😷New Chapter 11 Bankruptcy Filing - REVA Medical Inc.😷
REVA Medical Inc.
January 14, 2020
Take cover folks: it’s raining med device bankruptcies these days.
San Diego-based REVA Medical Inc. develops bioresorbable polymer technologies for coronary artery disease, peripheral artery disease and embolization therapy. If that sounds technical, you’re right: just like every other med device company that finds its way into bankruptcy. The details of the products go right over our heads but, fortunately, the general themes are the same as far less technical debtors. In a nutshell: the company’s products are highly capital intensive and require access to equity and debt markets.
And, indeed, REVA has accessed those markets. It was publicly-traded on an Australian exchange; it also raised tens of millions ($56.8mm to be exact) by way of convertible notes; and, finally, it had access to a senior secured credit facility that looks like a whole lot like bridge financing to a bankruptcy. Indeed, on January 9, just four days prior to filing, the debtor’s gained access to an additional $4.4mm from Goldman Sachs Specialty Lending Group, L.P. which perfectly teed up a cash collateral motion (which was granted the next day). With all of that debt and “relatively minimal sales,” the debtor “has not yet generated revenue at a level sufficient to support its cost structure.” (PETITION Note: we really hope that forthcoming med device AND biopharma debtors borrow this language because it’s likely universally applicable…they can save themselves the cost of 0.2 billable hours). Compounding matters was the maturity of its first issuance of converts, putting the debtor on the hook for $25.5mm. Ruh roh.
The debtor ran into other issues. For one, the debtor’s distributor, Abbott Laboratories ($ABT), withdrew one of the debtor’s products from the market (“Absorb”) after adverse events and poor clinical trial results. Score one for ethics! Thereafter, the European Society of Cardiology published new guidelines that basically napalmed the debtor’s Absorb saying that it’s not useful/effective and might actually be harmful. Whoops!
But there’s some good news here. The debtor has a deal. The deal will erase $90mm of debt with the senior secured lenders and the holders of convertible notes receiving new equity in the reorganized (read: post-bankruptcy) company. This product will live to see another day with the hope of a major course correction.
Jurisdiction: D. of Delaware (Judge Dorsey)
Capital Structure: $9.7mm senior secured credit facility (Goldman Sachs International), $25mm '14 7.54% convertible notes (matured 11/14/19)(Goldman Sachs International, Senrigan Capital Group), $47.1mm ‘17 8% convertible notes (GSI, Senrigan, Medtronic, Inc., HEC Master Fund LP, J.P. Morgan Securities plc, TIGA Trading Pty Ltd, and Saints Capital Everest LP)
Professionals:
Legal: DLA Piper LLP (Thomas Califano, Stuart Brown, Jamila Willis)
Financial Advisor: Ernst & Young LLP
Claims Agent: Stretto (*click on the link above for free docket access)
Other Parties in Interest:
5%+ Equityholders: Senrigan Capital Group, Goldman Sachs International, Robert Stockman, Elliott Associates, L.P, Brookside/Bain, Capital Public Equity, Cerberus Capital Management, JP Morgan, Citicorp Nominees PTY Limited, JP Morgan Nominees Australia Pty Limited, HSBC Custody Nominees (Australia) Limited –GSCO, HSBC Custody Nominees (Australia) Limited
Senior Secured Agent: Goldman Sachs International
Legal: Weil Gotshal & Manges LLP (David Griffiths, Kevin Bostel) & Richards Layton & Finger PA (Paul Heath, Zachary Shapiro, Sarah Silveira)
Senior Secured Lenders: MS Pace LP, Senrigan Capital Group Limited
Elliott Management Corporation
Legal: Debevoise & Plimpton LLP (Jasmine Ball) & Ashby & Geddes PA (William Bowden)