Broker, Parent File For Bankruptcy

November 4, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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Zenergy Brands, Inc., along with subsidiaries NAUP Brokerage, LLC, Zenergy Power & Gas, Inc., and Enertrade Electric, LLC, recently filed voluntary Chapter 11 petitions for bankruptcy

Zenergy in an 8-K stated, "The Company filed the Chapter 11 Case, in part, to resolve all of its outstanding liabilities, seek further financing or sell its assets, and resolve all issues resulting from the Company’s outstanding obligations owed to TCA Global Credit Master Fund, LP ('TCA')."

NAUP Brokerage, LLC specializes in brokering of electricity and natural gas for commercial, industrial, and municipal end-use customers. Zenergy Brands owns 80% of the ownership interests in NAUP. NAUP Investments, LLC, a Texas limited liability company, owns the remaining 20% ownership interests in NAUP.

Zenergy Power & Gas, Inc. (ZPGI) previously purchased 87.37% of the issued and outstanding equity interests of Enertrade Electric, LLC, a former Texas retail electric provider. Zenergy said that Free and Free Enterprises owns a 10.0% interest in both ZPGI and Enertrade. ZPGI currently holds 77.37% ownership of Enertrade

As previously reported, Zenergy said in its filing that, "Following the [Enertrade] acquisition, Zenergy Brands determined that the sellers of Enertrade made material misrepresentations and attempted to address and repair certain issues within Enertrade. Zenergy Brands ultimately concluded that it was in its best interest to cease its retail-electric operations. In doing so, Zenergy Brands was able to avoid a mass customer-transition event, which the Texas Public Utility Commission regards as a negative event. Had the Zenergy Brand’s winding down of the Enertrade operation consisted of a mass customer-transition event to the provider of last resort, then such an event would have prevented Zenergy Brands from ever acquiring a license as a retail-energy provider in Texas, as well as other deregulated energy markets."

In its Chapter 11 petition, Zenergy said, "The Debtors ... expanded rapidly by entering into different segments of the deregulated energy market by acquiring Enertrade and entering into the retail electricity provider market. While the Debtors were able to attract customers and were successfully entering into MESAs [Managed Energy Services Agreements] with customers, the Debtors did not receive returns on entering the retail electricity provider market. Furthermore, the Debtors’ total debt load and servicing costs eroded their ability to market and expand their customer base. Under these conditions, the Debtors did not have sufficient capital to maintain and grow their businesses and they began to fall behind on their obligations to creditors in 2018-2019."

The bankruptcy court authorized on an interim basis the Debtor to obtain secured, superpriority post-petition loans, advances, and other financial accommodations (the DIP Facility), on an interim basis for a period through and including the date of the Final Hearing, pursuant to the terms and conditions of a Senior Secured Revolving Credit Facility Agreement, as amended, restated, supplemented, or otherwise modified from time to time, by and among (a) the Debtor (b) the Guarantors [Zen Technologies, Inc, Zenergy Power & Gas, Inc., NAUP Brokerage, LLC, Zenergy Labs, LLC, and Zenergy & Associates, Inc.], and (c) TCA Special Situations Credit Strategies ICAV (the Lender), providing for a credit facility up to a principal amount of $5,000,000 with an initial principal advance of $2,000,000,

Case No. 19-42886

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