November 8, 2023 – The Court hearing the PhaseBio Pharmaceuticals, Inc. case has extended (for a fourth time) the periods during which Debtor has an exclusive right to file a Plan and solicit acceptances thereof, through and including January 18, 2024 and March 18, 2024, respectively [Docket No. 845]. Absent the requested relief, the Plan filing and solicitation periods were scheduled to expire on October 20, 2023, and December 18, 2023, respectively.
As made clear by the modest gap between the requesting motion and this fourth exclusivity order (Docket Nos. 829 and 845, respectively), these cases are stagnant, with the Debtors engaged in a post-sale dispute with the acquiror of their Bentracimab Assets, SFJ (as defined below). Fighting with SFJ, what else is new?
This time around, the impasse relates to a $15.0mn administrative claim bought by SFJ at the end of March from BioVectra Inc. (“BioVectra”) which had supplied the Debtors "with PB2452 bulk drug substance, a reversal agent for the anti-platelet activity of Ticagrelor and more commonly known as bentracimab" after the Petition date. As part of the December 31, 2022 settlement (see below) SFJ had agreed to pay BioVectra $5.8mn of the $15.0mn claim.
SFJ provides the following math: "the Debtor is liable to SFJ, as transferee of and successor in interest to BioVectra, for $15,428,944.03 in goods and services provided after the Petition Date less the $5.8 million that SFJ agreed to pay pursuant to the 9019 and Sale Order. As such, SFJ is entitled to an Allowed Administrative Expense Claim in the amount of $9,628,944.03."
The problem for both parties is that the Debtor does not have that money. SFJ continues: "According to the Debtor’s Liquidation Analysis, the Debtor projects it will have total assets of approximately $3.5 million on the Effective Date. The Plan offers no other explanation as to how the Debtor intends to pay Administrative Expense Claims other than saying they will be “paid in full,” which the Debtor does not have the means to accomplish. Thus, on its face the Plan cannot be confirmed as it cannot provide for the payment in full in cash of Administrative Expense Claims as required by section 1129(a)(9) of the Bankruptcy Code. SFJ objects to confirmation of the Plan as it does not adequately provide for the payment of, or an adequate reserve for, SFJ’s remaining unpaid Administrative Expense Claim,
which exceeds $9 million, and, as such, the Plan is not feasible…"
As to the impasse, the Debtor notes in its motion: "the Debtor is prepared to move forward with an objection to the SFJ Administrative Expense Motion and contested confirmation of the Combined Disclosure Statement."
On October 23, 2022, PhaseBio Pharmaceuticals, Inc. (Nasdaq: PHAS, “PhaseBio” or the “Debtor”) filed for Chapter 11 protection noting estimated assets of $18.0mn; and estimated liabilities of $21.3mn. At filing, the Debtor, “engaged in the research and development of specialized, highly innovative therapies for patients with serious cardiovascular disease,” cited efforts by investor SFJ to force a transfer of the Debtor’s bentracimab assets as compelling the need to seek bankruptcy shelter. See below for more on the pivotal bentracimab assets and the Debtor’s fight with SFJ over their ownership.
On December 31st, the Court issued an order approving the Debtor’s settlement agreement with SFJ Pharmaceuticals X, Ltd. (“SFJ”) further to which the Debtor and SFJ will settle their adversary proceeding and SFJ will purchase Debtor’s bentracimab assets (the “Bentracimab Assets”). On January 13, 2023, the Debtor notified the Court “that the closing of the Sale and Transfer contemplated by the Settlement Agreement and PTA occurred on January 13, 2023…Thereafter, SFJ and the Debtor jointly dismissed the claims that formed the basis of the Adversary Proceeding.”
SFJ acquired the Bentracimab Assets “in satisfaction of the [$120.0mn] SFJ Secured Claim, plus… the payment by SFJ of the SFJ Consideration [i.e., $32.9mn in cash].” Albeit considerably more attenuated, there is also a nominal 2.5% royalty to be paid on annual global sales of the Bentracimab Assets in excess of $300.0mn, with the mechanics for distributing that royalty to the Debtor’s creditors across time for the moment unclear.
