Contour, the Seattle-based action-camera maker that surprised employees by closing its doors a month ago, has been placed in the hands of a court-appointed receiver who will pursue a potential sale on behalf of creditors owed nearly $7.5 million by the company.
Court documents filed in connection with the receivership depict a company without leaders following the departure of its entire management and board —capped by the abrupt resignation two weeks ago of chairman Steven Moore, who had been Contour’s last remaining executive officer and board member.
Contour’s management unsuccessfully sought new financing prior to its closure, according to the court documents. An investment bank working on behalf of Contour has identified “several potential purchasers,” according to filings by the creditors. However, they say efforts to sell the company’s assets “have stalled with the resignation of management.”
The filings do not name the potential buyers identified by the investment bank. Contour faced stiff competition from GoPro, its heavily funded rival in the market for action cameras.
“In the absence of a board of directors and management there is no one in place at Contour to protect and preserve the assets or to pursue the sale of the business and assets that was being pursued prior to the resignation of the board and management,” wrote lawyers for the creditors, Comerica Bank and Montlake Capital, in an emergency petition Aug. 26 seeking to place the company in receivership.
“There is evidence that the value of the assets is declining, that customers are returning product and dumping product and returning prior payments on accounts receivable,” the filing says, noting that the receiver needs to act quickly because the peak season for Contour is approaching.
The appointment of Inverness Group LLC as the receiver has been given preliminary consent from King County Superior Court Commissioner Nancy Bradburn-Johnson, and the receivership was expected to be formally approved by the court at a hearing this morning.
Michelle Taylor, the former Contour finance and HR manager who is now working under contract for Inverness, confirmed via phone this morning that Contour is in receivership, and the receiver will be setting up a site to provide additional information to customers, partners and employees affected by the closure.
Taylor said Contour “continues to work with customers, suppliers and its vendors on an early resolution to allow for ongoing operations and planned growth of the business within a formal restructuring program.”
A month after the closure of the company, its Seattle headquarters haven’t been cleared out, and a skeleton staff has been keeping the lights on, literally. Desks and furniture remain in place, and framed news articles still hang on the wall just inside the door, documenting the company’s rise in the wearable sports camera market. The door was unlocked when GeekWire stopped by the headquarters yesterday. A lone employee came out to greet us, declining to comment on the future of the company.
Contour co-founder Marc Barros, for many years the public face of the company, had left earlier this year and wasn’t involved in the closure. Steven Moore had been named interim CEO when Barros resigned in February.
Montlake Capital is an equity investor in Contour in addition to serving as a creditor. It’s owed about $4.2 million by Contour under two promissory notes, according to court filings. Comerica is owed about $3.2 million by the company under a separate loan agreement.
Court filings say that Contour defaulted on the loans prior to its closure last month, and efforts to secure new financing didn’t materialize. The company closed its doors in early August, but on Aug. 9, then-board chairman Moore “asked to defer discussions because of another potential offer to save the company.”
However, on Aug. 12, Comerica was “informed that the new offer had collapsed,” according to one court filing.
Then, on Aug. 20, Comerica says it received “written notice without any explanation” from Steven Moore that he had resigned as chairman, which left the company without any remaining officers or board members.
“Subsequent communications with Mr. Moore have not resolved the lack of management or control issues,” wrote Comerica vice president David Ferree in an Aug. 26 declaration filed with the court, supporting the petition to put the company into receivership.
“There are several indications that the value of the assets is steadily declining while the company is without management and will continue to decline without someone in place to protect and preserve those assets and pursue a possible sale of Contour and its assets,” wrote Ferree in the declaration. ”Mr. Moore and the prospective purchaser have reported that certain sellers of Contour’s products are dumping the products. Additionally, Comerica recently received stop payment on a check for payment of accounts receivable and such receivables are aging.”
Stay tuned, we’ll continue to track this story as it unfolds.