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Sample decision memo

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This is the Workout Proposal Brief the platform generated from the same evaluation as the full sample audit — Audit No. HS-20260824-3G1N, Rev 3. It does not attempt to reproduce the full analysis. It sets out the debtor’s documented position, the ask by creditor, why the proposal beats each creditor’s bankruptcy alternative, the standstill and its milestones, and what the debtor commits in return — ready to forward for attorney review, with the complete supporting analysis available underneath it.

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HAAIS Restructuring

Decision memo

Derived from Audit No. HS-20260824-3G1N, Rev 3

WORKOUT PROPOSAL BRIEF — Meridian Precision Components LLC

TO
Engagement Committee
FROM
Audit Team
RE
Creditor-Facing Out-of-Court Workout Proposal — Meridian Precision Components LLC (Audit No. HS-20260824-3G1N, Rev 3)
DATE
August 26, 2026
1

Debtor's Documented Position

Meridian holds $184,000 cash (Document 3, as of 8/21/2026, uncorroborated by bank statements) against a $212,000 payroll due 8/28/2026 and a $76,000 Houston Power & Light arrearage with a 9/3/2026 shutoff deadline. Stated debt: $2,850,000 (Document 2, preliminary) — Lone Star Senior Credit Fund $1,425,000 (blanket lien; in default; 8/12/2026 reservation of rights); priority taxes $328,000 (IRS $186,000, Harris County $142,000); unsecured trade/benefit ~$725,000 (Atlas Resin $310,000, Gulf Polymer $215,000, Union H&W Fund $124,000, HP&L $76,000); lease arrearages $221,000 (North Freeway) and $151,000 (Torque Capital). Red Mesa's uptier challenge (~$850,000 tranche, 7/31/2026 letter) clouds Lone Star's priority. AR is $690,000 ($410,000 current). The filing alternative is credible: clean Texas §1408 venue, LOW transfer risk, and provisional Subchapter V eligibility ($2,850,000 vs. $3,424,000 limit, verification required).

2

The Ask — By Creditor

Lone Star (secured, $1,425,000)

90-day forbearance and consent to operating use of cash/AR proceeds, on its own telegraphed terms — weekly borrowing-base reporting, finalized 13-week budget, replacement-lien-equivalent protections (Document 3/7). Founder releases are expressly severed from this ask; the estate reserves all rights regarding the March 2024 uptier exchange.

Red Mesa (amount undocumented)

standstill on litigation of the uptier challenge pending documented claim reconciliation and a mediated allocation; ask for claim documentation within 15 days.

North Freeway ($221,000) / Torque ($151,000)

amend-and-extend — arrearages capitalized and repaid over the forbearance term per the finalized budget; no eviction/repossession action during standstill.

Atlas Resin ($310,000) / Gulf Polymer ($215,000)

continued shipment on agreed trade terms against a paydown schedule funded from the four open medical-device orders; no haircut requested at this stage.

Taxing authorities ($328,000) / Union Fund ($124,000)

installment arrangements; amounts are non-compromisable and acknowledged in full.

3

Why This Beats Each Creditor's Bankruptcy Alternative

In Chapter 11, Lone Star faces a contested cash-collateral fight with its $850,000 uptier tranche under challenge, no documented collateral values, and machinery specialized to customer contracts — piecemeal liquidation is the report's plausible low case. Trade creditors face a critical-vendor program capped at $175,000 against $525,000 of combined claims, with Atlas holding a blocking position that helps no one if the case converts. Lessors face §365 rejection-damage caps and an estate whose $372,000 cure stack exceeds its $184,000 cash. Every constituency recovers more from a funded going concern (74 jobs, four open medical-device orders) than from an administratively burdened filing whose discretionary first-day spend alone ($271,000 proposed) exceeds cash on hand.

4

Proposed Standstill & Milestones

Standstill: 90 days; all parties refrain from enforcement, setoff, termination, and litigation; the debtor refrains from asset transfers outside the ordinary course. Milestones: (a) Day 2 — finalized 13-week budget and borrowing-base certificate delivered with corroborating bank statements and AR aging; (b) Day 15 — Red Mesa claim documentation exchanged; (c) Day 30 — desktop collateral valuation and full lease-balance reconciliation delivered; intercompany arrangements with affiliates documented; (d) Day 60 — term sheet for recapitalization or consensual restructuring, including a committed founder new-value contribution; (e) Day 90 — definitive documentation or agreed pre-negotiated filing path.

5

Debtor Commitments in Return

Weekly borrowing-base and 13-week-budget variance reporting to Lone Star; full financial transparency (bank statements, AR aging, tax returns, P&L — all currently absent from the record and required); no insider payments or distributions during the standstill; preservation of the Gulf Coast IP LLC design-file access via board authorization or documented license; deferral of the $96,000 KERP; and a committed, quantified founder new-value contribution as the price of any release discussion.

Flagged missing documents

Flagged missing documents (per report): both lease agreements, the CBA, bank statements, AR aging, tax returns, P&L, affiliate financials, Red Mesa claim documentation, formal Schedules D/E/F. Current release/consent, §1113, and Fifth Circuit uptier authority are past freshness windows and require current-figure verification by counsel.

HAAIS Restructuring provides analysis for licensed professionals. This is not legal or financial advice. Review by a qualified attorney or financial professional is required before any client action.

Memo generated 2026-08-29 · Derived from Audit No. HS-20260824-3G1N · Rev 3

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HAAIS Restructuring provides analysis for licensed professionals. This is not legal or financial advice. Review by a qualified attorney or financial professional is required before any client action. Meridian Precision Components LLC, its principals, lender and creditors are fictional, created for demonstration; real institutions named as context imply no affiliation.