EnvisioNet debts total $25 million Sizable sums owed Orono

BANGOR – Court documents indicate the extent of the financial woes of EnvisioNet, the Internet support company that filed for Chapter 11 bankruptcy last week.

The Brunswick-based firm faces debts of $25.6 million and has assets totaling $15 million.

The debts include significant obligations in Orono, where the company opened a branch last year. It is two months behind in rent and loan payments to the town of Orono and the Orono Economic Development Corp.

The company faces the threat of losing use of the building and the machinery covered by debts of more than $7.3 million.

EnvisioNet, once the star of the state’s new economy focus, employs 1,300 people, with 770 of them in Orono answering support calls for Microsoft’s Internet service.

Under the bankruptcy protection, Orono and OEDC cannot repossess the machinery and equipment or order the company to vacate the building. But the court will set up a payment schedule, and an attorney representing both the town and the development corporations said he wants assurances that the payments will be made on time.

“If they can’t pay us, they can’t continue to use the stuff,” said attorney Jack Manheimer, mentioning he will file petitions seeking repossession of the equipment if payments are missed.

EnvisioNet attorney George Marcus said Manheimer’s possible actions fall within standard bankruptcy court procedures.

Orono Town Manager Gerry Kempen said that “in the worst case, yeah … it’s a possibility” that the property could be repossessed, but he does not believe it is going to happen.

“They’ve given us the assurance they’re going to make the payments,” Kempen said.

EnvisioNet owes OEDC $100,000 in rent on the $5.3 million building it leases at the Maine Research and Development Park near Interstate 95. It also owes the town $42,000 in payments on a $1 million loan for machinery and $13,000 in payments on another $1 million loan for equipment. The next due date on the three loan payments is June 25.

“They already told us they aren’t going to be able to make the next payments,” Manheimer said. “It’s a very sick company.”

The town of Orono lent OEDC $5.3 million to build the facility for EnvisioNet’s expansion. EnvisioNet has a 20-year lease at a fixed-rate rent. If it defaults on that lease, $564,000 of the company’s money currently in a secure fund would be withdrawn to pay the rent on the building for one year, according to Kempen.

By filing for bankruptcy protection, EnvisioNet has the opportunity to regroup in an effort to become viable and solvent. The company, which filed for protection last Thursday, is rewriting its business plan and is in discussions with possible investors.

“It’s going to be difficult,” Manheimer said. “Obviously the town is on EnvisioNet’s side in this.”

The equipment and machinery, he said, are depreciating in value and could not be resold at a later date to cover all of the balance of the $2 million in loans, he said.

The debts owed to Orono and OEDC are not the only ones facing EnvisioNet. The company, according to court documents, states it has more than 1,000 creditors, and has debts of $25.6 million and assets of $15 million.

KeyBank, the company’s primary lender, is owed more than $5.5 million. On Tuesday, EnvisioNet and the financial institution reached an agreement to continue a line of credit until Sept. 14 while the Internet support company reorganizes its business and seeks investors.

“Basically it maintains the status quo,” said KeyBank attorney David Hirshon.

The deal comes as EnvisioNet seeks approval from the U.S. Bankruptcy Court to use funds in a KeyBank account to pay its 1,300 employees and managers. KeyBank, in turn, wanted the court to freeze collateral used by EnvisioNet to secure loans from the bank.

Marcus said the actions by both EnvisioNet and KeyBank are standard procedures in a bankruptcy proceeding.

Attorneys for KeyBank and EnvisioNet will present the deal to a bankruptcy judge at 2 p.m. today in Portland.

EnvisioNet founder Heather Blease said last week that no layoffs are planned during the reorganization.

Last month, EnvisioNet laid off more than 560 people because of a reduction in forecasted call volume from Microsoft’s customers. One hundred of those employees were offered transfers to Orono from Augusta and Brunswick. Only a handful of trainers were cut in Orono.

About a week after the announcement, Gov. Angus King made a sudden trip to Seattle to mend the relationship between Microsoft and EnvisioNet. King came back to Maine with a guarantee that Microsoft would not break its contract with EnvisioNet in the short term.