ENKLU, Inc.

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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

In te: ) Case no. 26-09345

)
ENKELY, Inc., ) Chapter 7

)

Debtor, ) Honorable Jacqueline P. Cox
)
)
MEMORANDUM OPINION

This matter comes before the court on a Motion to Dismiss filed by Wanger Income and
Growth Fund, LP (WIGF’). WIGF argues that Enklu, Inc.’s Chapter 7 petition should be
dismissed because it lacked the corporate authority to file, The court finds that Enklu did have
authority to file as the Amended and Restated Certificate of Incorporation of Enklu, Inc. (the
“Amended Charter”) specifically listed actions it could not take without the permission of WIGF as
a Series A-1 Preferred Shareholder or Malcolm Bourne in his capacity as the Series A-1 Preferred
Director. Filing for bankruptcy was not one of them. As explained below, the court will not read
into the Amended Charter words that are not there. The Motion to Dismiss is denied, and Enklu
may proceed with its Chapter 7 petition.

BACKGROUND
I. The Amended Chatter

Enklu, Inc. is a software company incorporated in Delaware since July 8, 2016. (Amended
Charter, Dkt. 9 at p. 1). On December 1, 2023, Enklu adopted its Amended Charter, “which
established and governed the rights, preferences, powers, limitations, and protections associated with
its capital structure, including a Series A-1 Preferred Stock.” (Mot. to Dismiss, Dkt. 9 at ¥ 2).
According to the Amended Charter, Enklu is authorized to issue 83,640,482 in stock.’ (Amended

Charter, Dkt. 9, Ex. 1 at p. 1). WIGF is a lead investor and conttolling shareholder, having invested

'Enklu “has two classes of stock, referred to as Common Stock and Preferred Stock. There are 53,900,000 shares of
authorized Common Stock ... and 29,740,482 shares of authorized Preferred Stock .. . 14,625,313 of which ate hereby
designated as ‘Series A-1 Preferred Stock.” (Amended Charter, Dkt. 9, Ex. 1 at 1).

AUTHENTICATED
U.S. GOVERNMENT
INFORMATION

GPO

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$1,000,000 into the Series A-1 Preferred Stock. (Summaty of Deal Terms, Dkt. 9, Ex. 2); see aso
Chapter 7 Voluntary Petition, Dkt. 1, internal p. 31 at 4] 44. As of May 21, 2026, Enklu owed
WIGF $845,218.39, funds WIGF loaned to Enklu so Enklu could continue its operations. (Mot. to
Dismiss, Dkt. 9 at 45).

On December 1, 2023, Enklu and its investors signed an Amended Voting Agreement,
which entitled the Series A-i Preferred Stockholders “to elect one director of the Corporation (the
‘Series A-1 Preferred Director’).” (Amended Voting Agreement, Dkt. 9, Ex. 6, Recitals at p. 1).
Enklu’s Board of Directors initially included Ray Kallmeyer, Austin Walne, Eric Wanget, Gale
Savino, and Mike Savino. On May 4, 2026, Malcolm Boutne was elected as the A-1 Preferred
Director, replacing Eric Wanger. (Action by Written Consent of the Series A-1 Prefetred
Stockholders, Dkt. 9, Ex. 7).

il. Preferred Stock Protective Provisions

Article 4, Section 3.3 of the Amended Charter is titled Preferred Stock Protective Provisions.
This section details the actions requiting permission from the Requisite Holders. The Requisite
Holders are defined as “the holdets of at least a majority of the outstanding shares of Preferred
Stock, voting together as a single class on an as-converted to Common Stock basis and Wanget
Income and Growth Fund, LP.” (Amended Charter, Dkt. 9, Ex. 1, Art. Fourth, § 2.5.1 at p. 6).
WIGF summarizes the role of the Requisite Holders saying they “are stockholder-level
decisionmakers whose approval is required for specified actions identified in the Preferred Stock
Protective Provisions.” (Mot. to Dismiss, Dkt. 9 at 13). The actions requiring the permission of
the Requisite Holdets are as follows:

