Standard MEMS tries to reorganize
as it files Chapter 11 protection

Sept. 19, 2002 — Burlington, Mass., MEMS outfit Standard MEMS filed to reorganize under Chapter 11 protection in Wilmington, Del., on Monday.

Standard MEMS, which grew rapidly from 1999 to 2001, contracted just as quickly the past year as it lost major accounts and battled a glut in industry capacity. The company’s Hauppauge, N.Y., and Milpitas, Calif., fabs are both closed and more than 10 court judgments on behalf of creditors were delivered to the New York facility before it was shuttered, said Glenn Fricano, the former vice president of engineering and fab operations manager who left the company earlier this month. Court records show at least three lawsuits are pending.

Nick Ortyl, president and chief executive officer, said via e-mail that Standard MEMS is creating a reorganization plan “which includes the continuance of MEMS manufacturing in its New York facility,” but declined to elaborate, “as the plan needs to pass muster with the court.”

In its filing, the company estimated its total assets and debts at $10 million to $50 million each and said it has between 100 and 199 creditors, according to a Dow Jones Newswire report. Ortyl declined to elaborate on the numbers, which he said were reported on a “check the box” Chapter 11 filing form. No reason was officially cited for filing.

In response to questions about the formation of reorganization plans and creditor committees, Ortyl said they will unfold as circumstances dictate. He said they would not occur, if at all, until October due to court backlogs and standard procedural timelines.

Standard MEMS’ secured creditors include sensor manufacturer Kavlico Corp. of Moorpark, Calif., Copelco Capital of Mount Laurel, N.J., and rock star Peter Gabriel of Corsham, England, according to Uniform Commercial Code filings and Fricano.

Kavlico was one of the company’s major customers. Copelco Capital had previously bought fab equipment in the Hauppauge facility from Standard MEMS and then leased it back to the company, according to former employees.

Fricano said Gabriel was an early investor in the company and is a large stockholder. He said Gabriel’s secured investment early this year was a bridge loan until a next round of financing.

MEMC Electronic Materials Inc. of St. Peters, Mo., is the largest unsecured creditor with a $1.1 million claim and Innovion Corp. of San Jose, Calif., is the second-largest with an $861,000 claim, according to the Dow Jones report.

Former employees do not expect Ortyl’s task to be an easy one. Phil Butler, former executive vice president of sales and marketing, speculated that investors may try to remove Ortyl from power. However, Fricano said there are 220 shareholders in Standard MEMS and the lack of a single majority shareholder had historically weakened the power of the investors to act in unison when at odds with company management.

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