Nixed Nirvanix files for Chapter 11
Down the hatch in an orderly manner
Cloud storage startup Nirvanix that imploded last month, has formally admitted business defeat by filing for Chapter 11 bankruptcy.
It announced the fact on its website on October 1, saying:
On October 1, 2013, Nirvanix voluntarily sought Chapter 11 bankruptcy protection in order to pursue all alternatives to maximize value for its creditors while continuing its efforts to provide the best possible transition for customers.
In other words, it does not have enough cash to pay its creditors.
The company is working to help customers move their data to IBM SoftLayer, Amazon S3, Google Storage, or Microsoft Azure. IBM OEM'd the Nirvanix service as part of its SmartCloud service, and Nirvanix says, "We have an agreement with IBM, and a team from IBM is ready to help you."
Dell had a partnership with Nirvanix.
With its Chapter 11 filing Nirvanix can reorganize itself, as a debtor in possession, under the protection of US bankruptcy laws expressed through a federal bankruptcy court.
- There will be no funds available for unsecured creditors.
- CEO Debra Chrapaty signed the form as the debtor.
- Khosla Ventures and TriplePoint Capital hold the largest amount of Nirvanix equity and may provide debtor-in-possession financing to keep Nirvanix operational while it reorganises itself. (They would have first call on any cash generated by asset sale or liquidation.)
- Other equity owners include Intel Capital, Valhalla Partners and Mission Ventures. (Altogether Nirvanix took in $70 million in funding.)
- The largest unsecured creditor is Dell Marketing, owed $407,463.03.
- Other unsecured creditors include Nimsoft and Equinix, Salesforce.com ($28,305), ESG ($17,500), and Gartner ($15,500).
It is – relatively – good news for customers that Nirvanix is looking after their interests as best it can in the circumstances. Hopefully the incidences of data loss will be few. For the VCs, the incidences of dollar loss look likely to be huge. That's why it's called "Venture" Capital; the money is at risk. ®
Sponsored: Customer Identity and Access Management