On July 15, 2018, ActiveCare, Inc., a Delaware corporation (the "Company"), filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Bankruptcy Court assumed jurisdiction over the assets of the Company as of the date of the filing of the bankruptcy petition. The Company remains in possession of its assets, and continues to manage and operate its business and properties, as debtor-in-possession, subject to the provisions of the Bankruptcy Code and the supervision and orders of the Bankruptcy Court.
In connection with the bankruptcy filing, and subject to higher and better offers, the Company entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with Telcare, LLC, a Delaware limited liability company ("Telcare") which is described in more detail below. The Company has also entered into a $0.8 million debtor-in-possession ("DIP") credit facility and loan agreement (the "DIP Agreement") with Partners for Growth IV LP, as lender (the "Lender"). The DIP Agreement's effectiveness is subject to Bankruptcy Court approval. The Company will use the cash flow from operations and the DIP facility to provide working capital and financial resources necessary to allow business operations to continue as normal during the bankruptcy sale process, including meeting obligations to employees, vendors, customers and others.
Under the Asset Purchase Agreement, Telcare, upon the closing of the transactions contemplated thereby, will purchase substantially all of the Company's assets and assume certain of the Company's obligations associated with the purchased assets through a supervised sale under Section 363 of the Bankruptcy Code. The purchase price for such assets under the Asset Purchase Agreement is composed of (i) $3.75 million in cash, (ii) up to $100,000 to cure defaults under the Assumed Contracts as defined in the Asset Purchase Agreement, (iii) the forgiveness and cancellation of a note payable to Telcare, (iv) the forgiveness of accounts payable of the Company owed to Telcare; (v) delivery to the Company by Telcare of up to $500,000 of Product, and (vi) the assumption of Assumed Liabilities as defined in the Asset Purchase Agreement. Consummation of the transactions contemplated by the Asset Purchase Agreement is subject to higher or better offers, approval of the Bankruptcy Court, and customary closing conditions. As part of the Asset Purchase Agreement, the Company has filed a motion for authority to sell its assets to Telcare pursuant to Section 363 of the Bankruptcy Code, establishing bidding procedures, designating Telcare as the stalking horse bidder, and setting a hearing date on the sale of the assets.
Those interested in submitting bids should contact the Company in writing 1365 Business Park Drive West, Orem, UT 84058.
There can be no assurance that the Company can remain in possession of its assets and control of its business as a debtor-in-possession and that a trustee will not be appointed to operate the business of the Company. The Company's current business relationships and arrangements, and the Company's ability to negotiate future business arrangements may be adversely affected by the filing of the bankruptcy petition.
|
Item 2.03 Creation of a Direct Financial Obligation or Obligation under an Off-Balance Sheet Arrangement of a Registrant.
|
The information set forth in Item 1.03 above with respect to the DIP Agreement (as defined above) is incorporated herein by reference.
|
Item 9.01 Financial Statements and Exhibits.
|
| |
|
|
|
Exhibit No.
|
|
Description
|
|
10.1
|
|
Asset Purchase Agreement by and between the Company and Telcare, LLC dated July 15, 2018.
|