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): ~~February~~March 167, 2021

MEDLEY LLC

(Exact name of registrant as specified in its charter)

Delaware

001-37857

27-2437343

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

280 Park Avenue, 6th Floor East

New York, New York 10017

(Address of principal executive offices) (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 (see General Instruction A.2. below):

☐

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange

on which registered

6.875% Notes due 2026

7.25% Notes due 2024

MDLX

MDLQ

New York Stock Exchange

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 1.03. Bankruptcy or Receivership.

Voluntary Petition for Reorganization by Medley LLC

On March 7, 2021 (the “Petition Date”), Medley LLC (“Medley LLC”) commenced a voluntary case (the “Chapter 11 Case”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Chapter 11 Case is captioned In re: Medley LLC, Case No. 21-10526.

The Medley investment platform is comprised of a number of investment advisers and other related entities. Medley LLC is the only entity on the platform that has filed for Chapter 11 protection. Medley Management Inc. (NYSE: MDLY) (“MDLY”) and the other affiliated adviser entities on the Medley platform are not filing any bankruptcy petitions.

Medley LLC will continue to operate its business as “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. To ensure its ability to continue operating in the ordinary course of business, Medley LLC has filed with the Bankruptcy Court motions seeking a variety of “first day” relief, including authority to continue utilizing and maintaining its existing cash management system.

Business operations across the Medley platform including providing investment and advisory services to its clients are continuing without interruption.

Proposed Plan of Reorganization

In connection with the Chapter 11 Case, Medley LLC filed with the Bankruptcy court a proposed Plan of Reorganization (the “Plan”) and a proposed Disclosure Statement related thereto (the “Disclosure Statement”). Medley LLC intends to seek the Bankruptcy Court’s approval of the Disclosure Statement and confirmation of the Plan. There can be no assurances that Medley LLC will obtain the Bankruptcy Court’s approval of the Disclosure Statement and/or confirmation of the Plan, or that if the Plan is approved, that the reorganization of Medley LLC will be successfully implemented as contemplated by the Plan. This Current Report on Form 8-K is not a solicitation of votes to accept or reject the Plan or an offer to sell or exchange securities of Medley LLC or MDLY. Any solicitation of votes or offer to sell or exchange or solicitation of an offer to buy or exchange any securities of Medley LLC or MDLY will be made only pursuant to and in accordance with the Disclosure Statement following approval by the Bankruptcy Court. Capitalized terms used in this Item 1.03 under this heading titled “Proposed Plan of Reorganization” but not otherwise defined herein shall have the respective meanings given to such terms in the Plan.

Below is a summary of the treatment that the following stakeholders of Medley LLC would receive under the Plan, which is subject to confirmation of the Bankruptcy Court:

●

Secured Claims. Each holder of an Allowed Secured Claim shall receive, at the option of the Debtor and in its sole discretion: (i) payment in full in Cash of its Allowed Secured Claim; (ii) the collateral securing its Allowed Secured Claim; (iii) Reinstatement of its Allowed Secured Claim; or (iv) such other treatment rendering its Allowed Secured Claim Unimpaired in accordance with section 1124 of the Bankruptcy Code.

●

Other Priority Claims. Each holder of an Allowed Other Priority Claim shall receive treatment in a manner consistent with section 1129(a)(9) of the Bankruptcy Code.

●

Notes Claims. On the Effective Date, each holder of an Allowed Notes Claim shall receive: (i) if such holder votes to accept the Plan, 0.600 shares of newly-issued Class A Common Stock of MDLY for each $25 principal amount of 7.25% senior notes due 2024 (“2024 Notes”) and/or 6.875% senior notes due 2026 (“2026 Notes”) held by such holder; (ii) if such holder does not take any action and does not vote on the Plan, 0.450 shares of newly-issued Class A Common Stock of MDLY for each $25 principal amount of 2024 Notes and/or 2026 Notes held by such holder; or (iii) if such holder elects to Opt-Out of the Third Party Release contained in Article VIII of the Plan and/or votes to reject the Plan, the lesser of (x) 0.134 shares of newly-issued Class A Common Stock of MDLY for each $25 principal amount of 2024 Notes and/or 2026 Notes held by such holder or (y) a pro rata share of the Rejecting Noteholder Pool.

●

Strategic Claim. The holder of the Allowed Strategic Claim shall receive: (i) 218,182 shares of newly-issued Class A Common Stock of MDLY; (ii) $350,000 in Cash on the Effective Date or as soon as practicable thereafter; and (iii) a secured promissory note, the form of which will be negotiated between the parties prior to the Confirmation Hearing, which provides for 10 consecutive quarterly payments of $225,000 in Cash, commencing on the last Business Day of the first full calendar quarter following the Effective Date.

