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Item 7.01.
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Regulation FD Disclosure.
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As previously disclosed, on each of September
23, 2020 and November 4, 2020, the Debtors filed with the Bankruptcy Court a proposed Joint Plan of Reorganization under Chapter
11 of the Bankruptcy Code (the “Prior Plan”) and a proposed Disclosure Statement in Support of the Joint Plan of Reorganization
under Chapter 11 of the Bankruptcy Code (the “Prior Disclosure Statement”).
On November 18, 2020, the Debtors filed
with the Bankruptcy Court a proposed Revised Second Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code
(the “Amended Plan”) and a proposed Amended Disclosure Statement (the “Amended Disclosure Statement”) in
support of the Amended Plan describing the Amended Plan and the solicitation of votes to approve the same from certain of the Debtors’
creditors with respect to the Chapter 11 Cases.
The Amended Plan and the Amended Disclosure
Statement contemplate the proposed financing transactions described above, including the proposed Rights Offering and the proposed
issuance of the Notes. Under the Amended Plan, the proceeds of the proposed issuance of the Notes will be used to fund remaining
amounts owed to general unsecured creditors and would eliminate a $25 million note that was to be issued to the general unsecured
creditors under the terms of the Prior Plan. On November 18, 2020, the Bankruptcy Court entered an order approving the Amended
Disclosure Statement. The Debtors will solicit votes for acceptance of the Amended Plan from November 23, 2020 through December
16, 2020 (the “Voting Deadline”), and a confirmation hearing will be held on December 22, 2020.
Under the terms of the Amended Plan, at
the effective time of the Amended Plan, the Company’s board of directors will consist of nine members, three of which will
be appointed by the Commitment Party, one of which will be appointed by the Official Committee of Equity Security Holders in the
Chapter 11 Cases (the “Equity Committee”), one of which will be Steven R. Becker, and the remaining four members of
the board of directors will be selected from among the membership of the current board by mutual agreement among the current board,
the Equity Committee and the Commitment Party.
Information contained in the Amended Plan
and the Amended Disclosure Statement, including the proposal to conduct a Rights Offering, is subject to change, whether as a result
of amendments or supplements to the Amended Plan or the Amended Disclosure Statement, third-party actions, or otherwise, and should
not be relied upon by any party. Copies of the Amended Plan and the Amended Disclosure Statement are attached hereto as Exhibits
99.1 and 99.2, respectively.
This Current Report on Form 8-K is not a
solicitation to accept or reject the proposed Amended Plan. Any such solicitation will be made pursuant to and in accordance with
a court-approved disclosure statement, as may be amended from time to time, and applicable law, including orders of the Bankruptcy
Court.
The Amended
Disclosure Statement includes certain financial projections (the “Financial Projections”). The Financial
Projections were not prepared with a view toward compliance with the published guidelines of the Securities and Exchange
Commission or the guidelines established by the Public Company Accounting Oversight Board and should not be relied upon to
make an investment decision with respect to the Company. The Financial Projections do not purport to present the
Company’s financial condition in accordance with GAAP and have not been reviewed by the Company’s independent
registered public accounting firm. Any financial projections or forecasts therein or as otherwise presented in the Amended
Disclosure Statement and the exhibits thereto are only estimates and reflect numerous assumptions with respect to financial
condition, business and industry performance, general economic, market and financial conditions, and other matters, all of
which are difficult to predict, and many of which are beyond the Company’s control. Accordingly, there can be no
assurance that the assumptions made in preparing the Financial Projections will prove to be accurate. It is expected that
there will be differences between actual and projected results, and the differences may be material, including due to the
occurrence of unforeseen events occurring subsequent to the preparation of the Financial Projections. The disclosure of the
Financial Projections should not be regarded as an indication that the Company or its affiliates or representatives consider
the Financial Projections to be a reliable prediction of future events, and the Financial Projections should not be relied
upon as such. The statements in the Financial Projections speak only as of the date such statements were made, or any earlier
date indicated therein. Except as required by law, the Company disclaims any obligation to publicly update the Financial
Projections to reflect circumstances existing after the date when the Financial Projections were filed with the Bankruptcy
Court or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the
Financial Projections are shown to be in error. The statements provided in the Financial Projections are subject to all of
the cautionary statements and limitations described herein, therein and under the caption “Cautionary Notice Regarding
Forward-Looking Statements.”
