Mallinckrodt committee balks at Deutsche Bank’s stay relief motion

By Sarah Lizee

Olympia, Wash., Dec. 15 – Mallinckrodt plc’s official committee of unsecured creditors objected Tuesday to Deutsche Bank AG, New York Branch’s motion for relief from automatic stay, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee claims that in an effort to impose a higher post-petition interest rate under its credit agreement, Deutsche Bank is seeking relief from the automatic stay to send a notice specifying that the debtors’ act of filing the Chapter 11 cases is an event of default.

The group asserts that the motion should be denied because no basis exists to grant relief from the automatic stay for cause under section 362(d)(1) of the Bankruptcy Code.

“Contrary to Deutsche Bank’s assertions in the motion, delivering such notice is not merely a ‘technical matter,’ as sending the notice is a prerequisite and condition precedent under the credit agreement to any ability to exercise its rights,” the committee said.

“Allowing Deutsche Bank to send a notice of default could later result in the imposition of a higher default interest rate, which would equate to approximately $50 million in incremental interest expense for these estates through January 2022, the plan effective date milestone under the debtors’ proposed restructuring support agreement.”

Dublin-based Mallinckrodt develops, manufactures, markets and distributes specialty pharmaceutical products and therapies. The company filed Chapter 11 bankruptcy on Oct. 12 under case number 20-12522.

© 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.