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Lannett Files Prepackaged Chapter 11

May 03, 2023, 07:50 AM
Filed Under: Bankruptcy

Lannett Company announced that it and certain of its subsidiaries have commenced prepackaged Chapter 11 cases in the United States Bankruptcy Court for the District of Delaware to effectuate the transactions contemplated by the Restructuring Support Agreement ("RSA") announced on May 1, 2023. The restructuring transactions set forth in the RSA will substantially delever the Company's balance sheet, positioning Lannett with sufficient liquidity to implement their business plan, including efforts to launch several pipeline products.

The Company entered into the RSA with the significant support of key stakeholders, including holders of more than 80% of its Senior Secured Notes and 100% of its Second Lien Term Loan, seeking to significantly improve its financial position by eliminating approximately $597 million of funded debt, including $511 of secured debt, through conversion of the secured debt into equity in the newly reorganized Company. Subsequent to executing the RSA, Lannett solicited votes of support of its Prepackaged Plan, which is expected to receive the support of the parties to the RSA. The Company expects the Chapter 11 cases to be expeditious, with emergence occurring within 45 days after the filing of the petitions.

"The significant support of our debtholders and other stakeholders demonstrates their confidence in the Company's business plan and Lannett's long-term strategy," said Tim Crew, Chief Executive Officer, Lannett. "Commencing our Chapter 11 cases is an important step toward strengthening our financial position, and we intend to move through this process quickly and without disruption for our customers and partners. We believe that implementing these transactions will enable us to continue manufacturing and producing safe, life-enhancing, and affordable generic pharmaceutical medicines."

The Prepackaged Plan advances Lannett on its path to sustainable growth, with a focus on developing new, complex products and more competitive, higher-margin cost structures. The Company continues to anticipate near-term product launches and significant progress on more specialized technologies and capabilities supporting new product development.  In April, the Company announced that it received positive results from the pivotal clinical trial of biosimilar insulin glargine and is moving forward expeditiously to complete the Biologics License Application (BLA), with the goal of submitting the application to the FDA within the next several months.

Lannett is expected to operate in the ordinary course of business through the Chapter 11 process. The RSA and the Prepackaged Plan provide for vendors, employees, and other partners to be paid in the ordinary course of business for obligations incurred prior to and after the commencement of the Chapter 11 cases. The Company has sufficient liquidity to operate its businesses, including the payment of all such obligations. Lannett expects to move through the process seamlessly, emerging as a stronger Company better able to build for the future.

Lannett Company is filing with the Court a series of customary "First Day Motions" to facilitate a smooth transition and to support operations during its case. The Company will continue servicing its existing customers, vendors, partners, and other stakeholders in the ordinary course of business.

Lannett Company is being advised by Kirkland & Ellis LLP and Fox Rothschild LLP as legal counsel, Guggenheim Securities LLC as investment banker, FTI Consulting as financial advisor, C Street Advisory Group as communications advisor, and Omni Agent Solutions, Inc as Claims and Noticing Agent. The secured creditors are being advised by Sullivan & Cromwell LLP as legal counsel and Houlihan Lokey Inc. as financial advisor.

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