Exaeris, Inyx USA strike back, ask court to stop Westernbank Puerto Rico interference

By Caroline Salls

Pittsburgh, July 26 - Exaeris, Inc. and Inyx USA, Ltd. have asked the U.S. Bankruptcy Court for the District of Delaware to impose sanctions on lender Westernbank Puerto Rico, arguing that the lender is attempting to conduct criminal investigations against the wishes of the court, according to a Thursday court filing.

With its sanctions motion, Exaeris and Inyx USA said they are specifically asking the court to bar Westernbank's use of any documents or evidence obtained from any Inyx entity unless it was obtained in compliance with a July 22 order on procedures for obtaining information, and to bar Westernbank from issuing any public statements concerning the Inyx debtors or their bankruptcy, or revealing documents or evidence obtained under the procedures order.

Also the debtors are asking the court to stay Westernbank's pending motion for appointment of a Chapter 11 trustee for as long as Westernbank continues to withhold documents and computers under the Canadian court order, and to reimburse the debtors' debtor-in-possession financing lender for all DIP financing incurred during the stay period.

According to the motion, from the start of the Inyx, Inc. U.S. subsidiaries' Chapter 11 case, Westernbank and its agent Ernst & Young "have engaged in an improper course of conduct designed to bring about the demise of the debtor companies."

"Despite repeated admonitions by this court that Westernbank is not to act the FBI conducting a criminal investigation, Westernbank and its agents have systematically interfered with the day-to-day operations of the debtors, sought to intimidate debtors' employees by threatening to have them arrested, improperly searched persons and vehicles entering the plant in Puerto Rico, physically threatened debtors' employees and agents and slandered debtors in the local press in Puerto Rico," Exaeris and Inyx USA said in the motion.

Exaeris said all of Westernbank's actions were "under the guise of the alleged need to obtain records" in connection with an adequate protection order.

Most recently, the Inyx debtors said Westernbank has attempted to circumvent a court order on procedures of obtaining documents by obtaining a Canadian court order "virtually shutting down an affiliated entity in Canada, Inyx Canada, Inc."

In addition, Exaeris said it has no access to any of the financial records needed to run its business or to comply with court discovery orders because of Westernbank and Ernst & Young's actions.

If Westernbank does not stop, the debtors said the interference will result in the demise of their businesses.

As previously reported, since the debtors' Chapter 11 filing, Westernbank has filed an objection to their DIP financing and asked the court convert the case to Chapter 7 bankruptcy or replace the current management, appoint a Chapter 11 trustee or examiner and transfer the case from the Delaware court to Puerto Rico, all amid allegations of fraud.

Inyx is a pharmaceutical company based in New York that develops drug delivery technologies and products for the treatment of respiratory, allergy, dermatological, topical and cardiovascular conditions. Its U.S. subsidiaries - Exaeris and Inyx USA - were placed in bankruptcy on July 2, and their Chapter 11 case number is 07-10887.

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