At any time when at least 7,435,120 shares of Preferred Stock .. . are outstanding,

the Corporation shall not, either directly or indirectly by amendment, merger,

consolidation, domestication, transfer, continuance, recapitalization, reclassification,

waiver, statutory conversion, ot otherwise, effect any of the following acts or
transactions without ... the written consent or affirmative vote of the Requisite

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Holders: liquidate, dissolve or wind-up the business and affairs of the Corporation or
effect any Deemed Liquidation Event’ or any other merger, consolidation, statutory
conversion, transfer, domestication or continuance.

(Amended Charter, Dkt. 9, Ex. 1, Art. Fourth, §§ 3.3-3.3.1 at p. 9). Should Enklu desire to
liquidate, dissolve or wind-up the business and affairs of the Corporation or effect any Deemed
Liquidation Event, it would need the permission of the Requisite Holders as defined by the
Amended Charter. 8 Del. C. § 102(b)(1); see also CA, Ine. », AFSCME Emps. Pension Plan, 953 A.2d
227, 234 (Del. 2008).
Ill. Requisite Director Provisions

Article 4, Section 3.2(e) and Article 6 of the Amended Chatter “separately provide[] that
certain cotporate actions requite approval of the Requisite Directors, which includes the Series A-1
Preferred Director if serving on the Board.” (Mot. to Dismiss, Dkt. 9 at 9 18). Requisite Directors
means “approval by the Board of Directors, including the approval of the Series A-1 Preferred
Director [Malcolm Bourne] if the Series A-1 Director is a member of the Board at the time of such
consent.” (Amended Charter, Dkt. 9, Ex. 1, Art. Fourth, § 3.2(e) at p. 9). According to WIGF,
“Requisite Directors ate part of the Board-level governance structure and include the Series A-1
Preferred Director when serving on the Board.” (Mot. to Dismiss, Dkt. 9 at 13). Article 6 of the
Amended Chatter states, “so long as the holders of Seties A-1 Preferred Stock are entitled to elect a
Series A-1 Preferred Director, the affirmative vote of the Requisite Directors shall be required for
the authorization by the Board of Directors of any of the mattets set forth in the Investors’ Rights

Agreement.” (Amended Chatter, Dkt. 9, Ex. 1, Art. Sixth at p. 21). The Investors’ Rights

* The Amended Charter defines a Deemed Liquidation Event as “a merger, consolidation, statutory conversion, transfer,
domestication, or continuance . .. the sale, lease, transfer, exclusive license ot other disposition, in a single transaction ot
series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets
of the Cotporation and its subsidiaries taken as a whole, or, . . the sale, lease, transfer, exclusive license or other
disposition (whether by metger, consolidation, statutory conversion, domestication, continuance or otherwise, and
whether in a single transaction o1 a seties of related transactions) of one or more subsidiaries of the Corporation if
substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or
subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary
of the Corporation.”

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Agreement includes a provision that states, “The current protective provisions that currently require
the consent of the Preferred Director shail instead be amended to require the consent of the Series
A-i Director.” (Term Sheet, Investors’ Rights Agreement, Dkt. 9, Ex. 4 at p. 4). Should Enklu
desire to liquidate, dissolve or wind-up the business of the Corporation or effect a Deemed
Liquidation Event, 1t would need approval from the Series A-1 Preferred Shareholders.

IV. Series A-1 Preferred Stock

WIGF invested $1,000,000 in the Series A-1 Preferted Stock, making it the lead investot.
(Mot. to Dismiss, Dkt. 9 at {] 3); see aéso Summary of Deal Terms, Dkt. 9, Ex. 2.

