Austin’s Crossroads Systems seeks bankruptcy protection

Restructuring plan to give Dallas firm 49.5% stake for $4M.

Austin-based technology company Crossroads Systems has filed for bankruptcy protection, and has agreed to a restructuring deal that will bring it millions in cash from a Dallas-based investor in exchange for a significant ownership stake in the company.

Crossroads Systems said in a news release that it has reached an agreement with 210/CRDS Investment LLC – an entity controlled by Dallas investor Robert Alpert — to receive $4 million in cash and $10 million in financing in exchange for a 49.5 percent ownership stake in the company.

The plan has been approved by the shareholders that control more than two-thirds of the company’s preferred shares, Crossroads Systems said. The deal would still have to be approved by a bankruptcy court judge, as well.

“We are pleased 210/Crossroads Investment LLC has chosen to make an investment in Crossroads Systems Inc. The investment capital will allow Crossroads to continue to monetize its patent portfolio while pursuing potential acquisitions that can create value for investors,” Richard K. Coleman Jr., executive director at Crossroads Systems, said in a written statement.

Crossroads Systems was founded in 1996 as a developer of software to connect and protect data enterprise storage and cloud computing.

Today it is an intellectual property licensing company that has licensed patents to more than 50 companies since 2000. Since 2000, Crossroads Systems says, companies that use its technology have paid more than $61 million in fees.

Crossroads Systems’ shares closed Tuesday up 26.2 percent, or 57 cents, at $2.75.