Lernout & Hauspie auctions assets to shrink debt-mountain

Bankrupt Belgian speech recognition company Lernout & Hauspie is expected to make only a small percentage of the money needed to clear its million dollar debts when it auctions its assets.

Bidding started at the company's New York office yesterday afternoon. The company has divided its assets into eight lots, which can be bought individually, in combinations or as a whole.

Lernout has been struggling to fend-off bankruptcy for the past year. Bidders were given until 21 November to submit offers, subject to approval by a band of lawyers and investment bankers.

Former rivals Speechworks International and a Lernout subsidiary, Dictaphone, are expected to be looking for financial backing so they can snap up bargain basement priced speech technology.

Speech recognition technology bought in 2000 from Dragon Systems for more than $500m is on sale for $6m while the entire eight lots have an opening bid of $21.5m. At Lernout's height of popularity last year it was valued at $9bn.

Dictaphone is expected to start bidding for Dragon following a court-approved licensing agreement last month to use its technology. However, the founders of Dragon Systems, Janet and James Baker, are currently embroiled in extracting their former company from Lernout's bankruptcy misery.

Over the past few months Lernout has sold nearly $74m worth of assets. In August, Lernout's translation division, Mendez, was bought for $44.5m by financial printers Bown & Company. Its computer translation unit, Applications Technology, was sold for $2m to Apptek Partners.

The medical transcription business was sold to Medquist for $25m while two weeks ago, executives of Lernout's reading for the blind business - Kurzweil Educational Systems Group - offered to bail out the unit for $2m.