Struggling firm secures access to its drug test lab

The Boston firm that acquired a Schuylerville drug and alcohol testing laboratory from its bankrupt

The Boston firm that acquired a Schuylerville drug and alcohol testing laboratory from its bankrupt parent company got a boost from a bankruptcy court ruling amid a dispute with creditors.

MDRecovery last week filed for Chapter 11 reorganization in U.S. Bankruptcy Court in Boston primarily to regain access to its laboratory in a former Schuylerville high school. A group of creditors allegedly seized the property last August.

With the creditors denying MDR officials access to the premises of Saratoga Labs, the Boston firm sought a court order re-establishing its control over the property. MDR acquired the Schuylerville lab more than a year ago from the defunct DrugRisk Solutions.

MDR received that property turnover order Thursday — only four days before the New York Department of Health was scheduled to conduct a proficiency test. The inspection was crucial to maintaining Saratoga Labs’ status as a state-licensed lab and its viability as a business. In July 2006, the lab employed 15.

MDR’s Chapter 11 filing continues the saga that started when DrugRisk Solutions also filed for reorganization in U.S. Bankruptcy Court in Albany in March 2006. DrugRisk Solutions, an advanced hair follicle drug test technology developer, also was housed in the Schuylerville high school.

DrugRisk Solutions underwent liquidation and MDR picked up its subsidiary, Saratoga Labs. Saratoga Labs is a forensic toxicology lab that provides substance abuse testing of hair and urine samples for the Department of Transportation, correctional programs, courts, schools and rehabilitation institutions.

Last July, a group of investors led by Arrow Financial Corp. Director Kenneth Hopper sued MDR President Frederick Marden in Warren County Supreme Court for allegedly mismanaging his company and breaching his fiduciary duties. A month later, the case was moved to U.S. District Court in Albany.

The investors last year alleged that MDR was in default on a series of loans totaling $1.5 million. The alleged default had the investors demanding that MDR return certain assets, including a patent, equipment, two bank notes, corporate books and internal accounting documents. U.S. District Court Judge David Homer stayed the civil suit Monday because of the bankruptcy case in Boston.

Hopper was a chairman of DrugRisk Solutions, and he now serves as the chief executive officer and chairman of ExCel BioScience, a national toxicology lab. Hopper was also the owner of Saratoga Labs’ predecessor, Northeast Toxicology. He owns Adirondack Eye Physicians & Surgeons, a Glens Falls practice and a Saratoga Labs creditor, according to court documents and Securities and Exchange Commission filings.

Health Department spokeswoman Beth Goldberg said Saratoga Labs’ license was set to expire at the end of June, but it will be renewed. Attorneys for MDR and Hopper did not immediately return calls seeking comment.

Categories: Business

Leave a Reply