On September 2, 2009, GigaBeam filed for Chapter 11 Re-structuring. It had become clear that in the interests of the long-term stability, sustainability, and potential profitability of the Company, a permanent arrangement to restructure the many liabilities causing forward harm to the Company needed to be reached.
FILING FOR REORGANIZATION UNDER CHAPTER 11
The decision to file for reorganization was made after carefully considering all available options to the Company. Restructuring at this time provides the best means available for capitalization of the business and ensured success for our employees, customers, and suppliers. The effect of this restructuring will be a GigaBeam unencumbered with legacy debts, legal liabilities and other toxic factors that have hampered the forward progress and stability of the Company.
WHAT LED TO THE CHAPTER 11 FILING?
The Company, in order to ensure long term stability, sustainability, and potential profitability, required a permanent arrangement to restructure the many liabilities harming the Company.
These legacy liabilities were created by past practices of leadership in place prior to December 2007 who misjudged the size of the market opportunity and engaged in spending levels and business endeavors that GigaBeam could not support . . . This has been resolved.
These legacy liabilities, despite the best efforts of present management, can no longer be contained. Many have drifted to lawsuits and formal collection actions, causing further costs and distractions to the business. If we were to have remained on this course, management anticipated only more of these liabilities to the point of non-recoverability and business failure, despite the fact that our sales have been increasing, our costs have been greatly reduced and our future looks promising.
Furthermore, these liabilities disabled the Company’s fundraising opportunities, which presented a material barrier to future growth--a key component of our plan. To aggressively grow, GigaBeam must acquire new technologies, new products, and new markets, all of which require capital security to ensure success.
WHAT IS CHAPTER 11?
Restructuring under Chapter 11 is a proceeding that allows a company to continue operations under court protection from creditors disrupting its business while it arranges a program to restructure its debt and equity. Restructuring permits current management to continue to run the company and to pursue its goals. Under restructuring, a company operates according to the normal course of business.
RESTRUCTURING MANAGEMENT
The Board of Directors and management will continue to be responsible for the business affairs of the Company. Management’s principal objective is to develop an acceptable plan of reorganization through negotiations with creditors’ representatives.
CREDITORS’ COMMITTEE
The Court may appoint an official committee to represent the interests of the Company’s creditors. A committee is entitled to hire counsel to represent their interests. The committee’s function is to monitor the actions of the Company during the restructuring proceeding and to work with the Company in formulating a plan of reorganization.
DEBTOR-IN-POSSESSION FINANCING
Financing is provided to a debtor to allow it to fund ongoing operations after it has filed for restructuring. The Company has retained a commitment for such financing to ensure successful emergence from the restructuring process. Debtor-in-Possession financing must be approved by the court.
SUCCESS AND RESTRUCTURING
Many companies have successfully emerged from the restructuring process. Companies that have successfully emerged do so because they have strong and sound business practices and plans that can be made successful when unburdened from the heavy financial obligations preceding the restructuring petition. We have every expectation that the Company will emerge from its reorganization stronger, better able to capitalize on the improving economy and with a brighter future.
LENGTH OF RESTRUCTURING PROCEEDINGS
We have prepared a short cycle re-structuring program that includes a budget with expense plan, and revenue forecast; we believe that we will emerge from restructuring by the end of the year.
TRUTH VS. RUMOR
Chapter 11 bankruptcy is not a failure; it provides legal protection for a company to reorganize its capitalization so that it may operate on an ongoing basis with remedy for past obligations and liabilities that would otherwise hinder a success.
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| RUMOR |
TRUTH |
| GigaBeam is closing its doors. |
We are operating business as usual, with no layoffs, no production interruptions and no service interruptions. |
| GigaBeam is bankrupt. |
We are re-structuring legacy liabilities to ensure future success. |
| GigaBeam has no money. |
We have the support of our senior investors, who are supporting us through the re-structuring process. |
| GigaBeam is not viable. |
The Company has paid for operations out of revenue for almost two years and is poised for profit. |
| GigaBeam will not be able to provide product and service. |
The Company will provide the same high quality of product and service available prior to re-structuring and will improve post emergence. |
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