The Amended Voting Agreement entitled the Series A-1 Preferred Stockholders “to elect |
one director of the Corporation (the ‘Seties A-1 Preferred Director’).” (Amended Voting
Agreement, Dkt. 9, Ex. 6, Recitals at p. 1). WIGF states that the “Series A-1 Preferred Director was
not created to serve as an obsetver, but rather a role that was incorporated into the Chartet's
governance framework for specified corporate actions.” (Mot. to Dismiss, Dkt. 9 at | 12).

On May 4, 2026, Malcolm Bourne became the A-1 Preferred Director. (Action by Written
Consent of the Series A-1 Preferred Stockholders, Dkt. 9, Ex. 7). As stated, the Investors Rights
Agreement requires Enklu to obtain the permission of the Series A-1 Preferred Director to perform
the actions listed in the Preferred Stock Protective Provisions. (Term Sheet, Investors’ Rights
Agreement, Dkt. 9, Ex, 4 at p. 4). Once again, should Enklu desire to liquidate, dissolve, or wind-up
the business of the Corporation or effect any Deemed Liquidation Event, it needs the approval of
Malcolm Bourne as the Series A-1 Preferted Director.

V. The Chapter 7 Petition
On May 29, 2026, the board of directors held a meeting where a resolution was ptesented

for Enklu to file a Chapter 7 petition. (Chapter 7 Petition, Minutes of a Meeting of the Board of

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Directors (“Minutes,”) Dkt. 1 at pp. 4-6). The directors who were present were Ray Kallmeyer,
Malcolm Bourne (in his capacity as the Series A-1 Preferred Director), Austin Walne, Heidi Braun,
and Gale Wilkinson. Id at 4. On the resolution to file a petition, the Minutes teflect that “Gale
Wilkinson motioned to approve, with Austin Walne seconding. Gale Wilkinson, Austin Walne, and
Ray Kallmeyer voted to approve. Heidi Braun’ and Malcolm Bourne voted to abstain.” Id. at 4.
Following the resolution, Enklu filed its Chapter 7 petition on June 1, 2026. (Chapter 7 Voluntary
Petition, Dkt. 1).

WIGF filed its Motion to Dismiss for lack of corporate authority to file a Chater 7 petition on
June 16, 2026. (Mot. to Dismiss, Dkt. 9). In the Motion to Dismiss, WIGF states that the resolution
to file bankruptcy was without the approval of the Requisite Holders or the Preferred Stockholders
and Malcolm Bourne in his capacity as the Series A-1 Preferred Director, Id. at 420. It argues that
the Amended Charter expressly requires “the written consent or affirmative vote of the Requisite
Holdets . . . to ‘liquidate, dissolve or wind-up the business and affaits of the Corporation.” (Mot. to
Dismiss, Dkt. 9 at p. 9 (citing the Amended Charter, Art. Fourth, §§ 2.5.1, 3.3, and 3.3.1 at pp. 6-9)
Because “the written consent or affirmative vote of the Requisite Holders was [not] sought or
obtained,” and because “WIGF did not provide written consent or an affirmative vote in favor of
the putported action to liquidate,’ WIGF argues that “there is no authorization for the Chapter 7
filing.” Id at p. 11. Essentially, any actions in the Protective Provisions require the approval of the
Requisite Holders, which includes a majority of the shareholders and WIGF. (Amended Charter,

Dkt. 9, Ex. 1, Art. Fourth, § 2.5.1 at p. 6).

>In a footnote in its Motion to Dismiss, WIGF states, “The Board Minutes identify Heidi Braun as present and count
her toward the quorum. Movants are not aware of her appointment to the board.” (Mot. to Dismiss, Dkt. 9 at ] 19).

