Dive Brief:
- IronNet officials are considering a potential bankruptcy filing after the board of directors authorized a decision to furlough almost all employees at the cybersecurity firm, according to a filing with the Securities and Exchange Commission.
- The board approved the decision to effectively end most operations until the company can find enough liquidity to rehire the furloughed workers, IronNet said in a Sept. 5 SEC filing. The company has retained a number of workers to prevent complete service disruptions.
- The company conceded it is likely to lose customers due to the furloughs, which would have a material adverse effect on operations and financial condition. IronNet officials were not immediately available for comment.
Dive Insight:
The road forward for IronNet remains unclear. The company has been trying to emerge from severe financial straits since 2022 when it announced major layoffs and previously warned of a possible bankruptcy filing.
IronNet hoped to bounce back after a deal was finalized in July to restructure top management, recapitalize the company and delist from the New York Stock Exchange.
IronNet founder Gen. Keith Alexander stepped down as CEO in favor of Linda Zecher, the chair of C5 Capital, which has been a major shareholder of IronNet. Alexander remained as chair of IronNet under the deal.
C5, under a joint venture with Cohen Circle, agreed to fund the company with $15.5 million based on the company reaching certain milestones, followed by up to $51 million when the company went private.
By mid-July, IronNet said it would voluntarily delist from the NYSE, which would become effective Aug. 6. After the delisting the IronNet stock would trade on over-the-counter markets.
The company planned to resume a growth strategy with additional government business and private sector accounts as well as expansion overseas. IronNet hoped to regain business momentum under the new leadership, but it is not clear whether the company was able to bring back new business.
The company said the job furloughs and related end of business operations are considered default events in connection with multiple debt agreements, including secured promissory notes and a senior unsecured convertible note.
IronNet said it can’t file for bankruptcy under Chapter 11 and it may need to file under Chapter 7, which would involve a trustee appointment for asset liquidation.
