Insys Therapeutics Bankruptcy: Opioid Maker Files For Chapter 11 Bankruptcy Protection Following Corruption Charges

Opioid maker Insys Therapeutics, Inc. (INSYS) has announced that it has filed for Chapter 11 bankruptcy to address its legal liabilities and sell off all of its company assets. The company said it will continue operations under the supervision of the court as it pursues the sale process.

The bankruptcy filing comes less than a week after the company was fined $225 million for allegations related to its opioid pain medication. Insys pleaded guilty to five counts of fraud for allegedly paying kickbacks and using unlawful marketing of its opioid drug, Subsys, USA Today reported.

Subsys is a sublingual fentanyl spray, which the DOJ said was " a powerful, but highly addictive, opioid painkiller.” The drug is used to treat pain in the treatment of cancer.

Insys’ founder and former chairman, John Kapoor, who owns 63.2 percent of the company, according to its SEC filing, as well as four other executives were convicted in a scheme to bribe and provide kickbacks to doctors that prescribed large amounts of Subsys to patients that did not need the drug, according to the news outlet. The case is considered the first conviction brought against a drug company CEO involving opioids.

Through its bankruptcy filing, Insys Therapeutics said it will utilize the cash it has on hand to support its continued operations and will continue to pay employee wages and benefits without any interruption as well as the continuing to support the customer programs it offers. The company also said it will pay vendors and suppliers in full under its normal payment terms following its Monday filing date.

Insys will also initiate an auction for the sale of its assets, which it said will provide the “maximum value” for its creditors. The sale of the company’s assets is expected to be completed within 90 days. The company listed $175.1 million in assets and $262.5 million in debt.

“After conducting a thorough review of available strategic alternatives, we determined that a court-supervised sale process is the best course of action to maximize the value of our assets and address our legacy legal challenges in a fair and transparent manner,” Andrew G. Long, chief executive officer of Insys Therapeutics said in a statement.

“INSYS has compelling assets and a highly talented team. We believe this process will provide us with a forum to negotiate an equitable resolution with our creditors and represents the best opportunity for our people and our business.”

Insys Therapeutics is utilizing Weil, Gotshal & Manges LLP as its legal counsel and Lazard Freres & Co. LLC as its investment banker. FTI Consulting will serve as the company’s financial advisor.

Shares of Insys stock were down 51.56 percent as of 11:42 a.m. ET on Monday.