Solavei emerged on the scene two years ago with a high-profile list of investors, celebrity endorsers and an ambitious business model that relied on customers to spread the word about the company’s cellular phone service, earning cash along the way.
From the beginning, Solavei’s multi-level marketing approach drew criticism, sparking hundreds of comments on GeekWire.
Now, Solavei — which has flown under the radar for the several months — has hit some headwinds. The company filed for Chapter 11 bankruptcy protection last week, restructuring its debt to be more “manageable with current operating income.” The filing lists more than 200 creditors, and liabilities in the range of $50 million to $100 million.
One of those creditors, Cavallino Consulting of Sausalito, Calif. — is owed $7.5 million alone.
“We believe the actions taken today will give Solavei the flexibility it needs to better serve our significant member base in a high growth and rapidly changing market,” said Solavei CEO Ryan Wuerch in a statement today. “Solavei members and employees will notice no changes in service or operations as we work with our vendors and investors to refine the social commerce platform and model we pioneered. Solavei will emerge from this process equipped to continue our growth with strong operations, a better cost structure, and opportunity for our members.”
Wuerch is the former CEO of Motricity, which also fell on tough times back in 2012.
Late last year, some members of Solavei lashed out when the company decided to introduce a new rate plan that throttled how much cellular data they could use.
At the time, Solavei had paid out more than $18 million to its members. The company — backed by the likes of former AOL CEO Jonathan Miller, Amazon Kindle VP David Limp and others — said last October that it was on a revenue run rate of $67 million.
Solavei said it expects to emerge from Chapter 11 later this year.
Here’s the full filing.