As e-mail and interactive marketing firm Impower Inc. emerged from bankruptcy protection last week with a second chance to get things right, its unsecured creditors await the first installment of the 30 percent settlement approved by the court.
Impower, which was spun off from American List Counsel in 1999 amid the dot-com boom, filed for Chapter 11 protection last summer owing more than $27 million to creditors. It spent the past 10 months working on a restructuring plan that was confirmed May 23 in U.S. Bankruptcy Court in Trenton, NJ.
“Rather than insolvent with debts in excess of $20 million, we exit Chapter 11 with a balance sheet that will enable us to go forward, build our business, serve our customers and pay our creditors,” said Gregory C. Ellis, president/CEO of Impower, Princeton, NJ, who came on board a year ago.
Impower's biggest creditor was ALC with more than $13 million in unsecured claims. According to court documents, that included more than $7 million in rental payments owed to Dow Jones & Co. Inc. because ALC held the lease. Other unsecured creditors' claims totaled $8.5 million, and Toronto investment firm Counsel Corp. had a $6.2 million secured stake. ALC chairman/CEO Donn Rappaport vacated his executive post at Impower before the bankruptcy filing.
Under the reorganization plan, Impower's unsecured creditors will receive 30 percent of the money owed to them. At least 12 percent will be distributed in cash by the end of August. Payments on the rest begin in six months. According to a letter Impower mailed its trade partners, two-thirds of the settlement monies will be paid over the next year.
The plan dictates that Counsel Corp. will receive $800,000 and retain a 17.5 percent stake in Impower.
“Although our creditors deserve to be paid in full, that's not possible,” said Ellis, who added that he expects the company to break even in two to three months and reach profitability within six.
Though five of the 200 unsecured creditors voted against the plan, the majority gave approval and it went through. At least one company that approved the plan hopes to do business with Impower again.
“We would like to re-establish relationships with their brokers to generate orders of our managed e-mail lists,” said Leland Kroll, president of Kroll Direct Marketing, Plainsboro, NJ. Of the settlement, he said, “Thirty percent is certainly better than nothing. Our list owners will be happy to see these funds once they are released.”
Impower's infrastructure was built to support annual revenue of $100 million. Last year, it brought in $11 million. This year, Ellis expects $6 million. In the past year, Ellis has reined in costs. Impower's monthly operating losses dropped from $500,000 a year ago to $25,000. The newly restructured Impower has 20 full-time employees, down from a peak of 110.
Impower's main product offerings include e-mail brokerage, e-mail house file management and the ImpowerBase e-mail database. It will continue to offer its services to clients, which include Apple Computer, Autodesk, Chase, Digitas, Dow Jones, Equifax, Fidelity Investments, G. Neil Co., Grey Direct, Oracle, Performics, PriceWheels, Red Direct, Rodale Press and Thomson Financial Services.
The company will continue to be run by Ellis along with senior vice president Tom McCarty, who have a combined 50 percent stake in Impower. ALC has a 17.5 percent stake, and other Impower employees hold the remaining 15 percent. Aside from its upscale headquarters in Princeton, which it sublets from ALC, Impower has offices in Peterborough, NH, and Corte Madera, CA.
