CRO Cetero seeks bankruptcy protection
Monday, March 26, 2012
Cetero, a CRO based in Cary, N.C., has filed for bankruptcy just eight months after the FDA caught the company manipulating samples and faking documents, according to Reuters.
The misconduct discovery, made last July, originated from two FDA inspections of Cetero’s Houston facility in 2010, followed by an internal investigation and an audit from a third party. Cetero, as an early-phase research and bioanalysis company, may have given drugmakers faulty documents that were then used as supporting evidence in applications to the FDA for drug approval, according to Reuters. Due to the discovery, the FDA warned drugmakers that studies supported by Cetero between April 2005 and June 2010 might have to be repeated or confirmed. However, the FDA has not made any allegations of fraud.
In the Cetero bankruptcy filing, filed in Delaware on March 26, the company claimed the FDA warning letter caused its “liquidity position to become severely constrained,” and some lenders stipulated the misconduct discovery was an event of default due to “apparent violation of applicable health laws and regulations,” according to Reuters. Cetero is using the Chapter 11 process to maximize recovery for these lenders, having reached a deal to sell the majority of the company’s assets in a credit bid. To aid in this process, Cetero has gained $15 million in debtor-in-possession financing to provide working capital.
Cetero’s listed estimated assets range from $1 million to $10 million. The company has a $11 million 2012 revenue to date and roughly $248 million in liabilities, according to the court filing.