Cardiac Company Turns to Bankruptcy

Cardiac Science Corp., which makes automated external defibrillators, has filed for Chapter 11 bankruptcy protection.

Nancy Crotti

A new board of directors has taken charge of Cardiac Science (Pewaukee, WI), and has filed for bankruptcy protection to realign its business, restructure its debt, and prep for a sale of its business.

The bankruptcy filing is marked by "corporate intrigue," according to the Milwaukee Journal Sentinel, which states that the proceedings have been accompanying by the company's management being escorted from their offices and several legal actions launched simultaneously.

Based in Waukesha, WI, Cardiac Science is a subsidiary of Opto Circuits (India) Ltd., Bengaluru, India. In its bankruptcy filing, the company said it had about 1700 creditors. It listed assets between $10 million and $50 million, and liabilities between $100 million and $500 million.

Criticare, another company located at the same address as Cardiac Science, is also filing for bankruptcy protection.

Chief creditor DBS Bank Ltd. of Singapore, advanced Cardiac Science $80 million, secured by the company and its assets, according to a report by the Milwaukee Journal Sentinel. DBS sold the loans on September 29 to an entity called CFS 915 LLC, a surrogate for Aurora Holdings, a Los Angeles-private investment/hedge fund.

CFS "secretly purchased CSC's largest secured bank debt, which had creditor provisions allowing the creditor to vote the owner's shares," wrote attorney Stephen Kravit in an email. Kravit represents Opto Circuitschair and managing director Vinod Ramnani and other directors and officers named in the suit.

"CFS exercised that right, and secretly filed for a temporary restraining order, which was granted ex parte, preventing the ownership and seven officer/director defendants from returning to the company or doing anything," Kravit wrote. Waukesha County (WI) Circuit Court Judge Kathryn W. Foster dismissed the restraining order on Monday, after which CFS fired the officers and directors via a FedEx letter, Kravit wrote.

Two days later, CFS filed the bankruptcy petition for Cardiac Science and filed for a state court receivership for Criticare, a separate Opto company that made similar devices and shared space with Cardiac Science. Motions in the bankruptcy case are scheduled to be heard tomorrow.

Cardiac Science expects to continue operations during the bankruptcy proceedings, the company said in a statement.

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