Helionetics Files Petition for Chapter 11

Helionetics Inc., the controversial Irvine-based defense contractor, filed for protection from its creditors Thursday under Chapter 11 of the U.S. Bankruptcy Code after failing to negotiate new repayment terms for an overdue $4.5-million debt.

In its filing, the company listed assets of $33 million and liabilities of $21.5 million, including a secured $11.5-million note to Bank of America and unsecured debts of about $5 million. The filing was made in U.S. District Court in Santa Ana.

Despite the preponderance of assets, Helionetics has lost more than $23 million in the last 18 months and was unable to meet a March 31 repayment deadline on a $4.5-million loan from Downey Savings & Loan Assn. of Costa Mesa.

Last week, the S&L; threatened to foreclose on the note and to conduct a sale of Helionetics’ assets Thursday. The foreclosure sale was averted by the filing.

The filing gives Helionetics a chance to restructure payments on overdue debts and to line up new investors, President Michael Mann said. Company officials said they will continue to seek a joint venture or merger partner or a buyer during the bankruptcy proceedings.

The bankruptcy action does not affect the company’s five subsidiaries: HLX Laser Inc., Marinco Computers and Squire-Whitehouse of San Diego; HLX Electro Optical of Albuquerque, N.M., and Vard Newport Inc. of Costa Mesa. Vard Newport has been in a Chapter 11 bankruptcy action of its own since 1983.