Wave Computing: U.S. trustee objects to sale to stalking horse

By Sarah Lizee

Olympia, Wash., Feb. 3 – Wave Computing, Inc.’s motion for an order conditionally approving the sale of all of its assets to an undisclosed stalking horse bidder drew an objection Wednesday from Region 12 U.S. trustee James L. Snyder, according to a filing with the U.S. Bankruptcy court for the Northern District of California.

The company’s plan of reorganization, which contemplates a restructuring of about $56.91 million in funded and general unsecured debt and creditor claims, has a toggle feature that would allow the debtors to instead proceed with an asset sale if they receive one or more qualified bids in an amount in excess of $52.5 million.

Consistent with the plan’s dual-track strategy, the debtors entered into a stalking horse agreement in December.

The court authorized the debtors to file an unredacted version of the stalking horse agreement under seal. The primary basis of the sealing request was the debtors’ concern that disclosure of the stalking horse bidder’s identity “at least until the auction is conducted – will have an adverse effect on the debtors and their ability to conduct the auction.”

At the conclusion of the auction on Dec. 22, the debtors selected pre-petition and debtor-in-possession lender Tallwood Technology Partners LLC as the successful bidder. Tallwood’s winning bid reflected improvements to the value of the restructuring option of the plan. The stalking horse bidder was named backup bidder.

However, on Jan. 15, the debtors filed a motion seeking conditional authorization to sell its assets to the stalking horse bidder for $57.5 million, in the event that the debtors’ board determines that there is a material risk that the effective date of the plan will not occur on or before March 1.

“The stalking horse bidder’s identity is highly relevant to creditors’ assessment of the sale motion, particularly the sale motion’s request for a good faith finding under 11 U.S.C. § 363(m), and (ii) the provision of adequate assurance to contract counterparties under 11 U.S.C. § 365(f),” Snyder said in his objection.

“Thus, the identity of the stalking horse bidder should be disclosed to creditors prior to the court’s consideration of the sale motion.”

Santa Clara, Calif.-based Wave Computing is a processor technology company focused on the commercialization of RISC processor architectures and IP cores. The company filed bankruptcy on April 27, 2020 under Chapter 11 case number 20-50682.

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