Quirky, the company behind Wink smart home products and the development of online-submitted inventions, filed for Chapter 11 bankruptcy today. In a statement posted to their website, Quirky said the filing was an attempt “to facilitate a sale of substantially all of its assets” in the face of growing debt, despite having raised $185 million from venture capitalists since its founding in 2009.
The news doesn’t come as a complete surprise to investors, as significant problems were suspected when Quirky stopped building its signature community -based inventions, and began outsourcing the ideas to its corporate partners instead.
The announcement also follows the ousting of then-CEO Ben Kaufman in light of several high profile financial hardships, who was subsequently replaced by Ed Kremer, the company’s CFO.
The company closed both its San Francisco and Hong Kong offices in June as well, and endured several rounds of layoffs over the past year to further reduce overhead, including 159 employees this summer alone.
Quirky’s struggles were profiled by Make: in February in response to a webinar hosted by Kaufman, who acknowledged his company had hemorrhaged over $100 million, while total profits amounted to just $9 million. Kaufman also admitted to problems with customer service and product distribution, suggesting Quirky had been grappling with depleted resources for some time.
While Quirky itself seems unlikely to survive post-bankruptcy, the company is trying to salvage its moderately popular Wink smart home product line, and has accepted a $15 million bid from Flexatronics. Quirky previously tried to sell Wink back in April to recoup losses– for double the current offer– however those plans were postponed when Quirky suffered an “embarrassing” security breach, and had to recall the Wink Hub.
The bidding process is still in its infancy, however, and another suitor may line up with a higher bid at an official auction 60 days from now– a welcome prospect given Quirky’s debts are estimated to be in the $50-$100 million range.