Cybersecurity company founded by ex-NSA director files for bankruptcy | #hacking | #cybersecurity | #infosec | #comptia | #pentest | #ransomware

Keith Alexander, president and CEO of IronNet Cybersecurity and former Director of the National Security Agency, speaks during the TechCrunch Disrupt event in New York City, U.S., May 16, 2017. REUTERS/Brendan McDermid Acquire Licensing Rights

  • IronNet intends to seek a 90-day bankruptcy sale
  • Company terminated its employees in September
  • IronNet has about $35 million in debts

NEW YORK, Oct 13 (Reuters) – Cybersecurity company IronNet, founded by a former director of the U.S. National Security Agency, has filed for bankruptcy protection in Delaware, seeking to sell its assets.

U.S. Bankruptcy Judge Brendan Shannon on Friday signed off on some of the company’s initial steps in bankruptcy during a court hearing, including approving an agreement that would restore the company’s access to customer data and other key information held by Amazon Web Services.

The MacLean, Virginia-based company, which filed for Chapter 11 on Thursday, had terminated its 104 employees and shut down operations on Sept. 29 after a series of setbacks including a shareholder lawsuit, delayed payments from foreign government clients, difficulties finalizing new client contracts, and the termination of key cloud computing services provided by Amazon Web Services.

“Simply put, the company ran out of money,” IronNet president and CFO Cameron Pforr wrote in court documents.

IronNet, which owes about $35 million to its creditors, initially believed it would have to pursue a Chapter 7 liquidation, according to its court filings. But two bidders stepped forward to fund a Chapter 11 restructuring that would allow for a more orderly sale of its assets.

IronNet intends to fund its bankruptcy with a $10 million loan provided by IT networking company ITC Global. That loan would be converted into company equity if no buyer steps forward during the bankruptcy, according to court documents.

IronNet will use the loan proceeds to conduct an auction of its assets, restore its cloud computing services, re-hire terminated employees, and continue to serve its customers. The company intends to complete a bankruptcy sale within 90 days.

The company, founded in 2014 by former NSA director Keith Alexander, along with former top officials of the U.S. Department of Defense, the National Counterterrorism Center, and the Defense Advanced Research Projects Agency, went public via a special purpose acquisition company transaction in 2021.

A shareholder who purchased equity after the transaction later sued IronNet over bullish statements that the company made about its revenue projections and new contract pipeline, saying that the company misled investors and caused stock prices to double over a three-day period in September 2021. IronNet has denied the allegations, and the shareholder lawsuit remains pending in Virginia federal court.

IronNet became a private company again in July 2023, through a transaction with C5 Capital. Alexander stepped down from his CEO role as part of the take-private transaction.

The case is In re: IronNet Inc., U.S. Bankruptcy Court for the District of Delaware, No. 23-11710.

For the debtor: Kenneth Enos, Elizabeth Justison, Timothy Powell and Kristin McElroy of Young Conaway Stargatt & Taylor.

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Reporting by Dietrich Knauth

Our Standards: The Thomson Reuters Trust Principles.

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