4869-2087-5433

Jason S. Brookner (TX Bar No. 24033684)

Aaron M. Kaufman (TX Bar No. 24060067)

Lydia R. Webb (TX Bar No. 24083758)

GRAY REED

1601 Elm Street, Suite 4600

Dallas, TX 75201

Telephone: (214) 954-4135

Facsimile: (214) 953-1332

Email: jbrookner@grayreed.com

akaufman@grayreed.com

lwebb@grayreed.com

Proposed Counsel to the Debtors

and Debtors in Possession

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

§

In re: § Chapter 11

§

COTTONWOOD FINANCIAL LTD., et al.,

1 § Case No. 24-80035 (SWE)

§

Debtors. § (Joint Administration Requested)

§

NOTICE OF FILING OF FIRST DAY HEARING DEMONSTRATIVE

PLEASE TAKE NOTICE that attached to this Notice as Exhibit A is a demonstrative 

for the first day matters scheduled for hearing on February 29, 2024 at 9:00 A.M. Central Time

(the “First Day Hearing Demonstrative”). 

1 The Debtors in these chapter 11 cases and the last four digits of each Debtors’ federal tax identification number are 

as follows: Cottonwood Financial Ltd. (1001); Cottonwood Financial Administrative Services, LLC (7228); 

Cottonwood Financial Texas, LLC (9059); Cottonwood Financial Idaho, LLC (5651); Cottonwood Financial 

Wisconsin, LLC (7075). The Debtors’ principal offices are located at 2100 W Walnut Hill Lane, Suite 300, Irving, 

TX 75038.

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2

4869-2087-5433

Respectfully submitted this 28th day of February, 2024.

GRAY REED 

By: /s/ Lydia R. Webb

Jason S. Brookner (TX Bar No. 24033684)

Aaron M. Kaufman (TX Bar No. 24060067)

Lydia R. Webb (TX Bar No. 24083758)

1601 Elm Street, Suite 4600

Dallas, Texas 75201

Telephone: (214) 954-4135

Facsimile: (214) 953-1332

Email: jbrookner@grayreed.com

akaufman@grayreed.com

lwebb@grayreed.com

Proposed Counsel to the Debtors

and Debtors in Possession

Certificate of Service

I certify that on February 28, 2024, I caused a copy of the foregoing document to be served 

by the Electronic Case Filing System for the United States Bankruptcy Court for the Northern 

District of Texas.

/s/ Lydia R. Webb

Lydia R. Webb

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4869-2087-5433

Exhibit A

First Day Hearing Demonstrative

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In re Cottonwood Financial Ltd., et al.

The Honorable Scott W. Everett

Case No. 24-80035

February 29, 2024

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DEBTORS’ PROPOSED ADVISORS

©2024 Gray Reed. All Rights Reserved

2

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©2024 Gray Reed. All Rights Reserved

3

COMPANY OVERVIEW

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CORPORATE STRUCTURE

©2024 Gray Reed. All Rights Reserved

4

Cottonwood Financial 

Management, Inc.

Cottonwood Financial Ltd

Cottonwood 

Financial 

Wisconsin LLC

Cottonwood 

Financial Idaho 

LLC

Cottonwood 

Financial Texas 

LLC

Cottonwood 

Financial 

Administrative 

Services LLC

1%

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©2024 Gray Reed. All Rights Reserved

5

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HOW DO THE DEBTORS’ CUSTOMERS OBTAIN LOANS?

©2024 Gray Reed. All Rights Reserved

6

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IDAHO & WISCONSIN

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7

Cottonwood is the lender and makes and 

services loans directly to consumer.

Borrower

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TEXAS

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8

• In Texas, Cottonwood operates as a 

CSO and CAB under chapter 393 of 

the Texas Finance Code. 

• TreeMac Funding Group, LLC is the 

exclusive third-party lender 

pursuant to the parties’ Brokering 

and Servicing Agreement.

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SERVICES PROVIDED BY CSO TO CONSUMER

Borrower: “Can you make me a loan?”

The Cash Store: “We can help arrange a loan for you, but we are 

not a lender.”

Borrower: “What services do you provide?”

The Cash Store: “For a fee we will:

• process your application

• provide credit enhancement by issuing a 

non-bank letter of credit for your account for 

the benefit of a lender.

• Broker a loan for you from a lender under 

terms you might not otherwise qualify to 

receive.”

