Akorn Files for Chapter 11 Bankruptcy; Initiates Sales ProcessBy
Akorn, a specialty generic pharmaceutical company, and its US subsidiaries have filed for voluntary protection under Chapter 11 of the US Bankruptcy Code to execute an in-court sale of its business.
In connection with the filing made in the US Bankruptcy Court for the District of Delaware, Akorn has executed a restructuring support agreement with lenders representing more than 75% of its secured debt, who will collectively serve as a “stalking horse” bidder in the company’s sale process and provide additional liquidity to fund the company’s business operations during this process. Other buyers will continue to have the opportunity to improve on this bid for the company.
Akorn’s move to file for bankruptcy follows a terminated $4.75-billion merger agreement with Fresenius Kabi AG, a specialty and generic pharmaceuticals company. Fresenius had initially agreed to acquire Akorn in 2017 but later terminated the merger agreement in 2018 on the basis of material breaches relating to data-integrity requirements of Akorn’s operations found during Fresenius’ investigation.
To help fund and protect its operations during the Chapter 11 process, Akorn obtained consent to use cash collateral from all of its existing lenders and received commitments from certain of its lenders for $30 million in debtor-in-possession (DIP) financing. Upon approval of the Bankruptcy Court, the DIP financing will provide the company and its US subsidiaries with liquidity to fund their business operations and administrative expenses during the Chapter 11 cases.
The Chapter 11 cases include Akorn and each of its US subsidiaries. Akorn’s entities in India and Switzerland are not included in the Chapter 11 filing. The company says it is working to complete the sale process in the third quarter of 2020.
Akorn had earlier initiated a sale process for the company, but reported last month (April 2020) that it had received no bids