Powin - Plan / RSA Terms

Plan Terms

Overview

• The Debtors, Powin, LLC, and its affiliates, along with the Official Committee of Unsecured Creditors (“Committee”), are joint proponents of a combined chapter 11 plan of liquidation and disclosure statement.
• The plan is intended to represent a good-faith compromise and settlement of all claims and controversies.
• Under the plan, allowed administrative, secured, and priority claims will be paid in full.

Sale Transactions

• The Debtors commenced their chapter 11 cases to pursue a value-maximizing sale process for their assets, resulting in the following transactions:
  • Mainfreight Sale: Certain assets constituting collateral for Mainfreight Distribution Pty Ltd. were sold to Mainfreight via a $3 million credit bid.
  • FlexGen Sale: Certain assets were sold to FlexGen Power Systems, LLC for a purchase price of $36 million, comprised of a credit bid and cash, along with the assumption of certain liabilities.
  • EKS Sale: The Debtors entered into a comprehensive transaction with Hitachi Energy Ltd., whereby Hitachi acquired the remaining units in Powin EKS Sellco LLC and provided certain releases in exchange for a fixed sum of $15 million.

DIP Financing

• The Debtors obtained authorization for a postpetition DIP facility with a new money borrowing capacity of up to $27.5 million.
• The DIP facility was fully satisfied on Aug. 19, when the DIP lender applied the outstanding obligations as a credit against its purchase price in the FlexGen sale transaction.

Liquidating and Direct Claims Trusts

• The plan establishes two trusts to wind down the Debtors’ estates and make distributions to creditors:
  • Liquidating Trust: Formed to liquidate and distribute the assets of the estates, administer claims, and prosecute estate causes of action. All avoidance actions not constituting “IP and Customer Claims” as defined in the FlexGen APA will vest in the Liquidating Trust.
  • Direct Claims Trust: Formed to receive and monetize certain affirmative, direct claims held by general unsecured creditors against non-debtor third parties who are not released under the plan, including prepetition lenders, former directors, officers, or insiders.
• Holders of allowed general unsecured claims (Class 5A) will receive their pro rata share of interests in the Liquidating Trust.
• Holders of general unsecured claims who also contribute their direct claims to the Direct Claims Trust (Class 5B) will receive an additional interest in the Direct Claims Trust.
  • Holders are deemed to have contributed their direct claims unless they affirmatively opt out.
• The Committee will select the initial Liquidating Trustee, with the Debtors’ consent, who will also serve as the Direct Claims Trustee. Each trust will have a separate three-member oversight committee selected by the Committee.

Settlement Terms

• The plan proposes settlements for certain WARN Act claims and Settled Priority Claims.
  • WARN Act Claims: If the settlement is agreed to, holders will receive treatment including the allowance of their claims at a specified amount, certification of a class action, an initial cash payment from a WARN Act Claim Reserve on the effective date, and additional payments upon certain milestones until the claims are satisfied in full.
    • If no settlement is reached, WARN Act claims will be treated as either priority non-tax claims or general unsecured claims, as determined by the court.
  • Settled Priority Claims: If the settlement is agreed to, holders will receive payment for documented professional fees on the effective date, with the remainder of their allowed claim treated as a general unsecured claim.

Releases and Exculpation

• The plan provides for releases from the Debtors and their estates for the Released Parties, which include the Debtors, their current officers and managers, the CRO, certain individuals, and the Committee and its members and professionals.
• A third-party release is granted by Releasing Parties in favor of the Released Parties.
  • Releasing Parties include claim holders who do not opt out of the release and the Committee and its members.
• Exculpated Parties, which include the Debtors, the CRO, certain individuals, and the Committee and its members and professionals, are exculpated from liability for any good-faith action taken in connection with the chapter 11 cases between the petition date and the effective date.
• All releases and the exculpation are subject to a carve-out for willful misconduct, actual fraud, bad faith, or gross negligence.

Plan Support

• The Debtors and the Committee are joint proponents of the plan, believe it is in the best interests of all creditors, and recommend that all creditors entitled to vote cast their ballots to accept the plan.