In San Jose, Pivot VoIP Pays $2.65 Million To Win Zultys Bankruptcy Auction
At an auction last week, in U.S. Bankruptcy Court, Northern District of California, Pivot VoIP agreed to pay $2.65 million plus certain debt obligations for Zultys Technologies. Pivot VoIP is an independent company backed by IP telephony solutions provider Telrad Connergy that had been established by former Zultys engineers, who now plan to continue producing Zultys current product line and reseller channel.
In September, the VoIP hardware company had filed for Chapter 11 bankruptcy protection, citing more than $45 million of liabilities and just $1.8 million in assets. Company founder and president, Iain Milnes, had hoped to use the auction to reorganize Zultys but he was outbid.
Pivot will now begin the process of merging with Zultys.
Filing For Chapter 11 Bankruptcy:
Chapter 11 bankruptcy is typically used to reorganize a business, which may be a corporation, sole proprietorship, or partnership. A corporation exists separate and apart from its owners.
· A petition is filed in bankruptcy court in the area where the debtor filing has a residence or domicile. The petition can be either be voluntary—filed by the debtor—or involuntary—filed by creditors.
· Courts must charge $1,000/case filing fee and $39 administrative fee.
· Upon the filing of the bankruptcy petition, the debtor will adopt the identity of “debtor in possession.” The term refers to a debtor that keeps possession and control of its assets while undergoing reorganization under chapter 11, without the appointment of a case trustee. A debtor will remain a debtor in possession until the debtor's plan of reorganization is confirmed, the debtor's case is dismissed or converted to chapter 7, or a chapter 11 trustee is appointed.
· Upon filing the bankruptcy protection, the business is protected by an automatic stay, which prevents any creditor from taking action against the debtor.
· Usually, a written disclosure statement and a plan of reorganization have to be filed with the court.
Section 1107 of the Bankruptcy Code places the debtor in possession in the position of a fiduciary, with the rights and powers of a chapter 11 trustee. These duties, set forth in the Bankruptcy Code and Federal Rules of Bankruptcy Procedure, include accounting for property, examining and objecting to claims, and filing informational reports as required by the court and the U.S. trustee or bankruptcy administrator (discussed below), such as monthly operating reports. 11 U.S.C. §§ 1106, 1107; Fed. R. Bankr. P. 2015(a). The debtor in possession also has many of the other powers and duties of a trustee, including the right, with the court's approval, to employ attorneys, accountants, appraisers, auctioneers, or other professional persons to assist the debtor during its bankruptcy case.
If you are considering filing for Chapter 11 Bankruptcy or if you have already filed for bankruptcy and would like advise on creating a reorganization plan, Sagaria Law, P.C. can help you. With offices in San Jose, Fremont, and Monterey, you can visit Sagaria Law, P.C. or contact us online for a free consultation.
Zultys Auction Ends With Pivot VoIP Winning At $2.65 Million, TMC.net, October 31, 2006
Chapter 11: Reroganization Under The Bankruptcy Code, US Courts.Gov
Related Web Resources:
Corporate Bankruptcy, U.S. Securities and Exchange Commission
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