ViewRay files Chapter 11 bankruptcy with plans to sell business

By Sarah Lizee

Olympia, Wash., July 17 – ViewRay, Inc. filed Chapter 11 bankruptcy on Sunday in the U.S. Bankruptcy Court for the District of Delaware, according to a press release.

The company said in court documents that since the debtors’ inception they have had negative cash flows from operations and have incurred significant net operating losses.

Inflation has caused increases in product costs in connection with the parts used for its manufacturing process, increases in fuel, freight and transportation costs, and increased wage pressure, the company said.

The company said it plans to sell its business while continuing to support its customers during the Chapter 11 process.

To facilitate the process, in addition to having the use of its sufficient existing cash reserves, the company has received a commitment for about $6 million in debtor-in-possession financing from MidCap Financial Services, LLC.

The multiple-draw secured term loan DIP facility is set to mature on Sept. 27, 2023 and will bear interest at 15% per annum.

There is a 3% commitment fee and a 4% exit fee.

The DIP financing will also include an $18 million rollup of prepetition debt.

The company entered into a credit facility in late 2022 with MidCap. The facility consists of a $75 million tranche 1 term loan, a $25 million tranche 2 term loan and a $15 million revolver. As of the petition date, there was about $57.5 million outstanding.

Events of default have been occurring under the facility since May 2.

The company has filed a variety of first-day motions so it can continue its ordinary course operations, such as continuing to service its customers and honor its obligations to its remaining employees, following an additional reduction in force.

Before filing the petition, Phillip M. Spencer and Gail Wilensky resigned from the company’s board. Scott Drake is no longer acting as chief executive officer of the company and is now in a continuing role as a director of the company.

The company appointed Paul Ziegler as the new CEO of the company, effective Saturday. Ziegler, who had been the chief commercial officer of the company, has also been appointed to the board as a director.

The board also decreased to seven from nine directors.

The company also appointed Sanket Shah as senior vice president, general counsel of the company, effective Saturday. Shah has been at the company since 2019, most recently acting as vice president, deputy general counsel.

Faegre Drinker Biddle & Reath LLP is serving as legal counsel, B. Riley Securities, Inc. is serving as investment banker, and Berkeley Research Group is serving as financial adviser.

In its petition, the company listed 200 to 999 creditors, $100 million to $233.16 million in assets and $75 million in debt.

Its largest unsecured creditors are Siemens AG Imaging Therapy Division, based in Erlangen, Germany, with a $6.34 million trade claim, PEKO Precision Products, based in Rochester, N.Y., with a $2.77 million trade claim, Transgroup, based in San Francisco, with a $2.22 million trade claim, Jastec Inc., based in Tokyo, with a $2.01 million trade claim, and MC Electronics, based in Hollister, Calif., with a $1.08 million trade claim.

Denver-based ViewRay designs, manufactures and markets MRIdian, a magnetic resonance image-guided radiation therapy system to simultaneously image and treat cancer patients. The Chapter 11 case number is 23-10935.

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