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Full title: Reply Debtors' Reply in Support of Their Conditional Sale Motion (RE: related document(s)891 Order on Motion to Seal Document, 1055 Motion to Sell Property Free and Clear Under 363(f), 1108 Objection, 1123 Objection). Filed by Debtor Wave Computing, Inc. (Newman, Samuel) (Entered: 02/11/2021)

Document posted on Feb 10, 2021 in the bankruptcy, 7 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

Following an auction (the “Auction”) held22 December 21-22, 2020 involving two bidders—a certain potential purchaser (the “Stalking Ho23 Bidder”) and Tallwood Technology Partners LLC (“Tallwood”), a co-proponent of the Plan—24 Debtors, as an exercise of their business judgment and in accordance with the terms of the Bidd25 26 1 Notwithstanding anything to the contrary herein, the Debtors reserve all rights with respect to Restructuring, including the right to confirm the Plan (as defined herein) through the Restructurin27 2 See Sixth Amended Joint Chapter 11 Plan of Reorganization for Wave Computing, Inc. and its De 1 Procedures Order (as defined below),3 selected Tallwood as the Successful Bidder and the Stalk 2 Horse Bidder as the Backup Bidder.4 Here, because the Stalking Horse Bidder was designated 21 Backup Bidder at the Auction and the Debtors still intend to consummate the Restructuring with 22 Successful Bidder, disclosure of the identity of the Stalking Horse Bidder is not warranted.In the unlikely event that the Restructuring does not close and the Debtors seek to consum24 the Sale to the Stalking Horse Bidder, the Debtors will disclose the identity of the Stalking H25 Bidder and provide adequate assurance information to the applicable contract counterparties.26 9 See Conditional Sale Motion §§ III.D.b–e (providing that the Debtors must provide adeqassurance information promptly after pivoting to a Sale to the Stalking Horse Bidder and giv27 affected contract counterparties three (3) days after such notice to object).Nothing contained herein is intended or shall be construed as (i) an admission as to the vali3 of any claim against the Debtors; (ii) a waiver of the Debtors’ or any party in interest’s rights to disp4 the amount of, basis for, or validity of any claim of any creditor or interest of any interest holder un5 applicable bankruptcy or nonbankruptcy law; (iii) a waiver of any claims or causes of action wh6 may exist against any creditor or interest holder; or (iv) an assumption, adoption, or rejection of 7 agreement, contract, or lease between the Debtors and any third party under section 365 of 8 Bankruptcy Code.

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1 SIDLEY AUSTIN LLP Samuel A. Newman (SBN 217042) 2 (sam.newman@sidley.com) Genevieve G. Weiner (SBN 254272) 3 (gweiner@sidley.com) Julia Philips Roth (SBN 324987) 4 (julia.roth@sidley.com) 555 West Fifth Street 5 Los Angeles, CA 90013 Telephone: 213.896.6000 6 Facsimile: 213.896.6600 7 SIDLEY AUSTIN LLP Charles M. Persons (admitted pro hac vice) 8 (cpersons@sidley.com) Juliana Hoffman (admitted pro hac vice) 9 (jhoffman@sidley.com) Jeri Leigh Miller (admitted pro hac vice) 10 (jeri.miller@sidley.com) 2021 McKinney Avenue, Suite 2000 11 Dallas, TX 75201 Telephone: 214.981.3300 12 Facsimile: 214.981.3400 13 Attorneys for Debtors and Debtors in Possession 14 UNITED STATES BANKRUPTCY COURT 15 NORTHERN DISTRICT OF CALIFORNIA 16 SAN JOSE DIVISION 17 18 In re: ) Case No. 20-50682 (MEH) 19 ) WAVE COMPUTING, INC., et al., ) Chapter 11 (Jointly Administered) 20 ) Debtors.1 ) DEBTORS’ REPLY IN SUPPORT OF 21 ) THEIR CONDITIONAL SALE MOTIO ) 22 ) Related to Docket Nos.: 891, 1055, 1108, 11 ) 23 ) Date: February 18, 2021 ) Time: 10:15 a.m. (Pacific Time) 24 ) Judge: Honorable M. Elaine Hammond ) Hearing Via Zoom Video 25 ) 26 27 1 The Debtors in these chapter 11 cases are Wave Computing, Inc., MIPS Tech, Inc., Hellosoft, I

