Graceway Pharmaceuticals' U.S. trustee objects to disclosure statement

By Jim Witters

Wilmington, Del., Feb. 27 - The U.S. trustee for Region 3 objected to the approval of Graceway Pharmaceuticals, LLC's disclosure statement associated with its plan of liquidation, according to documents filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

Trustee Roberta A. DeAngelis stated that Graceway's disclosure statement runs contrary to the bankruptcy code by including the provision that reads: "In the event that no votes to accept or reject the plan are received with respect to a particular class, such class shall be deemed to have voted to accept the plan."

The bankruptcy code allows for deemed acceptance of a plan by a class, but only if that class is not impaired under the plan, the trustee's objection stated.

"The debtors seek to have the court rule that an impaired class will be deemed to have accepted the plan if no one in that class votes for the plan," the trustee wrote.

The trustee also argued that "the determination as to whether a class has voted to accept or reject the plan is a plan confirmation issue and is not appropriately addressed at the disclosure statement stage. What the debtors seek here is an advisory opinion as to how the court may rule if a situation arises in which no one in a particular class votes for the plan."

A hearing on the objection and approval of the disclosure statement is scheduled for 11 a.m. ET on March 1.

Graceway, a Bristol, Tenn.-based pharmaceutical company, filed for bankruptcy on Sept. 29. Its Chapter 11 case number is 11-13036.

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