NBI Inc, once a lusty manufacturer of dedicated word processors, has finally given up the unequal struggle to remain solvent on sales of its software alone and after 21 consecutive quarters of losses, has filed for Chapter 11 bankruptcy protection. The Boulder, Colorado company showed assets of $32m and liabilities of $76.1m at the end of last year, and laid off 25% of its field service staff, 73 people, a few days ago (CI No 1,606). Matters were brought to a head by the company’s inability to reach agreement with holders of its $34m of 8.25% convertible subordinated debt due in 2007. NBI reported late last year that it had set provisions of $5.4m to cover taxes and penalties in its last set of accounts, adding that it expected the tax claim to exceed that sum – and indeed, the Internal Revenue Service is demanding $30m to cover claims that go back to 1980. President and chief executive Steve Jerritts, who once ran Honeywell in the UK, says unconvincingly that NBI’s cash position is very strong with about $72.5m in tax credits – but they are only of any value if the company has some prospect of future profits against which to set them. They would be of value to a company making large unsheltered profits, which suggests that NBI, which says that it will file a reorganisation plan within the next few months, may attempt to sell itself out to a company looking for a tax shelter.