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WIGF explains in its Motion to Dismiss that the Requisite Holder and Requisite Director
provisions serve different purposes, According to WIGF, the Requisite Holder provisions function
at the shareholder level and govern certain corporate actions, including liquidation decisions. The
Requtsite Director provisions operate at the Board level and incorporate the participation of the
Series A-1 Preferred Director in the governance structure. According to WIGF, the existence of
one approval mechanism does not eliminate the other. (Mot. to Dismiss, Dkt. 9 at pp. 12-13). ‘The
court accepts WIGF’s position on these issues. The problem for the Debtor is that neither the
Requisite Holders nor the Requisite Director voted in favor of filing a bankruptcy petition at the
May 29, 2026 Board meeting. The court finds, however, that the approval of the Requisite Holders
nor the Requisite Director was required to file a petition,

In his seaponde to WIGF’s Motion to Dismiss, the Chapter 7 Trustee argues that “nothing in
Section 3.3 of the Amended Charter . . . applies to the initiation of insolvency proceedings or a
banktuptcy filing.” (Resp. in Opp’n., Dkt 22 at p. 5). Because there is no reference to a bankruptcy
filing, this court must refer to Delaware’s default rule, which states, “the business and affairs of
evety corporation .. . shall be managed by or under the direction of a board of directors, except as
may be otherwise provided tn [the DGCL] or in its certificate of incorporation.” Id. (citing 8 Del. C.
§ 141(a)). The Trustee further argues that “in the absence of specific provisions in a corporation’s
governing documents regarding authority to file a bankruptcy petition, the default rule that such a
decision is left to the corporation’s board of directors alone applies.” Jd. at 6.4 Without “specific
authorization, the authority rests, by default, with the corporation’s board of directors.” Id. at 7-8.

DISCUSSION

I, Authority to File a Chapter 7 Petition

‘The Trustee cites Iv re Maurie Graphic Design Inc., 667 B.R. 54, 56 (Banke. D. Idaho 2025), Mater of Giggles Rest., Ine. 103
B.R. 549, 552-53 (Bankr. D.N_J. 1989), Iv re Arkeo Props, Inc, 207 BLR. 624, 628 (Bankr, D. Ark. 1997), and Iv wv
Moni-Stat, Ine, 84 B.R. 756, 757 (Banke. D. Kan. 1988) to support this proposition,

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This court must determine whether Enklu’s petition was filed by those who had authority to
do so as “the initiation of [bankruptcy] proceedings, like the run of corporate activities, is left to the
corporation itself, ic. to those who have the power of management.” Price v. Gurney, 324 US. 100,
104 (1945). If this court “finds that those who purport to act on behalf of the corporation have not
been granted authority by local law to institute the proceedings, it has no alternative but to dismiss
the petition.” Jd Because Enklu is incorporated in Delaware, the authority to file a Chapter 7
petition is governed by Delaware law. CTS Corp. v. Dynamics Corp. of Am. 481 U.S. 69, 90 (1987)
(finding that corporations are governed by the corporate law of their state of incorporation); see also
Price, 324 U.S. at 106 (“In absence of federal incorporation, th{e] authority [to file a bankruptcy
petition] finds its source in local law.”). As a Delaware corporation, Enklu is governed by the
General Corporation Law of the State of Delaware (the “DGCL”).

Under the DGCL, “{t]he business and affairs of every corporation organized under this
chaptet shall be managed by or under the direction of a board of directors, except as may be
otherwise provided in this chapter or in its certificate of incorporation.” 8 Del. C. § 141 (a). The
Delaware Supreme Court interpreted Section 141 and said, “Section 141(a) requires that any
limitation on the board's authority be set out in the certificate of incorporation.” Onickturn Design
Sys, Ine, v. Shapiro, 721 A.2d 1281, 1291 (Del. 1998). Further, Section 102 of the DGCL states, “the
certificate of incorporation may also contain ... any provision ... limiting ... the powers of ... the
directors.” 8 Del. C. § 102(b)(1). Interpreting this section, the Delaware Supreme Court said,
“Section 102(b)(1} contemplates that any provision that limits the broad statutory power of the
directors must be contained in the certificate of incorporation.” AFSCME Eps. Pension Plan, 953
A.2d at 234. Therefore, if WIGF sought to limit the ability of Enklu to file bankruptcy, it would

have to include a specific provision in the Amended Charter.