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1 Wave Computing, Inc. (“Wave”) and its debtor affiliates, as debtors and debtors in possess2 (collectively, the “Debtors”) in the above-captioned chapter 11 cases (the “Chapter 11 Cases”) sub3 this reply (this “Reply”) in further support of Debtors’ Motion for Entry of an Order Condition4 (I) Authorizing the Sale of the Assets of the Debtors Free and Clear of All Liens, Clai 5 Encumbrances, and Other Interests, (II) Approving the Stalking Horse Agreement; (III) Authoriz6 the Assumption and Assignment of Executory Contracts and Unexpired Leases; and (IV) Grant 7 Related Relief [Docket No. 1055] (the “Conditional Sale Motion”)2 and in response to (i) the object8 and reservation of rights to the Conditional Sale Motion filed by the United States Trustee (the “ 9 Trustee”) on February 3, 2021 [Docket No. 1108] (the “U.S. Trustee Objection”); and (ii) the limi10 objection and reservation of rights to the Conditional Sale Motion filed by Drawbridge 3201 Sc11 LLC (“Drawbridge”) on February 4, 2021 [Docket No. 1123] (the “Drawbridge Limited Objecti12 and, together with the U.S. Trustee Objection, the “Objections”). In further support of the Conditio13 Sale Motion, the Debtors respectfully represent as follows: 14 15 16 17 18 19 20 21 22 23 24 25 26 27 2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to s

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1 MEMORANDUM OF POINTS AND AUTHORITIES 2 I. JURISDICTION 3 The United States Bankruptcy Court for the Northern District of California (this “Court”) 4 jurisdiction to consider this matter pursuant to 28 U.S.C. §§ 157 and 1334, the Order Referr 5 Bankruptcy Cases and Proceedings to Bankruptcy Judges, General Order 24 (N.D. Cal.), 6 Bankruptcy Local Rule 5011-1. This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venu7 proper before the Court pursuant to 28 U.S.C. §§ 1408 and 1409. 8 II. BACKGROUND 9 A. General Background 10 On April 27, 2020 (the “Petition Date”), each of the Debtors filed a voluntary petition for re11 under the Bankruptcy Code in this Court. The Debtors continue to operate their business and man12 their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankrup13 Code. No party has requested the appointment of a trustee or examiner in these Chapter 11 Ca14 The Debtors’ Chapter 11 Cases are being jointly administered for procedural purposes only pursu15 to Bankruptcy Rule 1015(b). 16 On May 18, 2020, the United States Trustee (the “U.S. Trustee”) appointed an Offi17 Committee of Unsecured Creditors (the “Committee”). 18 As described in the Conditional Sale, the Debtors pursued a dual-track strategy in these Cha19 11 Cases involving either a refinancing of the company’s current capital structure (20 “Restructuring”),1 as described in more detail in the Plan,2 or a sale of substantially all of the As21 to one or more third parties (any such sale, a “Sale”). Following an auction (the “Auction”) held22 December 21-22, 2020 involving two bidders—a certain potential purchaser (the “Stalking Ho23 Bidder”) and Tallwood Technology Partners LLC (“Tallwood”), a co-proponent of the Plan—24 Debtors, as an exercise of their business judgment and in accordance with the terms of the Bidd25 26 1 Notwithstanding anything to the contrary herein, the Debtors reserve all rights with respect to Restructuring, including the right to confirm the Plan (as defined herein) through the Restructurin27 2 See Sixth Amended Joint Chapter 11 Plan of Reorganization for Wave Computing, Inc. and its De

