L-Soft bankruptcy case is closed

The administration of L-Soft International Inc.'s bankruptcy case has officially ended.

The Landover, Md., software maker announced Tuesday, May 4, that Judge Wendelin Lipp of the U.S. Bankruptcy Court for the District of Maryland in Greenbelt signed the final decree in the company's bankruptcy, signaling the end of the three-year Chapter 11 case.

Lipp's order was effective on April 27.

L-Soft's reorganization plan became effective on June 17, 2009.

The plan incorporates a settlement between L-Soft and creditor Juan Altmayer Pizzorno, which ended years of litigation in district and bankruptcy court which dated back to 2002.

Under the terms of the reorganization plan, all administrative claims and taxes were paid in full in cash on the effective date.

Unsecured creditors other than Pizzorno received a pro-rata distribution of $367,265 in cash. Debtor counsel James Vidmar Jr. from Logan, Yumkas, Vidmar & Sweeney LLC estimated that the payment would be enough to give the unsecureds an 8.5% return on their claims.

Lipp confirmed the plan on May 28, 2009.

L-Soft International licenses the Listserv-brand mailing list management software from its nonbankrupt affiliate, L-Soft Sweden AB. Pizzorno was a licensee and the two had a falling out over the licensing contract and disagreed over the use of the copyright.

Pizzorno sued the company and on Aug. 10, 2006, a Maryland district court awarded him a $5.3 million judgment. After appealing the decision and losing, L-Soft filed for Chapter 11 on March 8, 2007, because the amount of the judgment exceeded its assets. Pizzorno became the debtor's largest unsecured creditor.

After the filing, Pizzorno and L-Soft made several attempts to come to a settlement. On Feb. 9, the parties reached an agreement where L-Soft would pay Pizzorno $450,000. The creditor will also be entitled to an additional undisclosed amount for an action he undertook against the debtor's insurance carrier, Transportation Insurance Co. The two sides also agreed to not pursue any further legal action against each on the original copyright infringement suit.

L-Soft's products deliver about 30 million messages a day to more than 130 million list subscription. Its customers include Microsoft Corp., IBM Corp., New York Times Co., Time Warner Inc., Dow Jones & Co., the United Nations, the U.S. Senate and Harvard University, according to court documents.

L-Soft dates back to 1986 when an engineering student in Paris developed a software program to automate the administration of e-mail lists. The company derives about 89% of its revenue from the sale of and consulting and hosting services on software products it licenses from its affiliate. L-Soft has offices in London, Stockholm and Erlangen, Germany.

by Kevin Fung
The Deal Pipeline