The creditors of Australian over-the-counter medicines and vitamins manufacturer Pan Pharmaceuticals have rejected a rescue bid for the company at a meeting held last week. Another meeting is due to be held later today (September 1).
Australia's Therapeutic Goods Association suspended Pan's manufacturing license in April and forced the recall of thousands of its products following breaches of quality control procedures.
At the meeting, former Pan CEO Jim Selim and Australian millionaire Fred Bart had proposed an arrangement under which Pan would acquire a new board and retain its 128 staff. However, the company's voluntary administrator, KPMG, told creditors that the deal was unacceptable and released Selim from legal responsibility.
KPMG's Tony McGrath again recommended that liquidation of the company was the best course of action as it would allow creditors to cut their losses and facilitate legal action against Mr Selim, which could boost the funds available for a settlement.
Subject to re-licensing by the TGA, KPMG would seek to re-market the business as a going concern to maximise asset values and preserve business opportunities, according to the Australian Financial Review.
Before the TGA stepped in, Pan was supplying 15 per cent of Australia's total market for vitamins, minerals and supplements. The latest developments came as the TGA hit back at Mr Selim's criticism of the recall of 1600 Pan products in April and a threat of legal action, made on Australian television.
The agency said Pan products were so poorly manufactured that users faced risks of death, serious injury or illness.