Storage Technology Corp, Louisville, Colorado, announced Tuesday night that it had implemented its reorganisation plan and completed its emergence from Chapter XI bankruptcy protection. The plan, which calls for the payment of more than $800m in debt, was approved by the US Bankruptcy Court for the District of Colorado in mid-June. Storage Technology has turned […]
Storage Technology Corp, Louisville, Colorado, announced Tuesday night that it had implemented its reorganisation plan and completed its emergence from Chapter XI bankruptcy protection. The plan, which calls for the payment of more than $800m in debt, was approved by the US Bankruptcy Court for the District of Colorado in mid-June. Storage Technology has turned over to its agents $133m in cash, $285m in 10-year interest bearing notes, and 192m shares of newly-issued common stock. Those agents will start handing out the cash and securities to Storage Technology’s creditors some time in the middle of August, according to StorageTek. Storage Technology had to accomplish a number of things to complete its reorganisation plan – the plan had to go effective in the jargon of the Bankruptcy Court. Although the company, which first went into Chapter XI on Halloween of 1984, had to deal with more than 8,000 creditors, the most important of these was the Internal Revenue Service. And, to get out of Chapter XI, Storage Technology had first to settle with Uncle Sam. On the so-called Effective Date of the plan, Storage Technology had to mail certified cheques totalling more than $37m to the IRS. Only after that could the company begin its other distributions. Besides settling with the IRS, Storage Technology had to clean up certain other business that was left over from when it was a rapidly-expanding, $1 billion company. StorageTek had more than two dozen subsidiaries – including Documation, which sells Siemens printers under its own label – many of which are no longer doing any business. According to the company’s reorganisation plan, one of the company’s senior executives was to have filed merger papers in Delaware, and Storage Technology’s moribund subsidiaries would be folded back into the parent firm. Also, Storage Technology had to pay $1,000 each to several hundred creditors who were owed $1,000 or less – or who were willing to reduce their claims to $1,000 to get paid in cash. The amount was wired to them. The balance of the cash has been deposited in a series of bank accounts. Cheques will be written from these accounts by the disbursement agent, which will pay each creditor the cash to which it is entitled. Stock is being issued, and most of it is going to the disbursement agent, although Storage Technology is keeping about 11.6m shares. Several of Storage Technology’s employees, particularly chief executive Ryal Poppa and president Steve Jerritts, are entitled to buy in at low prices under their employment contracts.