Peregrine Completes Chapter 11 Reorganization
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Peregrine Systems emerges from Chapter 11 bankruptcy Thursday after a tumultuous year in which the software maker reorganized its business in core areas of strength in enterprise software and settled with the U.S. Securities and Exchange Commission (SEC) over charges of fraudulent accounting.
The San Diego-based company's restructuring plan provides full recovery by many creditors, a substantial equity stake in the reorganized company to existing shareholders and sustains the company's business in enterprise software.
Peregrine, which makes infrastructure software for service desks and was among the top three players in its field a couple of years ago, said in its September Chapter 11 filing that the bankruptcy was prompted by financial and legal stumbling blocks raised by the company's inability to file audited financial reports for the 2000, 2001 and 2002 fiscal years.
That, in turn, prompted an SEC investigation. Earlier this year, Peregrine completed a restatement of financial results for 11 quarters from 2000-2002.
Peregrine said under the terms of the July SEC settlement, it has agreed to not violate federal securities laws and comply "on an accelerated basis" with the rules regarding financial data reporting as called for by the Sarbanes-Oxley Act of 2002. The SEC sought no financial damages in the case.
In addition, the settlement calls for Peregrine to retain an internal auditor to insure that its financial results are accurately reported and establish a corporate compliance program with a compliance officer for an ongoing review of Peregrine's governance systems.
The deal also calls on Peregrine to launch a training program for Peregrine's officers and employees in order to prevent violations of federal securities laws.
"We are proud to be the first enterprise software company to reorganize successfully under Chapter 11 as a public entity," said Gary Greenfield, Peregrine's CEO.
Peregrine's Plan of Reorganization was confirmed by the U.S. Bankruptcy Court for the District of Delaware on July 18. The plan was modified from the original version initially filed by Peregrine on Jan. 20 to reflect a "consensus among all major constituencies in the company's reorganization, including the Official Committee of Unsecured Creditors and the Official Committee of Equity Security Holders."
According to the plan, Nasdaq Market Operations and Participants Services will issue a new symbol for Peregrine's common stock, which will be posted on the company's Web site as soon as it becomes available.