall be accompanied by such supporting documentation as reasonably requested by

such legal and financial advisors, and each Budget shall be prepared in good faith based upon

- 51 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 174 of 223
assumptions the Debtors believe to be reasonable. A copy of the Budget shall be delivered to the

legal and financial advisors to the Committee (if appointed) and the U.S. Trustee following such

Budget’s approval. The Committee shall be provided concurrent drafts of any proposed

modifications to, or amendment or update to, the Budget, and the Debtors shall use

commercially reasonable efforts to provide the Committee with three (3) business days’ prior

notice of any proposed amendment or modification. 16. Budget and Reporting Compliance. The occurrence of a Budget Event or

the Debtors’ failure to provide the reports and other information required in the DIP Credit

Agreement shall constitute an Event of Default under the DIP Credit Agreement and this

InterimFinal Order, following the expiration of any applicable grace period set forth in the DIP

Credit Agreement. Contemporaneously with their delivery to the DIP Agent, all reports and

information required to be provided to the DIP Agent under the DIP Credit Agreement shall be

provided to the Prepetition ABL Agent and the Committee. 17. Borrowing Base; Borrowing Base Reporting. The Debtors shall deliver to

the Prepetition ABL Agent, with copies to the DIP Agent, counsel to the Ad Hoc Committee, and counsel to the Committee (if appointed), a Borrowing Base Certificate (as defined in the

Prepetition ABL Credit Agreement), together with all back up reports and information, in each

case in the format customarily provided prior to the Petition Date, delivered with such

Borrowing Base Certificates prior to the Petition Date, setting forth the Borrowing Base (as

defined in the Prepetition ABL Credit Agreement) (i) calculated as of the last day of the

- 52 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 175 of 223
immediately preceding calendar week on Wednesday of each week commencing on June 3, 2020

for the week ending May 30, 2020 and each Wednesday thereafter; provided that in preparing

such weekly Borrowing Base Certificate the Debtors shall only be required to roll forward the

stock ledger inventory and the JCI Listing for In Transit Inventory, and the Prepetition ABL

Agent may increase the “Store Closing Reserve”, if any, in such weekly calculation and (ii)

calculated as of the last business day of the immediately preceding fiscal month, promptly, but in

no event later than May 15, 2020 with respect to the fiscal month ended April 2020 and ten (10)

business days following the end of each subsequent fiscal month which monthly Borrowing Base

Certificates shall reconcile all weekly inventory roll forwards; provided that (x) none of the

Prepetition ABL Secured Parties shall be permitted to take any Reserves (whether Availability

Reserves (as defined in the Prepetition ABL Credit Agreement), Inventory Reserves (as defined

in the Prepetition ABL Credit Agreement), or otherwise) against the Borrowing Base that were

not in place as of May 2, 2020 other than (I) a reserve in the amount of $6,000,000 on account of

the Post Carve-Out Trigger Notice and (II) the Store Closing Reserve, (y) the appraisals used to

calculate the Borrowing Base shall be the most recent appraisals delivered by the Debtors in

accordance with the Prepetition ABL Credit Agreement as of May 2, 2020, and (z) no

subsequent appraisals, valuations, or reserves (other than a Store Closing Reserve) shall be

applied with respect to the Borrowing Base or any determination of Net Recovery Percentage (as

defined in the Prepetition ABL Credit Agreement), although the Prepetition ABL Agent may

obtain appraisals subsequent to the Petition Date solely for informational purposes and the

- 53 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 176 of 223
Debtors shall use commercially reasonable efforts to cooperate with the Prepetition ABL Agent

in obtaining such appraisals (and such appraisals shall not affect the Borrowing Base), and the

Debtors shall pay the Prepetition ABL Agent’s reasonable and documented expenses associated

with obtaining such appraisals. The Debtors shall deliver the first Borrowing Base Certificate as

provided herein not later than May 15, 2020. 18. Store Closing Reserve. The Prepetition ABL Agent may implement a

Store Closing Reserve (as defined below) as an Availability Reserve against the Borrowing

Base, which Store Closing Reserve may be taken by the Prepetition ABL Agent, on two (2)

business days’ written notice to the Debtors, the DIP Agent, and the Committee (if appointed), in

its Permitted Discretion (as defined in the Prepetition ABL Credit Agreement) solely on account

of Eligible Inventory (as defined in the Prepetition ABL Credit Agreement) held in stores where

“store closing sales” have been commenced after the Petition Date (each a “Closing Store”);

provided that a Store Closing Reserve may not be taken:

(a) before the first business day that is at least five (5) weeks after the

Petition Date;

(b) unless more than 10% of the Debtors’ aggregate store count

(excluding up to 25 stores in the aggregate that are closed after the Petition Date in connection

with the termination of the lease term applicable thereto or otherwise in the ordinary course of

business) as of the Petition Date shall have become Closing Store after the Petition Date;

(c) more than once per week; and

- 54 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 177 of 223
(d) for at least five (5) weeks after the commencement of a “store

closing sale” at the applicable store location. “Store Closing Reserve” means a reserve in an amount equal the results of reducing the Net

Recovery Percentage (as defined in the Prepetition ABL Credit Agreement) by 1000 bps per

week, commencing on week six and each week thereafter, multiplied by the Inventory Advance

Rate multiplied by the Cost of Eligible Inventory located at all Closing Stores. 19. To the extent the Borrowing Base set forth on the most recent Borrowing

Base Certificate is less than the lesser of (a) $375,000,000 and (b) the aggregate principal

amount of Revolving Credit Outstandings (as defined in the ABL Credit Agreement) (such

difference, if any, the “Borrowing Base Shortfall”), the Debtors shall cause the lesser of (x)

such Borrowing Base Shortfall and (y) $20,000,000 to be deposited in a segregated account (the

“Borrowing Base Account”) established by the Debtors at Bank of America, N.A. on or within

two (2) business days of delivery of such Borrowing Base Certificate, as additional adequate

protection for the Prepetition ABL Lenders, which Borrowing Base Account and all funds held

in the Borrowing Base Account, if any, shall be ABL Priority Collateral but not DIP Collateral

(but DIP Collateral shall include the Debtors’ reversionary interest in such funds); provided, further, that (x) funds held in the Borrowing Base Account shall be added to the Borrowing Base

and (y) on two (2) Business Days’ notice the Prepetition ABL Agent the Debtors may withdraw

funds held in the Borrowing Base Account to the extent the Borrowing Base Shortfall is less

- 55 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 178 of 223
than $20,000,000, as set forth by any subsequent Borrowing Base Certificate delivered as

provided herein.20. Modification of Automatic Stay. The automatic stay imposed under

section 362(a)(2) of the Bankruptcy Code is hereby modified as necessary to effectuate all of the

terms and provisions of this InterimFinal Order, including, without limitation, to (a) permit the

Debtors to grant the DIP Liens, Adequate Protection Liens, DIP Superpriority Claims, and

507(b) Claims; (b) permit the Debtors to perform such acts as the DIP Agent, the Prepetition

ABL Agent, the Prepetition Term Agent, and the Prepetition IPCo Indenture Trustees each may

reasonably request to assure the perfection and priority of the liens granted herein; (c) permit the

Debtors to incur all liabilities and obligations to the DIP Agent, DIP Lenders, and Prepetition

Secured Parties under the DIP Documents, the DIP Facility, and this InterimFinal Order, as

applicable; and (d) authorize the Debtors to pay, and the DIP Agent, the DIP Lenders, and the

Prepetition Secured Parties to retain and apply, payments made in accordance with the terms of

this InterimFinal Order. 21. Perfection of DIP Liens and Adequate Protection Liens. This InterimFinal

Order shall be sufficient and conclusive evidence of the creation, validity, perfection, and

priority of all liens granted herein, including the Carve Out, the DIP Liens and the Adequate

Protection Liens, without the necessity of filing or recording any financing statement, mortgage, notice, or other instrument or document which may otherwise be required under the law or

regulation of any jurisdiction or the taking of any other action (including, for the avoidance of

- 56 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 179 of 223
doubt, entering into any deposit account control agreement) to validate or perfect (in accordance

with applicable non-bankruptcy law) the DIP Liens or the Adequate Protection Liens or to entitle

the DIP Agent, the DIP Lenders, and the Prepetition Secured Parties to the priorities granted

herein. Notwithstanding the foregoing, each of the DIP Agent, the Prepetition ABL Agent, the

Prepetition Term Agent, and the Prepetition IPCo Indenture Trustees is authorized to file or

record, as it in its sole discretion deems necessary or advisable, such financing statements, security agreements, mortgages, notices of liens, and other similar documents to perfect its

respective liens in accordance with applicable non-bankruptcy law, and all such financing

statements, mortgages, notices, and other documents shall be deemed to have been filed or

recorded as of the Petition Date; provided, however, that no such filing or recordation shall be

necessary or required in order to create or perfect the DIP Liens or the Adequate Protection

Liens. The Debtors are authorized and directed to execute and deliver, promptly upon demand

to the DIP Agent, the Prepetition ABL Agent, the Prepetition Term Agent, and the Prepetition

IPCo Indenture Trustees, all such financing statements, mortgages, notices, and other documents

as the DIP Agent, the Prepetition ABL Agent, the Prepetition Term Agent, or the Prepetition

