RM Bakery: Insider DIP Converts to Equity in Confirmed SDNY Chapter 11

RM Bakery LLC and its parent BKD Group LLC, a Bronx-based wholesale artisanal bakery and its holding company, filed jointly administered chapter 11 petitions on June 15, 2020 in the U.S. Bankruptcy Court for the Southern District of New York under lead case number 20-11422. The filing came one day before a state-court replevin action by Pacific Western Bank was set to proceed on roughly $3 million of defaulted secured debt, and after a 65% pandemic revenue decline added to pre-existing defaults under the Pac West facility.

The case took 4.5 years to confirm. The plan went effective on January 27, 2025, with the initial distribution funded on February 4, 2025. The DIP facility was provided entirely by an insider entity controlled by CEO Mark Rimer, was amended three times, and was converted to equity at confirmation. General unsecured creditors recovered roughly 6.25 cents on the dollar through a $50,000 cash pool plus a three-year profit-participation tail. After confirmation, a four-month payment default to Banc of California (successor to Pac West) prompted court supervision in late 2025 and was cured through a sale-leaseback that closed December 31, 2025.

Debtor(s)	RM Bakery LLC (2 jointly administered entities)
Court	U.S. Bankruptcy Court, Southern District of New York
Case Number	20-11422
Petition Date	June 15, 2020
Confirmation Date	October 22, 2024
Effective Date	January 27, 2025
Judge	Hon. Martin Glenn
DIP Facility	$1.5 million committed (insider FS Lender 2015 LLC); converted to New Equity Units at plan effective date
Claims Agent	Epiq Corporate Restructuring, LLC

Pre-Pandemic Distress and Pac West Default

RM Bakery operates from a 22,500 square-foot Bronx facility producing more than 400 wholesale bread and pastry SKUs daily, primarily for hotels, restaurants, country clubs, and caterers across the tri-state area. The business was assembled in 2013 from the assets of Rollo Mio Artisan Bakery and consolidated under BKD Group, a holding entity created in 2016 to facilitate the move into the current facility. Prior to the pandemic the company served roughly 400 customers and employed approximately 70 people at the bakery plus 20 at two operating subsidiaries, RMB BONY LLC and Baked Wholesale LLC, per the LR 1007-2 affidavit of CEO Mark Rimer.

Distress predated COVID-19. The Rimer affidavit describes annual revenue growth of approximately $1 million from 2017 forward, but well short of the $11–$12 million range management estimated was needed to service debt and reach profitability. A senior operations manager's death in 2018 created a sustained operational disruption. An acquisition of "Good Bread" lost roughly half its revenue within six months when the sellers failed to meet their post-closing consulting obligations. Disagreements with Pacific Western Bank ("Pac West") over whether to use cash for further acquisitions or to amortize the existing facility further strained the lending relationship.

The Pac West facility had an original principal of $5 million. The debtors entered a Loan Default Agreement with Pac West in January 2019, defaulted again in June 2019, and never cured, per the Rimer affidavit. At the petition date approximately $3.3 million remained outstanding, secured by first liens on equipment, accounts, inventory, and general intangibles. Pac West had filed a summary judgment action in New York state court for more than $3 million and a replevin action that was set to proceed on June 16, 2020, the day after the bankruptcy filing.

Hotel, restaurant, and catering customers closed or scaled back operations in mid-March 2020, causing what the Rimer affidavit describes as a 65% revenue loss "almost overnight." With Pac West threatening foreclosure on equipment essential to operations and the replevin hearing imminent, the debtors filed for chapter 11 protection on June 15, 2020.

Insider DIP Facility from FS Lender 2015

DIP financing was provided entirely by FS Lender 2015 LLC, an entity owned or controlled by CEO Mark Rimer and the broader Kuzari investor group. The court entered an interim cash collateral and DIP order on June 26, 2020 authorizing initial borrowings, followed by a final order on July 16, 2020 approving the facility up to $1 million. Collateral consisted of a first-priority lien on unencumbered assets, a junior lien on encumbered assets, and a guarantee from non-debtor Kuzari Investor 27323 LLC secured by its equity in BKD Group. The order included a $100,000 professional fee carve-out for debtor and committee professionals, plus a $40,000 carve-out for any chapter 7 trustee. Adequate protection to Pac West was set at $2,500 per month beginning August 1, 2020.

