News : Fate of the Sydney's ServiCom Call Centre to be Decided in Bankruptcy Court
Sydney, NS, Canada, Dec, 2018 -- A feverish negotiation process, a collapse in talks and the shutdown of all call centre operations marked the final days of business at ServiCom Canada Ltd. in Sydney and related companies less than two weeks ago.
Documents filed in U.S. bankruptcy court in New Haven, Conn., last Thursday detail the search for a new buyer throughout late October and into November and the courting process undertaken between ServiCom’s parent company JNET Communications and potential new owner Marlowe Companies Inc. (MCI) of Iowa City, Iowa.
An offer negotiated between ServiCom and Marlowe to purchase the call centre’s assets will go before a bankruptcy court judge for approval.
But it was last month when investment bank TrueNorth Capital Partners LLC sought to find a potential buyer for JNET’s assets. What followed was several companies kicking tires on a corporation founded in 2003 by former Comcast senior executive David Jefferson that has, since then, found itself deep in debt.
MCI chief executive Anthony Marlowe’s offer came to the forefront as it was interested in "purchasing substantially all of the debtors’ assets," according to the motion filed before the court. A new entity called MCI Canada continued negotiations over a period of a few weeks with JNET and ServiCom officials.
According to documents, it was the intention of JNET to keep the company operating through the sale process. However, the company’s cash flow became so dire by Dec. 3 it requested MCI Canada to provide debtor-in-possession financing.
On the same day, JNET’s factoring company, Coral Capital Solutions, which regularly purchased the company’s receivables at a discount in order for JNET and its companies to have enough money to make payroll, refused to "fund any further purchases of receivables or to release reserves otherwise due under the Factoring Agreement, while it … negotiated terms affecting it related to MCI Canada’s proposed purchase of substantially all of the debtors’ assets and evaluated the debtors’ pressing cash needs."
Sponsor message - content continues below this message
Employee Engagement Awards NOW OPEN!
Enter your center,and compete for this prestigious award to attract new staff and show investors and customers you are #1 in your nation!!
Content continues ….
ServiCom Canada was due to pay its staff on Tuesday, Dec. 4, as part of an altered pay schedule established in the weeks following the Chapter 11 filing. But the lack of cash on hand forced further late-night negotiations between MCI Canada and Coral Capital on Dec. 5.
In his motion of sale of its call centre contracts, ServiCom lawyer Stephen Kindseth said Coral Capital "declined to provide its good faith assurance that it would continue to fund the debtors under its factoring agreement and the proposed (debtor-in-possession) loan budget to ensure the debtors could meet payroll obligations and continue operations through the date of sale closing with MCI Canada."
ServiCom informed the court of the impasse on Dec. 6, and, in the few hours that followed, its two call centres in Sydney and Machesney Park, Ill., were shut down immediately, throwing hundreds of people out of work.
Kindseth said an attempt was started right away to restructure the transaction with MCI Canada "in the hopes of generating sufficient proceeds to make a meaningful distribution to its former employees on account of their unpaid postpetition payroll."
ServiCom also sought to sell whatever assets it could in an effort to rehire many of the company’s former employees as soon as possible.
What is hindering the ability to pay employees is the fact the call centre did not own real estate and leased the bulk of its equipment and furnishings.
With no tangible assets, ServiCom’s only "real value" is the business that arises from its contracts. Another aspect, according to Kindseth, has been Canadian law that protect workers’ pay in cases of bankruptcy, making it difficult to transfer the assets to employees clear of liens in a timely manner.
Out of all of this, ServiCom officials managed to negotiate ta purchase price with MCI Canada, which included a "breakup fee," to be paid by ServiCom to MCI for the effort in money and other resources it expended in reaching a deal over the past several weeks.
The motion for sale is subject to "higher and better offers" if one is presented to the court.
Coral Capital also approves of the sale to MCI Canada.
U.S. bankruptcy court Judge Ann Nevins will make a decision on what happens next.
It’s expected Kindseth will ask the court to waive the 14-day waiting period in order to expedite the deal.
Company officials have indicated they want MCI Canada to reopen the Sydney call centre next week.
Posted by Veronica Silva Cusi, news correspondent
Today's Tip of the Day - Consistent Channel Strategy
More Editorial From Servicom, LLC
Published: Friday, December 21, 2018
LanguageLine Solutions offers language access solutions, over-the-phone, video remote, and onsite interpreting, translation and localization, as well as interpreter and bilingual staff training and as...
Semafone provides secure voice transactions for contact centres and retailers taking Cardholder Not Present (CNP) payments. The solution allows a call - and the call recording - to continue as normal ...
Cisco provides Unified Customer Contact solutions that extend customer care beyond simple phone transactions and the traditional contact centre to unique content-rich customer centric experiences. The...
|Amazon Web Services|
Amazon Web Services is a collection of remote computing services that together make up a cloud computing platform, offered over the Internet by Amazon.com. The most central and well-known of these ser...