Synergy lender agent seeks contempt ruling after equity group appeals

By Caroline Salls

Pittsburgh, March 19 – Synergy Pharmaceuticals Inc. lender agent CRG Servicing, LLC asked the U.S. Bankruptcy Court for the Southern District of New York to hold the official equity committee appointed for Synergy’s Chapter 11 case and law firm Stevens & Lee, PC in contempt of court.

“In what can only be described as a vindictive, ‘scorched earth’ effort to jeopardize the apparent successful resolution of these Chapter 11 cases,” CRG said the equity committee surprised all interested parties last week by appealing a settlement and final debtor-in-possession financing order “only hours after indicating no objection to this court’s approval, on the record, of the debtors’ disclosure statement.”

CRG said the committee’s actions immediately rendered the disclosure statement inadequate, and the filing of the appeals also violated the equity committee’s obligations under a plan settlement stipulation signed by the shareholder group.

Specifically, by filing the appeals, CRG said the committee “is essentially objecting to, and seeking to overturn, the releases, settlements, compromises and claim allowances set forth in the final DIP order and in the settlement agreement that have been incorporated into the provisions of the plan to which the equity committee agreed not to challenge.”

In addition, CRG said the committee apparently hired new counsel to prepare and file the appeals, without requesting court approval of the hiring, at the same time it was negotiating the plan settlement stipulation.

“CRG submits that these 11th hour, undisclosed tactics were purposeful, given that, without use of CRG’s new loans and cash collateral under the final DIP order, the debtor could not have continued to operate, entertain bids, hold an auction or close on its asset sale, to the potential detriment of the equity holders, nor would CRG (or presumably the debtors and the creditors’ committee) have consented to the plan settlement stipulation,” CRG said in its motion.

CRG is also asking the court to impose sanctions requiring the equity committee and Stevens & Lee to reimburse it for the fees and costs related to responding to the appeals and litigating the contempt motion.

A hearing is scheduled for April 9.

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.

© 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.