Item 8.01 Other Events.
On March 6, 2023, Shift Technologies, Inc. (the "Company") filed a petition (the
"Petition") in the Delaware Court of Chancery under Section 205 of the Delaware
General Corporation Law (the "DGCL") to resolve potential uncertainty with
respect to the Company's share capital. Such uncertainty was introduced by a
recent decision in Garfield v. Boxed, Inc., 2022 WL 17959766 (Del. Ch. Dec. 27,
2022) that potentially affects the Company and many other similarly situated
companies that were formed and became publicly traded as a special purpose
acquisition company ("SPAC"). Out of an abundance of caution, the Company has
elected to pursue the remedial actions described below. Concurrently with the
filing of the Petition, the Company filed a motion to expedite the hearing on
the Petition, which was subsequently granted on March 6, 2023, as described
below.
Background
On October 13, 2020, the Company, which was then a SPAC named Insurance
Acquisition Corp. ("IAC"), held a special meeting of stockholders (the "IAC
Special Meeting") to approve certain matters relating to the merger between IAC
and a privately held company then called Shift Technologies, Inc. One of these
matters was a proposal to amend and restate IAC's Amended and Restated
Certificate of Incorporation (the "SPAC Charter") in order to, among other
things, increase the number of authorized shares of Class A common stock from
50,000,000 to 500,000,000 (such proposal, the "Share Increase Proposal" and,
together with such other amendments to the SPAC Charter, the "Charter
Proposals").
At the IAC Special Meeting, the Charter Proposals were approved by a majority of
the outstanding shares of Class A common stock and a majority of the outstanding
shares of Class B common stock of IAC as of the record date for the IAC Special
Meeting, voting together as a single class. After the IAC Special Meeting, IAC
and Shift Technologies, Inc. closed the merger pursuant to which the Company
became the parent of Shift Technologies, Inc. (now named Shift Platform, Inc.),
and the Company's certificate of incorporation, as amended to give effect to the
Charter Proposals and to change the Company's name to Shift Technologies, Inc.,
became effective.
The recent ruling by the Delaware Court of Chancery in the Boxed case introduces
uncertainty as to whether Section 242(b)(2) of the DGCL would have required the
Share Increase Proposal to be approved by the vote of the majority of IAC's
then-outstanding shares of Class A common stock, voting as a separate class. The
Company has been operating with the understanding that the Charter Proposals
were validly approved at the IAC Special Meeting. In light of this recent
ruling, however, to resolve potential uncertainty with respect to the Company's
share capital, the Company has filed a petition in the Delaware Court of
Chancery under Section 205 of the DGCL to seek validation of the Charter
Proposals. Section 205 of the DGCL permits the Court of Chancery, in its
discretion, to ratify and validate potentially defective corporate acts.
If the Company is not successful in the Section 205 proceeding, the uncertainty
with respect to the Company's capitalization could have a material adverse
impact on the Company, including without limitation on the Company's ability to
timely file its Annual Report on Form 10-K for the fiscal year ended December
31, 2022 and the potential adverse consequences resulting therefrom.
Hearing Date
On March 6, 2023, the Court of Chancery granted the motion to expedite and set a
hearing date for the Petition to be heard. The hearing has been set for March
17, 2023 at 12:00 p.m. Eastern Time at the Leonard L. Williams Justice Center,
500 North King Street, Wilmington, Delaware 19801. As required by the Court of
Chancery, the Company is filing the Petition with this Current Report on
Form 8-K. A copy of the Petition is attached hereto as Exhibit 99.1.
This Current Report on Form 8-K constitutes notice of the hearing. If any
stockholder of the Company wishes to express a position on the Petition, such
stockholder may (i) appear at the hearing or (ii) file a written submission with
the Register in Chancery, Leonard L. Williams Justice Center, 500 North King
Street, Wilmington, Delaware 19801, referring to the case caption, In re Shift
Technologies, Inc., C.A. No. 2023-0275-LWW (Del. Ch.), in advance of the
hearing, and any such written submission should be emailed to the Company's
counsel, Kevin M. Gallagher, Richards, Layton & Finger, P.A., at
gallagher@rlf.com
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Forward-Looking Statements
Certain statements in this Current Report on Form 8-K constitute
"forward-looking statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Statements contained in this Form 8-K that are
not historical facts are forward-looking statements and include, for example,
statements with respect to the pending Section 205 proceeding referenced above
and the ability of the Company to timely file its Annual Report on Form 10-K.
Such forward-looking statements involve known and unknown risks and
uncertainties, and the Company's actual results could differ materially from
future results expressed or implied in these forward-looking statements. The
forward-looking statements included herein are based on the Company's current
expectations. These statements are not guarantees or indicative of future
performance. Important assumptions and other important factors that could cause
actual results to differ materially from the forward-looking statements include,
but are not limited to, the Company's ability to obtain the requested relief in
the Section 205 proceeding and those additional risks, uncertainties and factors
described in more detail under the caption "Risk Factors" in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2022,
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2021, and in the Company's other filings with the Securities and Exchange
Commission. The Company disclaims any obligation or undertaking to update,
supplement or revise any forward-looking statements contained in this Item 8.01.
Given these risks and uncertainties, readers are cautioned not to place undue
reliance on the forward-looking statements.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1 Petition of Shift Technologies, Inc. Pursuant to 8 Del. C. § 205.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
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