Sorrento Therapeutics’ case to stay open in Texas, court rules

By Sarah Lizee

Olympia, Wash., March 12 – A motion from U.S. trustee Kevin M. Epstein that sought to move Sorrento Therapeutics, Inc.’s Chapter 11 bankruptcy case to another venue or have the case dismissed was denied by the U.S. Bankruptcy Court for the Southern District of Texas, according to an order filed Monday.

As previously reported, Epstein said that until the day before they filed their bankruptcy cases, neither of the debtors – Sorrento Therapeutics nor wholly owned subsidiary Scintilla Pharmaceuticals, Inc. – had any known connection with the Southern District of Texas.

“That afternoon, a newly named partner at Jackson Walker, LLP, debtors’ bankruptcy counsel, where she visited a UPS Store in the Houston suburbs, where she rented a mailbox in Scintilla’s name,” the U.S. trustee had said in the motion.

“Early the next morning, just after midnight, Scintilla filed a Chapter 11 bankruptcy petition that represented that the UPS Store was both its ‘principal place of business’ and the location of its principal assets.”

Scintilla represented that it had maintained a principal place of business or its principal assets within the Southern District of Texas for the prior 180 days or for a longer portion of such 180 days than in any other district.

“None of these representations were true,” Epstein said.

The U.S. trustee said Scintilla’s misrepresentation about its principal place of business allowed it to file for bankruptcy in Texas and allowed Sorrento to file under the affiliate venue rule of bankruptcy code.

Epstein said he had relied on the statements in Scintilla’s petition and did not challenge the venue initially, but recently an equity holder uncovered the above facts.

“Under these circumstances, the court has only two options: it must either immediately dismiss these cases or transfer them to a district with proper venue under 28 U.S.C. §§ 1406 and 1408,” the U.S. trustee said.

The biopharmaceutical company is based in San Diego. The company filed bankruptcy on Feb. 13, 2023 under Chapter 11 case number 23-90085.

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