Alvarion, a maker of wireless broadband equipment whose roots go back more than two decades, appeared to be giving up its struggle for survival after its board of directors said on Sunday it wouldn’t fight a creditor’s petition for a wind-up order.
“The company’s board of directors has decided not to object to the request submitted by Silicon Valley Bank to the District Court of Tel-Aviv Jaffa for the enforcement of liens registered in connection with a loan extended by SVB to the company, and for the appointment of a receiver to enforce such liens,” the company said in a terse statement issued Sunday.
The financially troubled company, moved close to the brink over the weekend after the California-based lender sought to name a receiver − this after Alvarion failed to repay all of a $30 million loan extended to the company in 2011 to finance its acquisition of a company called Wavion.
Claiming Alvarion owes them NIS 7 million, a group of 40 employees on Sunday asked the same court to dissolve the company as well. R.H. Technologies, an Alvarion supplier located in Upper Nazareth that claims the company owes it $3 million, also joined the request for its liquidation.
Judge Eitan Orenstin scheduled a court hearing for Monday.
Trading in Alvarion shares was suspended by the Tel Aviv Stock Exchange on Sunday after the price, which has plunged 90% since the beginning of the year, dropped another 23% to NIS 1.62. At its peak, the company employed 1,000 people and traded at a market capi of NIS 4 billion.
In its petition, SVB claimed that Alvarion had failed to meet repayment of some $3.2 million, which it asserts the company can’t repay, rendering the company insolvent. Alvarion had provided the bank security on the loan in the form of its own stock, accounts receivable, intellectual property, bonds including liens on its assets, goodwill and other securities and rights.
Meanwhile, the employees claimed that the company owed them back pay for the July salaries due them plus other payments and social benefits. They said they were told by CEO Assaf Katan on Thursday that the company’s debts to creditors, aside from employers, amount to over $11 million.
The company instituted several rounds of layoffs involving hundreds of workers, cutting its workforce by two-thirds by the end of 2012 and selling off its patents in an attempt to shore up the balance sheet. Nevertheless, Alvarion’s cash shrunk to $3.5 million at the end of the first quarter.
The employees claim the company has accumulated $389 million in losses, laying blame on frequent turnover of top management, including four CEOs since 2009. Alvarion also owes over $200,000 in back taxes in the United States.