Bankruptcy

SeraCare Taps Turnaround CFO

The bankrupt company turns to a professional troubleshooter after firing most of its C-suite over accounting concerns last month.
Stephen TaubApril 7, 2006

SeraCare Life Sciences — which in March announced a restatement, fired four key individuals, filed for bankruptcy, and was delisted from Nasdaq — has named turnaround specialist Cathryn Low as its interim chief financial officer.

A U.S. Bankruptcy Court judge, noting the poor condition of SeraCare’s financial reports, last week approved the company’s request to set aside $100,000 for an interim CFO, according to The San Diego Union-Tribune. Low, a turnaround and workout specialist at Prolman Associates, will hold down the job until SeraCare fills the position permanently.

SeraCare provides biological products and services to diagnostic, therapeutic, drug discovery, and research organizations. According to the Union-Tribune, the company launched an internal investigation in December after its independent auditor, Mayer Hoffman McCann, noted concerns regarding inventory valuation, accounting practices, and possible undue influence by directors on financial reporting and auditing.

In March, the company disclosed that it expected to restate its financials for one or more of the first three quarters of fiscal 2005, primarily due to inventory accounting and revenue-recognition errors with respect to reserves, valuation, and the capitalization of overhead to inventory. Not surprisingly, SeraCare added that it “believes that there are material weaknesses in its internal control over financial reporting.”

The company fired chairman Barry D. Plost; president, chief executive officer, and director Michael F. Crowley Jr.; secretary and director Jerry L. Burdick; and chief financial officer Craig A. Hooson.

SeraCare also disclosed in a regulatory filing that the company and certain individuals had received subpoenas from the Securities and Exchange Commission and the U.S. Attorney’s Office for the Southern District of California requesting certain documents. The company added that it was cooperating fully.

In addition, the Union-Tribune reported that SeraCare and certain individuals have been named in a number of shareholder lawsuits alleging that the company’s share price was boosted through fraudulent accounting practices.