French Company Files Rare Bankruptcy Chapter

A French technology and media services company, Thompson SA, filed for the rare bankruptcy Chapter 15 protection in the U.S. The company is located in a Paris suburb.

The company supplies set top boxes and video production services to Hollywood film studios. The bankruptcy court papers state the company’s U.S assets were critical to its operations and value.

Half of the company’s revenue was generated from the U.S last year.

According to the Wall Street Journal, Thompson was negotiating deals earlier this year with its creditors in attempts to restructure its $3.8 billion debt.

Most creditors agreed to the reorganization plan but a few of them did not. Thompson then missed its deadline to reach a deal with creditors.

They were forced to file for “sauvegarde” which is the French equivalent to filing for Chapter 11 bankruptcy protection in the U.S.

But the company needed protection for their assets in France and the U.S. Thompson decided to file for Chapter 15 in the U.S bankruptcy court in order to protect the company’s assets.

Under Chapter 15, the company is requesting the bankruptcy court to recognize the U.S. as the “controlling” bankruptcy court during the proceedings.

If a U.S. Bankruptcy judge approves the Chapter 15, then the company can receive benefits of bankruptcy protection. Thompson also requested protection while waiting for the approval.

It was granted by U.S. Bankruptcy Judge Burton Lifland. He ordered protection on the company’s U.S assets pending the hearing. The hearing is scheduled for January 14 of 2010.

Thompson said the company is proposing a new plan based on terms that were agreed upon earlier in the year with their senior creditors. They also said if the reorganization is approved; they hope it will take them out of bankruptcy by February.

If two thirds of the creditors do not approve the reorganization, then the company will ask the French government to impose a “plan de sauvegarde.” This plan is set to reduce the number of employee layoffs and provide some protection for the company.

The company further claims that under that plan they could maintain their current debt and their repayment plans would be scheduled over the next 10 years. The interest rate would remain the same and not fluctuate over the repayment period.

Thompson said in the court papers that if the Chapter 15 bankruptcy is not approved then “Thompson and its creditors will be injured and its ability to complete sauvegarde will be jeopardized.” Even a potential Chapter 7 filing could be in the works if this plan doesn’t pan out.