DLA Piper represented medical device company Valeritas Holdings Inc. in its chapter 11 case in the United States Bankruptcy Court for the District of Delaware, one of the first chapter 11 cases to cite the coronavirus 2019 (COVID-19) pandemic as a factor in a bankruptcy.
The company’s chapter 11 plan was confirmed by US Bankruptcy Judge Laurie Selber Silverstein following a video hearing held on June 4, 2020.
In late 2019, Valeritas suffered a number of operational setbacks due to a supply disruption caused by a yield issue, which resulted in lower than typical inventory reserves. In prior years, the impact of the Chinese New Year holiday on Valeritas’ manufacturing was limited. This year, however, the holiday and attendant work-stoppages were extended by the Chinese government’s measures to combat the onset of COVID-19 (which, at that time, was believed to be largely confined to China). The combination of reduced inventory reserves and the delays in production in China caused by COVID-19 forced Valeritas to consider strategic alternatives, including a sale under chapter 11. In April, Zealand Pharma A/S announced its acquisition of substantially all assets of Valeritas for US$23 million, along with the assumption of certain liabilities related to the ongoing business, pursuant to the terms of the stalking horse asset purchase agreement previously entered into with Valeritas and approved by the US Bankruptcy Court for the District of Delaware on March 20, 2020.
The DLA Piper team representing Valeritas was led by partners Rachel Ehrlich Albanese (New York) and Emilio Ragosa (Short Hills) and included partners Craig Martin (Wilmington) and Melainie Mansfield (Chicago); and associates Gregory Juell, Nathan Sheps (both of New York), Matthew Sarna (Wilmington), Virginia Callahan (Baltimore), Elissa Barratt (Atlanta), Oliver Newman (Philadelphia), Christopher West (San Diego) and Caitlin Canahai (Chicago), among others. PricewaterhouseCoopers was the company’s restructuring advisor and Lincoln International was the company’s investment banker in the chapter 11 case.
