L&H files for bankruptcy protection

Speech recognition software firm Lernout and Hauspie (L&H), creator of the popular Dragon NaturallySpeaking software, has filed for Chapter 11 bankruptcy protection after failing to persuade its five main lending banks to restructure the $451m owed to them.

The filing, which affects all the company's major US businesses, is also being extended to its Belgian headquarters in a move known as a 'concordaat'.

In a prepared statement, recently appointed chief executive John Duerden said: "We have tried, without success, to reach an acceptable accommodation with our bank lenders.

"After an intensive analysis of L&H's worldwide business operations, and a careful assessment of its financial position, we concluded that a voluntary reorganisation filing is both prudent and necessary to preserve and rebuild our valuable customer base and technology assets."

According to the company's legal team, a significant factor in the decision was the need to restate its earnings following an investigation into L&H's Korean operations. Earlier this month, the company suspended John Soo from his duties as head of the business in that region.

L&H's share price has tumbled to below $7 on the US Nasdaq exchange, from a high of $72.50 in March, and to just over $3 on the European Easdaq.

Trading in the firm's stock was suspended on both markets on 9 November. On current quoted figures, L&H is now valued at about $470m, more than $1bn below its book value.

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