It is with utmost disappointment that we share that DZS was unable to secure the necessary working capital from either its current lender or any prospective lenders to sustain the business going forward.
As a result, on Friday, March 14, the Company commenced a liquidation proceeding under chapter 7 of the United States Bankruptcy Code. All United States operations ceased, and all United States employees were terminated as of the time of the chapter 7 filing.
The Company’s foreign subsidiaries, including those in Germany, the United Kingdom, and Australia may continue to exist outside of the United States liquidation. A Chapter 7 Trustee will be appointed soon to control the liquidation process in the United States and evaluate how to proceed with foreign subsidiaries and affiliates. Subsidiaries and affiliates outside of the United States will experience near term business disruption with day-to-day operations, which will include various IT (i.e., outlook/email), and other software programs. Please be patient as the Trustee assesses the situation and the manner in which to proceed, whether it be a going concern sale, administration under applicable local law, orderly liquidation or some other path.
During the Company’s 25 years, Zhone/DZS developed industry leading broadband access and connectivity solutions that today enable high-speed, secure and reliable internet access services to many service providers around the world.
Over the past nearly two years, the Company has been balancing its technology initiatives while optimizing operating expenses and securing the necessary working capital to stabilize the business. Please know that the Company has been working with extreme urgency to obtain a new working capital facility that would maintain the business and has otherwise been evaluating all possible strategic alternatives. Unfortunately, we have not been successful in those efforts.
As a result of the Chapter 7 asset liquidation process, the Company is hopeful that its market-leading broadband access, connectivity and cloud software solutions are acquired, and customers and suppliers are restored.
The Company expects that employees, creditors, customers and other interested parties will receive a notice of the bankruptcy filing from the United States Bankruptcy Court for the Eastern District of Texas with additional information, including the identity of the Chapter 7 Trustee their contact information.