September 5, 2023
IronNet‘s liquidity issues are forcing the company to furlough nearly all of its remaining employees and substantially curtail business operations.
In the meantime, its board of directors is evaluating its strategic alternatives, including bankruptcy protection.
IronNet disclosed its plan in a U.S. Securities and Exchange Commission (SEC) filing by president and chief financial officer Cameron Pforr. The threat detection provider has just over 100 employees.
IronNet will rehire a portion of the furloughed workers and resume business operations when it has sufficient operating liquidity.
“During the furlough, however, the company retained several employees to ensure there were no service interruptions,” Pforr said. “As a result of the furlough, the company may lose customers, which would have a material adverse impact on the company’s business, results of operations and financial condition. The board of directors of the company is continuing to evaluate strategic alternatives, including potentially seeking bankruptcy protection.”
We couldn’t reach IronNet for comment on how this plan will affect partners.
Keep up with our telecom-IT layoff tracker to see which companies are cutting jobs and the ensuing channel impact.
IronNet Defaults on Current Debt
The furlough and related cessation of business operations constitute events of default under the terms of the company’s borrowing.
Last fall, IronNet cut nearly 90 employees, or 35%, of its workforce, and co-CEO William Welch and CFO James Gerber left the company.
IronNet’s Cameron Pfoor
“The company currently does not have the ability to satisfy its debts and related obligations, including with respect to any current or future defaults under the outstanding indebtedness,” Pforr said.
Should additional sources of liquidity not become available, IronNet may need to file a voluntary petition for relief under the U.S. Bankruptcy Code in order to implement a plan of reorganization, court-supervised sale and/or liquidation.
If IronNet is unable to pursue chapter 11 bankruptcy, it may need to file chapter 7, in which a trustee would be appointed or elected to liquidate the company’s assets for distribution, Pforr said.
“In the event that the company pursues bankruptcy protection under chapter 7, the company’s material business activities will cease, and the company will no longer have the capability to prepare financial statements and other disclosures required for periodic reports for filing with the SEC,” he said. “The company expects that no distributions would be available for stockholders in a chapter 7 liquidation.”
C5 Capital and its partners have provided IronNet’s board with a term sheet to fund the company’s restructuring. In addition, C5 Capital gave IronNet $300,000 on Aug. 29. It also provided a $1 million note for further bridge financing of the company. C5 Capital and its partners are the sole funders of IronNet since January. In all, C5 Capital has provided nearly $15.2 million in financing to IronNet.
Last month, IronNet’s stock was delisted from the New York Stock Exchange after the company was notified it wasn’t in compliance for continued listing.
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