With Tens of Millions in Debt, Cloud Gaming Firm OnLive Barely Survived
August 23, 2012 1:52 PM
comment(s) - last by
Investors will only get 5 to 10 percent of what they paid back from the negotiated purchase/debt absolution
Joel Weinberg, CEO of Insolvency Services Group, shed some light on
cloud gaming service provider
OnLive's recent financial plight. He
Silicon Valley Mercury News
, "It was a company that was in dire straits. It only had days to live in terms of cash flow and the like. Something had to be done immediately or there would have been a hard shutdown, which would have been a disaster."
OnLive has received some criticism for moving some of its IT employees at its five data centers -- located in California, Georgia, Illinois, Texas, and Virginia -- to lower-paid contractor positions, and
laying off a handful of other employees
. Still, based on Mr. Weinberg's accounting, it was lucky all of the employees weren't released and the business fully liquidated.
According to him, OnLive owed creditors between $30M USD and $40M USD in debt that was about to mature, and it had no means of paying that bill.
But instead of liquidation, his firm negotiated a purchase by venture capital investors
, who previously had held a small stake in OnLive. Under the "
Assignment for the Benefit of Creditors
" (ABC) -- an alternative to bankruptcy -- the creditors and institutional investors (who included AT&T, Inc. (
), HTC Corp. (
), and Autodesk, Inc. (
)) received a fractional return on their respective stakes in exchange for forgiving the insolvent firm's debt. Mr. Weinberg says the expected payment to the debtors is approximately 5 to 10 cents per dollar earned.
OnLive narrowly avoided liquidation. [Image Source: Engadget]
That's the risk of venture capital, particularly pricey cloud-computing schemes, it seems.
The good news for OnLive subscribers is that the firm retains all its intellectual property so it is at no legal risk, and it expects to have no down-time from the transfer of assets to the new Lauder Partners-owned subsidiary.
In his interview, Mr. Weinberg declined to discuss how much Lauder Partners paid or whether their were alternative bids.
Silicon Valley Mercury News
This article is over a month old, voting and posting comments is disabled
8/23/2012 6:53:43 PM
This is the first time I've ever heard of Onlive so I downloaded it. I'm actually quite impressed! I'm not a gamer by any stretch, but this is really cool!
"The whole principle [of censorship] is wrong. It's like demanding that grown men live on skim milk because the baby can't have steak." -- Robert Heinlein
The OnLive Saga: How HTC, AT&T, Autodesk, and Others Got Burned
August 20, 2012, 10:50 AM
OnLive Launches with Free "Founding Members" Program
June 18, 2010, 9:00 AM
Die Shots Confirm A8 Packs Six PowerVR "Rogue" GPU Clusters
September 22, 2014, 4:05 PM
WSJ: Yes, HTC Nexus 9 ("Babel") is Incoming
September 22, 2014, 4:00 PM
Quick Note: Flagship BlackBerry Passport Smartphone to be Priced at $599 Unsubsidized
September 22, 2014, 3:31 PM
ChipWorks Confirms Apple's iPhone A8 SoC Switch to TSMC
September 22, 2014, 1:41 PM
A Year After It Was First Announced, PlayStation TV Headed to U.S. for $99
September 22, 2014, 11:37 AM
4.7" Samsung Galaxy Alpha to Grace AT&T’s Network Sept. 26 for $199 on Contract
September 22, 2014, 11:16 AM
Most Popular Articles
HTC Preps Nexus 9 With Nvidia K1 64-Bit "Denver" SoC, Android L Onboard
September 10, 2014, 10:21 PM
Apple iPhone 6, iPhone 6 Plus Reviews Roll In
September 16, 2014, 9:13 PM
Big Media: If You Want Privacy, You're Probably a Pirate
September 18, 2014, 2:57 PM
Apple Cripples NFC in iPhone 6, 6+ With Developer Ban
September 17, 2014, 1:00 PM
Home Depot Credit Card Theft is the Biggest in History, 55 Million Cards Stolen
September 18, 2014, 7:53 PM
Latest Blog Posts
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information