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End of the road for Basho: Court puts biz into receivership
Troubled NoSQL database-flinger was in ‘financial freefall’, court docs show
Basho, the outfit that developed the Riak distributed database, has been put into receivership after it stopped paying the bills to its main creditors.
Earlier this month, The Reg revealed the extent of the company’s troubles, with offices shuttering around the world and swathes of staff being laid off.
It was clear then that the upstarted, based in Bellevue, Washington, was in dire straits, and the fears of its former fans have now been confirmed.
According to court documents seen by The Reg, Basho’s main creditor, the Business Development Corporation of America, filed for receivership in early July after Basho defaulted on payments.
The filing said that BDCA loaned Basho $10m in March 2015, but that “as of September 27, 2016, events of default had occurred and were continuing, or were anticipated to occur, under the Credit Agreement”.
Basho is said to have failed to maintain liquidity of $1.5m at all times - as specified in the agreement - and to have defaulted on payments including cash interest payments.
The court document said that, “because the borrower is in default under the Loan Documents and in financial freefall”, a receiver was necessary to “among other things, protect, maintain and manage” BCDA’s collateral so it can be legally liquidated.
Receivership was granted by the Washington King County Superior Court on 14 July, and the company is now under the control of Pivotal Solutions.
Pivotal Solutions has confirmed to The Reg that it had been appointed as the general receiver of Basho.
It is expected that anything that can be liquidated at Basho will be - although one source suggested that there might not be much to work with. As creditor, BDCA will get first dibs on the proceeds, before investors in the company.
Descent from grace
Basho started life in 2008 and was for some time considered a shining star in the competitive NoSQL database world.
But the cracks started to show in 2012, with industry talk of unease about the demands of its major investors Georgetown Capital Partners.
Then, in 2014, a new leadership team ushered in a change in working style that precipitated an almost complete shift in the engineering team. One source told us that by the end of 2015, “all but two” of the engineers hired between 2010 and 2014 had left.
Sources told The Reg that, under new management, the company took an “aggressive hiring approach” and started pushing new products - but this appeared to suck energy from sales of existing products and soon sales teams were being downsized.
Basho tried to appeal to buyers, with a few potential deals coming through at the end of 2016, but insiders told us that these fizzled out or fell through, leaving the company with precious few options but to continue shrinking its staff and cut off support for customers.
Meanwhile, Basho's founder and former CEO Earl Galleher filed a lawsuit against Georgetown CP in 2016. This alleged the investor had imposed “punitive” G-round funding terms on Basho and engaged in self-dealing. ®