Saying it had no cash left to keep its business operating, technology manufacturer Teltronics of Palmetto, Florida, recently filed for Chapter 11 bankruptcy. The firm told a U.S. Bankruptcy Court for the Middle District of Florida that it could not raise the money it needed to continue.
The voluntary request for protection under the Chapter 11 lists company assets totaling just over $9 million and debts of nearly $20 million. The communications and electronics manufacturer, with a staff of 133, told the court that in 2010 the business earned $26.2 million in revenue, and had a $5 million operating loss.
The technology firm blamed an overall business downturn last year for its financial problems, although it said it was especially hit hard by a severe cut in government contracts from one of its biggest customers.
Attempts to recapitalize and refinance to stabilize the debts, the company stated, were also unsuccessful. After more than a dozen amendments to a Wells Fargo Capital Finance Inc. credit agreement expired in mid-June, the technology maker said it was cashless and unable to stay afloat.
The U.S. bankruptcy judge agreed to an emergency motion that can help the ailing technology manufacturer operate. The court has approved a $1.55 million boost to Teltronics from Wells Fargo Capital Finance.
Looking to the future for this Florida-based company, under a Chapter 11 bankruptcy the business will most likely try to come up with some sort of payment plan to reorganize its debts. That payment plan will then be presented to creditors, who can either accept or reject the plan. If they agree it’s the new contractual agreement. However, if those creditors do not agree, either the company will try and come up with a new repayment plan, negotiations may just stop between the company and creditors, or in some situations the courts could even force the creditors to accept the plan.
Source: Tampa bay Business Journal, “Teltronics files for bankruptcy,” Margie Manning, 30 June 2011