And we were hoping that lessons have been learned... Looks like...

And we were hoping that lessons have been learned... Looks like there is another nominee for the 2009 Bowtie award; they may hate each other, but turns out the two of them are not that different after all...

BioTechnology News
Ventracor into liquidation
Nick Evans
Tuesday, 7 July 2009

THE battle to save Ventracor is now effectively over, with staff and creditors voting to liquidate the company’s assets on Friday, and the Ventracor shareholders group announcing last night that it was giving up efforts to recapitalise the company.



VentrAssist

Save Ventracor says that last-ditch efforts to raise money to save the heart device maker failed after the group was unable to find a cornerstone institutional investor prepared to add to the $6.1 million pool already promised to the rescue plan by last Friday.

But $2.5 million of that money was conditional on the group finding a major institutional investor. When those last-ditch efforts failed, the funds available dropped to only $3.6 million – not likely to be enough to convince Ventracor’s creditors to accept the group’s deed of company arrangement – and Save Ventracor “reluctantly” withdrew its proposal.

The company’s assets will now be broken up and sold off by administrators Ferrier Hodgson, which said on Friday that it did not expect the “realisations will be sufficient to provide for a dividend to the company’s creditors”, including both trade creditors and Ventracor staff. The move means that staff are unlikely to see their entitlements fully paid out and Ventracor’s shares are now effectively worthless.

The shareholder group will not seek to purchase the company’s intellectual property and production assets at knockdown prices, citing likely difficulties for a new company to raise money, as well as the loss of around $200 million in tax credits built up by Ventracor, as major reasons for their decision.

The group also said it had been advised that insurance companies would now be unlikely to allow surgeons to begin implanting Ventracor devices.

“The reputational damage of a liquidation would be enormous and it is unlikely that any surgeon would ever implant a VentrAssist again because their malpractice insurer would forbid it,” the group said in a statement.

The group accused company founder Dr John Woodard of undermining its rescue efforts, saying Woodard had been seeking support for an alternative Ventracor recapitalisation in a way that “excluded the existing shareholders and would destroy their investment”.

The group said Woodard had approached a number of its cornerstone investors seeking support for his alternative proposal and, despite being approached by the group, had refused to cooperate with its efforts to pool funding into a rescue effort.

Save Ventracor spokesman Paul Donohue told BTN the group had spent around $100,000 on legal and accounting fees as part of the bid to save the company, the vast majority of which had been donated by Ventracor shareholders through the group’s fighting fund.

He said he was disappointed their efforts had ended in failure.

Donohue said that the group would now disband, after paying its final bills, but that some members were still considering their legal options, which may include a class action suit against the company’s directors and complaints to regulators about the conduct of both the company and its administrators.

Is there a future?

It is not clear whether Ventracor’s intellectual property will be picked up on the cheap as part of the liquidation process, now that the business will not be sold as a going concern.

BTN understands a number of groups are still looking at purchasing the company’s assets, including a group of Melbourne-based surgeons and the likely frontrunner, German heart device company Berlin Heart.

Berlin Heart had been a key supporter of the Save Ventracor campaign, but one investor close to the group told BTN the company had recently gone cool on its rescue efforts, and may be considering a bid for the company’s assets through the liquidation process.

Berlin Heart is a privately owned heart device company with its own left ventricular assist device, INCOR, which was granted CE Mark approval in 2003.