●

General Unsecured Claims. Each holder of an Allowed General Unsecured Claim shall receive, at the option of the Debtor: (i) the lesser of the amount of its Allowed General Unsecured Claim in Cash, or its pro rata share of the General Unsecured Claims Pool; or (ii) Reinstatement.

●

Intercompany Claims. Each Allowed Intercompany Claim shall be, at the option of the Debtor, either: (i) Reinstated; or (ii) canceled, released, and extinguished and without any distribution at the Debtor’s election and in its sole discretion.

●

Interests. Each holder of an Interest shall retain such Interest.

Copies of the Plan and the Disclosure Statement are furnished as Exhibits 99.1 and 99.2 hereto, respectively, and are incorporated herein by reference. The above description of the Plan is a summary only and is qualified in its entirety by reference to the full text of the Plan.

Additional Information on the Chapter 11 Case

Bankruptcy Court filings and other information related to the Chapter 11 Case are available at a website administered by Medley LLC’s noticing and claims agent, Kurtzman Carson Consultants LLC, at https://www.kccllc.net/medley. The documents and other information available via the website or elsewhere are not part of this Current Report on Form 8-K and shall not be deemed incorporated herein.

Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

OnThe ~~February~~commencement ~~16, 2021, Medley LLC did not pay the approximately $0.9 million quarterly interest payment due on such date in respect~~ of ~~Medley LLC’s 6.875% senior notes due 2026 (~~the ~~“2026~~Chapter ~~Notes”).~~11 ~~The~~Case ~~indentures~~constitutes ~~governing the 2026 Notes afford Medley LLC the benefit of a 30-day grace period (through March 18, 2021) which must elapse before a missed interest payment may be treated as~~ an event of default ~~under~~that ~~the~~accelerates ~~terms of~~ the ~~2026~~obligations ~~Notes.~~under ~~Approximately $54 million in aggregate principal amount of 2026 Notes are outstanding. As previously disclosed in Medley LLC’s Current Report on Form 8-K filed with~~ the ~~Securities~~following ~~and~~debt ~~Exchange~~instruments ~~Commission on February 2~~(collectively, ~~2021, Medley LLC did not pay~~ the ~~approximately $1.3 million quarterly interest payment due on February 1, 2021 in respect of Medley LLC’s 7.25% senior notes due 2024 (the~~ “~~2024~~Debt ~~Notes~~Instruments”); the missed interest payment on the 2024 notes is also subject to a 30-day grace period which extends through March 3, 2021. Approximately $69 million in aggregate principal amount of 2024 Notes are outstanding. The 2024 Notes and 2026 Notes trade on the NYSE under the symbols MDLQ and MDLX, respectively.:

~~Medley~~● ~~LLC continues to work with B~~7.25% ~~Riley~~senior ~~Securities,~~notes ~~Inc.,~~due ~~whom~~2024 ~~Medley~~(of ~~LLC~~which ~~has~~approximately ~~engaged~~$69 asmillion ~~financial advisor as previously announced~~ in ~~Medley~~aggregate ~~LLC’s~~principal ~~press~~amount ~~release~~are ~~issued on January 11~~outstanding), ~~2021,~~issued ~~with~~pursuant ~~regard~~ to ~~potential~~that ~~alternatives~~certain ~~for Medley LLC’s capital structure~~Indenture, ~~including~~dated ~~potential~~as ~~alternatives~~of toAugust restructure Medley LLC’s indebtedness and other contractual obligations including the 2024 Notes and the 2026 Notes. As previously disclosed in Medley LLC’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 9, ~~2021~~2016, ~~Medley~~as ~~Management~~supplemented ~~Inc.~~by ~~has~~that ~~designated~~certain aThird ~~newly-constituted~~Supplemental ~~subcommittee~~Indenture, ofdated ~~the~~as ~~Medley Management Inc. Board~~ of ~~Directors~~January ~~consisting~~18, of2017, ~~independent directors~~ and ~~created~~that tocertain ~~explore~~Fourth ~~restructuring~~Supplemental ~~transactions~~Indenture, ~~for~~dated ~~Medley~~as ~~LLC~~of ~~(the~~February ~~“Restructuring Subcommittee”). The Restructuring Subcommittee is authorized to~~22, ~~among other things~~2017, ~~consider,~~each ~~evaluate~~between ~~and approve possible strategic alternatives including restructuring transactions and/or similar transactions involving~~ Medley LLC, ~~none~~and ~~of which have been implemented at this time~~U. ~~There can be no assurance that the efforts described in this paragraph will result in any particular outcome~~S. ~~The~~Bank ~~foregoing~~National ~~statements regarding potential alternatives for Medley LLC’s capital structure~~Association, ~~indebtedness,~~as ~~contractual obligations~~Trustee, and ~~the~~each ~~2024~~as ~~Notes and 2026 Notes~~amended, ~~including possible strategic alternatives such as restructuring transactions and/or similar transactions involving Medley LLC that may be considered~~restated, ~~evaluated and approved by the Restructuring Subcommittee~~supplemented, ~~and~~or ~~efforts~~otherwise bymodified ~~Medley~~from ~~LLC~~time ~~and~~to ~~its~~time; ~~advisors in connection therewith represent forward-looking statements. See “Forward-Looking Information” below.~~and

