UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 1)*

 

 

POSITRON CORPORATION

(Name of Issuer)

Common Stock, par value $0.0001 per share

(Title of Class of Securities)

737397109

(CUSIP Number)

Cecil O’Brate

3118 N Cummings Road, P.O. Box 399

Garden City, Kansas 46038

(620) 275-9231

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

August 28, 2015

(Date of Event which Requires Filing of this Statement)

 

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.    ¨

 

 

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

 

 

 

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (“ Act ”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

CUSIP No. 737397109  

 

  1.   

Names of Reporting Person

 

Cecil O’Brate

  2.  

Check the Appropriate Box if a Member of a Group (See Instructions)

 

(a)   ¨         (b)   ¨

  3.  

SEC Use Only

 

  4.  

Source of Funds (See Instructions)

 

PF

  5.  

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)

 

¨

  6.  

Citizenship or Place of Organization

 

United States of America

Number of

Shares

Beneficially

Owned by

Each

Reporting

Person

With

 

     7.    

Sole Voting Power

 

3,276,297.22 (1)

     8.   

Shared Voting Power

 

0

     9.   

Sole Dispositive Power

 

3,276,297.22 (1)

   10.   

Shared Dispositive Power

 

0

11.  

Aggregate Amount Beneficially Owned by Each Reporting Person

 

3,276,297.22 (1)

12.  

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

 

¨

13.  

Percent of Class Represented by Amount in Row (11)

 

23% (2)

14.  

Type of Reporting Person (See Instructions)

 

IN

 

(1) Reflects the number of shares held by the reporting person following a reverse split of the issuer’s common stock, par value $0.0001 per share, on a 1 for 400 basis, effective April 8, 2015.
(2) Based upon 14,275,797 shares of the issuer’s common stock, par value $0.0001 per share, outstanding as of November 23, 2015, as disclosed in the issuer’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, that was filed by the issuer with the Securities and Exchange Commission on November 23, 2015.

 

This Amendment No. 1 to Schedule 13D is jointly filed by and on behalf of Cecil O’ Brate (the “ Reporting Person ”) to amend the Schedule 13D relating to shares of common stock, par value $0.0001 per share (the “ Common Stock ”) of Positron Corporation, a Texas corporation (the “ Issuer ”) previously filed by the Reporting Person with the Securities and Exchange Commission (as amended, the “ Schedule 13D ”). Each capitalized term used and not defined herein shall have the meaning assigned to such term in the Schedule 13D. Except as otherwise provided herein, each Item of the Schedule 13D remains unchanged.

Item 4. Purpose of Transaction

Item 4 of the Schedule 13D is hereby amended and supplemented as follows:

On August 28, 2015, DX and certain other creditors of the Issuer filed an involuntary chapter 11 bankruptcy petition against the Issuer in the U.S. Bankruptcy Court for the Northern District of Texas, Lubbock Division (the “ Bankruptcy Court ”), in a case pending under Case No. 15-502015-rlj, and styled:  In re: Positron Corporation (the “ Bankruptcy Proceeding ”).

On April 19, 2016, certain creditors, including DX, (the “ Creditors ”) and the Issuer entered into a Terms For Agreed Structured Dismissal (“ Structured Dismissal Agreement ”) providing for the dismissal of the Bankruptcy Proceeding. On May 2, 2016, the creditors and the Issuer filed a Joint Motion to Approve Agreed Structured Dismissal Pursuant to Bankruptcy Rule 9019 (the “ Joint Motion ”). The Joint Motion has not been approved by the Bankruptcy Court, and certain creditors have filed objections to the Joint Motion. Such approval is the subject of the hearing to be held before the Bankruptcy Court on Wednesday, June 22, 2016. Certain terms of the Structured Dismissal Agreement are outlined below:

Once the order approving the Joint Motion is final and non-appealable (the “ Order ”), the Issuer will purchase any and all shares of Common Stock owned by the Reporting Person (the “ Shares ”) for the total consideration of $100,000 pursuant to a promissory note executed by the Issuer and payable to the Reporting Person (the “ Settlement Note ”). The Settlement Note will be payable at 4.5% interest in 12 monthly installments of $8,537.85 each. The Settlement Note will be secured by the Shares. Furthermore, within 10 days of the Order becoming final and non-appeal, the Issuer will convey either (i) all of the assets of Manhattan or (ii) the membership interest of Manhattan to a company and/or entity designed by DX. Upon such transaction, the Note, along with all related guarantees, security interest, and rights DX acquired from Los Alamos, will be fully extinguished, deemed paid in full, and discharged. In addition, DX may employ a consulting firm of its choice to conduct due diligence concerning the operations of the Manhattan facility located in Lubbock, Texas. In exchange for the opportunity to conduct such due diligence, DX or the Reporting Person will advance to the Issuer and Los Alamos certain funds. Upon completion of all terms included in the Structured Dismissal Agreement, the Creditors and the Issuer will prepare and file a Joint Motion to Dismiss the Bankruptcy Proceeding. Should the Bankruptcy Court determine the Issuer has failed to comply with the terms of the Structured Dismissal Agreement or if the Bankruptcy Court should fail to approve the Structured Dismissal Agreement, it must file a voluntary bankruptcy petition. In such case, it is the intention of DX to exercise the rights of a creditor in bankruptcy.

