Aereo, the Internet TV-streaming service that suffered a crushing legal defeat at the Supreme Court this summer, said it has filed for Chapter 11 bankruptcy protection.
“Chapter 11 will permit Aereo to maximize the value of its business and assets without the extensive cost and distraction of defending drawn-out litigation in several courts,” CEO Chet Kanojia wrote in a message on the company’s website Friday.
New York-based Aereo had raised about $97 million, from investors including IAC chairman Barry Diller, media investor Gordon Crawford, Himalaya Capital Management, Highland Capital Partners and FirstMark Capital.
Aereo’s service, which first launched in New York City in March 2012, streamed live over-the-air TV signals and recorded shows to subscribers on a range of devices. Aereo was sued by broadcasters for transmitting their TV signals without permission. The startup had argued that the service was a private performance, allowed under fair-use provisions of the Copyright Act, because the tiny antennas it used were dedicated to specific users.
Aereo won several legal victories in federal courts. But in June, the Supreme Court overruled those decisions, in a 6-3 ruling finding that Aereo had violated copyright laws. The high court essentially said the startup was akin to a cable TV operator, and hence was covered by the same laws.
The U.S. Supreme Court decision “effectively changed the laws that had governed Aereo’s technology, creating regulatory and legal uncertainty,” Kanojia said in the post Friday. “And while our team has focused its energies on exploring every path forward available to us, without that clarity, the challenges have proven too difficult to overcome.”
[UPDATE: Aereo has $20.5 million in assets including $4.6 million in cash, according to documents filed Thursday, Nov. 20, with the U.S. Bankruptcy Court for the Southern District of New York. The startup reported $4.2 million in liabilities and listed its three biggest creditors as Level 3 Communications (to which Aereo owes $605,939), Quality Technology Services ($520,981) and Google ($309,422). According to the filings, Kanojia owns 42.3% of the equity in Aereo, followed by IAC with 23.3% and FirstMark with 12.6%.]
Earlier this month Aereo laid off a majority of its staff, including employees in New York and Boston. The company said a small executive team of about a dozen people would remain.
With Aereo’s Chapter 11 reorganization proceedings, it has also appointed Argus Management managing partner Lawton Bloom to serve as Aereo’s chief restructuring officer.