Sorrento gets interim OK of $20 million DIP loan via subsidiary

By Sarah Lizee

Olympia, Wash., July 6 – Sorrento Therapeutics, Inc. received interim approval of a $20 million debtor-in-possession junior term loan with non-debtor subsidiary Scilex Holding Co. as lender, according to an order filed Wednesday with the U.S. Bankruptcy Court for the Southern District of Texas.

As background, shortly after filing bankruptcy in February, the debtors obtained a $75 million senior secured post-petition facility from JMB Capital Partners Lending. The facility matures July 31, but the liquidity provided by the facility was only intended to last until on or around June 30, Sorrento said.

The company said the debtors’ current liquidity is expected to last only until July 7, and as a result, the debtors have been seeking additional liquidity to continue with their Chapter 11 cases.

Ultimately, chief restructuring officer Mo Meghji determined that the best source of liquidity under the current circumstances is the junior DIP facility with Scilex.

The junior DIP facility matures on Sept. 30, 2023, and the liquidity provided by the facility is expected to last through July.

“The junior DIP facility will help the debtors continue their efforts to obtain a value-maximizing result in these Chapter 11 cases, including the potential attainment of exit financing, the potential consummation of asset sales, and the confirmation of a Chapter 11 plan that provides significant recoveries to the debtors’ stakeholders,” the company said in the motion.

In connection with the debtors’ sale and financing process, their advisers are evaluating various bids and financing proposals, all of which require some runway to consummate, Sorrento said.

Absent access to the junior DIP facility, the debtors will have no liquidity to continue operations and will be forced to shut down and liquidate, the company said.

Interest on the facility is 12% per annum, payable in kind monthly.

There is a 1% commitment fee, a 1% funding fee and a 2% exit fee.

A final hearing is scheduled for July 24.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.