Seda France Files Chapter 11
GDA Staff -- Gifts and Dec, 11/1/2010 10:53:49 AM
Austin, TX - Candle manufacturer Seda France Inc. filed for Chapter 11 bankruptcy protection on October 18, according to the Austin Business Journal.
The company owes $1.8 million to venture capital firm Aegis Texas Venture Fund II LP. That's more than it has: Seda reported owning only $1.5 million in assets, compared to $2.5 million of debt. Seda France was unable to make its payments to Aegis, but made multiple proposals to Aegis beginning in July. Aegis rejected them because it wants a substantial ownership position in Seda France, according to court records.
According to Seda's lawyer, Kell Mercer of Brown McCarroll LLP, the financial data provided to Aegis under consultant firm The Square Group's watch was incorrect. Seda France is considering claiming a breach of fiduciary duty and/or fraud by The Square Group.
Mercer says Seda is well positioned to emerge from bankruptcy. The company reported about $5.4 million in revenue in 2008 and 2009, and about $3.5 million in 2010 to date.
According to the local news site ultimatememorial.com, a product of a the Houston Chronicle, the bankrupcty came shortly after Aegis filed suit in Harris County District Court on October 14 against Robert Hernandez, CEO and founder of Seda, for failure to repay the loan. The suit also alleges that Seda repeatedly provided false financial information (triggering the resignation of Seda's CFO) and that Hernandez used company funds for personal expenses.
A spokesperson for Seda France could not be immediately reached for comment.
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