The foregoing is qualified in its entirety by reference to the Structured Dismissal Agreement and the Joint Motion, each of which is attached hereto as Exhibit 99.3 and Exhibit 99.4, respectively, and incorporated by reference herein.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Item 6 is hereby amended and supplemented as follows:

“The information set forth in Item 4 is incorporated by reference into this Item 6.”

Item 7. Material to be Filed as Exhibits

Item 7 of the Schedule 13D is hereby amended and restated in its entirety as follows:

“The following exhibits are filed as exhibits hereto:

 

Exhibit    Description of Exhibit
99.1    Loan Purchase and Sale Agreement, dated as of April 30, 2015, by and between DX, LLC and Los Alamos National Bank (incorporated by reference to Exhibit 99.1 to the Schedule 13D filed on July 10, 2015, by the Reporting Person with the Securities and Exchange Commission).
99.2    Letter Regarding Defaulted Promissory Note, dated as of June 12, 2015, by Andrew R. Seger on behalf of DX, LLC (incorporated by reference to Exhibit 99.2 to the Schedule 13D filed on July 10, 2015, by the Reporting Person with the Securities and Exchange Commission).
99.3    Terms For Agreed Structured Dismissal, dated as of April 19, 2016, by and among DX, LLC, Jason & Suzanne Kitten, Moress, LLC and Posi-Med, LLC and Positron Corporation (incorporated by reference to the Exhibit 10.1 of the Form 8-K filed on May 10, 2016, by Positron Corporation with the Securities and Exchange Commission).
99.4    Joint Motion to Approve Agreed Structured Dismissal Pursuant to Bankruptcy Rule 9019 (filed herewith).”

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Date: June 21, 2016

   CECIL O’BRATE   
  

/s/ Cecil O’Brate

  

EXHIBIT INDEX

 

Exhibit    Description of Exhibit
99.1    Loan Purchase and Sale Agreement, dated as of April 30, 2015, by and between DX, LLC and Los Alamos National Bank (incorporated by reference to Exhibit 99.1 to the Schedule 13D filed on July 10, 2015, by the Reporting Person with the Securities and Exchange Commission).
99.2    Letter Regarding Defaulted Promissory Note, dated as of June 12, 2015, by Andrew R. Seger on behalf of DX, LLC (incorporated by reference to Exhibit 99.2 to the Schedule 13D filed on July 10, 2015, by the Reporting Person with the Securities and Exchange Commission).
99.3    Terms For Agreed Structured Dismissal, dated as of April 19, 2016, by and among DX, LLC, Jason & Suzanne Kitten, Moress, LLC and Posi-Med, LLC and Positron Corporation (incorporated by reference to the Exhibit 10.1 of the Form 8-K filed on May 10, 2016, by Positron Corporation with the Securities and Exchange Commission).
99.4    Joint Motion to Approve Agreed Structured Dismissal Pursuant to Bankruptcy Rule 9019 (filed herewith).

Exhibit 99.4

Max R. Tarbox; SBN: 19639950

Tarbox Law, P.C.

2301 Broadway

Lubbock, TX 79401

(806) 686-4448; fax: (806) 368-9785

Co-Attorney for DX, LLC and

Jasson & Suzanne Kitten

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

LUBBOCK DIVISION

 

In Re:    §   
   §   
Positron Corporation,    §    Case No. 15-50205-rlj-11
   §    Chapter 11 Proceeding

Debtor.

   §   
   §   

JOINT MOTION TO APPROVE AGREED STRUCTURED DISMISSAL

PURSUANT TO BANKRUPTCY RULE 9019

TO THE HONORABLE ROBERT L. JONES, Bankruptcy Judge:

The Petitioning Creditors 1 , Cecil O’Brate 2 , and the Alleged Debtor, Positron Corporation (“Positron” or “alleged Debtor”) file this their Motion to Approve Agreed Structured Dismissal Amended (“Motion”), and in support thereof, respectfully represent to the Court as follows:

 

I. Bankruptcy Proceedings

1. On August 28, 2015, the certain creditors of Positron, the Petitioning Creditors, filed an involuntary petition in this Court against Positron pursuant to Chapter 11 of the United States Code initiating the involuntary case [Case No. 15-50205.

