Your basic train wreck:
Shareholders accuse KIT Digital of data-blocking buyers
By Katy Stech, Dow Jones Daily Bankruptcy Review
Friday 21 June 2013
Judge to hear struggling online video specialist's reorganisation plan on 5 August.
Shareholders of struggling tech company KIT digital Inc. told a bankruptcy judge that critical details about the company's finances have been unfairly withheld from prospective buyers who may want to challenge the $25 million purchase offer led by KIT digital Chief Executive Peter Heiland's private-equity firm.
In court papers filed Wednesday, KIT digital shareholders said that the company, which makes software that supports online videos, could be missing out on better offers from bidders who've been turned away so far from an online-data room.
Two prospective bidders--Altamont Capital Partners and TMN Acquisition LLC--haven't been able to get access to the company's data room, and at least one bidder dropped out after concluding "that it will never get to a level playing field," attorneys for shareholders said in court papers filed with the U.S. Bankruptcy Court in Manhattan.
Click here to find out more!Specifically, shareholders said that potential bidders have been told by KIT digital that they need to promise a higher bid in exchange for access to the company's online-data room. That requirement has put the company and bidders at an impasse: bidders won't step up with offers unless they can see inside the company's finances, but KIT digital won't give access unless the bidders agree to provide a "superior bid."
"Neither [shareholders] nor...any bidder even knows the value of a bid required to gain that bidder access to information," shareholders said in court papers.
Shareholders said that access hasn't been a problem for groups behind the leading purchase offer, which came from Mr. Heiland's technology investment firm JEC Capital Partners and two other firms. That bidding group has been in a position to "enjoy boundless access to the [company] and up-to-date financial information," shareholders said in court papers.
In earlier court papers, KIT digital officials have disputed accusations that they are restricting access and said that they are continuing "to evaluate alternative proposals as they are presented." A company spokeswoman did not respond to an email seeking comment on Thursday.
Bankruptcy Judge Robert Gerber agreed to hear arguments on the matter Wednesday.
Shareholder concerns have been represented by a group of five investment firms, including Hudson Bay Master Fund Ltd., Mohawk Capital
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