SiO2 Medical Products: Oaktree Equitization, Cancelled Auction, and Founder Litigation

SiO2 Medical Products, Inc. and two affiliates filed chapter 11 on March 29, 2023 in the U.S. Bankruptcy Court for the District of Delaware, lead case number 23-10366 before Judge John T. Dorsey. The Auburn, Alabama–based pharmaceutical packaging company entered the case carrying roughly $430 million of funded debt and a $60 million DIP commitment from Oaktree.

The case was structured from day one as a debt-for-equity reorganization with Oaktree as plan sponsor under a prepetition restructuring support agreement, paired with a parallel marketing process. The auction was cancelled in late June 2023 with no qualified third-party bids, and Judge Dorsey confirmed the joint plan on July 19, 2023. The plan went effective on August 3, 2023, separating the three debtors into a Reorganized Debtor (Advanced Bioscience Consumables, Inc.) and two Closing Debtors that wound down through the SiO2 Liquidation Trust. The case was contested throughout by founder Robert S. Abrams, who alleged that ATHOS-affiliated investors led by Thomas Strüngmann engineered the filing to expropriate his stock and patent portfolio — allegations preserved in his proof of claim and in continuing state-court litigation.

Debtor(s)	SiO2 Medical Products, Inc. (3 jointly administered entities)
Court	U.S. Bankruptcy Court, District of Delaware (Wilmington)
Case Number	23-10366
Petition Date	March 29, 2023
Confirmation Date	July 19, 2023
Effective Date	August 3, 2023
Judge	Hon. John T. Dorsey
DIP Facility	$60 million from Oaktree Capital Management, L.P. (prepetition first lien holder); incremental to existing position
Funded Debt at Filing	Approximately $430 million
Claims Agent	Donlin, Recano & Company, Inc.

From Pandemic Glass-Lining Surge to a $430 Million Filing

SiO2 Medical Products operated a proprietary process for applying a silicon dioxide (SiO2) coating to plastic syringes and vials, producing containers that combined the gas-barrier properties of glass with the durability of polymer. The technology drew on a portfolio of 245 issued patents and saw increased demand during the COVID-19 vaccine rollout, when glass-vial supply tightened. By December 2021 the company closed a $205 million senior secured refinancing with Oaktree, refinancing a prior $85 million Oaktree position, and accepted a $100 million equity investment from Doosan Corporation at an implied valuation of roughly $2 billion. An April 2022 follow-on round implied a $3.2 billion valuation.

The company's path to chapter 11 turned on a 2022 attempt to raise additional equity that did not close. Yves Steffen, who replaced founder Robert S. Abrams as chief executive in July 2022, attributed the filing to liquidity pressure after capital markets tightened and the company's ATHOS-affiliated investors declined to provide further funding on terms acceptable to the board. The press release issued on the petition date framed the chapter 11 as a balance-sheet restructuring with an Oaktree-led equitization in place from day one. SiO2 laid off 104 employees from its Auburn workforce in the months around the filing as it refocused on its core packaging operations.

Three Delaware debtors joined the case under a March 30 joint administration order: SiO2 Medical Products, Inc. (lead case 23-10366), Advanced Bioscience Labware, Inc. (23-10367), and Advanced Bioscience Consumables, Inc. (23-10368). The petition listed assets between $100 million and $500 million against liabilities between $500 million and $1 billion. Steffen's first-day declaration and the parallel CFO/DIP declaration of R. Seth Bullock supplied the factual record for the first-day relief, including emergency authority to pay employee wages and critical and foreign vendor claims.

Capital Structure and the Oaktree-ATHOS Debt Stack

The prepetition capital structure stacked an Oaktree-held senior secured first lien against several junior layers controlled by ATHOS KG and its affiliates — investment vehicles tied to Thomas Strüngmann, the German biotech investor whose family office had become SiO2's largest investor group. Oaktree's first lien was a $205 million December 2021 refinancing of an earlier $85 million position. Below that sat a second lien term loan and a series of unsecured promissory notes issued to Strüngmann-affiliated holding companies between 2018 and 2021.

