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Post by brotherm1 on Apr 8, 2016 12:38:00 GMT -5
Who would benefit if the company files for bankruptcy? Who would get what assets? Would the creditors get Afrezza? Would they get the other patents? I thought I read pieces about what is secured and what is not secured somewhere in this board but if I did I've been unable to locate them again. So I thought I would create a new thread to better organize and discuss what I think would be of benefit to closely look at at this time. It's obvious the shorts would benefit wirh bankruptcy so we know their motivation is to crush the share price to preclude the company from having access to funds via a secondary. Who else would be motivated to have the company file for bankruptcy? Big pharma and other drug companies I suppose as they would lose a possible competitor. Who else would benefit from a bankruptcy filing and what would they stand to recieve in terms of financial benefits?
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Post by traderdennis on Apr 8, 2016 13:03:32 GMT -5
It depends. If they file liquidation or re-organization. What is consistent will be the stockholders get screwed.
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Post by Deleted on Apr 8, 2016 13:20:30 GMT -5
Does anyone have the exact breakdown of who they owe?
Can they even go bankrupt and still protect Afrezza
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Post by matt on Apr 8, 2016 15:24:29 GMT -5
What you need to understand about bankruptcy is that it is largely an administrative process where the rules of who gets what are set in stone. There is a judge but that judge does not render an opinion on what is "fair". The rulings are mostly limited to whether a claimant has a valid claim against the company (which pretty much comes down to principles of contract law) and whether the administrative process dictated by law has been followed. The simple answer is that shareholders would not be in good shape, and that the biggest winners would be the legal profession.
Secured claims are handled outside the bankruptcy. For example, if a bank holds a lien on some asset, lets say all the office furniture, the bank can seize the furniture and sell it to recover their loan. If the bank sells it for more than what they are owed, the excess proceeds go back to the company. If the proceeds are less than the loan, the bank has an additional unsecured claim for the difference. Sanofi has rights to the proceeds if the Valencia property is sold so I think they are secured to that extent. I haven't read the loan covenants in this case, but Deerfield normally secures their debt as well.
Any other debt is liquidated in strict priority order, according to the law, until the money is gone. In theory a company can reorganize but there has to be enough value left in the estate and in this case there simply is not. There is a near certainty that this would be a Chapter 7 liquidation because MNKD simply doesn't have enough cash to reorganize successfully. As of December 31 the assets are $126 million against liabilities of $477 million (a shortfall of $351 million), and we know the cash is going south every week so that gap has widened. To pull off a Chapter 11 a company needs money to keep operating, to pay off some of the credit, convert the rest of the credit to new equity, give a haircut to the common, and convince the court that the new business plan is feasible. That is a tall order.
The normal scenario is that the court approves an investment bank to shop the assets, the bank present a package to all the likely buyers, and bids are solicited; all within a period of a few months. Afrezza and the related patents would go to the highest bidder in a Section 363 sale, and the proceeds would get divided by the creditors according to their claims. I leave it to you to speculate how much somebody would pay for Afrezza, but a selling price anything less than about $500 million would leave the shareholders with essentially nothing and Section 363 sales rarely deliver a premium value to the estate.
All of which explains why bankruptcy is the worst possible option for MNKD and why just about anything else is better for shareholders and most of the creditors. If Matt has a rabbit in that magic hat of his, it is time for making more bunnies.
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Post by kc on Apr 8, 2016 17:05:37 GMT -5
The Mann Group owns about 45% of the common stock. That gets wiped out. If they own preferred stock that normally does not. The common stock holder is toasted. I would guess they would sell the company before having to have a bankruptcy situation. I sure hope so as I have too many underwater shares.
I would hope that the board would put the company up for sale if they haven't yet? I would bet there would be a bidding war for the company. based on the length of how long one has held the stock most longs have hopefully averaged down their share cost. I know that mine is not about $5.50 per share. That is not great but I would be happy to get my invested cost out of the shares at this time. So if the company was sold in a bidding war maybe they could get a low ball offer to start the bidding at about $5.00 per share and possibly end up at $12 to $25.00 per share. Maybe not the great win that we all had wanted back in 2014 but then again most folks would be whole and out of the company.
Personally I don't see a bankruptcy in the future for MannKind. Too much value to see it not get purchased by a Smart Nimble Pharma who can take Afrezza and Technosphere to the market. Afrezza is what the diabetic market needs and will eventually be the gold standard for treatment for T1, T2, and yes Pre-diabetes. |
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Post by kball on Apr 8, 2016 17:24:15 GMT -5
^ Always the optimist.
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Post by nylefty on Apr 8, 2016 17:59:37 GMT -5
kball: always the pessimist. |
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Post by bradleysbest on Apr 8, 2016 18:04:06 GMT -5
So much for having an APPROVED FDA drug.... Man I had so much hope (for diabetics & my investment) once MNKD was approved by the FDA & the signed partnership (I know...) with "that" company! #onlifesupport
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Post by nylefty on Apr 8, 2016 18:09:36 GMT -5
It ain't over till it's over: Y Berra, 1973
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Post by bradleysbest on Apr 8, 2016 18:12:21 GMT -5
I hear you! Hoping a "secret santa" shows up soon that wants to see Afrezza succeed! Have a great weekend folks.
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Post by kball on Apr 8, 2016 20:03:05 GMT -5
kball: always the pessimist. I'd amend that a little to bitter loser to be more accurate |
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Post by gaiza on Apr 10, 2016 13:58:49 GMT -5
You forget $200M paid to MNKD from SNY. Therefore the liability is NOT $477M
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Post by matt on Apr 10, 2016 14:41:56 GMT -5
You forget $200M paid to MNKD from SNY. Therefore the liability is NOT $477M You are correct, but neither of us has the right number. Of the $200 million from Sanofi, only $140 million remained as a liability as of December 31 and that should flow through the Q1 financials as realized gain (so essentially a reclass from liabilities to equity). That still leaves $337 million in true cash liabilities (plus the first quarter losses paid by Sanofi) against $126 million in assets (less any cash burned in Q1).
Those corrections do not change the fundamental conclusion; it is not possible to file Chapter 11 with a $200 million plus hole in the balance sheet so the case would convert to Chapter 7 immediately. Here is hoping that MNKD can raise the cash they need to stay out of court.
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Post by ricguy on Apr 13, 2016 22:36:38 GMT -5
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Post by Deleted on Apr 13, 2016 23:02:03 GMT -5
Yea that article def had an impact this morning
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