Melinta Therapeutics creditors committee objects to bid procedures

By Caroline Salls

Pittsburgh, Jan. 22 – Melinta Therapeutics, Inc.’s official committee of unsecured creditors objected to the bid procedures for the company’s proposed asset sale, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

“From the committee’s perspective, this case presents as a foreclosure by the debtors’ pre-petition lender, Deerfield Management Company, LP, and its investors and affiliates, at a time when antibiotic product values have dipped, rather substantially, but where these products have significant upside value,” the committee said in its objection.

“Because Deerfield’s foreclosure is being accomplished through a bankruptcy plan, Deerfield also obtains something it cannot obtain through an actual foreclosure or pursuant to a liquidation under Chapter 7 of the Bankruptcy Code, to wit, $350 million in net operating losses having a cash value of as much as $73.5 million.”

The committee said the plan proposed by the secured lender as sponsor, specifically calls for general unsecured claims to be cancelled and holders to receive no distribution on account of those claims if Deerfield is the high bidder for Melinta.

As a result, the committee said it is critical that a value proposition be created for the unsecured creditors “on whose backs the company was built.”

The creditor group said the sales process must be fair and designed to maximize value, and more specifically, must have at least two bidders besides Deerfield. Similarly, the committee said the company’s cash collateral order must limit the adequate protection and replacement liens afforded to Deerfield.

“If not, all potential value for unsecured creditors will be destroyed now, right at the outset of these cases,” the objection said.

Melinta is an antibiotics company based in New Haven, Conn. The company filed bankruptcy on Dec. 27 under Chapter 11 case number 19-12748.

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