from www.bloggingstocks.com – A day before it was set to go under the gavel, the sale of Sex.com stalled. The domain name was set to be auction, but an involuntary Chapter 11 filing by three of the company’s creditors has put the brakes on the bidding. Escom LLC, which owns Sex.com, his on the hook, it seems, for an eight-figure tab.
The creditors’ petition, filed in U.S. Bankruptcy Court shortly after noon yesterday by Washington Technology Associates, iEntertainment, Inc. and AccountingMatters.com LLC, claims that Sex.com owes them $10,092,118.68, according to a report by adult entertainment industry trade publication AVN (NSFW).
In a press release issued by Meister Seelig & Fein LLP, which represents the creditors, partner Lawrence Morrison explains the reasoning for what is reported to be a rare bankruptcy petition: “Petitioners took this action to protect their interests and to maximize value for all other creditors and equity holder.” He continues, “The filing will stay the public auction foreclosure proceedings previously scheduled for March 18, 2010, which petitioners believe would have diminished the value of Escom’s assets.”
The primary concern is that Sex.com simply won’t fetch enough to satisfy Escom’s obligations.
For the investors, the road has been rocky. According to AVN, investor and founder of BuyDomains Mike Mann reflects in a February interview on DomainNameWire.com, “I am merely an investor who got completely railroaded by other investors with big guns, bad practices, and bad attitudes. I am always up for a good fight since any money I would make was already pre-designated to innovative charities. I represent those charitable recipients always, I socked away enough for myself a long time ago, and I was never concerned about material wealth anyhow, the charitable works came first. I like to be clear about what I’m doing here.”
Mann was optimistic last month about Sex.com’s prospects at auction, saying, “This is clearly the best domain in the world that is for sale, the type in traffic is worth like 20M for the life of the asset at least, then add branding, uniqueness, shortness, global ubiquity, and someone building a real viral asset and brand development on top of all that, if I had access to 25M I’d easily be a buyer, someone will build it and exit for 50-100M, I’m sure.”