One of the legal documents from the proceeding today in bankruptcy court is making its way out to employees. Rackable CEO Mark Barrenchea filed an affidavit in conjunction with the ruling affirming that Rackable is a “good faith purchaser”.
Among the interesting parts of this statement, use of the term “stalking horse”
As more fully described in the Sale Motion and the Agreements, pursuant to 11 U.S.C. §363, Rackable is the Stalking Horse Bidder for a sale of substantially all of the assets of the Debtors, free and clear of all Encumbrances (except for Permitted Encumbrances). …
A deposit. Like buying a house I guess.
Rackable expects to fund its proposed acquisition of substantially all the assets of the Debtors using available reserves of cash, cash equivalents and long-term and short-term investments. Rackable has deposited $1,000,000 in good funds in escrow in support of its bid, in accordance with the Agreements.
Regarding who remains, who doesn’t, and who might have a parachute
Among other things, the Agreements provide for Rackable to enter into certain post Closing arrangements with the Debtors’ CEO, Robert Ewald, and ten other members of the Debtors’ management team (the “Executives”), as part of Rackable’s bid. In addition, on or before May 1, 2009, Rackable has agreed to provide the Debtors with a list of Debtors’ Executives that Rackable proposes to retain on a long-term basis, as well as a list of Debtors’ Executives that Rackable proposes to retain on a transitional basis. Those Executives not retained on a long-term or transitional basis by Rackable will be terminated. The Agreements further provide that prior to the Closing Date, Rackable shall provide the Debtors with a list of Specified Employees to whom Rackable intends to offer employment. Rackable has no obligation under the Agreements to hire, employ, or provide transitional arrangements to any employee of Debtors or any member of Debtors’ management team other than as specified in the above-referenced lists. Rackable has not yet provided these lists to the Debtors. These matters are more fully described in the Sale Motion and the Agreements.
Evidently at least part of our speculation was right: Bull was involved at some point, and so was a group of Secured Lenders
In accordance with and after entry of the Bid Procedures Order and consent provided by Seller pursuant thereto, Rackable communicated with Bull S.A. (“Bull”) and certain of the Secured Lenders regarding the Transaction, the Auction, and the assets of Debtors and their subsidiaries. The parties explored various scenarios which might provide an increased purchase price for the Sale of assets of the Debtors. As to Bull, the communications ended prior to the Auction, were inconclusive and Rackable did not reach, and does not have at this time, any agreement, arrangement, or understanding with Bull regarding the Transaction, the Auction, or the assets of Debtors and their subsidiaries. Rackable was not constrained in any way and did not constrain in any way Bull or any other parties as to their ability to bid at the Auction, either independently or with any bidding partner or partners. As to the Secured Lenders, the communications prior to the Auction were very brief and inconclusive, and Rackable did not reach any agreement, arrangement, or understanding with the Secured Lenders regarding the Transaction, the Auction, or the assets of Debtors and their subsidiaries. There were no further communications with the Secured Lenders prior to the Auction.