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Assuming the Confirmation Order has been granted, 33% dilution immediately after "effective date"
From the same doc...
1.35 “Effective Date” shall mean the first Business Day after the later to occur of (a) the fifteenth (15th) day following the Confirmation Date, provided that no stay pending appeal of the Confirmation Order has been granted, or (b) the date that all conditions precedent to the effectiveness of the Plan have been satisfied or waived by Auctus pursuant to Section 10.2 of the Plan.
10.1 Conditions Precedent to Effectiveness.
Subject to Section 10.2 of the Plan, the following are conditions precedent to the occurrence of the Effective Date:
(a) The Confirmation Order, in form and substance reasonably acceptable to Auctus shall have been entered by the Bankruptcy Court and shall not be subject to any stay;
10.2 Waiver of Conditions.
Except for the condition set forth in Section 10.1(a) of the Plan, Auctus may, in its sole discretion, waive the conditions precedent to the effectiveness of the Plan set forth in Section 10.1 by filing a notice of waiver with the Bankruptcy Court. The failure to satisfy or waive any condition precedent to the occurrence of the Effective Date may be asserted by Auctus regardless of the circumstances giving rise to the failure of such condition to be satisfied.
Transcript & Notice regarding the hearing held on 9/10/20. Pursuant to the new policy adopted by the Judicial Conference, transcripts are available for inspection only at the Office of the Clerk or may be purchased from the court transcriber. [Please see the court's website for contact information for the Transcription Service Agency]. Related [+]. Notice of Intent to Request Redaction Due By 10/15/2020. Redaction Request Due By 10/29/2020. Redacted Transcript Submission Due By 11/9/2020. TRANSCRIPT ACCESS WILL BE ELECTRONICALLY RESTRICTED THROUGH 01/6/2021 AND MAY BE VIEWED AT THE OFFICE OF THE CLERK. (Veritext)
Has anyone been able to successfully apply the "theft loss" deduction for Spongetech under Schedule A of their tax filings ?
This article (https://www.parkertaxpublishing.com/public/tax-pump-and-dump-stock-capital-losses.html) explains why it was not allowed in the case of Robert and Penny Greenberger, who bought their shares through that crook Douglas Furth...
I have tried to take this deduction several times with IRS but they have denied each time. I have, however, tried the theft loss deduction in the case of many other stocks such as USXP, LLEN, NEWL...and the IRS has allowed those losses to be deducted as "theft losses"...back in 2013 I heard someone successfully obtained a theft loss deduction for SPNG...Anyone ?
and what is your basis for saying "the company is failing?"...FDA had sanctioned Phase II...IEEE had published the scientific findings...the IPs are no doubt worth a lot...how do we know that Desmarais was al along not trying to pull a fast one saying that no takers had come forward to fund the Phase II trials ? Do you have that evidence ?
Case 8-20-71757-reg Doc 94 Filed 07/31/20 Entered 07/31/20 10:11:03
SECOND FINAL ORDER (I) AUTHORIZING DEBTOR TO OBTAIN POSTPETITION
FINANCING AND USE CASH COLLATERAL, (II) GRANTING
ADEQUATE PROTECTION, AND (III) GRANTING CERTAIN RELATED RELIEF
Upon the motion dated July 24, 2020 [ECF Doc. No. 86] (the “Extended DIP Motion”) of BioRestorative Therapies, Inc., the Debtor and Debtor in Possession in this case (the “Debtor”), seeking entry of a final order (the “Final Order”); and the Court having heard and resolved or
overruled any and all objections to the relief requested in the Extended DIP Motion at a hearing held on July 29, 2020 (the “Hearing”); and it appearing that the relief requested in the Extended DIP Motion is in the best interests of the Debtor, its estate, and creditors; and upon the record herein; and after due deliberation thereon; and good and sufficient cause appearing therefor ; and Auctus Fund, LLC (the “DIP Lender”) having agreed to extend the existing DIP Facility with
another approximately $401,000 of borrowing (the “Amended DIP Facility”) as set forth in the Budget attached to this Final Order as Exhibit A (the “Extended DIP Budget”); and upon the foregoing and the record made before this Court at the Hearing, the record of which is incorporated herein by reference; and good and sufficient cause appearing therefor;
IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1. Disposition. The Extended DIP Motion is granted on the terms set forth in this Final Order and in accordance with (i) the Extended DIP Budget, (ii) the Amended and Restated Secured Term Note attached hereto as Exhibit B (the “Amended Note”) and (iv) the Amended and Restated
Security Agreement attached hereto as Exhibit C (the “Amended Security Agreement”) (items (i), (ii), and (iii) being, collectively, the “Amended DIP Documents”).
2. Authorization For Amended DIP Financing And Use of Cash Collateral. The Debtor has demonstrated its reasonable exercise of its business judgment in negotiating for and proposing approval of the Amended DIP Facility, and is authorized to borrow from the DIP Lender and use the proceeds of the Amended DIP Facility on a final basis pursuant to the terms of the Amended DIP Documents and this Final Order consistent with the Extended DIP Budget. The Debtor is authorized to use its cash collateral pursuant to the terms of this Final Order and the Amended DIP Documents. All obligations of the Debtor under the Emergency Order, the Original Final Order, the DIP Documents the Amended DIP Documents and this Final Order shall be referred to as the “DIP Obligations”).
3. Authority to Execute and Deliver Necessary Documents. The Debtor is authorized and directed to enter into and deliver the Amended DIP Documents and such other documents and instruments as the DIP Lender may reasonably request with respect to the Amended DIP Facility. The Debtor is further authorized to perform all of its obligations and acts required under the Amended DIP Documents with respect to the Amended DIP Facility, and such other agreements as may be required by the Amended DIP Documents to give effect to the terms of the extended financing provided for in this Final Order.
4. Valid and Binding Obligations. All obligations under the Amended DIP
Documents with respect to the Amended DIP Facility shall constitute valid and binding obligations of the Debtor, enforceable against it and its successors and assigns, in accordance with the terms of the DIP Documents, the Amended DIP Documents, the Emergency Order, the Original Final Order and this Final Order.
5. DIP Lender’s Lien Priority.
(a) To secure the DIP Obligations, the DIP Lender is hereby granted on a final basis, pursuant to sections 364(c)(2), 364(c)(3) and 364(d)(1), valid, enforceable and fully perfected, first priority priming liens on and senior security interests in (collectively, the “DIP Liens”) all of the property, assets or interests in property or assets of the Debtor, of any kind or nature whatsoever, real or personal, now existing or hereafter acquired or created, including, without limitation, all property of the “estate” (within the meaning of the Bankruptcy Code) of the Debtor, including but not limited to all Accounts, Inventory, goods, contract rights, Intellectual Property, IP Ancillary Rights, instruments, documents, chattel paper, patents, trademarks, copyrights and licenses therefor, general intangibles, payment intangibles, letters of credit, letter of-credit rights, supporting obligations, machinery and equipment, real property, fixtures, leases, all of the equity interests of each subsidiary of the Debtor, all of the equity interests of all other Persons directly owned by the Debtor, money, investment property, deposit accounts, all commercial tort claims, all causes of action arising under the Bankruptcy Code or otherwise and any and all other collateral as may be described in the Amended Security Agreement, and all cash and non-cash proceeds, rents, products and profits of any collateral described above (collectively, the “DIP Collateral”), excluding all avoidance actions under chapter 5 of the Bankruptcy Code
(“Avoidance Actions”) and the proceeds thereof.
(b) The DIP Liens shall be effective immediately upon the entry of this Final Order and shall not at any time be made subject or subordinated to, or made pari passu with, any other lien, security interest or claim existing as of the Petition Date, or created under sections 363
or 364(d) of the Bankruptcy Code or otherwise.
(c) The DIP Liens shall be and hereby are deemed fully perfected liens and security interests, effective and perfected upon the date of this Final Order, without the necessity of execution by the Debtor or the filing by the DIP Lender of mortgages, security agreements, pledge agreements, financing agreements, financing statements or any other agreements or instruments.
(d) The liens described above shall be junior and subordinate only to: (i) all fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the U.S. Trustee under section 1930(a) of title 28 of the United States Code and (ii) up to $7,500 of professional fees and
expenses for a chapter 7 trustee and their counsel.
6. DIP Lender’s Superpriority Claim. The DIP Lender is hereby granted an allowed superpriority administrative expense claim on a final basis (the “DIP Superpriority Claim”) pursuant to section 364(c)(1) of the Bankruptcy Code in the Debtor’s Chapter 11 Case and in any successor cases under the Bankruptcy Code (including if this case is converted to chapter 7, or any case or cases under chapter 7 of the Bankruptcy Code, the “Successor Cases”) for the Amended DIP Facility and the DIP Obligations, having priority over any and all other claims against the
Debtor, now existing or hereafter arising, of any kind whatsoever, excluding only for purposes of this Final Order, any proceeds or property recovered in connection with the pursuit of Avoidance
Actions. The superpriority rights described above shall have priority over all pre-petition and postpetition liabilities, including any and all administrative expenses of the kind specified in Bankruptcy Code §§ 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 364(c)(1) and/or 726
and shall be junior and subordinate only to: (i) all fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the U.S. Trustee under section 1930(a) of title 28 of the United States Code and (ii) up to $7,500 in professional fees and expenses for a chapter 7 trustee and their counsel.
