Item 7.01
Regulation FD Disclosure.
As previously disclosed, on December 12, 2018, Synergy Pharmaceuticals Inc., a Delaware corporation (Synergy Pharmaceuticals or the Company) and its wholly-owned subsidiary, Synergy Advanced Pharmaceuticals, Inc., a Delaware corporation (Synergy Advanced and together with the Company, the Debtors) filed voluntary petitions for relief (the Chapter 11 Cases) under chapter 11 of title 11 of the United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Southern District of New York (the Court). The Debtors Chapter 11 Cases are jointly administered under the caption
In re Synergy Pharmaceuticals Inc., et al.
, Case No. 18-14010.
As previously disclosed, on March 29, 2019, the Debtors filed their proposed
Fourth Amended Joint Plan of Reorganization of Synergy Pharmaceuticals Inc. and it Debtor Affiliate
(as amended, modified, or supplemented from time to time, the Plan). As previously disclosed, on April 25, 2019, following a hearing held on April 23, 2019, the Court entered an order confirming the Plan. On May 1, 2019 (the Effective Date), the Plan became effective.
The following is a summary of certain material terms of the confirmed and effective Plan. This summary is qualified in its entirety by referenced to the Plan, and capitalized terms used but not defined in the following summary shall have the meanings ascribed to them in the Plan. The Plan contemplates that the Excess Sale Proceeds will be split on a 50-50 basis between the holders of allowed Term Loan Claims and holders of allowed General Unsecured Claims, except that CRG, on behalf of holders of Term Loan Claims, will direct that the CRG-ESH Settlement Fund be retained from the portion of Excess Sale Proceeds otherwise allocable to holders of allowed Term Loan Claims and applied pursuant to the Equity Committee Settlement.
In addition, holders of General Unsecured Claims, Section 510(b) Claims and equity interests in the Company will receive beneficial interests in a Litigation Trust established as of the Effective Date. As of the Effective Date, all avoidance actions and causes of action of the Debtors that are neither (x) acquired by the Purchaser or otherwise released pursuant to the Asset Purchase Agreement nor (y) released pursuant to the Plan or the Final DIP Order are vested in the Litigation Trust. Any recoveries from the causes of action and avoidance actions that vest in the Litigation Trust will be distributed pro rata to holders of General Unsecured Claims until such creditors are paid in full and thereafter will be distributed ratably between holders of Section 510(b) Claims until paid in full and holders of equity interests in the Company.
As previously disclosed, as of the Effective Date, (a) all equity interests in Synergy Pharmaceuticals are deemed automatically cancelled, released, and extinguished; (b) the respective boards of directors of the Debtors have terminated and the members thereof are deemed to have resigned; and (c) Synergy Advanced has merged into Synergy Pharmaceuticals, and Synergy Pharmaceuticals has been converted into a Delaware limited liability company and will continue to exist as the Liquidating Debtor.
The Plan provides that, as soon as practicable after the Effective Date, each holder of the Companys 7.5% Senior Convertible Notes due November 1, 2019 (the Prepetition Notes) shall surrender its note(s) to the Senior Notes Indenture Trustee, and each holder of Prepetition Notes shall be deemed to have surrendered such holders security, note, debenture, or other evidence of indebtedness upon surrender of such global security by the holder or a securities depository or custodian thereof. No distributions under the Plan shall be made for or on behalf of such holder unless and until such note(s) is received by the Senior Notes Indenture Trustee or the loss, theft, or
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