Scient Files for Chapter 11

The struggling Web services boutique filed for bankruptcy protection, with prepackaged deal to sell remaining operations to SBI.

Struggling Web services boutique Scient Inc. today filed for Chapter 11 bankruptcy protection, with a prepackaged deal to sell its remaining operations to SBI and Co.

Scient, weighed down by costly long-term leases it could no longer afford to pay, couldnt get out of its obligations fast enough to continue operating under its current structure, officials said.

Once the dust settles from the Chapter 11 restructuring, SBI officials expect to take on some 200 employees and about seven "key customers that make up 80 percent of ongoing revenue," said Coleman Barney, senior vice president and cofounder of SBI in Salt Lake City, Utah.

"Our business is about the teams we acquire – great client managers, strategists, technical people. Our biggest concern is how likely is it we can keep those teams together," he said.

SBI, with the approval of the bankruptcy court, will take on Scient offices in its New York headquarters as well as Chicago and Dallas.

SBI intends to leverage Scients expertise in customer experience management to build on its own services strength in helping clients improve and optimize internal organizations using technology from software providers such as SAP, Oracle and JD Edwards.

SBI will build on its services offerings to provide business assessment, business process optimization, enterprise application deployment and integration, supply chain management, customer collaboration, user experience, branding, visual design, technical architecture design and application development.

The combination will also yield a services company focused on manufacturing, transportation, telecommunications, retail, and with Scient, financial services, according to SBI officials.

SBI, a privately held company, is no stranger to fire sale deals with boutiques. Last year it acquired several MarchFirst offices in the western U.S and it acquired Emerald Solutions Inc. in Portland, Ore.

Despite the similarities, Barney asserted that SBI is very different from boutique raider Divine Inc.

"They are trying to swallow an elephant by making lot of acquisitions as a public company. Our approach is more pragmatic – we too have a software business that adds value to the services we deliver. We have business process optimization software thats an add-on to the solutions weve delivered. Divine is trying to create a services business around the next ERP type application. That is a lot riskier," he said.

Barney would not place a value on the deal, which isnt expected to close for at least another three months, depending on the courts resolution of the Chapter 11 restructuring. SBI agreed to provide Scient with financing of up to $4.9 million to fund ongoing operations.

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