DON BAUDER
Chapter 7 closes the book on Coded Communications
DON BAUDER
Union-Tribune library researcher Anne Magill contributed to this column.
24-Feb-1999 Wednesday
Carlsbad's Coded Communications, once a promising wireless communications
company, was put into Chapter 7 bankruptcy liquidation yesterday in
Wilmington, Delaware.
The company had filed for Chapter 11 reorganization in December, seeking
recapitalization, but then abruptly closed down operations one week ago. It
left a recorded phone message saying that it and a subsidiary, Decom
Systems, were going out of business.
Late yesterday in U.S. Bankruptcy Court in Wilmington, all the Coded
operations, including Decom, were put into Chapter 7, according to
Wilmington attorney Steven Spence.
Thirty people in San Diego and four in Florida lost their jobs, but
employment had been dwindling for some time. In April 1995, the financially
ailing company laid off almost half of its 128 employees.
The Chapter 7 filing "was a result of our inability to continue with the
consent of creditors to operate," says Spence. A Texas-based lender,
Renaissance Capital Partners, "objected to continued use of cash
collateral. We were using existing cash and accounts receivables, but they
claimed to have a lien on them."
When Coded filed for Chapter 11 in December, it said it had more than $1
million in orders. They will not be filled for lack of money, says Spence.
He does not know the value of assets. "We expect there will be interest on
the part of various parties to at least consider purchasing intellectual
property assets," he says. Also, there are opportunities for companies to
service the Coded systems that are already in place.
The company, founded in 1971, produced wireless communications equipment
and systems used by police forces, trucking companies and the like. Through
the company's equipment, a dispatcher would know the exact position of
every vehicle in a fleet; each driver would also know his or her position
in relation to others.
Police officers in the field could access critical government information
through the system. Fire departments could incorporate map graphics into
the Coded operation.
Decom Systems made aerospace telecommunications equipment.
In 1994, Coded's stock was delisted by Nasdaq. However, the company kept
assuring investors that new capitalization was right around the corner. A
massive tax-loss carryforward buoyed the stock somewhat during the period.
The next year, Coded announced a widespread restructuring, the closing of
most foreign offices and massive layoffs.
In 1996, Mexico-based Grupo ISA bought 78 percent of the company's stock
and assumed control. The company then got some significant orders in
Mexico.
In February of last year, chief executive Gary Luick left the company. He
was replaced by Hugo Camou, chairman of Grupo ISA. Camou's assistant,
Fernando Pliego, became executive vice president of administration.
In August of last year, the company reported that through the year's first
half, it had lost $3.4 million on sales of less than that, or $3 million,
down from $7 million a year earlier.
However, Pliego said then that the poor results reflected "previous
marketing and operating strategies that did not produce results in the
expected time frame." He went on to predict that Coded would "experience a
high rate of growth over the next three years."
However, by December, "the only engineers bright enough to understand their
systems were long gone," says a San Diegan who was close to the company.
As of yesterday, Grupo ISA still had the majority of the stock, says
Spence.
Camou, Pliego and Luick could not be reached for comment.
Union-Tribune library researcher Anne Magill contributed to this column.
Don Bauder's e-mail address is don.bauder@uniontrib.com |
