Endo International gets conditional approval of disclosure statement

By Sarah Lizee

Olympia, Wash., Jan. 16 – Endo International plc received conditional approval of the disclosure statement for its amended Chapter 11 plan of reorganization, according to an order filed Friday with the U.S. Bankruptcy Court for the Southern District of New York.

The combined hearing on final approval of the disclosure statement and confirmation of the plan is scheduled for March 19.

The company said in a press release that the plan is a preferred alternative to the previously announced sale of substantially all the company's assets to holders of Endo's first-lien debt, with substantially similar terms.

The plan sees the purchase of substantially all of the company's assets via a credit bid of existing first-lien debt, the assumption of some liabilities, and offers of employment to all of Endo's active team members.

“This ownership transfer, as previously announced, will result in a significant reduction in outstanding indebtedness relative to Endo's current capital structure and materially benefit opioid and other litigation-related claimants through the establishment of funded trusts,” the company said in the release.

“Endo is working with its stakeholders to finalize the documentation related to the transaction.”

In addition to the previously reached settlements, the plan incorporates the recently announced economic settlement in principle with the Department of Justice providing for payment of $364.9 million over 10 years, or $200 million if the obligation is paid in full on the plan effective date, plus up to an additional $100 million if the company's EBITDA exceeds the defined baseline during the period 2024 to 2028.

This settlement is subject to satisfactory resolution of criminal and civil fraud claims against the company related to the historical sale and marketing of Opana ER, which the company ceased promoting directly to U.S. health care providers in 2016.

According to the disclosure statement, priority non-tax claims and other secured claims are unimpaired.

Each holder of a class 3 first-lien claim will receive their pro rata of 96.3% of the purchaser equity (subject to dilution). If an exit minimum cash sweep trigger occurs, they will also receive a pro rata share of cash from the exit minimum cash sweep, and/or the net proceeds of syndicated exit financing, if any, after giving effect to the transactions occurring on the effective date, and/or new takeback debt. Holders will also receive a pro rata share of first-lien accrued adequate protection payments and first-lien subscription rights.

Holders of the debtors’ $2.34 billion in second-lien notes and unsecured notes, which make up class 4(A), will be entitled to receive about $23.3 million in cash, 3.7% of the purchaser equity, 100% of the subscription rights to participate in a GUC rights offering, and a 93.09% interest in the proceeds of the estate litigation claims and causes of action, and insurance rights transferred to the GUC trust.

Holders of class 4(B) other general unsecured claims will be entitled to receive their portion of a reserve for their claims funded with up to $2 million in cash from the GUC trust cash consideration and up to a 1.8% interest in the proceeds of the litigation trust consideration.

Holders of class 4(C) mesh claims will be entitled to receive their portion of the $2 million in cash from the GUC trust cash consideration, 50% of certain products liability insurance proceeds allocable to liability for mesh claims under the GUC trust agreement, and a 1.75% interest in the proceeds of the litigation trust consideration in line with the GUC trust agreement.

Holders of class 4(D) Ranitidine claims will be entitled to receive their portion of $200,000 in cash from the GUC trust cash consideration and 20% of insurance proceeds allocable to liability for Ranitidine claims.

Holders of class 4(E) generic price fixing claims will be entitled to receive their portion of $16 million in cash from the GUC trust cash consideration.

Holders of class 4(F) reverse payment claims will be entitled to receive their portion of $6.5 million in cash from the GUC trust cash consideration and a 3.36% interest in the proceeds of the litigation trust consideration.

With respect to any cash proceeds of the GUC trust litigation consideration in excess of $100 million, 5% of the cash proceeds will be paid to the purchaser entities, up to a maximum amount of $2.2 million, and the remaining 95% will be allocated among class 4 sub-classes.

The company hopes to emerge from bankruptcy in the second quarter of 2024.

Endo is a Dublin, Ireland-based specialty pharmaceutical company that filed bankruptcy on Aug. 16, 2022. The Chapter 11 case number is 22-22549.

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