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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                          to                         

Commission file number 001-37907
https://cdn.kscope.io/7f4ddb11df228252f910c8c0533c6157-xog-20200930_g1.jpg
EXTRACTION OIL & GAS, INC.
(Exact name of registrant as specified in its charter)

Delaware46-1473923
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
370 17th Street
Suite 5300
Denver,Colorado80202
(Address of principal executive offices)
(720) 557-8300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated Filer
Non-Accelerated FilerSmaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

The total number of shares of common stock, par value $0.01 per share, outstanding as of November 6, 2020 was 138,371,578.



Table of Contents
EXTRACTION OIL & GAS, INC.
TABLE OF CONTENTS

Page
PART I—FINANCIAL INFORMATION

1

Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
EXTRACTION OIL & GAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Debtor-In-Possession)
(Unaudited)
September 30,
2020
December 31,
2019
ASSETS
Current Assets:
Cash and cash equivalents$121,165 $32,382 
Accounts receivable, net
Trade53,485 32,009 
Oil, natural gas and NGL sales54,349 105,103 
Inventory, prepaid expenses and other48,951 36,702 
Commodity derivative asset32,625 17,554 
Total Current Assets310,575 223,750 
Property and Equipment (successful efforts method), at cost:
Proved oil and gas properties4,718,471 4,530,934 
Unproved oil and gas properties334,971 524,214 
Wells in progress140,290 149,733 
Less: accumulated depletion, depreciation, amortization and impairment charges(3,218,591)(2,985,983)
Net oil and gas properties1,975,141 2,218,898 
Gathering systems and facilities, net of accumulated depreciation 315,777 
Other property and equipment, net of accumulated depreciation71,379 72,542 
Net Property and Equipment2,046,520 2,607,217 
Non-Current Assets:
Commodity derivative asset 13,229 
Other non-current assets13,476 82,761 
Total Non-Current Assets13,476 95,990 
Total Assets$2,370,571 $2,926,957 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities$38,481 $190,864 
Revenue payable38,544 108,493 
Production taxes payable2,503 115,489 
Commodity derivative liability676 1,998 
Accrued interest payable5,369 20,625 
Asset retirement obligations 27,058 
DIP Credit Facility—Note 6110,000  
Credit Facility—Note 6453,746  
Total Current Liabilities649,319 464,527 
Non-Current Liabilities:
Credit Facility 470,000 
Senior Notes, net of unamortized debt issuance costs 1,085,777 
Production taxes payable17,116 98,740 
Commodity derivative liability 108 
Other non-current liabilities 54,579 
Asset retirement obligations 68,850 
Total Non-Current Liabilities17,116 1,778,054 
Liabilities Subject to Compromise2,109,446  
Total Liabilities2,775,881 2,242,581 
Commitments and Contingencies—Note 14
Series A Convertible Preferred Stock, $0.01 par value; 50,000,000 shares authorized, 185,280 issued and outstanding
189,840 175,639 
Stockholders' Equity (Deficit):
Common stock, $0.01 par value; 900,000,000 share authorized; 138,370,948 and 137,657,922 issued and outstanding, respectively
1,336 1,336 
Treasury stock, at cost, 38,859,078 shares
(170,138)(170,138)
Additional paid-in capital2,140,364 2,156,383 
Accumulated deficit(2,566,712)(1,743,208)
Total Extraction Oil & Gas, Inc. Stockholders' Equity (Deficit)(595,150)244,373 
Noncontrolling interest 264,364 
Total Stockholders' Equity (Deficit)(595,150)508,737 
Total Liabilities and Stockholders' Equity$2,370,571 $2,926,957 
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2

Table of Contents
EXTRACTION OIL & GAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Debtor-In-Possession)
(Unaudited)

