Storage solution/outsourced services provider Incentra has reorganized following its recent bankruptcy filing and is ready to meet customer challenges with an improved cost structure.
CEO Tom Sweeney said the original company, Incentra Solutions, filed for Chapter 11 bankruptcy in early February, but in mid-April sold all of its assets to its lender and was reorganized as Incentra LLC.
As a result of the sale and reorganization, all employees have had offers to continue with the new company, and Incentra is continuing to work with clients as before, Sweeney said.
"Bankruptcy gives us a chance to reorganize our debts," he said. "That's what happened during the 69 days we were in bankruptcy."
It also gave Incentra time to restructure its operating costs, Sweeney said.
"For example, we could eliminate costs in bankruptcy that we couldn't do before, such as a lease for a building we no longer needed," he said. "Also, we were a public company before. Now we're private, so we can eliminate the costs of financial reporting and keeping our public listing."
The move into Chapter 11 started at the end of last year when Incentra, which was publicly listed, needed to restructure its debt, Sweeney said. "We needed an agreement of our senior debt holder and the shareholders, but they didn't see eye to eye," he said. "The senior lender wanted us to go into bankruptcy to restructure the debt."
That debt was accumulated over the past few years thanks to several acquisitions of other solution providers, as well as the company's build-out of its services capabilities.
The company by November and December also was experiencing the impact of the economic slowdown, and its first quarter 2009 sales were down 20 percent compared to the same period last year, Sweeney said.
Sales this quarter are down from last year, although they are not down the 20 percent originally expected, and services revenue is currently flat with last year, he said.
Bankruptcy always means anxiety for employees, Sweeney said. "It happens, even though we communicated with them daily," he said. "They had to deal with competitors telling customers that we were going out of business. But we didn't lose any customers. We were up front with them, and followed through on our commitments."