Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On May 25, 2021, Medley Management Inc. ("MDLY" or the "Company") received a
notice from the New York Stock Exchange (the "NYSE") indicating that MDLY is not
in compliance with the NYSE's continued listing requirements under the timely
filing criteria set forth in Section 802.01E of the NYSE Listed Company Manual.
MDLY did not file its Quarterly Report on Form 10-Q for the quarter ended March
31, 2021 (the "Form 10-Q") with the Securities and Exchange Commission (the
"SEC") on or before May 24, 2021, the extended period provided for the filing
under Rule 12b-25(b) of the Securities Exchange Act of 1934, as amended.
The NYSE informed MDLY that, under the NYSE's rules, MDLY can regain compliance
with Section 802.01E of the NYSE listing requirements by filing the Form 10-Q
with the SEC at any time prior to November 24, 2021. If MDLY fails to file the
Form 10-Q by that date, the NYSE may grant, in its sole discretion, a further
extension of up to six additional months for MDLY to regain compliance,
depending on the specific circumstances. The NYSE notice indicates that NYSE may
commence delisting proceedings at any time during the period that is available
to complete the filing, if circumstances warrant.
As reported in the Form 12b-25 (the "Form 12b-25") filed by MDLY with the SEC on
May 17, 2021, the Form 10-Q was delayed because of the complexity of the
accounting treatment relating to the deconsolidation of MDLY's heretofore
consolidated subsidiary Medley LLC from MDLY's financial statements as of the
petition date of Medley LLC's Chapter 11 case (the "Medley LLC Chapter 11
Case"), the significant work required to effect the deconsolidation and other
significant demands associated with the Medley LLC Chapter 11 Case. At the time
of the filing of the Form 12b-25, MDLY expected to timely file the Form 10-Q
within the five calendar day extension period afforded by Rule 12b-25. However,
as a result of significant work that remains to be done in connection with the
accounting treatment thereof, MDLY was unable to timely file the Form 10-Q
within the extension period afforded by Rule 12b-25.
MDLY continues to work diligently to complete the deconsolidation and finalize
the Form 10-Q. Although MDLY plans to file the Form 10-Q as soon as possible
after completion and finalization of Form 10-Q financial statements and
disclosures and completion of review processes, MDLY is unable to predict a
specific filing date at this time.
In accordance with the NYSE Listed Company Manual, MDLY has contacted the NYSE
to discuss the status of the Form 10-Q. On June 1, 2021, MDLY issued a press
release announcing the receipt of the notice of non-compliance from the NYSE. A
copy of the press release is attached as Exhibit 99.1 to this Current Report on
Form 8-K.
As previously disclosed, on April 17, 2020, MDLY received written notice (the
"April 2020 Notice") from the NYSE that MDLY did not at the time of the April
2020 Notice (nor does MDLY at the time of filing of this Current Report on Form
8-K) satisfy the NYSE's continued listing requirements set forth in Section
802.01B of the NYSE Listed Company Manual, which prohibits the Company's average
global market capitalization over a consecutive 30 trading-day period from being
less than $50,000,000 at the same time its stockholders' equity is less than
$50,000,000. On June 1, 2020, MDLY submitted a business plan to the NYSE
reflecting MDLY's intent to seek to regain compliance with the Section 802.01B
listing standards. On July 27, 2020, the NYSE accepted the plan and extended the
cure period from December 26, 2020 to December 26, 2021, with MDLY subject to
ongoing quarterly monitoring for compliance with said plan.
Item 8.01. Other Events.
On May 26, 2021, certain related separately managed account clients
(collectively, the "Client") terminated the investment period under each of
Client's investment management agreements, effective as of such date. As a
result, Client will have no obligation to make further capital contributions to
fund new investments. As of May 26, 2021, Client's undrawn capital commitment
was approximately $728 million in the aggregate. In accordance with Client's
investment management agreements, Medley will continue to manage the repayment
and realization of investments remaining in Client's accounts to their scheduled
maturities or disposition, as the case may be; provided that Client has the
right to terminate its investment management agreements and Medley's management
of the existing investments upon 15 days' written notice to Medley, in addition
to such other termination rights as provided in Client's investment management
agreements. The existing investments remaining in Client's investment accounts
as of May 26, 2021 represented approximately $63 million in the aggregate.
For the years ended December 31, 2020 and 2019, Client represented approximately
2.2% and 2.5%, respectively, of Medley's total management fees. As of March 31,
2021, Client represented approximately 30.8% of Medley's AUM and 4.7% of
Medley's Fee Earning AUM. AUM refers to the assets of Medley's funds, which
represents the sum of the net asset value of such funds, the drawn and undrawn
debt (at the fund level, including amounts subject to restrictions) and uncalled
committed capital (including commitments to funds that have yet to commence
their investment periods). Fee earning AUM refer to the assets under management
on which the Company directly earns base management fees.
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Cautionary Notice Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and such
statements are intended to be covered by the safe harbor provided by the same.
