Creditors File Lawsuit to Force ICU Medical Into Bankruptcy

After gearing up for a sales boom that never materialized, ICU Medical Inc., an Irvine maker of products to protect health-care workers from AIDS and other infectious diseases, is heavily in debt and is being forced into bankruptcy by its creditors.

Company attorney Howard Bidna said Monday that six creditors of ICU Medical filed a court petition on Aug. 3 that will most likely result in a reorganization of the company under Chapter 11 of the federal bankruptcy code.

“The company has tried to sell itself to nonaffiliated third party buyers, to borrow money and to raise new equity without success,” Bidna said. “It is a company that, with its current debt situation, most people won’t touch.”

Bidna said the company has $5.5 million in assets and 250 creditors with claims of $9 million.

Bidna said the company ran up its debt by expanding its staff and preparing its facilities for a sales bonanza after Baxter Travenol Laboratories agreed in July, 1987, to sell its products nationwide.

ICU Medical manufactures stickless needles and other products that are designed to reduce the risk of transmitting infectious diseases to doctors and nurses. The products were said to be particularly valuable in preventing the spread of AIDS.

But sales of ICU Medical products proved disappointing and Baxter terminated the 3 1/2-year distribution agreement after only one year.

In response, ICU Medical took substantial cost-cutting measures last fall. Bidna said the company slashed its staff from 75 to 12 and moved from its headquarters in Mission Viejo to a much smaller facility in Irvine.

Bidna said the company also established agreements with a new nationwide network of product distributors.

“As a result, sales are up and the company is operating at approximately a break-even point,” he said. This year, he said, the company projects about $3 million in sales.

The creditors filed their bankruptcy petition after an attempt to sell ICU Medical’s operating assets to two of its major creditors was blocked.

As part of the payment for the company, Bidna said, the buyers would have agreed to forgive about $7 million of ICU Medical’s debt. The plan then would have called for ICU Medical to voluntarily enter Chapter 11 bankruptcy, Bidna said.

The deal was blocked, however, by Dr. George Lopez, the physician-turned entrepreneur who founded ICU Medical in 1984 and owns about 40% of the company, Bidna said. Lopez filed a lawsuit in Orange County Superior Court to prevent ICU Medical’s directors from selling the company’s assets, Bidna said.