Columbia Data Products, Inc., a manufacturer of IBM-compatible personal computers, said yesterday it has filed for protection under Chapter 11 of federal bankruptcy laws.
Under Chapter 11, a company is protected from its creditors and is allowed to continue operating while it develops a reorganization plan.
The company, based in Columbia, Md., lost an estimated $40 million last year on revenues of $50 million as the market for IBM PC compatibles shrank.
Although Columbia owes $16 million to its creditors and $22 million to its banks, Chairman Samuel Irwin said in a statement yesterday that Columbia is now operating "at approximately break-even before debt service and is now in position to make substantial progress."
Columbia has established "a framework of understanding" with its general creditors, institutional investors and its senior bank in Philadelphia "concerning an approach to long-term recapitalization to complete the turn-araound effort," Irwin said.
"However, the interested parties have been unable to achieve a framework of understanding with Columbia's junior bank in Washington," Irwin said.
"The Chapter 11 petition became necessary in order to protect the company, while the rights and interests of the junior bank are determined by the courts."
Columbia reportedly owes more than $9 million to National Bank of Washington. However, Columbia did not identify the junior bank.
Irwin said that, during the reorganization, "The company will scale back and consolidate its operations in order to further streamline the company and conserve cash, but the company will continue to ship and service its products, and the development of new products will continue."
Columbia recently was delisted by the National Association of Securities Dealers exchange because it was unable to meet the exchange's minimum capital requirements.
The firm also has requested permission from the Securities and Exchange Commission to delay filing its annual report so a special audit can determine the firm's financial condition.