Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
As previously announced, on March 10, 2023 (the "Petition Date"), Loyalty
Ventures Inc., a Delaware corporation (the "Company") and certain of its direct
and indirect subsidiaries (collectively, the "Debtors") filed voluntary
petitions for relief (the "Chapter 11 Cases") under chapter 11 of title 11 of
the United States Code, 11 U.S.C. §§ 101-1532 in the United States Bankruptcy
Court for the Southern District of Texas (the "Bankruptcy Court"). The Chapter
11 Cases are being jointly administered under the caption In re Loyalty Ventures
Inc., et al., Case No. 23-90111 (CML).
On March 10, 2023, the Company received a letter (the "Delisting Notice") from
the listing qualifications department staff of The Nasdaq Stock Market
("Nasdaq") notifying the Company that, in accordance with Nasdaq Listing Rules
5101, 5110(b), and IM-5101-1, the staff of Nasdaq has determined that the
Company's common stock, par value $0.01 per share (the "Common Stock") will be
delisted from Nasdaq. In the Delisting Notice, the staff of Nasdaq referenced
the Chapter 11 Cases and associated public interest concerns raised by it,
concerns regarding the residual equity interest of the existing listed
securities holders, and concerns about the Company's ability to sustain
compliance with all requirements for continued listing on Nasdaq. The Company
does not intend to appeal the delisting determination.
Prior to receipt of the Delisting Notice, as previously disclosed on March 10,
2023, the Company notified Nasdaq of its intent to file a Form 25 Notification
of Removal from Listing and/or Registration Under Section 12(b) of the
Securities Exchange Act of 1934 with the Securities and Exchange Commission on
or about March 20, 2023 to effect the voluntary delisting of the Common Stock
from Nasdaq. The Company continues to expect the delisting of its Common Stock
from Nasdaq to be effective on or about March 30, 2023.
The Company anticipates that the Common Stock will be suspended from trading on
Nasdaq upon market close on March 17, 2023. The Common Stock may be eligible to
be quoted on the Pink Open Market operated by the OTC Markets Group Inc. if a
market maker sponsors the security and complies with Rule 15c2-11 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), but the
Company can provide no assurances that a public market for trading the Common
Stock will exist after the expected suspension of trading on March 17, 2023 or
in the future.
Item 3.03 Material Modification of Rights of Security Holders.
As previously announced, in connection with the commencement of the Chapter 11
Cases, on the Petition Date the Debtors, LoyaltyOne, Co., an unlimited liability
company incorporated under the laws of Nova Scotia ("LoyaltyOne"), and certain
of the Company's other direct and indirect subsidiaries executed a Transaction
Support Agreement (and together with all exhibits and schedules thereto, the
"TSA") with certain consenting stakeholders party thereto.
The information set forth below in Item 8.01 of this Current Report on Form 8-K
(this "Form 8-K") regarding the Bankruptcy Court's Interim Order (I) Approving
Notification and Hearing Procedures for Certain Transfers of Beneficial
Ownership and Declarations of Worthlessness with Respect to Common Stock and
(II) Granting Related Relief (Docket No. 68) (the "Interim NOL Order") is
incorporated herein by reference.
Item 8.01. Other Events.
On the Petition Date, following the Bankruptcy Court's hearing on the Debtors'
motions for first day relief, the Bankruptcy Court entered the Interim NOL
Order. The Interim NOL Order is designed to assist the Debtors in preserving
certain of their tax attributes by establishing, on an interim basis, among
other things, the procedures (including notice requirements) (the "Procedures")
that restrict certain transactions involving, and require notices of the
holdings of and proposed transactions by, any person or entity that is or, as a
result of such a transaction, would become a Substantial Stockholder (as defined
below) of Common Stock (and prohibits certain other stockholders that, in the
three years preceding the Petition Date (i.e., the commencement of the Chapter
11 Cases), beneficially owned 50% or more of the Common Stock from making
declarations of worthlessness with respect to the Common Stock in violation of
the Procedures). For purposes of the Procedures, a "Substantial Stockholder" is
any person or entity that has direct or indirect beneficial ownership of, after
taking into account certain options or other similar rights to acquire
beneficial ownership of Common Stock, at least 1,112,625 shares of Common Stock
(representing approximately 4.5% of all issued and outstanding shares of the
Common Stock). The terms and conditions of the Procedures were immediately
effective and enforceable upon entry of the Interim NOL Order by the Bankruptcy
Court. Any transfers of or declarations of worthlessness with respect to
beneficial ownership of Common Stock in violation of the Procedures (including
the notice requirements) will be null and void ab initio, and (a) in the case of
any such transfer of beneficial ownership of Common Stock, the person or entity
making such a transfer will be required to take remedial actions specified by
the Debtors to appropriately reflect that such transfer of the Common Stock
is null and void ab initio and (b) in the case of any such declaration of
worthlessness with respect to beneficial ownership of Common Stock, the person
or entity making such a declaration of worthlessness with respect to the Common
Stock will be required to file an amended tax return revoking such declaration
and any related deduction to appropriately reflect that such declaration is void
ab initio.
