Bloomberg News

CDC Files for Bankruptcy With More Than $250 Million Debt

October 05, 2011

(Updates with company’s SEC filing in fourth paragraph.)

Oct. 5 (Bloomberg) -- CDC Corp., a maker of business- management software, sought bankruptcy protection from creditors, sending the stock down more than 50 percent.

CDC listed $377.4 million in assets and $250.2 million in debt as of June 30 in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Atlanta, where the company said it’s based.

A $65.4 million claim held by Evolution CDC SPV Ltd., its largest unsecured creditor, resulting from a judgment in a 2009 lawsuit, is disputed, the company said.

The company sought bankruptcy “to protect all creditors and the interests of shareholders, in light of the Sept. 8, 2011, judgment against the company,” it said in a filing today with the Securities and Exchange Commission. CDC will use the filing to “facilitate a restructuring, which is designed to restore the company to long-term financial health.”

Evolution sued CDC in December 2009 in New York State Supreme Court claiming it had properly redeemed CDC’s 3.75 percent notes and it was owed the principal of $41.2 million plus interest. The court ruled in favor of Evolution and awarded a judgment of $65.4 million.

“The company is currently considering all available options, including an appeal of this judgment,” it said in a Sept. 16 filing with the SEC.

CDC provides business-software applications and services, information-technology consulting and IT staffing, according to its website.

Online Games

The company is a leading developer of online games in China, pioneering the “free-to-play, pay-for-merchandise” online game model, which allows users to play the game for free while requiring them to pay for virtual items. It also operates, China.com, an Internet media company.

CDC, a holding company, and CDC Software have operations in Atlanta, according to an e-mail from James C. Cifelli, a lawyer representing the company in bankruptcy. The company’s worldwide headquarters are in Hong Kong.

CDC fell 45 cents, or 52 percent, to close at 42 cents in the Nasdaq Stock market trading. The shares have dropped 88 percent this year.

The case is In re CDC Corp., 11-79079, U.S. Bankruptcy Court, Northern District of Georgia (Atlanta).

--with assistance from Thom Weidlich in New York. Editors: Andrew Dunn, Stephen Farr

To contact the reporter on this story: Michael Bathon in Wilmington, Delaware, at mbathon@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.


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