Advanced Tissue Closes, Files $25M Bankruptcy

Former Advanced Tissue CEO Kevin Lamb says he's saddened by the company's closure, but has been out of the loop since stepping away in 2018.

A former CEO of Advanced Tissue LLC of Little Rock says he doesn’t know why the wound care supply company closed and filed for Chapter 11 bankruptcy reorganization in August, leaving hundreds out of work, but he wants to help find a solution to the ensuing legal fight.

The company, which shipped prescribed wound-care kits to patients mostly for use at home, listed $25.5 million in debts and $7.1 million in assets, according to its filing in U.S. Bankruptcy Court for the Eastern District of Arkansas.

The bankruptcy comes after Bell Bank of Fargo, North Dakota, sued Advanced Tissue and related companies — AT Buyer Inc., AT Parent LLC and Valley Ranch Skin Care LLC — over defaults on a series of 2017 loans, according to Aug. 18 filings in U.S. District Court in Arkansas.

In late 2020, Advanced Tissue and the companies failed to make “timely payments,” triggering the default, according to the bank’s suit, filed by attorney Lance Miller of Mitchell Williams Selig Gates & Woodyard of Little Rock.

Advanced Tissue and its subsidiaries told the bank they were being audited by the Centers for Medicare & Medicaid Services, the federal agency that provides health coverage to more than 100 million Americans, “but have not provided detailed information about the extent/purpose of the audit,” the suit said.

The bank also said the companies are insolvent and no longer have a board. The bank alleged that as of Aug. 13, the defendants owed $8.6 million plus interest and attorneys’ fees. It is suing for breach of contract and asking for a receiver be appointed. The case was paused when Advanced Tissue filed for bankruptcy protection.

Advanced Tissue CEO Robert Betchley and CFO Michael Cole could not be reached for comment. Betchley’s LinkedIn profile shows he was CEO from September 2020 to September 2021. Cole’s LinkedIn profile shows that he joined the company in 2006 and is still there. Advanced Tissue’s bankruptcy attorney, Kevin Keech of Little Rock, didn’t return a call for comment.

Kevin Lamb, who founded Advanced Tissue in 2000, told Arkansas Business via email last week that he learned on June 18 from an employee that the company was closing and “hundreds of employees would be without a job.

“While saddened by this sudden closure, I was not involved with or consulted about AT’s decisions,” Lamb said.

Lamb said he sold his stock in the company in September 2015, but remained as CEO until September 2018. “Since then, I have not been involved in any business decisions,” Lamb said. “In short, I know virtually nothing about Advanced Tissue’s operations in the time following my departure and can only speculate along with others in the industry as to what happened.”

But Advanced Tissue’s bankruptcy filing and lawsuit against it give a peek into the company’s financial picture.

One of Advanced Tissue’s largest creditors is Yukon Capital Partners II LP of Minneapolis, which has a claim for $15 million in debt that Advanced Tissue acquired in September 2017. Yukon Capital Partners is an investment firm that has an ownership interest in the company. Advanced Tissue is owned by AT Buyer Inc. of Southlake, Texas. AT Buyer is owned by AT Parent LLC of Little Rock, which is owned by Yukon Capital Partners, with 69.3% ownership; Ancor/AT Investments LLC of Southlake, Texas, with 28.3%; and Lamb of Little Rock with the remaining 2.4%.

Lamb, who worked in health care for more than 30 years, told Arkansas Business in 2013 that in the late 1990s, he was working in the pain management field and noticed that patients, some with non-healing wounds, were being pushed back into home settings.

“We got to looking around in this market and thought, wow, this is emerging. This was not even a trend then,” Lamb told Arkansas Business.

In 2013, he was a finalist for Arkansas Business Executive of the Year. At that time, the company had 135 employees and operated in 50 states. In an October 2016 article in the Arkansas Democrat-Gazette, Lamb estimated that Advanced Tissue did about $35 million to $45 million a year in revenue.

After Lamb left the company in 2018, Advanced Tissue’s gross revenue was $14.8 million in 2019 and grew to $18.2 million in 2020. It reported $9 million in gross revenue for nearly the first eight months of this year.

“I was proud of the work I did while running Advanced Tissue,” Lamb said. “And while I was not involved with the company at the time of its closure, I’m a strong believer in doing right by others, so I’m committed to finding fair and reasonable solutions for ongoing litigation.”