Alkegen filed prepackaged chapter 11 petitions in the Northern District of Texas on July 26, 2026, and it filed them with the deal already done. Solicitation launched six days before the petitions, on July 20. The restructuring support agreement carries holders of 99 percent of First Lien Claims, 80 percent of Second Lien Notes Claims, 95 percent of Preferred A Stock, and 99 percent of Senior Common Stock. The voting deadline is August 17, 2026, and the debtors are targeting entry of a confirmation order within 45 days of the petition date.

The transaction eliminates approximately $3.1 billion of funded debt obligations. A company that entered these cases carrying $3.325 billion of funded debt principal, and roughly $3.5 billion including accrued interest and make-whole amounts, would emerge with $400 million of term debt, approximately $200 million of liquidity, and the ability to put up to $150 million of new revolver capacity in place.

Trade creditors are unimpaired and are being paid in the ordinary course, which the declaration identifies as a condition the Ad Hoc Group required in exchange for its support of the RSA and the DIP Facility. General Unsecured Claims are reinstated or paid in full. Existing Alkegen Holdco Interests, defined as all outstanding Preferred A Stock, Preferred A-1 Stock, and Senior Common Stock, are canceled without distribution. The Sponsor holds the vast majority of the Senior Common Stock and Preferred A Stock, and it signed the RSA. The Preferred A-1 Stock is held entirely by third-party investors, and the declaration does not state their level of support.

The Dates That Matter

The RSA milestones compress the case into a window most operating chapter 11 filings would use just to get through a final DIP hearing. If any milestone slips, the RSA outside date of December 31, 2026 sits behind everything.

The declaration gives its own reasons for the compressed schedule: minimizing disruption to the business and limiting the accrual of administrative expenses. It separately identifies the September 30 PIK expiration as a source of increased pressure on liquidity. The two sit nine weeks apart.

Alkegen makes the materials that sit between heat and everything else. Its products are high-performance fibers engineered into blankets, felts, papers, boards, and mats used in blast furnaces, petrochemical refining, glass production, catalytic converters, and electric vehicle battery packs.

The company is the product of two long corporate histories. Unifrax was founded in 1942 by the scientist who invented ceramic fiber, commercialized a decade later as Fiberfrax. Lydall traces to 1869, when two families began manufacturing knitting needles in Manchester, Connecticut, and became a specialty filtration and advanced materials business listed on the New York Stock Exchange. Investment vehicles affiliated with Clearlake Capital Group acquired Unifrax in December 2018. Unifrax acquired Lydall in September 2021, and the combined operations were consolidated under the Alkegen banner.

Revenue concentrates in the industrial side of the portfolio. Industrial Solutions carried nearly two-thirds of 2025 revenue on insulation materials, high-efficiency filtration, and micro fine glass fibers. Mobility Solutions sells emission control mats used by virtually every automaker for catalytic converter support, along with battery fire protection for electric vehicles and stationary storage. Industrial Filtration makes felt-based media for industrial waste gases. SiFAB, a structured silicon anode material launched as a research project in 2017, has not yet reached commercialization.

Geographically, North America accounted for roughly 55 percent of 2025 sales, Europe 30 percent, and Asia 15 percent. The Asian exposure runs through a separate and consequential asset. Since 2014 Alkegen has held a stake in Luyang Energy-Savings Materials Co. Ltd., a Chinese producer of ceramic, soluble, and alumina fibers. In June 2022 a debtor subsidiary took a controlling interest of approximately 52.43 percent, later increased to 52.66 percent through share cancellation. Luyang is not a debtor, and its performance since 2022 sits at the center of the distress narrative.

The declaration attributes the filing to five drivers, and they compound rather than sit side by side. Start with rates. Elevated interest rates have held industrial capacity utilization below its long-run average since the pandemic, and Alkegen sells into steel, petrochemical, automotive, and construction end markets that move with that utilization. High rates also slowed the electric vehicle transition, and electric vehicles now represent 5.3 to 6 percent of new-vehicle sales, down from a peak of 10.6 percent in 2025.

Then add Chinese overcapacity. Persistent oversupply in Chinese manufacturing produced aggressive domestic price competition with spillover effects for producers everywhere else, costing Alkegen market share and compressing margins already pressured by inflation. The controlling stake in Luyang converted that macro exposure into a specific balance sheet problem.

The remaining three drivers are company-specific. Several growth initiatives that underpinned the 2024 refinancing either failed to reach commercialization or ramped more slowly than planned, which matters because those initiatives were part of the case creditors underwrote in 2024. Capital allocation compounded the problem: deferred plant maintenance created operating difficulties across facilities, a complex organizational structure reduced efficiency, and the leverage itself pushed management toward high-impact, hard-to-execute projects while the core business went under-invested. Inflation hit the supply chain on top of all of it.

