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How a VC-Backed Debt-Ridden Company Liquidated and Paid Back Creditors

From the Desk of Dr. Doom, Chief Restructuring Officer:

Trigger Warnings: Uncontrollable engineer spend

In a world where startups rise and fall at the drop of a hat, my reputation preceded me. They called me Dr. Doom, not because I brought the end, but because I could discern when it was inevitable and how to manage it. One could say I had a knack for telling whether a company was a phoenix waiting to rise or simply ashes blowing in the wind.

Silicon Valley in 2016 was a cauldron of innovation, but for every gem, there were countless stones. An email from a familiar name, Jordan, the analytical board member of many a venture, caught my attention. The subject line simply read: “Need Your Expertise.”

I clicked.

Joseph and Samuel, two co-founders who were as different as night and day, had managed to raise a commendable $12 million for their video processing venture. However, ambition had turned to desperation, and they found themselves drowning in a sea of debt.

The conversation I had with Joseph was a familiar one. Driven, direct, and always wanting to be in control, he laid out the facts for me. Their revolutionary tech had hit a brick wall, and with liabilities touching $18 million, their venture was hanging by a thread.

My next call was with Samuel, the more affable and people-oriented of the two. His upbeat demeanor did little to hide his stress, but his belief in their product was unwavering.

I took a look at my notes:

  • Too much debt
  • The product still not finished
  • Uncontrollable burn rate

Turnaround or Wind-down?

The first order of business was the Assignment for the Benefit of Creditors or ABC, a course of action that would give me control of the company’s assets to get the maximum value in liquidation. It was a bitter pill for the brothers to swallow, but it was their best shot.

The following weeks were a whirlwind. In-depth assessments, auctions, negotiations. My experience and methodical approach had us navigating the treacherous waters. The software assets caught the attention of a leading tech giant, who eventually bought them for $2.8 million. It wasn’t the billion-dollar exit Joseph and Samuel had dreamt of, but it was far from the abyss they were staring into.

The physical assets followed. Desks, chairs, servers – all sold to the highest bidder. Every dollar counted.

Yet, even as the physical reminders of the company were sold off, my job wasn’t done. I had to manage a myriad of conversations, ensuring that debts were paid, and obligations met. Over two years, I made sure every creditor, employee, and stakeholder was taken care of.

In the end, while the company may have dissolved, its legacy lived on in its tech and the many lessons learned. As for me, Dr. Doom, I moved onto the next challenge, leaving behind a trail of structured resolutions.

Facing startup wind-down, bankruptcy, or debt? Ravix Group is your expert in startup liquidation, finance, bookkeeping & accounting. Manage your VC-backed startup journey right with industry professionals from Ravix Group.

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