Case Doc 525 Filed 10/06/15 Page 1 of 10. IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND Greenbelt Division

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1 Case Doc 525 Filed 10/06/15 Page 1 of 10 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND Greenbelt Division In re: Chapter 11 NEOGENIX ONCOLOGY, INC., Case No (TJC Debtor. JOINT MOTION OF THE DEBTOR AND THE OFFICIAL COMMITTEE OF EQUITY INTEREST HOLDERS TO EXTEND TIME TO COMPLY WITH THE COURT S ORDER ENTERED OCTOBER 1, The above-captioned debtor and debtor-in-possession (the Debtor, together with the Official Committee of Equity Interest Holders (the Official Committee (collectively, the Movants, by their respective counsel, pursuant to Bankruptcy Rule 9006, hereby submit this motion (the Motion for the entry of an Order extending the date by which the Debtor may comply with this Court s Order entered October 1, 2015, which currently requires the Debtor to submit the following to the Court no later than October 8, 2015: (i supplemental solicitation pleadings, including form of supplemental ballot, notice of supplemental confirmation hearing, (ii supplemental hearing date to consider confirmation of an amended plan, (iii supplemental procedures for filing objections to the amended plan, (iv deadlines related to the supplemental solicitation and confirmation of the amended plan, and (v supplemental solicitation procedures for confirmation of the amended plan. In support of this Motion, the Movants state as follows: Status of the Case 1. On July 23, 2012 (the Petition Date, the Debtor filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. 1 All capitalized terms not defined herein shall have the meaning ascribed to them in Neogenix Oncology, Inc. s First Amended Disclosure Statement with Respect to Neogenix Oncology, Inc. s First Amended Plan of Liquidation (the Amended Disclosure Statement [Docket No. 280] and/or Neogenix Oncology, Inc. s First Amended Plan of Liquidation (the Amended Plan [Docket No. 281]. 1

2 Case Doc 525 Filed 10/06/15 Page 2 of The Debtor has continued in possession of its properties and is operating and managing its business as debtor-in-possession pursuant to sections 1107(a and 1108 of the Bankruptcy Code. 3. No request has been made for the appointment of a trustee or examiner. The Official Committee was appointed on August 7, 2012, which Official Committee is represented by the law firm of Sands Anderson P.C. Jurisdiction, Venue, and Statutory Predicates 4. The Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157 and Venue is proper in this district pursuant to 28 U.S.C and This matter is core within the meaning of 28 U.S.C. 157(b(2. 5. The relief sought herein is based upon Bankruptcy Rule Background 6. As of the Petition Date, the Debtor was a clinical stage, pre-revenue generating, biotechnology company focused on therapeutic and diagnostic products for the early detection and treatment of cancer. The Debtor s unique and proprietary therapeutic and diagnostic combination utilized biomarkers to pre-select therapy-specific patients, resulting in better clinical trial design and patient response. The Debtor s antibody drug candidates and diagnostics were designed to detect and target tumors with minimal destruction to healthy cells. 7. Historically, the Debtor s business had principally been funded with the net proceeds from the sale of common stock to various individuals in private placement transactions. Based on the strategy implemented under the direction of the Debtor s prior Chief Financial Officer and the advice of the company s prior counsel and outside advisors, however, Neogenix for years engaged in the practice of paying commissions to unlicensed finders in connection with the sale of its stock. Because of this practice, Neogenix had, as of the Petition Date, an estimated 2

