Large Scale Biology plan of liquidation granted court approval

By Jennifer Lanning Drey

Portland, Ore., Oct. 11 - Large Scale Biology Corp. obtained court approval of its plan of liquidation, according to a source at the hearing.

The approval came Tuesday from the U.S. Bankruptcy Court for the Eastern District of California.

Under the plan, the company will defer payment of priority and convenience claims.

In a previous motion, Large Scale Biology estimated that it will need to raise at least $750,000 through asset sales in order to pay on the priority and convenience claims.

As previously reported, the company will distribute at least 25% of all net funds received if it closes a sale that nets at least $1 million before Dec. 31. The company will also distribute at least 25% of the net funds from sales after Jan. 1 whenever it accumulates at least $1 million net of costs of sale and secured claims.

Investment bankers project a sale time frame of six to nine months or more.

Creditor treatment

Additional treatment of creditors under the plan includes:

• Holders of administrative claims will be paid in full in cash;

• Holders of secured claims will be paid in full with sale proceeds;

• Holders of other secured claims will retain their liens and receive deferred cash payments;

• Holders of convenience class claims of $5,000 or less, or who elect to reduce their claims to that amount, will be paid in full;

• Holders of general unsecured claims will receive payment in full from sale proceeds;

• All stock options will be canceled, and holders will receive their share of any remaining funds after all other claims have been paid.

According to Large Scale Biology's disclosure statement, the company's board of directors chose to liquidate rather than to restructure operations and continue as a public company because the company lacks the financial resources and access to additional funding to cover substantial anticipated research, development and other expenses needed.

Large Scale Biology, a Vacaville, Calif., company developing therapeutic and industrial proteins, vaccines and diagnostic products for effective characterization and treatment of disease, filed for bankruptcy on Jan. 9, 2006 in the U.S. Bankruptcy Court for the Eastern District of California. Its Chapter 11 case number is 06-20046.

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