Automotive supplier Eypex Corp. has taken over a Michigan therapy device startup after its founder was stripped of the company's assets through a forced bankruptcy liquidation.
Eypex, a Tier 1 supplier of magnetic fasteners for cars, came to terms with the trustee assigned to the case of JustLight, a maker of infrared light devices that Eypex invested in and then — together with other creditors – forced into Chapter 7 bankruptcy after losing faith in its founder.
Auburn Hills, Mich.-based Eypex agreed to pay $80,000 for the intellectual property and assets of the startup, plus $40,000 to settle a related dispute in district court, according to a motion filed in the U.S. Bankruptcy Court Eastern District of Michigan. Additionally, it agreed to waive $1.1 million in creditor claims against the company.
The motion was granted Friday by Judge Lisa Gretchko.
Peter Forhan, who started JustLight in 2020, said he was "disappointed but not surprised" by the outcome.
"It's a tale as old as time," he told Crain's Detroit Business, an affiliate of Automotive News. "I'm a young inventor that spent years of blood, sweat and tears to start a company, and now vulture capitalists have executed a hostile takeover. And the end."
Eypex and its CEO Robert Granata were among the largest creditors to Ann Arbor, Mich.-based JustLight, which contracted the automotive supplier to make its Sunflower product. The lamp-like devices emit infrared light to ease joint and muscle pain in a process known as photobiomodulation.
"Eypex is pleased to finally report that the bankruptcy judge, the Honorable Lisa Gretchko has ruled in favor of a multitude of investors whose investments were lost due to mismanagement by the debtor," Eypex President Clarence Martin said in an emailed statement. "The Judge agreed to allow the group to purchase the intellectual property and assets from the Trustee in our attempt to fulfill the vision of the original concept to utilize multi-wave length light to address maladies in the body."
It wasn’t immediately clear if Eypex envisions a product offering light therapy technology inside a car. Martin was not available for an interview on Friday.
JustLight's creditors forced it into bankruptcy with an involuntary Chapter 7 bankruptcy petition last August. The company carried $3.7 million in liabilities, according to its bankruptcy filing.
Netherlands-based Light Tree Ventures expressed interest in buying the company's assets, but its bid was substantially below that of Eypex, according to the motion to sell.
"The terms of the proposed offer represent the highest and best offer the trustee received for the assets," it said.
As part of the resolution of the bankruptcy case, the lawsuit filed by Forhan against Eypex – alleging a "desperate attempt to obtain JustLight's assets in liquidation and oust JustLight's founder" – was dissolved.
JustLight's largest creditor, which was not among those that drove it into bankruptcy, was Asahi Kasei, at $1.3 million. The Japanese chemical supplier indicated last year that it was cutting support for the startup.
"Asahi Kasei is not a shareholder in JustLight – we invested through a debt instrument," a company spokesman said in an email then. "Asahi Kasei has no intention of making further investments in JustLight."
Forhan said he is not resentful about what happened to his company. He has taken a step back from the entrepreneur life to soak up the sun.
"The last few months, I've just been living in different warm places for two weeks at a time, kind of exploring the world while I work remotely," he said, adding that he is doing design engineering consulting. "Today, I'm calling from Orlando; tomorrow I'll be in Puerto Rico; last week was in the Bahamas. Kind of chasing the sun."
He said light therapy has dramatically improved his life, and he might return to it as a business pursuit when the time is right.
"I think that there's a huge greenfield opportunity," he said.