Egalet Corporation – Files Amended Chapter 11 Plan and Disclosure Statement

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November 29, 2018 – The Debtors filed an amended Chapter 11 Plan and Disclosure Statement and related exhibits [Docket Nos. 163, 164 and 165] with blacklined versions reflecting changes to versions filed on October 31, 2018 [Docket Nos. 16 and 17]. The Disclosure Statement notes, “The overall purpose of the Plan is to restructure the Debtors’ Estates in a manner designed to efficiently maximize recovery to stakeholders. The Debtors have sought to achieve this purpose through the Iroko Acquisition, a debt for equity restructuring of the 5.50% Convertible Notes and 6.50% Convertible Notes, the issuance of the New Secured Notes and the other transactions contemplated by the Plan.” 

 
The following is an updated summary of classes, claims, voting rights and expected recoveries:
 
  • Class 1A, 1B, 1C (“Other Priority Claims”) are unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
  • Class 2A, 2B, 2C (“Other Secured Claims”) are unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
  • Class 3A, 3B, 3C (“First Lien Secured Notes Claims”) are impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $80,000,000, plus accrued and unpaid interest with respect thereon in the amount of $1,155,556 and the expected recovery is 91.40%. On the effective date each holder of an Allowed First Lien Secured Notes Claim shall receive its pro rata share of (i) $50 million in aggregate principal amount of the Series A-1 Notes, (ii) the First Lien Note Equity Distribution (ie 19.38% of the emerged Debtors’ new common stock, (iii) $20 million in cash (as adjusted) and (iv) cash in an amount equal to the fees and expenses of the First Lien Secured Notes Trustee…provided, however, that if the Debtors elect to consummate the Rights Offering, the shares of new common stock otherwise allocable to [holders] shall be distributed pursuant to the Rights Offering, and the holders of First Lien Secured Notes Claims shall receive $10 million in cash instead of the First Lien Note Equity Distribution.
  • Classes 4A, 4B, 4C (“Convertible Notes Claims”) are impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $48,538,000, plus accrued and unpaid interest with respect thereon in the amount of $1,320,272 and the expected recovery is 54.56%. On the effective date, each holder of an Allowed Convertible Notes Claim shall receive its pro rata share of (i) 31.62% of the emerged Debtors’ new common stock and (ii) if the Debtors elect to consummate the Rights Offering and such holder is an Eligible Holder, pro rata rights to participate in the Rights Offering.
  • Class 5A, 5B, 5C (“General Unsecured Claims”) are unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
  • Class 6A, 6B, 6C (“Intercompany Claims”) are unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
  • Class 7A, 7B, 7C (“Subordinated Claims”) are impaired, deemed to reject and not entitled to vote on the Plan. Expected recovery is 0.00%.
  • Class 8A (“Existing Equity Interests”) is impaired, deemed to reject and not entitled to vote on the Plan. Expected recovery is 0.00%.
  • Class 9B, 9C (“Intercompany Interests”) are unimpaired, deemed to accept and not entitled to vote on the Plan.
 
Also amended Plan also attaches Exhibit C: Management Incentive Plan (“MIP”) Term Sheet.

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