8-K: Wag! Group Co. Files for Pre-Packaged Chapter 11 Bankruptcy, Secures New Financing and Ownership Transition to Retriever LLC

Wag! Group Co. has initiated a voluntary pre-packaged Chapter 11 bankruptcy process to restructure its balance sheet, with its primary secured lender, Retriever LLC, set to assume full ownership and provide new financing.

Summary

• Wag! Group Co. and its subsidiaries (the Debtors) filed voluntary petitions for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on July 21, 2025, with a prepackaged plan of reorganization.
• The plan aims to reduce debt and transition ownership of the company to Retriever LLC, the primary secured lender, who has already voted to accept the plan.
• The company expects to emerge from Chapter 11 within approximately 40 days, with confirmation of the plan anticipated no longer than 42 days from the Chapter 11 commencement date.
• Existing equity interests, including common stock and warrants, will be canceled, and Retriever LLC will be issued 100% of the common stock of the reorganized Wag!.
• The Debtors secured a Senior Secured, Super-Priority Debtor-in-Possession (DIP) loan facility of up to $6.5 million from Retriever LLC, with $4.0 million available on an interim basis, accruing interest at 15% per annum (18% on default).
• Retriever LLC has also committed to provide an Exit Facility of up to $18.3 million in aggregate principal amount of exit term loans, accruing interest at 15% per annum (17% on overdue amounts).
• The Exit Facility will comprise $5.0 million in new notes for restructuring the Prepetition Financing Agreement, conversion of approximately $6.8 million of the DIP LSA (including accrued interest), and $6.5 million in additional term loan commitment.
• The company's existing term loan borrowings under the Financing Agreement totaled approximately $16.3 million, plus accrued interest, which became immediately due and payable upon the Chapter 11 filing.
• Wag! Group Co. received multiple delisting notices from Nasdaq, including for non-compliance with the market value of listed securities and minimum bid price rules.
• In July 2025, Wag Labs, Inc. sold assets related to its prescription management and digital e-scribing software (Furmacy) for $5.0 million, with approximately $3.5 million used to pay down prepetition obligations and $1.0 million retained by the company.
• For the year ending December 31, 2024, the company generated approximately $70.5 million in revenue, a 16% decrease from 2023, and incurred net losses of $17.6 million in 2024, $13.3 million in 2023, and $38.6 million in 2022.
• As of July 21, 2025, the Debtors had cash and cash equivalents of approximately $1.7 million and accounts payable of $2.2 million.

Sentiment

Score: 2

Explanation: The sentiment is overwhelmingly negative due to the Chapter 11 bankruptcy filing, the cancellation of all existing equity, and the company's history of net losses and declining revenue. While new financing is secured, it comes at the cost of existing shareholder value and significant debt post-emergence.

Positives

• The company has a clear and expeditious path to reduce debt and emerge from Chapter 11 within approximately 40 days due to a pre-packaged plan.
• Retriever LLC, the primary secured lender, has already voted to accept the reorganization plan, ensuring a consensual restructuring.
• Secured commitment for up to $6.5 million in debtor-in-possession (DIP) financing and up to $18.3 million in exit financing from Retriever LLC provides necessary liquidity and a well-capitalized balance sheet post-emergence.
• Operations across all business segments are expected to continue without interruption during and after the Chapter 11 process.
• General Unsecured Claims, Non-Tax Priority Claims, Other Secured Claims, and Interests in Subsidiary Debtors are expected to be unimpaired and paid in full or reinstated.

Negatives

• The company has filed for Chapter 11 bankruptcy, indicating severe financial distress.
• All existing equity interests, including common stock and warrants, will be canceled, resulting in no recovery for current shareholders.
• The company has received multiple delisting notices from Nasdaq due to non-compliance with listing rules, including minimum bid price and market value.
• The company has a history of net losses, including $17.6 million in 2024, and experienced a 16% decrease in revenue in 2024.
• The company will emerge with substantial debt, including the $18.3 million Exit Facility, which may limit future financing and operational flexibility.

Risks

• Failure to retain and grow the customer base could adversely affect operations and business.
• Inability to successfully execute the business plan in the rapidly evolving and competitive pet parenthood market.
• Loss of key personnel, strategic partners, or consultants, or failure to effectively manage and motivate the workforce.
• Downturns in general economic conditions or consumer confidence, including inflationary environments, rising interest rates, and increased market volatility.
• Cybersecurity incidents could negatively impact the business, leading to disruption, negative publicity, and potential liability.
• Uncertainty regarding the length and disruption of the Chapter 11 cases, which could adversely affect relationships with vendors, suppliers, customers, and employees.
• Risk of failure to receive adequate acceptances for the plan, potentially leading to alternative, less favorable restructuring or liquidation.
• Risk of the Bankruptcy Court denying confirmation of the plan, even if requisite acceptances are received.
• Potential for other parties-in-interest to propose alternative plans of reorganization, complicating the process.
• Risk that the plan may not be consummated, leading to prolonged Chapter 11 cases and insufficient liquidity.
• Potential delays in distributions to holders of claims if conditions to consummation are not met.
• Uncertainty regarding U.S. federal income tax consequences of the plan, which are complex and subject to change.
• No established market for the New Common Stock, and potential for future dilution.
• The fair market value of collateral securing the New Notes may not be sufficient to repay them in full upon foreclosure.
• No assurance that a rating will be obtained for the New Notes, or that an active trading market will develop for them.

