Veoh Networks plans to file for Chapter 7 bankruptcy and liquidate the business, company founder and CEO Dmitry Shapiro said on his personal blog Thursday.
The San Diego-based startup -- which provided video-sharing features a la YouTube -- had raised around $70 million. Investors included Time Warner Inc., former Walt Disney CEO Michael Eisner's Tornante investment firm, former Viacom CEO Tom Freston's Firefly3, former Viacom Entertainment Group CEO Jonathan Dolgen, Goldman Sachs, Intel Capital and Adobe Systems, among others.
Shapiro cited broader economic conditions and a fight with Universal Music Group, which had sued Veoh for copyright infringement.
"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 the blog post. "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."
Unlike Chapter 11 bankruptcy reorganization, the Chapter 7 variety involves selling off the company's assets and shutting down operations.
Veoh had grown to 28 million unique users per month, but struggled to make that popularity pay the bills. The company at one point had 110 employees but underwent a series of layoffs over the past year.
In addition, Veoh had been copyright-infringement lawsuit by Universal Music Group, which alleged Veoh illegally distributed online videos that featured music from its artists. Last September, Veoh won a ruling from a federal judge who said the site was protected by provisions under the Digital Millennium Copyright Act.
Veoh had won a previous copyright-infringement lawsuit filed by a gay-porn production company on the same grounds.
Veoh representatives and the company's outside public-relations agency did not respond to requests for comment.
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