HyreCar voluntarily initiated a Chapter 11 proceeding in the United States Bankruptcy Court for the District of Delaware (case number 23-10259).
The company has filed various “first day” motions with the bankruptcy court requesting customary relief that will enable it to transition into Chapter 11 without material disruption to its ordinary course operations, including payment of employee wages and benefits.
The company has also entered into an agreement with Holmes Motors to provide $5 million in debtor-in-possession financing. Approval of the DIP financing is part of the first day motions filed with the bankruptcy court.
Prior to the Chapter 11 filing, the Company entered into a term sheet with Holmes to acquire substantially all of the assets of the company for $7.75 million, subject to due diligence review by Holmes and the bankruptcy court approval. Holmes will be entitled to “credit bid” the DIP financing against the purchase price. The transaction is part of a sale process under Section 363 of the bankruptcy code that will be subject to compliance with agreed upon and bankruptcy court-approved bidding procedures allowing for the submission of higher or otherwise better offers, and other agreed-upon conditions. In accordance with the sale process under Section 363 of the bankruptcy code, notice of the proposed sale to Holmes will be given to third parties and competing bids will be solicited. The company will manage the bidding process and evaluate any bids received, in consultation with its advisors and as overseen by the bankruptcy court.
Upon approval by the Bankruptcy Court, the DIP financing, together with cash generated from ongoing operations, is expected to provide HyreCar with the necessary liquidity to support its operations during the sale process.
Prior to the filing of the Company’s Chapter 11 case, the board of directors and management evaluated a range of strategic alternatives to maximize value for all stakeholders. With the protections afforded by the bankruptcy code, the company intends to broaden its marketing efforts to seek a going concern sale of the business.
HyreCar is represented by Greenberg Glusker in Los Angeles, and Cole Schotz in Delaware as counsel.
