Vivus Bankruptcy Plan to Shift Equity to Icahn Unit Rejected (1)

Vivus Inc. failed to get court approval of a reorganization plan that would have given the bankrupt pharmaceutical company’s equity to a subsidiary of Icahn Enterprises after a judge questioned equity valuation and how shareholders would fare.

Four shareholders of the publicly traded company had objected to the plan because it wipes out their interests. Judge Laurie S. Silverstein of the U.S. Bankruptcy Court for the District of Delaware said Friday that she was ordering the U.S. Trustee, the Justice Department’s bankruptcy watchdog, to appoint a committee of shareholders to participate in the case.

Silverstein didn’t entirely kill Vivus’ plan, ...