~~Forward-Looking~~● ~~Information~~6.875% senior notes due 2026 (of which approximately $54 million in aggregate principal amount are outstanding), issued pursuant to that certain Indenture, dated as of August 9, 2016, as supplemented by that certain First Supplemental Indenture, dated as of August 9, 2016, and that certain Second Supplemental Indenture, dated as of October 18, 2016, each between Medley LLC and U.S. Bank National Association, as Trustee, and each as amended, restated, supplemented, or otherwise modified from time to time.

~~This~~Any ~~Current~~efforts ~~Report on Form 8-K contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, but are not limited~~ to, ~~statements~~enforce ~~regarding~~payment Medley LLC’s ongoing work with its financial advisor with regard to potential alternatives for Medley LLC’s capital structure, including potential alternatives to restructure Medley LLC’s indebtedness and other contractual obligations ~~including~~under the ~~2024~~Debt ~~Notes~~Instruments and the 2026 Notes, possible strategic alternatives including restructuring transactions and/or similar transactions involving Medley LLC that may be considered, evaluated and approved by the Restructuring Subcommittee, and other statements containing the words “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions. Such forward-looking statements represent management's current expectations and are ~~inherently~~automatically ~~uncertain.~~stayed ~~There~~as ~~are~~ a ~~number~~result of ~~important factors that could materially impact~~ the ~~value~~filing of Medley LLC’s securities or cause actual results to differ materially from those indicated by such forward-looking statements. These important factors include, but are not limited to, those discussed under the ~~caption~~Chapter ~~“Risk~~11 ~~Factors”~~Case inand ~~Part I. Item 1A of Medley LLC’s Form 10-K for~~ the ~~fiscal year ended December 31, 2019 and in Medley LLC~~holders’s ~~other~~rights ~~reports~~of ~~and~~enforcement ~~filings~~ with ~~the~~respect ~~Securities and Exchange Commission, and uncertainties associated with the impact from the ongoing COVID-19 pandemic. These important factors, among others, could cause actual results~~ to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Any such forward-looking statements represent management’s estimates as of the ~~date~~Debt ofInstruments ~~this~~are ~~Current~~subject ~~Report on Form 8-K. While Medley LLC may elect~~ to ~~update such forward-looking statements at some point in~~ the ~~future,~~applicable ~~Medley~~provisions ~~LLC disclaims any obligation to do so, even if subsequent events cause its views to change. These forward-looking statements should not be relied upon as representing Medley LLC’s views as~~ of ~~any date subsequent to~~ the ~~date~~Bankruptcy ~~of this Current Report on Form 8-K~~Code.

~~SIGNATURE~~Item 8.01. Other Events.

~~Pursuant~~In toconnection with the ~~requirements~~commencement of the ~~Securities~~Chapter ~~Exchange~~11 ~~Act~~Case, ofMedley ~~1934,~~LLC ~~the~~disclosed ~~registrant~~in ~~has~~its ~~duly~~pleadings ~~caused~~filed ~~this~~with ~~report~~the Bankruptcy Court certain matters related to beMDLY’s ~~signed~~and onMedley ~~its~~LLC’s ~~behalf~~business, byincluding the ~~undersigned~~regulatory ~~hereunto~~matter ~~duly~~described ~~authorized.~~below:

~~MEDLEY~~On ~~LLC~~September ~~By:~~17, /2019 the staff of the Securities and Exchange Commission’s/ ~~Richard~~Division T.of ~~Allorto,~~Enforcement ~~Jr.~~(the ~~Name:~~“Staff”) ~~Richard~~informed T.MDLY ~~Allorto,~~that Jrit was conducting an informal inquiry and requested the production and preservation of certain documents and records. ~~Title:~~MDLY ~~Chief~~fully ~~Financial~~cooperated ~~Officer~~with the Staff’s informal inquiry and began voluntarily providing the Staff with any requested documents.

