By Mardi Balgochian Scalise, Lightwave Web Editor
In a motion filed August 28 in the United States Bankruptcy Court for Illinois, Nanovation Technologies was given its options for continuing business: get funding or sell the company, in whole or part, to the highest bidder.
In July, Nanovation's continued restructuring efforts even after having to lay off more than two-thirds of its employees and file Chapter 11 reorganization. However, the company stood behind its products and was determined to get back on track.
Having essentially blocked the last round of funding leading to its demise, Stamford International, Nanovation's major shareholder, hadn't given Nanovation any indication of where it stood regarding the developments. Nanovation was also Stamford's primary asset.
At the time, the company hoped to emerge from bankruptcy after 100 days with additional funds being infused back into the company in order to regain normal operations.
The time has come, and the bankruptcy judge's orders were clear. In the bankruptcy filing, Nanovation was ordered to obtain credit from potential purchasers or sell the company to the highest bidder.
According to the filed motion, Nanovation had "an immediate and critical need to access the sources of working capital and financing," of which the company was unable to accomplish, either with secured or unsecured credit.
It could be worse. Some of Nanovation's assets will escape almost unscathed, namely the Motorola BCS Property. The motion stated, "Purchasers shall have no right to foreclose or sell the Motorola BCS Property, but merely shall be entitled to the profits distributable to [Nanovation]..." The Motorola BCS Property was formed approximately one year ago with the Broadband Communication Sector of Motorola. Motorola's NT Existing Intellectual Property and any improvements Nanovation has made are apparently not subject to the motion.
What do they do now? For the next few months, it will be a virtual roller-coaster ride for the company. Nanovation must prepare its business for a recapitalization or asset sale transaction. The company has sectioned its business units into three parts, saleable separately or as a whole: Indium Phosphide products, Silica products or a combination of the two divisions.
Interested investors and purchasers must submit bids to the court before October 15, with a final determination being made by October 19. At that time, Nanovation must notify the highest bidder and file a motion with the court to effectuate the transaction. Final hearing is set for November 6, and the transaction must close by November 17. If there are no viable bids for funding or sale, the company must auction off its assets.
If a potential purchaser or financer requires additional time to evaluate the transaction, an extension may be granted through January 15 as long as that potential purchaser or financer funds the business so the operating expenses does not come from creditors.
It is going to be a tough few months for the company, not to mention the remaining employees trying to weather a storm that will eventually come. However, executives at Nanovation are trying to remain positive, and are still holding its Indium Phosphide and Silica products in high regard. Maybe someone else will too.