Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
As previously announced, on March 10, 2023 (the “Petition Date”), Loyalty Ventures Inc., a Delaware corporation (the “Company”) and certain of its direct and indirect subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Chapter 11 Cases are being jointly administered under the caption In re Loyalty Ventures Inc., et al., Case No. 23-90111 (CML).
On March 10, 2023, the Company received a letter (the “Delisting Notice”) from the listing qualifications department staff of The Nasdaq Stock Market (“Nasdaq”) notifying the Company that, in accordance with Nasdaq Listing Rules 5101, 5110(b), and IM-5101-1, the staff of Nasdaq has determined that the Company’s common stock, par value $0.01 per share (the “Common Stock”) will be delisted from Nasdaq. In the Delisting Notice, the staff of Nasdaq referenced the Chapter 11 Cases and associated public interest concerns raised by it, concerns regarding the residual equity interest of the existing listed securities holders, and concerns about the Company’s ability to sustain compliance with all requirements for continued listing on Nasdaq. The Company does not intend to appeal the delisting determination.
Prior to receipt of the Delisting Notice, as previously disclosed on March 10, 2023, the Company notified Nasdaq of its intent to file a Form 25 Notification of Removal from Listing and/or Registration Under Section 12(b) of the Securities Exchange Act of 1934 with the Securities and Exchange Commission on or about March 20, 2023 to effect the voluntary delisting of the Common Stock from Nasdaq. The Company continues to expect the delisting of its Common Stock from Nasdaq to be effective on or about March 30, 2023.
The Company anticipates that the Common Stock will be suspended from trading on Nasdaq upon market close on March 17, 2023. The Common Stock may be eligible to be quoted on the Pink Open Market operated by the OTC Markets Group Inc. if a market maker sponsors the security and complies with Rule 15c2-11 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), but the Company can provide no assurances that a public market for trading the Common Stock will exist after the expected suspension of trading on March 17, 2023 or in the future.
Item 3.03 Material Modification of Rights of Security Holders.
As previously announced, in connection with the commencement of the Chapter 11 Cases, on the Petition Date the Debtors, LoyaltyOne, Co., an unlimited liability company incorporated under the laws of Nova Scotia (“LoyaltyOne”), and certain of the Company’s other direct and indirect subsidiaries executed a Transaction Support Agreement (and together with all exhibits and schedules thereto, the “TSA”) with certain consenting stakeholders party thereto.
The information set forth below in Item 8.01 of this Current Report on Form 8-K (this “Form 8-K”) regarding the Bankruptcy Court’s Interim Order (I) Approving Notification and Hearing Procedures for Certain Transfers of Beneficial Ownership and Declarations of Worthlessness with Respect to Common Stock and (II) Granting Related Relief (Docket No. 68) (the “Interim NOL Order”) is incorporated herein by reference.
Item 8.01. Other Events.
On the Petition Date, following the Bankruptcy Court’s hearing on the Debtors’ motions for first day relief, the Bankruptcy Court entered the Interim NOL Order. The Interim NOL Order is designed to assist the Debtors in preserving certain of their tax attributes by establishing, on an interim basis, among other things, the procedures (including notice requirements) (the “Procedures”) that restrict certain transactions involving, and require notices of the holdings of and proposed transactions by, any person or entity that is or, as a result of such a transaction, would become a Substantial Stockholder (as defined below) of Common Stock (and prohibits certain other stockholders that, in the three years preceding the Petition Date (i.e., the commencement of the Chapter 11 Cases), beneficially owned 50% or more of the Common Stock from making declarations of worthlessness with respect to the Common Stock in violation of the Procedures). For purposes of the Procedures, a “Substantial Stockholder” is any person or entity that has direct or indirect beneficial ownership of, after taking into account certain options or other similar rights to acquire beneficial ownership of Common Stock, at least 1,112,625 shares of Common Stock (representing approximately 4.5% of all issued and outstanding shares of the Common Stock). The terms and conditions of the Procedures were immediately effective and enforceable upon entry of the Interim NOL Order by the Bankruptcy Court. Any transfers of or declarations of worthlessness with respect to beneficial ownership of Common Stock in violation of the Procedures (including the notice requirements) will be null and void ab initio, and (a) in the case of any such transfer of beneficial ownership of Common Stock, the person or entity making such a transfer will be required to take remedial actions specified by the Debtors to appropriately reflect that such transfer of the Common Stock
