UPDATE 1: 10:59 a.m. ET 10/1/2021
: MECTA Corporation and its wholly owned subsidiary Balance Point, which was formed to hold, maintain, develop and license intellectual property supporting the medical devices used in the treatment of mental illness, submitted the first day declaration
of MECTA vice president Adrian Kettering. The debtors seek to address litigation and pursue a reorganization “so that the Debtors can emerge and continue to provide the life-saving devices for patients suffering from debilitating mental illness.”
“Despite the support of the U.S. Food & Drug Administration and the breadth of tremendously successful scientific research regarding ECT, unfortunately MECTA is not without critics and detractors,” Kettering says. He points to “direct harassment and meritless litigation,” including protests and a “highly misleading, untruthful and exaggerated movie produced about ECT.” The debtors say that there has been a recent litigation effort with a goal to put the debtors out of business, and that MECTA is a defendant in five lawsuits related to the company’s SpECTrum device, leading to the debtors being unable to obtain products liability insurance to cover the device since June. The debtors have discontinued manufacturing and servicing of the SpECTrum device as of the beginning of September. MECTA says its “innovative ∑igma ™ device is different from SpECTrum, and is insured and cleared by the FDA as a Class II medical device,” but that global supply shortages due to the Covid-19 pandemic has caused uncertainty regarding manufacturing, impacting projected receivables.
The debtors attribute the filing to the various litigations relating to the SpECTrum devices, and the “uncertainty of associated revenue” from the ∑igma ™ devices.”
The first day hearing has been scheduled for Monday, Oct. 4, at 2 p.m. ET.
The debtors have no secured debt, and “cash flow needs have historically been managed through sales of MECTA devices and receivables.”
The debtors also filed various standard first day motions, including the following:
Original Story 11:57 a.m. UTC on Sep. 30, 2021
FILING ALERT: Electroconvulsive Therapy Machine Manufacturer MECTA Corporation Files Chapter 11 in Delaware
, a Tualatin, Ore.-based manufacturer of electroconvulsive therapy (ECT) machines, filed for chapter 11 protection today in the Bankruptcy Court for the District of Delaware, along with affiliate Balance Point LLC
. The company reports $1 million to $10 million in both assets and liabilities. The debtors are represented by Polsinelli in Wilmington, Del. as counsel and Wyse Advisors as financial advisor. Stretto is the claims agent. The case numbers are 21-12279 and 21-11281.
MECTA’s balance sheet attached to the petition shows total assets of $1.6 million and total liabilities of $427,010 as of Dec. 31, 2020. The debtor seeks to proceed under Subchapter V of chapter 11 for small business debtors, according to the petition.
The debtors’ largest unsecured creditors include UMPQUA Bank with a $194,581 PPP loan, Digi-Key with a $22,813 vendor claim, along with various other vendor claims and unliquidated litigation claims held by various individuals.
MECTA owns 100% of the equity of Balance Point LLC. MECTA’s equityholders are as follows:
Reorg First Day is monitoring this case and will provide further coverage as appropriate.