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Armed with figures based on an internal audit made public last week, troubled Lernout & Hauspie Speech Products NV changed course Dec. 27 and refiled for bankruptcy protection in the Commercial Court of Leper, Belgium. The board of the troubled speech-software company had planned to appeal an earlier decision by the court denying bankruptcy protection. But an L&H spokesman said company lawyers and directors had met and concluded that refiling in the court had “the best chance for success.” Once considered the Microsoft Corp. of the Belgian business community, L&H has scrambled for bankruptcy protection in the U.S. and Belgium after accounting irregularities and claims of fraud battered its stock and created uncertainty for customers. L&H received bankruptcy protection under Chapter 11 in the U.S. but has been denied similar protection in Belgian courts. Sources have said that if the Belgian courts do not grant bankruptcy protection, L&H would most likely have to sell assets to repay creditors. In denying protection on Dec. 8, the judge cited the “poor content” of L&H’s request and the lack of reliable financial data. The judge added that L&H was free to refile at a later date. L&H has since tried to get a better handle on its financial situation. The company spokesman said the new documents submitted to the court include “actualized figures based on the internal audit report.” Last week, L&H disclosed that its internal audit committee found that revenues for the last two and a half years had been overstated by as much as $277 million. An outside audit by L&H auditor KPMG in Belgium is under way to help restate revenues. L&H cited several advantages of returning to the local commercial court rather than filing an appeal with a higher court in Ghent, Belgium. “With the Leper court, we have immediate protection [from creditors] from the moment we file. In the appeal process there is no protection until the court makes a decision,” the spokesman said. He also said L&H believed the Leper court would rule more quickly than the appeals court in Ghent. Lawyers following the L&H case agreed that refiling with the new financial figures was more logical than appealing the earlier decision. “Refiling makes a lot more sense,” said Larren Nashelsky, a partner with San Francisco-based Morrison & Foerster LLP, which is not representing any parties involved in the bankruptcy. “The appeal strategy was surprising. In the prior ruling where protection was denied, L&H sounded like they just had not gotten their act together with regard to restating their finances. They admitted that. It’s tough to appeal that.” L&H would not comment further on the content of the restructuring plan or other documents contained in the refiling. At a press conference Dec. 27, court officials in Leper said the commercial court would hear the new case Jan. 3. L&H’s stock price has dropped from $70 when it was listed on the Nasdaq and Europe’s Easdaq in March to less than $1 on the over-the-counter market, wiping out around $10 billion in market value. �Copyright 2000, The Deal, LLC. All Rights Reserved.

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