Systematic Audio, LLC Bankruptcy Case

Systematic Audio is operating in Chapter 11 under final cash-collateral authority, without a DIP facility, and is working toward an October plan filing and year-end confirmation. The court has authorized use of KeyBank’s and Medallion Capital’s cash collateral under an approved budget through the week of October 3, with replacement liens and section 507(b) superpriority protection for the secured creditors, as set out in the Final Cash Collateral OrderDkt. 146.

The car-audio manufacturer filed its Chapter 11 petitionDkt. 1 on June 9, 2026. It entered the case with approximately $25 million of funded debt—about $18.9 million owed to first-lien lender KeyBank and $6 million owed on a subordinated Medallion note—only about $55,000 of cash, roughly $2.5 million of estimated trade and accrued liabilities, and asserted litigation claims of at least $21.4 million. The debtor’s First Day DeclarationDkt. 30 framed the initial strategy around preserving liquidity and operations through cash-collateral access and authority to address wages, taxes, selected vendor claims, cash management, and other ordinary-course obligations.

The restructuring path is presently milestone-driven rather than supported by new-money financing: the final order requires the debtor to file an acceptable plan by October 31 and obtain confirmation by December 31. Cash use is subject to a 20% permitted variance for operating receipts and disbursements measured on a rolling five-week basis, and failure to comply with the budget, reporting requirements, or plan milestones constitutes a default. A 14-day objection window remains applicable to the order’s section 506(c) waiver; if challenged, that provision returns to interim status for an August 12 hearing. The next scheduled court date is a July 22 fee-application hearing.

The court authorized Systematic Audio to use cash collateral through the week of October 3 under a 13-week budget, with operating receipts and disbursements subject to a 20% variance covenant measured cumulatively over rolling five-week periods. The final cash-collateral order requires the debtor to file a Chapter 11 plan reasonably acceptable to KeyBank by October 31 and obtain confirmation by December 31; missing either milestone constitutes an event of default.

The order grants KeyBank and Medallion replacement and adequate-protection liens, gives KeyBank a section 507(b) superpriority claim, and reimburses KeyBank’s documented case-related legal expenses absent timely objection. The debtor stipulated that KeyBank was owed approximately $18.9 million in principal on its revolver and term loan as of the June 9 petition date, subject to challenges by creditors or another estate fiduciary through September 7. Professional-fee protection includes weekly escrow funding and a $100,000 post-default carve-out. The order therefore supplies short-term operating liquidity while placing the restructuring on a lender-driven path toward confirmation before year-end.

Systematic Audio, LLC

Systematic Audio, LLC

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Cash-collateral order imposes KeyBank-controlled plan milestones

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