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Bankrupt Web consultant marchFIRST Inc. has obtained permission from a federal court judge in Delaware to sell off its assets and go out of business, rather than trying to reorganize its finances and stay afloat. U.S. District Judge Joseph Farnan agreed to let marchFIRST switch its Chapter 11 bankruptcy filing for reorganization to a Chapter 7 filing for liquidation after creditors complained about the way the company was handling its reorganization. The Chicago-based company filed for bankruptcy protection April 12 after running out of cash and racking up more than $427.5 million in debt. Web consultants have suffered dramatically in the past year along with a slowdown in information-technology spending and a shrinking e-business sector. Part of its reorganization plan included the sale off a number of business units and assets to reduce debt and raise much-needed cash. The company agreed April 13 to sell its advertising business, McKinney & Silver, to French advertising giant Havas Advertising SA for about $35 million. On April 18, marchFIRST said it would sell its Web hosting business to Divine Inc., an Internet holding company in Lilse, Ill. The amount of the transaction was not disclosed, but part of the deal included Divine assuming a debt marchFIRST owed to software giant Microsoft Corp. marchFIRST also announced it would sell the assets of its New York, New Jersey and Boston offices to Epic Software & Services Inc. On April 23, the company said it would sell its Portland, Ore., San Francisco and Denver offices to SBI Inc. a Salt Lake City e-business services company. All of those deals required approval by the creditors and the court. Those rapid fire announcements prompted one of marchFIRST’s creditors, Bank One Corp., to complain to the court that the company was selling its assets too fast. Bank One also said it would sue marchFIRST’s officers and directors if it did not stop the sales of its assets. Because of those threats, marchFIRST told the court its debtors believe the company cannot effectively manage its reorganization and the best way to obtain any of their money back is for the company to sell everything and close down shop. According to court documents, marchFIRST has $789 million in assets. All the proceeds from the sale of those assets would first go to its creditors. marchFIRST was created last year by the $5.6 billion merger of Whittman-Hart Inc., a systems integrator, and USWeb/CKS. The once-10,000 employee e-consultancy came into being on the eve of a technology crash that annihilated much of its client base. Copyright (c)2001 TDD, LLC. All rights reserved.

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