A plan to turn around Fishers-based SteadyServ Technologies LLC after it filed for bankruptcy hasn’t been successful, and company officials are preparing to sell the 7-year-old company to the highest bidder.
RBE Investments LLC, an affiliate of Indianapolis businessman Robert Eveleigh and the company’s highest secured creditor, has made a nearly $5.8 million credit bid to purchase the company and its assets.
Other parties are invited to make a higher cash bid, but that doesn’t seem likely, Eveleigh’s attorney told IBJ.
The company is under pressure to work out a sale quickly since a $1 million loan it obtained to keep it operating through bankruptcy is due to be repaid June 7. SteadyServ has asked the court to close the sale on or before June 11 in order to ensure operating expenses, including payroll and payments to vendors, can be paid.
SteadyServ, a beer-service technology firm that gained national attention with a draft-beer management and inventory system called iKeg, filed for Chapter 11 bankruptcy Feb. 7 after missing sales projections in nearly every quarter since its founding in 2012.
The company’s bankruptcy filing listed assets of just $54,999 and liabilities of $6.5 million, much of it in the form of secured debt owed to Eveleigh and RBE Investments.
Additionally, company employment had fallen from nearly 50 to 14 since it made a high-profile move from Carmel to Fishers in September 2016. That’s well off the figure of 154 employees the company predicted it would have by now when it entered into an incentive agreement in 2014 with the Indiana Economic Development Corp. The company stood to receive $2.3 million in state tax credits if it fully met hiring goals but has claimed less than $95,000.
David Becker, an entrepreneur who is CEO of Fishers-based First Internet Bancorp and has invested in many software startups, recently became chairman and CEO of SteadyServ and sought to raise $3 million to $5 million from a range of sources, including himself, to inject into the company in the 90 days following the bankruptcy filing.
Becker, who did not return messages seeking comment, laid out a scenario where the company could break even financially within a year and achieve annual recurring revenue of $4.5 million in three years. But Eveleigh and his attorney, Jim Knauer, a partner in the law firm Kroger Gardis & Regas, weren’t convinced that plan would work.
To keep the company afloat during the reorganization, Becker and the investment arm of The Indiana Spine Group offered to provide $1 million in financing, but they wanted that loan to be placed ahead of Eveleigh’s secured claims in repayment priority, which a judged approved.
Now, that loan is due to be repaid, and SteadyServ has been unable to negotiate a reorganization plan that is acceptable to Eveleigh, according to court documents, prompting the sale.
RBE Investments has offered $5.79 million, the full amount of its secured claim, in the form of a credit bid, meaning the secured debt will be applied toward the purchase price.
The agreement is an attempt to ensure ongoing business operations and the continued employment of SteadyServ’s employees, who will be hired at-will by RBE Investments.
“The Debtor believes this result is the most effective way to establish a floor for recovery and is in the best interests of the Debtor, its creditors, equity holders and other constituencies,” SteadyServ wrote in its motion to authorize the sale.
Altogether, Eveleigh has invested more $13 million into SteadyServ, including $8 million in equity and another $1.5 million through a series of loans. He also agreed to personally guarantee a $4 million Centier Bank loan that went into default, forcing him to pay the entire amount last year.
Knauer told IBJ that Eveleigh had a lot of faith in the company and its software, as evidenced by the large investments he made.
While Knauer doesn’t know Eveleigh’s specific plans for SteadyServ if his bid is chosen, he believes his client will “try to do what’s necessary to make it successful.”
“I think he believes there’s still opportunity for it to be successful, even though it hasn’t been nearly as successful as everyone had hoped,” Knauer said.
It’s unclear what role, if any, Becker will continue to play in the company after the sale. Co-founder Steve Hershberger, who had been co-CEO with Becker, has left the company since the bankruptcy was filed, according to the new motion.
Andrew Kight, an attorney at Jacobson Hile Kight who represents SteadyServ, did not return messages requesting comment.