Online Auction to Feature Bankrupt Dot-Com Assets

SAN MATEO (08/08/2000) - In what apparently is the first such instance, an online-auction company will offer the entire holdings -- from domain names to chairs and desks -- of a bankrupt Internet company up for bid later this month., a Silver Spring, Md.-based online marketplace for buying and selling high-value, distressed assets, will oversee the sale of's remaining assets, which include everything from domain names to computer equipment software, printers, and office equipment. filed for Chapter 7 liquidation in the Northern District of Virginia earlier this year.

"Everything has changed since April with the market," said Bill O'Leary, vice president of marketing at "It got a lot more difficult (for dot-coms) to raise money. A lot of these firms are not able to go out and get more capital, and now they're seeing the cash run out and they're having to look for alternatives. Bankruptcy often takes months, and now you're seeing some of those firms emerge from the other side of the process, into bankruptcy or liquidation."

Indeed, O'Leary said was talking with officials at eight to 12 other Internet companies -- which he would not identify -- that are looking to offer at least some of their assets for auction on the site, in situations that range from filing for bankruptcy to liquidating a portion of their assets in hopes of surviving.

"We maximize their return on the sale of their assets," O'Leary said. "It's a natural thing in business to fail from time to time, and what we do is make it as graceful and exit as possible, and return as much money as we can to them."'s assets will be viewable in a preview beginning Tuesday, and the 10-day auction will begin Aug. 14, according to, which was founded last November and has listed more than $1 billion of assets for auction in the last six months"The people who would be interested in this will respond very well. They are comfortable using the Internet to get their information," said Warren Agin, a lawyer at the Boston firm Swiggert & Agin and author of Bankruptcy and secured lending in cyberspace. "You'll see more of it, especially as these kinds of things go on."

There are several advantages to auctioning off assets online, according to O'Leary and others. For one thing, the pool of potential buyers is worldwide.

And thanks to the ubiquitousness of the Internet, information can be shared and accessed instantly.

"If you're in a bankruptcy case and need to sell assets, the ability to put your information up on the Web is very, very useful," said Richard Tilton, a New York-based attorney who specializes in bankruptcy trends. "A buyer can evaluate pretty quickly what's out there."

Tilton, who is with the law firm of Greenberg Traurig and author of the book Bankruptcy Business Acquisitions, pointed to the recent privacy fiasco surrounding as controversy that could have been avoided with a Web auction.

Last week, 44 state attorneys general filed a legal brief protesting a proposed settlement between and the Federal Trade Commission that would allow the defunct online toy seller to sell its customer data to another company.

A potential customer could avoid such issues if all the documentation relevant to a bankruptcy case -- particularly court filings -- were viewable on the Web, Tilton said.

"If I'm a buyer, I could have gone to, looked at all the available information and done my due diligence right over the Web," Tilton said.

O'Leary agreed, saying "you won't see very many customers lists [up for auction] in the short term" because of the case., which was based in Alexandria, Va., was a wireless-technology company that focused on connecting public offices with constituents. In a statement, company officials blamed its failure on a lack of funding and poor market timing as it "tried to transition from a business-to-business consumer-oriented Web site to business-to-business."

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