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NY Bankruptcy Court Judge Approves Bid Procedures to Auction TurboWorx Patents

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TurboWorx officials said this week that a bankruptcy judge has approved the terms for the sale of its patent assets under a “license-back” structure that will allow the company to remain operational.
 
On March 6, Stuart Bernstein, chief bankruptcy judge for the US Bankruptcy Court of the Southern District of New York, approved the bid procedures and auction for the sale of certain of the company’s patent assets, Robert Boghosian, a partner with Cohen Tauber Spievack & Wagner, the firm representing TurboWorx, told BioInform this week.
 
TurboWorx filed for Chapter 11 bankruptcy protection last May after a failed attempt to raise additional financing [BioInform 05-19-06]. 
 
The company is auctioning one patent and three patent applications related to its workflow and sequence-comparison technology (see table, below, for details of the patents). According to several documents filed with the US Bankruptcy Court of the Southern District of New York, the company agreed to sell this IP to Langtree Assets for $250,000. As part of this transaction, TurboWorx received a royalty-free non-exclusive “license-back” to use the protected technology as part of its ongoing business. 
 
Boghosian said that Langtree serves as the so-called “stalking horse” bidder for the auction of the patent assets and that the terms of the agreement serve as “the model contract for which others will bid against.”
 
Interested parties who desire to bid on the assets “must execute an agreement on terms and conditions no less favorable than those contained in the Langtree Patent Purchase Agreement,” Boghosian explained, “except the purchase price must be at least $262,500.”
 
Parties interested in submitting an overbid must contact Boghosian at Cohen Tauber Spievack & Wagner by March 20, and the auction is scheduled to take place at 10:00 a.m. that day at the firm’s New York offices. A hearing to approve the sale of the patent assets to the “highest or best” bidder will occur the following day, and the closing for the purchase will be held on March 23.
 
Additional terms of the auction, Boghosian said, include a 10-percent deposit for overbids “and evidence satisfactory to TurboWorx of such overbidder’s ability to pay the purchase price and perform such other obligations.” Bidding at the auction will be in increments “of at least $10,000,” Boghosian said.
 

“The most valuable piece of IP that remains in the company is our software assets.”

Reorganization Plans
 
Srini Chari, acting president of TurboWorx, said that the company plans to file a reorganization plan to emerge from Chapter 11 following the auction. The proceeds from the asset sale will the company, while the license-back structure will enable it to retain access to key technology that will help it continue its business operations.
 
TurboWorx said in its court filings that the patents it is selling represent only a “portion” of the company’s IP assets, and stressed that the asset sale will not “impair the ability of [TurboWorx] to engage in its ongoing business operations.”
 
This week, Chari told BioInform that TurboWorx still retains all the IP related to its TurboWorx Cluster Manager product for cluster computing management. “The most valuable piece of IP that remains in the company is our software assets,” he said.
 
In addition to Cluster Manager, the company markets TurboWorx Builder, a desktop application for building analysis workflows, and TurboWorx Enterprise, a version of the company’s workflow technology that can scale up to hundreds of users.
 
“None of the patents [for sale] have anything to do with Cluster Manager,” Chari said. “All the patents that are up for sale underlie TurboWorx Enterprise and TurboWorx Builder.”
 
Chari said that TurboWorx still maintains relationships with its clients, which will continue to be “an important asset going forward.”

 
TurboWorx Patents to Be Auctioned
Patent or Application Number
Filing Date
Title
6,691,109
March 22, 2001
Method and apparatus for high-performance sequence comparison
10/610,133
June 30, 2003
Method and system for dataflow creation and execution
10/700,071
Nov. 3, 2003
Method and apparatus for high-performance sequence comparison
10/994,871
Nov. 22, 2004
Method and apparatus for dataflow creation and execution

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