Exaeris, Inyx USA U.S. Trustee ordered to appoint Chapter 11 trustee amid fraud allegations

By Caroline Salls

Pittsburgh, Aug. 3 - Exaeris, Inc. and Inyx USA, Ltd.'s U.S. Trustee obtained court approval to appoint a Chapter 11 trustee for the Inyx, Inc. U.S. subsidiaries' bankruptcy case amid allegations of fraud, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

According to the motion, based on the allegations of fraudulent activity uncovered in U.K. administration proceedings and given the substantial overlap in the management of all Inyx entities, appointment of a trustee is warranted to ensure the company is under the control of an independent party not connected to the fraud allegations.

As previously reported, Westernbank Puerto Rico said it has evidence of fraudulent activity that includes inducing Westernbank to advance funds to the Inyx companies' affiliates in connection with allegedly false and fraudulent invoices transmitted to customers, including using multiple invoices for transactions that could have been completed with a single invoice.

Westernbank said these actions resulted in the November 2006 disappearance of $37.7 million in fraudulently created invoices and corresponding receivables and in the June 2007 disappearance of $73.3 million in fraudulent invoices/receivables.

In addition, Westernbank said Inyx USA diverted at least $14 million in cash receipts from customers.

On July 11, Westernbank also asked the court to either convert the companies' case to Chapter 7 bankruptcy or appoint a Chapter 11 trustee, saying it was concerned that the companies' current management teams were unable to fulfill their fiduciary duty to creditors of their estates.

Inyx, Inc. is 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 - Exaeris and Inyx USA - were placed in Chapter 11 bankruptcy on July 2 by their parent company, and their case number is 07-10887.

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