Future Outlook

The company expects to emerge from Chapter 11 within approximately 40 days with a strengthened financial foundation and additional capital to support future growth, positioning the business for long-term success under private ownership. Operations across business segments are intended to continue without interruption.

Management Comments

• Garrett Smallwood, CEO and Chairman of Wag!, stated: 'This process enables us to move forward with a clear plan and a strong partner who shares our vision for the future. Retrievers ongoing support along with their long-term investment in our business will provide the financial and operational flexibility we need to continue serving our customers while positioning our business for sustainable growth and long-term success. With a well-capitalized balance sheet post-emergence and additional capital to support future growth, we believe the Company will be well-positioned to thrive over the long-term.'

Industry Context

The pet parenthood market is rapidly evolving and increasingly competitive. Wag!'s strategy to become a 'one-stop shop' for pet care through acquisitions and expanded services (e.g., pet insurance, food, apparel) reflects a trend towards integrated service offerings in the pet industry. However, the company's financial struggles and need for restructuring highlight the intense competition and the challenges of achieving profitability in this growing but demanding market, especially for technology-based platforms reliant on customer retention and adaptation to changing consumer demands.

Management Changes

Corporate Governance

Legal Proceedings

• Voluntary petitions for Chapter 11 bankruptcy filed by Wag! Group Co. and its affiliates in the U.S. Bankruptcy Court for the District of Delaware.
• Notice from Nasdaq Stock Market regarding non-compliance with Nasdaq Listing Rule 5450(b)(3)(C) (market value of listed securities), with the Nasdaq Hearing Panel to consider continued listing.
• Previously disclosed notices from Nasdaq for non-compliance with Nasdaq Listing Rule 5450(a)(1) (minimum bid price) and 5450(b)(2)(A) and 5450(b)(3)(C) (market value of listed securities).
• A contingent, unliquidated, and disputed general unsecured claim of Marketplace Operations, Inc. against Compare Pet Insurance Services, Inc. in the Superior Court of the State of California, County of Los Angeles (Case No. 24STCV30249), which is classified as a Non-Go Forward Claim and will be canceled without distribution.

Related Party Transactions

• Retriever LLC, the company's primary secured lender, acquired the debt and obligations outstanding under the Prepetition Financing Agreement from Blue Torch Finance LLC on April 11, 2025.
• Retriever LLC is providing the Senior Secured, Super-Priority Debtor-in-Possession (DIP) Loan and Security Agreement of up to $6.5 million.
• Retriever LLC has committed to provide the Exit Facility of up to $18.3 million.
• Retriever LLC will be issued 100% of the shares of common stock of the Reorganized Wag! and $5.0 million principal amount of term notes under the Exit Facility, effectively becoming the new owner.

Stakeholder Impact

• **Shareholders:** All existing equity interests (common stock, warrants, RSUs, options) will be canceled, resulting in no recovery for current shareholders.
• **Employees:** The Debtors intend to continue to operate their businesses and seek approval for first-day motions to pay prepetition claims owed to employees and continue employee benefit programs. Executive Bonus Agreements will be entered into, and most employment agreements will be rejected but claims capped as General Unsecured.
• **Customers:** The Debtors intend to continue to operate their businesses and seek authorization to honor customer obligations and continue prepetition customer programs in the ordinary course of business.
• **Suppliers/Vendors:** The Debtors intend to seek authorization to pay trade claims in the ordinary course of business, and General Unsecured Claims are expected to be unimpaired and paid in full.
• **Creditors (Retriever LLC):** As the primary secured lender, Retriever LLC will convert its existing debt and DIP financing into 100% ownership of the reorganized company and new notes under the Exit Facility, significantly improving its position.
• **Other Secured Creditors:** Expected to be unimpaired and receive payment in full or reinstatement.
• **Unsecured Creditors:** General Unsecured Claims are expected to be unimpaired and paid in full. The 'Non-Go Forward Claim' will be canceled without distribution.

Next Steps

• The Debtors intend to continue operating their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court.
• The Debtors are seeking approval of a variety of first-day motions to facilitate continued operations during the Chapter 11 Cases.
• The Debtors will seek court approval for the Senior Secured, Super-Priority Debtor-in-Possession Loan and Security Agreement (DIP LSA).
• The Debtors will seek approval of the prepackaged plan of reorganization by the U.S. Bankruptcy Court for the District of Delaware.
• The Debtors will enter into a financing agreement with Retriever LLC on the Effective Date for the Exit Facility.
• The reorganized Debtors will enter into an investment agreement with Retriever LLC on the Effective Date, leading to Retriever being issued 100% of the common stock.
• The company will present its views to the Nasdaq Hearing Panel regarding its continued listing deficiency by July 24, 2025.
• The company expects to emerge from Chapter 11 within approximately 40 days.
• The new board of directors will be appointed automatically on the Effective Date, and existing directors will resign.

Key Dates

Recommendation

Keywords

Chapter 11, Bankruptcy, Restructuring, DIP Financing, Exit Financing, Pet Care, Wag! Group Co., Retriever LLC, Nasdaq Delisting, Equity Cancellation, Debt Restructuring, Prepackaged Plan, Corporate Governance, Financial Performance