3 Case Doc 525 Filed 10/06/15 Page 3 of 10 multi-million dollar contingent liability under the laws of various states for potential rescission liability to shareholders who purchased their shares through unlicensed, compensated finders and the Securities and Exchange Commission (the SEC had initiated an inquiry into this practice (the SEC Inquiry. As a result of the foregoing, Neogenix was unable to raise sufficient equity capital outside of Chapter 11 to ensure the long term viability of the company. 8. In light of the deterioration of its cash position and the lack of realistic options for further investment, the Debtor s Board of Directors, in the exercise of its reasonable business judgment, ultimately determined that the most effective way to preserve the Debtor s therapeutic and diagnostic science and maximize the value of the Debtor s assets for the benefit of its shareholders was to seek bankruptcy protection in order to sell the Debtor s business and operating assets through a sale pursuant to section 363 of the Bankruptcy Code to Precision Biologics, Inc. ( Precision Biologics, a corporation funded by a number of the Debtor s shareholders, pursuant to an asset purchase agreement, and subject to higher and better bids at auction. 9. Pursuant to an Order of the Court dated September 20, 2012 [Docket No. 176], the sale of substantially all of the Debtor s operating assets to Precision Biologics closed on September 24, 2012 (the Closing. 10. On February 4, 2013, the Debtor filed with this Court its Disclosure Statement [Docket No. 258] and Plan [Docket No. 259]. A hearing on approval of the Disclosure Statement was held on March 7, 2013 (the Disclosure Statement Hearing. On March 11, 2013, in response to issues raised at and before the Disclosure Statement Hearing, the Debtor filed its Amended Disclosure Statement [Docket No. 280] and Amended Plan [Docket No. 281]. 11. The Amended Plan provides for the creation of a liquidating trust that will administer, liquidate and distribute all remaining property of the Debtor, including, without 3

4 Case Doc 525 Filed 10/06/15 Page 4 of 10 limitation, cash, the 5.5 million shares of PB Stock received by the Debtor from Precision Biologics at the Closing, and certain Causes of Action against various third parties. 12. On March 12, 2013, the Court entered its Order Approving the First Amended Disclosure Statement. [Docket No. 282]. 13. On April 16, 2013, the Office of the United States Trustee filed an objection to confirmation of the Amended Plan [Docket No. 301]. No other party in interest filed an objection to confirmation of the Amended Plan. 14. On April 30, 2013, the Debtor filed its Memorandum in Support of Confirmation of Neogenix Oncology, Inc. s First Amended Plan of Liquidation and in Response to the United States Trustee s Supplemental Objection to the Plan [Docket No. 309]. The Official Committee filed its Memorandum in Support of Confirmation of the Debtor s First Amended Plan of Liquidation on May 1, 2013 [Docket No. 310]. 15. A contested evidentiary hearing on confirmation of the Amended Plan was held on May 3, The U.S. Trustee filed her Post-Trial Memorandum on May 13, 2013 [Docket No. 335]. On May 20, 2013, the Debtor filed its Response to the United States Trustee s Post-Trial Memorandum [Docket No. 344] and the Official Committee filed its Response to the United States Trustee s Post-Trial Memorandum [Docket No. 345]. 17. On March 11, 2014, the Court issued its Memorandum of Decision [Docket No. 385] (the Memorandum Decision and Order Denying Confirmation of First Amended Chapter 11 Plan [Docket No. 386]. 18. In light of the Memorandum Decision, on April 22, 2014, the Debtor and the Official Committee filed a Joint Motion for the Entry of an Order Approving (I Supplemental Solicitation Including Form of Supplemental Ballot and Notice of Supplemental Confirmation 4

5 Case Doc 525 Filed 10/06/15 Page 5 of 10 Hearing, (II Supplemental Hearing Date to Consider Confirmation of the Amended Plan, (III Supplemental Procedures for Filing Objections to the Amended Plan, (IV Deadlines Related to Supplemental Solicitation and Confirmation of the Amended Plan, and (V Supplemental Solicitation Procedures for Confirmation of the Amended Plan (the Joint Motion. [Docket No. 393]. The purpose of the Joint Motion was to address the Court s concerns regarding the Third Party Releases contained in the Amended Plan, while preserving crucial value for the Debtor s interest holders in the form of providing for the prompt distribution of the PB Stock to the Debtor s interest holders. 19. The SEC filed a Limited Objection to the Joint Motion on May 13, 2014 [Docket No. 416] and the U.S. Trustee filed an Objection to the Joint Motion on May 14, 2014 [Docket No. 418]. 20. Following the filing of the foregoing objections, and in a good faith effort to promptly resolve the parties dispute and move this case forward towards the confirmation of a plan of liquidation while preserving scarce estate resources, the Debtor and the Official Committee proposed meeting with the U.S. Trustee and the SEC. Accordingly, the Debtor, the Official Committee, the U.S. Trustee, and the SEC engaged in substantive discussions and negotiations regarding the Joint Motion, and more specifically, a manner in which the Third Party Releases could be provided to the Debtor s Directors and Officers such that the PB Stock in the Debtor s possession could be promptly distributed to the Debtor s interest holders rather than held in escrow in the anticipated Liquidating Trust to be available to the Liquidating Trustee in the first instance to satisfy any potential remaining indemnification obligations that may arise with respect to the Class 3 Directors and Officers as a result of their having received either incomplete releases or no releases under the Amended Plan (as further amended until all potential statutes of limitation for possible pre-petition claims against the Debtor s Class 3 Directors and Officers have 5

