Local area network developer Corvus Systems Inc, San Jose, which does not like the reorganisation its major creditor at all, has now filed its own reorganisation plan with the US bankruptcy court. Under the Corvus plan, unsecured creditors of the company, which has been trading under Chapter 11 bankruptcy protection since summer 1988, would immediately on confirmation of the plan, get a cash payment equal to 10% of their allowed claims from Corvus’ current cash on hand, and a future cash payment amounting to an additional 10% of their claims within 12 months thereafter. As well as the cash, Corvus proposes to offer them the choice of either one new Corvus share for every $10 of their claims, or participation in a Creditors’ Fund under which they might get further cash payments on their claims from successful exploitation of some of the assets of the company. Acceptance of the plan would lead to an immediate one-for-10 consolidation of the existing shares. Berg & Berg Industrial Developers, a secured creditor of Corvus owed about $3.2m net of interest, under a promissory note from the company in October 1986, which came up with the alternative proposals Corvus so dislikes, would get its secured claim paid in full over seven years under a new promissory note to be secured by the company’s inventory and other collateral – but the the company intends to file a lawsuit to ask the bankruptcy court to determine the extent and value of Berg & Berg’s interest.
