L&H files new restructuring plan

The struggling Belgian software firm Lernout & Hauspie Speech Products filed a new restructuring plan with the Belgian bankruptcy...

The struggling Belgian software firm Lernout & Hauspie Speech Products filed a new restructuring plan with the Belgian bankruptcy court on 10 September, announcing that it is talking to at least two unnamed buyers.

The new plan will require $20m (£14m) to $25m in cash and the buyer will be required to retain 400 employees, said L&H's chief executive officer Philippe Bodson. The previous plan, rejected by the court in June, set a cash budget of $100m with 600 staff.

The scheme aims to create a company, dubbed Newco, from Lernout & Hauspie's core speech and language technologies divisions. It was filed on 28 August along with a separate plan for L&H's American division, Dictaphone.

Under the plan, L&H's debt and Dictaphone would be converted into equity, Bodson said. A consortium of five Belgian and German banks, together owed $340m by L&H, will receive 65% of Dictaphone, and Newco will be owned entirely by L&H's creditors.

"Shareholders will get nothing. They are the victim," Bodson said. "Under both United States and Belgian law, the first to be paid back in a bankruptcy are the creditors. If there is not enough for them then there will be nothing left for the shareholders. We are in that situation now. I cannot do anything about it," he continued.

Bodson would not reveal the identity of the two potential backers, but said they were serious and were among the biggest names in the technology business.

The two have different ideas for L&H. One is focused on the plan to create Newco, but the other is looking to sell off the assets. "We are talking to others too," Bodson said. "But these two are the ones most advanced."

If one backer does not make a firm commitment this month, Bodson said he would declare bankruptcy.

"We will not let the company die slowly, running out of money," he said. The company has enough money to last until the end of October. "If there is no binding offer in September, preferably September 17, then I think we are dead."

On September 18, L&H will meet with creditors, the independent commissioners appointed to oversee the rescue bid, and the court. The creditors are expected to support L&H's latest plan, as they did in June. The court then has 15 days to decide whether the bankruptcy protection should be extended beyond its expiration date at the end of September.

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