Item 1.03 Bankruptcy or Receivership.
On May 14, 2023 (the "Petition Date"), Athenex, Inc. (the "Company") together
with certain of its subsidiaries (collectively, the "Debtors") filed voluntary
petitions for relief under Chapter 11 of the United States Bankruptcy Code (the
"Code") with the United States Bankruptcy Court for the Southern District of
Texas (the "Bankruptcy Court"). On the Petition Date, the Debtors filed a motion
with the Bankruptcy Court seeking to jointly administer the Chapter 11 cases
under the caption "In re: Athenex, Inc., et al." (Case No. 23-90295) (the
"Chapter 11 Case").
The Debtors expect to continue to operate their businesses
as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in
accordance with the provisions of the Code and the orders of the Bankruptcy
Court. Also on the Petition Date, the Debtors filed with the Bankruptcy Court
motions seeking a variety of "first day" customary relief intended to enable the
Company to continue its ordinary course operations and to facilitate an orderly
wind down of its operations. The Company intends to sell substantially all of
its assets during the Chapter 11 Case pursuant to a competitive bidding and
auction process. The Company cannot be certain that holders of the Company's
common stock will receive any payment or other distribution for those shares
following the Chapter 11 Case.
Also on May 14, 2023, the Company issued a press release in connection with the
filing of the Chapter 11 Case. A copy of the press release is filed as Exhibit
99.1 to this Current Report on Form 8-K and incorporated by reference herein.
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The filing of the Chapter 11 Case constituted an event of default that
accelerated the Company's obligations under certain agreements relating to
direct financial obligations of the Company, including:
• the senior secured loan agreement dated as of June 19, 2020, as amended
from time to time, with Oaktree Fund Administration, LLC, as
administrative agent, and the lenders party thereto (the "Senior Credit
Agreement"), with respect to an aggregate outstanding principal amount of
approximately $41.875 million, together with accrued interest and all
applicable fees and other financial obligations under the Senior Credit
Agreement; and
• the revenue interest purchase agreement, dated as of June 21, 2022,
between the Company and ATNX SPV, LLC, on the one hand, and affiliates of
Sagard Healthcare Partners and funds managed by Oaktree Capital
Management, L.P., on the other hand.
The filing of the Chapter 11 Case automatically stayed most actions against the
Debtors. Subject to certain exceptions under the Code, the filing of the
Debtors' Chapter 11 Case also automatically stayed the continuation of most
legal proceedings or the filing of other actions against or on behalf of the
Debtors or their properties to recover on, collect or secure a claim arising
prior to the Petition Date or to exercise control over properties of the
Debtors' bankruptcy estates, unless and until the Bankruptcy Court modifies or
lifts the automatic stay as to any such claim.
Item 2.05 Costs Associated with Exit or Disposal Activities.
On May 9, 2023, the Company's board of directors ("Board") authorized the
termination of approximately 140 employees, or approximately 67% of the
Company's current employees, effective May 12, 2023 and restructured the
Company's operations to maintain a transition team of approximately 68 employees
to continue operations in connection with the Chapter 11 Case. The Company
recorded a one-time charge of approximately $1.3 million related to the
reduction in its workforce, consisting primarily of one-time severance payments
upon termination of the employees.
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On May 16, 2023, the Company received written notice from the Listing
Qualifications Department of the Nasdaq Stock Market LLC ("Nasdaq") notifying
the Company that, as a result of the Chapter 11 Case and in accordance with
Nasdaq Listing Rules 5101, 5110(b), and IM-5101-1, the Nasdaq staff determined
that the Company's common stock will be delisted from Nasdaq. The Company does
not intend to appeal this determination. Trading of the Company's common stock
will be suspended at the opening of business on May 25, 2023.
--------------------------------------------------------------------------------
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On May 9, 2023, the Board terminated Salary Deduction and Stock Purchase
Agreements between the Company and certain of its directors and executive
officers effective immediately.
On May 12, 2023, the Board appointed Joe Annoni to serve as the Company's
Assistant Chief Restructuring Officer in addition to his duties as Chief
Financial Officer. Also on May 12, 2023, the Company increased the base salary
of its Chief Financial Officer, Joe Annoni, from $288,750 to $360,000 and
reduced the base salary of Daniel Lang from $325,000 per year to $162,500 per
year. These salary adjustments take effect immediately.
Cautionary Note Regarding the Company's Common Stock
The Company cautions that trading in the Company's common stock during the
pendency of the Chapter 11 Case is highly speculative and poses substantial
risks. Trading prices for the Company's common stock may bear little or no
relationship to the actual recovery, if any, by holders of the Company's common
stock in the Chapter 11 Case. Accordingly, the Company urges extreme caution
with respect to existing and future investments in its common stock.
Cautionary Note Regarding Forward-Looking Statements
Except for historical information, information in this Current Report
on Form 8-K and the exhibit hereto consists of forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 that involve
risks, uncertainties and assumptions that are difficult to predict. Words such
as "expect," "intend," "may," "seek," and similar expressions, or the use of
future tense, identify forward-looking statements, but their absence does not
mean that a statement is not forward-looking. Actual results might differ
materially from those explicit or implicit in the forward-looking statements.
These forward-looking statements are subject to a number of risks, uncertainties
and assumptions including: risks inherent in the bankruptcy process, including
the Company's ability to obtain approval from the Bankruptcy Court for motions
or other requests made throughout the course of the Chapter 11 Case; the
Company's liquidity and financial position; the effects of the Chapter 11 Case
on the Company's operations; the Company's ability to continue to operate its
business during the pendency of the Chapter 11 Case, and the availability of
operating capital during the Chapter 11 Case; the Company's ability to maintain
relationships with partners, suppliers, customers, employees, regulatory
authorities and other third parties; the length of time that the Company will
operate under Chapter 11 protection; objections to the Company's restructuring
or liquidation process, third-party motions, or other pleadings filed that could
protract the Chapter 11 Case; and Bankruptcy Court rulings in the Chapter 11
Case and the outcome of the Chapter 11 Case, in general. You should not rely
upon forward-looking statements as predictions of future events. The Company
undertakes no obligation to update publicly any forward-looking statements for
any reason after the date of this Current Report on Form 8-K to conform these
statements to actual results or to changes in its expectations, except as
required by law.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
99.1 Press release dated May 14, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses