Memorex Telex NV and four affiliates duly filed for Chapter 11 protection in the US Bankruptcy Court in Delaware. The company says its pre-packaged reorganisation plan – which effectively disenfranchises the people that took equity in place of the money owed to them in Memorex’s last bankruptcy proceedings two years ago – has support from sufficient creditors. The court signed orders allowing the company to continue normal business operations. The consolidated assets of all the affiliates was $1,040m and liabilities $1,340m. Included in the first day orders approved by bankruptcy Judge Walsh, was a request to sell all the company’s shares of Leasing Solutions Inc, worth an estimated $6m to $8m. The plan eliminates about $591m of senior notes plus interest and $230m of bank debt through their conversion to equity. A tentative date of March 14 has been set for a confirmation hearing. The subsidiaries that filed for bankruptcy along with the parent company are Memorex Telex Corp, Irving, Texas, Tulsa Computer Products Ltd, of Tulsa, Oklahoma, Memorex Telex Holding NV, and Memorex Telex Distribution NV, Amsterdam. The plan converts $850m of debt into equity – the holders of this end up with 100% of the company – and leaves Memorex with only about $100m of debt. Memorex Telex said that votes in favour of the company’s prepackaged plan of reorganisation had been received from holders of more than 95% of claims in all classes voting on the plan. The poor unfortunates that got equity in place of their debt last time around end up with only warrants that if exercised would give them a stake of about 4% in the company.
