New York residents may be interested in the recent bankruptcy filing of a military radar systems manufacturer. Star Dynamics, of Hilliard, Ohio, recently filed for Chapter 11 bankruptcy protection amid excessive debt and a trade secrets suit brought by a competitor. In the filing, Star Dynamics said bankruptcy was the best course of action because of its constant need for funding and because the trade secrets litigation was proving to be a distraction. It is also putting itself up for sale.
State court actions usually get put on hold when a company is in bankruptcy. However, the competitor in the trade secrets suit, BAE Systems, asked the court to allow the litigation to continue despite Star Dynamic’s bankruptcy filing. BAE said that many of its former employees now work for Star and that a forensic investigation found nearly 200,000 of BAE’s records on Star Dynamic computers in altered form. BAE said a pause in the trade secrets litigation would cause irreparable harm to its business as Star is actively courting their clients.
In the bankruptcy filing, Star Dynamics listed assets of $28.5 million, liabilities of $50.9 million and revenue of $8.1 million. Approximately $32 million of the debt came from the company’s owner, who loaned money to the business since purchasing it in 2008. The company is also negotiation a tax incentive deal with the city of Hilliard. A city representative said it would continue working on the deal with the company’s new owner.
Bankruptcy is never the ideal path for a business, but sometimes it may be the best option. There are several types of bankruptcy, so picking the correct path is dependent on a company’s specific financial situation. A bankruptcy attorney may advise a business on whether bankruptcy is a viable option and which type of bankruptcy is most appropriate.
Source: Biz Journals, “Star Dynamics seeks Chapter 11 protection, puts itself up for sale amid trade secrets dispute“, Carrie Ghose, December 20, 2013by