Restructured Rockley emerges from bankruptcy

06 Jun 2023

Founder Andrew Rickman returns to CEO role following major workforce reduction.

Wrist-based medical technology

Rockley Photonics, the UK-US company developing advanced integrated photonics technology for wrist-based health monitoring applications, says it has emerged from bankruptcy proceedings with original CEO Andrew Rickman back at the helm.

In January the company had filed for “Chapter 11” bankruptcy protection, and updated financial information in a 10-K annual report dated May 15 indicates that it had racked up an operating loss of $170 million on sales of only $3.2 million in 2022.

That had left the firm, which raised net proceeds of $122.5 million from its August 2021 special-purpose acquisition company (SPAC) deal supported by SC Health, with $23 million cash on its balance sheet but liabilities totaling more than $180 million by the end of last year.

‘Disruptive med tech’
The 10-K filing states that Rockley filed for Chapter 11 bankruptcy protection in the US on January 23, seeking authorization to continue operating the business as a “debtor in possession” under the jurisdiction of the Bankruptcy Court, and with a plan to release $35 million of cash while eliminating existing debt.

The company says that it has now completed a comprehensive financial restructuring, emerging out of bankruptcy proceedings after measures including a 27 per cent workforce reduction. Rockley had 230 employees prior to the Chapter 11 filing.

Rickman said in a statement announcing the latest developments: “Rockley’s ability to emerge from Chapter 11 in just 46 days was a significant achievement and marks the beginning of a new era for the company.

“Our stakeholders’ ongoing belief in Rockley has provided us with a greatly strengthened balance sheet and the funds to continue to develop disruptive technology for the med tech market.

“We greatly appreciate the continued support not only of our stakeholders but also of our suppliers, partners and employees. I look forward to the opportunity to continue to develop Rockley’s products and bring them to market.”

Although it is yet to release any commercial products, Rockley says that all of its “material customer relationships” remain in place, and claims to be on schedule with all programs - including its development of remote patient monitoring technology.

Cayman connection
Having initially filed for bankruptcy protection in the US, Rockley then sought the appointment of joint restructuring officers in the Grand Court of the Cayman Islands.

In February, the firm executed a restructuring plan including the workforce reduction, at a cost of $1.9 million in employee severance-related payments.

Shortly afterwards the Cayman Islands court approved Rockley’s wider restructuring plan, including cancellation of the firm’s ordinary shares.

“Except as provided in the [restructuring plan], all other equity, debt, convertible equity, and convertible debt of any kind issued by [Rockley] were cancelled and are no longer outstanding as of the date of this annual report,” states the 10-K filing, which had anticipated company liquidation pursuant to Cayman Islands law.

The same filing also revealed that Richard Meier - who had replaced Rickman as company CEO in December 2022 - resigned last month. That followed the resignation of CFO Chad Becker in March, after which Meier had also taken on CFO responsibilities.

Rickman, who had been in the role of executive chairman following the December switch, moved back to the CEO position following Meier’s resignation.

Other information in the 10-K filing shows that Rickman received a base salary of just over $500,000 in 2022 - an increase of 16 per cent on the 2021 figure. The Rockley founder had received total pay, including stock-based compensation and option awards, of just over $12 million in 2021.