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Vermillion Deadline for Chapter 11 Reorganization Plan Pushed Back to November


This story originally ran on Aug. 5.

A bankruptcy judge last week agreed to extend Vermilion's deadline to file its Chapter 11 reorganization plan to Nov. 25 as the company awaits word from regulators on the fate of its ovarian cancer diagnostic.

The court also pushed back the date by which Vermillion can solicit and obtain acceptances of such a plan to Jan. 24, 2010. Vermillion previously faced a July 28 deadline for filing its reorganization plan and a Sept. 28 deadline for solicitation and acceptance of the plan.

The company filed a motion last week in US Bankruptcy Court in Delaware asking the court to extend both deadlines, saying that since it filed for Chapter 11 protection on March 30 it has worked "diligently" to create a reorganization plan. "However, [Vermillion's] future business prospects and success depends on the [US] Food and Drug Administration's approval process of the ovarian tumor triage test (OVA1)," the company said.

Accordingly, the reorganization plan also depends on whether it can get FDA approval for the test, and the company asked for the extension so that it can continue working to secure approval.

According to US Bankruptcy Code, Vermillion said, the court can offer such extension if cause can be shown. Factors identified by Bankruptcy Code in determining whether such a request should be granted include the size and complexity of a debtor's case; the amount of time that has elapsed since the bankruptcy filing was made; the debtor's progress in resolving issues facing its estate; whether "unresolved contingencies exist that affect the debtor's ability to reorganize"; and whether creditors and other interested parties would be harmed by such a delay.

Vermillion said that though it has made "substantial progress managing its business" since its Chapter 11 filing, the company's success will ultimately "hinge on the FDA's approval of OVA1. … With such a significant contingency standing between [Vermillion] and the successful formulation and implementation of a plan, [Vermillion] submits that seeking approval of a plan and disclosure statement without FDA approval of OVA1 would be premature."

Refusal to extend the deadlines, the company said, would deny Vermillion "a meaningful opportunity to solicit and ultimately consummate a plan, and thus, would be antithetical to the purpose of Chapter 11."

The court agreed. In rendering his decision, US Bankruptcy Judge Christopher Sontchi wrote that it determined extension of the deadlines to be "in the best interest of [Vermillion], its creditors, and all parties-in interest."

Last month, Vermillion reported that as of the end of June it had $179,242 remaining in cash. Adding it cash equivalents, it had $190,831. Its total assets were $9.7 million while total liabilities were $33 million [see PM 07/30/09].

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