Vivus: U.S. Trustee directed to appoint committee of equity holders

By Caroline Salls

Pittsburgh, Sept. 11 – The U.S. Trustee overseeing Vivus, Inc.’s Chapter 11 case has been directed to appoint an official committee of equity security holders for the case, according to an order filed Friday by the U.S. Bankruptcy Court for the District of Delaware.

The order said the reasons for the appointment were disclosed as part of a Thursday bench ruling made as part of the company’s plan of reorganization confirmation hearing.

However, the order did not give any further details on the bench ruling.

Last month, Region 3 U.S. trustee Andrew R. Vara said in an objection that Vivus shareholders are provided with no distribution under the plan, except that “shareholders who comply with the unduly restrictive provisions of the existing stock settlement” will receive a share of $5 million and a non-transferable contractual contingent value right to earn another $2 per share if the company meets financial milestones in both 2021 and 2022.

Vara said he objected to confirmation of the plan because the plan contains non-consensual release provisions that are “inconsistent with the Bankruptcy Code,” unduly restricts the actions of shareholders and imposes settlement standards upon all claims and interests regardless of whether a party has entered into a settlement agreement with the Vivus debtors.

In addition, the U.S. Trustee said the plan classifies dissimilar claims together in class 5, consisting of general unsecured claims that the company proposes to treat as unimpaired and indemnification claims that it proposes to treat as impaired.

Campbell, Calif.-based Vivus is a pharmaceutical company that filed bankruptcy on July 7. The Chapter 11 case number is 20-11779.

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