Pay By Touch to go under outside control until legal issues resolved
Pay By Touch, the venture and hedge fund-backed company that offers a way to let people pay at stores through fingerprint identification, has been facing a slew of problems. Now, it is being put under court-appointed, outside control, VentureWire reports (sub required), citing Delaware court documents.
Its investors are worried about management issues: The company is facing an involuntary petition under Chapter 11 bankruptcy protection, filed by former employees who say they haven’t been paid. Its founder may be facing personal bankruptcy and legal charges. Our past article, here, with more details.
Attorneys representing the company, and plaintiff Plainfield Asset Management LLP, a hedge fund that has put up at least $50 million of debt to the company, and claims voting control, will agree upon who will take outside control and send their proposal to the court.
Founder John Rogers’ personal attorney said Rogers “has been in New York attending to corporate matters and fundraising matters for the corporation.”
Pay By Touch has received more than $300 million in venture backing and hedge fund debt, according to a Plainfield legal filing.
Rogers used to hold 687,340,000 super-voting shares of Solidus, or 64% of voting stock in the company, the Plainfield legal filing states — a February financing agreement gave Plainfield the right to exercise 549,872,000 of Rogers’ super-voting shares, giving it majority control.
Venture capital investors include Rembrandt Ventures and Mobius Venture Capital, though Mobius sold its stake two years ago. The hedge funds include Plainfield, Och-Ziff Capital Management and Farallon Capital Management.
Other investors include well-known public figures such as Ron Burkle, the founder and manager of Ycaipa Cos. and Mario Lemieux, the co-owner of the Pittsburgh Penguins hockey team.
Others include the Gordon P. Getty Family Trust, Scout Capital, Quince Associates and Global Trust Partners.
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About the Author, Eric Eldon
Eric currently covers digital media technology and business news, especially what's happening on social networks and their platforms. He also writes and edits stories about venture capital, and lots of other stuff, too. He started at VentureBeat in the spring of 2007, half a year or so after Matt Marshall left his reporting job at the San Jose Mercury News to found the site. Eric previously cofounded a startup called Writewith, that was building editorial software for newspapers and other groups of writers. The startup didn't work out, but he learned a lot.
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