Cary-based Capitol Broadband Management, once one of the fastest growing private companies in the United States, is closing down as of today.
Some of the bankrupt company’s assets have been sold, and some people will keep their jobs, the company said.
Matt Springer, executive vice president for corporate development, said in a telephone interview that “virtually all” of Capitol Broadband’s assets had been sold through a bankruptcy auction for “approximately $20 million.”
“A very few minor assets are to be disposed of in the coming weeks,” Springer added.
According to a notice filed with the state of North Carolina, Capitol Broadband said the closure would occur Thursday and that 89 people would be laid off.
Former Cary Mayor Glen Lang founded the company and served as its chief executive officer.
The filing said the closure is “permanent.”
In the notice, Lang told the state and the Town of Cary that some assets of the firm had been sold as part of its bankruptcy and that some people would keep their jobs.
The so-called “WARN Notice Report,” or Worker Adjustment and Retraining Notification, requires that employers to provide 60 days’ notice of covered plant closings and mass layoffs.
Capitol Broadband, which operates under a number of different names including Connexion Technologies, filed for bankruptcy in April. It cut two thirds of its work force, including 140 jobs in Cary, in March. Some 80 people were laid off in January.
At that time, Connexion employed 600 people across various locations, including several outside North Carolina.
Capitol Broadband made the closure filing on Tuesday, June 19.
In the filing, Lang said “certain company assets” had been sold to “a number of purchasers,” including Hotwire Communications. Spring said other buyers included Mediacom and Golden Rain Foundation.
“It is our understanding that the purchaser is in the process of offering continued employment to at least 40 of the Company’s 89 current employees at that location,” Lang said, citing the Cary office. Springer said the people being retained were “across the organization.”
The closing on the sale is expected to occur Thursday, Lang wrote.
The deals will close “today and tomorrow,” Springer said in the interview.
Some 12 “current employees” will continue to work on bankruptcy-related matters for six weeks, Lang added.
Investors in Connexion include Jim Goodnight. The billionaire is CEO and co-founder of Cary-based SAS, an international software firm.
The Chapter 11 voluntary bankruptcy filing was made in Delaware.
Springer said the company secured $4 million in financing to keep the company operating through the bankruptcy auction process. He explained that company executives decided the auction was the best way to secure the most money for Capitol Broadband’s assets. After an initial offer was received from Hotwire, Springer said the number of buyers increased and the value of the sale “did improve.”
The company listed debts of up to $500 million and assets of between $100,001 and $50,000.
Creditors numbered between 200 and 999.
Connexion provides television and Internet services to multi-family housing complexes.
In court papers, Lang said a “deteriorating relationship with DirecTV and their overall corporate complexity made it highly unlikely the debtors would be able to obtain adequate financing in a timely fashion,” Bloomberg news reported.
In a statement provided to Bloomberg, DirectTV said it acted properly in terminating contracts with Connexion.
“Connexion, and Connexion alone, needs to take responsibility for their current situation,” spokesman Robert Mercer said. “Under the terms of our arrangements with Connexion, we properly exercised our right to terminate some contracts for business reasons.”
Dow Jones news reported in April mthat Connexion was seeking court approval for $4 million in bankruptcy financing from UniCredit Bank.
Connexion informed the state Department of Commerce on March 14 that it would be cutting 140 jobs at its Cary headquarters, effective the next day.
Connexion faces at least two wrongful-termination lawsuit dues to short notice given affected employees.
The suit also alleges that DirecTV quit doing business with Connexion because it “learned of alleged fraud committed by the defendant,” Dow Jones said.
The suit was filed earlier this month by a former Connexion employee who worked in Alabama.
“Defendant could reasonably foresee the business circumstances that caused this mass layoff as its primary customer, DirecTV learned of alleged fraud committed by Defendant and terminated the business relationship,” the suit reads.
Founded in 2002 by Lang, Connexion works with partners like satellite, cable and telecommunications firms to deliver video and data services.
Connexion made the Inc magazine 500 in 2010 as one of the nation’s fastest growing company and the Inc 5000 list in 2011.
In the 2011 list, Connexion was reported to have $30 million in revenue for 2010 and a 263 percent rate of growth over three years. Its headcount stood at 612, nearly doubling from 314 over that three-year period.