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Except it is not a bankruptcy.
Structuring the transaction as a stock sale, but it must look like an asset sale.
We also have to remember the additional complexity that this is happening under CCAA with an extended Stay Of Proceedings. There are also confidentiality agreements which the Canadian courts appear to uphold; agreements BioAmber signed with companies before and after CCAA.
When this wraps in Canada and goes to US Courts under Chapter 15 is likely when the fireworks will go off.
A 338h10 STARTS with acquistion of the equity of a company and then AFTERWARDS allows it to be treated as an asset purchase instead for tax purposes.
Yes, it is a bilateral election requiring approval from all parties.
"In the case of an IRC 338(h)(10) election, Buyer and Seller must each agree to the election."
And yet, that is exactly the opposite of what is happening. Short positions are in the minority when it comes to BioAmber.
At this late stage of the situation, and what some claim to be a "no-brainer" (that shares will be cancelled), that should be concerning.
"Pretty Much"
The ccaa will be closed . Then it will go back to the Delaware courts were priority is the law . Pretty much pennyless and debt ridden and in chapter 7 . Were all remaining debt will be discharged and the corporation will be dissolved. The Delaware court could care less who owns shares .
Under CCAA and the Bankruptcy and Insolvency Act, CCAA does not strictly require that the interests of each class be considered in order.
The CCAA has been referred to as the Canadian chapter 11, referring to US Bankruptcy Code chapter 11 proceedings, but there are important differences. For instance, CCAA protection is not automatic and there is no ability to “cram down” classes of creditors by seeking court authorisation. The absolute priority rule and equitable subordination do not exist in Canada.
What that means is that the interest of other stakeholders (i.e., Canadian JOBS, which was the primary purpose of enacting CCAA in the first place) are considered ahead of providing the maximum recovery for each class in order.
Nope.
Even LCY/Visolis is looking to make alternative products in the plant now that crude is tanking again.
Here is a snapshot of these companies, in order of their link:
1. Oakridge Holdings designed aviation ground support equipment.
2. Interphase Corp. was a "diversified information and communications technology" company that turned flat surfaces into interactive displays.
3. North Atlantic Drilling searched for oil and gas in harsh environments.
4. Patriot National provided "outsourcing solutions" for the insurance industry.
5. Enumeral Biomedical Holdings was engaged in trying to develop antibodies for diseases -- (read: R&D company with no sales)
6. Real Alloy converted aluminum scrap and is now Elah, shares were entitled to be received at a 1 share for 200 rate.
7. Ameriresource provided construction services and was headquartered in Las Vegas, NV, the gambling capital of the world.
8. Aerospostale, Inc. was a mall-based retailer of causal apparel and accessories for women between the ages of 11 to 18.
9. Colbalt explored for oil.
10. BreitBurn was an oil and gas partnership.
11. Ironclad made gloves and apparel.
3 oil companies, 2 apparel companies, an insurance gig, an R&D company with no sales, and a company that made the stairs that you push up to airplanes to load stuff?
These companies are hardly investable even without the "Q"!!!
BioAmber absolutely stands out as vastly distinct when compared to any of these companies, not only being from a completely different sector, but also in terms of value, whether referring to intrinsic, current assets, market, or potential.
The only thing that is comparable here is the letter "Q", and at a glance appears that none of these companies was a cross-border case governed by CCAA.
And yet just think, somewhere out there at this very moment exists the world's worst short seller.
I wonder if there are any statisticians who could calculate the odds that this individual is currently shorting BIOAQ.
This, of course, is a possibility. There is also the possibility that common shares survive.
There have been some reasonable points made in regards to BioAmber shareholders receiving nothing in terms of equity claims, however, very little has been said or supported with facts in terms of equity interest ending up with nothing.
At a glance, there appears to be a lot of uncertainty at the moment. The unusual thing when it comes to BioAmber is that there seems to be little to zero uncertainty at the extremes, namely that shares will either be cancelled or survive and thrive.
This is copied and reposted on OTC Watch from a sticky post above, which is the original source.
No, no, no, no.
Crude prices fell to current levels well after this deal was in the works.
LCY is not looking to produce other products on the whims of weekly or monthly oil price peaks and valleys. Many of these companies are looking forward years and decades.
Let's state this another way:
PwC did not need anyone to come in and purchase any of BioAmber's assets or business for less than scrap value. As the court appointed monitor, PwC was managing all of the critical financial and operational affairs of BioAmber.
