Quirky, Inc., a company that offers its inventors a forum for social product development and its customers an opportunity to acquire the most innovative products on the market, has announced in a blog post that it has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code.
The company took this action to help facilitate the sales of all of its assets.
Quirky said in the press release that Chapter 11 is the most effective and efficient process it could undertake, after considering and examining various alternatives available, to help the company in facilitating the sale of substantially all of its assets.
Chapter 11 provides certain advantages that can help enhance the value of Quirky's assets as it look for potential suitors.
Quirky also said in the press release that it has accepted a $15 million bid price from Flextronics International USA, Inc. for the sale of certain assets related to the business of Wink, Inc.
The sale will still be subject to higher or better offer as the company is still looking to conduct an auction.
Quirky also adds in the press release that it is looking to establish a stalking horse bidder for certain assets as it works with potentially interested parties.
The assets include those related to the Quirky online community and the Quirky name.
The Wall Street Journal adds that Quirky's filing of bankruptcy protection marks the "brightest flameouts" for a venture-backed company.
The company has received approximately $170 million in equity investments from prominent venture firms in Silicon Valley.
The reasons for Quirky to unravel are unclear, but a source familiar with the matter told The Wall Street Journal that the company has struggled to deliver its products at scale.
The company had also stumbled with distribution.
The Wall Street Journal said that the filing of the bankruptcy comes ahead of the maturity date of its $19.8 million revolver, which will mature in a month.
Quirky also faced $8 million in deferred payments for its acquisition of Undercurrent LLC, a company that provides consulting services.
The Wall street Journal adds that the company also has a $9.3 million secured term loan and a $36.8 million in unsecured bond debt.
Quirky also owe trade creditors an additional $28 million.
Firms that have invested in Quirky include Andreessen Horowitz, Kleiner Perkins Caufield & Byers, GE Ventures, Arizona Bay Technology Ventures, Atlas Venture, Contour Venture Partners, FreshTracks Capital, Lowercase Capital, Norwest Venture Partners, RRE Ventures, Village Ventures and individual investors, according to The Wall Street Journal.
