When early phase CRO (contract research organisation) Cetero filed for bankruptcy last month it set a May 1 deadline for bids. However, unsecured creditors reacted angrily to the timeline, calling it “unreasonably short”, and at a hearing on Friday a revised, longer bidding period was approved.
“The deadline to submit a qualifying bid for the seller assets is 4pm on May 11”, stated a revised document approved by the court. If Cetero receives a bid it can hold an auction on May 15 where current lenders, the ‘stalking horse’ bid, and the new interested party can compete for the CRO.
Before then there is the possibility of further objections to the process. Last week Cetero’s unsecured creditors criticised the sale process in the court and have until May 2 to file another objection. Some of the concerns raised last week were addressed, at least in part, in changes to the sale process.
“It is evident from the speed with which the debtors are proposing to prosecute the sale that they have determined to forge ahead with a sale that hands over the keys of their company to their purportedly secured lenders”, the unsecured creditors wrote in their objection to the court.
The creditors said the initial deadline was a “window dressing of a process for permitting other offers”. By making the timeline “unreasonably short” the bid has “seriously flawed” processes that “chill rather than enhance competitive bidding”.
Within the bid deadline a rival offer would need to post an $8.1m (€6.1m) deposit and have enough funds or financing documents to pay at least the minimum bid of $81m in cash, the unsecured creditors wrote.
The unsecured creditors also object to the value placed on Cetero. As secured creditors the banks can use the amount of its debt as a bid, negating the need for cash. Also, the bidding procedures allow for credit bids “up to the full amount of the prepetition and postpetition secured obligations”.
In their objection the unsecured creditors calculate this could add $66m to the initial bid, bringing the total up to $146m. “The amount of the credit bid is impossibly high and will chill bids”, the unsecured creditors wrote.
A list in the original chapter 11 filing showed Cetero owes more than $1m to its 30 biggest unsecured creditors. These organisations, which include World Courier and Fisher Scientific, get paid from what is left after secured and preferential creditors have taken their share.