Just one week after announcing that it was exploring strategic options that included bankruptcy, Divine Inc. formally declared bankruptcy Tuesday.
The e-business software company, formed from the acquisition of more than a dozen software and services companies, filed a voluntary petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
Company officials said the action was taken to protect the value and viability of Divines operations while it works to restructure its liabilities. Chicago-based Divine is also hoping the Chapter 11 filing will bring a faster and more favorable resolution to the recent Chapter 11 filing of its RoweCom Inc. subsidiary.
Divine filed the petition in the U.S. Bankruptcy Court in Boston, where RoweComs Chapter 11 case is also proceeding. Another Divine subsidiary, Divine/Whitman-Hart, which was formed from the acquisition of certain assets of MarchFIRST Inc., is not included in this filing.
Divine has retained financial advisory firm Casas, Benjamin & White LLC to assist in handling its day-to-day operations. The company continues to explore strategic options with Broadview International LLC as well, mainly related to the sale of its remaining assets. Divine has $25 million unrestricted cash on hand, which it says will be sufficient to keep its operations going until a resolution is found.
Divine also announced Tuesday that investment firm GTCR Golden Rauer LLC has offered to acquire the company in its entirety. Divine said it has received several other inquiries but did not specify whom they were from. Any sale of assets would have to be approved by bankruptcy court and subject to an auction process to ensure the highest yield, Divine officials said.
Divine also announced that its fourth-quarter and year-end earnings report has been postponed indefinitely. For the nine months ended Sept. 30, Divine had lost $174.2 million on $472.1 million in revenues.
Deborah Gallen, vice president of operations at Nutri/System Inc., a Divine customer in Horsham, Pa. , said the quality of Divines products and customer service "hasnt skipped a beat" despite Divines financial difficulties.
Nutri/System uses Divines NetAgent and Expressions products for customer service and online chat on its Web site. Gallen said shes confident that the quality of the software will make Divine an attractive investment for a stable, reputable company.
"Wherever the software ends up, thats who well be dealing with, and because of the integrity of the product, were confident that itll do well," said Gallen. "Our loyalty is to the product."
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