Case: 4:10-cv-00563-RWS Doc.

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Filed: 04/11/11 Page: 1 of 5 PageID #: 1794

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION BANK OF AMERICA, N.A., Plaintiff, v. ANALYTICS, INC., et al. Defendants. ) ) ) ) ) ) ) )

Case No.: 4:10-cv-00563-RWS

AMENDED REPORT OF SALE COMES NOW Morris-Anderson & Associates, Ltd. (the Receiver), the duly-appointed Receiver in this matter, by counsel, and for its Amended Report of Sale (the Report)1 states as follows: BACKGROUND A. The Receivership 1. On April 1, 2010, Bank of America, N.A. (Plaintiff) instituted this action by filing a

Complaint (the Complaint) against Defendants Analytics, Inc., AniClin Preclinical Services, LLC, AvivoClin Clinical Services, LLC, Azopharma Contract Pharmaceutical Services, LLC, CAS-MI Laboratories, LLC, and Chemir Analytical Services, LLC (collectively, the Defendants). 2. Concurrently with the filing of the Complaint, Plaintiff filed an Emergency Motion for

Turnover of Collateral and For Appointment of Receiver (the Receivership Motion). 3. On April 9, 2010, the Court granted the Receivership Motion in part and entered an Order

Appointing Receiver (the Original Receivership Order), pursuant to which it appointed the Receiver as receiver of the Collateral, as defined in the Order, in the possession of Analytics, Inc., AniClin Preclinical Services, LLC, Chemir Analytical Services, LLC, CAS-MI Laboratories, LLC, and the division of Azopharma Contract Pharmaceutical Services, LLC that was formerly known as Cyanta Analytical

This Amended Report replaces the original Report of Sale filed on April 11, 2011 at docket no. 151. This Amended Report is identical to the original Report of Sale except for paragraph 15, which has been modified from the original to more precisely set forth the timing of the receipt of certain payments.

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Laboratories, Inc. prior to a merger in or about September, 2009 (collectively, the Receivership Borrowers). 4. The Court entered an Amended and Restated Order Appointing Receiver on May 3, 2010

(the Receivership Order). 5. As of January 31, 2011, Plaintiff is owed $23,095,922.66 from the Receivership

Borrowers, which amount consists of $21,125,960.58 in principal, $1,709,533.765 in interest and $260,428.32 in fees and other charges (together with interest and other costs accruing thereafter, the Indebtedness). B. The Sale of Operating Companies Assets 6. Pursuant to the Receivership Order, the Receiver has a number of powers and duties

related to the Collateral. Among other things, the Receiver is responsible for (i) taking possession, custody and control of the Collateral (as defined in the Receivership Order), (ii) operating the respective businesses of the Receivership Companies on an interim basis, and (iii) conducting an orderly sale of the Collateral, with the proceeds to be applied to pay the Receivership Companies obligations to the Plaintiff and other creditors. 7. In the exercise of its duties under the Receivership Order, the Receiver entered into an

agreement (the Asset Purchase Agreement) to sell substantially all of the assets (collectively, the Sale Assets) of Analytics, Inc., Chemir Analytical Services, LLC, CAS-MI Laboratories, LLC, and the division of Azopharma Contract Pharmaceutical Services, LLC that was formerly known as Cyanta Analytical Laboratories, Inc. prior to a merger in or about September, 2009 (collectively, the Operating Companies) to EAG, Inc. (EAG) (the EAG Sale). 8. The EAG Sale was confirmed by the Court on February 23, 2011 with the entry of that

certain Order Approving Sale (the Sale Order) (Docket No. 147). Pursuant to paragraph 18 of the Sale Order, the Receiver is to file a Report of Sale within ten days of closing

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C. 9.

