BearingPoint files for bankruptcy
The management and technology adviser that consults with government agencies files for Chapter 11 under a heavy debt load.
NEW YORK (Reuters) -- BearingPoint Inc, which provides technology and management consulting services to the U.S. government, filed for Chapter 11 bankruptcy Wednesday and said it reached an agreement with senior secured lenders to cut its debt load.
The McLean, Virginia-based company, which began as the consulting arm of KPMG LLP and later struggled with accounting problems and a U.S. Securities and Exchange Commission probe, has been laboring under heavy debt exacerbated by an acquisition spree between 1999 and 2002.
Existing and new clients began to shy away from doing business with the company as concern about its ability to pay its debt obligations mounted, according to court filings.
BearingPoint made its bankruptcy filing with a prearranged restructuring plan so the process can be completed on an accelerated basis, it said. Overseas operations were not included in the filing.
Current management and board members will stay in place, said a spokesman.
It was not immediately clear if any job cuts would be necessary.
"The company plans to operate business as usual," said a spokesman. "Our staffing will be based on the needs of our business and the needs of our clients."
The spokesman declined to comment further on the topic.
BearingPoint's clients include 15 U.S. federal cabinet level-departments, 23 U.S. states and all of the top 10 global drug and biotechnology companies. It employs about 15,200 people.
As part of the prearranged plan, a $500 million senior secured credit facility will be replaced with a new secured, senior credit facility. New preferred stock will be issued, unsecured debt will be exchanged for different classes of common stock and all existing shares will be canceled.
As of September, assets were about $1.76 billion and liabilities were about $2.23 billion, according to court documents.
The company began as the consulting arm of KPMG, with the accounting firm creating a distinct business unit for those consulting services in 1997.
It was later spun off from KPMG and BearingPoint Inc (BGPT) began trading on the New York Stock Exchange in 2002.
Between 1999 and 2002, the company took on debt to make various acquisitions.
The company later delayed filing its annual financial reports as it worked to establish internal controls. Corporate expenses rose, due to accounting and audit costs. The company also took charges related to the decline in fair value for some of its reporting units.