Contract Research Solutions' creditors committee objects to bid procedures

By Jim Witters

Wilmington, Del., April 12 - Contract Research Solutions, Inc.'s official committee of unsecured creditors objects to the company's proposed sale procedures, saying the timeline is too short and the procedures preclude the development of alternative bids, according to documents filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

The debtors are seeking approval of a "fast-track sale" with bids due May 1, about 14 days after the hearing on the approval of bid procedures.

The sale hearing is scheduled for May 10.

"The sale timeline is unreasonably short," because it "effectively forecloses any real opportunity for any interested party to propose a different path, including a plan of reorganization or a competing bid," the committee states in its objection.

The debtors also are seeking "a de facto confirmation that the first-lien credit agreement debt is the subject of valid, perfected, first priority liens," the objection states.

The bidding procedures "impermissibly prefer the lien lenders over other bidders and contain other objectionable bidding procedures that nowhere approximates an even playing field," the objection states.

As previously reported, the company reached an agreement with some if its pre-bankruptcy first-lien lenders and pre-bankruptcy second-lien lenders for the sale of substantially all of its assets through a stalking horse sale and $50 million credit bid.

In addition to the credit bid amount, U.S. purchaser CSRI Holdings, LLC and Canadian purchasers 0935867 B.C. Ltd. and 0935870 B.C. Ltd. have agreed to assume $30 million of the company's obligations, including $15 million in post-bankruptcy financing and a $15 million roll-up of pre-bankruptcy secured obligations.

Specific objections

Calling the proposed sale "nothing more than a secured lenders' foreclosure," the committee states:

• The bid procedures fail to provide a meaningful opportunity for the development of alternative bids and therefore should be denied;

• The first-lien lenders should not be allowed to credit bid. The presumption is that the first-lien lenders should be allowed to credit bid not only for the $80 million initial bid, but for the full amount of their outstanding prepetition and post-petition obligations - potentially $146 million in total; and

• The bidding procedures contain several other objectionable provisions that willchill bidding. Specifically, the deposit amount only applies to third party bidders and not the stalking horse buyer and the stalking horse buyer is provided preferential information, such as copies of all bids and financial information of the other bidders through its first lien agent.

A hearing on the bid procedures is scheduled for 2 p.m. ET on April 13.

Contract Research Solutions, also known as Cetero, is a Cary, N.C.-based contract research organization that provides testing services for name-brand pharmaceutical and generic drug companies. The company filed its Chapter 11 case on March 26 in the U.S. Bankruptcy Court for the District of Delaware. The case number is 12-11004.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.