Personalized e-mail, rewards company Netcentives
Tuesday tossed in the towel and said it will reorganize the company under Chapter 11 of the U.S. Bankruptcy Code.
Outside of a major upheaval for the 130 employees at the company, the news also impacts Netcentive’s subsidiaries, Post Communications and MaxMiles, but apparently not its customers.
San Francisco-based Netcentives says it intends to maintain operating of all existing loyalty programs and services, including its ClickRewards, Delta SkyMiles Shopping, and United MileagePlus Shopping rewards networks, the E-mail Marketing Group and other related services.
Meantime, the company is looking to sell its business assets in an auction sometime in November.
“The filing is an important step in protecting the value of our loyalty and e-mail business operations and the underlying intellectual property, patents and source code as we seek to sell the company’s business operations,” says Netcentives CEO Eric Larsen. “The asset auction is a continuation of a restructuring plan announced earlier this year in which we are now divesting assets and reviewing payables under the guidance of the court to prioritize liabilities and preserve cash flow for creditors and, potentially, shareholders.”
As for Netcentive’s E-mail Marketing Group, formerly Post Communications, the company signed a letter of intent to sell off the assets to Plum Acquisition Corp., a company headed by Post founder Hans Peter Brondmo. The bankruptcy court needs to approve that portion of the deal and could open it up to competitive bids.
Larsen says Netcentives has signed a multi-million dollar patent licensing agreement with an undisclosed Internet media company. The agreement lets that company operate the online portion of Netcentives’ rewards programs under U.S. Patents No. 5,774,870 and No. 6,009,412. The mystery company is more than likely AOL or PlanetU, which the company had previous dealings with.
The company’s implosion seems to come from a cash flow problem and failure to attract large-scale, traditional clients. A company-wide restructuring eventually led to two rounds of staff cuts – once in August and again in September. This is about the same time the company had been bounced off the Nasdaq trading boards for holding a stock price under a dollar.
Netcentives says it has just enough cash on hand to finance its operations through auction of its assets, including supporting the company’s post-petition trade and employee obligations.