Inyx U.S. subsidiaries file Chapter 11 following loan acceleration, administrator appointment

By Caroline Salls

Pittsburgh, July 3 - Inyx, Inc. placed its non-U.K. subsidiaries Inyx USA, Ltd. and Exaeris Inc. in Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware Monday to protect the company in connection with lender Westernbank Puerto Rico's loan acceleration and appointment of a U.K. administrator, according to an 8-K filed with the Securities and Exchange Commission.

Inyx was not included in the Chapter 11 filing.

Inyx said its management team will continue to seek a transaction, under which it would buy out all unaffiliated shareholders.

The company's chairman and chief executive officer Jack Kachkar also currently intends to provide financing to Inyx and the bankrupt U.S. subsidiaries to enable them to continue their operations and business development activities.

According to the filing, on June 28, Inyx's three U.K. subsidiaries Inyx Pharma Ltd., Inyx Europe Ltd. and Ashton Pharmaceuticals Ltd. received a default and acceleration notice from Westernbank for failure to comply with some loan covenants.

As a result, on June 29, Westernbank demanded immediate payment of all outstanding loans. Westernbank also appointed an administrator to oversee the U.K. companies' businesses.

On June 29, Inyx and Inyx USA, together with Kachkar and his wife, filed suit against Westernbank in New York State Supreme Court, seeking at least $500 million in compensatory and punitive damages.

Inyx said the complaint alleges that Westernbank acted in bad faith by blocking the flow of funds from the Inyx parties' customers to the company and by preventing the Inyx parties from paying their debts.

In addition, Inyx vice president, treasurer and corporate secretary Rima Goldshmidt resigned, effective June 29 and director, compensation committee chairman and audit committee member Douglas Brown resigned, effective June 30.

On July 1, directors Peter Littmann and Roger Harrison resigned, and Joseph Rotmil resigned as director, chairman of the audit committee and member of the compensation committee.

Inyx said it believes the resignations of Brown, Harrison, Littman and Rotmil were prompted by the lender controversy and the desire to avoid becoming involved in the company's lawsuit.

Also, on July 2, Steven Handley and Colin Hunter resigned as directors, and the company said it believes these resignations were made in connection with the possible conflict of interest Handley and Hunter may face in serving on the board while continuing to manage the U.K. companies under the administrator's control.

Inyx's vice president of finance and principal accounting officer also resigned on July 2.

Jay M. Green has been elected as a director to fill a board vacancy.

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. The U.S. subsidiaries' Chapter 11 case number is 07-10887.

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