The online gaming company OnLive still owes creditors $18.7 million. Even after its buyout.
You may recall that, when the purchase of troubled gaming company OnLive took place in August, the deal closed for an unknown sum of money. Thanks to a letter from Insolvency Services Group – the company handling OnLive’s bankruptcy process – now we know what it takes to buy a company at what consultant Geoffrey Berman described as a “death’s door” valuation: $4.8 million. That price tag still leaves OnLive’s creditors short $18.7 million, never mind an $80,000 tax bill that OnLive also owes.
Creditors can expect to see about $0.26 on the dollar when all claims are settled. One creditor, Regina Chan of family-owned bakery Prolific Oven, is still looking for the $2,000 that OnLive racked up in unpaid bills. “It’s unfortunate for us because we are small,” Chan said. The $2,000 represents about a month’s worth of snacks that OnLive never paid for.
According to Insolvency Services Group, the deal was the best OnLive could hope for in the circumstances. OnLive had just enough cash to settle payroll obligations and nothing else, which meant that its patents and other IP were vulnerable. Without those assets or funds to market them, OnLive was one auction away from total extinction.
Insolvency Services Group has settled some of OnLive’s original $30-40 million debt burden, but that still left a considerable amount of money owing to creditors like the Chan family bakery. OnLive is still up and running, thanks to the buyout. According to Silicon Valley’s Mercury News, OnLive has claimed that the problem with its previous incarnation was not its business model, but its lack of capital. Perhaps new owner Gary Lauder has some ideas as to where that capital might come from.
Source: Mercury News
