In its filing with the bankruptcy court, North American Scientific (NASM) cited that its bank, pursuant to its rights under certain lending agreements, had reduced the company’s borrowing ability.
In addition, Best Theratronics terminated the management agreement and asset purchase agreement entered into in February 2009 and entered into a new asset purchase agreement with the company providing for the sale of the company’s prostate brachytherapy product line, which reduced the sale price of the assets to $2.5 million versus $5 million per the original asset purchase agreement.
NASM will receive $1.5 million at the closing of the transaction and the remaining $1 million will be paid in equal installments over the 12-month period following the closing. NASM’s board of directors has approved the transaction and the company has petitioned the court for an expedited process to sell the prostate assets.
NASM expects that Chapter 11 protection will enable the company to conduct its business operations as usual in both the prostate and breast device segments. To that end, NASM is seeking approval from the court for a variety of first day motions enabling the company to continue managing its operations in the ordinary course.
John Rush, president and CEO of NASM, said: “We have been focused on realigning our company through the disposition of the prostate brachytherapy business as a means to fund the clinical release of our ClearPath breast device. However, due to an unforeseen inability to continue to access funds under our credit facility, and the terminated management agreement, we are forced to alter our direction with the goal of achieving the same endpoint.
“This filing should relieve the immediate pressure from our creditors, and provide us the time to complete the sale of the prostate business while we continue to gain clinical experience with our ClearPath product line.”