TRM NRE Holding LLC and its affiliated debtor, TRM NRE Acquisition LLC, filed a motion on May 12, 2026 in the United States Bankruptcy Court for the District of Delaware seeking authority to obtain a $3 million junior debtor-in-possession revolving loan facility from TRM Equity Fund II LP. The Debtors assert they will run out of cash within two weeks without postpetition financing. The motion, docketed as Document 79 in Case No. 26-10568 (KBO), also requests authority to continue using the Prepetition Secured Parties' Cash Collateral on an interim basis.

The DIP Lender, TRM Equity Fund II LP, is not a third party. It is the equity sponsor and the holder of an existing $13.1 million subordinated note against the same borrower. This filing reflects a financing structure in which the party already deepest in the capital stack agrees to put $3 million of new money behind $20.2 million of senior debt, without rolling up its own subordinated position.

The Debtors are headquartered at 908 Shawnee Street, Mount Vernon, Illinois. TRM NRE Acquisition LLC operates the business identified in the Approved Budget caption as National Railway Equipment Company. The business includes locomotive and railway equipment assets together with a marine business and inventory, machinery, and equipment held at the Debtors' Paducah, Kentucky facility. The Approved Budget contemplates that the marine business and a portion of the inventory and equipment would be marketed as non-core assets if the Junior DIP Facility is repaid through asset sales rather than plan exit financing.

The Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on April 21, 2026 and are operating as debtors in possession under Sections 1107(a) and 1108. No trustee, examiner, or official committee of unsecured creditors had been appointed as of the May 12, 2026 motion filing.

The prepetition capital structure has three distinct layers. The senior layer is a three-tranche secured credit facility from Great Rock Capital Partners. The middle layer is a subordinated note in favor of the equity sponsor. The bottom layer is a small unsecured note in favor of the original sellers plus general trade obligations.

The senior layer was entered into on March 3, 2025 with TRM NRE Acquisition LLC as borrower, TRM NRE Holding LLC as guarantor, Great Rock Capital Partners Management, LLC as administrative agent, and GRC SPV Investments, LLC as sole lender. The facility consists of a $15 million revolving credit facility with availability tied to eligible accounts receivable and inventory, a term loan with an original principal of approximately $11.7 million backed by eligible machinery, equipment, and locomotives, and an uncommitted delayed draw term loan of up to $3 million that has never been drawn. As additional credit support, the Sponsor funded $1.5 million into an escrow account pursuant to an Escrow Agreement dated April 7, 2025 among the Sponsor, the prepetition agent, and Wilmington Trust. The Debtors contributed an additional $500,000. Approximately $2.0 million was held in escrow as of the petition date.

The middle layer is an Amended and Restated Subordinated Note dated March 3, 2025 in favor of TRM Equity Fund II LP, the equity sponsor. The note is fully subordinated to the Prepetition Secured Obligations under a Subordination Agreement of the same date, and the Sponsor is barred from taking any enforcement action until the senior obligations are paid in full.

The unsecured layer is small. It consists of approximately $3 million in general trade obligations and an Unsecured Promissory Note dated May 2, 2023 originally issued to the sellers of the business in the original principal amount of $360,000, bearing interest at 5.0 percent compounded annually. As of the petition date, the outstanding balance was $120,000 with a balloon payment due May 2, 2026, which coincided almost exactly with the timing of the DIP financing motion.

The Debtors entered Chapter 11 with $86,570 of cash on hand. The Approved Budget projects gross weekly receipts averaging $1.2 million, but operating disbursements alone consume most of that, before professional fees and other bankruptcy-related costs. The first Interim Cash Collateral Order, entered April 29, 2026, authorized consensual use of Cash Collateral through May 8. The Prepetition Agent consented to two short-term extensions, first to May 13 and then to May 14, while negotiations on a longer-term framework continued.

The Debtors assert that without immediate access to postpetition financing, they will run out of cash within two weeks. Cash Collateral alone is insufficient to fund both administration of the Chapter 11 cases and ongoing operational needs, including payroll, insurance, taxes, and timely completion of key customer projects and the associated receivables. The Junior DIP Facility, together with continued Cash Collateral use, is presented as the only path that preserves the going-concern value of the business while administering the case.

The Junior DIP Facility is structured as a $3 million junior delayed draw revolving loan with $2 million available on entry of the interim order and the remaining $1 million unlocked on entry of the final order. The facility is 100 percent new money. There is no roll-up, refinance, or other satisfaction of the existing Sponsor Subordinated Note. The DIP liens sit at 1.5 priority, junior to the prepetition liens and the adequate protection liens but senior to the Sponsor's existing subordinated lien on Acquisition LLC's assets, which the Sponsor (in its DIP Lender capacity) has agreed to subordinate.

The repayment structure is the part of the term sheet that does the most strategic work. After the prepetition credit facility is repaid in full, the DIP facility is repaid through weekly cash sweeps of all cash on hand in excess of $1.00 million, together with proceeds from sales of non-core assets, including the marine business, inventory, machinery and equipment, and assets located at the Paducah, Kentucky facility. Repaid amounts may be reborrowed during the Chapter 11 cases. The structure preserves operating flexibility while ensuring that any liquidity generated above a thin working capital cushion flows to the DIP first.