The facility was amended three times during the case. In April 2023 the court granted an interim $56,000 increase to fund a workers' compensation insurance premium, lifting the cap to $1,056,000. The court denied the second motion's request for a final increase on May 31, 2023, but approved a $444,000 increase to $1.5 million on June 28, 2023 as a bridge to plan confirmation. The third amendment motion filed July 11, 2024 sought to raise the cap to $1,642,500 on an interim basis and up to $2 million on a final basis to fund operations through the plan effective date; the court entered a Second Final Cash Collateral Order approving that increase on August 1, 2024.

Adequate protection to Pac West fell into arrears. As of November 1, 2023 Pac West reported $62,500 in unpaid adequate protection, with no payments since February 2022, per its motion to convert the case to chapter 7. Under the confirmed plan, all allowed FS Lender claims (other than professional fees) converted to equity in the Reorganized Debtor at four New Equity Units per dollar of debt; FS Lender's professional fees were paid in full on the Initial Distribution Date.

Conversion Threats from Pac West and the U.S. Trustee

By late 2023 the case had been pending for more than three years without a confirmable plan. Pac West moved to convert the case to chapter 7 on November 2, 2023, citing repeated plan failures, habitual late filing of monthly operating reports, $62,500 in unpaid adequate protection, nearly $1 million in outstanding post-petition operating expenses as of August 2023, unpaid October 2023 rent, and uncertainty about post-petition IRS tax liabilities. The motion was eventually mooted by the debtors' renewed plan-filing activity in early 2024.

The U.S. Trustee filed a parallel motion to dismiss or convert on May 31, 2024, citing approximately $48,884 in delinquent quarterly fees, failure to file a confirmable plan in nearly four years, habitual batch-filing of late monthly operating reports, and outstanding administrative claims from the IRS, the New York State Department of Labor, and the National Labor Relations Board. The UST ultimately did not object to the voting results before the October 2024 confirmation hearing once the debtors made progress toward confirmation.

The NLRB had previously moved on August 24, 2020 for an administrative expense of $29,682.40 covering post-petition wages and benefits owed to five employees terminated for protected concerted activities between June 15 and August 12, 2020, an unfair labor practice charge that originated pre-petition. Mintaka Financial / Team Funding Solutions, holder of an approximately $91,035 secured equipment claim, objected to confirmation on the ground that the Third Amended Plan added the phrase "until all of the above payments are made" to a guarantee preservation provision and limited Mintaka's rights against personal guarantor Mark Rimer; Mintaka withdrew the objection on September 20, 2024.

Third Amended Plan and Class 6 Profit Participation

The Third Amended Joint Plan of Reorganization, filed June 28, 2024, was confirmed on October 22, 2024 by Judge Martin Glenn and went effective on January 27, 2025. The amended disclosure statement was approved on August 22, 2024. The two debtors are substantively consolidated as of the effective date, and the plan establishes eight claims classes plus a separate equity class.

Administrative claims. Estimated administrative claims totaled approximately $900,000, with $250,000 payable on the Initial Distribution Date and $650,000 over time, per the amended disclosure statement. The largest single administrative claim was Consolidated Edison's $510,531.80 unpaid utility claim, settled for $100,000 paid up front in July 2024 and $326,182.28 paid on the Initial Distribution Date — a roughly ~$84,000 discount to face value. The Hartford's allowed administrative claim of $40,479.41 for workers' compensation was resolved by 2021 stipulation, with $26,263.11 due on the Initial Distribution Date.

Secured classes. Class 2 (Pac West) was allowed at $300,000 plus accrued adequate protection, with $125,000 plus accrued AP paid at the Initial Distribution Date and the balance amortized in quarterly installments over four years at a prime-based rate capped at 6%; the Pac West deficiency was redirected to Class 6. Class 3 (GSB / formerly Mayrich) retained $750,000 of secured exposure on existing credit-line terms, with the approximately $630,000 deficiency converted to New Equity Units at four units per dollar. Class 4 (FS Lender DIP) converted entirely to New Equity Units at four units per dollar except for professional fees, which were paid in full on the Initial Distribution Date. Class 5 (other secured claims, including Ascentium, m2 Lease Funds, and Mintaka) gave the debtors the option of paying collateral value over 36 months or returning the collateral.

