Bankrupt biotechnology firm Aquasearch Inc. is asking that one of its former executives David Watumull repay $195,000 owed for a loan, but Watumull contends that the company owes him $300,000. Aquasearch seeks $195,000
repayment from ex-execBy Tim Ruel
truel@starbulletin.comWatumull, who resigned as executive vice president of Aquasearch in December 2000, has never made a payment on the loan since he left, which is when the loan became due, records show.
"There was a demand made for payment and another will be made shortly," said Richard L. Sherman, who was recently appointed to serve on a committee that is in charge of Aquasearch's bankruptcy reorganization.
Watumull is now president and chief executive of Oahu firm Hawaii Biotechnology Group Inc. Sherman is senior vice president and a former director of Hawaii Biotechnology Group, and also joined Aquasearch's board of directors last year.
Watumull said yesterday that he has not paid the $195,000 because he believes he is owed money for $300,000 in bonuses that were never paid. However, Aquasearch does not list Watumull as a creditor in its recent financial statement.
When asked if there was the appearance of a conflict of interest because Watumull and Sherman work for Hawaii Biotech together, Watumull said he wasn't concerned.
"I would just say that I would trust Dick Sherman to do the right thing in this situation," Watumull said.
Watumull joined Aquasearch in July 1998 after leaving First Honolulu Securities Inc., a downtown broker-dealer where he secured $1.3 million in financing for Aquasearch.
First Honolulu Securities is owned by Gregory Kowal, one of the creditors who sued to force Aquasearch into bankruptcy on Oct. 30. Aquasearch filed for voluntary Chapter 11 reorganization on Nov. 30 as part of a deal with the creditors. Kowal was recently named to the three-person bankruptcy committee along with Sherman.
The third member of the committee is Richard Propper, a principal of San Diego-based Chardon Ventures, which recently loaned Aquasearch $300,000 to keep the company afloat.
In the Oct. 30 suit, Kowal and the creditors had been seeking to remove Aquasearch's then-chief executive and chairman, Mark Huntley, a scientist who founded Aquasearch in 1988. Huntley has since stepped down to become chief technical officer of Aquasearch, and remains on the board of directors.
Aquasearch had its first full creditors meeting yesterday to review a statement of its financial condition, which was filed with the U.S. Bankruptcy Court earlier this month.
Aquasearch lists total debts, largely unsecured, of $4.5 million and assets of $4.3 million.
Five creditors attended yesterday's meeting, which lasted about an hour.
Aquasearch was represented by attorney Jerrold K. Guben, who told creditors Aquasearch is now current on its lease, having made payments covering December and January. The payment means the company will now be able to negotiate a new 30-year lease with the state, Guben said.
Aquasearch also secured an agreement with Longs Drug Stores in San Diego to sell its neutraceutical supplements. How well the product does will likely be known when the company files its January operating report, due Feb. 20, Guben said.
Representing Aquasearch's landlord on the Big Island, the National Energy Laboratory of Hawaii Authority, Russell Tsuji asked whether real property assets listed in the bankruptcy filing as $2.75 million, represented improvements made to the property. Guben said the improvements were included.
Questions were also raised about a disputed claim for more than $412,000 owed to Richard Jones of Vashon, Wash. Aquasearch representatives said the notes are in dispute because the company believes the loans were all unsecured. But, a representative for Jones said at least $100,000 was secured against Aquasearch products.
Aquasearch will have until April 1 to file a plan with the court for its reorganization. That plan will also have to be approved by creditors. Guben said he expects to file the plan sometime before the end of March.
Star-Bulletin reporter Lyn Danninger contributed to this story.