Item 1.02. Termination of Material Definitive Agreement
On August 29, 2022, Allena Pharmaceuticals, Inc., (the "Company") entered into a
settlement agreement (the "Settlement Agreement") with Pontifax Medison Finance
(Israel) L.P. and Pontifax Medison Finance (Cayman) L.P. (collectively, referred
to as the "Lenders"), in connection with which the Company agreed to pay the
Lenders $1.4 million in full satisfaction of all amounts outstanding under that
certain Loan and Security Agreement with the Lenders dated September 29, 2020
(the "Loan Agreement"). The Settlement Agreement included a customary release of
claims and a release of all liens arising under the Loan Agreement.
In connection with the Settlement Agreement, the Company agreed to make certain
additional payments to the Lenders in the event the Company pays certain other
creditors of the Company more than 25% of the amount currently owed to such
creditors. In addition, prior to any distribution or payment of any kind being
made on account of any of the Company's equity interests, other than non-cash
distributions in connection with any reverse merger, the Company agreed to first
pay to the Lenders all amounts that would otherwise be outstanding under the
Loan Agreement had the Settlement Agreement not been entered into, including any
interest, fees and charges that would otherwise have accrued, after giving
effect to any payments previously made.
Item 1.03. Bankruptcy or Receivership.
On September 2, 2022, after considering all strategic alternatives, the
Company filed a voluntary petition (the "Voluntary Petition") for relief under
the provisions of Chapter 11 of Title 11 of the United States Code (the "Code")
in the United States Bankruptcy Court for the District of Delaware (the
"Court"). The bankruptcy case is being administered under the caption In re
Allena Pharmaceuticals, Inc. (Case No. 22-10842).
In connection with this Chapter 11 filing, the Company has appointed Matthew
Foster as the Company's Chief Restructuring Officer, effective as of
September 2, 2022, and has engaged Mr. Foster's firm, Sonoran Capital Advisors,
LLC, to provide services to the Company in connection with its Chapter 11 case.
The Company intends to continue to operate its business at a reduced level as a
"debtor-in-possession" under the jurisdiction of the Court and in accordance
with the applicable provisions of the Code and orders of the Court.
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In connection with the Chapter 11 filing, the Company has engaged SSG Advisors,
LLC in connection with any restructuring transaction or asset sale transaction
arising under the Chapter 11 case. Any sale of assets would be subject to review
and approval of the Court, compliance with agreed upon and Court-approved
bidding procedures allowing for the submission of higher and better offers, and
other agreed-upon conditions.
The Company currently expects that the Chapter 11 filing will result in, among
other things, the cancellation or extinguishment of all outstanding shares of
the Company's capital stock without any payment or other distribution on account
of those shares.
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
As previously reported, on August 23, 2022, the Company received a letter from
the Listing Qualifications Department (the "Staff") of The Nasdaq Stock Market
LLC ("Nasdaq") indicating that (i) the Company has not regained compliance with
its requirement to maintained a minimum closing bid price of $1.00 per share for
the required period (the "Minimum Bid Price Requirement"), and (ii) failure to
regain compliance with the Minimum Bid Price Requirement serves as a basis for
delisting the Company's securities from The Nasdaq Capital Market unless the
Company timely requests a hearing before a Nasdaq Hearings Panel (the "Panel").
On August 30, 2022, the Company requested a hearing before the Panel, which has
temporarily stayed the suspension of trading and delisting of the Company's
common stock. However, in light of the Chapter 11 filing the Company is unlikely
to pursue the hearing further. Accordingly, the Company expects that the
Company's common stock will soon be suspended and a Form 25-NSE will be filed
with the Securities and Exchange Commission (the "SEC"), which will remove the
Company's securities from listing and registration on The Nasdaq Stock Market,
after which time the Company's securities may trade in the over-the-counter
market.
Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
In connection with the Chapter 11 filing, on September 2, 2022, the Company
terminated the employment of substantially all of its employees, including Louis
Brenner, President and Chief Executive Officer of the Company and Richard D.
Katz, Chief Financial Officer of the Company.
As previously disclosed, in January 2022 the Company entered into retention
agreements with each of Dr. Brenner and Dr. Katz as a result of which no
additional severance payments will be provided in connection with these
separations. In connection with such retention agreements, each executive agreed
to provide three months of consulting services to the Company, as requested by
the Company, at an hourly rate derived using the executive officer's current
base salary.
In addition, on September 2, 2022 and following approval of the Chapter 11
filing and related actions, Louis Brenner, Gino Santini and Allene Diaz resigned
from the Board of Directors (the "Board") of the Company, effective as of the
filing of the Voluntary Petition with the Court. At the time of resignation,
Ms. Diaz was Chair of the Compensation Committee and a member of the Nominating
and Corporate Governance Committee of the Board and Mr. Santini was a member of
the Audit Committee and the Compensation Committee of the Board. The
resignations are not the result of any disagreement with the Company regarding
the Company's operations, policies or practices.
* * * * *
Cautionary Information Regarding Trading in the Company's Securities.
The Company's securityholders are cautioned that trading in the Company's
securities 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 thereof in
the Company's Chapter 11 case. As noted above, the Company currently expects
that the Chapter 11 filing will result in, among other things, the cancellation
or extinguishment of all outstanding shares of the Company's capital stock
without any payment or other distribution on account of those shares.
Accordingly, the Company urges extreme caution with respect to existing and
future investments in its securities.
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Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K release contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
including, without limitation, statements concerning the outcome of the
Company's Chapter 11 filing and the expected delisting of the Company's equity
securities on the Nasdaq Stock Market. Any forward-looking statements in this
Current Report on Form 8-K are based on management's current expectations of
future events and are subject to a number of risks and uncertainties that could
cause actual results to differ materially and adversely from those set forth in
or implied by such forward-looking statements. Additional risks and
uncertainties include, but are not limited to: the Company's Chapter 11
strategy; risks and uncertainties associated with Chapter 11 proceedings
generally; the negative impacts on the Company's business as a result of filing
for and operating under Chapter 11 protection; the time, terms and ability to
confirm a Chapter 11 plan of reorganization for the Company; the adequacy of the
capital resources of the Company's businesses and the difficulty in forecasting
the liquidity requirements of the operations of its business; the
unpredictability of the Company's financial results while in Chapter 11
proceedings; the Company's ability to discharge claims in Chapter 11
proceedings; negotiations with the holders of the Company's indebtedness and its
trade creditors and other significant creditors; and risks associated with the
Company's ability to identify and consummate financing and strategic
alternatives that yield additional value for shareholders. For a discussion of
other risks and uncertainties, and other important factors, any of which could
cause the Company's actual results to differ from those contained in the
forward-looking statements, see the section entitled "Risk Factors" in the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, as
well as discussions of potential risks, uncertainties and other important
factors in the Company's subsequent filings with the Securities and Exchange
Commission. All information in this Current Report on Form 8-K is as of the date
of the release, and the Company undertakes no duty to update this information
unless required by law.
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