February 1, 2022 – The Court hearing the Vewd Software USA cases confirmed the Debtors’ Second Amended Prepackaged Plan of Reorganization [Docket No. 130]. On January 31st, the Court agreed to confirm the Debtors' Plan subject to modifications; with the Debtors subsequently making those changes and filing the now confirmed iteration of the Plan on February 1st [Docket No. 118, which attaches a redline showing changes to the version filed on January 27th].

In a press release announcing the Plan's confirmation, the Debtors provide: "Under the Plan, Vewd’s pre-petition secured lenders will exchange their existing debt for equity in the reorganized business and provide new capital to effectuate Vewd’s growth plan. Furthermore, the Plan provides for payment in full to all trade vendors and resolves any potential disputes brought upon Vewd by its previous owners."

In what will have come as a surprising development to more than just the Debtors, Judge Michael E Wiles rejected the Debtors' attempt to bifurcate general unsecured creditors into two classes, those with whom the emerged Debtors would have a go-forward relationship and those with whom they would not, with the Debtors' Plan as proposed making the former whole and the latter receiving no recovery. 

The Plan as confimed now collapses Classes 4A an 4B into one class and ALL general unsecured creditors are to be treated as unimpaired, assumed to accept the Plan and in line for full recoveries; with the unified Class 4 receiving the following treatment: "(i) the Reorganized Debtors shall continue to pay or treat each General Unsecured Claim in the ordinary course of business as if the Chapter 11 Cases had never been commenced, or (ii) such Holder will receive such distribution acceptable to the Required Consenting Lenders as necessary to render such Allowed General Unsecured Claim Unimpaired, in each case subject to all defenses or disputes the Debtors and the Reorganized Debtors may have with respect to such Claims; provided that, notwithstanding the foregoing, the Allowed amount of General Unsecured Claims shall be subject to and shall not exceed the limitations or maximum amounts permitted by the Bankruptcy Code."

The unification of the class results from the single, remaining objection that the Debtors faced going into their Plan confirmation hearing, that of 1325 Avenue of the Americas, L.P. (the “NY Landlord”) which held a relatively small $599k general unsecured claim for lease rejection damages; and which argued that the Plan "unfairly discriminates and violates the absolute priority rule" at the expense of those with no going concern (or go-forward) role. 

In rebutting the objection, the Debtors put forward a not uncommon (and often winning) argument as to the separation of general unsecured creditors into two distinctly treated classes based on the utility of go-forward trade creditors to (a) the emerged Debtors and (b) to otherwise impaired secured creditors sitting above all of the general unsecured creditors (however grouped) who are "gifting" what would otherwise be their own recovery to benefit themselves (and every stakeholder in the emerged Debtors).

The Debtors' memorandum in support of Plan confirmation provides: "… classifications and recoveries under the Plan are based on, among other things, the Debtors’ capital structure, the unique rights afforded to the separate classes of Claims and Interests as defined in the Debtors’ prepetition debt documents and other definitive documents that control the rights of the respective Holders of Claims and Interests, and the importance of a Class concerning the success of Debtors’ ongoing, post-emergence business. 

….In addition, the recovery provided to Holders of General Unsecured Trade Claims in Class 4B is a ‘gift’ from the Debtors’ Prepetition Lenders, who are themselves impaired under the Plan. It is not uncommon for trade creditors to receive a ‘gift’ from senior creditors when trade creditors are critical to a debtor’s go forward business. 

Here…both General Unsecured Claims and General Unsecured Trade Claims are out of the money based on the valuation…which has not been challenged. Indeed, neither General Unsecured Claims nor General Unsecured Trade Claims would receive any distribution under the Plan unless the Prepetition Lenders are to provide a  contribution to make funds available for such classes. The Prepetition Lenders have consented to such treatment for General Unsecured Trade Claims because maintaining the Debtors’ business relationships with their trade creditors is critical to the success of the Reorganized Debtors’ business post-emergence." 

The Second Amended Plan also includes revisions to the Exculpation provision language (found on pages 191 and 192).

