Belgian speech-technology firm Lernout & Hauspie (LH) came a step closer to insolvency Friday when a local court rejected its request for bankruptcy protection.
"The company presented no restructuring plan. The court can't grant bankruptcy protection without such a plan," said Jean-Marie Coppens, the public prosecutor at L&H's local court in Leper, Belgium.
L&H declined to comment, as did the five banks that have loaned the most to the company. These include Deutsche Bank, Dresdner Bank and Fortis Bank.
$400million loan The banks loaned L&H $400 million in May to help it acquire Dictaphone.
"The banks have declared that L&H should pay back its loans as soon as possible. Nothing has changed," said an official in one of the banks who requested anonymity.
The L&H board is deciding whether to re-submit its request to the court with a full restructuring plan and full audited figures, or to admit insolvency, which would lead to the liquidation of the company. Public prosecutor Coppens said the court would consider another request as long as it was accompanied by a feasible restructuring plan.
The US Securities and Exchange Commission is investigating L&H's accounting practices in South Korea, where the company recently discovered "a very significant cash shortfall" on the balance sheet. This was also cited as a reason for seeking bankruptcy protection.
L&H stock is quoted on Nasdaq and its European counterpart Easdaq. It has fallen about 90 per cent since March when its market value peaked at about $10 billion.