A Georgia bankruptcy judge on Tuesday approved CDC Corp.'s sale of its 87 percent stake in CDC Software Inc. to Vista Equity Partners affiliate Archipelago Holdings Inc. for nearly $250 million.
In an order giving CDC the go-ahead, U.S. Bankruptcy Judge Paul W. Bonapfel determined the $10.50-a-share sale to Archipelago was fair and reasonable, and acknowledged the necessity for the sale to be closed as soon as possible.
"Notwithstanding any requirement for approval or consent by any person, the transfer of the CDC Software shares to the purchaser is a legal, valid and effective transfer of the debtor's right, title and interest in the CDC Software shares to the purchaser," the order said.
The bankrupt software firm and Archipelago reached a deal on Feb. 1. The judge agreed with CDC's assessment of the sale as being in the best interest of its estate and the best option to provide recovery for CDC's creditors.
"At this point we're just looking forward to closing," CDC attorney Gregory D. Ellis of Lamberth Cifelli Stokes Ellis & Nason PA said. The deal is expected to close in early April.
An attorney for Archipelago declined to comment Tuesday.
CDC filed for bankruptcy in October to "protect" its creditors and shareholders from a New York state court ruling ordering it to pay almost $65.4 million to Evolution CDC SPV Ltd., its largest unsecured creditor, in a dispute over CDC's failed initial public offering.
In a U.S. Securities and Exchange Commission filing, China-based CDC said it was filing for Chapter 11 in response to the judgment in its ongoing battle with Evolution over $41.2 million in convertible notes it had bought from CDC in 2009.
The dispute with Evolution arose after the hedge fund purchased the notes in 2006 in anticipation of CDC's IPO, which didn't pan out.
Evolution then said that because the IPO didn't happen, CDC had to pay a 12.5 percent interest rate on the notes, as opposed to the 3.25 percent it had been paying.
New York Supreme Court Judge Charles E. Ramos agreed with the hedge fund in August, ordering CDC to repay the $41.2 million principal, along with 12.5 percent interest retroactively from November 2006 to December 2009, and an additional 18 percent interest from December 2009 to whenever CDC had repaid the amount, according to court documents.
The total amount came to $65.4 million as of Aug. 3, according to the decision.
Archipelago is represented by David A. Breach and Stuart E. Casillas of Kirkland & Ellis LLP.
CDC is represented by James C. Cifelli and Gregory D. Ellis of Lamberth Cifelli Stokes Ellis & Nason PA.
The case is In re: CDC Corp., case number 1:11-bk-79079, in the U.S. Bankruptcy Court for the Northern District of Georgia.
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