Plan Overview

On December 15, 2021, Vewd Software USA, LLC and two affiliated Debtors (“Vewd” or the “Debtors.” "a leading provider of OTT and hybrid TV solutions") filed for Chapter 11 protection (on a prepackaged basis) with the U.S. Bankruptcy Court in the Southern District of New York, lead case number 21-12065. At filing, the Debtors’ lead petition noted estimated assets between $1.0mn and $10.0mn; and estimated liabilities between $100.0mn and $500.0mn.

The Debtors' Memorandum [Docket No. 98] provides the following pre-confirmation hearing state of play: “The Plan contemplates a conversion of the Prepetition Lenders’ outstanding prepetition debt arising under the Prepetition Credit Agreement into the equity of the Reorganized Debtors. Further, to sustain the Debtors’ operations upon emergence from these chapter 11 cases, the Plan contemplates the conversion of the DIP Facility into an exit facility of at least $25 million (including $5 million of new capital provided by certain DIP Lenders and their affiliates) plus up to $20 million of new capital through the issuance of preferred stock by the Reorganized Debtors to certain DIP Lenders and Otello Corporation ASA (‘Otello’), a minority shareholder of the Debtors’ non-Debtor parent Last Lion Holdings Limited (‘LTD’), if it elects to participate in such issuance pursuant to the terms of the Otello Settlement Agreement.

…the Plan, also provides for two settlement agreements: (i) the Moore Settlement Agreement between the Debtors and the Moore Parties and (ii) the Otello Settlement Agreement (together with the Moore Settlement Agreement, the ‘Settlement Agreements’) between Otello (together with the Moore Parties, collectively, the ‘Settlement Parties’). The Settlement Agreements are integral to the Debtors’ restructuring efforts because they allow the Debtors to avoid costly, burdensome, and value-destructive litigation that could have delayed the Debtors’ restructuring efforts….

The Plan will allow the Debtors to emerge from these chapter 11 cases as a healthy and robust going concern, maximizing value to stakeholders, and preserving jobs in the process. The Plan accomplishes the Debtors’ goals of a comprehensive debt restructuring, including (a) substantially deleveraging the Debtors’ balance sheet, (b) enhancing liquidity through the Exit Facility and Preferred Stock Issuance that will enable the Debtors to fund the Plan and business operations, and (c) protecting relationships with the Debtors’ trade creditors who are unimpaired under the Plan. The Debtors believe that Confirmation of the Plan is in the best interest of the Debtors’ stakeholders as it maximizes the value of the Debtors’ Estates and allows the Debtors to emerge from chapter 11 with a right-sized capital structure and liquidity sufficient to support go-forward success.”

The Disclosure Statement [Docket No. 16, drafted prior to the Otello Settlement] provides, “Following extensive due diligence and arm’s length, good faith negotiations, the Debtors and the Prepetition Lenders agreed to the terms of the restructuring transactions embodied in the Plan. The Plan contemplates a comprehensive reorganization that will result in a substantial deleveraging of the Debtors’ balance sheets. The Debtors’ reorganization will be funded by a $20 million DIP Facility, including $10 million of new money, provided by the DIP Lenders, that will be used to, among other things, pay working capital and other general corporate needs of the Debtors in the ordinary course of business and the administration of these chapter 11 cases. Upon the Debtors’ emergence from chapter 11, the DIP Facility will convert into an exit facility of at least $25 million plus up to $20 million of new money (whether as delayed draw term loans or through the issuance of preferred stock by the Reorganized Debtors).

The Plan contemplates a conversion of the Prepetition Lenders’ outstanding prepetition debt arising under the Prepetition Credit Agreement into the equity of Reorganized Holdco that will own 100% of the equity of Vewd AS."

