Asset Liquidation Signals End of San Diego’s Verari Systems
When San Diego tech firm Verari Systems abruptly laid off nearly all of its employees last month, senior vice president Dan Gatti maintained that the doors remained open, a few executives were staying on, and the company was restructuring its business. In a Dec. 14 statement posted on Verari’s website, the company said it had initiated a process to protect “our customer investment and benefit our creditors as we restructure the business…There are several options that are being considered to provide solutions to our customers.”
Several former employees denounced the company’s line in e-mails to me and in comments posted beneath our story, saying all 200 employees were terminated Dec. 11 and Verari, which specializes in data storage hardware and green data storage centers, has no business left to restructure.
It now appears that Verari has indeed ceased operations. An advertisement on its website is soliciting offers for an asset sale, saying, “All assets will be sold by CMA (Credit Management Association) as assignee for the benefit of creditors.” Such language reflects a well-established tool that is an alternative to bankruptcy for insolvent companies that cannot continue to operate. A rough translation is that Verari pledged its blade-based computers and other equipment to secure a bank loan—and the banker is selling the assets to recoup the debt. The deadline for submitting bids was 5 p.m. yesterday.
The CMA representative handling Verari’s asset sale did not return my call. The Burbank, CA-based company explains on its website that secured creditors view the process known as a “general assignment for the benefit of creditors” as useful “because the secured creditor is relieved of the legal costs and risks associated with the foreclosure and sale of its collateral.”
It seems likely that Verari’s insistence on characterizing its shutdown as a restructuring was intended to assuage customers that have installed Verari’s data storage equipment and who might reasonably expect some level of continued technical support. Those customers include Akamai, Microsoft, Qualcomm, Petrobas, Harris, and Lockheed-Martin.