December 28, 2000, 9:23 AM — Embattled speech-recognition technology vendor Lernout & Hauspie Speech Products NV (L&H) yesterday said it will appeal a Belgian court's rejection of a request for protection under that country's bankruptcy laws, an announcement that came just hours after the court froze the company's assets and appointed a trio of administrators to monitor its activities.
The appeal for concordaat -- Belgium's version of bankruptcy protection -- is due to be filed within seven days. John Duerden, L&H's president and CEO, said in a statement that the board of directors "remain[s] convinced that the best solution for the company is joint protection [from creditors] in the U.S. and Belgium."
However, Duerden added, L&H executives will now "consider every possibility that maximizes value for our shareholders and creditors." Officials at the beleaguered Belgium-based company previously said they hoped to avoid selling off some business units or liquidating it outright.
L&H, which is being investigated by the U.S. Securities and Exchange Commission because of questions about some of its reported sales, filed for Chapter 11 bankruptcy protection in the U.S. two weeks ago, after discovering that $100 million was missing from its South Korean subsidiary.
But a judge at a business court in Ieper, Belgium, shot down a similar request for protection last Friday. Yesterday, the same court approved a motion from a group of L&H shareholders to freeze the company's assets in order to forestall any liquidation attempt.
The request was filed to prevent the company from selling off any business units or using them as security for new loans, said Christian Van Buggenhout, an attorney who's representing the shareholders. "Our first concern is to preserve the current assets," he said. "We don't want to obstruct the company management, just avoid dangerous curves."
The Ieper court also appointed three officials -- an attorney, an accountant and an auditor -- to guard L&H's assets. Van Buggenhout acknowledged that the asset freeze may not have much effect in the U.S., where L&H has headquarters in Burlington, Mass. "But at least a couple more signatures will be required before any part of the company can be used as security for a loan," he said.
For the time being, Duerden said, L&H continues to operate under U.S. Chapter 11 guidelines and the presence of the three administrators in Belgium. He added that negotiations are being finalized with an investment banking firm to assist the company in dealing with financial and strategic plans.
