Capital Growth Systems, Inc.(fka CGSYQ)

[kennypooh]

Here's an updated summary of what's taken place so far in this Bankruptcy.

Capital Growth Systems, Inc. (CGSY), doing business as Global Capacity, Inc., operated as a telecom information and logistics company that leveraged a collection of global telecom supply and pricing data to enable transparency and automation in the access network market worldwide.

CGSY was underwater and could not pay their debts and filed Chapter 11 bankruptcy in August 2010. The Q was added to the ticker to signify bankruptcy.

Capital Growth Systems remaining assets were sold at auction and are being transferred under an Asset Purchase Agreement (APA) supervised by the Delaware BK court. The old Telecom business was allowed to continue operating during the auction and transfer of it's assets to the winning bidder Global Capacity Pivotal LLC.

The Pivotal Group's bid and plan was approved by the BK court in late Feb.
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001116694&type=&dateb=&owner=include&count=40

Capital Growth Systems was required by the BK court to file monthly financial results (8k's) for it's operations through final closing of the BK.

Financial status of the BK company as of March 31, 2011 8k:
Total Liabilities ($106,268,878)
Total assets $26,408,554
Total current company value ($69,860,324)

As of May 20, 2011 the bulk of the assets, debts, agreements, contracts, liabilities, etc. have been transferred to a Pivotal Group subsidiary named Global Capacity Pivotal LLC.
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001116694&type=&dateb=&owner=include&count=40

CGSYQ remains the ticker of the old company until BK closes. It's no longer in any business of any kind...it will not emerge from BK.

Pivotal/Najafi is the 'beneficial owner' of 61.5% of the empty shell CGSYQ that remains in the estate. The beneficial ownership resulted from a private purchase transaction (outside the bankruptcy) in December 2010 between Pivotal and the prior holders of CGSY debentures and warrants. The other 38.5% of the shell is owned by common shareholders.

Speculation surrounding the fate of the shares of CGSYQ:

1) All CGSYQ shares may be de-registered and canceled.

Pivotal has alluded to that possibility in their 13D filing. From Page 5 of Schedule 13D.
"The plan of reorganization as ultimately confirmed by the court may involve extraordinary corporate transactions among the Issuer, PGC and affiliates of PGC, a transfer of substantially all of the assets of the Issuer to PGC or an affiliate of PGC, a change in the composition of the current board of directors of the Issuer, a material change in the capitalization or dividend policy of the Issuer, and/or changes in the corporate organizational documents of the Issuer. It is also anticipated that the Issuer’s common stock will cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association and may become eligible for termination of registration under the Securities Exchange Act under Section 12(g)(4) thereof as a result of this transaction or under the plan.

Neither PGC nor any of its affiliates, at this time, intend to acquire any additional securities of the Issuer. PGC currently does not intend to convert any of the debentures or exercise any of the warrants to acquire the Issuer’s common stock." http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=7626703

2) If the shares are not canceled, the empty shell could be sold to an outside buyer, or possibly used for a Reverse Merger or Reverse Acquisition by the Pivotal Group itself.

Caution....In a RM or RA scenario, common holders most often see their shares heavily diluted. Their current stake could drop drastically if shares are issued to new debt holders, insiders, consultants, attorneys, accountants, employees and nominees with little left for the old commons. Commons are always last in line.