Subject: Endotronics Inc. Files Petition For Chapter 11
Date: Published: 3/30/87 73 lines
Source:  Wall Street Journal.  Copyright Dow Jones & Co. Inc. 

   Endotronics Inc. 
   Files Petition
   For Chapter 11
    ---
   By Richard Gibson
   Staff Reporter of The Wall Street Journal

   MINNEAPOLIS -- Endotronics Inc. said it filed a Chapter 11
bankruptcy-law petition after a supplier seized finished
goods in lieu of payment on a note.
   The filing, which the company plans to announce today,
caps a spate of problems for the once-highflying
biotechnology concern, which has been seeking cures for
cancer, acquired immune deficiency syndrome, or AIDS, and
other diseases.
   As previously reported, Endotronics is under investigation
by the Federal Bureau of Investigation, the Securities and
Exchange Commission and a federal grand jury.  Also, Peat,
Marwick, Mitchell & Co., the company's outside auditor,
withdrew its endorsement of Endotronics's 1986 financial
statements, and numerous shareholders have sued the company,
alleging stock fraud.
   Endotronics entered its filing in U. S. bankruptcy court
here late Friday after representatives of Minntech Corp., a
Minneapolis maker of hollow fibers, accompanied by a
sheriff's deputy, entered Endotronics's headquarters and
seized several cell-replicating devices.
   Thomas J. McGoldrick, a Minntech vice president, said
Endotronics had defaulted on a $500,000 note owed Minntech in
settlement of a trade-secrets lawsuit last year.  When the
monthly payment of $20,800 wasn't made, Minntech called in
the entire note, Mr. McGoldrick said.
   Shortly after several machines were loaded onto trucks,
Endotronics attorneys notified Minntech that the
bankruptcy-law filing had occurred, Mr. McGoldrick said.
Under Chapter 11 of the federal Bankruptcy Code, a company is
protected from creditor suits while it devises a plan to pay
its debt.
   Minntech also notified Endotronics and Hoechst Celanese
Corp., which owns 36% of Endotronics, that their license to
use Minntech's hollow-fiber assembly technology was being
revoked.  Endotronics incorporates that technology in its
Acusyst cell-replicating machines.
   Earlier this month, Hoechst Celanese said it would make
available $1,250,000 in credit to Endotronics if the company
requested it.  Hoechst Celanese, a unit of Hoechst AG of
Frankfurt, West Germany, couldn't be reached for comment.
   Endotronics officials wouldn't elaborate on a company
statement about the filing, which had been expected.  In
recent weeks Endotronics's two founders have resigned their
positions as officers and a new chief executive officer has
been named as the company's troubles compounded.
   Endotronics's slide began in January, after some investors
and others questioned the viability of the company's search
for vaccines for various diseases.  That set off a series of
negative disclosures, including a $2.7 million loss for the
first quarter ended Dec. 31.  The company has reported a small
profit for fiscal 1986.  Also, an FBI agent, in an affidavit
filed in federal district court here recently, has questioned
the veracity of some Endotronics sales in Japan.
   Last summer, Endotronics had traded as high as $35.50 a
share.  In national-over-the-counter trading Friday,
Endotronics closed at $1.75 a share, unchanged.

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