These statements are based on the current beliefs and expectations of Medley's
management and are subject to significant risks and uncertainties. The above
statements regarding Medley's plans associated with the Form 10-Q including
completion of work associated therewith, the timing thereof, and the timing of
the filing of the Form 10-Q, and other statements containing the words
"believes," "anticipates," "plans," "expects," "will" and similar expressions,
constitute forward-looking statements that are based on Medley's current
expectations. Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause Medley's actual
results, as well as Medley's expectations regarding materiality or significance,
to differ materially from those in the forward-looking statements. These factors
include, but are not limited to, the following: (i) the outcome of the formal
review process being undertaken by Sierra Income Corporation ("Sierra") to
evaluate strategic alternatives for Sierra, and whether Sierra's review process
results in a termination of Medley's advisory agreement with Sierra, which event
would have a significant and material adverse effect on Medley's business and
prospects in which case we believe that Medley would likely not be able to
continue operations; (ii) the outcome of the Medley LLC Chapter 11 Case and
Medley LLC's ability to successfully reorganize and emerge from bankruptcy
protection; (iii) Medley LLC's ability to develop and propose an amended Chapter
11 Plan of Reorganization of Medley LLC ("Plan"), successfully attain Bankruptcy
Court confirmation of any such amended Plan that Medley LLC may propose, and
thereafter successfully consummate and implement such Plan in accordance with
the terms thereof; as previously reported in our Current Report on Form 8-K
filed on May 13, 2021, pursuant to filings with the Bankruptcy Court, on May 13,
2021, Medley LLC withdrew its original Plan and Disclosure Statement; Medley LLC
has to date been unable to successfully develop an amended Plan and an amended
Disclosure Statement; (iv) since the commencement of Medley LLC's Chapter 11
proceedings we have experienced and may continue to experience certain adverse
effects on our business, including employee attrition, client attrition and a
reduction in assets under management; (v) whether the Bankruptcy Court will
confirm any amended plan of reorganization that Medley LLC may develop and
propose (there being the risk that any amended plan of reorganization that
Medley LLC may propose may never be confirmed by the Bankruptcy Court or become
effective); (vi) additional risks related to the Medley LLC Chapter 11 Case and
any reorganization in connection therewith, including, but not limited to, risks
associated with any reorganization that Medley LLC may pursue (including but not
limited to risks associated with potential changes to our capital structure),
the Bankruptcy Court may grant or deny motions in a manner adverse to Medley
LLC, claims that may not be discharged in the Medley LLC Chapter 11 Case,
adverse publicity in connection with Medley LLC's bankruptcy petition, the
impact of the Medley LLC Chapter 11 Case on our overall future financial
performance, and risks related to trading in our securities during the pendency
of the Medley LLC Chapter 11 Case; (vii) in the event Medley LLC is unable to
successfully develop an amended Plan, or any such Plan that Medley LLC proposes
fails to attain confirmation of the Bankruptcy Court, Medley LLC may have no
suitable alternatives reasonably available to it other than a liquidation under
Chapter 11 of the Bankruptcy Code, or to convert the Medley LLC Chapter 11 Case
into a liquidation case under Chapter 7 of the Bankruptcy Code, in which event a
Chapter 7 trustee would be appointed to liquidate Medley LLC's assets for
distribution in accordance with the priorities established by the Bankruptcy
Code; (viii) our ability to continue as a going concern; (ix) the outcome of,
the timeframe for, and the ultimate resolution of the matters raised by the
Wells Notices received by MDLY, Medley LLC and certain pre-IPO owners of Medley
LLC, including whether any enforcement action will be brought and the full
extent of the potential implications thereof; any adverse outcome in connection
therewith could have a material effect on our business, financial condition, or
results of operations; (x) difficult market and political conditions; (xi) our
success in retaining or recruiting, or changes required in, our officers, key
employees or directors; (xii) our ability to successfully compete for and retain
fund investors, assets, professional talent and investment opportunities; (xiii)
our ability to successfully formulate and execute our business, investment and
growth strategies; (xiv) our financial performance; (xv) our ability to
consummate or successfully integrate development opportunities, acquisitions or
joint ventures; (xvi) our ability to manage conflicts of interest; (xvii) our
assumptions relating to our operations, investment performance, financial
results, financial condition, business prospects, growth strategy and liquidity;
(xviii) the uncertain effect of COVID-19 or other future pandemics or events on
our business, operating results and financial condition, including disruption to
our customers, our employees, the global economy and financial markets; (xix),
our ability to regain and maintain compliance with NYSE continued listing
requirements and our ability to maintain our NYSE listing, and (xx) any further
delays associated with the completion and filing of the Form 10-Q, as to which
we are unable to provide a specific filing date at this time.
All forward-looking statements made herein speak only as of the date of this
Current Report on Form 8-K. Except as required by law, MDLY undertakes no
obligation to update the forward-looking statements to reflect the impact of
circumstances or events that may arise after the date of the forward-looking
statements. For a discussion of a variety of risk factors affecting MDLY's
business and prospects, see "Risk Factors" in MDLY's annual and quarterly
reports filed with the SEC including, but not limited to, its Annual Report on
Form 10-K for the fiscal year ended December 31, 2020, which has been filed with
the SEC and is available on MDLY's website (www.mdly.com) and on the SEC's
website (www.sec.gov).
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
99.1 Press Release of Medley Management Inc. dated June 1, 2021.
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