Little Hope For Creditors In Zultys Fire Sale [UPDATED]

Looking for a cheap and easy entry into the burgeoning VoIP market?

Companies interested in buying up the assets of failed SMB VoIP hardware company, Zultys are likely to pick up a bargain with a US Federal Court judge planning to resume the auction of the company’s assets [on the first of November].

The bidding will reportedly re-start at US$1.55 million with three [bidders] showing interest in what is left of the company.

After a promising period of expansion via the IT channel, the company erupted in a ball of flame filing for Chapter 11 bankruptcy protection, firing most of its staff and leaving creditors more than US$40 million in the red.

Now a US federal bankruptcy judge has halted auction proceedings to allow bidders to re-group after the [bidders] asked for time to get more money and to agree on terms of the auction.

Bids will resume Wednesday [11/1/06] US time at US$1.55 million with Founder and former President, Iain Milne, one of those looking to pick up the intellectual property still held by the failed company.

Milne was attempting to mount a management buyout of the smoldering remains but fell short of cash as the bidding war gained momentum, according to reports. He has now turned to former channel partners in a bid to raise enough money to keep control of the business.

Other bidders include InPath [original story incorrectly said iPath] which kicked of its offer with US$700,000 before realizing this was not going to be enough and asking for a delay. inPath’s offer reached US$1.2 million before Pivot, another company seeking to access the VoIP technology, pledged to start the new round of bidding by slapping down US$1.5 million forcing inPath to make a counter offer of US$1.55 million. The judge agreed to call a halt to proceedings to allow time for bidders to work out how to run the auction.

Milne is said to be a million short of a viable bid and is unlikely to be able to raise enough capital required to retain control of his company in such a short time.

Pivot is a newly listed entity owned by Israel-based telecommunications hardware company Telrad which picked up [some of] Zultys’ engineering talent after they were let go by the company.

With assets worth US$1.8 million according to its balance sheet, Zultys racked up US$41.8 million in unsecured liabilities and US$2.75 in unpaid salaries before filing in late September.

Ironically, creditors which stand to get almost nothing from a sale were keen to conclude the matter on Monday reportedly willing to settle for one of the sub-US$2 million bids rather than allow the matter to be delayed by two days.

Related news items
  • Avaya Drives Australian SMB Channel Plans -12/02/2007
  • Zultys Debacle – The Inside Story -17/11/2006
  • Pivot Renames Itself Zultys Technologies -13/11/2006
  • Zultys Remnants Sold To Highest Bidder -31/10/2006
  • Zultys Said To File For Chapter 11 -18/09/2006

Leave a Reply

Your email address will not be published. Required fields are marked *