Enviva: $500M DIP and $250M+ Rights Offering Plan

Enviva filed chapter 11 in March 2024 in the Eastern District of Virginia with a restructuring problem set that was simultaneously conventional and highly specific. The conventional part was timing: a leveraged industrial company with near-term covenant and maturity pressure, tightening liquidity, and a credit-market backdrop that made refinancing difficult. The specific part was what the company sold and how it sold it—industrial wood pellets into global energy and industrial markets—paired with disputes over customer contracts and alleged trading/hedging exposure that became central to the distress narrative as counterparties and rating agencies scrutinized what happened in late 2022.

The case is a useful template for creditor-led financings and rights-offering plans. Enviva’s court filings described a two-tranche, no-rollup debtor-in-possession facility intended to stabilize liquidity while the company negotiated a plan track with key creditor constituencies. The plan ultimately paired a rights offering with target proceeds at least $250 million, a first-lien senior secured exit facility, and a post-emergence litigation trust designed to segregate and pursue certain claims after the effective date. Enviva announced it had equitized more than $1 billion of debt upon emergence on December 6, 2024, transitioned to private ownership, and installed a new board and leadership team.

Creditor-Backed DIP and Rights Offering Plan

What Enviva is (and how the business model affects restructuring). Enviva has been described as the world’s largest producer of industrial wood pellets and a major supplier into international energy markets. Bankruptcy filings emphasized two operational levers that matter in a restructuring: (i) the ability to run the plants reliably and improve production efficiency, and (ii) the ability to renegotiate long-term offtake agreements with customers in Japan, the United Kingdom, and Germany. When those offtake agreements are mispriced relative to input costs or benchmark energy prices, the pressure shows up quickly in cash flow, covenant compliance, and refinancing capacity—particularly for a company with a large, long-dated project and logistics footprint.

Scale and logistics: why “tons shipped” and port access show up in court papers. Enviva’s operating profile is often described in physical terms—plants, ports, and shipped volumes—because the economics are heavily logistics-driven. A local policy publication described Enviva as operating multiple pellet plants in North Carolina and reported that the company shipped about 5 million metric tons overseas in 2023, down from 6.2 million metric tons in 2022. In the chapter 11 record, that operational reality appears through collateral and asset descriptions: the DIP declaration described ground leases for the Pascagoula port and real estate in Waycross, Georgia and Bond, Mississippi as unencumbered collateral. For restructuring professionals, those details are a reminder that a biomass producer’s “real assets” are not just the plants—they are the logistics rights and throughput capacity that allow product to reach export customers under long-term arrangements.

Project finance and tax-advantaged structures: municipal bonds and NMTC claims. Enviva’s liability management problem was not only “notes and loans.” Reporting described tax-exempt municipal bond exposure associated with certain Enviva-related projects, with one report highlighting $353 million of municipal bonds and the way those instruments were swept into the chapter 11 process (municipal bond exposure). In the plan architecture, that complexity showed up as a discrete unimpaired class for NMTC Claims, reflecting the presence of New Markets Tax Credit–related financing structures in the broader capital stack. Practically, these structures can affect collateral packages, consent rights, and the sequence of payments required to keep project-level arrangements intact during a restructuring—especially when port and facility assets are intertwined with development financing and long-term customer contracts.

Debt headlines and why they were not the whole story. Public reporting at filing time emphasized total debt levels and a complex creditor mix. One wire report stated Enviva’s debts exceeded $2.6 billion and referenced significant bank and contract counterparty claims. Another angle was the presence of tax-exempt municipal bonds associated with certain projects, which brought additional stakeholder dynamics and documentation complexity to the table (municipal bond exposure). Those numbers frame scale, but the restructuring fulcrum was timing and confidence: rating agency commentary and company disclosures painted a picture of a business facing “going concern” pressure and uncertainty about its ability to renegotiate contracts and stabilize earnings (going concern pressure).