Unsecured classes and projected recoveries. Class 6 (non-insider general unsecured claims over $15,000), facing approximately $4 million in claims (more than half of which was the Pac West deficiency), receives a pro rata share of $50,000 cash on the Initial Distribution Date plus 25% of the Reorganized Debtor's net profits for the first three full fiscal years following the effective date. The Third Amended Plan projects roughly $250,000 of total Class 6 recovery over that period — approximately 6.25 cents on the dollar. The Reorganized Debtor retains an optional buyout right that declines from $350,000 before the Initial Distribution Date to $100,000 in 2027. Class 7 (the convenience class for claims of $15,000 or less) receives a pro rata share of $20,000. Class 8 insider general unsecured claims (8A management fees at 0.6 units per dollar; 8B insider loans at 2 units per dollar) were converted to New Equity Units. Class 9 existing equity in BKD Group was canceled with no distribution.

Voting and confirmation. Classes 2 through 8 unanimously accepted the plan; Class 9 was deemed to reject. Mintaka's withdrawal of its objection left no contested confirmation issues, and Judge Martin Glenn entered the confirmation order on October 22, 2024.

Post-Confirmation Default and Sale-Leaseback Cure

Plan implementation hit an early problem. Banc of California, successor in interest to Pac West, reported four months of plan payment defaults on December 4, 2025 and requested a status conference, signaling that it would otherwise file a motion to enforce the confirmation order. The Reorganized Debtor's status submissions attributed the shortfall to the failure of an anticipated co-manufacturing agreement and lower-than-expected business volume from affiliated entity Featherstone in summer 2025.

The Reorganized Debtor cured the default through a sale-leaseback transaction on its baking equipment that closed on December 31, 2025 and generated approximately $750,000 in liquidity, per a January 2026 status letter. A follow-up status report on January 12, 2026 stated that all past-due plan payments had been made and that the Reorganized Debtor was in compliance with its obligations under the confirmed plan, with a status conference set for January 14, 2026 at which the debtors indicated an intent to seek a final decree.

The Reorganized Debtor also reported a new co-manufacturing agreement that produced 16% revenue growth in the second half of 2025, supporting management's projection of a $1.3 million 2026 operating profit. Under the Class 6 profit-participation mechanism, that profit would generate additional distributions to general unsecured creditors above the $50,000 initial pool.

Professional Retentions and Fee History

Mayerson & Hartheimer, PLLC ("M&H") served as debtors' bankruptcy counsel for the duration of the case. The firm's final fee application, covering the second interim period from October 1, 2021 through October 22, 2024, requested $100,000 in fees and $577.79 in expenses. The court entered the final fee order on July 29, 2025.

Vernon Consulting, Inc. was retained as financial advisor and accountant at the start of the case. Its final fees of $38,130 were allowed by December 2021 order, but Vernon was required to file a motion to compel payment in January 2022 after the debtors failed to fund the approved amount; the dispute was resolved by stipulation in March 2022. Sherwood Partners, Inc. was retained in April 2022 as the replacement financial advisor and served through plan confirmation. Epiq Corporate Restructuring, LLC served as claims and noticing agent throughout.

Post-Confirmation Claim Objections

After confirmation the Reorganized Debtor filed a series of claim objections supported by a declaration of CEO Mark Rimer, and the court entered orders on February 3, 2025 disposing of four claims:

The objections to the Cintas and US Foods claims were grounded in the debtors' books and records showing materially lower or no liability. The Chubb duplicative-claim issue was resolved by allowing one liquidated amount and expunging the second.

Key Timeline

Frequently Asked Questions

Who is the claims agent for RM Bakery LLC?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

What was the projected recovery for general unsecured creditors?

The Third Amended Plan projects approximately 6.25 cents on the dollar for Class 6 non-insider general unsecured creditors against approximately $4 million in claims, comprising a $50,000 pro rata cash distribution at the Initial Distribution Date and 25% of the Reorganized Debtor's net profits for three years after the first full post-effective fiscal year.

Who provided the DIP financing?

FS Lender 2015 LLC, an entity controlled by CEO Mark Rimer, provided the DIP facility. The commitment grew from $1 million to approximately $1.5 million across three amendments and converted to equity in the Reorganized Debtor at four New Equity Units per dollar at the effective date.

What happened after plan confirmation?

The Reorganized Debtor missed four months of payments to Banc of California (successor to Pac West) by late 2025. The default was cured on December 31, 2025 through a sale-leaseback of baking equipment that generated approximately $750,000 in liquidity, and the Reorganized Debtor reported full plan compliance on January 12, 2026.

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