Cable Services Company Casa Sells Cloud Unit to Fund Bankruptcy

Steven Church, Bloomberg News

(Bloomberg) -- Casa Systems Inc., which makes software and other products for cable television companies, won court approval to sell its cloud-based unit for $32.3 million to Lumine Group US Holdco Inc. in order to fund the rest of its bankruptcy case.

US Bankruptcy Judge Karen Owens agreed with the company that without the sale, Casa would suffer a cash crisis next week and would have to furlough workers. Owens said she was initially skeptical of the unusually quick sale because it was designed to raise cash to pay for the reorganization case. Typically, a company arranges an emergency loan just before it files bankruptcy and then uses the money to keep operating while selling assets and reorganizing.

“My primary concern was that in the future, sophisticated parties could engineer a liquidity crisis to avoid” borrowing money and going through the longer process of arranging a more traditional auction, Owens said during a court hearing Friday in Wilmington, Delaware.

Casa’s situation is unique and justified the need for the sale, she said. The company must close the sale by next week, or the unit will go to a back-up bidder who made the only other offer.

The company will use the money to help it keep operating while it organizes an auction for its more valuable cable television unit, which sells services to companies like Charter Communications Inc. and Liberty Global, according to court papers.

The Andover, Massachusetts-based company filed bankruptcy earlier this month, blaming supply chain problems caused by the pandemic and a general decline in the cable television industry. Casa has a proposed restructuring agreement with nearly all of its lenders, who are owed about $183 million, according court papers.

Before it filed for court protection, the company struck a tentative deal to sell its cable business to Vecima Networks Inc. for $20 million. Vecima, a broadband and content solutions company, could still be outbid during the bankruptcy.

The case is Casa Systems, Inc., 24-10695, US Bankruptcy Court for the District of Delaware.