Teligent creditors committee voices concern over sale procedures

By Sarah Lizee

Olympia, Wash., Jan. 13 – Teligent, Inc.’s bid procedures for substantially all of its assets drew a limited objection from the official committee of unsecured creditors, according to a filing made Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

The committee said that while overall it supports the proposed sale transactions, it has concerns relating to the lenders’ ability to credit bid and the proposed sale order’s automatic and permanent application of sale proceeds against the debtor-in-possession debt.

The sale motion seeks to protect the lenders’ rights to credit bid on the sale of any of the debtors’ assets. The committee said it objects to this provision to the extent the lenders would seek to credit bid on any assets over which they do not possess a lien.

Specifically, the committee said it objects to the extent the lenders seek to credit bid on more than 65% of the debtors’ interest of the stock of Teligent Canada, Teligent Luxembourg Sarl or Teligent OU. This is because the security agreements which give the lenders their security interests explicitly exclude as “excluded assets” the voting equity above 65% in these entities to the extent a further grant of security in their voting stock “would cause adverse tax consequences” for the debtors.

While the committee said it continues to work with the debtors and lenders on this issue, to date the committee is not in possession of information that enables it to determine that a further grant of security in the voting stock would not trigger the adverse tax consequences. The committee said it objects to any attempt by the lenders to credit bid this purported secured interest.

Sale procedures

As previously reported, the assets are divided into three categories: a pharmaceutical manufacturing and laboratory facility in New Jersey, substantially all of the company’s assets located in Canada, and the U.S. marketing authorizations, which comprises the abbreviated New Drug Applications for generic drug products that the debtors have submitted for approval to the Food and Drug Administration.

The company has entered into stalking horse agreements for each of the categories.

Under the stalking horse agreements, Leiters, Inc. has offered $27 million plus assumed liabilities for the facility, SteriMax Inc. has offered roughly $30 million for the Canadian assets, and PAI Holdings, LLC has offered $7 million plus assumed liabilities for the U.S. marketing authorizations.

Bid protections include a breakup fee of $900,000 and an expense reimbursement of $500,000 for the Canadian assets, a breakup fee of $210,000 and an expense reimbursement of $120,000 for the U.S. marketing authorizations, and up to $810,000 of bid protections for the facility.

A sale hearing is scheduled for Jan. 18.

Teligent is a Buena, N.J.-based specialty generic pharmaceutical company. The company filed bankruptcy on Oct. 14 under Chapter 11 case number 21-11332.

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