AaiPharma May Seek Chapter 11 Bankruptcy

North Carolina-based drug developer aaiPharma is on the verge of seeking Chapter 11 bankruptcy protection after missing a recent interest payment.

The company recently said that a bankruptcy filing is "highly likely" after it missed an April 1 interest payment on its senior subordinated notes due in 2010. AaiPharma said its senior lenders have agreed not to take any action with respect to the default until April 30.

The failure of the company to make the interest payment within 30 days after April 1 will entitle the holders of 25 percent of the outstanding amount of the notes or the trustee to declare the outstanding amount of the notes immediately due and payable. AaiPharma has continued its discussions with advisers to an ad hoc committee of holders of the notes regarding a potential restructuring.

The company said it has also initiated discussions to sell a portion of its pharmaceutical business to an unidentified third party. AaiPharma has signed an agreement that provides the potential buyer a three-week exclusivity period to negotiate a sale. AaiPharma didn't disclose any details about which assets are on the auction block.