Item
1.03 Bankruptcy or Receivership
Voluntary
Petitions for Bankruptcy
On
August 30, 2022 (the “Petition Date”), NewAge, Inc., a Delaware corporation (the “Company”), and its wholly-owned
direct and indirect subsidiaries, Morinda Holdings, Inc., a Utah corporation, Morinda, Inc., a Utah corporation, and ARIIX LLC, a Utah
limited liability company (collectively, the “Debtors”) filed voluntary petitions for relief (collectively, the “Petitions”)
under chapter 11 of title 11 (“Chapter 11”) of the United States Code (the “Bankruptcy Code”) in the United States
Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), thereby commencing Chapter 11 cases for the Debtors.
The Debtors are requesting joint administration of their Chapter 11 cases (the “Chapter 11 Cases”) under the caption “In
re NewAge, Inc., et al., Case No. 22-10819).”
The
Debtors continue to operate their business as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and
in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Debtors are seeking approval
of a variety of “first day” motions containing customary relief intended to assure the Debtors’ ability to continue
their ordinary course operations.
Additional
information about the Chapter 11 Cases, including access to Court documents, is available online at cases.stretto.com/NewAge,
a website administered by Stretto, Inc., a third-party bankruptcy claims and noticing agent. The information on this web site is not
incorporated by reference into, and does not constitute part of, this Form 8-K.
Asset
Purchase Agreement
The
Debtors (together, the “Sellers”) entered into a “stalking horse” Asset Purchase Agreement (the “Asset
Purchase Agreement”), dated August 30, 2022, with DIP Financing, LLC, or its permitted assignee (the “Purchaser”),
pursuant to which the Purchaser agreed to purchase substantially all of the assets of the Debtors (such assets, the “Assets,”
and such transaction, the “Asset Sale”).
The
Sellers have sought the Bankruptcy Court’s approval of the Purchaser as the “stalking horse” bidder in an auction of
the Assets under Section 363 of the Bankruptcy Code. If approved by the Bankruptcy Court as the stalking horse bidder, the Purchaser’s
offer to purchase the Assets, as set forth in the Asset Purchase Agreement, would be the standard by which any other bids to purchase
the Assets would be evaluated. Pursuant to Section 363 of the Bankruptcy Code, the Debtors are seeking authorization to conduct an auction
process to allow other bidders to competitively bid on the Assets.
Pursuant
to the terms of the Asset Purchase Agreement, the Purchaser agreed, subject to the terms and conditions of the Asset Purchase Agreement,
to acquire the Assets from the Sellers for $28 million, which would be satisfied in cash and with a “credit bid” (as defined
within the meaning of Section 363(k) of the Bankruptcy Code) with respect to the Purchaser’s portion of the Company’s secured
indebtedness. The Asset Purchase Agreement provides for consideration to be paid by the Purchaser in the form of assumption of specified
liabilities relating to the Assets, including certain trade payables and specified employee benefits. The consummation of the Asset Sale
is subject to certain customary conditions precedent as specified in the Asset Purchase Agreement. The Asset Purchase Agreement also
provides for a termination fee and expense reimbursement payable to the Purchaser upon the occurrence of certain events.
The
foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to
the Asset Purchase Agreement filed with the Bankruptcy Court.
DIP
Loan Agreement
The
Company entered into a Senior Secured Debtor-In-Possession Term Loan Agreement (the “DIP Loan Agreement”), dated August 30,
2022, with the Purchaser, whereby the Purchaser agreed to provide the Company a delayed draw term loan facility (the “DIP Term
Loan Facility”) in the aggregate principal amount of $16,000,000 in new money loans. Subject to approval by the Bankruptcy Court,
the obligations of the Company under the DIP Loan Agreement will be secured by a super-priority security interest in substantially all
of the assets of the Company in accordance with the terms of the DIP Loan Agreement.
The
proceeds of the DIP Term Loan Facility will be used by the Debtors, as permitted by the Bankruptcy Court and the DIP Loan Agreement,
for working capital and general corporate purposes, the payment of fees and expenses in connection with the transactions related thereto,
the pursuit of sale transactions, and bankruptcy-related costs and expenses in accordance with an approved budget. Borrowings under the
DIP Loan Agreement will bear interest at a rate per annum equal to 11.50% (increased by 2.0% upon the occurrence of an event of default).
The
obligations of the Company under the DIP Loan Agreement are guaranteed by the Company’s wholly-owned direct and indirect subsidiaries,
Morinda Holdings, Inc., a Utah corporation, Morinda, Inc., a Utah corporation, and ARIIX LLC, a Utah limited liability company.
The
foregoing description of the DIP Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the
DIP Loan Agreement filed with the Bankruptcy Court.