At the beginning of February 2023, the Debtor notified the Court that it had closed on a pair of small sales in respect of some remaining assets (the “Non-Bentracimab Asset Sales”).
On July 7th, the Debtor filed a Combined Plan of Liquidation and Disclosure Statement (the “Combined Document”). The Debtor’s Disclosure Statement was approved on August 1st, with the Debtor also filing a solicitation version of the Combined Document on that date.
The Extension Motion
The Debtor's October 20th motion [Docket No. 829] states, “Since the closing of the SFJ Sale and Transfer and the Non-Bentracimab Asset Sales, the Debtor has effectively ceased operating and is now focused on winding down its estate for the benefit of all stakeholders….
On September 8, 2023, SFJ filed (i) SFJ Pharma X, Inc.’s Motion for an Order Allowing Administrative Expense Claim [Docket No. 778] (the 'SFJ Administrative Expense Motion') and (ii) SFJ Pharma X, Inc.’s Objection to Confirmation of the Debtor’s Combined Disclosure Statement and Chapter 11 Plan [Docket No. 779] (the 'SFJ Confirmation Objection'). The Debtor vigorously disputes the allegations set forth in the SFJ Administrative Expense Motion and the assertions made in the SFJ Confirmation Objection.
The Debtor has been engaged in efforts with SFJ to resolve the parties’ disputes and pave the way for the approval of the Combined Disclosure Statement and Plan on a consensual basis. However, the Debtor is prepared to move forward with an objection to the SFJ Administrative Expense Motion and contested confirmation of the Combined Disclosure Statement and Plan in the event the parties are unable to resolve their disputes.
Accordingly, the Debtor believes that the relief requested herein is critical to (i) preserving the Debtor’s efforts to date to maximize recoveries to all stakeholders and (ii) avoiding the distraction and unnecessary costs associated with a competing plan process at this junction of the Chapter 11 Case."
The motion further provides, "The Debtor’s substantial progress in administering this Chapter 11 Case supports the requested extension of the Exclusive Periods. The proposed extension of the Exclusive Periods will ensure that the Debtor has an unhindered opportunity to complete its efforts and maximize value for its creditors by working to resolve the Disputes and pursue confirmation of the Combined Disclosure Statement and Plan. Additionally, in the event that the Debtor’s proposed Combined Disclosure Statement and Plan is not confirmed or does not go effective, then the Debtor may use the extended Exclusive Periods to negotiate with all interested parties to develop, file and solicit a new chapter 11 plan or to reach an alternative resolution of this Chapter 11 Case.
In addition, termination of the Exclusive Periods would adversely impact the Debtor’s efforts to preserve and maximize the value of its estate and the progress of the Chapter 11 Case. Such termination would undermine the Debtor’s efforts to date and prevent a potential value-maximizing, comprehensive resolution embodied by the Combined Disclosure Statement and Plan.”
About the Debtor
According to the Debtor: “PhaseBio Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company focused on the development and commercialization of novel therapies for cardiovascular diseases. The Company’s pipeline includes: bentracimab (PB2452), a novel reversal agent for the antiplatelet therapy ticagrelor; and PB6440, an oral agent for the treatment of resistant hypertension. PhaseBio’s proprietary elastin-like polypeptide technology platform enables the development of therapies with potential for less-frequent dosing and improved pharmacokinetics and drives both internal and partnership drug-development opportunities.”
PhaseBio is located in Malvern, PA, and San Diego, CA.
The Perkins Declaration adds: “Founded in 2002, PhaseBio is a clinical-stage biopharmaceutical company focused on the development and commercialization of novel therapies for cardiovascular diseases.
PhaseBio’s business strategy is to identify, develop and commercialize novel therapies for cardiovascular diseases. Its portfolio of products includes a number of clinical and pre-clinical candidates that are currently in varying stages of development, none of which has received regulatory approval to date.”
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The post PhaseBio Pharmaceuticals, Inc. – With Debtor Still Locking Horns with SFJ (This Time Over a Contested $9.6mn Administrative Expense Claim), Court Grants 90-Day (Fourth) Extension of Exclusive Plan Filing Period until January 18, 2024 appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.