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February 18, 2019 – The Debtors requested that the Court hearing the Aceto Corporation case issue both a bidding procedures order and a sale order. The bidding procedures order would authorize (i) the Debtors’ proposed bidding procedures in respect of a potential section 363 asset sale of the Debtors’ Chemical Plus Business (the “Sale”), (ii) bidder protections for its current stalking horse bidder, (iii) procedures for the assumption and assignment of certain of the Debtors’ executory contracts and unexpired leases and (iv) an auction schedule.
The sale order would (i) authorize the Sale and (ii) allow the Debtors to perform under one or more asset purchase agreements, including the asset purchase agreement (the "Stalking Horse Agreement") between the Debtors and NMC Atlas, L.P. (the “Buyer” or “Stalking Horse Bidder”) pursuant to which the Buyer has agreed to purchase the Debtors’ Chemical Plus Business for an aggregate purchase price of $338mn, plus payment of cure costs and the assumption of certain liabilities.
Key Terms of the Stalking Horse Agreement:
Sellers: Aceto Corporation, Aceto Agricultural Chemicals Corporation and Aceto Realty LLC.
Purchase Price: The aggregate consideration for the Purchased Assets (the “Base Purchase Price”) shall be the sum of the following:
- Cash of $338mn (including a cash deposit of $33.8mn),
- plus the amount, if any, by which Net Current Assets exceeds $126,181,807,
- minus the amount, if any, by which Net Current Assets are less than $126,181,807,
- minus Net Debt (such amount, as adjusted pursuant to Section 2.4 below, the “Cash Balance”),
- plus the Cure Costs,
- plus the assumption by Buyer of the Assumed Liabilities.
Key Terms of the Proposed Bidding Procedures:
The Stalking Horse Agreement provides that if the Stalking Horse Bidder is not the successful bidder, then the Debtors will pay the Stalking Horse Bidder a “break-up” fee of $6.76mn (2% of the cash component of the Base Purchase Price, the “Break-Up Fee”) and reimburse expenses in cash of up to $2mn (the “Expense Reimbursement”).
Qualified Bids: Qualified bids, if for the Purchased Assets, must exceed the aggregate cash consideration set forth in the Stalking Horse Agreement by at least $9.76mn, which is comprised of the (i) Break-Up Fee plus (ii) the maximum amount of the Expense Reimbursement plus (iii) an overbid of $1.0mn.
Proposed Key Dates:
- Sale Objection Deadline: April 5, 2019
- Bid Deadline: April 8, 2019
- Deadline to Notify Qualified Bidders: April 9, 2019
- Deadline to Select Starting Bid: April 10, 2019
- Auction: April 12, 2019
- Sale Hearing: April 16, 2019
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