BY Fraser Tennant
In order to facilitate an efficient sale process and position itself for long-term success, communications technology company Pareteum Corporation and certain affiliates has filed for Chapter 11 bankruptcy protection.
Prior to the Chapter 11 filing, the board and management of New York-based Pareteum evaluated a wide range of strategic alternatives and implemented a strategic asset sale strategy.
After a thorough marketing process to obtain a ‘stalking horse bidder’ for a court-supervised sale process, and as a result of arm's length negotiations, Circles MVNE Pte. Ltd has combined with Channel Ventures Group, LLC to execute a stalking horse asset purchase agreement for substantially all of Pareteum’s assets.
Pareteum expects to continue operations as usual during the Chapter 11 process and complete the process swiftly. To help fund and protect its operations, the company has received a commitment from Circles for up to $6m in debtor-in-possession (DIP) financing.
Upon approval from the bankruptcy court, the DIP financing, along with normal operating cash flows and the consensual use of cash collateral, will fund post-petition operations and costs under normal terms.
“Pareteum has faced numerous challenges in the last few years, especially in light of an increased cost of capital and the coronavirus (COVID-19) pandemic and has been working towards resolving legacy corporate issues while making progress to lay a foundation for future growth,” said Bart Weijermars, interim chief executive of Pareteum. “Despite our business challenges, our products and services that we provide to customers remain strong and relevant in this competitive industry.”
These challenges include accusations of fraud, as well as a number of shareholder lawsuits filed in the wake of a Securities and Exchange Commission (SEC) investigation into inflated revenue reports.
“We look forward to using the Chapter 11 process to position our business for sustained future success across our business lines,” continued Mr Weijermars. “By taking today's decisive and positive step, we are confident that under new ownership, the business can be best positioned for growth and to reach necessary scale and its full potential.”
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