~~Date:~~By ~~February~~letter 16dated December 18, ~~2021~~2019, the Staff advised MDLY that a formal order of private investigation (the “Order”) had been issued and that the informal inquiry was now a formal investigation. The Order indicated that the investigation relates to Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940, Rule 206(4)-8, Sections 13(a) and 14(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13, and 14a-9 thereunder. MDLY continues to cooperate fully with the investigation.

MDLY cannot predict the outcome of, or the timeframe for, the conclusion of this investigation. An adverse outcome could have a material effect on MDLY’s and Medley LLC’s business, financial condition, or results of operations.

Cautionary Notice Regarding Forward-Looking Statements

This Current Report on Form 8-K contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, but are not limited to, statements regarding Medley LLC’s intention to seek the Bankruptcy Court’s approval of the Disclosure Statement and confirmation of the Plan, the intended reorganization of Medley LLC as contemplated by the Plan, and other statements containing the words “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions. Such forward-looking statements represent management's current expectations and are inherently uncertain. There are a number of important factors that could materially impact the value of Medley LLC’s and MDLY’s securities or cause actual results to differ materially from those indicated by such forward-looking statements. These important factors include, but are not limited to, (i) Medley LLC’s ability to obtain the Bankruptcy Court’s approval of the Disclosure Statement and confirmation of the Plan, including the treatment of the claims of Medley LLC’s noteholders and other creditors, among others, (ii) Medley LLC’s ability to obtain approval by the Bankruptcy Court of motions in the Chapter 11 case, the Bankruptcy Court’s other rulings in the Chapter 11 Case, and the outcome of the Chapter 11 Case in general, (iii) the effects of the Chapter 11 Case on Medley LLC’s and MDLY’s businesses and the interests of various constituents and stakeholders, (iv) the length of time Medley LLC will operate under Chapter 11 protection, and the risks associated with potential disruptions to the business, (v) risks associated with third-party motions in the Chapter 11 Case, which may interfere with Medley LLC’s ability to develop and consummate the Plan or any other plan of reorganization, (vi) the potential adverse effects of the Chapter 11 Case on Medley LLC’s and MDLY’s liquidity, results of operations or business prospects, (vii) the ability to execute on Medley LLC’s and MDLY’s business and restructuring plans, (viii) increased legal and advisor costs related to the Chapter 11 Case and other litigation and the inherent risks involved in a bankruptcy process, (ix) the consequences of the acceleration of Medley LLC’s debt obligations, (x) the trading price and volatility of Medley LLC’s 7.25% senior notes due 2024 and 6.875% senior notes due 2026, and the trading price and volatility of MDLY’s Class A Common Stock, and the related ability to remain listed on the NYSE, (xi) uncertainties associated with the impact from the ongoing COVID-19 pandemic, (xii) uncertainties and risks associated with the outcome of, and timeframe for, the Securities and Exchange Commission investigation disclosed in Item 8.01 of this Current Report on Form 8-K, and (xiii) other factors disclosed by Medley LLC and MDLY from time to time in their respective filings with the Securities and Exchange Commission, including those discussed under the caption “Risk Factors” in Part I. Item 1A of Medley LLC’s and MDLY’s Annual Reports on Form 10-K for the fiscal year ended December 31, 2019, in Medley LLC’s and MDLY’s Quarterly Reports on Form 10-Q and in Medley LLC’s and MDLY’s other reports and filings with the Securities and Exchange Commission. These important factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Any such forward-looking statements represent management’s estimates as of the date of this Current Report on Form 8-K. While Medley LLC or MDLY may elect to update such forward-looking statements at some point in the future, Medley LLC and MDLY disclaim any obligation to do so, even if subsequent events cause their views to change. These forward-looking statements should not be relied upon as representing Medley LLC’s or MDLY’s views as of any date subsequent to the date of this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description

99.1	Proposed Chapter 11 Plan of Reorganization of Medley LLC

99.2	Proposed Disclosure Statement for the Chapter 11 Plan of Reorganization of Medley LLC

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.

MEDLEY LLC

By:	/s/ Richard T. Allorto, Jr.
	Name:	Richard T. Allorto, Jr.
	Title:	Chief Financial Officer

Date: March 8, 2021

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