Management responded on the operating side. A new chief executive officer and a chief transformation officer were appointed in October 2025, with Alvarez & Marsal supporting both roles. Project Horizon began in late 2025. In March 2026 the company collapsed nine business units into the two primary groups it reports today, streamlining hierarchy, centralizing operations management, and driving headcount reductions worth approximately $9 million of annual savings. The full slate of performance improvement initiatives is forecast to generate approximately $40 million of Adjusted EBITDA improvement by 2030.

Forty million dollars of run-rate EBITDA improvement by 2030 is real work. It is also not a solution to $320 million of annual debt service. The declaration says as much: the cost measures have generated and will continue to generate meaningful savings, and they are insufficient to support the existing capital structure.

Six funded debt instruments, five of them secured across three lien tiers, all of them dated or amended on the same day in September 2024. The uniformity of the maturity profile is not a coincidence. It is the signature of a comprehensive liability management transaction.

Note the PIK toggles. The First Lien Term Loans, First Lien Notes, and Second Lien Notes each allowed the company to elect partial payment in kind, and each of those elections expires on September 30, 2026. On that date, interest across those three instruments must be paid entirely in cash. The incremental annual cash burden is approximately $110 million, layered onto forecast 2026 debt service of approximately $320 million, itself up from $297 million in 2025.

The equity above that stack is closely held. Approximately 450,000 shares of Preferred A-1 Stock sit with third-party investors, while the vast majority of the approximately 96,000 shares of Senior Common Stock and 803,000 shares of Preferred A Stock are held by sponsor-affiliated investment vehicles. Roughly 300 shares of Class A Common Stock are held by family members of a former employee. None of it is exchange-listed.

Every fact in the capital structure table traces back to a single transaction. In 2023, facing a 2025 maturity on its then-existing first lien facility, Alkegen engaged Kirkland & Ellis and Centerview Partners. A marketing process that began in February 2024 and included both existing creditors and third-party financing sources closed on September 30, 2024 as a three-part transaction.

The revolver was uptiered to a superpriority position in exchange for a sixteen-month maturity extension. The existing first lien term loan was refinanced in cash through the new Senior Facilities. And holders of a majority of the existing secured and unsecured notes exchanged into the newly issued Second Lien Notes, consenting along the way to strip substantially all affirmative and negative covenants, eliminate events of default, release guarantees, and reprice the lien priority of the Third Lien Notes from first priority to third.

By the standard metrics of a liability management exercise, that is a well-executed deal. It cleared the near-term maturity wall, captured discount, brought in new money, and added a two-year PIK option that reduced near-term cash interest. It was approved by a special committee of the boards comprising a single disinterested director appointed on September 10, 2024, who resigned following the closing.

It also did not deleverage the company. That is the sentence the declaration returns to, and it is the sentence that explains the 2026 filing. The 2024 refinancing assumed a recovery in petrochemical, steel, aluminum, automotive, and general industrial demand beginning in 2025. That recovery did not arrive. The growth initiatives underwritten in the deal did not commercialize on schedule. And the PIK option that made the arithmetic work in 2025 and 2026 was always going to expire in September 2026 and hand back roughly $110 million of annual cash interest.

The waivers tell you when the bridge started failing. On May 18, 2026, first lien Required Lenders and Required Holders granted a limited waiver of the requirement to deliver an unqualified audit opinion and financial statements for fiscal year 2025 and the first quarter of 2026, along with any resulting default. The same day, certain Second Lien Noteholders signed a forbearance covering the same delivery failures. On June 30, both were extended to July 30, 2026. The petitions were filed on July 26, four days before that runway ended.

The most consequential thing the 2024 refinancing did for this case has nothing to do with pricing or maturities. It has to do with the two intercreditor agreements executed on September 30, 2024, which together shaped the DIP and narrowed the objections available to junior creditors.

The Senior Intercreditor Agreement

The Senior Intercreditor Agreement governs relative priority among the RCF Lenders, the First Lien Term Loan Lenders, and the First Lien Noteholders. The remedies waterfall runs first to non-principal revolver obligations, second to revolver principal, third to the First Lien Term Loans and First Lien Notes pro rata, and fourth into the Junior Intercreditor Agreement. Embedded in it is a provision that governs precisely this scenario: if any DIP financing is secured by liens pari passu with or senior to the liens securing the RCF Obligations, the RCF must either be rolled up into the DIP with senior priority or repaid in full in cash upon interim funding.

