Sotera Wireless emerged from bankruptcy protection with nearly $32 million in hand, after a lawsuit brought by rival Masimo (NSDQ:MASI) drained its coffers, but is enjoined from using Masimo data allegedly purloined by a pair of former employees who jumped ship for Sotera.
The San Diego-based company filed for Chapter 11 bankruptcy protection in September 2016, saying it owed its main creditors roughly $13.1 million. Sotera, which developed the ViSi wireless wearable patient monitor, reported raising about $20.7 million back in April 2014 and acquired sensor developer Reflectance Medical for an undisclosed amount the next year.
But the Masimo suit, alleging that former workers James Welch and David Hunt stole trade secrets they passed to Sotera, proved costly to defend – legal costs had mounted to $3 million by the time of the bankruptcy filing.
A federal bankruptcy court judge in May approved a plan that would see Sotera exit insolvency with $31.8 million, but also enjoined the company from using any of the data or documents obtained from Welch or Hunt. Sotera is also barred from including Welch “in the development of pricing strategies for the sale of the ViSi Mobile system” or in the design controls process until Sept. 16, 2021, according to court documents.
In a regulatory filing dated July 17, Sotera said it raised $31.8 million from 11 investors, which according to law firm Foley & Lardner included a $19.8 million contribution from Apple (NSDQ:AAPL) supplier Foxconn Technology Group. Other investors include Sanderling Ventures and Xiaoai Medical Technology, the law firm said.