For the Three Months Ended September 30,For the Nine Months Ended September 30,
2020201920202019
Revenues:
Oil sales$111,072 $151,042 $271,581 $501,591 
Natural gas sales24,413 16,801 62,734 74,385 
NGL sales22,741 9,099 50,753 44,940 
Gathering and compression  1,473  
Total Revenues158,226 176,942 386,541 620,916 
Operating Expenses:
Lease operating expense12,401 22,979 65,775 68,445 
Midstream operating expenses  3,935  
Transportation and gathering50,166 6,922 99,258 29,142 
Production taxes1,696 9,711 19,828 46,419 
Exploration and abandonment expenses9,762 13,245 184,903 32,725 
Depletion, depreciation, amortization and accretion85,306 114,996 243,977 352,134 
Impairment of long lived assets  1,736 11,233 
Gain on sale of property and equipment (1,011) (1,329)
General and administrative expense11,605 27,445 47,350 85,835 
Other operating expenses9,766  75,549  
Total Operating Expenses180,702 194,287 742,311 624,604 
Operating Loss(22,476)(17,345)(355,770)(3,688)
Other Income (Expense):
Commodity derivative gain (loss)(9,673)87,956 184,041 39,383 
Loss on deconsolidation of Elevation Midstream, LLC  (73,139) 
Reorganization items, net(501,073) (527,992) 
Interest expense(1)(7,388)(23,224)(49,059)(54,791)
Other income3 1,337 615 3,332 
Total Other Income (Expense)(518,131)66,069 (465,534)(12,076)
Income (Loss) Before Income Taxes(540,607)48,724 (821,304)(15,764)
Income tax expense (14,800)(2,200)(900)
Net Income (Loss)$(540,607)$33,924 $(823,504)$(16,664)
Net income attributable to noncontrolling interest 5,776 6,160 13,849 
Net Income (Loss) Attributable to Extraction Oil & Gas, Inc.(540,607)28,148 (829,664)(30,513)
Adjustments to reflect Series A Preferred Stock dividends and accretion of discount(1,865)(4,403)(14,201)(13,079)
Net Income (Loss) Available to Common Shareholders, Basic and Diluted$(542,472)$23,745 $(843,865)$(43,592)
Income (Loss) Per Common Share (Note 13)
Basic and diluted$(3.92)$0.17 $(6.11)$(0.28)
Weighted Average Common Shares Outstanding
Basic and diluted138,348 137,789 138,080 155,847 
(1)Absent the automatic stay described in Note 6—Long-Term Debt, interest expense for the three and nine months ended September 30, 2020 would have been $24.6 million and $69.2 million, respectively.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
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EXTRACTION OIL & GAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Debtor-In-Possession)
(In thousands)
(Unaudited)
For the Nine Months Ended September 30,
20202019
Cash flows from operating activities:
Net loss$(823,504)$(16,664)
Reconciliation of net loss to net cash provided by operating activities:
Depletion, depreciation, amortization and accretion243,977 352,134 
Abandonment and impairment of unproved properties179,022 26,166 
Impairment of long lived assets1,736 11,233 
Gain on sale of property and equipment (319)
Gain on sale of assets of unconsolidated subsidiary (1,010)
Gain on repurchase of 2026 Senior Notes (10,486)
Amortization of debt issuance costs3,345 3,799 
Non-cash lease expense10,549 7,739 
Non-cash reorganization items, net13,398  
Contract asset12,317 22,175 
Commodity derivatives gain(184,041)(39,383)
Settlements on commodity derivatives76,992 (18,527)
Premiums paid on commodity derivatives (2,852)
Earnings in unconsolidated subsidiaries(480)(1,217)
Loss on deconsolidation of Elevation Midstream, LLC73,139  
Distributions from unconsolidated subsidiaries 2,630 
Deferred income tax expense2,200 900 
Stock-based compensation4,462 39,306 
Changes in current assets and liabilities:
Accounts receivable—trade(19,384)(1,395)
Accounts receivable—oil, natural gas and NGL sales50,754 16,293 
Inventory, prepaid expenses and other(26,868)1,078 
Accounts payable and accrued liabilities62,668 (6,469)
Accrued damages for rejected and settled contracts494,398  
Revenue payable(6,986)(21,723)
Production taxes payable(16,311)12,211 
Accrued interest payable16,420 (4,977)
Asset retirement expenditures(18,750)(14,081)
Net cash provided by operating activities149,053 356,561 
Cash flows from investing activities:
Oil and gas property additions(218,382)(526,187)
Sale of property and equipment11,147 41,982 
Gathering systems and facilities additions, net of cost reimbursements4,193 (169,180)
Other property and equipment additions(3,574)(32,575)
Investment in unconsolidated subsidiaries(10,033)(22,487)
Distributions from unconsolidated subsidiary, return of capital 569 
Sale of assets of unconsolidated subsidiary 1,010 
Net cash used in investing activities(216,649)(706,868)
Cash flows from financing activities:
Borrowings under Credit Facility200,500 375,000 
Repayments under Credit Facility(70,000)(110,000)
Borrowings under DIP Credit Facility35,000  
Repurchase of 2026 Senior Notes (39,325)
Repurchase of common stock (137,743)
Payment of employee payroll withholding taxes(120)(1,164)
Dividends on Series A Preferred Stock (8,164)
Debt issuance costs and other financing fees(1,273)(2,055)
Proceeds from issuance of Preferred Units 99,000 
Preferred Unit issuance costs (2,500)
Net cash provided by financing activities164,107 173,049 
Effect of deconsolidation of Elevation Midstream, LLC(7,728) 
Increase (decrease) in cash and cash equivalents88,783 (177,258)
Cash, cash equivalents at beginning of period32,382 234,986 
Cash, cash equivalents at end of the period$121,165 $57,728 
Supplemental cash flow information:
Property and equipment included in accounts payable and accrued liabilities$38,898 $158,178 
Cash paid for interest$34,188 $71,878 
Cash paid for reorganization items, net$10,454 $ 
Accretion of beneficial conversion feature of Series A Preferred Stock$5,452 $4,915 
Preferred Units commitment fees and dividends paid-in-kind$6,160 $13,849 
Series A Preferred Stock dividends paid-in-kind$8,749 $ 
Derivative unwinds decreasing the Credit Facility$96,065 $ 
Draw on letter of credit increasing the Credit Facility$24,311 $ 


