Nuvectra (NSDQ:NVTR) announced that it filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
The Plano, Texas–based neurostimulation company filed the petition earlier this week in the U.S. Bankruptcy Court for the Eastern District of Texas. Nuvectra said it plans to use the court-supervised bankruptcy process to review its options for maximizing value and addressing its financial obligations.
Top of the list among creditors with unsecured claims were two contract manufacturers, Minnetronix Medical and Greatbatch Medical, now a part of Integer Holdings (NYSE:ITGR). Minnetronix is owed nearly $2.8 million, and Greatbatch’s unsecured claim is nearly at $2.2 million. The next largest claim is just over $150,000.
Minnetronix declined to comment at this early stage in the process, while Integer declined to comment on another company. Nuvectra began as the QiG Group, a part of Greatbatch/Integer, before its spinout was approved in February 2016.
Nuvectra said its board of directors and management team believe the company and its assets have value and are exploring options, including a sale of the company as a whole, its Algovita spinal cord stimulation system, its Virtis neuromod system or other specified assets.
The company said it is committed to supporting current patients, physicians, clinicians and facilities using Algovita. The system’s safety and functionality won’t be impacted by the bankruptcy process, according to a news release. However, Nuvectra is suspending support of future implants until the path forward is cleared, and it recommends that physicians cease new implantations, trial procedures and clinical studies in progress until then.
Nuvectra filed multiple motions seeking court authorization to support its operations during the bankruptcy process. The support would include a consensual cash collateral motion and a motion to pay employee wages and benefits. The company said it expects to receive approval for the motions shortly.
“Since launching as an independent company, Nuvectra has been investing in our mission to help physicians improve the lives of people with chronic conditions,” Nuvectra CEO Fred Parks said in the release. “We were successful in bringing Algovita to market and have opportunities in our pipeline, including Virtis, which we believe will generate value in the future. To fund our innovation and commercialization efforts, the company took on substantial debt. We have been working to achieve an alternative path forward through our extensive review of options for our business over the past several months. Following constructive discussions with our lenders, the court-supervised process we are starting today will provide us the time and flexibility we need to continue our review of options, maximize the value of our assets and address our financial obligations.”
Nuvectra shares were up 2.9% at 23¢ per share in early-morning trading today.
