Roanoke-based Luna Innovations Inc. filed for Chapter 11 bankruptcy protection this morning in the U.S. Bankruptcy Court for the Western District of Virginia.

In a news release this morning, the company said it plans to continue to operate normally, developing and manufacturing products. Luna also said it will maintain employment at all facilities during the reorganization process.

The filing comes after a California jury ordered Luna to pay $36.3 million in a breach of contract and misappropriation of trade secrets dispute. That verdict was issued in April and Luna has continued to challenge the outcome in court.

"The jury verdict in our dispute with Hansen Medical in April obviously presented a very serious potential negative outcome for Luna as well as its creditors, shareholders and other stakeholders,” said Kent Murphy, chairman and chief executive officer of Luna, in the press release. “In the absence of reasonable settlement of that dispute, we believe that today’s filing is in the best interests of Luna and our shareholders, creditors and communities, while providing the first step toward securing a future for Luna.

As part of its reorganizations plan, Luna has asked the Virginia judge to cut the award to Hansen Medical Inc. to $1.3 million. In documents filed with bankruptcy court, Luna listed assts of about $29.8 million and debt of about $55.6 million.
 
If confirmed by the court, the reorganization plan would allow Luna to pay its creditors and leave its current shareholders in place.
 
The day's filing also stops the court proceedings in California from moving forward. Hansen and Luna were scheduled to appear Monday before the Superior Court of California County of Santa Clara.
 
The news of Luna's bankruptcy filing sent shares of the company down 45 percent to 29 cents Friday morning.
 
Luna has scheduled a conference call and Web cast with investors at 2 p.m. The dial-in number is 1-800-299-7089 and the access code is 10926194.