a21, Inc. and its subsidiaries SuperStock, Inc. and ArtSelect, Inc. have filed voluntary petitions with the Jacksonville division of the U.S. Bankruptcy Court to reorganize under Chapter 11 of the Bankruptcy Code.
In addition, a21 has filed separate motions to sell the U.S. assets of SuperStock to Masterfile Corp. and the assets of ArtSelect to Metaverse Corp. Both sales are free of liens and encumbrances, and both are subject to higher and better bids at an auction sale. The sale will be handled by the Bankruptcy Court within four to six weeks.
Masterfile agreed to pay $1.5 million for SuperStock assets, which include 350,000 wholly owned images. It is this imagery that is probably of greatest interest to the Toronto stock agency. Masterfile’s intentions for the imagery owned by contributing photographers and other SuperStock partners are unclear; company executives were not immediately available for comment.
a21 has also filed a series of legal motions to assure the continuity and stability of its businesses, including the payment of wages. All debts incurred by a21 and its subsidiaries after the Dec. 4 Chapter 11 filing will have priority for payment. However, prior debts will be paid based on the priority of such claims and the amount of proceeds from the sale of assets.
The company’s outstanding debt includes two notes, which total $17.9 million. Since these obligations take precedence over any monies owed to a21 suppliers, the company is unlikely to be able to pay contributor royalties for image sales made before Dec. 4.
If the eventual purchaser of Superstock desires to acquire a given photographer’s contract, payments owed may be paid. In cases where contracts are not purchased, photographers will receive a notice of return of photographs. Photographers who object to the potential reassignment of their contracts to the purchaser must individually file objections with the clerk of the Bankruptcy Court, and so must photographers who object to the proposed payment of the “cure amount” set forth on a21’s books.
a21 president and chief executive officer John Ferguson said: “Over a year ago, we announced that [we] were exploring strategic alternatives. After exhausting all possibilities and considering the current state of credit markets, we determined that the best way to complete a restructuring of our company and to protect the franchise value of our underlying businesses was to pursue a sale of the company’s assets under court supervision in a Chapter 11 proceeding.”
The company has established a Web site to provide information regarding the bankruptcy case. The Web site houses copies of major pleadings and information for potential purchasers, such as summaries of ArtSelect and SuperStock assets and the bidding rules and process of the upcoming auction.