Attached files
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8-K - 8-K - Orexigen Therapeutics, Inc. | d619899d8k.htm |
Exhibit 99.1
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: Orexigen Therapeutics, Inc. Debtor |
Case No. 18-10518 (KG) Reporting Period: August 1, 2018 - August 31, 2018 |
MONTHLY OPERATING REPORT
File with Court and submit copy to United States Trustee within 20 days after end of month.
Submit copy of report to any official committee appointed in the case.
REQUIRED DOCUMENTS |
Form No. | Document Attached |
Explanation Attached |
Affidavit/Supplement Attached |
||||||||||
Schedule of Cash Receipts and Disbursements |
MOR-1 | X | ||||||||||||
Schedule of Disbursements by Debtor Entity |
MOR-la | X | ||||||||||||
Schedule of Debtor Bank Account Balances |
MOR-lb | X | ||||||||||||
Schedule of Professional Fees and Expenses Paid |
MOR-lc | X | ||||||||||||
Copies of bank statements |
Certification Attached | |||||||||||||
Cash disbursements journals |
Certification Attached | |||||||||||||
Bank reconciliation |
Certification Attached | |||||||||||||
Statement of Operations |
MOR-2 | X | ||||||||||||
Balance Sheet |
MOR-3 | X | ||||||||||||
Status of Postpetition Taxes |
Certification Attached | |||||||||||||
Copies of IRS Form 6123 or payment receipt |
Certification Attached | |||||||||||||
Copies of tax returns filed during reporting period |
Certification Attached | |||||||||||||
Summary of Unpaid Postpetition Debts |
||||||||||||||
Summary of Unpaid Post Petition Accounts Payables |
MOR-4 | X | ||||||||||||
Accounts Receivable Aging |
MOR-5 | X | ||||||||||||
Debtor Questionnaire |
MOR-5 | X |
I declare under penalty of perjury (28 U.S.C. Section 1746) that this report and the attached documents are true and correct to the best of my knowledge and belief.
/s/ Thomas P. Lynch | 27 SEPT 2018 | |||
Signature of Authorized Individual* | Date | |||
/s/ Thomas P. Lynch | Chief Administrative Officer and General Counsel | |||
Printed Name of Authorized Individual | Title of Authorized Individual |
* | Authorized individual must be an officer, director or shareholder if debtor is a corporation; a partner if debtor is a partnership; a manager or member if debtor is a limited liability company. |
Notes:
The last four digits of Debtors federal tax identification number are (8822). The Debtors mailing address for purposes of this chapter 11 case is 3344 North Torrey Pines Court, Suite 200, La Jolla, CA, 92037.
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: Orexigen Therapeutics, Inc. Debtor |
Case No. 18-10518 (KG) Reporting Period: August 1, 2018 - August 31, 2018 |
CERTIFICATION REGARDING POST-PETITION BANK ACCOUNT
RECONCILIATIONS, CASH DISBURSEMENT JOURNALS AND
COMPLIANCE AND PAYMENT OF POST-PETITION TAXES
I, Thomas Lynch, Chief Administrative Officer & General Counsel, of Orexigen Therapeutics, Inc. (the Debtor) hereby certify the following:
1. Attached to MOR-1 is a listing of the Debtors bank accounts, by account number, and the opening and closing balances. These accounts are reconciled monthly in accordance with the Debtors ordinary course accounting practices and are available to the United States Trustee upon request.
2. Cash disbursement journals are maintained in accordance with the Debtors ordinary course accounting practices and are available to the United States Trustee upon request.
3. To the best of my knowledge and belief, the Debtor is current on all post-petition taxes, and no post-petition tax amounts are past due.
/s/ Thomas P. Lynch | 27 SEPT 2018 | |||
Thomas Lynch | Date | |||
Chief Administrative Officer & General Counsel |
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: Orexigen Therapeutics, Inc. Debtor |
Case No. 18-10518 (KG) Reporting Period: August 1, 2018 - August 31, 2018 |
Notes to Monthly Operating Report
Debtor in Possession Financial Statements
The financial statements and supplemental information presented in this Monthly Operating Report (MOR) have been prepared using the Debtors books and records solely to comply with the monthly reporting requirements under the United States Bankruptcy Code and those of the United States Trustee for Region Three.
