Lannett committee calls for slower plan confirmation timeline

By Sarah Lizee

Olympia, Wash., May 30 – Lannett Co., Inc.’s official committee of unsecured creditors thinks the company’s Chapter 11 plan should be “on a more normalized confirmation schedule,” according to a motion filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

The committee said that it has attempted to resolve its scheduling concerns with the debtors and consenting stakeholders, but those parties have shown no interest in backing off the current schedule.

As such, the committee is asking the court to modify the current scheduling order with a 60-day extension on the related dates, subject to further extension.

Currently, the combined hearing on confirmation of the plan and final approval of the disclosure statement is scheduled for June 8.

“To be clear, the debtors’ so-called ‘pre-packaged’ plan, among other things, non-consensually wipes out an entire class of unsecured creditors, class 6, holding claims totaling approximately $86.25 million in principal amount (the convertible notes),” the committee said in the motion.

“Meanwhile, the second-lien term loan claims are projected to receive a 5% recovery (excluding any value associated with the new warrants) despite such claims appearing to be completely ‘out of the money’ according to the debtors’ own mid-point valuation estimate of $283 million.

“No explanation is provided for this markedly different treatment.”

Also, intercompany claims and intercompany interests, which are classes below convertible notes claims, may be reinstated or equitized at the option of the applicable debtor.

The other class of unsecured claims, class 5 (owed about $20 million), is, according to the debtors, unimpaired, and will be either reinstated or paid in full in cash on the later of the effective date or the date the payment would otherwise be due in the ordinary course.

“While the projected recovery for class 5 is promising, it is by no means guaranteed as the plan is subject to a litany of risk factors set forth in the disclosure statement,” the committee said.

Based in Trevose, Pa., Lannett develops, manufactures, packages, markets and distributes generic pharmaceutical products. The company filed bankruptcy on May 2 under Chapter 11 case number 23-10559.

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