Insys Therapeutics proposes plan of liquidation based on settlement

By Caroline Salls

Pittsburgh, Sept. 17 – Insys Therapeutics, Inc. filed a plan of liquidation and related disclosure statement with the U.S. Bankruptcy Court for the District of Delaware, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

The plan is based on a settlement between Insys and several parties to its Chapter 11 cases.

Under the settlement, the company’s assets will be transferred to one of two trusts on the plan effective date for the benefit of creditors.

The victims’ restitution trust will receive an assignment of Insys’ product liability insurance policies and any proceeds thereof for the benefit of personal injury claimants and states, municipalities and Native American tribes. Meanwhile, the Insys liquidation trust will receive an assignment of all other assets and will be charged with winding down the company, liquidating its assets and making distributions to creditors.

The first $3 million in distributions from the liquidation trust will be for the benefit of trade creditors, and onwards, up to the first $38 million, will be distributed to other creditors other than personal injury claimants.

Distributions in excess of $38 million from the liquidation trust will be split 20% to private creditors and 80% to public creditors.

Secured claims will be paid in full or reinstated.

Holders of equity interests will receive no distribution.

The specialty pharmaceutical company is based in Phoenix. The company filed bankruptcy on June 10 under Chapter 11 case number 19-11292.

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