Lawsuit filed for Investors who lost money with shares of BigBear.ai Holdings, Inc. (NYSE: BBAI)

An investor, who purchased shares of BigBear.ai Holdings, Inc. (NYSE: BBAI), filed a lawsuit over alleged violations of Federal Securities Laws by BigBear.ai Holdings, Inc.in connection with certain allegedly false and misleading statements.

Investors who purchased shares of BigBear.ai Holdings, Inc. (NYSE: BBAI) have certain options and for certain investors are short and strict deadlines running. Deadline: June 10, 2025. NYSE: BBAI investors should contact the Shareholders Foundation at mail@shareholdersfoundation.com or call +1(858) 779 - 1554.

Columbia, MD based BigBear.ai Holdings, Inc. provides analytics solutions defense, intelligence, and commercial markets.
In June 2021, BigBear.ai Holdings entered into a merger agreement (the "Merger Agreement") with GigCapital4, Inc., GigCapital4 Merger Sub Corporation, and BBAI Ultimate Holdings. Pursuant to the Merger Agreement, Merger Sub first merged with and into BigBear.ai Holdings, with BigBear.ai Holdings being the surviving entity in the merger (the "First Merger"). Then, immediately following the First Merger, BigBear.ai Holdings merged with and into GigCapital4, with GigCapital4 being the surviving entity in the merger (the "Second Merger," and together with the First Merger, the "Mergers," and together with the other transactions contemplated by the Merger Agreement, the "Business Combination").
In December 2021, BigBear.ai Holdings, Inc. and GigCapital4, closed a business combination, and the combined company was renamed BigBear.ai Holdings, Inc.

Upon completion of the Business Combination, BigBear.ai Holdings, Inc. issued $200 million of unsecured convertible notes-debt instruments that can be converted into equity at a future date-due to mature on December 15, 2026 (the "2026 Convertible Notes" or "2026 Notes"). The 2026 Convertible Notes bear interest at a rate of 6.0% per annum, payable semi-annually, and not including any interest payments that are settled with the issuance of shares, and were convertible into 17,391,304 shares of the Company's common stock at an initial Conversion Price of $11.50. Convertible notes are often classified as long-term debt and as such, consistent with generally accepted accounting principles ("GAAP"), they must be accounted for in a company's quarterly and annual reports as liabilities until they reach maturity, at which point they either convert to equity or are repaid as principal and interest.
BigBear.ai Holdings, Inc. uses the Financial Accounting Standards Board's Accounting Standards Codification ("ASC")-the single source of United States ("U.S.") GAAP-to account "for all transactions and events in which it obtains control over one or more other businesses (even if less than 100% ownership is acquired), to recognize the fair value of all assets and liabilities assumed and to establish the acquisition date fair value as of the measurement date." Accordingly, because the Business Combination qualified as such a transaction, BigBear was required to account for it, and its issuance of the 2026 Convertible Notes therewith, in accordance with the ASC.
Under ASC 815-15, an entity is required to bifurcate and separately account for a feature or derivative embedded within a host contract (such as the conversion option within the 2026 Convertible Notes) if: (1) the economic characteristics and risks of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; (2) the hybrid instrument is not remeasured at fair value under otherwise applicable GAAP with changes in fair value reported in earnings as they occur; and (3) a separate freestanding instrument with the same terms as the embedded derivative would meet the definition of a derivative and would not qualify for a "derivative scope exception." An embedded derivative may qualify for a scope exception if, for example, it meets the requirements of ASC 815-40, which covers contracts issued or held by an entity that are both indexed to its own stockand classified in stockholders' equity in its statement of financial position. If an embedded feature qualifies for a derivative scope exception, the entity does not separate it from the host contract and the entity accounts for the entire instrument (assuming no other embedded features require bifurcation) in accordance with other U.S. GAAP. Therefore, whether BigBear was required to bifurcate the conversion option within the 2026 Convertible Notes as a derivative was dependent, in part, upon the conversion option's qualification for a derivative scope exception.

