andrew@tekecs.UUCP (Andrew Klossner) (09/15/83)
OSBORNE CORP. FILES FOR CHAPTER 11 SHIELD HARDWARE, Calif. (AP) -- Osborne Computer Corp. said Wednesday that it filed for protection from its creditors under federal bankruptcy laws, but that three banks have agreed to provide the company with temporary financial help. Osborne, the first company in what has become a highly competitive field of makers of briefcase-sized computers, filed for Chapter 11 protection in U.S. Bankruptcy Court in Oakland on Tuesday. Under Chapter 11, a company is shielded from creditors' lawsuits while it devises a plan to pay off its bills. Osborne, which last spring employed more than 1,000 people and boasted annual revenue of $$ 100 million, laid off 300 of its remaining 400 employees last Friday. It also halted manufacture of its portable computers. In a statement, officials of the 2.5-year-old company said the filing "has been taken to enable the company to work out arrangements with its creditors while it seeks new financing." A hearing was scheduled Thursday on a request for a court order approving an interim borrowing arrangement. James Lopes, attorney for Osborne, said Security Pacific Bank, Chemical Bank and National Bank of North America have agreed to lend the company $$ 600,000 "to keep us afloat." "The banks have been very cooperative and they're going to work with us in trying to reorganize the company," Lopes said. Officials said the bank loans "will permit the company to continue the sales and service of its existing products and to pursue development of its new products." Lopes said company officials were holding discussions with business people regarding possible acquisition or investment in the company. Company officials have denied that ITT Corp. was one of those making overtures. ITT also earlier denied rumors that it was interested in Osborne. The bankruptcy protection filing followed by a day a lawsuit by two California computer parts makers claiming Osborne owes them more than $4.5 million. The lawsuit filed Monday by Testology Inc. and PH Components Inc., two San Jose firms run by Porter Hurt, charge that Osborne has not paid for computer circuit boards, disc drives and other component parts it bought. It also says Osborne backed out of an agreement to buy a large quantity of products Testology was preparing for delivery. A host of competitors jumped into the market after Osborne introduced its pioneering portable computer, the Osborne 1, a 26-pound machine featuring a 5-inch screen and hundreds of dollars worth of word processing, spreadsheet and programming software. Sales of the Osborne 1 plummeted as word leaked out of an improved computer, the Executive. But when the Executive hit the market late, it gave the company a month or more of no income, and by that time competitors were giving Osborne a run as well as taking advantage of the trend toward making products compatible with those made by International Business Machines Corp.