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December 7, 2020 – Tamarac 10200, LLC, Unipharma, LLC (“Tamarac” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Florida, lead case number 20-23345. The Debtors, healthcare packaging companies serving the pharmaceutical and nutraceutical sectors, are represented by Christopher A Jarvinen of Berger Singerman LLP. Further board-authorized engagements include (i) [ ] as general bankruptcy counsel, (ii) SOLIC Capital Advisors, LLC and SOLIC Capital, LLC providing a chief restructuring officer and (iii) Kurtzman Carson Consultants LLC as claims agent.
The Debtors’ lead petition notes between 1 and 49 creditors; estimated assets between $10.0mn and $50.0mn; and estimated liabilities between $50.0mn and $100.0mn. Documents filed with the Court listed no unsecured creditors for the Debtors.
Painting a tale of woe highlighted by a Senior Secured Loan default, a management shake-up and an investigation of transactions and dealings between Unipharma and members of the Santamarta family, who were among those removed from the Debtors' boards of managers, the Debtors said they now aim "to provide this innovative business with a fresh start under a new management through a court-supervised sale process."
To that end, an entity related to the Debtors' Senior Secured Lender, which the Debtors hale as a savior in the months leading up to the Petition date, has agreed to act as stalking horse bidder and will provide $15.6mn in DIP Financing to the Debtors.
A motion for approval of the designation of the lender entity as the Stalking Horse Bidder (Docket No. 19] specifies that the consideration that would be paid in accordance with the Stalking Horse Bid includes a $20 million credit bid of prepetition loan obligations, assumption of the remaining senior secured prepetition debt and, if so elected by the buyer, all or a portion of DIP financing obligations, as well as the assumption of other liabilities.
Goals of the Chapter 11 Filings
In a declaration filed in support of the Debtors' Chapter 11 petitions (the "Luria Declaration" [Docket No. 10], Neil Luria, the Debtors' chief restructuring officer, stated, "The primary goal of these Chapter 11 cases is simple: to consummate a sale of the Debtors' assets, which will maximize recoveries for the Debtors' estates and preserve a viable business that will continue to employ over 130 individuals, to maintain contracts with its vendors and service providers and to provide products and services to the customers of the Debtors.
Absent the agreement of Senior Secured Lender to serve as the Stalking Horse Bidder, and to provided debtor-in-possession financing and access to cash collateral to fund the sale process and working capital needs pending a sale, the Debtors would have been forced to cease operations, lay off their remaining employees and shut their operations. Without the relief requested in the First-Day pleadings, and later, with respect to the bidding procedures and sale motions, immediate liquidation likely remains the Debtors' only viable option."
Events Leading to the Chapter 11 Filing
According to the Luria Declaration, "On April 16, 2020, I am informed by counsel that the Senior Secured Lender provided notice to the Loan Parties of various defaults under the Senior Secured Loan Agreement. As a result of continuing defaults thereunder, on October 18, 2020, I am informed by counsel that the Senior Secured Lender provided notice to the Loan Parties and exercised its voting and other consensual rights vested in the Senior Secured Lender…As a result, and among other things, I am informed by counsel that the managers of the Debtors were removed, and (i) Charles Sweet and Elizabeth Muscato were appointed to the board of managers of Unipharma and (ii) Charles Sweet was appointed as the sole manager of Tamarac.
Thereafter, the Debtors removed certain officers and employees and approved the appointment of Alex Petro as chief executive officer to oversee and manage the Debtors' day-to-day business operations and to assist the Debtors with formulating strategic financial and operational alternatives with the ultimate goals of optimizing the Debtors' business outlook and maximizing the Debtors' value for the benefit of their stakeholders….
When SOLIC was retained during October 2020, SOLIC discovered that Unipharma had cash on hand in the approximate amount of $3.7 million, which represented approximately two months of operating cash, based on historical cash burn. Unipharam's cash position became perilously low by the third week of November, and Unipharma would not have been able to continue operations without an incremental loan from the Senior Secured Lender in the approximate amount of $1.15 million and a subsequent $150,000 incremental loan on December 4, 2020 to facilitate operations until the Debtors' entry into these Chapter 11 cases.
Upon SOLIC's retention during October 2020, and after the Debtors' respective Boards of Managers had removed the Santamarta family members from such Boards and terminated their employment with the Debtors, SOLIC has been made aware of transactions, transfers and non-arm's length business dealings between Unipharma and certain members of the Santamarta family and their affiliates. SOLIC has brought these issues of concern to the Board of Managers of Unipharma, and that Board recently directed SOLIC and Berger Singerman LLP (the proposed bankruptcy counsel to the Debtors) to commence an investigation into a variety of matters related to certain of the Santamarta family members and their affiliates and/or associates….
The Debtors and their advisors have determined to provide this innovative business with a fresh start under a new management through a court-supervised sale process."
The Debtors' prepetition capital structure consists of (i) the Senior Secured Loan Agreement ($69.6mn outstanding); (ii) the Subordinated Notes ($82.3mn outstanding); (iii) a $1.6mn Paycheck Protection Loan; and (iv) other tax-related and general unsecured claims.
International Supply Group Corp. and Raimundo Jose Santamarta were listed as entities holding 10% or more of any class of the Debtors' equity interest.
About the Debtors
According to the Debtors: "At Unipharma, scientific research is a major component of who we are. Our research and development team is focused on developing Rx, OTC and Nutraceutical products by identifying the right ingredients and the best delivery system for the product. Whether you need Blow-Fill-Seal (BFS) or traditional filling for manufacturing in liquid or semi-solid forms, we can manage every part of the process."
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