The January 2024 interest-payment decision as a catalyst (and what it signaled). In January 2024, reporting and court materials converged on a pivotal decision: Enviva’s board elected to forgo a semi-annual interest payment on its 6.5% senior notes due 2026, triggering a contractual grace period and accelerating the timeline for an executable restructuring solution, a decision described in the court filings. Fitch subsequently downgraded Enviva to restricted default after the grace period expired without cure and referenced forbearance arrangements and creditor negotiations (restricted default downgrade).

Equity-market collapse and “going concern” language as a financing constraint. The capital markets backdrop heading into the filing was harsh. One coastal-focused publication described Enviva’s stock falling from a 2022 peak to well under $1 by late 2023, illustrating how quickly market confidence can evaporate when contract economics and liquidity are questioned. Fitch’s downgrade commentary referenced “substantial doubt” language about the company’s ability to continue as a going concern and highlighted uncertainty about contract renegotiation outcomes (going concern uncertainty). In practical restructuring terms, that combination restricts options: equity issuance becomes punitive, unsecured refinancing windows close, and management is forced toward a creditor-led solution with tighter covenants and control rights.

From a restructuring process perspective, the missed interest payment is less important as a moral judgment and more important as a bargaining signal. When a board elects to preserve liquidity rather than make a coupon payment, it often indicates that (i) liquidity is a binding constraint, (ii) management expects a formal liability management transaction or bankruptcy to follow, and (iii) creditor groups will consolidate quickly around a plan framework that can be implemented within the grace-period and forbearance windows. Enviva’s bankruptcy filings described a compressed timeline in which the company selected a creditor-backed DIP just days before the grace period concluded.

Contract and hedging disputes: how a biomass supplier can become a derivatives and litigation story. The biomass industry narrative around Enviva included disputed transactions and contract cancellation issues tied to RWE and its trading affiliate RWEST. A detailed trade press report described Q4 2022 transactions involving elevated spot-price sales and below-market purchase commitments, creating potential liquidity pressure and governance controversy. Other reporting framed RWE’s termination of long-term agreements and damages claims as a major creditor and litigation theme in the chapter 11 process.

Fitch’s commentary similarly referenced uncertainty tied to contract renegotiation and a sizable liability related to contract issues, which is a practical way of saying: if customer contracts are cash-flow negative or carry large dispute exposure, refinancing becomes hard because lenders and noteholders cannot underwrite stable forward margins (contract renegotiation uncertainty). Enviva’s DIP declaration described negotiations with RWEST over “Q4 2022 Transactions” and emphasized the need for financing to avoid covenant defaults and address maturities.

DIP financing: structure, economics, and what “no roll-up” meant here. Enviva’s chapter 11 featured a large DIP facility request and approval: $500 million split into Tranche A ($250 million) and Tranche B ($250 million), with pricing described at SOFR plus 800 basis points and a no roll-up, approved in the final DIP order. The DIP declaration described an initial draw of $150 million on Tranche A with additional delayed draws contemplated, and it explained the debtor’s financing need as a bridge to renegotiate key contracts, improve plant performance, and run the plan process.

In many chapter 11 cases, a roll-up can be a flashpoint because it elevates prepetition lender exposure into the postpetition priority structure. Here, the “no roll-up” description functionally signaled that the DIP was being positioned as new postpetition financing to stabilize operations and fund the restructuring track without immediately refinancing prepetition debt into DIP priority. That does not mean creditors lacked leverage—this DIP was still creditor-led and backstopped by a key ad hoc group—but it changes how other constituencies (unsecured creditors, contract counterparties, and municipal-bond stakeholders) evaluate the DIP’s distributional impact.

Collateral detail: why the DIP filings emphasized specific ground leases and real estate. The DIP declaration’s collateral description included long-term ground leases for a port in Pascagoula, Mississippi, and real estate in Waycross, Georgia and Bond, Mississippi. For a biomass producer, logistics assets and port access are not peripheral—they are integral to export economics. Calling out specific collateral categories in a DIP is often a way to clarify what is truly unencumbered and what can support a priming lien package without violating prepetition collateral arrangements.

