| Add to balance / Manage account | User: | Log out |
| Prospect News home > News index > List of issuers M > Headlines for Melinta Therapeutics, Inc. > News item |
SEC opposes Melinta Therapeutics plan release, injunction provisions
By Caroline Salls
Pittsburgh, Feb. 14 – Melinta Therapeutics, Inc.’s Chapter 11 plan drew an objection Friday from the Securities and Exchange Commission, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.
“The commission objects to approval of the disclosure statement and confirmation of the plan, which includes a liquidation option, because it would release the liability of, and permanently enjoin actions against, non-debtor third parties and the potentially liquidating debtors,” the objection said.
The SEC said non-debtor third-party releases generally violate a Bankruptcy Code regulation that states that only debts of a debtor in a bankruptcy case are affected by Chapter 11 discharge provisions.
The commission said a violation of this provision affects public investors because non-debtors may be allowed to benefit from a debtor’s bankruptcy by obtaining their own releases related to past misconduct, including violations of the federal securities laws or breaches of fiduciary duty under state law.
“While such releases may be allowed if parties expressly consent to them in exchange for consideration from each released party, those circumstances are not present here,” the objection said. “Nor are there exceptional circumstances that would support non-consensual releases.”
In addition, the SEC said it objects to Melinta’s inclusion of a permanent injunction in the plan, which could prohibit the filing of any action post-confirmation against the liquidating debtors or their estates.
Melinta is an antibiotics company based in New Haven, Conn. The company filed bankruptcy on Dec. 27 under Chapter 11 case number 19-12748.
© 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.