Internet Consultant MarchFirst Files for Bankruptcy Protection

Baldwin Louie — Thu, 12 Apr 2001 15:00:00 -0700

CHICAGO -- Cash-strapped Internet consultant MarchFirst Inc., which last week announced plans to cut 30% of its work force, Thursday filed for Chapter 11 bankruptcy protection from creditors after several attempts to restructure its operations failed.

The company listed $789.3 million in assets and $427.5 million in liabilities as of Dec. 31. MarchFirst (MRCH) had been facing liquidity problems since last fall, when the Internet-consulting sector turned sour.

The company has been actively trying to sell its business units. Earlier Thursday, software consultant Divine Inc. closed the acquisition of certain MarchFirst offices and assets. Divine paid $6.25 million at closing, and MarchFirst will receive an additional $29.75 million note payable over not more than five years and up to an additional $16 million payable over five years depending on the performance of the acquired operations.

Divine -- which cherry-picked some of MarchFirst's assets last month -- agreed to hire 2,100 employees in 19 to 20 U.S. offices and received $130 million in MarchFirst account receivables from a separate acquisition closed on last week. In that deal, Divine paid $6.25 million at closing, and MarchFirst will receive an additional $27.75 million note payable over not more than five years. MarchFirst can also receive up to an additional $39 million payable over five years, depending on the acquired assets' performance.

Last week, MarchFirst said it would lay off 1,700 people.

Early Thursday, the Nasdaq Stock Market halted trading on MarchFirst before regular trading began. On Wednesday, the company's shares nearly tripled, surging 20 cents to 31 cents. The stock reached a 52-week high of $27.19 a year earlier and a 52-week low of three cents last week. The stock traded above $80 in December 1999.

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Internet Consultant MarchFirst Files for Bankruptcy Protection