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1 Procedures Order (as defined below),3 selected Tallwood as the Successful Bidder and the Stalk 2 Horse Bidder as the Backup Bidder.4 Pending confirmation of the Plan and the closing of 3 Restructuring transactions contemplated therein, the Debtors filed the Conditional Sale Motion. 4 On February 10, 2021, the Court held a hearing on the confirmation of the Plan (5 “Confirmation Hearing”). At the conclusion of the Confirmation Hearing, the Court overruled6 outstanding objections and confirmed the Plan. The Debtors are in the process of finalizing the f7 of the confirmation order and will seek to close the Plan’s Restructuring transactions in short orde 8 B. The Sealing Motion and Order 9 Prior to the commencement of the Auction, the Debtors filed a motion to file under seal 10 name of the Stalking Horse Bidder on the basis of commercial sensitivity (the “Sealing Motion”).5 11 described in the Sealing Motion, the Debtors were concerned that public disclosure of the identit12 the Stalking Horse Bidder not only might deter other potential bidders from participating in 13 Auction, but also could lead to the attrition of employees and/or customers due to concerns about 14 potential change of ownership of the business.6 Any such attrition would be a waste of estate resour15 if the Debtors never, in fact, proceeded to consummate a transaction with the Stalking Horse Bid16 Accordingly, the Debtors requested that the Court permit the Debtors to keep the identity of 17 Stalking Horse Bidder confidential.7 The Court entered an order granting the Sealing Motion18 December 11, 2020 [Docket No. 891] (the “Sealing Order”). 19 C. The Objections 20 The U.S. Trustee objects to the Conditional Sale Motion on the basis that it fails to prov21 3 Order (I) Approving Bidding Procedures in Connection with the Sale of Substantially All of 22 Debtors’ Assets; (II) Approving Procedures for the Assumption and Assignment of ExecutContracts and Unexpired Leases; and (III) Granting Related Relief [Docket No. 940] (the “Bidd23 Procedures Order”); 4 See Notice of Designation of Successful Bidder and Backup Bidder [Docket No. 965]. 24 5 Motion of Debtors Pursuant to 11 U.S.C. §§ 105(a) and 107(b) for Entry of an Order (I) Authoriz25 the Debtors to File Under Seal Exhibit 2 to the Debtors’ Unredacted Bidding Procedures Motion, (II) Granting Related Relief [Docket No. 887]. 26 6 Id. at 4. 27 7 Id.

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1 adequate information to parties that would be affected by a Sale to the Stalking Horse Bid 2 Specifically, the U.S. Trustee notes that the Debtors have not yet disclosed the identity of the Stalk 3 Horse Bidder or provided adequate assurance information to applicable contract counterparties. 4 Drawbridge objected and reserved its rights to supplement its objection on the grounds th5 certain postpetition lease (the “Lease”), dated as of April 28, 2020, by and between Drawbridge 6 Debtor MIPS Tech, LLC, purportedly cannot be assigned without prior written consent of Drawbri7 and, as of the filing of the Drawbridge Limited Objection, Drawbridge has not consented. Drawbri8 acknowledges that the Stalking Horse Bidder has not yet finalized the schedule of purchased contr9 and, as such, it is yet to be determined whether the Debtors seek to assign the Lease. Drawbri10 accordingly represents that it will withdraw the Drawbridge Limited Objection if the Stalking Ho11 Bidder does not seek to purchase the Lease. 12 III. DEBTORS’ REPLY 13 The concerns raised by the U.S. Trustee will be moot upon consummation of the Restructuri14 which the Debtors anticipate will occur within the next week. In the meantime, the commer15 sensitivity that the Debtors identified in the Sealing Motion still applies—unless and until the Debt16 abandon the Restructuring and pivot to the Sale transaction, disclosure of the Stalking Horse Bidd17 identity could lead to unnecessary loss of value to the business due to disruption of employee an18 client relationships. The Sealing Motion requested authority to maintain the confidentiality of 19 Stalking Horse Bidder’s identity until at least the Auction, (i.e., until the time of the Auction or la20 depending on the results of the Auction). Here, because the Stalking Horse Bidder was designated 21 Backup Bidder at the Auction and the Debtors still intend to consummate the Restructuring with 22 Successful Bidder, disclosure of the identity of the Stalking Horse Bidder is not warranted. 23 In the unlikely event that the Restructuring does not close and the Debtors seek to consum24 the Sale to the Stalking Horse Bidder, the Debtors will disclose the identity of the Stalking H25 Bidder and provide adequate assurance information to the applicable contract counterparties. 26 potential negative consequences of disclosing the identity of the Stalking Horse Bidder would27 longer be unnecessary or wasteful if the Debtors do, in fact, seek to transfer ownership of the busin

