Phoenix-based streaming services technology company Edgio Inc. has sought Chapter 11 bankruptcy protection, concluding a tumultuous period marked by financial challenges and executive shakeups. The filing on September 9 in the U.S. Bankruptcy Court for the District of Delaware is intended to facilitate the sale of the company's assets and potentially allow Edgio to continue its operations under new ownership, as reported by the Phoenix Business Journal.
In a "stalking horse" purchase agreement, Edgio's primary lender, Lynrock Lake Master Fund LP, will potentially acquire some of the company’s assets through a credit bid valued at $110 million, an arrangement that emerged from Edgio's financial deterioration and a cascade of setbacks spanning over leadership changes, the restatement of financials due to an accounting error, and compliance challenges, according to a statement obtained by the Phoenix Business Journal. Concurrently, Edgio has been proactively seeking offers for its assets, including their applications, security suite, and the Uplynk platform, alongside an enterprise delivery network relied upon by close to 1,000 customers.
Facing a combination of assets and liabilities ranging between $100 million and $500 million and an extensive list of 1,000 to 5,000 creditors, the company's CEO Todd Hinders emphasized optimism, asserting, "We are confident the flexibility gained through this process will enable the continued delivery of video streaming and web security solutions to our over 935 global customers who rely on us daily," in a statement reported by the ABC15.
The road to bankruptcy was strewn with daunting challenges for Edgio, which was previously known as Limelight Networks before rebranding subsequent to its acquisition of Edgecast from Yahoo in 2022; this all comes after the SEC delisting notification due to its sub-$1 share price over 30 days, the resulting need to transfer its common stock to the Nasdaq Capital Market, and Edgio's inability to secure the required capital to address its financial obligations all these trials led to the drastic step of filing for bankruptcy while attempting to mitigate further cuts in its workforce, according to the Phoenix Business Journal.
In efforts to sustain operations during the restructuring process, Edgio sought court approval for a $15.6 million debtor-in-possession financing from Lynrock Lake, which, if granted, would ensure continued payment of employee wages, benefits, and critical vendor obligations. The company's announcement in March regarding the layoff of 80 workers this year adds another layer to Edgio's current predicament, all while preparing to finalize the sale process within the stipulated 80-day timeframe disclosed in the regulatory filing and amidst their stock price closing at a meager $1.22 per share last Monday, as reported by the Phoenix Business Journal.
