1. Over the last month, we've heard a lot of rumors and speculation on what has happened over at Hercules Technology. Exactly what has happened?
Well, even though the official story is out, "the real story" about what happened at Hercules is still pretty cloudy, especially for the numbers of people who have seen the glowing reviews of Hercules' latest products and lined up to preorder them or look for them in stores.
2. So has Hercules actually shut down or gone out of business?
The Owner of Hercules has filed Chapter 7 bankruptcy.
We've all heard about Chapter 11 Bankruptcy, at least in passing. That's what happens when a company in financial peril needs to undergo a "reorganization" in order to reassess its debts and determine how to repay its creditors. The actual goal of filing for Chapter 11 is to have the court approve a Plan of Reorganization, which will legally determine how much money is owed to said creditors and how (and who) will repay them. In most cases it's a negotiating (or attacking) process between the debtor and the creditor to determine how much is going to be paid back and when.
Chapter 7 differs in that it's an action to actively repay the creditor with whatever assets are available. It's known as a "liquidation proceeding," in that all "non-exempt" properties owned by the filing company is liquidated for cash by which to pay any creditors.
In the likely case where the liquidated amount does not cover the expenses (and hence the need for bankruptcy proceedings), the debtor receives a "discharge of all dischargeable debts," which in essence wipes out any non-exempt debts and bills.
3. Why did the top management team resign? Did the employees follow suit?
In 1997, when the current ex-management team took over, Hercules was already deeply in debt. In the last two years, the Hercules team concentrated on bringing the company back to profitability by producing the best graphics products given the existing technologies. We did fairly well given the competitive nature of our industry, but ultimately our financial situation caught up with us.
In the last few weeks, the employees were made aware that their pay could not be guaranteed. Virtually everyone, including upper management, decided that we would attempt to deliver the exiting backlog of orders and provide customer support. In the meantime, a prospective business proposal was in the works that would alleviate the financial burdens that we were carrying. In the end, the team just could not stay together long enough for the completion of the deal.