SureBeam, a US food safety technology company, has announced that it is to file for bankruptcy under Chapter 7 of the United States Bankruptcy Code and plans to cease operations at the end of the week.
Under Chapter 7, a trustee is appointed by the court to liquidate the company and its principal operating subsidiary, SB OperatingCo. SureBeam plans to cease operating its business by the end of day, 16 January 2004.
SureBeam, which provides irradiation technology to kill food-borne bacteria, said it has been unable to reach a restructuring agreement with its senior secured lender, and the lender has indicated its intent to accelerate the maturity and to demand payment of SureBeam’s debt. In addition, the company has been unable to raise additional funds it needs to continue its operations.
The company had been hoping that the US Food and Drug Administration (FDA) would grant its approval for the irradiation of ready-to-eat foods such as hot dogs, deli meats and frozen entrees. But the FDA approval, expected last February, never came.
In October 2003, SureBeam was delisted from the Nasdaq Stock Market for failing to file quarterly earnings reports. The company also faces class action lawsuits from investors alleging that the company reported favourable financial results in its public filings, press releases and other public statements by, among other things, artificially inflating the company’s revenue and earnings by improper revenue recognition practices.