💥New Chapter 11 BK - Ideanomics Inc.💥
Serial EV business acquirer body slammed into chapter 11
On December 4, 2024, Ideanomics Inc. and eight affiliates (collectively, the “debtors”) filed chapter 11 bankruptcy cases in the District of Delaware (Judge Goldblatt).
We previously went over the name here:
The debtors have a turbulent history. They first started in ‘10 as an on-demand video company based in China. Then in ‘17, the debtors dove into the fintech space. It wasn’t until ‘21 when the debtors went on a $320mm acquisition spree to enter the EV space.
What the debtors ended up with was a mish-mash of EV related businesses. We’ll let the first day declaration from CRO, Alpesh Amin, explain how these acquisitions went:
“The majority of these investments, however, were unsuccessful, or continue to remain a substantial liquidity drain on the Debtors as the Debtors seek profitability in the relatively new and growing EV industry which has faced well-publicized challenges and crises in recent years.”
Yep, battery electric vehicles (“BEV”) growth has slowed dramatically, especially when compared to hybrids, per the US Energy Information Administration (“EIA”):
BEV sales have decreased to 7.0% of the US light-duty vehicle market for 3Q’24, down from 7.4% in 2Q’24. The underperformance has led to the debtors closing shop on most of its EV businesses by the petition date, with just one single operating business remaining: WAVE, a provider of charging solutions.
And by the way, this piece of 💩 peaked above $600/share back in '21 due to some positive press releases spurring a flood of Robinhood ($HOOD) users into the stock:
Ask us if we miss the meme stock era.
The debtors have also racked up some debt:
Tillou Management and Consulting LLC (“Tillou”) holds the biggest chunk of prepetition debt and is also controlled by the debtors’ chairman, Shane McMahon. Why yes, the same Shane McMahon that won a WWE championship and who also happens to be the son of Vince McMahon.
The resemblance is truly uncanny:
The McMahon affiliate is at the heart of these cases since it’ll be the one acting as stalking horse bidder and DIP lender. The DIP is a $11.6mm new money term loan injection (~$7mm on interim, $4.6mm on final) and carries an interest rate of 12%. There’s also a dollar-for-dollar roll-up of Tillou’s $14.3mm prepetition debt into the DIP facility.
The stalking horse bid is a credit bid of Tillou’s entire claim (prepetition + DIP) and the assumption of liabilities.* The deadline for a sale order is currently contemplated to be February 21, 2025, and to this end the debtors filed a motion seeking approval of the bid procedures and stalking horse protections on December 9, 2024.**
A hearing on the debtors’ proposed sale motion is set for January 7, 2025 at 2pm ET.
The debtors are represented by Foley & Lardner LLP (Timothy Mohan, Emil Khatchatourian, John Simon, Jake Gordon) and Ashby & Geddes PA (Ricardo Palacio, Gregory Taylor) as legal counsel, Riveron Consulting (Alpesh Amin, Antonio Mittiga, Rick Malagodi) as financial advisor, and SSG Advisors LLC as investment banker. Tillou is represented by Faegre Drinker Biddle & Reath LLP (Frank Velocci, Michael Pompeo, Sarah Silveira, Drew Magee) as legal counsel.
*And an amount required to pay encumbrances senior to Tillou and amounts due to be paid to SSG, lol. Love how the bankers made sure their fees get taken care of!
**The proposed bid protections consist of a $500k expense reimbursement or 1.6% of the proposed purchase price (exclusive of assumed liabilities).
Company Professionals:
Legal: Foley & Lardner LLP (Timothy Mohan, Emil Khatchatourian, John Simon, Jake Gordon) and Ashby & Geddes PA (Ricardo Palacio, Gregory Taylor)
Financial Advisor/CRO: Riveron Consulting (Alpesh Amin, Antonio Mittiga, Rick Malagodi)
Investment Banker: SSG Advisors LLC
Claims Agent: Epiq (Click here for free docket access)
Other Parties in Interest:
DIP Lender and Stalking Horse Bidder: Tillou Management and Consulting LLC
Legal: Faegre Drinker Biddle & Reath LLP (Frank Velocci, Michael Pompeo, Sarah Silveira, Drew Magee)