7. Adequate Protection for John M. Desmarais. In accordance with 11 U.S.C. § 361(2), as adequate protection in respect of any diminution in the value of the interest of John M. Desmarais (“Desmarais”) in the Debtor’s prepetition collateral which secures the so-called Secured February Bridge Loans by Desmarais, Desmarais is hereby granted post-petition replacement liens on his prepetition collateral; subject, however, to all possible rights and remedies that could affect the validity or security of such February Bridge Loans and prepetition collateral, including without limitation, objections, recharacterization, avoidance powers or otherwise.
8. Lender Expenses. All reasonable fees and costs and expenses of the DIP Lender under and as provided for in the Amended DIP Documents shall be treated as additional DIP Obligations to the extent no objection thereto is received by the DIP Lender within fifteen (15) business days after delivery of a summary invoice (redacted for privilege) to the Debtor and to the U.S. Trustee and without the need for further application to or order of this Court.
9. Termination. Upon the occurrence of an Event of Default (as defined in the Amended DIP Documents or described in the Amended DIP Documents), a default by the Debtor of any of its obligations under this Final Order, unless waived in writing by the DIP Lender, in its sole discretion, and the provision of seven (7) day’s written notice thereof by Lender to the Debtor, Debtor’s counsel and the Office of the U.S. Trustee (which notice may be given by facsimile or email transmission), or the Termination Date (as defined in the Term Sheet), the Debtor’s use of cash collateral shall terminate, subject to such use being extended or re-authorized upon further order of this Court after notice and a hearing. Thereafter, (i) the DIP Lender shall have the right to move this Court on an expedited basis for appropriate relief, including, but not limited to, relief of the restrictions of 11 U.S.C. § 362 or under any other section of the Bankruptcy Code or applicable law or rule, and seek authorization to take immediate action to protect the DIP Collateral from harm, theft and/or dissipation and to exercise all of its contractual, legal and equitable rights and remedies as to all or such part of the DIP Collateral as the DIP Lender shall elect, (ii) the
Debtor’s use of cash collateral shall immediately and automatically terminate and (iii) the DIP Obligations shall be immediately due and payable.
10. Adequate Notice. The notices given by the Debtor of the Extended DIP Motion and the Hearing were given in accordance with Bankruptcy Rules 2002, 4001(b) and 4001(c), the local rules of this Court and the order scheduling the Hearing, and, under the circumstances, was adequate and sufficient.
11. No Section 506(c) Claims. Except as expressly set forth herein, no costs or expenses of administration which have been or may be incurred in this Chapter 11 Case or any Successor Case at any time shall be surcharged against, and no person may seek to surcharge any
costs or expenses of administration against, the DIP Lender or any DIP Collateral, pursuant to sections 105 or 506(c) of the Bankruptcy Code or otherwise, without the prior written consent of the DIP Lender. No action, inaction or acquiescence by the DIP Lender shall be deemed to
be or shall be considered evidence of any alleged consent to a surcharge against the DIP Lender or the DIP Collateral.
12. Equities of the Case Waiver. The DIP Lender shall be entitled to all of the rights and benefits of section 552(b) of the Bankruptcy Code. No person may assert an “equities of the case” claim under section 552(b) of the Bankruptcy Code against the DIP Lender with respect to proceeds, product, offspring or profits of any of the DIP Collateral.
13. Good Faith. Any loan under the Amended DIP Documents and other financial accommodations made to the Debtor by the DIP Lender pursuant to the Amended DIP Documents and this Final Order shall be deemed to have been extended by the DIP Lender in good faith, as that term is used in section 364(e) of the Bankruptcy Code, and the DIP Lender shall be entitled to all protections and benefits afforded thereby.
14. Immediate Binding Effect; Entry of Final Order. This Final Order shall not be stayed and shall be valid and fully effective immediately upon entry, notwithstanding the possible application of Bankruptcy Rules 4001 (a)(3), 6004(h), 7062, and 9014, or otherwise, and the Clerk
of the Court is hereby directed to enter this Final Order on the Court’s docket in this Chapter 11 Case.
Case 8-20-71757-reg Doc 93 Filed 07/30/20 Entered 07/30/20 15:59:12
JOINT REPLY IN OPPOSITION TO THE OBJECTION OF JOHN M. DESMARAIS TO DISCLOSURE STATEMENT WITH RESPECT TO JOINT PLAN OF REORGANIZATION FILED BY AUCTUS FUND, LLC AND BIORESTORATIVE THERAPEIS, INC.
BioRestorative Therapies, Inc. (the “Debtor”), the debtor and debtor-in-possession in the above-captioned case, and Auctus Fund, LLC (“Auctus” and together with the Debtor, the “Proponents”), for their joint reply to the Objection of John M. Desmarais to Disclosure Statement with Respect to Joint Plan of Reorganization filed by Auctus Fund, LLC and
BioRestorative Therapies, Inc. [ECF Doc. No. 91] (the “Objection”) and in further support of their Joint Motion for Order: (A) Approving Adequacy of Disclosure Statement for the Debtor’s and Auctus Fund, LLC’s Joint Plan of Reorganization; (B) Establishing Procedures for
Solicitation and Tabulation of Votes to Accept or Reject the Plan; (C) Scheduling a Hearing on Confirmation of the Plan; (D) Shortening Time for the Hearing on Approval of the Disclosure Statement and Confirmation of the Plan and (E) Approving Related Notice Procedures [ECF
Doc. No. 74] (the “Disclosure Statement Motion”) which seeks, among other relief, a finding that the proposed disclosure statement (the “Disclosure Statement”) for the Proponent’s proposed Joint Plan of Reorganization of BioRestorative Therapies, Inc. and Auctus Fund, LLC, dated July 8, 2020 [ECF Doc. No. 72] (the “Plan”), contains “adequate information” as required under Section 1125 of the Bankruptcy Code, respectfully state as follows:
PRELIMINARY STATEMENT
1. The Debtor is a development stage biopharmaceutical company which, by its nature, involves risk and a certain level of speculation because the success of companies at this point in their life cycle is entirely dependent on developing and proving that the therapies that are being developed actually work and are safe and are ultimately approved by an appropriate governmental unit. It is unquestionable that pharmaceutical products are expensive to develop, test and bring to market. John M. Desmarais (“Desmarais”), the only creditor to object to the proposed Disclosure Statement, knows this. And he was given the opportunity at the beginning of this case to bring his vision and proposed outcome to the Debtor’s creditor and shareholder body concerning what should happen to the Debtor and its assets. He apparently desires to see the Debtor liquidated as opposed to reorganized because his Objection is essentially a confirmation objection and not an objection to the adequacy of the Disclosure Statement. He also declined, after this Court’s comments concerning a sale process done through a plan, to
engage in such a plan process that would allow the creditors and shareholders to decide whether the company should be sold or continue as a going concern and reorganize with a better and a stronger balance sheet than the Debtor had when it entered this case.
2. Desmarais makes no case in the Objection for why the Debtor should not be reorganized and focuses almost entirely on feasibility of the plan. The Proponents disagree with Desmarais that the feasibility issue should be considered now because the feasibility issues raised are tied to financial projections that will only become clear at the confirmation stage. That was not the situation in the case cited by Desmarais for this Court’s consideration of feasibility at this stage. See, e.g., In re 18 RVC, LLC, 485 B.R. 492 (Bankr. E.D.N.Y. 2012 (finding that
feasibility, and thus confirmation, of proposed plan contingent upon separate classifications of creditor claims). In 18 RVC, this Court was faced at the disclosure statement approval phase with a proposed plan that involved the creation of a class for a secured creditor’s deficiency claim separate from another class for general unsecured creditors. The debtor in that case conceded that it could not confirm a plan without such separate classification. Id. at 495. After a detailed analysis of the legal landscape of separate classifications, this Court held that such a separately classified claim was not appropriate on the facts of that case, and declined to approve the proposed disclosure statement. Id. at 496-97. That plan was rejected at the disclosure
statement phase because of a classification issue, not because of one party’s speculation over the Reorganized Debtor’s ability to meet Plan obligations post-confirmation.
