Nassau County is attempting to recapture tax breaks awarded to Aceto Corp. now that the Port Washington company is selling most of its assets in bankruptcy court, officials said.
The county’s Industrial Development Agency, through the U.S. Bankruptcy Court in Newark, hopes to recoup some of the tax savings that Aceto has received since 2010. The chemicals seller and manufacturer of generic drugs won IDA incentives to move its headquarters from Lake Success to 2 Tri Harbor Court, rather than relocate to Pennsylvania.
“We will be pursuing a clawback of funds,” IDA chairman Richard Kessel said. “The amount has not yet been determined, but there have been very cooperative discussions” with Aceto officials.
“We put some numbers together that are being reviewed by Aceto. Hopefully, this will be resolved at the final closing of the bankruptcy hearing at the end of the month,” he said at the IDA’s monthly meeting last week.
In February, Aceto, which is 72 years old, filed for Chapter 11 bankruptcy protection from its creditors, citing massive debt and mounting losses from its Rising Pharmaceuticals Inc. division in New Jersey.
The sale of Rising to an India-based drug company for $15 million has been completed, Aceto announced on Monday. The sale of the company's chemicals division to the private equity firm New Mountain Capital in Manhattan for $411 million is pending.
As part of the New Mountain transaction, Aceto voided its IDA tax-break deal and must pay a “termination fee or similar payment” to Nassau, according to an April 14 sale agreement between New Mountain and Aceto.
The tax-break deal wasn’t due to end until 2022. The IDA currently holds the title to Aceto’s 48,000-square-foot headquarters, a common practice to make sure companies receiving tax incentives uphold their employment and investment commitments.
Aceto’s tax savings totaled $146,617 over the four years ended Dec. 31, 2016, according to IDA reports filed with the state.
In return for the tax breaks, the public company promised to preserve 80 jobs in Port Washington with an average salary of $93,214 per year. The payroll peaked at 91 people in 2015 and fell to 80 in 2017, the most recent available, reports show.
“We have offered to sit down with the new owners of the company and discuss opportunities that might be there for them to work with the IDA to keep the operations here and to preserve, and even enhance, those jobs,” Kessel said last week.
In addition to the IDA help in 2010, Aceto received a $489,000 grant from Empire State Development, the state’s primary business-aid agency, to renovate the Port Washington building that became the company’s headquarters. The total project cost was $7.8 million, state records show.