Electrotherm Ltd. of Ahmadabad, India has indicated its desire to purchase Firefly's assets.Electrotherm has also indicated that they are willing to satisfy PNC as to the remainder of the amount due on Firefly's loan after the County and City were to pay $2 Million (jointly). PNC has indicated a positive response, but the transaction has not yet been completed. In order to complete the transaction between Electrotherm and PNC, the assets must be capable of being transferred free and clear. Other creditors of Firefly's bankruptcy besides PNC have filed claims of interest in the same assets. The Court-appointed Trustee of the Firefly bankruptcy estate has agreed, subject to the Court's approval, to accept a payment of $500,000 to resolve the claims of Firefly's other creditors for the IP assets. There is a caveat in that the agreement with the Trustee for the $500,000 purchase of the IP assets is independent of the Electrotherm transaction being completed. The Board has previously acted to approve the agreement with the bankruptcy trustee.
In summary, the total cost to the County and City for both proposed payments is a combined $2.5 Million, or roughly two-thirds less than was originally anticipated when Firefly filed for bankruptcy. Under the intergovernmental agreement with the City that was adopted when the Firefly loan guarantee was originally created, the County is obligated to pay the first $1 Million and 41.07% of the remaining balance for a total outlay of $1,616,250. This amount is 64.65% of the total $2.5 Million. As a result, the County would receive 64.65% of any royalties paid by Electrotherm. At this time, Electrotherm has agreed to pay a maximum of $1,000,000 in royalties. If the agreement is denied, then the County and the City will be faced with payment demand from PNC for the full amount of their loan, minus anything received at auction for the equipment. It is possible that litigation could ensue as part of PNC's demand for payment. The potential exists that a loss of litigation would mean the County and the City would owe PNC the full amount and any legal fees that are sure to ensue.
Staff recommends adoption of the attached resolution that would grant the County Administrator the authority with the concurrence of the State's Attorney to negotiate and execute the final agreement
