Insys Therapeutics Inc., the first opioid maker to use bankruptcy to cope with legal trouble stemming from the national addiction crisis, is struggling to wind up its affairs in the face of a wave of protests, WSJ Pro Bankruptcy reported. The manufacturer, which manufactured an under-the-tongue formulation of the powerful painkiller Fentanyl, filed for chapter 11 protection in June after its former top leaders were convicted of racketeering. Insys sold its businesses and is trying to win creditor support and court approval for a chapter 11 plan that spells out how the proceeds will be distributed. Rounding up support for the plan hasn’t been easy for the company, which yesterday pushed off for the second time a key preliminary test of its payout proposal. The chapter 11 plan proposed by Insys would leave a payout of $15 million to $20 million for creditors, and other possible revenue streams, such as royalties from products, according to court papers filed by a court-appointed creditor committee. Government lawyers said public creditors, such as the states and cities, are entitled to at least as much of Insys’s cash as private creditors, including suppliers. Liability releases for Insys are still under discussion, lawyers told Judge Kevin Gross yesterday. Judge Gross has set a Dec. 4 hearing for Insys to deliver a preliminary chapter 11 plan report to tell creditors what they will get, and what they will give up, if the arrangement is confirmed. Read more.
In related news, Insys outlined a deal yesterday to divide its dwindling cash among governments, insurers, hospitals and individuals who accused the company of fueling the U.S. opioid crisis, Reuters reported. The company was largely adopting a plan it had filed in September, which now had the support of numerous groups that initially opposed it, said Brenda Funk, who represents the company, at yesterday’s hearing before a Bankruptcy Judge Kevin Gross in Delaware. The Insys agreement established the company owed various parties a combined $1 billion, well below the billions of dollars that could have been claimed. In addition, the Department of Justice would have a claim of $243 million, along with undetermined claims for forfeiture and restitution. Read more.