The plan track: rights offering plus creditor-supported exit financing. Enviva’s restructuring press release on the petition date framed a plan supported by a restructuring support agreement and described a $500 million DIP committed by an ad hoc group of creditors, with an expected emergence timeline in the second half of 2024 (restructuring support agreement). The court record later shows how that plan track was operationalized: a disclosure statement order established solicitation procedures and expressly identified the notice and claims agent tasked with distributing solicitation packages and tabulating votes.

The amended plan’s class treatment is especially instructive because it shows how a rights-offering plan can allocate value across different unsecured buckets while preserving creditor control over post-effective litigation through a trust. In simplified terms:

• Bond general unsecured claims (a key unsecured constituency) received a package of reorganized equity allocations, subscription rights, and the majority of litigation trust interests.
• Non-bond general unsecured claims received a smaller mix of cash and litigation trust interests, allocated through a distribution pool concept.
• Existing equity interests were canceled with no recovery.

These mechanics are characteristic of a creditor-led deleveraging where participating unsecured holders fund new money through a rights offering and in exchange receive the reorganized equity upside.

Rights offering economics: “at least $250 million” and why the premium math matters. The amended plan defined the “Rights Offering Amount” as proceeds of at least $250 million (subject to adjustment under procedures) and defined a rights offering backstop commitment premium of $29,374,622.28 payable in additional reorganized equity issued at the same price and discount as the rights offering shares (subject to dilution by management incentive plan equity). The disclosure statement described the rights offering in functional terms: it was designed to raise new equity capital and repay certain DIP tranches at emergence, with eligibility tied to holders of allowed bond general unsecured claims.

Separately, the backstop motion described the premium as 10% of the aggregate rights offering amount payable in equity and a 5% cash termination premium payable in specified termination or fiduciary-out scenarios. For practitioners, the key takeaway is not the percent alone but the incentive architecture: a rights offering needs a credible backstop to assure funding, and a premium (plus termination protections) is the price paid for that certainty—particularly when the equity being issued is in a reorganized company with operational risk and contract-dispute overhang.

DIP Tranche A equity participation: a bridge between DIP repayment and post-emergence ownership. One distinctive feature of Enviva’s restructuring architecture was the way DIP repayment and equity allocation were intertwined. The plan contemplated that DIP Tranche A claims would be paid in full in cash, but also described an election mechanism allowing certain holders to receive reorganized equity by effectively offsetting purchase price against DIP principal (an “equity participation” path). The implication is that the financing constituencies were not just lending into chapter 11—they were structurally positioned to convert exposure into ownership at emergence, aligning post-emergence governance with the creditors underwriting the restructuring.

Exit financing: from a $1.0 billion concept to a $1.05 billion confirmed alternative. The plan and disclosure statement described a first-lien senior secured exit facility in the $1.0 billion range, with a structure expected to include a $750 million exit term loan and a $250 million delayed draw term loan, and with premiums for commitment parties (including an upfront premium and a commitment premium). The backstop/exit facility motion similarly described a $1.0 billion facility split between term loan and delayed draw components and described premium mechanics treated as superpriority administrative expense claims.

The confirmation order then described an alternative first-lien senior secured exit facility in an aggregate principal amount of $1.05 billion, comprising $800 million of exit term loans and $250 million of delayed draw term loans, and included court findings that this alternative was more favorable and essential to plan consummation. This is a key point for anyone modeling feasibility: even when a plan is broadly creditor-supported, the precise debt quantum and structure at emergence can change late in the case as market conditions, lender appetite, and term negotiations evolve.

Litigation trust: why control mechanics were negotiated in detail. Enviva’s plan included a litigation trust structure and spelled out governance terms with unusual granularity: selection of the litigation trustee by the committee subject to consent rights, and a three-member litigation trust board with specified appointment mechanics and settlement veto/compel authority—plus an option for no board (trustee as sole governor) depending on creditor elections. This structure matters because a litigation trust is not merely a “postscript.” It is the mechanism by which estate causes of action (and the proceeds of those actions) can be pursued and distributed after emergence, often in disputes that are too complex or too value-contingent to resolve before the effective date.

