On December 2, 2011, Medicis Pharmaceutical Corporation (“Medicis”), a leading independent specialty pharmaceutical corporation in the United States and Canada, completed the acquisition of substantially all of the assets of Graceway Pharmaceuticals, LLC and its subsidiaries (“Graceway”), including certain of the assets of its solvent Canadian subsidiary, Graceway Canada Company (“Graceway Canada”) for US$455 million, following approval by Graceway's board of directors, clearance under the Hart-Scott-Rodino Act and final approvals by the US bankruptcy court overseeing Graceway's Chapter 11 proceedings and the Canadian court overseeing the receivership proceedings of Graceway Canada. The acquisition of Graceway's R&D pipeline and commercial pharmaceutical product portfolio broadens Medicis's presence in the dermatology sector in North America.
Graceway filed for Chapter 11 bankruptcy protection on September 29, 2011, having already signed an agreement to sell its assets to Galderma S.A. for US$275 million in cash, which would be sought to be approved as a stalking horse agreement. Graceway Canada also provided the debtor in possession funding for its parent, on a super priority basis with the approval of the US Court.
Graceway Canada's assets were included in the purchase agreement and a process was required to help convey its assets to the purchaser free and clear of liens. However, Graceway Canada was solvent and could not utilize the Companies' Creditors Arrangement Act. On October 4, 2011, with the support of its parent, Graceway Canada took an innovative approach and applied to the Ontario Superior Court to appoint RSM Richter Inc. (“Richter”) as its receiver, albeit with a limited mandate to only oversee a coordinated sale of the assets of Graceway Canada with the sale in the US bankruptcy proceedings. The Receiver did not take possession of Graceway Canada and it was not involved in the operation of its business pending the sale. However, this course of action ensured that a Court-supervised process was established to protect Canadian stakeholders in circumstances where they might otherwise be at risk due to the insolvency of the US parent.
In accordance with the bidding procedures approved by both the U.S. and Canadian courts at a joint hearing on October 17, 2011, Graceway, with the assistance of its financial advisors, Lazard Frères & Co. LLC and Alvarez & Marsal North America, LLC, ran a stalking horse sale process which resulted in Medicis being declared the successful bidder upon the completion of the auction held on November 18, 2011. A portion of the purchase price was paid to Richter, who administered the distribution of the proceeds.
Medicis was represented in Canada by Fasken Martineau DuMoulin LLP with a team that included Timothy Squire (regulatory/IP); Scott Conover (M&A, corporate); Aubrey Kauffman and Stuart Brotman (insolvency/restructuring); Richard Cheung (regulatory); Ian Campbell (labour); Paul Casuccio (tax); Kevin Holbeche (IP); Paul King (real estate); Ronald Nobrega (tax) and Juho Song (corporate). Weil Gotshal & Manges LLP was Medicis's lead US counsel, with a team that included Joseph Basile (M&A); Michael Walsh (financial restructuring); Joseph Bernardi (private equity, M&A); Kyle Junik (private equity, M&A) and Damon Meyer (financial restructuring). Eugenia Garrett-Wackowski and Joe Hao (IP) at Kilpatrick Townsend & Stockton LLP also assisted on the transaction.
Graceway Canada was represented by Goodmans LLP with a team led by Joseph Latham (insolvency/restructuring) that included Fred Myers (insolvency litigation); Caroline Descours and John Uhren (insolvency/restructuring); Cristina Alaimo (corporate); David Veneziano (tax); Amalia Berg Trister (IP); and Joe Conforti (employment & labour). Graceway was represented in the United States by Latham & Watkins LLP with a team led by David Heller that included Josef Athanas, Caroline Reckler, Matthew Warren and Alicia Weisz (insolvency/restructuring) and Zachary Judd, Tiffany Campion, Gabriel Edelson and Craig Grossardt (corporate). Richter was represented by Jay Swartz, Natasha MacParland (insolvency) and Natasha vandenHoven (employment) of Davies Ward Phillips & Vineberg LLP.
Galderma S.A. was represented in the United States by Debevoise & Plimpton LLP with a team led by Kevin Rinker (corporate/M&A) and My Chi To (restructuring) that included Adiya Dixon and Uri Herzberg (corporate/M&A); Natasha Labovitz and Jessica Katz (restructuring); Peter Furci (tax); Jonathan Lewis and Jennifer Whetsell (executive compensation) and Dagmar Tricot (IP); and in Canada by Bennett Jones LLP with a team that comprised Kevin Zych and Mark Laugesen (restructuring); Mary Beth Currie (labour); Martin Sorensen (tax) and Chandimal Nicholas (regulatory & IP).
The 1st lien lenders to Graceway Pharmaceuticals, LLC were represented in the United States by Wachtell, Lipton, Rosen & Katz with a team that included Scott Charles and Michael Benn (restructuring); and in Canada by McMillan LLP with a team that included Waël Rostom (restructuring) and Jeffrey Levine (insolvency litigation).
Graceway filed for Chapter 11 bankruptcy protection on September 29, 2011, having already signed an agreement to sell its assets to Galderma S.A. for US$275 million in cash, which would be sought to be approved as a stalking horse agreement. Graceway Canada also provided the debtor in possession funding for its parent, on a super priority basis with the approval of the US Court.
