September 5, 2022 – The Debtors filed a motion requesting each of a bidding procedures order and a sale order [Docket No. 12]. The bidding procedures order would: (i) approve bidding procedures in relation to the sale of substantially all of the Debtors’ assets (the "Sale"), (ii) authorize the Debtors to enter into stalking horse arrangements (none selected yet) and (iii) adopt a proposed auction/sale timetable culminating in an auction on October 12th and a sale hearing on October 18th. The sale order would approve the Sale. A form of Asset Purchase Agreement (the “APA”) is attached as Exhibit A to the motion.
On September 5, 2022, Clarus Therapeutics Holdings, Inc. and one affiliated Debtor (Nasdaq: CRXT and, as of August 31, 2022, OTCMKTS: CRXT; “Clarus” or the “Debtors”) filed for Chapter 11 noting estimated assets between $50.0mn and $100.0mn; and estimated liabilities between $50.0mn and $100.0mn (the Debtors’ petition lists $48,940,000 in total assets and $62,003,000 of total debts as of June 30, 2022). At filing, the Debtors a specialty pharmaceutical company, cited the impact of COVID-19 on "crucial in-person marketing efforts" for their first (and only) commercial product (JATENZO, a testosterone supplement/booster), summing up "because of their liquidity constraints and the ongoing impact of the COVID-19 pandemic — which halted crucial in-person marketing efforts shortly after Clarus commenced U.S. commercial sales of JATENZO in February 2020 — the Debtors have not achieved their sales targets."
As discussed further below, despite "robust prepetition sale and marketing efforts" led by investment banker Raymond James (138 parties contacted and 21 NDAs), the Debtors were unable to find any acceptable interest in an out-of-court sale; with re-booted in-court efforts now centered around re-engaging "with all parties who had conducted substantial diligence to discuss their interest in serving as a stalking horse bidder."
Bidding Procedure Motion
The motion explains, “The Debtors filed these Chapter 11 Cases after obtaining the support from the Indenture Trustee and the Noteholders for an in-court restructuring strategy that contemplates the Debtors’ continuation of their robust prepetition sale and marketing efforts through a court approved bidding and auction process designed to foster competitive bidding and maximize the value of the Debtors’ estates for their stakeholders.
…the Debtors spent significant time and effort to bring to market a formal process for an investment in, or a sale of, the Debtors’ business with the assistance of an investment banker. Specifically, in April 2022, a Special Committee appointed by the Board of Directors of Debtors Clarus Therapeutics Holdings, Inc., on behalf of the Debtors, retained Raymond James (as defined below) as their investment banker to conduct a marketing process to explore opportunities for strategic transactions."
Marketing Efforts
The motion continues: "With assistance of Raymond James, the Debtors identified and contacted one hundred and thirty-eight (138) potential bidders, comprised of forty-five (45) strategic parties, fifty-two (52) financial buyers, and forty-one (41) capital providers. Following the initial outreach to the potential bidders, the Debtors executed non-disclosure agreements with twenty-one (21) of the parties, provided such parties with a 44-page Confidential Information Memorandum and access to a data room with more than 280 files, conducted more than fifty (50) calls with prospective bidders, and received five (5) non-binding indications of interest. Since then, multiple interested parties have engaged in extensive due diligence on the Debtors’ business and operations.
Despite having several promising opportunities, the Debtors were unable to reach agreement with any of the prospective purchasers on the terms of an actionable out-of-court transaction. However, the Debtors continued their marketing efforts and in the period immediately preceding the Petition Date, Raymond James reengaged with all parties who had conducted substantial diligence to discuss their interest in serving as a stalking horse bidder. Parties expressing interest in serving as a stalking horse have received an updated confidential information memorandum, the Debtors’ most recent financial information, and a draft asset purchase agreement. While a stalking horse bidder has not yet been selected, Raymond James, working in conjunction with the Debtors and the Debtors’ other advisors, is in regular dialogue with a number of prospective bidders interested in submitting a stalking horse bid.
The Debtors believe strongly that a value-maximizing transaction can be achieved expeditiously through a sale. In order to advance these Chapter 11 Cases toward the Debtors’ ultimate goal—a going concern transaction—the Debtors, in consultation with the Noteholders, have designed the Bidding Procedures to maximize the likelihood of competitive participation in the Sale while maintaining optionality for the Debtors and their stakeholders.”
Proposed Key Dates
- Deadline for Debtors to designate a Stalking Horse Bidder and enter into a Stalking Horse Agreement: September 30, 2022
- Bid Deadline: October 10, 2022
- Sale Objection Deadline: October 11, 2022
- Auction (if necessary): October 12, 2022
- Sale Hearing: October 18, 2022
- Deadline to consummate approved Sale: October 27, 2022
About the Debtors
According to the Debtors: “Clarus Therapeutics Holdings, Inc. is a pharmaceutical company with expertise in developing androgen and metabolic therapies – including potential therapies for orphan indications. Clarus Therapeutics’ first commercial product is JATENZO (testosterone undecanoate)."
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The post Clarus Therapeutics Holdings, Inc. – Testosterone Supplement Manufacturer Seeks Approval of Bidding Procedures for Asset Sale; Re-Boots Marketing Efforts and Aims for October 18th Sale Hearing appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.