The following is an summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement, see also the Liquidation Analysis below):

• Class 1 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class 2 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class 3 (“Prepetition Credit Facility Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $111.36mn and expected recovery  is 66%-85%. Each Holder will receive, on the Effective Date, its Pro Rata share of 100% of the Reorganized Common Stock (subject to dilution, if any, by the Management Incentive Plan). 
• Class 4 (“General Unsecured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Treatment: In full and final satisfaction, compromise, settlement, release, and discharge of and in exchange for each General Unsecured Claim, (i) the Reorganized Debtors shall continue to pay
  or treat each General Unsecured Claim in the ordinary course of business as if the Chapter 11 Cases had never been commenced, or (ii) such Holder will receive such distribution acceptable to the Required Consenting Lenders as necessary to render such Allowed Ge neral Unsecured Claim Unimpaired…
• Class 5 (“Intercompany Claims”) is impaired/unimpaired, deemed to accept or reject and not entitled to vote on the Plan.
• Class 6A (“Vewd USA Interests”) is impaired/unimpaired, deemed to accept or reject and not entitled to vote on the Plan.
• Class 6B (“Vewd AS Interests”) is impaired, deemed to reject and not entitled to vote on the Plan.
• Class 6C (“LLH AS Interests”) is impaired, deemed to reject and not entitled to vote on the Plan.
• Class 7 (“Subordinated Claims”) is impaired, deemed to reject and not entitled to vote on the Plan.

Key Documents

The Disclosure Statement attaches the following exhibits:

• Exhibit A: Plan of Reorganization
• Exhibit B: Organizational Structure
• Exhibit C: Liquidation Analysis
• Exhibit D: Financial Projections
• Exhibit E: Valuation Analysis
• Exhibit F: Exit Facility Term Sheet
• Exhibit G: New Governance Term Sheet

The Debtors also filed Plan Supplements at Docket Nos. 70 and 97 (the latter attaching each earlier filed document with accompanying redlines in respect to amended documents) which attached the following:

• Exhibit A: Assumed Executory Contract and Unexpired Lease List
• Exhibit B: Rejected Executory Contract and Unexpired Lease List
• Exhibit C: Exit Loan Note Issuance Agreement
• Exhibit D: Subscription Agreement
• Exhibit E: Identities of the Members of the New Board and the Reorganized Debtors’ Officers
• Exhibit F: New Governance Documents
  • Exhibit F(i): Reorganized Holdco Articles of Association
  • Exhibit F(ii): Reorganized Holdco Shareholder’s Agreement
• Exhibit G: Restructuring Steps Memorandum
• Exhibit H: Schedule of Retained Causes of Action
• Exhibit I: Identity and Terms of Compensation of the Plan Administrator

Otello Settlement

The Otello settlement calls for the Reorganized Debtors to enter into an advisory services agreement with Otello on the Plan Effective Date.

In addition, according to the amended Plan, "As of the Effective Date, Otello shall have an option to exercise by irrevocable written notice to the Company and the holders of Preferred Stock on or before the six (6) month anniversary date of the Effective Date to participate in any future issuance of Preferred Stock (as defined in the Plan) that is unsubscribed at the time at which the notice to exercise the option is delivered in an amount equal to the lesser of $9,000,000.00 and the face amount of any unsubscribed Preferred Stock at such time, unless otherwise agreed by the holders of Preferred Stock at such time (the 'Otello Preferred Stock Participation Option'). In the event that Otello exercises the Otello Preferred Stock Participation Option, it shall send an irrevocable written notice of such exercise to the Company and the holders of Preferred Stock at such time and shall specify the amount of Preferred Stock for which Otello wishes to subscribe. Nothing herein shall require the Company to issue any additional Preferred Stock, and any such issuance of Preferred Stock shall be subject to the terms and conditions of the Company’s Articles of Association and applicable law."

Moore Settlement

The Plan also contemplates a settlement by and between the Moore Parties and the Debtors (the ‘Moore Settlement’). Pursuant to the Moore Settlement, as contemplated in the Plan, the Moore Parties and the Debtors have agreed to the settlement of all claims, interests, and causes of action between the Moore Parties and the Debtors in consideration for the releases granted by the Moore Parties and the Debtors to each other and the other Released Parties and other benefits provided under the Plan.

