Item 1.03 Bankruptcy or Receivership.
Voluntary Petition for Reorganization
On January 23, 2023 (the "Petition Date"), Rockley Photonics Holdings Limited
(the "Company" or "Rockley"), filed a voluntary petition for relief under
chapter 11 of title 11 (the "Chapter 11 Case") of the United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court"). The Company filed motions with
the Bankruptcy Court to seek authorization to continue to operate its business
as a "debtor in possession" under the jurisdiction of the Bankruptcy Court and
in accordance with the applicable provisions of the Bankruptcy Code and the
orders of the Bankruptcy Court. The Company has filed a series of first day
motions with the Bankruptcy Court that seek authorization to ensure that it can
continue to conduct its business without interruption. These motions are
designed primarily to minimize the effect of bankruptcy on the Company's
operations. None of Rockley's subsidiaries have filed voluntary petitions for
relief under the Bankruptcy Code. The Company also filed the Prepackaged Chapter
11 Plan of Reorganization of Rockley Photonics Holdings Limited (as amended,
supplemented, or modified from time to time, the "Plan") and related Disclosure
Statement. The Company has sought expedited approval of the Plan as part of a
comprehensive restructuring to de-lever the Company's consolidated balance sheet
by eliminating existing debt and introducing a new capital structure which will
provide approximately $35 million of cash for ongoing operations.
The Company cautions that trading in the Company's securities (including,
without limitation, its common stock) during the pendency of the Chapter 11 Case
is highly speculative and poses substantial risks. Trading prices for the
Company's securities may bear little or no relationship to the actual recovery,
if any, by holders of the Company's securities in the Chapter 11 Case.
Additional information about the Chapter 11 Case, court filings and other
documents related to the Chapter 11 Case are available on a website administered
by the Company's claims and noticing agent, Kroll Restructuring Administration
LLC, at https://cases.ra.kroll.com/RockleyPhotonics. The information on this
website is not incorporated by reference into, and does not constitute part of,
this Form 8-K.
Item 2.04. Triggering Events that Accelerate or Increase a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement.
The text set forth in Item 1.03 of this Current Report on Form 8-K regarding the
bankruptcy filing is incorporated into this item by reference.
The filing of the Chapter 11 Case described above constituted an event of
default or otherwise triggered or may trigger repayment obligations under a
number of instruments and agreements relating to direct financial obligations of
the Company and certain of its subsidiaries (the "Debt Instruments"). The Debt
Instruments include (i) approximately $29.31 million in aggregate principal
amount of outstanding convertible senior secured notes issued under that certain
Indenture, dated as of May 27, 2022, by and among the Company, the guarantors
party thereto, and Wilmington Savings Fund Society, FSB, as trustee and
collateral agent (the "May Notes"), and (ii) approximately $90.6 million in
aggregate principal amount of outstanding convertible senior secured notes
issued under that certain Indenture, dated as of October 25, 2022, by and among
the Company, the guarantors party thereto, and Wilmington Savings Fund Society,
FSB, as trustee and collateral agent (the "October Notes").
The May Notes and the October Notes each provide that, as a result of the
Chapter 11 Case, the principal, accrued and unpaid interest and certain other
amounts due thereunder, including certain prepayment premiums payable, shall be
immediately due and payable. Any efforts to enforce such payment obligations
under the Debt Instruments as to the Company are automatically stayed as a
result of the Chapter 11 Case, and the Company's creditors' rights of
enforcement in respect of the Debt Instruments are subject to the applicable
provisions of the Bankruptcy Code and any Bankruptcy Court orders impacting the
stay.
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Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
As previously disclosed in the Company's 8-K filed December 15, 2023, on
December 9, 2022, the Company received a letter from the New York Stock Exchange
("NYSE") notifying it that the Company is not in compliance with the continued
listing requirement in Section 802.01B of the NYSE's Listed Company Manual
because the Company's market capitalization fell below $50 million over a 30
trading day period and its stockholders' equity is less than $50 million. As a
result of the Chapter 11 Cases in accordance with Section 802.01D of the NYSE
Listed Company Manual, the Company expects that the Company's common stock will
be the subject of delisting from the NYSE. Under NYSE delisting procedures, the
Company has the right to appeal this determination, but the Company does not
intend to appeal.
Forward Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act
of 1995. Forward looking statements include, but are not limited to, statements
regarding the Company's plans with respect to the Chapter 11 Case, the Company's
plan to continue its operations while it works to complete its proposed
reorganization, the length of time that the Company will operate under Chapter
11 protection and the continued availability of operating capital during the
pendency of the Chapter 11 Case. Such statements are based on current
assumptions that involve risks and uncertainties that could cause actual
outcomes and results to differ materially, including: the ability of the Company
to continue as a going concern and to continue to operate its business during
the pendency of the Chapter 11 Case; the Company's ability to obtain approval by
the Bankruptcy Court of the relief requested in the first day motions; the
Company's ability to effectuate the restructuring plan and financing; the
ability of the Company to develop and consummate a plan of reorganization with
respect to the Chapter 11 Case; the Bankruptcy Court's rulings in the Chapter 11
Case and the outcome of the Chapter 11 Case in general; the length of time the
Company will operate under the Chapter 11 Case; employee attrition and the
Company's ability to retain senior management and other key personnel due to the
distractions and uncertainties; the effectiveness of the overall restructuring
activities pursuant to the Chapter 11 Case and any additional strategies the
Company may employ to address its liquidity and capital resources; the actions
and decisions of creditors and other third parties that have an interest in the
Chapter 11 Case; increased legal and other professional costs necessary to
execute the Company's restructuring; the Company's ability to maintain
relationships with suppliers, customers, employees and other third parties as a
result of the Chapter 11 Case; the trading price and volatility of the Company's
common stock and the effects of the expected delisting from New York Stock
Exchange; litigation and other risks inherent in a bankruptcy process; and other
risks set forth in the Company's most recent Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q, as well as other documents that the Company
files with the Securities and Exchange Commission. Investors are cautioned not
to place undue reliance on these forward-looking statements, which speak only as
of the date hereof. The Company disclaims any obligation to update these
forward-looking statements because of new information, future events or
circumstances or other factors.
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