October 25, 2006
Here are the gory details of the Zultys bankruptcy. It is staggering how much controversy this whole ordeal has caused in the industry. In attendance at the hearing were Al Reis, the former EVP of operations at Zultys; Matt Ferro and Michael Yee representing Omaha, Neb.-based InPath Devices; lawyers representing Pivot, a newly created company backed by telecom equipment vendor Telrad Connegy of Israel; and lawyers representing underwriters and the creditors' committee.
It remains unclear how the auction will impact creditors and other existing obligations. Under Section 363 (f) of the Bankruptcy Code, petitioners can seek the sale of assets "free and clear of liens and encumbrances." At the time of its Chapter 11 filing on September 8, Zultys had more than $45 million of liabilities on its balance sheet and assets of only $1.8 million. It owes $2.75 million of back wages and more than $41.8 million of unsecured creditor claims.
"As to the purchaser, it would be acquiring the assets free and clear of any liens, claims or interests asserted against the debtor, pursuant to Section 363 (f) of the Bankruptcy Code," explained Jonathan Pasternak, a partner at Harrison, NY-based Rattet, Pasternak & Gordon Oliver.
I have been getting many calls about this whole situation with lots of rumors coming at me from all directions. It is tough to know what is happening -- who is telling the truth, who has a hidden agenda. Indeed being in Europe I am somewhat removed from the details. Here is an article
with more about the story.