Endo committees seek to prosecute claims against lenders, execs

By Sarah Lizee

Olympia, Wash., Jan. 26 – Endo International plc’s official committee of unsecured creditors and official committee of opioid claimants are seeking an order granting them authority to prosecute and settle estate claims on behalf of the debtors, according to a motion filed with the U.S. Bankruptcy Court for the Southern District of New York.

The groups said strong estate claims exist against both the secured creditors and the officers and directors in this case – claims with significant value for unsecured creditors and opioid claimants.

But rather than capture that value by pursuing or preserving the claims, the debtors have agreed to release each of them as part of their proposed sale and stipulated to vastly overbroad and unsupported descriptions of the secured creditors’ collateral, the committees said.

The groups said these releases and stipulations were given in the absence of a robust investigation by the company, and effectively in exchange for either insufficient consideration in the case of opioid unsecured creditors, or no consideration at all in the case of non-opioid unsecured creditors.

The committees had asked the debtors to grant them standing to prosecute these claims on their behalf, but to date, Endo has refused to consent to such standing.

The first set of claims the committees seek to bring involve the debtors’ various U.S. deposit accounts, valued at about $670 million as of the petition date, which were not subject to perfected liens.

In addition, numerous other debtor assets are either unencumbered or are subject to avoidable liens, the committees said. These assets include the remainder of the debtors’ deposit accounts outside the United States in excess of $350 million, valuable equity interests, commercial tort claims and more.

The committees said they have also identified fraudulent or preferential transactions involving the debtors and/or the prepetition secured parties.

Among them are a series of transactions in which the debtors, in full recognition of their financial distress and impending bankruptcy filing, “prepaid” their management roughly $95 million in future compensation.

Nearly $55 million of these bonus payments were made to just four employees.

Endo is a Dublin, Ireland-based specialty pharmaceutical company that filed bankruptcy on Aug. 16. The Chapter 11 case number is 22-22549.

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