Akorn, Inc. (NASDAQ: AKRX), a leading specialty pharmaceutical company ("Akorn" or the "Company"), today announced that the Company and its U.S. subsidiaries filed for voluntary protection under Chapter 11 ("Chapter 11") of the U.S. Bankruptcy Code in United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") to execute an in‑court sale of its business while addressing litigation-related overhangs and best positioning the business for long-term success under new ownership. In connection with the filing, the Company has executed a Restructuring Support Agreement with lenders representing more than 80% of its secured debt, who will collectively serve as a "stalking horse" bidder in the Company's sale process and provide additional liquidity to fund the Company's business operations during this process.
In accordance with the Company's previously announced sale process, Akorn will use the legal protections of the Chapter 11 process to execute a sale of its business in accordance with the milestones set forth in the Restructuring Support Agreement. As a result of negotiations, Akorn and certain of its existing lenders have agreed to a Stalking Horse Asset Purchase Agreement ("Stalking Horse APA") whereby the existing lenders will serve as the "stalking horse" bidder in the court-supervised sale of the business, which will be subject to further marketing during the Chapter 11 process in accordance with the Company's proposed bid procedures. Other buyers will continue to have the opportunity to improve on this bid for the Company.
To help fund and protect its operations during the Chapter 11 process, Akorn obtained consent to use cash collateral from all of its existing lenders and received commitments from certain of its lenders for $30 million in debtor-in-possession ("DIP") financing. Upon approval of the Bankruptcy Court, the DIP financing will provide the Company and its U.S. subsidiaries with ample liquidity to fund their business operations and administrative expenses during the Chapter 11 cases.
Akorn is confident in the underlying strength of its business and plans to continue to operate as usual throughout the duration of the Chapter 11 and sale process, including meeting its contractual obligations and making payments to vendors. The Company has filed customary motions with the Bankruptcy Court intended to allow Akorn to maintain normal operations and fulfill its go-forward commitments to customers, suppliers, associates and other stakeholders. These motions are typical in the Chapter 11 process and Akorn anticipates they will be heard and approved in the first few days of the case.
Doug Boothe, Akorn's President and Chief Executive Officer, commented, "Today's announcement represents a decisive, positive step for Akorn, one that we have been able to achieve because of the underlying strength of our business and potential for growth. We look forward to separating legacy litigation and debt from the Company's most valuable assets – our products, our people, our manufacturing facilities and our knowledge – so that we can move forward unencumbered by these liability exposures under new ownership that believes in our future."
"The current public health crisis has re-emphasized that the work our associates do tirelessly each and every day is vital to those we serve. I anticipate that today's decisive action will allow us to be better positioned to continue this work for many years to come."
The Chapter 11 cases include Akorn and each of its U.S. subsidiaries. The Company's entities in India and Switzerland are not included in the Chapter 11 filing.
The Company is working to complete the sale process in the third quarter of 2020 and emerge as a more vibrant company, even better positioned to improve patients' lives through the quality, availability and affordability of its products.
Akorn is advised in this matter by Kirkland & Ellis as legal advisor, PJT Partners as financial advisor and AlixPartners as restructuring advisor.