Key terms of the Moore Settlement are:

• on the effective date of the Plan, the Reorganized Debtors will enter into a consulting agreement with Mr. Moore pursuant to which the Reorganized Debtors will pay Mr. Moore a $4 million nonrefundable retainer on the effective date of the Plan plus $880,000 payable over 12 monthly installments and Mr. Moore will provide consulting services as agreed to by the Reorganized Debtors and Mr. Moore for up to 15 hours per week and agree not to compete with the Reorganized Debtors on the terms set forth in the Moore Settlement;
• the Debtors will continue to pay Mr. Moore’s health benefits through the expiration of the consulting agreement;
• the Debtors will pay up to $100,000 of legal expenses of Mr. Moore;
• the Debtors will reject Mr. Moore’s existing employment agreement on the effective date of the Plan; and
• the Debtors will reject their lease in New York, which has primarily been used by Mr. Moore and his associates, effective as of December 31, 2021.”

Key Terms of Proposed Exit Facility

• Borrower: Reorganized Vewd
• Guarantors: Reorganized Holdco and each subsidiary of the Borrower (other than any Excluded Subsidiary) (collectively, the “Guarantors”)
• Lenders: The DIP Lenders
• Type and Amount of Exit Facility: A senior secured term loan credit facility (the “Exit Facility,” and the loans thereunder, the “Exit Term Loans”) in an aggregate principal amount of approximately $25 million (the “Exit Facility Credit Agreement”).
• Maturity Date: 4 years from the Plan Effective Date.
• Interest Rate: 11.00% per annum, which shall (x) prior to the second anniversary, in the sole discretion of the Borrower, be paid in-kind (“PIK”) and (y) following the second anniversary, be paid in cash; provided that, at the election of the Borrower, up to 5.00% may be PIK.
• Default Rate: Applicable interest rate plus an additional 2.00% per annum on all outstanding amounts under the Exit Facility upon the occurrence and during the continuance of any Specified Event of Default (to be defined in the Exit Facility Credit Agreement).
• Fees: Exit Fee: 3% of the aggregate principal amount of the Exit Term Loans and the New Money DDTL Loans shall be earned as of the Closing Date and payable in cash upon prepayment, repayment or termination of the Exit Facility (including at maturity, upon acceleration or otherwise).

Prepetition Indebtedness

As of the Petition Date, the Debtors have approximately $117.96 million in aggregate principal amount of funded debt obligations arising under the Prepetition Credit Agreement. The chart below summarizes the Debtors’ prepetition capital structure.

Petition Date Perspective

In a press release announcing the filing, the Debtors advised that: “Vewd Software AS, the leading provider of OTT software solutions, today announced that it has come to an agreement with its senior lenders to position the company for continued success in the fast-changing world of Connected TV via a court supervised process that will result in deleveraging and improving its balance sheet. The restructuring of its balance sheet will be facilitated through a debt-for-equity exchange pursuant to a prepackaged plan of reorganization under Chapter 11 of the United States Bankruptcy Code supported by 100% of the company’s senior lenders. To effectuate the balance sheet enhancements, Vewd Software AS and its affiliates Last Lion Holdco AS and Vewd Software USA, LLC (collectively, 'Vewd' or the 'Company') filed voluntary Chapter 11 petitions with the United States Bankruptcy Court for the Southern District of New York. The financial restructuring process is expected to have no impact on the day-to-day operations of the Company and the Company expects to carry on business as usual."

The Debtors' CEO Aneesh Rajaram commented further, “As we embark on our next phase of growth in a highly dynamic, fast-paced industry, it has become imperative that we boost our ability to invest into the accelerated roll-out of our new products and solutions. We look forward to emerging from this process with a healthy balance sheet, empowering Vewd to continue its growth trajectory within the evolving OTT industry. Our future owners have demonstrated a clear commitment to our Company’s long-term success and our mission to enable entertainment everywhere."

