NEW YORK (GenomeWeb News) – Shares of CombiMatrix fell more than 12 percent on Tuesday, as President and CEO Amit Kumar sought for the second day in a row to assuage potential investor concerns that a $35.7 million court award will be delivered from a subsidiary of beleaguered insurer American International Group.
In May, the US District Court for the Central District of California entered a final judgment in favor of CombiMatrix for $35.7 million, to be paid by the National Union Fire Insurance Company, a subsidiary of AIG. The court had sided with CombiMatrix in its suit against National Union, which claimed that the insurance firm had refused to defend and indemnify CombiMatrix under its director and officer’s insurance policy.
While the insurance firm is appealing the decision, the district court ordered it to increase its bond to cover damages from $36 million to $39.2 million. According to CombiMatrix, the insurance firm has until Sept. 30 to increase the bond, which it said would provide additional coverage for accrued interest and other costs.
As the firms await a final decision from the appellate court, National Union Fire Insurance’s parent firm, AIG, is reportedly in dire financial shape, with the potential for a bankruptcy filing this week if it doesn’t receive some sort of financial aid to continue operations. CombiMatrix’s Kumar stressed in two separate statements on Monday and Tuesday that the court-awarded damages are secured by the bond, and whatever happens to AIG will not affect the award.
The bond is “severed from the assets and liabilities of National Union and AIG,” Kumar said today. “No matter what happens to those companies financially, these funds are safe and payable to us upon success in the appeal process.”
In afternoon trade on the Nasdaq, CombiMatrix’s shares were down 6 percent at $12.62. The shares had fallen by more than 12 percent earlier in the day, before CombiMatrix released its statement.