The proposed priority structure varies by the type of collateral or claim involved. On DIP Collateral, the carve-out leads, followed by permitted prior liens, prepetition liens, adequate protection liens, and then DIP liens. On unencumbered property, the carve-out leads, followed by adequate protection liens and then DIP liens. On administrative claims, the carve-out leads, followed by adequate protection claims and then DIP superpriority claims under Section 364(c)(1).

Subject to entry of a final order, the DIP Lender and Prepetition Secured Parties would receive waivers of the estate's rights to surcharge collateral under Section 506(c), to invoke the equities-of-the-case exception under Section 552(b), and to seek marshaling of assets. Subject to entry of a final order, the DIP Liens would also reach the proceeds of avoidance actions under Sections 502(d), 544, 545, 547, 548, 549, and 550.

Following the April 29, 2026 First Day Hearing, the Debtors' independent director and chief restructuring officer solicited postpetition financing proposals from both the Sponsor and the Prepetition Secured Parties, and separately from third-party lenders outside the capital structure. The motion states that no third-party lender was willing to fund the Debtors on a junior basis on the timeline required. The Sponsor's proposal was selected as the best available alternative based on the combination of runway, economics, covenants, operational viability, and strategic alignment, with all interest and fees paid in kind and certain fees waivable depending on the ultimate restructuring outcome.

The Debtors invoke the business judgment standard under Section 364, citing the line of Delaware decisions including In re L.A. Dodgers LLC, In re Trans World Airlines, In re Exide Technologies, and In re ION Media Networks, which collectively give debtors substantial deference in selecting a postpetition lender and weighing non-economic factors such as timing, certainty, and likelihood of successful reorganization. The Debtors then argue that the facility satisfies the three-part test for secured credit under Section 364(c): the inability to obtain unsecured credit, the necessity of the credit to preserve estate assets, and the fairness and reasonableness of the terms.

The Approved Budget covers the 13-week period from May 15, 2026 through August 7, 2026. Receipts are forecast to substantially exceed disbursements over the period, with the ending cash balance growing from $86,570 to roughly $4.1 million. The DIP draws are concentrated at the front of the budget: $2 million in week one and $1 million in week two, with no further draws contemplated thereafter.

Permitted variances under the Term Sheet allow up to 20 percent unfavorable deviation on both total operating receipts and total operating disbursements on a rolling four-week testing basis. The variance test is one of the principal covenants that determines whether the Debtors remain in compliance during the case.

The Junior DIP Facility imposes a series of binding case milestones. The path is calibrated to either a confirmable plan that repays the Prepetition Secured Obligations in full or, if that path fails to materialize, a Section 363/1123(b)(4) sale process. The first divergence point is September 3, 2026: if the disclosure statement order is not entered by that date, the Debtors must promptly commence the sale process.

At the time of the motion's filing, the Prepetition Secured Parties had not yet confirmed their consent to continued Cash Collateral use. The parties were described in the filing as engaged in active, good faith negotiations. The Prepetition Agent had consented to successive short-term extensions of the interim Cash Collateral period, most recently through May 14, 2026. The Debtors indicated they would present evidence for nonconsensual Cash Collateral use under Section 363(c)(2)(B) if consent was not obtained before the hearing.

As adequate protection for any diminution in value of the prepetition collateral, the proposed order would grant the Prepetition Secured Parties replacement liens on the DIP Collateral, super-priority administrative expense claims under Section 507(b), and payment of reasonable documented fees of their advisors. The carve-out structure has two tiers: pre-default, all statutory fees plus all professional fees included in the Approved Budget are protected; post-default, professional fees are capped at $250,000.

Any challenge to the validity, perfection, priority, or enforceability of the prepetition liens or obligations must be brought by the earlier of (a) plan confirmation, (b) entry of a Section 363 sale order, or (c) 75 calendar days from the entry of the Interim Order. Up to $25,000 in total funding, split evenly between the DIP facility and the Prepetition Secured Parties' Cash Collateral, is available for a creditors' committee, if appointed, to investigate the prepetition obligations and liens prior to the expiration of the Challenge Period.

The court is scheduled to hold a final hearing on the DIP motion on June 5, 2026, at 9:00 a.m. prevailing Eastern Time. Objections must be filed and received by counsel no later than May 29, 2026, at 4:00 p.m. prevailing Eastern Time. Notice of the motion was provided to the Office of the United States Trustee for Region 3, the United States Attorney for the District of Delaware, the holders of the thirty largest unsecured claims against the Debtors, counsel to the Prepetition Secured Parties, counsel to the DIP Lender, the Internal Revenue Service, the Attorney General for the State of Delaware, any official committee of unsecured creditors appointed in the cases, and any party that requested notice under Bankruptcy Rule 2002.

The matter is pending before the United States Bankruptcy Court for the District of Delaware as In re: TRM NRE Holding LLC, et al., Case No. 26-10568 (KBO), jointly administered. The Junior DIP Financing Motion was filed as Docket No. 79 on May 12, 2026, with the Proposed Interim Order, DIP Term Sheet, and 13-week Approved Budget attached as Exhibits A, 1, and 2 respectively, spanning 104 pages in total.