NanoMech allowed to cast off exit deal with former CEO

A judge has given the go ahead for bankrupt NanoMech to reject its separation agreement with the company's former chief executive.

Earlier this month, Springdale's NanoMech asked Judge John Dorsey to allow it to cancel its separation deal with its former CEO Jim Phillips. NanoMech called the agreement burdensome, adding that the company determined the deal is of no value. NanoMech argued bankruptcy law allows a debtor to reject some contracts or leases in certain instances, with court approval.

Attorneys for Phillips initially objected to the wording of NanoMech's motion but the two sides came to an accord. Dorsey signed an order earlier this week allowing the rejection of the agreement.

NanoMech, founded in 2002, develops nanotechnology for use in machining and manufacturing, lubrication and packaging, coatings and also develops specialty chemicals. Nanotechnology is the manipulation of matter at the atomic and molecular scale.

Phillips retired weeks before 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.

NanoMech said in earlier court filings that certain stakeholders had raised questions about Phillips' leadership and actions as CEO. NanoMech said its investigations show Phillips spent more than $750,000 in company funds on personal expenses, including lavish trips, and also awarded himself a compensation package the company could ill afford.

Phillips contends that NanoMech's allegations are gross mischaracterizations of the truth or outright fabrications.

In the court documents, NanoMech said Phillips' separation deal includes a $400,000 severance payment, $452,000 in accrued unpaid salary and a payment of $155,283. The deal called for an initial payment of $500,000 with the remainder to be paid in monthly installments over 24 months, beginning in mid-March.

In late July, a judge approved the sale of NanoMech's assets free of liens and other legal encumbrances to P&S Holdings for $8 million. The sale closed in early August. P&S is a subsidiary of Houston's Vinmar International Ltd., a global marketing, distribution and project-development company serving the petrochemical industry.

Business on 08/22/2019

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