PALO ALTO, Calif. – Investors in Pay By Touch are poised to seize control of the leading provider of fingerprint identification technology as lawsuits are swirling in federal bankruptcy court and the Chancery Court of Delaware, where the company is incorporated.
Plainfield Asset Management LLC has asked the Delaware court to award it four board seats–control of the seven-person panel–after the company, known legally as Solidus Networks Inc., failed to meet provisions of a financing agreement.
The privately held company’s troubles emerged publicly last week after three Pay By Touch employees filed an involuntary chapter 11 petition in U.S. Bankruptcy Court in San Francisco to force the company into bankruptcy. The filing was followed a day later by the personal bankruptcy filing of Pay By Touch founder and CEO John Rogers, who currently controls the board. Pay By Touch is the maker of a popular fingerprint reader used in supermarkets and convenience stores that connects shoppers with their credit union and bank accounts–without the use of a credit or debit card. Rogers founded Solidus in 2002 and has raised $300 million in debt and equity capital since then.
Plainfield has asked the bankruptcy court to declare Solidus/Pay By Touch in default on its debt covenants and allow it to appoint four directors.
