Contract Research Solutions bankrupt; lenders submit bid for assets

By Caroline Salls

Pittsburgh, March 26 - Contract Research Solutions, Inc., also known as Cetero, filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Delaware to implement a sale process supported by its pre-bankruptcy lenders, according to court documents.

Specifically, the company has 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 Cetero's 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.

Competing bids must be for at least $81 million in cash, which is equal to the proposed purchase price, plus assumed liabilities, as well as a $1 million initial minimum overbid.

In addition, some of the pre-bankruptcy lenders have agreed to provide Cetero with $15 million in debtor-in-possession financing to give the company working capital during the restructuring process.

Freeport Financial LLC is the DIP loan agent.

The facility will mature on the earliest of June 29, the closing of a sale of substantially all of the company's assets, the filing of a plan of reorganization that does not have the agent and DIP lenders' consent and does not provide for payment in full of the DIP loan obligations and occurrence of a termination event.

Interest will be Base rate plus 800 basis points.

The company is seeking interim access to $2.4 million of the DIP financing.

According to court documents, Cetero had $205 million in assets and $248 million of debt as of Feb. 29. The company did not list any unsecured creditors with claims of $1 million or more.

The company is represented by Young Conaway Stargatt & Taylor, LLP.

Cetero is a Cary, N.C.-based contract research organization that provides testing services for name-brand pharmaceutical and generic drug companies. The Chapter 11 case number is 12-11004.

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