Quotient’s Chapter 11 plan accepted by all voting creditors

By Sarah Lizee

Olympia, Wash., Feb. 14 – Quotient Ltd.’s pre-packaged Chapter 11 plan was accepted by all voting creditors, according to a tabulation summary filed Monday with the U.S. Bankruptcy Court for the Southern District of Texas.

Specifically, all 15 holders of $10 million of bridge notes claims, all 22 holders of $145 million of secured notes claims and all 16 holders of $105 million of convertible notes claims voted to accept the plan.

The confirmation hearing is set for Feb. 15.

As previously reported, Quotient said it is using the Chapter 11 process in an attempt to preserve the business as a going concern.

As a result of the strained liquidity, the company was unable to make interest payments on its senior secured notes and convertible notes that were due on Oct. 15 and Nov. 15, respectively.

Before the grace periods expired, the company negotiated with its creditors and agreed to pay the Oct. 15 and Nov. 15 interest payments in kind by the issuance of new debt in order to avoid a default.

After months of negotiations, the parties entered into a transaction support agreement on Dec. 5, which is embodied in the Chapter 11 plan.

The senior secured noteholders provided $10 million in additional funding on Dec. 15 in the form of bridge notes. This allowed the company to avoid a potential liquidation.

The restructuring transactions reflect an agreement by the debtholders to reduce (in the case of the senior secured noteholders) or eliminate (in the case of the convertible noteholders) the funded debt of the company, coupled with the contribution of new equity capital by noteholders to effectuate a recapitalization while leaving general unsecured creditors unimpaired through either reinstatement or payment in full in cash.

These transactions will reduce funded debt by about $137 million and provide about $41 million of additional liquidity.

More specifically, on the effective date, each holder of an allowed bridge notes claim will receive its pro rata share of $10 million of new senior secured notes or new senior secured term loans; and an amount of cash equal to the documented fees and expenses of the senior secured notes trustee to the extent not previously paid as restructuring expenses.

Each holder of an allowed senior secured notes claim will receive their pro rata share of $109.52 million of new senior secured notes or new senior secured term loans; its right to purchase Newco partnership interests through a private placement; and an amount of cash equal to the documented fees and expenses of the senior secured notes trustee to the extent not previously paid as restructuring expenses.

Holders of convertible notes claims will receive their right to purchase Newco partnership interests through the convertible noteholder private placement; and cash equal to the documented fees and expenses of the convertible notes trustee to the extent not already paid as restructuring expenses.

Other priority claims and other secured claims are unimpaired under the plan.

Interests and section 510(b) claims will be canceled with no distribution.

Quotient is an Eysins, Switzerland-based holding company for subsidiaries that develop, manufacture and sell products for the global medical diagnostics market. The company filed bankruptcy on Jan. 10 under Chapter 11 case number 23-90003.

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