A judge for the U.S. Bankruptcy Court in Delaware granted a motion Thursday to allow MarchFirst to convert to a Chapter 7 filing, which means a trustee will be appointed to help the company through an orderly liquidation process, according to a representative with MarchFirst's attorney office. A trustee should be appointed within the next two weeks.
A Chapter 7 filing does not mean the company will cease operations immediately, but it does mean MarchFirst will have about 30 days to close up shop. The Chicago-based company has already sold certain parts of its business, including some 20 offices and certain consulting practices.
Like several Internet consultant players suffering from the downturn in the consulting arena, MarchFirst has had it rough.
The company, created by the merger between management consultancy Whittman-Hart and Web consultant USWeb/CKS, has had a string of bad news such as layoffs and trying to operate with a nonexistent management team. Earlier this month it filed for bankruptcy protection, then informed former employees last week that they would have to file a claim with the court to request their severance payments.
The company cut about 4,700 employees in recent months as it attempted to cut costs, achieve profitability, and redirect its focus. MarchFirst helps clients with Web development and devising Internet strategies.
Under the Chapter 7 filing, creditors will be dealt with once the trustee has helped MarchFirst liquidate all of its assets. Microsoft and Credit Suisse First Boston hold the largest unsecured claims with the company, according to MarchFirst's bankruptcy filing.
Late last year, Microsoft, which also poured money into the former USWeb/CKS, loaned $12 million to the ailing MarchFirst and is claiming the same amount. CS First Boston, which managed the merger deal, is claiming payment of approximately $10.6 million.