Ever wonder why TBG says it never intended for AFFY to file bankruptcy?
As an health care lawyer with 30 years practice experience, here are some of my thoughts.
1. The recent filing of the 8-K disclosure, which contained that statement, automatically becomes a "business document" exception to the hearsay rule and can be admitted into evidence in any litigation where "intent" may be an issue.
2. TBG's and AFFY's intent could become an issue in situations where negotiations may have led to certain outcomes dependent upon whether or not "bankruptcy intent" was material.
3. As but one example, TBG negotiated payments of approx. $6M to Nektar/Lonza in exchange for a release of approx. $32M of firm contract commitments. Consequently, TBG saved AFFY about $26M in committed expenditures. Maybe Nektar/Lonza could have been paid more had AFFY filed for BK instead of agreeing to a lesser immediate payment. Maybe TBG induced Nektar/Lonza to take the $6M in lieu of the obligated $32M under a representation that O would return to market and Nektar/Lonza would make more money by a new Takeda manufacturing contract. I do not know. I only know that "intent" is very relevant in that scenario.
4. As another example, look at the Bachem agreement where TBG negotiated to pay Bachem $5M and a $1M contingent milestone payment upon AFFY's receipt of a first milestone payment from Takeda if O ever commercially sold. I have not taken the time to determine how much AFFY owed Bachem, and the benefit of that bargain. I looked at several AFFY SEC filings to determine the amount, but I did not readily find it. Doesn't matter. The point is that representations were made to induce Bachem to accept the payment, and maybe, or maybe not, Bachem was induced to accept the payment depending upon AFFY's intent to seek BK protection or survive.
5. In the quarter between March 20, 2013 and June 30, 2013, AFFY's cash position of $60M decreased by $50M to $10M. If creditors were fraudulently to accept less by TBG than under AFFY BK, they could sue.
...blah blah blah blah Zzzz! Zzzz... You're just beyond boring lately, GWP. It actually hurts my teeth to read your recent message posts. It's just a harrowing and painful experience seeing the world through your eyes lately.
So you're suggesting they had bankruptcy in mind but dangled O going back on the market in front of their creditors in order to negotiate resolution of liabilties for reduced amounts. If that's true, why didn't they just go BK, have their assets split among creditors, and be done with it? Or are you just saying don't read anything into the 8-K, it's status quo, and the 8-K phrasing is just to protect them in the event ultimately they do go BK, where the BK issue remains legitimately uncertain and undecided.
TBG is smart. A primary objective IMHO was to ensure that AFFY's departing officers were paid all of their termination compensation without having to look over their shoulders for a potential preferential claim in bankruptcy. Through its "restructuring" approach, TBG has managed to eliminate all of AFFY's noncontingent creditors outside of bankruptcy. AFFY's only remaining creditors are the contingent claims of the litigation plaintiffs and anticipated products liabilities claims. In order for AFFY's contingent creditors to challenge a TBG prepetition payment to a creditor they must prove that it was a "fraudulent conveyance" - a much more difficult burden and one its central issues is TBG's "intent" when the payment was made. TBG wants to cut such claims off at the pass so to speak by issuing the 8K statement that it "never intends bankruptcy" and that it was hired to implement a "restructuring" to await Takeda's decision about O. TBG is smart, and has smart lawyers advising them.