September 17, 2013

U.S. bankruptcy court praises case as a great success.

Willkie client K-V Pharmaceutical Company and certain of its affiliates successfully emerged from chapter 11 bankruptcy protection on September 16, 2013. Under its chapter 11 plan, the St. Louis, Missouri-based healthcare company restructured approximately $570 million in debt, including approximately $85 million in debtor-in-possession financing, down to approximately $125 million.  K-V is a specialty branded pharmaceutical marketing company primarily focused on women’s health care products. Their single-most valuable product is Makena® (hydroxyprogesterone caproate injection), the first and only FDA-approved drug that reduces the risk of preterm birth for certain pregnant women.

Willkie represented K-V through highly contentious negotiations with its DIP lenders, senior noteholders and junior noteholders. Following multiple rounds of both in court and out of court bidding spanning months, Willkie steered the company and major creditors to a consensual plan of reorganization. The consensual plan confirmed on August 28, 2013 provides, among other things, for the company’s (i) senior noteholders to be paid in full; (ii) junior noteholders to receive 7% of reorganized K-V’s common stock; and (iii) general unsecured creditors to receive a pro rata share of $10.25 million. The junior noteholders also had the opportunity to participate in a $238 million rights offering, which was backstopped by a group of senior and junior noteholder investors. The rights offering was almost fully subscribed. A group of junior noteholder investors and/or their affiliates also directly purchased $37 million shares of new common stock and provided a $100 million new first lien exit loan.

Highlighting that the company’s business prospects are significantly improved from a year ago, United States Bankruptcy Court Judge Allan L. Gropper said, "I would note in passing that this case has been a great success and I think demonstrates that Chapter 11 still has some utility."

The matter was handled by bankruptcy partners Matthew Feldman and Paul Shalhoub, special counsel Robin Spigel and associates Andrew Sorkin, Ji Kim and Andrew Mordkoff; corporate partners Cristopher Greer and Jeffrey Goldfarb and associates Delano Ladd, Thomas Cantore and Sean Zoltek; litigation partner Joseph Baio and associates Benjamin McCallen, Nicole Humphrey and Alicia Kelman; and tax partner Henry Cohn and associate DJ Stauber.