Melinta Therapeutics U.S. Trustee objects to asset sale procedures

By Caroline Salls

Pittsburgh, Jan. 23 – The U.S. Trustee overseeing Melinta Therapeutics, Inc.’s Chapter 11 case objected Wednesday to the bid procedures for the proposed sale of the company’s assets, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

Region 3 U.S. Trustee Andrew R. Vara said in his objection that Melinta included supporting lender Deerfield, which the company is asking the court to designate as the stalking horse bidder, as a one of the “consultation parties” in the bid procedures motion.

In a consulting party role, Vara said Deerfield will have input on which bidders become qualified bidders, will be able to review offers from potential bidders, will be part of the group negotiating bids and will also have input on which bids to reject.

“Deerfield’s involvement may have a chilling effect on the debtors’ obligation to conduct an open and fair public sale,” the objection said. “Accordingly, Deerfield should be excluded as a consultation party.”

In addition, Vara said the bidding procedures allow Deerfield to credit bid $140 million, the alleged amount of its pre-bankruptcy claim, although the challenge period related to the amount of that claim will not expire until late March. Until that point, Vara said Deerfield may not bid its lien.

“At this time, it cannot be presumed that Deerfield has a pre-petition secured claim on debtors’ assets, nor can the amount of such a claim be presumed,” the objection said.

The U.S. Trustee also objected to the proposed payment of a $2 million expense reimbursement to Deerfield if it is not ultimately the winning bidder.

Specifically, Vara said expense reimbursements are intended to be incentives for a party to invest time and money to conduct necessary due diligence to submit a stalking horse bid, but Deerfield did not need to undertake any due diligence to make a bid.

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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