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SGI receives court approval for bankruptcy motions

Chippewa Falls, Wis. - Silicon Graphics, Inc. has received interim approval from a New York bankruptcy court to use its $70 million financing facility to fund day-to-day business operations during a reorganization process.

The approval came during a hearing in which the U.S. Bankruptcy Court for the Southern District of New York granted approval of several first-day motions to protect employees, suppliers, and customers. The orders, which enable SGI's business to continue without disruption, give the company approval to pay employee wages and provide healthcare and similar benefits, pay suppliers for goods and services provided after the filing, and maintain uninterrupted delivery of products and services to customers.

On May 8, SGI and its domestic U.S. subsidiaries filed voluntary petitions for business reorganization under Chapter 11 of the U.S. Bankruptcy Code.

SGI, which employs 340 people at its Chippewa Falls manufacturing plant, will use the credit facility, which was provided by a group of its bondholders, to cover employee salaries, benefits, supplier payments, and other operating expenses.

The Mountain View, Calif.-based computing technology consultant made clear its intention to make timely payments for goods and services provided on or after the filing date "in the normal course of business and in accordance with terms of existing supplier agreements." SGI also indicated that new product plans would continue to move forward.
"This approval will enable SGI to operate globally and meet normal business obligations," said Dennis McKenna, chairman and chief executive officer.

Meet the new boss

McKenna, who became chairman and CEO in January, has launched a restructuring program in which 12 percent of its workforce, or about 250 employees, have been let go. In March, SGI announced the cutting of 33 jobs at the Chippewa Falls facility, but said it remained committed to the Wisconsin community, where it has operated a manufacturing plant for more than 10 years.

The company's restructuring also was to include the consolidation of its computer server and visualization platform, the pursuit of new markets, and expansion of its line of Altix servers.

Among the Wisconsin plant's signature achievements is its role in the development of the world's fastest supercomputer for the National Aeronautics and Space Administration. The supercomputer, named Columbia after the space shuttle that exploded in 2003, runs on SGI's Altix 3700 systems and 10,240 Intel Itanium 2 processors. The purpose of the machine, which was considered 10 times faster than any other advanced system, is to provide high-end calculations inside NASA for all of its divisions and missions.

Construction of the super computer was completed in just 129 days.

Case study

SGI's non-U.S. subsidiaries were not included in the filing and will continue their business operations without supervision from the U.S. courts.

The Silicon Graphics consolidated case number is 06-10977 (ALG). SGI's cases are being presided over by Judge Allan L. Gropper.

More information about SGI's reorganization can be found on the Internet at

Related Article
SGI layoffs affect 33 at Chippewa Falls plant


William Dollar responded 9 years ago: #1

Looking back on SGI in the mid to late 1980s its hard to realize this company is on the ropes! But they are! I attended many analysts briefings over the years and clearly remember how they always seemed to be on top of technology and way ahead of the curve. But technology changes at a blinding pace, and if you don't chagne with it, you are left in the dust!

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