07.13.2003 05:18 PM
MCSi Files For Bankruptcy Protection
Audiovisual equipment and services provider MCSi filed for Chapter 11 bankruptcy protection in early June. The company has been plagued by a series of problems, including a Securities and Exchange Commission investigation, shareholder lawsuits, and removal from the Nasdaq. As of press time, it was engaged in negotiating a restructuring plan with its lenders.
MCSi, whose broadcast clients include, among others, Fox Sports Net, Georgia Public TV (The Weather Channel), iBeam, Turner Broadcasting System, Inc.-Turner Studios, and World Championship Wrestling, reported a net loss of $222 million for 2002. Its shares fell more than 70% during that time as well, closing at 6 cents when they were removed from the Nasdaq in April. The SEC sued ClearOne Communications, an MCSi supplier, in January, claiming the company had inflated revenue, income, and accounts receivable by shipping unsold merchandise to distributors and resellers, including MCSi, and reporting it as sold. Several shareholders filed lawsuits against MCSi after the SEC initiated the lawsuit. The SEC also investigated MCSi’s accounting practices.
The company expects to conduct business as usual during the reorganization. Employees will continue to receive wages, and vendors will be paid for post-petition goods and services.