PEKIN− Reditus Laboratories, a company that became one of the largest COVID-19 testing centers in Illinois, will shutter on Nov. 4, a court-appointed receiver has said.
In a press release Monday, Adam Silverman, the receiver appointed by a judge earlier this year to manage the company's day-to-day affairs, said the company must shut down, in part due to ongoing litigation involving its former CEO and former business partners.
"The expected duration of the litigation is just one factor in the decision to cease operating and liquidate. The receiver and the company’s management are extremely disappointed that the lab must shut down but do not believe there are any alternatives for numerous reasons," the news release stated.
In a court filing in Tazewell County Circuit Court on Oct. 27, Silverman, a Chicago-based attorney, said he and his team made the "difficult decision" to close the company and to liquidate all its assets.
A specific reason for the closure wasn't given but Silverman said he would give one in his next report. However, those reports have been largely sealed and kept out of the public's eye because it's stated they contain trade secrets and other information private to the firm.
A timetable for when this would happen wasn't given, though the press release did say that employees "will receive legally-required advance notice of the closing of the company, which will give them time to explore their next opportunities."
But a filing on Oct. 27 states Judge Steve Kouri has given Silverman the authority to "effectuate a reduction inworkforce (a 'RIF') of no more than twenty-five (25) employees, in his sole and absolute discretion, without prejudice to seeking further guidance from the Court on a subsequent RIF after notice and a hearing."
Kouri also authorized, in the Oct. 27 order, Silverman to begin "a marketing process for the sale of all or substantially all of the assets of the Company as a going concern." If that's not completed by Nov. 4, then he would hold a hearing in court over the liquidation of the firm, the order states.
When reached, James Keane, the company's acting CEO, declined to elaborate, saying the court filings speak for themselves. He did say that more information would be forthcoming later through the court process.
At one time, Reditus was a biotech darling, garnering some $200 million in state money during the COVID-19 pandemic. It became one of the largest testing companies in the state. However, a dispute between investors and CEO Aaron Rossi appears to have derailed that.
Those cases have been consolidated and will be heard together for the sake of judicial efficiency.
The suits accuse Rossi of using the business as his personal piggybank. That, they have alleged, will leave the company founded in 2019 unable to function and could result in some or all of the roughly 300 people employed there losing their jobs.
Team Rossi strongly disputes that. His representatives have characterized the current and former investors as being unhappy about the money situation and blaming him.
Last spring, both sides agreed to place Reditus' day-to-day operations under the control of a receiver, an independent third party who is appointed by a judge to oversee the affairs of a company involved in a lawsuit. That effectively puts Rossi out of the loop, though he's still with the company.
Rossi is also facing federal fraud charges related to alleged misuse of funds from a Bloomington medical practice.
He's facing nine counts of mail fraud charges, all of which reportedly occurred in 2017, that allege while he was working for Central Illinois Orthopedic Surgery, he used his position as an office manager for his own gain.
He allegedly moved the practice's bank account to a different institution and changed accountants. He also allegedly made misleading and false entries in the firm's financial records to hide this. The indictments list the practice as a victim as well as two doctors who owned the practice, listed in the indictment as "Victims A and B."
That case is pending in Peoria's federal court.
This article originally appeared on Journal Star: Reditus Labs in Pekin to close as lawsuits one of 'numerous reasons'