Tech company Sungard files second bankruptcy in three years

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REUTERS/Brendan McDermid

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  • Company to seek sale or debt-for-equity swap
  • Prior bankruptcy reduced debt by $800 million

(Reuters) - Technology company Sungard Availability Services returned to bankruptcy on Monday about three years after wrapping up its prior Chapter 11 case.

The Wayne, Pennsylvania-based cloud services provider filed in the U.S. Bankruptcy Court for the Southern District of Texas with about $424 million in secured debt. Sungard said in a statement on Monday that while it reduced its debt load by more than $800 million during its 2019 bankruptcy, it did not resolve “challenges inherent to the company’s operating structure,” including burdensome leases and underused space despite efforts to lower those costs in recent years.

The 2019 bankruptcy involved a prepackaged plan that was approved by a New York bankruptcy court one day after it was filed.

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Sungard’s largest shareholder is investment firm Angelo Gordon. Blackstone Credit, Carlyle Group, FS/KKR Advisor LLC and Arbour Lane Capital Management LP also hold significant stakes in the company. It has operations, which remain ongoing, across the U.S., Canada, UK, Ireland, France, India, Luxembourg and Poland.

CEO Michael Robinson said in a statement that the company's financial trouble was driven by the economic impact of the COVID-19 pandemic, lower demand for certain workplace-focused services as office workers began working remotely, and inflation in energy prices. The company also said its UK branch was hit by rising energy prices caused by Russia’s invasion of Ukraine.

Sungard is considering a sale of its assets or converting its existing debt to equity. It currently has about $5 million in cash, according to court papers.

Sungard, which was represented by Kirkland & Ellis in its 2019 bankruptcy but has retained Akin Gump Strauss Hauer & Feld for the current case, has lined up a $95 million loan to fund operations during the bankruptcy. It expects to complete the Chapter 11 restructuring process by mid to late summer.

Chief U.S. Bankruptcy Judge David Jones in Houston will oversee the case.

The case is In re Sungard AS New Holdings LLC, U.S. Bankruptcy Court, Southern District of Texas, No. 22-90018.

For Sungard: Philip Dublin, Meredith Lahaie, Marty Brimmage, Lacy Lawrence and Zach Lanier of Akin Gump Strauss Hauer & Feld; and Matthew Cavenaugh, Jennifer Wertz and Rebecca Blake Chaikin of Jackson Walker

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Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at maria.chutchian@thomsonreuters.com.