Administrator considers options after court case causes Queensland biotech company collapse

The administrator of collapsed biotechnology company Occupational & Medical Innovations is considering whether to try and sell the company’s assets or operate the business, which collapsed with debts of more than $12 million.

The directors of the Queensland-based technology company, which manufacturers safety devices for the medical industry, including syringes and scalpels, placed the company into the hands of David Stimpson and Terry Rose of insolvency firm SV Partners on New Year’s Eve.

This followed a court case in the US District Court in Texas, where it was alleged OMI had misappropriated a trade secret and infringed a patent belonging to rival Retractable Technologies.

OMI denied the allegations but on December 18, a jury ordered OMI to pay $US3.7 million in damages as a result of the case.

OMI vowed to continue to fight the legal action, and on December 21 told the ASX it has received about $1.4 million in funding to provide working capital to keep the company afloat.

But 10 days later, the directors shut the door.

According to a report from AAP, the company’s debts are more than $12 million, with $5 million owed to external creditors and around $3.8 million in debts relating to the court decision.

Administrator David Stimpson must now weigh up whether to try and sell the company’s assets (the value of its safety syringe and safety scalpel payments was put at $3.8 million in the company’s annual report) or try and keep the business operational.

Operations at OMI have temporarily stopped while he continues his invsetigations into the company’s position.

However, Stimpson told SmartCompany this morning that any attempt to start trading again will require some sort of equity injection.

“We’d need substantial working capital and we have none at this point, basically. And that’s difficult to get in this current environment.”  

After listing on the ASX in October 2000, OMI stock peaked at $6.61 in December 2002. But shares have since slumped along with the company’s fortunes and were suspended in September 2009 at 14.5c.

The first creditors’ meeting will be held in Brisbane on 13 January.