IPCo Indenture Trustees, as applicable, may reasonably request. Each of the DIP Agent, the

Prepetition ABL Agent, the Prepetition Term Agent, and the Prepetition IPCo Indenture

Trustees, in its discretion, may file a photocopy of this InterimFinal Order as a financing

statement with any filing or recording office or with any registry of deeds or similar office, in

addition to or in lieu of such financing statements, notices of lien, or similar instrument, and all - 57 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 180 of 223
applicable officials are hereby directed to accept a photocopy of this InterimFinal Order for

filing or recordation for such purpose. To the extent the Prepetition ABL Agent, the Prepetition

Term Agent, the Prepetition IPCo New Money Notes Indenture Trustee, or the Prepetition IPCo

Exchange Notes Indenture Trustee is the secured party under any security agreement, mortgage, landlord waiver, credit card processor notices or agreements, bailee letters, custom broker

agreements, financing statement, account control agreements, or any other Prepetition

Documents or is listed as loss payee or additional insured under any of the Debtors’ insurance

policies, the DIP Agent shall also be deemed without any further action to be the secured party

or the loss payee or additional insured, as applicable, under such documents. The Prepetition

ABL Agent, the Prepetition Term Agent, and the Prepetition IPCo Indenture Trustees, as

applicable, shall serve as agents for the DIP Agent for purposes of perfecting the DIP Liens on

all DIP Collateral that is of a type such that, without giving effect to the Bankruptcy Code and

this InterimFinal Order, perfection of a lien thereon may be accomplished only by possession or

control by a secured party. 22. Protections of Rights of DIP Agent, DIP Lenders and Prepetition Secured

Parties. (a) Unless the Required Lenders shall have provided their prior

written consent, or all DIP Obligations (excluding contingent indemnification obligations for

which no claim has been asserted) have been indefeasibly paid in full in cash and the lending

commitments under the DIP Facility have terminated, the entry of any order in these Chapter 11

- 58 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 181 of 223
Cases shall be an Event of Default for purposes of the DIP Credit Agreement if such order

authorizes any of the following (unless such order provides for the simultaneous satisfaction of

such obligations): (i) the obtaining of credit or the incurrence of indebtedness that is secured by a

security, mortgage, or collateral interest or other lien on all or a portion of the DIP Collateral or

that is entitled to administrative priority with a value in excess of $500,000 in the aggregate that

are superior to or pari passu with the DIP Liens, the DIP Superpriority Claims, the Prepetition

Liens, the Adequate Protection Liens, or the 507(b) Claims except as expressly set forth in this

InterimFinal Order or the DIP Documents; (ii) the use of Cash Collateral for any purpose other

than as permitted pursuant to the Budget Requirement, the DIP Documents, and this InterimFinal

Order; provided that Debtors’ rights to seek to use Cash Collateral on a non-consensual basis

after the Cash Collateral Termination Date are fully reserved; or (iii) any modification of any of

the DIP Agent’s, any DIP Lender’s, or any Prepetition Secured Party’s rights under this

InterimFinal Order, the DIP Documents, or the Prepetition Documents with respect any DIP

Obligations or Prepetition Obligations except as specifically provided herein. (b) The Debtors (and/or their legal and financial advisors in the case

of clauses (ii) through (iv) below) will, whether or not the DIP Obligations (excluding contingent

indemnification obligations for which no claim has been asserted) have been indefeasibly paid in

full in cash, (i) use commercially reasonable efforts to maintain books, records, and accounts to

the extent and as required by the DIP Documents and the Prepetition Documents (and subject to

the applicable grace periods set forth therein); (ii) reasonably cooperate with, consult with, and

- 59 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 182 of 223
provide to the DIP Agent (solely in its capacity as such) all such information and documents that

any or all of the Debtors are obligated (including upon reasonable request by the DIP Agent) to

provide under the DIP Documents or the provisions of this InterimFinal Order; and (iii) permit

the DIP Agent and the Prepetition ABL Agent, the Prepetition Term Agent, and the Prepetition

IPCo Indenture Trustees and their advisors and appraisers to consult with the Debtors’ management and advisors on matters concerning the Debtors’ businesses, financial condition, operations, and assets in each case during regular business hours and commercially reasonable

advance notice and otherwise use commercially reasonable efforts to cooperate with such

advisors and appraisers. The Debtors shall use commercially reasonable efforts to cause the

Committee to receive any financial reporting required to be provided by the Debtors

contemporaneously with the provision of such reports to the DIP Agent, Prepetition ABL Agent, Prepetition Term Agent, or Prepetition IPCo Indenture Trustees. 23. Credit Bidding. In connection with any sale process authorized by the

Court, whether effectuated through sections 363, 725, or 1123 of the Bankruptcy Code, the DIP

Agent (or its designee) at the direction of the Required Lenders, the DIP Lenders, and, subject to

entry of the Final Order, the Prepetition Term Agent (or its designee), at the direction of the

Required Term Lenders, and the Prepetition IPCo Indenture Trustees, may credit bid up to the

full amount of the outstanding DIP Obligations or the relevant Prepetition Obligations, as

applicable, in each case including any accrued and unpaid interest, expenses, fees, and other

- 60 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 183 of 223
obligations for their respective priority collateral (each such bid, a “Credit Bid”) pursuant to

section 363(k) of the Bankruptcy Code, subject in each case to the Intercreditor Agreements. 24. Proceeds of Subsequent Financing. If the Debtors, any trustee, any

examiner with expanded powers, or any responsible officer subsequently appointed in these

Cases or any Successor Cases shall obtain credit or incur debt pursuant to sections 364(b), 364(c), 364(d) of the Bankruptcy Code in violation of the DIP Documents or this InterimFinal

Order at any time prior to the indefeasible repayment in full of all DIP Obligations and the

termination of the DIP Agent’s and DIP Lenders’ obligation to extend credit under the DIP

Facility, including subsequent to the confirmation of any plan with respect to any or all of the

Debtors (if applicable), then all the cash proceeds derived from such credit or debt shall

immediately be turned over to the DIP Agent to be applied in accordance with this InterimFinal

Order and the DIP Documents. 25. Maintenance of DIP Collateral. Until the indefeasible payment in full of

all DIP Obligations, all Prepetition Obligations, and the termination of the DIP Lenders’ obligation to extend credit under the DIP Facility, the Debtors shall (a) insure the DIP Collateral

as required under the DIP Facility or the Prepetition Documents, as applicable; and (b) maintain

the cash management system in effect as of the Petition Date, as modified by any order entered

by the Court. 26. Termination Dates. Subject to the Carve-Out in all respects, (a) on the DIP

Termination Date (as defined below), subject to the Carve-Out (as defined below), all DIP

- 61 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 184 of 223
Obligations shall be immediately due and payable, all commitments to extend credit under the

DIP Facility will terminate, other than as required in paragraph 41 with respect to the Carve-Out

(as defined below); and (b) on the Cash Collateral Termination Date (as defined below) all

authority to use Cash Collateral shall cease, provided, however, that (x) during the Remedies

Notice Period, the Debtors may use Cash Collateral (i) solely to pay expenses necessary to avoid

immediate and irreparable harm to the Debtors’ estates, in accordance with the Budget

Requirement; (ii) to satisfy obligations benefitting from the Carve Out without regard to whether

or not a Budget Event would be triggered, and (iii) as otherwise agreed by the DIP Agent, acting

at the direction of the Required Lenders, and (y) the Debtors’ rights to seek to use Cash

Collateral on a non-consensual basis after the Cash Collateral Termination Date are fully

reserved; and (c) upon occurrence of a Termination Date, the Debtors may otherwise exercise

rights and remedies under the DIP Documents in accordance with this InterimFinal Order. 27. Events of Default. The occurrence and continuation of any of the

following events, unless waived by the Required Lenders in writing and in accordance with the

terms of the DIP Credit Agreement, shall constitute an event of default (collectively, the “Events

of Default”) under this InterimFinal Order: (a) the failure of the Debtors to perform, in any

respect, any of the terms, provisions, conditions, covenants, or obligations under this

InterimFinal Order, subject to a three business day cure period following receipt of notice (if

such failure is capable of being cured); (b) the occurrence of an “Event of Default” as defined in

the DIP Credit Agreement; or (c) delivery of an ABL Cash Collateral Termination Declaration

- 62 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 185 of 223
(as defined herein). 28. DIP Case Milestones. The occurrence an Event of Default under Section

8.01(c) of the DIP Credit Agreement of the DIP Credit Agreement, unless waived by the

Required Lenders in writing and in accordance with the terms of the DIP Credit Agreement, shall, (a) constitute an Event of Default under each of (i) the DIP Credit Agreement and (ii) this

InterimFinal Order; (b) subject to the expiration of the Remedies Notice Period, result in the

automatic termination of the Debtors’ authority to use Cash Collateral under this InterimFinal

Order except as otherwise provided herein; and (c) permit the DIP Agent, subject to the terms of

paragraph 31, to exercise the rights and remedies provided for in this InterimFinal Order and the

DIP Documents. 29. Termination Date; Remedies. (a) Subject to any applicable notice and

cure period under the DIP Documents and/or this InterimFinal Order, while (x) any Event of

Default (as defined in the DIP Credit Agreement) (in the case of the subsequent subclause (a)) or

