A medical tech company that moved from Canada to Minnetonka in 2014 has now filed for Chapter 11 bankruptcy.
The company plans to sell its operations to another company after the bankruptcy auction. Pending court approval, the deal is expected to close by the end of the summer.
The purchaser has offered to pay nearly $10 million for the company, according to the Wall Street Journal. The purchaser will provide the company with the financing it needs to stay up and running and pay its bills.
The med tech company, which builds MRI-guided surgical systems, said that the high cost of research and development has delayed product installations. It is this delay that they say has caused them to file bankruptcy.
The company, like many of its competitors, has been going through a lot of changes that have interfered with its ability to operate in the black. Its current structure is not working for them. They cite fixed operating costs that are allocated to research and development of new technologies, as well as the variability in the timing of the receipt of customer payments have a lot to do with why they are delayed on their installs. They have dealt a lot of operating losses, which has caused their liquidity to deteriorate and their equity value to erode.
In just one filing, they have listed between 200 and 999 creditors. They are all Minnesota companies that are owed.
When the company moved to the Twin Cities, they brought 100 jobs with them. Because the company was relocating to Minnetonka, the Minnesota Investment Fund allowed them to finance $500,000 as a part of that relocation.
In 2013, the company brought in $46 million in revenue, making it the seventh largest medical technology company in the state.
However, the company’s sales saw a steep drop to just $29 million in 2014. They were able to reduce their losses to $30 million, which was less than the $42 million they saw in 2013. The company’s figures for 2015 are not yet available because the company has postponed releasing its results for the first quarter of 2015.
As with many companies in the country, the business climate changes and that causes them to have to change their structures. This forces some into Chapter 11 bankruptcy so that they can restructure the business to better coincide with the current climate. By creating a plan in which they can financially thrive, many businesses are able to turn things around so they can once again profit. This can prevent layoffs and eventual closure.