STAR Dynamics files bankruptcy amid litigation, plans to sell assets

By Caroline Salls

Pittsburgh, Dec. 11 - STAR Dynamics Corp. filed Chapter 11 bankruptcy on Tuesday in the U.S. Bankruptcy Court for the Southern District of Ohio amid plans to sell substantially all of its assets.

STAR said in documents filed with the court that it has been in litigation for the past year under which BAE Systems Technology Solutions & Services, Inc. alleged misappropriation of trade secrets under the Ohio Uniform Trade Secrets Act, unfair competition, tortious interference with contract and with prospective business expectancy, aiding and abetting breach of fiduciary duty and aiding and abetting breach of duty of loyalty.

The company said a state court dismissed all counts except the count for alleged misappropriation of secrets.

In connection with the lawsuit, a magistrate recommended that STAR be enjoined from any competitive bidding or accepting any contracts for which BAE has submitted a bid or intends to submit a bid.

The state court subsequently enjoined the company on an interim basis from bidding on specific projects identified by BAE, using or disclosing any of the alleged trade secretes identified by BAE and developing STAR's CSTAR radar system.

As of the bankruptcy filing date, STAR said the interim order had expired and the state court had not yet issued a final order on BAE's motion for a preliminary injunction.

In light of a continuing need for funding, coupled with the distractive nature of the litigation, STAR said it decided that its best course of action would be to put itself up for sale.

The company hired Sagent Advisors, LLC in October to assist it obtaining a transaction for a sale of all or substantially all of its assets. As a part of this process, STAR said a data room has been established, and Sagent has begun to cultivate interested parties.

According to court documents, STAR Dynamics has $28.47 million in assets and $50.89 million in debt.

The company did not list any unsecured creditors with claims of $1 million or more.

STAR Dynamics Holdings, LLC and TAZ Ventures, LLC each hold 45% of STAR's shares, and Jerry Jost holds 10%.

The company is represented by Allen Kuehnle Stovall & Neuman LLP.

STAR Dynamics is a Hilliard, Ohio-based instrumentation radar systems company. The Chapter 11 case number is 13-59657.

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