Timeline discipline: how the case moved from filing to emergence in under nine months. The docket record reflects a relatively fast case for a complex industrial business with multiple creditor constituencies. After the March 2024 filing, the case progressed through DIP approval and a plan solicitation process culminating in confirmation in November 2024 and an effective date in December 2024. The effective date notice also triggered post-effective deadlines for administrative expense and professional fee claims—important mechanics for creditors and professionals managing post-emergence claim processing.

Emergence and governance reset: what changed on December 6, 2024. Enviva’s emergence announcement framed the restructuring outcome as a balance sheet reset: equitization of more than $1 billion of debt and a transition to private-company ownership, with American Industrial Partners’ fund identified as the largest shareholder and a new board including representation from American Industrial Partners, Keyframe Capital Partners, and Ares Management funds. The release also announced a leadership change, naming Glenn Nunziata as CEO and James Geraghty as CFO.

Law-firm experience descriptions of the case highlighted the creditor-driven nature of both the DIP and exit financing and referenced new-money equity and a secured credit facility at emergence, reinforcing the broader picture of a plan financed and controlled by creditor stakeholders rather than a third-party buyer (Davis Polk matter description; Davis Polk DIP filing description). For restructuring professionals, the durable lesson is that a creditor-led package can combine: (i) stabilization liquidity (the DIP), (ii) new equity funding (rights offering/backstop), (iii) a long-term capital structure (exit facility), and (iv) a post-emergence litigation vehicle (litigation trust)—each with negotiated control rights and economic incentives.

Frequently Asked Questions

When did Enviva file for chapter 11 bankruptcy?

Enviva filed chapter 11 on March 12, 2024 (filed chapter 11; petition date).

Where was Enviva’s chapter 11 case filed and who is the judge?

The case was filed in the U.S. Bankruptcy Court for the Eastern District of Virginia (Alexandria Division) before Judge Brian F. Kenney.

Why did Enviva enter chapter 11 and what was the role of the missed 2026 notes interest payment?

Court filings described near-term covenant and maturity pressure and a liquidity squeeze that intensified after the board elected to forgo a semi-annual interest payment on the 2026 notes, triggering a grace period. Reporting and rating agency actions around the missed payment and grace-period expiration underscored the acceleration toward a formal restructuring process (skipped interest payment; restricted default downgrade).

How large was Enviva’s DIP financing and what were the key terms?

Enviva’s filings described a DIP facility split into Tranche A ($250 million) and Tranche B ($250 million), with pricing at SOFR + 800 bps, approved in the final DIP order.

Did Enviva’s DIP include a roll-up of prepetition debt?

The DIP declaration described the DIP as having no roll-up component.

What was the rights offering and who could participate?

The plan defined a rights offering with target proceeds at least $250 million and described it as being offered to eligible holders of allowed bond general unsecured claims through subscription rights to purchase reorganized equity.

What was the rights offering backstop premium and how was it paid?

The plan defined a rights offering backstop commitment premium of $29,374,622.28 payable in additional reorganized equity issued at the same price and discount as rights offering shares (subject to dilution by management incentive plan equity). The backstop motion described the premium as 10% of the aggregate rights offering amount payable in equity and described a separate cash termination premium in specified scenarios.

How big was Enviva’s exit facility at emergence?

The confirmation order described an alternative first-lien senior secured exit facility in an aggregate principal amount of $1.05 billion, comprising $800 million of exit term loans and $250 million of delayed draw term loans.

What is the Litigation Trust and who controlled it after emergence?

The plan described a litigation trust to receive litigation trust assets on the effective date, with a litigation trustee selected by the committee subject to consent rights and (if established) a three-member litigation trust board with defined settlement authority.

When was Enviva’s plan confirmed and when did it become effective?

The bankruptcy court entered the confirmation order on November 14, 2024, and the effective date occurred on December 6, 2024.

Who is the claims agent for Enviva?

Kurtzman Carson Consultants LLC, d/b/a Verita Global serves as the notice and claims agent and voting agent for solicitation and ballot tabulation functions.

Read more bankruptcy case research on the ElevenFlo blog.