Bankruptcy judge OKs NanoMech financing

A bankruptcy judge approved additional financing for NanoMech on Tuesday as the tech company winds down after its assets were purchased last month.

At a hearing in Delaware, Judge John Dorsey gave the approval for NanoMech to take on an additional $350,000 in financing as part of an amendment to the company’s debtorin-possession agreement with Michaelson Capital Partners. With the approval of the bankruptcy court, NanoMech is acting as a debtor in possession, which allows the business within certain limits to operate normally as the bankruptcy unfolds.

In late July, Dorsey approved the sale of NanoMech’s assets, free of liens and other legal encumbrances, to P&S Holdings for $8 million. P&S is a subsidiary of Houston’s Vinmar International Ltd ., a global marketing, distribution and project development company serving the petrochemical industry. The deal closed Aug. 1.

NanoMech’s attorney, Michael Busenkell, said during the hearing that the company’s chief executive officer was ready to testify the funds were needed to meet expenses and that the terms were fair and reasonable. The money will be used to pay for administrative expenses, the administration of the estate and its claims against third parties, according to court documents.

NanoMech said in earlier court filings that certain stakeholders had raised questions about former CEO Jim Phillips’ leadership and actions as the company’s top executive. NanoMech said its investigations show Phillips spent more than $750,000 in company funds on personal expenses, including trips, and also awarded himself a compensation package the company could not afford.

Phillips contends that NanoMech’s allegations are gross mischaracterizations of the truth or are outright fabrications.

Phillips retired weeks before NanoMech filed for Chapter 11 bankruptcy protection in April in U.S. Bankruptcy Court for the District of Delaware. NanoMech claimed $7.2 million in assets and owes nearly $19 million to its creditors, according to initial bankruptcy filings.

NanoMech, founded in 2002, develops nanotechnology for use in machining and manufacturing, lubrication and packaging, and coatings. It also develops specialty chemicals. Nanotechnology focuses on the manipulation of matter at the atomic and molecular scale.