The decision removes the control of the business from the hands of Inyx Inc.'s chairman and CEO Dr Jack Kachkar, who four weeks ago was accepted by the bankruptcy court as the debtor-in-possession lender for Inyx' two North American subsidiaries, Inyx USA and Exaeris, which are both trading under Chapter 11 Bankruptcy protection.
At the time Inyx Inc.'s primarly lender Westernbank bitterly objected to this decision and the two firms have continued to fight over the remnants of Inyx USA ever since.
Ten days ago in court the Puerto Rican bank announced its intention to attempt to seize control of Inyx USA via "a transfer of the stock," by exercising "its rights as a secured creditor".
It had previously made a court filing requesting that an independent Chapter 11 trustee be appointed to take control of Inyx USA to replace Dr Kachkar.
According to a Bloomberg report, the filing cited "specific events [concerning Inyx Inc.] evidence a pattern of fraud" and referred specifically to "false and fraudulent'' invoices.
It also made a filing requesting that the US bankruptcy court transfer the case to the bankruptcy court in Puerto Rico.
Friday's ruling sanctioning an independent trustee therefore comes as a partial victory for Westernbank, although the court proceedings will not be transferred to Puerto Rico as requested.
The decision also renders redundant the bank's previous plans to take control of Inyx USA via a stock transfer.
A high-ranking company spokesperson provided Outsourcing-Pharma.com with the latest update on the case.
Commenting on the decision, the spokesperson said: "The unsecured creditors committee wanted an independent trustee to be appointed and Dr Kachkar also supports the decision, just as long as the business remains protected".
Potential Chapter 11 trustees are now being interviewed by the judge, who was likely to make a decision on which nominee will be appointed by the end of today.
The approved trustee will soon give both Westernbank and Dr Kachkar the opportunity to present their "plans to protect both the business and the creditors moving forward", said the spokesperson.
So Friday's decision does not leave Dr Kachkar out of the game yet - whichever party is deemed to have the most appropriate business plan will be placed in charge of running Inyx USA by the independent trustee.
It is unknown within what timeframe this decision will be taken.
In the meantime, Westernbank will take over from Dr Kachkar in providing financing for the continued running of Inyx USA, while the only remaining business unit of Inyx Inc., Exaeris (a niche commercialisation and marketing services firm), is not being pursued by the bank and will continue to be funded by Dr Kachkar.
Inyx Inc. and Westernbank are involved in a bitter legal battle over financing arrangements that have turned sour.
At the end of June the entire UK operations of Inyx Inc. were put into administration by the bank, after Inyx allegedly defaulted on loans to the tune of around $130m (€95m).
On 2 July Inyx Inc. placed its non-UK subsidiaries, Inyx USA and Exaeris, into voluntary Chapter 11 bankruptcy protection.
In court last Friday the bankruptcy judge denied Inyx Inc.'s request to impose penalties on Westernbank, who were alleged to be "overstepping themselves" on a number of bankruptcy procedures, particularly its searches of Inyx USA's premises.
"The actions taken by the bank were aggressive, but they were not out of proportion to the potential harm to Westernbank and therefore I will deny the motion for sanctions," the judge said in court, according to a Dow Jones Newswire report.
In other related news, a firm called Nu-Mex Uranium has announced the appointment of James Brown as a director of the Company.
Brown, who had worked for Inyx Inc. since 2003, resigned from his positions as director, chairman of the compensation committee and member of the audit committee on June 30 this year.
This was after it was announced that Dr Kachkar and his wife Viktoria Benkovitch filed a lawsuit against Westernbank, alleging the bank "acted in bad faith and in a commercially unreasonable manner by blocking the flow of funds from the Inyx Parties' customers to the company, and preventing the Inyx Parties from paying their debts."
Westernbank bit back shortly after, launching its own legal bid with allegations of "racketeering and corruption".
Several of Brown's senior-level colleagues resigned around the same time.
A Securities & Exchange Commission (SEC) filing stated that Inyx Inc. "believes the resignations of Brown, Harrison, Littman and Rotmil were occasioned by the controversy with the company's lender and the desire to avoid becoming involved in the litigation that has been commenced by the company."
Meanwhile, on 23 July Dr Kachkar and Benkovitch, launched a second lawsuit on Westernbank, in a Florida court, alleging that the bank committed "tortuous acts within this state, and claims to hold mortgages on properties…
The bank has also operated, engaged in, or carried on its business within this state, specifically in regard to Kachkar and Benkovitch…" Specific allegations listed in the court documents include: "Bank representatives failed to follow the most basic asset-based lending best practices, embarked on a scheme to shore up the bank's security interests in the Inyx entities and grab as many interests in real properties owned personally by Kachkar and/or Benkovitch as possible, with no intention of providing any additional consideration in exchange…" Kachkar and Benkovitch are seeking "damages that exceed $75,000, and for equitable relief including the recission and cancellation of mortgages wrongfully recorded in the public records of Miami-Dade county Florida", the complaint alleges.
So the tug-of-war between the Westernbank and Inyx continues, with bankruptcy court proceedings, along with Kachkar's two lawsuits against Westernbank, and the bank's counter suit, all ticking along in the background.