Local area networking systems and equipment pioneer Corvus Systems Inc, trading under Chapter 11 bankruptcy protection, has a new fight on its hands – Berg & Berg Industrial Developers, a California general partnership that is a secured creditor of Corvus and is owed about $3.2m net of interest under a promissory note delivered by the company in October 1986 on which Corvus defaulted on April 10, 1988, has filed a proposed creditor’s plan with the US Bankruptcy Court for the reorganisation of Corvus – and Corvus hotly opposes the plan. Chairman Roger Mosher says It is the opinion of the board that Carl Berg’s proposed plan is completely inequitable and unfair to the company’s creditors, employees and stockholders. We believe that the disclosure statement does not adequately describe Mr Berg’s intentions with respect to the reorganised company and that, contrary to the proposed plan’s stated intention, Mr Berg has no intention of operating the company as a going concern. Mosher said that the board was fully committed to preserving the operations of the company and the interests of the creditors and stockholders and would continue to pursue initiatives for a plan of reorganisation that would be in the best interests of and fair to all parties, including the company’s unsecured creditors, Berg and the company’s stockholders. According to the proposed plan and related disclosure statement, $700,000 cash would be made available for distribution among the company’s unsecured creditors who may expect to receive cash payments up to about 20% of their allowable claims. The payments would be made from Corvus’ cash on hand and any shortfall would be made up from up to $750,000 cash to be contributed by Berg & Berg Industrial Developers. The holders of Corvus stock would not receive anything for their shares, which would be cancelled upon confirmation of the plan. Berg & Berg Industrial Developers would get no cash under the plan, but would be issued about 4.2m shares of newly issued Corvus common stock upon confirmation of the plan. The disclosure statement does indicate that Corvus would continue as a going concern after confirmation of the plan and that a new board would be elected by the new shareholders after confirmation of the plan, with Berg, who is the largest shareholder in Corvus, assuming the office of president and chief executive. Carl Berg was a director of Corvus until he resigned in May 1986 and also a director and shareholder of Onyx+IMI Inc which merged with Corvus in July 1985.
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