The foregoing description of the Interim NOL Order is not complete and is
qualified in its entirety by reference to the Interim NOL Order, a copy of which
is filed herewith as Exhibit 99.1 and is incorporated herein by reference.
Additional Information on the Chapter 11 Cases
For Bankruptcy Court filings and other additional information related to the
Chapter 11 Cases available from time to time, please see
https://cases.ra.kroll.com/LVI, a website administered by Kroll Restructuring
Administration LLC, a third party bankruptcy claims and noticing agent (the
"Restructuring Website"). The information on the Restructuring Website is not
incorporated by reference into, and does not constitute part of, this Form 8-K.
Interested parties who may have questions related to the Chapter 11 Cases may
call Kroll at (833) 570-5238 (US/Canada Toll Free) or (646) 440-4764
(International).
Cautionary Note Regarding Forward-Looking Statements
This Form 8-K contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the Exchange
Act. Forward-looking statements give our expectations or forecasts of future
events and can generally be identified by the use of words such as "believe,"
"expect," "anticipate," "estimate," "intend," "project," "plan," "likely,"
"may," "should" or other words or phrases of similar import. Similarly,
statements that describe our business strategy, outlook, objectives, plans,
intentions or goals also are forward-looking statements. Forward-looking
statements, however, are subject to a number of risks and uncertainties that
could cause actual results to differ materially for a variety of reasons,
including, among others, our high level of indebtedness; increases in market
interest rates; the potential failure to satisfy the closing conditions under
the purchase agreement for our BrandLoyalty business, which may result in the
sale transaction not being consummated; the potential failure to satisfy the
borrowing conditions under the bridge loan agreement in connection with the sale
of our BrandLoyalty business, which may result in the BrandLoyalty business not
being able to obtain bridge loans, which could lead to the insolvency of the
BrandLoyalty business; continuing impacts related to COVID-19, including
variants, labor shortages, reduction in demand from clients, supply chain
disruption for our reward suppliers and capacity constraints, rising costs or
other disruptions in the airline or travel industries; changes in geopolitical
conditions, including the Russian invasion of Ukraine and related global
sanctions and Russian restrictions or actions with respect to local assets;
fluctuation in foreign exchange rates; execution of restructuring plans and any
resulting cost savings; loss of, or reduction in demand for services from,
significant clients; loss of active AIR MILES Reward Program collectors or
greater than expected redemptions by the same; unfavorable resolution of pending
or future litigation matters; disruption to operations due to the separation
from our former parent or failure of the separation to be tax-free; new
regulatory limitations related to consumer protection or data privacy limiting
our services; loss of consumer information due to compromised physical or cyber
security; the TSA may be terminated by certain of its parties if specified
milestones are not achieved, amended or waived, or if certain other events
occur; our ability to operate within the restrictions and the liquidity
limitations of the debtor-in-possession financings we anticipate incurring in
connection with the Chapter 11 Cases and the proceedings of LoyaltyOne for
creditor protection in Canada under the Companies' Creditors Arrangement Act
(Canada) (the "CCAA Proceeding") in the Ontario Superior Court of Justice
(Commercial List) (the "Canadian Court")? our receipt of other acquisition bids
and negotiations with associated bidders in connection with the sale and
investment solicitation process (the "SISP") for our AIR MILES business? and the
ability to obtain relief from the Bankruptcy Court to facilitate the smooth
operation of our businesses during the Chapter 11 Cases and other risks and
uncertainties relating to the Chapter 11 Cases, including but not limited to,
our ability to obtain approval of the Bankruptcy Court and the Canadian Court
with respect to motions or other requests made to the Bankruptcy Court and the
Canadian Court throughout the course of the Chapter 11 Cases and the CCAA
Proceeding (collectively, the "Cases"), including with respect to our CCAA
debtor-in-possession facility and intercompany debtor-in-possession facility,
the SISP, and the stalking horse purchase agreement we entered into with Bank of
Montreal, a Schedule I bank under the Bank Act (Canada) or the consummation of
the transactions contemplated therein, the effects of the Cases on us and on the
interests of various constituencies, Bankruptcy Court and Canadian Court rulings
in the Cases and the outcome of the Cases in general, the length of time we will
operate under the Cases, risks associated with third-party motions in the Cases,
regulatory approvals required to emerge from chapter 11, the potential adverse
effects of the Cases on our liquidity or results of operations and increased
legal and other professional costs in connection with the Cases. We believe that
our expectations are based on reasonable assumptions. No assurances can be given
that our expectations will prove to be correct. Additional risks and
uncertainties are set forth in the Risk Factors section of both (1) our Annual
Report on Form 10-K for the fiscal year ended December 31, 2021 and (2) any
updates in Item 1A, or
elsewhere, in our Quarterly Reports on Form 10-Q filed for periods subsequent to
such Form 10-K or any updates thereto. Our forward-looking statements speak only
as of the date made, and we undertake no obligation, other than as required by
applicable law, to update or revise any forward-looking statements, whether as a
result of new information, subsequent events, anticipated or unanticipated
circumstances or otherwise.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Document Description
99.1 Interim NOL Order
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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