Eagle Computer said Wednesday that it has ended its two-year struggle for survival and will liquidate its assets to pay off debts totaling about $7.2 million. The decision came after Bank of America, Eagle's largest creditor, refused to approve a proposed reorganization plan.
Last month, Eagle filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. The decision to liquidate under Chapter 7 of the code followed what Gary Kappenman, Eagle's president and chief executive, called a fruitless series of offers and counteroffers between Eagle and Bank of America, to which Eagle owed $4.8 million.
Under the reorganization proposal, the bank would have accepted 22% of the company as payment of the debt. An investment group was prepared to provide Eagle with as much as $500,000 in return for a 40% interest in the company--but only if the bank approved the plan.
Kappenman said that the bank last week offered to forgive Eagle's debt in exchange for a $600,000 note and guarantees of protection against dilution of its holdings in the company. Eagle in turn offered stock and a $177,000 note--equal to the company's book value. That offer was turned down late Tuesday.