(y) any Event of Default (in the case of the subsequent subclause (b)), in each case, has occurred

and is continuing, following the Debtors’ and Committee’s receipt of notice, notwithstanding the

provisions of section 362 of the Bankruptcy Code, without any application, motion or notice to, hearing before, or order of the Court, but subject to the terms of this InterimFinal Order, (i) the

DIP Agent, acting at the direction of the Required Lenders, may declare in accordance with

Section 8.02 of the DIP Credit Agreement (w) the Commitments (as defined in the DIP Credit

Agreement) of each DIP Lender to be terminated, (x) the unpaid principal amount of all - 63 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 186 of 223
outstanding DIP Loans, all interest accrued and unpaid thereon, and all other amounts owing or

payable under the DIP Documents to be immediately due and payable, (y) subject to the Carve- Out, termination of the DIP Facility and the DIP Documents as to any future obligation of the

DIP Agent and the DIP Lenders, without affecting any of the DIP Liens or the DIP

Obligations, or the post-petition administrative superpriority claim status of the DIP

Obligations, and (z) that the application of the Carve-Out (as defined below) has occurred

through the delivery of the Carve-Out Trigger Notice (as defined below) to the Debtors (any

such declaration shall be referred to as a “DIP Termination Declaration” and the date on which

a DIP Termination Declaration is delivered shall be referred to as the “DIP Termination Date”)

and (ii) the DIP Agent, acting at the direction of the Required Lenders, may declare a

termination, reduction or restriction of the Debtors’ ability to use any Cash Collateral derived

solely from the proceeds of DIP Collateral or that constitutes Cash Collateral as of the Petition

Date (any such declaration shall be referred to as a “DIP Cash Collateral Termination

Declaration” and the date on which either a DIP Cash Collateral Termination Declaration or an

ABL Cash Collateral Termination Declaration is delivered shall be referred to as the “Cash

Collateral Termination Date”; the Cash Collateral Termination Declaration and the DIP

Termination Declaration are each a “Termination Declaration”; the Cash Collateral

Termination Date and the DIP Termination Date are each a “Termination Date”); and (b) upon

the occurrence and during the continuation of an ABL Cash Collateral Termination Event, the

Prepetition ABL Agent, may declare a termination, reduction, or restriction of the Debtors’

- 64 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 187 of 223
ability to use Cash Collateral (any such declaration shall be referred to as an “ABL Cash

Collateral Termination Declaration”). 30. A Termination Declaration or ABL Cash Collateral Termination

Declaration shall be given by electronic mail (or other electronic means) to counsel to the

Debtors, counsel to athe Committee (if appointed), counsel to the DIP Agent (solely with respect

to an ABL Cash Collateral Termination Declaration) counsel to the Prepetition ABL Agent

(other than with respect to an ABL Cash Collateral Termination Declaration), counsel to the

Prepetition Term Agent, counsel to the Prepetition IPCo Indenture Trustees, counsel to the Ad

Hoc Committee, and the U.S. Trustee. 31. The automatic stay is hereby modified so that five (5) business days after

the date a Termination Declaration is delivered (such five (5) business day period, the

“Remedies Notice Period”), the DIP Agent, acting at the direction of the Required Lenders, shall be entitled to exercise its applicable rights and remedies in accordance with the DIP

Documents and this InterimFinal Order, subject in all respects to the Carve-Out (as defined

below) except as otherwise ordered by the Court. During the Remedies Notice Period, the

Debtors and/or athe Committee (if appointed) shall be entitled to seek an emergency hearing

from the Court for the sole purpose of contesting whether an Event of Default (hereunder and/or

under the DIP Credit Agreement) or an ABL Cash Collateral Termination Event has occurred

and/or is continuing, and /or seeking to use the Cash Collateral on a non-consensual basis, and

upon and after delivery of the Termination NoticeDeclaration, each of the DIP Agent, acting at - 65 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 188 of 223
the direction of the Required Lenders, and the Prepetition ABL Agent consent to such

emergency hearing being heard on an expedited basis. 32. Unless the Courts orders otherwise during the Remedies Notice Period, the automatic stay shall automatically be terminated at the end of the Remedies Notice Period

without further notice or order as to the DIP Agent and the DIP Lenders, subject to the Carve- Out (as defined below). Upon expiration of the Remedies Notice Period, the DIP Agent and any

liquidator or other professional will have the right to access and utilize, at no cost or expense, any trade names, trademarks, copyrights, or other intellectual property of the Debtors to the

extent necessary or appropriate in order to sell, lease, or otherwise dispose of any of the DIP

Collateral, including pursuant to any Court-approved sale process. 33. ABL Cash Collateral Termination Event. An “ABL Cash Collateral

Termination Event” shall mean:

(a) the Final Order shall not have been entered on or within forty-five

(45) days from the Petition Date;

(b) an order confirming a plan of reorganization shall not have been

entered on or within one hundred thirty (130) days from the Petition Date;

(c) the effective date of a plan of reorganization shall not have

occurred within one hundred fifty (150) days from the Petition Date;

- 66 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 189 of 223
(d) an Event of Default (as defined herein) that occurred and is

continuing and has not been waived under the DIP Credit Agreement within (5) days’ of the

occurrence thereof and for which a forbearance is not in place under the DIP Credit Agreement;

(e) the termination of all Commitments (as defined in the DIP Credit

Agreement) or the acceleration of the unpaid principal amount of all outstanding DIP Loans;

(f) the delivery of a Termination Declaration by the DIP Agent;

(g) the DIP Lenders have failed to fund the (i) Interim Loans on the

Closing Date in the Interim Loan Amount; or (ii) the Final Loans in the Final Loan Amount on

the Final Loan Date as each such term is defined in the DIP Credit Agreement as of the Petition

Date, and such default has not been cured within seven (7) calendar days thereof;

(h) the Debtors shall have failed to pay their monetary obligations

under paragraph 12(c) within two (2) business days of its due dates or paragraph 19, or the

Debtors shall otherwise failed to perform with respect to their adequate protection obligations in

favor of the Prepetition Secured Parties to the extent required under this InterimFinal Order after

two (2) business days from receipt of written notice from the Prepetition ABL Agent (also to be

provided to the Committee) and an opportunity to cure, which cure shall occur within two (2)

business days of such notice;

(i) the Borrowing Base Shortfall at any time is greater than

$20,000,000 and the Debtors have not funded such shortfall into the Borrowing Base Account

- 67 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 190 of 223
within two (2) business days of delivery of the Borrowing Base Certificate reflecting such

Borrowing Base Shortfall;

(j) the Debtors shall have filed a motion or pleading with the Court to

(i) stay, vacate, or reverse this InterimFinal Order; or (ii) amend or modify this InterimFinal

Order in a manner adverse to Prepetition ABL Secured Parties and such motion shall not have

been withdrawn after two (2) business days written notice thereof;

(k) other than with respect to the Debtor Reserved Claims set forth at

Paragraph F(v)(a)(i), the Debtors shall attempt to invalidate, reduce, or otherwise impair the

Prepetition ABL Liens or the Prepetition ABL Obligations, in each case pursuant to a pleading

filed with the Court that is not withdrawn after two (2) business days’ notice thereof;

(l) the entry of an order (i) appointing a trustee, receiver, or examiner

with expanded powers with respect to any of the Debtors; (ii) dismissing any of the Debtors’ cChapter 11 cCases; or (iii) converting any of the Debtors’ cases to cases under chapter 7 of the

Bankruptcy Code, in each case where such order has become a final order not subject to appeal;

(m) (i) the failure to deliver all Borrowing Base Certificates as and

when required; or (ii) the failure to deliver all other reports and certificates, (2) business days’ after notice to the Debtor and opportunity to cure;

(n) the breach of paragraphs 22(a) or 43 in each case after two (2)

business days’ notice and an opportunity to cure;

- 68 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 191 of 223
(o) the failure to fund the Professional Fees Account as and when

required pursuant to paragraph 38;

(p) the effective date of a chapter 11 plan in any of the Chapter 11

Cases that is confirmed pursuant to an order of the Bankruptcy Court; and/or

(q) any stay, reversal, vacatur, rescission or other modification of the

terms of this InterimFinal Order in any matter that is adverse to the Prepetition ABL Secured

Parties and that is not consented to by the Prepetition ABL Agent

34. Good Faith Under Section 364(e) of the Bankruptcy Code; No

Modification or Stay of this InterimFinal Order. Based on the findings set forth in this

InterimFinal Order and the record made during the InterimFinal Hearing, and in accordance with

section 364(e) of the Bankruptcy Code, in the event any or all of the provisions of this

InterimFinal Order are hereafter modified, amended, or vacated by a subsequent order of this

Court or any other court of competent jurisdiction, the DIP Agent, the DIP Lenders, and

Prepetition Secured Parties are entitled to the protections provided in section 364(e) of the

Bankruptcy Code. Any such modification, amendment, or vacatur shall not affect the validity

and enforceability of any advances previously made or made hereunder, or lien, claim, or

priority authorized or created hereby. 35. Payment of Fees and Expenses. The Debtors are authorized and directed

to pay all reasonable and documented prepetition and postpetition fees and out-of-pocket

expenses (but not “success”, “transaction”, or similar fees), of the legal and financial advisors to

