Judge Approves SynCardia’s Bankruptcy Auction

by San Antonio Attorney

SynCardia Systems, a manufacturer of artificial heart devices, has been authorized by a bankruptcy court to proceed with a public sale on Sept. 14, despite the oppositions from a trustee and its creditors.

Delaware Bankruptcy Court Judge Mary F. Walrath signed the order allowing the sale on Aug. 5, stating that SynCardia provided satisfactory business reasons to conduct the auction.

The process was delayed by a complained filed by the U.S. Trustee of the case and a group of unsecured creditors, arguing that the timetable of the auction was very short.

The Tucson-based company and its potential buyer wanted the auction to ensue on Aug. 19 and get a court approval of the sale by Aug. 22. They justified that a quick sale was necessary to keep the company going without suffering financial failure.

Walrath scheduled the auction on Sept. 14 and the court hearing to grant the sale to the top bidder wil be on Sept. 16.

SynCardia, producer of the only artificial heart approved by the FDA as a bridge to transplantation, filed for Chapter 11 bankruptcy last month.

SynCardia came up with a plan to sell its assets to its secured creditor for $19 million in credit bid and $150,000 cash, depending on the offers received in the upcoming auction.

Moreover, the potential buyer is giving short-term financing to fund SynCardia throughout the bankruptcy process.

An objection was also filed by a bankruptcy trustee because of certain compensation to the potential buyer and the time frame of the auction.

Judge Walrath has approved the auction’s procedures for assumption and assignment, as well as a breakup fee.

The judge has also approved SynCardia’s request to continue using its bank accounts and ordered for utility services to be uninterrupted as long as satisfactory payment assurances are made.

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