Daisytek International Corporation Files for Chapter 11 Reorganization5 Jun, 2003
Daisytek International Corporation Files for Chapter 11 Reorganization
ALLEN, TX—June 3, 2003—Daisytek International Corporation has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The petition was filed in Dallas, Texas.
Prior to the filing by Daisytek International Corp., the company’s primary operating subsidiary, Daisytek, Incorporated and a number of its U.S. operating subsidiaries, including Arlington Industries, Inc., Digital Storage Inc. and The Tape Company, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on May 7, 2003 in Dallas, Texas.
On May 16, 2003 the boards of directors for U.K.-based ISA International plc and Daisytek Australia each appointed a Voluntary Administrator to assume day-to-day management of operations. PriceWaterhouseCoopers LLP, the Voluntary Administrator appointed by ISA International’s board of directors, subsequently sold the business and assets of the U.K. and the Republic of Ireland businesses, together with the equity in the Swedish and Norwegian companies of ISA International.
It is unlikely that the shareholders of Daisytek International Corp. will realize any value from the company’s Chapter 11 case. Last week, Daisytek’s U.S. lending syndicate filed a Motion for Relief from the Automatic Stay with the bankruptcy court as contemplated by the Agreed Cash Collateral Order of May 21, 2003. Such motion, if granted, would enable the lenders to enforce their liens on Daisytek assets. Daisytek intends to vigorously oppose such a motion. Under the cash collateral order, Daisytek’s U.S. subsidiaries received consensual approval from the bankruptcy court and its U.S. lending syndicate to use a significant percentage of the lenders’ cash collateral through June 13, 2003 to pay for operating expenses and to increase inventory levels at Arlington Industries and The Tape Company.
The company continues to conduct negotiations with creditors of its U.S. subsidiaries and to pursue the reorganization process in the court. Currently, the company does not anticipate that it will resume taking orders from the Allen, Texas operations facility, nor does the company intend to resume shipments from its Memphis, TN; Bakersfield, CA or Albany, NY distribution centers. These locations comprised the primary operational facilities for the Daisytek, Incorporated subsidiary.
Daisytek’s Mexico and Canadian operations, which are independently funded in their respective countries and have not been included in any bankruptcy filings, continue to report business as usual.