RealTime IT News

Bankruptcy for GeoNet, Hope Remains

GeoNet Services Inc., a Houston, Texas-based application service provider serving the oil and gas industry, Wednesday filed for Chapter 7 bankruptcy after failing to secure new funding for the two year-old venture.

According to published reports, GeoNet ran out of funds after the events of Sept. 11 prevented the company from closing a new round of funding and put paid to plans for a crucial merger deal, when the attacks on the World Trade Center towers destroyed offices of the backing firms for New York-based East River Ventures, GeoNet's key investor.

Offices were also lost by Isis, a French firm that had invested several million dollars in GeoNet last November.

GeoNet was depending on a loan from East River Ventures to secure an alliance with Petris Technology, a local energy technology firm. Both firms saw an opportunity to survive in the flagging energy-linked technology market through combining GeoNet's relationships with more than 70 software companies using Petris' Web-based data retrieval and conversion tools.

"We had signed the term sheet with the investors and were ready to move forward with the merger," says James Pritchett, president and CEO of Petris told the Houston Chronicle. But things changed over night when the funding was called off.

Pat Herbert, CEO of GeoNet does not know if East River Ventures lost interest because of the tragedy or were simply unable to operate without offices, but says attempts to woo new investors were impossible so the firm had to shut down: "In the weeks after the attack, it was an environment where no one could sit down and think about a high-risk investment like ours," he explained to the Houston Chronicle.

However, GeoNet's demise has not killed the idea that provided the impetus for the planned merger. Petris has hired several GeoNet employees, Herbert included, to rebuild the business within Petris and there is speculation that through the bankruptcy trustee, Petris may purchase some of GeoNet's intellectual property:

"We think there's a lot of value in their business, even if it hadn't fully taken off," Pritchett told the Houston Chronicle. He believes the defunct merger may yet provide an opportunity for Petris.