Santa Ana’s Scoop Files for Bankruptcy
Money-losing Scoop Inc. filed for bankruptcy protection Friday as part of a plan to sell the bulk of the Santa Ana-based Internet news service’s operations over the objections of some investors.
The filing shows that Scoop has about $950,000 in assets and $1.4 million in liabilities.
The company, which raised about $6 million in its public stock offering in April 1997, posted a second-quarter loss of $643,000 just two months later. Scoop provides news stories, magazine articles and research to subscribers via the Internet.
The company said it will continue operating and serving its clients during the bankruptcy.
In July, Scoop was dropped from the Nasdaq market for small companies because of its financial woes. Company officials said that action killed a deal for it to acquire an educational software company, leaving Scoop’s future “in substantial doubt.’
Records in the Chapter 11 petition filed in U.S. Bankruptcy Court in Santa Ana show that Scoop recently signed an agreement to sell its largest asset, Scoop Media Services division, to a privately owned Laguna Hills company, Call Properties.
The sale is expected to raise enough to repay about 80% of Scoop’s debt, said Rob Opera, the Irvine bankruptcy attorney representing the company.
But in ordinary circumstances, the sale would have required shareholder approval--and some of the investors who paid $4.50 a share for Scoop stock during its initial offering apparently were dragging their feet because the deal would not have raised sufficient funds to buy them out.
Opera would not comment and company officials could not be reached, but the bankruptcy attorney did say the Chapter 11 was filed “to facilitate the sale” of Scoop’s operating units.
In a bankruptcy, a company’s shareholders are last in line to be paid off and typically lose their entire investment. Judges can and routinely do order sales of assets to raise money to repay creditors, leaving stockholders empty-handed.
Opera said he expects the court to approve the sale of Scoop Media and said the deal could be completed by the end of the month.
A smaller unit, Scoop Information Services, also is on the block. “We hope to sell it in the next month,” Opera said.
The company also said Friday that two more directors, Karl Karlsson and Michael Baum, have resigned. Three board members and most of the company’s operating officers already had quit.
