Toronto-based Frontline Technologies Inc. (TSXV:FLC), a provider of technology-based equity and options trading services, is restructuring under the Bankruptcy and Insolvency Act (BIA), the company said Wednesday.
The company says it started restructuring proceedings after considering all viable alternatives with its advisors. Frontline says it made this decision with the unanimous approval of its board of directors.
Frontline has been granted BIA protection for an initial period of 30 days, expiring on Jan. 10, 2013. While under protection, creditors and others are stayed from enforcing any rights against the firm, giving it the opportunity to pursue restructuring alternatives.
Frontline Technologies’ subsidiary, Frontline Technologies Corp., which offers IT infrastructure support and managed services, has also filed a notice to make a proposal under the BIA. The subsidiary’s normal day-to-day IT infrastructure operations are expected to continue without interruption.
Frontline says its liquidity position has deteriorated as a result of various factors, including, negative cash flow from operations, an inability to secure additional sources of financing and increasing pressure to make payments to its creditors.
The company says the restructuring proceedings will allow it to deal decisively with its cost and debt burdens and to narrow its strategic focus in an effective and timely manner.
Frontline has developed a plan to wind-down its trading platform business while it transitions its customers on an expedited basis to new service providers. The wind down process may include speaking to parties interested in acquiring the trading platform business.
Duff & Phelps Canada Restructuring Inc. has been appointed as trustee that will monitor the ongoing operations of Frontline Technologies and of the subsidiary while under BIA protection.