©2024 Gray Reed. All Rights Reserved

9

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MAKING THE LOAN

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10

Borrower wants to 

borrow money

Borrower

Lender

CSO

Borrower seeks 

assistance from 

The Cash Store

• At Borrower’s request, 

CSO provides Letter of 

Credit to enhance 

Borrower’s credit. 

• CSO receives repayment 

funds from Borrower and 

transmits the funds to 

Lender

Loan

CSO enhances 

credit, brokers Loan

Lender approves the Borrower’s 

loan application and provides 

loan to the Borrower

Application

Repayment 

Funds

TreeMac

Letter of Credit

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TREEMAC SETTLEMENT PROCESS

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11

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©2024 Gray Reed. All Rights Reserved

12

COMPANY DEBT

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PREPETITION CAPITAL STRUCTURE

SECURED DEBT

• Main Street Loan: $26 million

• Third Coast Bank (5%)

• Boston Fed (95%)

• Bomani Business Lending: $38 million

• Subordinated to Main Street Loan

• Trade Vendors: $4 million

UNSECURED DEBT

©2024 Gray Reed. All Rights Reserved

13

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©2024 Gray Reed. All Rights Reserved

14

WHY ARE WE HERE?

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EVENTS LEADING TO BANKRUPTCY 

©2024 Gray Reed. All Rights Reserved

15

• COVID-19

– Stimulus payments

– Child tax credit advances

– Decrease in demand for 

Cottonwood’s loan products

– Decrease in customers using 

brick-and-mortar storefronts

– Increase in competitors’ 

online business

• Regulations in Texas

• Increase in bad debt due to shift in 

consumer behavior

• Outsized overhead despite store 

closures

• Default & acceleration of Main 

Street Loan

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PREPETITION EFFORTS

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16

• Closing of 44 Cash Stores across the country

• Reduction in workforce of 96 employees

• Engagement of Harney Partners

– Karen Nicolaou, CRO

• Engagement of Oppenheimer & Co., Inc.

– Investment banker marketing for potential asset sale

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FIRST DAY MOTIONS

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17

Docket No. Motion

No. 2 Joint Administration Motion

No. 3 Designation of Complex Case

No. 4 Schedules & Statements Extension Motion

No. 5 Epiq Retention Application

No. 6 Creditor Matrix Motion

No. 7 Tax Motion

No. 8 Insurance Motion

No. 9 Utilities Motion

No. 10 Customer Programs Motion

No. 11 Lease Rejection Motion

No. 12 Cash Management Motion

No. 13 Wages Motion

Nos. 48 & 49 DIP & Cash Collateral Motion

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SECOND DAY RELIEF

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18

• TreeMac Motion to Assume 

• Bidding Procedures

• Final DIP Hearing

March 20, 2024, at 10:00 

a.m. (prevailing Central 

Time)

Hearing to approve Bidding Procedures

March 26, 2024 Deadline to serve Bid Packages

April 5, 2024 Deadline to file list of Potential Assumed Contracts and Cure 

Notice

April 25, 2024, at 4:00 

p.m. 

(prevailing Central Time)

Bid Deadline to submit Qualified Bids 

April 26, 2024 Notifications to Qualified Bidders

May 1, 2024 Deadline to return deposits to non-Qualified Bidders

April 29, 2024, at 10:00 

a.m. 

(prevailing Central Time)

Auction (if more than one Qualified Bids is received)

April 30, 2024 Deadline to file Notice of Successful Bidder

May 1, 2024 Deadline to file Notice of Proposed Sale Order

May 3, 2024 Deadline to object to Sale Transaction

May 3, 2024 Deadline for Adequate Assurance Objection or Cure Objection

May 8, 2024 Deadline to file the Assumed Contract Schedule

May 10, 2024, at __:__

_.m. (prevailing Central 

Time)

Sale Hearing, to approve the results of the Auction

Proposed Sale Timeline Case 24-80035-swe11 Doc 60 Filed 02/28/24 Entered 02/28/24 23:12:23 Desc Main

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EVIDENTIARY SUPPORT

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19

• First Day Declaration 

[Docket No. 19]

– Karen Nicolaou, Chief 

Restructuring Officer

• Declaration in support of DIP & 

Cash Collateral Motion 

[Docket No. 50]

– Karen Nicolaou, Chief 

Restructuring Officer

• Epiq Declaration

[Docket No. 5, Ex. B] 

– Alex Warso, Epiq

• Amended Witness and Exhibit 

List 

[Docket No. 55]

– Exhibits 1 - 12

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©2024 Gray Reed. All Rights Reserved

20

FIRST DAY MOTION 

PRESENTATIONS

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