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): ~~January~~June 151, 2018

QUADRANT 4 SYSTEM CORPORATION

(Exact name of Registrant as Specified in its Charter)

Illinois	33-42498	65-0254624
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)
10300 W. Charleston Blvd., Suite 13-312
Las Vegas, NV		89135
(Address of Principal Executive Offices)		(Zip Code)

10300 W. Charleston Blvd. Suite 13-312, Las Vegas, NV	89135
(Address of Principal Executive Offices)	(Zip Code)

(855) 995-7367

Registrant’s telephone number, including area code

~~Schaumburg,~~Not ~~IL 60173~~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:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2-(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 ~~of this chapter~~) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 ~~of this chapter~~).

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 1.~~01.~~03 ~~Entry~~Bankruptcy ~~Into~~or ~~a Material Definitive Agreement~~Receivership.

As previously reported by Quadrant 4 System Corporation (the “Company”), the Company filed a voluntary petition for relief commencing a case under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. § 101 et seq. (the “Bankruptcy Code”), designated as Case Number 17-19689 (the “Chapter 11 Case”) in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the “Bankruptcy Court”). As previously reported, the Company subsequently caused its wholly-owned subsidiary, Stratitude, Inc. (“Stratitude”) to file a voluntary petition for relief commencing a case under Chapter 11 of the Bankruptcy Code, designated as Case Number 17-30724 (the “Stratitude Chapter 11 Case”) in the Bankruptcy Court. Since that time, the Company ~~has~~and Stratitude have operated as ~~debtor~~debtors-in-possession under the Bankruptcy Code. The Chapter 11 Case and the Stratitude Chapter 11 Case are jointly administered. The Company, with the assistance of its restructuring consulting firm and its investment ~~banker~~banking firm, has ~~successfully~~sold ~~identified~~all ~~purchasers~~of ~~for~~its ~~the~~business ~~majority~~operations and substantially all of its assets, and substantially all of the business operations and assets of Stratitude, and distributed the net proceeds to their secured creditors. Other ~~The~~than operating cash and an account receivable of $7 million designated for assignment to the Company’s ~~sole~~senior ~~remaining~~secured ~~assets~~lender, ~~are~~BMO ~~the~~Harris ~~Residual~~Bank, ~~Assets~~N.A., under the Plan (as defined below), the Company’s and Stratitude’s sole remaining assets are certain potential causes of action as summarized below.

~~TriZetto~~On ~~License~~June ~~Agreement~~5, 2018, the Bankruptcy Court entered an Order Approving Form and Manner of Notice and Establishing Dates for Hearing on Adequacy of Disclosure Statement and Filing of Any Objections Thereto (Docket No. 417) (the “Order”). The Order includes the Bankruptcy Court’s approval of a Notice of Hearing to Approve Disclosure Statement and Plan Confirmation Procedures (the “Notice”) to be sent to all creditors and other interested parties regarding a proposed Disclosure Statement (Docket No. 408) (as may be amended from time to time, the “Disclosure Statement”) for Joint Plan of Liquidation of Quadrant 4 System Corporation and Stratitude, Inc. and the Official Committee of Unsecured Creditors (Docket No. 407) (as may be amended from time to time, the “Plan”), which has been jointly filed by the Company, Stratitude and the Official Committee of Unsecured Creditors in the Chapter 11 Case and Stratitude Chapter 11 Case (the “Committee”).

