Achaogen Inc. (fka AKAOQ)

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Liquidation Plan Wipes out Equity

Silicon Valley Bank and Debtor’s lawyers have filed a liquidation plan to be voted on in May. Equity will receive nothing; unsecured debtors receive pittance. SVB takes it all.

This is wrong. IRC Section 382 I.5 allows 100% of net operating losses in. CH. 11 filing to be utilized in a merger, and allocated against future revenues as a tax credit. A clear asset that belongs to equity.

The Cares Act now authorizes those same losses to be used as carry back in addition to carry forward. This changes everything. The NOLs can now be used by an acquirer for immediate tax credit against preceding five years of tax filings.

https://www.claconnect.com/resources/articles/2020/tax-savings-opportunities-from-the-cares-act

$95 million tax credit is immediately liquid for an acquirer.

The tax credit has a value that exceeds AKAO’ s debt to SVB. The Debtor should be sold, debt extinguished, and all equity should share in the Cipla royalty stream, which should accrue overtime in account and periodically distributed on a share basis.

The other option would be for Cipla to buyout the company, using tax credit to finance the deal. They could continue and process EMA filing, participate in any Barda contract which is more likely now due to COVid-19, develop C Scape, and of course keep all Plazomicin revenue.

If the liquidation plan passes, via this bogus ballot based upon claims value, rather then by voting shares, this is a complete fraud, and equity is robbed it’s fair value.