3. As to the other cases cited by Desmarais on feasibility, both In re 8315 Fourth Ave. Corp., 172 B.R. 725 (Bankr. E.D.N.Y. 1994) and In re Prudential Energy Co., 58 B.R. 857 (Bankr. S.D.N.Y. 1986) involved a determination of feasibility based on, among other things, feasibility of projections at the plan confirmation stage. In re 231 Fourth Ave. Lyceum, LLC, 506 B.R. 196 (Bankr. E.D.N.Y. 2014) addressed feasibility of a plan prior to confirmation, but in the context of whether to grant a motion to modify the automatic stay and whether a proposed plan
had “a reasonable possibility of being confirmed within a reasonable time” as required under 11 U.S.C. § 362(d)(3) in a single asset real estate case. 231 Fourth Ave. Lyceum, 506 B.R. at 202. In that case, the Court determined that the debtor could not meet required plan payments on both a monthly basis and a lump sum basis. Again, that is not the case here.
4. Accordingly, Desmarais’s attacks on the feasibility of the proposed Plan are premature and are more properly addressed at confirmation. Nonetheless, that issue is addressed herein on at least a limited basis. In responding to the Objection, Auctus herein responds to the
feasibility issue as related to the financial projections and budgets, and as to the identification of post-confirmation officers and directors and their compensation because those issues relate to the business and direction of the reorganized Debtor.
proposed to turn debt into shares...at 0.01/share or 100 times current price...read carefully...
July 27, 2020
OBJECTION OF JOHN M. DESMARAIS TO DISCLOSURE STATEMENT
WITH RESPECT TO JOINT PLAN OF REORGANIZATION FILED
BY AUCTUS FUND, LLC AND BIORESTORATIVE THERAPIES, INC.
Excerpts.....
the Disclosure Statement does not contain “adequate information” to allow a “hypothetical investor” to make an “informed judgment” about whether to vote for or against the proposed Plan, as required by 11 U.S.C. § 1125(a).
The Declaration of Mark Weinreb (“Mr. Weinreb”), the Debtor’s Chief
Operating Officer, under Local Bankruptcy Rule 1007-4, filed with this Court on March 20 (ECF no. 3)(the “Declaration”) explains the nature of the Debtor’s business, as follows:
BRT develops therapeutic products and medical therapies
using cell and tissue protocols, primarily involving adult
stem cells. It is currently pursuing its Disc/Spine Program
with an initial investigational therapeutic product called
BRTX-100. In February 2017, the Debtor received
authorization from the Federal Drug Administration (the
“FDA”) to commence a Phase 2 clinical trial investigating
the use of BRTX-100, the Debtor’s lead cell therapy
candidate, in the treatment of chronic lower back pain
arising from degenerative disc disease. Prior to the
bankruptcy filing, we intended to commence such clinical
trial and made numerous attempts at raising sufficient
funding in order to start such trial. The funding necessary
to start that trial is approximately $10MM – 12MM
with additional substantial funding necessary to
complete it.
In developing BRTX-100, BRT obtained a license to use
patent-pending technology for investigational adult stem
cell treatment of disc and spine conditions, including
protruding and bulging lumbar discs. The technology is an
advanced stem cell injection procedure that may offer relief
from lower back pain, buttock and leg pain, and numbness
and tingling in the leg and foot. Moreover, that license also
includes a patented investigational curved needle device
that is a needle system designed to deliver cells and/or
other therapeutic products or materials to the spine and
discs. Also as part of that license, the Debtor sublicenses
a part of the licensed intellectual property back to the
licensor which results in yearly revenues (“Cash
Collateral”) which in 2019 totaled $130,000. All other
monies necessary for the operations of the Debtor have
come through debt and/or equity financings throughout
the years.
Auctus and its advisors have prepared projections
(collectively the “Projections”) for the anticipated postEffective Date operating costs, attached as Exhibit B and
for the clinical trials for the ThermoStem™ Program and
BRTX-100 program, attached as Exhibit C-1 and Exhibit
C-2, respectively. The projections for the post-confirmation
Effective Date period include projected payments under the
Plan, other than the payments due on or about the Effective
Date, which are estimated to be approximately $684,500,
consisting of: (a) payments to the Convenience Class,
which are estimated to be not more than $70,000, (b) cure
claims for assumed leases and contracts, which are
estimated to be not more than $65,000, (c) Professional Fee
Claims, in the estimated amount of approximately $82,500
of fees and expenses that will be incurred by the Debtor’s
retained professionals through August 31, 2020, net of
retainer monies funded or to be funded under the DIP
Facility and held or to be held by the Debtor for the
payment of allowed professional fees., (d) Priority Claims,
estimated to be not more than $110,000, and (e) a
contingent amount of approximately $357,000 to the holder
of the Class 1 Allowed Secured Claim, the payment of
which is contingent on the treatment the holder of such
claim receives under the Plan.
The Reorganized Debtor’s operations following the
Effective Date will be funded by the financing obtained
pursuant to Sections 4.3(c)(ii) and 5.2 of the Plan, both
before and after confirmation of the Plan. Provided that at
least $2,000,000 in other financing is raised prior to
confirmation of the Plan, Auctus has agreed to provide
financing of $3,000,000, less the DIP Obligation and the
Plan Costs. After the payment of amounts due on the
Effective Date (detailed above), the Proponents project
that the Reorganized Debtor will have at least
approximately $3,000,000 to fund its post-Effective Date
operations, which will provide funding for the
Reorganized Debtor to operate for more than a year. . .
Accordingly, the Proponents submit that the Plan is
feasible.
Thus, the commitment being made by Auctus, to fund the Total
Plan/Operating/Trial Costs is (a) expressly conditioned on at least $2,000,000 in other financing being raised PRIOR TO CONFIRMATION OF THE PLAN (the “Auctus Funding Condition”) before Auctus will invest any more money into the Debtor, and (b) if, and only if, this funding condition is somehow satisfied, Auctus is limited to providing up to $3 million
additional financing less (a) the DIP Obligation (defined in § 1.30 of the Plan to mean “all amounts, including principal, interest, costs and fees, owed to Auctus on account of the debtorin-possession loans made to the Debtor by Auctus during the Bankruptcy Case), and (b) Plan Costs (defined in § 1.56 of the Plan to mean “the costs incurred by Auctus to be a proponent of the Plan, including, without limitation, attorneys’ fees and costs, consultants’ fees and costs, and out of pocket costs and expenses).
During the past year, the Debtor directly and through
retained professionals reached out to numerous persons and
entities, including individuals, medical device companies,
healthcare funds, cell therapy companies, and
pharmaceutical companies, in an attempt to summon
interest by these entities to make a financial commitment to
our programs through primarily licensing or purchasing
structures. The discussions targeted a plethora of industries
and the full range of company sizes and value. There was
no interest in acquiring outright any of the Debtor’s
programs or technology, or the Company itself. In
addition, the Debtor was advised that any potential interest
in the technology would only occur after a successful
clinical trial of BTRX-100 (which the Debtor has yet to
start and is unable to commence due to a lack of
funding). After contacting over 70 parties involved in
degenerative disc disease, back pain, devices to treat the
spine and general regenerative medicine, no parties
expressed adequate interest to offer any indication to
partner, acquire or license the Debtor’s programs.
Indeed, Objectant, who was a member of the Debtor’s Board of Directors
until resigning on January 10, 2020, understands that the Phase 2 trial, which will take approximately a year and a half to complete and will ultimately cost around $15 million. Further, if the Phase 2 trial is successful, the Debtor will then have to go through a Phase 3 trial,
which requires many more patients, will take approximately two more years, and will cost at least $100 million. The Debtor concedes it does not have the funds needed to pay for Phase 2 trial on its own and says those funds will be raised under Section 5.2 of the Plan discussed above. When the $10-$12 million to fund the Phase 2 trial is added to the First Year Projected Operating Costs and the Effective Date payments, the total needed to be raised by Debtor is between
$13,078,934 and $15,078,934 (the “Total Plan/Operating/Trial Costs”).
The Plan is highly speculative, to say the least, and the Disclosure
Statement offers no reason why Debtor should be any more successful now in raising $2.0 million before Confirmation from third parties, or the additional $10 million to $12 million needed for Phase 2 trials when the Debtor has been unable to raise any funds for several years, despite exhaustive efforts.
WHEREFORE, for the foregoing reasons, Objectant respectfully requests that the Disclosure Statement not be approved by the Court, and that the Court grant such other, further relief as this Court deems just and proper.
Filed today....
In order to continue day-to-day operations further while the plan process continues, the Debtor requested that Auctus lend it, subject to Court approval, an additional approximately $401,000.00 under a new 8-week budget, running from July 6, 2020 through and including August 30, 2020 (the “Extended Budget”), a copy of which is annexed to the DIP Increase Motion as Exhibit A.
Auctus has agreed to the Extended Budget, subject to entry into amended and restated DIP Documents (the “Amended DIP Documents”) and approval by this Court.
