Back on December 18, 2019 we wrote our last article about Akorn Inc. with the title “May File Chapter 11“. Now, more than three months later – and longer than we anticipated – that’s about to happen, if news reports are to be believed. In the interim Akorn put itself on the block; found a buyer and then lost said buyer.
“”Unfortunately, our sale process has been negatively impacted by the broader market uncertainties related to the COVID-19 crisis. However, we are working closely with our lenders to determine the best path forward to ensure that the company is positioned for long-term success,” Doug Boothe, Akorn’s president and CEO, said in a news release.
Now the company is trying to negotiate a restructuring plan with its lenders that will, in all likelihood, include a trip to bankruptcy court once a mutually agreed deal is reached.
There’s only one BDC with skin in this game and that’s Garrison Capital (GARS), which has a modest $2.0mn position in the company’s 2021 First Lien debt. That’s currently trading at a (15%) discount. We expect that restructuring to get negotiated soon and that long delayed Chapter 11 filing to occur. GARS will be losing – for a time – $0.22mn of investment income, but the final damage – if any – should be minor.