2. On October 13, 2015, the Positron filed its Answer to the involuntary petition. [doc. no. 13].

3. It was the Petitioning Creditors position that Positron should be in Chapter 11 since, it

 

 

1   The Petitioning Creditors consist of the following: DX, LLC, Jason & Suzanne Kitten, Moress, LLC and Posi-Med, LLC
2   Cecil O’Brate is a party to this Agreement since the Agreement provides that Positron will purchase any and all shares of stock in Positron owned b Cecil O’Brate for the total consideration of $100,000.00. The terms of this purchase is more specifically set out in the attached Agreement. alleged, Positron was not paying it debts as they came due. It was the position of Positron that there were insufficient qualified entities to initiate an involuntary petition and that it was paying its debts as such debts became due.

 

Page 1 of 6

II. Agreed Structured Dismissal

4. The Petitioning Creditors, Cecil O’Brate and Positron (also referred to collectively as the “parties”) have reached an agreement to settle any and all claims, disputes and litigation between them and to dismiss the involuntary petition. The terms of this agreement are more specifically set out and incorporated in the Terms for Agreed Structured Dismissal (sometimes, the “Agreement”) attached hereto as Exhibit “A.” The approval of this Motion would result in the dismissal of this case.

5. Pursuant to the Agreement, the Petitioning Creditors and Cecil O’Brate agree to release all claims they may have or could assert against Positron, and Positron releases claims it may have or could assert against the Petitioning Creditors and Cecil O’Brate.

6. It is understood that this is a settlement of disputed positions held by the respective parties, and the Court is not being asked to consider or resolve, and is not considering or resolving, any fact issues raised in the proceeding as described above.

7. As stated above, attached as Exhibit A is Terms for Agreed Structured Dismissal which sets forth the treatment accorded to the parties and the other unsecured creditors.

 

III. Approval of this Agreement pursuant to Bankruptcy Rule 9019

8. In ruling on the propriety of the proposed Agreement, the Court should determine that the Agreement is in the best interest of the above referenced Alleged Debtor’s bankruptcy estate. See Protective Committee for Independent Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414 (1968); Connecticut General Life Insurance Co. v. United Companies Financial Corporation (In re Foster Mortgage Corp.) , 68 F.3d 914, 917 (5 th Cir. 1995); United States v. Aweco, Inc. (In the matter of Aweco, Inc.) , 725 F.2d 293, 298 (5 th Cir. 1984) cert. denied , 469 U.S. 880 (1984); In re Jackson Brewing Co., 624 F.2d 599, 602 (5 th Cir. 1980); In re American Reserve Corp., 841 F.2d 159 (7 th Cir. 1987).

 

Page 2 of 6

9. To make such a determination, the Court should compare the relative strengths and weaknesses of each party’s claims and the probability of success for each of the parties should the claims and disputes continue to be litigated. Further, the Court should compare (i) the complexity, expense and likely duration of such litigation, (ii) the potential harm to the Alleged Debtor’s estate caused by the delay and cost of litigation, (iii) the possible difficulties of collecting any claims if the involuntary petition is successful and (iv) whether the settlement is fair and equitable, to the relative benefits being obtained by the Alleged Debtor’s estate, the creditors and other parties in interest through the Agreement. See Connecticut General Life Insurance, Co., v. United Companies Financial Corporation (In re Foster Mortgage Corp.), 68 F.3d 917; In re Jackson Brewing Co., 624 F.2d 609; In re American Reserve Corp., 841 F.2d at 161-162.

10. Application of the above criteria to the Agreement compels the conclusion that the Agreement is in the best interest of the Alleged Debtor’s estate, on the one hand, and Positron’s creditors, on the other hand, for several reasons, including but not limited to: (i) the uncertainty of the probability of success of the claims, disputes and litigation asserted by the Petitioning Creditors against the Alleged Debtor; (ii) the claims, disputes and litigation asserted by the Petitioning Creditors against the Alleged Debtor involve complicated and disputed legal issues which have been and will continue to be expensive litigation; and (iii) the settlement amounts afforded the Petitioning Creditors and other creditors by the Alleged Debtor are reasonable, in light of the uncertainty, complexity and likely duration, risk, expense, inconvenience and delay caused by the continuation of the disputes and litigation between the Petitioning Creditors and the Alleged Debtor. Also, the Petitioning Creditors feels that such Agreement will ensure collection of the funds for the creditors of Positron, whereas the Petitioning Creditors are not sure they could expeditiously collect additional sums should they not succeed and the dispute was not otherwise settled.

11. Based upon each of the Petitioning Creditors’s evaluation and the Alleged Debtor’s evaluation of the claims, disputes and litigation by and between the Petitioning Creditors and the Alleged Debtor, the Petitioning Creditors and the Alleged Debtor believe that this Agreement is in their respective

 

Page 3 of 6

best interests; therefore, the Petitioning Creditors, Cecil O’Brate and the Alleged Debtor each request this Court to approve the Agreement on the terms and conditions set forth therein. The Petitioning Creditors and the Alleged Debtor further request this Court to enter an order approving this Motion.

