Brainhunter Inc. (BH.TO) said that its board has authorized to file for court protection, seeking a stay of proceedings against the company. Under the court protection, the company will continue to operate normally while it engages in either selling its business or restructuring its liabilities and operations.
After conducting an extensive review of strategic alternatives, the company's board has decided that this action is in the best interests of the company's clients, contractors, employees, creditors and other stakeholders.
Brainhunter specializes in the provision of staffing solutions to major companies and governments in Canada and the United States. Currently, the largest part of the business is providing IT and engineering staffing consultants, on a contract basis, to major companies and government entities in Canada. The company also sells recruiting related software including applicant tracking systems and vendor management software.
The company deploys over 1,500 contractors with an internal staff of over 160 personnel.
Brainhunter said, it has been financially affected by the global economic downturn. The company came up with the decision to seek court protection after its efforts to recapitalize and reduce corporate overhead expenses failed.
TD Bank has agreed to provide a Debtor in Possession interim financing facility to the company.
Brainhunter's board has also received and accepted a 'Stalking Horse Bid' from CEO Raj Singh, which has the support of the senior management team. The company will subsequently be asking the court to approve this bid as part of a court-supervised bid process.
The Stalking Horse Bid is effectively an offer to acquire the business as a going concern. It will act as a reserve bid against which other potential parties can also bid for the company's assets or offer to sponsor a restructuring plan.
As part of the formal legal requirements of this restructuring, the company has proposed that Deloitte & Touche Inc. be appointed by the court as Monitor to provide oversight and supervise the CCAA process.
Brainhunter last traded on Dec. 1 at C$0.025.
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