Michaelson Capital Partners of New York is suing NanoMech Inc. of Springdale in the Supreme Court of New York for $8.9 million plus interest, costs and fees.
NanoMech uses nanotechnology to manufacture industrial lubricants, specialty chemicals and other advanced products that primarily for the energy industry. Michaelson Capital said it loaned NanoMech the $8.9 million in April. The lawsuit, filed on Monday, claims that the tech firm defaulted on the loan and violated other terms of promissory notes and agreements between the two businesses.
John Michaelson, chief investment officer of Michaelson Capital Partners, said in a news release that it is his firm’s intent to work with NanoMech’s equity shareholders to “rescue the company and keep its technology and jobs in Arkansas.”
More: Read the lawsuit.
“We believe in the technology and in the talented employees of the company,” Michaelson said. “Unfortunately, as our filings state, the current executive leadership of the company has repeatedly failed to meet its obligations and is in breach of its agreements. This action is a last resort to save a great Arkansas company. We look forward to working with NanoMech’s shareholders and investors, including the Arkansas Economic Development Commission, and, above all, its outstanding employees, to rebuild this company.”
After touting the NanoMech’s accomplishments, NanoMech Chairman and CEO Jim Phillips, in a statement sent to Arkansas Business late Thursday, said, “Unfortunately, we are involved in a dispute with a lender and that lender has made matters worse by choosing litigation rather than discussion to resolve these issues. NanoMech will officially respond to this lawsuit with court filings at the appropriate time. However, we are excited about the future of our business and continue to work every day to ensure continued success in the coming years.”
Robbie Wills, the attorney representing Michaelson Capital, said the firm was brought in as a debt lender to help NanoMech consolidate its outstanding debts. This was atypical of the firm, which is usually an equity investor in technology companies, he said.
“The bottom line is the company has not met its obligations under the promissory note and, after a long period of trying to work it out with the company, Michaelson Capital was left with no choice but to initiate these proceedings,” Wills told Arkansas Business. “The intent of this is, basically, to save the company, to keep it headquartered here in Arkansas, to keep the employees and the jobs here in Arkansas. The technology is very sound. It’s got a great future. Michaelson Capital hopes to work with the equity shareholders to move the company forward.”
Wills added that the firm would like to remain involved with NanoMech as long as this loan is repaid.
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