Lannett’s pre-packaged Chapter 11 plan accepted by both classes

By Sarah Lizee

Olympia, Wash., June 6 – Lannett Co., Inc.’s pre-packaged Chapter 11 plan was accepted by both voting creditor classes, according to a tabulation summary filed Monday with the U.S. Bankruptcy Court for the District of Delaware.

Specifically, 93 holders, or 100% in number, of $335.09 million, or 100% in amount, of first-lien senior secured note claims voted to accept the plan.

And, three holders, or 100% in number, of $220.19 million, or 100% in amount, of second-lien term loan claims voted to accept the plan.

There were 123 ballots and four ballots received for each class, respectively, but 31 of those were counted as invalid.

A hearing on the plan is scheduled for Thursday.

As previously reported, the company filed Chapter 11 to implement a restructuring support agreement with holders of more than 80% of its 7¾% senior secured notes due 2026 and 100% of the lenders party to the company's second-lien credit and guaranty agreement.

The restructuring aims to reduce the company's outstanding secured debt by about $511 million, significantly strengthening the company's balance sheet and enhancing financial flexibility going forward, Lannett said.

In connection with the debt reduction, the amount of interest expense will substantially decrease, ensuring capacity to invest in the business plan, the company said.

Following the transaction, the secured noteholders and lenders will own the equity of Lannett, and the company’s existing stock will be canceled.

Specifically, each holder of an allowed first-lien senior secured note claim will receive (i) its pro rata share of 97% of the new common stock, subject to dilution on account of the management incentive plan (MIP) new common stock and the new warrants and (ii) its pro rata share of 97% of a takeback exit facility.

Each holder of an allowed second-lien term loan claim will receive (i) its pro rata share of 3% of the new common stock, subject to dilution on account of the MIP new common stock and the new warrants, (ii) its pro rata share of 3% of the takeback exit facility, and (iii) its pro rata share of the new warrants.

Each holder of an allowed general unsecured claim will, at the option of the applicable debtor, be either (i) reinstated or (ii) paid in full in cash.

All allowed convertible note claims will be canceled, released and extinguished without any distribution to holders of convertible note claims.

Other secured claims and other priority claims are unimpaired.

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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