ConnectEDU Files for Bankruptcy
CONNECTEDU: Another one bites the dust--and this time, in the realm of college and career planning. High school guidance web-services platform ConnectEDU.com has officially filed for Chapter 11 bankruptcy. Founded in 2002, the Boston-based company publicly raised more than $28 million in financing rounds, including a $10M round led by Allen & Co in 2011. However, sources close to the company suggest that that number could be closer to $50M. In the filing, ConnectEDU lists their largest shareholder as Allen & Co at 10%. Other major investors include New Markets Venture Partners, who is listed as having issued a $1M convertible note.
Changes in ConnectEDU’s leadership last year may have foreshadowed the bankruptcy filing. Former CEO Craig Powell was replaced by current CEO Evan Nisonson in May of 2013, coupled with the departure of several board members (including former Secretary of Education Margaret Spellings).
UPDATE: PR reps for ConnectEDU later elucidated further details to EdSurge on April 29. The rep explained that the filing, "came as a result of significant liquidity constraints, including insufficient revenues to satisfy its debt obligations and certain operating expenses." The filing will allow ConnectEdu’s wholly-owned subsidiaries (Academic Management Systems, Inc. and Experience, Inc.) to "continue operations and protect, preserve, restructure and maximize the value of the businesses for the benefit of their creditors and employees."
ConnectEDU entities currently owe secured debt totaling about $10.7 million, and unsecured debt totaling about $4 million. And the employees? PR Rep Sharon Levine of Lowenstein continues:
Given ConnectEDU’s cash position immediately prior to the chapter 11 filing and inability to obtain sufficient financing, prior to the bankruptcy filing, ConnectEDU was forced to terminate all but the approximately ten (10) of its approximately sixty-five (65) employees, with the remaining employees associated primarily with Academic Management Systems, Inc. – the CoursEval business.