Bridge Information Systems has failed to win creditor support for a pre-packaged plan of reorganisation under US Chapter 11 bankruptcy rules. The troubled business news group has instead filed for ordinary Chapter 11 bankruptcy protection, a procedure which is more fraught than its preferred streamlined option.
The filing by Bridge moots the involuntary petition filed by Highland Capital Management at the beginning of the month. Bridge says that protection under Chapter 11 will ensure that the company can continue to operate in the ordinary course of business while its management seeks outside investment in the company and finalises a reorganisation plan to reduce outstanding debt.
Welsh, Carson, Anderson & Stowe, Bridge's largest shareholder, intends to submit a bid for the company as part of the reorganisation proceeding. Bridge is also retaining an investment banker to evaluate proposals from other third party bidders.
A spokesman for Welsh Carson says: "Bridge has an excellent franchise. We support the decision by the Board and management to proceed with the sale process through Chapter 11, and we intend to submit a bid for the company in its entirety."
Previously, the company had announced an agreement in principle with its creditors and Welsh Carson to proceed with a streamlined pre-packaged bankruptcy filing. It is understood that Highland Capital refused to sign off on the plan, which called for Welsh Carson to pump an additional $150 million into the company in return for a majority shareholding
Bridge says that as part of the filing it has obtained debtor-in-possession (DIP) financing from its senior lender group to provide working capital during the reorganisation proceeding.
David Roscoe, Bridge president, comments: "We have determined that entering Chapter 11 now will allow us to both maximise the value of the company and provide our clients with the assurance that we will continue to operate our business without interruption. We intend to continue to pay employee salaries, wages and benefits without interruption and to pay suppliers and vendors for goods and services received during the proceeding."