In a comprehensive disclosure statement filed April 1, content delivery network provider Edgio, Inc. has outlined its path to emerge from Chapter 11 bankruptcy with dramatically reduced debt and new ownership. The plan, which requires court approval, would slash the company's secured debt from $244.5 million to $40 million while transferring ownership to its largest creditor, Lynrock Lake Master Fund LP.
The Delaware bankruptcy court will hold a confirmation hearing on June 13 to consider approving the plan, which is the product of extensive negotiations among Edgio, Lynrock, and the official committee of unsecured creditors. The reorganization plan implements a global settlement reached on January 9, 2025.
"The Global Settlement is a fundamental element of the Plan," the company stated in its disclosure statement, noting that the agreement resolved challenge rights and objections raised by the creditors committee.
Formerly known as Limelight Networks, Edgio operated global computer networks that supported high-speed delivery of websites, video streaming, and security services before filing for bankruptcy protection on September 9, 2024. The company had approximately 300 server locations globally prior to bankruptcy.
Restructuring Transaction Details
Under the proposed plan, Lynrock would receive:
- 100% of the new equity in reorganized Edgio
- New term loans totaling $40 million
- 90% of any remaining sale proceeds
- Class A liquidating trust interests entitling it to portions of proceeds from certain litigation claims
General unsecured creditors would receive Class B liquidating trust interests, giving them rights to:
- 30% of proceeds from designated litigation claims
- 50% of proceeds from potential claims against directors, officers, and auditors
- 10% of remaining sale proceeds
- Other assets allocated to a GUC recovery pool
"Accomplishing an efficient and expeditious resolution of the Chapter 11 Cases is essential to preserving and maximizing the going-concern value of the Debtors' estates," the company stated in the filing.
Asset Sales During Bankruptcy
The reorganization follows several significant asset sales during the bankruptcy process. After an auction in November 2024, Edgio selected three different buyers for various parts of its business:
- Akamai Technologies acquired Edgio's Apps & Security Business and Network Assets
- Lynrock Lake Star LLC purchased the Uplynk/Media Business Assets
- InterDigital acquired Edgio's patent portfolio
Additional network equipment was sold to Parler Cloud Technologies and an affiliate of Encore Technologies through a private sale approved in February 2025.
Rather than completing a standalone asset purchase, Lynrock elected to convert its successful bid for the Uplynk business into an acquisition of equity in the reorganized company through the Chapter 11 plan.
Financial Troubles Stemmed from Accounting Issues
Edgio's financial troubles began with accounting problems. In March 2023, the company announced it would restate financial statements due to errors in accounting for its Open Edge product. This delayed financial reporting triggered a series of events that ultimately led to bankruptcy.
The restatement delayed SEC filings, which caused the company's stock to be delisted from the Nasdaq Global Select Market and transferred to the Nasdaq Capital Market in October 2023. This transfer unexpectedly triggered a "Fundamental Change" under the company's convertible notes indenture, giving noteholders the right to require repayment at par.
Without sufficient cash to repay the notes, Edgio was forced to negotiate with Lynrock, which held $118.87 million of the $125 million outstanding notes. The resulting refinancing in November 2023 left the company with substantial secured debt it ultimately could not service.
The company's financial position was further weakened when its public accounting firm resigned in December 2023, causing additional reporting delays and compliance issues.
Path Forward
The bankruptcy court has set key deadlines for the plan approval process, including:
- May 5, 2025: Voting record date
- May 6, 2025: Disclosure statement hearing
- June 6, 2025: Plan voting deadline
- June 13, 2025: Confirmation hearing
If confirmed, the plan would implement a complex set of transactions establishing the reorganized company under Lynrock's ownership while creating a liquidating trust to pursue potential claims against former directors, officers, and auditors.
Edgio is represented by Milbank LLP and Richards, Layton & Finger, P.A. in the Chapter 11 cases.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 114 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.