Monday July 20, 2020
Ordered, Debtors time period within which the Debtor must assume or reject the Lease is extended through and including the conclusion of the hearing on the Motion, which is scheduled for August 10, 2020 at 9:30 a.m.; Bridge Order shall not extend past October 16, 2020 absent the written consent of the Landlord in accordance with E.D.N.Y. LBR 6004-1(b). Related [+]. Signed on 7/20/2020 (jaf)
Breathing life into a corpse...remember...if the shareholders and creditors approve the new plan, the note holders get to convert at 0.01/share or at 100 times higher price than current 0.0001...
Agree a 100%...the latest developments are very promising for the stock...
If the plan is approved, and there is a very good chance of this happening, the stock will open at 0.01 or 0.02 or 100 to 200 times the current price...why...because that is the price that has been approved for conversion of the notes into common stock...
The hour of doom for the short sellers indeed approaches...they shall run helter skelter like cockroaches...
Case 8-20-71757-reg Doc 74 Filed 07/09/20 Entered 07/09/20 01:10:53
Hearing Date: August 3, 2020 At: 10:00 a.m.
JOINT MOTION FOR ORDER: (A) APPROVING ADEQUACY OF DISCLOSURE STATEMENT FOR THE DEBTOR’S AND AUCTUS FUND, LLC’S JOINT PLAN OF REORGANIZATION; (B) ESTABLISHING PROCEDURES FOR SOLICITATION AND TABULATION OF VOTES TO ACCEPT OR REJECT THE PLAN; (C) SCHEDULING A HEARING ON CONFIRMATION OF THE PLAN; (D) SHORTENING TIME FOR THE HEARING ON APPROVAL OF THE DISCLOSURE STATEMENT AND CONFIRMATION OF THE PLAN AND (E) APPROVING RELATED NOTICE PROCEDURES
To: THE HONORABLE ROBERT E. GROSSMAN UNITED STATES BANKRUPTCY JUDGE
BioRestorative Therapies, Inc. (the “Debtor”), the above-captioned debtor and debtor-in possession, and Auctus Fund, LLC (“Auctus,” and collectively with the Debtor, the “Proponents”) submit this joint motion (the “Motion”) seeking entry of an order under section 1121(d) of title 11, United States Code (the "Bankruptcy Code") for entry of an order (the “Disclosure Statement Order”):
(a) approving the adequacy of the Disclosure Statement for their Plan of Reorganization, dated July 8, 2020 [ECF Doc. No. 73] (the “Disclosure Statement”);
(b) establishing procedures for solicitation and tabulation of votes to accept or reject the Joint Plan of Reorganization, dated July 8, 2020 [ECF Doc. No. 72] (the “Plan”);
(c) scheduling hearings on shortened notice for the approval of the Disclosure Statement (the “Disclosure Statement
Hearing”) and confirmation of the Plan (the “Confirmation Hearing”); and
(d) approving related notice procedures. In support of the Motion, the
Proponents respectfully state as follows:
JURISDICTION
1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. Venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b).
2. The statutory predicates for the relief requested herein are Bankruptcy Code § 1125, Rules 3017, 3018 and 3020 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and Rules 3017-1 and 9077-1 of the Local Bankruptcy Rules for the Eastern District of New York.
BACKGROUND
3. On March 20, 2020 (the “Petition Date”), the Debtor commenced a case in this Court by the filing of a voluntary petition for relief under chapter 11 of the Bankruptcy Code.
4. The Debtor is a publicly traded company (Stock Symbol: BRTX) that develops therapeutic products and medical therapies using cell and tissue protocols, primarily involving adult stem cells. The Debtor’s website is at www.biorestorative.com. The Debtor is currently developing a Disc/Spine Program referred to as “brtxDISC”. Its lead cell therapy
candidate, BRTX-100, is a product formulated from autologous (or a person’s own) cultured mesenchymal stem cells collected from the patient’s bone marrow. The product is intended to be used for the non-surgical treatment of painful lumbosacral disc disorders. In developing BRTX 100, the Debtor obtained a license to use patent-pending technology for investigational adult stem cell treatment of disc and spine conditions, including protruding and bulging lumbar discs. The technology is an advanced stem cell injection procedure that may offer relief from lower back pain, buttock and leg pain, and numbness and tingling in the leg and foot. Moreover, that license also includes a patented investigational curved needle device that is a needle system
designed to deliver cells and/or other therapeutic products or materials to the spine and discs. Also as part of that license, the Debtor sublicenses a part of the licensed intellectual property back to the licensor which results in yearly revenues. In 2019, that revenue totaled
approximately $130,000.
5. In February 2017, the Debtor received authorization from the Federal Drug Administration to commence a Phase 2 clinical trial investigating the use of BRTX-100, the Debtor’s lead cell therapy candidate, in the treatment of chronic lower back pain arising from degenerative disc disease.
6. The Debtor is also engaging in research efforts with respect to a platform technology utilizing brown adipose (fat) for therapeutic purposes to treat type 2 diabetes, obesity and other metabolic disorders and has labeled this initiative its ThermoStem™ Program. Further,
the Debtor has licensed a patented curved needle device that is a needle system designed to deliver cells and/or other therapeutic products or material to the spine and discs or other potential sites. Patents related to the ThermoStem™ Program were issued, or are scheduled to be issued, to the Debtor by (i) the United States in September 2015, January 2019 and March 2020; (ii) Australia in April 2017 and October 2019; (iii) Japan in December 2017; and (iv) Israel in August 2019. Additionally, the Debtor was advised in April 2020 that a patent from the European Union was issued, with the company filing validations of that patent in the United Kingdom and eight different EU countries, including, but not limited Germany, Italy and France.
7. Additional information about the Debtor’s business and the events leading up to the Petition Date can be found in the “Declaration of Mark Weinreb Under Local Rule 1007-4 in Connection with Chapter 11 Filing, and Local Rule 9077-1 in Support of Certain ‘First Day’ Motions,” dated March 20, 2020 [ECF Doc. No. 3].
8. The Debtor is authorized to remain in possession of its property and to continue in the operation and management of its business as a debtor in possession under Bankruptcy Code §§ 1107 and 1108.
9. To date, no committee, trustee or examiner has been appointed in this case.
Case 8-20-71757-reg Doc 73 Filed 07/09/20 Entered 07/09/20 00:06:01
[PROPOSED] DISCLOSURE STATEMENT WITH RESPECT TO JOINT PLAN OF REORGANIZATION OF BIORESTORATIVE THERAPIES, INC. AND AUCTUS FUND, LLC
THE DEBTOR AND AUCTUS, AS CO-PROPONENTS, URGE ALL CREDITORS TO VOTE TO ACCEPT THE PLAN BECAUSE IT IS ANTICIPATED TO PROVIDE A HIGHER AND MORE CERTAIN RETURN TO CREDITORS THAN ANY ALTERNATIVE.
II. SUMMARY OF THE PLAN
The Plan contemplates that new capital will be raised that will provide for the payment of Allowed Claims under the Plan and the funding of the Reorganized Debtor’s continued operations, including clinical trials and other steps necessary to continue the development of the Debtor’s technology and intellectual property. The Plan provides for the satisfaction in full of all Allowed Secured Claims, Administrative Claims, Priority Claims and Priority Tax Claims, unless the holders of such Claims agree to different treatment. The holders of Allowed General Unsecured Claims will receive, at their election, either (a) common stock in the Reorganized Debtor in exchange for their Allowed Claims, or (b) if they choose to provide financing to the Reorganized Debtor in an amount of not less than seventy-five percent (75%) of their respective Allowed Claims, a Convertible Plan Note for the amount of their respective Allowed Claims and a Secured Convertible Plan Note for the amount of financing they provide to the Reorganized Debtor.
Case
A summary of the types of Claims and the projected recovery for each type of Claim follows. A Claim is placed in a particular Class for the purpose of voting on the Plan, and only to the extent that such Claim is Allowed for voting purposes in that Class and such Claim has not been paid, released or otherwise settled prior to the Confirmation Date.
Type of Claim Estimated Amount
Administrative Claims $25,000.00
Professional Fee Claims $82,500.00
Priority Tax Claims $0
Class 1 Secured Claims of John Desmarais, Tuxis Trust and/or Phoenix Cell Group Holdings, LLC $357,000.00
Class 2 Priority Claims $85,000.00
Class 3 General Unsecured Claims $14,796,000.00
Class 4 Convenience Class Claims $70,000.00
Class 5 Equity Interests N/A Retention of Equity Interests Unimpaired
4.2 The Debtor’s Assets
C. Unsecured Claims
As of the Petition Date, exclusive of payroll obligations, the Debtor’s unsecured liabilities were approximately $13,797,835. Those liabilities, exclusive of employee related obligations, are comprised of (i) convertible promissory note debt in the aggregate amount of $10,101,493, including interest and fees; (ii) convertible promissory note debt held by current insiders, in the aggregate amount of $156,542; (iii) non-convertible promissory note debt, excluding the 2016/2017 Notes and the February 2020 Bridge Notes, in the aggregate amount of $481,050, (iv) rent and additional rent arrears to the Debtor’s landlord in the amount of $50,686; (v) unpaid amounts under a services agreement concerning an animal study in the amount of $15,409; and (vi) other unsecured trade debt other operating debt totaling approximately $2,991,792. If the liens securing the 2016/2017 Notes are avoided, then the Debtor’s unsecured debt would increase by approximately $999,027.
