Lot of cyber-buzz on Sorenson’s Bankruptcy. Reading fiscal reports can be a real challenge. So I will try to explain in a clear way.
First of all, it does not mean that Sorenson VRS will stop. SVRS will continue to provide service. However, the reason why Sorenson filed for bankruptcy was revealing and you all be the judge of what that meant.
It is Chapter 11 Bankruptcy that SVRS is filing for. Also called “rehabilitation bankruptcy”. Chapter 7 typically means sell off assets and close the company. Chapter 11 means negotiating with creditors and revamping its financial structures; usually means creditors/investors will not get their money on agreed date, but to a later date or lower amount of payments.
Now the following explanation is the best I could understand of the circumstance of the bankruptcy. If I am wrong, please feel free to provide valid documents or links to show that I’m wrong. I will gladly post these.
What SVRS has done over years is that at the end of fiscal year for SVRS, the company would give most if not all profit to investors. SVRS needs capitol to continue providing service, so they borrow – could be bank, bond, additional liens, refinancing loans, etc – and over course of a fiscal year turn profit and be in position to pay back all the creditors and then give the profits to the investors. This pattern repeats annually.
As it turned out, last fiscal year SVRS had to file for bankruptcy because the profit was not enough to pay off the creditors. SVRS had asked FCC to raise reimbursement rates to cover the financial woes that SVRS has. The FCC, of course, denied that. Hence the bankruptcy filing by the SVRS.
Here are the links:
Above is about Corporate Restructuring.
Above is about SVRS reaches agreement on comprehensive debt restructuring.
Above: SVRS letter to the FCC. Note the word “substantial change”. I leave that to you to interpret what that means in bankruptcy proceedings.
So what does that mean in terms of service, SVRS employees, etc? Generally, Chapter 11 does impact all these; some obvious and some not so obvious. Often Ch 11 means changing from full time to part time or or laying off many lower level positions or letting a few top managers go or hiring less expensive interpreters (shorter hours or passable new interpreters which can be little bit cheaper).
Maybe time for SVRS employees to whip up their resumes?
It does look like that SVRS was primarily thinking of Investors first and that SVRS is just business to them. SRVS has history of that. Remember that bombshell of a financial report showing SVRS made profit of 1,200%. Or not too long ago on that Interoperability issue on one of its products. No wonder FCC is not happy about these and probably one of reasons why these awful VRS Reforms are being implemented by the FCC.
Be on the lookout for next video clip which will show “Pragmatic Perspective of VRS Cost vs Tax Base of VRS Users”.
eyes open & thumbs up,
Categories : Alerts, Vlogs, VRS