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January 16, 2019 – The Debtors requested Court approval of proposed bidding procedures for the sale of its remaining pharmacy assets (“Pharmacy Assets”) [Docket No. 27]. The Debtors motion also attached a form of asset purchase agreement that it would expect prospective bidders to execute in the event that a bid was chosen as the successful bid. Clearly time is of the essence; with the Debtors stressing the importance of speed to the capture of value in respect of the Debtors’ the Pharmacy Assets.
The motion notes, “The Debtors seek to accelerate the process for a potential sale disposition of certain of their Pharmacy Assets. To that end, the Debtors have commenced these chapter 11 cases to facilitate a timely and efficient process that will monetize the Debtors’ assets and maximize the value of the Debtors’ estates….Since beginning the marketing process in June 2018, the Debtors have diligently worked with their financial advisors to develop and explore several strategic alternatives to maximize value for the Debtors’ Pharmacy Assets. The Bidding Procedures represent the final stage of a thorough and effective marketing process conducted by Houlihan Lokey, Inc. (‘Houlihan Lokey’) the Debtors, and the Debtors’ other advisors over the course of nearly six months. The process was designed to solicit bids for the Debtors’ Pharmacy Assets and obtain the greatest proceeds to maximize the value for the Debtors’ stakeholders.
Having begun the process with approximately 234 pharmacy locations, following these negotiations, the Debtors and Houlihan Lokey identified 134 locations with attractive bids from 6 parties for the purchase of the Pharmacy Assets. Of these 134 locations, the Debtors were able to execute and close agreements for 82 of the locations. In addition to the marketing process, which was a robust process to identify the bidders that would offer the best possible price for the Pharmacy Assets, the Debtors have also proposed these Bidding Procedures in connection with the process to sell, liquidate, or otherwise cause the disposition of the Debtors’ Pharmacy Assets of the remaining 146 locations.
The Debtors’ motion breaks down the need for speed as follows: “
- First, the Pharmacy Assets are the quintessential “melting ice cube,” where the value of such assets is decreasing by each day
- Second, certain of the Debtors’ inventory suppliers, including McKesson Corporation (‘McKesson’), have stopped supplying inventory to the Debtors, making it imperative that Debtors can continue to service their existing customers while completing the final stages of the marketing and sale process for the Pharmacy Assets.
- Third, no party will be prejudiced by the bidding process described herein because Wells Fargo Bank, N.A…which acts as agent for the parties that have lent money to the Debtors and for which the Pharmacy Assets serve as collateral, supports the proposed sale process outlined in this Motion.
- Fourth, pursuant to the debtor-in-possession financing facility…the Debtors must satisfy certain milestones with respect to the Pharmacy Assets, including conducting an auction on or before the tenth day following the Petition Date, among other milestones….Failure to adhere to the milestones included in the DIP Orders would have severe consequences and threaten the Debtors ability to continue along the best path for the Debtors and maximize the value of their estates.”
- Bid Deadline: January 21, 2019
- Auction: January 23, 2019
- Transaction Objection Deadline: January 25, 2019
- Reply Deadline: January 28, 2019
- Transaction Hearing: January 28, 2019
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