Phoenix Payment Systems Inc., a processor of credit card and electronic check transactions, sought bankruptcy protection from creditors saying it plans to sell the company to a North American Bancard LLC unit or a higher bidder.
The company cited as much as $50 million each in assets and debts in Chapter 11 papers filed today in U.S. Bankruptcy Court in Wilmington, Delaware.
“The sale is somewhat unusual” because it will “pay all undisputed creditors in full” and make “significant distributions” to equity holders, Chief Restructuring Officer Michael Jacoby said in court papers.
The company, with offices in Wilmington and Phoenix, plans an initial “stalking horse” bid of $50 million and will ask the court to approve a working loan of as much as $5 million, according to filings.
Phoenix expects to process 400 million transactions this year using its proprietary software.
The company, founded in 2004, “has been cash-flow insolvent since at least December,” has defaulted on some obligations, and has been unable to pay litigation judgments and legal costs, Jacoby said.
The case is In re: Phoenix Payment Systems Inc., 14-bk-11848, U.S. Bankruptcy Court, District of Delaware (Wilmington).