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1 to the Stalking Horse Bidder. As such, the Debtors will disclose the identity if and when they annou2 a pivot to a Sale. In the interim, if a creditor or other party in interest wishes to obtain the confiden3 information relating to the Stalking Horse Bidder, that party can do so via the procedures set fort4 the Sealing Order.8 Finally, the procedures for the assumption and assignment of executory contr5 set forth in the Bidding Procedures Order and the Conditional Sale Motion require the disclosur6 adequate assurance information and provide an opportunity for affected contract counterpartie7 object.9 The Debtors will comply with these disclosure requirements and objection procedures if t8 ultimately pursue the Sale transaction. All of the concerns raised by the U.S. Trustee will9 adequately addressed prior to the closing of any Sale. 10 Similarly, consideration by the Court of the issues raised in the Drawbridge Limited Object11 would be premature at this time. If and when the Debtors pivot to a Sale, the Debtors will coordi12 with Drawbridge to address its concerns. 13 IV. CONCLUSION 14 Debtors filed the Conditional Sale Motion to preserve the viability of the Sale transactio15 the event that the Restructuring transactions contemplated in the Plan were not consummat16 Although the Court has confirmed the Plan, it is in the Debtors’ best interests to continue this d17 track process until the Restructuring transactions close. Disclosure of the Stalking Horse Bidd18 identity and the delivery of adequate assurance information to contract counterparties will 19 appropriate only if and when that closing does not occur and the Debtors pivot to the Sale. Un20 those circumstances, the Debtors submit that the concerns raised in the U.S. Trustee Objection wil21 adequately addressed and, at that time, should be overruled. Similarly, the Debtors maintain that 22 Drawbridge Limited Objection can be addressed only if and when the Debtors seek to consumm23 the Sale. Until then, the issue raised in the Drawbridge Limited Objection remains premature. 24 25 8 See Sealing Order at 2, lines 23-24. 26 9 See Conditional Sale Motion §§ III.D.b–e (providing that the Debtors must provide adeqassurance information promptly after pivoting to a Sale to the Stalking Horse Bidder and giv27 affected contract counterparties three (3) days after such notice to object).

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1 V. RESERVATION OF RIGHTS 2 Nothing contained herein is intended or shall be construed as (i) an admission as to the vali3 of any claim against the Debtors; (ii) a waiver of the Debtors’ or any party in interest’s rights to disp4 the amount of, basis for, or validity of any claim of any creditor or interest of any interest holder un5 applicable bankruptcy or nonbankruptcy law; (iii) a waiver of any claims or causes of action wh6 may exist against any creditor or interest holder; or (iv) an assumption, adoption, or rejection of 7 agreement, contract, or lease between the Debtors and any third party under section 365 of 8 Bankruptcy Code. The Debtors reserve all of their rights under the Bankruptcy Code. 9 10 Dated: February 11, 2021 Respectfully submitted, SIDLEY AUSTIN LLP 11 /s/ Samuel A. Newman 12 Samuel A. Newman Genevieve G. Weiner 13 Charles M. Persons 14 Attorneys for Debtors and 15 Debtors in Possession 16 17 18 19 20 21 22 23 24 25 26 27