AUSTIN, Texas, Aug. 14, 2017 /PRNewswire/ — Crossroads Systems, Inc., (NASDAQ: CRDS) today announced that it has filed a case under Chapter 11 of the Bankruptcy Code and a prepackaged Chapter 11 plan of reorganization (“Plan”) that has been accepted by the holders of more than 2/3 of the Preferred Shares of CRDS. In connection with the filing, the company entered into restructuring support agreements with 210/CRDS Investment LLC (“210”) and with certain holders of the Company’s Series F Preferred Stock.
Subject to the terms and conditions of the Plan and the restructuring support agreement with 210 (“210 RSA”), Dallas-based 210 will invest $4 million cash in Crossroads Systems in exchange for shares of the reorganized company’s common stock representing approximately 49.49% of the common stock of the reorganized company. In addition, 210 will provide up to $10 million of financing for the company to use (subject to the terms and conditions of the Plan and the 210 RSA) to implement its strategy of monetizing its intellectual property assets and pursuing investments in companies that generate profit and positive cash flows, thus creating long-term shareholder value.
The Plan provides for the payment of all creditor claims in full, for holders of Preferred Shares to receive their pro rata share of $2,672,233.78 in cash plus 8% of the common stock of the reorganized company, and for holders of common stock to exchange their existing shares of common stock for an equivalent number of new shares of the common stock of the reorganized company, which shares would constitute approximately 42.51% of the outstanding share of the common stock of the reorganized company.
Richard K. Coleman, Jr., Executive Director at Crossroads Systems said, “We are pleased 210/Crossroads Investment LLC has chosen to make an investment in Crossroads Systems, Inc. The investment capital will allow Crossroads to continue to monetize its patent portfolio while pursuing potential acquisitions that can create value for investors.”
Robert Alpert, a management representative of 210, commented: “We are excited about the opportunity to invest in Crossroads Systems, Inc. and look forward to working with management to implement the company’s business strategy and create long-term shareholder value.”
The consummation of the Plan will be subject to customary conditions and other requirements. The 210 RSA also provides for termination by each party, or by any party, upon the occurrence of certain specified events.
The foregoing descriptions of the 210 RSA and the Plan are qualified by reference to the full text of such documents, copies of which are available on the company’s website: www.crossroads.com.
The company filed its voluntary Chapter 11 petition and the Plan in the U.S. Bankruptcy Court for the Western District of Texas in San Antonio.