Palmaz assesses offer to purchase assets of bankrupt company

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Dr Julio Palmaz is considering making an offer to acquire the assets of Palmaz Scientific Inc., the San Antonio medical device company that sought refuge from creditors in bankruptcy court on Friday.

But the company shareholders wonder if the Chapter 11 filing is simply a way for Palmaz – the founder of the company who is best known as the inventor of the heart stent that saved millions of lives – to try and get the assets to a reduction.

“What is happening is you have suspected fraudsters trying to take assets on the cheap,” Jason Brookner, a Dallas attorney who represents a handful of Palmaz Scientific investors, told US Judge Craig Gargotta. at a hearing Tuesday.

Over 330 investors have collectively sunk about $ 40-50 million into the business, but it only has about $ 30,000 left in its bank accounts and has never generated much revenue. Last year, a few investors sued the company, Palmaz and others for fraud and civil theft. The company denied the allegations and blamed its situation on a “negative campaign of false information disseminated by certain people.” He filed a lawsuit to sue for millions in damages.

Palmaz abruptly resigned as chairman of the company the same day it filed for bankruptcy. Manager Phil Romano, best known as the founder of restaurant chains Fuddruckers and Romano’s Macaroni Grill, also resigned from the board that day. The day before, CFO and board member John Asel resigned. This follows the resignation, on February 19, of the CEO, Dr Philippe Henri Marco, who only joined the company last fall.

The only remaining director is Eugene Sprague, who is now the “appointed representative” of Palmaz Scientific. He is a professor in the Department of Radiology at the University of Texas at San Antonio, the school’s website says.

Before the bankruptcy, Palmaz Scientific laid off 10 of its 17 employees. The other seven employees work at a research and development center in Fremont, California. The company’s only employee in San Antonio is a part-time accountant.

At Tuesday’s bankruptcy hearing, company attorney Michael Parker said he believed an entity related to Palmaz will come up with a “harassment” offer for Palmaz Scientific’s assets. Such an offer would essentially be the first offer for the assets.

Palmaz Scientific and the assets of its affiliates include a portfolio of more than 250 patents and 182 other pending patent filings, according to a court record. She valued her assets, as well as her debts, between $ 10 million and $ 50 million. The company said it was focused on developing the next generation of implantable prosthetic devices.

At the time of its filing, Palmaz Scientific indicated that bankruptcy would save it time to identify and assess potential buyers for its technology.

“An experienced bankruptcy practitioner would look at this case and think this is an effort to write off all debts and return the patents to the principals,” said Raymond Battaglia, a San Antonio attorney representing John Foster, the largest independent shareholder of the company. , at the end of the hearing.

In addition to being a significant shareholder, Palmaz owns a controlling stake in Oak Court Partners Ltd., which has provided $ 12.5 million in secured financing. As a secured lender, he is among the first creditors to be paid if there is any proceeds to distribute from the bankruptcy estate.

Another Palmaz entity, Vactronix Scientific Inc., which was only formed last week, had offered to loan Palmaz Scientific up to $ 2 million to cover its bankruptcy expenses. Lawyers representing the investors have agreed to allow Palmaz Scientific to receive approximately $ 532,500 in funding from Vactronix. This gives Vactronix priority over other creditors, including shareholders, to receive bankruptcy estate payments.

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Twitter: @AlamoPD


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