A major Markham, Ont.-based networking integrator and service provider, is bleeding cash and has filed for court protection to avoid bankruptcy.
Cygnal Technologies Corp., which designs, installs and maintains corporate networks, announced this week it has asked Ontario Supreme Court of Justice for protection from creditors under the Companies’ Creditors Arrangement Act.
The company, which recently lost its chief financial officer, announced it obtained an order to “initiate a court-supervised restructuring.” Though no details of the court order were released, the company had requested that Laurus Master Fund Ltd., which in June loaned the company US$2 million, be ordered to provide an additional $7.4 million in “debtor-in-possession” financing. It has also asked for a 30-day “stay period,” during which it will not be required to pay any creditors.
Cygnal says the $7.4 million requested from Laurus is “expected” to provide “adequate liquidity” to fund its operations.
The company installs voice, video and data networks, using wired and wireless technologies, in Canadian corporations.
On Nov. 14, Cygnal stated it was filing for court protection because it faces a “serious liquidity issue” due in part to loans borrowed at a high interest rate. Cygnal reported a loss of $1.1 million for the second quarter of 2007, with a total loss of $3.6 million during the first six months of 2007. At the end of June, its long-term debt was more than $10 million. It has not published financial results for the third quarter and does not expect to do so until next month.