December 17, 2020 – The Debtors filed a Joint Plan of Liquidation and related Disclosure Statement [Docket No. 88 and 87, respectively].

All three voting creditor classes will need to get in line behind holders of DIP Financing claims, which must be paid in full in cash before the other classes will see any recovery from liquidating trust interests.

Plan Overview

The Disclosure Statement [Docket No. 87], provides, "The Plan provides for, among other things, the appointment of a Plan Administrator for each of the Debtors, as of the Effective Date, to carry out and implement all provisions of the Plan…After a contemplated sale of substantially all of the Debtors' assets, the remaining assets in the Estates include Cash on hand and the Causes of Action."

The following is summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement):

• Class 1 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class 2 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class 3 (“NHTV Lender Secured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $0 and estimated recovery is 0%. Each holder will receive its pro rata share of Liquidating Trust Interests, pari passu with General Unsecured Claims and Prepetition Unsecured Subordinated Notes Claims (subject to the Subordination Agreement); provided, however, such Liquidating Trust Interests shall be subordinate to the Liquidating Trust Interests held by holder(s) of DIP Claims, and holders of NHTV Lender Secured Claims shall receive no distribution from the Liquidating Trust until the DIP Claims are satisfied in full and in cash.
• Class 4 (“Prepetition Unsecured Subordinated Notes Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $0 and estimated recovery is 0%.Each holder will receive its pro rata share of Liquidating Trust Interests pari passu with General Unsecured Claims and NHTV Lender Secured Claims (subject to the Subordination Agreement); provided, however, such Liquidating Trust Interests shall be subordinate to the Liquidating Trust Interests held by holder(s) of the DIP Claims, and the holders of Prepetition Unsecured Subordinated Notes Claims shall receive no distribution from the Liquidating Trust until the DIP Claims are satisfied in full and in cash.
  • The Disclosure Statement notes that, in 2018, Unipharma entered into a promissory note in favor of individual shareholder RJS in the original face amount of $7.0mn and a promissory note in favor of Global Capital Invest Finance Ltd. in the original face amount of $73.2mn. Those notes are subject to the terms of a Subordination Agreement with the Debtors' Senior Secured Lender
• Class 5 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $7.1mn and the estimated recovery is _%. Each holder shall receive its pro rata share of (i) the NHTV Class 5 Claims Distribution and (ii) Liquidating Trust Interests with respect to the balance of its General Unsecured Claim pari passu with Prepetition Unsecured Subordinated Notes Claims and NHTV Lender Secured Claims provided, however, such Liquidating Trust Interests shall be subordinate to the Liquidating Trust Interests held by holder(s) of the DIP Claims, and the holders of General Unsecured Claims shall receive no distribution from the Liquidating Trust until the DIP Claims are satisfied in full and in cash. In no event shall the holder of a General Unsecured Claim receive distributions on account of such Claim in excess of the Allowed amount of such Claim plus accrued post-petition interest, if any.
• Class 6 (“Intercompany Claims”) is impaired, deemed to accept and not entitled to vote on the Plan.
• Class 7 (“Other Subordinated Claims”) is impaired, deemed to reject and not entitled to vote on the Plan.
• Class 8 (“Existing Tamarac Equity Interests”) is impaired, deemed to reject and not entitled to vote on the Plan.
• Class 9 (“Existing Unipharma Equity Interests”) is impaired, deemed to reject and not entitled to vote on the Plan.

The Disclosure Statement attached the following exhibits [Docket No. 87]:

• Exhibit A: Debtors’ Joint Plan of Liquidation dated December 17, 2020
• Exhibit B: Liquidation Analysis (to be filed)
• Exhibit C: List of Insider Avoidance Actions (to be filed)

Asset Sale

On December 7, 2020, the Debtors filed motions requesting each of a bidding procedures order and a sales order [Docket Nos. 18 and 19, respectively]. The bidding procedures order would (i) authorize the Debtors’ to enter into a Stalking Horse Purchase Agreement with NHTV (AIV) ULM BIDCO LLC (the “Stalking Horse Bidder” with a $20.0mn credit bid), (ii) approve bidding procedures including an expense reimbursement for the Stalking Horse Bidder and (iii) approve a proposed timetable culminating in an auction and sale hearing before the end of January 2021 (exact dates TBD). The sale order would approve the sale to the Stalking Horse Bidder further to the terms of the Stalking Horse APA (attached to the sale motion at Exhibit A) or to any third party "Successful Bidder."

The Stalking Horse Bidder is an acquisition entity formed by holders of debt issued under the Debtors' September 2018 Senior Secured Loan Agreement ($69.6mn outstanding as at the Petition date) and is fronted by Morgan Stanley affiliate MS Capital Partners Adviser Inc. 

There is no break-up fee, but there is an initial cash overbid increment of $500k and the Debtors' are obliged to cover the reasonable expenses of the Stalking Horse Bidder, an amount which will be added on to any third party bid.

Notwithstanding the absence of a break-up fee, any third party bidders will have a lot more to contend with then the $20.0mn credit bid. In addition to factoring in the expense reimbursement and the initial overbid amount, qualified bids must include cash consideration sufficient to settle the Debtors' prepetition and DIP debt.

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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