SANZ, an Englewood, Colo.-based storage-focused solution provider, and one of the few publicly listed regional solution providers, said in a Form 8-K filed on Tuesday with the Securities and Exchange Commission (SEC) that it filed a voluntary petition for relief under Chapter 7 of the U.S. Bankruptcy Code.

CMP ChannelWeb reported on Monday that the company was exploring either a sale of its assets or filing for bankruptcy protection.

Most of the employees of SANZ were officially terminated in a single e-mail from the company's CEO, Todd Oseth, according to one former employee who preferred to remain unnamed.

Next steps are unclear for the company and for former employees. The former employee said there are rumors that several former employees are looking to re-incorporate as a storage solution provider.

However, one solution provider who is talking to a number of former SANZ employees about job possibilities said there is speculation is that some of those former employees will work with another solution provider which currently has no storage practice.

Something has to be done for SANZ's customers, the former employee said. "The customers? I wish I know what was going to happen," the former employee said. "Everybody I know wants to take their customers with them. There's no provision to pass the customers to other solution providers. Both the customers and the employees will be hurt."

The former employee said that SANZ, which was hurting financially for some time, was mismanaged, especially after Oseth joined as CEO earlier this year. Oseth previously worked at storage vendor McData, and brought with him a team of people from McData and EMC who started managing the sales and engineering teams as if the company was a vendor.

"Oseth often compared us to EMC," the former employee said.

Oseth also alienated many of SANZ's sales people when he took over, the former employee said. "Todd came in and pissed off enough people so that half or our top sales [reps] left," the former employee said. "The engineers are there. But you can't recover when so many sales [reps] leave and need to be replaced."

Another big mistake was trying to be a solution provider and a vendor at the same time, the former employee said.

SANZ earlier this year sold its EarthWhere division, which developed software to manage geospatial data, for $600,000, after investing about $11 million total on that business, according to a Form 424B3 it filed with the SEC on November 1.

"EarthWhere was a big, five-year mistake," the former employee said. "You can't be a vendor and a VAR. Todd (Oseth) jettisoned it. It had to be done. But it took our valuation down."

SANZ officials did not respond to requests for further information.

According to Tuesday's Form 8-K, Oseth voluntarily resigned as CEO, president, and chairman of SANZ on Monday. At the same time, CFO David Rosenthal, along with three directors, also voluntarily resigned.

The closure of SANZ was triggered in part by Avnet, a distributor which held SANZ notes to the tune of $2.9 million. Avnet on November 15 wrote a letter of default to SANZ demanding immediate payment on the $1.3 million considered to be past due and notifying SANZ that it will no longer sell products to SANZ on trade credit terms.

The other trigger was the decision by Sun Capital Partners II, an affiliate of the majority shareholder of SANZ, to cease funding the company.

SANZ, in its present form, was formed by the merger of two other solution providers, Storage Area Networks and Solunet Storage, in early 2003. Both those companies were themselves the products of several earlier mergers.