Electric truck maker Lordstown files for Chapter 11

BY Fraser Tennant

Amid accusations that its investment partner Foxconn has reneged on its commitments, struggling US electric truck manufacturer Lordstown Motors Corp. has filed for Chapter 11 bankruptcy.

As part of the bankruptcy process, Lordstown has filed litigation detailing its description of Foxconn’s fraud and wilful and consistent failure to live up to its commercial and financial commitments to Lordstown, arguing that Foxconn’s actions led to material damage to Lordstown as well as its future prospects.

Under the partnership, Lordstown had agreed to divest its most valuable assets to Foxconn, namely its Lordstown, Ohio manufacturing facility, which is one of the largest in North America, along with its highly talented and experienced manufacturing and operational employees.

The Chapter 11 filing will also allow Lordstown to commence a comprehensive marketing and sale process for the Endurance all-electric vehicle (EV) and related assets, as well as provide a prospective buyer with a going concern asset that is free and clear of any legacy issues.

“As one of the early entrants to the EV industry, we have delivered the Endurance, an innovative and highly-capable EV with significant commercial and retail potential,” said Edward Hightower, chief executive and president of Lordstown. “We  subsequently engaged with Foxconn in a purposeful, strategic partnership to leverage this expertise into a broader EV development platform.”

“However, despite our best efforts and earnest commitment to the partnership, Foxconn wilfully and repeatedly failed to execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximise the value of Lordstown's assets for the benefit of our stakeholders. We will vigorously pursue our litigation claims against Foxconn accordingly.”

To ensure a smooth transition into Chapter 11, the company filed with the bankruptcy court a series of customary ‘first day’ motions to continue operating the business and uphold its commitments to stakeholders during the process. Lordstown enters Chapter 11 with significant cash on hand and is debt-free.

“While in Chapter 11, Lordstown will continue to support our customers,” concluded Mr Hightower. “We are grateful for the Lordstown team for their commitment and dedication to our vision and to our customers, suppliers and business partners.”

News: Lordstown Motors files for bankruptcy, sues Foxconn

Data centre operator Cyxtera files for Chapter 11

BY Fraser Tennant

In a bid to put itself on a more solid financial footing, data centre operator Cyxtera Technologies Inc. and certain of its subsidiaries has filed for Chapter 11 bankruptcy protection.

Cyxtera’s bankruptcy filing – which does not include its subsidiaries in Germany, Singapore and the UK – is pursuant to a previously disclosed restructuring support agreement (RSA) it reached with certain of its lenders holding over two-thirds of its outstanding term loan.

The company expects to use the Chapter 11 process to strengthen its financial position, meaningfully deleverage its balance sheet and facilitate the business’s long-term success.

In addition, Cyxtera has received a commitment for $200m in debtor-in-possession (DIP) financing from certain of the term lenders, which is convertible into an exit facility upon the company's emergence from the court-supervised process. This new financing is expected to provide sufficient liquidity to support Cyxtera during this process and beyond.

“We have thoroughly evaluated options to enhance value for the company and our stakeholders,” said Nelson Fonseca, chief executive of Cyxtera. “Together with our lenders, we determined that initiating this process is the best path forward for Cyxtera and our stakeholders as we pursue new opportunities for growth.

“We appreciate the significant support from our lenders, which will enable us to move through this process as quickly as possible,” he continued. “We are confident these steps will enable us to position our business for the long term as we continue serving our customers with innovative services and the highest levels of support.”

A global leader in colocation and interconnection services, with a footprint of more than 60 data centres in over 30 markets, Cyxtera provides more than 2300 enterprise and government customers with the technology solutions they need to scale faster, achieve financial goals and gain a competitive advantage.

“Our recent business momentum and the high demand for our global data centre platform are a testament to the hard work and commitment of our team, as well as to the continued support of our customers and business partners,” concluded Mr Fonseca. “We look forward to emerging from this process as a stronger organisation with additional financial flexibility to drive Cyxtera’s next phase of growth.”

News: Data-center operator Cyxtera files for bankruptcy

UK chemicals giant Venator files for Chapter 11

BY Fraser Tennant

Following a period of mounting losses, UK-based chemical giant Venator Materials PLC has agreed a recapitalisation plan with its lenders and noteholders as part of a bid to rescue the business.

To be implemented through a pre-packaged Chapter 11 bankruptcy in the US, the plan will equitise nearly all of Venator’s funded debt, strengthen its balance sheet and facilitate an infusion of new capital, which will position the company for future growth and success.

Moreover, the plan will be financed by a debtor-in-possession (DIP) financing facility, which includes a commitment for $275m in new-money financing from the company’s supporting creditors.

Following approval by the court, the DIP financing, together with cash on hand and cash generated from ongoing operations, is expected to provide substantial liquidity to support Venator throughout the recapitalisation process and beyond.

A global manufacturer and marketer of chemical products, Venator’s offerings comprise a broad range of pigments and additives that bring colour and vibrancy to buildings, protect and extend product life and reduce energy consumption. Based in Wynyard, UK, the company employs approximately 2800 associates and sells its products in more than 106 countries.

