The Ghost of MVLA: How Corporate Restructuring Leaves Shareholders Holding Contingent Value Rights

In a move that redefines its existence, former public company Movella Holdings Inc. (now MVLA Holdings, Inc.) has completed a sweeping restructuring that strips it of operational control and transforms its equity into a high-risk, speculative bet on future contingent value. The deal, finalized with creditors FP Credit Partners, leaves shareholders clutching little more than a 7-year earnout agreement—one that hinges on a sale of its former subsidiary’s new owner hitting increasingly steep valuation thresholds.

The Anatomy of the Deal: Equity for a Chancy Payout

The restructuring’s core terms are stark. Movella Holdings’ wholly-owned subsidiary, Movella Inc., was effectively handed to New Parent (a Delaware entity controlled by FP Credit Partners) in exchange for releasing the company from its $50 million debt obligation under the 2022 Note Purchase Agreement. Shareholders retained their equity, but MVLA Holdings’ sole remaining asset is the Earnout Agreement. This agreement entitles shareholders to a slice of future proceeds—2.5% or 5% of net sales proceeds above $25M–$100M thresholds—if New Parent is sold within seven years.

The math is ruthless: a $110M sale would generate only $500,000 for shareholders (5% of $10M over the $100M threshold). To put this in perspective, if New Parent’s value never exceeds $75M, shareholders receive nothing. Even a $76M sale would yield just $150,000 (2.5% of $1M over $75M).

Delisted, Disconnected, and Dependent

MVLA Holdings’ status as a public company is now a relic. Its shares were delisted from Nasdaq in April 2024, and it filed to suspend SEC reporting in January 2025. The board was gutted: all former directors resigned, replaced by Larry Perkins, CEO of SierraConstellation Partners LLC. This signals a shift from corporate governance to a passive, quasi-litigation-focused entity, with no operational ties to Movella Inc.’s ongoing activities.

Data Note: While historical stock price data is limited post-delisting, MVLA’s shares had already collapsed from a high of $15.50 in late 2021 to $0.10 by April 2024, reflecting market skepticism.

The Shareholder’s Gambit: Speculation or Scam?

Shareholders are left in a precarious position. Their recovery depends entirely on:
1. New Parent’s Sale Timing: The seven-year window is long but not indefinite. If no sale occurs, returns vanish.
2. Valuation Milestones: The $25M–$100M thresholds are steep for a company whose debt was just refinanced at $50M. A sale under $50M yields nothing.
3. Net Proceeds Calculation: The $50M note and transaction costs must be subtracted first, shrinking the pool for shareholder payouts.

Tax liabilities further complicate matters. Shareholders may face capital gains taxes on earnout proceeds—even if the company’s equity value has already collapsed. The SEC’s suspension of reporting requirements adds opacity, making it harder to track New Parent’s performance.

Risks and Realities: A House Built on “Ifs”

The restructuring’s legal compliance with Delaware’s Section 272(b)(2)—which allows asset transfers without shareholder approval—is a technical win for creditors. But for investors, this is a textbook contingent value rights (CVR) scenario, akin to a lottery ticket. Historical CVR outcomes are grim: a 2022 analysis by CreditSights found that only 30% of CVR-linked payouts meet or exceed initial expectations, with many failing to deliver any value.

MVLA’s situation is riskier still. Shareholders:
- Have no voting rights or operational influence over New Parent.
- Must remain shareholders at the time of payout—a hurdle if the company’s shares are no longer tradable.
- Face the possibility of New Parent’s value stagnating or declining, especially if FP Credit Partners prioritizes debt servicing over growth.

Conclusion: A High-Wire Act with No Safety Net

MVLA Holdings’ restructuring is a masterclass in creditor-friendly restructuring—leaving shareholders clinging to a theoretical upside while transferring control and risk entirely to new owners. The math is damning:

• To trigger even the smallest 2.5% payout ($1.25M), New Parent must be sold for at least $50M.
• A 5% payout at $100M requires doubling that threshold—a feat unlikely without industry tailwinds or a strategic buyer’s overpayment.

With the clock ticking on the seven-year earnout period, shareholders are effectively betting on a high-stakes game of “what if.” For most, the restructuring likely concludes their MVLA journey—with equity now a speculative footnote, not an investment.

In short, MVLA’s transformation is a cautionary tale: when a company’s value hinges on someone else’s sale, you’re not an investor—you’re a spectator waiting for a miracle.