Bothell firm lines up buyer before bankruptcy

LapLink, a long-standing Bothell software company, filed for Chapter 11 bankruptcy protection Tuesday, and said it plans to sell its assets to a former Microsoft executive. LapLink is burdened with debt and hasn't been able to generate the kind of cash it needs, said Chief Executive Mark Eppley.

"The team did a noble job of getting to where it is, but at some point in time you have to say, 'OK, the company does have to get restructured,' " Eppley said yesterday. The company will not lay off its 20 employees, Eppley said, and customers should not be affected by the change.

LapLink's revenue has dropped dramatically recently. The company reported $10.8 million in sales in 2001 and $4.5 million in 2002, according to bankruptcy filings. Net loss rose from $2 million to $2.4 million during that period.

The company's software lets people access e-mail and personal computer files over the Internet from devices with Web browsers, such as Internet-enabled cellphones. The company launched a new product Monday.

It has tried to sell its assets in recent months, according to bankruptcy filings, and began negotiating with two potential buyers. One is Thomas Koll, who was vice president of Microsoft Network Solutions Group before he resigned in 2001.

Koll helped to initiate Microsoft's wireless strategy, and oversaw worldwide business with telecommunications companies, network-equipment providers and Internet service providers. He is now chairman of Infowave Software, a Burnaby, B.C., company that develops software for wireless computing. He became CEI of Infowave while he was at Microsoft, and stepped down from that position to become chairman last April.

According to bankruptcy filings, Koll has formed a company called Tiro Trading for the purposes of acquiring LapLink's assets. LapLink and Koll have agreed on a purchase price of $1.5 million in cash, plus an additional $300,000 if LapLink meets certain milestones in the year following the purchase.

LapLink's assets are open to other bidders, but the company said in the filing that Koll has given the highest and best offer so far for its assets. The company also said the sale will generate a "meaningful amount of unencumbered funds" for its creditors.

It is common for companies to line up buyers before filing for Chapter 11 bankruptcy, said Deborah Crabbe, a bankruptcy attorney in Seattle. The bankruptcy filing often allows a company to sell its assets without the burden of debt.

"The buyer can walk away with a nice, clean asset," Crabbe said. The bankruptcy petition and asset sale are scheduled to be discussed at a hearing later this month.

Eppley, who owns 37 percent of the company, said he may continue to lead LapLink after the sale, but that will depend on how the "dust settles," he said. "I'm not going to retire," he said.

Last Thursday, the company discovered someone had broken into its computer network using the login names and passwords of two former employees.

The hacker had removed key files and disrupted LapLink's e-mail and other computer systems.

Laplink was founded in 1983 as Traveling Software, and developed ways for people to remotely access their personal computers and computer networks. The company shifted its focus in 1998 to mobile application software.

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com