ATHOS-related claims totaled more than $123.9 million across the affiliated entities, and broke down across the following instruments based on the proofs of claim filed in the case:

• Salzufer Beteiligungs GmbH second lien term loan: $36,507,829 ($35 million principal plus interest and fees)
• Klinge Biopharma GmbH secured note: $14,404,027 ($14 million original principal)
• 2018 Patiro Holding AG promissory notes: $38,159,787
• 2019 Patiro Holding AG promissory note: $21,392,846 ($15.6 million original principal)
• Santo Holding AG promissory note: $10,977,778 ($10 million original principal)
• Klinge Biopharma indemnification claim: $2,500,000

Outside the ATHOS stack, Southern States Bank held a perfected first-priority security interest in certain accounts receivable, inventory, and equipment that became contested when the DIP motion sought to prime its collateral. Regions Bank was a secondary contested counterparty. The Disclosure Statement also identified roughly $70 million previously raised from the Retirement System of Alabama and Teachers' Retirement System of Alabama, repaid in full by December 31, 2021, alongside earlier convertible debt investments from MPM and Novartis (2019–2020). Doosan's $100 million equity investment in December 2021 sat on top of that capital structure as common-equivalent stock that was cancelled at confirmation without recovery.

The $430 million headline debt figure cited in contemporaneous press coverage reflected the aggregate of the Oaktree first lien, ATHOS junior layers, vendor and trade obligations, and disputed claims that ultimately mapped to the Class 5 General Unsecured pool and the separately-classified Athos Subordinated Claims.

DIP Financing and the Southern States Bank Priming Objection

Oaktree extended a $60 million new-money DIP facility on the petition date, structured as incremental financing rather than a roll-up of the prepetition $205 million position. The Court entered an interim DIP order on March 30, 2023 authorizing draws against an interim budget, and entered the final DIP order on April 26, 2023 following a hearing that addressed both the DIP motion and the cash management motion together. Sullivan & Cromwell LLP appeared for Oaktree in the DIP proceedings, while Kirkland & Ellis LLP and Cole Schotz P.C. represented the debtors.

Three significant DIP objections shaped the final order. Southern States Bank filed a preliminary objection on April 13, 2023 asserting a valid, perfected, first-priority security interest in the debtors' accounts receivable, inventory, and equipment, and challenging the priming structure on adequate-protection grounds. Regions Bank filed a parallel limited objection. The U.S. Trustee filed a separate limited objection on adequate-protection and budget-discretion issues, and Abrams's holding company A. Enterprises, LLC filed a limited objection echoing the equityholder concerns about plan-track financing. The DIP objections were ultimately resolved through documentation refinements and adequate-protection liens reflected in the final order rather than through litigated rulings.

A Cleary Gottlieb DIP survey discussed SiO2 alongside other 2023 cases as an example of a prepetition first lien lender extending incremental financing to support a pre-arranged equitization plan. The Bullock CFO declaration explained the financing need by reference to a 13-week budget, working-capital seasonality, and the cost of running the parallel sale process.

Cancelled Auction and the Pre-Arranged Reorganization Path

The debtors filed bidding procedures alongside the chapter 11 petition (Docket 17), proposing a dual-track sale and plan process under which Oaktree's debt-for-equity proposal would proceed unless overbid by a qualified cash bid. Judge Dorsey entered the bidding procedures order on April 25, 2023, setting bid deadlines and an auction date in the second half of June. The marketing process was run by Lazard Frères & Co., LLC under a $150,000 monthly advisory fee plus a transaction success fee.

On June 23, 2023, the debtors filed a Notice of Bidding Results and Cancellation of Auction reporting that no qualified third-party bids had been received and that the auction would not be held. The case thereafter proceeded on the reorganization track only, with Oaktree converting its DIP and prepetition first lien claims into the equity of the Reorganized Debtor. Day-one coverage of the case had flagged Oaktree's expected control of the company through the restructuring, and Wall Street Journal reporting tracked the same prearranged path before the marketing pivot to plan-only execution.

$350 Million Debt-for-Equity Plan and the SiO2 Liquidation Trust

Judge Dorsey confirmed the joint plan on July 19, 2023, with all objections resolved or overruled at or before the confirmation hearing. The confirmation order approved a $350 million debt-swap reorganization under which Oaktree exchanged its prepetition first lien debt and DIP claims for the equity of the Reorganized Debtor. The plan was solicited under voting procedures approved on July 10, 2023 following the disclosure statement hearing on June 7.

