Relevant Documents:
Voluntary Petition
First Day Declaration
DIP Financing Motion
Bid Procedures Motion
Avadim Health, Inc., an Asheville, N.C.-based privately held healthcare and wellness company offering topical products that improve neuromuscular health and skin barrier health and serve as a key component of hospital infection prevention bundles, filed for chapter 11 protection on Monday, May 31, in the Bankruptcy Court for the District of Delaware, along with affiliates Avadim Health IP, Bionome Properties, Quality Assurance Associates and Relion Manufacturing. The company reports $10 million to $50 million in assets and $100 million to $500 million in liabilities.
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“Faced with diminishing liquidity, increasing debts, and limited available funding for an operational turnaround,” the company filed chapter 11 to sell its assets as a going concern to Midava Holdings 3, Inc., an affiliate of its prepetition lenders, as stalking horse bidder. The stalking horse asset purchase agreement attached to the bid procedures motion includes a purchase price of approximately $70 million in the form of a credit bid, plus the assumption of certain liabilities. Milestones include a bid deadline of July 26 and a sale closing deadline of Aug. 9. The cases would be funded by $7.2 million of delayed-draw DIP financing from its prepetition lenders. Upon entry of the interim order, $2.3 million of the DIP facility would be available to the debtors.
The company’s prepetition capital structure includes:
- Secured debt:
- Term loan facility: “more than” $79.6 million
- Secured notes: “not less than” $22 million
- Unsecured debt:
- Convertible notes: $6.4 million in original principal
- PPP loan: $2 million
- Patent settlement agreement: $4.8 million
The company says it has failed to achieve profitability despite steadily increasing revenue and significant investments. Following unsuccessful IPO efforts, in March 2020, Avadim and its advisors explored strategic alternatives but ultimately found no viable options, resulting in the formation of a restructuring committee in mid-January 2021. The company retained SSG in May 2021 to market the company for a going concern sale.
The debtors are represented by Pachulski Stang Ziehl & Jones and Chapman and Cutler as co-counsel, Carl Marks Advisors as restructuring advisor, with Carl Marks’ Keith Daniels serving as the debtors’ chief restructuring officer effective May 5, and SSG Advisors as investment banker. Omni is the claims agent. The
jointly administered case number is 21-10883. The case has been assigned to Judge Craig T. Goldblatt.
Reorg First Day will provide a full summary once the first day briefing is complete.