Case 12-19882

Doc 3

Filed 12/21/12 Document

Entered 12/21/12 18:03:46 Page 1 of 5

Desc Main

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MASSACHUSETTS EASTERN DIVISION ____________________________________ ) In re: ) ) NEW ENGLAND COMPOUNDING ) CHAPTER 11 PHARMACY, INC., ) CASE NO. 12-19882-HJB ) Debtor. ) ____________________________________) APPLICATION OF DEBTOR FOR AUTHORITY TO EMPLOY VERDOLINO & LOWEY, P.C. AS ACCOUNTANTS AND FINANCIAL ADVISORS TO DEBTOR Pursuant to 11 U.S.C. 327(a) and Bankruptcy Rule 2014(a), New England Compounding Pharmacy, Inc., the debtor-in-possession in the above-captioned Chapter 11 bankruptcy case (the Company), respectfully requests that this Court enter an Order authorizing the employment of Verdolino & Lowey, P.C. (V&L) as accountants and financial advisors to the Debtor, including service by Keith D. Lowey as Chief Restructuring Officer (CRO) as more specifically described below. In support of this Application, the Debtor submits the Affidavit of Craig R. Jalbert in Support of Application for Employment Pursuant to Bankruptcy Rule 2014(a) and Local Rule 2014-1 attached hereto as Exhibit A. In further support of this Application, the Debtor states as follows: 1. On December 21, 2012, the Company filed a voluntary petition pursuant to

Chapter 11 of the Bankruptcy Code (the Petition Date). 2. The Company continues to own and manage its assets as a debtor-in-possession

pursuant to 1107(a) and 1108 of the Bankruptcy Code.

Case 12-19882

Doc 3

Filed 12/21/12 Document

Entered 12/21/12 18:03:46 Page 2 of 5

Desc Main

Background 3. The Company is a compounding pharmacy which combines and mixes

ingredients to create specific formulations of pharmaceutical products. 4. Prior to the Petition Date, numerous individuals across the country were stricken

with fungal meningitis. Information available through the Centers For Disease Control and Prevention (CDC) indicates that 39 people have died and over 600 individuals have been sickened. Although the CDCs investigation is on-going, the CDC attributes the outbreak of fungal meningitis to contaminated pharmaceuticals distributed by NECC. In early October, NECC initiated a nationwide recall of thousands of vials of the substance at issue and, in cooperation with regulatory authorities, ceased operation. 5. Approximately 130 lawsuits against NECC have been filed across the country in

connection with this tragic occurrence. In addition, NECC has received demands from over 270 additional claimants asserting injury from the contaminated pharmaceuticals. The number of lawsuits and demands is rising on a daily basis. The sheer volume and wide geographic distribution of cases bringing the prospect of chaotic, conflicting and value-destroying pretrial orders and remedies has necessitated commencing this case at this time. 6. On December 12, 2012, the directors and shareholders of the Company appointed

Keith D. Lowey of Verdolino & Lowey, P.C. as an independent director and the chief restructuring officer with plenary and exclusive authority over matters related to personal injury and wrongful death claimants and other creditors. Mr. Lowey is also empowered with plenary and exclusive authority over the Companys conduct of this Chapter 11 case. 7. Through this Chapter 11 case NECC seeks to address the claims of hundreds of

individuals in a single forum of national jurisdiction in a proceeding that minimizes costly

4259212-1

Case 12-19882

Doc 3

Filed 12/21/12 Document

Entered 12/21/12 18:03:46 Page 3 of 5

Desc Main

litigation that drains assets from the estate. By facilitating a consensual resolution among the major constituencies to develop a Compensation Fund for personal injury creditors as has been accomplished in other cases, NECC hopes to provide a greater, quicker, fairer and less expensive payout to its creditors than they could achieve through piecemeal litigation. Verdolino & Lowey Services 8. advisors to: a. b. to prepare cash forecasts, budgets and reports on behalf of the Company; to complete Monthly Operating Reports and any other financial reporting The Company hereby requires the services of V&L as accountants and financial

that may be required in connection with this case; c. to advise the Company concerning matters relating to the liquidation of

assets and the winding up of its affairs; d. to have Keith D. Lowey serve as independent director and chief

restructuring officer pursuant to the Corporate Authorization filed with the petition; e. to prepare and file on behalf of the estate all necessary tax returns that may

be required by federal, state or local law; f. g. to advise the Company regarding the tax implications of asset recovery; to advise and assist the Company with respect to evaluating and objecting

to proofs of claim submitted by federal and state taxing authorities; h. to assist the Company in reviewing and examining the books and records

of the Company with respect to potential preference and/or fraudulent conveyance or transfer claims; and

4259212-1

Case 12-19882

Doc 3

Filed 12/21/12 Document

Entered 12/21/12 18:03:46 Page 4 of 5

Desc Main

i.

to assist the Company with other tasks that the Company may require and

reasonably request. 9. The full scope of services to be provided by V&L and the basis for their

compensation is further set forth in the Engagement Agreement between the Company and V&L, attached hereto as Exhibit B. 10. V&L has requested and the Company has agreed to enter into an Indemnification

Agreement attached hereto as Exhibit C. 11. V&L has substantial experience in proceedings under the Bankruptcy Code, and

has the varied and substantial resources necessary to advise and assist the Company. 12. Subject to this Courts jurisdiction with respect to professional fees, the Company

has agreed to compensate V&L for its professional services described above at its usual hourly rates in effect at the time services are rendered, subject to adjustment with the consent of the Company and V&L. The Company has also agreed to reimburse V&L for its cash disbursements and for such expenses as V&L customarily bills to its clients. V&L maintains detailed, contemporaneous records of time and any actual and necessary expenses incurred in connection with the rendering of the services described above, by category and nature of the service rendered. 13. Except as set forth in the Lowey Affidavit, V&L does not represent any interest

adverse to the estate in matters upon which V&L is to be employed, and V&L, its principals and its employees who provide professional services are otherwise disinterested persons with respect to the Company and as that term is defined in 101(14) of the Bankruptcy Code as it applies to 327(a).

4259212-1

Case 12-19882

Doc 3

Filed 12/21/12 Document

Entered 12/21/12 18:03:46 Page 5 of 5

Desc Main

14. estate.

The Company believes that the employment of V&L is in the best interest of the

WHEREFORE, the Company respectfully requests this Court enter an order pursuant to the provisions of 327(a) of the Bankruptcy Code authorizing the Company to employ Verdolino & Lowey, P.C. to act as accountants and financial advisors for the Company for bankruptcy related matters and to perform the professional services specified herein, including but not limited to any and all accounting services which may be required during the course of this case and for such other and further relief as is just. Respectfully submitted, NEW ENGLAND COMPOUNDING PHARMACY, INC., By its attorneys, /s/ Daniel C. Cohn Daniel C. Cohn, Esq. BBO #090780 Keri L. Wintle, Esq. BBO #676508 Murtha Cullina LLP 99 High Street, 20th Floor Boston, MA 02110 (617) 457-4000 Telephone (617) 482-3868 Facsimile dcohn@murthalaw.com kwintle@murthalaw.com Proposed Counsel to New England Compounding Pharmacy, Inc.

Dated: December 21, 2012

4259212-1