DENVER — Redback Networks Inc. made a long-anticipated filing for Chapter 11 bankruptcy in U.S. Bankruptcy Court in San Jose, Calif. on Monday (Nov. 3).
The filing was part of a reorganization plan announced in July.
Redback had attempted an out-of-court settlement from creditors and shareholders, but failed to reach a quorum, despite overwhelming support from those voting. Kevin DiNuccio, president and chief executive of Redback, said court approval of the plan "would remove existing debt of $467 million and reduce operating expenses by a third."
Redback opened its doors in the late 1990s, selling provisioning systems for DSL and cable TV headend networks. Its Subscriber Management System was popular with some carriers, but as competitive carriers crashed in 2000, Redback reinvented itself as an edge-router company with its SmartEdge product line. The move meant tougher competition against bigger rivals like Cisco Systems Inc. and Juniper Networks Inc. The company struggled to differentiate its products and many of its founders left the company.
On Oct. 27, Institutional Shareholder Services recommended its clients vote for the financial restructuring, setting the stage for a special meeting on Oct. 30, at which the company board voted to file for Chapter 11. Redback will retain all business operations during the bankruptcy, and has entered into a commitment letter for secured-debt financing of up to $25 million to fund sales, marketing and product development.
