NEW WESTMINSTER, BC, Sept. 21, 2020 (GLOBE NEWSWIRE) — DigitalTown, Inc. (OTC: DGTW) (the “Company”) announces that the Company has filed for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Minnesota, St. Paul Division, paving the way for business continuity, profitability and sustained growth in shareholder value.
Following the announcement of a new management team in May 2019, DigitalTown began making substantial progress on their commitment of cleaning up the Company’s balance sheet and exploring opportunities that would bring value to the Company’s shareholders. DigitalTown was successful in converting over $2 million of debt into stock and structuring a go-forward plan with appropriate financing measures. The plan’s execution was conditional on negotiating a satisfactory resolution with its former CEO who had an active, previously disclosed lawsuit against the Company at that time. DigitalTown’s various negotiation efforts were unsuccessful, leading to the granting of a summary judgment motion in favor of the Company’s former CEO due to the Company’s inability to access resources to formally defend itself.
Since that time, this same party has filed another lawsuit against the Company and has made hostile threats of additional suits against the Company as well as personal suits against directors and officers, unless management resigned and turned over control of the Company to him. DigitalTown’s management has been working on a detailed plan for moving the Company forward and realizing value for shareholders and all stakeholders, and is prepared to execute on this plan after a successful reorganization. In the absence of an alternate, genuine plan for the business clearly articulated by any other party, management would have considered it a breach of its fiduciary duty to turn the Company over to anyone to simply avoid the inconvenience of threatened, specious lawsuits.
“After careful consideration of all challenges and alternatives, we firmly believe that our Chapter 11 process represents the best long-term solution for DigitalTown to address its legal and liquidity challenges and to strengthen its operations for future growth and profitability,” said Sam Ciacco, CEO and Chairman of the Board of DigitalTown.
DigitalTown’s approach to leveraging the benefits of Chapter 11 allows the Company to emerge with a healthy balance sheet and reorganize its debt and fairly treating creditors, while ensuring existing shareholders retain their equity stakes. Management decided on this preferred alternative to a Chapter 7 Bankruptcy in which the positions of DigitalTown’s creditors and shareholders positions would be entirely lost. This remains a possible outcome should the Company’s plan be obstructed in some way.
DigitalTown’s board and management is appreciative of the support and endorsements received to date from so many of its stakeholders.
Founded in 1982, DigitalTown has serviced various sectors from sports to computer training to computer hardware and software. DigitalTown develops turn-key hosted solutions for economic development, civic engagement and digital inclusion platforms for both web and mobile devices, improving the quality of life for residents and visitors in cities around the world.
This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The matters discussed herein include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to the future operating performance of the Company and its asset utilization. Investors are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward looking statements as a result of various factors.
The Bankruptcy Case will likely result in holders of our liabilities and/or securities receiving no value for their interests. Because of such possibilities, the value of these liabilities and/or securities is highly speculative and will pose substantial risks. Trading prices for the Company’s common stock may bear little or no relationship to the actual recovery, if any, by holders thereof in the Bankruptcy Case. Accordingly, the Company urges extreme caution with respect to existing and future investments in its common stock. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our view only as of the date hereof, and which we assume no obligation to update.