Sorrento Therapeutics equity holders want official representation

By Sarah Lizee

Olympia, Wash., March 17 – An informal group of Sorrento Therapeutics, Inc. equity holders asked the U.S. Bankruptcy Court for the Southern District of Texas to appoint an official committee of equity security holders, according to an emergency motion filed Thursday.

The group consists of Eagle Rock Capital Management, Alta Fundamental Advisors, HZ Investments, LLC, Invictus Global Management, LLC and four individuals.

The group said that while it’s clear the cases were filed to address the company’s litigation with Dr. Patrick Soon-Shiong and his Nant companies, it is not clear how the debtors intend to exit the cases or how the Chapter 11 strategy will affect shareholders.

The group said there is a conflict of interest between the debtors’ board and management and shareholders, which took actions leading up to the petition date that require investigation by an equity committee.

The equity holders also took issue with NantCell being on the official committee of unsecured creditors.

“This court even expressed its concerns with the formation of the creditors’ committee at the hearing on March 10 – stating that ‘there is no way’ NantCell should be on the creditors’ committee and that this court ‘was hoping for a truly independent committee,’” the group said in the emergency motion.

As previously reported, Sorrento has filed a motion seeking to throw NantCell from the committee, and the U.S. trustee that appointed the committee filed an objection to that motion.

The equity holders said an official committee should be appointed as soon as possible to ensure a fair, open and value-maximizing investigation of potential causes of action against the debtors’ directors and officers, participation in the final debtor-in-possession financing hearing, mediation, and negotiation of a plan of reorganization.

“Without such appointment, these cases will not result in a value maximizing process, but rather an expedient result for certain constituencies at the expense of shareholders,” the group said.

The biopharmaceutical company is based in San Diego. The company filed bankruptcy on Feb. 13 under Chapter 11 case number 23-90085.

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