In a move to assuage employees and customers, Cloud-gaming service provider OnLive has confirmed asset sale and assured continuation of services without interruption. OnLive announced Aug. 17 that a newly formed company had bought its assets and it will continue operations under the OnLive brand name.
The company has undertaken restructuring under an "Assignment for the Benefit of Creditors (ABC)," an option for struggling companies to transfer assets to another to run the business efficiently and prepare the company for a quick sale, according to The Verge.
Venture capital firm Lauder Partners that had invested in companies such as Aereo and LiveScribe is apparently the company's "first investor."
Though details of the investment are not known, Lauder's website reveals that it had previously invested in OnLive in 2009.
"OnLive's board of directors, faced with difficult financial decisions for OnLive, determined that the best course of action was a restructuring. The asset acquisition, although a heartbreaking transition for everyone involved with OnLive, allows the company's core innovation and ongoing offerings - the product of over a decade of hard work transforming the OnLive vision into reality - to survive and continue to evolve," the company said in a statement.
The company expects to have more investors soon, Jane Anderson, Spokeswoman, OnLive, told San Jose Mercury News.
The company statement also elaborated how Steve Perlman, CEO of the old OnLive, received no compensation from the acquisition of OnLive assets and has received no cash compensation from the new company. He does not yet have a title or contract with the new OnLive, Lauder Partners stated in an e-mail to San Jose Mercury News.
However, other company executives saw their salaries cut, "to allow the company to hire as many employees as possible within the current budget."
The company claimed to have 2.5 million subscribers overall, with an active base of 1.5 million subscribers.
Responding to a query on the intellectual property transfer, OnLive told VentureBeat that it was incubated by Perlman's Rearden thinktank for over five years. In 2007, it received its first outside investment and the intellectual property was transferred to the spinout. Disputing rumors that Reardon owns rights to the patents, OnLive stated: "The rumors that Rearden has retained ownership of patents are utterly false, and any competent patent attorney can verify that."
Following widespread interest in its bankruptcy protection filing and subsequent speculation, OnLive released an FAQ to assuage employees and customers.
The company's former investors reportedly include AT&T, HTC, Autodesk, Warner Brothers and Maverick Capital.
The Verge also noted in another report that HTC has announced a whole $40 million loss to the Taiwan Stock Exchange as it is not sure if it will be able to secure returns on its investment after OnLive filed an ABC.