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i. The Applicable Language of the Delaware Code is Cleat.

The Amended Charter plainly states that Enklu requires the consent of the Requisite
Holders to “liquidate, dissolve or wind-up the business and affairs of the Corporation or effect any
Deemed Liquidation Event.” (Amended Charter, Dkt. 9, Ex. 1 Art. Foutth, § 3.3.1 at p. 9).
Delaware law informs that “the terms liquidation, dissolution and winding-up refer to corporate
transactions which are essentially statutory in nature and typically have a precise statutory meaning
under the applicable corporation law of a particular jurisdiction.” Prescott, Ball > Turben, et al v. LTV
Corp., 531 F. Supp. 213, 219 (S.D.N.Y. 1981) (citing N.Y.B.C.L. Articles 5 (Liquidation), 10-11
(Dissolution), DelCode Ann. tit. 8, ss 271-284 (Winding Up and Dissolution), 291-303
(Liquidation)).

Under Delaware law, these terms are outlined under Title 8 of the DGCL. Sections 271
through 285 deal with sales of assets, dissolution, and liquidation while Sections 291 through 303
deal with insolvency, receivers, and trustees. Further, Section 303 specifically details the actions a
cotporation in federal bankruptcy may take without obtaining approval from its directors or
shareholders. 8 Del. C. § 303. Considering that each matter has its own requirements, rules, and
ptocedutes as explained in the DGCL, the Trustee legitimately argues, “under Delawate law,
bankruptcy is a concept separate from liquidation, dissolution, and the other processes referred to in
Section 3.3.1 [of the Amended Charter] and in the definition of Deemed Liquidation Event.” (Resp.
in Opp’n, Dkt. 22 at 9).

The court agrees with the Trustee. Courts ate required to read the plain language of a statute
and may not tead language into the statute that is not there. Romag Fasteners, Ine v. Fossil, Inc. 590 U.S.
212, 215 (2020); In we Rody, 468 B.R. 384, 388 (Bankr. D. Ariz. 2012) (“Coutts must apply the plain

meaning of the statute and may not tread into a statute an exemption that is not there.”). Where the

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statute's language is plain, “the sole function of the coutts is to enforce it according to its terms.”
Caminetti v. United States, 242 U.S. 470, 485 (1917). See also United States v. Ron Pair Enters, Inc, 489
US. 235, 240-41 (1989) (“[A]s long as the statutory scheme is coherent and consistent, there
generally is no need for a court to inquire beyond the plain language of the statute.”).

Reading the plain language of the statute, it is clear that liquidation, dissolution, winding-up,
and bankruptcy ate not synonymous as the Delawate legislature dealt with each of them separately.
Dedicated Nursing Assocs., Inc. v. Buckeye Forest At Akron LLC, No. 2:25-CV-236, 2026 WL 575073, at
*5 (S.D. Ohio Mar. 2, 2026} (“A Chapter 7 bankruptcy is not... the same as a dissolution. The
former involves the administration and liquidation of an entity's assets, whereas dissolution results in
the termination of an entity's existence.”) (citation omitted). Indeed, if the court were to read these
terms as synonymous, it would render each redundant, and courts should “avoid a reading which
tenders some wotds altogether redundant.” Gustafion v, Alloyd Co., 513 U.S. 561, 562 (1995). If the
Delaware legislature wanted liquidation, dissolution, winding-up, and bankruptcy to be synonymous,
it would not have divided each event into its own category in the statute with separate rules,
procedures, and requirements.