Therefore, in the absence of a bid commensurate with scrap value, PwC themselves could have sold off BioAmber's assets for scrap value, which exceeds 4.3 million.
This fact alone has yet to be answered, and likely for good reason. It does not make sense and would require extensive distortion of basic reasoning and elementary level business judgement.
Except in this specific situation it does not.
The reason "Liquidation Process" was used versus just "Liquidation" is because it included not only the possibility of a simple liquidation of assets, but also that of a purchase agreement by a strategic buyer. This is not just semantics. Visolis/LCY Chemical is a strategic buyer in that their intentions for investment in BioAmber is to buy, own, and operate the Sarnia plant.
In fact, I am surprised there is not an uproar from anyone who believes this is a simple liquidation at the final purchase price of 4.3 million, which is below scrap value. There has yet to be one single plausible explanation of this gap in value.
If one were short on BIOAQ, that fact alone should gnaw and nag at hopes of shares being cancelled.
The final answer is not at all clear.
The Liquidation of a Liquidation Process
PwC's documents refer to it as a "Liquidation Process", and in other places it is referred to as a "Liquidation Scenario", or "Liquidation Scenario under a SISP".
At some point the word "process", "scenario", and other specific phrasing has been dropped and left for dead. As a result, this language and the larger reality of the CCAA proceeding has been seized upon by those maintaining fantasies of BioAmber's common shares being cancelled.
The fantasies of BioAmber's shares being cancelled are less a result of this specific situation and more a result of what has happened to other companies in the past in vaguely similar yet very different circumstances, other "Q" stocks in the past in vaguely similar yet very different circumstances, falsely believing the case is a U.S. Chapter 7 or 11, falsely thinking there are no circumstances under which the NOL's have value, and other repetitive mind musings and mental gymnastics more suited to making one feel better about a particular investment decision rather than offering convincing ideas with clear, sound reasoning supported by facts.
When it comes to BioAmber some see the glass half full. Others see the glass half empty. Instead, it is best to see the glass for exactly what it is, which is fully half.
Filing Chapter 15 - means the bankruptcy will be governed by the US Bankruptcy laws.
This entire line of reasoning has been debunked multiple times.
This is a cross-border case underneath the CCAA (Companies' Creditors Arrangement Act) via Canadian courts as the primary case, with the ancillary case being a U.S. Chapter 15 (not U.S. Chapter 7 or 11).
Therefore, any conclusions derived from erroneous premises are fantasy.
It is Canadian laws that need to be cited to support conclusions. Those who think shares will be cancelled have cited zero laws from any country, let alone Canada.
First, it is worth noting that we agree this case is filed under CCAA. That's progress!
However, two corrections:
1. The location of creditors is completely irrelevant -- rather it is the location of the debtors main interests.
2. The motion for the CCAA below cites the following reasons, among others, that would be advantageous versus having the case filed under more restrictive circumstances:
The aggregate effect and justification for proceeding under CCAA is that it is for the ultimate benefit of all concerned stakeholders.
FOREIGN MAIN PROCEEDING
The Chapter 15 was to allow the bankruptcy to be filed under the US Bankruptcy laws
The cross border stuff is meaningless
Absolutely incorrect - this is a cross-border case governed by the CCAA with US Chapter 15 as ancillary.
Anyone arguing this is a US Chapter 7 or 11 is incorrect and is unable to cite one law or document, which is why none have been posted.
There may be only one outcome, or it might have elements of both sides, or it might be something nobody has yet predicted. Many possibilities in the case of BioAmber. Still, anyone can flip a coin and begin making an argument for that side.
It is not sufficient to be right, rather to be right for the right reasons.
The many reasons being presented that the cancellation of BioAmber's shares as an imminent fact is based on incorrect, wrong, faulty, inaccurate, false, vague, misleading, and distorted information. There is no need to wait for an "outcome", that is enough knowledge to stop paying attention to those arguments immediately.
Because FINRA is LAST IN LINE and only executes the decisions of the purchasing entity and what PwC and the Canadian Courts rule on what happens with equity interest via CCAA!
HAHAHA!!!
PWC et al are concerned with specifying what happens in their sphere. No reason for them to say what happens after their actions are complete. That's not their responsibility.
PWC determined there is nothing for commons to recover from the assets.
No reason for them to say what happens after their actions are complete. That's not their responsibility.
This is 100% false.
This is 100% false.
Yes.
Couple this with the fact that many erroneously believe this is a US Chapter 7 or 11, and are drawing conclusions and forming opinions on that basis.
