Online video sharing service Veoh Networks Inc plans to file for bankruptcy protection and liquidate the business, according to the company's founder.
In a blog on his website late on Thursday, Veoh founder Dmitry Shapiro said the company would file for Chapter 7 bankruptcy protection, citing the difficult economy and costly legal battles with Vivendi's Universal Music Group over claims of copyright infringement.
The distraction of the legal battles, and the challenges of the broader macro-economic climate have led to our Chapter 7 bankruptcy, Shapiro said on his personal website.
Under Chapter 7 of the U.S. bankruptcy code, companies are usually shut down rather than reorganized.
Veoh, which Shapiro formally launched in September 2005, competes with Google Inc's YouTube in allowing Internet users to broadcast video content. Since the launch, its audience has grown to 28 million users per month, Shapiro said.
According to the company's website, Veoh is backed by investors that include Shelter Capital, Spark Capital, former Walt Disney Co Chief Executive Michael Eisner's Tornante Co, Goldman Sachs, Time Warner Inc, Intel Capital, Adobe Systems Inc, Gordon Crawford, former Viacom Inc CEO Tom Freston's Firefly3 LLC and former Viacom Entertainment Group CEO Jonathan Dolgen.
Shapiro said investors had pumped $70 million into the company.
Veoh did not immediately respond to an email seeking comment.
(Reporting by Emily Chasan; Editing by Lisa Von Ahn)