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EXTRACTION OIL & GAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS’ EQUITY AND NONCONTROLLING INTEREST
(Debtor-In-Possession)
(In thousands)
(Unaudited)
Common StockTreasury StockAdditional Paid in CapitalAccumulated DeficitExtraction Oil & Gas, Inc. Stockholders' Equity (Deficit)Noncontrolling InterestTotal Stockholders' Equity (Deficit)
SharesAmountSharesAmountAmount
Balance at January 1, 2020176,517 $1,336 38,859 $(170,138)$2,156,383 $(1,743,208)$244,373 $264,364 $508,737 
Preferred Units commitment fees & dividends paid-in-kind— — — — (6,160)— (6,160)6,160 — 
Series A Preferred Stock dividends— — — — (4,748)— (4,748)— (4,748)
Accretion of beneficial conversion feature on Series A Preferred Stock— — — — (1,770)— (1,770)— (1,770)
Restricted stock issued, net of tax withholdings and other234 — — — (35)— (35)— (35)
Net income— — — — — 9,037 9,037 — 9,037 
Effects of deconsolidation of Elevation Midstream, LLC— — — — — — — (270,524)(270,524)
Balance at March 31, 2020176,751 $1,336 38,859 $(170,138)$2,143,670 $(1,734,171)$240,697 $ $240,697 
Stock-based compensation— — — — 2,560 — 2,560 — 2,560 
Series A Preferred Stock dividends— — — — (4,001)— (4,001)— (4,001)
Accretion of beneficial conversion feature on Series A Preferred Stock— — — — (1,817)— (1,817)— (1,817)
Restricted stock issued, net of tax withholdings and other452 — — — (85)— (85)— (85)
Net loss— — — — — (291,934)(291,934)— (291,934)
Balance at June 30, 2020177,203 $1,336 38,859 $(170,138)$2,140,327 $(2,026,105)$(54,580)$ $(54,580)
Stock-based compensation— — — — 1,902 — 1,902 — 1,902 
Accretion of beneficial conversion feature on Series A Preferred Stock— — — — (1,865)— (1,865)— (1,865)
Restricted stock issued, net of tax withholdings and other27 — — —  —  —  
Net loss— — — — — (540,607)(540,607)— (540,607)
Balance at September 30, 2020177,230 $1,336 38,859 $(170,138)$2,140,364 $(2,566,712)$(595,150)$ $(595,150)