As of the Petition Date, the Debtor owed its non-officer employees salaries of approximately $13,333, and officers $43,260 for the most recent pay period running from March 1, 2020 through and including March 15, 2020. Thus, the total payroll accrued but unpaid as of the Petition Date totaled approximately $60,923, inclusive of the associated taxes to be withheld from the employees or otherwise paid by the employer. Additionally, as of the Petition Date, the Debtor owed its employees and officers for expense reimbursements, a pre-petition severance claim, unused vacation time and unpaid salary totaling approximately $210,783. Some portion of these amounts is likely entitled to priority treatment under Section 507 of the Bankruptcy Code.
4.4 Events Precipitating the Bankruptcy Case
Subsequent to the FDA issuing its approval for the Debtor to commence a Phase 2 trial of BRTX-100, the Debtor engaged in efforts to raise funds sufficient to start such trial. While the Debtor had some success raising funds in order to sustain its operations, those efforts were not successful in raising sufficient funds to commence the Phase 2 trial. The Debtor’s efforts continued during the year prior to the Petition Date, with the Debtor directly and through retained professionals reaching out to numerous persons and entities, including individuals, medical device companies, healthcare funds, cell therapy companies, and pharmaceutical companies, in an attempt to summon interest by these entities to make a financial commitment to the Debtor’s programs through primarily licensing or purchasing structures. Those discussions targeted a plethora of industries and the full range of company sizes and value. There was no interest in acquiring outright any of the Debtor’s programs or technology, or the Company itself. In addition, the Debtor was advised that any potential interest in the technology would only occur after a successful clinical trial of BRTX-100 (which the Debtor has yet to start and is unable to commence due to a lack of funding). After contacting over 70 parties involved in degenerative disc disease, back pain, devices to treat the spine and general regenerative medicine, no parties expressed adequate interest to offer any indication to partner, acquire or license any of the Debtor’s programs.
On January 10, 2020, Desmarais resigned from the Debtor’s board of directors. With the 2016/2017 Notes maturing on January 30, 2020, Desmarais advised the Debtor that such maturity dates would not be extended, but that he would forebear from calling a default and enforcing his rights under those notes. Subsequent to the maturity of the 2016/2017 Notes, the Debtor received an offer from Desmarais, for the Debtor to sell all or substantially all of the Debtor’s assets, including, but not limited to, its owned intellectual properties and licenses of other intellectual properties and goodwill, as a going concern (collectively, the “Sale Assets”) through an orderly, competitive bid and sale process (the “Sale”) to Phoenix as part of a chapter 11 bankruptcy filing, subject to higher or better offers and Bankruptcy Court approval.
That offer (the “Phoenix Offer”) was thereafter negotiated by the Debtor and Phoenix and culminated in the execution of a stalking horse asset purchase agreement (the “Stalking Horse APA”), as further amended, which provided for the purchase by Phoenix of the Sale Assets, subject to the approval of this Bankruptcy Court and higher or better offers.
To facilitate the Debtor’s ongoing operations until the consummation of the Sale, Phoenix also agreed to provide debtor in possession financing sufficient to maintain operations of the Debtor, pay for the operating and administrative costs of the case according to an agreed upon budget, and implement the Sale process. Accordingly, the Phoenix Offer contemplated the continuation of the Debtor’s business without any corresponding liabilities, and did not provide for a forced liquidation sale of the Sale Assets in pieces.
The February 2020 Bridge Notes funding was made so that the Debtor could continue to operate as a going concern while definitive documents for the proposed sale and DIP Facility, as well as documents necessary to commence a chapter 11 filing, were prepared. After considering available options within the context of the status of the Debtor’s operations and inability to secure sufficient funding at that time, the Debtor determined in its business judgment to accept Phoenix’ offers to purchase the Sale Assets under the Stalking Horse APA, subject to the Bankruptcy Court’s approval and higher or better offers, and to fund the Sale process under 11 U.S.C. § 363(b) and (f) with the DIP Facility, subject to entry of both an order of the Court approving the DIP Facility on an interim basis and the Bid Procedures Order.
Absent the Sale of the Sale Assets under the proposed Stalking Horse APA, the Debtor and its board of directors determined it was unlikely that the Debtor would be able to prevent Desmarais from foreclosing on the Debtor’s assets which would have eliminated any ability to provide any material amount of money to its unsecured creditors. Moreover, the Phoenix Offer preserved the going concern value of the Sale Assets and avoided a possible chapter 7 bankruptcy filing in which going concern value would have been materially impacted and subjected the Sale Asset to forced liquidation value realizations. The Debtor believed no further purpose would have been served in maintaining the Debtor’s operations for a prolonged period beyond the Sale process without additional funding and incurrence of the extra cost and expense of seeking to reorganize the Debtor’s business due to its stage in business development, which relies on debt and/or equity investments to fund operations. The Debtor strongly believed that the Sale Assets needed to be sold as quickly as possible in order to preserve the going concern value of those Assets for the benefit of the Debtor, its creditors and its Estate. This bankruptcy case followed and was commenced on the Petition Date.
8.2 Best Interests of Creditors and Comparison with Chapter 7 Liquidation
As a condition to confirmation of the Plan, Section 1129(a)(7)(A)(ii) of the Bankruptcy Code requires that each holder of a claim or an interest in an impaired Class of Claims or Equity Interests must either accept the Plan or receive or retain at least the amount or value it would receive if the Debtor were liquidated under chapter 7 of the Bankruptcy Code on the Effective Date of the Plan.
Attached as Exhibit D is a liquidation analysis for the Debtor. If the Plan is not confirmed, the Debtor’s case would be converted to a chapter 7 case. As is demonstrated by the liquidation analysis, in a chapter 7 case the liquidation of the Debtor’s assets would not generate sufficient funds to pay secured claims in full, much less pay a dividend to Administrative Claims, Priority Claims or General Unsecured Claims.
In contrast, the Plan will provide for the payment in full of all secured claims, Administrative Claims and Priority Claims, and will distribute Common Stock or convertible notes and warrants to the holders of Allowed General Unsecured Claims and Allowed Equity Interests. The Proponents have not projected the value of such Common Stock on the Effective Date, but if the Reorganized Debtor can successfully develop its technology, the Common Stock may increase in value. Since the Petition Date, the Debtor’s stock has been trading at between $0.0001 and $0.0002 per share. If the Debtor’s share price continues to trade in that range after the Effective Date, a creditor electing to receive 100 shares per each $1.00 of unsecured debt would receive value of between $0.01 and $0.02 on that debt. Naturally, in the event that share price increases because the marketplace determines that the Debtor’s value has increased prior to confirmation of the Plan or will increase upon exit from bankruptcy under a confirmed Plan, such value may increase to the benefit of all shareholders, including those creditors receiving shares in exchange for debt. In any event, confirmation of the Plan will result in a greater return to unsecured creditors than might be realized if this case were converted to a case under chapter 7 of the Bankruptcy Code.
