SmileDirectClub Fails To See “Bankruptcy Bounce” Following Chapter 11 Filing

Four years after going public in an $8.9 billion IPO transaction, SmileDirectClub (NASDAQ: SDC) filed for bankruptcy.

The filing came after hours on Friday, with the company indicating it has filed for Chapter 11 in the US Bankruptcy Court for the Southern District of Texas, Houston Division. Certain of its subsidiaries however were not included in the filing.

As part of the filing, the company declared it intends to implement what it refers to as a “comprehensive recapitalization transaction.” The firms founders have reportedly committed to invest at least $20 million to improve the firms balance sheet and protect its near and long term financial health, with up to $60 million of additional capital available upon certain conditions being met.

Customers meanwhile are expected to not experience a disruption in connection with the filing.

Despite the filing, the company has failed to see a “bankruptcy bump” in the market as of the time of writing, despite the recent phenomenon. The company instead is currently down over 61% as a result of the filing.

The company meanwhile gave the firms chief legal officer and chief financial officer retention bonuses of $350,000 and $500,000, respectively, as a result of the filing, stating that they are part of a key employee retention plan. The retention bonus is equal to 50% of each of their respective base salaries. The bonus was advanced and prepaid, and will vest and become non-forfeitable on the earlier of six month anniversary of a retention letter sent September 27, or the consummation of a transaction.

Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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