Luna Innovations' plan is confirmed; company emerges from bankruptcy

By Lisa Kerner

Charlotte, N.C., Jan. 12 - Luna Innovations Inc. announced that it emerged from Chapter 11 reorganization after its plan of reorganization was confirmed by the U.S. Bankruptcy Court for the Western District of Virginia, Roanoke Division, on Tuesday.

Under the plan, Luna's creditors will receive a 100% recovery on their valid claims and Luna's current shareholders will retain their shares, a company news release said.

Luna said it voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in response to a potential negative outcome in its litigation with Hansen Medical, Inc.

The two companies reached a settlement in December that resolved outstanding litigation and resulted in a development and supply agreement.

According to an attorney familiar with the case, the confirmation order gives Hansen $5 million over time and 9.9% of equity.

"From the outset, our intent during this restructuring has been to continue to serve our customers, keep the pace of our key development initiatives, maintain employment at our four facilities in Virginia, settle with Hansen, provide our creditors with a full recovery on their valid claims, and allow current shareholders to retain their shares," said Luna chief executive officer Kent Murphy.

"Emerging from Chapter 11 will allow Luna to move forward on developing technologies that will provide tremendous value for our partners and customers," Murphy said.

Luna, a Roanoke, Va.-based company involved in research, development and commercialization of innovative technologies in molecular technology services and sensing products, filed for bankruptcy on July 17, 2009. Its Chapter 11 case number is 09-71811.

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