Case 8-20-71757-reg Doc 72 Filed 07/08/20 Entered 07/09/20 00:00:38
JOINT PLAN OF REORGANIZATION OF BIORESTORATIVE THERAPIES, INC. AND AUCTUS FUND, LLC
ARTICLE I
DEFINITIONS AND CONSTRUCTION OF TERMS
1.47 “Leak Out Restriction” shall mean, unless waived by the Reorganized Debtor, in its discretion, in one or more instances:
(a) For shares of Common Stock received pursuant to Section 4.3(c)(i) of the Plan, a restriction prohibiting the holder of such stock and any of its Trading Affiliates, from selling, directly or indirectly, (including, without limitation, any sales, short sales, swaps or any derivative transactions that would be equivalent to any sales or short positions): (i) during the period between the Effective Date and 11:59 p.m. (Eastern Standard Time) on the thirtieth (30th) day following the Effective Date, more than thirty-three percent (33%) of the total amount of shares of Common Stock it received on the Effective Date; (ii) during the period between 12:01 a.m. (Eastern Standard Time) on the thirty-first (31st) day following the Effective Date and 11:59 p.m. (Eastern Standard Time) on the sixtieth (60th) day following the Effective Date, more than thirty-three percent (33%) of the total amount of shares of Common Stock it received on the Effective Date; and (iii) during the period between 12:01 a.m. (Eastern Standard Time) on the sixty-first (61st) day following the Effective Date and 11:59 p.m. (Eastern Standard Time) on the ninetieth (90th) day following the Effective Date, more than thirty-three percent (33%) of the total amount of shares of Common Stock it received on the Effective Date; and
(b) For shares of Common Stock obtained through the conversion of a Convertible Plan Note received pursuant to Section 4.3(c)(ii)(1) of the Plan, a restriction prohibiting the holder of such stock and any of its Trading Affiliates, from selling, directly or indirectly, (including, without limitation, any sales, short sales, swaps or any derivative transactions that would be equivalent to any sales or short positions): (i) during the period between the Effective Date and 11:59 p.m. (Eastern Standard Time) on the thirtieth (30th) day following the Effective Date, more than sixteen and six-tenths percent (16.6%) of the total amount of shares of Common Stock it received upon the conversion of such note; (ii) during the period between 12:01 a.m. (Eastern Standard Time) on the thirty-first (31st) day following the Effective Date and 11:59 p.m. (Eastern Standard Time) on the sixtieth (60th) day following the Effective Date, more than sixteen and six-tenths percent (16.6%) of the total amount of shares of Common Stock it received upon the conversion of such note; (iii) during the period between 12:01 a.m. (Eastern Standard Time) on the sixty-first (61st) day following the Effective Date and
11:59 p.m. (Eastern Standard Time) on the ninetieth (90th) day following the Effective Date, more than sixteen and six-tenths percent (16.6%) of the total amount of shares of Common Stock it received upon the conversion of such note; (iv) during the period between 12:01 a.m. (Eastern Standard Time) on the ninety first (91st) day following the Effective Date and 11:59 p.m. (Eastern Standard Time) on the one-hundred and twentieth (120th) day following the Effective Date, more than sixteen and six-tenths percent (16.6%) of the total amount of shares of Common Stock it received upon the conversion of such note; (v) during the period between 12:01 a.m. (Eastern Standard Time) on the one-hundred and twenty-first (121st) day following the Effective Date and 11:59 p.m. (Eastern Standard Time) on the one-hundred and fiftieth (150th) day following the Effective Date, more than sixteen and six-tenths percent (16.6%) of the total amount of shares of Common Stock it received upon the conversion of such note; and (vi) during the period between 12:01 a.m. (Eastern Standard Time) on the one-hundred and fifty-first (151st) day following the Effective Date and 11:59 p.m. (Eastern Standard Time) on the one-hundred and eightieth (180th) day following the Effective Date, more than sixteen and six-tenths percent (16.6%) of the total amount of shares of Common Stock it received upon the conversion of such note.
3.1 Claim and Equity Interest Categories.
Claims against and Equity Interests in the Debtor have been classified as follows:
Class Designation Impairment Entitled to Vote
1 Secured Claims of John Desmarais, Tuxis Trust and/or Phoenix Cell Group Holdings, LLC Impaired Yes
2 Priority Claims Unimpaired No
3 General Unsecured Claims Impaired Yes
4 Convenience Class Claims Impaired Yes
5 Equity Interests Unimpaired No
Case 8-20-71757-reg Doc 77 Filed 07/09/20 Entered 07/09/20 14:20:20
NOTICE OF ENTRY OF ORDER SCHEDULING HEARING ON SHORTENED NOTICE TO DETERMINE, AMONG OTHER RELIF, WHETHER THE PROPOSED DISCLOSURE STATEMENT FOR THE DEBTOR’S AND AUCTUS FUND, LLC’S JOINT PLAN OF REORGANIZATION, DATED JULY 8, 2020, SHOULD BE FOUND TO CONTAIN “ADEQUATE INFORMATION”
PLEASE TAKE NOTICE that on July 9, 2020, the United States Bankruptcy Court for the Eastern District of New York entered an Order Scheduling Hearing on Shortened Notice [ECF Doc. No. 76] in the above captioned case, a copy of which is attached, setting August 3, 2020, at
10:00 a.m. as the hearing date and time for the Court to consider that part of the Joint Motion for Order: (A) Approving Adequacy of Disclosure Statement for the Debtor’s and Auctus Fund, LLC’s Joint Plan of Reorganization; (B) Establishing Procedures for Solicitation and Tabulation of Votes to Accept or Reject the Plan; (C) Scheduling a Hearing on Confirmation of the Plan; (D) Shortening Time for the Hearing on Approval of the Disclosure Statement and Confirmation of the
Plan and (E) Approving Related Notice Procedures [ECF Doc. No. 74] (the “Motion”) as to whether the proposed Disclosure Statement contains “adequate information” and whether other plan process notice and deadlines should be shortened (collectively, the “Disclosure Statement
Relief”).
PLEASE TAKE FURTHER NOTICE, that the Hearing shall be held telephonically on August 3, 2020 at 10:00 a.m. (prevailing Eastern Time) before the Honorable Judge Robert E. Grossman, Courtroom 860, United States Bankruptcy Court for the Eastern District of New York (the “Bankruptcy Court”), 290 Federal Plaza, Central Islip, New York 11722. The telephonic
hearing will be conducted using Court Solutions LLC. All attorneys and parties wishing to appear at, or attend, this telephonic hearing must make arrangements with Court Solutions no later than 12:00 p.m. on the business day prior to the hearing date. Instructions for registration with Court Solutions can be found on the Court’s website at https://www.nyeb.uscourts.gov/sites/nyeb/files/Court-solutions-registration-instructions.pdf.
PLEASE TAKE FURTHER NOTICE, that any written responses or objections to the Motion concerning the Disclosure Statement Relief shall: (a) be in writing; (b) state the name and address of the objecting party and the nature of the Claim or Interest of such party; (c) state with
particularity the basis and nature of any objection to confirmation of the Plan; and (d) be filed with the Court and a copy served on (i) Certilman Balin Adler & Hyman, LLP (Attention: Robert D. Nosek, Esq.), counsel the Debtor; (ii) Murphy & King, P.C., One Beacon Street, 21st Floor, Boston, MA 02108 (Attn: William R. Moorman, Jr., Esq.), counsel to Auctus Fund, LLC and (iii) Office of the United States Trustee, Alfonse D’Amato Courthouse, 560 Federal Plaza, Central Islip, New York 11722, (Attn: Stan Y. Yang, Esq.), so that such objections are received no later
than July 27, 2020 at 4:00 p.m.
PLEASE TAKE FURTHER NOTICE, that the Hearing may be adjourned from time to time without further notice other than the announcement of such adjournment in open Court, or the filing of a notice of adjournment on the docket of the Debtor’s case.
Dated: East Meadow, New York
July 9, 2020
CERTILMAN BALIN ADLER & HYMAN, LLP
Counsel to the Debtor and Debtor in Possession
By: _/s/ Robert D. Nosek ___
RICHARD J. MCCORD, ESQ
Robert D. Nosek, Esq.
90 Merrick Avenue
East Meadow, New York 11554
(516) 296-7000
Case 8-20-71757-reg Doc 75 Filed 07/09/20 Entered 07/09/20 08:15:17
AFFIRMATION IN SUPPORT OF DEBTOR’S AND AUCTUS FUND, LLC’S REQUEST
TO SHORTEN NOTICE PERIOD PURSUANT TO E.D.N.Y. LBR 9077-1(c)
ROBERT D. NOSEK, ESQ., the undersigned, an attorney duly licensed to practice law in the Courts of New York State and in this Court, hereby affirms the following to be true under the penalties of perjury:
1. I am an associate of Certilman Balin Adler & Hyman, LLP, attorneys for BioRestorative Therapies, Inc. (the “Debtor”), the debtor and debtor in possession in the abovecaptioned case and, as such, am fully familiar with the facts and circumstances of this matter.
2. The instant affirmation is submitted in accordance with E.D.N.Y. LBR 9077- 1(c), and in support of the Debtor’s and Auctus Fund, LLC’s (collectively, the Proponents”) Joint Motion for Order: (A) Approving Adequacy of Disclosure Statement for the Debtor’s and Auctus Fund, LLC’s Joint Plan of Reorganization; (B) Establishing Procedures for Solicitation and Tabulation of Votes to Accept or Reject the Plan; (C) Scheduling a Hearing on Confirmation of the Plan; (D) Shortening Time for the Hearing on Approval of the Disclosure Statement and
Confirmation of the Plan and (E) Approving Related Notice Procedures [ECF Doc. No. 74] (the “Motion”).
Shortening of Notice Periods
3. Pursuant to Local Rule 9077-1(c), it is respectfully submitted that a reduction in the notice periods as requested in the Motion is warranted concerning hearings on and time to object to the Proponents’ Joint Plan of Reorganization, dated July 8, 2020 [ECF Doc. No. 72] and the
accompanying proposed Disclosure Statement [ECF Doc. No. 73].
4. Notice for a hearing on approval of and the deadline to object to and hold hearings to consider a proposed disclosure statement and proposed plan of reorganization is normally as long as thirty-one (31) days in this District. See, e.g., Fed. R. Bankr. P. 2002(b)(1), (2); E.D.N.Y.
