Wave Systems Corp. (fka WAVXQ)

[BerthaB]

Form 8-K for WAVE SYSTEMS CORP

https://biz.yahoo.com/e/160829/wavxq8-k.html

29-Aug-2016

Bankruptcy or Receivership, Other Events, Financial Statements and Exhibits

Item 1.03 Bankruptcy or Receivership.

As previously disclosed, Wave Systems Corp. (the "Company"), commenced a bankruptcy case (the "Chapter 7 Case") by filing a voluntary petition for relief under the provisions of Chapter 7 of Title 11 of the United States Code, 11 U.S.C. ?? 101 et seq. (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). On May 16, 2016, the Bankruptcy Court entered an order converting the Chapter 7 Case to a case under the provisions of Chapter 11 of Title 11 of the Bankruptcy Code (the "Chapter 11 Case"). Since May 20, 2016, the Company has operated under a court appointed Chapter 11 Trustee under the jurisdiction of the Bankruptcy Court.

On August 26, 2016, the Bankruptcy Court entered an order (Docket No. 303) (the "Confirmation Order") confirming the Chapter 11 Plan of Reorganization of the Company dated June 17, 2016, as amended on August 23, 2016 (collectively, with all exhibits and supplements and modifications or other amendments thereto, the "Plan"). The Plan became effective on August 29, 2016 (the "Effective Date"). Pursuant to the Confirmation Order, on the Effective Date, (a) the Company continued in existence as a reorganized entity (the "Reorganized Company"), (b) substantially all assets of the Company, except certain patents, and potential estate causes of action which may result in litigation recoveries to be distributed to holders of allowed claims and, potentially, interests pursuant to Article VII of the Plan and funds earmarked for payment of professional fees in connection with the Chapter 11 Case, vested in the Reorganized Company, (c) all previously outstanding common stock of the Company and all rights to convert, exchange or receive Company common stock were automatically cancelled, released and extinguished, and all rights of ownership evidenced by the common stock were terminated, and the Company's pre-reorganization stockholders are not entitled to receive or retain any cash, securities or other property on account of their cancelled, released, extinguished, and terminated common stock and rights, unless amounts remain in the bankruptcy estate following satisfaction of all allowed claims of the Company's creditors, and (d) ESW Capital LLC ("ESW") received as follows: (i) in its capacity as post-petition lender, ESW received 60% of the New Common Stock (as defined below) on the Effective Date in exchange of amounts loaned under the Post-Petition Note (as such term is defined in the Plan) via the Subscription Option (as such term is defined in the Plan), and (ii) in its capacity as Plan sponsor, ESW received the remainder of the New Common Stock in exchange for cash payments of $3,800,000, which amount was on deposit with the Chapter 11 Trustee on the Effective Date, and an additional $3,075,000, which was paid by ESW on the Effective Date.

The authorized capital stock of the Reorganized Company consists of 10,000 shares of common stock, par value $0.0001 per share ("New Common Stock"). Pursuant to the Plan, on the Effective Date, 1,000 shares of New Common Stock were issued to ESW as described above.

Information as to the assets and liabilities of the Company as of June 30, 2016, is hereby incorporated by reference to the Company's Monthly Operating Report for the Period beginning May 16, 2016 and ending June 30, 2016, attached as Exhibit 99.7 to the Company's Form 8-K filed with the Securities and Exchange Commission on August 16, 2016.

The description of the Confirmation Order and the Plan contained herein does not purport to be complete and is qualified in its entirety by the reference to the Confirmation Order and the Plan attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated herein by reference.