The company submitted a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.
Although their main headquarters were located in New York City, they recently opened an office on the top two floors of the Center City building in downtown Schenectady. The location consists of both a call center and testing lab.
As part of a tax incentive deal with the state of New York, Quirky committed to create 180 jobs at the Schenectady office, but only reached a maximum of approximately 150.
In 2014, CEO Ben Kaufman spoke of his big plans for the city: “Why Schenectady? Well, besides its awesome, tongue-twisting name, Schenectady is the home of the original GE headquarters. So, we’re pretty excited to follow in GE’s footsteps and continue Schenectady’s longstanding tradition of innovation.”
On Tuesday, when Quirky announced via its blog that it had filed for bankruptcy, there was also a mention of a plan to sell all assets.
The company intends on accepting a $15 million offer for its subsidiary, “Wink,” a software platform for smart-home products.
The bid was made by Flextronics International Ltd, a design and manufacturing company that initially provided hardware for Wink. In the blog post, entitled, “Important Update,” the company stated, “Through this process we hope to find a new home for the Quirky community, where innovation can continue to be made accessible.”
The company initially showed promise, with a determined founder, corporate partnerships and a reality TV show on the Sundance Channel.
According to industry tracker Dow Jones VentureSource, Quirky was able to raise $170 million from several firms, including Norwest Venture Partners, RRE Ventures, General Electric’s GE Ventures and Andreessen Horowitz Fund.
Quirky stated that it currently has $53.9 million in assets and $136.8 million in liabilities.
When Kaufman founded Quirky in 2009, his goal was to create a crowd-sourced invention platform,where inventors could pitch their ideas and solicit help from the community. The company developed the products and paid royalties to the inventors.
Products such as the Pivot Power, a flexible power strip that sold more than 1.5 million units, were quite successful. But some products were misses and plunged Quirky’s profitability.
The company’s recent bankruptcy can be attributed to their first rapid expansion and a struggle of controlling such a diverse set of products.
“In short, Quirky was unable to attain manufacturing and distribution scale, and sustained significant losses on many of these products,” Quirky said in its bankruptcy court documents.
Despite attempts to change focus, Quirky needed cash fast. Their $19.9 million revolving loan from Comerica Bank was rapidly approaching and $36.8 million in convertible bonds were set to mature at the end of the year.
Additionally, a year ago, GE announced a $3 billion sale of its appliance business, depriving Quirky inventors of access to some of GE’s patents, according to the Wall Street Journal.
By late summer, the Wall Street Journal reported that Quirky lost leases for offices in New York and San Francisco, laying off 159 employees and replacing Kaufman as CEO.