WILMINGTON –aaiPharma, which has received subpoenas from a U.S. district court over its financial results, recently warned that it may be forced to file for bankruptcy if it is unable to restructure some credit agreements.
In an SEC filing, the Wilmington-based pharmaceutical company said the two subpoenas it received in April are from a grand jury of the U.S. District Court for the western district of North Carolina. The company also was notified by that court that it may receive another subpoena from the SEC.
The subpoenaed documents are related to the company’s 2002 and 2003 financial information, its Brethine bronchospasm medication and Darvocet pain-management drug, internal and external investigations of pharmaceutical product sales activities, and some loans obtained by the company.
On March 1, aaiPharma withdrew its first-quarter and full-year earnings estimates, and said it was investigating “sales abnormalities” for its key products, Brethine and Darvocet. The company then appointed an independent committee of directors to conduct an inquiry of the Brethine and Darvocet product lines during the second half of 2003.
Later that month, the company said it planned to restate financial results for at least part of 2003, and said it wouldn’t file its annual report. As a result, the company’s stock is subject to delisting, though shares are still trading on the Nasdaq under the symbol AAIIE.
Meanwhile, creditors have moved to block aaiPharma from making April interest payments. The company is asking holders of its 11 percent senior subordinated notes due 2010 to approve amendments and waivers of some terms of the notes. The waivers would address the company’s failure to file its annual report for 2003, which has resulted in a default.
If aaiPharma doesn’t get the waivers, the company says it may be unable to borrow under its credit agreement and may not have sufficient funds for operations, forcing it to file for bankruptcy, it said in the filing.