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SGI exits bankruptcy protection

The high-end server maker emerges from Chapter 11 protection with a new board of directors and new funding.

Stephen Shankland Former Principal Writer
Stephen Shankland worked at CNET from 1998 to 2024 and wrote about processors, digital photography, AI, quantum computing, computer science, materials science, supercomputers, drones, browsers, 3D printing, USB, and new computing technology in general. He has a soft spot in his heart for standards groups and I/O interfaces. His first big scoop was about radioactive cat poop.
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Stephen Shankland
2 min read
Silicon Graphics exited Chapter 11 bankruptcy protection on Tuesday with a new board of directors and new funding to try to restore its faltering high-end computer business.

The Mountain View, Calif.-based company, once a Silicon Valley icon, eliminated its long-term debt and raised $115 million to help it through the transition out of bankruptcy protection. The funding arrangements, through Morgan Stanley Senior Funding and General Electric Capital, also include an $85 million loan and a $30 million revolving line of credit, the company said.

After years of struggles, SGI got a new chief executive, Dennis McKenna, in January, laid off 12 percent of employees in March and entered bankruptcy protection in May. A court approved the company's exit from bankruptcy protection in September.

"In these past six months, everyone at SGI has worked intensely to remake the organization into one engineered for stability and growth with innovative new products targeting the largest market opportunities in the history of the company," McKenna said in a statement.

Among the changes afoot at the company, SGI has added lower-end cluster computing systems using servers with Intel's Xeon processor and plans to tackle new business markets, for example mining corporate data for useful trends or selling servers with very large memory capacity.

In addition, the company has pared down its product line, dropping machines using its MIPS processors and Irix operating system and focusing on those using Intel Xeon and Itanium processors and the Linux operating system instead.

McKenna and James McDivitt remain on the company's board, but there are several new members: Eugene Davis, chairman and CEO of Pirinate Consulting Group; Anthony Grillo, founder and CEO of American Securities Advisors; Kevin Katari, managing member of Watershed Asset Management; and Chun Won Yi, an associate of the Quadrangle Group.