The financial statements and supplemental information presented herein are unaudited, preliminary in nature, and may not comply with generally accepted accounting principles in the United States of America (U.S. GAAP) in all material respects. These preliminary unaudited financial statements and other information represent the Debtors good faith attempt to comply with the requirements of the United States Bankruptcy Code and those of the United States Trustee using the resources available. This information is limited in scope to the requirements of this report.
These preliminary unaudited financial statements have not been subject to procedures that would typically be applied to financial information presented in accordance with U.S. GAAP, and upon application of such procedures, the Debtor believes that the financial information could be subject to changes, which could be material. Certain totals may not sum due to rounding.
All related tax implications are not currently reflected in the preliminary unaudited financial statements herein. The financial impact of potential tax and other adjustments on the accompanying preliminary unaudited financial statements cannot be determined at this time.
There may be adjustments to the opening balance sheet as of March 12, 2018 that will impact these accompanying preliminary unaudited financial statements. ASC 805 permits a one-year measurement period in which the opening balance sheet can be adjusted if additional information becomes available.
Liabilities Subject to Compromise
As a result of the commencement of the Debtors chapter 11 case, the payment of certain prepetition indebtedness of the Debtor is subject to compromise or other treatment under a plan of reorganization.
Reorganization Items
ASC 852 requires expenses and income directly associated with the Debtors chapter 11 cases to be reported separately in the income statement as reorganization items. Reorganization items include expenses related to legal advisory and representation services, and other professional consulting and advisory services. Reorganization costs also include adjustment to record debt at the estimated amount of the claim and an estimate of the loss on sale of assets which is pending a valuation.
Litigation
The Debtor is subject to lawsuits and claims that arise out of its operations in the normal course of business.
Prior to the petition date, the Debtor was the defendant to various legal proceedings, described in detail in the most recent publicly filed financial statements, which are stayed during the course of the chapter 11 bankruptcy proceedings.
There are uncertainties inherent in any litigation and appeal and the Debtor cannot predict the outcome. At this time the Debtor is unable to estimate possible losses or ranges of losses that may result from such legal proceedings described in detail in the most recent publicly filed financial statements, and it has not accrued any amounts in connection with such legal proceedings in the financial statements herein, other than attorneys fees accrued prior to the petition date.
Sale Transaction
On April 23, 2018, the Debtor entered into an asset purchase agreement with Nalpropion Pharmaceuticals, Inc. (the Buyer) for the sale of substantially all of its assets through section 363 of the Bankruptcy Code. This transaction was subsequently approved by the Bankruptcy Court on June 28, 2018. On July 27, 2018, the Debtor closed the sale and transferred substantially all of its assets to the Buyer. As part of the sale, the Debtor entered into a transition services agreement for the post-closing period through the effective date of a Plan of Liquidation. The Debtors are currently in discussions with their stakeholders to develop and file a Plan of Liquidation in the near term.
In re: Orexigen Therapeutics, Inc. Debtor |
Case No. 18-10518 (KG) Reporting Period: August 1, 2018 - August 31, 2018 |
MOR - 1
Consolidated Schedule of Cash Receipts and Disbursements (1)
For the Period: August 1, 2018 - August 31, 2018
(Unaudited)
$ USD 000s |
August 1, 2018 - August 31, 2018 |
Cumulative Since Filing |
||||||
Beginning Cash Balance (Book) |
$ | 36,874 | $ | 21,372 | ||||
Receipts |
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Operating Receipts |
| 64,422 | ||||||
Miscellaneous Receipts |
1,487 | 70,549 | ||||||
