FOR IMMEDIATE RELEASE

Paradigm’s Participation in Celeritas’ Bankruptcy

In 2007, Paradigm instituted a lawsuit against Celeritas in which Paradigm asserted claims of fraud, trade-secret misappropriation, breach of contract, breach of fiduciary duty, and violation of the federal computer fraud and abuse act. The jury returned a verdict in Paradigm’s favor, including a finding that Celeritas was liable for fraud, in December 2009. On December 14, 2009, the United States District Court for the District of Kansas entered judgment against Celeritas in the amount of $2.7 million, which included $1.1 million in compensatory damages and $1.6 million in punitive damages. Paradigm is also asking to recover its attorney’s fees from Celeritas, and the Court is currently considering Paradigm’s application.

On July 13, 2010, Celeritas filed a voluntary petition for bankruptcy with the United States Bankruptcy Court for the District of Kansas. As Celeritas’ largest creditor, Paradigm has closely followed the bankruptcy proceeding and participated as appropriate.

Celeritas has asked the Bankruptcy Court to allow the company to sell the majority of its assets (software, intellectual property, accounts receivable, contracts, data, etc.) through a "Section 363" auction. The Bankruptcy Court has not yet approved this process or ruled on Paradigm’s objections to the sale. On July 28, 2010, the Bankruptcy Court granted Paradigm’s request to conduct discovery into Celeritas and its bankruptcy filing. That process is still underway.

If the sale/auction process is finally approved, qualified companies can present a bid to buy Celeritas’ assets. On July 27, 2010, Celeritas asked the Bankruptcy Court’s permission to hire an investment bank called FOCUS, LLC to market Celeritas’ assets and find potential buyers.

You may have heard of a company called DRD or its owner, Donald R. Davis. In bankruptcy terminology, DRD is a "stalking horse" bidder. Meaning, DRD has presented a first bid on the assets. If approved by the Bankruptcy Court, DRD’s bid will start the auction. Other bids will then be received and considered — just like any other auction. There is no guarantee DRD will be the winning bidder.

At the conclusion of the auction, the winning bid, whether from DRD or another company, will be submitted to the Bankruptcy Court for approval. As of today, no date has been established for the auction.

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