Luna Innovations files amended plan to reflect Hansen claim settlement

By Caroline Salls

Pittsburgh, Dec. 14 - Luna Innovations Inc. filed an amended plan of reorganization and disclosure statement Friday with the U.S. Bankruptcy Court for the Western District of Virginia after reaching a claim settlement with Hansen Medical, Inc.

Under the original plan, Luna was asking the court to estimate the Hansen litigation claim, and, if Luna's request to estimate the claim at $1.3 million were granted, the company believed creditors would recover 100% of their claims and existing shareholders would be left in place.

However, Luna said Hansen objected to the estimation motion, and a settlement was crafted to avoid litigation.

Creditor treatment under the amended plan will include:

• Holders of administrative claims, priority tax claims and professional fee claims will recover 100% in cash;

• Holders of miscellaneous secured claims will recover 100% either in cash or through reinstatement of the claim or the return of the property securing the claim;

• Holders of Carilion claims will have their notes reinstated and recover 100% of their claims in cash;

• Holders of unsecured claims and litigation claims will recover 100% in cash plus interest accruing from the bankruptcy filing date through the distribution date;

• Holders of Hansen claims will recover 15% to 20% comprised of $5 million in secured notes, up to $5 million in purchase discount credits and 9.9% of Luna common stock and a three-year warrant to preserve this ownership percentage.

The company will also enter a development and supply agreement with Hansen, as well as a license agreement and a cross-license agreement; and

• Interests will be reinstated and holders will retain their rights to the interests.

Luna, a Roanoke, Va.-based company involved in research, development and commercialization of innovative technologies in molecular technology solutions and sensing solutions, filed for bankruptcy on July 17. Its Chapter 11 case number is 09-71811.

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