Luna, seriously wounded by a $36 million jury verdict files for Chapter 11 protection:
Luna Innovations Files for Chapter 11 Reorganization
Company to maintain operations and employment
Press Release
Source: Luna Innovations Incorporated
On Friday July 17, 2009, 8:00 am EDT
ROANOKE, Va.--(BUSINESS WIRE)--Luna Innovations Incorporated (NASDAQ:LUNA - News), a company focusing on sensing and instrumentation solutions and pharmaceutical nanomedicines, today voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Western District of Virginia. The company emphasizes that it expects to continue to operate normally to serve customers, develop and manufacture products, and maintain employment at all facilities during the restructuring process.
“The jury verdict in our dispute with Hansen Medical in April obviously presented a very serious potential negative outcome for Luna as well as its creditors, shareholders and other stakeholders,” said Kent Murphy, chairman and chief executive officer. “In the absence of reasonable settlement of that dispute, we believe that today’s filing is in the best interests of Luna and our shareholders, creditors and communities, while providing the first step toward securing a future for Luna. We intend to build on our history of innovation and product development, outstanding products, and excellent customer service.
“As previously reported, the jury in our litigation proposed an award to Hansen in excess of $36 million,” Murphy added. “Since then, we have filed motions with the court in California to have the award reduced, and Hansen has filed motions to ask the court to increase the award. While we believe we have arguments as to why the award should be significantly reduced, there is no way to predict the outcome of the litigation.”
As part of its filing for reorganization, Luna is requesting the Virginia court to estimate Hansen’s claims in litigation at less than $1.3 million. If that motion is successful before the court, the company believes the proposed reorganization plan would result in creditors receiving 100 percent of their allowed claims.
“The plan that we proposed and filed today, if confirmed by the court, would pay our creditors on their valid claims and leave our current shareholders in place while allowing us to continue to build upon the recent achievements of this company and the potential of our product pipeline,” Murphy said. “It was after long and careful consideration with our board of directors and outside advisors that we concluded this was the right move. I believe that the actions taken today represent the best path for Luna and all of our stakeholders.”
Murphy stressed that Luna’s business has continued to make progress in recent quarters despite the litigation. “Since the first quarter of 2007, we have grown our revenue base by approximately 20 percent while reducing our baseline expenses and increasing the efficiency of operations by nearly 20 percent,” he said. “These results are a tribute to our employees and the work they do for our customers every day. We look forward to operating in the normal course of business during our restructuring to meet our customers’ needs.”
Luna will hold a conference call and webcast for investors at 2:00 p.m. (EDT) today. To participate by telephone, the domestic dial-in number is 1. 800.299.7089 and the international dial-in number is 1. 617.801.9714. The participant access code is 10926194. Investors are advised to dial in at least five minutes prior to the call to register. The web cast will be archived on the company’s website at www.lunainnovations.com under “Investor Relations, Webcasts and Presentations” for 30 days following the conference call.
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