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Common StockTreasury StockAdditional Paid in CapitalAccumulated DeficitExtraction Oil & Gas, Inc. Stockholders' EquityNoncontrolling InterestTotal Stockholders' Equity
SharesAmountSharesAmountAmount
Balance at January 1, 2019176,210 $1,678 4,543 $(32,737)$2,153,661 $(375,788)$1,746,814 $147,872 $1,894,686 
Preferred Units issuance costs— — — — — — — (10)(10)
Preferred Units commitment fees & dividends paid-in-kind— — — — (3,975)— (3,975)3,975  
Stock-based compensation — — — 13,008 — 13,008 — 13,008 
Series A Preferred Stock dividends— — — — (2,721)— (2,721)— (2,721)
Accretion of beneficial conversion feature on Series A Preferred Stock— — — — (1,596)— (1,596)— (1,596)
Repurchase of common stock— (77)7,824 (32,135)— — (32,212)— (32,212)
Restricted stock issued, net of tax withholdings270 — — — (454)— (454)— (454)
Net loss— — — —  (94,032)(94,032)— (94,032)
Balance at March 31, 2019176,480 $1,601 12,367$(64,872)$2,157,923 $(469,820)$1,624,832 $151,837 $1,776,669 
Preferred Units issuance costs and discount— — — — — — — 10 10 
Preferred Units commitment fees & dividends paid-in-kind— — — — (4,098)— (4,098)4,098  
Stock-based compensation — — — 14,957 — 14,957 — 14,957 
Series A Preferred Stock dividends— — — — (2,722)— (2,722)— (2,722)
Accretion of beneficial conversion feature on Series A Preferred Stock— — — — (1,637)— (1,637)— (1,637)
Repurchase of common stock— (217)21,685 (84,067)— — (84,284)— (84,284)
Restricted stock issued, net of tax withholdings108 — — — (128)— (128)— (128)
Net income— — — — — 43,444 43,444 — 43,444 
Balance at June 30, 2019176,588 $1,384 34,052$(148,939)$2,164,295 $(426,376)$1,590,364 $155,945 $1,746,309 
Preferred Units issued— — — — — — — 99,000 99,000 
Preferred Units issuance costs— — — — — — — (2,500)(2,500)
Preferred Units commitment fees & dividends paid-in-kind— — — — (5,776)— (5,776)5,776  
Stock-based compensation— — — — 11,387 — 11,387 — 11,387 
Series A Preferred Stock dividends— — — — (2,721)— (2,721)— (2,721)
Accretion of beneficial conversion feature on Series A Preferred Stock— — — — (1,682)— (1,682)— (1,682)
Repurchase of common stock— (48)4,807 (21,199)— — (21,247)— (21,247)
Restricted stock issued, net of tax withholdings344 — — — (582)— (582)— (582)
Net income— — — — — 33,924 33,924 — 33,924 
Balance at September 30, 2019176,932 $1,336 38,859$(170,138)$2,164,921 $(392,452)$1,603,667 $258,221 $1,861,888 


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EXTRACTION OIL & GAS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DEBTOR-IN-POSSESSION)

Note 1—Business and Organization

Extraction Oil & Gas, Inc. (the "Company" or "Extraction") is an independent oil and gas company focused on the acquisition, development and production of oil, natural gas and natural gas liquids (“NGLs”) reserves in the Rocky Mountain region, primarily in the Wattenberg Field of the Denver-Julesburg Basin (the "DJ Basin") of Colorado, as well as the construction and support of midstream assets to gather crude oil, natural gas and water production. As described in the section titled Voluntary Reorganization under Chapter 11 of the Bankruptcy Code below, during the second quarter of 2020, the Company filed for bankruptcy and, as a result, was delisted from the NASDAQ Global Select Market on June 25, 2020 and began trading on the Pink Open Market under the symbol "XOGAQ."

