Indianapolis-based training firm Adayana Inc. is seeking Chapter 11 bankruptcy reorganization after two years of unsuccessfully trying to restructure its debts out of court, the company said this week.
In papers filed Monday in U.S. Bankruptcy Court in Indianapolis, the company said it hopes to keep most of its operations intact after working out a deal with its biggest creditor.
The company lists debts in the range of $10 million to $50 million and assets in the same range. However, attorney Michael O’Neil from Taft Stettinius & Hollister LLP, who represents Adayana, said the total debt was roughly about $16 million and assets were in the $8 million to $12 million range.
ComVest Capital II LP, an equity fund operated by West Palm Beach, Fla.-based Comvest Partners, has the biggest claim against Adayana–a $13.3 million claim, with about $12 million of it secured.
Seven other creditors have claims ranging from $104,167 to $361,209. Five others are seeking between $10,000 and $52,000.
Adayana is a holding company for two operating units that provide outsourced training. It has clients in the federal government, and in the automotive, agribusiness and health-care industries.
The company had as many as 300 employees two years ago, but has downsized to about 160 since then, said founder and CEO Rajiv Tandon. About 60 of those work in Indianapolis, including fewer than 10 in corporate operations. The rest are in Falls Church, Va., and other locations.
Adayana said it needs “substantial working capital” because of its negative cash flow. Its secured lender is willing to provide bankruptcy financing, the company said.
O’Neil said it is likely that ComVest will acquire the holding company to settle the debt, keeping “business as usual” at the operating units.
The company estimated that no funds would be available for distribution to unsecured creditors.
Adayana was founded in Minneapolis in 2001 but moved its headquarters to Indianapolis in 2005 after acquiring local custom-training firm ABG Inc.
The company took on “tens of millions of dollars” to make several acquisitions from 2005 and 2008. Those acquisitions didn’t live up to expectations when the recession hit, leaving the firm highly overleveraged.
Things “came crashing down,” more recently, Tandon said, when the federal government began severely reducing contracts amid budget concerns.
Kubera Cross-border Fund LP owns all of the company’s Series A and Series B preferred stock, court papers show. Tandon owns more than 15 percent of the common stock.