Liberty files complaint against Medco
PORT ST. LUCIE, Fla. – Liberty Medical has filed a complaint with the U.S. Bankruptcy Court for the District of Delaware against Medco Health Solutions alleging that Medco engaged in “inequitable conduct” during Liberty management’s buyout of Medco’s then-subsidiary Polymedica, a transaction that included the Liberty business.
Liberty’s management alleges, among other things, that it was only after filling for bankruptcy that they learned that more than $42 million listed in accounts receivables were uncollectable and that the value of Liberty’s property and equipment was overstated by $9 million. Additionally, they allege that Medco refused to pay pre-closing taxes for Polymedica, leaving Liberty on the hook for millions of dollars in taxes.
“It is our view that Medco was aware that Liberty would be unable to survive as a stand-alone company should Medco fail to perform as promised in connection with the management buyout,” the company states in a press release.
Among other remedies, Liberty seeks damages relating to a series of transactions and over $1 billion in equity redemptions that left Liberty and its subsidiaries insolvent at a time when the businesses were being prepared for sale.
Liberty’s management acquired Polymedica for $30 million in December 2012. Three months later, Liberty filed for Chapter 11 bankruptcy protection.