Long time player in the high-end server and cluster market, Silicon Graphics Inc. today filed for Chapter 11 bankruptcy in the US. The company had been incurring debt at an increasing rate over the last two years and had been struggling to keep up with competition in pricing as well as innovation. Per discussion with its board members as well as banks and lenders SGI decided that it would be best for the company if it filed for Chapter 11 to reduce its debt in the amount of roughly $250 million. Despite the filing, its international subsidiaries are not affected and the company says that its off-shore locations will continue to operate as usual.
As part of this agreement with many of its major stakeholders, and as the next step in its previously announced plan to reorganize its businesses, the Company and its U.S. subsidiaries have filed voluntary petitions under chapter 11 of the U.S. Bankruptcy Code. SGI's non-U.S. subsidiaries, including European, Canadian, Mexican, South American and Asia Pacific subsidiaries were not included in the filing; will continue their business operations without supervision from the U.S. courts; and will not be subject to the requirements of chapter 11.
SGI indicated that during this time, it is planning a massive company restructuring strategy to bring it back to profitable business and increase its brand reputation. The company also indicated that partners and customers will continue to see business from SGI as usual and should not expect any disturbances. SGI hopes to be get out of Chapter 11 within six months.
The Company expects to file its Plan of Reorganization reflecting the agreement shortly, and to emerge from Chapter 11 within six months.
"We want to assure our customers, our employees and our communities that SGI is operating-business as usual," Dennis P. McKenna, the recently appointed, Chairman and CEO of SGI, stated. "Our customers can continue to rely on SGI for its mission-critical products, services, and support."
SGI says that it will begin looking for a new CEO and CFO as well as other executives. Also, parts of the restructuring strategy are programs that will help reduce manufacturing and operating costs. SGI says that it is also in the middle of closing large sales deals that are indicative of its customers strong support in its products and brand.
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