Newchip, a startup accelerator that has been active for over six years, has filed for bankruptcy, according to a letter penned by the company’s CEO and founder, Andrew Ryan.
In the letter, Ryan detailed the unfortunate events and challenges that led to the company’s current predicament, expressing deep regret for the situation and apologizing to all those involved.
A series of unfortunate events
Ryan explained that Newchip encountered significant difficulties during the ongoing global tech recession, prompting the company to downsize in Q4 and Q1 and limit its operations in the global economy.
In an attempt to strengthen its position during the recession, Newchip filed for subchapter 5 bankruptcy to restructure its venture debts, intending to emerge stronger and more resilient after the financial downturn.
However, the company was unprepared for the restrictions that came with this process and the confusion surrounding the difference between bankruptcy protection “re-organization” and bankruptcy “liquidation.”
Ryan disclosed that a few former employees exploited the situation by attempting a hostile takeover, which ultimately failed. When their efforts were unsuccessful, these individuals resorted to manipulating the court system to force the company into liquidation.
A team’s unwavering commitment
Despite the company’s current state, a dedicated team of investors and creditors is working to challenge the decision and find a constructive solution for all stakeholders.
Newchip is exploring options such as a potential program buy-out, with the goal of continuing to power programs globally and deliver value to its creditors.
Ryan has assured that many of the company’s Venture Fellows and IR team members are still willing to volunteer and help.
He also mentioned that they had secured sufficient investor commitments to continue operations and had the support of the majority of their creditors to voluntarily dismiss the bankruptcy protection provided by Subchapter 5.
During the proceedings to voluntarily dismiss the bankruptcy, a false emergency report, known as “swatting,” targeted Newchip’s office, claiming that the CEO was armed and threatening himself and his employees.
This dangerous act disrupted the hearing preparations and destabilized the process. Throughout the proceedings, ex-employees continued to harass the court with anonymous outbursts and Zoom trolling.
The path forward for Newchip
Ryan expressed the company’s commitment to finding a swift and favorable resolution for all parties, apologizing for the distress caused by Newchip’s forced entry into Chapter 7 bankruptcy.
If the appeal is unsuccessful, the company is seeking investors willing to acquire its debts or take over in a buyout from the trustee to ensure continuity and new leadership.
Newchip’s journey began with the belief that innovation should be accessible and affordable for all. Ryan reflected on the company’s impact on the global startup landscape, helping reduce the failure rate of startups worldwide.
Despite the current challenges, he emphasized that the mission to foster a global community of innovators, dreamers, and doers is larger than one company.
As Newchip faces an uncertain future, the company’s founders and employees remain dedicated to supporting startups and finding a solution to navigate these complex circumstances.
You can read Andrew Ryan’s letter here.
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Source: https://www.cryptopolitan.com/startup-accelerator-newchip-goes-bankrupt/