By Jessica Iannetta – Associate Editor,
Baltimore Business Journal
Aug 16,
2019, 8:24am EDT
Sleep
testing technology firm NovaSom Inc. — backed by some Philadelphia-area
investors — has filed for Chapter 11 bankruptcy and is in talks to be bought by
a Florida medical technology services company.
NovaSom said it would shut down its
Baltimore-area headquarters on Sept. 1, a move that impacted 169
employees. Shortly thereafter, on Aug. 2, the company filed for bankruptcy,
according to court documents filed in the United States Bankruptcy Court for
the District of Delaware.
In the
wake of the bankruptcy filing, NovaSom is seeking to sell all its assets to
VirtuOx, for an estimated sales price of $5.33 million, court documents show.
The deal is expected to close sometime in September through a stalking horse
auction. A stalking horse bid is an initial “benchmark” bid on a bankrupt
company’s assets chosen by the bankrupt company. Other interested bidders can
make a competing bid at a later date.
Jeffrey
Kurtzman, an attorney for NovaSom, could not be reached for comment.
The
27-year-old company develops home tests for obstructive sleep apnea, a
condition which causes pausing in breathing during sleep. NovaSom is backed by
more than $50 million in financing, according to documents filed with the U.S.
Securities and Exchange Commission. That includes a $35 million Series D round
raised in 2011, led by Pennsylvania-based Safeguard Scientifics. (NYSE: SFE).
NovaSom’s previous investors also include Philadelphia-based Quaker Partners
and Texas-based TPG Biotech fund.
All
three investors are listed as owning, directly or indirectly, 10% or more of
NovaSom in the court documents.
Court
documents show that NovaSom encountered a "liquidity crisis" and
began efforts to sell or recapitalize as early as 2017. NovaSom had assets of
between $1 million and $10 million and liabilities of between $10 million and
$50 million, according to the documents.
NovaSom recently raised about $7.5 million
in debt financing, according to round reported last month with the
SEC. The company had declined to comment on who participated in the round and
what the new funding would be used for.
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