Paragon Industries, Inc., an Oklahoma-based steel pipe manufacturer operating in Chapter 11 bankruptcy, has filed a motion seeking court approval for the sale of substantially all of its assets to Integrated Utility Services LLC for $40 million. The motion, filed on February 26, 2026, in the United States Bankruptcy Court for the Eastern District of Oklahoma, follows a nearly 17-hour auction and a months-long marketing process that drew interest from hundreds of prospective buyers.
Company Background and Business Operations
Paragon Industries operates steel pipe manufacturing facilities in Oklahoma. The company filed a voluntary Chapter 11 petition on May 21, 2025, and has continued to operate its business as a debtor-in-possession. No trustee or examiner has been appointed in the case.
The company entered into a Binding Plan Support Agreement in September 2025, which was approved by the Bankruptcy Court on September 10, 2025. The debtor holds various environmental permits from the Oklahoma Department of Environmental Quality, including an air quality permit, a stormwater discharge authorization, and an industrial wastewater treatment permit.
Prior to the bankruptcy filing, Paragon Industries was the subject of at least 16 lawsuits across multiple jurisdictions, including actions brought by creditors such as Amarillo National Bank, Byline Bank, and Nucor Corporation, among others.
The Marketing and Sale Process
The Bankruptcy Court approved the employment of Three Keys Capital Advisors II LLC as the debtor's investment banker on October 22, 2025. The debtor filed its bidding procedures motion the following day, and the court entered the bidding procedures order on November 25, 2025.
Three Keys conducted an extensive marketing process. The investment banker contacted 287 prospective bidders, executed confidentiality agreements with 65 of those parties, and facilitated site visits for 17 potential bidders at the debtor's facilities. The process yielded two stalking horse proposals and nine bids.
The sale process timeline was modified four times between December 2025 and February 2026, with the bid deadline ultimately set for February 10, 2026.
The Auction
The auction took place on February 19, 2026, at the Dallas offices of McDermott Will & Schulte LLP. Beginning at approximately 10:00 a.m. Central Time, the auction continued through the early morning hours of February 20, 2026, concluding at approximately 2:38 a.m. — a duration of nearly 17 hours.
Seven entities participated as bidders: Integrated Utility Services LLC; Gordon Brothers Commercial & Industrial, LLC; Maynards Industries USA, LLC; McIntosh Corporation; PI Acquisition, LLC; Byline Bank; and Hydroline Distribution, LLC.
One additional entity, Triforged Industries, LLC, had originally qualified as a bidder after submitting a $35 million all-cash bid with no contingencies. However, Triforged was excluded from the auction for failing to provide a good faith deposit prior to the start of bidding. According to the motion, Triforged is controlled by an individual described as an insider of the debtor due to a close familiar relation with the debtor's former chief executive officer. The motion notes that multiple interested parties had expressed concern about Triforged's involvement in the auction process. Apart from an objection lodged by counsel to Triforged regarding its exclusion, no other objections were raised at the auction.
Integrated Utility Services was selected as the successful bidder with a bid of $40 million. The second-highest bid came from PI Acquisition at $33.5 million. However, the debtor determined in its business judgment that the PI Acquisition bid was not of sufficient value to serve as a backup bid. In the event the successful bidder cannot close, the debtor has elected to conduct a remarketing process using funds from the $2.5 million deposit that the purchaser would forfeit.
Terms of the Asset Purchase Agreement
The debtor and Integrated Utility Services entered into an Asset Purchase Agreement dated February 23, 2026. Key terms include:
Purchase Price: $40,000,000
Deposit: $2,500,000, of which $480,000 was deposited on February 13, 2026, as an auction deposit. The remaining $2,020,000 is to be wired to complete the deposit obligation. Upon court approval of the sale, the deposit is to be released to the debtor in monthly installments of $500,000 for use toward ongoing operating expenses.
Closing Date: The later of 60 days from entry of the sale order or the second business day after all closing conditions are satisfied. The purchaser may extend the initial closing deadline by 30 days, for a total of 90 days from entry of the sale order.
Financing Contingency: The closing is contingent upon the purchaser obtaining financing on commercially reasonable terms sufficient to fund the purchase price. If the purchaser fails to close due to an inability to obtain financing, the debtor is entitled to retain the $2.5 million deposit.
Expense Reimbursement: Up to $125,000 for the purchaser's reasonable expenses, payable only if the agreement is terminated due to a competing transaction, treated as a superpriority administrative expense.
Purchased and Excluded Assets
The sale encompasses substantially all of the debtor's assets used in connection with its steel pipe manufacturing business, including equipment, machinery, real property, leasehold interests, intellectual property, assumed contracts, inventory, information technology assets, and goodwill.
The purchase price is allocated as follows: equipment accounts for approximately 90 percent ($35.9 million), buildings for approximately 6 percent ($2.5 million), and land for approximately 4 percent ($1.6 million).
Excluded from the sale are the debtor's cash and cash balances, accounts receivable, benefit plans, insurance policies, causes of action (including Chapter 5 avoidance actions), and certain other assets. The sale is structured on an "as-is, where-is" basis with extensive disclaimers regarding environmental conditions at the manufacturing facilities.
The Port of Muskogee Dispute
The transaction involves a property dispute at the Port of Muskogee. The debtor operates on approximately 2.21 acres at the port under a sublease arrangement with Johnston's Port 33, Inc., which in turn leases from the Muskogee City-County Port Authority.
The port authority has asserted ownership of assets located at the port property, and both the port authority and Johnston's Port 33 have challenged the validity of the sublease. Assets at the port property that are subject to a bona fide dispute as of the closing date are excluded from the sale. The debtor maintains that it owns the steel slitter and associated equipment located at the port and has reserved all rights to adjudicate its ownership interest.
The Asset Purchase Agreement includes a covenant requiring both parties to use commercially reasonable efforts during the interim period to renegotiate the port lease arrangements, with the purchaser's satisfaction conditioned on acquiring the coil slitting equipment located on the port property.
Legal Arguments in Support of the Sale
The debtor advances several legal arguments in support of the proposed sale. The motion argues that a sound business purpose exists for the sale because the court-approved auction process exposed the assets to the market, creating a presumption that a fair price was obtained. The debtor cites case law holding that the paramount goal in any sale of estate property is to maximize proceeds for the bankruptcy estate.
The debtor seeks approval of the sale free and clear of liens under Bankruptcy Code Section 363(f), noting that no lienholders objected to the bidding procedures or the sale. The motion also requests a finding that the purchaser acted in good faith under Section 363(m), noting that the APA was an arm's-length transaction resulting from a competitive auction process.
The debtor further requests a waiver of the 14-day stay under Bankruptcy Rule 6004(h), arguing that any delay in closing would push the case closer to administrative insolvency and substantially lessen the chances that the transaction closes.
Key Dates and Timeline
- May 21, 2025: Chapter 11 petition filed
- September 5, 2025: Binding Plan Support Agreement Term Sheet dated
- October 22, 2025: Court approved employment of investment banker
- November 25, 2025: Bidding procedures order entered
- December 22, 2025: Notice to contract parties regarding potential assumption filed
- February 10, 2026: Bid deadline
- February 19, 2026: Auction held
- February 26, 2026: Sale motion filed; hearing on sale motion
- April 20, 2026: Anticipated closing date (subject to extension)
Professional Representation
The debtor is represented by Phillips Murrah P.C. of Oklahoma City, Oklahoma. The purchaser is represented by GableGotwals of Tulsa, Oklahoma.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 75 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.