Look at the use of proceeds for the DIP Facility. First on the list is paying off the First Lien Revolving Loan Claims in full. That is not a business judgment the debtors exercised at the last minute. It is a contractual output of a document signed 22 months before the petition date.

The Junior Intercreditor Agreement

The Junior Intercreditor Agreement subordinates the Second Lien Notes to the Senior Facilities and the Third Lien Notes to the Second Lien Notes. It also contains the covenant that matters most here: if the Senior Secured Parties consent to, or do not object to, DIP financing, the Second Lien Noteholders and Third Lien Noteholders agree not to object to that financing and to subordinate their liens on the same basis.

Combine that with the priming structure and you get the defining feature of this case. Approximately $1.07 billion of Second Lien, Third Lien, and Unsecured Notes claims sits behind a first lien tranche taking substantially all of the reorganized equity, and the holders of that junior debt contractually gave up their ability to fight the financing that gets the case there.

This is the practical lesson for anyone underwriting or documenting a liability management transaction. The pricing grid and the maturity schedule get the attention in the term sheet. The intercreditor provisions govern what happens when the trade fails, and they do it without further negotiation.

The debtors entered these cases with approximately $35 million of unrestricted cash, which is not enough to run a business with 50 plants in 23 countries through even a 45-day case. The $630 million DIP Facility solves for that and for the exit at the same time.

There is a participation mechanic worth flagging. Any party that wants to become a DIP Lender must sign the RSA and irrevocably commit to subscribe for its pro rata share of the Equity Rights Offering. The DIP and the equity are a single package. You do not get to lend into the case without underwriting the reorganized equity, and no assignment of a DIP commitment relieves a lender of the rights offering obligation unless the transferee expressly assumes it.

The exit is sized to match. A $400 million senior secured first lien term facility funds on the effective date, comprising $85 million distributed pro rata to holders of Allowed First Lien Claims and $315 million refinancing the new-money DIP on a cashless, dollar-for-dollar basis. Five-year term, one percent annual amortization, no financial covenants, no junior lien tranche. The reorganized company may also seek a new revolving facility of up to $150 million.

The plan runs nine classes, and only two of them vote. Everything below the first lien is either unimpaired and presumed to accept, or wiped out and deemed to reject.

The Equity Stack

Class 3 receives 100 percent of the New Equity Interests, and then a series of dilution mechanics carve that number down. The Equity Rights Offering allows holders of Allowed First Lien Claims to purchase their pro rata share of 59 percent of the New Equity Interests for up to $335 million, with the final rights offering amount set equal to the outstanding principal and accrued interest on the Roll-Up DIP Claims as of the effective date. Backstop Parties receive an Equity Backstop Premium worth 3 percent of the New Equity Interests. A management incentive plan takes up to 10 percent on a fully diluted basis.

That third gauge is the one to sit with. Class 4 combines First Lien Deficiency Claims, Second Lien Notes Claims, Third Lien Notes Claims, and Unsecured Notes Claims, which means roughly $1.07 billion of junior funded debt principal before any deficiency claim is added. Its recovery is 1.0 percent of the New Equity Interests plus five-year warrants on 5 percent of the equity, struck at an implied total equity value of $2.046 billion, exercisable only on customary liquidity events, with customary anti-dilution protection and no Black-Scholes protection.

Price the warrants against the deal itself. The Equity Rights Offering asks holders of Allowed First Lien Claims to pay up to $335 million for 59 percent of the New Equity Interests, which implies a total equity value of roughly $568 million on those terms. The Class 4 warrants do not come into the money until total equity value reaches $2.046 billion. One caveat on that arithmetic: the final Rights Offering Amount is set by reference to the outstanding Roll-Up DIP Claims rather than to an independent valuation, and the declaration does not include a valuation analysis. The disclosure statement is where that question gets answered.

One timing detail deserves attention. The RSA was executed on July 19, 2026. An amendment dated July 24, five days later and two days before the petitions, added the Unsecured Funded Debt Equity Interests, the 1.0 percent equity slice, to Class 4 treatment. Under the original term sheet, Class 4 received warrants only. Class 4 is one of the two voting classes.

The governance record in this case was built deliberately, and it was built before the negotiations concluded rather than after.

On March 10, 2026, two experienced disinterested directors were appointed to the boards of Ulysses Parent and ASP Unifrax, and a 2026 Special Committee comprising those directors was established the same day. The committee received exclusive authority over Conflicts Matters, defined as any matter where a conflict exists or is reasonably likely to exist between the company and its Related Parties, plus authority to review any strategic transaction. On April 16, 2026, at the sole direction of the disinterested directors, Katten Muchin Rosenman was retained as independent counsel to assist with an Independent Investigation into the merits and potential value of any claims the company might hold relating to Conflicts Matters.

