Graceway Pharmaceuticals seeks court OK of settlement with ad agency

By Jim Witters

Wilmington, Del., Dec. 2 - Graceway Pharmaceuticals, LLC is seeking court approval of a settlement with its advertising agency that resolves a dispute over ownership of Graceway's intellectual property, according to documents filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

Metaphor, Inc. sought to block the $455 million sale of substantially all of Graceway's assets to Medicis Pharmaceutical Corp.

Judge Peter J. Walsh overruled Metaphor's objection to the inclusion of intellectual property in the sale, but Metaphor initiated an adversary proceeding and contemplated an appeal of Walsh's ruling, according to court documents.

The sale to Medicis closed Dec. 2.

The ad agency filed its objection to the sale after Metaphor's representative resigned from the official committee of unsecured creditors. Metaphor was seeking to collect $471,000 in unpaid fees Graceway owed before its bankruptcy case began.

The proposed settlement has the support of the official committee of unsecured creditors. The first-lien holders did not object, according to court documents.

A hearing on the proposed settlement is scheduled for 11:30 a.m. ET on Dec. 28.

Settlement terms

Under the terms of the proposed agreement:

• Metaphor will waive all rights of appeal of the sale;

• Metaphor and the debtors will file a joint stipulation for the dismissal with prejudice of the Metaphor adversary proceeding;

• The debtors will pay Metaphor $25,000 in cash; and

• Metaphor will receive an allowed general non-priority unsecured claim of $398,230.

Graceway, a Bristol, Tenn.-based pharmaceutical company, filed for bankruptcy on Sept. 29 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 11-13036.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.