Wave Computing emerges from Chapter 11 bankruptcy, rebrands as MIPS

By Sarah Lizee

Olympia, Wash., March 1 – Wave Computing, Inc. and its subsidiaries, including MIPS Tech, emerged from Chapter 11 bankruptcy on Monday, according to a press release.

Going forward, the restructured business will be known as MIPS, reflecting the company's strategic focus on the RISC-based processor architectures which were originally developed by MIPS.

The emergence follows the approval of the company's Chapter 11 plan of reorganization on Feb. 10 by the U.S. Bankruptcy Court for the Northern District of California.

After a thorough marketing process and a bankruptcy auction held in December, Tallwood Venture Capital emerged as the winner with a restructuring bid valued at $61 million. Tallwood will take majority ownership of the reorganized company.

During the Chapter 11 process, a team from Sidley Austin LLP led by Sam Newman served as legal counsel to Wave and MIPS; SierraConstellation Partners served as financial and restructuring adviser; and Armory Securities served as investment banker. Robert G. Harris from the Silicon Valley bankruptcy boutique, Binder & Malter LLP, served as counsel to Tallwood.

Plan terms

The company’s plan of reorganization, which contemplated a restructuring of $56.91 million in funded and general unsecured debt and creditor claims, contained a toggle feature that allowed the debtors to instead proceed with an asset sale if they received one or more qualified bids in an amount in excess of $52.5 million, as previously reported.

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.

Under the restructuring option, 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.

Under the asset sale option, holders of DIP claims and Tallwood claims would have received 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.

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.

Under the restructuring option, 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. Had the asset sale distribution been elected, holders would have received 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.

Under the restructuring option, each holder of general unsecured claims will receive its right to recovery under the liquidating trust. Had an asset sale distribution been elected, holders would have received 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.

Holders of preferred interests, section 510(b) claims and common interests will receive no distribution.

Intercompany interests will be either reinstated or 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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