Video Web site Veoh Networks is bankrupt and its assets will be sold off to repay creditors, the company's top executive announced Friday.
Dmitry Shapiro, Veoh's founder and CEO, blamed the company's collapse on a costly legal battle with Universal Music Group, which Veoh ultimately won, and a difficult economic environment.
"Unfortunately, great vision, a passionate team, tens of millions of users, millions in revenues and victory in court were not enough. The distraction of the legal battles, and the challenges of the broader macro-economic climate have led to our Chapter 7 bankruptcy," he wrote in a blog post.
Unlike Chapter 11 bankruptcy, which allows a company to reorganize its business and repay its creditors over time, Chapter 7calls for the sale of the debtor's assets, with proceeds used to repay creditors.
Veoh, which allowed users to watch TV shows and other video content, raised US$70 million from investors but couldn't generate enough cash to stay afloat. Veoh had 28 million users per month and was on a "run rate" of $12 million, Shapiro said, apparently referring to the company's revenue.
However, a company's run rate is not the same as its actual revenue. A run rate takes a company's actual revenue and growth over a given period and uses these figures to forecast what revenue for an entire year.
Shapiro's blog post didn't reveal Veoh's actual revenue or the amount the company owes its creditors.
"This chapter of our lives has come to an end, but a bright new chapter will soon begin, and I assure all of you reading this, that we have lots of important work ahead of us. Stay tuned, you will hear from us again!" he wrote.