Opinion ID: 2557
Heading Depth: 2
Heading Rank: 1

Heading: Events Leading to the Debtor's Chapter 11 Filing

Text: The Debtor, a Delaware corporation headquartered in New York, had provided wireless transaction delivery and gateway services to the payments processing industry. Initially a hardware manufacturer of wireless point-of-sale terminals, in 1999 the Debtor launched its Synapse wireless platform and transaction gateway, a software platform that allowed merchants accepting credit or debit cards to transmit payment transactions faster and less expensively than had been possible using a traditionally wired telephone line. In 2000, the Debtor's business expanded to include the Synapse Adapter, which converted dial-up credit card terminals to wireless ones, and the Synapse Enabler, which not only allowed vending machines and taxicab meters to process credit cards, but also permitted faster payment processing for businesses such as fast-food restaurants. These aspects of the Debtor's commercial activities are collectively referred to herein as the Synapse business. The Debtor partially financed its Synapse business with the assistance of a $2.75 million bridge loan from Brascan Financial Corporation (Brascan), secured by the Debtor's assets. By January 2004, the Debtor had suffered significant losses and had experienced a negative cash flow. Specifically, the Debtor had exhausted the bridge loan and accumulated a deficit of nearly $145 million, while its principal source of liquidity totaled approximately $456,000 in cash and cash equivalents. Despite an additional advance of $250,000 from Brascan, on March 26, 2004, the Debtor filed a voluntary petition for relief pursuant to Chapter 11 of the Bankruptcy Code in order to protect, preserve and maximize the value of its assets through sales under section 363 of the Bankruptcy Code. Debtor's Motion for Various Orders at 6 ¶ 16, In re: U.S. Wireless Data, Inc., No. 04-12075 (Bankr.S.D.N.Y. Mar. 26, 2004). After filing its petition, the Debtor continued to manage and operate its business as a debtor in possession under 11 U.S.C. §§ 1107 and 1108.