LBR 9006-1(c) (requiring additional period of notice depending on method of service).
5. By joint motion filed on July 9, 2020 [ECF Doc. No. 75], the Proponents sought, among other relief, entry of an order under section 1121(d) of title 11, United States Code (the "Bankruptcy Code") (a) approving the adequacy of the Disclosure Statement for their Plan of
Reorganization, dated July 8, 2020 [ECF Doc. No. 73] (the “Disclosure Statement”) and confirmation of the Plan [ECF Doc. No. 74]. The Proponents seek to have the Court schedule a hearing on confirmation on August 31, 2020. However, in order to meet that date, the notice
periods for hearings on the Disclosure Statement and confirmation would need to be shortened by
several days each. The Proponents are seeking the following deadlines and hearing dates:
• Deadline to Object to Disclosure Statement July 27, 2020, at 4:00 p.m.
• Hearing on Disclosure Statement August 3, 2020, at 10:00 a.m.
• Deadline for Replies on Disclosure Statement July 30, 2020, at 12:00 p.m.
• Voting Deadline August 24, 2020, at 4:00 p.m.
• Deadline to Object to Confirmation August 24, 2020, at 4:00 p.m.
• Deadline for Replies on Confirmation August 27, 2020, at 12:00 p.m.
• Hearing on Confirmation August 31, 2020, at 10:00 a.m.
6. Assuming service of notice of an August 3, 2020 hearing date on the Disclosure Statement by Monday, July 13, 2020, that notice period would be shortened to twenty-one (21) days. Assuming service of the Solicitation Package for a confirmation hearing on August 31, 2020
by August 6, 2020, that notice period would be shortened to twenty-five (25) days.
7. This case has been pending for almost four months and has seen limited involvement of creditors and shareholders outside of a core group of parties in interest, one of which is a Proponent of the Plan.
8. Furthermore, the sooner the Debtor can exit bankruptcy the sooner it can focus on its post-Effective Date goals including, but not limited to, raising additional capital beyond that which it intends to raise through the Plan. Moreover, if the Plan can be confirmed by August 31,
2020, then further borrowing under another extended DIP facility may not be necessary which could avoid the further incurrence of reorganization fees and costs.
9. The Debtor submits that shortened notice is appropriate, and no creditors or parties in interest would be prejudiced by the minor reductions sought in the notice periods particularly given that creditors and shareholders have not been active in this case outside of the small group that make appearances at every hearing, and the Debtor is attempting to move the case forward. In the case of deadlines to vote and file objections to confirmation and the hearing on confirmation,
the Proponents seek, at most, six (6) days shorter notice.
10. The Debtor submits that the requested order is warranted, provides for a continued efficient administration of the Debtor’s case, a reasonably expedited plan process, and does not prejudice any creditors or shareholders over any adjustment in timing of notice and hearings on
the relief sought.
11. No prior application has been made to this or any other court of competent jurisdiction in this case for the shortening of notice concerning the disclosure statement and plan. All other requests to shorten time in this case for other relief sought has been granted by the Court.
12. Accordingly, based upon the foregoing, it is respectfully submitted that this Court enter the requested procedural order which accompanies this Affirmation.
Dated: East Meadow, NY
July 9, 2020
__________/s/Robert D. Nosek___________
ROBERT D. NOSEK
Case 8-20-71757-reg Doc 71 Filed 07/02/20 Entered 07/02/20 17:33:08
Dear Judge Grossman:
We are counsel to BioRestorative Therapies, Inc. (the “Debtor”), the above-referenced debtor and debtor in possession. We submit this status letter jointly with counsel to Auctus Funds, LLC to update the Court
concerning the proposed plan of reorganization and disclosure statement. As we advised the Court earlier this week during the case status conference, counsel to Auctus provided us with a draft plan of reorganization for review and comment, which we reviewed with the Debtor’s management on Sunday, June 30, 2020. After the status conference, we needed to move the Debtor’s board meeting to Tuesday evening, which did occur. That meeting went well with a good comments and questions, but because Auctus was still working on the financial
aspects of the proposed disclosure statement, the Board did not have an ability to vote whether to join the draft plan as a co-proponent with Auctus.
Counsel to Auctus and counsel to the Debtor, and the respective business
people, have been working diligently over the past several weeks, with redoubled efforts since the status conference, to complete the draft disclosure statement so that the Debtor’s Board has sufficient information to make an informed decision whether to have the plan submitted as a joint plan. With this being a holiday week, we may have been overly aggressive in trying to have everything done and buttoned up for filing today. With counsel to Auctus advising that the proposed disclosure statement is in final draft form and being reviewed by their client, and almost ready to be circulated to the Debtor and the Board, and the Board making itself available over the holiday weekend to discuss and vote on whether to be a plan proponent, the parties are
targeting a plan and disclosure statement filing on Monday, July 6. In any event those documents will filed no later than Wednesday, July 8. That filing will be accompanied by a motion to approve the proposed disclosure statement, with any other necessary documents targeting a hearing date of August 3, 2020, which is the current date that the parties are next before the Court.
We thank the Court for its patience in this matter.
Respectfully submitted,
/s/ Robert D. Nosek
ROBERT D. NOSEK
78k in April and 45k in May paid to professionals Silva, Pacassassi, Weinreb et al...why ? because there is value in the company...the shorts are going to get screwed big time...very soon...start covering for your own sanity...
Pursuant to 28 U.S.C. § 1746, the undersigned hereby certifies as follows:
1. On April 14, 2020, BioRestorative Therapies, Inc. (the “Debtor”), the debtor and debtor in possession in the above-captioned case, filed its Application to Employ K & L Gates as Special Intellectual Properties Counsel to Debtor and Debtor in Possession [ECF Doc. No. 41] (the “Motion”).
2. On June 3, 2020, the Debtor filed and served a notice (the “Notice”) of hearing on the Motion, with a copy of the Motion and a proposed order, scheduling a hearing on the Motion for June 22, 2020. See Notice at ECF Doc. No. 64 and Affidavit/Certificate of Service at ECF Doc. No. 65.
3. Pursuant to E.D.N.Y. LBR 9006-1, responsive papers are to be served so as to be received not later than 7 days before the hearing date (the “Objection Deadline”), which was June 15, 2020.
4. The Objection Deadline has passed and no objections or other responsive pleadings to the Motion have been received by the Movant or filed with the Court. Accordingly, this Court may enter the proposed order granting the Motion without need for a hearing.
Dated: East Meadow, New York June 18, 2020
So the IPs are going to be properly evaluated soon...
Hearing scheduled for 6/22/2020 at 01:30 PM at Courtroom 860 (Judge Grossman), CI, NY. (jaf)
Related: [-] 41 Application to Employ filed by Debtor BioRestorative Therapies, Inc.,64 Exhibit filed by Debtor BioRestorative Therapies, Inc.
Proposed Order Authorizing Employment of K&L Gates, LLP as Special Intellectual Properties Counsel to the Debtor and Debtor in Possession Pursuant to 11 U.S.C. Section 327(e)
Hopefully, K&L Gates finds out the IPs are worth hundreds of millions...after all, we are talking about a stem cell cure for lower back pain and a cure for overweight folks...
Wed. June 3, 2020
ORDER AUTHORIZING EMPLOYMENT OF K&L GATES, LLP AS SPECIAL
INTELLECTUAL PROPERTIES COUNSEL TO THE DEBTOR AND DEBTOR IN
POSSESSION PURSUANT TO 11 U.S.C. § 327(e)
NOTICE OF HEARING ON MOTION FOR ENTRY OF AN ORDER
AUTHORIZING EMPLOYMENT OF K&L GATES, LLP AS SPECIAL
INTELLECTUAL PROPERTIES COUNSEL TO THE DEBTOR
AND DEBTOR IN POSSESSION PURSUANT TO 11 U.S.C. § 327(e)
PLEASE TAKE NOTICE that, Biorestorative Therapies, Inc. (the “Debtor”), the abovecaptioned debtor and debtor in possession, by its counsel, Certilman Balin Adler & Hyman, LLP, by and through the accompanying application [ECF Doc. No. 41], will move before the Honorable Robert E. Grossman, United States Bankruptcy Judge, at the United States Bankruptcy Court for the Eastern District of New York, Alfonse M. D'Amato U.S. Courthouse, 290 Federal Plaza, Courtroom 860, Central Islip, New York, on June 22, 2020, at 1:30 p.m. (the “Hearing”), or as soon thereafter as counsel can be heard, for entry of an order pursuant to 11 U.S.C. §327(e)
authorizing employment of K&L Gates, LLP. as Special Intellectual Properties Counsel to the Debtor and Debtor in Possession, and for such other and further relief as is just.
