Webvan to sell assets in liquidation
( 2001-08-14 10:31) (7)
Online grocer Webvan Group Inc, which declared bankruptcy last month, said on Monday it is soliciting bids for its business units, technology platforms and other assets, but does not expect to raise enough money to pay its shareholders.
The company did say that based on a preliminary analysts, it does expect to have funds available for its unsecured creditors.
On July 13, Webvan, which raised a breathtaking US$1 billion to build a grocery delivery company in the early days of the Internet frenzy, filed for Chapter 11 under US Bankruptcy law, saying it would cease operations and terminate 2,000 employees.
Webvan had assets with a book value of US$1.2 billion and debts of US$106 million, according to papers filed in the US Bankruptcy Court in Delaware, where the company is incorporated.
Among its unsecured creditors is former Chief Executive George Shaheen, with whom the company said in May it would honor its agreement to pay him US$375,000 a year for life. He resigned in April, after Webvan said that although its first-quarter sales more than doubled to US$77.2 million, its net loss ballooned to US$217 million.
The company said it has contacted more than 60 potential buyers and expects several interested parties to submit offers by an August 27 deadline.
The centerpiece of the assets offered for sale is Webvan's electronic commerce platform for warehouse management. Last week, the company said it auctioned off the furniture, office equipment and material-handling systems from its Atlanta facilities in a first round of bankruptcy sales.
Webvan shares reached a high of US$34 on Webvan's debut as a public company in November 1999. Its shares no longer trade on the Nasdaq.
The company suffered as expenses reeled out of control, hampering acquisitions aimed to expand its geographic reach and ultimately sending it to the dot-com graveyard to join once-hyped Internet retailers such as EToys Inc, Pets.com and PlanetRX.com.
The start-up wasn't the only one to struggle with the grocery delivery business. Online grocer ShopLink.com went bust and Groceryworks.com -- an Internet shopping site run by No.3 grocery chain Safeway Inc -- has been "temporarily suspended" since June.