Lannett seeks approval to use cash collateral of prepetition lenders

By Sarah Lizee

Olympia, Wash., May 4 – Lannett Co., Inc. is seeking approval to access the cash collateral of its prepetition secured lenders, according to a motion filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware, according to a press release.

The company said it won’t be seeking access to debtor-in-possession financing during its proceedings.

However, the debtors need access to cash on hand and cash flow from operations to fund working capital needs, capital expenditures and other general corporate purposes.

“Without access to these funds throughout the Chapter 11 cases, the debtors’ business operations would grind to a halt – threatening the consensual restructuring embodied in the plan,” the company said in its motion.

As previously reported, the company filed a pre-packaged plan that has the support of holders of more than 80% of its 7¾% senior secured notes due 2026 and 100% of the lenders party to the company's second-lien credit and guaranty agreement.

The restructuring will reduce the company's outstanding secured debt by about $511 million, significantly strengthening the company's balance sheet and enhancing financial flexibility going forward, Lannett said.

Following the transaction, the secured noteholders and lenders will own the equity of Lannett, and the company’s existing stock will be canceled.

Based in Trevose, Pa., Lannett develops, manufactures, packages, markets and distributes generic pharmaceutical products. The company filed bankruptcy on May 2 under Chapter 11 case number 23-10559.

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