Report of Sale On March 31, 2010, the EAG Sale was closed. The parties were forced to make some

last minute changes to the Asset Purchase Agreement, however. On March 30, 2010, after the close of business, EAG notified the Receiver that EAG had discovered via an online search that seven liens totaling $1,256,576 (the Liens) had been filed in recent weeks against Azopharma Contract Pharmaceutical Services, LLC by the Missouri Department of Revenue. In fact, a single lien, comprising $1,233,344.14 of the total, had been filed on March 11, 2011, after the Court approved the EAG Sale but before closing. This discovery was particularly troublesome because the parties, for a number of legal and economic reasons, had established March 31, 2011 as the deadline for the closing. 10. The Receiver immediately researched the Liens and concluded early in the morning of

March 31, 2011 that all but one of the Liens had actually been filed against a non-receivership entity, Azopharma Contract Services, Inc. This entity was a predecessor to Azopharma Pharmaceutical Contract Services, LLC., and the taxes mostly related to alleged payroll tax amounts due in 2005 through 2007, a time period in which Azopharma Contract Services, Inc. had no Missouri employees. 11. Around mid-morning of March 31, 2011, the Receiver contacted the Missouri

Department of Revenue (MODOR) in an effort to clear up the liens in time for a closing later that day. David Garro of MODOR was particularly helpful in researching the liens and speaking with the Receivers counsel. By mid-afternoon, it was apparent that the neither Azopharma Contract Services,

Inc. nor Azopharma Contract Services, LLC owed any back taxes to MODOR. Nevertheless, MODOR was physically unable to release the Liens in time for a March 31 closing. 12. In the late afternoon of March 31, 2011, the Receiver and EAG agreed to amend the

Asset Purchase Agreement so that an aggregate amount of $2 million of the purchase price will be held in escrow pending the release of the Liens and the Receivers satisfaction of certain other conditions, including receipt of tax clearance certificates from several states other than Missouri. This modification to the Asset Purchase Agreement was signed and the parties closed on the EAG Sale, as modified, late in the day of March 31, 2011.

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13.

In the days following March 31, 2011, the Receiver continued to negotiate with EAG

over the terms of the escrow. Because the Missouri liens had proven to be invalid, the Receiver argued that the amount of the escrow should be reduced and that the number of other states from who tax clearance certificates should be limited. On April 8, 2011, the parties entered into a second modification where the amount of the escrowed funds would be reduced to $800,000. 14. Therefore, as of April 11, 2011, an accounting of the purchase price is as follows:

Sums Wired by EAG to Bank of America . $21,200,000.00 Sums Wired by Thompson Coburn to Receiver (earnest money) $ 1,000,000.00 Amount Held in Escrow $ 800,000.00 Total Adjustments Per Purchase Agreement $ 7,512.42 Total Purchase Price (after closing adjustments) $23,007,512.42 15. As of April 11, 2011, Bank of America has been paid the sum of $21,200,000. In

addition, the Receiver had cash on at closing of approximately $3,238,695, consisting of cash in the business (not included in the sale) of approximately $2,238,695 and $1,000,000 earnest money deposit received at closing. 16. From the cash available to the Receiver, the following still must be paid: Bank of America on account of the balance of its secured claim. Employees on account of accrued vacation and paid time off (already paid) Morris Anderson on account of its previously allowed investment banking fee (already paid) Employees on account of accrued bonuses (to be paid the week of April 11) Employees on other payroll and travel/expenses (to be be paid the week of April 11) Vendors on account of post-receivership accounts payable (to be paid when invoices are received Apri./May 2011) Customers on account of returned deposits (April) Employees on account of other accrued benefits (May/Jun) Taxing authorities (potentially) on account of income taxes

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17.

At the present time, it is impossible to determine conclusively whether the Receiver will

have sufficient funds to make distributions to general unsecured creditors.

Dated: April 11, 2011

Respectfully submitted, THOMPSON COBURN LLP

By: /s/ David A. Warfield David A. Warfield, ED Mo. #34288MO Allison E. Graves, ED Mo. #60748MO One US Bank Plaza St. Louis, MO 63101 (314) 552-6000 Fax (314) 552-7000 dwarfield@thompsoncoburn.com agraves@thompsoncoburn.com Attorneys for Receiver Morris-Anderson & Associates, Ltd. CERTIFICATE OF SERVICE I hereby certify that on April 11, 2011 the foregoing was served upon all parties receiving notice through the Courts CM/ECF system. /s/ David A. Warfield