Following an insolvency filing by the biopharmaceutical company on the previous day Wednesday, Clovis Oncology Inc. (NASD: CLVS) has increased 15.02% to $0.1532 in pre-market trading hours.
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Which filing has CLVS made?
On Monday, Clovis (CLVS) disclosed that it, along with a few of its subsidiaries (the “Debtors” collectively), had voluntarily filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware. They intend to sell their assets under the supervision of the bankruptcy court.
The Debtors have filed a number of “first-day” motions with the Bankruptcy Court asking for customary relief, such as the right to obtain debtor-in-possession (“DIP”) financial support and pay employee wages and benefits that will allow them to enter Chapter 11 without significantly disrupting their regular business operations.
Clovis has secured a commitment in the amount of up to $75 million in a number of DIP financing arrangements in order to provide the required cash during the Chapter 11 procedure. The DIP funding is anticipated to give CLVS the cash it needs, upon Bankruptcy Court permission, to function normally, satisfy its commitments to its workers, vendors, and customers during the Chapter 11 action, and carry out the sales process.
With Novartis Innovative Therapies AG, CLVS entered into a “stalking horse” purchase and assignment arrangement prior to the Chapter 11 petition, subject to Bankruptcy Court approval (“Novartis”). The deal called for an upfront payment of $50 million, up to an additional $333.75 million upon the accomplishment of specific development and regulatory milestones, and later sales milestones totaling $297 million to acquire nearly all of the Company’s rights to its pipeline clinical candidate, FAP-2286.
The transaction will be subject to compliance with agreed-upon and Bankruptcy Court-approved bidding processes permitting the submission of higher or otherwise better bids, as well as other agreed-upon conditions since it is a part of a sale process under Section 363 of the Bankruptcy Code.
CLVS exploring opportunities to shun assets
Clovis (CLVS) is deeply involved in conversations with a slew of potential parties about the possibility of selling one or more of its other businesses. CLVS is seeking to sell its assets. Any of these transactions would be subject to bankruptcy court scrutiny, approval, and adherence to the bidding guidelines set out by the bankruptcy court.