- 69 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 192 of 223
the DIP Agent and the legal and financial advisors to the Ad Hoc Committee, the members of

which constitute DIP Lenders, in connection with the DIP Facility, as provided in the DIP

Documents. Professionals of the DIP Agent and the Ad Hoc Committee shall not be required to

comply with the U.S. Trustee fee guidelines; however, any time that such professionals seek

payment of fees and expenses from the Debtors, each professional shall provide summary copies

of its fee and expense statements or invoices (which shall not be required to contain time entries

and which may be redacted or modified to the extent necessary to delete any information subject

to the attorney-client privilege, any information constituting attorney work product, or any other

confidential information, and the provision of such invoices shall not constitute any waiver of

the attorney-client privilege or of any benefits of the attorney work-product doctrine) to the U.S. Trustee and counsel to the Committee (if appointed) contemporaneously with the delivery of

such fee and expense statements to the Debtors. After delivery of a fee and expense statement or

invoice, the Debtors, the U.S. Trustee, and the Committee (if appointed) shall have ten (10) days

to raise an objection thereto. If an objection is timely raised, such objection shall be subject to

resolution by the Court. Pending such resolution, the undisputed portion of any such fee and

expense statement or invoice shall be paid promptly by the Debtors. Notwithstanding the

foregoing, the Debtors are authorized and directed to pay upon entry of this Interim Order all

reasonable and documented fees, costs, and out-of-pocket expenses of legal and financial

advisors to the DIP Agent provided for in the DIP Credit Agreement incurred on or prior to such

dateentry of the Interim Order without the need for any professional engaged by the DIP Agent - 70 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 193 of 223
or the DIP Lenders to first deliver a copy of its invoice as provided for herein. No attorney or

advisor to the DIP Agent or Ad Hoc Committee shall be required to file an application seeking

compensation for services or reimbursement of expenses with the Court. Any and all fees, costs, and expenses paid prior to the Petition Date by any of the Debtors to the (i) DIP Agent or DIP

Lenders in connection with the DIP Facility, (ii) Prepetition Secured Parties in connection with

the Chapter 11 Cases, and (iii) legal and financial advisors to the Ad Hoc Committee, the

members of which constitute DIP Lenders, are hereby approved in full. For the avoidance of

doubt, the fees set forth in any engagement letter executed by any of the Debtors prior to the

Petition Date with any of the legal or financial advisors to the Ad Hoc Committee shall be

deemed reasonable for all purposes under this Order, including, without limitation, under

paragraph 12(h) hereof and this paragraph 35. 36. Indemnification. To the extent provided by the DIP Credit Agreement, the Debtors shall, jointly and severally, indemnify and hold harmless the DIP Agent, each of the

DIP Lenders, and each of their respective affiliates, officers, directors, fiduciaries, employees, agents, advisors, attorneys and representatives from and against all losses, claims, liabilities, damages, and expenses (including out-of-pocket fees and disbursements of counsel) in

connection with any investigation, litigation or proceeding, or the preparation of any defense

with respect thereto, arising out of or relating to the DIP Facility or the transactions

contemplated in the DIP Credit Agreement or the other DIP Documents. 37. Proofs of Claim. The DIP Agent, the DIP Lenders, and the Prepetition

- 71 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 194 of 223
Secured Parties will not be required to file proofs of claim in any of the Chapter 11 Cases or

Successor Cases for any claim allowed herein. Notwithstanding any order entered by the Court

in relation to the establishment of a bar date in any of the Chapter 11 Cases or Successor Cases

to the contrary, each of the Prepetition ABL Agent, the Prepetition Term Agent, the Prepetition

IPCo New Money Notes Indenture Trustee and the Prepetition IPCo Exchange Notes Indenture

Trustee is hereby authorized and entitled, in its sole discretion, to file a single consolidated

master proof of claim on behalf of the Prepetition ABL Secured Parties, the Prepetition Term

Secured Parties, the Prepetition IPCo New Money Notes Secured Parties, and the Prepetition

IPCo Exchange Notes Secured Parties, as applicable, in each of the Chapter 11 Cases or

Successor Cases, and such master proof of claim shall constitute the filing of a proof of claim. Any proof of claim filed by Prepetition ABL Agent, the Prepetition Term Agent, the Prepetition

IPCo New Money Notes Indenture Trustee, or the Prepetition IPCo Exchange Notes Indenture

Trustee shall be deemed to be in addition to and not in lieu of any other proof of claim that may

be filed by any of the Prepetition ABL Secured Parties, the Prepetition Term Secured Parties, the

Prepetition IPCo New Money Notes Secured Parties, and the Prepetition IPCo Exchange Notes

Secured Parties, respectively. The provisions of this paragraph 37 and each master proof of

claim are intended solely for the purpose of administrative convenience and shall not affect the

right of each Prepetition Secured Party (or its successors in interest) to vote separately on any

plan proposed in these Chapter 11 Cases or to assert that the amount of its claim is different from

that set forth on the applicable master proof of claim. The master proofs of claim shall not be

- 72 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 195 of 223
required to attach any instruments, agreements or other documents evidencing the obligations

owing by each of the Debtors to the applicable Prepetition Secured Parties, which instruments, agreements or other documents will be provided upon written request to counsel to the

applicable Prepetition Secured Party. 38. Professional Fees Account. The Debtors shall (i) contemporaneously with

the initial funding of the Loans, transfer cash proceeds from the DIP Facility in an amount equal

to the total budgeted weekly Professional Fees for the first two weekly periods set forth in the

Budget and (ii) thereafter on a weekly basis transfer cash proceeds from the DIP Facility or cash

on hand in an amount equal to the total budgeted weekly Professional Fees for the next unfunded

week set forth in the Budget, in each case into a segregated account not subject to the control of

the DIP Agent, any DIP Lender, or any Prepetition Secured Party (the “Professional Fees

Account”). 39. The Debtors shall cause funds held in the Professional Fees Account to be

used to pay Professional Fees solely as they become allowed and payable pursuant to any interim

or final orders of the Bankruptcy Court or otherwise; provided that when all allowed

Professional Fees have been paid in full (regardless of when such Professional Fees are allowed

by the Bankruptcy Court), any funds remaining in the Professional Fees Account shall revert to

the Debtors for use in accordance with the DIP Credit Agreement and this InterimFinal Order;

provided further that the Debtors’ obligations to pay allowed Professional Fees shall not be

limited or be deemed limited to funds held in the Professional Fees Account. - 73 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 196 of 223
40. The Professional Fees Account, and all funds held in the Professional Fees

Account, shall be held in trust exclusively for the benefit the Professional Persons (as defined

below), including with respect to obligations arising out of the Carve-Out. Funds transferred to

the Professional Fees Account shall not be subject to any liens or claims granted to the DIP

Lenders or to any other party pursuant to this InterimFinal Order (whether on account of

adequate protection, Diminution in Value, or otherwise), shall not constitute Collateral, Cash

Collateral, or DIP Collateral, and shall not be or be deemed to be property of any Debtor’s

estate; provided that the DIP Collateral shall include the Debtors’ reversionary interest in funds

held in the Professional Fees Account, after all Professional Fees have been indefeasibly paid in

full in cash (regardless of when such Professional Fees are allowed by the Court. 41. Carve-Out. (a) As used in this InterimFinal Order, the term “Carve-Out” means

the sum of: (i) all fees required to be paid to the Clerk of the Bankruptcy Court and to the Office

of the United States Trustee under section 4001(c)(1)(B) 1930(a) of title 28 of the United States

Code plus interest at the statutory rate and expenses of members of the Committee allowable

under section 503(b)(3)(F) of the Bankruptcy Code (without regard to the notice set forth in (iii)

below); (ii) fees and expenses up to $50,000 incurred by a trustee under section 726(b) of the

Bankruptcy Code (without regard to the notice set forth in (iii) below); (iii) to the extent allowed

at any time, whether by interim or final compensation order, all unpaid fees and expenses

(including transaction fees or success fees) incurred by persons or firms retained by the Debtors

- 74 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 197 of 223
pursuant to section 327, 328 or 363 of the Bankruptcy Code (collectively, the “Debtor

Professionals”) and any officialthe cCommittee of unsecured creditors (the “Committee

Professionals” and, together with the Debtor Professionals, the “Professional Persons” and

such fees and expenses of the Professional Persons, the “Professional Fees”) appointed in the

Cases pursuant to section 1103 of the Bankruptcy Code at any time before or on the first

business day after delivery by the DIP Agent of a Carve-Out Trigger Notice (defined below)

including success or transaction fees earned by or payable to a Professional Person, whether

allowed by the Bankruptcy Court prior to or after delivery of a Carve-Out Trigger Notice (as

defined below) and without regard to whether such fees and expenses are provided for in the

Budget; and (iv) allowed Professional Fees incurred after the first Business Day following

delivery by the DIP Agent of the Carve-Out Trigger Notice (as defined below), to the extent

allowed at any time, whether by interim order, procedural order or otherwise in an aggregate

amount not to exceed $6,000,000 with respect to Professional Persons (the amount set forth in

this clause (iv) being the “Post-Carve-Out Trigger Notice Cap”). (b) For purposes of the foregoing, “Carve-Out Trigger Notice” shall

mean a written notice delivered by email (or other electronic means) by the DIP Agent, acting at

the direction of the Required Lenders (or, following the satisfaction in full of all DIP

