Microforum Inc. filed for protection from its creditors on Tuesday.
The Toronto-based software provider and integrator received a 30-day grace period, or initial Order, from the Ontario Superior Court of Justice under the Companies’
Creditors Arrangement Act. Ernst & Young Inc. has been appointed by the court to monitor the CCAA proceedings.
According to a statement from Microforum, it has also retained TD Securities Inc. to assist with identifying and evaluating strategic alternatives for the company, including a merger.
“”Microforum’s customers will remain unaffected by this announcement as the company has sufficient funds on hand to continue normal operations during the initial Order,”” said president and CEO Steven Schofield in the release.
The announcement marks a turbulent 12 months for the company. In April 2001, then-president and CEO Rick Segal stepped down after only nine months at the helm. Segal reportedly left after the company had decided to freeze the development of new software. A new chief financial officer was appointed in October.
The firm’s third quarter results announced Tuesday offered no relief: a loss of $9.4 million ($0.22 per share) on revenue of $3.2 million for the three-month period ended November 30, 2001 compared to a loss of $33.5 million ($0.79 per share) on revenue of $7.1 million for the same period the year before. Layoffs were also part of the third quarter picture, as 44 employees were let go, reducing the head count to 139. It had approximately 300 employees last May.
While revenues were down, however, Microforum continued to make sales. It had been working with Toronto-based Kitchen Stuff Plus implementing a Navision accounting package and was slated to implement a point-of-sale solution as well. Kitchen Stuff Plus could not be reached for comment at press time.
John Macdonald, general manager of Navision’s Canadian operations, said the announcement came as a surprise. He said Microforum was “”a good contributor”” and was “”in good standing with us.”” Should Microforum be unable to service its customers beyond the initial Order, he said there is a list of Navision resellers on its Web site.
“”We have 29 partners in Canada. In just the Greater Toronto Area we have eight or nine partners,”” Macdonald said. “”Microforum’s Navision customers have many options and will be well taken care of by our channel.””
Resellers are facing a tough year according to one analyst. Paul Edwards of IDC Canada says mergers might be the only way to survive.
“”There’s been an inordinate amount of acquisitions going on. Certain last there was a hell of a lot and think that’s a trend we’ll see this year as well. It’s partly because of the economy because resellers need to get capital and the quickest way to do that is to merge with somebody else,”” Edwards says.
Microforum, whose other vendor partners include Oracle, Microsoft and Cognos, had an extensive client list. This included Hudson’s Bay, Financial Pacific Leasing, CIT (Newcourt Credit Group) and eight Ontario government departments and ministries.
