April 25, 2023 – In advance of an April 26th bidding procedures hearing, the Debtor has filed a notice designating RockitCoin, LLC* as stalking horse (the “Stalking Horse,” $16.75mn opening cash bid) in respect of a proposed Section 363 sale process [Docket No. 473, with the Stalking Horse's term sheet attached at Exhibit]. The assets covered by the Stalking Horse's bid include the Debtors Digital Currency Machine (“DCM”) locations (with related software, etc) and the Debtor's Brazilian business.
*RockItCoin, which touts itself as "the most trusted name in bitcoin ATM" is a cryptocurrency and Bitcoin ATM provider offering privacy-centric Crypto ATMs, online purchases, and OTC trading.
Key Terms of Stalking Horse Bid
- Seller: Cash Cloud, Inc. (d/b/a Coin Cloud), a Nevada Corporation
- Buyer: RockitCoin, LLC, a Delaware limited liability company
- Assets: (i) all non-rejected Digital Currency Machine (“DCM”) locations, (ii) all of Debtor’s assets and contracts needed to operate those locations and service those customers (i.e. turnkey), including the assumption by the Buyer of associated cure costs and payment of certain critical vendor liabilities; and (iii) Debtor’s Brazil operation.
- Purchase Price: Cash of $16.75mn, of which $250k fund a litigation trust; plus (i) the payment of Cure Costs and (ii) the assumption of certain other liabilities associated with the Assumed Liabilities (e.g. the critical vendor payments).
- Bid Protections: (i) a Break-Up fee of 3% of the Purchase Price and (b) a $150k expense reimbursement.
Key Dates
- Bidding Procedures Hearing: April 26, 2023
- Deadline for filing Toggle Plan and Disclosure Statement: April 28, 2023
- Bid Deadline: May 19, 2023
- Auction: May 23, 2023
- Transaction Election Deadline: June 5, 2023
- Deadline for Contract Objections and objections to Disclosure Statement, Toggle Plan, and Transaction: June 12, 2023
- Voting Deadline for Toggle Plan: June 12, 2023
- Hearing on (i) Contract Objections, (ii) Disclosure Statement and Confirmation of the Toggle Plan, and (iii) approval of the Transaction: June 26, 2023
Case Status
On February 7, 2023, Cash Cloud Inc. (dba Coin Cloud) (“Coin Cloud” or the “Debtor”) filed for Chapter 11 protection noting estimated assets between $50.0mn and $100.0mn; and estimated liabilities between $100.0mn and $500.0mn. At filing, the Debtor, which operates digital currency machines in the United States and Brazil, noted that it “intends to use the Chapter 11 process to evaluate all of its restructuring options and to maximize value for the stakeholders. The overall goal is either to seek new financing for Cash Cloud’s continued operations or to conclude a sale of the company’s assets.”
On March 20, 2023, the Court hearing the Cash Cloud cases issued a final order authorizing the Debtors to: (i) access the $2.5mn balance of what is in total $5.0mn of new money debtor-in-possession (“DIP”) financing being provided by CKDL Credit, LLC, a Delaware limited liability company.
Bidding Procdures Background
On April 7th, in support of what was then characterized as a possible asset sale "toggle," the Debtor filed a bidding procedures motion and noted that it would "continue to market test" a possible asset sale through an extended bid deadline in anticipation of filing a "toggle" Plan by April 28th.
Bidding Procedures Motion
The motion [Docket No. 392] states, “The DIP Financing Agreement requires, among other things, that the Debtor must meet certain milestones with respect to either (a) the filing of a plan that provides for payment of the DIP Loan in full, or (b) a motion seeking approval of bidding procedures for a sale of the Debtor’s assets, each in a form acceptable to CKDL Credit, LLC (the ‘DIP Lender’). In order to meet the milestones and avoid a default, the Debtor is filing this Motion to obtain approval of the proposed bid procedures in sufficient time to select the Bidder proposing the highest and best Bid and to file a plan incorporating the proposed Bid Procedures and related process before the milestone deadline.
… No later than April 21, 2023, the Debtor, in consultation with the Consultation Parties, may designate a Bidder to be the stalking horse (the ‘Stalking Horse’), based on its proposed Transaction (the ‘Stalking Horse Transaction’) providing the highest or otherwise best return for the Debtor’s stakeholders and being in the best interests of Debtor and its estate.
On or before April 28, 2023, the Debtor will file a chapter 11 plan (the ‘Toggle Plan’) implementing a ‘toggle’ structure, whereby the Debtor may proceed to fund the Toggle Plan with the proceeds of either (i) a bid to act as Sponsor of the a Reorganization Plan (the ‘Plan Sponsor’), or (ii) a bid to purchase substantially all of the Debtor’s assets (a ‘Sale’) (the election between a Reorganization Plan and a Sale, the ‘Transaction Election’) with such Sale proceeds to be distributed under the Toggle Plan as a liquidating plan.”
Marketing Efforts
The motion provides: "Starting months before the Petition Date, Debtor has been seeking to source financing to enable the Debtor’s restructuring. Prior to the approval of the DIP Loan, Debtor had limited resources necessary to seek new financing for Cash Cloud’s continued operations. However, the DIP Financing Agreement approves a budget providing for the employment of Province to seek financing for a restructuring of the business (and, as an alternative, to market the Debtor’s assets for sale, if necessary). As part of the marketing efforts, Province, in concert with the Debtor and in consultation with the Consultation Parties, will send out a marketing teaser describing the Debtor’s business and the auction process to entities known to Province, as well as entities that may be recommended by the Consultation Parties or other creditors. Province has already contacted forty eight (48) potential interested parties to date, with fifteen (15) signing nondisclosure/ confidentiality agreements….On March 30, 2023, the Debtor posted an initial notice of the bid deadline on the website for the Debtor’s claims agent, Stretto, Inc., at https://cases.stretto.com/CashCloud. The initial notice provides that the bid deadline is April 12, 2023, at 5:00 p.m. (Pacific Time). The initial notice is intended to solicit interested from potentially motivated transaction parties to identify a potential Stalking Horse Bidder, which the Debtor intends to select by April 21, 2023. As set forth more fully herein, the Debtor proposes to set a further Bid Deadline for all parties on May 12, 2023, at 5:00 p.m. to submit bids competitive with a Stalking Horse Bid….the Debtor, together with Province and with input from the Consultation Parties, intends to pursue its marketing efforts through the Bid Deadline to continue to market test the Stalking Horse Transaction…
About the Debtor
According to the Debtor: “Coin Cloud’s 5,000+ Digital Currency Machines (DCMs) across the USA and Brazil empower you to buy and sell Bitcoin, Ethereum, Dogecoin, Shiba Inu and other popular cryptocurrencies with cash.”
Corporate Structure
In 2020, Cash Cloud formed Coin Cloud Ativos Digitais Brasil LTDA (“Coin Cloud Brazil”) as a wholly‐owned subsidiary of Cash Cloud for the purpose of expanding its operations to Brazil. Coin Cloud Brazil began operations in November 2020, and as of December 31, 2021 had 22 DCMs in operation. Cash Cloud formed Evive Trading, LLC (“Evive”) in August 2021 as a Cayman Islands Limited Liability Company, which is a wholly‐owned subsidiary of Cash Cloud, for the purpose of accessing certain digital asset trading markets. As of the Petition Date, Evive has not commenced commercial activity.
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The post Cash Cloud Inc. – Ahead of the Bidding Procedures Hearing, Designates RockitCoin ($16.75mn Opening Cash Bid) as a Stalking Horse Bidder for Bitcoin ATM Assets and Brazilian Business appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.