VALERITAS HOLDINGS: Unsecureds to Receive Up to 75% Under Plan

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Debtors Valeritas Holdings, Inc., Valeritas, Inc., Valeritas Security Corporation, and Valeritas US, LLC, Prepetition Lenders and the Creditors’ Committee filed the Combined Disclosure Statement and Plan for the Liquidation of the Debtors’ remaining assets and distribution of the proceeds of the Estates’ assets to the holders of allowed claims against the Debtors.

On Feb. 9, 2020, the Debtors and Zealand Pharma A/S or its designee entered into an asset purchase agreement for the sale of substantially all of the Debtors’ assets. On April 2, 2020, the Debtors closed a going-concern sale of substantially all of their assets to the Purchaser. The sale provided for payment of $23 million in cash, plus the assumption of certain liabilities, and included offers of employment for a majority of the Debtors’ then-current employees. The sale ensures that the V-Go Wearable Insulin Delivery device remains available to type 2 diabetes patients who depend on it to improve their health and simplify their lives.

On May 24, 2013, Debtor Valeritas, Inc., as borrower, and certain subsidiaries as guarantors, entered into a prepetition term loan agreement with the Prepetition Lenders. The Prepetition Term Loan is a senior secured loan that had an initial six-year term and is secured by substantially all of the Debtors’ assets.

The Amended Settlement, which was entered into between and among the Debtors, the Creditors’ Committee, and the Prepetition Lenders, and was the subject of a supplement to the Settlement Motion filed on March 16, 2020, provides for certain sharing mechanisms between the Prepetition Lenders and General Unsecured Creditors with respect to the Net Sale Proceeds. Additionally, the Amended Settlement provides for the creation of the Creditors’ Trust for the benefit of Holders of Allowed General Unsecured Claims and the Prepetition Lenders. As provided in this Plan, the Creditors’ Trust will be funded with $150,000 of the wind down funds allocated to the Revised Administrative Escrow.

Class 4 General Unsecured Claims will consist of all General Unsecured Claims against the Debtors other than the Class 3 Prepetition Lenders’ Unsecured Claims. Class 4 Claims are impaired by the Plan and entitled to vote to accept or reject the Plan.

Holders of Class 4 Claims will be entitled to receive pro rata distributions from the Creditors’ Trust and Plan Escrow up to 75% of the face value of the allowed general unsecured claims. After receiving 75% of the face value of the allowed general unsecured claims, holders of Class 4 Claims will not receive further distributions from the Creditors’ Trust until $2,000,000 is paid to the Holder of the Class 2 Claim on account of the unpaid portion of the CRG Secured Claim, whereupon Holders of Class 4 Claims will share any further Distributions from the Creditors’ Trust on a pro rata basis with Holders of Class 3 Claims.

Class 6 Interests (Preferred Stock and Common Stock) will not receive any distribution under the Plan. Holders of Class 6 Interests are deemed to reject the Plan and, therefore, not entitled to vote on the Plan. On the Effective Date, Interests in the Debtors will be canceled, released, and expunged without any Distribution on account of such Interests.

A full-text copy of the Combined Disclosure Statement and Plan dated April 7, 2020, is available at from PacerMonitor at no charge.

Counsel to the Debtors:

R. Craig Martin|
1201 North Market Street, Suite 2100
Wilmington, Delaware 19801
Tel: (302) 468-5700
Fax: (302) 394-2341

– and –

Rachel Ehrlich Albanese
1251 Avenue of the Americas
New York, New York
Tel: (212) 335-4500
Fax: (212) 335-4501

Counsel to the Prepetition Lenders:

Jeffrey S. Sabin
Carol A. Weiner Levy
1251 Avenue of the Americas
New York, New York
Tel: (212) 307-5500
Fax: (302) 307-5598

– and –

Daniel A. O’Brien
1201 North Market Street, Suite 1400
Wilmington, DE 19801
Tel: (302) 298-3535
Fax: (302) 298-3550
E-mail: dao’

Counsel to the Official Committee of Unsecured:

Brett S. Moore
Robert M. Schechter
Kelly D. Curtin
100 Southgate Parkway
P.O. Box 1997
Morristown, New Jersey 07962
Tel: (973) 538-4006
Fax: (973) 538-5146

Eric J. Monzo
Brya M. Keilson
500 Delaware Avenue, Suite 1500
Wilmington, DE 19801
Tel: (302) 888-6800
Fax: (302) 571-1750

About Valeritas Holdings

Valeritas Holdings, Inc. (OTCPK: VLRXQ) is a commercial-stage medical technology company focused on improving health and simplifying life for people with diabetes by developing and commercializing innovative technologies.

Valeritas’ flagship product, V-Go Wearable Insulin Delivery device, is a simple, affordable, all-in-one basal-bolus insulin delivery option for adult patients requiring insulin that is worn like a patch and can eliminate the need for taking multiple daily shots. V-Go administers a continuous preset basal rate of insulin over 24 hours, and it provides discreet on-demand bolus dosing at mealtimes. It is the only basal-bolus insulin delivery device on the market today specifically designed keeping in mind the needs of type 2 diabetes patients.

New Jersey-based Valeritas operates its R&D functions in Marlborough, Mass.

Valeritas Holdings and three affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10290) on Feb. 9, 2020. Valeritas Holdings disclosed $49.2 million in total assets and $38.2 million in total debt as of Sept. 30, 2019.

Judge Laurie Selber Silverstein oversees the cases.

The Debtors tapped DLA Piper LLP (US) as legal counsel; Lincoln International as investment banker; PricewaterhouseCoopers LLP as financial advisor; and Kurtzman Carson Consultants LLC as claims agent.

The U.S. Trustee for Regions 3 and 9 appointed a committee of unsecured creditors in the Debtors’ cases.

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