Court accepts L&H's second restructuring plan

After reviewing a second restructuring plan on 21 September, a commercial court in Belgium granted Lernout & Hauspie Speech...

After reviewing a second restructuring plan on 21 September, a commercial court in Belgium granted Lernout & Hauspie Speech Products (L&H) a nine-month extension of its bankruptcy protection period.

But this extension does not change the fact that the company has to find a suitor within the coming weeks to avoid liquidation, according to comments by chief executive officer, Philippe Bodson, earlier this month.

There are two major conditions for the extension. According to a summary of the court decision, transfer of the core L&H activities must guarantee long-term economical activity and substantial employment in Belgium, and at least 80% of the gross income from asset sales has to be reserved to pay off creditors.

"The question is if these stringent conditions won't hamper normal operations," Belgian news agency Belga quoted Bodson as saying in reaction to the court's decision.

L&H needs cash to keep running. The company has enough money to last until the end of October, Bodson said on 10 September. But the L&H chief would rather close a deal with a buyer before running out of money.

The second restructuring plan, filed by L&H on 10 September, requires $20m (£14m) to $25m cash to form a new company from L&H's core speech and language technology business that will keep 400 employees. There are at least two unnamed buyers interested in the company's core activities, L&H has said. But as of 18 September there had been no binding offer.

In late June, the commercial court chastised L&H's first "restructuring and recovery plan". The judge said it lacked clarity and was based on wishful thinking.

The court has set 11 June 2002 as the date for the next hearing on the bankruptcy protection period.

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