Creditors Petition for Liquidation of Imagyn Medical
Financially ailing Imagyn Medical Technologies Inc. said Tuesday that three of its creditors have filed a petition to force the company into a bankruptcy liquidation.
Imagyn, which makes products for use in surgeries and for treatment of impotence and other urological and gynecological conditions, has seen sales and revenue plummet since the impotence drug Viagra was introduced.
The Newport Beach-based company said it hopes to persuade the federal Bankruptcy Court in Delaware to approve a voluntary Chapter 11 bankruptcy proceeding that would enable Imagyn to remain in business under present management while it restructures its finances and devises a plan to repay its creditors. The petition seeking involuntary bankruptcy was filed in Delaware.
Imagyn missed an interest payment last week on $160 million in corporate bonds, triggering the bankruptcy petition by New York-based Turnberry Capital Partners and two affiliated investment companies. The three companies said in the filing that they are owed more than $6.4 million.
Bankruptcy law permits three or more creditors of a company to band together and file a petition to force the company into bankruptcy as long as the creditors’ claims exceed $10,000.
Creditors generally file involuntary-bankruptcy petitions when they believe a company is trying to sell assets to raise funds but doesn’t intend to use the revenue to repay them.
Imagyn has until the end of the month to respond to the Turnberry group’s petition.
The company said in its statement that it has been working with financial advisors and its major creditors to reorganize the company, and is preparing a restructuring plan with its senior lenders and the holders of about 79% of the bonds.
The plan, which would have to be approved by creditors and by the Bankruptcy Court, involves refinancing and converting part of Imagyn’s debt into equity by issuing company stock to the bond holders.
Imagyn stock fell 6 cents Tuesday to close at 13 cents a share in over-the-counter trading.
