SiO2 Medical Products receives confirmation of Chapter 11 plan

By Sarah Lizee

Olympia, Wash., July 18 – SiO2 Medical Products, Inc.’s Chapter 11 plan was confirmed by the U.S. Bankruptcy Court for the District of Delaware, according to a minute entry filed Tuesday.

The plan was accepted by all voting creditors, as previously reported.

Specifically, the one holder of $224.74 million of first-lien term loan claims, the one holder of $36.51 million of second-lien term loan claims, 32 holders of $17.13 million of general unsecured claims and four holders of $109.54 million of Athos subordinated claims accepted the plan.

Oaktree Capital Management, LP, which holds all of the company’s first-lien debt and debtor-in-possession debt, is acting as plan sponsor.

The plan is also supported by equity holder Athos KG and the official committee of unsecured creditors.

The plan has three main components.

First, Oaktree agreed to provide a $120 million superpriority DIP facility, $60 million of which is new money and $60 million is a rollup of prepetition term loans.

Second, Oaktree committed to serve as the initial plan sponsor and equitize its allowed DIP claims and allowed first-lien term loan claims into 100% ownership of reorganized SiO2 through the plan, subject to the company meeting certain milestones and Oaktree’s ability to move away from the plan and purchase the assets of the debtors if a toggle trigger occurs.

Third, Oaktree agreed to subject its recovery under the plan to an auction process under court-approved bid procedures. Oaktree agreed that it wouldn’t participate in the auction process.

Under the plan, other secured claims and other priority claims are unimpaired.

Holders of first-lien term loan claims will receive their pro rata share of new common stock or exit financing. This is expected to lead to a recovery of 71.2% to 100%.

Through a settlement, holders of second-lien term loan claims agreed that their claims will recover as Athos subordinated claims.

Holders of general unsecured claims will receive their pro rata share of a $1.25 million cash pool, consideration made available through the excess sale proceeds waterfall, if any, and distributions on account of the liquidation trust interests.

Holders of Athos subordinated claims will receive their pro rata share of consideration available under the excess sale proceeds waterfall, if any, and distributions on account of liquidation trust interests, after senior classes have been paid in full or otherwise satisfied.

Holders of intercompany claims, intercompany interests, section 510(b) claims and interests in SiO2 will receive no recovery.

The company is hoping the plan will be effective by the end of July.

The Auburn, Ala.-based company creates and manufactures engineered primary packaging container components for the pharmaceutical and biotechnology industry. The company filed bankruptcy on March 29 under Chapter 11 case number 23-10366.

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