New York-based finance company Ingalls & Snyder LLC is suing Akela Pharma Inc. and board members Beng Lai, Robert Rieder and Gordon Busenbark for misrepresentation after the biotech firm allegedly failed to keep a lease for a pharmaceutical manufacturing facility in good standing and for terminating its CEO.
Ingalls & Snyder filed a notice of civil claim in BC Supreme Court on March 13. According to the lawsuit, the finance company acted as a collateral agent for clients who had investments in Akela since 2007. The pharmaceutical firm was in “operational and financial turmoil,” and by 2011, it was close to defaulting on its obligations. At the time, Akela CEO Gary McKee approached Ingalls & Snyder to secure $4 million in debt financing, the claim says. However, the finance company was reluctant to give the loan because McKee had been serving as Akela’s CEO without an employment contract. The defendants allegedly induced Ingalls & Snyder to provide the loan by assuring that McKee and other “critical personnel” would be given formal employment contracts.
In February 2012, the plaintiff provided Akela with $2.13 million in loan financing, according to the complaint, but about five weeks later, Akela terminated McKee as its CEO, leading to a “significant subsequent disruption” of the company’s operations and “substantial financial hardship.”
The company also lost its lease on its manufacturing facility in Austin, Texas, and later moved to San Diego. In 2013, according to the lawsuit, Akela and a subsidiary had their assets foreclosed on by their landlord and Ingalls & Snyder lost its entire investment. Ingalls & Snyder seeks declaratory relief and damages for breach of contract and fraudulent misrepresentation.
None of the allegations has been proven in court and the defendants had not filed responses by press time.
