UNCERTAINTY over the future of Auctionata-Paddle8 AG has intensified after the firm filed for preliminary insolvency in Germany to restructure its business.
Sales at Auctionata are expected to continue under a “special protection regime” in the hope of securing new funding, while subsidiaries Paddle 8 and ValueMyStuff may now be sold to a new investor.
Following speculation that the company had failed to pay its staff in December, a statement issued on January 16 confirmed it had appointed German restructuring and insolvency specialist Bernsau Brockdorff Insolvenz (BBL) as preliminary administrator.
Thomas Hesse took over the position as chief executive of Auctionata-Paddle8 from Auctionata founder Alexander Zacke in September 2016.
Hesse said: “The parent company is in several active conversations with promising investors to recapitalise, fund Auctionata’s strategic development, and further develop its powerful technology platform”.
However, these funds did not arrive quickly enough to avoid insolvency.
The company said there “currently cannot be any payment of sales returns” that were made before January 16.
Hesse added that any revenue from future sales will be held in escrow under the protection of BBL with any merchandise in warehouse storage considered “a separate estate that continues to be owned by the consigner”.
From a legal perspective, Paddle8 operations are not subject to the proceedings. A separate release stated that an agreement in principle had been reached with a “market-leading investor group” that will “fund Paddle8’s original founding team and management”.
Hesse said he believes “the proceedings and the separation will allow each brand and business to realise their potential and are ultimately the best way forward to protect our assets and employees”.
The two firms, together had close to $100m in four rounds of funding.