Savient and Tang agree to drop claims tied to convertibles exchange

By Caroline Salls

Pittsburgh, April 28 - Savient Pharmaceuticals, Inc. requested court approval of a settlement reached with convertible noteholder Tang Capital Partners LP that resolves a dispute related to the company's convertible notes exchange, according to an April 28 filing with the U.S. Bankruptcy Court for the District of Delaware.

Savient said Tang did not participate in an exchange of the company's 4.75% convertible senior notes due Feb. 1, 2018 for senior secured discount notes due May 9, 2019. At the time of the exchange, Tang was the largest holder of the 4.75% convertible notes.

On April 30, 2012, Tang filed a derivative action in the Delaware Court of Chancery seeking a temporary restraining order against the closing of the exchange transaction. Tang claimed the exchange was a breach of fiduciary duty by Savient's directors and a fraudulent transfer.

After the Court of Chancery declined to grant the requested injunction, Tang and additional noteholders twice amended their requests, seeking appointment of a receiver, claiming Savient was in default on the convertible notes and insolvent and asserting breach of fiduciary duty claims.

Savient said it filed a counterclaim against Tang, arguing that Tang breached the terms of a non-disclosure agreement by describing the transaction in its complaint. Savient also claimed Tang intentionally filed its action to interfere with Savient's prospective business and relationships with other exchange participants.

An appeal of a partial final judgment on the receiver request is pending, the motion said.

After Savient filed bankruptcy, Tang submitted a claim for $15.63 million, plus unliquidated amounts. Savient objected to that claim.

Under the proposed settlement, the Tang action and Savient counterclaim will be dismissed, as well as all related litigation.

A hearing is scheduled for May 19.

Savient, an East Brunswick, N.J., pharmaceutical company, filed for bankruptcy on Oct. 15, 2013. The Chapter 11 case number is 13-12680.

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