On March 18, 2025, BigBear.ai Holdings, Inc. disclosed in a filing with the SEC that certain of the Company's financial statements since fiscal year 2021 should no longer be relied upon and would be restated. Specifically, management identified a material error in the previously reported financial statements related to the accounting treatment of the Company's 2026 Convertible Notes. In addition, BigBear revealed that, as a result of the foregoing, the Company would be unable to timely file its Annual Report for 2024 "without unreasonable effort or expense."

Then, post-market on March 25, 2025, BigBear filed its its Annual Report for 2024. In discussing the error in the previously reported financial statements, its Annual Report for 2024 stated, in relevant part, that a "conversion option embedded within the 2026 Notes was incorrectly deemed to be eligible for a scope exception from the bifurcation requirements of ASC 815-15 and therefore requires bifurcation as a derivative ('2026 Notes Conversion Option')" and that "[t]he 2026 Notes include certain adjustments to the conversion rate that violate the 'fixed-for-fixed' criteria described in [ASC] 815-40." As a result, the consolidated financial statements were restated "to reflect the issuance of the 2026 Notes Conversion Option at fair value as of December 7, 2021 and the subsequent remeasurement to fair value at each reporting date." The its Annual Report for 2024 further revealed that the adjustments reflected in the restatements related to, among other items, accumulated deficit, derivative liabilities, deferred tax liabilities, net loss, interest expense, and amortization of debt issuance discount. Finally, the its Annual Report for 2024 disclosed that the Company had identified a material weakness in its internal control over financial reporting-specifically, that BigBear had not "consistently executed [its] technical accounting review policies, inclusive of the application of certain interpretations subject to significant judgement or differences in interpretation, at a precision level sufficient to achieve complete, accurate and timely financial accounting, reporting and disclosures of certain non-routine, unusual, or complex transactions."

Shares of BigBear.ai Holdings, Inc. (NYSE: BBAI) declined from $10.36 per share on February 13, 2025 to as low as $2.41 per share on April 16, 2025.

The plaintiff claims that between March 31, 2022 and March 25, 2025, the Defendants made false and/or misleading statements and/or failed to disclose that BigBear.ai Holdings, Inc. maintained deficient accounting review policies related to the reporting and disclosure of certain non-routine, unusual, or complex transactions, that as a result, the Company incorrectly determined that the conversion option within the 2026 Convertible Notes qualified for the derivative scope exception under ASC 815-40 and failed to bifurcate the conversion option as required by ASC 815-15, that accordingly, BigBear.ai Holdings, Inc. had improperly accounted for the 2026 Convertible Notes, that the foregoing error caused BigBear.ai Holdings, Inc. to misstate various items in several of the Company's previously issued financial statements, that as a result, these financial statements were inaccurate and would likely need to be restated, that BigBear would require extra time and expense to correct the inaccurate financial statements, thereby increasing the risk that the Company would be unable to timely file certain financial reports with the U.S. Securities and Exchange Commission ("SEC"), and that as a result, the Company's public statements were materially false and misleading at all relevant times.

Those who purchased shares of BigBear.ai Holdings, Inc. (NYSE: BBAI) have certain options and should contact the Shareholders Foundation.

Contact:
Michael Daniels
Shareholders Foundation, Inc.
3111 Camino Del Rio North
Suite 423
San Diego, CA 92108
Tel: +1-(858)-779-1554
E-Mail: mail@shareholdersfoundation.com

About Shareholders Foundation, Inc.
The Shareholders Foundation, Inc. is a professional portfolio monitoring and settlement claim filing service, and an investor advocacy group, which does research related to shareholder issues and informs investors of securities lawsuits, settlements, judgments, and other legal related news to the stock/financial market. Shareholders Foundation, Inc. is in contact with a large number of shareholders and offers help, support, and assistance for every shareholder. The Shareholders Foundation, Inc. is not a law firm. Referenced cases, investigations, and/or settlements are not filed/initiated/reached and/or are not related to Shareholders Foundation. The information is provided as a public service. It is not intended as legal advice and should not be relied upon.

This release was published on openPR.