Sonicblue Files for BankruptcyConsumer electronics will sell off ReplayTV, Rio, GoVideo.
Sonicblue is filing for reorganization under federal bankruptcy laws and plans to sell off the divisions that make the popular consumer devices ReplayTV, the Rio MP3 player, and entire GoVideo business unit.
The company filed for Chapter 11 bankruptcy protection with the United States Bankruptcy court of the Northern District of California, San Jose Division. Sonicblue plans to sell the ReplayTV and Rio product lines to D&M Holdings, parent of home electronics makers Denon and Marantz Japan.
Sonicblue also announced a definitive agreement to sell its GoVideo business unit, which makes integrated DVD+VCRs, Dual-Deck VCRs, and digital home theater systems, to Opta Systems for about $12.5 million. That company has ties to Sonicblue; Opta's vice chairman, Roger Hackett, is a former vice president of Sonicblue and for a decade was chief executive officer of Sensory science, GoVideo's original developers.
The proposed deal for ReplayTV and Rio would give Sonicblue $40 million, less up to $5 million in liabilities. Any agreements must be approved by the bankruptcy court. Sonicblue representatives said the transactions should be completed by the end of April.
Sonicblue's business units will be better able to function with "better-heeled owners," noted Gregory Ballard, Sonicblue CEO. Sales of those divisions and the reorganization under Chapter 11 will enable Sonicblue to stay in business while moving the individual business units to the new owners.
"The continued support of our manufacturers and retailers will play an integral role in our ongoing efforts to make the changes that will enable the continued growth and success of our products," Ballard added.
Opta is eager to take on the GoVideo technology, said Hackett and Carmine Adimando, chairman of Opta Systems.
"We believe that Opta Systems can unlock GoVideo's true potential and take full advantage of the unprecedented growth in the digital video marketplace," Adimando said in a statement.
Sonicblue ran into controversy last year when a judge ordered it to devise a way to record the viewing and usage habits of customers of its ReplayTV 4000, to find out if they were illegally copying and sharing television shows and movies. The order was set aside, but Sonicblue remains under legal pressure by Hollywood firms eager to quash piracy opportunities.
Sonicblue has received a credit agreement to provide $4 million in additional financing, and hopes to retain Houlihan Lokey Howard & Zukin Capital as financial advisors and Pillsbury Winthrop as legal counsel.