The release continues, "The Company’s senior lenders have agreed to provide $10 million of new financing through a debtor in possession facility, subject to court approval (see more on DIP financing below). Combined with the Company’s operating cash flows, the new financing will provide sufficient liquidity for the Company to operate throughout the financial restructuring process, which is anticipated to last less than 45 days."

Goals of the Chapter 11 Filing

The Debtors' Disclosure Statement [Docket No. 16] explains, "The Debtors’ goal from the outset of these chapter 11 cases is to maximize the value of their assets for the benefit of all stakeholders. The Restructuring Transactions contemplated in the Plan, including the Moore Settlement, in conjunction with the proposed schedule requested in the Debtors’ Scheduling Motion (as defined herein) will provide the Debtors the ability to accomplish this goal. The Debtors are confident that the negotiated path forward will preserve the going-concern value of the Debtors’ business, maximize recoveries available to all stakeholders and protect the jobs of the Debtors’ employees."

Events Leading to Chapter 11 Filing

The Disclosure Statement continues, "Following the consummation of the 2016 Transaction, pursuant to [Last Lion Holdings Limited's ("LTD"’)] articles of association, Moore Freres & Co. ("MFC") was entitled to appoint three directors to the board of directors of LTD (the 'LTD Board') and Otello Corporation ASA was entitled to appoint one director to the LTD Board. Under the shareholders’ deed entered into by MFC and Otello for the joint ownership of LTD (the 'Shareholders’ Deed'), the members of the LTD Board consisted of the following four members: Mr. [Martez] Moore, an appointee of MFC; Martino Moore, an appointee of MFC; Robert Azeke, an appointee of MFC; and Lars Boilesen, an appointee of Otello….

In October 2017, Mr. Moore, on behalf of MFC, began approaching parties to sell some of MFC’s shares in LTD, as well as a portion of the Otello Minority Interest. By late October, MFC and Mercury Software Partners LLC ('Mercury') were engaged in serious discussions regarding the sale of MFC’s shares and the Otello Minority Interest. Despite representing that they spoke for Otello in the negotiations, MFC never shared Mercury’s offers with Otello, and instead MFC negotiated a two-step transaction whereby MFC would purchase the Otello Minority Interest for $31 million and subsequently sell such interests to Mercury for $48 million. However, MFC cancelled both proposed transactions prior to consummation. Subsequently, in early 2018, Mercury and Otello negotiated their own sale and purchase agreement (the 'SPA') whereby Mercury would acquire the Otello Minority Interest from Otello for $48 million.

Pursuant to article 13.2 of LTD’s articles of association, Otello can only transfer its shares in LTD if approved by a majority of the LTD Board. Accordingly, on February 20, 2018, upon the signing of the SPA, Lars Boilesen, Otello’s CEO and member of the LTD Board, called for a LTD Board meeting to be held on February 23, 2018 to consider approval of the SPA. Contemporaneously therewith, on February 21, 2018, counsel for MFC sent a 'Cease and Desist Letter' to Mercury accusing it of (i) breaching a non-disclosure agreement between MFC and Mercury related to the prior sale and (ii) seeking to harm or interfere with MFC’s interests in LTD and/or its relationship with Otello. At the next LTD Board meeting on March 5, 2018, the LTD Board established a committee, consisting of Martino Moore and Robert Azeke, to review the SPA. On April 17, 2018, such committee recommended that the LTD Board not approve the SPA, which was accepted by the LTD Board by majority vote on April 27, 2018, with Mr. Boilesen as the lone vote in favor of approval.

In the meantime, on April 12, 2018, Otello sought an injunction in the English High Court compelling the LTD Board’s approval of the SPA and, alternatively, if the SPA should fail, relief by way of an order that MFC be required to buy the Otello Minority Interest or an order for the sale of LTD’s assets or damages. The English High Court ruled in favor of Otello. On September 14, 2018, the English High Court (i) concluded that Otello had been the victim of unfair conduct on the part of MFC to obstruct the sale of the Otello Minority Interest to Mercury and that MFC had breached LTD’s articles of association and (ii) granted injunctive relief to Otello requiring the LTD Board to immediately approve Mercury as a potential transferee of the Otello Minority Interest pursuant to Article 13.2 of LTD’s articles of association (the 'Original Order'). The English High Court then adjourned the proceedings generally in the event that the injunction failed to achieve its intended objective.