The plan allocates the three debtor entities into two post-emergence buckets. Advanced Bioscience Consumables, Inc. emerged as the Reorganized Debtor and continues operations under the Oaktree-controlled equity. SiO2 Medical Products, Inc. and Advanced Bioscience Labware, Inc. became the "Closing Debtors," winding down their residual estates through the SiO2 Liquidation Trust established under the plan and administered by Peter Kravitz as Liquidation Trustee. The plan also established release and exculpation provisions covering the debtors, the DIP lender, and the Strüngmann-affiliated investor group — provisions that became the subject of post-confirmation litigation in 2024.

Class treatment under the confirmed plan turned on the limited cash available outside the Oaktree equitization. Administrative, priority, and secured claims are paid by the Reorganized Debtor in the ordinary course. Class 5 General Unsecured Claims share a Liquidation Trust funded with $1.25 million of cash on hand at the Effective Date, subject to growth from litigation proceeds and reduction by trust operating expenses. The separately-classified Athos Subordinated Claims share residual distributions on a subordinated basis. Existing equity interests, including Doosan's stock and Abrams's common shares held through A. Enterprises, were cancelled and received no distribution.

Class	Treatment	Recovery (as of Q3 2025)
Administrative / Priority Claims	Paid by Reorganized Debtor	n/a (no Trust visibility)
Secured Claims (other than DIP/first lien)	Satisfied through reorganization	n/a
Oaktree DIP and first lien	Equitized into Reorganized Debtor	Plan sponsor
Class 5 General Unsecured	Cash distributions from Liquidation Trust ($1.25M starting cash)	0% paid to date; reconciliation ongoing
Athos Subordinated Claims	Subordinated Trust distributions	0% paid to date
Existing Equity Interests	Cancelled	0%

The Notice of Effective Date was filed on August 4, 2023, formalizing emergence and triggering the administrative bar date and other plan deadlines.

The Abrams Founder Litigation and Strüngmann Allegations

Founder Robert S. Abrams contested the case throughout. Acting through his personal holding company A. Enterprises, LLC, Abrams filed an examiner motion on April 28, 2023, the limited DIP/bidding-procedures objection, an objection to the disclosure statement, and an objection to the debtors' Rule 2004 motion. The examiner motion was withdrawn by stipulation in early May 2023 after the debtors and the Official Committee of Unsecured Creditors (UCC) agreed on document production protocols and case-management commitments.

Abrams's central claims, preserved in Proof of Claim No. 150, allege that Strüngmann fraudulently induced him to step down as CEO and surrender voting control of his shares via proxy in July 2022, after promising $240 million to $250 million in new equity that the Strüngmann-affiliated entities allegedly never intended to deliver. Abrams further alleges that the new management team — including Steffen — abandoned a roughly $111 million Request for Equitable Adjustment against the federal government for COVID-19 vaccine-vial production costs and rejected an unsolicited approximately $750 million asset offer from a strategic acquirer in the months before the chapter 11. The proof of claim characterizes the bankruptcy as engineered to transfer SiO2's IP and biotech assets to the Strüngmann group on terms favorable to ATHOS.

The proof of claim asserts causes of action for fraud, breach of fiduciary duty, intentional interference with prospective economic advantage, and related theories. Abrams ultimately entered into a stipulation resolving his confirmation objection before the July 18–19 confirmation hearing, but his underlying claims against Strüngmann and the ATHOS principals continued in non-bankruptcy forums. The litigation surfaced in two related state-court actions: a Brighthill Capital action in New York over a failed financing intended to support Abrams's bid to retake control of SiO2, and a Smart Plastics promissory-note ruling from the Illinois Appellate Court enforcing a judgment against Abrams.

Plan Objections and Estate Professionals

Beyond the Abrams litigation, the confirmation hearing drew limited objections from the U.S. Trustee, the United States, Regions Bank, Klinge Biopharma GmbH, ATHOS KG (filed as a reservation of rights under Bankruptcy Code Section 365(n) in connection with IP-related executory contracts), and Dixie Electric Cooperative. All were resolved before or at the confirmation hearing without contested rulings shaping the final plan, and the confirmation order entered without limitation on the plan releases.

