A federal bankruptcy court judge has effectively barred former employes of Columbia Data Products Inc. from setting up a rival computer company and selling to Columbia's customers while the firm struggles to reorganize under the protection of federal bankruptcy laws.
Judge Robert Maness agreed late Wednesday to grant an injunction that effectively blocks an effort by former Columbia president Robert Cross to set up a new firm, Chesapeake Data Products.
Once a high-flying personal computer company with revenue approaching $100 million a year, Columbia's fortunes collapsed along with the personal computer market, and the company filed for protection under Chapter 11 of federal bankruptcy laws early in May after an effort to reach agreements with its creditor banks failed. The company is over $40 million in debt.
Columbia's bankruptcy trustee, appointed during the first week in June, had sought the injunction to stop Cross and several former Columbia engineers from creating Chesapeake Data Products, a personal computer company that intended to compete for many of Columbia's customers.
Cross had sought to create the new company because his creditor banks -- notably the First Pennsylvania Bank Corp. -- wouldn't permit him to proceed with new product plans.
The decision, which was rendered at 11:35 p.m. Wednesday at federal bankruptcy court in Rockville, came after more than 40 hours of testimony during the course of a month. The injunction prohibits Chesapeake from using any of Columbia's technological expertise. The injunction also would prohibit Chesapeake from contacting up to 500 customers selected by Columbia until May 31, 1986.
For all intents and purposes, the breadth of the injunction appears likely to cripple the effort to launch Chesapeake as a company.
"It's a very broad injunction," said William J. Murphy, Cross' attorney. "I'm certainly disappointed."
Both Murphy and Cross declined to say whether the injunction would be appealed, preferring to wait until next Wednesday when the list of prohibited customers is presented.
Cross did say that "we intend to stay in business," but declined to comment further on the injunction.
In his comments, the judge pointed to a press release announcing the creation of Chesapeake, issued June 7, the same day the bankruptcy trustee was appointed. "The clear implication is that the king was dead, long live the king," said Maness.