SiO2 Medical founder asks bankruptcy court to appoint an examiner

By Sarah Lizee

Olympia, Wash., May 1 – SiO2 Medical Products, Inc.’s founder and former chief executive officer, Robert S. Abrams, asked the U.S. Bankruptcy Court for the District of Delaware to appoint an examiner to the company’s Chapter 11 case, according to a motion filed Friday.

In July 2022, Abrams resigned as CEO and executed a proxy ceding voting control of his controlling common and preferred stock interests in SiO2 to Patiro Holdings AG, a company owned by investor Thomas Strungmann. In exchange, Strungmann promised to provide SiO2 over $200 million in new capital.

“Strungmann never intended to perform his promises based on his future actions and statements,” Abrams said in the motion.

Instead, Strungmann and his chosen CEO, Yves Steffen, drove SiO2 to an unnecessary bankruptcy just as SiO2 was poised to commercialize its products, Abrams said.

“Strungmann not only failed to provide SiO2 the funding he had promised, he actively hindered SiO2’s fundraising efforts by instructing Abrams to break off talks with other potential investors for SiO2,” Abrams said.

Separately, Steffen failed to apply to the U.S. government for over $100 million in monies to which SiO2 was entitled because of the money it had spent on a government contract, Abrams added.

“Strungmann then used his board seats and ill-gotten proxy to authorize the filing of this bankruptcy proceeding and commence a rushed post-petition process,” he said.

Absent bidders, Oaktree Capital Management LP, the prepetition first-lien lender, post-petition lender and proposed plan sponsor, will acquire SiO2’s business in a transaction that provides zero recovery to unsecured creditors and wipes out equity holders, Abrams stated.

“These facts raise grave questions not only about the current management’s prepetition conduct but also its ability to fulfill its fiduciary duty as debtor-in-possession and its purported commitment to maximizing recovery for the benefit of all creditors,” Abrams said.

“The immediate appointment of an examiner is critical to preserve the company’s value, investigate the conduct of Strungmann and management during the period May 2022 through the petition date, and explore potential claims of the estate – all for the benefit of the company and its stakeholders.”

The Auburn, Ala.-based company creates and manufactures engineered primary packaging container components for the pharmaceutical and biotechnology industry. The company filed bankruptcy on March 29 under Chapter 11 case number 23-10366.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.