Cantrell Drug, which provides sterile injectable pharmaceuticals principally used in hospitals, filed for voluntary bankruptcy Tuesday, citing two inspections by the Federal Drug Administration in the past year that forced the 65-year-old privately held company to temporarily suspend product manufacturing and shipping.
The Chapter 11 bankruptcy petition filed in U.S. Bankruptcy Court of the Eastern District of Arkansas listed $7.5 million in liabilities and $15.1 million in assets.
The creditor with the biggest unsecured claim listed in the bankruptcy petition was Pharmax Services Inc. of San Juan, Puerto Rico, which is owed $999,400.
Cantrell Drug has a production facility in Little Rock and corporate offices in North Little Rock.
In a separate news release, the company's chairman chief executive officer, James McCarley Jr., said the setback is temporary and pledged to pay all the company's creditors.
"Above all I want to make it clear to everyone that our intent is to pay one hundred cents on the dollar to all our creditors," McCarley said in the release. "We have no intention of any sort of liquidation, cram down or write off.
"I've asked our vendors to work with us, to give us time to get back on our feet. So far, I've been very pleased with the understanding and support we've received from the trade."
He called the deficiencies uncovered in the FDA inspections "regulatory in nature and not in response to any product problem or patient illness."
Cantrell provides drugs that are either in short supply or require compounding to prepare the medication in a final form for administering to patients. Cantrell said its products offer significant cost savings to hospitals.
Compounding pharmacies have come under stricter FDA oversight after a deadly outbreak of fungal meningitis from compounded drugs provided by a pharmacy in Massachusetts in 2012.
But McCarley said he wasn't blaming the FDA for the company's financial woes and said the company is "working diligently" with the agency to address its concerns.
As a family-owned business, McCarley said the company had to reorganize under bankruptcy protection because it lacked the financial wherewithal to "weather the economic circumstances of a shutdown" that publicly traded pharmaceutical companies have.
"I'm paying for operations and payroll out of my own pocket at this point," he said. "My wife, Lynn, who co-owns the company with me, and our family is determined to get through all this."
After shutting down production twice in the past eight months, the company has outsourced its authority for "batch release" and other parts of its quality assurance/quality control department to a third-party expert firm called Escalate Sciences to avoid further adversely affecting the company's hospital customers, according to McCarley.
"To our hospital customers, I understand that you rely on Cantrell Drug and that drug recalls and production shutdowns create headaches in your supply chain," he said. "It's my intent to restore the goodwill and trust we've worked so hard over the years to gain."
The setback comes as Cantrell was in the midst of an expansion that included, beginning last year, leasing the former Southwest Airlines reservation center at Bill and Hillary Clinton National Airport/Adams Field.
The facility, once modified, would give the company the capability of handling higher volumes and add redundancy. With the expansion, the company was expected to add 150 employees.
The lease alone costs $360,000 annually.
Cantrell has a 20,000-square-foot facility that includes production, quality assurance, warehouse, and office space and until a recent round of layoffs had employed more than 175 people, according to the release.
Business on 11/08/2017
Print Headline: Cantrell Drug files for bankruptcy