Quirky has filed for Chapter 11 bankruptcy and has accepted a $15 million bid for the Wink home automation hub from Flextronics, the contract manufacturer that originally built the device. Quirky’s bankruptcy filing cites between $50 million and $100 million in debts and between $10 and $50 million in assets. Its largest unsecured creditor is Flextronics, while its most surprising unsecured creditor might be former Quirky CEO Ben Kaufman, who is owed almost $300,000.
The company’s initial blog post notes that it plans to sell all of its assets. Earlier this summer former Quirky CEO Ben Kaufman explained that he has only $12 million in cash left and his goal was to try to save Wink. This was after Kaufmann’s interview onstage at Fortune’s Brainstorm Tech conference where he confessed to being out of cash and explained Quirky’s shift from making physical products to signing partnerships with established brands to help them figure out how to invent new products more rapidly with the aid of the Quirky community.
So far Quirky has so far only managed to find a potential buyer for Wink in Flextronics, although another bidder might emerge in the bankruptcy process. If another bidder emerges the total price for Wink could go higher. The parties involved hope the process will be complete in 60 days, and a Wink spokesman says “This does not impact how users experience Wink, and they will continue to receive the same support after the process is finalized.”
Quirky has been trying to sell the Wink division for ever lower amounts since at least March of this year, when it was asking for roughly $30 million for the home automation hub and software. Sources told me that companies that included Amazon (AMZN) had looked at the hub, but a security snafu in May ultimately scared off potential buyers. As for the thousands of Wink hub owners out there, it appears they will get a bit of a reprieve.
The blog post on both Quirky and Wink sites says:
As for Quirky, the company is trying to drum up bids and will conduct an auction within the next 60 days. Meanwhile, Quirky product evaluation and development projects are suspended.
The company has engaged Cooley LLP and Klestadt Winters Jureller Southard & Stevens, LLP as counsel, FTI Consulting as its restructuring advisors, Centerview Partners LLC as investment banker with respect to the Wink assets, and Hilco Streambank as investment banker with respect to the Quirky assets.
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