The Springdale Public Facilities Board, which sold NanoMech land in its industrial park in 2013, is objecting to a plan by the bankrupt tech company to reject a part of the contract that allows the board to repurchase the property at its original sale price of nearly $55,000.
In a recent filing, the board argued its contract with NanoMech 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. It noted 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.
In a June filing, NanoMech asked the bankruptcy judge for the ability to reject the part of the contract that allowed the land to be repurchased. NanoMech argued the three parcels were worth more to NanoMech and its creditors, since a sale of the property now or in the near future would likely result in a higher price than the $54,750 the company initially paid for it.
Joshua Silverstein, a professor at the W.H. Bowen School of Law at the University of Arkansas at Little Rock who researches and writes about bankruptcy law, said that while bankruptcy courts have some power in rejecting contracts they typically involve contracts that are ongoing, such as leases.
NanoMech filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware in April. Founded in 2002, NanoMech develops nanotechnology for use in machining and 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.
NanoMech claims $7.2 million in assets and owes nearly $19 million to its creditors, according to bankruptcy filings. Property includes $2.9 million in inventory; $3 million in intangibles and intellectual property including patents, trademarks and trade secrets; and nearly $350,000 in cash. Total liabilities stand at $18.9 million with $12.5 million owed to creditors secured by property and $6.4 million in unsecured claims. Typically secured creditors take priority and are paid first in a bankruptcy.
The sale of the company is set for the middle of this month after a June sale was postponed. Plans are for NanoMech's largest creditor, Michaelson Capital, to 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. The bid deadline for NanoMech is July 17 with an auction set for July 19 and a hearing to approve the sale scheduled for July 23.
Business on 07/09/2019
Print Headline: Springdale board fights bankrupt firm on property buyback