Invention Startup Quirky Files for Bankruptcy

Startup invention company Quirky Inc., which specializes in developing products to control household appliances with smartphones and other devices, has filed for chapter 11 bankruptcy to launch a sale.

The company filed for bankruptcy with a plan to sell its Wink business—which holds its 60 household product and applications and has partnerships with General Electric Co., Honeywell International Inc. and others—to an affiliate of Flextronics International Ltd. for $15 million, an offer that will be tested at auction.

Quirky is also searching for a buyer for the rest of its assets, saying it hopes to preserve its online invention community but will discontinue all of its business lines that can't be sold at auction.

The company filed for bankruptcy a month ahead of the maturity date of its $19.9 million revolver. It also faced $8 million in deferred payments related to its acquisition of Undercurrent LLC that would begin coming due in December. Undercurrent is a consulting services provider that Quirky purchased last March.

Additionally, Quirky has a $9.3 million secured term loan and $36.8 million in unsecured bond debt. Trade creditors are owed an additional $28 million.

Quirky was founded as an invention platform in 2009 by Ben Kaufman. Mr. Kaufman was replaced as CEO last month after Quirky laid off 159 employees and as it became clear that the company's efforts to sell its Wink business could only be executed in bankruptcy. As of Tuesday, Quirky employed 90 people.

Write to Stephanie Gleason at [e-mail]

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September 22, 2015 12:35 ET (16:35 GMT)

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