Obligations, the Prepetition Agents and Prepetition IPCo Trustees, upon appropriate direction in

accordance with the applicable underlying documents) to the Debtors, their lead restructuring

counsel (Weil, Gotshal & Manges LLP), counsel to the Ad Hoc Committee (Milbank LLP), the

- 75 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 198 of 223
U.S. Trustee, and lead counsel to the Committee (if any), which notice may be delivered

following the occurrence and during the continuation of an Event of Default and acceleration of

the obligations under the DIP Facility (or, following a DIP Repayment, any occurrence that

would constitute an Event of Default hereunder) or the occurrence of the Maturity Date (as

defined in the DIP Credit Agreement), stating that the Post-Carve-Out Trigger Notice Cap has

been invoked; provided that after the occurrence of an ABL Cash Collateral Termination Event

the Prepetition ABL Agent may deliver a Carve-Out Trigger Notice in accordance with the

notice requirements and upon the delivery of such notice and to the extent that the Carve-Out

Reserve Account (as defined below) has been fully funded in the amounts required to be funded

as of the date of the Carve-Out-Trigger Notice, the Prepetition ABL Liens and Prepetition

Adequate Protection Liens, in each case with respect to ABL Priority Collateral including all

proceeds thereof shall not be subject to the Carve-Out on account of obligations benefitting from

the Carve-Out, that arise after delivery of such notice. (c) On the day on which a Carve-Out Trigger Notice is received by the

Loan Parties, the Carve-Out Trigger Notice shall constitute a demand to the Debtors to utilize all

cash on hand (including cash contained in the DIP Funding Account (as defined in the DIP

Credit Agreement)) to fund a cash reserve in an amount equal to all obligations benefitting from

the Carve-Out, to the extent not previously funded into the Professional Fees Account. The

Debtors will deposit and hold such amounts in a segregated account outside the control of any

DIP Lender or any Prepetition Secured Party exclusively to pay such obligations (the “Carve-

- 76 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 199 of 223
Out Reserve Account”), provided that the Carve-Out Reserve Account may be the Professional

Fees Account. (d) For the avoidance of doubt, to the extent that Professional Fees and

expenses of the Professional Persons have been incurred by the Debtors at any time before or on

the first business day after delivery by the DIP Agent (or, following a DIP Repayment, the

Prepetition Agents and Prepetition IPCo Indenture Trustees) of a Carve-Out Trigger Notice but

have not yet been allowed by the Bankruptcy Court on the date that the DIP Agent (or, following

a DIP Repayment, the Prepetition Agents and Prepetition IPCo Indenture Trustees) delivers a

Carve-Out Trigger Notice, such Professional Fees and expenses of the Professional Persons shall

benefit in all respects from the Carve-Out, regardless of whether such fees are allowed by the

Bankruptcy Court pursuant to an interim order, final order, or otherwise entered before or after

delivery of the Carve-Out Trigger Notice. (e) Following delivery of a Carve-Out Trigger Notice, the DIP Agent

shall deposit into the Carve-Out Reserve Account any and all cash swept or foreclosed upon

(including cash received as a result of the sale or other disposition of any assets) until the Carve- Out Reserve Account has been fully funded in an amount equal to all obligations benefiting from

the Carve-Out regardless of whether such obligations have been allowed by the Bankruptcy

Court (pursuant to an interim order, final order, or otherwise) as of such date. Notwithstanding

anything to the contrary herein or in the DIP Documents, following delivery of a Carve-Out

Trigger Notice, the DIP Agent shall not sweep or foreclose on cash (including cash received as a

- 77 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 200 of 223
result of the sale or other disposition of any assets) of the Debtors until the Carve-Out Reserve

Account has been fully funded in an amount equal to all obligations benefiting from the Carve- Out. Further, notwithstanding anything to the contrary herein, (i) disbursements by the Debtors

from the Carve-Out Reserve Account shall not constitute DIP Loans, (ii) the failure of the

Carve-Out Reserve Account to satisfy in full the Professional Fees shall not affect the priority of

the Carve-Out, and (iii) in no way shall the Carve-Out, the Professional Fees Account or the

Budget Requirement, or any of the foregoing be construed as a cap or limitation on the amount

of the Professional Fees that may be allowed by the Bankruptcy Court and payable by the

Debtors and their estates at any time (whether by interim order, final order, or otherwise). (f) For the avoidance of doubt and notwithstanding anything to the

contrary herein or in the DIP Documents, the Carve-Out shall be senior to all liens and claims

with respect to the Debtors’ estates, including all liens securing and all claims on account of the

DIP Facility, any adequate protection liens, and superpriority claims (whether granted on

account of the DIP Facility, as adequate protection, or otherwise), and any and all other liens and

claims. For the avoidance of doubt, if a DIP Repayment occurs or the DIP Facility is otherwise

terminated, the DIP Order shall remain in full force and effect, including with respect to the

Debtors’ use of Cash Collateral, the Carve-Out, the Carve-Out Reserve Account, and all related

provisions in respect thereof, and the Prepetition Agents and Prepetition IPCo Indenture Trustees

shall assume any rights and obligations that the DIP Agent previously had with respect to the

Carve-Out and the Carve-Out Reserve Account. - 78 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 201 of 223
42. No Direct Responsibility for Fees or Disbursements. Subject to any of the

DIP Agent’s, DIP Lenders’, or Prepetition Secured Parties’ obligations with respect to the

Carve-Out, none of the DIP Agent, the DIP Lenders, or the Prepetition Secured Parties shall be

(i) responsible for the direct payment or reimbursement of any fees or disbursements of any

Professional Persons incurred in connection with the Chapter 11 Cases or any Successor Cases, or (ii) obligated in any way to compensate, or to reimburse expenses of, any Professional

Persons or to guarantee that the Debtors have sufficient funds to pay such compensation or

reimbursement.43. Limitations on Use of DIP Proceeds, Cash Collateral, and Carve-Out. No

proceeds of the DIP Facility, the DIP Collateral, or the Prepetition Collateral, in each case, including Cash Collateral may be used in connection with (a) except to contest the occurrence of

an Event of Default (hereunder or under the DIP Credit Agreement) or an ABL Cash Collateral

Termination Event, or to seek the non-consensual use of Cash Collateral following the

commencement of the Remedies Notice Period, preventing, hindering, or delaying any of the

DIP Agent’s or the DIP Lenders’ realization upon any of the DIP Collateral or enforcement of

any of their respective rights thereto in accordance with paragraph 31; (b) for any purpose that is

prohibited under this Interim Order, the Final Order (when entered), the DIP Documents, or the

Bankruptcy Code; (c) to prosecute or finance in any way any adversary action, suit, arbitration, proceeding, application, motion, or other litigation of any type adverse to the interests of any or

all of the DIP Agent, the DIP Lenders, or the Prepetition Secured Parties, any of their respective

- 79 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 202 of 223
affiliates, agents, attorneys, advisors, professionals, officers, directors, or employees, in their

respective capacities as such, or their respective rights and remedies under DIP Documents, the

Interim Order, thethis Final Order (when entered), or the Prepetition Documents, including, without limitation, any actions under chapter 5 of the Bankruptcy Code, section 724(a) of the

Bankruptcy Code, or any other avoidance actions under the Bankruptcy Code or applicable state

law equivalents; (d) for the payment of fees, expenses, interest, or principal under the Prepetition

Documents (in each case, other than payments on account of the Adequate Protection

Obligations or required by this InterimFinal Order); (e) unless the Exit Conversion occurs, to

make any distribution under a plan of reorganization confirmed in the Chapter 11 Cases that

does not provide for the indefeasible payment of the DIP Loans in full and in cash; (f) except as

permitted by the Budget Requirement, to make any payment in settlement of any claim, action, or proceeding in excess of $500,000 in the aggregate without the prior written consent of the DIP

Agent, acting at the direction of the Required Lenders; (g) [reserved]; (h) incurring Indebtedness

(as defined in the DIP Credit Agreement), except to the extent permitted under the DIP Credit

Agreement or this InterimFinal Order; (i) seeking to amend or modify any of the rights granted

to the DIP Agent, the DIP Lenders, or the Prepetition Secured Parties under this InterimFinal

Order, the DIP Documents, or the Prepetition Documents; (j) seeking to subordinate, recharacterize, disallow, or avoid the DIP Obligations or the Prepetition Obligations, other than

seeking a determination (i) that payments provided on account of adequate protection should be

recharacterized under section 506(b) of the Bankruptcy Code as payments on account of the

- 80 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 203 of 223
secured portion of the Prepetition Secured Facilities and (ii) as to the value of collateral securing

the Prepetition Secured Facilities as of the Petition Date; (k) reserved; or (l) to pay allowed fees

and expenses, in an amount in excess of $250,000 in the aggregate (the “Investigation Budget

Amount”), incurred by Committee Professionals (if a Committee is appointed), in investigating