Instead, it is a cross-border case under CCAA with the ancillary case being US Chapter 15.
Completely different legal structure.
So, are you suggesting FINRA will remove the BioAmber ticker symbol at the behest of a US Court or a Canadian Court?
If shares are cancelled, they will not only be cancelled in the "good old USA", they will also be cancelled in Canada, India, Madagascar, and basically anywhere and everywhere a shareholder might exist. For example, if there are investors in outer space, shares will also be cancelled on Uranus.
Still, for those who are easily influenced by repetitive language, FINRA must receive notification in order to "cancel" shares. Insofar as some would like you to believe, the impetus to cancel shares does not arise within FINRA. They execute the order upon notification after shares have already been cancelled via the courts.
This is a cross-border case governed by Canadian laws under the CCAA. Those are the laws that need to be cited.
Now, they may very well follow the same hierarchy as US Chapter 7 Bankruptcy laws, (which this isn't), but currently we have yet to see cited one single Canadian law under the CCAA which is equivalent to the US Laws in regards to the hierarchy of distribution protocol, namely that shares become cancelled if any stakeholders up the chain are "impaired".
Additionally, I'm not sure I understand what you mean when you say I can live in "pinky fantasyland". Since you referenced me as a person, (versus the topic at hand), can you please elaborate and help me understand what that has to do with either the CCAA or US Bankruptcy laws as it pertains to this specific case with BioAmber Inc.?
Chapter 15 allows a foreign corporation to use the US Bankruptcy court - the Chapter 15 and CCAA has completely confused the BioAmber shareholders.
You do understand that the assets of BioAmber have been liquidated and the management/directors have resigned.
They know the party is over and BioAmber is finished.
Only the shareholders that invested more than they can afford to lose are still praying - hoping - wishing the commons aren't cancelled but it clearly states in the monitors report.
Ignoring the facts and wishful thinking won't save the commons from being cancelled.
Equity Claim VS Equity Interest
According to Canada's Companies' Creditors Arrangement Act (CCAA), and for which BioAmber's insolvency case is currently filed under, CCAA defines "equity claim" separately and distinct from "equity interest":
In the Supplementary Report of the Seventh Report of the Monitor, Marc Duchesne, the attorney for PwC (Borden Ladner Gervais, LLP), responded to the "Crane Letter" with the following statement:
Again, PwC has maintained their expertise in what they do not say, specifically as it relates to equity interest.
There are many US Bankruptcy laws, each with a different purpose depending on the situation.
To which US Bankruptcy laws are you referring, specifically?
BioAmber is a Cross-Border case. The United States (and other countries) have adopted certain laws in such situations, specifically for dealing with insolvency cases involving more than one country. According to the United States Courts, the reasons for this are as follows:
(1) to promote cooperation between the United States courts and parties of interest and the courts and other competent authorities of foreign countries involved in cross-border insolvency cases;
(2) to establish greater legal certainty for trade and investment;
(3) to provide for the fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested entities, including the debtor;
(4) to afford protection and maximization of the value of the debtor's assets; and
(5) to facilitate the rescue of financially troubled businesses, thereby protecting investment and preserving employment. 11 U.S.C. § 1501.
For example, in the instance of a Chapter 15 proceeding, the case will be ancillary to a primary proceeding brought in another country. This means the United States will not be in the proverbial "driver's seat", but rather will cooperate with the laws of the country which holds the primary proceeding. Here, it is the Canadian courts who are overseeing the case via CCAA, having appointed PwC as monitor and as recognized by US Chapter 15 laws as a "foreign representative" under a "foreign proceeding".
Any of this language sound familiar?
False Narratives and Phantoms
What has most likely happened is that someone has been able to represent themselves as someone from the company and gotten that info uploaded to Pitchbook in order to create a false "acquisition/merger" narrative.
"To suggest they need to R/M a subsidiary they just created??...for what reason? They're a billion dollar company, they have no need for capital."
Here are some reasons:
To enhance competitiveness, and increase revenue and profitability, each business division formulates their own future business strategies in the aspects of raw material procurement, production integration, product marketing, customer service, technological development and future development based on their short, medium and long-term needs.
PwC is tasked with overseeing the Sarnia plant while in care and maintenance mode (i.e. selling inventory and managing accounts receivable) to facilitate the transition for LCY (not "LYC") to take over operations. correct...they were not part of the sale to LYC but they are still the responsibility of the Monitor to realize on & distribute to creditors