PracticeConsultingL&H bankruptcy follows KPMG probe

L&H bankruptcy follows KPMG probe

A beleaguered Belgian software company yesterday filed a Chapter 11 petition for reorganisation protection under the US bankruptcy code, following an investigation by KPMG that uncovered accounting irregularities.

In a statement, speech recognition specialist Lernout & Hauspie said filing for Chapter 11 should enable it to address its ‘past problems’, which include two investigations into its accounts and two lawsuits by US companies.

L&H has a debt of more than $430m, money borrowed from a consortium major banks for the acquisition of US company Dictaphone – a deal completed in May of this year. The Belgian banking and finance commission is currently investigating this loan.

‘After an intensive analysis of L&H’s world-wide business operations and a careful assessment of its financial position we concluded that a voluntary reorganisation filing is both prudent and necessary to preserve and rebuild our valuable customer base and technology assets,’ said chief executive officer John Duerden.

KPMG Bedrijfsrevisoren was called in to look at the company’s accounts in August following US newspaper reports of discrepancies in the results of L&H’s Korean subsidiary, a charge the company vehemently denied at the time. In addition the US Securities and Exchange Commission also launched an inquiry into L&H’s financial statements.

And in a statement in November, L&H said that as a result of certain errors and irregularities identified in KPMG’s inquiry, it would restate its financial statements for the periods 1998, 1999 and for the first half of 2000.

It has since admitted that there was ‘a very significant shortfall on the balance sheet of the Korean subsidiary’.

Last week, the company dismissed L&H Korea president and general manager Joo Chul Seo. At the same time Pol Hauspie, founder, co-chair and managing director, Nico Willaert, managing director and Gaston Bastiaens, former CEO and president – resigned.

The departures followed the suspension of L&H’s shares on Nasdaq and Easdaq pending results of numerous investigations. The suspension came as shares traded 95% below their March highs.

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Lernout & Hauspie goes into Chapter 11

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