NanoMech Inc. of Springdale filed for voluntary Chapter 11 bankruptcy reorganization Monday afternoon in Wilmington, Delaware.
The preliminary filing by the nanotechnology firm estimated both its debts and its assets as between $10 million and $50 million.
Accompanying the Chapter 11 petition was a 44-page overview submitted by Benjamin Waisbren, chief restructuring officer at Nanomech since March 7.
“NanoMech’s recent progress with key suppliers and customers is encouraging and is an objective illustration of how, despite its financial and past operational issues, NanoMech’s major customers continue to want to use the debtor’s products in manufacturing and in the field,” Waisbren noted. “In short, this shows NanoMech’s competitive attributes and advantages; it’s a tech company that has not been able to exploit fully it’s [sic] valuable intellectual property and product know-how. With appropriate levels of working capital and investment, I now believe it can.”
He noted that the company has struggled through continual losses from operations together with slow revenue growth.
Under the leadership of former CEO Jim Phillips, NanoMech invested in overhead and research and development that did not produce a return, and this negatively impacted liquidity and business operations.
Waisbren noted that the company has long-labored as an undercapitalized venture despite raising millions in capital.
NanoMech paid Phillips about $500,000 last month as part of a separation agreement and outstanding compensation payout.
Among the top executives still onboard are Wyatt Watkins, senior vice president of finance and operations; and Greg Schwartz, president of NanoMech Energy.
Gone is Arpana Verma, chief science officer and NanoMech board member who worked in the Houston office. Verma was also co-inventor of the founding patented technology for the company’s nGlide lubricant technology platform.
NanoMech employed as many as 51 staffers, according to Waisbren’s narrative. The current headcount is half that after recent payroll cuts that included the shuttering of what Waisbren determined to be unnecessary, expensive offices in Texas.
By his reckoning, the closing of the Dallas and Houston offices will save NanoMech more than $300,000 annually.
The three largest unsecured creditors listed in the Chapter 11 filing are the Waring & Carmen Partridge Foundation of Kingsville, Texas, $2 million; Cornelia Jennings of Mill Neck, New York, $1 million; and Dan Carroll of Bloomfield Hills Michigan, president of NanoMech’s Automotive & Industrial Group.
Creditors with the largest security claims include Michaelson Capital Special Finance Fund LLP of New York, $9.3 million; Arvest Bank of Fayetteville, $1.5 million; and the Arkansas Economic Development Commission, $508,332.
Another $1 million of secured debt is divided among three affiliates of Advantage Capital: Southeast Community Development Fund VII LLC, $680,000; CDVCA SUB-CDE IV LLC, $176,000; and Advantage Capital Community Development Fund LLC, $144,000.
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