Tricida’s Chapter 11 plan of liquidation effective as of June 12

By Sarah Lizee

Olympia, Wash., June 13 – Tricida, Inc.’s Chapter 11 plan of liquidation went into effect on Monday, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, at a hearing held May 19, judge John T. Dorsey took issue with the plan’s releases and opt-out mechanism and denied confirmation. After the company adjusted the related release language, Dorsey confirmed the plan on May 24.

As background, Tricida filed bankruptcy to facilitate the sale of its assets.

The company entered into a restructuring support agreement with the support of over 80% of its convertible noteholders. The company currently has about $204.5 million in debt under the convertible notes, including accrued interest.

The RSA also sets up a general framework for the treatment of claims against and interests in the debtor. In sum, holders of allowed general unsecured claims, along with the claims of the convertible noteholders, will be paid their pro rata right to recovery in cash on the effective date of the plan.

These claims will additionally have the right to a later true-up payment from a liquidating trust.

Under the plan, as currently proposed, holders of the $201.06 million of convertible noteholder claims, the $149.51 million Patheon claim and the $14.74 million of general unsecured claims are expected to receive an 8% recovery.

De minimis claims of less than $7,500 will receive 50% of the allowed amount of their claim in cash on the effective date, subject to an aggregate recovery amount for such claims of $60,000.

Disputed general unsecured claims and the Patheon rejection claim will receive pro rata distributions from the liquidating trust at the time the size of their claims is determined and allowed.

Other priority claims and other secured claims will receive full recovery.

Interests will be canceled with no distribution.

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

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