Athenex creditors committee and lenders reach global settlement

By Sarah Lizee

Olympia, Wash., Aug. 24 – Athenex, Inc.’s official committee of unsecured creditors and its prepetition secured lenders have reached a global settlement, according to a term sheet filed Wednesday with the U.S. Bankruptcy Court for the Southern District of Texas.

The parties said the settlement will resolve any challenge by the committee with respect to the prepetition term loan secured debt, the prepetition term loan liens, and the prepetition secured parties under the final cash collateral order.

Through the settlement, the debtors will indefeasibly pay all outstanding debt as defined in the prepetition term loan credit agreement in full, in line with the final cash collateral order, including post-petition interest and all applicable prepayment and exit fees, subject to the terms of the settlement term sheet.

Through a Chapter 11 plan, a general unsecured creditor trust will be created to hold and administer assets for the benefit of general unsecured creditors.

The committee and the prepetition secured parties have based their respective agreements on the debtors’ winddown budget, which provides for enough funding to pay all anticipated administrative and priority claims without impacting the general unsecured creditor trust assets.

On the effective date of the plan, the trust will be vested with the following assets:

• $1 million in cash plus a third of the amounts paid to the prepetition secured parties on account of the exit and prepayment fees due and payable under the prepetition credit agreement, which fees are in the total amount of about $1.675 million;

• The roughly $5.6 million receivable currently held by non-debtor affiliates Athenex API Ltd. and Athenex Pharmaceuticals (China) Ltd.;

• 50% of the value of Kuur Therapeutics Inc. and its subsidiaries whenever sold or liquidated;

• 100% of the $5 million milestone payment pursuant to the Orascovery sale, to the extent triggered;

• Any and all causes of action against any of the debtors’ current or former officers and/or directors that are not released under the plan;

• All other commercial tort claims and causes of action and claims, including but not limited to third-party claims, cross-claims and counter-claims, claims for intercompany receivables, and all claims arising under Chapter 5 of the bankruptcy code or under similar or related state or federal statute that are not released under the plan; and

• All residual assets of the debtors after payment of all administrative, priority and otherwise senior claims.

The prepetition secured parties agree to waive any deficiency claim on account of their claims that could be asserted against the debtors’ estates.

The plan will provide for customary releases of the prepetition secured parties in debtor release and third-party release.

Athenex is a clinical-stage biopharmaceutical company with headquarters in Buffalo, N.Y. The company filed bankruptcy on May 14 under Chapter 11 case number 23-90295.

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