Wave Computing receives confirmation of dual-track Chapter 11 plan

By Sarah Lizee

Olympia, Wash., Feb. 16 – Wave Computing, Inc.’s Chapter 11 plan of reorganization was confirmed Friday by the U.S. Bankruptcy court for the Northern District of California, according to an order.

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 allows 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.

Plan distributions will be funded with proceeds from a $5.11 million first-lien senior secured revolving credit facility from debtor-in-possession lender Tallwood Technology Partners LLC, new common stock, cash on hand and newly-issued senior secured notes, secured subordinated notes and a GUC loan.

General administrative expense claims and priority tax claims will be paid in full in cash.

If a restructuring occurs, each holder of DIP claims will receive, if the total claims are equal to or less than $4 million, their pro rata share of 37.66% of new common stock, and if the total claims exceed $4 million, their pro rata share of 37.66% of new common stock, and only with respect to the portion of claims that exceeds $4 million, their pro rata share of a senior secured note.

If the asset sale is elected, holders of DIP claims and Tallwood claims will receive allowance of the Tallwood claims in the amount of $10.6 million, and, with respect to distribution of the sale proceeds, subordination to the general unsecured claims of $5 million of the DIP claims and $7.95 million of the Tallwood claims, and recovery on account of the remaining $2.65 million of Tallwood claims pari passu with the general unsecured claims.

The DIP lender will have the right to credit bid, dollar-for-dollar, the full amount of the DIP claim, plus all interest and fees. In no event will Tallwood have the right to credit bid any amount of the Tallwood claims.

Holders of other secured claims will be paid in full in cash or receive the collateral securing their claims.

Holders of other priority claims will receive payment in full in cash.

If a restructuring occurs, holders of Tallwood claims will receive their pro rata share of 62.34% of new common stock, their pro rata share of the secured subordinated note, and their right to recovery under the liquidating trust. If the asset sale distribution is elected, holders will receive their pro rata share of the sale proceeds after satisfaction of general administrative expense claims, DIP claims, professional claims, priority tax claims, other priority claims, other secured claims and de minimis unsecured claims.

Holders of de minimis unsecured claims will receive payment in full in cash.

If the restructuring occurs, each holder of general unsecured claims will receive its right to recovery under the liquidating trust. If the asset sale distribution is elected, holders will receive their pro rata share of the sale proceeds after satisfaction of the general administrative expense claims, DIP claims, professional claims, priority tax claims, other priority claims, other secured claims, Tallwood claims and de minimis unsecured claims.

Intercompany claims will be reinstated or canceled without any distribution if a restructuring occurs. If the asset sale distribution is elected, the claims will be canceled without any distribution.

Holders of preferred interests, section 510(b) claims and common interests will receive no distribution if a restructuring occurs. If an asset sale occurs, they will receive their pro rata share of the sale proceeds after satisfaction of senior claims.

Intercompany interests will be either reinstated or canceled with no distribution if a restructuring occurs. If an asset sale occurs, intercompany interests will be canceled with no distribution.

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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