[Cross-posted from the KaloBios Bankruptcy Site.] Well. . . this was worth the wait: very late this evening, in Delaware, the Plan was filed (that’s a 50 page PDF file). As were the prelininary disclosure statement and related exhibits. I’ll have more in the coming days, but the Plan, as disclosed tonight, serves Mr. Shkreli a “very tall glass of shut up juice….”
And I am smiling. The wheels of justice grind slowly, but they do grind fine.
From the Plan, we learn that Mr. Shkreli’s KaloBios common stock — and his stock alone — (as I said it would be) is the lonely solo bottom class of priority, below even all other common stock-holders — and all PIPE claims. He alone is Class 9. All other common holders are Class 8, or better. Delicious. And Class 8 is not impaired — they keep ALL their shares, in the “new” KaloBios, post Chapter 11. But not Martin. His Class 9 shares are subject to reduction by all the securities claims generally — and the PIPE claims, specifically. He is not likely to agree.
If he does not agree, Mr. Shkreli is NOT a “released party” — and so, anyone with claims (of any sort) against him may still sue him post bankruptcy, if he doesn’t consent to this cram-down (at page 9 of the Plan):
“…Non-Released Parties means: (i) Martin Shkreli and the PIPE Plaintiffs with respect to any and all releases set forth in Section 10.3(a) the Plan (Debtor Releases) and any and all releases set forth in Section 10.3(b) of the Plan (Releases by Holders of Claims and Interests); (ii) all Old Debtor Related Parties with respect to any and all releases set forth in Section 10.3(a) of the Plan (Debtor Releases)….”
I am sleepy — but gratified. Oh, and yes, the PIPE Plaintiffs are awarded (as I earlier guessed they would be) up to $250,000 in cash for their legal fees, in bringing their claims — if they accept the treatment as Class 4 — page 21:
“…If Class 4 Accepts the Plan, each Holder of a PIPE Claim that has Accepted the Plan will be Allowed and will receive in full and final satisfaction of such PIPE Claim (i) its pro rata share of [163,314] shares of Remaining New Common Stock and (ii) reimbursement of reasonable, documented attorneys’ fees incurred in connection with the PIPE Litigation up $250,000 in the aggregate among all Holders of PIPE Claims that have accepted the Plan. The pro rata share of Remaining New Common Stock allocated to each Holder of an Allowed PIPE Claim shall be determined by reference to the allocation of shares purchased in the PIPE Transaction (e.g., a Holder of a PIPE Claim that acquired 5% of the shares of common stock issued in the PIPE Transaction shall receive 5% of the Remaining New Common Stock allocated to Class 4)….“
Yep, that puts the PIPE buyers five full notches ahead of Mr. Shkreli, in the pecking order. Sweet — late night street justice indeed.