The LTD Board and MFC failed to comply with the Original Order. Consequently, because the LTD Board failed to comply with the Original Order, the English High Court, among other things, ordered MFC to purchase (i) the Otello Minority Interest from Otello for $48 million and (ii) a $5 million promissory note issued to Otello by Last Lion Management LLC, a wholly owned subsidiary of MFC, in connection with the 2016 Transaction, including any accrued but unpaid interest due under the note (the 'Damages Order').

Moreover, the English High Court concluded MFC should not be permitted to conduct the sale of LTD’s shares. Accordingly, in the event that MFC failed to comply with the Damages Order, the English High Court concluded that LTD’s shares should be sold by a receiver to be appointed to conduct the sale, with any sale proceeds to be applied in satisfaction of MFC’s obligations under the Damages Order.

MFC did not comply with the Damages Order. In lieu of a receiver, Otello and MFC, together with the Prepetition Lenders, announced a mutual agreement for the establishment of the Special Committee to the LTD Board comprised of three independent directors appointed by each of the parties to the agreement. On April 1, 2021, the English High Court approved the appointment of the Special Committee to the LTD Board to pursue and approve the sale of the Company’s assets or, alternatively, a recapitalization of the Company. The proceeds of any sale or recapitalization would first repay the Prepetition Lenders’ claims under the Prepetition Credit Agreement in full and second pay the amounts awarded to Otello under the Damages Order….

Separately, because MFC has failed to pay any of the ordered amounts to Otello, Otello obtained a judgment against MFC entered by the Supreme Court of the State of New York for the payment of its legal fees. See Otello Corporation ASA v. Moore Freres & Company, Index No. 153973/2021, Doc. No. 19 (Supreme Court of the State of New York, New York County) (Decision and Order on Motion for Summary Judgment, June 17, 2021).

Prepetition Lenders Exercise Rights Under the Prepetition Credit Agreement

At around the time of the appointment of the Special Committee, certain defaults and events of default occurred under the Prepetition Credit Agreement, including breaches of representations and covenants. After several rounds of discussions, the Prepetition Lenders and the Debtors agreed to enter into certain forbearance periods under the Prepetition Credit Agreement.

Pursuant to the first forbearance agreement, dated June 2, 2021 (as amended on June 28, 2021, the 'First Forbearance Agreement'), the Prepetition Agent and the Prepetition Lenders agreed to forbear from exercising rights and remedies under the Prepetition Credit Agreement and other loan documents arising from or related to specified events of default, and the Prepetition Lenders agreed to fund a borrowing request for additional Delayed Draw Term Loans in an aggregate principal amount of $3,000,000. The forbearance period provided under the First Forbearance Agreement expired on July 8, 2021.

Subsequently, on July 8, 2021, as a result of the occurrence of multiple events of default under the Prepetition Credit Agreement, the Prepetition Agent, on behalf of the Prepetition Lenders, accelerated the obligations under the Prepetition Credit Agreement and exercised certain rights and remedies under the Prepetition Credit Agreement to remove Mr. Moore from the board of directors of Debtors LLH AS and Vewd AS. The three members of the Special Committee then resigned from the LTD Board and accepted an appointment as independent directors of Debtors LLH AS and Vewd AS. They were also appointed to the board of Vewd USA. The Prepetition Agent exercised such rights to preserve the value of the Company.

Since Mr. Moore’s removal from the LTD Board, Mr. Moore, on behalf of MFC, has asserted additional claims against the Debtors totaling approximately $24,258,156.73 plus interest (the 'Moore Claims') allegedly arising under certain prepetition agreements between the Debtors and MFC, Last Lion Management LLC, Mr. Moore and Mr. Moore’s late wife Charlita Cardwell (collectively, the 'Moore Parties').

