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MetaMorphix convertibles holders seek to force company into bankruptcy
Company looking for urgent funding to finance reorganization
By Jennifer Chiou
New York, Sept. 28 - MetaMorphix, Inc. announced that the U.S. Bankruptcy Court for the District of Delaware has scheduled a Thursday hearing at which it will consider the involuntary Chapter 7 petition from holders of the company's $18.4 million of 10% secured convertible promissory notes.
The holders originally filed a petition against the company on Jan. 28, 2010.
According to a company release, MetaMorphix was looking to convert to Chapter 11 from Chapter 7 to seek an orderly restructuring and continue operations.
The company noted that a Chapter 11 filing entails obtaining debtor-in-possession financing to reorganize.
MetaMorphix said it has been in negotiations with possible financing entities but added that these efforts have not resulted in the needed financing. It stated that it continues to seek DIP financing.
The company said that the likely result of the hearing - unless DIP financing is secured in the coming week - is that the court will enter an order for relief, resulting in the company becoming a Chapter 7 debtor.
On July 17, 2008, noteholders filed suit against the company and co-chairman, president and chief executive officer Edwin Quattlebaum. The investors are seeking $10 million in compensatory damages in three of their claims, rescission of their investments in two of their claims and unspecified compensatory damages in one of their claims.
MetaMorphix said in a prior SEC filing that it believes it has meritorious defenses against these claims.
Based in Beltsville, Md., the company develops genetic markers.
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