Order Establishing Deadline for Filing Proofs of Claim. Proofs of Claims due by 7/7/2020. Government Proof of Claim due by 9/16/2020. Signed on 5/28/2020 (jaf)
Case 8-20-71757-reg Doc 61-1 Filed 05/28/20 Entered 05/28/20 10:54:26
EXHIBIT A
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In re:Chapter 11
BIORESTORATIVE THEAPIES, INC.
Case No.: 20-71757-reg
Debtor.
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NOTICE OF DEADLINE REQUIRING FILING OF PROOFS OF CLAIM ON OR BEFORE ____________________, 20__TO ALL PERSONS AND ENTITIES WITH CLAIMS AGAINST BIORESTORATIVE THERAPIES, INC.
The United States Bankruptcy Court for the Eastern District of New York has entered an Order establishing ____________, 20__ (the “Bar Date”) as the last date for each person or entity (including individuals, partnerships, corporations, joint ventures, trusts and governmental units) to file a proof of claim against BioRestorative Therapies, Inc., (the “Debtor”).
Equity Interest Holders:
If you are a holder of an equity interest in the Debtor, you need not file a proof of interest with respect to the ownership of such equity interest at this time. But, if you assert a claim against the Debtor, including a claim relating to your equity interest or the purchase or sale of that interest, you must file a proof of claim on or prior to the Bar Date in accordance with the procedures set forth in this Notice.
This Notice is being sent to many persons and entities that have had some relationship with or have done business with the Debtor but may not have an unpaid claim against the Debtor. The fact that you have received this Notice does not mean that you have a claim against or equity interest in the Debtor, or that the Debtor or the Court believes that you have a claim against or hold an equity interest in the Debtor.
3. WHEN AND WHERE TO FILE
Except as provided for herein, all proofs of claim must be filed so as to be received on or before ________________. Attorneys (with full access accounts) and employees of institutional creditors (with limited
access accounts) shall file proofs of claim electronically on the Court’s Case Management/Electronic Case File (“CM/ECF”) system. Those without accounts to the CM/ECF system shall file their proofs of claim by mailing or delivering the original proof of claim to the Court at the address provided below:
United States Bankruptcy Court
Eastern District of New York
Alfonse M. D’Amato U.S. Courthouse
290 Federal Plaza
Central Islip, NY 11722
A proof of claim will be deemed timely filed only when received by the Bankruptcy Court on or before the Bar Date.
Both Sylla and the Chinese company got 5 million Preferred A shares each, convertible to 2 billion ordinary shares...and the only thing the company got was 50K and 100k of a loan to Sylla wiped out...something does not compute...
to a related party, Beijing Gas Blue Sky Holding Limited, pursuant to an agreement dated April 6, 2020...what are the details in the agreement ? this is not clear...
They sold to a Chinese co. "Beijing Gas Blue Sky Holding Limited? 5 million preferred shares cnvertible to 1 billion shares in exchange for 50,000 $...or 1 billion shares were sold at 0.00005 per share or 1/10th of where it closed today...also, the Company’s Executive Chairman, Kevin J. Sylla, agreed to convert $100,000 of outstanding debt owed to him by the Company into 5,000,000 shares of Series A Preferred Stock or 1 billion ordinary shares at 0.0001/share or 1/5th of today's closing price...does not look good..
Unforunately, it has been postponed to June 29, 2020
Status hearing to be held on 06/29/2020 at 01:30 PM at Courtroom 860 (Judge Grossman), CI, NY. (mtagle)
May 4, 2020
Court authorized DIP funding of 713,000$ to keep the doors open till the week of July 6...most of the funds to pay salaries...
Purpose:
Proceeds of the advances under the DIP Facility will be used solely to pay, in accordance with the Budget, the (i) post-petition operating expenses of the Borrower incurred in the ordinary course of business, (ii) costs and expenses of administration of the Case, including United States Trustee fees and (iii) other amounts expressly specified in the Budget.
Now why would Auctus agree to lose another 713,000$ unless they view the assets at the end of the period when the tests are complete to be worth a lot more than that and the 2+ million owed to them ???
Official Form 201
Voluntary Petition for Non-Individuals Filing for Bankruptcy
13. Debtor's estimation of available funds
. Check one:
x? Funds will be available for distribution to unsecured creditors
14. Estimated number of creditors x? 100-199
15. Estimated Assets x? $50,000,001 - $100 million
16. Estimated liabilities x? $10,000,001 - $50 million
Final Hearing. The Court shall conduct a Final Hearing on the Motion commencing on May 11, 2020 at 10:00 am (Eastern Time). The Debtor shall file and serve a proposed Final Order consistent with the DIP Documents on the Service Parties referred to in paragraph 10 above by no later than May 4, 2020.
Boom time after May 11...comeuppance she is a coming...
According to this paper, there is a lot of value in the oil and gas properties owned by this company.....
https://scholarworks.uark.edu/cgi/viewcontent.cgi?article=1044&context=anrlaw
In the Jan. 21 PR, the company valued the properties at $372 million on Jan. 17, 2020 when WTI crude was selling at 50$/barrel. Today WTI crude is selling for around 25$/barrel, so the properties are worth around 186 mllion$. In January, the company had about 9 million$ in convertible loans. The evaluation of the company's market value can be performed using the above mentioned paper. In effect, the valuation is anywhere from 5% to 35% of the value of the underlying assets. Taking 10% as a conservative value, the company should be valued at 18.6 million$. Take away 9 million for the loans, the market cap becomes worth about 9 million $. That comes to a stock price of 0.009 (9E+06/1E+09)or about 45 times current value. Not a bad return on investment no matter how one looks at it...
check an earlier post of mine...
Its all good...the shorts are going to get pummeled...the trials for June are on track...if you are under 65 and have a back problem, register for a free trial...
There are any number of companies that have gone into Chapter 11 and come out stronger, both for the company and its existing shareholders...the language in filings about the commons will get nothing after the reorganization is just standard language to protect their own derrieres...the fear mongers always have an ulterior purpose...
Homebrew and Trader...you guys still have not explained why Auctus would spend so much money and effort in trying to rejuvenate the company...whats in it for them ? why waste another million to get back their 3 million when the company is only worth 500k as you say ??
GM, Delta, United, American .... went BKpt Chapter 11...came back and saw another day...talk about lies...
So in reading the filings it appears that Auctus has succeeded in funding the company to keep the doors open for at least another 10 weeks...to allow the Univ. of Utah (?) matabolic program to be completed...Dr. Sylva needs to stay on for the deal to go through...does that mean the study of patients for the lower back pain stem cell therapy will go ahead ? Where does all this leave the shareholders ? What is the intent of Auctus if not to let the company survive so they can get a reasonable return on their investment ? I see that Auctus barging in and stating that Desmarais et al. were quietly proceeding to cheat all the unsecured creditors including the shareholders suggests they have a plan for the company to survive and the shares of the company to survive also...Anybody have anything useful to add here ?
Thanks...that was very enlightening...
I believe the next date for hearing the new offer is May 11 and all letters, etc. need to be received by the courts by May 5th ??? Everyone with a position needs to send their positions to the debtor's attorneys unless someone has a better suggestion...
Last Wednesday, I first sent the following to Yang, Stan (USTP) <Stan.Y.Yang@usdoj.gov>
This message is with regards to the case UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF NEW YORK - In re: Chapter 11 BIORESTORATIVE THERAPIES, INC., Case No.: 20-71757-reg Debtor.
I hold close to 135 million shares in BRTX at a cost basis of close to XXX$ in my Fidelity account, proof of which is attached. Please include me as one of the unsecured creditors for this case.
In the event that you are not able to process this information for the courts, please inform me as to where I should this information to (email addy and/or tele no. would be appreciated).
He promptly replied saying
"Mr. XXX,
You need to send the information to the debtor’s counsel.
Stan Y. Yang, Trial Attorney
Office of United States Trustee, Region 2
United States Department of Justice
560 Federal Plaza
Central Islip, NY 11722
(d) 631-715-7787
(f) 631-715-7777
followed by an email saying "I am working remotely. If you need to reach me, please either email me or call me at (202) 834-1709. Thank you and have a good day."
Then I wrote to rmccord@certilmanbalin.com and rnosek@certilmanbalin.com, who were stated in the court docs to be the debtor's counsel stating "I was asked by the USDOJ attorney to send this to you. Thank you for your consideration."
No response from these gentlemen yet.
Yes, but that shows that they are willing to put more money into the company attempting to recover the 3 million the co. owes them...what does that tell you ? They see value in the company's IPs and they are willing to throw some money at it...also, Chapter 7 is not happening for a while...
I was just amazed at how closely the profile tracked UCO, something I follow. Both have fallen about 25-fold since March 1. The only way FTXP moves up is if somebody buys them out for a discount or oil prices move north of 35$/barrel. A market cap of 200k for a company that has at least 50 million $ of oil underground at today's prices is ridiculous...something has to give soon...