The commercial court in Ieper, Belgium, rejected on Wednesday the “restructuring and recovery plan” filed by Lernout & Hauspie Speech Products NV (L&H). The company was ordered to come up with a new plan, the court confirmed.
The judge chastised the plan by saying it lacks clarity and is based on wishful thinking. He extended the bankruptcy protection period to Sept. 30 and ordered L&H to draft and file a new plan by Sept. 10. A hearing on the new plan has been scheduled for Sept. 18, court clerk Wim Orbie said.
L&H filed the restructuring and recovery plan, which suggests either the complete sale of all L&H assets, or the preservation of just its core business, a month ago. In early June, a vast majority of the company’s creditors approved the plan drafted by the company’s crisis management team.
L&H has been trying to sell its translation unit Mendez for months. However, Credit Suisse First Boston Corp. has been unable to find a buyer. In the United States, L&H will try to sell, among other assets, dictation and call-centre company Dictaphone Corp., which it acquired for about US$510 million in March of last year.
The new restructuring plan ordered by the court Wednesday should include an overview of L&H’s current financial situation and forecasts for payments to creditors based on realistic proceeds from the sale of assets, the judge said. Additionally, the judge wants a clear picture of L&H’s operational and restructuring costs, according to Orbie.
One of the main reasons the restructuring plan was turned down was because the court felt it favored the banks over other creditors, Orbie added. The company owes $603 million euros ($514 million) to creditors including Fortis NV and KBC NV, two Belgian banks, as well as Deutsche Bank and Dresdner Bank of Germany.
L&H declined to comment.
Lernout & Hauspie, with dual headquarters in Ieper, Belgium, and Burlington, Mass., can be reached at http://www.lhsl.com/.