August 3, 2026 - Alkegen, FreshRealm, Sleep Number

This episode covers key developments in three major restructuring and bankruptcy cases:

Alkegen, a global manufacturer of high-performance industrial fibers, files a prepackaged Chapter 11 designed to eliminate approximately $3.1 billion in funded debt. Backed by overwhelming lender support and a $630 million DIP facility, the plan would reduce term debt to roughly $400 million, preserve trade creditor recoveries, and transfer substantially all reorganized equity to first-lien lenders.

FreshRealm seeks approval to solicit votes on a Chapter 11 liquidation plan funded largely by a settlement with former customer Blue Apron, whose departure—along with Walmart’s—eliminated approximately 90% of the company’s revenue. The proposed plan remains under negotiation, with no disclosed recovery estimates and no qualifying bids received for the company’s assets.

And a New York bankruptcy court approves $1.825 million in retention awards for 38 Sleep Number employees over the U.S. Trustee’s objection, finding that the participants were not statutory insiders and that the payments represented a reasonable exercise of business judgment following a $701.8 million winning auction bid.

💡 From multibillion-dollar balance sheet restructurings and customer-driven liquidations to contested employee retention programs, this episode explores how creditor support, settlement proceeds, and workforce stability are shaping outcomes across today’s Chapter 11 landscape.

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Welcome to Stretto's Restructuring Report, a podcast featuring notable stories curated by professionals and powered by Stretto Intelligence. Join us each week for the highlights, updates, and news impacting restructuring professionals. Want to go deeper than the headlines? Research Suite by Stretto lets you search across every jurisdiction in one place, with AI summaries cited directly to the docket so you can find, review, and understand the information that matters most. Try the Essential Plan free at researchsuite.stretto.com. Story 1. Alcagen files prepackaged Chapter 11 to shed $3.1 billion. Alcogen filed pre-packaged Chapter 11 petitions in the Northern District of Texas on July 26th, and it filed them with the deal already done. 63 debtor entities filed together, and solicitation had launched six days before the petitions. The restructuring support agreement carries holders of 99% of first lien claims and 80% of second lien notes claims. Alcogen makes high-performance fibers used in blast furnaces, petrochemical refining, glass production, catalytic converters, and electric vehicle battery packs. The company generated $991 million of revenue last year across roughly 50 manufacturing sites in 23 countries, and it employs about 3,900 people. The transaction eliminates approximately $3.1 billion of funded debt. Alcegan entered the case carrying $3.3 billion of principal, and it would emerge with $400 million of term debt and roughly $200 million of liquidity. A $630 million debtor in possession facility funds the case, split evenly between new money and a roll-up of existing first lien claims. The story behind the filing is a liability management transaction that never deleveraged the company. In September 2024, Alcogen uptired its revolver, refinanced its first lien-term loan, and exchanged a majority of its notes into new second lien paper. That deal captured roughly $150 million of discount, brought in $350 million of new money, and pushed every maturity out to 2028 and 2029. Net debt reduction was not meaningful. It also added a two-year payment in kind toggle that expires on September 30th of this year, handing back about $110 million of annual cash interest. The petitions came nine weeks before that expiration. Trade creditors are unimpaired and are being paid in the ordinary course, a condition the ad hoc first lien group required. First lien holders take substantially all of the reorganized equity. Roughly $1.07 billion of junior debt receives 1% of the equity plus out-of-the-money warrants. Existing equity is canceled. Voting closes August 17th, with confirmation targeted within 45 days of the filing. Story 2. FreshRealm seeks votes on a liquidating plan funded by the customer that left. In other bankruptcy news, FreshRealm and four affiliated debtors filed a disclosure statement in the District of New Jersey on July 27th, seeking approval to solicit votes on a liquidating Chapter 11 plan. FreshRealm built shared manufacturing and fulfillment infrastructure for fresh food brands, spreading the fixed cost of a plant across multiple customers. Its anchor facility is a 495,000 square foot plant in Linden, New Jersey. And as of the petition date, it was fulfilling roughly 60,000 boxes and prepared meals a week for Blue Apron customers alone. Two customers accounted for about 90% of revenue. Blue Apron alone was about 70%, and Walmart was more than 20%. Beginning in late March 2025, the company experienced five separate withdrawal or recall incidents tied to Listeria monocytogenous, all of which the disclosure statement attributes to contaminated material received from suppliers. Blue Apron sent a notice of termination in December 2025. Walmart ended its relationship the following month. The company had raised $110 million in an October 2025 recapitalization, conditioned on right sizing its cost structure to the revenue base as it stood at that moment. Both of those customers gave notice within the following four months. What funds the plan is the settlement of the fight with the customer that left. Blue Apron held a 10-year exclusive supply agreement with roughly seven years remaining. The debtors disputed the validity of the termination, the parties told their claims, and the dispute settled 38 days into the case for approximately $47 million in cash, more than $8 million in claim waivers, and additional accommodations. A portion of that cash is deferred over 15 months and is payable by Blue Apron rather than by the estate. Two features of the filing stand out. The Creditors Committee does not support the plan, and the disclosure statement itself says the plan remains subject to further negotiation. No liquidation analysis has been filed, the debtors do not plan to file a valuation, and no recovery estimate is disclosed for any class. Against roughly $168 million of prepetition secured debt, the auction drew no qualifying bid at all. The combined disclosure and confirmation hearing is set for September 24th, with objections due September 15th. Story 3. Court approves $1.825 million in sleep number retention awards over trustee objection. And finally, a published decision on retention pay out of the Southern District of New York. On July 28th, the bankruptcy court overruled an objection from the United States trustee and authorized $1.825 million in retention awards to 38 Sleep Number employees. Sleep Number, the adjustable smart bed retailer, filed Chapter 11 on June 12th to run a going concern sale. At auction on July 13th, the winning bid came in at $701.8 million, exceeding the stocking horse floor of $415 million by $286.8 million. Prepetition-secured lenders are owed approximately $672.5 million. Senior leadership adopted the retention plan in May before the filing with the assistance of compensation advisors and attorneys. Individual awards ranged from $10,000 to $125,000, averaging about $48,000, vesting on continued employment through year end or on a change in control. Nine participants carry vice president titles, 13 carry director titles, and 16 provide management and support functions. The trustee argued primarily that the participants were statutory insiders, which would subject the awards to the far stricter standard the bankruptcy code applies to insider retention pay, supported by the theory that at least some of them report directly to and perform work for insiders. In the alternative, the trustee argued that even non-insider awards were not justified by the facts of the case. The court rejected both. None of the 38 was appointed by the board, none sits on the board, the executive leadership team, or the management committee, and none sets corporate policy. As the court put it, an employee does not transform into an insider merely by reporting to one. Under the business judgment analysis, the court found $1.825 million modest against a bid above $700 million, roughly one quarter of 1%. No economic stakeholder objected, and the creditors committee affirmatively supported the plan. One participant resigned on the day of the evidentiary hearing, which the court cited as proof that the flight risk was not hypothetical. A separate dispute over severance owed to officers and directors was carved out of the sale order and set for hearing on August 3rd. That's it for this week's restructuring report. For more case summaries, court updates, and bankruptcy insights, subscribe wherever you get your podcasts. And when you need the full story behind a case, Research Suite by Stretto gives you access to cases across all jurisdictions in a single search. Summaries cited straight to the source. Start free with the Essential Plan at researchsuite.stretto.com