MiniScribe Corporation

Situation

MiniScribe Corporation, a $600 million disk drive manufacturer had funded its rapid growth over several years with bank and public debt. The former management was replaced in an attempt to correct the company’s operating difficulties, after which new management uncovered fraudulent activities, attempted to deal with class action lawsuits, and began to experience a cash crisis. MiniScribe was forced to file for bankruptcy, and announced that because of its desperate cash situation, the company would be sold quickly.

Engagement

Maxtor Corporation, a major disk drive manufacturer, engaged Gordian Group to advise it in acquiring MiniScribe. Gordian Group assisted Maxtor in assessing MiniScribe’s business values, structuring a bid and negotiating with creditors. As part of its assignment, Gordian Group was required to recreate financial data, because reliable historical financial statements were not available, given the company’s prior fraudulent activities.

Outcome

A substantial portion of MiniScribe’s assets were in Hong Kong and Singapore, and hence, outside of the U.S. bankruptcy court’s jurisdiction. Gordian Group worked with Maxtor and the bank to devise a mechanism for foreclosure of the offshore assets and subsequent sale to Maxtor.