ViewRay’s Chapter 11 bankruptcy case converted to Chapter 7

By Sarah Lizee

Olympia, Wash., Oct. 27 – ViewRay, Inc.’s Chapter 11 bankruptcy case was converted to Chapter 7 by the U.S. Bankruptcy Court for the District of Delaware on Thursday at the company’s request, according to an order.

As a reminder, on Aug. 23, the court approved bid procedures for the company’s assets. Under a final debtor-in-possession financing order, an event of default would occur if the debtors failed to deliver to the DIP and prepetition lenders a fully executed asset purchase agreement that either provides for the payment in full in cash all of the DIP facility debt and the prepetition secured debt or is otherwise acceptable to the lenders.

The debtors didn’t receive any bids for their assets or a signed asset purchase agreement by the bid deadline, which resulted in an event of default.

As such, the debtors’ rights to use cash collateral immediately terminated and the DIP secured parties and prepetition secured parties had automatic and immediate relief from the automatic stay with respect to the DIP collateral and prepetition collateral.

However, at the request of potential bidders, the debtors extended the bid deadline to Sept. 26. The DIP and prepetition lenders agreed to consider any asset purchase agreements submitted by the extended bid deadline.

The lenders also agreed to consent to limited continued use of cash collateral to permit the debtors to maintain operations up through the extended bid deadline and, if no bid acceptable to the lenders was received, to permit the debtors to maintain limited operations for up to 30 days so as to ensure continuity of care for patients in active treatment on the debtors’ MRIdian systems.

On Sept. 25, the DIP agent and the prepetition agent submitted a protective credit bid for the debtors’ intellectual property and other assets. But, other than the credit bid, no asset purchase agreements were received prior to the extended bid deadline.

The debtors’ use of cash collateral has been terminated, other than for the patient wind-down in line with the stipulation.

Upon entry of a wind-down order, all personnel of the debtors not essential to patient treatment were separated, and the debtors’ business operations were limited to the ramp down and completion of any existing treatments, which was to be completed on or about Oct. 25.

At conclusion of the patient wind-down, the debtors had no access to cash with which to continue their business or pay remaining personnel, nor to pursue a sale or propose and confirm a Chapter 11 plan.

Denver-based ViewRay designs, manufactures and markets MRIdian, a magnetic resonance image-guided radiation therapy system to simultaneously image and treat cancer patients. The company filed Chapter 11 bankruptcy on July 16 under case number 23-10935.

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