COVID-19, Delayed Spending, More, Lead to 2nd Sungard AS Bankruptcy

Sungard Availability Services has filed bankruptcy. Again.

This marks the second time in three years the cloud services provider — which specializes in DRaaS, data center, colocation and more — has gone into Chapter 11. In 2019, Sungard AS cited the need to reduce its debt by nearly $800 million. This time, the vendor said a variety of different factors led to the new bankruptcy round.

Sungard AS’ Mike Robinson

“Like many companies, our business has been affected by challenges in our capital structure, driven by the global COVID-19 pandemic and other macroeconomic trends including delayed customer spending decisions, insourcing and reductions in IT spending, energy inflation, and reduction in demand for certain services,” Mike Robinson, CEO and president of Sungard AS, said in a prepared statement.

(The last time Sungard AS emerged from bankruptcy, Robinson replaced then-CEO Andrew Stern. Robinson previously led Broadview Networks.)

Robinson called the new Chapter 11 process “a right and critical step forward for the future of our business and our stakeholders.”

Sungard AS did not shy away from the specter of its recent other bankruptcy. While that effort successfully reduced the company’s long-term debt, the company said in a press release, it did not fix operating structure problems — namely, expensive leases and underused space.

“The business has been working to address these cost challenges over the last three years,” Sungard AS said. “Recent factors have resulted in the company’s decision to accelerate addressing the company’s cost structure in the U.S. for the overall financial stability of Sungard AS’s global operations.”

How Will the Sungard AS Bankruptcy Impact the Channel?

Channel Futures had reached out to Sungard AS for comment about the bankruptcy’s expected impact on channel partners this time around; we didn’t hear back by time of publication. Three years ago, the company told us that restructuring would not affect partners. Reading between the lines of the April 11, 2022, press release, it appears little, if anything, will change when it comes to Sungard AS’ operations, which should include the channel.

That’s because Sungard AS said it secured $7 million in bridge financing before filing chapter 11. That funding will “support [Sungard AS’] ordinary course operations” during bankruptcy, the company said. In addition, some of its secured lenders have committed to providing up to $95.3 million in new money. Due to those infusions, Sungard AS said it “intends to meet its financial obligations, including paying suppliers in the normal course of business for goods and services delivered from today forward.”

Sungard AS further said it has filed the typical legal motions indicating it will “honor its ongoing commitments to employees and customers. As such, Sungard AS will continue to operate in the normal course of business, including delivering the high levels of service its customers expect.”

Robinson, in a prepared statement, sounded optimistic about Sungard AS’ prospects post-chapter 11.

“Over the past three years, we’ve made significant network, product and infrastructure investments, which are being well-received by customers and gaining significant traction,” he said.

Sungard AS filed for bankruptcy in both Houston, Texas, and Toronto, Canada, covering its operations in the United States, Canada and the U.K. However, the vendor said its operations in Ireland, France, India, Belgium, Luxembourg and Poland are not impacted by the proceedings.

Sungard AS expects to wrap the bankruptcy process some time this summer.