Two months after its CFO abruptly resigned, Arch Therapeutics, a Framingham-based biotechnology company, has filed for Chapter 11 bankruptcy.
The firm filed for voluntary bankruptcy on April 18, citing capital market challenges including those leading to the company’s downgrading from the OTCQB market to the OTC Expert Market and its inability to meet payroll, according to Arch’s Chapter 11 filing.
Furthermore, at the time of the filing, Arch’s President and CEO Dr. Terrence Norchi was the company’s sole employee, filling in as CFO and chairman while remaining unpaid.
Arch’s phone lines were down on Tuesday, and the company did not immediately reply to WBJ’s email request for comment.
“Given Arch’s current lack of sufficient funding to sustain its operations independently, a Chapter 11 sale represents the optimal and likely only viable path to preserving and maximizing the value of the estate for the benefit of creditors and stakeholders,” Norchi wrote in the bankruptcy filing.
Founded in 2006, Arch Therapeutics specializes in manufacturing wound care used to stop bleeding during surgeries, trauma, and interventional care, according to the company’s website.
Arch expects its Chapter 11 proceedings will cancel all equity securities, with its shareholders receiving no payout.
So far, Arch has accepted a stalking horse bid, subject to higher or better offers, also known as the first bid for the company’s assets before its auction is available to the public. The bid is from Vivex Biologics, a Miami-based medical technology firm, according to a Friday filing with the U.S. Securities and Exchange Commission. The company would provide debtor-in-possession financing including up to a $900,000 credit bit as well as up to $500,000 in cash.
“I believe that this process provides the only realistic mechanism for the debtors to survive and/or the best prospects for Arch to ensure future success for its products and technology, which would provide life-changing benefits to suffering patients,” wrote Norchi.
In addition to its bankruptcy, Arch announced in its SEC filing its public accounting firm, Weinberg & Co. of Rhode Island, had resigned on Thursday, effective immediately.
Weinberg’s resignation comes after Michael Abrams, Arch’s CFO and treasurer, stepped down from his positions on Feb. 3, also effective immediately. At the time of his resignation, Abrams relinquished any potential rights or claim to any financial obligations under his contract, according to a Feb. 7 SEC filing.
Mica Kanner-Mascolo is a staff writer at Worcester Business Journal, who primarily covers the healthcare and diversity, equity, and inclusion industries.