6 Case Doc 525 Filed 10/06/15 Page 6 of 10 run with no such claims having been filed or, in the event that any such claims are timely filed, after those claims have been fully and finally adjudicated. 21. In light of the foregoing, the Debtor and the Official Committee formulated a modified proposal (the Modified Proposal in their Omnibus Joint Response to the Objections Filed to the Joint Motion [Docket No. 435]. The U.S. Trustee and the SEC did not consent to the Modified Proposal and instead maintained their objections. A contested hearing on the Joint Motion, the various objections thereto, and the Modified Proposal, was held by the Court on July 1, At the conclusion of such hearing, the Court took the Joint Motion and the Modified Proposal under advisement. 22. On October 1, 2015, the Court issued its Memorandum of Decision (the October Opinion [Docket no. 521] with respect to the Joint Motion and the Modified Proposal. In the October Opinion, the Court made certain findings of fact and conclusions of law with respect to the form of consent required from the Debtor s Class 5 shareholders in order for the Court to approve the Third Party Releases contained within the Amended Plan with respect to the releases of thirteen officers and directors of the Debtor the Class 3 members. In the October Opinion, the Court approved the Modified Proposal in part and denied the Modified Proposal in part, and ordered that a supplemental solicitation be made pursuant to certain of the Court s modifications to the Modified Proposal, as described in the October Opinion. 23. On October 1, 2015, in connection with the October Opinion, the Court also entered an Order Approving Supplemental Solicitation as Modified by the Court (the Supplemental Solicitation Order [Docket No. 522]. The Supplemental Solicitation Order states that the Debtor shall submit within 7 days from the entry of this Order a modified order consistent with this Order and Memorandum of Decision approving (I supplemental solicitation including form of supplemental ballot, as modified by the court, and notice of supplemental 6

7 Case Doc 525 Filed 10/06/15 Page 7 of 10 confirmation hearing, (II supplemental hearing date to consider confirmation of the amended plan, (III supplemental procedures for filing objections to the amended plan, (IV deadlines related to supplemental solicitation and confirmation of the amended plan, and (V supplemental solicitation procedures for confirmation of the amended plan. 24. Seven days from the entry of the Supplemental Solicitation Order is October 8, Relief Requested 25. By this Motion, the Movants respectfully request that this Court enter an order extending the time by which the Debtor must comply with the Supplemental Solicitation Order from October 8, 2015 through and including October 30, Bankruptcy Rule 9006(b states that when an act is required or allowed to be done at or within a specified period by... order of court, the court for cause shown may at any time in its discretion (1 with or without motion or notice order the period enlarged if the request therefor is made before the expiration of the period originally prescribed The Movants respectfully suggest that cause exists to extend the time by which the Debtor must comply with the Supplemental Solicitation Order by filing the pleadings and documents referenced therein. First, the Debtor needs more time to properly prepare the various pleadings and forms that necessarily arise as a result of the Supplemental Solicitation Order, as well as to consult with the Official Committee regarding drafts of the same. Second, the Debtor s Chairman was overseas when the October Opinion and Supplemental Solicitation Order were entered by the Court and he currently remains overseas with very limited communications. As a result, the Debtor s counsel needs additional time to confer with the Debtor and properly advise it regarding the Court s October Opinion and various related issues. The Debtor s Chairman is due to return to the United States on October 16, Third, counsel for the Official Committee also 7