Voluntary Reorganization under Chapter 11 of the Bankruptcy Code

As previously disclosed, on June 14, 2020 (the “Petition Date”), Extraction and its wholly owned subsidiaries (collectively, the “Debtors”), filed voluntary petitions for relief under chapter 11 ("Chapter 11") of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Debtor's Chapter 11 cases (the “Chapter 11 Cases”) are being jointly administered under the caption In re Extraction Oil & Gas., et al. Case No. 20-11548 (CSS).

The Debtors continue to operate their businesses and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Debtors continue to operate as an ongoing business in accordance with the previously approved Bankruptcy Court orders.

The commencement of a voluntary proceeding in bankruptcy constituted an immediate event of default under the Credit Agreement (as defined in Note 6—Long-Term Debt) and the indentures governing the Company’s Senior Notes (as defined below), resulting in the automatic and immediate acceleration of all of the Company’s debt outstanding under the Credit Agreement and Senior Notes. Accordingly, the Company has classified its outstanding Senior Notes debt as liabilities subject to compromise on its condensed consolidated balance sheet as of September 30, 2020. The Credit Facility (as defined in Note 6—Long-Term Debt) was not classified as liabilities subject to compromise because it is fully secured and is expected to be unimpaired. Please refer to Note 4—Liabilities Subject to Compromise for more information. Pursuant to the Bankruptcy Code and as described in Note 6—Long-Term Debt, the filing of the Chapter 11 Cases automatically stayed most actions against the Debtors, including most actions to collect indebtedness incurred prior to the Petition Date or to exercise control over the Debtors’ property.

Restructuring Support Agreement

As previously disclosed, on June 14, 2020, the Company entered into a Restructuring Support Agreement (the “RSA”) with (i) significant holders of its 7.375% senior unsecured notes due 2024 (the “2024 Senior Notes”) issued pursuant to that certain indenture, dated as of August 1, 2017, by and among Extraction, as issuer, certain guarantors party thereto and Wilmington Savings Fund Society, FSB, as trustee (such trustee, “WSFS” and such indenture, the “2024 Senior Notes Indenture”) and (ii) significant holders (such holders, together with the foregoing significant holders under the 2024 Senior Notes, the “Consenting Stakeholders”) of its 5.625% senior unsecured notes due 2026 (the “2026 Senior Notes” and, together with the 2024 Senior Notes, the “Senior Notes”) issued pursuant to that certain indenture, dated as of January 25, 2018, by and among Extraction, the subsidiary guarantors party thereto and WSFS, as trustee (the “2026 Senior Notes Indenture” and, together with the 2024 Senior Notes Indenture, the “Senior Notes Indentures”). The RSA contemplates a financial restructuring of the existing indebtedness of, and equity interests in, the Company to be effectuated through a joint Chapter 11 plan of reorganization (as amended or modified, the “Restructuring Plan”).

Restructuring Plan, Disclosure Statement, and Backstop Commitment Agreement

On July 30, 2020, the Debtors filed a proposed Restructuring Plan and related Disclosure Statement describing the Restructuring Plan and the solicitation of votes to approve the same from certain of the Debtors’ creditors with respect to the Chapter 11 Cases (as amended or modified, the “Disclosure Statement”). Subsequently on October 22,
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2020 and November 5, 2020, the Debtors filed first and second amendments, respectively, to the Disclosure Statement. The hearing to consider approval of the Disclosure Statement was held on November 6, 2020. On November 6, 2020, the Bankruptcy Court approved the adequacy of the Disclosure Statement and the Debtors commenced solicitation process to receive votes on the Restructuring Plan. Pursuant to the terms of the Restructuring Plan and as described in the Disclosure Statement, the Debtors will also commence a rights offering, which has been backstopped by certain holders of the Senior Notes. On November 6, 2020, the Bankruptcy Court approved the Backstop Commitment Agreement, which provides a commitment of $200 million. The hearing on the confirmation of the Restructuring Plan has been scheduled to be held on or before December 21, 2020.

