Convicted ‘Pharma Bro’ Shkreli’s Companies File For Ch. 11
Convicted ‘Pharma Bro’ Shkreli’s Companies File For Ch. 11
Written By: Leslie A. Pappas
Re-posted by Law360 (May 10, 2023, 10:36 AM EDT) — Pharmaceutical companies Phoenixus AG and Vyera Pharmaceuticals LLC, founded by convicted “Pharma Bro” Martin Shkreli, filed for bankruptcy protection in Delaware on Tuesday with more than $10 million in debt and a plan in place to sell substantially all of its assets.
Phoenixus, Vyera, and affiliates SevenScore Pharmaceuticals LLC, Oakrum Pharma LLC, Dermelix Biotherapeutics LLC, and Orpha Labs AG filed under Subchapter V of Chapter 11 of the bankruptcy code, a streamlined bankruptcy process for small businesses.
Vyera Pharmaceuticals, which was founded by Shkreli and is the parent company of Phoenixus, attracted scrutiny from federal regulators in 2015 after acquiring rights to the drug Daraprim — a medicine used to treat potentially fatal parasitic infections — and almost immediately raising its price from $17.50 per pill to $750 per pill, a 4,000% increase.
The Federal Trade Commission and New York’s attorney general filed suit in January 2020alleging violations of antitrust law. They were later joined by an additional six states.
Shkreli was convicted in August 2017 of securities fraud and conspiracy for defrauding investors in his ailing hedge funds and conspiring to game the stock price of his biotech Retrophin Inc. to pay off his debts. In 2018, a judge sentenced the former executive, who was 34 years old at the time, to seven years in prison.
Duane Morris LLP, which represented Shkreli, was listed as the company’s largest unsecured creditor with a $2.13 million litigation claim, which the company noted is both contingent and disputed. The firm last year sought to withdraw as Shkreli’s counsel in an antitrust case against the disgraced pharmaceutical executive, telling a New York federal court that the firm hadn’t been paid.
The next largest unsecured creditors were Cardinal Health Inc., with a trade claim of approximately $452,547 and ANI Pharmaceuticals Inc., with a royalty payable claim of $439,696, court papers said.
Shkreli owns 31.59% of Phoenixus, according to court records attached to the bankruptcy filing.
Lawrence Perkins of Sierra Constellation Partners LLC will act as the company’s chief restructuring officer, according to the court filing.
Alvarez & Marsal Securities LLC will be the investment banker and Epiq Corporate Restructuring LLC will serve as the claims agent.
Phoenixus Ltd. is represented by R. Craig Martin of DLA Piper LLP.
The case is In re Phoenixus Ltd., case number 1:23-bk-10606, in the U.S. Bankruptcy Court for the District of Delaware.
–Additional reporting by Dorothy Atkins, Bonnie Eslinger, and Matthew Perlman. Editing by Alyssa Miller.
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