NB: At the time Mr. Moore was removed from the boards, he was Chairman and Chief Executive Officer of Moore Fréres & Company (“MFC”), a majority shareholder of the Company through its 70% shareholding in LTD.

Negotiations with the Prepetition Lenders

The Debtors, under the direction of their directors (including the three recently appointed independent directors and their CEO, Aneesh Rajaram) remained committed to pursuing a value maximizing sale or recapitalization transaction. In view of the circumstances, the Debtors, with the assistance of their advisors, determined that a more comprehensive sale process and restructuring solution may be required and, accordingly, launched a review of strategic alternatives and canvassed and evaluated a wide array of potential restructuring alternatives, including a sale of all or a portion of the Company’s business, third-party financing alternatives and various permutations of the foregoing. The Company considered both in- and out-of-court implementation alternatives.

In addition, the Debtors, with the assistance of Jefferies and their advisors, conducted a robust prepetition marketing process for the sale of all or a portion of the Debtors’ assets, and commenced discussions with the Prepetition Lenders regarding a broader consensual restructuring, with the goal of reaching consensus on a comprehensive transaction that would best position the Debtors to fulfill their obligations under the Damages Order and return to profitability as a market leader in their industry.

After the Prepetition Agent exercised remedies in July 2021, the Prepetition Lenders, the Prepetition Agent, and the Company entered into the Fifth Amendment and Second Forbearance to the Prepetition Credit Agreement, dated August 3, 2021, pursuant to which, among other things, (i) the Prepetition Agent and the Prepetition Lenders agreed to forbear from further exercising rights and remedies under the Prepetition Credit Agreement and other loan documents arising from or related to specified events of default; (ii) the Prepetition Agent and the Prepetition Lenders agreed to amend the Prepetition Credit Agreement to provide the Prepetition Superpriority Term Loans; and (iii) upon an election by the Company to implement any restructuring in a case under chapter 11 of the Bankruptcy Code, the Company and the Prepetition Lenders agreed to negotiate a debtor-in-possession financing facility.

The forbearance period provided under the Fifth Amendment and Second Forbearance to the Prepetition Credit Agreement originally was set to expire on December 1, 2021, but was extended to December 17, 2021 with the consent of the requisite Prepetition Lenders. Thereafter, the Debtors continued constructive discussions with the Prepetition Lenders regarding potential in- and out-of-court restructuring transactions. These discussions included review of certain third-party purchase offers for the Debtors’ business (none of which exceeded the Prepetition Lenders’ secured debt).

However, an out-of-court transaction presented certain challenges, including the ongoing risks associated with the Debtors’ liquidity constraints, the potential for the value of the Debtors’ business to deteriorate and the need to resolve the Moore Claims and claims related to the Shareholder Litigation. These transactions continued to be kept under close review until shortly before the Petition Date and the Debtors were committed to implementing an out-of-court transaction if such transaction was supported by the Prepetition Lenders or provided enough value to pay the Prepetition Lenders in full.

Unfortunately, no such transaction materialized and, in light of the challenges noted above, the Debtors, in consultation with their advisors, determined that an in-court process was likely to be the most viable solution. Ultimately, discussions between the Prepetition Lenders and the Debtors yielded an agreement on a restructuring transaction, as outlined in the Plan."

Liquidation Analysis (for notes, see Exhibit C to Disclosure Statement [Docket No. 16])

About the Debtors

According to the Debtors: “Vewd Software is the leading provider of OTT and hybrid TV solutions, connecting consumers anywhere to the content they love. By making OTT possible on almost 40 million connected devices each year, Vewd leads the way in defining the future of entertainment. Our suite of products and services are crafted to simplify complexity and offer solutions that unite the entire value chain, from silicon vendors to end-users. Market leaders such as Sony, Hisense, TPV, Vodafone, Sagemcom, and many more rely on Vewd products and services.”

Corporate Structure Chart

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