WeAre8 - Chapter 11 Case Summary

WeAre8, a social media and advertising technology company, filed for Chapter 11 with approximately $15,000 of cash and more than $32 million of funded debt. It attributes its liquidity crisis to the failure of a planned $10 million equity investment under an arrangement with McCourt and affiliated entities, matured convertible notes, McCourt’s lawsuit seeking repayment, and its inability to raise sufficient new capital. It intends to pursue a Section 363 going-concern sale of substantially all of its assets, funded by a proposed DIP facility from existing investors of up to $1.6 million, including a $430,000 roll-up of bridge financing.

Business Description

WeAre8, PBC (the "Debtor") is a Delaware public benefit corporation. It is a technology company that has spent more than a decade building a social media platform and an advertising ecosystem around it. Its proprietary technology has three parts:

Social platform — A social media network that lets users control the content they see instead of relying on engagement-maximizing algorithms.
Advertising platform — A system in which users choose to engage with advertising content and share in the economic value their attention generates.
AI Shield — A proprietary content moderation system based on artificial intelligence. It is designed to find and remove harmful content, including scams, harassment, hate speech, violence and the exploitation of minors.

The Debtor has commercialized its technology. Its app has more than one million downloads worldwide, and it has run advertising campaigns for more than 200 brands and institutions, including internationally recognized companies and governmental organizations. It has not, however, secured the capital it needs to reach commercial scale. The Debtor is the parent of the WeAre8 group and the only debtor in the case. Its subsidiaries in the United Kingdom, Greece, Australia and India are not in Chapter 11.

Corporate History

Zoe Kalar founded the Debtor in 2014 and has been its Chief Executive Officer since then. Kalar was formerly known as Sue Fennessy, and some of the Debtor's historical records and agreements remain in that name. Kalar is also a member of the Debtor's board of directors (the "Board"), a stockholder, and the holder of certain of the Debtor's secured convertible notes. As of the petition date, the Debtor had approximately 64.9 million shares outstanding and approximately 87.8 million on a fully diluted basis, made up of common stock, preferred stock, warrants, options and restricted stock units.

Corporate Structure

The Debtor's direct and indirect subsidiaries (the "Non-Debtor Affiliates") include five entities. The Debtor wholly owns four of them: WeAre8 Media Ltd and 12470936 Limited, both in England and Wales, WeAre8 Greece Single Member P.C., and WeAre8 Australia Pty Ltd. The fifth, WeAre8 India Media Pvt Ltd, is 99% owned by the Debtor and 1% owned by WeAre8 Media Ltd.

UK Administration

In April 2026, the Debtor's former UK operating subsidiary entered administration in England. It was then named WeAre8 Media Ltd and is now 12470936 Limited. The administrators sold its business and assets for £85,000 to a newly formed subsidiary of the Debtor, which now carries the WeAre8 Media Ltd name. The UK employees transferred to the new company. An independent evaluator's report and an independent valuation supported the sale.

Operations Overview

The Debtor runs a substantially remote operation with a small workforce. A substantial portion of that workforce is independent contractors based outside the United States, and the Debtor has one U.S.-based employee.

Users withdraw funds from their WeAre8 Wallets by submitting a payout request under the platform's terms of use. Payouts are processed through each user's designated PayPal account, so PayPal is the channel through which funds owed to users are transferred.

The Debtor funds and shares certain operating costs with the Non-Debtor Affiliates, mainly the UK team at WeAre8 Media Ltd. The Debtor's first-day declaration (the "Declaration") describes these intercompany transactions as integral to preserving the platform's value during the sale process.

Prepetition Obligations

As of September 30, 2026, the Debtor's funded debt totaled approximately $32.1 million including accrued interest, on approximately $23.6 million of original principal:

Instrument	Holders	Original principal	With accrued interest	Priority
Senior Secured Convertible Notes	8	$8,765,309	$11,447,948	First-priority secured
Secured Convertible Notes	57	$11,233,508	$16,187,794	Second-priority secured
McCourt Convertible Note	1	$3,500,000	$4,356,063	Unsecured
Other Unsecured Loans	2	$66,671	$66,671	Unsecured
Total		$23,565,488	$32,058,476

According to the Debtor, both the senior secured convertible notes and the secured convertible notes are secured by liens on substantially all of its assets. Those liens were granted under a series of note, security and related intercreditor arrangements and are perfected by UCC-1 financing statements. The McCourt Convertible Note (the "McCourt Note") is unsecured and matured on June 30, 2025.

Beyond its funded debt, the Debtor has ordinary-course obligations to technology contractors, to platform users owed earnings through its advertising ecosystem, to charities owed donations made through the platform, and to trade creditors.

