Point of clarification to my post above.
My post about covers the WSJ coverage of the hearing today. From the WSJ I take only this: :"Today's purpose is to preserve the status quo," Judge Lane said
The rest of that post --- including the "in the drivers seat for a new record" remark --- is my perspective. Not that of the WSJ.
I trust people understand that under the current scenario, the only way the BR court gets jurisdiction of the SIGA/PIP litigation is if the Delaware Supreme court reverses or remands the case again. The chances of that are perhaps 1 in 10. If the Supreme court affirms Parsons, BR court never hears or rules on the merits of the case.
Before anyone gets upset let me say that what I am going to say is just my perspective.
With Perelman controlling SIGA I don't count on more than a PE of about 4.
I don't see any value to the pipeline results expected in the next 3 years.
I feel that a doubling of money in a three year timeframe is within reason.
The valuation lid is the uncertainty as to whether RP would do a reverse merger with a low PE valuation. Buying both SIGA and PIP for a three or four year hold I see as less profitable then SIGA alone.
But if SIGA gets delisted and goes on the Pink Sheets the price might get low enough to make these to change my current expectations.
When the docket activity picks up I may need to revise my thinking again. Go figure. TLA
The WSJ covered the Hearing at 10 am today (9/17.2014)
"Today's purpose is to preserve the status quo," Judge Lane said
The rest of the story is merely information from the Rose statement filed in the docket yesterday.
Significantly there was no mention as to whether PIP would oppose the SIGA arrangement of avoiding the use of a Trustee or the avoiding of PIP becoming a debtor in possession.
Significantly there was no mention of whether PIP would oppose on the grounds of ripeness.
Significanltyl there was no mention of whether PIP would challenge to be the debtor in possession.
Significantly there was no mention whether SIGA would want to stay portions of the appeal to the DelawareSC until after hearings by the bankruptcy court in NY to determine the amount of litigation reserve needed to proceed with an OldCompany NewCompany reorganization.
This approach could conceivably would have the Bankruptcy Court in the drivers seat for a new record for damage award estimates. And this result would estop the award amount determination process in Delaware. But most critically it would enable SIGA to enter new evidence as to the uncertainty of satisfying the scientific challenges to meeting the FDA animal rule.
Prior testimony from experts in Delaware did not cover this. Those experts had backgrounds in economics and were not qualified to introduce such evidence (and did not). This evidence would show that the monkey trial served to decrease the uncertainty of probability of success as to scientific challenges from about 1% to about 4%. And without success on the science pertaining to internal validity and external validity of the evidence to satisfy the FDA animal rule there could be no reasonable expectation of selling ST-246. The PIP money helped pay for a monkey trial that was not sufficient in principle to satisfy either internal validity or external validity.
SIGA management just wants to wipe out the current shareholders of the stock first prior to becoming substantially profitable with a new potential contract and paying the judgment to Pharmathene.
Management wants to preserve their jobs by the fact that the company cannot be taken over with a hostile takeover by another company while under bankruptcy protection. Crooked management. They all should be thrown out and the judgment paid.
From an article -- November 13, 2011
Siga was awarded the final contract in May through a "sole-source" procurement in which it was the only company asked to submit a proposal. The contract calls for Siga to deliver 1.7 million doses of the drug for the nation's biodefense stockpile. The price of approximately $255 per dose is well above what the government's specialists had earlier said was reasonable, according to internal documents and interviews.
...Siga's projected profit at that point was 180%, ....
Simply put, SIGA is NOT BANKRUPT with the judgment. In fact, since the end of July, it has made another $22 million from BARDA for delivery of additional doses.
SIGA does in fact have about $300 million in its coffers to offer to the court for the final judgement, and can still continue as a going concern once the debt to PIP is paid without any encumberaces, if so ordered by the court once the debt to PIP is paid.
Seriously, how can SIGA say it only has $100 million in cash and $187 million in liabilities?
The "deferred revenue" of $187 million from the SIGA sales to BARDA are showing up as a liability, and the cash is not accounted for on the asset side.
Simply put, in truth, SIGA has about $287 million in cash, after expenses, from the delivery of 1.3 million doses of ST-246 to BARDA since its initial delivery, or about $312 million in cash at the agreed upon $240 / dose contract with BARDA.
SIGA is LYING to the courts about its financial condition, and pretending it has not received funds from BARDA.
The bankruptcy was triggered by an Aug. 8 ruling from Delaware's Court of Chancery in a suit that started in 2006. The court said PharmAthene is entitled to collect lump-sum damages, with interest and fees. While the companies involved have provided their estimates of the damages, the court hasn't yet determined a dollar amount. Whatever it is, Siga said any payment "is likely to be substantial, and enforcement of that judgment by PharmAthene would jeopardize Siga's viability and ability to produce and deliver Tecovirimat."
As of June 30 , Siga was reporting assets of $209.5 million , including less than $100 million cash.
Smallpox drug maker Siga Technologies Inc. on Wednesday told a judge that without bankruptcy protection, it "would no longer be able to continue its operations."
Weil Gotshal & Manges LLP's Harvey Miller , a Siga lawyer, called Siga a healthy company that filed for Chapter 11 because it can't afford to post the necessary bond that would allow it to appeal a recent court decision over its smallpox drug, Tecoviramat.
" Siga believes that it has meritorious and substantial grounds for appeal," Mr. Miller said. Siga filed for bankruptcy on Tuesday, saying the automatic stay provided by the bankruptcy code is the only thing that can prevent it from having to post as much as $200 million related to the loss so it can appeal.