8 Case Doc 525 Filed 10/06/15 Page 8 of 10 needs additional time to consult with and advise the Official Committee regarding the October Opinion, the new pleadings and forms referenced above, and various other related issues. Fourth, the Debtor, in consultation with the Official Committee, is currently reviewing, analyzing, and evaluating what additional amendments are needed to the Amended Disclosure Statement and the Amended Plan in order to properly solicit the Class 5 Shareholders votes and to help ensure confirmation of the Amended Plan in light of the October Opinion. More specifically, the Debtor and the Official Committee need additional time to continue to work in a collaborative manner to review, analyze, revise and update the Amended Disclosure Statement and the Amended Plan inasmuch as these documents were originally drafted in March 2013 and there have been significant, substantive developments with respect to, amongst other things, the Debtor, the Debtor s third-party causes of action, post-petition financing, and Precision Biologics, since that time and which necessitate significant amendments to the Amended Disclosure Statement and the Amended Plan. Finally, in addition, the Official Committee needs additional time to prepare an Official Committee solicitation letter regarding the foregoing. For purposes of efficiency and minimizing professional fees and expenses, the Movants anticipate proposing such changes to the Amended Disclosure Statement, the Amended Plan, and the pleadings and documents required by the Supplemental Solicitation Order all at one time. 28. By providing an extension until October 30, 2015, the Movants currently anticipate having sufficient time to perform the tasks set forth in paragraph 27 above. 29. Pursuant to Bankruptcy Rule 9006(b(1, this Motion is being made before the expiration of the October 8, 2015 deadline set forth in the Supplemental Solicitation Order. Notice 30. Notice of this Motion has been given to the following parties or, in lieu thereof, to their counsel, if known: (a the Office of the United States Trustee for the District of Maryland; 8

9 Case Doc 525 Filed 10/06/15 Page 9 of 10 (b counsel to Precision Biologics, Inc; (c all other parties identified on the List of 20 Largest Unsecured Creditors; (d those parties requesting notice pursuant to Rule 2002; and (e the Securities and Exchange Commission. The Movants submit that, in light of the nature of the relief requested, no other or further notice need be given. Request to Waive Notice and Hearing 31. Pursuant to Bankruptcy Rule 9006(b(1, the Movants respectfully request that the Court grant the relief requested herein without the Movants having to provide additional notice because the request for relief is being made by the Movants before the expiration of the Court s original deadline of October 8, Statement Pursuant to Local Bankruptcy Rule Pursuant to Rule of the Local Bankruptcy Rules of the United States Bankruptcy Court for the District of Maryland, the Movants state that, in lieu of submitting a memorandum in support of this motion, they will rely solely upon the grounds and authorities set forth herein. No Prior Request 33. The Movants have not previously sought the relief requested herein from this or any other court. Conclusion WHEREFORE, the Movants respectfully request that this Court enter an order granting the relief requested herein and that it grant the Movants such other and further relief as is just and proper. 9

10 Case Doc 525 Filed 10/06/15 Page 10 of 10 Dated: October 6, 2015 GREENBERG TRAURIG, LLP SANDS ANDERSON PC By: /s/ Thomas J. McKee, Jr. Thomas J. McKee, Jr. (MD Bar No Greenberg Traurig, LLP 1750 Tysons Boulevard, Suite 1000 McLean, Virginia ( ( (fax - and - Maria J. DiConza (Pro Hac Vice Greenberg Traurig, LLP 200 Park Avenue New York, NY ( ( fax diconzad@gtlaw.com Counsel for the Debtor and Debtor-in- Possession J. Johnathan Schraub (MD Bar No Sands Anderson PC 1497 Chain Bridge Road, Suite 202 McLean, Virginia ( jschraub@sandsanderson.com - and - By: /s/ Roy M. Terry, Jr. Roy M. Terry, Jr. (Pro Hac Vice Sands Anderson PC 1111 East Main Street, Suite 2400 (23219 P.O. Box 1998 Richmond, Virginia ( rterry@sandsanderson.com egunn@sandsanderson.com Counsel for the Official Committee of Equity Security Holders Lawrence E. Rifken (Pro Hac Vice The Rifken Law Firm PLLC Bowen Avenue Great Falls, VA ( lrifken@rifkenlaw.com Proposed Co-counsel for the Debtor and Debtor-in-Possession 10