Events Leading to Bankruptcy

By the petition date, the Debtor had approximately $15,000 of available cash and more than $32 million of funded debt. It did not have enough liquidity to cover payroll, contractor costs, platform maintenance and other operating expenses. The Declaration attributes the liquidity crisis to a combination of factors, including:

the failure of a planned strategic investment that was expected to supply growth capital;
matured secured and unsecured convertible notes, which made it much harder to attract new investors;
litigation over that debt; and
the Debtor's inability to raise financing given its capital structure and near-term maturities.

The Declaration characterizes the filing as the result of this liquidity crisis rather than of any failure of the Debtor's technology, platform or business model.

McCourt Transaction

In November 2024, the Debtor entered into a strategic investing arrangement with McCourt and affiliated entities for up to $15 million of funding. The arrangement had two parts: the McCourt Note, a $5 million convertible promissory note facility, and a later $10 million equity investment. The parties expected advances under the note to convert into equity when the equity investment closed. McCourt advanced $3.5 million between November 2024 and January 2025, and the Debtor committed substantial management and engineering resources in anticipation of the broader partnership.

The equity investment never closed. As a result, the McCourt Note stayed outstanding as debt, and the Debtor continued to rely on existing investors and lenders for funding. The Debtor obtained limited extensions of the McCourt Note and discussed conversion, restructuring and other alternatives, but no consensual resolution was reached.

Capital Raising and McCourt Litigation

According to the Debtor, the matured McCourt Note materially impaired its fundraising. Prospective investors frequently raised concerns that new capital would be used to pay existing debt rather than fund growth and operations, and several pointed to the Debtor's increasingly complex capital structure. Existing stakeholders continued to provide secured financings, extensions and other accommodations, but access to new capital became increasingly limited. The Debtor's final secured note issuance was on August 24, 2026. After that, it could obtain only limited bridge funding from existing investors.

In August 2026, McCourt sued the Debtor seeking repayment of amounts allegedly due under the McCourt Note. The Declaration describes the suit as coming on top of an already overleveraged capital structure, limited liquidity and an unsuccessful search for replacement growth capital, and as materially increasing the urgency of a comprehensive restructuring.

Cost Reductions

During 2025 and 2026, the Debtor reduced operating expenses, cut its workforce, closed its London office and streamlined its operations. Throughout, it continued to maintain its platform, advertising technology and AI Shield. According to the Declaration, these measures significantly reduced operating costs but did not meet the Debtor's longer-term liquidity needs or resolve its capital structure problems. The Debtor also restructured its UK operations through the April 2026 administration of the former UK subsidiary and the transfer of its business and assets to a newly formed subsidiary. The Declaration describes that transaction as preserving operational capabilities, workforce and technology infrastructure while reducing costs.

TobinLeff Marketing Process

On September 10, 2026, the Debtor hired TobinLeff, an independent M&A advisory firm, to run an expedited search for investors, financing sources, strategic partners and acquirers. Using an anonymized teaser and other marketing materials, TobinLeff contacted approximately 189 prospective parties in September and October 2026. These included strategic buyers, venture capital firms, private equity sponsors, family offices, and media and technology companies.

More than 20 parties engaged at a preliminary level and reviewed introductory materials. By the petition date, however, none had signed a confidentiality agreement, entered formal diligence, submitted a financing proposal or delivered an indication of interest. According to the Debtor, the feedback focused on its liquidity, existing debt, capital structure, and need for substantial additional funding to reach commercial scale. With no viable out-of-court financing or sale available and debt maturities approaching, the Debtor concluded that an out-of-court restructuring was unlikely to succeed. It chose Chapter 11, with debtor-in-possession financing and a court-supervised sale.

Chapter 11 Filing

The Debtor filed for Chapter 11 on November 3, 2026 in the U.S. Bankruptcy Court for the District of Delaware. It intends to use the case to sell substantially all of its assets as a going concern under section 363 of the Bankruptcy Code, funded by debtor-in-possession financing from existing investors. Meanwhile, it plans to keep operating in the ordinary course, retain its workforce and continue serving its users.

DIP Facility

The Debtor negotiated a debtor-in-possession financing facility (the "DIP Facility") with a group of existing investors (the "DIP Lenders"). Subject to court approval, its terms would be:

Size — Up to $1.6 million, made up of approximately $1.2 million of new money and a $430,000 roll-up of bridge financing.
Roll-up — Certain DIP Lenders advanced the bridge financing in the days before the filing to fund payroll, professional retainers and critical operating expenses, among other things. The bridge advances would roll into the DIP Facility when the interim order is entered.
Interim availability — Approximately $780,000, including the roll-up. The rest would become available after a final order is entered.
Rate — 6% per annum, accruing and capitalized monthly.
Fees — No arrangement, commitment or similar financing fees.
Protections — The DIP Lenders would receive liens, claim priority and other protections under the DIP credit documents, which the Declaration describes as essential features without which the DIP Lenders would not have committed funding.
Use of proceeds — Operations, workforce and contractor relationships, obligations to users and service providers, administrative expenses of the case, and the sale process, all under a court-approved budget.

