Current Report Filing (8-k)
October 22 2021 - 3:06PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities
Exchange Act of 1934
Date of Report
(Date of earliest event reported): October 18, 2021
Sierra Income Corporation
(Exact Name of
Registrant as Specified in its Charter)
0-54650
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Maryland
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45-2544432
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(Commission File Number)
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(State or other jurisdiction of incorporation)
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(I.R.S. Employer Identification No.)
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100 Park Avenue New York, NY 10017
(Address of Principal
Executive Offices and Zip Code)
Registrant’s
telephone number, including area code: (212) 759-0777
Not Applicable
(Former Name
or Former Address, if Changed Since Last Report)
Check the appropriate
box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b)
of the Exchange Act: None
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405)
or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging
growth company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 8.01. Other Events.
On March 7, 2021 (the “Petition
Date”), Medley LLC (the “Debtor”) commenced a voluntary case (the “Medley Bankruptcy Case”) under chapter
11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy
Court”). The Debtor is the sole member of the investment adviser, SIC Advisors LLC (“SIC Advisors”), and the administrator,
Medley Capital LLC (“Medley Capital”) of Sierra Income Corporation (“Sierra”). Following the commencement
of the Medley Bankruptcy Case, the Debtor continued to manage its business as a debtor in possession under the Bankruptcy Code.
The Debtor, Medley Capital and the Official Committee of Unsecured Creditors appointed in the Medley Bankruptcy Case reached agreement
on the terms of a chapter 11 plan, which was filed with the Bankruptcy Court on August 13, 2021, and ultimately confirmed by the Bankruptcy
Court on October 14, 2021 (as supplemented and modified, the Modified Third Amended Combined Disclosure Statement Chapter 11 Plan of
Medley LLC, the “Plan”). The Plan became effective on October 18, 2021 (the “Effective Date”).
The Plan provides for a limited
restructuring in chapter 11 to enable the Debtor to maximize the value of its remaining contracts (the “Remaining Contracts”)
over a short run-off period, until the Remaining Contracts are terminated, subject to an end date of March 31, 2022 (the “Run-Off
End Date”). The Remaining Contracts consist of investment management agreements between the Debtor’s subsidiary advisers and
third-party clients, including Sierra’s investment advisory agreement and related agreements with SIC Advisors and its administration
agreement and related agreements with Medley Capital. The Debtor does not have its own employees, and in order to provide for the
continued performance of the Debtor’s subsidiaries under the Remaining Contracts, the Plan establishes a compensation plan for Medley
Capital’s employees (the “Non-Debtor Compensation Plan”). The Non-Debtor Compensation Plan is designed to retain certain
key Medley Capital employees to service the Remaining Contracts, including Sierra’s investment advisory agreement with SIC Advisors
and pursuant to the Non-Debtor Compensation Plan, Sierra has agreed to contribute $2.1 million of a total cost of $5.7 million to fund
the Non-Debtor Compensation Plan. Sierra’s obligations under the Non-Debtor Compensation Plan expire on January 31, 2022, while
Medley Capital’s obligations under the Non-Debtor Compensation Plan expire on the Run-Off End Date. The Plan also contemplates that
SIC Advisors will continue to honor its obligations under Sierra’s investment advisory agreement until the termination thereof.
Accordingly, Sierra’s arrangements with SIC Advisors and Medley Capital are expected to remain in place until the closing of the
proposed mergers (the “Transaction”) contemplated by that certain Agreement and Plan of Merger (the “Merger Agreement”)
dated as of September 21, 2021 by and among Sierra, Barings BDC, Inc. (“BBDC”), Mercury Acquisition Sub, Inc., a Maryland
corporation and a direct wholly owned subsidiary of BBDC, Sierra and Barings LLC, a Delaware limited liability company and investment
adviser to BBDC.
The Plan further provides
for a liquidating trust established for the benefit of creditors holding allowed claims against the Debtor. On the Effective Date, the
Debtor’s assets, including all cash on hand and all causes of action retained by the estate under the Plan were transferred to the
liquidating trust, and the Plan provides for the subsequent transfer of the proceeds received by the Debtor under the Remaining Contracts
once the wind-down is complete.
In the event the Transaction is
not consummated for any reason on or before the Run-Off End Date, Sierra’s Board of Directors would expect to consider alternatives,
including another merger transaction, Sierra’s liquidation or the replacement of SIC Advisors as its investment adviser, based on,
among other things, then-current market circumstances, the performance of the Sierra portfolio and the financial position of Sierra. Sierra
also might seek to reach agreement with the liquidation trustee for the liquidation trust established under the Plan, SIC Advisors and
Medley Capital to extend the Run-Off End Date so that SIC Advisors may continue to serve as Sierra’s investment adviser beyond March
31, 2022.
SIGNATURES
Pursuant to the requirements of
the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: October 22, 2021
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SIERRA INCOME CORPORATION
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By:
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/s/ Richard T. Allorto, Jr.
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Name:
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Richard T. Allorto, Jr.
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Title:
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Chief Financial Officer
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