Cambridge Endoscopic Devices Files for Bankruptcy

Medtech buyers take note—Cambridge Endoscopic Devices is selling all of its assets.
 
The Framingham, Mass.-based device manufacturer filed for bankruptcy last month, listing $3 million in assets and more than $17 million in liabilities. The company blamed its financial troubles on the Affordable Care Act (ACA), claiming in a federal court filing that its advanced endoscopes and laparoscopes—used in less invasive surgeries—became too expensive for hospitals to purchase after the ACA became law in 2010.
 
“While the articulating laparoscopic devices developed by the Debtor were unique and helped surgeons perform more difficult laparoscopic cases more easily, they added cost to each procedure. With the advent of the Affordable Care Act, hospitals became significantly more cost conscious,” Cambridge’s bankruptcy filing reads. “The Debtor’s sales effort required to establish meaningful sales in the face of this economic hurdle was more significant than could be justified by the potential sales. For this reason, the Debtor was not able to secure a profitable distribution relationship with a major company, or to find an acquirer for the Debtor’s business. Ultimately, the Debtor’s declining financial condition and business prospects have caused the Debtor to curtail ongoing business operations and product development.”
 
Cambridge tried its best to stave off insolvency but none of its more than 40 potential suitors extended a “viable” marriage proposal in the last two years. The firm’s income totaled $355,000 in 2013, $328,000 last year and only $70,000 thus far in 2015; its largest creditors include White Sand Beach LLC of New York, N.Y., (which represents a group of debtors that is owed $8.1 million); Walter Winshall of Weston, Mass. (owed $2.9 million); and Joong Hahn of Sagamore, Ohio, (owed $1.7 million). The additional debt is comprised of smaller loans—like those given by Boston, Mass., law firm Goodwin Procter LLP ($77,000) and business law firm Gunderson Dettmer ($94,000).  
 
The vast majority of Cambridge’s assets are intellectual property, including patents filed for surgical instruments. Those resources are going to White Sand Beach but other assets “without limitation” like tangible properties covering research equipment, machinery, inventory, and tooling and fixtures are fair game for buyers.
 
“While the Debtor’s product development efforts created a valuable portfolio of patents and related intellectual property, the Debtor never achieved a level of product sales to generate sufficient revenue to meet its substantial debt obligations,” the company’s bankruptcy filing states. “Having negligible remaining cash, and no ability to obtain further financing of any continued sale effort, the Debtor has been forced to curtail business operations and wind up its affairs.”
 
Buyers interested in Cambridge’s bankruptcy sale must submit bids by Nov. 19.