It has been announced that cloud gaming firm, OnLive, has barely survived following tens of millions of debt and it has also been revealed that investors will only get back 5 to 10 per cent of what they paid from the negotiated purchase/debt absolution.
The CEO of Insolvency Services Group, Joel Weinberg, has revealed details of OnLive’s recent financial disaster. He has been quoted saying the following: “It was a company that was in dire straits. It only had days to live in terms of cash flow and the like. Something had to be done immediately or there would have been a hard shutdown, which would have been a disaster.”
What’s more, OnLive has received some pretty harsh criticism for moving some of its IT employees on to lower paid contractor positions and laying off others from their five data centres, located in California, Georgia, Illinois, Texas and Virginia. However, based on Joel Weinberg’s accounting, it was quite lucky that the business survived at all and that some employees actually got to keep their jobs.
Mr Weinberg has further added that OnLive owed creditors between $30 million and $40 million in debt that was about to mature. Mr Weinberg has also said that OnLive had no way to pay the debt back.
In order to save the company, Mr Weinberg’s firm negotiated a purchase by venture capital investors, Lauder Partners. Lauder Partners had previously held a small stake in OnLive.
Whilst this is a major set-back for the cloud gaming firm, which offers gaming through a variance of cloud hosting, with Lauder Partners now taking up ownership, it means the cloud gaming service, OnLive, will be able to retain all its intellectual property whilst there will be no down time from the transfer of assets to the new Lauder Partners owned subsidiary.
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