SAN JOSE, Calif. A failed lawsuit has forced Aptix Corp., a provider of rapid prototyping systems, into Chapter 11 bankruptcy, EE Times has learned. Coming on the heels of the imprisonment of its former CEO, Aptix was granted Chapter 11 protection after being unable to pay court-ordered fees to Cadence Design Systems.
Aptix' woes stem from a civil case in which Mentor Graphics licensed an Aptix patent to sue Quickturn Design Systems, now part of Cadence, as part of an ongoing battle over emulation patents. The suit backfired in 2000 when a court ruled that Amr Mohsen, former Aptix CEO, and his brother Aly fabricated evidence and committed perjury. The Mohsens were subsequently indicted, and late last month, Amr Mohsen was arrested and jailed as a potential flight risk.
Also in 2000, Aptix was ordered to pay Cadence $4.2 million to cover that company's legal fees. Aptix was unable to complete the payments, so the company won Chapter 11 protection April 28, 2004, following an April 1 court order assigning all current and future receivables to Cadence Design Systems.
Aptix senior vice president of marketing and business development Charlie Miller said Aptix paid Cadence $2 million after the 2000 ruling, but could not keep up with the payment schedule for the balance, which prompted the April 1 judgment against Aptix and subsequently this week's Chapter 11 filing.
"We have been operating at a cash-flow breakeven for about the last year, and as a result of the court order April 1st we had no choice but to file Chapter 11," said Miller. "The judge has agreed to let us continue our operations, collect revenues and operate under Chapter 11 protection."
Miller said as a result of the Chapter 11 protection, Aptix will be able to continue to support customers and innovate IC prototyping systems.
In late March, Amr Mohsen was arrested and imprisoned by FBI agents after allegedly trying to flee the country days before he and his brother were scheduled to appear in court to answer to charges related to their actions during the 2000 civil suit.
Miller said the company is looking forward to putting this chapter behind them. "Everybody here has been working without pay during this period because they believe in this company and want it to go forward," said Miller. "One of the big results coming out of the ruling today is that we get paid going forward."
In March, 2003, Mohsen and his brother were indicted on 19 counts, including conspiracy to commit perjury, perjury, subornation of perjury, mail fraud and obstruction of justice. The maximum statutory penalty for each count is five years in prison.
In the 2000 civil case, Mentor licensed a patent from Aptix and used it to sue Quickturn. A judge dismissed the case after ruling that Aptix's patent documentation was fraudulent. Court documents from the 2000 case stated that Mohsen falsified engineering diaries and staged a break-in of his own car allegedly to conceal evidence.