11 Case Doc Filed 10/06/15 Page 1 of 4 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND Greenbelt Division In re: Chapter 11 NEOGENIX ONCOLOGY, INC., Case No (TJC Debtor. ORDER GRANTING THE JOINT MOTION OF THE DEBTOR AND THE OFFICIAL COMMITTEE OF EQUITY INTEREST HOLDERS TO EXTEND TIME TO COMPLY WITH THE COURT S ORDER ENTERED OCTOBER 1, UPON CONSIDERATION of the Joint Motion of the Debtor and the Official Committee of Equity Interest Holders to Extend Time to Comply with the Court s Order Entered October 1, 2015 (the Motion, and any response to the Motion: IT APPEARING that on October 1, 2015, the Court entered the Supplemental Solicitation Order that required the Debtor to submit the following to the Court no later than October 8, 2015 (the Original Deadline : (i supplemental solicitation pleadings, including form of supplemental ballot, notice of supplemental confirmation hearing, (ii supplemental 1 All capitalized terms not defined herein shall have the meaning ascribed to them in the Motion. TCO v2

12 Case Doc Filed 10/06/15 Page 2 of 4 hearing date to consider confirmation of an amended plan, (iii supplemental procedures for filing objections to the amended plan, (iv deadlines related to the supplemental solicitation and confirmation of the amended plan, and (v supplemental solicitation procedures for confirmation of the amended plan. IT FURTHER APPEARING that cause exists to extend the Original Deadline for the Debtor to comply with the Supplemental Solicitation Order by filing the pleadings and documents referenced therein; and IT FURTHER APPEARING that cause exists to grant the Motion; it is hereby ORDERED that the Motion is granted; and it is further ORDERED that the Original Deadline is hereby extended until October 30, cc: Attached Service List End of Order TCO v2

13 Case Doc Filed 10/06/15 Page 3 of 4 Service List Counsel for the Debtor Thomas J. McKee, Jr., Esq. Greenberg Traurig, LLP 1750 Tysons Boulevard, Suite 1000 McLean, Virginia Telephone: ( Facsimile: ( mckeet@gtlaw.com - and- Maria J. DiConza, Esq. Greenberg Traurig, LLP 200 Park Avenue New York, NY Telephone: ( Facsimile: ( diconzam@gtlaw.com Proposed Co-counsel for the Debtor Lawrence E. Rifken, Esq. The Rifken Law Firm PLLC Bowen Avenue Great Falls, VA ( lrifken@rifkenlaw.com Counsel for Official Committee of Equity Security Holders Roy M. Terry, Esq. Sands Anderson PC 1111 East Main Street P.O. Box 1998 Richmond, VA Telephone: ( Facsimile: ( RTerry@sandsanderson.com Office of The United States Trustee Lynn A. Kohen, Esq. Office of The United States Trustee 6305 Ivy Lane, Suite 600 Greenbelt, MD Telephone: ( Facsimile: ( lynn.a.kohen@usdoj.gov Counsel for Precision Biologics, Inc. Gene T. Price, Esq. Derek Meek, Esq. Burr & Forman LLP th Street North, Suite 3400 Birmingham, AL Telephone: ( Facsimile: ( dmeek@burr.com gprice@burr.com - and - Richard L. Costella, Esq. Miles & Stockbridge, P.C. 10 Light Street Baltimore, MD rcostell@milesstockbridge.com Facsimile: ( Counsel for Daniel J. Scher KLG Luz & Greenberg, LLP Attn: Thomas J. Luz, Esq. 370 Lexington Ave., 24 th Fl. New York, NY Telephone: ( Facsimile: ( tluz@karalaw.com TCO v2 3

14 Case Doc Filed 10/06/15 Page 4 of 4 Securities & Exchange Commission Attention: Susan Sherrill, Esq. 100 F. Street NE Washington, DC Telephone: ( sherrill-beard@sec.gov - and - Securities & Exchange Commission Philadelphia Regional Office The Mellon Independence Center 701 Market Street Philadelphia, PA Telephone: ( philadelphia@sec.gov TCO v2 4