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Insteon's vanishing act explained: Smart home biz insolvent, sells off assets

Acknowledgement of shutdown almost a week after backend powered off

Smartlabs, Inc, parent of vanished internet of things vendor Insteon, is unable to meet its financial obligations and has assigned its assets to a financial services firm to be sold.

After recently shutting down the servers supporting its smart home hub app and saying nothing to its customers or partners, the California-based firm on Wednesday evening finally got around to publishing an update to its website.

The notice explains that in 2017, Smartlabs had financial problems and obtained additional capital and new management to improve its situation. But the emergence of the global pandemic in 2020 and the ensuing supply chain disruption proved too much, prompting the company to seek a buyer in November 2021.

"The process resulted in several interested parties and a sale was expected to be realized in the March timeframe," the company post says. "Unfortunately, that sale did not materialize. Consequently, the company was assigned to a financial services firm in March to optimize the assets of the company."

Smartlabs, Inc. has assigned its assets to a company with a confusingly similar name, SmartLabs (ABC), LLC. The rebranded firm, managed by an individual identified as David Miller, exists to liquidate corporate assets and handle claims from creditors.

Smartlabs has dealt with its insolvency through a General Assignment for the Benefit of Creditors – reflected in the ABC in the new company name. Available in some US states, this is an alternative to liquidation under federal bankruptcy proceedings, which involve a court, potentially significant costs, and possible stigma.

The legal paperwork for this process noted, in March, that Smartlabs "is indebted to various creditors and is unable to pay its debts in full, and has decided to discontinue its business," and thus transferred its assets so that those owed money can be paid back.

The former CEO of Smartlabs and Insteon, Rob Lilleness, appears to be concerned that the failure of his company might haunt him: he initially changed his LinkedIn profile to omit any mention of Smartlabs or Insteon and reduced his display name to initials. Then after the unannounced shutdown of Insteon's servers was reported, his LinkedIn profile disappeared completely.

That prompted one visitor to Reddit's /r/Insteon forum to post a screen capture of the company's suddenly coy management. Insteon's leadership-bios page at the time this story was filed returned a "404 not found" error. Another forum visitor has taken the opportunity to acquire the domain and populate it with a single-page website that makes the company's shutdown more evident.

Insteon's goodbye message acknowledges the "extraordinary following and community" that developed around the firm's IoT products – a group that clearly resents being blindsided by a deal closed on March 22, 2022 and was made public by a server shutdown only a few days ago. And it expresses hope that a buyer can be found before concluding with a statement of regret.

"Although incredibly difficult, we hope that the Insteon community understands the tireless efforts by all the employees to serve our customers, and deeply apologize to the community," the message says.

There could yet be a happy ending, however. In a post to the forum of Universal Devices – maker of an Insteon-compatible home automation controller – Universal Devices CEO Michel Kohanim said he has been in communication with the company handling the insolvency and may pursue buying a license to Insteon's technology or what remains of the company. Insteon, he said, has about 100,000 hub users. Some of them presumably would welcome new management.

Kohanim said he can't go into more detail at the moment due to a non-disclosure agreement.

Meanwhile, Insteon's system status page continues to show all's well. ®

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