By Stephanie Gleason
Star Dynamics Corp., an Ohio defense contractor that has been embroiled in a legal battle with a BAE Systems PLC subsidiary (BAESY, BA.LN) for the last year, has filed for Chapter 11 bankruptcy with a plan to sell its assets.
The company said in documents filed Tuesday with the U.S. Bankruptcy Court in Columbus, Ohio, that in July 2013, a state court issued an interim injunction preventing it from bidding on certain contracts identified by BAE and from developing a radar system.
BAE had alleged "misappropriation of secrets," but most of the proceedings aren't public due to the nature of Star's and BAE's businesses.
Although the order hasn't become final and Star said it is objecting, the fight has drained resources during a time of industry-wide plight caused by cuts to federal spending. With more than $50.9 million in debt, Star decided that a bankruptcy sale of its assets was the best option.
The company is early in the process of marketing its assets but has hired a financial adviser to help identify potential purchasers.
Located primarily in Hillard, Ohio, but with offices in Herndon, Va., and Sandestin, Fla., Star logged $8.1 million in sales through Nov. 30. As a result of its failure to generate more revenue, Star has been supported largely through loans, some of which have been made by institutional lenders, but the majority--$32 million as of Tuesday--has come from Star's owner, Tom Becnel.
Mr. Becnel is also the owner and chief executive of Sandestin Golf and Beach resort, a 2,400-acre vacation resort and neighborhood along the Gulf of Mexico between Pensacola and Panama City, Fla., and is the cofounder of Southern Fidelity Insurance Co.
He acquired Star in 2008 and changed the name from Aeroflex Powell Inc., which it was established as in 1994.
The company sells radar systems, including time, space and position tracking information, to the U.S. military, the Swedish Defence Materiel Administration, the Korean Agency for Defense Development and the Israeli Ministry of Defense.
It employs 112 people and said its assets are worth $28.4 million.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)
Write to Stephanie Gleason at [email protected]