Sungard AS has emerged from its bankruptcy restructuring, with debtors having taken an $800 million haircut and the recovery service specialist provided with $100 million of new liquidity by its creditors – and a new CEO.
The data infrastructure and disaster recovery company’s announcement that it was filing for bankruptcy had rocked the industry channel on April 1 this year, as it collapsed under the weight of its debt and as margins fell on competition from cloud rivals, forcing it to seek relief in the courts.
Sungard Bankruptcy: Record Speed for Restructuring
The company cited $1.4 billion of liabilities and $496 million of assets in its filing. The pre-negotiated restructuring was the fastest in US corporate history.
“Sungard AS emerges from this process as a much stronger company with a sustainable capital structure to support the company’s investment and growth plan and to continue to service existing and new customers well into the future,” it said today.
Former Broadview Networks CEO, Michael K. Robinson takes over as chief executive from Andrew Stern, who had led Sungard AS for nine years. Close observers will note that Broadview also filed for Chapter 11 bankruptcy, before ultimately being sold off five years later after restructuring for $227.5 million in an all-cash deal.
The reorganised company’s new ownership and largest shareholders now include: Angelo, Gordon & Co., LP; The Carlyle Group Global Credit; FS Investments and GSO Capital Partners LP.
“I’m thrilled to be joining Sungard AS,” Robinson said today.
“Our strong heritage as a leader in IT services, colocation and disaster recovery creates an exciting opportunity for the emerged business. The strength of our restructured balance sheet combined with our robust solutions portfolio, extensive global footprint, strong customer base and the outstanding professionals who are dedicated to providing exceptional service for our customers make us uniquely positioned to take advantage of the market potential before us.”
Sungard AS operated in the normal course of business during the short restructuring process, the company said, “including delivering the high levels of service its customers expect and making planned investments in its fully resilient production and recovery solutions portfolio.”
The company noted that it obtained court approval for the restructuring in less than 19 hours and emerged from Chapter 11 bankruptcy proceedings in less than 48 hours, “an aggressive pace that has helped to preserve the Company’s relationships with key stakeholders and will further help to position the Company for future success.”
Critics have suggested it is “unclear how Sungard will generate profit in this sector after it emerges from bankruptcy”, saying it has been slow to recognise the threat from hyperscale cloud providers and it faces a challenging future.