|Jolla office, Tampere, Finland|
Financing round delayed, Jolla files for debt restructuringNovember 20, 2015, Tampere, Finland. Additional to the lay offs of many employees, Jolla has filed for debt restructuring in the court of Helsinki. Jolla's current goal is to get their product, Sailfish OS mobile operating system, tailored to new manufacturing partners and get the company back to its feet.
[news] Jolla files for debt restructuring
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During the past 4 years Jolla Oy has gathered 50M USD of funds and used them for development of Sailfish OS mobile operating system, Jolla Phone released on November 2013 and Jolla Tablet released so far to a minor part of Indiegogo backers on October 2015. After the tablet campaign, which end result is yet to be seen, Jolla has already dropped the hardware development out of their business plan. The earlier plan to license Sailfish OS to device manufacturers with commercial features enabling local content is now extended with tailored Sailfish OS option, offering a serious alternative to the mobile operating system market giants: Google's Android and Apple's iOS.
After the lay-offs, which have been already informed to the employees, people left in house seems to include only key personnel and a team focusing on tailoring of Sailfish OS for new device manufacturing candidates to join in. First external device Intex Aqua Fish is expected to hit the markets in India between December 2015 to January 2016
On the current lay-offs Antti Saarnio, Head of Jolla, shares:
"Unfortunately the development until this point has required quite a lot of time and money. To get out of this death valley we need to move from a development phase into a growth phase. At the same time we need to adapt our cost levels to the new situation".On the short term development plans on Sailfish OS, Mr. Saarnio continues:
"One of the main actions is to tailor the operating system to fit the needs of different clients. We have several major and smaller potential clients who are interested in using Sailfish OS in their projects."On the debt restructuring via court, Mr. Saarnio points out:
"In Finland we have very good laws for corporate restructuring. These enable the continuation of businesses through debt restructuring, which gives a company more time to take care of its financial liabilities. I believe that through this program Jolla can turn its business to be profitable in the future. Sailfish OS is a very valuable asset and worth fighting for."The news were released by Jolla after yesterday's news on the lay-offs by Finnish newspaper Aamulehti ( English translation )
Updated: To avoid any cultural misunderstandings, I'll start with introducing the steps of debt restructuring via court in Finland. In short, it's an optional procedure used instead of bankruptcy, and a company must qualify to get into it. Qualification includes the cost of the procedure itself, the fact that a company can be seen as recoverable, and that the file is supported by some of the creditors. In general, the end result should return more money to all the creditors compared to a bankruptcy.
- Company files for restructuring in District Court. File includes a clarification of the company's activity, list of debts, reasoning for the need of restructuring, and a preliminary plan on how it could be done. At this point, company still makes all the decisions in their board.
- The Court will decide on starting the procedure, hearing the major creditors, and all creditors if needed. Qualification for starting requires that the company has enough of liquidity for the cost of the process itself, and that the file is supported by creditors with at least 20% of debt. At this point, company still makes all the decisions in their board.
- If started, the Court appoints a liquidator into the company to go through its financial situation including assets, debts and activities. From this point on, payments of debts listed on the file are on hold. The liquidator will discuss on company's decision making with the biggest creditors and he has the last word on any board decisions having remarkable financial impact.
- The liquidator, cooperating with both the creditors and the company, makes a final plan for needed reorganizations and arrangements of debts. Plan must be better for creditors compared to a bankruptcy, but it must also note the needs of both parties equally. It might include new payment schedules, smaller payments, cuts in activity (if unprofitable activity found) and other reorganizations. During the planning liquidator supervises the company's decision making and reports to creditors when needed.
- The liquidator introduced the plan in the Court and opinions of creditors on it are heard. If needed, there will be a vote among them. In some cases even the support of minority of creditors may be enough to confirm the restructuring plan. The work of the liquidator ends here.
- If the plan is confirmed, company is expected to follow the plan. The payments of debts listed in the file follows the restructured plan, which also replaces any earlier agreements on the filed debts. The Court can appoint a supervisor to follow the progress of the plan and to report any major perceptions affecting to the progress of the plan.
- A) If the company manages through the procedure following the confirmed plan, the rest of the original debts filed are simply forgiven and the company can carry on from a debt clean table. The procedure ends, and decision making is returned to the company board alone.
B) If the company doesn't manage with a single payment in the confirmed plan, the restructuring might be cancelled, followed by that none of the original debts are forgiven and creditors can require company to follow the original agreement. The procedure ends, possibly followed by a bankruptcy procedure (if filed by any party)
To get the ship to turn, what Jolla really needs is a source of income. While their phone is selling low due to its age, the new product (Jolla Tablet) is not even expected on sales, and the partnership with Intex doesn't seem to bring in any money in short term, new investors or licensing partners are more than wanted.
The question is: Is the product (Sailfish OS) polished enough to meet the needs of the markets? In my personal opinion it's very close to that. Looking at the age of Sailfish OS, it has been developing as fast as the more famous operating systems Android and iOS in its features, but there are still things to do especially in the core apps.
Another important question is the reliability of the company. How does the potential investors see this company who has filed for a debt restructuring, has several delays on the Jolla Tablet campaign and has not exactly communicated perfectly during that campaign. Is there still trust left?
My guess is that licensing partner candidates and new investors are holding their breath until they see how the Intex cooperation takes off. There are still few months to see that (according to the current launch schedule). The operating system does have potential, the device specs are yet unknown, but expected to meet the requirements on the selected price group (below 10K INR).
While waiting for the launch from Intex, is there anything Jolla could do in the meanwhile to get some great Sailors back to work?
Delay on the financial round affect also to the Jolla Tablet shipping schedule
More details shared by Antti Saarnio on an interview with Techcrunch
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Sources: Jolla Press
Published: 2015-11-20 15:18 UTC
Updated: 2015-11-21 15:02 UTC