In a hearing Monday in Delaware, a federal bankruptcy judge denied NanoMech's request to reject parts of its deed with the Springdale Public Facilities Board, but he left the door open to further court action on the matter.
The provision in the deed allows the board to repurchase the property it sold to NanoMech in its technology park at its original sale price. The Springdale Public Facilities Board, which sold the land to NanoMech in 2013 for nearly $55,000, objected to NanoMech's motion to reject the repurchase option in the deed.
Bankruptcy Judge John Dorsey ruled NanoMech had the burden of proof to show the provision was burdensome and hadn't presented him with enough evidence to make that determination. He denied NanoMech's request without prejudice, then gave NanoMech only a two-week time frame to refile its motion.
Attorney Sarah Ennis, acting for NanoMech, told the judge the company has determined the deed had little or no value to the estate and as an executory contract it can be rejected under bankruptcy law. Ennis argued the three parcels were worth more to NanoMech and its creditors, since a sale of the property would likely result in a higher price than what the company initially paid for it.
Charles Coleman, attorney for the Springdale board, argued its deed with NanoMech was not an executory contract. He said the deed required the company to begin construction on its headquarters or a similar industrial building on the more than 7 acres within five years of the December 2013 purchase date but that the company failed to meet that deadline.
He contended that when NanoMech didn't meet the conditions of the deed, the board's right to repurchase the property matured, all prior to the date NanoMech filed for bankruptcy. Coleman told the court the property was not part of a recent sale of NanoMech, so it was not a vital part of its business.
In late July, Dorsey approved the sale of most of NanoMech's assets, free of liens and other legal encumbrances, to P&S Holdings for $8 million. P&S is a subsidiary of Houston's Vinmar International Ltd., a global marketing, distribution and project-development company serving the petrochemical industry. The deal closed Aug. 1.
NanoMech filed for Chapter 11 bankruptcy protection in April in U.S. Bankruptcy Court for the District of Delaware. NanoMech claimed $7.2 million in assets and owes nearly $19 million to its creditors, according to initial bankruptcy filings.
Founded in 2002, NanoMech developed nanotechnology for use in machining and manufacturing, lubrication and packaging, and coatings. It also developed specialty chemicals. Nanotechnology focuses on the manipulation of matter at the atomic and molecular scale.
Business on 09/10/2019
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