Negotiations continued late Wednesday between Helionetics Inc. and one of its largest creditors in an effort to avert a threatened foreclosure on an overdue $4.5-million loan that would send the tiny Irvine defense contractor into bankruptcy.
Although Helionetics officials had said earlier that they would file Wednesday for protection under Chapter 11 of the U.S. Bankruptcy Code if the dispute was not resolved, company lawyers continued talking to representatives of Downey Savings & Loan Assn. of Costa Mesa throughout the day.
However, today is the deadline for the talks to end.
Downey representatives have scheduled a foreclosure sale this morning on the courthouse steps in Santa Ana to collect on the collateral securing the loan, which came due April 1. But Helionetics officials have said they will file for bankruptcy before allowing the sale to occur.
Helionetics President Michael Mann said that if the talks fail to produce a settlement by this morning, the company will carry out its bankruptcy filing threat.
Mann said continued losses have depleted the company's reserves and left it unable to meet many of its obligations. Helionetics' other creditors, including the Bank of America, which is owned $11.5 million, have agreed informally to accept late payments from the company until its financial problems are resolved.