Tricida’s settlement with Patheon draws objection from U.S. trustee

By Sarah Lizee

Olympia, Wash., May 19 – Tricida, Inc.’s proposed settlement with Patheon Austria GmbH & Co. KG drew an objection from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to documents filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

Vara said he objects to the settlement to the extent it seeks to impose on parties in interest a material modification of the third-party release provisions of the company’s Chapter 11 plan without adequate further notice and process.

The U.S. trustee said the relief sought in the Patheon settlement includes a change to the definition of “released party” under the plan that was not part of the solicited materials for the plan scheduled for confirmation concurrently with the Patheon settlement.

The hearing on both matters was scheduled to take place on May 19.

Settlement terms

As background, Tricida entered into a manufacturing and commercial supply agreement with Patheon on Oct. 4, 2019. Under the agreement, Patheon agreed to manufacture a supply of veverimer sufficient to support Tricida’s plan for commercialization.

In December, after providing notice of an alleged breach under the agreement to Tricida, Patheon issued a notice of termination, purporting to terminate the agreement.

Tricida disputed Patheon’s characterization of circumstances it relied on in connection with its termination of the agreement.

On Feb. 6, the court entered an order rejecting the agreement as of Jan. 19.

In March, Patheon filed two proofs of claim, each in the amount of $136.21 million.

Since then, Tricida and Patheon have been in active negotiations regarding the claims.

In connection with its review of the Patheon claims and potential counter claims against Patheon, the debtor determined that litigating the claims would involve significant costs to the estate and have an uncertain outcome.

As such, the parties entered into the settlement.

Through the settlement, on the effective date, Patheon’s proofs of claim will be allowed as a general unsecured claim in the amount of $85 million.

All other proofs of claim filed by Patheon on the debtor’s claims register will be deemed withdrawn.

Patheon will be deemed to be both a released party and releasing party under the plan.

Patheon will support the debtor’s plan through the confirmation and implementation thereof.

No further claims between the parties will arise from the settlement agreement.

Tricida said the settlement provides further certainty with respect to recoveries and disbursement to general unsecured creditors, and, with Patheon’s support of the plan, it facilitates a clearer path to confirmation.

The San Francisco-based pharmaceutical company filed bankruptcy on Jan. 11 under Chapter 11 case number 23-10024.

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