The information furnished in this Item 7.01
of this Current Report on Form 8-K and the documents attached hereto as Exhibits 99.1 and 99.2 shall not be deemed “filed”
for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise
subject to the liabilities of such section, and shall not be deemed to be incorporated by reference into the filings of the Company
under the Securities Act of 1933, as amended, or the Exchange Act.
Cautionary Statement Regarding Trading in the Company’s
Common Stock
The Company cautions that trading in the
Company’s common stock during the pendency of the Chapter 11 Cases 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 Cases.
Cautionary Notice Regarding Forward-Looking Statements
This Current Report
on Form 8-K contains forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation
Reform Act of 1995, which are based on management’s current expectations, estimates and projections. Forward looking statements
include the Financial Projections, the proposed transactions contemplated by the Backstop Commitment Letter and the Commitment
Letter, the proposed Amended Plan and the proposed Amended Disclosure Statement, other statements regarding the Company’s
plans with respect to the Chapter 11 Cases, the Company’s plan to continue its operations while it works to complete the
Chapter 11 process and other statements regarding the Company’s proposed reorganization, financing, strategy, future operations,
performance and prospects. These forward-looking statements are subject to risks and uncertainties that could cause the Company’s
actual results to differ materially from the expectations expressed in the Company’s forward-looking statements. These risks,
uncertainties and events also include, but are not limited to, the following: the Company’s ability to obtain timely approval
of the Bankruptcy Court with respect to motions filed in the Chapter 11 Cases; pleadings filed that could protract the Chapter
11 Cases; the Bankruptcy Court’s rulings in the Chapter 11 Cases, and the outcome of the Chapter 11 Cases generally; the
Company’s ability to comply with the restrictions imposed by the terms and conditions of the Company’s debtor-in-possession
financing arrangements, including the Company’s ability to maintain certain minimum liquidity requirements and obtain approval
of a plan of reorganization or sale of all of its assets by agreed upon deadlines; the Company’s ability to obtain any necessary
financing; the length of time that the Company will operate under Chapter 11 protection and the continued availability of operating
capital during the pendency of the Chapter 11 Cases; the Company’s ability to continue to operate its business during the
pendency of the Chapter 11 Cases; employee attrition and the Company’s ability to retain senior management and other key
personnel due to the distractions and uncertainties; the effectiveness of the overall restructuring activities pursuant to the
Chapter 11 Cases and any additional strategies the Company may employ to address its liquidity and capital resources; the actions
and decisions of creditors and other third parties that have an interest in the Chapter 11 Cases; risks associated with third
parties seeking and obtaining authority to terminate or shorten the Company’s exclusivity period to propose and confirm
one or more plans of reorganization, for the appointment of a Chapter 11 trustee or to convert the Chapter 11 proceeding to a
Chapter 7 proceeding; increased legal and other professional costs necessary to execute the Company’s restructuring; the
Company’s ability to maintain relationships with suppliers, customers, employees and other third parties as a result of
the Chapter 11 Cases; the trading price and volatility of the Company’s common stock and the effects of the delisting from
The Nasdaq Stock Market; litigation and other risks inherent in a bankruptcy process; the effects and length of the novel coronavirus
pandemic; and the other factors listed in the Company’s filings with the Securities and Exchange Commission.
Except as may be required by law, the
Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date on
which the statements were made or to reflect the occurrence of unanticipated events. Investors are cautioned not to place undue
reliance on any forward-looking statements.