MediCor files Chapter 11 bankruptcy, plans to sell businesses

By Caroline Salls

Pittsburgh, July 2 - MediCor Ltd. filed Chapter 11 bankruptcy Friday in the U.S. Bankruptcy Court for the District of Delaware, and the company plans to sell its businesses during bankruptcy.

According to court documents, the company has experienced sustained losses since its inception.

In addition, the company said it lost its major source of working capital funding on Jan. 24 when its chairman, director and largest shareholder Donald K. McGhan resigned amid allegations that he misdirected more than $80 million in company funds.

International Integrated subsequently withdrew a commitment to fund MediCor's operating expenses and capital expenditures through July 1.

According to a debtor-in-possession financing motion, MediCor and its non-debtor affiliates historically raised funds to support their operating expenses and capital requirements through sales of equity or debt securities and borrowings on an unsecured basis from International Integrated, which is controlled by McGhan.

Since February, the company said it has been marketing its businesses, and on June 26 it selected bidders with which to enter into negotiations for potential stalking horse bid agreements.

In connection with the bankruptcy filing, MediCor has requested court approval of $1.5 million in DIP financing from Silver Oak Capital, LLC, HFTP Investment LLC, Promethean II Master, LP, Promethean I Master Ltd. and Portside Growth and Opportunity Fund.

Interest on the DIP will be 8.5%.

The DIP will mature on the earlier of Jan. 31, 2008 and the effective date of a plan of reorganization or liquidation.

The company will pay a closing fee of 1% of the commitment amounts in cash on the maturity date.

MediCor listed $120.35 million in assets and $121.44 million in debt.

The company's largest unsecured creditors include Sirius Capital LLC, Las Vegas, with a $42.55 million note payable claim and International Integrated, Las Vegas, with a $34.95 million note payable claim.

MediCor is a North Las Vegas, Nev., health care company that makes and sells products for the aesthetic, plastic and reconstructive surgery and dermatology markets. Its Chapter 11 case number is 07-10877.

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