ViewRay files for Chapter 11 protection

BY Richard Summerfield

ViewRay Inc., has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware. The company’s filing, which came on Tuesday, saw it further disclose that it intends to pursue a sale of its business under section 363 of the Bankruptcy Code, including a sale of all or a portion of the company’s assets, while continuing to support its customers during the Chapter 11 process.

To facilitate the Chapter 11 filing, in addition to having the use of its sufficient existing cash reserves, the company has received a commitment of around $6m in debtor-in-possession (DIP) financing from MidCap Financial Services.

The company has appointed Paul Ziegler as its chief executive. Mr Ziegler, who had previously served as the chief commercial officer (CCO) of the company, has also been appointed to the board as a director. The board also decreased from nine to seven directors. Prior to the Chapter 11 filing, the company terminated its then-CEO, its interim chief financial officer and chief legal officer.

ViewRay developed the MRIdian radiation-therapy system, the ‘world’s first’ radiation therapy system integrated with diagnostic-quality MRI guidance.

“Despite the operating challenges, MRIdian has facilitated real societal value and remains critically important for a broad population of cancer patients, including those who were previously considered untreatable,” said Mr Ziegler in a statement. “We deeply appreciate our teammates, customers, partners, and patients that we serve. We will continue to work diligently to maximize value for the benefit of all stakeholders.”

ViewRay has endured some financial difficulty in recent years. Hit by inflation, supply chain challenges and inconsistent payments from international customers, the company has fallen on hard times. As of 31 March 2023, ViewRay had an order backlog of $411m and recorded adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) losses of $25m in the first quarter of 2023. The company currently intends to lay off 71 employees, in addition to the 36 it let go earlier in 2023. ViewRay currently has 232 remaining employees.

Going forward, ViewRay has vowed to continue “strategically managing” its inventory to help maintain customer sites across the globe. It has also filed several motions in bankruptcy court with the intent of continuing to service customers and honour obligations to remaining employees “following an additional reduction in force”.

News: ViewRay Files Voluntary Chapter 11 Petitions

Bankruptcies boom in H1 2023

BY Richard Summerfield

Commercial Chapter 11 bankruptcies increased significantly over the first half of the year, according to Epiq Bankruptcy.

There were 2973 total commercial Chapter 11 bankruptcies filed during the first six months of 2023, a 68 percent increase over the 1766 filings during the same period in 2022. Individual Chapter 13 filings increased by 23 percent during the same period.

June saw a rise of 12 percent in overall commercial filings, with 2123 filings up from the 1891 commercial filings registered in June 2022. The 404 commercial Chapter 11 filings in June represented a 9 percent increase from the 371 filings in June 2022.

Bankruptcy filings for small businesses, known as subchapter V elections within Chapter 11, also increased 55 percent, according to the data.

Furthermore, total bankruptcy filings reached 217,420 during the first six months of 2023, a 17 percent increase from the 185,352 total filings during the same period a year ago. Total individual filings also registered a 17 percent increase, as the 205,313 filings during the first half of 2023 were up from the 175,094 filings during the first six months of 2022. The 85,390 individual Chapter 13 filings in the first half of 2023 represented a 23 percent increase over the 69,367 filings during the same period in 2022.

All chapters increased in June 2023 compared to June 2022, with 37,700 total bankruptcy filings representing an increase of 17 percent from the 32,198 filed in 2022.

Total commercial filings were up 12 percent from 1,891. Total individual filings were up 18 percent from 30,307.

“The increase in commercial and individual bankruptcy filings during the first half of 2023 underscores the economic challenges faced by businesses and individuals,” said Gregg Morin, vice president of business development and revenue at Epiq Bankruptcy.

Some of the most notable recent filings have included SVB Financial Group, Envision Healthcare Corp and Bed Bath & Beyond. An increasing number of companies is encountering financial difficulty as the global economy continues to fluctuate. The coronavirus (COVID-19) pandemic, the ongoing war in Ukraine, rising interest rates, inflation and increased borrowing costs have all impacted organisations significantly in recent years.

News: Commercial Chapter 11 Filings Doubled Over Same Period Last Year

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