Bankruptcy Proceedings

12 Months Ended

Mar. 31, 2024

Reorganizations [Abstract]

Bankruptcy Proceedings

BANKRUPTCY PROCEEDINGS

Voluntary Petitions for Bankruptcy

On March 4, 2024 (the “Petition Date”), the Company and certain of its subsidiaries (together, the “Company Parties”) filed voluntary petitions (the “Bankruptcy Petitions”) for relief under chapter 11 of title 11 of the United States Code 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”). The chapter 11 cases for the Company Parties (the “Chapter 11 Cases”) are being jointly administered under the caption In re BowFlex Inc., et al., Case No. 24-12364. Through the Chapter 11 Cases, the Company Parties sought to implement a sale of substantially all of their assets pursuant to Section 363 of the Bankruptcy Code.

When we filed the Bankruptcy Petitions with the Bankruptcy Court, we expressed our intention to sell substantially all of our assets as part of the Chapter 11 Cases. The court approved the continued operation of our business as debtors in possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Additionally, the Bankruptcy Court approved certain motions filed by us requesting relief intended to enable continued ordinary course operations and facilitate an orderly transition of the assets. As of and for the fiscal year ended March 31, 2024, claims from creditors are reflected in the Consolidated Balance Sheets and in Note 3 BowFlex Inc. Condensed Combined Financial Statements as Liabilities subject to compromise in accordance with ASC 852. It is anticipated that additional claims may arise post-filing due to the rejection of contracts and from the determination by the Bankruptcy Court, or agreed to by parties in interest, of allowed claims for contingencies and other disputed amounts.

Additional information about the Chapter 11 Cases is available online at https://dm.epiq11.com/case/bowflex/info.

Stalking Horse Asset Purchase Agreement

On March 4, 2024, the Company entered into a “stalking horse” asset purchase agreement (the “Asset Purchase Agreement”) with Johnson Health Tech Retail, Inc. ("Johnson Health Tech") to sell the assets of the Company (the “Acquired Assets”) identified in the Asset Purchase Agreement, representing substantially all of the assets of the Company, for a total of $37.5 million in cash at the closing of the transaction, including a deposit of $3.75 million paid into an escrow account on March 4, 2024, but less closing adjustment amounts for accounts receivable, inventory and certain transfer taxes. Refer to Note 28, Subsequent Events for additional information.

As of March 31, 2024, the acquisition of the Acquired Assets by the Bidder pursuant to the Stalking Horse Asset Purchase Agreement was subject to approval by the Bankruptcy Court and an auction process to solicit higher or otherwise more favorable bids.

On April 15, 2024, the Bankruptcy Court entered an order authorizing the sale of the Acquired Assets pursuant to the terms of the Asset Purchase Agreement (the “Asset Sale”) and on April 22, 2024, the Asset Sale closed (the “Closing”). As previously reported, there were insufficient proceeds from the Asset Sale for common stockholders to receive value for their shares. Further, there are insufficient funds for the Company to make, and the Company will not be making, any future distributions to stockholders.

DIP Credit Facility

Subject to the approval of the Bankruptcy Court, we amended our existing Term Loan Credit Agreement with Crystal Financial LLC d/b/a SLR Credit Solutions (“SLR”) and its affiliates dated November 30, 2022 (the “DIP Amendment”) to, among other things, make available to us a debtor-in-possession financing facility in an aggregate amount up to $25 million, comprised of a $9 million revolving commitment and $16 million term loan reflecting the roll-up of our pre-petition term loans of approximately $16 million with SLR (the “DIP Facility”).

On April 22, 2024, proceeds from the Asset Sale were used to repay the Company’s obligations under the DIP Facility, and immediately upon such repayment, the DIP Facility was terminated.