Gizmondo Europe Files For Bankruptcy Re-Organization
Following its continued and highly publicized issues
, at the close of business on Friday January 20, 2006, Tiger Telematics subsidiary and handheld game hardware company Gizmondo Europe filed a High Court application for administration in the United Kingdom.
According to an SEC filing in the U.S., the application "provides Gizmondo Europe with a moratorium in order to affect a financial restructuring of the business." Gizmondo Europe will have a court hearing on 31 January 2006 to grant the administration order. During the interim period, Gizmondo Europe is immediately subject to protection of the Court and all enforcement actions of creditors are automatically stayed.
The statement also reveals significant layoffs at the company and the apparent funding of a bridge loan, commenting: "The Company intends to use funds from its recently announced $5 million bridge loan to reinvest in the business in the in UK and to restructure the overall debt of the European business. Gizmondo Europe Limited made a reduction in payroll of approximately 50% of monthly staff costs during the week prior to the court application to reduce overall operating expenses of the business and significantly improve its prospects for a successful turnaround."
However, the statement also revealed that Gizmondo Europe will continue to 'trade as normal', but "anticipates a similar action in Sweden for the game subsidiary of Gizmondo Europe and for the Company's Gizmondo Studios, Sweden AB subsidiary within the next few days." However, the limited operations and sales under its Gizmondo USA division will not be affected by this announcement.