TORONTO – GuestLogix Inc. (TSX:GXI) has obtained court protection from creditors, allowing the payment technology company to continuing operating while it works to resolve its financial problems.
GuestLogix’s core business is providing airlines and passenger rail services with technology for processing onboard customer purchases.
The Toronto-based company had announced layoffs in October as it worked to cut operating costs and followed that in November by hiring Canaccord Genuity to assist with a strategic review.
On Dec. 16, GuestLogix’s board announced a formal review of accounting practices after a preliminary review suggested some contracts hadn’t followed proper revenue recognition policies.
The company’s main lenders also agreed in December to forbear from formally demanding repayments until Dec. 18, a deadline that was later extended.
On Tuesday, GuestLogix disclosed that it had obtained protection under the Companies’ Creditors Arrangement Act — which prevents lenders from seizing assets without court approval — after its senior lender filed a formal notice of default on Feb. 8.
“The company’s management will remain responsible for the day-to-day operations of the company,” GuestLogix said.
Under the CCAA proceedings, GuestLogix expects to continue operations uninterrupted and the company will meet its obligations to employees, key suppliers of goods and services and customers on an ongoing basis.
GuestLogix said its Dublin, Ireland,-based subsidiary, OpenJaw Technologies Ltd., isn’t covered by the CCAA proceedings.
Trading of GuestLogix shares (TSX:GXI) has been suspended pending a review by the Toronto Stock Exchange. They last traded Monday at 9.5 cents. Their 52-week high of $1.03 was hit nearly a year ago.