Tuesday December 21 11:35 AM EST

Java Pioneer Goes Bankrupt

Deborah Gage, ZDNet

Employees and creditors of Sanga International were told last week that the Java start-up has filed for bankruptcy, lessening chances they will ever be paid.

The bankruptcy is somewhat of a black eye for the Java community, because Sun Microsystems hyped Sanga's efforts during much of 1998. Former Sanga partners say the company had offices inside Sun headquarters for several months.

Sun declined comment about the bankruptcy.

Deloitte & Touche, which was helping to resolve claims against Sanga, told Sanga's creditors that settlement talks have fallen apart and that Deloitte is removing itself from the process, according to a document viewed by Sm@rt Reseller.

Settlement talks were initiated under an agreement struck last July, after Sanga CEO John Andrews filed a lawsuit alleging fraud by Sanga's co-founder, Shane Maine. As part of the agreement, Andrews withdrew the suit. Sanga had stopped paying some bills in the fall of 1998, and some employees are owed back pay for as much as 10 months.

Ironically, Sanga continued hyping itself during its financial troubles. In October 1998, Sanga named Sun Computer Systems president Masood Jabbar and former Bell Canada CEO John McLennan to its board of directors, as it continued to crank out press releases about customer wins. McLennan was heading the settlement talks, according to Sanga employees.

Things went sour from there. In its petition for bankruptcy, Sanga lists itself as a Barbados corporation that also went by the names Sanga Canada, Sanga USA, Sanga New Zealand, and Sanga Research. It estimates both assets and debts at between $10 million and $50 million.

Deloitte says a Canadian creditor has filed a petition in Toronto under the Bankruptcy and Insolvency Act against Sanga Canada and Sanga Research, whose creditors will be notified by the Canadian court.

Andrews and Sun have been busy trying to salvage Sanga's assets, but it's unclear how Sanga's creditors will benefit. In January, Andrews was named chairman and CEO of e-MedSoft.com, which purchased health-care management and billing software from Sanga International and Sanga e-Health in exchange for 41 million shares of stock. In a press release, Jabbar called the deal "perhaps the most significant Java-related development ever in the health-care industry." In addition, National Century Financial Enterprises pledged $22 million to finance Sanga's expansion into health care.

In March, e-MedSoft.com terminated its license agreement with Sanga International and became the sole marketer and distributor of its health-care software.

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