Alpha Red Bankruptcy Filing Spotted
- By Liam Eagle, December 08, 2008
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(WEB HOST INDUSTRY REVIEW) -- According to a posting on the Workbench blog, written by Rogers Cadenhead, Alpha Red (www.alphared.com) filed for bankruptcy last week in Texas, claiming more than $10 million in liabilities.
"While looking through some records in a bankruptcy database, I found an item that hasn't hit the news yet," wrote Cadenhead.
In a Friday Twitter post, he wrote "I found out a large web host declared bankruptcy. Waited two days and saw no news stories, so I reported it myself. Is this the future?"
While its website remains online, Alpha Red reportedly shut down its data centers in Houston in October. The company, and its CEO James McCreary had been named by Microsoft and Washington state Attorney General Robert McKenna for their involvement in the distribution of a piece of "scareware" known as Registry Cleaner XP.
The company allegedly used pop-up messages telling users that their systems had become corrupted and urged them to spend $39.95 acquiring the unnecessary Registry Cleaner software.
Amid a flurry of outages and angry message board postings, customers reported losing contact with Alpha Red. At the time, hosting provider CWIE announced plans to acquire Alpha Red, but backed out during discussions, saying only that the deal "could not be consummated, notwithstanding considerable effort."
In message board threads at the time, company employees appeared to be making an effort to help customers get their equipment out of the Alpha Red facilities.
In his Workbench posting, Cadenhead says the company owes more than $4.57 million to the top 20 debtors in the bankruptcy, including $826,000 owed to the IRS.
The post quotes a statement made in the filing by receiver Douglas Brickley - who was appointed to run the company in the wake of a court action by Alpha Red customer MegaUpload Ltd. - which makes it clear the Chapter 11 filing, in this case, is not intended to enable the company to reorganize.
"[T]he Receiver deems it to be in the best interests of the Company to file a bankruptcy petition," says Brickley, "for the purposes of winding up the Company's business affairs, liquidating the Company's assets and distributing payment to creditors."
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Comment by Anonymous on Tuesday, December 09, 2008
As a director of AcroNOC, the employee group organized to provide operational continuity, I can definitively say that the assets of Alpha Red are being reorganized for an asset sale of a working entity. An auction will be held under the direction of the bankruptcy court. The working entity will continue to operate. The same employees will be providing services unless a long term employment cannot be reached. It seems unlikely that employment contracts could not be reached.
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