Amp’d Mobile has provided the U.S. Bankruptcy Court in Delaware with some additional background as to why it filed for Chapter 11 protection last Friday. I could summarize, but the Amp’d bankruptcy lawyers can write themselves some prose (albeit with a propensity for run-on sentences).
What follows is from Amp’d, which refers to itself as Debtor:
“Unfortunately, at a time when the Debtor began to experience unprecedented growth in the number of its subscribers, it also encountered a myriad of problems, including a large number of non-paying customers, which led to a serious liquidity crisis in the spring on 2007. Unable to sustain the business model in the face of mounting debts, and faced with a default notice received from Cellco Partnership d/b/a Verizon Wireless on May 22, 2007 in connection with a wholesale agreement entered into in April 2005 that permitted the Debtor to purchase the minutes and megabytes necessary to serve its customer base, the Debtor began in earnest to attempt to raise additional funds from its existing equity and debt holders.
As late as the morning of June 1, 2007, the Debtor believed that a resolution would be reached but those hopes were dashed and then Debtor was forced to seek protection under the Bankruptcy Code later that same evening. While preparing the emergency filing, the Debtor was in communications and negotiations with [Kings Road Investment Ltd.] concerning an interim debtor-in-possession financing facility and, in fact, had received a term sheet that, subject to certain conditions and Court approval, would have provided the Debtor with sufficient additional liquidity to make a smooth transition into Chapter 11.
As the director result of the Debtor having received a purported termination letter from Verizon late in the evening of June 1, 2007, the Debtor is unable to satisfy certain conditions of [Kings Road’s] “new money” proposal but has negotiated for and obtained [Kings Road’s]consent (subject to Court approval) to the use of cash collateral on certain terms and for the primary purpose of allowing the Debtor to negotiate and/or litigate the purported termination of the Wholesale Agreement between Verizon and the Debtor.”
Download a more detailed rundown here (pages 2-5): Ampd21.pdf. In a separate document, the company also mentions that it has 229 employees, with monthly payroll of just under $1 million.