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Two creditors of bankrupt NanoMech have filed limited objections to the plan for the tech company's post-petition financing, contending it fails to provide the creditors with adequate protection.

Arvest Bank and Daniel Carroll contend in separate filings that the motion setting up financing for NanoMech during the bankruptcy process is unclear and allows for liens, including those against proceeds from certain insurance policies, that take priority over secured creditors. In a bankruptcy, secured creditors are typically backed by collateral and have priority in their claims.

According to court documents, Arvest claims it's owed more than $1.5 million while Carroll said he's owed a little over $1 million.

Springdale-based 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 Carroll; and $1 million to the Arkansas Economic Development Commission.

NanoMech's chief restructuring officer, attorney Benjamin Waisbren, has said the tech company can operate as a going concern if it's properly capitalized. He said NanoMech was woefully undercapitalized and was on the verge of collapse just days before the company's board of directors opted to seek bankruptcy protection.

In court filings, Waisbren noted debtor-in-possession financing had been secured from Michaelson Capital to keep NanoMech afloat during the bankruptcy process. That motion has yet to be approved by the court.

Last month, NanoMech presented a preliminary plan to the court to sell the tech company at auction in June. The plan calls for the company's largest creditor, New York-based Michaelson Capital Co., 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.

NanoMech, founded in 2002 by Jim Phillips, 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. Phillips retired weeks before the bankruptcy filing.

Business on 05/08/2019

Print Headline: Creditors object to tech firm financing


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