In re Biolitec, Inc.

Biolitic, Inc. (Biolitic) (debtor), an affiliate of Biolitic AG (BAG), a German corporation, filed for Chapter 11 bankruptcy. AngioDynamics (creditor) was Biolitic’s largest unsecured creditor. AngioDynamics had an outstanding $23 million judgment claim against Biolitic in addition to a pending fraudulent-transfer action in federal court against both Biolitic and BAG, which was ultimately decided in AngioDynamic’s favor. To ensure the honest administration of Biolitic’s bankruptcy estate, the court appointed a Chapter 11 trustee (the trustee) to administer it. The bankruptcy court approved a settlement between AngioDynamics and the trustee that set AngioDynamics’ unsecured claim against Biolitic at $29 million and sold the majority of Biolitic’s assets to AngioDynamics to satisfy the outstanding $23 million judgment claim. AngioDynamics also agreed that it would collect the remaining $6 million it was owed only if all other unsecured claims were paid first. Subsequently, AngioDynamics and the trustee filed for approval of a proposed structured-dismissal agreement that would dismiss Biolitic’s bankruptcy and create a liquidating trust to collect and distribute Biolitic’s remaining assets. Distribution from the liquidated trust would be handled by a new, nonbankruptcy trustee and would be subject to AngioDynamic’s review and consent. The proposed dismissal agreement also made BAG’s senior interests subordinate to all other allowed claims without BAG’s consent. BAG objected to the proposed dismissal agreement and moved for a Chapter 7 conversion.