K-V Pharmaceutical noteholders seek to subordinate convertible notes

By Jim Witters

Wilmington, Del., July 5 - An informal group of K-V Pharmaceutical Co. senior noteholders, joined by Wilmington Trust, NA, is asking the court to declare that certain convertible notes are subordinated to the senior noteholders' claims, according to a July 3 filing with the U.S. Bankruptcy Court for the Southern District of New York.

Specifically, the senior noteholders want repayment in full of all principal and interest accrued, plus post-petition interest, before the convertible noteholders receive any distribution.

As of the petition date, K-V had outstanding obligations under the senior notes indenture with Wilmington Trust dated March 17, 2011 for $225 million of 12% senior notes due 2015.

K-V also had outstanding obligations under a May 16, 2003 indenture with Deutsche Bank Trust Co. Americas for $200 million of 2½% contingent convertible subordinated notes due 2033 - the convertible notes.

"The convertible notes indenture provides that the convertible notes are subordinated to all existing and future senior indebtedness," the filing states.

Despite that provision, "the convertible noteholders have asserted in these cases that they are not subordinated to interest accruing on the senior notes subsequent to the petition date," the senior noteholders say.

As part of a global settlement related to a Chapter 11 plan, the parties agreed to settle the issue through litigation.

No hearing on the request has been scheduled.

K-V Pharmaceutical, a St. Louis specialty pharmaceutical company, filed for bankruptcy on Aug. 4, 2012. Its Chapter 11 case number is 12-13346.

© 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.