Synergy Pharmaceuticals committee questions financing request timing

By Caroline Salls

Pittsburgh, Dec. 21 – Synergy Pharmaceuticals Inc.’s official committee of unsecured creditors objected Friday to the company’s motion for a second interim order approving debtor-in-possession financing, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

“The debtors have not shown that they have an immediate need for cash, let alone that their cash situation is so dire as to justify this court’s approval, on minimal notice, of DIP loan documents that provide the DIP lenders with control over the outcome of these cases – and in fact the documents filed by the debtors appear to show the opposite,” the committee said in its objection.

The committee said the hearing on the second interim DIP financing order should be continued to Jan. 4.

In addition, the creditor group said “approval of the DIP facility is inextricably tied to the proposed roll up and bound to the acceptable plan, which, together, will dictate the outcome of these cases.”

According to the objection, Synergy’s counsel said the quick approval of the financing was necessary because the company needed expedited access to $11.5 million, which was granted under the first interim order.

“The only information the debtors have presented to back up these bald assertions from debtors’ counsel are two declarations filed after the objection deadline and only 36 hours in advance of the hearing on the second interim order, plus a budget showing that such funds will not even be used until after Jan. 4,” the objection said.

The second interim hearing was scheduled for Dec. 21. No order or other comment on the status of the hearing had been filed as of late Friday.

Synergy is a New York-based biopharmaceutical company focused on the development and commercialization of novel gastrointestinal therapies. The company filed bankruptcy on Dec. 12 under Chapter 11 case number 18-14010.

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