Item 1.01. Entry Into a Material Definitive Agreement.
The information set forth below under Item 1.03 of this Current Report on Form
8-K regarding the DIP Facility (as defined below) is incorporated herein by
reference.
Item 1.03. Bankruptcy or Receivership.
On February 24, 2023, HyreCar Inc. (the "Company") filed a voluntary petition
(the "Bankruptcy Filing") for relief under Chapter 11 of the United States
Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court"). The case is being
administered under the caption "In re: HyreCar Inc." The Company will continue
to operate its businesses as a debtor-in-possession under the jurisdiction of
the Bankruptcy Court in accordance with the applicable provisions of the
Bankruptcy Code and orders of the Bankruptcy Court.
Copies of the various documents filed with the Bankruptcy Court can be accessed
online at https://www.donlinrecano.com/ Clients/hci/Index.
Non-Binding Term Sheet to Complete an Asset Purchase
Prior to the Bankruptcy Filing, on February 23, 2023, the Company entered into a
term sheet with Holmes Motors Inc. ("Holmes"), which contemplates the purchase
of substantially all of the Company's assets by Holmes, as a stalking horse
purchaser, under Section 363 of the Bankruptcy Code. The term sheet with Holmes
contemplates that the sale shall be subject to higher and better bids. The
Holmes term sheet is non-binding and provides no guarantee that a transaction
will be completed. The terms of any potential transaction with Holmes, or any
other strategic counterparty, are subject to a number of contingencies,
including the negotiation and execution of definitive transaction agreements,
the completion of a bidding process as provided for by the Bankruptcy Court, and
final approval of the Bankruptcy Court. Consequently, there can be no assurance
that the Company's efforts to consummate a strategic transaction, including the
proposed transaction with Holmes, will be successful. Furthermore, even if the
Company were to complete a strategic transaction, the proceeds of any such
transaction may be insufficient to allow the Company to pay its creditors in
full. In any event, the Company does not anticipate that its stockholders will
receive any return on their shares.
Debtor-in-Possession Financing
In connection with the Bankruptcy Filing, on February 24, 2023, the Company
filed a motion (the "DIP Motion") with the Bankruptcy Court, seeking, among
other things, interim and final approval of a proposed superpriority secured
debtor-in-possession credit facility (the "DIP Credit Facility") by and between
the Company and Holmes.
Under the DIP Credit Facility, Holmes has agreed to lend the Company an
aggregate principal amount of $5.0 million at an annual interest rate of 6.0%.
The proceeds of the Loan shall be used solely to pay working capital needs of
the Company and pay professional fees and expenses arising in the Company's
Chapter 11 Case as set forth in and in accordance with the budget agreed to by
Holmes and approved by an order of the Bankruptcy Court.
The loan will be made available to the Company in one interim and one final
advance as follows:
• Interim DIP Loan: a loan facility to be available, subject to certain terms
and conditions set forth in the DIP Credit Facility, in aggregate principal
amount not to exceed $3,100,000 (the "Interim DIP Loan"); and
• Final DIP Loan: a loan facility in an aggregate principal amount of 5.0
million (inclusive of the Interim DIP Loan) (the "Final DIP Loan" and together
with the Interim DIP Loan, the "DIP Loans").
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The maturity date of the DIP Loans as defined in the DIP Credit Facility is the
earliest to occur of (i) the date that is seventy-one (71) days after the
Interim Funding Date; (ii) the effective date of a Chapter 11 plan of the
Company; (iii) the consummation of a Sale Transaction or other Disposition of
the Acquired Assets of the Company under Section 363 of the Bankruptcy Code or
otherwise; and (iv) the acceleration of the Loan, including, without limitation,
as a result of the occurrence of an Event of Default.
The DIP Loans are subject to certain events of default, including failure to
achieve certain specified bankruptcy related milestones, breach of the terms of
the DIP Credit Facility, entry of an order by the Bankruptcy Court that does not
provide for the payment in full in cash to Holmes of the DIP Loans, appointment
of a Chapter 11 trustee with enlarged powers to operate the business, filing of
a motion to dismiss or convert the case to Chapter 7 of the Bankruptcy Code , if
the DIP order and the bidding order is revoked, remanded, vacated, reversed,
rescinded, modified or amended, and other customary events of default. Upon an
event of default, Holmes may declare all amounts outstanding under the DIP Loans
immediately due and payable and seek other customary remedies subject to right
of the Company to seek relief from the Bankruptcy Court. The Interim DIP Loan
was approved by the Bankruptcy Court by an interim order entered on February 28,
2023.
The foregoing description of the DIP Credit Facility does not purport to be
complete and is qualified in its entirety by reference to the final, executed
DIP Credit Facility, as approved by the Bankruptcy Court.
Item 2.03. Creation of a Direct Financial Obligation or Obligation under an Off
Balance Sheet Arrangement of a Registrant.
The information set forth above under Item 1.03 of this Current Report on Form
8-K regarding the DIP Credit Facility is incorporated herein by reference.
Forward Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act").
Forward-looking statements generally relate to future events or the Company's
future financial or operating performance. In some cases, you can identify
forward-looking statements because they contain words such as "may," "will,"
"should," "expects," "plans," "anticipates," "could," "intends," "target,"
"projects," "contemplates," "believes," "estimates," "predicts," "potential,"
"continue" or "budgeted" or the negative of these words or other similar terms
or expressions that concern the Company's bankruptcy filing, and its ability to
continue to operate the business as a debtor-in-possession. The Company's
forward-looking statements in this Current Report on Form 8-K include, but are
not limited to, statements about the Company's plans to sell its assets pursuant
to Chapter 11 of the U.S. Bankruptcy Code and the timing of such sales and
ability to satisfy closing conditions? the Company's intention to continue
operations during the Chapter 11 case? the Company's belief that the sale
process will be in the best interest of the Company and its stakeholders? and
other statements regarding the Company's strategy and future operations,
performance and prospects, among others. These forward-looking statements
involve a number of risks, uncertainties (some of which are beyond the Company's
control) or other assumptions that may cause actual results or performance to be
materially different from those expressed or implied by these forward-looking
statements. These risks and uncertainties include, but are not limited to, the
risks associated with the potential adverse impact of the Chapter 11 filings on
the Company's liquidity and results of operations? changes in the Company's
ability to meet its financial obligations during the Chapter 11 process and to
maintain contracts that are critical to its operations? the outcome and timing
of the Chapter 11 process and any potential asset sale? the effect of the
Chapter 11 filings and any potential asset sale on the Company's relationships
with vendors, regulatory authorities, employees and other third parties?
possible proceedings that may be brought by third parties in connection with the
Chapter 11 process or the potential asset sale? uncertainty regarding obtaining
Bankruptcy Court approval of a sale of the Company's assets or other conditions
to the potential asset sale? and the timing or amount of distributions, if any,
to the Company's stakeholders. These forward-looking statements are based on
current expectations and beliefs concerning future developments and their
potential effects. There can be no assurance that future developments affecting
the Company will be those anticipated, and the Company disclaims any obligation
to update any forward-looking statements, except as required by law.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
99.1 Press release issued by HyreCar Inc. dated February 27, 2003.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
© Edgar Online, source Glimpses
HYRECAR INC. 
