OCZ Technology Group, Inc., a vendor of solid state drives (SSDs) for computing devices and systems that competes with Seagate and Western Digital, has filed for bankruptcy.
The company, based in San Jose, Calif., received notices that Hercules Technology Growth Capital, Inc. took exclusive control of the OCZ’s depository accounts at Silicon Valley Bank and Wells Fargo Bank, National Association.
In the company’s recent SEC filings, Hercules and the OCZ are parties to a loan and security agreement. This agreement, according to OCZ, is not in compliance with certain of the operating ratios and covenants in the loan agreement. As a result, the depository institutions disbursed the cash in the company’s respective accounts to accounts under the control of Hercules.
There is a bright spot of sorts. OCZ received an offer from Toshiba Corp. to acquire substantially all of the assets in a bankruptcy proceeding. The parties have substantially completed negotiations on an asset purchase agreement and OCZ believes that all the material terms have been agreed to.
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The agreement is subject to various conditions: the preservation of the value of the business, including the retention of employees, the negotiation and execution of definitive documentation, the filing of bankruptcy petitions by the company and certain of its subsidiaries, Toshiba’s offer being accepted by the bankruptcy court as the highest and best offer under the circumstances after an auction process conducted under the relevant provisions of the United States Bankruptcy Code, and other customary closing conditions. OCZ expects to file a petition for bankruptcy shortly after completing final documentation with Toshiba and Hercules, and to conduct the court-supervised auction process to attempt to maximize the value of the company’s assets and operations in an orderly process.
Its also important to note that if OCZ is not able to agree to final documentation with Toshiba, then look for it to imminently file a petition for bankruptcy and liquidate.
This is sad tale of the 10-year old company who was one of the first to introduce solid state drives along with personal power and cooling units.