Rochester Drug Cooperative proceeds allocation settlement approved

By Caroline Salls

Pittsburgh, July 17 – Rochester Drug Cooperative, Inc. received court approval of a global settlement reached with its official committee of unsecured creditors, M&T Bank and the United States of America on behalf of the Drug Enforcement Agency, according to an order filed Friday with the U.S. Bankruptcy Court for the Western District of New York.

Rochester Drug said M&T Bank is a secured creditor that is owed in excess of $21.5 million. The United States is owed $10 million by the company under a deferred prosecution agreement and has filed a $78 million civil penalty claim and forfeiture rights against the company’s Rochester and Fairfield facilities.

According to the motion, the settlement provides an agreed-upon allocation of the proceeds to be received by each of the parties from the liquidation of Rochester Drug’s assets, including real property assets, equipment, furniture, fixtures and accounts receivable.

The company said the settlement calls for the creation and funding of a liquidating trust for the benefit of unsecured creditors and the funding of reserves for allowed administrative expense and priority unsecured claims under its forthcoming plan of liquidation.

Under the settlement, post-bankruptcy distributions to M&T Bank will not exceed the balance due to the bank under a credit agreement, less than $1.8 million. Upon receipt of its distributions, M&T Bank will waive any deficiency claim, its adequate protection liens and a super-priority claim.

Distributions to the United States will not exceed $10 million, the motion said. It will also have a $55 million allowed general unsecured claim against Rochester Drug.

The settlement order requires the company to obtain confirmation of a plan by Sept. 25 and the plan to take effect by Oct. 9.

The company is a Rochester, N.Y.-based health care distributor. It filed bankruptcy on March 12 under Chapter 11 case number 20-20230.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.