Dendreon Bankruptcy

Announced on Monday:

Chapter 11 Filing: On November 10, 2014, Dendreon Corporation (the "Company") and its wholly owned subsidiaries, Dendreon Holdings, LLC, Dendreon Distribution, LLC and Dendreon Manufacturing, LLC (collectively, the "Debtor Subsidiaries," and together with the Company, the "Debtors"), filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court," and the filings therein, the "Chapter 11 Filings"). The Chapter 11 cases are expected to be jointly administered under the caption "In re Dendreon Corporation et. al." Case No. 14-12515.

The Debtors intend to promptly seek the necessary relief from the Bankruptcy Court to pay certain claims of employees and other claims in accordance with their existing business terms, and intend to continue operating their businesses in the ordinary course, taking into account their status as debtors in possession, as they prosecute the Chapter 11 cases.

Plan Support Agreement: On November 9, 2014, the Debtors and (i) certain holders representing approximately 47.8% and (ii) certain other holders representing approximately 35.9% (collectively, the "Supporting Noteholders") of the outstanding principal amount of the Company's 2.875% Convertible Senior Notes due 2016 (the "2016 Notes") entered into two separate Plan Support Agreements (the "PSAs"). Under the terms of the PSAs, the parties have agreed to work to effectuate a restructuring of the Debtors' obligations pursuant to a stand-alone plan of reorganization in Chapter 11 (the "Stand-Alone Plan") under which holders of the 2016 Notes will receive new shares of common stock in the reorganized Company, subject to the outcome of the competitive process described below.

The PSAs further provide that, as an alternative to the Stand-Alone Plan, the Debtors will concurrently conduct a competitive process, pursuant to bidding procedures (the "Bidding Procedures") to be approved by the Bankruptcy Court, seeking qualified bids for (a) a sale of all or substantially all of the Debtors' assets pursuant to Section 363 of the Bankruptcy Code (a "363 Sale") or (b) a recapitalization transaction effectuated through a plan of restructuring (a "Plan Sale"). As further discussed below, a qualified bid must have a value in excess of $275,000,000 and meet certain other criteria, each as specified in the Bidding Procedures.

Under the terms of the PSAs, the Supporting Noteholders and the Debtors have agreed to negotiate in good faith the terms of the proposed plan. The Debtors will use commercially reasonable efforts to complete the restructuring under the proposed plan, and the Supporting Noteholders have agreed to vote in favor of the plan of reorganization (or, in the case of a 363 Sale, the plan of liquidation) and to not object to a 363 Sale. Additionally, subject to a limited exception for market makers, the Supporting Noteholders have agreed to not transfer their claims unless the transferee also agrees to be bound by the terms of the applicable PSA. The Debtors' obligations under the PSAs are subject to a fiduciary duty exception.

Each PSA will terminate following the occurrence of certain termination events set forth in the respective agreement (each, a "Termination Event"), subject to, in most cases, a three day cure period, unless the Termination Event is waived by the applicable parties. Termination Events include failure to meet certain milestones such as court approval of the agreement, solicitation, confirmation and consummation; changes to the plan without approval of the Supporting Noteholders party to such agreement; uncured material breach by the Supporting Noteholders party to such agreement or the Debtors, as the case may be; a Material Adverse Effect, as defined in the PSAs, with respect to the Debtors; and failure to achieve certain net revenue targets. Certain actions under the PSAs by the Supporting Noteholders party thereto, including waiver of certain Termination Events and amendments to the relevant PSA, require the consensus of two-thirds of claims held by all the Supporting Noteholders party to such PSA.

The PSAs also include certain customary representations and warranties of the parties, as well as a covenant by the Debtors to use commercially reasonable efforts to operate in the ordinary course of business, taking into account their status as debtors in possession.

The foregoing description of the PSAs is qualified in its entirety by reference to the respective agreements, which are filed as Exhibit 10.1 and Exhibit 10.2 hereto respectively and are incorporated herein by reference.

Qualified Bids; Stalking Horse Deadline: The Debtors have filed a motion with the Bankruptcy Court requesting that the court approve a bid deadline and set a date for an auction to implement the competitive process provided for under the PSAs. In order for a bid received during the competitive process to be considered a qualified bid, it must have a value in excess of $275,000,000 and meet certain other criteria, each as specified in the Bidding Procedures. If no qualified bids are received by the bid deadline, the Debtors will proceed to confirmation of the Stand-Alone Plan.

Crazy. It only took three months after the company announced that "we are currently considering alternatives to the repayment of the 2016 Notes in cash, including alternatives that could result in leaving our current stockholders with little or no financial ownership of Dendreon" for the filing to happen. This filing has the exhibits with copies of the actual plan support agreement and so forth.