~~Among~~Under the ~~assets~~Plan as proposed, shareholders are not expected to receive or retain any distribution in respect of their shares, due to the ~~QHIX~~amounts ~~Healthcare~~of ~~Platform~~the ~~are~~superior claims of the Company’s ~~rights~~secured and unsecured creditors. The Plan as ~~licensor~~proposed ~~under~~will, ~~that~~if ~~certain~~confirmed ~~Source~~by ~~Code~~the ~~License~~Bankruptcy ~~and~~Court, ~~Services~~provide ~~Agreement~~for, among other things: (a) the ~~“License~~resignation ~~Agreement”)~~of ~~entered~~all ~~into~~officers onand ordirectors ~~about~~of ~~March~~the 2Company, ~~2016,~~(b) ~~between~~the winding up and eventual dissolution of the Company, and ~~TriZetto~~(c) ~~Corporation,~~the ~~now~~creation ~~known~~of asa ~~Cognizant~~liquidating ~~TriZetto~~trust ~~Software~~under ~~Group~~the direction of a newly appointed liquidating trustee for the retention and preservation of various causes of action on the part of the Company and Stratitude, ~~Inc.~~which may (~~“TriZetto”~~though not necessarily will)~~. Pursuant~~ toinclude, ~~the~~without ~~License~~limitation, ~~Agreement~~if any, ~~the~~preferential ~~Company~~transfers; ~~granted~~fraudulent ~~TriZetto~~transfers; breaches aof ~~license~~fiduciary toduties; ~~use~~aiding ~~certain~~and ~~software~~abetting ~~products~~breaches (of fiduciary duties; piercing the ~~“Licenses”)~~corporate ~~and~~veil; ~~agreed~~conversion; tofraud; ~~provide~~negligence; ~~certain~~negligent ~~related~~misrepresentation; ~~services~~waste toof ~~TriZetto~~corporate assets; malpractice; breach of contract; subrogation; and equitable subordination of claims. InNeither ~~exchange,~~the ~~TriZetto~~Company ~~agreed~~nor ~~to,~~the ~~among~~Committee ~~other~~have ~~things~~yet specifically identified and analyzed the potential causes of action, ~~pay~~nor ahave ~~royalty~~any ~~and~~lawsuits ~~other~~been ~~fees~~filed toby or on behalf of the Company with respect to the causes of action. ~~The~~Moreover, ~~License~~under ~~Agreement~~the ~~provided~~Plan, ~~that~~any ~~royalties~~causes ~~are~~of ~~payable~~action against certain directors of the Company have been designated for assignment to BIP Quadrant 4 System Debt Fund I, LLC, the Company’s ~~only~~junior ifsecured ~~TriZetto~~lender is(“BIP”). Any ~~making~~net ~~use~~proceeds from such director causes of ~~the~~action ~~Licenses,~~shall ~~with~~first abe ~~theoretical~~applied ~~maximum~~to ~~royalty~~satisfy the claims of ~~$90~~BIP,~~000~~ with the remaining proceeds,~~000.~~ ~~However~~if any, ~~TriZetto~~remitted ~~and~~to the ~~Company~~liquidating ~~have~~trust ~~had~~for ~~protracted~~payment ~~material~~to ~~disagreements~~unsecured ~~with~~creditors. ~~respect~~Even toafter resolution of the ~~License~~foregoing ~~Agreement~~causes of action, ~~including~~management ascontinues to ~~whether~~believe ~~any~~that ~~royalties~~there ~~are~~will innot ~~fact~~be ~~due~~sufficient proceeds, after payment of administrative expenses, secured creditors and unsecured creditors, to ~~the~~make ~~Company~~any distributions to its shareholders.

~~Management~~As ~~determined~~noted ~~that~~in the ~~Company’s~~Order ~~ability~~and tothe ~~service~~Notice, the ~~License~~Bankruptcy ~~Agreement~~Court ~~was~~will ~~becoming~~hold ~~compromised~~a hearing on July 12, ~~due~~2018 toon athe ~~lack~~adequacy of ~~staffing~~the ~~and~~information ~~financial~~contained ~~resources,~~in ~~and~~the Disclosure Statement. Objections with respect the ~~Company~~adequacy ~~and~~of ~~its~~the ~~advisors~~information ~~began~~contained ~~exploring~~in athe ~~settlement~~Disclosure ~~and~~Statement ~~buy-down~~must be filed with ~~TriZetto~~the inBankruptcy ~~September~~Court ~~2017. Management~~no ~~also~~later ~~determined~~than ~~that~~July ~~achievement~~10, of2018. If the ~~theoretical~~Disclosure ~~maximum~~Statement ~~royalty~~is ~~was~~approved ~~unlikely,~~by ~~and~~the ~~that~~Bankruptcy ~~there~~Court, ~~was~~the aCompany ~~real~~anticipates ~~possibility~~receiving ofauthorization ~~receiving~~to nosend ~~royalty~~the ~~payments~~Plan atto ~~all. As~~its ofcreditors ~~mid-January~~for ~~2018~~voting, ~~the~~at ~~Company~~which ~~had~~time, ~~not~~notice ~~received~~of ~~any~~a ~~bids~~hearing ~~for~~to ~~any~~be ofscheduled to consider the ~~assets~~outcome of the ~~QHIX~~voting ~~Healthcare~~and ~~Platform~~the ~~which~~confirmation ~~included~~of the ~~License~~Plan ~~Agreement,~~will inbe ~~bulk~~sent orto ~~piecemeal,~~creditors ~~despite~~together ~~having~~with ~~granted~~the ~~approximately~~Plan, 25voting ~~potential~~materials, ~~bidders~~ and ~~their~~the ~~advisors~~Disclosure ~~access~~Statement, toas ~~due diligence information~~approved.