WHEREFORE, PREMISES CONSIDERED, the Petitioning Creditors, Cecil O’Brate and the Alleged Debtor respectfully request this Court to enter an order granting this Motion and authorizing the Petitioning Creditors, Cecil O’Brate and the Alleged Debtor to enter into the Agreement upon the terms and conditions set forth herein, and for such other and further relief as is just.

Dated: May 2, 2016

 

Respectfully submitted,
TARBOX LAW, P.C.
2301 Broadway
Lubbock, Texas 79401
(806) 686-4448; FAX (806) 368-9785

By:

 

/s/ Max R. Tarbox

Max R. Tarbox

State Bar No. 19639950

Co-Attorney for Petitioning Creditors:

DX, LLC and Jason & Suzanne Kitten

KEY TERRELL & SEGER, LLP

P.O. Box 98433 (Mailing Address)

Lubbock, Texas 79499

4825 50th St., Ste. A (Street)

Lubbock, Texas 79414

(806) 793-1906; FAX (806) 792-2135

By:

 

/s/ Andrew R. Seger

Andrew R. Seger

State Bar No. 24046815

Co-Attorney for Petitioning Creditors:

DX, LLC and Jason & Suzanne Kitten

 

Page 4 of 6

MULLIN HOARD & BROWN, LLP
P.O. Box 2585
Lubbock, TX 79408
(806) 765-7491; FAX (806) 765-0553
By:  

/s/ David R. Langston

David R. Langton
State Bar No. 11923800
Brad W. O’Dell
State Bar No. 24065839
Attorneys for Positron Corporation
ZAMUDIO LAW PROFESSIONALS
233 South Colfax
Griffith, Indiana 46319
(219) 924-2300; FAX (219) 924-2401
By:  

/s/ Daniel Zamudio

Daniel Zamudio
Attorneys for Moress, LLC
JOEL ROBERT COOK , ATTORNEY
810 Main Street
Lubbock, TX 79401
( 806) 747-3825
By:  

/s/ Joel R. Cook

Joel R. Cook
State Bar No. 24044289
Attorneys for Posi-Med LLC

IMPORTANT NOTICE

IT IS POSSIBLE THQAT NO HEARING WILL BE CONDUCTED HEREON UNLESS A WRITTEN RESPONSE IS FILED WITH THE CLERK OF THE UNITED STATES BANKRUPTCY COURT AT ROOM 306, FEDERAL BUILDING, 1205 TEXAS AVENUE, LUBBOCK, TEXAS 79401, WITHIN TWENTY-FOUR (24) DAYS FROM THE DATE OF SERVICE HEREOF.

 

Page 5 of 6

ANY RESPONSE MUST BE IN WRITING AND FILED WITH THE CLERK, AND A COPY MUST BE SERVED UPON COUNSEL FOR THE MOVING PARTY PRIOR TO THE DATE SET FORTH HEREIN. IF A RESPONSE IS FILED, A HEARING WILL BE HELD WITH NOTICE ONLY TO THE OBJECTING PARTY. IF NO HEARING ON SUCH NOTICE OR MOTION IS TIMELY REQUESTED, THE RELIEF REQUESTED SHALL BE DEEMED TO BE UNOPPOSED, AND THE COURT MAY ENTER AN ORDER GRANTING THE RELIEF SOUGHT OR THE NOTICED ACTION MAY BE TAKEN.

PLEASE GOVERN YOURSELVES ACCORDINGLY.

CERTIFICATE OF SERVICE

I hereby certify that on this 2nd day of May, 2016 a true and correct copy of the foregoing Motion was served upon the following listed parties either by enabled electronic filing or via first class United States mail.

 

1.    U.S. Trustee   
   1100 Commerce, RM 976   
   Dallas, TX 75242   
2.    Andrew Seger   
   KEY TERRELL & SEGER, LLP   
   P.O. Box 98433   
   Lubbock, Texas 79499   
3.    David R. Langston   
   MULLIN HOARD & BROWN, LLP   
   P.O. Box 2585   
   Lubbock, TX 79408   
4.    Daniel Zamudio   
   ZAMUDIO LAW PROFESSIONALS   
   233 South Colfax   
   Griffith, Indiana 46319   
5.    Joel R. Cook   
   JOEL ROBERT COOK, ATTORNEY   
   810 Main Street   
   Lubbock, TX 79401   
6.    All parties in interest registered with the   
   U. S. Bankruptcy Court to receive electronic   
   notices in this case.   

 

 

/s/ Max R. Tarbox

  Max R. Tarbox

 

 

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