Aereo Chapter 11 Filing Lists $4.5 Million in Cash Assets, $4.2 Million in Liabilities
Video streaming service Aereo has about $20 million in assets, including about $4.5 million in cash, and faces $4.2 million in liabilities, plus potential damage claims from broadcasters, the company said in a Chapter 11 bankruptcy filing Thursday in U.S. Bankruptcy Court in Manhattan.
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Aereo's June defeat in the U.S. Supreme Court (see 1406260071) and ongoing litigation “have proven too difficult to overcome,” said Aereo founder Chet Kanojia in an open letter on the company's website. Declaring Chapter 11 bankruptcy will suspend the legal claims against the company while it attempts to go through its restructuring, several broadcast attorneys told us.
Aereo is pursuing a restructuring with the hopes that it will be granted a compulsory copyright license and that a proposed FCC rule change to redefine over-the-top services as multichannel video programming distributors will come to fruition, says the bankruptcy affidavit, which quotes FCC Chairman Tom Wheeler as saying the move could help Aereo. “If the FCC elects to permit internet transmission of local linear broadcast channels, then the Debtor, assuming its continued viability, expects to be able to operate profitably within that framework,” the affidavit said. Despite seeing Wheeler's comments as a good omen, Aereo's board voted Nov. 14 to move ahead with the bankruptcy because “the timing of a decision from the FCC is uncertain,” Aereo said. The broadcast plaintiffs in the case declined to comment, and NAB didn't comment on the bankruptcy declaration.
Aereo's largest creditor is Level 3 Communications, to which it owes just over $600,000, according to the affidavit. It also owes just over $520,000 to Quality Technology Services, around $300,000 to Google, $120,000 to law firm Fish & Richardson and around $100,000 to law firm Bingham McCutcheon, the affidavit says. Five of its top 20 creditors are law firms, according to the affidavit. According to the affidavit, Aereo raised about $95.6 million in venture equity as its business grew, and generated more than $3 million in gross revenue before it stopped operating. The company laid off 74 employees earlier this year and has only 14 remaining employees, the bankruptcy documents said.
The most active of the several court cases against Aereo is the case brought by broadcasters in U.S. District Court in Manhattan that led to the arguments before the Supreme Court and the currently in-place nationwide injunction against Aereo's service. Earlier this month, Aereo and the broadcast plaintiffs were ordered to each submit motions for summary judgment in the case by Feb. 16. Its other cases in Utah (see 1402210067) and New York (see 1305080048) are currently stayed. Although the amount of damages that could be granted against Aereo isn't yet clear, the company estimates it as being less than $5 million, the affidavit says. The bankruptcy temporarily “hits the pause button” on the company's copyright infringement cases, said Fletcher Heald appellate attorney Harry Cole, who is not connected to the litigation. The bankruptcy court “will be in a position to determine what Aereo’s assets are and how they should be distributed,” Cole said.