OnThe ~~January~~foregoing ~~16,~~description ~~2018,~~of the ~~Company~~terms ~~filed~~of ~~with~~ the ~~Bankruptcy Court a motion to approve the Company’s entry into a Modification Agreement with TriZetto~~Order, ~~whereby TriZetto would retain~~ the ~~Licenses,~~Notice ~~retain limited exclusivity in the target market,~~ and ~~accelerate royalty payments, and~~ the ~~Company~~Plan ~~would~~does ~~retain~~not ~~the~~purport ~~rights~~ to ~~the~~be ~~underlying~~a ~~source~~complete ~~code~~description ~~and~~of ~~the~~all ~~ability to grant licenses to third parties outside~~ of ~~the target market (the “Modification Agreement”). The material~~ terms of the ~~Modification~~Order, ~~Agreement include~~ the ~~following:~~Notice ~~(a)~~and ~~all payments of royalties due to~~ the ~~Company~~Plan, ~~by TriZetto shall be accelerated~~ and ~~replaced~~is qualified in ~~their~~its entirety by anreference ~~absolute, irrevocable and unconditional obligation~~ to ~~pay to~~ the ~~Company~~full ~~the~~text ~~sum~~ of ~~$10~~such documents,~~000,000,~~ incopies ~~full (subject to certain setoff rights~~ of ~~TriZetto~~which ~~with~~are ~~respect~~attached to ~~the~~this ~~final~~report $500,000), no later than January 15, 2021, on the installment schedule detailed more fully in the Modification Agreement; (b) except as expressly provided in the Modification Agreement, neither the Company nor TriZetto shall have any further obligations under the License Agreement; and ~~(c)~~incorporated ~~the~~herein ~~parties~~by ~~shall release all existing claims against each other~~reference.

~~The~~All ~~official~~filings ~~committee of unsecured creditors~~ in the Chapter 11 Case ~~(the “Committee”)~~ and ~~BIP~~the ~~Lender~~Stratitude ~~LLC~~Chapter ~~(“BIP”)~~11 Case, including the ~~Company’s~~Disclosure ~~junior secured creditor~~Statement, ~~raised~~may ~~various~~be ~~objections~~obtained tofrom the ~~Company’s~~Office ~~entry~~of ~~into~~ the ~~Modification~~Clerk ~~Agreement,~~of ~~which~~the ~~were subsequently withdrawn~~U. OnS. ~~February~~Bankruptcy 7Court, ~~2018,~~219 ~~the~~South ~~Bankruptcy~~Dearborn ~~Court~~Street, ~~entered~~Room an713, ~~order~~Chicago, ~~authorizing~~Illinois ~~the~~60604 ~~Company’s~~or ~~entry~~through ~~into~~its ~~the~~website ~~Modification~~via ~~Agreement~~PACER (~~the “Modification Order”~~https://ecf.ilnb.uscourts.gov/),. Such ~~and~~information ~~the~~is ~~Company~~not ~~and~~incorporated ~~TriZetto~~by ~~then~~reference ~~executed~~into ~~the~~this ~~agreement effective as of January 15, 2018~~report.

The first two installments due under the Modification Agreement, totaling $3,000,000, were received on February 16, 2018. Those proceeds were applied in the following amounts: $800,000 to BMO Harris Bank, N.A. (“BMO”), the Company’s senior secured creditor; $500,000 held in trust by the Company’s bankruptcy counsel pending reconciliation of any amounts due by the Company to First Tek Services Private Limited under the Company’s letter agreement with First Tek; $100,000 to BIP; $100,000 for the Committee (which amount is currently held in trust by the Company’s bankruptcy counsel at the direction of the Committee’s counsel); $150,000 to Robert Steele for his services in connection with the transaction, pursuant to a key employee payment order approved by the Bankruptcy Court; and $100,000 to Livingstone Partners, LLC, the Company’s investment banker, for its Bankruptcy Court-approved commission for marketing of the assets and assisting with the transaction underlying the Modification Agreement. The balance, $1,250,000, was retained by the Company as debtor-in-possession for continued funding of the Chapter 11 Case through the anticipated confirmation of a plan of liquidation.

The foregoing description of the terms of the Modification Agreement does not purport to be a complete description of all of terms of the Modification Agreement and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached to Exhibit 2.1 to this report and incorporated herein by reference.

