IPIC iPic Entertainment Inc

Item 1.03 Bankruptcy or Receivership.

On August 5, 2019 (the “Petition Date”), iPic Entertainment Inc. (“iPic” or the “Company”) and certain of its wholly-owned subsidiaries (together with iPic, the “Debtors”) filed voluntary petitions (collectively, the “Bankruptcy Petitions”) under 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 “Court”), for which joint administration has been sought (the “Chapter 11 Cases”), under the caption In re: iPic-Gold Class Entertainment, LLC, et al Case No. 19-11737. Each Debtor will continue to operate its business as a “debtor in possession” under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Court. The Debtors expect to continue their operations during the pendency of the Chapter 11 Cases, pending the sale of their assets in one or more going concern sales pursuant to a competitive bidding and auction process. To maintain and continue operations during the Chapter 11 Cases, the Debtors have filed a variety of “first day” motions seeking approval from the Court for various forms of customary relief.

To ensure access to sufficient liquidity throughout their Chapter 11 Cases, the Debtors filed a motion seeking authority to execute, enter into and perform under a debtor-in-possession financing facility (the “DIP Facility”) on the terms set forth in that certain Debtor-In-Possession Loan and Security Agreement (“DIP Credit Agreement”), by and among the Teachers’ Retirement System of Alabama (“TRSA”), the Employees’ Retirement System of Alabama, (“ERSA,” together with TRSA, “RSA”), as lenders, and the Debtors, as borrower, a form of which DIP Credit Agreement was filed with the Court on the Petition Date. The DIP Credit Agreement provides for new revolving loans in an amount up to $16 million. The proceeds of the DIP Facility will be used to pay (a) postpetition operating expenses and other working capital requirements of the Debtors, (b) costs and expenses incurred in administering the bankruptcy cases; and (c) interest and fees (including professional fees and expenses) due under the DIP Facility.

The DIP Facility and the loans thereunder will become available upon the satisfaction of customary conditions precedent thereto, including the entry of an order of the Court approving the DIP Facility.

The maturity date of the loans to be made under the DIP Facility is the earliest to occur of: (i) the expiration of ninety (90) days after the Petition Date, (ii) the date upon which RSA elects to terminate availability of the DIP Facility and accelerate the obligations thereunder following the occurrence and continuance of an event of default, and (iii) the date that a sale pursuant to Section 363 of the Bankruptcy Code shall be consummated pursuant to a sale order to the winning bidder, or such later date as to which RSA may expressly agree in writing in its sole discretion. The outstanding principal on the loans under the DIP Facility will bear interest at a rate of 10.5% per annum, payable monthly, and a 2.0% commitment fee will be payable upon entry of an interim order approving the DIP Facility. The DIP Facility is subject to certain customary affirmative and negative covenants and events of default as set forth in the DIP Credit Agreement.