Well, it finally happened: MoviePass’s parent company, Helios and Matheson Analytics, is over, having filed for Chapter 7 bankruptcy liquidation.
The decision, shared in a Tuesday filing with the Securities and Exchange Commission, means the company will be sold for parts. The company said in its filing that it may owe up to $1.2 million to roughly 12,000 customers, which is about $100 each.
“As a result of filing the Petition, a Chapter 7 trustee will be appointed by the Bankruptcy Court to administer the estate of the Company and to perform the duties set forth in Section 704 of the Code,” the SEC filing stated.
Shares of Helios and Matheson plummeted nearly 83% on Tuesday, trading at nearly zero, and overall, have declined 96% in the last year.
In addition to filing for bankruptcy, Helios and Matheson board members Prathap Singh, Gavriel Ralbag, Muralikrishna Gadiyaram and Joseph Fried all tendered their resignations. Parthasarathy Krishnan also resigned as the interim CEO and Robert Damon resigned as interim CFO.
The company noted that the resignations were a result of the bankruptcy filing and are “not the result of any disagreement with the company regarding the company’s operations, policies, or practices.”
MoviePass has had disagreements with board members and executives in the past. In 2018, board member Carl J. Schramm resigned, saying that the ticketing company withheld important financial information and made influential decisions without the board’s input. In March 2019, executive vice president Khalid Itum resigned three months after the company announced he had taken over the role.
The bankruptcy filing was, for many, an expected final step for MoviePass, which shuttered in September. The company had looked to revolutionize the theater-going experience by offering fans the ability to see a movie a day for $9.95 per month, which quickly presented MoviePass with financial problems as it basically subsidized moviegoers’ theater-going habits.
When MoviePass closed its doors in September, Helios and Matheson said that its board of directors had formed a strategic review committee in order to identify, review and explore all strategic and financial alternatives for the company. That, in the company’s words, included “a sale of the company in its entirety, a sale of substantially all of the company’s assets including MoviePass, Moviefone and MoviePass Films, a business reorganization or one or more other extraordinary corporate transactions, together with the assumption or settlement of the Company’s liabilities in connection with any of these alternatives.”
After MoviePass suspended its service, Helios and Matheson chairman and CEO Ted Farnsworth resigned, and subsequently submitted a bid to buy the movie-going company and take it private.
“I put in an official offer to buy all the assets of Helios and Matheson, which is the owner of MoviePass, MoviePass Films and Moviefone,” Farnsworth told TheWrap at the time. “I believe in the brand.”
It’s been a slow, and often painful death for MoviePass, which struggled to raise money and right the ship after a tumultuous run.
After slashing the price of a subscription to $10 a month from as much as $50 in August 2017, MoviePass enjoyed a period of rapid subscriber growth — more than expected — and newfound popularity. But the expansion proved economically unsustainable.
The company burned through millions of dollars, suffered from what it said was a significant fraud problem, continually frustrated customers and struggled to keep its head above water.
Throughout a tumultuous 2018, MoviePass managed to stave off bankruptcy and find itself embroiled in shareholder lawsuits amid claims of fraud. And to put a cap on the oddity of the company’s struggles, in March, it was forced to re-report third-quarter financial results, due to initially believing it had more subscribers than it did. That resulted in a bigger reported net loss for the quarter, ballooning to $146.7 million from the previously reported $137.2 million.