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KaloBios Pharmaceuticals Trustee Appointment, Conversion Denied

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According to the U.S. Bankruptcy Court docket, the Court issued an order denying the emergency motion of the U.S. Trustee assigned to KaloBios Pharmaceuticals case seeking appointment of a Chapter 11 trustee or, in the alternative, conversion to liquidation under Chapter 7.

The denial order states, “The Court having considered the emergency motion of the U.S. Trustee, as well as the oppositions filed by the Debtors and by Savant Neglected Diseases, together with all accompanying declarations and exhibits in support of same, as well as the testimony, other evidence and arguments of counsel received into the record at the hearing held on the Motion and the oppositions thereto on February 4, 2018 (the ‘Hearing’); it is hereby Ordered that for the reasons set forth by the Court on the open record at the Hearing, the Motion is Denied.”

As previously reported, the Trustee had argued, “Current management has no first-hand historical knowledge of KaloBios’s financial affairs, employees’ morale and commitment are fragile and waning, KaloBios has only $2.9 million in unencumbered cash, and there are no rapidly monetizable assets. Therefore, a trustee is needed to take over KaloBios’s operations. In addition, a trustee will need to determine (1) whether any funds resulting from Mr.Shkreli’s alleged fraudulent activities were used to either acquire KaloBios stock or fund its operations, (2) whether KaloBios has any viable prospects for reorganization, and (3) whether various current employees, shareholders, and investors are connected to Mr.Shkreli and should be segregated from current operations and strategy as a result.”

Read more KaloBios bankruptcy news.