(but not prosecuting or challenging) the validity, enforceability, perfection, priority, or extent of

the Prepetition Liens (the “Investigation”) before the Challenge Deadline (as defined below);

provided that the foregoing shall not limit or be deemed to limit in any way the Debtors’ authority to (x) seek a determination (i) that payments provided on account of adequate

protection should be recharacterized under section 506(b) of the Bankruptcy Code as payments

on account of the secured portion of the Prepetition Secured Facilities and (ii) as to the value of

collateral securing the Prepetition Secured Facilities as of the Petition Date; and (y) to satisfy

obligations benefitting from the Carve Out, in each case incurred by Professional Persons

retained by the Debtors. Except with respect to the Committee’s Investigation Budget Amount, any Professional Fees incurred by or on behalf of Committee Professionals in connection with

any of the activities described in this paragraph 43 shall not constitute an allowed administrative

expense claim for purposes of section 1129(a)(9)(A) of the Bankruptcy Code.. 44. Effect of Stipulations on Third Parties. (a) Generally. The Debtors’ Stipulations set forth in paragraph F of

this InterimFinal Order shall be binding on the Debtors and any successor thereto (including, without limitation, any chapter 7 or chapter 11 trustee appointed or elected for any of the

- 81 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 204 of 223
Debtors) upon entry of this InterimFinal Order. The Stipulations shall also be binding on all

creditors and all other parties in interest and all of their respective successors and assigns, including, without limitation, athe Committee (if appointed), unless, and solely to the extent that, a party in interest with standing and requisite authority (i) has timely commenced an appropriate

proceeding or contested matter required under the Bankruptcy Code and Bankruptcy Rules, including, without limitation, as required pursuant to Part VII of the Bankruptcy Rules (in each

case subject to the limitations set forth in this paragraph 44) (A) objecting to or challenging the

amount, validity, or enforceability of the Prepetition Obligations or the perfection or priority of

the Prepetition Liens or (B) otherwise asserting or prosecuting any action for preferences, fraudulent conveyances, other avoidance power claims or any other claims, counterclaims or

causes of action, objections, contests or defenses against the Prepetition Secured Parties or any

of such parties’ affiliates, representatives, attorneys or advisors in connection with matters

related to the Prepetition Documents, the Prepetition Secured Debt, and the Prepetition

Collateral (each such proceeding or contested matter, a “Challenge”) by no later than (a) for

athe Committee (if appointed), sixty (60) days from its formation, August 3, 2020 or (b) for all

other parties in interest (excluding the Debtors), seventy-five (75) days following the entry of the

Interim Order (the “Challenge Deadline”), as such deadline may be extended in writing from

time to time in the sole discretion of the Prepetition ABL Agent (with respect to the Prepetition

ABL Liens and Prepetition ABL Obligations), the Prepetition Term Agent, acting at the

direction of the Required Term Lenders (with respect to the Prepetition Term Liens and

- 82 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 205 of 223
Prepetition Term Obligations), and the Prepetition IPCo Indenture Trustees (with respect to the

Prepetition IPCo Liens and Prepetition IPCo Notes Obligations) or by this Court for good cause

shown pursuant to an application filed by a party in interest prior to the expiration of the

Challenge Deadline, and (ii) this Court enters judgment in favor of the plaintiff or movant in any

such timely and properly commenced Challenge and any such judgment has become a final

judgment that is not subject to any further review or appeal, and then only to the extent of any

such final judgment. (b) Binding Ef ect. To the extent no Challenge is timely and properly

commenced by the Challenge Deadline, or to the extent such Challenge does not result in a final

and non-appealable judgment or order that is inconsistent with any of the Debtors’ Stipulations, then, without further notice, motion, or application to, order of, or hearing before, this Court and

without the need or requirement to file any proof of claim, the Debtors’ Stipulations shall, pursuant to this InterimFinal Order, become irrevocably binding on any person, entity, or party

in interest in the Chapter 11 Cases, as well as their successors and assigns, and in any Successor

Case for all purposes and shall not be subject to further challenge or objection. Notwithstanding

anything to the contrary herein, if any Challenge is properly and timely commenced by a party in

interest, the Debtors’ Stipulations shall nonetheless remain binding on all other parties in

interest. To the extent any Challenge is timely and properly commenced, the Prepetition

Secured Parties shall be entitled to, as adequate protection, payment of the related costs and

expenses, including, but not limited to, reasonable attorneys’ fees, incurred in defending

- 83 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 206 of 223
themselves against any Challenge; provided that, any such fees shall be subject to

recharacterization in the event a Challenge is granted pursuant to a final order not subject to

appeal. (c) Delaware LLCs. Solely with respect to (i) J. Crew Brand

Holdings, LLC, (ii) J. Crew Brand Intermediate, LLC, (iii) J. Crew Brand, LLC, (iv) J. Crew

Domestic Brand, LLC, and (v) J. Crew International Brand, LLC, the Debtors’ Stipulations and

releases contained in paragraph F hereof will not be binding on a trustee appointed for such

Debtors if, upon a motion filed by the Committee (and no other party) prior to expiration of the

Challenge Period (a “Committee Motion”) that specifically identifies the Debtors’ Stipulations

and releases opposed by the Committee, the Court (i) converts the chapter 11 case in question to

chapter 7 of the Bankruptcy Code, or (ii) appoints a chapter 11 trustee to administer such case;

provided that the Challenge Period shall be tolled with respect to such Debtors’ Stipulations and

releases specifically identified in the Committee Motion, while it remains pending with respect

to such Debtors’ Stipulations or Releases; provided further that, the Debtors’ Stipulations and

releases will be reserved for a Court-appointed trustee solely to the extent they are specifically

identified in the Committee Motion, if any, and are approved by the Court in any order

appointing the chapter 7 or 11 trustee. 45. No Third-Party Rights. Except as explicitly provided for herein, this

InterimFinal Order does not create any rights for the benefit of any third party, creditor, equity

holder, or any direct, indirect, or incidental beneficiary. - 84 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 207 of 223
46. Section 506(c) Claims. Subject to entry of the Final Order with respect to

parties other than the DIP Agent and the DIP Lenders, and eExcept to the extent of the Carve- Out, no costs or expenses of administration that have been or may be incurred in the Chapter 11

Cases at any time shall be charged against the DIP Agent, the DIP Lenders, the Prepetition ABL

Agent, the Prepetition ABL Secured Parties; Prepetition Term Agent, the Prepetition Term

Lenders, the Prepetition IPCo Indenture Trustees, the Prepetition IPCo Noteholders, the DIP

Collateral, or the Prepetition Collateral pursuant to sections 105 or 506(c) of the Bankruptcy

Code, or otherwise, without the prior written consent of the DIP Agent (acting at the direction of

the Required Lenders), the Prepetition Term Agent (acting at the direction of the Required

Lenders), or the Prepetition IPCo Indenture Trustees, as applicable, and no such consent shall be

implied from any action, inaction, or acquiescence by any party. 47. No Marshaling/Applications of Proceeds. The DIP Agent, the DIP

Lenders and the Prepetition Secured Parties shall not be subject to the equitable doctrine of “marshaling” or any other similar doctrine with respect to any of the DIP Collateral or the

Prepetition Collateral; provided, that the Prepetition ABL Agent, acting at the direction of the

Requisite Lenders (as defined in the Prepetition ABL Credit Agreement), shall first realize on

the ABL Adequate Protection Liens and ABL 507(b) Claims from DIP Collateral that constitutes

ABL Priority Collateral (now owned or hereafter acquired) before realizing on such liens and

claims from DIP Collateral of any other Debtor; provided, further, that the Prepetition Term

Agent, acting at the direction of the Required Term Lenders, shall first realize on the Term

- 85 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 208 of 223
Adequate Protection Liens and Term 507(b) Claims from DIP Collateral of the Term Debtors

before realizing on such liens and claims from DIP Collateral of any other Debtor; provided, further, still that the Prepetition IPCo Trustees, acting at the direction of Holders (as defined

under the applicable Prepetition IPCo Notes Indenture) of a majority in principal amount of the

total Prepetition IPCo Notes then outstanding under the applicable Prepetition IPCo Notes

Indenture, shall first realize on the IPCo Adequate Protection Liens and IPCo 507(b) Claims

from DIP Collateral of the IPCo Debtors before realizing on such liens and claims from DIP

Collateral of any other Debtor. Notwithstanding anything herein or in the DIP Documents to the

contrary, the Prepetition Secured Parties shall use commercially reasonable efforts to satisfy

their applicable Adequate Protection Liens and 507(b) Claims, if any, from proceeds of the DIP

Collateral other than Avoidance Action Proceeds before satisfying such liens and claims from

Avoidance Action Proceeds. 48. Section 552(b). Subject to entry of the Final Order, theThe Prepetition

Secured Parties shall each be entitled to all of the rights and benefits of section 552(b) of the

Bankruptcy Code, and the “equities of the case” exception thereunder shall not apply to any of

them. 49. Limits on Lender Liability. Nothing in this InterimFinal Order, any of the

DIP Documents, the Prepetition Documents, or any other documents related thereto, shall in any

way be construed or interpreted to impose or allow the imposition upon the DIP Agent, the DIP

Lenders, or the Prepetition Secured Parties of any liability for any claims arising from any

- 86 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 209 of 223
activities by the Debtors in the operation of their businesses or in connection with the

administration of these Chapter 11 Cases or any Successor Cases. The DIP Agent, the DIP

Lenders, and the Prepetition Secured Parties shall not, solely by reason of having made loans

under the DIP Facility or authorizing the use of Cash Collateral, be deemed in control of the

operations of the Debtors or to be acting as a “responsible person” or “owner or operator” with

respect to the operation or management of the Debtors (as such terms, or any similar terms, are

used in the United States Comprehensive Environmental Response, Compensation and Liability

