Defunct online grocer Webvan announced late Thursday that it has accepted a provisional US$2.5 million bid for its technology platform from a company controlled by its founder, Louis Borders.
According to procedures approved by the court handling Webvan’s bankruptcy filing, an overbid auction will be held on October 1st to give other interested parties an opportunity to bid.
Borders’ company, Mercury Acquisitions, stands to obtain the Webvan and HomeGrocer.com technology platforms, trademarks and other intellectual property if no other bids come in. Webvan acquired HomeGrocer in September 2000.
“Naturally, the process doesn’t stop with this offer,” said Scott McNutt of McNutt & Litteneker, LLP, counsel for unsecured creditors in Webvan’s bankruptcy case. “When the Borders’ deal is presented to the bankruptcy court, others can bid up the price. This would make the Webvan creditors’ committee very happy, as it will bring more money to the Webvan creditors.”
Webvan said that it contacted more than 100 companies about purchasing its technology platforms and that over 30 companies placed bids.
According to the company, the price offered “is a fraction of what it would cost to develop a comparable platform.”
The Foster City, California-based company said in August that it anticipates having funds available for distribution to unsecured creditors, but not to shareholders.
Webvan auctioned off the furniture, office equipment and material-handling systems from its Atlanta, Georgia facilities in August, and plans to sell off the assets from its Northern California and Baltimore, Maryland facilities later this month.
Although Webvan did not say what the proceeds from its Atlanta auction were, published reports indicated that the company auctioned off assets previously valued at $22 million for about $3 million.
Among the assets auctioned were various pieces of office equipment and a 1999 Volkswagen Beetle that reportedly sold for $15,000.
Before filing for bankruptcy in July, Webvan tried numerous measures to stay afloat.
In January, Webvan curtailed its planned expansion into several East Coast cities and started closing operations in existing markets. Before exiting the online grocery business completely in July, Webvan departed the Dallas, Texas; Sacramento, California; and Atlanta, Georgia markets.
Days before finally pulling the plug, Webvan shareholders approved a 1-for-25 reverse stock split that would have kept the company’s shares trading on the Nasdaq stock exchange.
Since filing bankruptcy, Webvan has been hit with several shareholder suits claiming that the handling of the company’s initial public offering violated federal securities law.
When Webvan filed for bankruptcy, its shares were trading at 6 cents each, down from an all-time high of $25.44. The shares had not traded above $1, the minimum requirement for a Nasdaq listing, since November.