Violin Memory files Chapter 11 bankruptcy to find buyer for assets

By Caroline Salls

Pittsburgh, Dec. 15 – Violin Memory, Inc. filed Chapter 11 bankruptcy on Dec. 14 in the U.S. Bankruptcy Court for the District of Delaware in order to complete a sale of substantially all of its assets.

The company said in a bid procedures motion filed with the court that it has not identified an initial or stalking horse bidder for its assets.

If a stalking horse bidder is ultimately selected, Violin Memory said it would pay that bidder a breakup fee of up to 3% of the purchase price and reimburse up to 2% of the bidder’s expenses if an alternative transaction is completed.

The company is asking the court to hold the bid procedures hearing by Jan. 6, set the bid deadline for 5 p.m. ET on Jan. 13 and schedule an auction and asset sale hearing for Jan. 17 and Jan. 20, respectively.

Violin Memory wants the sale to close by Jan. 23, according to the motion.

If the sale does not close within the proposed timeline, the company said it will not have sufficient cash to complete the process and may be forced to convert or dismiss the Chapter 11 case.

According to court documents, Violin Memory had $38.93 million in total assets and $145.5 million of total debt as of Oct. 31.

The company’s largest unsecured creditors are Wilmington Trust, NA of Minneapolis, with a $120.85 million claim for the company’s 4.25% convertible senior notes due Oct. 1, 2019; Forty Niners Football Co. LLC of Santa Clara, Calif., with a $14 million sponsorship agreement claim; Jefferies LLC of New York, with a $3 million professional services claim; GlobalLogic Inc. of San Jose, Calif., with a $1.2 million trade debt claim; and Aetna, based in Hartford, Conn., with a $1.14 million service contract claim.

Bruce H. Grant of Jupiter, Fla., owns 14.9% of the company’s shares, and Garden Growth Industries AB holds 12.6%.

The company is represented by Bayard, PA.

Santa Clara, Calif.-based Violin Memory develops and supplies computer data storage products. The Chapter 11 case number is 16-12782.

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