Implant Sciences Shareholders Call for Platinum Partners Investigation
November 16 2016 - 3:30PM
Dow Jones News
Troubled hedge fund Platinum Partners is the focus of another
investigation.
Shareholders of Implant Sciences Corp., one of Platinum's
investments, is calling for the firm to open its books about its
dealings with the company, which filed for bankruptcy last
month.
Shareholders of Implant, a Massachusetts company that makes and
sells high-tech detector systems and devices that trace amounts of
explosives and drugs, said in a court filing Tuesday that the
company's primary source of debt was a series of bonds issued to a
family of funds managed by Platinum. Court papers show the bonds
were allowed to be converted into equity interests.
Implant is said to be a major position in Platinum funds, The
Wall Street Journal has reported. Shareholders are requesting
documents from Platinum and its affiliated funds for a deeper look
into Implant's financial position, management and debt before the
bankruptcy filing.
"First, these chapter 11 cases involve facts giving rise to a
strong suspicion of wrongdoing that caused [Implant Sciences], and,
in turn, their shareholders substantial harm," an attorney for the
shareholders said in court papers.
A spokesman for Implant and a lawyer representing Platinum
didn't immediately comment on the matter.
The shareholders are set to ask Judge Brendan Shannon to force
the company, Platinum and its funds to hand over their books at a
Nov. 29 hearing in U.S. Bankruptcy Court in Wilmington, Del.
Implant's bankruptcy-loan agreement requires the shareholders to
wrap any investigation of Platinum and its affiliates by Dec.
23.
The affiliates, DMRJ Group LLC and Monstant Partners LLC, are
both funds managed by Platinum. Before the bankruptcy filing, DMRJ
and Monstant were part of the group that provided Implant Services
with about $68 million in debt, court papers show.
Platinum's flagship fund sought chapter 15 protection on Oct.
18, days after Implant Sciences' chapter 11 filing. The hedge fund
said in court papers that it has its legal operations in the Cayman
Islands and has already appointed liquidators to wind down the
fund.
The firm's liquidators have been in discussions with the U.S.
Securities and Exchange Commission and the U.S. Justice Department
regarding the potential sale of Implant's notes to "Platinum
'insiders,'" court papers said.
Implant Sciences, based in Wilmington, Mass., designs,
manufactures and sells systems and sensors that detect trace
amounts of explosives and drugs, according to court papers. Its
customers include the U.S. Transportation Security Administration,
the Canadian Air Transport Security Authority and European
airports.
Write to Lillian Rizzo at Lillian.Rizzo@wsj.com
(END) Dow Jones Newswires
November 16, 2016 16:15 ET (21:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.