Nearly four months after issuing a voluntary recall of all lots of unexpired sterile drug products, Cantrell Drug Company has filed for bankruptcy.
Nearly four months after issuing a voluntary recall of all lots of unexpired sterile drug products, Cantrell Drug Company has filed for bankruptcy.
The privately owned company announced it filed for reorganization under Chapter 11 bankruptcy rules on Tuesday. Chief Executive Officer James McCarley, Jr. said the reorganization is not an indication of a fire-sale of the company or its assets.
“Above all I want to make it clear to everyone that our intent is to pay one hundred cents on the dollar to all our creditors. We have no intention of any sort of liquidation, cram down or write off. I’ve asked our vendors to work with us, to give us time to get back on our feet. So far, I’ve been very pleased with the understanding and support we’ve received from the trade,” McCarley said in a statement.
Over the course of the past year, Cantrell has faced a number of challenges following inspections from the U.S. Food and Drug Administration. In the company’s statement, the reorganization and the company’s “current financial stress” can be attributed to two FDA inspections in the last year that resulted in temporary suspension of product manufacturing and shipping. Cantrell Drug Company is the maker of sterile injectable drugs used in hospitals. Many of the drugs made by the company require compounding before they can be administered to patients. The drugs manufactured by Cantrell are often at a cost-savings to hospitals that use the products. In July, the company hit a snag when it issued the recall of its drugs due to lack of sterility assurance.
In the company’s announcement, McCarley said Cantrell’s deficiencies were “regulatory in nature” and not a response to “any product problem or patient illness.” He said the company ceased production of its drugs twice in the last eight months as a precautionary measure. McCarley added that as a privately-held company owned by his family, Cantrell does not have the economic resources to “weather the economic consequences of a shutdown.” McCarley said he is paying for operations and payroll out of his own pocket.
As CEO, McCarley said he takes full responsibility for the company’s quality assurance and quality control issues raised by the FDA inspections. Cantrell is working with the regulatory agency to address those problems, McCarley said.
While the company undergoes its reorganization, McCarley said Cantrell will outsource the authority for batch release and other aspects of our QA/QC department to Escalate Sciences.
“It’s my intent to restore the goodwill and trust we’ve worked so hard over the years to gain. Our goal is to come out of Chapter 11 in a minimal amount of time and to pursue our expansion plans that have been in the works for the last year. We will emerge from all this as a stronger, better company,” McCarley said.
Once the company comes through the reorganization, McCarley said Cantrell will continue efforts to raise capital for a planned expansion for a second production facility.
