Rockley Photonics Holdings Limited (NYSE:RKLY) today announced that the company has filed for Chapter 11 bankruptcy, less than two years after completing a merger with SC Health Corp.
The smart materials-maker filed motions with the bankruptcy court to seek authorization to continue to operate its business as a “debtor in possession” under the jurisdiction of the court.
Additionally, Rockley has filed a series of first day motions with the court to seek authorization to ensure that it can continue to conduct its business without interruption.
These motions will minimize the effect of bankruptcy on the company’s operations while it seeks an expedited approval of a reorganization plan that will restructure and de-lever the balance sheet. Rockley hopes to eliminate its existing debt and introduce a new capital structure that will provide $35 million of cash for ongoing operations.
As of now, the company has a debt of approximately $29.31 million in aggregate principal amount of outstanding convertible senior secured notes from May 2022 and approximately $90.6 million from October 2022.
The Chapter 11 bankruptcy filing comes a month after Rockley received notice from the NYSE that it was not in compliance with continued listing requirements as its market cap fell below $50 million over a 30 trading day period and its stockholders’ equity was less than $50 million. Following the filing, NYSE Regulation has now determined to move forward with the proceedings to delist the securities from the exchange, and trading in the securities will be suspended immediately.
Just days before Rockley received the notice from the NYSE, the company underwent a change in management. Andrew Rickman, who served as CEO and helped take the company public, resigned from his position and was replaced by Richard Meier.
SC Health announced its $1.2 billion deal with Rockley in March 2021 and shareholders approved the deal in August 2021. Rockley photonics makes semiconductors that can be incorporated into silicone to take medical readings through materials like watchbands or other wearables.
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