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Total Receipts |
1,487 | 134,971 | ||||||
Operating Disbursements |
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Payroll & Benefits / Contractors |
(554 | ) | (16,196 | ) | ||||
Inventory |
| (4,406 | ) | |||||
Manufacturing and Logistics |
| (133 | ) | |||||
Gross to Net Disbursements |
| (36,451 | ) | |||||
Marketing / Commercial Operations |
(25 | ) | (15,998 | ) | ||||
Ordinary Course Professionals |
| (637 | ) | |||||
Rent / Facilities / Equipment |
(3 | ) | (559 | ) | ||||
Insurance |
| (279 | ) | |||||
IT / Utilities |
(44 | ) | (341 | ) | ||||
Regulatory and Compliance |
(7 | ) | (562 | ) | ||||
Other G&A |
(30 | ) | (927 | ) | ||||
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Total Operating Disbursements |
(663 | ) | (76,491 | ) | ||||
Operating Cash Flow |
824 | 58,480 | ||||||
Reorganization Costs |
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DIP Loan Interest and Fees |
| (44,480 | ) | |||||
US Trustee Fees |
| (371 | ) | |||||
Restructuring Professional Fees |
| (3,564 | ) | |||||
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Total Reorganization Costs |
| (48,415 | ) | |||||
Total Disbursements |
$ | (663 | ) | $ | (124,906 | ) | ||
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Lender Professional Fees |
(266 | ) | (1,605 | ) | ||||
Net Cash Flow |
$ | 558 | $ | 8,460 | ||||
DIP DrawCash |
| 7,600 | ||||||
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Ending Cash Balance (Book) |
$ | 37,432 | $ | 37,432 |
Notes:
(1) | The Schedule of Cash Receipts and Disbursements is presented on a book basis. |
In re: Orexigen Therapeutics, Inc. Debtor |
Case No. 18-10518 (KG) Reporting Period: August 1, 2018 - August 31, 2018 |
MOR - 1a
Schedule of Disbursements by Debtor Entity (1)
For the Period: August 1, 2018 - August 31, 2018
(Unaudited)
$ USD 000s |
August 1, 2018 - August 31, 2018 | Cumulative Since Filing |
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Orexigen Therapeutics, Inc. |
$ | 928 | $ | 126,511 | ||||
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Total |
$ | 928 | $ | 126,511 |
Notes:
(1) | The Schedule of Disbursements is presented on a book basis. |
In re: Orexigen Therapeutics, Inc. Debtor |
Case No. 18-10518 (KG) Reporting Period: August 1, 2018 - August 31, 2018 |
MOR - 1b
Schedule of Debtor Bank Account Balances (1)
For the Period: August 1, 2018 - August 31, 2018
(Unaudited)
$USD 000s Debtor |
Bank |
Last Four Digits Account No. |
Account Description |
Beginning Balance 8/1/2018 |
Ending Balance 8/31/2018 |
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Orexigen Therapeutics, Inc. |
Silicon Valley Bank | 6813 | General checking | $ | | $ | | |||||||||
Orexigen Therapeutics, Inc. |
Silicon Valley Bank | 1180 | Zero-balance lockbox(2) | | | |||||||||||
Orexigen Therapeutics, Inc. |
Silicon Valley Bank | 3036 | Sweep account | 36,981 | 37,483 | |||||||||||
Orexigen Therapeutics, Inc. |
Silicon Valley Bank | 7307 | Utility adequate assurance | 10 | 10 | |||||||||||
Orexigen Therapeutics, Inc. |
Silicon Valley Bank | 5177 | Collateral | 100 | 100 | |||||||||||
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Total Bank Account Balances |
$ | 37,091 | $ | 37,593 | ||||||||||||
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Notes:
(1) | The Consolidated Schedule of Cash Receipts and Disbursements (MOR-1) and Schedule of Disbursements by Debtor Entity (MOR-1a) represent book balances while MOR-1b represents bank balances. The balances differ primarily due to the banks delayed recording of intrabank activity between the general checking and sweep accounts. |
(2) | Account was closed in September 2018. |
In re: Orexigen Therapeutics, Inc. Debtor |
Case No. 18-10518 (KG) Reporting Period: August 1, 2018 - August 31, 2018 |
MOR - 1c
Schedule of Professional Fees and Expenses Paid
For the Period: August 1, 2018 - August 31, 2018
(Unaudited)
Month Ended 8/31/18 | Cumulative Since Filing | |||||||||||||||||||||||||||
Payee |
Category |
Payor |
Date | Period Covered | Fees | Expenses | Fees | Expenses | ||||||||||||||||||||
Retained Professionals |
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Hogan Lovells US LLP |
Debtor Counsel | Orexigen Therapeutics, Inc. | 3/12/2018 - 5/31/2018 | $ | 1,035,364 | $ | 5,834 | |||||||||||||||||||||
Morris, Nichols, Arsht & Tunnell LLP |