On the debtor side, Kirkland & Ellis LLP served as lead bankruptcy counsel through partners Brian Schartz, Dan Latona, Anna G. Rotman, and Grant Jones, with Cole Schotz P.C. as Delaware co-counsel. Lazard Frères & Co. served as investment banker, and Ernst & Young LLP provided audit services. Donlin, Recano & Company served as claims and noticing agent.

The Official Committee of Unsecured Creditors retained White & Case LLP (Gregory F. Pesce, Andrew F. O'Neill, Erin Rosenberg, John Ramirez, and Andrea Kropp) as lead counsel with Richards, Layton & Finger P.A. as Delaware co-counsel and Province, LLC as financial advisor. ATHOS and the Strüngmann-affiliated entities appeared through Katten Muchin Rosenman LLP (Steven J. Reisman, Shaya Rochester, Julia B. Mosse). Sullivan & Cromwell LLP (Ari B. Blaut, Benjamin S. Beller, Nicholas R. Baker) appeared for Oaktree across the DIP and confirmation proceedings — a representation Sullivan & Cromwell later highlighted as one of its 2023 successful restructurings.

Post-Confirmation: ATHOS Release Dispute and Trust Administration

The plan's release and exculpation provisions returned to court in September 2024, when ATHOS-affiliated entities — Athos Service GmbH, Patiro Holding AG, Santo Holding AG, Thomas Strüngmann individually, and Andreas Biagosch — filed an emergency motion to enforce the plan's releases against post-confirmation third-party litigation that had named the released parties. Judge Dorsey denied the emergency motion on October 11, 2024, declining to treat the released-party shield as a categorical bar to the litigation that had been proceeding outside the bankruptcy court.

Trust administration has remained active well into 2026. The Liquidation Trustee filed post-confirmation reports for Q2 2025 and Q3 2025 showing no distributions to General Unsecured Claims and ongoing claims reconciliation. The Trustee's third motion to extend the claims objection deadline was granted by the court on February 5, 2026, with a scheduled omnibus hearing on the second omnibus claims objection on April 15, 2026. The reports identify an anticipated final decree application in mid-2026, contingent on completion of claims reconciliation and any litigation recovery.

The case has also continued to surface in third-party litigation. FirstBank initiated proceedings in 2025 against SiO2 Medical Products — proceedings handled outside the closed chapter 11 administrative docket. The Strüngmann-related civil disputes involving Abrams have continued in Illinois and New York state courts.

Oaktree's post-emergence investment in the Reorganized Debtor has been disclosed through Oaktree Specialty Lending Corporation (OCSL), which reported SiO2 first lien term loans at 12% due August 3, 2028, alongside 1,184,630 shares of common stock received in the reorganization. OCSL's fiscal 2025 annual report (for the year ended September 30, 2025) shows the SiO2 common stock position written to zero — down from a $20.8 million fair value reported the prior year — with the term loan portfolio marked at aggregate fair values significantly below par. SiO2 was OCSL's largest single unrealized loss for fiscal 2025 at $13.9 million.

Key Timeline

Frequently Asked Questions

Who is the claims agent for SiO2 Medical Products?

Donlin, Recano & Company, Inc. serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

What did existing equity receive under the confirmed plan?

The confirmation order cancelled all existing equity interests in SiO2 Medical Products, Inc. without distribution. Doosan Corporation's $100 million stake and the founder's common stock held through A. Enterprises, LLC each received zero recovery.

Who emerged with control of the company?

Oaktree Capital Management received the equity of the Reorganized Debtor (Advanced Bioscience Consumables, Inc.) in exchange for its DIP claims and prepetition first lien debt. SiO2 Medical Products, Inc. and Advanced Bioscience Labware, Inc. wound down through the SiO2 Liquidation Trust as Closing Debtors.

What is the status of General Unsecured Creditor recoveries?

Class 5 General Unsecured Claims share distributions from the SiO2 Liquidation Trust, which began with $1.25 million of cash on hand at the Effective Date. The Q3 2025 post-confirmation report identifies no distributions to date, with claims reconciliation ongoing and an anticipated final decree application in mid-2026.

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