Fallbrook Technologies Inc. 

2/26/18 Recap: Texas-based inventor of and patent-holder in the NuVinci Technology, a potential gear replacement technology, has filed for bankruptcy to implement a balance sheet restructuring. The company's "game changer" NuVinci Technology purportedly "changes the way mechanical power is transmitted to improve the performance and efficiency of transmission systems" and can be incorporated in bicycles, automotive accessory drives, electric vehicles, lawn care equipment and small wind turbines. 

In addition to commercializing its technology, the company deploys a licensing and royalties model. Unfortunately, however, the company's licensees aren't selling product with the NuVinci Technology thus far and, consequently, royalty revenue is non-existent. As such, "the Debtors’ revenue streams do not currently provide sufficient liquidity necessary to satisfy their debt and operating expense obligations." Not quite a game changer, yet, it seems. Due to this, the company fell short of financial covenants protecting its lenders. 

After an attempted but failed prepetition sale process, the company secured a DIP credit facility from Kayne Credit Opportunities Fund (QP) LLP in support of a prearranged bankruptcy agreed to with certain supporting noteholders for the purposes of deleveraging. 

• Jurisdiction: D. of Delaware (Judge Walrath)
• Capital Structure: $49.6mm 12% '19 senior secured notes (inclusive of fees and PIK interest), $8.8mm secured bridge notes, $15.3mm '19 senior subordinated convertible notes     
• Company Professionals:
  • Legal: Shearman & Sterling LLP (Ned Schodek, Jordan Wishnew) & (local) Young Conaway Stargatt & Taylor LLP (Pauline K. Morgan, Kenneth J. Enos, Jaime Luton Chapman, Betsy L. Feldman)
  • Financial Advisor/CRO: Ankura Consulting (Roy Messing)
  • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • DIP Lender: Kayne Credit Opportunities Fund (QP) LLP
    • Legal: Willkie Farr & Gallagher LLP (Rachel Strickland, Paul Shalhoub, Richard Choi) & (local) Richards Layton & Finger PA (Mark Collins, Michael Merchant, Joseph Barsalona)
  • Licensee: Dana Holding Corporation
    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Alan Kornberg, Aaron David) & (local) Cozen O'Connor (Mark Felger)