Palmaz Scientific has filed for chapter 11 bankruptcy protection in San Antonio. According to a company release, this action has been taken to provide adequate time to identify and evaluate prospective buyers for its metallurgical medical device technology.
Julio Palmaz and others founded the company in 2008 to develop the next-generation of safe implantable prosthetic devices. Two decades earlier, Palmaz invented the first commercially successful balloon expandable heart stent, the Palmaz Stent. The company owns or controls over 250 issued patents, and has other active patent filings in progress.
The company asserts that its ability to attract capital investment and continue its business operations has been seriously impaired by a negative campaign of false information disseminated about the company. Litigation involving these allegedly false charges was brought by, and against, the company in 2015. Palmaz Scientific seeks millions of dollars in damages.
According to the Company, false information was provided to current investors, potential business partners, the news media and even Federal government authorities, resulting in substantial damage to the Company and crippling its ability to maintain its ongoing operations. The company asserted, for example, that misinformation prompted a Federal investigation by the US Attorney’s office in Dallas. Palmaz Scientific cooperated in the investigation and was cleared in a letter from the US Attorney’s office, which closed their investigation and praised the Company’s timely and transparent response.
The company asserts that it suffered irreparable harm, with potential transactions and development projects with large medical device companies falling victim to the alleged defamation campaign.
Throughout this turbulent time, the company has been financially supported by the Palmaz family, the company’s largest shareholder. The family loaned the company millions of dollars in the last year alone to preserve and further develop its technology, and to identify strategic partners.
While Palmaz Scientific reports that potential suitors expressed praise for the technology, the company believes that the alleged defamation and the related litigation have prevented meaningful investment. The chapter 11 proceeding presents an opportunity to separate the valuable technology from the collateral effects of the alleged defamation and subsequent litigation.