PCD, once better known as UTStarcom has announced via press release that it will sell its complete business holdings in the US to smaller competitor Quality 1 Wireless as a result of a “stalking horse bid” by the latter entity. As a result of the bid, PCD has voluntarily filed for Chapter 11 bankruptcy protection in order to facilitate the transaction by Q1W for $105.3 million according to Dow Jones Business News, as the official release does not disclose the purchase sum for the assets.
PCD is best known for being the firm that handled the majority of HTC’s North American CDMA device development and handled much of the carrier customizations for each HTC Windows Mobile device on CDMA carriers before the firm completely relaunched as its own Tier 1 brand in 2009. Aside from handling device development for HTC, PCD also handled much of the device development for Pantech and Casio-Hitachi when those companies first attempted to break into the market through Verizon Wireless, with the most recent device handled by PCD being the Pantech Perception as well as Microsoft’s failed attempt at a feature phone in the KIN series.
The purchase deal will still be subject to regulatory approval, though PCD will still continue to operate while the deal is being completed. While this deal will include all of the US-based assets, the Canadian PCD subsidiary will now operate as an independent entity unrelated to the former US-based PCD or the new Quality 1 Wireless.
According to the bankruptcy filing, PCD lists between $100 million and $500 million in both assets and liabilities, while assigning the blame for the sale of the business to the actions of former CEO Philip Christopher, who is being alleged as the culprit in the legal affidavit attached to the filing with the following statement by current Chief Financial Officer Raymond F. Kunzmann:
“While Mr. Christopher still worked for PCD, he conspired with several then-current PCD employees, AirTyme and Reliance, to create a competitive entity, and began a campaign to disparage and defame PCD and its board of directors. PCD, as a supplier of non-premium and niche handsets and wireless devices, has correspondingly been adversely affected as profit margins have continued to erode.”
While the litigation between PCD and AirTyme has been settled regarding the formation of the latter as a separate entity in the state of New York, an adjoining suit against former CEO Philip Christopher by PCD is still underway. PCD has also stated a $107 million debt to first-lien and second-lien lenders while a unit of manufacturer HTC is listed as its largest unsecured creditor, owing the company a total of $96.3 million.