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K&L Gates Successfully Recovers Breakup Fee for Italian Pharmaceutical Company in Delaware Chapter 11 Case

10 February 2023

Wilmington - K&L Gates recently represented Italian-based Chiesi Farmaceutici in a case regarding a canceled Delaware Chapter 11 auction of a drug research firm. A family-controlled global pharmaceutical company, Chiesi had been chosen to serve as a bidder-to-beat for the later-canceled Delaware Chapter 11 auction of PhaseBio Pharmaceuticals.

Chief Bankruptcy Judge Silverstein, U.S. Bankruptcy Court for the District of Delaware, ruled that Chiesi was entitled to a $2 million breakup fee based on the proposal's benefit to the estate, concluding that the fee and expense reimbursement terms were "essential" parts of Chiesi Farmaceutici's proposed stalking horse asset purchase agreement. Terms of the deal made the breakup fee payable in the context of the debtor’s settlement with another party resulting in an alternative transaction.

Chiesi was represented by Raleigh partners Lee Hogewood, Margaret Westbrook, and John Gardner, associate Emily Steele, and Wilmington partner Steve Caponi and associates Matthew Goeller and Megan O’Connor.

“This was an interesting and unique set of issues and, as Judge Silverstein concluded, a breakup fee ultimately made sense in this case,” Hogewood said. “We are grateful we were given the opportunity to make a record and that the court found our presentation persuasive.”

Combining the firm’s restructuring and insolvency experience with its proficiency in related areas such as mergers and acquisitions, private equity, asset-based lending, secured transactions, distressed real estate, and intellectual property, K&L Gates’ Restructuring and Insolvency practice offers a broad range of clients such as lenders, borrowers, debtors, creditors, equity holders, committees, trustees, credit providers, asset purchasers, vendors, landlords, and receivers creative legal solutions in areas including transactions, planning, counseling, and litigation.

K&L Gates is a fully integrated global law firm with lawyers located across five continents. The firm represents leading multinational corporations, growth and middle-market companies, capital markets participants and entrepreneurs in every major industry group as well as public sector entities, educational institutions, philanthropic organizations and individuals.

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