Last month, a Delaware corporate-law court found Siga liable to PharmAthene Inc. in a licensing dispute, a decision that could mean a damages award of $232 million or more. The court ruled PharmAthene was entitled to lost profits related to Tescoviramat.
The antiviral Tecoviramat is being delivered to the U.S. Strategic National Stockpile under the Project BioShield Act of 2004. Chapter 11 bankruptcy protection would allow the company to operate as a going concern.
"It would be disastrous for this vital organization to be dismantled," Mr. Miller said. He said Siga estimates it would be liable for $173 million in the loss to PharmAthene , while PharmAthene places that number at $232 million .
K&L Gates LLP's Charles A. Dale , a lawyer for PharmAthene , told Judge Sean H. Lane of U.S. Bankruptcy Court in Manhattan , "I don't think this case, judge, is about whether they owe us money," but rather "how much."
Judge Lane said that the first-day in court, in which he approved Siga's routine first-day motions such as allowing it to use its cash, as well as pay its vendors and 34 employees, wasn't for arguments in the case with PharmAthene .
"Today's purpose is to preserve the status quo," Judge Lane said.
I do not know whether SIGA has the options noted in the top post of this thread.
If they do then these options could have a major impact on the relative valuations of SIGA and PIP.
I will be watching the docket activity.
I am not sure that the price of SIGA will get low enough to please me. And even if it did I might not buy it.
Go figure, TLA
**Alternatively, the bankrupt debtor may
seek to have the civil action “removed” from
the nonbankruptcy court, other than a U.S.
tax court, to the bankruptcy court.46 Procedurally,
the debtor must file a notice of
removal with the district court and with the
state court in which the litigation is pending.
Once removed, the district court will then
refer the case to the bankruptcy court. In
most district courts, however, an order automatically
refers the matter to the bankruptcy
court, and the notice of removal can be filed
directly in the bankruptcy court rather than
the district court.**
**If a litigant opposes removal to bankruptcy
court, it can file a motion to remand
or abstain in the district court.48 In deciding
whether to oppose the removal, civil litigants
should consider its consequences. Once a
civil lawsuit is removed to the bankruptcy
court, it becomes an adversarial action subject
to the Federal Rules of Evidence and the
Federal Rules of Civil Procedure to the extent
that they are incorporated by the Bankruptcy
Rules of Civil Procedure. Therefore, the rules
governing discovery, evidence, and dispositive
motions will likely be different than if the case
were pending in state court and could affect28
the outcome of the case.**
**If an objection is made to the proof of claim,
the bankruptcy court is entitled to have a
hearing and receive evidence to determine the
validity and amount of the claim.55 In addition,
when a claim is contingent or unliquidated, the
bankruptcy court is entitled to make an estimation
of the amount of the claim to prevent
undue delay in the administration of the case.56
Because the bankruptcy court’s determination
of the amount of the claim can collaterally
estop that determination in state court, often
litigants with pending civil actions will seek
relief from the automatic stay to have the civil
trial court liquidate the claim.**
Part - 4
(from Rose's statement)
++++++++The Court of Chancery then compounded its error by ignoring other postbreach evidence that clearly showed the speculative nature of PharmAthene’s damages case and should have led to no damages at all, or at most to a much smaller damages calculation.
For example, the Court ignored the fact that the first sale of Tecovirimat did not occur until 2013, instead speculating without any reasonable basis in fact that sales would have begun in 2010. This erroneous conclusion itself more than doubled the damages calculation.
Similarly, the Court, while relying on evidence of sales seven years post-breach, ignored the fact that only 2.0 million courses have ever been sold, instead speculating on the basis of a discredited model that 14.9 million courses were reasonably likely to be sold between 2010 and 2014. This utterly speculative conclusion also greatly inflated the calculation of damage+++++++++
(from another docket document)
Confirmation of a chapter 11 plan may result in a discharge of debts, which may include all or part of your debt. See Bankruptcy Code § 1141 (d). A discharge means that you may never try to collect the debt from the debtor, except as provided in the plan.
If you believe that a debt owed to you is not dischargeable under Bankruptcy Code § 1141 (d) (6) (A), you must start a lawsuit by filing a complaint in the bankruptcy clerk’s office by the “Deadline to File a Complaint to Determine Dischargeability of Certain Debts” listed on the front side. The bankruptcy clerk’s office must receive the complaint and any required filing fee by that deadline]
(more on BC code $1141 (d)(6)(A) in part -5 )
Part -3 (from Rose's statement)
+++++Although the Court of Chancery has not yet issued a final judgment specifying the dollar amountof such damages, SIGA expects it to be substantial – as much as $232 million (or more with post-judgment interest and attorneys’ and expert fees++++++++++
+++++35. On August 18, 2014, PharmAthene submitted its expert’s calculations of damages and the Backup Material. Based on such calculations, PharmAthene stated that the amount of damages is approximately $232 million (inclusive of pre-judgment interest but exclusive of professional fees and expenses).
On September 3, 2014, SIGA (reserving all rights to appeal) submitted its objections and damage calculations and asserted that, based on the methodology ordered by the Court of Chancery, the damages are approximately $173 million (inclusive of pre-judgment interest but exclusive of professional fees and expenses).+++++++++
+++++++The BARDA Contract (without taking into account options) is worth approximately $463 million, including $409.8 million for procurement-related activities and $54 million of potential reimbursements related to development and supportive activities
United States Bankruptcy Court Southern District of New York
Assigned-to: Judge Sean H. Lane
Case-name: SIGA Technologies, Inc
Date-case-filed: 2Part 014-09-16