Sizmek, the world’s largest independent buy-side advertising platform, filed for bankruptcy late Friday, after its main private equity backer cut off access to capital amid snowballing losses.
Its bankruptcy filing show it owes money to between 1,000 and 5,000 creditors, including $4.5 million to Google. The company is continuing to trade while seeking protection from the courts.
(Sizmek serves 1.5 trillion ad impressions yearly, with a user base of 20,000 advertisers and 3,600 agencies globally ).
The lengthy list of unsecured claims for ad sales emphasises the challenge ad tech companies face fronting inventory costs before marketers pay for campaigns.
The bankruptcy filing comes amid turmoil in the industry, with Google reported by Adweek to be considering changes to Google Chrome and Marketing Platform that could fundamentally shift how online content is presented and monetised.
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No asset fire sale is nigh, the company claimed however.
Sizmek said on its website that it continues to trade.
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“Sizmek is open for business. The U.S. Chapter 11 process – unlike bankruptcy schemes in other geographies – is specifically designed for companies like ours to operate as usual while working to resolve financial issues. Rest assured, we are committed to serving our clients to the same high standard you’ve come to expect from us and are working diligently to ensure our platforms experience as little interruption as possible”.
Sizmek Bankrupt: Filing “the only responsible mechanism by which the Company can seek access to capital”
In a separate public statement the company blamed its main lender, understood to be Cerberus Capital, for cutting off funding.
“In the months preceding the filing, Sizmek has been in extended discussions with its stakeholders regarding their continued support of the Company as it pursued various strategic alternatives to address its over-leveraged balance sheet. Despite these ongoing discussions, the Company’s primary lender took control of the Company’s bank accounts and sought to divert customer receivables, thereby cutting off access to capital.
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“As a result of this action, Sizmek’s Board of Directors unanimously determined that Chapter 11 protection is the only responsible mechanism by which the Company can seek access to capital and preserve value while it continues to explore value-maximizing alternatives. The Company is aggressively seeking to access its existing cash, and intends to fully resume normal-course operations as soon as possible.”
The filing amounts to a high profile failure for the private equity firm Vector Capital, which took it private in 2016 at a significant premium to its then-public shareprice.
The filing comes as Vector had struggled to integrate Sizmek with Rocket Fuel, a struggling ad tech company it bought in 2017 for $145 million.
Unable to return Sizmek to profitability, Vector last year closed further investments in the company leaving bond holder Cerberus Capital to take over its equity stake.