Debtor Local Counsel | Orexigen Therapeutics, Inc. | 3/12/2018 - 5/31/2018 | 342,651 | 14,812 | |||||||||||||||||||||||
Ernst & Young, LLP |
Debtor Financial Advisor | Orexigen Therapeutics, Inc. | 3/12/2018 - 5/31/2018 | 876,132 | 113,520 | |||||||||||||||||||||||
Perella Weinberg Partners |
Debtor Investment Banker | Orexigen Therapeutics, Inc. | 3/12/2018 - 5/31/2018 | 496,713 | 3,546 | |||||||||||||||||||||||
Irell & Manella LLP |
Committee Counsel | Orexigen Therapeutics, Inc. | 3/27/2018 - 4/30/2018 | 326,130 | 337 | |||||||||||||||||||||||
Elliott Greenleaf, P.C. |
Committee Local Counsel | Orexigen Therapeutics, Inc. | 3/27/2018 - 4/30/2018 | 49,332 | 466 | |||||||||||||||||||||||
Kurtzman Carson Consultants LLC |
Claims Agent | Orexigen Therapeutics, Inc. | 3/12/2018 - 5/31/2018 | 143,705 | 155,188 | |||||||||||||||||||||||
Other Restructuring Professionals |
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Wilmington Trust, National Association |
DIP Administrative Agent | Orexigen Therapeutics, Inc. | 3/12/2018 - 7/31/2018 | $ | 51,600 | $ | | |||||||||||||||||||||
Arnold & Porter Kaye Scholer LLP |
DIP Administrative Agent Counsel | Orexigen Therapeutics, Inc. | 3/12/2018 - 7/27/2018 | 131,889 | 1,034 | |||||||||||||||||||||||
Quinn Emanuel Urquhart & Sullivan, LLP |
DIP Lenders Counsel | Orexigen Therapeutics, Inc. | 8/1/2018 | 3/12/2018 - 8/1/2018 | 72,639 | | 753,286 | 12,140 | ||||||||||||||||||||
Brown Rudnick LLP |
DIP Lender Counsel | Orexigen Therapeutics, Inc. | 2/15/2018 - 5/31/2018 | 147,048 | 1,497 | |||||||||||||||||||||||
Whiteford Taylor Preston |
DIP Lenders Local Counsel | Orexigen Therapeutics, Inc. | 3/12/2018 - 7/27/2018 | 203,253 | 2,141 | |||||||||||||||||||||||
U.S. Bank, N.A. |
Indenture Trustee | Orexigen Therapeutics, Inc. | 8/29/2018 | 3/1/2018 - 6/30/2018 | 191,303 | 1,884 | 330,948 | 2,326 | ||||||||||||||||||||
Duane Morris |
DIP Administrative Agent Secondary Counsel | Orexigen Therapeutics, Inc. | 4/10/2018 - 7/27/2018 | 17,609 | | |||||||||||||||||||||||
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Total |
$ | 263,941 | $ | 1,884 | $4,905,659 | $312,840 |
In re: Orexigen Therapeutics, Inc. Debtor |
Case No. 18-10518 (KG) Reporting Period: August 1, 2018 - August 31, 2018 |
MOR - 2
Statement of Operations
For the Period: August 1, 2018 - August 31, 2018
(Unaudited)
$ USD 000s |
August 1, 2018 - August 31, 2018 | March 12 - August 31, 2018 | ||||||
Net product sales |
$ | | $ | 27,871 | ||||
Cost of product sales |
| (6,336 | ) | |||||
Operating expenses: |
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Research and development |
(8 | ) | (2,674 | ) | ||||
Selling, general and administrative |
(74 | ) | (32,262 | ) | ||||
Amortization expense of intangible assets |
| (2,987 | ) | |||||
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Total operating expenses |
(81 | ) | (37,924 | ) | ||||
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Loss from operations |
(81 | ) | (16,389 | ) | ||||
Other income/(expense): |
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Interest income |
21 | 705 | ||||||
Refundable tax credit(1) |
| 1,300 | ||||||
Interest expense |
| (728 | ) | |||||
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Total other income (expenses) |
21 | 1,276 | ||||||
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Net loss |
(60 | ) | (15,112 | ) | ||||
Reorganization expenses(2) |
552 | (312,264 | ) | |||||
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Net gain/(loss) |
$ | 492 | $ | (327,377 | ) | |||
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Notes:
(1) | Refundable tax credit includes refundable alternative minimum tax as created by the Tax Cuts and Jobs Act. |
(2) | Reorganization expenses include the loss on sale of assets as well as the write up of the notes to the principle balance, the elimination of the debt discount and debt costs related to the 2013 debt. The loss on sale of assets is not final and pending the completion of a valuation of the non-debtor subsidiaries. |
In re: Orexigen Therapeutics, Inc. Debtor |
Case No. 18-10518 (KG) Reporting Period: August 1, 2018 - August 31, 2018 |
MOR - 3
Balance Sheet
(Unaudited)
Orexigen Therapeutics, Inc. | ||||||||
$ USD 000s |
As of March 11, 2018 | As of August 31, 2018 | ||||||
Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 21,372 | $ | 37,432 | ||||
Accounts receivable, net |
19,203 | | ||||||
Inventory |
8,857 | | ||||||
Prepaid expenses and other current assets |
6,868 | 7,994 | ||||||
Intercompany receivable(1) |
93,353 | | ||||||
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Total current assets |
149,653 | 45,427 | ||||||
Non-current assets: |
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Property and equipment, net |
543 | | ||||||
Investment in Subsidiary(1) |
19,000 | | ||||||
Intangible assets |
66,566 | | ||||||
Other long-term assets |
588 | 1,643 | ||||||
Restricted cash |
100 | 110 | ||||||
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Total assets |
$ | 236,450 | $ | 47,180 | ||||
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Liabilities and Stockholders Equity |
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Current liabilities: |
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Accounts payable (2) |
925 | 1,787 | ||||||
DIP loan |
| | ||||||
Accrued expenses |
3,921 | 8,148 | ||||||
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Total current liabilities: |
4,846 | 9,934 | ||||||
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Total liabilities not subject to compromise |
4,846 | 9,934 | ||||||
Total liabilities subject to compromise |
110,381 | 245,481 | ||||||
Series Z preferred stock |
3,343 | | ||||||
Stockholders equity (deficit) |
117,880 | (208,235 | ) | |||||
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Total liabilities and stockholders equity (deficit) |
$ | 236,450 | $ | 47,180 | ||||
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Notes:
(1) | Investment in Subsidiary $19m reclassed from Intercompany Receivable at March 11, 2018 to properly align for reporting. |
(2) | Accounts payable excludes all liabilities assumed by the purchaser under the terms of the Asset Purchase Agreement. |
In re: Orexigen Therapeutics, Inc. Debtor |
Case No. 18-10518 (KG) Reporting Period: August 1, 2018 - August 31, 2018 |
MOR - 4
Summary of Unpaid Post Petition Accounts Payables
As of August 31, 2018
(Unaudited)
$ USD 000s |
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Number of Days Past Due | ||||||||||||||||||||||||
Post Petition Accounts Payable Aging |
Current | 0-30 | 31-60 | 61-90 | Over 90 | Total | ||||||||||||||||||
Post-Petition Accounts Payable (1) |
$ | 146 | $ | 1,641 | $ | | $ | | $ | | 1,787 | |||||||||||||
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$ | 146 | $ | 1,641 | $ | | $ | | $ | | 1,787 |
Notes:
(1) | The above figures represent post petition trade payables recorded in the Debtors subledger. |
In re: Orexigen Therapeutics, Inc. Debtor |
Case No. 18-10518 (KG) Reporting Period: August 1, 2018 - August 31, 2018 |
MOR - 5
Accounts Receivable Aging
As of August 31, 2018
(Unaudited)
$ USD 000s | ||||||||||||||||||||||||
Accounts Receivable Aging |
Current | 0-30 Days | 31-60 Days | 61-90 Days | 91 Days+ | Total | ||||||||||||||||||
Accounts Receivable, net |
$ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||
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$ | | $ | | $ | | $ | | $ | | $ | |
Debtor Questionnaire
Must be completed each month |
Yes |
No | ||
1. Have any assets been sold or transferred outside the normal course of business this reporting period? If yes, provide an explanation below. |
X | |||
2. Have any funds been disbursed from any account other than a debtor in possession account this reporting period? If yes, provide an explanation below. |
X | |||
3. Have all post petition tax returns been timely filed? If no, provide an explanation below. |
X | |||
4. Are workers compensation, general liability and other necessary insurance coverages in effect? If no, provide an explanation below.(1) |
X | |||
5. Has any bank account been opened during the reporting period? If yes, provide documentation identifying the opened account(s). If an investment account has been opened provide the required documentation pursuant to the Delaware Local Rule 4001-3. |
X |
Notes:
(1) | The Debtor received a notice from the Workers Compensation Board for the State of New York regarding a failure to maintain disability and paid family leave insurance. This notice is being looked into by the Debtor, but the Debtor believes that all applicable coverages are still in effect. |