A Belgian court on Friday morning granted troubled software vendor Lernout & Hauspie Speech Products NV (L&H) bankruptcy protection under Belgian law, after which L&H promptly announced Friday afternoon that it will lay off 1,200 employees within the next three months as part of its recovery plan.
It was the second bid by L&H for concordat – the Belgian equivalent of U.S. Chapter 11 bankruptcy protection. The Belgian court held a four-hour hearing behind closed doors in Ieper, Belgium, on Wednesday to determine if the bankruptcy protection would be granted.
“We’ve been given concordat on a six-month provisional basis. During this period, we believe we can develop a recovery plan. That is all that I can confirm at this moment,” said an L&H spokesman. L&H plans to hold a news conference in Ieper on Monday to flesh out the details of its recovery plan, he said.
As part of the concordat ruling, the court has appointed three composition trustees to oversee L&H operations during the protection period, L&H said in a statement released late Friday afternoon .
Under the concordat law, L&H can withhold payments for six months on a US$400 million loan as it comes up with a plan for repayment. L&H received the loan last May to help it acquire Dictaphone Corp. Primarily five banks including the German banks Deutsche Bank AG and Dresdner Bank AG, and Belgian banks Fortis Bank, Artesia Banking Corp. and KBC NV backed the loan. Other banks exposed to the company include Shawmut Bank of Hartford, Conn.