The Sunnyvale, Calif., company and its Cayman Island subsidiary Trident Microsystems (Far East) Ltd. filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington on Wednesday. The debtors are seeking joint administration, as well as the ability to continue using current cash management systems and to pay prepetition wages. No hearing had been scheduled as of Wednesday afternoon.

According to a company statement, the company will also seek stay protection in the Cayman Islands.

Entropic Communications Inc. has offered a $55 million stalking-horse bid to purchase Trident's set-top-box business, which makes devices used to transform signals from cables or satellites into images on televisions.

San Diego-based Entropic makes silicon and software solutions for home entertainment systems. According to a statement released by Entropic, the acquisition would bring together two complementary technologies.

Trident hadn't filed bidding procedures for the sale as of Wednesday afternoon, but a court declaration by Trident's executive vice president and general counsel, David Teichmann, said that the sale would allow the debtor to decide whether it should market and sell its other business lines or reorganize for future operations.

The Trident statement notes that the company's board of directors has already approved the sale to Entropic and that the sale is expected to close in late February.

"Trident, like many of its competitors, has been undergoing rapid changes which have hindered its ability to operate profitably," Trident CEO Bami Bastani said in the statement.

Founded in 1987 in Sunnyvale, Trident now has research-and-development facilities, as well as sales offices and operating facilities across the globe, including in Asia, Europe and a second U.S. location in Austin, Texas.

Upon its founding, Trident developed microchips for the PC graphic design industry, according to Teichmann's declaration. While Trident was originally successful, the microchip market shrank in size, leading the company to sell that business in 2000 and redirect its focus to the digital television market.

Trident then became a market leader for video controllers until 2008, when video and audio technology were combined into a single chip.

As the market for standalone video chips declined, Trident was again forced to reinvent its business.

In May 2009, the company acquired certain frame rate converters, demodulators and audio decoder products from Micronas Semiconductor Holding AG and in February 2010 purchased a set-top-box business from NXP Semiconductors NV. The latter transaction gave Trident 60% of NXP's common shares.

Trident's primary focus is now the set-top-box business and the audio and demodulator products purchased from Micronas and NXP, said Teichmann.

The company designs, develops and markets circuits and related software for televisions and computers. Its largest customers include Samsung Electronics Co., LG Electronics Inc., Sony Corp., Sharp Electronics Corp., Philips Electronics NV, Comcast Corp. and DirecTV Inc.

The television industry, however, is continually changing, making it difficult for Trident to operate profitably, said Teichmann. Increased prices from suppliers and the decrease in consumer purchases have forced the company to adjust its pricing. Teichmann also noted that manufacturers have been slow to develop new products, so consumers have little need to buy new home entertainment products. As a result, Trident has experienced operating losses and the deterioration of its outstanding common stock, leading Bank of America NA to terminate a line of credit it had previously provided.

In an attempt to fix its financial problems, Trident's board decided to reduce the company's workforce to 1,000 from 1,275 on Sept. 21, but Trident continued to experience declining revenues and losses, leading to the Chapter 11 filing.

Prior to seeking bankruptcy protection, Trident marketed its assets and chose Entropic as its stalking horse for an auction. Trident will continue to operate its business until the sale closes.

Also on Wednesday, Trident announced that it entered into a license agreement with RDA Technologies Ltd., under which RDA was granted a nonexclusive license to use one of its television products. Under the agreement, RDA made a $7.5 million up-front payment to Trident and will pay an additional $8.5 million.

According to a company statement, Trident believes the license agreement, along with its other revenue, will provide adequate liquidity for its obligations during the bankruptcy proceedings.

Trident is the parent company that oversees operations while its subsidiary, Trident Microsystems (Far East), conducts manufacturing operations and holds most of the entire corporation's intellectual property assets, supply contracts and finished goods.

A nonbankrupt subsidiary, Trident Microsystems (Hong Kong) Ltd., is the distributor for the products.

Trident doesn't have any secured debt, but owes about $215.3 million to unsecured creditors. Of that amount, about $128 million is from intercompany payables.

According to its petition, as of Oct. 31, Trident had assets of $310 million.

Trident is traded on Nasdaq under the ticker TRID. Its stock closed at 2 cents per share on Tuesday.

Entropic is also traded on Nasdaq under the ticker ENTR. It closed at $5.50 per share on Tuesday.

Debtor counsel Stuart M. Brown of DLA Piper LLP (US) couldn't immediately be reached Wednesday.