Nuclea files for bankruptcy
PITTSFIELD — Nuclea Biotechnologies, which moved out of its Pittsfield offices earlier this year, has filed for Chapter 7 bankruptcy protection, leaving a significant list of Berkshire creditors in its wake.
The local debtors include the Pittsfield Economic Development Authority, the city of Pittsfield, Berkshire Medical Center, the former North Adams Regional Hospital's laboratory, the Berkshire Gas Co., the owner of Nuclea's former facility on Elm Street, several private businesses and local residents, and three Berkshire County law firms, according to papers filed in U.S. Bankruptcy Court in Delaware.
Nuclea's liabilities could be as high as $10 million, according to the documents.
A hearing in the case is scheduled for Nov. 9.
PEDA, the quasi-public agency charged with the William Stanley Business Park's development, has filed a claim with the court seeking close to $10,000 that Nuclea owes the agency for its share of unpaid rent and utility costs.
The biotech company sublet space from PEDA for its computer operations at the agency's administration building on 81 Kellogg St. from November 2012 before vacating the space at the end of April. Nuclea's sublease with PEDA — the administration building is owned by General Electric — expired this month, said PEDA Executive Director Cory Thurston.
Nuclea also owes the city of Pittsfield $1,521 in property tax revenue, according to records on file in the city tax collector's office. It was not clear whether the city intends to file a claim with the court for that sum. Mayor Linda M. Tyer referred inquiries to City Solicitor Richard M. Dohoney, who could not be reached for comment.
Founded in 2005, Nuclea Biotechnologies developed diagnostic assays and kits used in the early detection and monitoring of biomarkers in oncology and endrocrinology. Nuclea's HER2 Neu License, also know as the Serum HERS2 IVD ELISA diagnostic kit, is a highly regarded means for testing for metastatic breast cancer, according to court documents.
Filing for bankruptcy protection under Chapter 7 of the federal bankruptcy code allows financially troubled entities to forgive some debts, but requires them to sell a variety of personal assets — a process known as liquidation — to repay as many of its remaining debts as possible. Creditors are repaid in order of priority, with secured debtors receiving payment first.
The court is required to appoint a trustee to oversee assets in a Chapter 7 bankruptcy case, according to Pittsfield Attorney Jack Houghton Jr., the Chapter 7 bankruptcy trustee for Berkshire County.
"His job is to marshal or pull together all the assets as they might be, liquidate them into cash, and bring that altogether," Houghton said.
Don A. Breskone, the attorney appointed as the trustee in the case, said while Nuclea has ceased operations and no longer has employees, it continues to hold "potentially valuable intellectual property," including its HER2Neu license.
Breskone, of Wilmington, Del., is interested in marketing and selling Nuclea's intellectual property and other assets, court documents indicate.
Nuclea has up to 200 creditors, between $50,000 and $100,000 in assets, and between $1 million and $10 million in liabilities.
Those figures are not unusual in a Chapter 7 bankruptcy filing, Houghton said.
"When you're running a business you generally want your assets to exceed your liabilities and your income to exceed your expenses," Houghton said. "When somebody goes south, you usually look at their income as well as their financial statements. It's sort of like a doctor assessing someone's general health looking at blood tests to detect a high sense of illness.
"You're going to see that on these types of businesses that are fading," Houghton said. "It's not unusual that when you go into Chapter 7 (those figures) are way out of balance."
Once administrative expenses are paid, no funds will be available for distribution to unsecured creditors, the filing states. But Houghton said that procedure can be subject to change, and that if a change does occur a new filing will take place.
"Many times, but not all the time, with a corporation filing that may initially be the case," he said. "But many times it will change."
Nuclea's decision to file for bankruptcy comes after a series of events that began last December when the company's board of directors replaced founder and CEO Patrick J. Muraca, a Pittsfield native, with biotech veteran Donald E. Porgozelski, who left the company soon after.
In January, Nuclea announced that it planned to close a laboratory in Pittsfield while eliminating positions at another company facility in Cambridge.
The company then vacated its Pittsfield operations on Elm Street this spring, and moved its headquarters to Cambridge. Nuclea also maintained operations at Muraca's alma mater, Clark University in Worcester.
The company also ran a student educational initiative, the Nuclea Summer Science Institute, in conjunction with Berkshire Community College for three summers before it ended in 2012.
Contact Tony Dobrowolski at 413 496-6224.
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