Acerus Pharmaceuticals and its subsidiaries, Acerus Biopharma, Acerus Labs and Acerus Pharmaceuticals USA, have received an order for creditor protection from the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (the CCAA).

On Sept. 21, 2022, Acerus undertook a strategic review of its business including possible debt and equity financings, assets sales, M&A and licensing transactions which was overseen by a committee of independent directors. Following such strategic review and after careful consideration of all available alternatives following consultation with legal and financial advisors, the directors of the company determined that it was is in the best interests of the company to file an application for creditor protection under the CCAA.

The initial order includes, among other things: a stay of proceedings in favour of the Acerus Group; approval of the DIP Loan; and the appointment of Ernst & Young as monitor of the Acerus Group.

The Acerus Group sought creditor protection under the CCAA in order to receive a stay of proceedings that will allow the Acerus Group to work with the Ernst & Young to facilitate the development of an orderly process designed to maximize the value of the Acerus Group’s assets, for the benefit of its creditors and other stakeholders. The DIP Loan is anticipated to fund the operations of the Acerus Group in the ordinary course during this process.

The Acerus Group intends to also file petitions commencing proceedings under Chapter 15 of the United States Bankruptcy Code at the United States Bankruptcy Court for the District of Delaware for creditor protection in the United States.

Management of the company will remain responsible for the day-to-day operations of the company, under the general oversight of Ernst & Young. FAAN Advisors Group has been appointed as chief restructuring officer of the company.

In order to fund the CCAA proceedings and other short-term working capital requirements, the Acerus Group has executed a facility agreement with First Generation Capital, a company affiliated with the chairman of the board of directors of Acerus, pursuant to which the DIP Lender has agreed to advance a debtor-in-possession loan in the amount of $7 million. The continued availability of the DIP Loan is conditional on, among other things, certain conditions being satisfied, including the initial order remaining in effect.

It is anticipated that the Toronto Stock Exchange will place the company under delisting review and there can be no assurance as to the outcome of such review or the continued qualification for listing on the TSX.