Grass Valley medical equipment firm Eigen Inc. has filed a Chapter 11 bankruptcy in federal court to reorganize the company and save 22 Nevada County jobs.
"We are not closing, or laying off anybody, or slowing down," said Eigen President and CEO Brian Burr this week.
"This is an unfortunate hiccup and we're cleaning up past management mistakes," Burr said. "We hope we can emerge from this the first week in July as a stronger organization with sound financing."
Burr confirmed that former CEO Michael Castorino and Chief Technology Officer Jas Suri have left the firm in the past year. He said he could not elaborate on why they left, as it was a personnel matter.
The Union was unable to locate Castorino or Suri for comment.
Eigen owes $20 million to investor Kazi Management VI, according to documents filed this week in a Delaware federal bankruptcy court by Richard Edick. Eigen named Edick as its restructuring officer to lead the firm through the bankruptcy process.
Edick leveraged another $3.3 million in a revolving line of credit from Kazi, with $2 million immediately available so the company could pay bills and stay afloat, according to the bankruptcy document filed March 30.
The money will allow the firm to meet its bi-weekly payroll of more than $96,000, the document said. Along with the 22 employees at Eigen's office in the Loma Rica Industrial Park, there are 10 salesman who work out of the area, Burr said.
Although Eigen is struggling, Burr said its Artemis machine, which is designed to detect prostate cancer, could put the firm back in the black. The device links to ultrasound machines and allows surgeons to see prostate cancers in three dimensions and identify problem areas early on.
"It allows doctors to do focal therapy rather than taking out the prostate glands, which is expensive surgery and has nasty side effects like incontinence and sexual inadequacy," Burr said.
Other Eigen imaging products are used in 4,000 hospitals worldwide, according to the court documents and the firm's Web site.
The bankruptcy documents also reveal that Kazi tried to sell the assets of Eigen under the Uniform Commercial Code. Under the code, a firm like Eigen puts up its assets as collateral for loans, according to the U.S. Small Business Administration.
Kazi tried to sell Eigen's assets prior to the bankruptcy, but was blocked by a temporary restraining order obtained by former employees, according to the bankruptcy documents.
The documents also say that Eigen could still sell its assets in order to maximize its value to creditors.
"It's always a possibility in the process," Burr said.
Unlike other business and personal bankruptcies where a full collapse is dealt with, Chapter 11 filings are designed to keep businesses alive, according to the official Web site of the federal courts system.
"We'd offer anything we could to help, but there's not a lot we can do at this point if they're in Chapter 11," said Nevada County Economic Resource Council President and CEO Gil Mathew.
The Eigen news comes on the heels of an announcement that the Grass Valley Group has laid off about 10 percent of its 300 employees in Nevada City.
The firm known officially as the Grass Valley division of French company Technicolor has been up for sale since February 2009 because of plunging sales of its cutting-edge broadcast equipment.
To contact Senior Staff Writer Dave Moller, e-mail email@example.com or call 477-4237.