That investigation began in April 2026 and, per the declaration, remains ongoing as of the petition date. The committee anticipates concluding it during these chapter 11 cases. The committee ultimately recommended that the company enter into the RSA, incur the DIP financing, and file.

The release construct is opt-out. Releasing Parties include all holders of claims that vote to accept the plan, all holders deemed to accept who do not affirmatively check the opt-out box on the applicable notice of non-voting status, all holders who abstain and do not opt out on the ballot, and all holders deemed to reject who do not opt out. Released Parties include the debtors, the reorganized debtors, agents and trustees, the DIP parties, the RCF Lenders, the Exit Facility parties, the Consenting Creditors, and the Sponsor, in each case unless that party opts out or timely objects, whether formally on the docket or informally in writing. Exculpated Parties are limited to the debtors, the reorganized debtors, and their directors and officers.

One limit on what the record supports. The declaration describes the Independent Investigation only by reference to Conflicts Matters, defined by the relationship between the company and its Related Parties. It does not identify which transactions or claims are under review, and it does not connect the investigation to the 2024 refinancing. What the filing establishes is the scope of the delegation and the fact that the work is unfinished.

The Reorganized Board

Post-emergence governance is set out in the Governance Term Sheet. New Alkegen would be a private entity with a single class of common equity and a seven-member board, with the jurisdiction and form of entity left bracketed in the term sheet pending tax and regulatory input: one manager designated by each of three Consenting First Lien Creditors that hold at least 15 percent of the outstanding equity, three independent managers designated by holders of a majority of the equity, and the chief executive officer. Each designating equityholder is also entitled to a non-voting observer. Control of the reorganized company sits with the same creditor group that funded the 2024 refinancing.

The debtors filed thirteen first day motions. One of the more consequential asks for authority to pay all trade claims in the ordinary course rather than to run a limited critical vendor program.

The rationale is geographic. Approximately 40 percent of the debtors’ vendor base consists of foreign trade creditors who may disregard the automatic stay and pursue remedies in non-U.S. jurisdictions, and the company sources highly specialized inputs that are difficult or impossible to replace on a useful timeline. The declaration is direct about the second reason: leaving trade claims and other non-funded debt claims unaffected was required by the Ad Hoc Group as a condition of its support for the RSA and the DIP Facility.

That is worth understanding as a value calculation rather than a courtesy. The creditors receiving substantially all of the reorganized equity are the ones insisting that trade be paid in full, because they are buying a going concern with 50 plants across 23 countries and a supply chain that does not survive a two-week payment freeze.

The same logic drives a companion request to restate and enforce the worldwide automatic stay, the anti-discrimination provisions, and the ipso facto protections. With entities incorporated in 24 countries and foreign governmental units able to condition licenses and permits, a domestic order confirming the extraterritorial reach of the stay is a practical necessity rather than a formality.

The section 163(j) carryforward figure is the one to note. Approximately $1 billion of disallowed interest carryforwards is a direct artifact of the capital structure that produced this case, and preserving it is a meaningful component of the reorganized company’s value.

If the plan is confirmed as proposed, the outcomes sort cleanly by where a stakeholder sat in the September 2024 documents.

What to Watch

Three things will determine whether this case matches its schedule. The first is the Independent Investigation. It is open, it is being conducted by independent counsel at the direction of two disinterested directors, and the plan asks the court to approve releases covering the Sponsor. How and when that investigation resolves is the variable the milestones cannot control.

The second is Class 4. Approximately $1.07 billion of junior funded debt principal is voting on a plan that gives it 1.0 percent of the equity and warrants struck well above the value implied by the rights offering. Second Lien support runs at 80 percent, and the Junior Intercreditor Agreement forecloses a DIP objection, but it does not foreclose a confirmation objection on valuation or best interests grounds.

The third is regulatory. The effective date milestone contains an automatic 60-day extension available solely for outstanding regulatory approvals. The debtors have entities incorporated in 24 countries and hold a controlling stake in a Chinese listed company, and the declaration does not identify which approvals are outstanding or when they are expected.

None of this is final. The voting deadline has not passed, the disclosure statement has not been approved, objection deadlines remain open, and the plan may be amended. What the first day record establishes is the shape of the deal and the assumptions behind it, which is precisely what makes it worth reading closely at the front of a case rather than at the end.