GovWorks sells off key tech, files for Chapter 11

American Management Systems Inc. and eOne Global LP, a developer of Internet-based

payment technologies, announced in January that they have signed a letter

of intent to buy govPay, the transaction-processing business of embattled

govWorks Inc.

GovPay provides state and local governments with the tools for online

payment of taxes, utility bills and parking violations, as well as for securing

recreational and other governmental permits via the World Wide Web.

GovWorks was in the news in November when it laid off employees as part

of a restructuring effort, according to David Camp, vice president of marketing

for the New York City-based company.

Under the terms of the letter of intent, eOne and AMS will jointly acquire

the govPay payment-processing software and related assets from govWorks.

Also, eOne will operate the govPay business — including servicing existing

contracts — and will assume responsibility for about 35 govWorks employees.

"We have expanded our capabilities to serve the needs of customers at

the state and local levels," said Garen Staglin, president and chief executive

officer of eOne. "In places like New York City, people can now pay traffic

tickets online thanks to govWorks and govPay." There are more than 20 similar

systems in place throughout the country.

The eOne Cashtax operation has been handling electronic payments for

local, state and federal governments for more than 15 years; clients include

the Internal Revenue Service and the governments of California, New York

and Texas, Staglin said. Each year, Cashtax processes more than 36 million

payments for more than 2 million taxpayers, totaling more than $1 trillion

in federal, local and state taxes.

AMS and eOne have a joint marketing agreement. And in addition to cash,

AMS will contribute all of its current investments in govWorks as part of

the purchase price.

The sale of govPay will be completed in the context of the Chapter 11

reorganization process being pursued by govWorks. The parties anticipate

that eOne and AMS will assist in funding govPay business operations pending

the closing of the sale.

"We're waiting on the formality of a bankruptcy proceeding and expect

that to be a four- to six-week activity," Staglin said, adding that the

parties have begun account planning and technology integration.

Linda Morse, chief operating officer of govWorks, said the sale of govPay

was a "wonderful opportunity for us to speed up the growth of eOne and govPay."

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