Verified Identity Pass, which ceased operations this summer as the dominant operator of the Registered Traveler program and brought the expedited airport screening industry to a halt, filed for Chapter 11 bankruptcy protection on Tuesday as it seeks to close the imminent sale to an undisclosed "prospective buyer."
VIP in court documents said bankruptcy court protection offered the firm the best option for a sale, and according to a court affidavit dated Dec. 1 by James Moroney, VIP president and the "sole representative of the debtor's senior management," the company "expects to file a motion to sell within seven days."
According to court documents, "the company has been in negotiations with potential buyers and has reached substantial agreement in principle to sell its assets." Though the company would not disclose which bidder it plans to sell its assets, VIP said it is "actively engaged in negotiations" with three firms: WidePoint Corp., Henry Inc. and L-1 Identity Solutions, though only the latter two firms "presented proposed asset purchase agreements to eliminate or restructure contingencies to closing and to ensure the protection of the customer data in connection with a sale."
Investment firm Henry Inc. in September signed a letter of intent with Verified Identity Pass and its primary debt holder, Morgan Stanley, which holds $32 million of Verified's debt, to purchase some "assets and liabilities" of the company. L-1 Identity Solutions is a provider of biometric identification and security technology provider and VIP's third-largest creditor, according to court documents.
According to court documents, Moroney estimates the company to hold "a book value" of between $7 million and $10 million, which includes airport kiosks, other tangibles from computers to office furniture, and "intangible property," including intellectual property, customer data and contracts.
Until its abrupt shutdown in June, VIP operated its Clear Registered Traveler program at 18 of the 21 airports in the United States that offered a program. Since it halted operations, one of its competitors, Vigilant Solutions, also folded, and the sole survivor, Flo Corp., suspended operations at the only airport where it operated
(BTNonline, July 27).
While those operations have yet to resume, Flo Corp. principal and managing partner Fred Fischer today said, "We are days away from announcing a major former Clear airport. Even if Verified Identity Pass is sold, it will take them months to launch."