Sungard files for bankruptcy for the second time in three years
Legacy IT firm unable to remedy its financial problems in the current economic climate
US tech firm Sungard Availability Services filed for bankruptcy on Monday, the second time the company has done so in just three years.
The filing was made in a Texas court with the company sitting on around $424 million of secure debt, according to Reuters.
In a statement, the firm said that it has reduced its debts by more than $800 million during its 2019 bankruptcy, but it did not manage to deal with "challenges inherent to the company's operating structure". These, it said, included "burdensome" leases and underused office space.
CEO Michael Robinson said the company's latest financial ills were driven by the pandemic and lower demand for certain workplace centric services due to the rise in remote working. He also cited "other macroeconomic trends" such as delayed customer spending decisions, insourcing and reductions in IT spending. He also noted that inflation in energy prices had contributed to its plight, with its UK branch taking a hit due to the energy price rises caused by Russia's invasion of Ukraine.
"Over the past three years, we've made significant network, product, and infrastructure investments which are being well-received by customers and gaining significant traction," said Robinson. "We believe the chapter 11 process is a right and critical step forward for the future of our business and our stakeholders."
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The company is based in Pennsylvania and sells software and services to education, financial services, and public sector organisations. The firm was formed in 1983 when the Sun Oil Company spun off its computer division. Since that time, it has been acquired by various private equity firms, but its profits have steadily declined for years.
Its current leadership is considering options for a sale of its assets or converting its existing debt into equity. The firm has around $5 million in cash, according to court papers, and it has also lined up a $95 million bank loan to fund operations while it undergoes bankruptcy.
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