Residual Assets Sale

Following months of marketing efforts, on February 12, 2018, the Company filed with the Bankruptcy Court a motion (the “Residual Assets Sale Motion”) to, among other things, approve the sale of its remaining operating assets, namely its remaining rights under the License Agreement; its Quadrant 4 Healthcare Business Unit (QHIX) and EmpowHR products, technology and commercial businesses; and licenses as to the QHIX and EmpowHR business (collectively, the “Residual Assets”), to BIP pursuant to a Settlement and Asset Purchase Agreement dated on or about February 12, 2018 (the “Residual Assets APA”). BIP is the Company’s junior secured lender holding a claim upon the Petition Date against the Company and its wholly-owned subsidiary, Stratitude, Inc., in excess of $5 million. The Residual Assets APA provides for a $1 million purchase price for the Residual Assets in the form of a credit bid from BIP. The Residual Assets Sale Motion is supported by BMO and the Committee.

On February 26, 2018, the Bankruptcy Court entered an order in the Chapter 11 Case, which among other things, scheduled a sale hearing on the approval of the Residual Assets APA for March 20, 2018 at 11:00 a.m. Central Time. On March 21, 2018, the Bankruptcy Court entered an order approving the sale of such Residual Assets to BIP. The sale resulted in no cash proceeds to the Company. Due to the lack of any offers or letters of intent for the Residual Assets having been received by the Company during the many months of prior marketing efforts by the Company and its professionals, there was no competitive bidding process held.

Throughout the Chapter 11 Case, and continuing to date, the Company’s objective has been to maximize the value of its assets for the benefit of all of the Company’s creditors, shareholders and other interested parties. These efforts continue with respect to all remaining assets in the bankruptcy estate, namely possible claims in favor of the Company. The Company is unable to predict the value of any such claims at this time, however management continues to believe that there will be insufficient proceeds, after payment of administrative expenses, sale expenses, secured creditors and unsecured creditors, to make distributions to its shareholders.

All filings in the Chapter 11 Case may be obtained from the Office of the Clerk of the U.S. Bankruptcy Court, 219 South Dearborn Street, Room 713, Chicago, Illinois 60604 or via its website (www.ilnb.uscourts.gov). Such information is not incorporated by reference into this report.

Item 1.03. Bankruptcy or Receivership.

The disclosures set forth in Item 1.01 above are incorporated herein by reference.

Item 2.01. Completion of Acquisition or Disposition of Assets.

The disclosures set forth in Item 1.01 above are incorporated herein by reference.

Item 5.02. Compensatory Arrangements of Certain Officers.

The disclosures set forth in Item 1.01 above are incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

Exhibit No.		Description of Exhibit
2.1		~~Modification~~Order ~~Agreement~~Approving ~~Order~~Form and Manner of Notice and Establishing Dates for Hearing on Adequacy of Disclosure Statement and Filing of any Objections Thereto entered ~~February~~June 85, 2018
2.2		Notice of Hearing to Approve Disclosure Statement and Plan Confirmation Procedures approved June 5, 2018
2.3		Joint Plan of Liquidation of Quadrant 4 System Corporation and Stratitude, Inc. and the Official Committee of Unsecured Creditors filed June 1, 2018

Forward-Looking Statements

This Current Report on Form 8-K contains certain statements that are “forward-looking statements.” Those statements may include statements regarding the intent, belief or current expectations of the Company or its officers with respect to the Company’s ~~continued~~liquidation ~~efforts to sell its remaining assets~~process, among other matters. These forward-looking statements are based on a number of assumptions and currently available information, and are subject to a variety of risks and uncertainties. Although the Company believes that the assumptions on which the forward-looking statements contained herein are based are reasonable, any of those assumptions could prove to be inaccurate given the inherent uncertainties as to the occurrence or nonoccurrence of future events. There is no assurance that the forward-looking statements contained in this Current Report will prove to be accurate. The inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that its objectives will be achieved.

SIGNATURE

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.


QUADRANT 4 SYSTEM CORPORATION

By:		/s/ Robert Steele
		Robert H. Steele, Chief Executive Officer

Date: ~~April~~July 2, 2018

Index to Exhibits

Exhibit No.		Description of Exhibit
2.1		~~Modification~~Order ~~Agreement~~Approving ~~Order~~Form and Manner of Notice and Establishing Dates for Hearing on Adequacy of Disclosure Statement and Filing of any Objections Thereto entered ~~February~~June 85, 2018
2.2		Notice of Hearing to Approve Disclosure Statement and Plan Confirmation Procedures approved June 5, 2018
2.3		Joint Plan of Liquidation of Quadrant 4 System Corporation and Stratitude, Inc. and the Official Committee of Unsecured Creditors filed June 1, 2018

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