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<DIV><FONT face=Arial size=2>I don't know if this is old news, and am not sure
of the reliability of the source. But thought all the Mandrake fans (of which I
am one myself) would be interested in this alleged story which was sent to me by
a friend who said he'd also heard something about it on Tech TV. ---Al
Johnson</FONT></DIV>
<DIV><FONT face=Arial size=2>=================</FONT></DIV>
<DIV style="FONT: 10pt arial">
<DIV> </DIV></DIV>
<DIV><BR></DIV><B>MandrakeSoft mulls Chapter 11 style escape, says email <BR><?/bigger><?/bigger><?/bigger><?/bigger></B><?fontfamily><?param Arial><?bigger>By
<?color><?param 0000,0000,DDDD>Bruce Tober <?/color><BR><?/bigger>Posted:
14/01/2003 at 16:39 GMT <BR><BR><?/fontfamily><?fontfamily><?param Geneva><?bigger>MandrakeSoft is
looking at a Chapter 11-style bankruptcy, to solve its financial difficulties,
according to a leaked email from one of its executives. The executive has
declined to be interviewed by <?/bigger><?/fontfamily><I><?fontfamily><?param Arial><?bigger>The Register.
<BR><BR><?/bigger><?/fontfamily></I><?fontfamily><?param Geneva><?bigger>New
MandrakeSoft CEO Francois Bancilhon says the liabilities total about €2 million,
but that he's weighing all possible choices for resolving the problems. The
leaked email, however, paints a different picture. It describes specific plans
to go with either Chapter 11 or its French equivalent. <BR><BR>The email, sent
earlier this month, says going Chapter 11 would allow MandrakeSoft to
renegotiate all liabilities and to clear out all other problems, because people
could be sacked and contracts easily broken. Chapter 11 is a form of bankruptcy
in the US in which companies try to reorganize. Management <?/bigger><?/fontfamily><I><?fontfamily><?param Arial><?bigger>may <?/bigger><?/fontfamily></I><?fontfamily><?param Geneva><?bigger>continue to run
the operations, although the bankruptcy court must approve all significant
decisions. <BR><BR>The equivalent law in France, where MandrakeSoft is
headquartered, is the "Law of 25th January 1985". MandrakeSoft also has a wholly
owned subsidiary in the USA, and so could file under either. <BR><BR>"Going
Chapter 11 is what that email says to me," an industry insider told <?/bigger><?/fontfamily><I><?fontfamily><?param Arial><?bigger>The Register. <?/bigger><?/fontfamily></I><?fontfamily><?param Geneva><?bigger>"He didn't
leave any options to that. And for the whole industry, this would be the worst
case because it will continue a long time." <BR><BR>The e-mail goes on to
discuss the way the company is working on a two-step method of going the
bankruptcy route. Firstly, it wants to put the company on a break-even footing
ASAP by merging with a Linux services company. <BR><BR>Secondly, it wants to get
Venture Capital (VC). The email claims the company is close to cutting a deal
with one or more VCs. The author of the e-mail was hoping its recipient would be
an investor, or would at least claim to intend to invest to help convince the
company's board of the validity of the bankruptcy scenario. <BR><BR>Bancilhon
told The Register, "We're looking at every option right now, renegotiations and
so on. You just call your creditors and ask, "would you take 25 cents or 50
cents or ten cents on the dollar?", or "Would you accept an extended payment?"
<BR><BR>Asked if that's not an unofficial version of Chapter 11, he said, "What
I'm talking about is just, it's a standard way of taking into account your
difficult situation." He added, "As I said, we're looking at every option. Of
course, we have to. It's a standard procedure that many companies go through...
It's something we might want to use at some point." <BR><BR>Bancilhon conceded:
"I looked at both of them [US and French types of bankruptcy]. But they serve
the same purpose and deal with the same situations. It's basically a mechanism
by which you want to help a company get back in business, when the long-term
prospects are reasonable." <BR><BR>As for VCs, he said he's talking with them
also and "we have people very seriously looking at the opportunity." On the
possibility of a merger, he added it's something that should always be looked at
but is "sceptical" because he believes a company's problems should be solved
first before mergers are undertaken. <BR><BR>Asked what his preference would be,
the merger, the VC or the bankruptcy, Bancilhon said, "the real solution is
going to be an investment... And in the future there could be a merger, but
that's not a key strategic decision to our growth right now.... Whether as a
part of all this there is going to be a Cha
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