With the auction to sell the company just days away, bankrupt NanoMech is asking a judge to allow petrochemical company Vinmar International Ltd. to step in as the new stalking horse bidder.
According to documents filed late Friday, Springdale-based NanoMech is asking the court to allow Vinmar to make a credit bid of up to $13.08 million for the company's assets and take over as the stalking horse bidder.
NanoMech's largest creditor, Michaelson Capital of New York, is currently acting as the so-called stalking horse bidder, who typically sets the minimum price for a company. The $8 million initial bid for NanoMech remains in place along with bidding increments set at $250,000.
After Michaelson Capital was named the stalking horse bidder, Michaelson and Vinmar made a deal to have Vinmar take up Michaelson's pre- and post-petition debt and replace Michaelson as the stalking horse bidder, according to court filings.
Houston-based Vinmar is a global marketing, distribution and project development company serving the petrochemical industry, according to its website. According to a 2017 news release, the company was founded in 1978 and generated $5 billion in revenue in 2016.
Phone and email messages seeking comment from Vinmar on the move to buy NanoMech were not returned by Monday evening.
Founded in 2002, NanoMech develops nanotechnology for use in machining, manufacturing, lubrication, packaging, biomedical implant coatings and the development of specialty chemicals. Nanotechnology is a branch of technology that focuses on the manipulation of matter at the atomic and molecular level.
There is a hearing scheduled Wednesday to consider the motion and a motion allowing for a shortened notification notice requirement. The bid deadline for NanoMech is also Wednesday, with an auction set for Friday if necessary and a hearing to approve the sale scheduled for July 23.
NanoMech filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware in April. NanoMech claims $7.2 million in assets and owes nearly $19 million to its creditors, according to bankruptcy filings. The 12 secured claims include Michaelson Capital for $8.95 million, Arvest Bank for $1.55 million as well as $1 million to the Arkansas Economic Development Commission. There are 166 unsecured creditors.
With the approval of bankruptcy court, NanoMech is acting as a debtor in possession, which allows the business to operate normally as the bankruptcy unfolds.
Also on Friday, The U.S. attorney's office, on behalf of the Department of Defense objected to aspects of NanoMech's sale, contending the deal includes the transfer of a military contract that, by law, is nontransferable.
In mid-June, Daniel Carroll, a creditor with a $1 million promissory note, filed a limited objection in bankruptcy court to the sale, contending any sale order should spell out that it doesn't allow the debtor to sell the proceeds from directors' and officers' insurance policies. The policies are a type of liability insurance covering claims made against those serving on a company board or as an officer.
NanoMech's former chief executive, Jim Phillips, also has objected to the sale on similar grounds, contending the insurance policies should not be part of the deal for several reasons, including the nontransferable nature of the policies.
NanoMech has asked the court to compel Phillips to produce documents and answer questions it says show he was involved in wrongdoing that led to the company's failure.
NanoMech said an investigation indicated Phillips spent more than $750,000 in company funds on personal expenses, including trips for himself and his wife to the Paris Air Show and outings to Dallas and Indianapolis to attend car races. Other claims include the company made payments for renovations at Phillips' home and company funds were used to buy electronics and pay for other expenses not connected to Phillips' job as CEO.
Business on 07/16/2019