Act, 29 U.S.C. §§ 9601 et seq., as amended, or any similar federal or state statute). Nothing in

this InterimFinal Order or the DIP Documents, shall in any way be construed or interpreted to

impose or allow the imposition upon the DIP Agent, the DIP Lenders, or any of the Prepetition

Secured Parties of any liability for any claims arising from the prepetition or postpetition

activities of any of the Debtors. 50. Insurance Proceeds and Policies. Upon entry of thisAs of the date of the

Interim Order and, to the fullest extent provided by applicable law, the DIP Agent (for itself and

for the benefit of the DIP Secured Parties), the Prepetition ABL Agent (for itself and for the

benefit of the Prepetition ABL Lenders), the Prepetition Term Agent (for itself and for the

benefit of the Prepetition Term Secured Parties), and the Prepetition IPCo Indenture Trustees

(for themselves and for the benefit of the applicable Prepetition IPCo Noteholders), shall be, and

shall be deemed to be, without any further action or notice, named as additional insured and loss

payee on each insurance policy maintained by the Debtors that in any way relates to the DIP

- 87 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 210 of 223
Collateral. 51. Joint and Several Liability. Nothing in this InterimFinal Order shall be

construed to constitute a substantive consolidation of any of the Debtors’ estates, it being

understood, however, that the Debtors shall be jointly and severally liable for the obligations

hereunder and all DIP Obligations in accordance with the terms hereof and of the DIP

Documents. 52. Rights Preserved. Notwithstanding anything herein to the contrary, the

entry of this InterimFinal Order is without prejudice to, and does not constitute a waiver of, expressly or implicitly, subject to the Transaction Support Agreement, the DIP Documents, the

Prepetition Documents and the Intercreditor Agreements: (a) the DIP Agent’s, DIP Lenders’, and Prepetition Secured Parties’ rights to seek any other or supplemental relief; (b) any of the

rights of any of the DIP Agent, DIP Lenders, and/or the Prepetition Secured Parties under the

Bankruptcy Code or applicable non-bankruptcy law, including, without limitation, the right to (i)

request modification of the automatic stay imposed by section 362 of the Bankruptcy Code, (ii)

request dismissal of any of the Chapter 11 Cases or Successor Cases, conversion of any of the

Chapter 11 Cases to cases under chapter 7, or appointment of a chapter 11 trustee or examiner

with expanded powers, or (iii) propose, subject to the provisions of section 1121 of the

Bankruptcy Code, a chapter 11 plan or plans; or (c) any other rights, claims, or privileges

(whether legal, equitable, or otherwise) of any of the DIP Agent, the DIP Lenders, or the

Prepetition Secured Parties. Notwithstanding anything herein to the contrary, the entry of this

- 88 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 211 of 223
InterimFinal Order is without prejudice to, and does not constitute a waiver of, expressly or

implicitly, the Debtors’, athe Committee’s (if appointed), or any party in interest’s right to

oppose any of the relief requested in accordance with the immediately preceding sentence except

as expressly set forth in this InterimFinal Order. Entry of this InterimFinal Order is without

prejudice to any and all rights of any party in interest with respect to the terms and approval of

the Final Order and any other position which any party in interest deems appropriate to raise in

these Chapter 11 Cases or any Successor Cases. For all adequate protection and stay relief

purposes throughout the Chapter 11 Cases, the Prepetition Secured Parties shall be deemed to

have requested relief from the automatic stay and adequate protection as of the Petition Date. For

the avoidance of doubt, such request will survive termination of this Interim Order. 53. No Waiver by Failure to Seek Relief. The failure of the DIP Agent, the

DIP Lenders, or the Prepetition Secured Parties to seek relief or otherwise exercise their rights

and remedies under this InterimFinal Order, the DIP Documents, the Prepetition Documents, or

applicable law, as the case may be, shall not constitute a waiver of any of the rights hereunder, thereunder, or otherwise of the DIP Agent, the DIP Lenders, or the Prepetition Secured Parties. 54. Binding Effect of InterimFinal Order. Immediately upon entry on the

docket of this Court, the terms and provisions of this InterimFinal Order shall become binding

upon the Debtors, the DIP Agent, the DIP Lenders, the Prepetition Secured Parties, all other

creditors of any of the Debtors, anythe Committee, and all other parties in interest and their

respective successors and assigns, including any trustee or other fiduciary hereafter appointed in

- 89 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 212 of 223
any of the Chapter 11 Cases, any Successor Cases, or upon dismissal of any Case or Successor

Case. 55. No Modification of InterimFinal Order. A motion or pleading filed by any

of the Debtors to modify, stay, vacate, amend, or reverse this Order shall be an Event of Default

unless and until: (a) as to the DIP Obligations and the Prepetition Obligations (other than

contingent obligations with respect to then unasserted claims), unless and until (i) they have

been indefeasibly paid in full in cash (such payment being without prejudice to any terms or

provisions contained in the DIP FacilityDocuments which survive such discharge by their terms)

or otherwise deemed satisfied or waived by the DIP Agent (acting at the direction of the

Required Lenders), and all commitments to extend credit under the DIP Facility have been

terminated; or (bii) the DIP Agent (acting at the direction of the Required Lenders) consents to

such pleading or motion; or (b) as to the Prepetition Obligations (other than contingent

obligations with respect to then unasserted claims), unless and until (i) they have been

indefeasibly paid in full in cash or otherwise deemed satisfied or waived by, as applicable, the

Prepetition ABL Agent, the Prepetition Term Agent (acting at the direction of the Required

Term Lenders), and/or the Prepetition IPCo Indenture Trustees, or (ii) the Prepetition ABL

Agent, the Prepetition Term Agent (acting at the direction of the Required Term Lenders), or the

Prepetition IPCo Indenture Trustees, as applicable, consent to such motion or pleading. 56. Continuing Effect of Intercreditor Agreements. The Debtors, the DIP

Agent, the DIP Lenders, and the Prepetition Secured Parties each shall be bound by, and in all - 90 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 213 of 223
respects of the DIP Facility shall be governed by, and be subject to all the terms, provisions, and

restrictions of the Intercreditor Agreements. 57. InterimFinal Order Controls. In the event of any inconsistency between

the terms and conditions of the DIP Documents and this InterimFinal Order, the provisions of

this InterimFinal Order shall control. 58. Discharge. The DIP Obligations and, except as otherwise provided in

Paragraphs 12(b), 12(e), and 12(g) hereof, the obligations of the Debtors with respect to the

adequate protection provided herein shall not be discharged by the entry of an order confirming

any plan of reorganization in any of the Chapter 11 Cases, notwithstanding the provisions of

section 1141(d) of the Bankruptcy Code, unless (x) such obligations have been indefeasibly paid

in full in cash (other than contingent indemnification obligations for which no claim has been

asserted), on or before the effective date of such plan of reorganization, (y) each of the DIP

Agent, the DIP Lenders, the Prepetition Agents, and the Prepetition IPCo Indenture Trustees, as

applicable, has otherwise agreed in writing or as otherwise provided herein or (z) each of DIP

Agent, the DIP Lenders, the Prepetition Agents, and the Prepetition IPCo Indenture Trustees

have accepted their treatment in a plan of reorganization or liquidation as provided herein;

provided, that the DIP Loans shall automatically and mandatorily convert into the Exit Term

Loans upon the occurrence of the Exit Conversion (as defined in the DIP Credit Agreement, the

“Exit Conversion”) in accordance with the DIP Credit Agreement. It shall be an Event of

Default if the Debtors shall propose or support any plan of reorganization or sale of all or

- 91 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 214 of 223
substantially all of the Debtors’ assets, or order confirming such plan or approving such sale, that is not (1) conditioned upon the indefeasible payment in full in cash of the DIP Obligations

(other than contingent indemnification obligations for which no claim has been asserted), and the

payment of the Debtors’ obligations with respect to the adequate protection provided for herein, in full in cash within a commercially reasonable period of time (and in no event later than the

effective date of such plan of reorganization or sale) or (2) on such other terms as are set forth in

the Transaction Support Agreement (a “Prohibited Plan or Sale”), without the written consent

of each of the DIP Agent (acting at the direction of the Required Lenders), DIP Lenders, the

Prepetition Term Agent (acting at the direction of the Required Term Lenders), the Prepetition

ABL Agents, and Prepetition IPCo Indenture Trustees, as applicable. For the avoidance of

doubt, the Debtors’ proposal or support of a Prohibited Plan or Sale, or the entry of an order with

respect thereto, shall constitute an Event of Default hereunder and under the DIP Documents. 59. Survival. The provisions of this InterimFinal Order, including with

respect to the priority of the Carve Out, and any actions taken pursuant hereto shall survive entry

of any order which may be entered: (a) confirming any plan of reorganization in any of the

Chapter 11 Cases; (b) converting any of the Chapter 11 Cases to a case under chapter 7 of the

Bankruptcy Code; (c) dismissing any of the Chapter 11 Cases or any Successor Cases; or (d)

pursuant to which this Court abstains from hearing any of the Chapter 11 Cases or any Successor

Cases. The terms and provisions of this InterimFinal Order shall continue in the Chapter 11

Cases, in any Successor Cases, or following dismissal of the Chapter 11 Cases or any Successor