The Restructuring Plan contemplates, among other things, the following:

holders of claims under the Amended and Restated Credit Agreement, dated as of August 16, 2017, by and among Extraction, the subsidiary guarantors party thereto, the lenders from time to time thereto, and Wells Fargo Bank, National Association, as administrative agent (as may be amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”), except to the extent that a Holder of an Allowed Revolving Credit Agreement Claim and the Debtors against which such Allowed Revolving Credit Agreement Claim is asserted agree to a less favorable treatment for such Holder, in full and final satisfaction, settlement, release, and discharge of and in exchange for each Allowed Revolving Credit Agreement Claim, each Holder of such Allowed Revolving Credit Agreement Claim shall receive, either:

(i) if such Holder elects to participate in the Exit RBL Facility on a pro rata basis, determined on a ratable basis with respect to its percentage of the Obligations (as defined in the Revolving Credit Agreement) under the Revolving Credit Agreement, such Holder of an Allowed Revolving Credit Agreement Claim shall become an Exit RBL Facility Lender in accordance with the terms of the Exit RBL Facility Documents; or

(ii) if such Holder does not elect to participate in the Exit RBL Facility as provided above (including by not making any election with respect to the Exit RBL Facility on the ballot), its Pro Rata Share of the Exit Term Loans.

holders of claims under the Senior Notes Indentures (“Senior Notes Claims”) shall receive, in full and final satisfaction, compromise, settlement, release, and discharge of, and in exchange for such Allowed Senior Notes Claim, its Pro Rata share of (A) the Claims Equity Allocation and (B) the Senior Noteholder Subscription Rights;

holders of trade claims shall receive, in full and final satisfaction, compromise, settlement, release, and discharge of, and in exchange for such Allowed Trade Claim, payment in full of such Allowed Trade Claim on the Effective Date or otherwise in the ordinary course of the Debtors’ business;

holders of claims arising from non-funded debt general unsecured obligations shall receive, in full and final satisfaction, compromise, settlement, release, and discharge of, and in exchange for such Allowed General Unsecured Claim, its Pro Rata share of the Claims Equity Allocation;

each Existing Preferred Interest in the Company shall be canceled, released, and extinguished, and will be of no further force or effect, and each Holder of an Allowed Existing Preferred Interest shall receive, in full and final satisfaction, compromise, settlement, release, and discharge of, and in exchange for such Existing Preferred Interest, its Pro Rata share of (A) 50% of the Existing Interests Equity Allocation, (B) the Existing Preferred Interest Subscription Rights, (C) 50% of the Tranche A Warrants, and (D) 50% of the Tranche B Warrants;

each Existing Common Interest in the Company shall be canceled, released, and extinguished, and will be of no further force or effect, and each Holder of an Allowed Existing Common Interest shall receive, in full and final satisfaction, compromise, settlement, release, and discharge of, and in exchange for such Existing Common Interest its Pro Rata share of (A) 50% of the Existing Interests Equity Allocation, (B) the Existing Common Interest Subscription Rights, (C) 50% of the Tranche A Warrants, and (D) 50% of the Tranche B Warrants;

holders of claims arising from the DIP Credit Facility (as defined in Note 6—Long-Term Debt) receiving cash or such other consideration as the DIP Lenders (as defined in Note 6—Long-Term Debt) agree in their sole discretion;

cash payment in full of all administrative expense claims, priority tax claims, other priority claims, and other secured claims or other such treatment rendering such claims unimpaired, including reinstatement pursuant to section 1124 of the Bankruptcy Code or delivery of the collateral securing any such secured claim and payment of any interest required under section 506(b) of the Bankruptcy Code; and
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the Restructuring Plan will provide for the establishment of a post-emergence management incentive plan to be adopted by the New Board (the “Management Incentive Plan”), which may include (a) restricted stock units, options, New Common Shares, or other rights exercisable, exchangeable, or convertible into New Common Shares representing up to 10% of the New Common Shares on a fully diluted and fully distributed basis (the “MIP Equity”) and (b) other terms and conditions customary for similar type equity plans.

Information contained in the Restructuring Plan and the Disclosure Statement is subject to change, whether as a result of amendments or supplements to the Restructuring Plan or Disclosure Statement, third-party actions, or otherwise, and should not be relied upon by any party. There is no guarantee the Restructuring Plan can be i