A Delaware judge has approved short-term financing for bankrupt NanoMech and has given the OK for plans to sell the company at auction in June.
In an order filed on Friday, Judge Christopher Sontchi with the United States Bankruptcy Court for the District of Delaware approved up to $850,000 in post-petition financing by Michaelson Capital Co. of New York, a creditor of NanoMech. The filing spells out protections to pre-petition lenders.
The judge also gave the green light to plans for selling NanoMech. In an order also filed Friday, the judge allowed for a June 17 deadline for bids and set an auction for June 19 if at least two qualified bids are received. A sale hearing will be held June 24.
Last month, NanoMech in Springdale presented a preliminary plan to the court to sell the company at auction. The company's largest creditor, Michaelson Capital, will act as the so-called stalking horse bidder in an auction, making a $9 million initial bid for the company's assets along with assumed liabilities.
Two creditors had filed limited objections to the financing plan, contending it failed to provide the creditors with adequate protection. Arvest Bank and Daniel Carroll argued in separate filings the plan was unclear and allowed for liens that take priority over secured creditors.
The approval of the sale parameters also comes over the objection of NanoMech's former chief executive officer Jim Phillips, who said the sale plan improperly includes up to $7 million in insurance policies and aren't designed to maximize the tech company's selling price. Phillips stepped down as CEO weeks before the company filed for bankruptcy.
NanoMech filed for Chapter 11 bankruptcy protection in a Delaware court in April. In initial filings, NanoMech claimed between 100 and 199 creditors, between $10 million and $50 million in assets and between $10 million and $50 million in debt.
Filings showed debts including $8.9 million to Michaelson Capital; $2 million to Waring and Carmen Partridge Foundation of Texas; $1.5 million to Arvest; $1 million to investor Daniel Carroll; and $1 million to the Arkansas Economic Development Commission.
NanoMech develops nanotechnology for use in machining and manufacturing, lubrication, packaging, biomedical implant coatings, and the development of specialty chemicals. Nanotechnology is the manipulation of matter at the atomic and molecular scale.
Business on 05/14/2019
CORRECTION: Jim Phillips joined Springdale-based NanoMech in 2008 as company chairman, became its chief executive officer, and stepped down last month. An earlier version of this story incorrectly described his initial position with the company.