Cybersecurity company founded by ex-NSA director files for bankruptcy

Ironnet

13/10/2023 20:36

* 
      IronNet intends to seek a 90-day bankruptcy sale
    

        * 
      Company terminated its employees in September
    

        * 
      IronNet has about $35 million in debts
    

  
    By Dietrich Knauth
       NEW YORK, Oct 13 (Reuters) - Cybersecurity company
IronNet, founded by a former director of the U.S. National
Security Agency, has filed for bankruptcy protection in
Delaware, seeking to sell its assets.
    U.S. Bankruptcy Judge Brendan Shannon on Friday signed off
on some of the company's initial steps in bankruptcy during a
court hearing, including approving an agreement that would
restore the company's access to customer data and other key
information held by Amazon Web Services.
    The MacLean, Virginia-based company, which filed for Chapter
11 on Thursday, had terminated its 104 employees and shut down
operations on Sept. 29 after a series of setbacks including a
shareholder lawsuit, delayed payments from foreign government
clients, difficulties finalizing new client contracts, and the
termination of key cloud computing services provided by Amazon
Web Services.  
    "Simply put, the company ran out of money," IronNet
president and CFO Cameron Pforr wrote in court documents.
    IronNet, which owes about $35 million to its creditors,
initially believed it would have to pursue a Chapter 7
liquidation, according to its court filings. But two bidders
stepped forward to fund a Chapter 11 restructuring that would
allow for a more orderly sale of its assets. 
    IronNet intends to fund its bankruptcy with a $10 million
loan provided by IT networking company ITC Global. That loan
would be converted into company equity if no buyer steps forward
during the bankruptcy, according to court documents.
    IronNet will use the loan proceeds to conduct an auction of
its assets, restore its cloud computing services, re-hire
terminated employees, and continue to serve its customers. The
company intends to complete a bankruptcy sale within 90 days.
    The company, founded in 2014 by former NSA director Keith
Alexander, along with former top officials of the U.S.
Department of Defense, the National Counterterrorism Center, and
the Defense Advanced Research Projects Agency, went public via a
special purpose acquisition company transaction in 2021. 
    A shareholder who purchased equity after the transaction
later sued IronNet over bullish statements that the company made
about its revenue projections and new contract pipeline, saying
that the company misled investors and caused stock prices to
double over a three-day period in September 2021. IronNet has
denied the allegations, and the shareholder lawsuit remains
pending in Virginia federal court.
    IronNet became a private company again in July 2023, through
a transaction with C5 Capital. Alexander stepped down from his
CEO role as part of the take-private transaction.
     
    The case is In re: IronNet Inc., U.S. Bankruptcy Court for
the District of Delaware, No. 23-11710.
    For the debtor: Kenneth Enos, Elizabeth Justison, Timothy
Powell and Kristin McElroy of Young Conaway Stargatt & Taylor.
    
    Read more:
    Under threat: Cyber security startups fall on harder times

    IT company Ciber files for bankruptcy with $50 mln purchase
offer
  

    Cybersecurity firms' earnings set to benefit from growing
threat of hacks
  

 (Reporting by Dietrich Knauth)
 ((Dietrich.Knauth@thomsonreuters.com;))