Looks like Bebo, once an early star in social networking, is progressing to the next step in the long and messy struggle between majority shareholder Criterion Capital Partners and minority shareholders that include co-founder Michael Birch, Hecker Consultancy and SV Angel: Bebo.com, Inc. has filed a voluntary petition for Chapter 11 Bankruptcy in the Central District of California. First spotted by the blog Chapter 11 Cases, this appears to be the latest development in a case that was first filed in February of this year, in which some of the smaller shareholders requested for the courts to appoint a receiver to take control of the company after they judged that it had been mis-managed by Criterion.
This appears to be what happened. According to the Chapter 11 filing (embedded below), the receiver that got appointed in the Bebo case, after the February motion, was Michael Ong, who is listed as an investing partner at Burke Capital Corporation. Burke lists as its specialties “Capital Sourcing, Crisis Management, Growth & Value Accretion, Exits & Harvest.” We have also reached out to Ong for more detail on what comes next — whether it will be a sale of whole or part of the assets with an attempt to restructure the remaining business.
Chapter 11 Cases lists the largest unsecured creditors in the case as the “IRS ($380,000); Criterion Capital ($314,000 – disputed); AOL Advertising ($120,900 – subject to setoff, according to Bebo); Quality Technology Services ($120,000) and e-DBA Limited ($43,571).”
The February suit, as we reported at the time, might lead to the removal of Adam Levin as Bebo’s CEO. And according to his LinkedIn profile, the appears to be what happened, with his role as CEO at the company ending in February 2013 (although, confusingly, under his name on his profile card, Levin still lists “chief executive officer at Bebo”). Levin is also MD of Criterion Capital Partners, a position he retains.
We have reached out to Levin, as well as two of the shareholders, Michael Birch (also one of the co-founders) and Richie Hecker of Hecker Consultancy, for more detail.
Once a fast-growing social network that was particularly popular in the UK and Ireland — in the UK in 2008 (when Facebook was much smaller) it claimed to have 40 million users who spent an average of 40 minutes each on the site. Bebo was bought by (TechCrunch owner) AOL for $850 million in 2008 but then sold to Criterion for $10 million only two years later.
Prior to the February 2013 motion, in April 2012, minority shareholders had filed a $5 million suit against Criterion for “destroying” the site, in their words. Competition from much bigger and stronger players like Facebook may have been the biggest pressure on Bebo — which turned to various avenues like original video content to drum up more usage (perhaps ahead of its time, considering the move once more to online original video content) but the shareholders allege that the site’s owners didn’t help that situation.
After apparently defaulting on a lease for its San Francisco offices, Levin then allegedly moved the company down to Los Angeles without consulting the board — LA is where Bebo is now listed as being headquartered on current Chapter 11 filing. The lawsuit also claimed Levin paid himself $14,000 a month as CEO even though he wasn’t working full-time at the company and was focused on other work for Criterion. Moreover, the company didn’t hold any board meetings for at least 20 months and didn’t turn over financial information about the performance of the company over to the board.
The February 2013 motion added more kindling to that fire, claiming that Levin didn’t pursue leads for the sale of Bebo to interested parties like Tagged and AdKnowledge, with the latter offering to pay $15 million plus a $15 million earnout.
On the consumer front, Bebo has also been somewhat quiet: the site’s official Twitter account hasn’t been updated since November 2012, and its @TeamBebo support account has not tweeted since 2011. It’s suffered a few bouts of downtime, too, the most recent being earlier this week.
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