The Amp’d Mobile bankruptcy situation posted by Joe on June 5th, 2007 - 11:11 am | Amp'd Mobile
In a move that doesn’t come as a surprise to many, Amp’d Mobile has filed for Chapter 11 bankruptcy protection in Delaware.
For those not familiar with Chapter 11, it means that the company is filing with the government for temporary protection from its creditors. While the company is protected under Chapter 11, it will figure out how to restructure debt and seek additional funding. However, there is always a chance it could fold.
According to mocoNews.net, it appears that Amp’d has the funding to make this a quick proceeding. The state of management is still in question, as it probably should be. Many times, a series of poor managerial decisions leads a company to bankruptcy, so the securing of funding and a change of management can bring it back.
The Verizon MVNO has roughly 200,000 subscribers, so it’s fully possible that they do rebound. That is a respectable customer base, which puts the heat more directly on management. This notion is furthered by numerous reports of terrible customer service practices.
As for money owed to creditors, it’s quite a list, and totals to more than $100 million, which the company claims is more than its assets. Here’s a short breakdown:
Verizon: $33 million
Motorola: $16 million
Vivendi: $10 million
BestBuy: $8 million
MTV Networks: $1.8 million
Other creditors include venture capital firms RedPoint Ventures, Highland Capital Partners, and Columbia Capital.
Bankruptcy hearings will probably be heard throughout June. We’ll keep you posted as the situation progresses.
Update: Man, the guys at mocoNews have this thing covered like a ’65 Caddy. Apparently, Verizon declared default on the $33 million debt on May 22, and gave Amp’d 10 days to pay off $4.5 mil of it. And there, ladies and gentlemen, you have your Friday bankruptcy petition.
Another development is that Amp’d is dealing with a number of non-paying customers. They’re said to have a subscriber base between 100,000 and 200,000, and are reporting that nearly 80,000 aren’t paying. Yep, that’ll lead you to bankruptcy pretty damn quick.
The first hearing is schedule for Tuesday. We’ll keep you on the up and up.