Graceway Canada's assets were included in the purchase agreement and a process was required to help convey its assets to the purchaser free and clear of liens. However, Graceway Canada was solvent and could not utilize the Companies' Creditors Arrangement Act. On October 4, 2011, with the support of its parent, Graceway Canada took an innovative approach and applied to the Ontario Superior Court to appoint RSM Richter Inc. (“Richter”) as its receiver, albeit with a limited mandate to only oversee a coordinated sale of the assets of Graceway Canada with the sale in the US bankruptcy proceedings. The Receiver did not take possession of Graceway Canada and it was not involved in the operation of its business pending the sale. However, this course of action ensured that a Court-supervised process was established to protect Canadian stakeholders in circumstances where they might otherwise be at risk due to the insolvency of the US parent.
In accordance with the bidding procedures approved by both the U.S. and Canadian courts at a joint hearing on October 17, 2011, Graceway, with the assistance of its financial advisors, Lazard Frères & Co. LLC and Alvarez & Marsal North America, LLC, ran a stalking horse sale process which resulted in Medicis being declared the successful bidder upon the completion of the auction held on November 18, 2011. A portion of the purchase price was paid to Richter, who administered the distribution of the proceeds.
Medicis was represented in Canada by Fasken Martineau DuMoulin LLP with a team that included Timothy Squire (regulatory/IP); Scott Conover (M&A, corporate); Aubrey Kauffman and Stuart Brotman (insolvency/restructuring); Richard Cheung (regulatory); Ian Campbell (labour); Paul Casuccio (tax); Kevin Holbeche (IP); Paul King (real estate); Ronald Nobrega (tax) and Juho Song (corporate). Weil Gotshal & Manges LLP was Medicis's lead US counsel, with a team that included Joseph Basile (M&A); Michael Walsh (financial restructuring); Joseph Bernardi (private equity, M&A); Kyle Junik (private equity, M&A) and Damon Meyer (financial restructuring). Eugenia Garrett-Wackowski and Joe Hao (IP) at Kilpatrick Townsend & Stockton LLP also assisted on the transaction.
Graceway Canada was represented by Goodmans LLP with a team led by Joseph Latham (insolvency/restructuring) that included Fred Myers (insolvency litigation); Caroline Descours and John Uhren (insolvency/restructuring); Cristina Alaimo (corporate); David Veneziano (tax); Amalia Berg Trister (IP); and Joe Conforti (employment & labour). Graceway was represented in the United States by Latham & Watkins LLP with a team led by David Heller that included Josef Athanas, Caroline Reckler, Matthew Warren and Alicia Weisz (insolvency/restructuring) and Zachary Judd, Tiffany Campion, Gabriel Edelson and Craig Grossardt (corporate). Richter was represented by Jay Swartz, Natasha MacParland (insolvency) and Natasha vandenHoven (employment) of Davies Ward Phillips & Vineberg LLP.
Galderma S.A. was represented in the United States by Debevoise & Plimpton LLP with a team led by Kevin Rinker (corporate/M&A) and My Chi To (restructuring) that included Adiya Dixon and Uri Herzberg (corporate/M&A); Natasha Labovitz and Jessica Katz (restructuring); Peter Furci (tax); Jonathan Lewis and Jennifer Whetsell (executive compensation) and Dagmar Tricot (IP); and in Canada by Bennett Jones LLP with a team that comprised Kevin Zych and Mark Laugesen (restructuring); Mary Beth Currie (labour); Martin Sorensen (tax) and Chandimal Nicholas (regulatory & IP).
The 1st lien lenders to Graceway Pharmaceuticals, LLC were represented in the United States by Wachtell, Lipton, Rosen & Katz with a team that included Scott Charles and Michael Benn (restructuring); and in Canada by McMillan LLP with a team that included Waël Rostom (restructuring) and Jeffrey Levine (insolvency litigation).
Lawyer(s)
Waël Rostom
Paul V. Casuccio
Stuart Brotman
Amalia M. Berg
A. Chandimal Nicholas
Timothy M. Squire
David J. Heller
Scott D. Conover
David Veneziano
Joseph Latham
Jeffrey A. Levine
Peter A. Furci
Mark S. Laugesen
Paul R. King
Richard Y. Cheung
Natasha MacParland
Caroline Descours
Natasha A. vandenHoven
Fred Myers
Aubrey E. Kauffman
John Uhren
Juho Song
Ronald E. Nobrega
Ian M. Campbell
Jay A. Swartz
Kevin E. Holbeche
Joe Conforti
Martin A.U. Sorensen
Kevin J. Zych
Cristina Alaimo
Mary Beth Currie
Firm(s)
Fasken Martineau DuMoulin LLP
Weil Gotshal
Kilpatrick Stockton LLP
Goodmans LLP
Latham & Watkins LLP
Davies Ward Phillips & Vineberg LLP
Debevoise & Plimpton LLP
Bennett Jones LLP
Wachtell, Lipton, Rosen & Katz
McMillan LLP