Editor’s note: This story is updated to include a statement from NanoMech.
New York-based technology financing company Michaelson Capital Partners is suing Springdale-based nanotechnology company NanoMech for not making payments on two loans and is seeking an $8.909 million judgement against NanoMech on the notes. Michaelson Capital filed suit Monday (Feb. 4) in the Supreme Court of New York.
In April 2018, Michaelson Capital provided NanoMech $7 million in loans, and NanoMech was expected to make quarterly payments on them. A $2 million loan was expected to be paid off April 19, 2019, and a $5 million loan was expected to be paid off April 10, 2022, according to court documents. In November, Michaelson Capital and NanoMech signed a temporary forbearance agreement to delay a default, but Michaelson alleges that NanoMech didn’t make required payments under the agreement.
John Michaelson, chief investment officer of Michaelson Capital Partners, said he intends to work with NanoMech’s equity shareholders to save the company and retain the technology and jobs in Arkansas.
“We believe in the technology and in the talented employees of the company,” Michaelson said in a statement. “Unfortunately, as our filings state, the current executive leadership of the company has repeatedly failed to meet its obligations and is in breach of its agreements. This action is a last resort to save a great Arkansas company. We look forward to working with NanoMech’s shareholders and investors, including the Arkansas Economic Development Commission, and, above all, its outstanding employees, to rebuild this company.”
An assistant to Jim Phillips, chairman and CEO of NanoMech, said he was in meetings and would not be available for comment until this afternoon. A spokesperson for AEDC also said a request for comment could not be provided until later today.
When the company announced the $7 million in loans in April 2018, Phillips said NanoMech would use the money to pay for debt and accelerate the company’s growth in nanoscale engineering and manufacturing technologies.
NanoMech uses nanotechnology to make industrial lubricants, coatings and specialty chemicals. The company primarily serves the energy industry but is working to expand into transportation and trucking, automotive and aerospace. It has about 60 employees across four offices in Dallas, Detroit, Houston and Springdale.
“NanoMech, Inc. is an Arkansas success story. At NanoMech, our business has grown from a startup to a company that is a global leader in surface engineering and material science nano-engineering manufacturing of lubricants, oils, specialty chemicals, pastes, paints, coatings, cutting tools, and advanced textiles with record sales every year since going commercial.
“Every week, NanoMech ships globally to Fortune 500 companies as well as to emerging companies who have chosen to innovate their way to the top by incorporating our nanoengineered solutions into disruptive and far more competitive products. NanoMech has brought revolutionary and transformative innovation to iconic customers in automotive, transportation and trucking; retail; energy manufacturing, exploration, and service; truck and marine manufacturing; Indy and NASCAR racing; agriculture and construction equipment manufacturing; refining and formulating lubrication manufacturing; aerospace manufacturing; textile manufacturing; and advanced military applications.
“We’re proud that the innovations that NanoMech has engineered have been recognized through the receipt of five Edison awards honoring NanoMech products that consistently outperform competing products in addition to the R&D 100 Award and Frost & Sullivan’s Award for Best Coatings and Lubricants in North America.
“Unfortunately, we are involved in a dispute with a lender and that lender has made matters worse by choosing litigation rather than discussion to resolve these issues. NanoMech will officially respond to this lawsuit with court filings at the appropriate time. However, we are excited about the future of our business and continue to work every day to ensure continued success in the coming years.”