- 92 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 215 of 223
Cases notwithstanding the entry of any orders described in clauses (a)-(d) above, and all claims, liens, security interests, and other protections granted to the DIP Agent, the DIP Lenders, and the

Prepetition Secured Parties pursuant to this InterimFinal Order and/or the DIP Documents shall

maintain their validity and priority as provided by this InterimFinal Order until: (i) in respect of

the DIP Facility, all the DIP Obligations have been indefeasibly paid in full in cash (other than

contingent indemnification obligations for which no claim has been asserted) or the Exit

Conversion shall have occurred; and (ii) in respect of the Prepetition ABL Facility, all of the

Prepetition ABL Obligations have been indefeasibly paid in full in cash (other than contingent

indemnification obligations for which no claim has been asserted); (iii) in respect of the

Prepetition Term Facility, all of the Prepetition Term Obligations have been indefeasibly paid in

full in cash (other than contingent indemnification obligations for which no claim has been

asserted); (iv) in respect of the Prepetition IPCo New Money Notes, all of the Prepetition IPCo

New Money Notes Obligations have been indefeasibly paid in full in cash (other than contingent

indemnification obligations for which no claim has been asserted); and (v) in respect of the

Prepetition IPCo Exchange Notes, all of the Prepetition IPCo Exchange Notes Obligations have

been indefeasibly paid in full in cash (other than contingent indemnification obligations for

which no claim has been asserted). The terms and provisions concerning the indemnification of

the DIP Agent and the DIP Lenders shall continue in the Chapter 11 Cases, in any Successor

Cases, following dismissal of the Chapter 11 Cases or any Successor Cases, following

termination of the DIP Documents, and/or the indefeasible repayment of the DIP Obligations. - 93 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 216 of 223
60. Payments Held in Trust. Except as expressly permitted in this

InterimFinal Order or the DIP Credit Agreement, and subject to the Carve-Out in all respects, in

the event that any person or entity receives any payment on account of a security interest in DIP

Collateral, receives any DIP Collateral or any proceeds of DIP Collateral, or receives any other

payment with respect thereto from any other source prior to all DIP Obligations in accordance

with the DIP Credit Agreement, such person or entity shall be deemed to have received, and

shall hold, any such payment or proceeds of DIP Collateral in trust for the benefit of the DIP

Agent and the DIP Lenders and shall immediately turn over such proceeds to the DIP Agent, or

as otherwise instructed by this Court, for application in accordance with the DIP Credit

Agreement and this InterimFinal Order. 61. Headings. Section headings used herein are for convenience only and are

not to affect the construction of or to be taken into consideration in interpreting this InterimFinal

Order. 62. Final Hearing. The Final Hearing to consider entry of the Final Order and

final approval of the DIP Facility is scheduled for May 28, 2020, at 11:00 a.m. (ET) before the

Honorable Keith L. Phillips, United States Bankruptcy Judge at the United States Bankruptcy

Court for the Eastern District of Virginia, Richmond Division. On or before May 7, 2020, the

Debtors shall serve, by United States mail, first-class postage prepaid, notice of the entry of this

Interim Order and of the Final Hearing (the “Final Hearing Notice”), together with copies of

this Interim Order and the Motion, on the Notice Parties. The Final Hearing Notice shall state

- 94 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 217 of 223
that any party in interest objecting to the entry of the proposed Final Order shall file written

objections with the Clerk of the Court no later than on May 21, 2020, at 4:00 p.m. (EST), which

objections shall be served so as to be received on or before such date by: (i) counsel to the

Debtors, Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153 (attn:

Ray C. Schrock, P.C. and Ryan Preston Dahl) and Hunton Andrews Kurth LLP, Riverfront

Plaza, East Tower, 951 East Byrd Street, Richmond, Virginia 23219 (attn: Tyler P. Brown, Henry P. (Toby) Long, III, and Nathan Kramer; (ii) counsel to the Ad Hoc Committee, Milbank

LLP, 55 Hudson Yards, New York, New York 10001 (attn: Samuel Khalil and Matthew Brod)

and Tavenner & Beran, PLC, 20 North Eighth Street, Second Floor, Richmond, Virginia 23219

(attn: Lynn Tavenner, Esq. and Paula Beran, Esq.); (iii) counsel to the DIP Agent, Seward &

Kissel LLP, One Battery Park Plaza, New York, New York 10004 (attn: John R. Ashmead and

Gregg S. Bateman); and (iv) counsel to the Prepetition ABL Agent, Choate, Hall & Stewart LLP, Two International Place, Boston, MA 02110 (attn.: Kevin J. Simard) and McGuireWoods LLP, Gateway Plaza, 800 East Canal Street, Richmond, VA 23219-3916 (attn. Douglas Foley). 62. 63. Retention of Jurisdiction. The Court has and will retain jurisdiction to

enforce the terms of any and all matters arising from or related to the DIP Facility and/or this

InterimFinal Order. 63. 64. DIP Election Procedures. The DIP Election Procedures are hereby

approved. The DIP Agent may, in connection with allocations of the commitments under the

DIP Facility or any other allocations contemplated to be made pursuant to, and in accordance

- 95 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 218 of 223
with, the DIP Credit Agreement, conclusively rely on, and shall have no obligation to determine, investigate or confirm, and shall incur no liability whatsoever with respect to, any ownership

information with respect to the Prepetition Term Obligations and Prepetition IPCo Notes

Obligations as set forth on any election joinder (the form of which is attached as Exhibit M to

the DIP Credit Agreement) submitted by an Electing DIP Term Lender (as defined in the DIP

Credit Agreement). The DIP Agent may conclusively rely on any allocations of the

commitments under the DIP Facility as provided to the DIP Agent by the advisors to the Debtors

and/or Ad Hoc Committee without incurring liability therefor. 64. 65. Exit Conversion. It is understood and agreed that any provision in this

InterimFinal Order requiring the indefeasible payment of the DIP Obligations in full in cash

shall be deemed to be satisfied to the extent any such DIP Obligation is converted into an Exit

Term Loan (as defined in the DIP Documents) pursuant to the Exit Conversion. 65. 66. During the Support Period (as defined in the Transaction Support

Agreement), J. Crew Domestic, LLC agrees to forbear from collection or enforcement of the

“License Fees” as defined in and contemplated under the Amended and Restated Intellectual

Property License Agreement and 2017 Intellectual Property License Agreement, each dated July

13, 2017, provided that the accrued and unpaid License Fees will remain outstanding without

interest, penalties, or other charges through the earlier of the Support Period, payment in full, or

consummation of the Plan (as defined in the Transaction Support Agreement). 66. 67. Notwithstanding anything to the contrary herein, the rights of the DIP

- 96 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 219 of 223
Agent and DIP Lenders to use or occupy any premises subject to a lease of non-residential real

property shall be limited to (i) any such rights agreed to in writing by the applicable landlord, (ii)

any rights of the DIP Agent or DIP Lenders that are valid and enforceable under applicable non- bankruptcy law, if any, and (iii) such rights as may be granted by this Court upon appropriate

notice to the applicable landlord. 67. Nothing in this Final Order shall affect the priority of ad valorem tax liens

existing as of the Petition Date, if any, and which may arise during the pendency of these

Chapter 11 Cases. The Debtors shall provide notice to applicable ad valorem taxing authorities

of sales out of the ordinary course of business during the course of these Chapter 11 Cases. 68. Comenity. (a) Comenity Bank’s, f/k/a World Financial Network National Bank, (“Comenity”) rights with respect to the Amended and Restated Private Label Credit Card

Program Agreement between Comenity and J. Crew Operating Corp., dated as of May 11, 2011, as amended from time to time (the “Program Agreement”): (i) shall not be affected, modified, waived, primed, subordinated, or impaired in any way by this Final Order, (ii) shall not be made

subject to, subordinated by, or pari passu with any new (x) secured financing, security interests, or liens, and/or (y) super priority, administrative, or adequate protection claims. (b) The Debtors and Comenity shall remain bound by the terms of the

Program Agreement, including the confidentiality provisions therein; provided that nothing

herein shall (i) expand Comenity’s rights under the Program Agreement or the Bankruptcy Code, - 97 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 220 of 223
or (ii) be deemed to constitute an assumption of the Program Agreement or a waiver or

modification of the Debtors’ rights to assume, assume and assign, or reject the Program

Agreement pursuant to section 365 of title 11 of the Bankruptcy Code in these Chapter 11 Cases. The Debtors hereby reserve all rights available to them in their Chapter 11 Cases. (c) All of Comenity’s rights, remedies, claims, defenses, and other

relief arising from or related to the Program Agreement, including, but not limited to, those set

forth in in this paragraph 68, are expressly preserved and reserved. Dated: , 2020

Richmond, Virginia

UNITED STATES BANKRUPTCY JUDGE

- 98 -

WEIL:\97486216\1\54457.0008WEIL:\97486216\9\54457.0008

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 221 of 223
ExhibitSchedule 1

DIP Credit Agreement

SWDOCIDLOCATION

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 222 of 223
ExhibitSchedule 2

InitialCurrent DIP Budget

SWDOCIDLOCATION

Case 20-32181-KLP Doc 427 Filed 06/03/20 Entered 06/03/20 11:47:03 Desc Main

Document Page 223 of 223