Cohen's SAC Capital Named to K-V Creditor Committee
08/14/2012| 01:57pm US/Eastern
By Joseph Checkler
Steven A. Cohen's SAC Capital Advisors was named to the official committee of unsecured creditors of K-V Pharmaceutical Co., the government's federal bankruptcy watchdog said in a filing.
The office of the U.S. Trustee said in a Monday filing with U.S. Bankruptcy Court in Manhattan that an affiliate of SAC would be on the committee, along with Deutsche Bank AG (>> Deutsche Bank AG), which represents convertible noteholders owed more than $200 million.
SAC owned more than 29.8 million shares in the convertible notes as of the end of the first quarter, according to its most recent report of securities holdings with the Securities and Exchange Commission. While those convertible shares would be virtually worthless if sold on the open market today, a successful reorganization by K-V could make them valuable. SAC's holdings report for the end of the second quarter is due this week. A spokesman for SAC declined to comment for this story.
A committee's role in a bankruptcy case is to represent all unsecured creditors. Typically, its legal and professional fees are paid by the bankrupt company's estate. Committees also get the right to investigate a company's pre- and post-bankruptcy actions to determine whether to fight for more money.
Also named to the committee were two of the company's vendors, as well as an affiliate of quantitative trading firm Susquehanna International Group Inc., which owned some of the convertible notes as of the end of the second quarter, according to its most recent report of its holdings.
Aside from the convertible noteholders, the two other major creditor groups in the case have secured claims: Hologic Inc. (>> Hologic, Inc.), owed $95 million in money tied to the company's most important product, the premature-birth drug Makena, and a group of noteholders owed $225 million secured by all of K-V's assets other than Makena.
K-V filed for bankruptcy protection earlier this month, blaming a March 2011 Food and Drug Administration decision not to take action against "compounders" that make far cheaper premature-birth drugs using the same active ingredients as Makena's.
Although the FDA clarified its statement about Makena in June, K-V thought it didn't go far enough and sued the agency. A judge is currently considering the FDA's bid to dismiss the case.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)
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