Business Context and Reporting Period
Company: Borealis Foods Inc. (BRLS)
Filing Type: Form 8-K (Current Report)
Date of Report: March 27, 2026
Event: Entry into a Forbearance and Amendment Agreement with Frontwell Capital Partners Inc. due to multiple Events of Default under the existing Credit Agreement.
Key Financial Metrics and Obligations
- Outstanding Obligations: As of March 25, 2026, aggregate obligations under the Credit Agreement were no less than $16,116,215.30, plus accrued interest, fees, and costs.
- Default Interest Rate: Obligations have accrued interest at the default rate since December 9, 2025 (an increase of 2.00% per annum over the non-default rate).
- Applicable Margin Increase:
- Revolving Loans: Increased from 4.50% to 6.50% per annum.
- Term Loan: Increased from 4.75% to 6.75% per annum.
- Reserve: A $600,000 general reserve has been imposed by the Lender.
- Blocked Notes: Approximately $26.7 million in unsecured notes issued to shareholders and affiliates are blocked from payment.
- Immediate Costs: A $50,000 forbearance fee is payable on the effective date.
Material Changes and Defaults
The filing details a "Forbearance Period" from March 27, 2026, to April 27, 2026, during which the Lender will temporarily refrain from exercising remedies regarding "Specified Defaults." These defaults include:
- Failure to maintain required Excess Availability.
- Failure to eliminate overadvances on the revolving credit facility (October 2025 – March 2026).
- Issuance of approximately $26.7 million in unsecured notes in violation of indebtedness restrictions.
- Granting of capital stock of Canadian subsidiaries in violation of lien restrictions.
- Failure to deliver an unqualified auditor's opinion for fiscal year 2024.
- Failure to timely deliver monthly financial statements and compliance certificates.
The Lender is under no obligation to extend further loans or financial accommodations.
Guidance, Outlook, and Management Commentary
Restructuring Status: The Company is evaluating strategic alternatives, including equity raises and refinancing transactions. There is no assurance of success or that the Company can continue as a going concern.
Key Milestones: To avoid immediate termination of the Forbearance Period, the Company must:
- By March 30, 2026: Retain and install a Chief Restructuring Officer (CRO).
- By April 9, 2026: Deliver a refinancing plan satisfactory to the Lender sufficient to fully repay all obligations.
Management Changes: Jeffrey T. Varsalone of VRS Restructuring Services, LLC, was appointed Chief Restructuring Officer effective March 30, 2026. He holds powers at least as broad as the CEO. Failure to follow the CRO's directives constitutes an immediate default.
Risks: Failure to satisfy milestones or refinance could result in the acceleration of obligations and foreclosure on collateral.
Investor Verification Checklist
- Verify the status of the $26.7 million in "Blocked Notes" and the identity of the holders (including Chairman Barthelemy Helg and CEO Reza Soltanzadeh).
- Confirm the timeline for the delivery of the refinancing plan (due April 9, 2026) and the Forbearance Outside Date (April 27, 2026).
- Review the engagement letter terms for the Chief Restructuring Officer, noting the hourly fee structure ($325–$925) and the $100,000 retainer already paid.
- Assess the impact of the increased interest rates and the $600,000 reserve on immediate liquidity.
- Monitor for any announcement regarding the failure to meet the March 30 CRO installation milestone or the April 9 refinancing plan deadline.