The online auctioneer, Auctionata Paddle8, which merged last May, has filed for insolvency to restructure the business. The Berlin-based parent group announced on 19 January that it is holding several conversations with investors about future funding for Auctionata.
Meanwhile, Paddle8 announced it has found an investor to buy back the New York-based company, which is a separate entity to Auctionata. Paddle8’s operations are not subject to the insolvency proceedings. Auctionata will continue to run auctions and sell merchandise under a “special protection regime”, according to a statement.
Auctionata is a multi-focus auction house that offered multiple sales per quarter all over the world without live audiences present. Bidding takes place predominantly online and the format relied heavily on a proprietary live filming system that also encouraged bidders to stop the auction mid-sale to ask their experts questions about the lots as bidding was taking place.
The company had been suffering in the build up to the announcement and the depth of their recent troubles included layoffs and failure to pay employees’ December 2016 salaries.
However, according to German law, which does not differentiate between bankruptcy and insolvency, the administrator of the preliminary insolvency proceedings secures the debtor’s assets in order to ascertain that legal fees can be paid and that employees receive salaries so there may be some respite for their staff yet.
This isn’t the first time that Auctionata has faced this kind of problems, according to reports, they laid off 130 individuals in 2015, even though they had just secured $45 million in series C funding.
The company already has plans to restructure, with the goal of recapitalizing, and added that there are “promising” talks with potential new investors. Auctionata also plans to separate from its New York office to focus on its main branch in Berlin.
Despite the opening of insolvency proceedings, the company’s auctions will continue, as the luxury objects remain the property of their consignors but the cloud of doubt surrounding the company cannot be filling bidders with confidence.