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Judge OKs Versa Takeover of InPhonic

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Bigstud is here   Friday, 12/14/07 04:32:31 PM
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Judge OKs Versa Takeover of InPhonic
12.14.07, 1:45 PM ET

PHILADELPHIA - Philadelphia's Versa Capital Management won court approval to take over InPhonic Inc., after reaching a deal with creditors of the Web-based retailer of wireless devices and services.

Judge Kevin Gross approved the deal at a hearing Thursday in the U.S. Bankruptcy Court in Wilmington, Del. In a prepared statement, Versa officials said they believe the business "holds great promise."

The Washington, D.C. company filed for Chapter 11 protection Nov. 8, shortly after Versa positioned itself for the takeover by acquiring $90 million worth of top-level bank debt at a steep discount.

Unsecured creditors opposed Versa's bid to acquire InPhonic (nasdaq: INPC - news - people ), arguing they were getting nothing out of the deal, and therefore, Chapter 11 bankruptcy was not an appropriate forum.

To win creditors over, Versa agreed to help fund wind-down costs, including investigations that could lead to a recovery for the vendors InPhonic is leaving unpaid.

"Versa is making certain funding available so we can get this case resolved in Chapter 11 through a plan," said Claudia Springer of the law firm of Reed Smith, attorney for the official committee of unsecured creditors.

Some creditors will be made whole thanks to the takeover, because the buyers have to make good on old debts owed to vendors whose contracts they want to continue in the revived InPhonic.

"We think this was a good settlement, based on the type of case that it is," Springer, commenting on the urgent need to get the company into new hands if the business is to be preserved.

InPhonic's plunge into bankruptcy followed admissions of flawed accounting and tainted financial reports filed with the Securities and Exchange Commission for 2006.

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