II. Enklu Had Authority to File Its Chapter 7 Petition.

The Amended Charter does not include filing for bankruptcy as an event that requites
approval of the Requisite Shareholders or Malcom Bourne as the Series A-1 Preferred Director.
Simply put “the list of actions requiting consent is clear, specific and limited. The filing of a_
bankruptcy petition is not equivalent to liquidation or dissolution.” In re E. End Dev., LLC, 491 BR.
633, 640 (Bankr. E.D.N.Y. 2013); aad see In re SSRE Holdings, LLC, No. 2:21-BK-10327-WB, 2021
WL 3829303, at *5 (B.A.P, 9th Cir. Aug. 26, 2021) (holding that corporation had authority to file

bankruptcy because “the Operating Agreement does not specifically require the consent of all

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members to file bankruptcy”). Put another way, “[t]he authority to file a petition was not specifically
included and may not be derived by implication from any of the specifically authorized acts. There
is a difference between winding up and dissolving the corporation and filing a bankruptcy petition
on its behalf.” Inv re Stavola/ Manson Elec. Co., Inc, 94 B.R. 21, 23 (Bankr. D. Conn. 1988). The court
finds that liquidation, insolvency, winding up dissolution, and bankruptcy ate not synonymous, “and
the Court wili not equate... [them] for the purposes of including bankruptcy as an event requiring
the consent of [the Requisite Holders].” FE. Bad Dev. LLC, 491 B.R. at 640,

Finally, WIGF argues that under Price » Gurney that the question “is not whether the
Amended Charter expressly references bankruptcy, but whether Delaware law and Enklu’s
governing documents allocated authority over the corporate action the Board approved.” (Reply in
Support, Dkt. 27 at 3). While that is the correct inquiry, the court cannot ignore that the Amended
Charter simply does not say that filing bankruptcy is an action requiting consent. Just as this court
will not “read into statutes words that aren't there,” neither will it read into the Amended Charter
words that are not there. Romag Fasteners, Inc, 590 US, at 215. This court does not have the “power
to amend the language of the Operating Agreement, which provides a comprehensive tecitation of
the parties’ rights and responsibilities. To do so would arbitrarily limit the full rights granted to the
managing member and would be inconsistent with the express terms of the Operating Agreement.”
Inve Ei. End Dev. 491 B.R. at 636.5

Further, the Amended Charter is unambiguous in defining which actions require the

permission of the Requisite Holders or the Series A-1 Preferred Director. “If a contract is

WIGE attempted to distinguish East Eud Development, arguing, “East Evd itself recognizes the distinction WIGF
advances here: filing bankruptcy and liquidating are not synonymous concepts, but a bankruptcy proceeding may
nevertheless be the process through which liquidation is accomplished.” (Supp. Mem. Regarding Iy Re Bast Had
Development, LLC, Dkt. 36 at p. 6). As already stated, the court will not equate liquidation and bankruptcy. The words ate
legal terms of art, and requiring permission to file a bankruptcy petition needed to be expressly written in the Amended
Charter.

-10-

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unambiguous, extrinsic evidence may not be used to interpret the intent of the parties, to vary the
terms of the contract or to cteate an ambiguity.” Eagle Indus., Ine. v. DeVilbiss Health Care, Inc., 702
A.2d 1228, 1232 (Del. 1997). Under Delaware law, the “patol evidence rule bars the adinission of
evidence exttinsic to an unambiguous, integrated written contract for the purpose of varying or
contradicting the terms of that contract.” Galantino ». Baffone, 46 A.3d 1076, 1081 (Del. 2012). If
WIGF wanted the filing of a bankruptcy petition to be among the actions requiting permission of
the Requisite Holders or the Series A-1 Preferred Director, it should have included that in the
Amended Charter. It did not, and since “{t]his is the contract that the patties wrote,... [WIGF]
must live with the consequences.” Lanich v. Bragg, No. 05-CV-269-D, 2006 WL 8435531, at *5 (D.
Wyo. June 22, 2006).
CONCLUSION
For the reasons stated above, WIGF’s Motion to Dismiss is denied. Enkha had the authority to

file its Chapter 7 petition and may proceed with its bankruptcy case. This opinion represents the

court’s findings of fact and conclusions of law. A separate order will be entered.

Date: October 14, 2026 ENTERED:

Pepebais G6

Jacqueline P. Cox
Chief Bankruptcy Judge

-ll-