Noteholder Consents to the DIP Facility

Between September 28 and October 24, 2026, the Debtor sent multiple rounds of written correspondence to each holder of its senior secured convertible notes and secured convertible notes. The letters covered the McCourt litigation, the Debtor's liquidity, the need for Chapter 11 and the proposed use of the DIP Facility. On October 9 and October 24, 2026, the Debtor invited all noteholders to participate in the DIP Facility.

Consent levels as of the petition date were as follows:

Senior secured convertible notes — Holders of approximately 77% of outstanding principal have signed the First Amendment to Senior Secured Convertible Promissory Notes, consenting to the DIP Facility. The holder of another approximately 13% has given express verbal consent. Holders of the remaining approximately 10% had not communicated any objection.
Secured convertible notes — Holders of approximately 70.97% of outstanding principal have signed the Eighth Amendment to 2023/2024/2025/2026 Convertible Promissory Notes, consenting to the DIP Facility. A holder of approximately 5.07% has agreed to sign. Holders of the remaining approximately 23.96% had not communicated any objection.

Sale Process

The Debtor expects to seek approval of bidding procedures that would open the process to all qualified bidders and provide for an auction if more than one qualified bid is received. Subject to court approval, TobinLeff would continue marketing the business throughout the case. It would go back to the parties it contacted before the filing and approach new prospective buyers who may value the Debtor's platform, advertising infrastructure, intellectual property, user community and AI content moderation capabilities.

The Debtor expects an initial bid from a group of existing stakeholders. That bid would serve only as a baseline offer, open to higher or otherwise better proposals. The proposed bidding procedures would preserve the Board's ability, acting through its independent directors, to evaluate all qualified bids and select the highest or otherwise best offer.

Insider Participation and Sale Governance

Kalar, the Debtor's Chief Executive Officer and also a director, stockholder and secured noteholder, may participate in an investor group that is evaluating a possible acquisition of the Debtor's assets through a third-party entity, Octava Orbit Inc., in the event no higher or otherwise superior bidder emerges through the sale process. Kalar disclosed this possible participation to the Board before the filing and, since October 12, 2026, has recused from all Board deliberations and decisions on the sale process, including:

approval of bidding procedures;
evaluation of competing proposals;
negotiation of transaction documents; and
selection of the successful bidder.

Oversight of the sale has been delegated to the Debtor's independent directors. According to the Declaration, they have no economic interest in any prospective bidder and no relationship with any investor group seeking to acquire the Debtor's assets.

First Day Motions

The Debtor expects the court to hear its first-day motions within a few business days of the filing.

Insurance — Authority to continue, renew, revise or replace the Debtor's insurance programs and to pay up to $5,000 of prepetition amounts. The programs cover general liability, workers' compensation, directors' and officers' liability, employment practices liability and employers' liability. The Debtor does not believe it owes any prepetition amounts to its carriers.
Cash management — Authority to keep the existing cash management system and use existing business forms. The system includes four bank accounts (three at Bank of America, N.A. and one at Column N.A.) and payment service providers including PayPal, which held approximately $8,500 at the petition date, and Wise, which had no balance and is used for cross-border payments to part of the workforce. The motion also asks to continue intercompany transactions with the Non-Debtor Affiliates, with administrative priority for intercompany claims, and to waive strict compliance with section 345(b) and certain operating guidelines for the bank accounts.
Wages — Approximately $91,427.81 of prepetition employee obligations will come due after the filing. Most of it is owed to independent contractors in Europe, mainly software engineers and other technology professionals, and will be paid in euros. The Debtor's U.S. employee is paid in dollars through TriNet. The Debtor seeks interim authority to pay up to $95,000, subject to the priority limits in sections 507(a)(4) and 507(a)(5), and to continue its compensation and benefit programs. The cap is set slightly above the estimate to absorb exchange-rate fluctuations.
Taxes — Authority to pay up to $5,000 in total of prepetition income and franchise taxes, business license and regulatory fees, and other taxes and fees, including amounts later found owing on audit. The motion also seeks authority to keep paying taxes and fees in the ordinary course. The Debtor is not aware of any outstanding prepetition amounts but expects part of the taxes owed during the case to relate to prepetition periods.