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This article appears in the Sept. 3, 2009, edition of ISO&Agent Weekly.
Cynergy Data LLC Tuesday announced it has initiated Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court in Delaware and is pursuing the sale of its assets, according to the New York-based merchant-service provider.
Cynergy Data has entered into an asset-purchase agreement with stalking-horse bidder Cynergy Holdings LLC, an affiliate of private-investment firm The ComVest Group. A stalking-horse bidder in bankruptcy proceedings is a company the debtor solicits to submit the first bid. The asset sale is subject to an auction and court approval, states Cynergy Data.
By selling its assets, Cynergy Data expects to enable the sale of the business to ComVest or a higher bidder, according to Cynergy Data, which also expects the sale process to conclude within 90 days.
The Chapter 11 filing prohibits the commencement or continuation of lawsuits against Cynergy Data and prohibits its creditors from taking actions against the company's assets during its reorganization, according to the company.
The merchant-service provider does not anticipate service interruptions during the restructuring and sale processes. "The company plans to conduct business as usual through the process and has asked for court approval to continue paying vendors, employees, ISOs and merchants," states the company.
Cynergy Data's ISO partners are "very important," and the company has taken "a number of steps, including obtaining adequate financing, to ensure that we're in a position to continue servicing them in the manner they've come to know and expect," says Cynergy Data CEO Marcelo Paladini. "We expect to emerge from this process as a new company with a much stronger financial position focused on" providing products and services to merchants and the company's ISO partners, he says.
In a letter to the payments industry, Cynergy Data noted it has faced such recent challenging circumstances as the difficult economy and an unsustainable debt load.
West Palm Beach, Fla.-based ComVest also has majority control over processor Pipeline Data Inc.