“We have faced unprecedented economic headwinds, including significantly lower product demand and higher raw material and energy costs in the second half of 2022,” said Simon Turner, president and chief executive of Venator. “The agreement we have reached with our lenders on a recapitalisation plan will significantly reduce Venator’s debt burden and place the company on a sound financial footing, which will enable us to deliver on our strategy and capitalise on future growth opportunities.”

Venator's businesses are expected to continue to operate as normal for the duration of the Chapter 11 process and Venator expects to continue to pay wages and benefits to its global workforce and pay all trade partners.

Throughout the court-supervised bankruptcy process, Venator will remain in possession and control of its assets, as well as retain its existing management team and board of directors.

Venator expects to complete its Chapter 11 process within approximately two months.

Mr Turner concluded: “Venator’s management, alongside our advisers, has worked tirelessly to assess all viable options available to us to ensure the long-term sustainable success of the company.”

News: Venator files for Chapter 11 bankruptcy process as US shares to be delisted

Drugmaker Athenex files for Chapter 11

BY Fraser Tennant

After exploring several options to stay afloat, biopharmaceutical company Athenex, Inc has voluntarily filed for Chapter 11 bankruptcy to divest its assets, while seeking to maximise value for its stakeholders.

The company has also reached agreement with its lenders to move forward with an expedited sales process of its assets across its primary businesses, which is expected to conclude by 1 July 2023, with Chapter 11 cases continuing thereafter to resolve claims.

Athenex has also reached an agreement with its secured lenders, subject to court approval, for the consensual use of cash collateral, which will enable the company to, among other things, satisfy certain obligations to its vendors for authorised goods received and services rendered after the filing.

Founded in 2003, Athenex is a clinical-stage biopharmaceutical company dedicated to becoming a leader in the discovery, development and commercialisation of next-generation cell therapy products for the treatment of cancer.

“Throughout our history, we have sought to become a leader in bringing innovative cancer treatments to the market and improving patient health outcomes,” said Dr Johnson Lau, chief executive of Athenex. “Our team was successful in bringing tirbanibulin, through regulatory approvals, to the US market and a number of European Union (EU) countries, as well as Taiwan.

“Unfortunately, our oral paclitaxel product candidate received a complete response letter from the US Food and Drug Administration, and this significant regulatory setback, coupled with challenging biotech markets and the difficult economic environment, put tremendous pressure on our ability to continue to fund our businesses.”

Over the past two years, Athenex has refocused its business around its NKT cell therapy platform, monetised non-core assets to improve its balance sheet and extended its cash runway, while paying down $108m of debt and undertaking a comprehensive review of strategic alternatives to create value for our stakeholders.

Dr Lau concluded: “We are incredibly thankful to our team for their dedication to Athenex and will look to support our colleagues through this transition period.”

News: Drugmaker Athenex voluntarily files for U.S. Chapter 11 proceedings

Bittrex bankrupt

BY Richard Summerfield

Cryptocurrency exchange Bittrex Inc has filed for Chapter 11 in the US Bankruptcy Court for the District of Delaware, just weeks after the company was accused of operating an unregistered securities exchange by the US Securities and Exchange Commission (SEC).

At the end of April, Seattle-based Bittrex halted its US operations and noted that its international customers, which are served by its global platform based in Liechtenstein, would not be impacted by its US bankruptcy. Bittrex, which was founded in 2014, said it has more than 100,000 US-based creditors. Its estimated liabilities are between $500m and $1bn, according to the court filing. The US Treasury’s Office of Foreign Assets Control (OFAC) emerged as the company’s largest creditor, with a substantial claim exceeding $24m.

In mid-April, the SEC sued Bittrex on allegations it operated a national securities exchange, broker and clearing agency. The SEC also sued former Bittrex chief executive Bill Shihara and Bittrex Global. Oliver Linch, chief executive of Bittrex Global. said last month that the exchange intended to fight the charges in court, but a bankruptcy proceeding may make this more difficult.

“Having previously announced that Bittrex, Inc. would be ceasing all operations in the U.S. effective April 30th, we have now made the decision to file Chapter 11 bankruptcy in federal court in Delaware,” said Bittrex in a statement announcing the bankruptcy filing. “This announcement does not impact Bittrex Global, which will continue operations as normal for its customers outside the U.S.

“For those customers who did not withdraw their funds from the platform prior to the end of April, your funds remain safe and secure, and our main priority is to ensure that our customers are made whole. While the Bankruptcy Court will ultimately decide the method by which those funds can be claimed by and distributed to our customers, we intend to ask the court to activate those accounts as soon as possible so that customers meeting the necessary regulatory requirements will be able to withdraw them,” he added.

In filings made at the Delaware Court, Evan Hengel, the co-chief restructuring officer of Bittrex, said that customers would get a “100 percent like-kind cryptocurrency distribution” under its liquidation plan, enabling them to access the Bittrex platform and withdraw their funds.

News: Crypto exchange Bittrex files for bankruptcy after SEC complaint