(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.”
About Liam Eagle
Liam Eagle has worked as a contributor to the Web Host Industry Review since its inception in 2000, and as editor since 2003. He has been editor of the WHIR's print magazine since its launch. His daily involvement in the gathering and reporting of Web hosting news and his regular interaction with Web hosting leaders gives him an uncommonly broad appreciation of the issues and tends facing the business. Through his WHIR blog, Liam spots Web hosting trends and offers opinions on the industry-wide impacts of major developments and the motivation behind big announcements. Follow him on Twitter @liameagle
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