Certa Dose Chapter 11 trustee, largest creditor reach settlement

By Sarah Lizee

Olympia, Wash., May 31 – Certa Dose, Inc.’s largest creditor, Dr. Caleb Hernandez, and Chapter 11 operating trustee Kenneth P. Silverman have entered into a settlement that provides for the sale of the debtor’s assets to Hernandez, according to court documents filed with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the trustee has sought conversion of the Chapter 11 case to Chapter 7, which has drawn opposition from Hernandez.

After an April 26 hearing, the parties agreed to negotiate over the next several weeks regarding the dispute.

As a result of those negotiations, Silverman and Hernandez reached the settlement.

Silverman said the purchase price, which will be at least $1.2 million, provides for substantial value to be realized for the assets and other benefits to the debtor’s estate, including a substantial cash contribution, the resolution of Hernandez’s first-lien secured claims through the credit bid, Hernandez’s assumption of some liabilities and the waiver of administrative claims that could be asserted by him, along with his agreement to waive any right to recovery from the cash component based on his other liens and claims asserted against the estate.

Silverman said he doesn’t believe this value would be available under any alternative transaction, especially if the debtor’s case were converted.

Additionally, Hernandez’s agreement to continue funding the debtor’s business operations in connection with the sale prior to closing provides for the payment of the administrative business expenses, substantially reducing the administrative burden in the debtor’s case.

“The value of this funding is significant, in both dollar amount and value to many of the debtor’s stakeholders,” the trustee said.

Under the settlement, upon triggering of an auction toggle, a process for public sale of the debtor’s assets as a going concern will begin, and Hernandez will serve as stalking horse bidder.

The New York-based company develops, licenses and sells pharmaceutical products and technology. The company filed bankruptcy on May 30, 2021 under Chapter 11 case number 21-11045.

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