SiO2 Medical disclosure statement draws objection from committee

By Sarah Lizee

Olympia, Wash., May 10 – SiO2 Medical Products, Inc.’s disclosure statement for its Chapter 11 plan drew an objection from the official committee of unsecured creditors, according to documents filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

As a reminder, the debtors and some affiliates and funds of Oaktree Capital Management, LP, which holds all of the company’s first-lien debt, have developed a comprehensive restructuring, which the plan is based on.

The committee, which was appointed just over three weeks ago, said it has started its investigation into what turned a “well-capitalized company into a Chapter 11 case in which all creditors save Oaktree are slated to be zeroed out under the plan.”

“It is at this early juncture that, pursuant to certain case milestones agreed to by the debtors prior to filing these cases, creditors must assess a disclosure statement that is but a snapshot in time, in a case that could be radically different in another month’s time,” the committee said in its objection.

“This case posture raises a fundamental question: can disclosure be adequate when there is no clarity as to whether the plan in question will actually be pursued to confirmation, and whether potential recoveries to certain voting classes, if any, will be determined after the passage of the plan voting and objection deadlines?”

The committee said that there are too many open questions for voting creditors and other impacted stakeholders to adequately assess what might happen and what their treatment and actual impact on their rights will be.

“The debtors and presumptive new owner Oaktree have sprinted toward confirmation or a sale based on an RSA timeline and DIP budget that hamstrung the debtors’, and later the committee’s, ability to less accelerated, less convoluted process,” the group said.

The committee said that its investigation won’t be completed until after solicitation, meaning that certain potential valuable estate claims and causes of action will not be described, value or carved out prior to the hearing on the disclosure statement, which is currently scheduled for May 16.

The Auburn, Ala.-based company creates and manufactures engineered primary packaging container components for the pharmaceutical and biotechnology industry. The company filed bankruptcy on March 29 under Chapter 11 case number 23-10366.

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