Investors in New York who follow the health care industry may be familiar with the diagnostics firm Atherotech. The Alabama-based company made news in 1999 when it announced that it would begin marketing a VAP cholesterol test developed at the University of Alabama. However, reports indicate that the company submitted a Chapter 7 bankruptcy filing on March 3.
A statement released by Atherotech's CEO made it clear that the decision to file under Chapter 7 was only taken after the company had tried unsuccessfully to raise capital and refinance its debts. Aerotech was once one of the fastest growing businesses in the Birmingham area. According to the Alabama Department of Commerce, about 300 workers will be impacted by the bankruptcy filing.
In the filing, the company disclosed that its debts fell into the range of between $50,000 and $100 million. The company sent notice to its more than 1,800 creditors. Some of the larger creditors include Madison Capital Funding, Regions Financial Corporation, First American Commercial Bancorp and Southern States Bank. The VAP cholesterol test that is considered Atherotech's most valuable asset cannot be sold as the license is held by the University of Alabama.
Many media reports about business bankruptcies deal with Chapter 11 filings, but businesses may also file Chapter 7 bankruptcies. A Chapter 11 filing allows business to continue as debts are reorganized while a Chapter 7 filing liquidates business assets. Choosing which path to take is often a difficult decision for business owners, and attorneys could explain the merits and drawbacks of both options. This advice could be particularly useful for owners who have provided personal guarantees for business debts.
Source: The Birmingham Business Journal, "Atherotech files for Chapter 7 bankruptcy", Alan Alexander, March 10, 2016