Speech technology vendor Lernout & Hauspie Speech Products NV (L&H), with dual headquarters in the U.S. and Belgium, was declared bankrupt Wednesday after the commercial court in Ieper, Belgium, rejected the company's request for bankruptcy protection.
Five liquidators appointed by the court have taken over control of L&H and will inventory the company's assets and sell those off as quickly as they can to benefit creditors, confirmed court clerk Wim Orbie.
L&H did not meet the criteria for another period of bankruptcy protection, said Orbie. A company should use bankruptcy protection to resolve its financial troubles and come to terms with creditors, which L&H has been unable to do, Orbie said.
The restructuring plan presented by L&H was in reality nothing more than a liquidation plan that only handed money to selected creditors, the court said, according to press reports in Belgium.
The curators have the option of closing down the entire company and sending all 651 staff members home, but will probably keep parts of L&H running, as selling an empty shell would be difficult.
Effects on L&H customers are uncertain.
L&H had requested to be shielded from its creditors for another two months to keep the company running while management sold off individual parts. L&H lost bankruptcy protection in Belgium last week when the Appeals Court in Gent, Belgium, rejected the company's second restructuring plan.
Sale of the assets, as planned by company management, wouldn't have put a dent in the company's total 520 million euros (US$463 million) debt. It became clear at the hearing in court today that not even 25 million euros would be raised from the sales, said Orbie.
L&H officials were not immediately available for comment.
However, L&H President and Chief Executive Officer Philippe Bodson said the court had passed a "rash verdict," according to the online edition of Belgian daily De Standaard.
Earlier Wednesday, before the court's decision on bankruptcy, L&H announced that it had received another bid for its core speech and language technology business. The company hoped the bid, and the presence of about 100 staff who came to court in a show of support for company management, would move the court to allow it to carry out its sell-off plan.
L&H still has bankruptcy protection in the U.S., which, according to Orbie, will be for the liquidators to deal with.