Quanergy Systems, a provider of LiDAR sensors and smart 3D solutions, initiated an orderly sale process for its business. To facilitate the sale and maximize value, the company filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware and intends to pursue a sale of the business under section 363 of the Bankruptcy Code.
Kevin Kennedy, CEO, will retire from Quanergy effective Dec. 31, 2022, but will continue to serve as non-executive chair of the board of directors. Kennedy will transition executive leadership to a newly appointed chief restructuring officer and president, Lawrence Perkins.
“It has been my honor to serve as CEO at Quanergy for the past 2.5 years,” Kennedy said. “During this time, the company shifted our technology focus towards security and industrial applications which enabled the company to grow revenue by serving customer needs in a new marketplace. The board and i have agreed that it is an appropriate time for me to transition day-to-day leadership to our capable newly appointed chief restructuring officer. I will continue to provide guidance, continuity and support as non-executive board chair.”
Perkins is the founder and chief executive officer of SierraConstellation Partners, an interim management and advisory firm, which he founded in 2013. Perkins has served in a variety of senior-level positions, including interim CEO/president, chief restructuring officer, board member, financial advisor, strategic consultant and investment banker, to numerous private and public middle-market companies.
Prior to the filing of the company’s Chapter 11 case, the board of directors and management evaluated a wide range of strategic alternatives to maximize value for all stakeholders. The company also significantly reduced operating expenses and resolved significant patent litigation with Velodyne. Now with the protections afforded by the Bankruptcy Code, the company intends to broaden its marketing efforts to potential purchasers interested in specific business segments or assets as well as continuing to seek a going concern sale of the business.
The company expects to continue operations during the Chapter 11 process and seeks to complete an expedited sale process with Bankruptcy Court approval. To help fund and protect its operations, Quanergy intends to use available cash on hand along with normal operating cash flows to fund post-petition operations and costs in the ordinary course.
“Quanergy has made considerable efforts to address ongoing financial challenges stemming from volatile capital market conditions,” Perkins said. “Despite these challenges, the company has seen improving demand in the security, smart spaces, and industrial markets and improvements in supply chain conditions. We are confident that Quanergy’s efforts have positioned the company for a value-maximizing transaction during the Chapter 11 sale process. During the process, we will continue to prioritize the needs of our customers and I am thankful to the entire Quanergy team for their continued efforts and contributions to the business.”
The company has filed customary motions with the Bankruptcy Court intended to allow Quanergy to maintain operations in the ordinary course including, but not limited to, paying employees and continuing existing benefits programs, meeting commitments to customers and fulfilling go-forward obligations, including vendor payments. Such motions are typical in the Chapter 11 process and Quanergy anticipates that they will be heard in the first few days of its Chapter 11 case.
Cooley is serving as counsel, Young Conaway Stargatt & Taylor is serving as co-counsel, Raymond James & Associates is serving as investment banker and FTI Consulting is serving as financial advisor to Quanergy.
