Exalt Communications has "reinvented" itself as a new company, Exalt Wireless, and is hoping to leave its troubled recent past behind.
Exalt Communications Inc. was struggling for additional funding in the tough microwave backhaul market. In September, it shuttered its HQ in Campbell, Calif. for 10 days as it undertook an insolvency procedure that is an alternative to bankruptcy: The procedure is supposed to make it easier and quicker for creditors to get paid.
The Exalt management team bought the assets after the Assignment for the Benefit of Creditors (ABC) procedure had started. Now the team are setting up as a new company, Exalt Wireless, although the company's management and headquarters, and webpage URL remain the same as Exalt Communications. (See Exalt CEO: Company Lives On Following Management Buyout and Exclusive: Microwave Maven Exalt Is Cooked.)
CEO Amir Zoufonoun sent a note about the "reinvented" company to its entire database -- and Light Reading -- Tuesday morning. Describing copper as "dead" and fiber as "too expensive," Zoufonoun says that Exalt now has an opportunity to bridge the "bandwidth gap" with its wireless backhaul products.
"The new Exalt intends to support its installed base and to serve its broad customer base by offering the same popular brands such as ExtendAir, G2, ExploreAir, ExtremeAir, eMIMO, ExpandAir, and the legacy EX-Series, while continuing to develop additional new backhaul and access products," the CEO writes.
Learning our ABCs The Assignment for the Benefit of Creditors process requires the company to assign a third-party "assignee" to handle the liquidation of its assets and payment to creditors. Exalt Communications named "Exalt (assignment for the benefit of creditors) LLC" as its third party on September 23. The third party then has a month to send a notice to creditors and the creditors have up to six months to respond with claims.
As has happened here, the asset sale can take place in parallel with the process of informing creditors and getting claims back.
Creditors have started to receive a "Notice of Assignment for the Benefit of Creditors and Deadline for Submitting Claims" dated October 23. Creditors that feel they have a claim against Exalt Communications should submit a claim before March 22, 2015, the notice, which Light Reading has seen, says.
The banks, "by far the largest creditors" in Exalt Communications, chose "Assignment for the Benefit of Creditors" (ABC) as "the process for the wind down," CEO Zoufonoun writes in an email to us.
"An Assignment for the Benefit of Creditors is a well-established tool that is an alternative to bankruptcy and can provide a benefit to troubled companies and present an opportunity for potential buyers," writes the American Bar Association in a helpful primer on the process.
- Through an Assignment, the insolvent company's assets can be sold quickly and efficiently, and the liquidation proceeds can be distributed to creditors shortly thereafter. In general, after the secured creditors are paid first, then tax and wage claims are paid.
The Association says that the process is analogous to a Chapter 7 liquidation. In California, however, a company doesn't have to file court papers when an ABC is undertaken.
"We [Exalt Wireless] stepped in and bought the assets post ABC," the CEO tells us.
Therefore, Zoufonoun writes, the new company is not Exalt Communications and has no liability: "As a corporation, Exalt Wireless is not at all, in any shape or form, associated with Exalt Communications, and not responsible for anything associated with Exalt Communications."
The banks -- by far the largest lenders remember -- are typically among the secured creditors. So the third-party assignee, the Exalt LLC, will likely endeavor to pay them first with whatever proceeds the asset sale made.
"Other creditors are companies we will most likely continue to do business with," he tells Light Reading. "In the long run, everyone benefits by doing more business."
To that end, Exalt Wireless is working on new products that it expects to announce in the first quarter of 2015.
— Dan Jones, Mobile Editor, Light Reading