MediCor creditor committee rejects company's proposed asset sale, calls plan premature

By Reshmi Basu

New York, Aug. 21 - MediCor Ltd.'s official committee of unsecured creditors denounced the company's proposal to sell substantially all of its assets, contending that too many uncertainties are casting a shadow on the proposed sale, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The company wants to sell its foreign operating subsidiaries, which include France-based Eurosilicone SAS and U.K.-based Nagor Ltd.

MediCor also wants to place its Biosil business on the shopping block. The company has applied for pre-market approval with the Food and Drug Administration to distribute and market those assets.

Under the proposed bidding procedures, the company has requested that bids be due by Sept. 12, about 20 days after the court's hearing to approve the motion, the committee said in the court filing. The company also wants to schedule an auction for Sept. 18 and a sale hearing for Sept. 24.

The creditors argued that since there is no stalking horse bidder nor has a minimum price been established for those assets, there is a great deal of uncertainty surrounding the sale, since no one, including bidders, is aware of what the "floor" is with respect to the auction.

In addition, the committee contends that there are competing claims to any proceeds that may be derived from a sale, including trust claims of the unsecured creditors.

Moreover, there are disputes as to whether or not lenders, such as Silver Oak Group, can or should be permitted a credit bid, "as assets of both debtor and non-debtor entities are in the mix for possible sale.

"With no stalking horse and the Silver Oak Group's purported credit bid rights on as much as $60 million of prepetition indebtedness preserved, the auction and sale process is unlikely to create value in the form of cash proceeds ... The proposed auction, therefore, could have the effect of putting the assets to the Silver Oak Group if Silver Oak exercises any credit bid rights afforded to it," the committed contended in the filing.

In addition, there is no consensus that there will be sufficient proceeds available to creditors to share.

MediCor is a North Las Vegas health care company that makes and sells products for the aesthetic, plastic and reconstructive surgery and dermatology markets. Its Chapter 11 case number is 07-10877.

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