Endo’s $6 Billion Sale Opposed by IRS, DOJ Over Payout Concerns

The Justice Department and other federal agencies objected to Endo International Plc’s proposed sale to lenders, arguing the $6 billion deal is “discriminatory” to the US government and other creditors.

The deal, in which lenders would take over the pharmaceutical maker by applying the debt they’re owed, would improperly distribute some sale proceeds to certain favored creditors, US Attorney for the Southern District of New York Damian Williams said in court papers filed Tuesday.

It would leave the government’s claims “completely unsatisfied,” Williams said in his objection, filed on behalf of the Department of Justice, Department of Health and Human Services, Department of Veterans Affairs, and the Internal Revenue Service.

Endo owes nearly $3.5 billion in priority, unsecured tax claims and hundreds of millions of dollars in claims stemming from federal law enforcement and healthcare liabilities, Williams said. The company filed for bankruptcy last year to resolve allegations that it profited from the national opioid crisis.

“The United States and certain other unsecured creditors have been singled out to recover nothing,” he said.

Williams also asked the court to appoint a Chapter 11 trustee to oversee and investigate the company’s bankruptcy.

Endo last month agreed to proceed with the “stalking horse” bid submitted by Tensor Limited, formed by a group of Endo’s first-lien lenders. The bid includes all of Endo’s assets in exchange for wiping out $6 billion of debt owed.

The Canadian government, public school districts and the DOJ’s bankruptcy watchdog have also objected to the proposed sale.

Endo didn’t immediately respond to a request for comment.

This case is Endo International plc and Par Sterile Products, LLC, Bankr. S.D.N.Y., No. 7:22-bk-22549, 7/18/23.