Oscient files liquidation plan, eyes extension to win creditor support

By Caroline Salls

Pittsburgh, Feb. 11 - Oscient Pharmaceuticals Corp. filed a liquidating plan of reorganization and related disclosure statement Wednesday with the U.S. Bankruptcy Court for the District of Massachusetts.

Under the plan, the company said it will liquidate its estates and distribute remaining assets to creditors.

The plan also incorporates a settlement with debtor Guardian II Acquisition Corp. and Paul Royalty Fund Holdings II that will increase the recovery for unsecured creditors to 18.9% from 9.6% and reduce the amount of claims against Oscient by $49.7 million through Paul Royalty's waiver of 80% of its claim.

Treatment of creditors will include:

• Holders of administrative claims, priority tax claims and other priority claims will be paid in full in cash;

• Holders of secured claims will be paid in full in cash or receive the collateral securing the claim;

• Holders of Oscient unsecured claims will receive a share of Oscient trust interests; and

• Holders of subordinated securities claims, Guardian second-lien claims and Guardian unsecured claims and equity interests will receive no distribution.

In addition, Oscient has requested an extension to its exclusive periods to file and solicit votes on its reorganization plan.

Specifically, the company wants to extend its exclusive filing period to May 11 from Feb. 10 and the solicitation period to July 8 from April 9.

According to the motion, Oscient's official committee of unsecured creditors has not agreed to the Paul Royalty settlement.

Since holders of unsecured claims are the only creditors entitled to vote on the plan, the company said the plan will not be confirmed without their acceptance.

As a result, Oscient said it needs more time to negotiate with the creditors committee.

Oscient, a Waltham, Mass., commercial-stage pharmaceutical company, filed for bankruptcy on July 13, 2009. Its Chapter 11 case number is 09-16576.

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