CHOICE Genetics USA LLC (CGUSA) jointly filed a plan of reorganization with the Official Committee of Unsecured Creditors proposing to pay all creditors in full, thus providing a quick exit from its Chapter 11 reorganization proceeding.
Because of an unexpected and unfavorable decision by an arbitration panel on Jan. 31, CGUSA filed a Chapter 11 reorganization case on Feb. 13 in order to assure the continuation of its business and give it time to negotiate a resolution to a contract dispute.
CGUSA has continued to operate as usual since the filing, with no interruptions in farm operations, payments to suppliers, the research and development program or supply to its customers.
The arbitration procedure was initiated in 2012 by Scidera Inc., which claimed rights under a technology licensing contract executed in 2004 by its original parties, Monsanto Co. and MetaMorphix Inc. (MMI). CGUSA became a party to the contract after it acquired the Monsanto Choice Genetics business in 2007. In 2011-12, Scidera claimed to have acquired certain assets of MMI after MMI filed for bankruptcy in 2010.
In addition to a monetary award, the arbitration decision included other provisions CGUSA interpreted as essentially rewriting the terms of the contract, therefore causing an extraordinary challenge for CGUSA to operate within its business model under the new contract.
CGUSA announced that it has reached an agreement on the terms of a settlement with Scidera that is incorporated in the reorganization plan. The plan, which is subject to approval in the reorganization case, provides for a buyout/termination of the contract, allowing CGUSA to continue its business with full rights to all of its lines.